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Sourcing locally instead of from distant suppliers lowers transaction costs.
Formal alliances with distant suppliers can mitigate some of the disadvantages of distant outsourcing.
But extracting onshore shale gas could make up for the decline in North Sea gas and make Britain less dependent on unreliable, distant suppliers.
By contrast, ties with distant suppliers and clients improve innovative capability (as measured by the number of registered patents), whereas ties with neighboring suppliers or clients do not affect innovative capability.
We find that ties with distant suppliers improve productivity (as measured by sales per worker) more than ties with neighboring suppliers, which is likely because distant firms' intermediates embody more diversified knowledge than those from neighboring firms.
Speed and reliability of shipping enabled just-in-time production, which in turn allowed firms to grow leaner and more responsive to markets as even distant suppliers could now provide wares quickly and on schedule.
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A distant supplier is unlikely to have insight into the exact needs and expenses of buyers.
Until recently, a typical transaction began when a buyer sent a purchase order to a distant supplier by mail, telex, e-mail, or an internet portal.
Manufacturers on both sides are developing a regional directory so companies can buy from each other instead of from more distant national suppliers.
Provincial and state governments are pursuing several new joint economic development programs, from designing a snowmobile trail that wanders back and forth across the border to encouraging governments and businesses to disregard distant domestic suppliers if they can do business more cheaply nearby, even if it is in the other country.
And when it came time to connect with distant clients or suppliers or colleagues, people got on planes.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com