The World is Not Yet Flat: Transport Costs Matter !
55 Pages Posted: 11 Nov 2016
Date Written: October 17, 2016
The paper provides evidence of the effects of changes in transport costs on the geographic concentration of industries. The analysis uses micro-level commodity flow data and micro-geographic plant-level data to construct industry-specific ad valorem trucking rates and continuous measures of geographic concentration. The findings show that, controlling for international trade exposure and input-output links, increasing trucking rates are significantly associated with declining geographic concentration. The effect is large: changes in trucking rates explain around 20 percent of the observed decline in geographic concentration of Canadian manufacturing industries between 1992 and 2008.
Keywords: Economic Geography, International Trade and Trade Rules, General Manufacturing, Construction Industry
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