Bilateral Trade Data Research Articles

New insights into Korea's trade relations: A comprehensive FNARDL analysis with 18 global partners

This study applied the Fourier nonlinear autoregressive distributed lag (FNARDL) model to investigate the bilateral J-curve effect between Korea and 18 trading partners. As a result, negative asymmetric effects of changes in the real exchange rate were detected in some cases in the short run. However, in other cases, these effects were positive or exhibited both positive and negative trends. This variation stemmed from the heterogeneity of import and export products and the diverse reactions of exporters to exchange rate fluctuations. By contrast, positive asymmetric effects were evident in most cases in the long run. Through the Fourier function, the FNARDL model better captured the J-curve effect compared to the standard NARDL model. Furthermore, by using bilateral trade data, this study mitigated the problem of aggregate misalignment, compared to using a country's gross trade data with the rest of the world. Therefore, the hidden effects of the real exchange rate were unveiled. This study's findings will enhance policymakers' awareness of formulating exchange rate management strategies.

An analysis of how digital technology impacts trade costs—Based on the empirical data of RCEP member countries

<p class="MsoNormal" style="margin-top: 12pt; text-align: justify;"><span lang="EN-US" style="font-family: 'times new roman', times, serif; font-size: 14pt;">This paper explores how digital technology reduces trade costs using bilateral trade data from RCEP member countries and a panel fixed effects model. The findings show that digital technology significantly lowers trade costs, a conclusion that holds even after accounting for lag effects and various robustness checks. The impact of digital technology on trade costs follows an inverted U-shape: the effect is most significant in the current period, especially with a one-period lag, and diminishes over time. Larger economies and higher export levels strengthen this negative impact due to their reliance on exports and continuous improvements in domestic digital technology. The study recommends investing in digital infrastructure, formulating reasonable internet access policies, supporting digital skills development, and enhancing digital connectivity to bridge the digital divide, thereby promoting trade facilitation and efficiency.</span></p>

Service sectors and trade through a digital medium: a modified gravity approach

ABSTRACT Given the increasing role played by services delivered through online platforms, this study is a first to undertake cross-sectoral examination of the trade performance of nine service sectors exploring only the digitally delivered components of these. The article makes two main contributions. First, in the absence of bilateral trade data, it develops gravity-like indices using a methodology to capture the influence of common variables used in the gravity literature. Sector-level unilateral import data on the WTO, GATS mode 1 of service delivery or cross-border trade, which is largely synonymous with digital trade, is drawn from the relatively new OECD-WTO-TiSMoS database. Next, the constructed gravity-like variables along with an index of the importer’s services trade restrictiveness, the level of internet penetration of the importing economy and their interaction are examined across the said sectors using a panel of 50 countries for the years 2014–2017. The findings of the constructed gravity variables support earlier literature using bilateral service trade data. The outcomes of the interactions reveal that the trade dampening effect of larger service trade restrictions is somewhat mitigated by deeper internet penetration in consumer services like education in contrast to others like insurance & financial services which are usually producer services.

Vertical Spillovers in Global Value Chains

This paper uses input-output relationships across highly disaggregated products to establish two empirical regularities with bilateral trade data. First, countries are likely to have revealed comparative advantage (RCA) in a product if they also have RCA in products that are upstream or downstream to that product. Second, the RCA of a product improves over time if the country experiences export demand shocks to its inputs or outputs. This suggests that being integrated as suppliers into the global production network can benefit countries by improving their capabilities across different stages of production.

Heterogeneous Impacts of the Korea-Japan Trade Dispute on Bilateral Agri-Food Trade

Purpose - The purpose of this paper is to provide a rigorous quantitative assessment of the heterogeneous impacts of the Korea-Japan trade dispute on bilateral agri-food trade across different product categories. Design/Methodology/Approach - Based on a structural gravity model and a difference-in-differences approach, the paper estimates the effects of the dispute on trade flows in both aggregated and disaggregated HS 2-digit product levels. The analysis utilizes annual bilateral trade data from 2017-2022 and monthly data for 2019. Findings - The findings reveal significant declines in Japanese exports of vegetable products and prepared foodstuffs to Korea, consistent with the theoretical prediction that sectors with higher average consumer animosity would be more negatively affected. However, the results also point to potential trade diversion and substitution effects, as evidenced by the increase in Korean exports of animal/vegetable oils to Japan post-dispute. Research Implications - The findings have important implications in understanding the complex effects of trade disputes on sensitive sectors like agriculture. These emphasize the need to consider sector-specific dynamics and both short-term and long-term effects when assessing the consequences of trade tensions. The study contributes to the literature on the heterogeneous impacts of trade conflicts, and provides insights for evidence-based policymaking in navigating the global trade landscape.

Political relations and trade cooperation of the Belt and Road initiative: research on trade network based on strategic emerging industries

PurposeThe purpose of this study is to examine the impact of political relations on trade in strategic emerging industries (SEIs) in the Belt and Road initiative (BRI) associated countries. This investigation encompasses not only from the perspective of bilateral political relations but also the political intervention of third parties.Design/methodology/approachThe study employs the temporal exponential random graphmodel to analyze the dynamic structure and influencing factor of SEIs trade network among 150 BRI-associated countries from 2015 to 2020.FindingsThe results indicate that the trade of SEIs in the BRI-associated countries exhibits a pattern of concentrated exporters and decentralized importers. Amicable bilateral political relations foster trade cooperations in SEIs, while political pressure from the United States has the opposite effect. Furthermore, compared with the influence of third parties, the BRI has created a more robust trade environment characterized by political mutual trust.Practical implicationsBRI-associated countries should strengthen their political communication, and endeavor to transform political consensus and shared vision into concrete collaborative projects, while mitigating geopolitical uncertainties through a sound risk evaluation system. Moreover, they should establish a more transparent and consistent consultation mechanism and leverage the BRI trade network to foster balanced and mutually beneficial partnerships that minimize rivalry and dependence on a single market.Originality/valueThis study goes beyond observed trade cost and incorporates the political factor into the determinants of the BRI trade, thereby expanding the theoretical boundaries of existing BRI research. Also, this study employs bilateral trade data to construct SEIs trade networks (SEITNs) along the BRI route. It provides a comprehensive understanding of the dynamic determinates of the SEITNs will provide valuable practical guidance for enhancing and expanding trade and cooperation among BRI-associated countries.

Trade strategy with the countries along the Ice Silk Road: a Rabin model-based perspective

ABSTRACT Since the Ice Silk Road (ISR) was put forward, its development prospect has become the focus of academic circles. To study the influence mechanism of ‘fairness preference’ on the trade cooperation of countries along the ISR, this paper constructs the trade cooperation network based on the bilateral trade data of countries along the ISR, establishes the theoretical model of network game based on Rabin model, and uses the simulation method to test the model. The results show that: (1) the sense of national cognitive fairness does have an impact on the trade cooperation of the ISR; (2) the ‘eye for an eye, tooth for a tooth’ strategy is not an advantage strategy in the trade cooperation of the ISR; (3) the most significant factor affecting the trade cooperation of countries along the ISR is the neighbor node in the trade network and the social public opinion pressure of cooperation in the network.

Does governance matter? Comparing the determinants of Chinese and Western trade with Africa

AbstractIn recent decades, China has risen to prominence in the global economy with breakneck speed. Many have hypothesised that Chinese economic actors undermine the global drive to promote good governance in developing countries, and in Africa in particular, by disproportionately engaging economically with countries that suffer from poor governance outcomes. Using bilateral trade data, this paper explicitly compares how different aspects of African countries' governance levels impact their trade patterns with China and the West. It finds that African countries with better corruption controls and improved democratic development levels export more to the Western countries sampled, though the opposite is true with regard to their exports to China. Interestingly, democratic development is associated with greater imports from both the West and China, but the opposite holds with regard to respect for human rights. Finally, political stability has no significant impact on African trade—with either the West or China. However, when oil exporters are excluded from the sample, the relationship between political stability and African exports strengthens dramatically, which suggests that both Western and Chinese importers are willing to tolerate political instability to secure oil.

Global renewable energy trade network: patterns and determinants.

The renewable energy product trade is critically important to global economic prospects and its rapid development, making it a key issue in international economics of much interest to scholars. Previous studies have paid attention to bilateral trade, yet we still know little about the patterns of renewable energy product trade and its evolution from the whole industry perspective. Based on bilateral trade data, complex network, as well as ERGM and TERGM, we build global renewable energy trade networks (GRETNs) during 2000-2018 and explore the patterns and determinants. The results show that (1) the GRETNs expand during 2000-2018, characterized by a small-world, reciprocity, degree disassortative, and export volume heterogeneity. (2) The GRETNs form four communities, and the community patterns greatly fluctuate over time. (3) Economies in North America, Europe, and Asia play dominant roles, while the USA, Germany, and China are the cores of the GRETNs. (4) Endogenous structure of reciprocity, structural embeddedness, and out-degree popularity are essential parts of the evolving patterns of GRETNs. Most trade relationships are developed between economies located within the same continent, participating in APEC or WTO, or having similar areas. There is heterophily in GDP and per capita income, and Matthew effects in GDP, urbanization, and industrialization rate. Countries that share a common geographic border, language, religion, or currency, being former colonies of the same colonialists, and having signed regional trade agreements are more likely to trade in renewable energy products.

Deploying Machine Learning Methods to Predict Global Trade Patterns: The Case of Beef

Highlights Machine Learning (ML) methods are offered as an alternative to conventional techniques for understanding global commodity trade. A formal comparison is made between ML results with those from the Poisson Pseudo Maximum Likelihood (PPML) Estimator, which is the most commonly used statistical technique for bilateral trade analysis. PPML takes into account fixed effects and the dynamic nature of panel data to provide a better fit and higher prediction accuracy than ML in the context of in-sample forecasts. ML methods have strengths in feature selection, better validation statistics, and stronger predictive power than PPML, especially with out-of-sample forecasts. Abstract. In international economics, there has been a steady stream of innovations to explain patterns of trade between and among countries with emerging techniques. The most recent - Poisson Pseudo Maximum Likelihood (PPML) estimator – corrects for a potential bias caused by the large proportion of zero observations in bilateral trade data. Alternatively, this study offers Machine Learning (ML) as an option, especially in the presence of finer data on bilateral trade patterns. Using monthly and HS-6-digit (product) level data, the study finds that the main advantage of PPML is its accuracy of forecasts in-sample, but feature selection is somewhat rigid due to the inclusion of a large number of pair-wise fixed effects. ML models have the advantage in selecting features when a long list of explanatory variables is to be considered. Model validation statistics such as MAE and RMSE favor ML methods, but PPML tends to yield higher goodness of fit. In the out-of-sample context, ML has better accuracy than PPML, and a one-step walk-forward ML approach further improves the accuracy of ML forecasts. While PPML has a rich research and application history, emerging ML techniques have sufficient room for improvement in their adaptation to economic analysis. Keywords: Beef, Bilateral Trade, Boosting, Machine learning, ML for Policy

Unraveling the driving factors of the plastic waste trade network formation and dynamics

International trade of plastic waste promotes the global plastic circular economy and improves resource efficiency, but exacerbates the ubiquitous plastic pollution. Understanding the drivers behind the evolution of the global plastic waste trade network (GPWTN) is pivotal for developing new international instruments to end plastic pollution and fostering clean solid-waste trade. Employing social network analysis (SNA) and quadratic assignment procedure (QAP) model, this study structures the GPWTN using bilateral trade data, revealing shifts from highly centralized to cross-layered networks and relevant drivers. It is suggested that Malaysia and Turkey has become the new key recipients of the GPWTN, replacing China, accompanied by the launch of new environmental regulations in some countries. Transportation cost is the most critical factor for the formation of the GPWTN, followed by gaps in resource demand, bio-based resource availability, and transportation accessibility. Trading partners in closer proximity, especially those with contiguous borders, are more likely to trade in waste plastics, while coastal countries play an important role in these partnerships. Economies with more abundant biomaterials, higher incomes, and greater environmental burdens are more likely to be exporters, while economies with scarcer resources and more compelling demands are more likely to import plastic waste. Countries involved in the trade in plastic waste, as either importers or exporters, receive varying degrees of economic benefits but bear potential environmental impacts. Therefore, global plastic pollution control and trade prosperity necessitates necessitate coordinated endeavors from nations and intergovernmental bodies for a mutually advantageous denouement.

The Impact of the Russo-Ukrainian War on the Bilateral Trade in the Region: Evidence from a Panel Gravity Model

This study aims to investigate the regional impact of the sanctions imposed by the West on the Russian Federation. To this end, we used two samples to estimate the determinants of bilateral trade. The first dataset belongs to ex-Soviet countries between 1992 and 2019, and the second dataset expands it with bilateral trade data relating to China, Iran and Turkey. The results reveal that there are structural differences between the two samples regarding the determinants of the bilateral trade flows and sanctions that have spillover effects in the region. We also projected our findings to the recent events. JEL Codes: C33, F13, F14

The global consumer incidence of carbon pricing: Evidence from trade

Carbon pricing is often seen as regressive, disproportionately burdening low-income consumers. I show that higher prices following a global carbon price would be mildly regressive in industrialized countries, mildly progressive in developing countries, and steeply regressive across countries. Refunding revenues via national carbon dividends would reverse all three findings. The net effect would be globally progressive, even without international transfers. My approach to estimating the global distributional effects of carbon pricing uses bilateral trade data and features non-homothetic consumers who differ both between and within countries. The supply side includes substitution of inputs along global value chains.

Determinants of intra‐COMESA trade in services

AbstractThis paper analyzes intra‐Common Market for Eastern and Southern Africa (COMESA) trade in services by establishing its determinants and exploring the role of trade facilitation on the same. The study relies on the Poisson Pseudo Maximum Likelihood (PPML) estimator of the gravity model on bilateral services trade data for total services and eight categories of services in 17 COMESA countries from 2005 to 2019. Results reveal that several factors determine intra‐COMESA services trade, the salient ones being GDP (exporter's and importer's), distance, contiguity, and time zone differences. Trading under a service‐specific trade agreement affects a few services: transport and other business services exports. The effect is positive for transport services and negative for other business services exports. Trade facilitation measures, especially broadband technologies, significantly improve services trade across various sectors. A key policy implication of our results is that service trade is more likely to grow through digital, information, and communication infrastructure development. Thus, policy should prioritize increasing access and usage of broadband technologies.

International food trade contributes to dietary risks and mortality at global, regional and national levels

Food trade is generally perceived to increase the availability and diversity of foods available to consumers, but there is little empirical evidence on its implications for human health. Here we show that a substantial proportion of dietary risks and diet-related mortality worldwide is attributable to international food trade and that whether the contributions of food trade are positive or negative depends on the types of food traded. Using bilateral trade data for 2019 and food-specific risk–disease relationships, we estimate that imports of fruits, vegetables, legumes and nuts improved dietary risks in the importing countries and were associated with a reduction in mortality from non-communicable diseases of ~1.4 million deaths globally. By contrast, imports of red meat aggravated dietary risks in the importing countries and were associated with an increase of ~150,000 deaths. The magnitude of our findings suggests that considering impacts on dietary risks will become an important aspect of health-sensitive trade and agriculture policies, and of policy responses to disruptions in food chains.

Exchange rate effects on China's exports: Product sophistication and exchange rate elasticity

AbstractThe negative effect of a currency appreciation on a country's exports may be attenuated as its export basket becomes more sophisticated. This paper investigates whether exchange rate changes affect China's exports differently depending on their sophistication levels, as measured by the Product Complexity Index (PCI). We estimate exchange rate elasticities for 1242 export categories disaggregated at the HS‐4‐digit level from 1995 to 2018 using bilateral trade data between China and 190 partner economies. Results indicate that exchange rate fluctuations have negative effects on China's export values, and exchange rate effects are less for more sophisticated exports. This decreasing of exchange rate elasticities for more sophisticated exports holds even when controlling for tariffs. The evidence also shows that, as China has upgraded its export basket over time, the impact of exchange rates on exports has become smaller and less significant. Moreover, the effect of exchange rate related policies on export values via the exchange rate is smaller and less significant for China's more sophisticated exports.

Can authorities curtail falsified trade & investment data that hide capital movements? Evidence from flows between BRICS and the USA

Usually developing and transitional countries are characterised by foreign exchange and capital scarcities and hence resort to stringent trade and capital control policies. This might become counterproductive and provide incentives to the international traders and investors to go for corrupt practices. This paper investigates how do these tight policies might encourage illegal or hidden capital movements across borders. By presenting both a theoretical and an empirical analysis, where traders and investors rationally misreport to evade stringent trade and investment barriers, we first show that illegal capital outflow takes place through trade misreporting and interestingly, export and import misreporting are cointegrated. Secondly and more importantly illegal capital inflow might take place through overreporting of FDI values and illegal capital outflow and inflow are cointegrated too. Based on the thorough investigation of the BRICS – USA bilateral trade and FDI data, we propose that a less regulated trade and investment regime might benefit these countries more as tight and restrictive policies seem to be self-defeating. Our study comes up with policy conclusions that might minimise the cross-border illegal capital movements.

COVID‐19 and the distance effect

AbstractUsing nearly 200 countries' bilateral trade data and the gravity equation, this paper provides evidence that COVID‐19 has led countries to trade more with their closer countries. The negative distance effect is greater during the pandemic period, with a greater number of infected cases, deaths or stricter control policies. A simple model of a transportation sector that was affected by the pandemic was built to explain our empirical findings.

Analysis on the Legal System of International Technology Trade Management Based on Data Mining Analysis

With the rapid development of computer and information technology, people can obtain and store data in a faster and cheaper way, which makes the amount of data and information grow exponentially. Based on data mining technology, this paper systematically analyzes and compares the basic situation and evolution of international trade networks and international human relations networks using the bilateral trade data and human relations data of countries and regions in the world. The research shows that the strength external entropy, strength internal entropy, and network weight entropy of the whole international trade network from 2008 to 2014 are generally lower than 0.75. The whole network still showed a downward trend from 2010 to 2015, but it began to rise steadily after 2016. The monopolistic behavior in international technology trade has a significant impact on the fundamental freedoms and rights of citizens.

Military alliance and international trade: Evidence from NATO enlargement

AbstractThis paper exploits the three eastward expansions of NATO after the Cold War as a quasi‐natural experiment to investigate the relationship between military alliance and trade. To identify the impact of alliance membership on trade, we adopt the difference‐in‐differences method to estimate a gravity model with global bilateral trade data from 1995 to 2015. The results show that joining NATO has a positive effect on new member countries' exports, as well as an enhancing effect on both imports and exports between old and new members. Further analysis of subdivided data reveals that formal alliance between old and new members boosts bilateral trade of security‐sensitive products, facilitates specialisation and helps mitigate trade disputes, suggesting that deepening of mutual strategic trust is a possible channel of influence.