Luis LANASPA SANTOLARIA
Department of Economic Analysis, University of Zaragoza.
llanas@unizar.es
Irene OLLOQUI CUARTERO
Department of Economic Analysis, University of Zaragoza.
Fernando SANZ GRACIA
Department of Economic Analysis, University of Zaragoza.
Abstract
This work is an empirical study of the Spanish Autonomous Communities from 2000 to 2010 to quantify the so-called border effect, or in other words, how much more intense are flows of goods between regions and the rest of Spain than between these regions and other countries. For this, we use the gravity equation model of trade. The main conclusions are: One, the border effect exists: the dummy variable which quantifies it is always positive and statistically different from zero. Two, the border effect tends to diminish over time. Three, estimating all the regions together, the border effect is around a factor of 10.5. Four, estimating each Autonomous Community independently, the greatest border effect is found in the Canary Islands (factor of 58.36) and the Balearic Islands (factor of 29.81); meanwhile, the regions with the least border effect are the ones with the two largest cities in the country: Catalonia (factor of 8.11) and Madrid (5.17), with Aragon in third place (8.14). Five, if we distinguish between regions’ imports and exports, the border effect is significantly higher for the former (factor of nearly 17, compared to one of nearly 10).