Abstract
The new economic geography literature has broadened awareness that economic agents’ geographic locations influence one another. Whereas the effect of proximity between exporting and importing units has been investigated somewhat heavily, the possible effect that neighboring economic units can have on each other’s trade with other economic units only relatively recently has received much attention. Neglecting spatial correlation can produce biased estimated coefficients and, consequently, biased estimates of trade, regardless of methodology the latter is based on. Using panel data on the manufacturing exports of the 48 contiguous U.S. states to 24 Asian countries, we empirically test for local spatial linkages in the manufacturing exports of U.S. states to the Asianregion. We investigate if spatial linkages are created by geographic, cultural, infrastructural, innovation asset, business environment, and economic development proximities. We find that all proximity weights generate statistically significant spatial linkages.
Highlights
The importance of knowledge spillovers, spatial linkages, and the spatial agglomeration in regional and international economic performance has been expounded by the new economic geography literature
The positive and significant coefficient for the population of the importing country, indicates that larger countries import more from the U.S In contrast, the coefficients for state gross state product (GSP) and population are negative and significant, which may mean that size does not translate into better state export performance
We investigated whether spatial linkages exist in U.S state manufacturing exports to Asia
Summary
The importance of knowledge spillovers, spatial linkages, and the spatial agglomeration in regional and international economic performance has been expounded by the new economic geography literature. Few studies have investigated U.S states’ export patterns, and most have focused exclusively on the distance from importing countries, with only a few including Coughlin (2004) considering other spatial issues such as regional trade agreements. To better characterize the structure of U.S state’s international export patterns, this study employs a spatial autoregressive gravity model with fixed effects to investigate the presence of local spatial linkages in states’ high-technology, low-technology, and total exports. The use of physical distances partly builds on what Krugman (1991a) has termed the core-periphery problem In our case, this is to investigate whether concentration of trade activity has relatively strong effect in raising surrounding regions trade activity to similar levels.
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