IDEAS home Printed from https://ideas.repec.org/a/eee/chieco/v34y2015icp261-273.html
   My bibliography  Save this article

Trade flows and trade specialisation: The case of China

Author

Listed:
  • Caporale, Guglielmo Maria
  • Sova, Anamaria
  • Sova, Robert

Abstract

Using annual data for the periods 1992–2012, this paper examines trade flows between China and its main trade partners in Asia, North America and Europe, and whether increasing trade has led to industrial structural adjustment and changes in China's trade patterns. The analysis is based on both economic indicators and the estimation of a gravity model, and applies recently developed panel data methods that explicitly take into account unobserved heterogeneity, specifically the fixed effect vector decomposition (FEVD) technique. The findings confirm the significant change in China's trading structure associated with the fast growth of foreign trade. In particular, there has been a shift from resource- and labour-intensive to capital- and technology-intensive exports.

Suggested Citation

  • Caporale, Guglielmo Maria & Sova, Anamaria & Sova, Robert, 2015. "Trade flows and trade specialisation: The case of China," China Economic Review, Elsevier, vol. 34(C), pages 261-273.
    • Handle: RePEc:eee:chieco:v:34:y:2015:i:c:p:261-273
    DOI: 10.1016/j.chieco.2015.03.010
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1043951X15000516
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.chieco.2015.03.010?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Mr. Vivek Arora & Mr. Athanasios Vamvakidis, 2004. "How Much Do Trading Partners Matter for Economic Growth?," IMF Working Papers 2004/026, International Monetary Fund.
    2. Eichengreen, Barry & Irwin, Douglas A., 1995. "Trade blocs, currency blocs and the reorientation of world trade in the 1930s," Journal of International Economics, Elsevier, vol. 38(1-2), pages 1-24, February.
    3. Yang, Shanping & Martinez-Zarzoso, Inmaculada, 2014. "A panel data analysis of trade creation and trade diversion effects: The case of ASEAN–China Free Trade Area," China Economic Review, Elsevier, vol. 29(C), pages 138-151.
    4. Greeven, M.J., 2004. "The evolution of high-technology in China after 1978: Towards technological entrepreneurship," ERIM Report Series Research in Management ERS-2004-092-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    5. repec:bla:reviec:v:9:y:2001:i:1:p:108-22 is not listed on IDEAS
    6. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    7. Bergstrand, Jeffrey H, 1985. "The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 474-481, August.
    8. Laszlo Matyas, 1997. "Proper Econometric Specification of the Gravity Model," The World Economy, Wiley Blackwell, vol. 20(3), pages 363-368, May.
    9. Helpman, Elhanan, 1987. "Imperfect competition and international trade : Opening remarks," European Economic Review, Elsevier, vol. 31(1-2), pages 77-81.
    10. Jeffrey A. Frankel, 1997. "Regional Trading Blocs in the World Economic System," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 72, April.
    11. Bergstrand, Jeffrey H, 1989. "The Generalized Gravity Equation, Monopolistic Competition, and the Factor-Proportions Theory in International Trade," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 143-153, February.
    12. Helpman, Elhanan, 1987. "Imperfect competition and international trade: Evidence from fourteen industrial countries," Journal of the Japanese and International Economies, Elsevier, vol. 1(1), pages 62-81, March.
    13. Ando, Mitsuyo, 2006. "Fragmentation and vertical intra-industry trade in East Asia," The North American Journal of Economics and Finance, Elsevier, vol. 17(3), pages 257-281, December.
    14. Keith Head & John Ries, 2001. "Overseas Investment and Firm Exports," Review of International Economics, Wiley Blackwell, vol. 9(1), pages 108-122, February.
    15. N/A, 2005. "The World Economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 191(1), pages 8-30, January.
    16. Enrico Marelli & Marcello Signorelli, 2011. "China and India: Openness, Trade and Effects on Economic Growth," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 8(1), pages 129-154, June.
    17. F. Gerard Adams & Byron Gangnes & Yochanan Shachmurove, 2006. "Why is China so Competitive? Measuring and Explaining China's Competitiveness," The World Economy, Wiley Blackwell, vol. 29(2), pages 95-122, February.
    18. Plümper, Thomas & Troeger, Vera E., 2007. "Efficient Estimation of Time-Invariant and Rarely Changing Variables in Finite Sample Panel Analyses with Unit Fixed Effects," Political Analysis, Cambridge University Press, vol. 15(2), pages 124-139, April.
    19. David Hummels & James Levinsohn, 1995. "Monopolistic Competition and International Trade: Reconsidering the Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(3), pages 799-836.
    20. Simon J. Evenett & Wolfgang Keller, 2002. "On Theories Explaining the Success of the Gravity Equation," Journal of Political Economy, University of Chicago Press, vol. 110(2), pages 281-316, April.
    21. Peter Egger & Michael Pfaffermayr, 2003. "The proper panel econometric specification of the gravity equation: A three-way model with bilateral interaction effects," Empirical Economics, Springer, vol. 28(3), pages 571-580, July.
    22. Xing, Weibo & Whalley, John, 2014. "The Golden Tax Project, value-added tax statistics, and the analysis of internal trade in China," China Economic Review, Elsevier, vol. 30(C), pages 448-458.
    23. Bahmani-Oskooee, Mohsen & Ratha, Artatrana, 2010. "S-Curve dynamics of trade between U.S. and China," China Economic Review, Elsevier, vol. 21(2), pages 212-223, June.
    24. Lee, Hyun-Hoon & Park, Donghyun & Wang, Jing, 2013. "Different types of firms, different types of products, and their dynamics: An anatomy of China's imports," China Economic Review, Elsevier, vol. 25(C), pages 62-77.
    25. Carrere, Celine, 2006. "Revisiting the effects of regional trade agreements on trade flows with proper specification of the gravity model," European Economic Review, Elsevier, vol. 50(2), pages 223-247, February.
    26. Y Wei & X Liu, 2006. "Productivity spillovers from R&D, exports and FDI in China's manufacturing sector," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 37(4), pages 544-557, July.
    27. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-116, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Guglielmo Maria Caporale & Christophe Rault & Robert Sova & Anamaria Sova, 2009. "Trade Specialisation and Economic Convergence: Evidence from Two Eastern European Countries," Discussion Papers of DIW Berlin 875, DIW Berlin, German Institute for Economic Research.
    2. Zhang, Daowei & Li, Yanshu, 2009. "Forest endowment, logging restrictions, and China's wood products trade," China Economic Review, Elsevier, vol. 20(1), pages 46-53, March.
    3. Guglielmo Caporale & Christophe Rault & Robert Sova & Anamaria Sova, 2009. "On the bilateral trade effects of free trade agreements between the EU-15 and the CEEC-4 countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(3), pages 573-573, October.
    4. Raúl Serrano & Vicente Pinilla, 2014. "New directions of trade for the agri-food industry: a disaggregated approach for different income countries, 1963–2000," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 23(1), pages 1-22, December.
    5. Kandogan, Yener, 2009. "A Gravity Model for Components of Imports," Review of Applied Economics, Lincoln University, Department of Financial and Business Systems, vol. 5(1-2), pages 1-17, April.
    6. Michele Fratianni, 2007. "The Gravity Equation in International Trade," Working Papers 2007-17, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    7. Yilmazkuday, Hakan, 2012. "Understanding interstate trade patterns," Journal of International Economics, Elsevier, vol. 86(1), pages 158-166.
    8. Martínez-Zarzoso, Inmaculada & Felicitas, Nowak-Lehmann D. & Horsewood, Nicholas, 2009. "Are regional trading agreements beneficial?: Static and dynamic panel gravity models," The North American Journal of Economics and Finance, Elsevier, vol. 20(1), pages 46-65, March.
    9. Chengang Wang & Yingqi Wei & Xiaming Liu, 2010. "Determinants of Bilateral Trade Flows in OECD Countries: Evidence from Gravity Panel Data Models," The World Economy, Wiley Blackwell, vol. 33(7), pages 894-915, July.
    10. James Harrigan, 2001. "Specialization and the Volume of Trade: Do the Data Obey the Laws?," NBER Working Papers 8675, National Bureau of Economic Research, Inc.
    11. Yilmazkuday, Hakan, 2009. "Distribution of Consumption, Production and Trade within the U.S," MPRA Paper 16361, University Library of Munich, Germany.
    12. Kareem, Fatima Olanike & Martinez-Zarzoso, Inmaculada & Brümmer, Bernhard, 2016. "Fitting the Gravity Model when Zero Trade Flows are Frequent: a Comparison of Estimation Techniques using Africa's Trade Data," GlobalFood Discussion Papers 230588, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    13. Yongcheol Shin & Laura Serlenga, 2004. "Gravity Models of the Intra-EU Trade: Application of the Hausman-Taylor Estimation in Heterogeneous Panels with Common Time-specific Factors," Econometric Society 2004 Far Eastern Meetings 671, Econometric Society.
    14. Miguel Tinoco-Zermeño & Francisco Venegas-Martínez & Víctor Torres-Preciado, 2014. "Growth, bank credit, and inflation in Mexico: evidence from an ARDL-bounds testing approach," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 23(1), pages 1-22, December.
    15. Dinçer, Gönül, 2014. "Turkey’s Rising Imports from BRICS: A Gravity Model Approach," MPRA Paper 61979, University Library of Munich, Germany.
    16. Jacks, David S. & Meissner, Christopher M. & Novy, Dennis, 2011. "Trade booms, trade busts, and trade costs," Journal of International Economics, Elsevier, vol. 83(2), pages 185-201, March.
    17. Baier, Scott L. & Bergstrand, Jeffrey H., 2001. "The growth of world trade: tariffs, transport costs, and income similarity," Journal of International Economics, Elsevier, vol. 53(1), pages 1-27, February.
    18. Yilmazkuday, Hakan, 2009. "How Important is Technology? A Counterfactual Analysis," MPRA Paper 16838, University Library of Munich, Germany.
    19. Muhammad Ullah & Kazuo Inaba, 2012. "Impact of RTA and PTA on Bangladesh’s Export: Application of a Gravity Model," Journal of Industry, Competition and Trade, Springer, vol. 12(4), pages 445-460, December.
    20. Mwebaze, P., 2018. "The Impact of EU Pesticide Residue standards on African Fresh Produce Exports to the UK," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 275998, International Association of Agricultural Economists.

    More about this item

    Keywords

    Gravity model; Panel data analysis; Trade specialisation; Comparative advantage;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:chieco:v:34:y:2015:i:c:p:261-273. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/chieco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.