Export Demand Functions Research Articles

Export Demand of Non-Timber Forest Products: A Case Study of Cinnamon Products in Indonesia

Indonesia is a major cinnamon (Cinnamomum sp.) exporting country in the world. Previous research generally measured the information on competitiveness. To improve performance, export demand behavior should also be known. This study aimed to estimate Indonesia’s cinnamon export demand function. The panel data model was investigated using panel data exports to 11 country destinations from 2010 to 2020. The classical assumption test of heteroscedasticity and autocorrelation and the model specification test were conducted. The results show that the export demand function can be represented well by the fixed-effects model, which explains about 96% of its variance. The obtained income and price elasticities were 1.08 and -0.30, indicating normal goods with inelastic export demand. It implies that countries with high-income growth should be prioritized in export expansion, and raising an export price might be a good policy option. Research on global supply chains and price volatility is needed. In addition, this study results in formulating policies related to developing the cinnamon product industry and trade. Keywords: Cinnamomum sp., data regression, demand, export, function panel

How Does the Inflow of Tourism Affect the Agricultural Exports of India?

The empirical relationship between tourism inflow and international trade has been explored during recent years, supporting the argument that international tourism inflow promotes international trade between countries. However, the impact of international tourism inflow on agricultural exports has been neglected within standard agricultural trade models such as agricultural exports function and gravity model. The main aim of the article is to provide theoretical and empirical evidence that international tourism inflow matters for agricultural trade. The study uses an agricultural export demand function and augmented gravity model to examine the impact of tourism inflow on agricultural exports of India from the top 10 importing countries for the period 2000–2019. The agricultural trade model is estimated using random effect and fixed-effect model. To overcome the problem of panel heteroscedasticity and autocorrelation, it uses the panel corrected standard error model. Further, potential endogeneity is treated by using a 2SLS model. The empirical evidence confirms the significant and positive impact of tourism inflow on agricultural exports of India. JEL Codes: F1, Q17, Z30

Estimation of an ARDL (m, p, q, r, s) Model to Determine the Long-run Effects of World Income, Relative Price, Real Exchange Rate and Employment on Export Demand for the Garment Sector of Bangladesh

In this paper, an ARDL (m p, q, r, s, s) log-linear export demand function is estimated to find the long-run impacts of world income, relative price, real exchange rate, and employment on exports of the garment sector of Bangladesh using modern econometric techniques based on time series data from 1979-2020. Long-run significant relationships among exports, relative price, real exchange rate, world income and employment are found. The VEC model's estimated results indicate short-run bidirectional causalities between different pairs of variables. The long-run causalities are found while exports and employment are the endogenous variables. The estimated results indicate that both long-run and short-run exports are influenced positively and significantly by world income. Relative price, real exchange rate and employment carry negative signs for both long-run and short-run in which the effects of relative price and real exchange rate are statistically significant in the long run which implies that a 1% decrease in relative price, exports will increase by 1.256%. It is found that the coefficient of ECM(-1) is -0.9705 which is statistically significant at any significance level, suggesting that when the export value is above its equilibrium level, it will adjust about 97.05% within the first year. The full convergence process to reach the equilibrium level takes more than a year. Thus, this study will help the economists, policymakers and stakeholders of the garment sector of Bangladesh to predict the dynamics of export demand due to changes in world income level, relative price, real exchange rate and employment.

우리나라 주요 수출산업과 농식품산업의 수출결정요인 비교 분석

The global economy is slowing down significantly due to the Russia-U.S. war, rising raw material prices, and global monetary tightening, and the localization of global value chains and global supply chains is actively progressing, especially in countries that have been unstable in global supply chains due to global economic uncertainties. Against this backdrop, strengthening the agricultural base through agricultural exports needs to seek ways to strengthen competitiveness to foster agriculture as a new export industry as it can secure stable sources for major foods that are highly dependent on imports, including food resources, and can be a new opportunity to increase exports of agricultural and fishery foods. In this study, the export demand function of each major industrial group in Korea is estimated and compared with the determinants of export demand for agricultural products. As for the analysis target period, the top 10 exporting countries in Korea were set as analysis target countries for annual data from 1995 to 2022. In summary, it can be seen that factors affecting exports differ by industry group, and factors affecting the export of agricultural products are affected by the trade partner's gross domestic product, per capita gross domestic product, relative price index with trading partner, R&D investment, comparative advantage index by trading partner for specific products, and FTA signing or not.

한국수출입은행의 공적수출금융지원이 한국의 수출에 미치는 영향 연구

Purpose – The purpose of this study is to analyze the impact of official export finance supported by the Export-Import Bank of Korea on Korea's exports. In particular, in order to differentiate from previous studies, the detailed size, as well as the long-term and short-term effects of export financing support on exports, were analyzed. Design/Methodology/Approach – In this analysis, an Export Demand Function Model was introduced. Prior to the empirical analysis, a unit root test and cointegration test were conducted. As a result of the pretest, it was found that the variables included in the analysis were I (1), and the cointegration vector did not exist. Based on these results, a Vector Autoregressive (VAR) model was established. Findings – As a result of estimating the impulse response function, it was found that when an official export finance shock was applied, exports gradually increased from the time of the shock to the third period, and then the increase slowed and converged to zero. As a result of the variance decomposition analysis, the export financing support amount began to show explanatory power in export fluctuations from the second period, and showed about 2.5% explanatory power from the third to the tenth period. Research Implications – It was confirmed that export finance provided to exporting companies plays an important role in helping to promote exports. Therefore, the government and financial institutions should support exporting companies by providing active export financing support, along with export promotion policies.

The relevance of Thirlwall’s growth law in the Zambian economy

AbstractThis paper uses a blended methodology—conventional tests of ‘Thirlwall's law’ combined with an in‐depth growth narrative approach and unit root tests—to identify the dominant balance‐of‐payments adjustment mechanism in the Zambian economy over the period 1956–2017. Consistent with Thirlwall's growth law, the main results identify income changes as the dominant balance‐of‐payments adjustment mechanism, rather than relative price changes. The three‐regime export demand function further reflects the vulnerability of the Zambian economy to unexpected busts in the world copper market, and highlights the need for effective industrial policies to create a more diversified economy into higher value‐added manufactures. The analysis also demonstrates that the results are robust to some of the main criticisms that have been levelled against Thirlwall's original growth law.

우리나라 주요 산업군별 수출수요 결정요인 비교 분석

After COVID-19, supply chain management problems were exposed in the global economy. As a way to prevent this, each country has established a strategy to pursue supply chain localization that expands domestic production from food to strategic products for efficient supply chain management.
 In this study, the export demand function was used to analyze the export determinants by industry by dividing 10 industries of Korea's total exports from 1995 to 2021 for 10 major export destinations. In particular, it was intended to propose a plan to expand agricultural exports in the mid- to long-term by comparing general manufacturing products with agricultural products through empirical analysis.
 As a result of the analysis, it was found that there were differences in factors affecting exports by industry. In particular, in the case of exports of agricultural, forestry and fisheries products, the total production of trading partners, the price of Korean export goods, and whether or not an FTA was signed had a significant impact at the 1% significance level. Although Korea's agriculture accounts for a low proportion of gross domestic product, it is evaluated as a field with various functions at various levels, such as food security and sustainable environmental conservation.
 In the recent growth process of the global agri-food market in the global economy, Korea's agri-food sector is emerging as a blue ocean field. In order to expand the export sector of Korean agricultural products, a national strategy should be established to efficiently combine the roles of agricultural producers, exporters, and the government.

U.S. Almond Exports and Retaliatory Trade Tariffs

The U.S. is the top producer, exporter, and consumer of tree nuts in the world. Tree nuts are a significant part of U.S. agricultural exports to the world. In 2019, the U.S. exported about USD 9.1 billion worth of tree nuts, just behind soybean exports at USD 18.7 billion. Tree nuts, such as almonds and pistachios, are mostly produced in the state of California. California produces 100% of U.S. commercial almonds. Globally, almonds are the leading U.S. tree nut export in both value and volume. Almonds are shipped to over 90 countries annually. This study aimed to investigate factors affecting the export demand function for U.S. almonds in major destination countries and evaluate the impact of the retaliatory trade tariffs policy by some of the importing countries on the U.S. almond exports. The currently available literature does not fully address these issues. We identified the top five almond export destinations, which were in Europe and Asia, namely, China/Hong Kong, Germany, India, Japan, and Spain, which account for more than 50% of U.S. almond imports. We used a double-log export demand equation that is well referenced in the literature and economic theory to identify the significant explanatory variables affecting the U.S. almonds export demand function. We also tried to estimate the impact of retaliatory tariffs on almond exports imposed by the major importing countries. Our results showed that U.S. almond and pistachio prices, real exchange rates, and gross domestic products of importing countries were significant factors that affected U.S. almond exports. The results showed that the imposed retaliatory tariffs had no negative effect on U.S. almond exports. This could have been because the study ended in 2019 and did not involve enough data to fully evaluate the impact of the retaliatory trade tariffs policy. U.S. almond exports have market concentration and strong market power in international markets. The efforts toward more sustainable production of almonds to solidify an already established market share in the world almond markets and against substitutes, such as pistachios, seem to be a sound strategy and focus of the U.S. almond agribusinesses and exporters.

Determinants of Exports in a Small and Vulnerable Economy: Fiji Islands-A Disaggregated Analysis.

The previous studies of exports performance in Fiji were carried out at the aggregate level. We conduct a disaggregated analysis of exports of three major products, namely, sugar, tourism, and gold. This analysis is useful for developing sector-based export promotion policies. The long run as well as dynamic export demand functions are estimated at the aggregate and disaggregate levels. The results identify a number of factors such as trading partner income, relative prices, productivity shocks, natural disasters, political disturbances, and the exchange rate that affect the export demand for sugar, tourism, and gold, though not in the same way. For instance, tourism and sugar enjoy the highest income elasticity. Sugar export is adversely affected by natural calamities and political upheavals. The political upheavals also affect tourism adversely in Fiji. The exchange rate affects the export of sugar more than others. The idea that devaluation will promote exports in Fiji needs careful investigation because results show that this will happen with a high cost, i.e. 5% nominal devaluation will be required to increase real exports by 1%.

The importance of selected structural competitiveness indicators for exports : a comparative analysis between the euro area and Greece

Structural (non-price) competitiveness departs from price or cost competitiveness and captures a multitude of dimensions, both quantitative and qualitative, affecting the trade and openness of a country. Greece over time has lagged behind in key structural competitiveness indicators relative to other euro area countries, but has improved its position in some of the indicators in the recent years, in terms of relative prices and unit labour costs. The paper examines the evolution of selected price and structural competitiveness indicators approximated with institutional quality indicators (published by international organisations), recording the performance of Greece and euro area countries over the last decade, on an annual basis, in order to gain more insight into how exports are affected. A panel regression of an export demand function is estimated for the 19 euro area member countries, separately for each of the selected indicators. It is confirmed that structural competitiveness, along with price competitiveness, has played an important role in determining exports in the euro area and in Greece over the 2007-19 period. Greater sensitivity of Greek exports to institutional quality indicators is found, compared with average euro area exports. This is an indication of the faster pace of reform implementation in other euro area countries, while the reforms in Greece are in a process of catching up. The implementation of structural reforms in the direction of improving institutional deficiencies has contributed, among other factors, to the observed post-crisis export-led growth in Greece. In conclusion, the pace of reforms already under way should be accelerated and this will be mirrored in the structural competitiveness indicators of the country and expressed as better scores and higher rankings converging towards the performance of the other euro area countries.

An Analysis of the Effects of Agricultural Export Determinants on Export Expansion

Purpose - Globalization has made it possible to divide and specialize across borders, and efficiency-oriented production and consumption have become mainstream. In particular, following COVID-19, the global supply chain has faced a crisis, promoting the localization of supply chains that expand domestic production, and focusing on daily necessities, national strategic products, and food. This study recognizes the structural changes in the agricultural product market in the process of promoting globalization and attempts to estimate the effect of the determinants of the export of agricultural products in Korea on exports. Design/Methodology/Approach - This study aims to analyze the effect on the export of agricultural products by deriving export demand factors for Korean agricultural products from 1996 to 2019 targeting 28 countries that have signed FTAs with Korea. As for the analysis method, the most generalized panel analysis is used to analyze time series data and cross-sectional analysis data. Findings - As a result of estimating the export demand function of agricultural products, it was estimated that the other nation s income (GDP), per capita income (PGDP), exchange rate (EXR), and free trade agreement (FTA), which are determinants of agricultural exports, affected Korea s agricultural products. In particular, it was found that a Free Trade Agreement (FTA) greatly contributed to the expansion of agricultural exports. However, contrary to the analysis expectations, it was analyzed that the relative price index (REPRI) did not directly affect exports. Research Implications - This study derives the most representative variable among the export determinants on the export of Korean agricultural products covered in previous studies whether it actually affects export expansion. Based on the estimated results, it is meaningful in that it presented the necessity of exporting agricultural products to improve income and competitiveness in the domestic agricultural sector.

Estimation of Indonesia Wooden Furniture Export Demand Function

The export value of Indonesia’s wooden furniture was sharply decreased by about 31.9% over the period in 2007-2018. On the other hand, global wooden furniture export was increased by 5.8% during the same period. Understanding the behavior of the demand side of Indonesia’s wooden furniture exports that is reflected by its relative price and income elasticities is needed for the policy development of Indonesia’s wooden furniture industry in the future. The objective of this study was to estimate the export demand function of Indonesia wooden furniture using a panel data regression model. Three types of panel data models, such as pooled ordinary least squares model, fixed-effects model, and random effects model, were investigated. The results showed that the export demand function of Indonesia wooden furniture could be well estimated using the fixed effects model. Relative price elasticity and income elasticity were -0.45 and 0.8, respectively. The adjusted R2 value obtained was 0.99. Keywords: export demand function, panel data regression, wooden furniture

Determinants of Export Demand Function for Malawi Tobacco

This paper examines the export demand function of Malawi tobacco using panel data from 1997 to 2019. It estimates the relationship of tobacco quantity exported with Malawi’s export price, competitor’s export price, Gross Domestic Product (GDP), Real effective exchange rate (REER) as well as the impact of the World Health Organization’s (WHO) Framework Convention on Tobacco Control (FCTC). A double log fixed effects model with driscoll- kraay standard errors as well as fixed effects model with Least Square Dummy Variables (LSDV) model was used for empirical estimation. The empirical results confirmed that there exists a significant relationship among Malawi tobacco export demand, trade partner’s real income and export price. Furthermore, REER was elastic, while own price and cross price elasticities were less than zero. The results indicated that Malawi should take advantage of the high incomes of the tobacco importing countries to enhance international market share.

Estimation of the export demand function (for example, Russia’s trade with Germany

The authors of this scientific article propose an approach that allows to describe the dependence of the export dynamics of the studied exporting country on the socio-economic state of the importing countries, followed by modeling and forecasting the export development of the studied country, taking into account the analysis of various scenario conditions for the development of the world economy. Within the framework of this scientific article, we also provide our own methodological development of a criterion for the eff ectiveness of a country’s export, based on the formula used by the Federal Statistical Office of Germany for assessing the eff ectiveness (productivity) of a country’s export using our hypothesis about the relationship between the socio-economic state of importing countries and the dynamics of the country’s export volumes — exporter.

An Analysis on the Determinants of Agricultural Export due to the FTA: Focused on Korea-EU and Korea-EFTA

Purpose - The global agricultural trade market is an area where practical obstacles exist to simply compare comparative advantages by trading products that reflect the characteristics of each country’s natural and geographical conditions. In particular, agricultural products are not only the characteristics of economic goods like other goods, but also the trade between diverse industries such as food security and sustainable environment preservation, which can be interpreted in various ways. In the case of the European Union (EU), a joint policy on agricultural products is being pursued, and the European Free Trade Association (EFTA) is also classified as an area where the agricultural market plays a major role. Design/methodology/approach - This study examined the current status of agricultural trade between the EU and the EFTA among the signed free trade agreements and derived determinants for securing the competitiveness of Korea’s agricultural exports. The analysis method was analyzed using the export demand function using the panel data. Findings - Analysis shows that the free trade agreement between the EU and the EFTA has been put into effect, which has a positive impact on exports. It can be interpreted that agricultural products accounted for a relatively high proportion of the total export volume. The export effect is interpreted as a result of the easing of non-tariff barriers in the agricultural sector in addition to tariff rate cuts through the conclusion of the free trade agreement. Research implications or Originality - In order to export Korea’s agricultural products in the future, export expansion measures should be introduced in terms of easing non-tariff barriers in addition to tariffs.

Determinants of coffee export in Ethiopia: an application of co-integration and vector error correction approach

Purpose. The study aimed to analyze the determinants of coffee export through the variables of coffee production, trade openness, world coffee export in tone, population and export prices for the period of 1977–2016 for 38 observations. 
 Methodology / approach. The co-integration approach was employed to investigate the long-run causal association between Ethiopian coffee export in kg and export price, world coffee export level, population and coffee production, trade openness. The coffee export demand functions in Ethiopia were estimated using co-integration analysis and Vector Error Correction Models.
 Results. The co-integration result confirmed the existence of a long-run relationship between Quantity Ethiopian coffee exported and export price, coffee production world export coffee in tone and population size of age between 15 to 64. The analysis pointed out that in the long run the extent of Ethiopia coffee export inversely related to coffee production in the country and world coffee supply in tone and directly related to export price and population size of active aged category. The speed of adjustment was estimated to be 24 % that implied the economy will converge towards the long run equilibrium in approximately one year following a shock. 
 Originality / scientific novelty. The empirical analysis indicated the existence of short term causal link from lagged export level of coffee, population size of active labour force, trade opens and export price towards export in the coffee export model. In short run Ethiopian coffee export defined as positive function of trade opens and negative function of lagged year coffee export in tone, export price and population size of active labour force in the country. 
 Practical value / implications. The policy implication of the time series analysis calls for improved works on value addition and productivity improvement to respond for soaring national and international demand and betterment in trade relation with nations abroad that expected to optimization of the organic attributes of Ethiopian coffee in sustainable manner. The Vector Error Correction Model also indicated a significant short-run as well as long run relationship between changes in exports and changes in export price and population size.

A semi-endogenous growth model with public factors, imported capital goods, and limited export demand for developing countries

ABSTRACTWe build a semi-endogenous growth model for developing countries with non-rivalrous public factors, imported capital goods, and an export demand function. The model exhibits the three-way interaction between public and private investment and trade shown recently in the empirical literature. A parameter for government-investment inefficiency has transitional growth effects distorting between public investment and private capital, consumption, and exports, the latter biasing the terms of trade. Our analysis of a vector error-correction model (VECM) for Trinidad &Tobago shows that additional expenditure for public investment increases output less than taxes decrease per capita consumption and therefore is sub-optimal there. Both temporary and permanent shocks on public investment have level effects supporting semi-endogenous growth modeling and demonstrate that the VECM effects are in line with the logic of the theoretical model; terms of trade are endogenous.

Determinants of Export Service in Selected West African Countries

This study empirically tries to investigate the determinants of export service in selected West African countries (Ghana, Benin, Cote d'Ivoire, Gambia, Mali, Niger, Sierra Leone, Togo, Nigeria and Burkina Faso). The study adopted the export demand function introduced by Bahmani-Oskooee (1986) with little additions and modifications of variables based on the reviewed literature. It was discovered from the empirical results that the value added by the services has no impact on service export. However, variables such as foreign direct investment, communication facilities, real exchange rate, and foreign income level possesses a significant robust impact on export trade in services in the selected countries. These countries should therefore widen their opportunities to strive in exporting services worldwide. This can be materialized by exploiting their potentials with relative competitiveness and reasonable negotiations in the global export markets.

Impact of Import and Export on GDP of Egypt: Application of ARDL Model

This paper examines the applications of Autoregressive Distributed Lag (ARDL) model in the analysis of Egypt’s import and export data concerning the consequential impacts on the country’s Gross Domestic Product (GDP) between 1980 to 2010 years. Given that exports and imports significantly impact the economic status of Egypt through the balance of payment, it is therefore vital for policymakers to adequately comprehend and understand the factors affecting the revenue of the country’s economy. The study provides a wide range of elasticity estimates made from the data collected in the field. Moreover, this paper seeks to examine the current estimated import and export demand function for Egypt by employing the ARDL approach using the Eviews program. The results from ARDL approach analysis agrees with the hypothesis that Egypt has a long run relationship with export, import demand, economic growth prices of exports and imports, and volatility of an actual effective exchange rate in the market. Therefore, the imports and exports in Egypt are affected by the country’s GDP. Hence it is growth driven.

A Study on Trading partner’s Time Varying GDP Effect on Export

본 논문은 교역 상대국의 소득이 우리나라의 수출에 미치는 영향에 대해 분석하였다. 우리나라의 주요 교역상대국, 43개국의 1991년부터 2016년까지의 패널자료를 사용하여 함수계수패널모형으로 ‘수출함수’를 설정하고 수출에 대한 소득의 영향을 소득계수로 추정하였다. 추정된 소득계수의 변화 요인을 소득수준과 시간으로 분해한 결과, 소득계수는 시간에 따라 상승하고, 그 상승 정도가 감소하는 형태를 보이고, 저소득 국가일수록 상승하는 기울기는 컸다. 이러한 추정결과는 기술발전 등으로 각종 무역장벽들이 약화되면서 교역이 활발해지는 현상(소득계수의 상승)과 국제분업화의 심화로 저소득 국가들, 특히 중국과 동남아 국가들과의 중간재 교역이 활발하게 일어나는 현상(저소득국가의 큰 기울기)으로 설명할 수 있었다. 본 논문의 연구결과는 소득의 수출유발효과의 변화를 요인별로 제시했다는 측면에서 의미가 크며, 추정결과는 국가별 수출 장기전망이나 국가별수출전략을 세우는데 참고자료로 활용될 수 있을 것이다.This paper investigates the relationship between the GDP per capita (GDPPC) of Korea’s trading partners and Korean exports. We model export demand functions using a functional coefficient panel model using panel data from 1991 to 2016 with 43 partner countries. The GDPPC coefficient of our model is a function both of time, allowing temporal changes in an otherwise linear model, and of the GDPPC itself. Estimated income coefficients increase over time but that the degree of increase gradually decreases. Furthermore, for lower-income nations, the slope of increase was found to be greater. These results can help explain how trade increases as technological developments break down trade barriers (increases of income coefficient), and active trade in intermediary goods with China and Southeast Asian nations (high slope in low-income country). Our empirical results could be profitably referenced in coordinating long-term export policies aimed at specific countries or blocs.