Changes In Trade Patterns Research Articles

The revealed cost competitiveness of changing trade patterns: A country-sector exercise

In new trade models with heterogenous firms, trade liberalization between high-cost and low-cost countries is expected, all the rest equal, to increase cost competitiveness (i.e., to decrease real marginal costs) relatively more in the former. We report evidence in favour of this prediction for a sample of countries, accounting for about 85% of world trade, from the 1980s to the 2000s. The estimation of the country-sector changes in cost competitiveness (relative to the UK) hinges on taking advantage of the observability of international trade patterns to reveal information on cross-country differences in marginal costs, hence ‘revealed’’ cost competitiveness.

Sanctions and Consequent Effects on North Korea's Trade

This paper aims to show how neighboring countries' bilateral sanctions have changed the trade patterns of the DPRK, and how extensive they are. We can see how much the DPRK has sacrificed its potential growth to pursue its nuclear program, and how it would recover if the DPRK freezes its nuclear program and sanctions by its neighbors are subsequently eased or lifted. Sanctions against the DPRK caused changes in trade patterns, which is referred to as trade diversion. The sanctions sender cuts off economic relations including trade to achieve its goal, and the sanctions target country diversifies its trade routes to minimize the negative effects of sanctions. Trade diversion can be decomposed into four categories: trade suspension, trade substitution, detour (bypass) trade, and trade creation. The DPRK’s changes in trade are an exemplary case of trade diversion after bilateral sanctions were imposed by Japan (in 2006) and South Korea (2010). The most drastic form of change in the DPRK's trade had been trade suspension after the sanctions have been imposed. Roughly, about $189 million's worth of trade was suspended between the DPRK and Japan after 2006, and about $298 million has been suspended in inter-Korean trade after 2010. Trade substitution is the next significant change in the DPRK's trade, in which the target country increases trade with existing trade partners other than the sanctions sender countries. In the case of the DPRK, after Japan's bilateral sanctions, South Korea and China became target countries of its trade substitution. In 2006, inter-Korean trade soared by 113.1%, and trade between the DPRK and China increased by 95.2%, substituting its previous trade with Japan. In 2010, trade between the DPRK and China increased by 195.0% due to South Korea's sanctions. Detour (bypass) trade is the unintended effect of sanction. Regardless of the sanctioned country's intentions, even after the sanctions the target country's trade with sanctions sender country is likely to be maintained due to preexisting economic relations via a third country, instead of direct trade between sanctions sender and target countries. Changes to the sender countries' sanctions against the DPRK would take the form of either tightening or loosening of the sanctions. If the DPRK would continue to implement nuclear missile tests or develop other weapons of mass destruction (WMD), sanctions would not only continue, but also are likely to be strengthened, as can be seen in the recent UNSCR sanctions mandate adding 15 DPRK individuals and 4 entities in the sanctions blacklist in early June. However, in order for the sanctions to be effective, the cooperation of the DPRK's major trade partner and key patron, China, is imperative. Conditions for loosening sanctions would require the DPRK's suspension of its development of WMDs, including its nuclear weapons program. Despite the fact that causes for sanctions are multifaceted, the main impetus for any easing of existing sanctions would come from the DPRK's suspension of its WMD development, including its nuclear weapons program.

Trade creation, trade diversion and imbalances in the EMU

The aim of this paper is to provide a unified explanation for the mixed evidence on the euro effect on trade and the development of imbalances in the European Monetary Union (EMU). It is argued that the two phenomena are the result of trade creation and trade diversion effects generated by the euro introduction and by globalisation-induced changes in trade patterns. Trade creation and trade diversion effects are estimated as structural changes in the relation between trade flows and financial opening, growth, prices, and measures of globalization. While most of these effects point to the increase in imbalances, financial opening is found to positively affect intra-EMU trade. On the other hand, GDP growth and global changes in production technology reduced intra-EMU trade. The results suggest that policies aimed at rebalancing the EMU should be strengthened and supported by measures aimed at improving the competitiveness of the single market as a whole.

Contextualising the drivers for trade: Some lessons from historical case studies

This paper uses three historical trade case studies, oil trade, bulk commodities and containers, to explore and better understand the drivers of shipped trade. This qualitative work explores the relevance of established drivers, such as economic growth, and identifies additional factors which have shaped trade patterns. This work adds a new dimension to quantitative approaches, such as cross-country regression analyses, which although are often used to ascertain the importance of potential drivers for trade may face difficulties, particularly when drivers are complex or interlinked. Our analysis considers inter-related economic and political factors which have influenced changes in trade patterns. The results confirm the importance of elements such as economic growth, openness (such as a lack of tariffs), geography and transport costs and for each of the case studies explains the context which gave rise to these drivers. This analysis affords three main conclusions, firstly distinct trading regions may react differently to similar circumstances, secondly, policies which can influence both supply and demand can have a significant impact on established trade patterns and finally initially isolated elements can (with the benefit of hindsight) prove to have had a significant impact on trade.

The emission cost of international sourcing: using structural decomposition analysis to calculate the contribution of international sourcing to CO2-emission growth

ABSTRACTThe effect of changes in trade patterns, particularly increasing international sourcing, on global CO2-emissions growth has yet to be clearly understood. In this paper, we estimate the emission cost of sourcing (ECS), which originates from replacing domestic products by imports from countries with more CO2-intensive technologies. Using a structural decomposition analysis, we find that changes in sourcing patterns between 1995 and 2007 contribute (1) to reducing territorial emissions in high-wage countries (70% of their territorial emissions growth) and (2) to increasing territorial emissions in low-wage countries (30% of their territorial emissions increase). The net global effect, the ECS, amounts to 18% of total global CO2-emissions growth. Our results call the climate change policies based on territorial principles into question given that they disregard that differences in emission intensities between countries contribute to raising global emissions. In contrast, policies fostering the transfer of cleaner technologies to low-wage countries decrease the ECS.

Hybridising Medicine: Illness, Healing and the Dynamics of Reciprocal Exchange on the Upper Guinea Coast (West Africa).

The present article seeks to fill a number of lacunae with regard to the study of the circulation and assimilation of different bodies of medical knowledge in an important cultural contact zone, that is the Upper Guinea Coast. Building upon ongoing research on trade and cultural brokerage in the area, it focuses upon shifting attitudes and practices with regard to health and healing as a result of cultural interaction and hybridisation against the background of growing intra-African and Afro-Atlantic interaction from the fifteenth to the late seventeenth century. Largely based upon travel accounts, missionary reports and documents produced by the Portuguese Inquisition, it shows how forms of medical knowledge shifted and circulated between littoral areas and their hinterland, as well as between the coast, the Atlantic and beyond. It shows that the changing patterns of trade, migration and settlement associated with Mandé influence and Afro-Atlantic exchange had a decisive impact on changing notions of illness and therapeutic trajectories. Over the centuries, cross-cultural, reciprocal borrowing contributed to the development of healing kits employed by Africans and non-African outsiders alike, which were used and brokered by local communities in different locations in the region.

Economic sanctions and trade diplomacy: Sanction-busting strategies, market distortion and efficacy of China’s restrictions on Norwegian salmon imports

This article confirms that China’s economic sanction in the form of restricting salmon imports from Norway was in retaliation for the 2010 Nobel Peace Prize awarded to a Chinese dissident. By combining personal accounts of stakeholders interviewed in the Norway–China salmon trade with an examination of trade data, there is strong evidence that links changes in trade patterns of fresh/chilled whole Norwegian salmon to border measures applied in response to the peace prize. While disproportionate border measures targeting Norwegian salmon have distorted China’s market since 2011, private actors appear to have busted the sanction by circumventing these measures, including rerouting, falsifying country-of-origin certification, and smuggling. This could have long-term consequences for trade patterns and quality. Official statistics record a reduced Norwegian market share and decreased Norway–China salmon trade despite an expansion of the volume of Chinese imports. However, official data do not record Norwegian salmon entering illegally, which some stakeholders estimate at between 50 and 70 per cent of the market. Norway’s official refusal to meet the Dalai Lama in May 2014 suggests that China’s sanction has affected foreign policy. The salmon sanction demonstrates that China has become more assertive in its international relations.

Global Trade Creation, Trade Diversion, and Economic Impacts from Changing Global Transport Costs

Despite the complex political and economic trade environment, the generalized costs of transportation still play an important role in determining trade patterns. This paper analyzes how global trade patterns would simultaneously change as a result of new global transportation costs and for which countries the new patterns of global trade would be beneficial or detrimental. A random utility-based multiregion input–output model helps quantify the size of the impacts, identify the countries and sectors that would gain or lose the most, and explain the change in trade patterns that would create these impacts. Results suggest that Canada is most susceptible to negative economic impacts caused by decreases in global transportation costs, mainly because of its important trade relationship with the United States. Canada’s economy benefits from its proximity to the United States, but as transportation costs decrease, this proximity becomes less relevant as the United States increasingly trades with more distant countries. The United States suffers the same susceptibility to negative economic impacts with decreases in global transportation costs, but to a larger absolute (smaller relative) extent. However, global transportation cost reductions are especially beneficial to Japan, China, and South Korea, which absorb much of the trade diverted away from the United States and Canada.

Australia-Thailand trade: An analysis of competitiveness and effects of the bilateral FTA

This paper undertakes an analysis of bilateral trade linkages between Australia and Thailand over 1990 to 2011, analysing changes in trade competitiveness, and possible role played by the Thailand-Australia Free Trade Agreement (TAFTA) that came into force in 2005. Trade competitiveness changes are measured by the revealed comparative advantage index (RCAI) at an aggregate and value-added level, as well as a constant market share analysis (CMS) analysis. An export-demand model utilizing interaction effects in presence of the TAFTA is then estimated, hitherto not attempted earlier in the empirical literature on Australia-Thailand trade. The findings of the paper suggest that the Thailand-Australian trade relationship has undergone further adjustment since the establishment of the TAFTA. However, the changes in trade patterns are not necessarily due to TAFTA but more of a long term trend. CMS analysis suggest that Thailand’s export competitiveness significantly contributed to the remarkable growth of exports to Australia experienced over the period, and the strongest trade link between the two countries has been the export of automotive vehicles from Thailand to Australia. However, value-added RCAI reveals that Thailand’s domestic industry have been contributing to its exports to a much lesser extent than as actually observed in its gross exports, and this reflects the increasing role of foreign firms and imported inputs in Thailand’s machinery and transport equipment sector. The export demand model therefore finds a significant positive impact of the TAFTA only on Australian exports to Thailand, but not vice-versa. The observed statistically insignificant impact of the TAFTA on Thai exports to Australia could be due to the limited impact of the TAFTA on trade barriers in Australia, as Thai exporters already enjoyed low tariffs prior to implementation of the TAFTA. The insignificant income effect observed in presence of TAFTA confirms that the TAFTA agreement had no impact on Thailand’s demand for Australian exports even while the Australian economy was growing. The results imply that Australia and Thailand’s membership with the same country in three different FTAs (bilateral, regional and cross-regional) could throw up additional challenges of utilization of these agreements for actual business purposes in the near future.

The Future Development of EU Exports in a Global Context

Global trade patterns are changing rapidly. Emerging economies are increasing their share of exports overall and intensifying competition in nearly all sectors. Using a gravity-based approach, this report examines the future profile of European Union (EU) world market shares at the aggregate and sectoral level. It further points towards the changing patterns of trade within the EU. Based on the results, some conclusions on EU industrial policy are drawn.

Crime Scene Reconstruction: Online Gold Farming Network Analysis

Many online games have their own ecosystems, where players can purchase in-game assets using game money. Players can obtain game money through active participation or “real money trading” through official channels: converting real money into game money. The unofficial market for real money trading gave rise to gold farming groups (GFGs), a phenomenon with serious impact in the cyber and real worlds. GFGs in massively multiplayer online role-playing games (MMORPGs) are some of the most interesting underground cyber economies because of the massive nature of the game. To detect GFGs, there have been various studies using behavioral traits. However, they can only detect gold farmers, not entire GFGs with internal hierarchies. Even worse, GFGs continuously develop techniques to hide, such as forming front organizations, concealing cyber-money, and changing trade patterns when online game service providers ban GFGs. In this paper, we analyze the characteristics of the ecosystem of a large-scale MMORPG, and devise a method for detecting GFGs. We build a graph that characterizes virtual economy transactions, and trace abnormal trades and activities. We derive features from the trading graph and physical networks used by GFGs to identify them in their entirety. Using their structure, we provide recommendations to defend effectively against GFGs while not affecting the existing virtual ecosystem.

Divergent patterns in Indian Ocean trade to East Africa and southern Africa between the 7th and 17th centuries CE: The glass bead evidence

Glass beads form a large part of archaeological evidence attesting to Indian Ocean trade with eastern Africa between the 7th and 17th century CE, but they have generally been under-utilized by archaeologists in their efforts to understand and interpret that trade. Research in the past decade has identified seven bead series that were present in southern Africa during this time span, and chemical analysis has opened windows on the origins of the glasses used to make the beads. Together they facilitate the recreation of the changing trade patterns that will be explored here. In addition, the differences between the bead assemblages found on the northern and southern ends of the coast and the interior demonstrate that the two regions appear to have had different trade relations. The beads suggest that trade, or at least the trade in beads, to the south was never completely controlled by the north and at times may have been quite separate.

The British commercial houses in Peru and Chile between the two world wars: success and failure

The previously successful British merchant houses on the west coast of South America faced significant problems between the two world wars. Earlier historians have referred to difficulties such as the volatility of commodity prices, the organisation and structure of the firms, and changes in patterns of trade. This paper, instead, compares their different experiences on the basis of archives from the merchants and their banks, concluding that their response to crisis differed, depending on the manner and extent of diversification, their core expertise, the quality of their management, and the support of their banks. The outcomes varied from outright failure to continued growth, with the two largest firms struggling to survive and adapt to the new business environment.

Impacts of the Arab Spring on trade in airline services

ABSTRACTThis article examines the impacts of the ‘Arab Spring’ on trade in air services between the various North African and Levant countries involved. Studies of the implications of these socio-economic changes on trade in the region are made difficult because of a paucity of good economic data and the involvement of outside countries in the trade that now takes place. The number of international airline seats available provides a partial and fairly reliable variable to examine trade patterns. The analysis looks at changes in patterns of trade in these services between 1997 and 2013.

Food security in the context of climate change and bioenergy production in Tanzania: methods, tools and applications

A dramatic population growth is projected for the least developed countries of the world (United Nations 2013), which will also suffer disproportionally from ongoing and predicted climate disruptions (IPCC 2013). More frequently occurring extreme weather events have led to yield losses and decreasing cattle populations—aggravating an already precarious situation and leading to critical food shortages. Food security is a function of food availability, food accessibility, food stability and food utilisation (FAO 2002; Ziervogel and Ericksen 2010). Climate change and population growth are seen as key drivers of food insecurity severely affecting farming systems (Muller et al. 2011; Haberl et al. 2011, Strengers et al. 2010), as well as the global energy demand and therefore induced biofuel production (Von Braun 2007a), changing trade patterns through liberalisation and globalisation (Von Braun 2007b; Lotze-Campen et al. 2010), and the state of health of the population (10–20 % AIDS rate in East Africa). Cause– effect chains, in which food security is involved (droughts– diseases–health–human capital), are also drivers over large regions (Ziervogel and Ericksen 2010). Most of these drivers do not only lead to a productivity decline, but also often result in a degraded natural resource base and declining soil fertility (Graef et al. 2000). Rapidly changing framework conditions (Muller 2011) require a thorough understanding of integrated food systems and targeted incorporation of region-specific innovations. However, creating a sustainable road map for the future is a huge challenge for a variety of reasons. Mainly rainfed, subsistence-oriented smallholder farming systems are not only extremely vulnerable to a changing and unpredictable climate, but often also lack access to external inputs, institutional support and adaptive capacity. Moreover, food insecurity is often regarded as insufficient food availability which is only part of the picture. Instead of solely focussing on boosting crop yields, the highly complex state of vulnerability needs to be addressed encompassing economic and sociopolitical factors (Misselhorn 2004; Pretty et al. 2006). Also, increased bioenergy production has fuelled land use conflicts and lead to largescale deforestation due to the growing international demand for biofuels. Biomass is still the primary source of energy in developing countries—important for income, energy supply, poverty reduction and self-sufficiency of rural communities (Harvey and Pilgrim 2011; Mitchell 2011; Tilman et al. 2009). Effective climate change adaptation and food security intervention strategies need to pursue a holistic approach and an array of objectives: social and economic viability, soil health, minimum use of scarce water and fossil energy, affordable and low external inputs, improvement in infrastructure and market access, as well as conservation of natural resources and biodiversity. To achieve positive impacts and sustainable solutions, international research projects increasingly focus on integrated in-depth analysis of the food system itself and its core elements: (a) natural and human resources, (b) the use of Disclaimer The views expressed are purely those of the authors and may not in any circumstances be regarded as stating an official position of the European Commission.

Historical trade integration: globalization and the distance puzzle in the long twentieth century

In times of ongoing globalization, the notion of geographic neutrality expects the impact of distance on trade to become ever more irrelevant. However, over the last three decades a wide range of studies has found an increase in the importance of distance during the second half of the twentieth century. This paper tries to reframe this discussion by characterizing the effect of distance over a broader historical point of view. To make maximal use of the available data, we use a state-space model to construct a bilateral index of historical trade integration. Our index doubles to quadruples yearly data availability before 1950, allowing us to expand the period of analysis to 1880–2011. This implies that the importance of distance as a determinant of the changing trade pattern can be analyzed for both globalization waves. In line with O’Rourke (Politics and trade: lessons from past globalisations. Technical Report, Bruegel, 2009) and Jacks et al. (J Int Econ 83(2):185–201, 2011), we find that the first wave was marked by a strong, continuing decrease in the effect of distance. Initially, the second globalization wave started out similarly, but from the 1960s onward the importance of distance starts increasing. Nevertheless, this change is dwarfed by the strong decrease preceding it.

The Formation of Russian Agrarian Trade Structure: Inter-industry vs. Intra-industry Trade Activities

The paper is focused on specialization of Russia’s foreign trade in agrarian products and foodstuffs in terms of inter-industry and intra-industry trade. The main objective of this study is to analyse the extent of intra-industry trade in Russia’s foreign trade in agricultural products and to identify significant changes in trade patterns at the industry level over the transformation period (1996–2012).The results coming from individual conducted analyses provide a systematic decomposition of Russia’s foreign trade into three trade types: inter-industry, intra-industry in horizontally and vertically differentiated products. Inter-industry type of trade dominates in Russian foreign trade in agricultural and food products and accounts for about a third of total trade flows. The analysis revealed significant differences in the intensity of intra-industry trade, depending on geographic region. The lowest level of intra-industry trade is observed in relation to Africa and South America, the highest - in relation to CIS countries. There were also found some trends, including the expanding intra-industry trade in relation to the CIS countries, as well as a decrease in relation to Asian and EU countries.

Trade Openness and Spatial Inequality in Emerging Countries

Emerging world countries have experienced over the last two decades a significant change in their trade patterns. Bold trade reforms have been followed by rapid rises in international trade levels. However, despite these radical changes, we know remarkably little about how changes in trade patterns are affecting the evolution of regional inequality in the developing world. This paper addresses the link between trade openness and spatial inequality across 22 emerging countries over the period between 1990 and 2006. Our findings show that changes in international trade bring about a significant rise in within-country inequality across the developing world and that this impact is greatest in the poorest countries. This result is robust to the inclusion of a number of control variables, and to changes in the specification of the sample and in the measure used to quantify the level of regional disparities. Consequently, the increase in trade exposure across the emerging world, while possibly benefiting the countries involved in the process in aggregate terms, is generating winning and losing regions.

Impact of Growth on Factor Endowment and Structure of India’s Trade

The paper aims at empirically validating the inter relations between changing factor endowment, structure of trade and Indian economy. Heckscher-Ohlin theory of international trade envisages that a country specialises in the production and export of such goods as conform to its factor endowment. It generally imports goods, the production of which does not conform to its factor endowment. The theory, like the classical comparative cost theory, uses static analytical framework. Among others, an assumption of the theory is that the factor endowment does not change, and therefore, the pattern and composition of its trade remains stable. Classical and neo classical theories also assumed that such factors of production as land, labour and capital are immobile between countries but mobile within countries. Goods are, however, assumed to be totally mobile both within and between countries. An implication of the assumption is that the relative supply of labour and capital cannot be altered by imports and exports of these factors. This assumption also implicitly rules out the pattern of growth to alter factor endowment of the economy. Economic growth, however, leads to the transformation of not only the pattern and structure of production but it also transforms factor endowment. It brings about drastic changes in the quantum, pattern and structure of international trade of an economy. Even if the pattern of trade and factor endowment were initially consistent with each other, these will diverge with each other as a consequence of growth. Factor endowment also changes with growth and developing economies focus mainly on industrialisation. Imports of goods in the early stages of growth are replaced by domestic production and some of these goods enter even export basket thus initial factor endowment will guide the import of capital intensive goods, special capital goods and export of labour intensive goods in the initial phase of growth . This argument forms the basis of this paper. The main hypothesis of investigation in this paper is that there exists an interrelation between changing factor endowment, changing pattern of trade and the production structure of a developing economy like India. The past factor endowment governs the current exports structure and the current exports structure governs the future factor endowment of the country and

Growth in Densely Populated Asia: Implications for Primary Product Exporters

AbstractEconomic growth and integration in Asia is rapidly increasing the global economic importance of the region. To the extent that this growth continues and is strongest in natural resource‐poor Asian economies, it will add to global demand for imports of primary products, to the benefit of (especially nearby) resource‐abundant countries. How will global production, consumption and trade patterns change by 2030 in the course of such economic developments and structural changes? We address this question using the GTAP model and Version 8.1 of the 2007 GTAP database, together with supplementary data from a range of sources, to support projections of the global economy from 2007 to 2030 under various scenarios. Factor endowments and real gross domestic product are assumed to grow at exogenous rates, and trade‐related policies are kept unchanged to generate a core baseline, which is compared with an alternative slower growth scenario. We also consider the impact of several policy changes aimed at increasing China's agricultural self‐sufficiency relative to the 2030 baseline. Policy implications for countries of the Asia‐Pacific region are drawn out in the final section.