Export sensitivity to time delays and the pattern of international trade

Abstract

ABSTRACTA growing body of literature in the field of international trade highlights the increasing importance of the time delays associated with transporting goods over long distances and the differing effect that such delays have on traded goods that exhibit diverse degrees of time-sensitivity. This literature also canvasses the likely changes in the pattern of trade in time-sensitive goods that are likely to have accompanied recent advances in transportation and information and communication technologies. However, the empirical research on these patterns has so far been exploratory and incomplete. We use U.S. import data, on both the intensive and the extensive margin of 70, five-digit level End-Use categories of goods, from 121 countries, during 1991–2017, in an effort to investigate how the pattern of trade in time-sensitive goods has changed in recent years. We identify three distinct features of such changes: (i) trade in time-sensitive goods has expanded dramatically in recent decades, (ii) the production of such goods agglomerates in close proximity to the demand centre, and (iii) regardless of proximity to the demand centre, developed countries have comparative advantage in time-sensitive exportables. These results shed light on a topic of considerable academic interest and have important policy relevant implications.