OPENING THE INTERREGIONAL TRADE BLACK BOX : THE C-INTEREG DATABASE FOR THE SPANISH ECONOMY ( )

Transcription

1 OPENING THE INTERREGIONAL TRADE BLACK BOX : THE C-INTEREG DATABASE FOR THE SPANISH ECONOMY ( ) AUTHORS: Carlos Llano Economc Analyss Deparmen. and L.R.Klen Insue-CEPREDE. Faculad de CC.EE y EE. Módulo E-XIV. Unversdad Auónoma de Madrd. Campus Canoblanco MADRID (carlos.llano@uam.es) 1 Almudena Eseban. L.R.Klen Insue and CEPREDE (almudena.eseban@ceprede.es ) Julán Pérez: Appled Economcs Deparmen. L.R.Klen Insue and CEPREDE. Faculad de CC.EE y EE. Módulo E-XIV. Unversdad Auónoma de Madrd. Campus Canoblanco MADRID; (julan.perez@uam.es) Anono Puldo. Appled Economcs Deparmen. L.R.Klen Insue and CEPREDE. Faculad de CC.EE y EE. Módulo E-XIV. Unversdad Auónoma de Madrd. Campus Canoblanco MADRID: (anono.puldo@uam.es) JEL CODE: R-15 WORDS: nerregonal rade; gravy model; regonal balances of paymens; ranspor flows; orgn and desnaon marces; 1 Correspondng auhor.

2 Absrac: Recen leraure on border effec demonsraes ha naonal rade (nra plus nerregonal rade) ends o be more nense han nernaonal rade. Unforunaely, due o he dearh of nformaon on nerregonal economc relaons, hs mporan aspec of he economy has remaned relavely gnored. In hs paper we descrbe he mehodology and man resuls of he larges esmaon of Spansh nerregonal rade ( ), carred ou as par of he C-Inereg projec. The resuls obaned hghlgh he mporance of he nernal rade and he valdy of he gravy model. Alhough he esmaon focuses on he Spansh economy, he mehodology s easly appled o oher EU counres. In he upcomng years, hs nnovave daabase wll be furher develop n all of s dmensons (space, me and secors) o serve as a promsng framework for he applcaon of dfferen echnques such as spaal neracon models or nerregonal npu-oupu approaches. 1. Inroducon Despe he marked process of globalsaon and negraon of OECD economes, he man bulk of economc ransacons sll connue o ake place whn naonal boundares. Indeed, recen leraure on border effec ndcaes ha a par of regons whn a counry ends o rade 10 o 20 mes as much as an oherwse dencal par of regons across counres. 2 Anoher group of sudes, hs me focused on he US and Japan (Hewngs e al., 1998, Munroe and Hewngs, 1998, Hom e al., 2000), also found ha whn-counry nerregonal rade s growng more rapdly han nraregonal and nernaonal rade and ha, n general erms, regons have become more closely lnked. More recenly, Jackson e al (2006) noed ha US ndusres shpped approxmaely $7 rllon worh of goods ner-regonally n 1997 usng he naon s hghways, ralroads, waerways, ppelnes and avaon sysems (11 bllon ons and McCallum (1995), Hellwell (1996, 1998), Anderson and van Wncoop (2003), Okubo (2004), Gl e al. (2005). 2

3 rllon on-mles). Ths volume has ncreased by 18.8% (up o 14.5% and 9.9% for ons and on-mles, respecvely) snce Hence, no only has he volume of nerregonal rade ncreased bu radng paerns have become more complex oo. The evdence from he European Unon appears o confrm hese fndngs. Whle he nensy of nra-european rade has grown n recen decades (Van der Lnden and Ooserhaven, 1995; European Economy, 2005 and 1997), mos of rade sll connues o be concenraed whn each counry (Ferrera, 2008; Llano, 2004a, 2004b; Olver e al, 2003). As a resul, alhough regonal dependence on nernaonal rade may have ncreased n he majory of Europe s regons, one can expec mos economc growh n a sngle regon o be prmarly explaned by naonal causes (nra+nerregonal shocks) as opposed o nernaonal ones. Unforunaely, he absence of nformaon regardng nerregonal rade makes dffcul o demonsrae such a hypohess n he case of he majory of counres. Due o hs lack of daa, consequenly, a key area of economc acvy remans largely unknown, hus lmng possble analyss of he ner-secoral and ner-regonal lnkages ha accoun for he co-movemens of regonal cycles or nerregonal spllovers n erms of growh, employmen or producvy. The sze of hs black box s enormous for mos counres. For example, n he case of he Spansh economy, whch occupes a md-poson n erms of s nernaonal openness rao n he OECD conex, over 80% of naonal oupu s purchased by he counry self, wh only 20% expored abroad. In addon, gven he hghly decenralsed erroral organzaon of he counry, s possble o conclude ha many sraegc decsons regardng he compeveness of he dfferen regons are beng aken whou he requred relevan nformaon. To solve hs ssue, a group of researchers from he L.R. Klen Insue-CEPREDE and 11 ou of Span s 17 regonal governmens launched he C-Inereg projec ( se up as a permanen nave focused on nerregonal economc relaons n Span and he res of Europe. The frs oucome of he projec s he larges esmaon o dae of Spansh nerregonal 3

4 rade of goods ( ), ncludng nformaon on he spaal orgn and desnaon of flows (regons NUTS-2 and provnces NUTS-3), 16 ypes of producs and 6 ypes of ranspor modes. The man objecve of he presen paper s o descrbe he mehodology used n he esmaon and analyse he man resuls obaned usng he gravy model. In hs regard, s mporan o noe ha, alhough he esmaon focuses on he Spansh economy, hs mehodology can be easly appled o oher EU counres. Indeed, a recen work has employed a smlar mehodology o esmae nerregonal rade whn Porugal and whn he Iberan Pennsula as a whole (Ferrera, 2008). The res of he paper s srucured as follows. In secon 2 we provde a bref revew of he mos common approaches used o esmae nerregonal rade, boh a nernaonal level and n he parcular case of Span. Secon 3 focuses on he mehodology used n he C-Inereg daabase, based on blaeral ranspor flows and regonal prces. Fnally, he nerregonal commody flows for he perod are analysed n secon 4 usng he classcal gravy model. 2. Inerregonal rade: esmaon mehods and prevous experences Informaon concernng nerregonal commody flows s scarce and ncomplee n he majory of counres (Jackson e al., 2006). Inerregonal rade, herefore, has o be esmaed hrough non-survey echnques, whch are based on dfferen hypoheses regardng he probably of neracons beween a par of pons n space. The curren leraure on nernaonal rade, ranspor economcs and spaal neracon models ses ou several approaches o esmae commody flows n space, akng no accoun a number of crcal varables such as dsance, ndusry specalsaon, nfrasrucure endowmen and ranspor connecvy. Gravy models, spaal choce, enropy maxmsng paradgm and neuronal nework models are among he bes-known mehods (see Wlson, 1970a, 1970b, 1973; 4

5 Cesaro, 1975, 1976; McFadden, 1981; Baen 1983; Haynes and Foherngham, 1984; Sen and Smh, 1995; Boyce and Bar-Gera, 2003; Roy and Thll, 2004; Njkamp, e al., 2004). Moreover, he leraure on nerregonal npu-oupu modellng (Isard, 1951, 1953; Moses, 1955; Polenske, 1980; Km e al, 1983; Ooserhaven, 1984; Mller y Blar 1985; Hewngs e al, 1998; Hom and Hewngs, 2000; Lu and Vlan, 2004; Kockelman e al., 2005; Ruz and Kockelman, 2006;) and mulregonal Compuable General Equlbrum models and Socal Accounng Marces (Sone, 1961; Round 1995; Jackson e al., 2006; Bröcker and Schneekloh, 2006; Bröcker 1998) also offer neresng approaches o esmae nerregonal rade flows, lnkng he IO and SAM frameworks o nerregonal ranspor flows. << Table 1 abou here>> 2.1 The esmaon of nerregonal rade n Span Alhough several sascs wh paral nformaon on Spansh nerregonal rade are avalable (Table 2), her conssency and comparably remans nsuffcen. Gven hese lmaons, he man objecve of he C-Inereg Projec was o esmae a permanen daabase wh daa on nra, nerregonal (and nernaonal) rade of all he Spansh regons, wh dfferen levels of secoral and spaal dsaggregaon for boh goods and servces. The curren daabase corresponds o he larges ( ) esmaon of nerregonal rade n goods a regonal level (Eurosa Nus2 level: 18 Spansh regons or Auonomous Communes ) and he frs a provncal level (Eurosa Nus3 level: 52 Spansh provnces), ncludng a dealed breakdown by ypes of produc (30 caegores of goods), ranspor mode (road, ral, shp, plane, ppe and elecrcy sysem) and uns (Euros, Tons). << Table 2 abou here>> 5

6 The mehodology used for he esmaes s based on prevous works (Llano, 2004a, 2004b; Puldo e al. 2000; Olver, 1997) and ncludes a number of mprovemens and exensons. I combnes he mos accurae daa on Spansh ranspor flows of goods by ranspor modes (road, ral, shp, plane, ppe and he Spansh elecrcy sysem) wh addonal nformaon used o esmae 52 specfc expor prce vecors, one for each provnce of orgn, ranspor mode and produc ype. The mehodology also ncludes a process for debuggng he orgnal ranspor flow daabase ha makes possble he denfcaon and reallocaon of mul-modal ranspor flows and nernaonal rans flows whch may be orgnally hdden n he nerregonal flows. Ths procedure resuls n nal esmaes of nerregonal rade flows n ons and curren euros based on a combnaon of he ranspor and prces daabases. Fnally, a process of harmonzaon s appled o produce fnal fgures n ons and euros conssen wh he fgures for oal oupu from he Spansh Indusral Survey and Naonal Accouns. I should also be noed ha, a each sage up o he fnal aggregaon no 16 ypes of produc and he fnal process of harmonzaon wh oupu fgures, he mehodology reles on he lowes level of dsaggregaon avalable. More specfcally, he ranspor flows are based on classfcaons ha range from 160 o 40 dfferen ypes of produc (dependng on he 4 ranspor modes avalable) and prce daa on 11,000 dfferen ypes of produc. 3. Esmang Spansh nerregonal rade n he C-Inereg Projec The mehodology employed n he elaboraon of he daabase can be dvded no he sx seps descrbed n he followng secons Harmonsaon of ranspor flows and esmaon of unavalable daa: 3 For he sake of smplcy, alhough we use he general concep of regons, he mehodology was appled o he 52 Spansh provnces (Nus 3) and hen aggregaed o he 18 Spansh regons (Nus 2). In addon, he mehod relays, a each successve sep, on he hghes level of dsagregaon for each ranspor mode. 6

7 In hs secon, we revew he suaon of he Spansh sascs regardng he commody ranspor flows, and he ransformaons requred for obanng a full coverage of he movemens accouned whn he counry durng he perod under sudy. Before gong no furher deal, s mporan o bear n mnd ha, for each year and ranspor mode, he goal s o esmae a se of orgn and desnaon marces (OD marces) ha capure all he delveres n Tons (Tn.) by he larges possble produc dsagregaon. For he purpose of clary, he procedure appled for each ranspor mode s explaned separaely usng a smlar noaon. In general erms, he fnal am s o esmae all he ranspor flows n ons descrbed by F rs, elemens, whch capure he flows F of produc n year wh orgn n regon r and desnaon R T n regon s. Then, for each ranspor mode, we wll defne equvalen elemens,, S F rs, F rs, F rs, A P,, where he upper scrp R denoes he flows usng road ransporaon, he T for ran, he S for shp, he A for arcraf and he P for ppe. F rs, F rs, << Table 3 abou here>> R a) Transpor flows by road ( F, ): removng nra-muncpal flows and nernaonal rans rs flows The Permanen Survey on Commody Transpor by Road (PSCTR), publshed by he Spansh Mnsry of Publc Works (Mnsero de Fomeno), s one of he key sources of our orgnal daabase on ranspor flows n ons (more han 80% of commody flows n Span are moved by road). Based on hs key survey, for each year and each ype of produc (=160), a large se of OD marces of flows n ons were obaned. The man lmaon of he orgnal daa s ha, from 2000 onwards, he survey ncludes he nra-muncpal flows (IMF). Due o he absence of hs nformaon for he perod , and n order o assure he comparably of nraregonal flows along he whole perod ( ), nra-muncpal flows have been removed 7

8 from he road ransporaon daabase 4. In addon o hs, as we wll see n secon 3.2, he orgnal flows recorded by he PSCTR requred o be depuraed o preven he ncluson of nernaonal rans flows (ITF) hdden n he ner-regonal delveres. These processes are descrbed n he followng ransformaon: R R R R F rs, OFrs, IMFrr, ITFrs, = (1) R R where OF rs, represens he orgnal OD flows from he PSCTR survey, IMF rr, he nramuncpal commody flows ncluded n he survey afer 2000 and rans flows moved by road (see secon 3.2). ITF, R rs he nernaonal T b) Transpor flows by ran ( F, ): assessng secoral dsaggregaon o conaners rs Informaon on commody flows by ran s provded by he naonal ral nework RENFE (a former naonal monopoly). Commodes are moved eher n complee wagon (CW) or conaners (CNT) (30% of Tons were moved by CNT). Unforunaely, RENFE does no provde dealed nformaon n relaon o he ypes of producs ncluded n he conaners. For hs reason, he allocaon of hese flows o specfc producs s done employng he secoral srucure of ralway flows ha use complee wagon, have he same regon of orgn and can be ranspored n conaners. Snce no all ype of producs can be ranspored n conaners, we use super scrp j o denoe hose ypes of producs ha are usually ranspored n hs submode 5. Accordngly, for each year, he fnal amoun of flows by ralway from orgn r o desnaon s of produc ( r F rs, ) s obaned from he followng expresson: 4 I should be noed ha, n some cases, nra-muncpal flows do no correspond o economc ransacons bu o he capllary dsrbuon of commodes socked and dsrbued whn each muncpaly for fnal consumpon. In hs respec, he elmnaon of nra-muncpal flows may be an advanage raher han a drawback because helps o preven he double counng of nra-regonal flows. By conras, he elmnaon of he nra-muncpal flows wll end o decrease he nra-provncal rade and, herefore, he border effec a hs spaal level. 5 Due o he absence of nformaon on he specfc commodes ranspored n he conaners, and consderng ha he elmnaon of hs sub-mode wll lead o a decrease of 30% of flows by ralway, we have suggesed he mehodology descrbed above. Based on he RENFE s qualave nformaon, we were nformed ha some commodes lke raw maerals, non ransformed agrculural producs, energec producs, mnerals, ec, are no ranspored n conaners. From hs nformaon we nferred ha, for each orgn, he conaners wll conan he same (j) caegores ha were able o be ranspored n 8

9 CW T r, T F rs, = CWrs, + CNTrs, ITF j rs, CWr, = 1 (2) where CW, rs are he commodes of ype measured n ons ranspored n complee wagon from regon r o s, CNT, rs s he oal amoun of commodes n ons ranspored n conaners from regon r o s, j = 1 CW r, CW r, s he share of each commodes j ha were ranspored n complee wagon (and can be ranspored n conaners ) wh orgn n r compared o he oal amoun of commodes j ranspored n complee wagon wh orgn n ha regon r. Fnally, ITF, T rs capures he nernaonal rans flows moved by ran whch, lke n he case of commody flows by road, requred also o be depuraed (see secon 3.3). S c) Transpor flows by shp ( F, ): Esmaon of OD marces usng updaed margns and old rs OD marces Due o he absence of an up-o-dae se of OD marces by shp wh he requred secoral breakdown, hese are esmaed by means of a common approach used n he npu-oupu leraure o updae old nersecoral srucures usng new daa for he margn oals. Ths procedure, based on prevous works (Allen and Gosslng, 1975; Djkman H. and Burgess, 1994; Polenske and Möhr, 1987), uses he Long Scale Opmzaon procedure (Fylsra e al, 1998; Lasdon and Smh, 1992) o updae he mos recen OD marces avalable (publshed by Span s Sae Pors Auhory -Pueros del Esado- n 1989) wh new daa on he volume of conaners, and were presen n he producon and exporng srucure by ralway of each exporng provnce. Ths assumpon s based on he dea ha f a provnce s specalsed n producng and exporng commodes n complee wagon, smlar frms whn hs provnce would delver hem n conaners, wh he lmaon always on he naure of he produc and he possbly o be ranspored n hs mode. 9

10 commodes loaded/unloaded n each por ( Sascal Yearbook. Pueros del Esado 6 ). Ths procedure can be brefly summarsed n hree seps: 1. Frs, based on he avalable nformaon for 1989, we bul a se of 1989 OD marme flows S Frs, 89 ( ) ha consder r=27 possble orgns and desnaons (he man Spansh pors a ha me) and =46 ypes of produc (correspondng o he CSTE -Commody Classfcaon for Transpor n Europe-, ha s, he classfcaon used n he 1989 reference). 2. Secondly, we bul a parallel daabase wh he annual daa publshed for domesc marme volumes loaded and unloaded n he man Spansh pors for each year ( ) and ype of produc (=40 caegores). A hs sage, s mporan o noe ha, for some years and ypes of produc, he oal amoun of ons loaded (l) and unloaded (u) do no mach. Gven ha n an OD marx he sum along he rows mus concde wh he sum along he columns, we re-scale he larges vecor o he oal of he shores one, usng he followng procedure. If If s= 22 r= 22 u, < s s r s= 22 r= 22 u, > s s r l r, l r, hen hen l u r, s, = l r, = u s, r= r r= r r= r r= r u l s, r, l r, u s, (3) u s, where s he orgnal amoun of commody () unloaded (u) n regon (s) and year (), s he orgnal amoun of commody () loaded (l) n regon (r) and year (). Equvalenly, where l r, u, we have he new amoun of commody () unloaded n regon (s), whle s l, denoes he r new amoun of commody () loaded n regon (r) and year (). As s descrbed n equaon (3) he new amoun s obaned re-scalng he larger wh he lower oal amoun. Accordngly, for each year (), we oban wo new vecors of elemens u, and s l, ha sum up he same r amoun of ons, and manan he srucure of he orgnal vecors. Therefore, for each year and 6 Pueros del Esado: hp:// 10

11 produc, hese re-scaled vecors are now ready o be used as margns for updang he old OD marces. 3. Nex, for each year (1995 onwards) and ype of produc (=40) and usng a Long Scale Opmzaon procedure (Fylsra e al, 1998; Lasdon and Smh, 1992), we fnd an OD flow marx where he sums along he rows and columns concde wh he correspondng oals loaded and unloaded n each por, by year and ype of produc. The neracve procedure begns wh he 1989 acual OD marx for each ype of produc and concludes wh a complee se of OD flow marces for 40 ypes of produc from 1995 onwards. In lne wh Polenske and Möhr (1987), hs sep can be descrbed as a maxmzaon procedure of he non-null values subjec o he margn consrans 7. S, = Max Frs, (4) r S s S S Frs 89 Subjec o: r S s S S F = l, rs, s ( s = 1,2,... n) S F = u, rs, r ( r = 1,2,... n) S F rs, where s an elemen on he new OD flow marx by shp (S) esmaed for year (1995 onwards) conanng he flows n ons of produc moved from por r o por s, S Frs, 89 s an elemen on he old 1989 OD flow marx by shp (S), conanng he flow n ons of produc moved from por r o por s; S {( r, s) f > 0} represens he non-null flows raded beween = rs he 27 man pors (r,s); l, s he vecor of ons of produc loaded n he pors r n year ; and r u, s he vecor of ons of produc un-loaded n he por s n year. s 7 The problem could also be descrbed as he mnmzaon of he dfference beween he oal sum of blaeral flows n each new OD marx and he old ones, subjec o he same margnal consrans (Allen and Gosslng, 1975; Djkman and Burgess, 1994) 11

12 A d) Transpor flows by arcraf ( F, ): assessng he secoral dsaggregaon of domesc OD rs marces Surprsngly, despe he exsence of a sngle OD marx of oal domesc flows by arcraf n A ons for each year ( DF rs, ), has proven mpossble o oban dealed daa wh respec o each secoral dsaggregaon. For hs reason, for each year ( ), he produc dsaggregaon A of hs sngle marx ( DF rs, ) has been deduced usng he produc specalsaon of nernaonal A flghs ( IF r, for whch daa are avalable) for each arpor of orgn (r) and year (). Wh hs esmaon, s assumed ha f a specfc regon has nerregonal expors of goods shpped by arcraf, he secoral srucure of s domesc ouflows o any of s desnaons wll be he same as hose observed n nernaonal expors from he same arpor. In order o ncrease he plausbly of such an assumpon, we only consder he nernaonal rade of Spansh regons wh he neares counres (France, Porugal, Germany, Ialy and Morocco), where he same compeon srucures n erms of ranspor modes operae. The flows are dvded accordng o he 160 caegores consdered n he NSTR-3 dgs used for road flows. IF F (5) A A A r, rs, = DFrs, = 160 A IFr, = 1 where A F rs, s an elemen on he new OD flow marx by arcraf (A) n year conanng he flows n ons of produc moved from arpor r o arpor s. These secoral flows are obaned deparng from he oal amoun of commodes n year moved from arpor r o s DF, A rs, and A he secoral srucure of he nernaonal flows ( IF r, ) for each commody (=160) and arpor of orgn r n percenage of he oal amoun of commodes delvered by plane from he same orgn = 160 = 1 IF r A, 12

13 P e) Transpor flows of ol refned producs ( F, ): reallocaon of ol producs delvered by rs ppe. Due o he specal dsrbuon process of he ol refned producs (gasolne, fuel-ol, kerosene...) n whch ppelnes are used o approach he produc o he fnal markes from dsan refneres, he ppe blaeral flows should no be aggregaed o he oher ranspor flows, bu only used for he re-allocaon of some road and ral flows of ol producs 8. From our pon of vew, f a regon n wh no refneres regsers delveres of ol producs by road and ran, can be safely assumed ha he expored produc was orgnally produced n anoher regon r wh refnery, whch s servng he regon n by ppe. Consequenly, he rgh allocaon of he blaeral flows should frs elmnae false expors arbued o he regons whou refnery, and re-allocae hem o he regons ha orgnally produced he producs and served hem hrough he ppe. In order o do hs, some manpulaons of he orgnal flows (OF) are needed: R T OF rs, Frs, + Frs, =. P F rs, OFrs, FRrs, + PFrs, = (6) F PF (7) ' rs, = 1993 rs, = FRrs, s= 51( r s) Frs, = 1993 s= 1 where P F rs, s an elemen of he fnal OD marx of ol producs moved by road and ralway, whch s obaned by he addon of hree elemens (equaon 6): a) The frs one, OF, denoes he orgnal flows of ol-producs moved by road R ) rs and ran T ) n year wh orgn n regon r and desnaon n s; ( F rs, ( F rs, 8 A hs pon s helpful o consder he dsrbuon srucure of ol producs. In Span, mos refneres are locaed n he coas, near he bg pors where he mpored crude s unloaded and refned. There s jus one refnery locaed n an nner regon (Caslla-La Mancha). Some refned producs are pumped hrough he ppes o he man pons of consumpon, where hey are socked n anks and re-dsrbued by rucks and rans. Trucks and rans can also deparure from he refneres hemselves o serve close markes. Based on hs srucure, we consder ha ppe flows should be consder as rans flows from he refneres o he anks. However, he ppe flows serve o re-allocae oher flows of refned ol producs ha apparenly were delvered from regons wh no refneres. 13

14 b) he second, FR rs,, whch s subraced from he prevous one, denoes an specfc ype of flows ha fulfl he followng requremens: 1) hey are flows moved by road and ralway of refned producs ha could be ranspored by ppe, and, 2) hey were orgnaed n regons (r) wh no refneres. Snce we do no wan o have regons whou refnery exporng ol producs o oher regons, FR rs, elemens are, consequenly, elmnaed from he road and ralway daabase. ' c) The hrd elemen, PF rs,, capures he FR rs, flows once hey have been reallocaed as expors from he regons wh refneres whch are more lkely o have orgnally produced he ol 9 and pumped o he regons ha, accordng o he orgnal daa, were exporng by road and ralway. As s explaned n equaon (7), he reallocaon of Frs, = 1993 hese flows s obaned by means of he only OD marx avalable for he ppe,, whch was esmaed for he year Consequenly, he re-allocaon of he apparen expors by road and ruck of regons whou refnery o he regons wh refnery s based on he percenages obaned from he mos recen OD marx avalable for flows of ol-producs hrough ppe. Followng hese ransformaons, he elemen P F rs, capures he fnal flows of a subgroup of ol refned producs ha could be ranspored by ppe, ha were ranspored by ruck and ralway and whose regons of deparure r have refneres. Afer hs procedure, he obaned flows are hen aggregaed o he res of he flows from he correspondng modes. 3.2 Frs debuggng procedure for ranspor flows n Tons: a) Debuggng nerregonal flows from nernaonal rans flows 9 Snce expors wh orgn n regons whou refnery become mpors from he regons wh refnery ha ' served hem, he ransformed OD marx FR rs, s denoed as FR rs,. 10 A 1993 OD marx calculaed by THEMA-Consulng Group and he Mnsry of Economc Developmen usng daa from CLH (he man Spansh ol dsrbuor). Due o he lberalsaon of he ol dsrbuon secor n Span, has no been possble o oban more recen nformaon on OD flows afer

15 Alhough all he nformaon ncluded n secon 3.1 refers o nerregonal flows n ons, he ranspored producs may have an nernaonal orgn/desnaon. Mos esmaons of Spansh nerregonal rade end no o have consdered hs complex ssue (Ferrera, 2008; Olver, 1997, Olver e al, 2003). As a resul, he nernaonal rade may be double-couned and he nerregonal rade of some specfc regons overvalued. In he case of Span, he hghes rsk n relaon o nernaonal rans flows s assocaed wh marme-road and marme-ralway ner-modal connecons 11. In prevous works, Llano (2001, 2004a) has developed a meculous approach for dealng wh hs problem. Now, gven he vas amoun of daa consdered for he whole perod, he denfcaon of nernaonal rade n rans along Spansh roads s based on a more auomac procedure. The process of denfcaon and elmnaon of nernaonal rans flows has focused solely on ranspor flows by road (whch accoun for more han 90% of flows n Span) and comprses he hree seps descrbed below: 1. For each year durng he perod , we have obaned a daabase wh he road flows beween he 52 provnces and he muncpales where he counry s 27 man pors are locaed. Ths daabase conans flows for each of he 160 ypes of produc consdered n Span s Permanen Survey on Commody Transpor by Road (PSCTR). 2. Usng he comprehensve daabase of Spansh nernaonal rade (Spansh Tax Agency, we esmae he nernaonal flows ha were expored/mpored by shp and moved by road/ralway from/o he pon of orgn/desnaon. The fgures for each ype of produc and por are obaned by denfyng, from he aforemenoned daabase, flows machng he followng resrcons: Transpor Mode = 1 (Shp); Expors: he provnce of orgn/desnaon of he flow s dfferen o he Cusoms pon where he expor/mpor s cleared (only Cusoms n he 27 man Spansh Pors are consdered). 3. Nex, by comparng he wo daabases menoned above for each of each of he 160 ypes of produc, we elmnae flows from he PSCTR ha can be consdered nernaonal rans flows. Bearng n mnd he dfferen naure of he daabases (he frs s a survey 11 In Span mos nernaonal rade wh non-european counres uses shppng as he ranspor mode. Trade by road ends o use nernaonal fregh servces, whch are no ncluded n our daabase. 15

16 based on a drecory of ranspor companes, whle he second s a regser of all nernaonal rade operaons) some lms are esablshed o hs debuggng process: 1) nonnegave fgures may resul: f he nernaonal flow s greaer han he fgure calculaed n he PSCTR, he former can become zero bu no negave; 2) for each produc, he fgures elmnaed may be below 15% of he flow receved (delvered) by he provnce from he same orgn (desnaon) 12. b) Allocaon of mul-modal flows: Anoher key lmaon when esmang nerregonal rade usng ranspor flows derves from he dffculy n denfyng ner-modal flows correspondng o he same ransacon. When hs ssue s no appropraely aken no accoun by he employed mehodology, he growng complexy of curren ranspor logscs may lead o an ncreasng bas n such esmaons. In he case of Span, he rsk of ner-modal connecons s manly assocaed wh nerregonal rade beween he manland, he Islands (Balearcs, Canary Islands) and Ceua and Mellla (n Afrca). However, due o he exsence of specal fscal regmes n some of hese errores (Canary Islands, Ceua and Mellla), we have been able o access dealed fscal nformaon on nerregonal rade beween he manland and he Canary Islands, as well as wh Ceua and Mellla (Spansh Tax Auhory, To he bes of our knowledge, hs s he frs me such hgh-qualy daa on acual nerregonal rade beween he Spansh manland and he Islands has been ncluded n a comprehensve esmaon of nerregonal rade. 3.3 Esmang nerregonal rade prces In lne wh prevous sudes (Llano, 2004a; Olver e al., 2003; Olver, 1997; Puldo e al. 2000), nerregonal rade prces are esmaed on he bass of value/volume relaons deduced from dealed sascs conaned n he Spansh Branch Surveys and Inernaonal Trade 12 Ths hreshold s based on he nformaon avalable wh respec o he mporance of rucks/ralways for he nerconnecon of pors and producon and consumpon spos for nernaonal flows. Snce he comparably of he wo daabases s lmed, he 15% hreshold avods a complee elmnaon of flows beween each par of provnces. 16

17 daabases. For each year, ranspor mode and ype of produc, we ry o esmae 52 expor prce vecors (one for each Spansh provnce, Nus-3), denoed by m P r,, a he lowes level of dsaggregaon, n order o capure prce/qualy dfferences among regons for he same produc. For he sake of smplcy, we use superscrp m o denoe he 4 ranspor modes consdered explcly (R, T, S, A) 13. Regonal (Nus 2) and naonal prces are used when here s an absence of provncal daa. The esmaon mehodology comprses he followng wo seps: a) Dealed esmaon of prces ( /Tn.) for base year 2000 Indusral producs: he prces are deduced by dvdng he daa on value and volume publshed by he Survey of Indusral Producs (INE-2000) for each regon (NUTS 2) and wh a hgh level of produc dsaggregaon (4dgs-NACE). Due o he lack of nformaon a provncal level, all provnces whn he same regon share he same prces for each produc, year and ranspor mode. Prces for agrculural producs are deduced from he Naonal Survey on Agrculural Producs (Eurosa and he Spansh Mnsry of Agrculure, MAPA). Unforunaely hese prces are no avalable a regonal level. Alernave sources (Eurosa) have been used for some specfc producs lke, for example, energy. A he same me, an alernave daabase has been esmaed usng nformaon on nernaonal expor prces a he lowes level of dsaggregaon (11,000 producs; Combned Nomenclaure, CN-8dgs) for each year and ranspor mode a provncal level. Ths daabase has been used as a reference o conrol for oulers n he prevous esmaon based on Branch Surveys. b) Prce projecon for he remander of he perod ( ; ). Based on he prce levels esmaed for he base year 2000, he prces for he remanng years are esmaed ndvdually for each regon, ranspor mode and ype of produc usng he avalable nformaon on ndusral and agrculural prce ndexes a he lowes level of dsaggregaon (Eurosa). Due o he lack of nformaon a regonal level, for each ype of 13 Noe ha he ppe (P) was jus used o re-allocae apparen expors by road and ruck. 17

18 produc he evoluon of regonal prces n 2000 follows he naonal growh raes for he remander of he perod. Before applyng hs procedure, we esed o verfy ha he use of prce ndexes nduces lower levels of nsably han oher alernave procedures (Llano, 2004a; Puldo e al, 2000; Olver, 1997), such as nferrng hem drecly from branch surveys or nernaonal rade daabases for each year. 3.4 Translaon of OD debugged marces from Tons no Moneary Uns Nex, he 4 ses of OD marces of flows n ons by ranspor modes are ranslaed no moneary uns (euros) by mulplyng he correspondng 4 ses of prce vecors esmaed n secon Accordngly, ranspor flows n ons F rs, from regon r o s, of produc and year are ransformed no rade flows n euros M rs, wh he same feaures, usng specfc expor prces vecors P r, All he OD marces already valued n curren euros are hen aggregaed accordng o he larges common classfcaon ha allows furher comparsons and homogenzaons (see secon 3.5.). R R T T S S A A ( F * P ) + ( F * P ) + ( F * P ) + ( F P ) M rs, rs, r, rs, r, rs, r, r, * r, = (8) where M rs, are he OD rade flows n moneary uns, where denoes de ype of produc, r and s he orgn and desnaon regons and he year. A hs sep we use wo dfferen classfcaons: he man one, wh 16 ypes of produc (R-16), and an exended one feaurng 30 ypes (R-30), whch manans he correspondng proporon wh he frs classfcaon. These classfcaons (R-16 and R-30) are boh based on he NACE offcal classfcaon and he specfc classfcaons of he ranspor mode already consdered. 14 I should be noed ha he OD marces of refned ol producs orgnally ranspored by rucks and rans and reallocaed accordng o he ppe nformaon are here fnally ncluded n he orgnal ranspor modes. There are, accordngly, no OD marces of ppe. 18

19 3.5 Fnal screenng of he R-16 OD marces of goods n Euros: Fnally, he rade flows for each of he 16 ypes of produc (R-16) are harmonzed wh he oal oupu by regon/provnce and ndusry obaned from dfferen sources: a) Indusral producs (R3-R15): For each of he 14 OD marces of ndusral acves (excludng energy producs), nraregonal and nerregonal flows were harmonsed wh he avalable daa publshed by he Spansh Indusral Survey (SIS). A he regonal (NUTS 2) and provncal level (NUTS 3), he SIS provdes nformaon on oal oupu per regon r and ndusry ( ) and s geographcal dsrbuon by large markes: own regon ( XInra r, ); res of Span ( XIner r, ) and he res of he world ( XRw r, ). O r, O r, XInrar, + XInerr, + XRwr, = (9) Based on hs nformaon, for each year and ndusral secor, he sums along rows of all he off-dagonal elemens n he OD marx n euros M rs, were harmonzed wh he Xner, whle he on-dagonal elemens were harmonzed wh he Xnra. Due o he lack of nformaon on he amoun of producs consumed, no consrans were esablshed for he sums along columns. Thus, new OD marces for adjused moneary flows ( AM rs, ) are obaned for each year and secor, where he row oals for nra and nerregonal flows concde wh he aggregaed nformaon from he SIS, whle he M rs, blaeral srucure s based on he whole se of OD marces. XInerr, Inerregonal adjused flows: AM rs, = M rs, (10) s 51( r = s) M Inraregonal adjused flows: AM b) Agrculural producs: rr, rr, s= 1 rs, XInra = M (11) M r, rr, 19

20 Snce he SIS does no provde nformaon on Agrculure, Fshng and Foresry producs (R1), he adjused flows for hs secor ( AM = of nra+ner-regonal flows R1 rs, = R1 = R1 ( M rs M ), rr, ) are obaned from he harmonzaon + o he domesc oupu (non expored R1 abroad) of agrculural producs provded by he Naonal Accouns ( DO = ) 15. I should be noed here ha he qualy of hs adjusmen s weaker han n he prevous case (ndusres) snce does no conrol for he oupu produced and sold on he naonal marke by each regon/provnce. = R1 = R1 ( M + M ) = R1 DO AM (12) = R1 rs, = rs, rr, s = 52 s= 1 = R1 = R1 ( M + M ) rs, rr, 3.6 Specal cases: a) R2.-Mnng and refnery. The SIS nformaon wh respec o he mnng and refnery (R2) ndusry s based due o he presence of he headquarers of he bg mulnaonal companes n ceran regons, parcularly n Madrd. Ths effec s no so apparen n oher ndusres. As a resul, SIS daa has o be re-esmaed n order o elmnae hs headquarer effec. The procedure uses he regonal shares of Regonal Accouns n erms of he gross value added (GVA) of hs ndusry (=R2). AO = R2 GVAr, (13) GVA = R2 = R2 r, = Or, * r = 52 r= 1 = R2 r, 15 Noe ha snce Naonal Accouns do no nclude he oal oupu per year, n some years mus R1 be deduced from he gross value added ( GVA = ) and he nernaonal expors ( EXP = R1 ) n year, and he oal oupu of he agrculural secor ( GO = DO = R1 = GVA = R1 GO * GVA = R1 = 2000 = R1 = 2000 EXP = R1 R1 DO = ) publshed n he las npu-oupu able (=2000): R1 20

21 = R2 = R2 = R2 XInerr, The adjused nerregonal oals are: AXIner r, = AOr, * (14) = R2 O = R2 = R2 = R2 XInrar, The adjused nraregonal oals are: AXInra r, = AOr, * (15) = R2 O Nex, he OD marces of producs correspondng o hs ndusry are harmonzed 16. = R2 = R2 = R2 AXInerr, Inerregonal adjused flows: AM rs, = M rs, (16) s 51( r = s) = R2 M = R2 = R2 = R2 AXInrar, Inraregonal adjused flows: AM rr, = M rr, (17) = R2 M s= 1 rr, rs, r, r, b) R16.-Producon and dsrbuon of elecrcy, gas and waer. The OD marces of hese producs are esmaed usng he followng mehodology: As n he prevous case, he SIS nformaon concernng hs ndusry requred correcon o elmnae he headquarer effec. The procedure appled s he same as he prevous one. Unlke he case of oher commodes, here are no OD marces n ons and euros a regonal and provncal level for hs ndusry. Consequenly, he allocaon of o blaeral flows needs o be based on an alernave procedure: AXIner = R16 r, a. For each year, an OD marx of elecrcy flows n GW/h s obaned from he man Spansh operaor (Red Elécrca de España). The marces are a he regonal (NUTS 2) bu no provncal level (NUTS 3). b. In order o esmae he OD flows a provncal level we buld vecors of producon ep, r and consumpon ec s, of elecrcy by years and provnces r and s. Then, gven he sysem for elecrcy dsrbuon n Span and he fac ha ner-regonal elecrcy expors are always based on proxmy, a se of OD marces are obaned usng a b-proporonal RAS procedure (Allen, 1975; Polenske and Möhr 1980) based F = rs, on he ner-provncal dsance marx as a pror. Thus, for each year, hrough a b- R16 proporon we oban a marx ha s neares o anoher marx D (dsance rs 16 I should be noed ha we use s=51 snce here are 52 provnces. Addonally, should be aken no accoun ha as saed n secon 3.2.e), nerregonal flows of some refned producs moved by road and ralway are subsequenly reallocaed accordng o he ner-provncal ppe nework. 21

22 beween provnces n Km) bu wh he row sums equal o ep r, and he column sums equal o ec s,. c. Nex, he OD marces for elecrcy a provncal level (NUTS 3) are harmonzed accordng o he acual OD marces a regonal level (NUTS 2) and are hen used o esmae he blaeral flows n coherence wh he nformaon obaned from he SIS: = R16 = R16 = R16 AXInerr, Inerregonal adjused flows: AM rs, = M rs, (18) s 51( r = s) = R16 M = R16 = R16 = R16 AXInrar, Inraregonal adjused flows: AM rr, = M rr, (19) = R16 M s= 1 rr, rs, 4. Daa analyss In hs secon we analyse he man resuls obaned, frs, by usng a descrpve approach and,hen, by means of a smple economerc model based on he classcal gravy model. 4.1 Descrpve analyss: denfyng he man flows As can be expeced, he level of domesc rade (nra+nerregonal) n goods n Span durng he perod s clearly hgher han for nernaonal rade (see Table 4). Ths s rue for boh expors and mpors, for he economy as a whole and for he majory of Span s regons. << Table 4 abou here>> Regardng he balances obaned, only fve regons have posve balances for nerregonal rade, compared o seven for nernaonal rade. The hghes nerregonal surplus s found n Caalona, followed by Galca, he Basque Counry, Navarre and Caslla-La Mancha. In some cases, he sgn of he balance for he domesc marke s he oppose of ha for he foregn marke. For example, whereas Caalona, Galca and Caslla-La Mancha showed posve balances n he naonal marke and defcs n he nernaonal one, he reverse was rue for regons lke Aragon, Valenca, Caslla-Leon, Exremadura and La Roja. The openness raos are much hgher han he rao obaned when only nernaonal rade s consdered. The hghes 22

23 values are found n he smalles regons n erms of sze, namely, Madrd, La Roja, Canary Islands, Balearc Islands, Canabra. Despe he domnance of nra-naonal rade (nraregonal + nerregonal rade), he evoluon of ner-naonal flows s more dynamc: whle ner-naonal mpors and expors ncreased by 169% and 122% respecvely beween 1995 and 2005, ner-regonal and nra-regonal rade grew by jus 82% and 80%. Consequenly, alhough domesc rade sll connues o accoun for he man bulk of acvy n he Spansh economy, he process of globalzaon and EU negraon appear o be gradually shfng naural economc relaons away from regonal neghbours owards foregn counres. Indeed, n some of he mos mporan regons lke, for nsance, Caalona and Madrd, alhough nerregonal expors connue o be hgher han her nernaonal counerpars, he oppose s rue n he case of mpors. Moreover, conssen wh prevous fndngs n he case of he US and Japan (Jackson e al, 2006), he evoluon of nerregonal rade s more dynamc (79%) han nra-regonal rade (73%). Ths resul pons o he ncreasng negraon of Span s regons and may also be relaed o he fragmenaon process of he producon chan (Freensra, 1998; Jones and Kerzkowsk, 2005) and he hollowng ou process descrbed n he leraure (Hewngs e al. 1998; Munroe and Hewngs, 1998, Hom and Hewngs, 2000). <<Fgure 2 abou here>> Usng he relave share of each blaeral flow of oal domesc rade, we denfy he sronges rade flows durng he perod. Based on average fgures for he perod (see Table 8 and 9 n he Annex), he mos nense nra and nerregonal flows are usually assocaed wh hghly ndusralzed and heavly populaed regons such as Caalona, Madrd, Valenca and Andalusa. I s also neresng o noe he exsence of nense and sable commody flows 23

24 connecng regons locaed far away from each oher (e.g. Caalona-Madrd, Caalona- Andalusa) <<Fgure 3 abou here>> In addon o he man nra and nerregonal flows, we may wan o denfy hose represenng he hghes levels of concenraon of nflows or ouflows for each regon. These coeffcens can help us denfy he man supplers and clens for each regon. In hs regard, s parcularly neresng o noe ha mos of he bgges expor and mpor shares are regsered beween conguous regons. In Fgure 4, for example, we show he hghes blaeral mpor shares n 2005, wh he regons coloured accordng o he regonal axes of developmen usually consdered n regonal analyss of Span. Furhermore, he sably of he man clens and supplers for each regon hroughou he perod ndcaes he presence of mporan nerregonal ner-secoral lnkages beween hem (see Table 8 and 9 n he Annex). In prevous research (Pérez e al, 2008; Llano 2004a) we have already shown how hese lnkages ac as ransmsson chans for nerregonal spllovers n erms of growh, employmen and producvy. We expec o show soon furher evdence n hs respec, based on hs exended daa-base. <<Fgure 4 abou here>> Moreover, he endency owards sable and nense flows beween he sronges economes (Fgure 3 and 5, and Table 7 and 8 n he Annex), ogeher wh he hgh marke shares found beween conguous regons (Fgure 4), pon o he classcal gravy model as he mos approprae canddae o explan he nensy of blaeral rade among Spansh regons. Ths hypohess s esed n he nex secon. 4.2 Tesng nerregonal rade usng he classcal gravy equaon 24

25 The gravy equaon has been wdely and successfully used o analyse he nensy of blaeral rade beween pars of naons and regons. In s mos basc formulaon, blaeral rade beween wo geographc areas s drecly proporonal o her economc szes and nversely proporonal o he dsance beween hem. More refned specfcaons of he model may nclude addonal varables n order o capure oher effecs such as accessbly, secoral specalzaon, hsorcal and culural neras or nework assocaons of all knds, whch would also condon he drecon and nensy of he flows. Based on varous conrbuons from he leraure on emprcal applcaons of he gravy model o nernaonal and nerregonal rade (Anderson and van Wncoop, 2003; Baldwn and Taglon, 2006; Helpman e al 2007; Cheng and Wall, 2005; Egger, 2005; LeSage and Pace; 2008a), equaon (21) suggess a general specfcaon ha ncludes a group of varables for he orgn and desnaon regons, socked respecvely n marx Xo r (capacy of emsson) and Xd s (power of aracon). Y Xo Xd ds ln rs = β 0 + β1 ln r + β2 ln s + β3 ln rs + ε rs (21) where subscrp r ndcaes an exporng Spansh regon and s an mporng Spansh regon. Y rs are he expors from regon r o regon s, expressed n curren euros, and dsrs are he dsances beween regon r and s. Table 5 gves all he varables esed: he varables n bold alcs are he ones fnally ncluded n he Xo and Xd groups of varables n he exended specfcaons of r s he model; varables n pale grey have been dscarded or ncluded n oher varables. In order o analyse general relaons durng he perod ( ), he model s appled usng average fgures, boh for rade flows and regressors. I should be noed here ha he analyss s exclusvely focused on oal blaeral rade, leavng secor-specfc flows for furher analyss. All he varables are expressed n logs. The models were esmaed by he Ordnary Leas Square (OLS) procedure, usng publc doman rounes programmed n Malab (LeSage, 1999). In hs 25

26 regard, several papers dscuss he mos approprae mehod for esmang gravy models, boh for cross secon daa (Anderson and van Wncoop, 2003; Baldwn and Taglon, 2006; Helpman e al 2007) and panel daa specfcaons (Cheng and Wall, 2005;Egger, 2005). Snce he goal of our model s o evaluae he coherence of he daabase n he lgh of he gravy model, we adop he mos basc mehod of esmaon (OLS), whch mgh serve as a baselne for furher developmen (LeSage and Pace, 2008; LeSage and Llano, 2008a, 2008b). Before analysng he resuls obaned wh he gravy model, s neresng o observe he sably and perssence of he OD flows hroughou he perod ( ). To hs end, Fgure 5 plos he dsance and he OD flows n mllons of euros beween Spansh regons (Nus 2), boh expressed n log-scale and ranked accordng o he 1995 OD flows. Noe ha f he ascendng rankng of he flows durng he perod had concded wh he one observed n 1995, he shape of he resulng lnes would have evolved n parallel. Alhough hs s far from beng he case, as can observed n Fgure 5, we can sll apprecae a grea sably n he flows. In fac, he devaon from 1995 of he mos nense flows (upper-rgh sde of he fgure) durng subsequen years s much lower han n he weakes OD flows (boom-lef sde of he fgure). Ths endency ndcaes he sably of he nensy of he flows and he perssence of he orgn-desnaon srucure hroughou he perod. Furhermore, when he dsance beween he orgn-desnaon pars s also ranked accordng o he 1995 rankng, we oban an unsable dsance curve ha capures he presence of srong flows beween non-conguous regons. In spe of he rregular shape of he dsance curve, he assocaed endency-lne clearly shows a negave slope. Consequenly, we may expec ha hs negave relaon beween he nensy of rade and he dsance beween he producer and he consumer wll be capured wh a negave sgn by he gravy model. <<Fgure 5 abou here>> 26

27 Nex, we focus on he resuls obaned usng he basc specfcaon of he model. Based on Table 6, nerregonal flows n logs are relavely well explaned (R 2 =0.89) by dsance and by orgn and desnaon GDP. The varables are hghly sgnfcan and her sgns concde wh he expeced ones accordng o prevous sudes n he leraure (posve n he case of GDP and negave n he case of dsance). << Table 6 abou here>> Takng he mos basc specfcaon as a baselne, we es nne more specfcaons ha nclude some of he varables used n prevous sudes focusng on nernaonal and nerregonal rade n goods and servces. In Model 2, followng Kyracos (2006), he basc specfcaon s compleed wh he sze of he orgns and desnaons n erms of populaon. The resuls obaned show no sgnfcan relaon beween he nensy of he blaeral flows and he populaon of he orgn and desnaon regons. In Model 3, he populaon s subsued by he per capa ncome of he orgn and desnaon regons (O_ ncome and D_ncome). Here, he sgnfcance of hs varable s hgher for he orgn han for he desnaon. Furhermore, he dfferen sgns obaned pon o an nverse relaonshp beween he nensy of he flows and he relave wealh of he orgns and desnaons, gven ha he flow nensy ncreases wh he prospery of he orgns and decreases wh ha of he desnaons. When ncome s subsued by he acual sze of each par of regons (Model 4), only he sze of he desnaon regons appears o condon he flow nensy. Models 5, 6 and 7 nclude some new varables ha aemp o capure he relaon beween he nensy of blaeral flows, accessbly and ranspor nfrasrucure endowmen. The varables ncluded n Model 5 (O_acc_mn, D_acc_mn) consder he mnmum me a ruck spends 27

28 ravellng from each regon o he neares one. Accordng o he resuls obaned, he nensy of he flows ncreases when orgns are more accessble, whereas he accessbly of desnaons does no appear o have a sgnfcan nfluence. In Models 6 and 7, he accessbly varables are subsued by a measure of relave nfrasrucure endowmen (O_nfras; D_nfras) or he remoeness ndex used n prevous works analysng nernaonal rade (Kmura and Lee,. 2006). In he case of Model 6, alhough only he desnaon varable s sgnfcan, s mporan o hghlgh he negave relaons obaned, boh for orgns and desnaons, beween nfrasrucure endowmen and he nensy of he blaeral flow. Ths somewha surprsng resul can be caused by he defnon of he varable n relave erms, whch mgh end o reduce he relave mporance of such nfrasrucures n ceran larger regons (such as Caalona, Valenca, he Basque Counry or Andalusa) whch are also he man orgn of nerregonal rade flows. On he oher hand, a relavely hgh endowmen of nfrasrucures n small regons may also concde wh srong nerregonal nflows (.e. Madrd, Navarre, La Roja, Murca ). In he case of Model 7, he relaon beween he flow nensy and he remoeness ndex s also negave and sgnfcan, boh for orgns and desnaons. In hs case, he resuls obaned mach hose ha can be expeced, snce he nensy of he flows decreases when he orgn and desnaon regons are locaed far from he regons wh he larges GDPs. By conras, he man drawback of hs specfcaon s he reducon of he relevance of O_gdp and D_gdp, whch seems o compee wh he remoeness varables. In Model 8 we explore he relaon beween he nensy of nerregonal blaeral rade and he mporance of he orgn and desnaon regons n erms of nernaonal goods rade. The resuls obaned for hese four new varables (O_expor, O_mpor, D_expor, D_mpor) requre a more dealed analyss. Frs, should be sressed ha all bu O_mpor are sgnfcan. Second, he sgns obaned reveal neresng nformaon wh respec o he nerrelaon beween naonal and foregn markes. For example, he negave coeffcen obaned n he case of O_mpors and D_mpors suggess some knd of compeon beween markes, snce hgh nerregonal commody ouflows n orgn and desnaon regons correlae 28

29 negavely wh hgh nernaonal mpors arrvng o hese regons. Conversely, he posve sgn obaned for O_expors and D_expors mples ha srong nerregonal ouflows and nflows are assocaed wh hgh levels of nernaonal expors, boh n orgn and desnaon regons. Ths resul s perhaps capurng he spaal dmenson of he ypcal nermedae-fnal value-chan n he exporng secors (Hom and Hewngs, 2000). Fnally, Models 9 and 10 aemp o combne he bes varables esed n he prevous modes. In he case of Model 9, only four ou of he egh varables ncluded are sgnfcan (O_gdp, O_expors, D_gdp, Dsance), whereas n Model 10 all he varables are clearly sgnfcan and he explanaory power reaches s hghes value (R 2 =0,908). Accordng o hs fnal specfcaon, he nensy of he blaeral flows s posvely correlaed wh orgn and desnaon GDP and nernaonal expors n he orgns, bu decreases wh he remoeness of he desnaons and he dsance beween hem. In relaon o he dsance varable, s neresng o noe ha n all he specfcaons Log_dsance s always sgnfcan, wh negave coeffcens beween and Ths resul ndcaes ha, on average, an ncrease of one un n he dsance beween wo pons n Span s assocaed wh a decrease of one un n he nensy of he flow Concluson Accordng o he frs law of geography and more recen research concernng border effec, one can expec o fnd hgher levels of negraon beween regons whn a counry han beween counres hemselves. Paradoxcally, he avalable nformaon on economc neracons beween counres s more exensve and dealed han beween regons whn he same counry. 17 Noe ha alhough rade flows are n euros and dsance n klomeres, all varables n he model are ncluded n logs. 29