Distance still matters: A fact to remember when formulating South Sudan trade policy

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Created on Friday, 23 August 2013 22:05

Last Updated on Tuesday, 03 September 2013 15:17

Written by Akol Aguek Ngong, The New Sudan Vision (NSV), www.newsudanvision.com

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CAMBRIDGE, MA—We live in a world of fast paced technological revolution in which people are instantly and continuously chatting and making transactions (business or otherwise) with each other across the globe using new technological devices. The world is now said to be getting smaller and smaller resulting in some pundits calling it a global village. In a corporate world, the consensus is distance is no longer an issue so much so that one can do business with anybody at any place around the globe without regard to distance between them. These days a sovereign nation prefers trading with far away wealthy trading partner because it perceives distance as something of the past. Even at the academia, there is a rise in free online distance learning through which people nowadays logon to their computers at distant places around the world and take free online courses here at Harvard University[i] or at any other institution of higher learning here in the US and around the globe.

This revolution has opened new opportunities and challenges for accredited academic institutions as well as new opportunities for fraudulent academic institutions such as diploma mills. No wonder the diploma mills are printing college diplomas and mailing them to distant places like nobody’s business! The proliferation of the massive online courses and learning opportunities (MOOCS) has shaken the institutions of higher learning to the extent that they wonder as to whether or not this technological revolution is threatening their very existence as the envy of the world. The world is now a global village. Really? No kidding! Okay!

Well, as it turns out, distance still matters and it continues to matter the most over time and shouldn’t be dismissed as something of the past. It is unbelievable but the empirical research backs it up. So far the economists have come up with a model that measures the effect of distance on trade, social interactions, and ties among individuals and sovereign states. The economists have adopted Isaac Newton’s Gravity Model and they use it to discern the effect of distance on interactions and trades among individuals and sovereign states respectively.

Using gravity equations, the economists have thus far concluded distance as vital when it comes to trades, interactions, friendships, and social ties among individuals and states. In other words, the closer to each other you are, the higher the chances are you will interact, befriend, and develop social ties with each other than when you are farther apart from each other. Even further, the closer to each other the sovereign states are, the higher the volumes of trade across their borders. And the farther apart the sovereign states are, the lower the volumes of trade between or among those sovereign states. We have examples of empirical studies on the effect of distance on the volumes of trade and social interactions among sovereign states and individuals respectively.

In 2008, the economists, Disdier and Head, summarized 78 studies using gravity equations with 1052 observations from year 1870 to 1999 to discern the effect of distance on trade. They found out that if distance between or among the sovereign state doubles, the trade declines by 89 percent. Their finding has also shown how the impact of distance on trade is becoming more apparent over time. They showed the doubling of distance between or among sovereign states declined trade by 64 percent in pre 1969 era and by 94 percent at the post 1990 era[ii]. Their finding leaves no doubt that distance on trade matters and it matters the most over time.

 Distance Still Matters for Trade over Time

Source: Anne-Célia Disdier & Keith Head, 2008

Further, other economists analyzed the trade volumes between the United States and its two North American trading partners, namely Canada and Mexico, relative to the volumes of trade between the United States and its European Union trading partners. And they found the trade volumes between the United States and its North American trading partners way higher compared to its trade volumes with its EU trading partners even though the United States’ North American trading partners have lower income relative to its EU trading partners[iii]. Again, the take away from this finding is distance favors neighbors with even moderately lower income over far away wealthy trading partners. The closer to each other the countries are, the higher their trade volumes across their borders, and the farther away from each other they are, the lower the volumes of trade between those nations.

 The US trades much more with nearby countries 

Source: Robert Z. Lawrence’s free trade lecture (2013)

In 2010, a facebook intern on the infrastructure engineering team, Paul Butler, gathered details from more than 500 million facebook members to create a friendship map of the world. He then plotted the friendship networks using current cities according to the members’ profiles. Upon completing his world’s facebook mapping analysis, Butler concluded “[It is] a surprisingly detailed map of the world. Not only were continents visible, certain international borders were apparent as well. What really struck me, though, was knowing that the lines didn't represent coasts or rivers or political borders, but real human relationships[iv].” In other words, human relationships were the driving force behind the facebook friendships and were more pronounced the closer to each other the facebook friends are. Put another way, the closer to each other you are, the higher the chances are you will become facebook friends. His conclusion was even with facebook connections, distance still matters. Distance still matters folks!

Paul Butler’s Facebook Map of the World: Facebook friendships between cities

Source: Paul Butler (http://www.facebook.com/note.php?note_id=469716398919)

Earlier in 2009, the scholars, Goldenberg, J. & Levy, M. did a study on the effect of distance on facebook and emails contacts as well as on the naming convention. Using all three variables, the scholars found the distance to matter as well[v].

Using the density of facebook contacts relative to miles between facebook friends, they found out that the closer to each other the facebook friends are, the higher the density of facebook contacts between or among those facebook friends. In other words, the closer facebook friends tend to chat or inbox each other more frequently than those facebook friends who are farther apart from each other. It means I tend to chat with my facebook friends here in the US and Canada more often than I am with other facebook friends in Australia and South Sudan. Again, it drives the message home that distance still matters!

Source: Goldenberg and Levy (2009)

The scholars, Goldenberg and Levy, also applied the same concept in the same study to email communications. Again, the email communications favored local ties over distant relationships. The closer you are to each other, the higher the density of email communications. And the farther away from each other you are, the lower the density of email communications. In other words, while email communications have made it a lot easier to communicate with relatives and friends around the globe, we tend to email those closer to us more often than those who are farther away from us. The frequency of phone calls as a variable wasn’t included in this research but it is also speculated that people closer to each other tend to call each other more often than those who are farther away from each other. Again, distance still matters!

Source: Goldenberg and Levy (2009)

Further, the same scholars, Goldenberg and Levy, applied the same concept to “analyzing the spatial dissemination of new baby names” and they found the physical proximity correlating with the concentration of specific names in particular regions in the United States. This was becoming more pronounced over time especially after the 1990s (See two maps and the chart). Again, the lesson learned is distance still matters and it continues to matter the most over time.

The Dynamics of the Name “Ashley”

 Source: Goldenberg and Levy (2009)

The Dynamics of the Name “Kaden”

Source: Goldenberg and Levy (2009)

 Spatial dissemination of new baby names over time

Source: Goldenberg and Levy (2009)

Back in 2000, Jeffrey Frankel and Andrew Rose estimated in their then unpublished working paper the effect of distance attributes on trade and below are some of their findings. They found out that access to ocean increases trade by 50 percent; common border by 80 percent; common language by 200 percent; common regional trading bloc by 330 percent; colony-colonizer relationship by 900 percent; common colonizer by 190 percent; common polity by 300 percent; and common currency by 340 percent[vi]. I have to admit that I once cited this data in my previous article in case a reader finds this data repetitive. But the point is this data supports the argument made on the effect of distance on trade between sovereign states.

Overall, the literature is very consistent on the effect of distance on social ties and interactions among individuals as well as on the trade volumes between sovereign nation states. But if this empirical body of knowledge is anything to be valued at all, it speaks to the fact that the effect of distance on trade among nations cannot be overstated now and in future.

So what is the point here? Well, in our case as South Sudanese, average citizens and policymakers alike, this body of knowledge points to a very important fact and that is South Sudan must trade more with even its less wealthy neighbors (including its sworn enemies to the degree that it can without compromising its security) than it should with its far away affluent friends. Now, it is an open secret that our politicians always look up to the United States, China, EU, and other distant wealthy nations as the only sources of foreign direct investment. But the truth of the matter is our wealth is to be maximized as a result of trading with our neighbors including our sworn enemy, the Republic of Sudan. Jeffrey Frankel’s and Andrew Rose’s data strongly supports building strong trade relations with the Republic of Sudan. Lest I may be mistaken, of course, there is nothing wrong with wooing foreign investors from the United States or from other wealthy nations around the globe. Of course, the policymakers should do exactly that. But to the extent that wealth is maximized through trades with other nation states, less wealthy neighbors beat the distant more affluent friends.

It is therefore important to be clear that when it comes to negotiating bilateral or regional free trade agreements that our policymakers know that more money is to be made from the neighbors than from distance friends. South Sudan should not leave any money on the table when it comes to trading with neighboring states in hopes of making a fortune from distant wealthy friends. The evidence of trade flows between South Sudan and its neighboring states of Uganda, and Kenya shows South Sudan isn’t leaving any money on the table. But I worry that South Sudan may continue to view the Republic of Sudan as a perpetual enemy not worthy of doing business with and that point of view is misplaced. We should trade with the Republic of Sudan just as we are with other neighboring countries to the degree that we can without jeopardizing our national security. This is precisely because distance still matters and it matters the most over time even in this more globalized world. The Republic of Sudan had committed heinous crimes in South Sudan but it will always be South Sudan’s neighbor and to the degree that trade relation is established between two countries, the better the future for both nations.    

Akol Aguek Ngong, MBA, was assistant director of admissions at the University of Vermont (2006 -2012). He is currently pursuing a second master’s in public administration (international affairs focus) from The John F. Kennedy School of Government at Harvard University. He is a columnist for The New Sudan Vision. You can contact him at This email address is being protected from spambots. You need JavaScript enabled to view it.