Re: Post-Brexit Thread
Quote:
Originally Posted by 1andrew1
Britain will discover that distance still matters in trade
"...Not only have so-called gravity models of trade shown that the distance to a trading partner and the size of its economy matter for goods but, remarkably, they also reveal that the same seems to be true for services.
The negative effect of distance on trade has been evident for decades, even if economists struggled to explain its persistence. The ubiquity of the standard shipping container, the computerisation of transport logistics and the digitisation of production processes, enabling dispersed economies to be woven into a single supply chain, have not reduced the importance of proximity.
The standard analysis for goods is that each doubling of distance with a trading partner halves trade between them. A survey of Canadian services exports found that each 1 per cent increase in distance with a trading partner reduced trade by a third. The International Monetary Fund, which generated some estimates for the UK, found that the effect of distances on services trade was even higher than for goods."
https://www.ft.com/content/964afa06-...8-d3778b55a923
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thats a bummer for Canada and the EU trade deal then .
nice link to a paywall
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