Cultural, administrative, and economic proximity between the UK and Canada should be good for trade

Economists place considerable emphasis on the role of (geographic) distance in explaining the pattern of international trading relationships. Using a metaphor from Newtonian physics, trade and foreign direct investment (FDI) between countries are often seen as being driven by the forces of gravity, encapsulated in the relative size of their markets and the distance between their economies. Moreover, as shown in a previous brief, geographic distance is expected to have non-linear effects; as countries become further away, their trading relationship is expected to become less intense at an increasing rate. Building on that, in this post, Saul Estrin, Angelina Borovinskaya, Christine Cote, and Daniel Shapiro provide a more fine-grained perspective on gravity effects which takes into account administrative and economic differences as well as cultural factors. They argue that cultural, administrative, and economic proximity between the UK and Canada should be good for trade.