Increasing Importance of Proximity for Exports From U.S. States

Changes in income, trade policies, transportation costs, technology, and many other variables affect the geographic pattern of international trade flows. This paper focuses on the changing geography of merchandise exports from individual U.S. states to foreign countries. Generally speaking, the geographic distribution of state exports has changed so that trade has become more intense with nearby countries relative to distant countries. All states, however, did not experience similar changes. As measured by the distance of trade, which is the average distance that a state's international trade is transported, 40 states experienced a declining distance of trade, while 11 states (including Washington, DC) experienced an increasing distance of trade. Evidence, albeit far from definitive, suggests that declining transportation costs over land, the implementation of the North American Free Trade Agreement, and faster income growth by nearby trading partners relative to distant partners have contributed to the changing geography of state exports.