Is the Border Effect an Artefact of Geographical Aggregation?

Llano, Carlos; Minondo, Asier; Silvente, Francisco Requena

doi:10.1111/j.1467-9701.2011.01398.x

Cited by 22 publications

(29 citation statements)

References 35 publications

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“…Now, as in Llano‐Verduras et al. (), the contiguity dummy becomes nonsignificant for the two models, and even negative for M8.…”

Section: Resultssupporting

confidence: 59%

“…This persistent external border effect around 8 is slightly larger than that obtained by Llano‐Verduras et al. () with region‐to‐country [3.3 = exp(1.2)] and province‐to‐country [4.9 = exp(1.6)] data. Note that the papers use different data sets but similar specifications for distance and the same estimation procedures as in M6 and M7 .…”

Section: Resultscontrasting

confidence: 57%

“…In Llano‐Verduras et al. (), the external border effect was computed with PPML procedures. Simply by disaggregating the spatial unit of the exporting area in Spain, they were able to obtain a significant reduction in the border effect.…”

mentioning

confidence: 99%

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Thick and Thin Borders in theEuropeanUnion: How Deep Internal Integration is Within Countries, and How Shallow Between Them

Gallego

Llano

2015

World Economy

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The existence of large border effects is one of the main puzzles of international macroeconomics. The seminal paper by McCallum found that trade between any two Canadian provinces was (on average) 22 times greater than trade between any Canadian province and any US state. Although various authors have estimated internal and external border effects for the whole European Union and some specific European countries, none has done so in the manner that McCallum's seminal paper, stymied by lack of data on region‐to‐region international trade flows. This study uses a novel data set that captures intra and international truck shipments between Spanish regions and regions in seven European countries during the period 2004–11. It computes internal and external border effects, offering novel results for aggregate flows and the importing countries, and estimates several specifications of the gravity equation, so as to tackle such issues as the multilateral resistance term, heteroscedasticity, and zero flows and non‐linear relation between trade and distance. The paper also adds a detailed analysis on the external border effect for each Spanish exporting region and each of the seven European countries considered. By means of this analysis, we shed new light on the relative integration between regions of these seven countries and Spanish exporting regions. Finally, we conduct an extrapolation exercise, computing the ‘trade potentials’ that would be expected in a fully integrated Europe and estimating how long full integration would take to achieve between each Spanish exporting region and each European importing country. To this regard, two alternative scenarios are considered: one using the growth rates of the Spanish exports before the crisis (2001–08) and other considering the post‐crisis growth rates (2011–13).

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“…Now, as in Llano‐Verduras et al. (), the contiguity dummy becomes nonsignificant for the two models, and even negative for M8.…”

Section: Resultssupporting

confidence: 59%

Section: Resultscontrasting

confidence: 57%

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Thick and Thin Borders in theEuropeanUnion: How Deep Internal Integration is Within Countries, and How Shallow Between Them

Gallego

Llano

2015

World Economy

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“…This finding makes sense in light of these border provinces' past political tensions with international neighbours and their tendency to be overshadowed by other, larger Spanish provinces nearby (e.g., Girona vs. Barcelona, Guipuzcoa vs. Vizcaya, Cáceres vs. Sevilla). The previous result for border regions and the link between internal and external trade are crucial to researchers using the C-intereg dataset- Llano et al (2010); Ghemawat et al (2010); Llano-Verduras et al (2011);-Garmendia et al (2012), or the official freight flows considered in this paper, as the data show no clear sign that international transit flows are included with interprovincial flows.…”

Section: Intranational Home Bias 389mentioning

confidence: 92%

Intranational Home Bias in the Presence of Wholesalers, Hub-spoke Structures and Multimodal Transport Deliveries

Gallego¹,

Llano²,

Mata³

et al. 2015

Spatial Economic Analysis

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When modelling interregional flows it is standard to identify the origin and destination of a flow with the point of production and consumption. However, the presence of hub-spoke structures or multimodal flows may introduce bias, such as being an additional source for cross-sectional correlation between dyadic flows. The aim of this paper is to model inter-provincial flows within a country (Spain) considering this potential bias using a novel dataset with 50 inter-provincial flows and four transport modes. We then feed this dataset into various specifications of a gravity model that incorporates crosssectional dependence attributable to hub-spoke structures. express their gratitude to the UAM and the Ministry of Education and Science respectively for their generous FPI and FPU scholarships. Much-appreciated comments from various colleagues have served to improve the quality and scope of previous versions of this manuscript. However, any errors herein are entirely the responsibility of the authors. We all want to express our sincere gratitude to J.P. Lesage for gratefully sharing his Matlab routines in www.spatial-econometrics.com , which served as a base for our personal developments. Both investigations were developed in the context of three research projects: the C-intereg Project (www.c-intereg.es), founded by seven Tendance intra-nationale à privilégier le marché intérieur, au niveau des grossistes, de structures en étoile, et des livraisons par des moddes de transport multimodaux RÉSUMÉ lors de la modélisation de flux interrégionaux, la méthode standard consiste à identifier l'origine et la destination d'un flux avec le point de production et la consommation. Toutefois, la présence de structures en étoile ou de flux multimodaux est susceptible de fausser les données, en constituant, par exemple, une source additionnelle de corrélation transversale entre des flux dyadiques. Le but de la présente communication est de modéliser des flux interprovinciaux au sein d'un certain pays (l'Espagne), en tenant compte de ce parti pris potentiel, et en tenant compte d'un nouvel ensemble de données avec cinquante flux interprovinciaux et quatre modes de transport. Nous intégrons ensuite cet ensemble de données dans différentes spécifications d'un modèle à gravité incorporant une dépendance transversale attribuable à une structure en étoile.Favoritismo local intranacional en la presencia de mayoristas, estructuras de interconexión radial y repartos con transporte multimodal RESUMEN al modelar flujos interregionales, es normal determinar el origen y el destino de un flujo con el punto de producción y consumo. Sin embargo, la presencia de estructuras de interconexión radial o flujos multimodales puede dar origen a favoritismos, por ejemplo ser una fuente adicional para la correlación transversal entre flujos diádicos. El objetivo de este estudio es modelar los flujos interprovinciales en un país (España) considerando este posible favoritismo usando un conjunto de datos nuevo con cincuenta flujos interprovinciales y cuatro mo...

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“…From this analysis we can conclude that, regardless of flow type, the bulk of trade takes place over short distances and beyond a certain point the negative effect of distance falls off deeply. Hence the relevance of territorial disaggregation, Llano‐Verduras et al () and Garmendia et al () have shown that, with insufficient territorial disaggregation of trade, the gravity equation may lead to an overestimation of the border effect and an underestimation of the distance effect. As we will see in the next section, this overall effect can arise not just when regions are used instead of provinces, but also when countries are used instead of regions.…”

Section: The Datamentioning

confidence: 99%

The Border Effect and the Nonlinear Relationship between Trade and Distance

Gallego

Llano

2014

Rev International Economics

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After the seminal paper by McCallum, various authors have estimated the effect of regional and national borders on trade. This paper digs deeper into the matter, estimating how the internal and external border effect is affected by the non-linear relation between trade and distance at different spatial levels, and the econometric procedure used to control for it. Our paper uses a novel dataset that captures intra-and inter-national truck shipments between Spanish regions and regions in eight European countries. To deal with this non-linearity, we use three alternative strategiessegmented distance, piecewise regressions and semi-parametric approaches-that achieve similar results.

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Is the Border Effect an Artefact of Geographical Aggregation?

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Cited by 22 publications

References 35 publications

Thick and Thin Borders in theEuropeanUnion: How Deep Internal Integration is Within Countries, and How Shallow Between Them

Thick and Thin Borders in theEuropeanUnion: How Deep Internal Integration is Within Countries, and How Shallow Between Them

Intranational Home Bias in the Presence of Wholesalers, Hub-spoke Structures and Multimodal Transport Deliveries

The Border Effect and the Nonlinear Relationship between Trade and Distance

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