Is Our World Going to Get a Whole Lot Smaller?

The surge of oil prices in recent years has led to speculation that rising transportation costs could end the period of dramatic world trade growth–in the words of Rubin (2009), “…Your world is going to get a whole lot smaller.” Using data from China’s Customs Statistics, we examine the impact of oil prices on trade’s sensitivity to distance. We find that higher oil prices increase trade’s elasticity to distance, but that the economic effect is small. We also find that the effect is more pronounced for trade within global production networks, and less large for goods shipped by air. 

Published: Gangnes, B. and Van Assche, A., 2011, China’s Exports in a World of Increasing Oil Prices, The Multinational Business Review, 19(22).

Leave a Comment

Your email address will not be published. Required fields are marked *

The University of Hawaii Economic Research Organization (UHERO) welcomes online comments to stories that are posted on our website or social media pages. Comments are intended to be a forum for open, respectful, and family-friendly discussion. UHERO reserves the right to remove anything posted on our website or social media pages that is deemed inappropriate. All comments are moderated and will therefore have a delayed post time.
Some guidelines (not an exhaustive list) we use when moderating/approving comments include:

  • Do not bully, intimidate, or harass any user.
  • Do not post content that is hateful, threatening or wildly off-topic; or do anything unlawful, malicious, discriminatory or defamatory.
  • Observe confidentiality laws at all times.
  • Do not post spam or advertisements.
  • Observe fair use, copyright and disclosure laws.
  • Do not use vulgar language or profanity.

UHERO may amend this policy from time to time.