Firm networks, borders, and regional economic integration

Borders reduce interprovincial trade relative to intraprovincial trade. Using trade and firm ownership microdata over a 9‐year period (2004–2012), we show firm ownership networks, like trade flows, diminish with distance and borders and that the estimated effect of provincial borders on trade may fa...

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Bibliographic Details
Published in:Journal of regional science 2020-03, Vol.60 (2), p.374-395
Main Authors: Brown, W. Mark, Dar‐Brodeur, Afshan, Tweedle, Jesse
Format: Article
Language:English
Subjects:
border effects
Borders
Economic integration
firm networks
International trade
Interprovincial trade
Networks
Ownership
Regional development
Statistical analysis
trade
Trade flows
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Summary:Borders reduce interprovincial trade relative to intraprovincial trade. Using trade and firm ownership microdata over a 9‐year period (2004–2012), we show firm ownership networks, like trade flows, diminish with distance and borders and that the estimated effect of provincial borders on trade may fall by almost 75% after accounting for firm networks. This suggests the weaker presence of firm networks across borders has a significant, although statistically imprecise, effect on interprovincial trade. These findings reinforce the view that understanding border effects require not only the identification of barriers to trade but also barriers to investment across borders.
ISSN:0022-4146
1467-9787
DOI:10.1111/jors.12456