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Is Our World Going to Get a Whole Lot Smaller?

Author

Listed:
  • Byron S. Ganges

    (University of Hawaii at Manoa; Visiting Professor, Yokohama National University)

  • Alyson C. Ma

    (University of San Diego)

  • Ari Van Assche

    (HEC Montreal, Katholieke Universiteit Leuven and CIRANO)

Abstract

The surge of oil prices in recent years has led to speculation that rising transportation costs could end the period of dramatic world trade growth �in the words of Rubin (2009), ��Your world is going to get a whole lot smaller.� Using data from China�s Customs Statistics, we examine the impact of oil prices on trade�s sensitivity to distance. We find that higher oil prices increase trade�s elasticity to distance, but that the economic effect is small. We also find that the effect is more pronounced for trade within global production networks, and less large for goods shipped by air.

Suggested Citation

  • Byron S. Ganges & Alyson C. Ma & Ari Van Assche, 2011. "Is Our World Going to Get a Whole Lot Smaller?," Working Papers 2011-1, University of Hawaii Economic Research Organization, University of Hawaii at Manoa.
    • Handle: RePEc:hae:wpaper:2011-1
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    File URL: https://uhero.hawaii.edu/wp-content/uploads/2019/08/WP_2011-1.pdf
    File Function: First version, 2010
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    References listed on IDEAS

    as
    1. de Almeida, Pedro & Silva, Pedro D., 2009. "The peak of oil production--Timings and market recognition," Energy Policy, Elsevier, vol. 37(4), pages 1267-1276, April.
    2. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, November.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Sacks, Audrey & Rahman, Erman & Turkewitz, Joel & Buehler, Michael & Saleh, Imad, 2014. "The dynamics of centralized procurement reform in a decentralized state : evidence and lessons from Indonesia," Policy Research Working Paper Series 6977, The World Bank.

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    More about this item

    Keywords

    oil prices; distance; trade; vertical specialization; mode of transport; China.;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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