State Merchandise Export Trade Determinants

Abstract

Our results demonstrate that economic freedom, trade value, national cultural distance and exchange rates impact state merchandise export trade. These findings add new determinants to the existing literature. The results remain robust even with the inclusion of prior known determinants such as geographic distance, international trade agreements and partner country gross domestic product (GDP). The data set for this study includes 100,000 observations from 1996 to 2013 ranging from one southern state to 181 different countries. World Institute for Strategic Economic Research (WISER) Trade compiles and distributes the data from the United States Census Bureau, Foreign Trade Division. Merchandise exports are goods, not services, but include commodities and agricultural crops. The associations described in this note are derived using multiple linear regression models. State exports positively associate with economic freedom and trade value, but negatively associate with national cultural distance and an appreciating dollar. We use a country-level measure of economic freedom to capture the extent to which a country relies on private property, limited government and free markets to guide economic activity. We affirm that state export sales will rise when trading partner countries exhibit a greater amount of economic freedom. Int Adv Econ Res (2016) 22:95–97 DOI 10.1007/s11294-015-9538-8