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National Border Effects: Location, Not Nationality, Matters

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  • Carolyn L. Evans

Abstract

A recent literature documents the downward impact of national borders on trade. This paper probes the relative importance of two potential sources of border effects: (1) pure locational factors, such as transport costs and tariffs; and (2) an inherent disadvantage for a firm selling in a foreign market. I am able to make this decomposition by using data on the local sales of foreign affiliates of US multinational enterprises, on US bilateral exports, and on domestic sales by host‐country firms. The “border effect” arises almost entirely from locational factors. If a firm establishes and sells from a subsidiary located in the foreign country, its local sales are about on a par with those of domestic firms in that market.

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  • Carolyn L. Evans, 2007. "National Border Effects: Location, Not Nationality, Matters," Review of International Economics, Wiley Blackwell, vol. 15(2), pages 347-369, May.
    • Handle: RePEc:bla:reviec:v:15:y:2007:i:2:p:347-369
    DOI: 10.1111/j.1467-9396.2007.00665.x
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    1. Alan V. Deardorff, 2011. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," World Scientific Book Chapters, in: Robert M Stern (ed.), Comparative Advantage, Growth, And The Gains From Trade And Globalization A Festschrift in Honor of Alan V Deardorff, chapter 24, pages 267-293, World Scientific Publishing Co. Pte. Ltd..
    2. Robert C. Feenstra, 1997. "U.S. Exports, 1972-1994: With State Exports and Other U.S. Data," NBER Working Papers 5990, National Bureau of Economic Research, Inc.
    3. Robert C. Feenstra & Robert E. Lipsey & Harry P. Bowen, 1997. "World Trade Flows, 1970-1992, with Production and Tariff Data," NBER Working Papers 5910, National Bureau of Economic Research, Inc.
    4. Shang-Jin Wei, 1996. "Intra-National versus International Trade: How Stubborn are Nations in Global Integration?," NBER Working Papers 5531, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Dennis Novy, 2010. "Trade Costs and the Open Macroeconomy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 112(3), pages 514-545, September.
    2. Dennis Novy, 2013. "Gravity Redux: Measuring International Trade Costs With Panel Data," Economic Inquiry, Western Economic Association International, vol. 51(1), pages 101-121, January.
    3. Patrick M. Krueger & Tajudaullah Bhaloo & Pauline Vaillancourt Rosenau, 2009. "Health Lifestyles in the United States and Canada: Are We Really So Different?," Social Science Quarterly, Southwestern Social Science Association, vol. 90(5), pages 1380-1402, December.
    4. Alexandra Ferreira-Lopes & Ccndida Sousa & Helena Carvalho & Nuno Crespo, 2017. "Trade Protectionism and Intra-industry Trade: A USA - EU Comparison," Research in World Economy, Research in World Economy, Sciedu Press, vol. 8(2), pages 88-102, December.

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