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Journal of Economic Geography Advance Access published online on November 22, 2006
Journal of Economic Geography, doi:10.1093/jeg/lbl022
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© The Author (2006). Published by Oxford University Press. All rights reserved. For Permissions, please email: journals.permissions@oxfordjournals.org

Economic integration and the diversification of regional exports: evidence from the Canadian–U.S. Free Trade Agreement

Michel Beine{dagger} and Serge Coulombe*

* University of Ottawa, Canada. email < scoulomb{at}uottawa.ca>

{dagger} Corresponding author: University of Luxembourg, Luxembourg, University of Brussels, Belgium and CES-ifo. email < michel.beine{at}uni.lu>

We investigate the impact of Canada–U.S. trade integration on the degree of export diversification of the Canadian regions. Trade integration is captured through the decrease of trade-weighted tariffs that were boosted by implementation of the Canadian–U.S. Free Trade Agreement. We found strong evidence to support integration's long-run impact on the patterns of absolute exports diversification. Significantly, this new finding remains robust to the exclusion of the primary sectors and to the potential presence of unit root in the data. Our results lead us to support a positive long-run relationship between trade integration and export diversification.

Keywords: Regional specialization, Free Trade Agreement, core-periphery structure, panel data,
JEL classifications: F14, F15, R12

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