The new economic geography literature has created awareness that geographic locations influence each other. Whereas the effect of proximity between exporting and importing units has been investigated to a great extent, the possible impact that neighboring economic units can have on each other’s trade with other economic units has not received much attention. Neglecting spatial correlation can produce biased estimated coefficients and, consequently, biased estimates of trade, regardless of methodology the latter is based on. Using panel data on the manufacturing exports of the 48 contiguous U.S. states to 24 Asian countries, we empirically test for local spatial linkages in the manufacturing exports of U.S. states to the Asian region. We investigate if spatial linkages are created by geographic, cultural, infrastructural, innovation asset, business environment, and economic development proximities. We find that all proximity weights generate statistically significant spatial linkages.
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