Title

Three essays on the mobility and determinants of trade patterns

Date of Award

2005

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Economics

Advisor(s)

Mary E. Lovely

Second Advisor

Devashish Mitra

Keywords

International trade, China, Mobility, Trade patterns

Subject Categories

Economics | International Economics | Social and Behavioral Sciences

Abstract

My thesis empirically investigates the dynamics and determinants of trade patterns, with a special emphasis on the role of emerging economies. In Chapter 1, I find that trade patterns associated with developing countries exhibit higher mobility than trade patterns associated with developed countries. Econometrically, I show that the existing empirical literature is marked by a misinterpretation of transition matrices used to measure the mobility of trade patterns. I also propose two different econometric strategies to get valid conclusions about intra-distribution dynamics of trade patterns.

My second essay investigates how product differentiation and transport costs affect decisions of trading partners to make the following findings. First, when countries enter the U.S. market for the first time , they are more likely to become relatively important exporters in homogeneous products than in differentiated products. All countries in my sample are more likely to exit the export market in homogeneous products than in differentiated products. Also, after their exit, they are more likely to reenter the export market in differentiated products than in homogeneous products. Countries also are found to be more likely to exit the U.S. market and remain non-exporter to the U.S. market after their exit in high-transport-cost products than low-transport-cost products. Finally, independent of product differentiation and transport costs, countries are more likely to exit the U.S. market in sectors in which they have high revealed comparative disadvantages.

My third essay contributes to recent debates on the ability of the Heckscher-Ohlin model to explain trade patterns in a number of ways. First, it sets up a theoretical framework on which we can base the analysis of across-product and within-product specialization. Second, it shows that there is evidence of across-product specialization if we account not only for differences in relative factor endowments but also for differences in technology, economic size and the phenomenon of new products. Third, I show that it is China's trade pattern that is the explanation for Schott's finding of an increasing number of products simultaneously imported by the U.S. from low-wage, middle-wage , and high-wage countries. Finally and most importantly, the paper shows that if within-product specialization takes place, it is the high-wage countries that are the driving force behind it. In other words, differences in relative endowments do matter for within-product specialization of developed countries.

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