The (New) Geography of International Trade and Investment: Exploring the extent to which 'distance' matters in the establishment of economic relations

点击翻译按钮获取中文摘要

It is a widely held view among economics and business scholars that the regional trade agreements such as NAFTA and EU have provided benefits to member countries, including Canada and the UK, and that these might be threatened by renegotiation of the NAFTA agreement (Caliendo and Parro, 2015), and BREXIT (Dingra et al, 2018). Thus, both Canada and the UK seek to diversity their trade and investment partners to include more distant countries. In response to such concerns, our knowledge synthesis project will identify the impact of distance on the ability of countries to establish strong trade and investment ties with more distant partners. It responds to the theme of "Technological and digital transformations, cross-border trade in services, and geography." It represents an international initiative devoted to synthesizing knowledge about the roles of Canada and the UK in global trade leadership. This project is timely because Canada-UK trade relationships have profound sociocultural, political, and economic implications for both countries and global markets.A significant literature in economic geography and business has long provided strong evidence that'distance' matters, where distance includes not only physical distance, but also cultural and institutional distance. For example, there is evidence that bilateral trade and investment flows are greater when countries share a common border, a common language, and common institutional structures. These stylized facts provide the underlying context for trade and investment agreements and explain why so many of them are 'regional'. At the same time, these commonalities may facilitate and enhance the potential benefits of both trade and foreign direct investment (FDI) as knowledge spills over across borders.The question we will address is whether these stylized facts about the relevance of distance havechanged in a more globalized world, and in particular one where technology may make all forms ofdistance less relevant. A particular manifestation of this possibility is the rise of cities and the tendency for knowledge-based firms to (co) locate in a relatively small number of large and diverse cities. We therefore intend to survey the recent literature on trade and investment flows in knowledge-based industries (which includes services) to examine whether and how distance matters. We will also survey the evidence on the impact of cities on these flows.Our Canada -UK collaboration will 1) make research accessible to national and regional/city governmental organizations, including Ministries concerned with trade, innovation, employment and urban authorities seeking to promote FDI and technological innovation; 2) engage with major companies interested in location strategies for internationalization and innovation as well as consultancy groups advising firms and governments on these matters; 3) disseminate our principal findings to the academic community of international business scholars as well as think-tanks and the policy community in the UK and Canada.