The World is Not Yet Flat: Transport Costs Matter!

49 Pages Posted: 23 Jan 2015

See all articles by Kristian Behrens

Kristian Behrens

University of Quebec at Montreal (UQAM) - Department of Economics

Théophile Bougna

University of Quebec at Montreal (UQAM) - Université du Québec à Montréal

W. Mark Brown

Statistics Canada

Date Written: January 2015

Abstract

We provide evidence for the effects of changes in transport costs, international trade exposure, and input-output linkages on the geographical concentration of Canadian manufacturing industries. Increasing transport costs, stronger import competition, and the spreading out of upstream suppliers and downstream customers are all strongly associated with declining geographical concentration of industries. The effects are large: changes in trucking rates, in import exposure, and in access to intermediate inputs explain between 20% and 60% of the observed decline in spatial concentration over the 1992-2008 period.

Keywords: geographical concentration, input-output linkages, international trade exposure, transport costs, trucking rates

JEL Classification: C23, L60, R12

Suggested Citation

Behrens, Kristian and Bougna, Théophile and Brown, Williams Mark, The World is Not Yet Flat: Transport Costs Matter! (January 2015). CEPR Discussion Paper No. DP10356, Available at SSRN: https://ssrn.com/abstract=2554430

Kristian Behrens (Contact Author)

University of Quebec at Montreal (UQAM) - Department of Economics ( email )

P.O. Box 8888, Downtown Station
Montreal, Quebec H3C 3P8
Canada

Théophile Bougna

University of Quebec at Montreal (UQAM) - Université du Québec à Montréal ( email )

CP 8888 Succ Centre Ville
Montréal, H3C3P8
Canada

Williams Mark Brown

Statistics Canada ( email )

Ottawa, Ontario
Canada

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