"How Much Does Geography Deflect Services Trade? Canadian Answers"
e estimate geographic barriers to trade in nine service categories for Canada's provinces from 1997 to 2007 with novel high quality bilateral provincial trade data. The border directly reduces average provincial trade with the US relative to interprovincial trade to 2.4% of its borderless level. Third party effects acting through multilateral resistance combine with direct effects to reduce foreign relative to interprovincial trade to 0.1% of its frictionless potential. The downward deflection of international services trade is some 7 times smaller than the deflection of international goods trade. Surprisingly, intraprovincial trade in services and goods is equally deflected upward.