A standard observation is that places which are closer together trade with each other more than places which are further apart. Add to that the thought that larger economies will trade more with other larger economies – well, you know, more economic activity means more economic activity – and you get the gravity model of trade. So, therefore Britain’s trade future lies with those places nearby, in the EU, than with places further away like the Commonwealth or the US.
This is, sadly, actually the level of debate over Brexit at times. We should trade with France because it’s 26 miles away, so there. The point being that while the gravity model is true – among the best empirically supported of all economic observations – that’s not actually what it says. Rather, that those places which are closer by trade distance trade more with each other. Trade distance being a more complex point than mere geographical location.
At which point this lovely map.
“I think trade routes and topography explains world history in the most concise way,” Månsson explains in the very small print at the map’s lower right corner. “By simply studying the map, one can understand why some areas were especially important–and remained successful even up to modern times.”
The point here being that by showing the trade routes it is showing us this trade, or perhaps economic, distance which is what the gravity model is about. Valencia and Palma were very much closer – and trade very much more – than Valencia and Toledo, despite roughly equal distances crowfly wise.
The full map is here. And OK, this is 11 and 12 th century trade routes. But the same principles apply today. For example, as Brad Delong has pointed out, once you’re on the container transport route you can move 36 tonnes of anything to anywhere for under $5,000. Fiji is $5,000 – the useful measure of economic distance – from Adelaide and London. Someone merely 100 miles off the container routes is further away than Fiji whatever mere the miles distance tells us.
Whether Britain will prosper through trade after Brexit is still arguable. But it is economic, not geographical, distance which matters.