Optimizing Canada–U.S. Border Crossing Investments for Export Competitiveness

Abstract

Border crossings are vital to a nation’s safety and security as well as its economic competitiveness. On one hand, borders are intended to ensure the safety of a nation against external threats; on the other, they are needed to ensure the efficient crossing of legitimate people and goods. For Canada and the United States (U.S.), the latter is particularly important considering that the trade between the two countries amounts to $1.8B USD daily. Small changes in border crossing operations could have large economic impacts on both countries. In this study, a new tool is proposed, which combines a computable general equilibrium (CGE) model with several empirical transportation datasets to prioritize Canada–U.S. border crossing investments along the entire international boundary, from both countries’ perspectives. Simulation results suggest that reducing wait times at border crossings can have sizable impacts on trade value, gross domestic product (GDP), and welfare. GDP and welfare changes are always positive with maximum values of $11.50 and $3.15M USD per year, respectively. Border crossing improvements affect industries differently, ranging from an increase of $2.09M USD to a decrease of $–0.22M USD in trade value. Analysis results indicate that the Lansdowne, Ambassador, Sarnia, Fort Erie, and Coutts border crossings are the highest priority for Canada to U.S. trade facilitation. Lastly, results suggest that investing in borders that benefit Canada to U.S. trade typically benefits the U.S.’s GDP as well.