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The role of price and nonprice factors in predicting Australia's trade performance

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  • Kishor Sharma
  • Pemasiri J. Gunawardana
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    Abstract

    This article investigates the role of price and nonprice factors in predicting Australia's trade performance. Results broadly suggest that Australia's trade performance is largely explained by the nonprice factors namely, R&D, reliability of domestic supply, aggregate world demand and Foreign Direct Investment (FDI) flows in long run. Price factors such as, relative price of Australian exports and domestic prices are also important predictors of trade competitiveness. The policy implications of these findings are that there are dividends in terms of improved trade performance by encouraging R&D expenditure, attracting FDI, improving domestic supply and implementing appropriate policies to improve price competitiveness.

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    File URL: http://hdl.handle.net/10.1080/00036846.2011.566193
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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Applied Economics.

    Volume (Year): 44 (2012)
    Issue (Month): 21 (July)
    Pages: 2679-2686

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    Handle: RePEc:taf:applec:44:y:2012:i:21:p:2679-2686

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    Web page: http://www.tandfonline.com/RAEC20

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    Web: http://www.tandfonline.com/pricing/journal/RAEC20

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    1. Greenhalgh, C. & Taylor, P. & Wilson, R., 1991. "Innovation and Export Volumes and Prices- A Disaggregated Study," Economics Series Working Papers 99107, University of Oxford, Department of Economics.
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    3. Antoine Magnier & Joël Toujas-Bernate, 1994. "Technology and trade: Empirical evidences for the major five industrialized countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 130(3), pages 494-520, September.
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    5. Krishna Iyer & Alicia Rambaldi & Kam Ki Tang, 2009. "How trade and foreign investment affect the growth of a small but not so open economy: Australia?," Applied Economics, Taylor & Francis Journals, vol. 41(12), pages 1525-1532.
    6. Wilkinson, Jenny, 1992. "Explaining Australia's Imports: 1974-1989," The Economic Record, The Economic Society of Australia, vol. 68(201), pages 151-64, June.
    7. Hughes, Kirsty S., 1986. "Exports and innovation: A simultaneous model," European Economic Review, Elsevier, vol. 30(2), pages 383-399, April.
    8. Lawrence Edwards & Robert Z. Lawrence, 2006. "South African Trade Policy Matters: Trade Performance and Trade Policy," NBER Working Papers 12760, National Bureau of Economic Research, Inc.
    9. George Halkos & Nickolaos Tzeremes, 2008. "Trade efficiency and economic development: evidence from a cross country comparison," Applied Economics, Taylor & Francis Journals, vol. 40(21), pages 2749-2764.
    10. Ruhul Salim & Harry Bloch, 2009. "Business expenditures on R&D and trade performances in Australia: is there a link?," Applied Economics, Taylor & Francis Journals, vol. 41(3), pages 351-361.
    11. Krugman, Paul, 1983. "New Theories of Trade among Industrial Countries," American Economic Review, American Economic Association, vol. 73(2), pages 343-47, May.
    12. Fagerberg, Jan, 1988. "International Competitiveness: Errata," Economic Journal, Royal Economic Society, vol. 98(393), pages 1203, December.
    13. Fagerberg, Jan, 1988. "International Competitiveness," Economic Journal, Royal Economic Society, vol. 98(391), pages 355-74, June.
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