IDEAS home Printed from https://ideas.repec.org/p/ags/eaae08/44135.html
   My bibliography  Save this paper

Comparative Advantages, Transaction Costs and Factor Content in Agricultural Trade: Empirical Evidence from the CEE

Author

Listed:
  • Ciaian, Pavel
  • Kancs, d'Artis
  • Pokrivcak, Jan

Abstract

The present study examines factor content in the CEE transition country agricultural trade. However, deviating from the traditional approach, we do not test the HOV prediction. Instead, we examine the theoretical predictions that relate the factor content of international trade to cross-country differences in technology and endowments. Our empirical findings suggest that factor content between agricultural exports and imports is rather similar in CEE. In order to explain the general lack of the CEE agricultural specialisation and the observed paradox, we attempt to identify the role of transaction costs and market imperfections in determining factor content in agricultural production and trade. We find that technological differences and factor endowment are only weak determinants of country specialisation. Transaction costs and market imperfections distort farm specialisation and organisation in CEE, and hence factor content in traded agricultural goods.

Suggested Citation

  • Ciaian, Pavel & Kancs, d'Artis & Pokrivcak, Jan, 2008. "Comparative Advantages, Transaction Costs and Factor Content in Agricultural Trade: Empirical Evidence from the CEE," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44135, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaae08:44135
    DOI: 10.22004/ag.econ.44135
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/44135/files/242a.pdf
    Download Restriction: no

    File URL: https://libkey.io/10.22004/ag.econ.44135?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
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Jeffrey A. Frankel, 1998. "The Regionalization of the World Economy," NBER Books, National Bureau of Economic Research, Inc, number fran98-1, October.
    2. Mathijs, Erik & Swinnen, Johan F M, 1998. "The Economics of Agricultural Decollectivization in East Central Europe and the Former Soviet Union," Economic Development and Cultural Change, University of Chicago Press, vol. 47(1), pages 1-26, October.
    3. Yong-Seok Choi & Pravin Krishna, 2004. "The Factor Content of Bilateral Trade: An Empirical Test," Journal of Political Economy, University of Chicago Press, vol. 112(4), pages 887-914, August.
    4. Jarko Fidrmuc, 2005. "Trade Structure during Accession to the EU," Post-Communist Economies, Taylor & Francis Journals, vol. 17(2), pages 225-234.
    5. Werner Antweiler & Daniel Trefler, 2002. "Increasing Returns and All That: A View from Trade," American Economic Review, American Economic Association, vol. 92(1), pages 93-119, March.
    6. Stefano Federico & Gaetano Alfredo Minerva, 2008. "Outward FDI and Local Employment Growth in Italy," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 144(2), pages 295-324, July.
    7. Leamer, Edward E. & Levinsohn, James, 1995. "International trade theory: The evidence," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 26, pages 1339-1394, Elsevier.
    8. Nigel Swain, 1999. "Agricultural Restitution and Co-operative Transformation in the Czech Republic, Hungary and Slovakia," Europe-Asia Studies, Taylor & Francis Journals, vol. 51(7), pages 1199-1219.
    9. Donald R. Davis & David E. Weinstein, 2001. "An Account of Global Factor Trade," American Economic Review, American Economic Association, vol. 91(5), pages 1423-1453, December.
    10. Jeffrey A. Frankel, 1998. "Introduction to "Regionalization of the World Economy, The"," NBER Chapters, in: The Regionalization of the World Economy, pages 1-6, National Bureau of Economic Research, Inc.
    11. Keith Head & John Ries, 2001. "Increasing Returns versus National Product Differentiation as an Explanation for the Pattern of U.S.-Canada Trade," American Economic Review, American Economic Association, vol. 91(4), pages 858-876, September.
    12. Peter K. Schott, 2003. "One Size Fits All? Heckscher-Ohlin Specialization in Global Production," American Economic Review, American Economic Association, vol. 93(3), pages 686-708, June.
    13. Harrigan, James, 1997. "Technology, Factor Supplies, and International Specialization: Estimating the Neoclassical Model," American Economic Review, American Economic Association, vol. 87(4), pages 475-494, September.
    14. Allen, Douglas W & Lueck, Dean, 1998. "The Nature of the Farm," Journal of Law and Economics, University of Chicago Press, vol. 41(2), pages 343-386, October.
    15. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-1297, November.
    16. James R. MARKUSEN, 2021. "Multinationals, Multi-Plant Economies, And The Gains From Trade," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 1, pages 3-24, World Scientific Publishing Co. Pte. Ltd..
    17. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    18. Deardorff, Alan V., 1984. "Testing trade theories and predicting trade flows," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 10, pages 467-517, Elsevier.
    19. Leamer, Edward E, 1980. "The Leontief Paradox, Reconsidered," Journal of Political Economy, University of Chicago Press, vol. 88(3), pages 495-503, June.
    20. Lee, Chinkook & Wills, Darryl & Schluter, Gerald, 1988. "Examining the leontief paradox in U.S. agricultural trade," Agricultural Economics, Blackwell, vol. 2(3), pages 259-272, November.
    21. Pavel Ciaian & Johan F.M. Swinnen, 2006. "Land Market Imperfections and Agricultural Policy Impacts in the New EU Member States: A Partial Equilibrium Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(4), pages 799-815.
    22. Schmitt, Gunther, 1991. "Why Is the Agriculture of Advanced Western Economies Still Organized by Family Farms? Will This Continue to Be So in the Future?," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 18(3-4), pages 443-458.
    23. Schluter, Gerald E. & Lee, Gene K., 1978. "Is Leontief'S Paradox Applicable To U.S. Agricultural Trade?," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 3(2), pages 1-8, December.
    24. Bowen, Harry P & Leamer, Edward E & Sveikauskas, Leo, 1987. "Multicountry, Multifactor Tests of the Factor Abundance Theory," American Economic Review, American Economic Association, vol. 77(5), pages 791-809, December.
    25. Nora Dihel & Ben Shepherd, 2007. "Modal Estimates of Services Barriers," OECD Trade Policy Papers 51, OECD Publishing.
    26. Leamer, Edward E, 1987. "Paths of Development in the Three-Factor, n-Good General Equilibrium Model," Journal of Political Economy, University of Chicago Press, vol. 95(5), pages 961-999, October.
    27. Philippa Dee, 2005. "Measuring And Modelling Barriers To Services Trade: Australia'S Experience," World Scientific Book Chapters, in: Philippa Dee & Michael Ferrantino (ed.), Quantitative Methods For Assessing The Effects Of Non-Tariff Measures And Trade Facilitation, chapter 6, pages 71-105, World Scientific Publishing Co. Pte. Ltd..
    28. Konan, Denise Eby & Maskus, Keith E., 2006. "Quantifying the impact of services liberalization in a developing country," Journal of Development Economics, Elsevier, vol. 81(1), pages 142-162, October.
    29. Lerman, Zvi, 2001. "Agriculture in transition economies: from common heritage to divergence," Agricultural Economics, Blackwell, vol. 26(2), pages 95-114, November.
    30. Julia Wörz, 2005. "Dynamics of Trade Specialization in Developed and Less Developed Countries," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 41(3), pages 92-111, May.
    31. Neven, Damien, 1995. "Trade liberalisation with Eastern nations: Some distribution issues," European Economic Review, Elsevier, vol. 39(3-4), pages 622-632, April.
    32. Michael A. Landesmann & Robert Stehrer, 2002. "Evolving Competitiveness of CEEC’s in an Enlarged Europe," Rivista di Politica Economica, SIPI Spa, vol. 92(1), pages 23-88, January-F.
    33. Scott Rozelle & Johan F.M. Swinnen, 2004. "Success and Failure of Reform: Insights from the Transition of Agriculture," Journal of Economic Literature, American Economic Association, vol. 42(2), pages 404-456, June.
    34. Lerman, Z. & Brooks, K. & Csaki, C., 1994. "Land Reform and Fram Restructuring in Ukraine," World Bank - Discussion Papers 270, World Bank.
    35. Debeare, Peter, 2003. "Relative Factor Abundance and Trade," Journal of Political Economy, University of Chicago Press, vol. 111(3), pages 589-610, June.
    36. Andrew K. Rose & Eric van Wincoop, 2001. "National Money as a Barrier to International Trade: The Real Case for Currency Union," American Economic Review, American Economic Association, vol. 91(2), pages 386-390, May.
    37. Karel Janda & Daniel Münich, 2004. "The Intra-Industry Trade of the Czech Republic in the Economic Transition," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 40(2), pages 27-50, March.
    38. Pavel Ciaian & Johan F.M. Swinnen, 2006. "Land Market Imperfections and Agricultural Policy Impacts in the New EU Member States: A Partial Equilibrium Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(4), pages 799-815.
    39. Imre Fertö, 2005. "Vertically Differentiated Trade and Differences in Factor Endowment: The Case of Agri‐Food Products between Hungary and the EU," Journal of Agricultural Economics, Wiley Blackwell, vol. 56(1), pages 117-134, March.
    40. Rombouts, Jeroen V. K. & Bauwens, Luc, 2004. "Econometrics," Papers 2004,33, Humboldt University of Berlin, Center for Applied Statistics and Economics (CASE).
      • BAUWENS, Luc & ROMBOUTS, Jeroen V.K., 2004. "Econometrics," LIDAM Reprints CORE 1713, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    41. Trefler, Daniel, 1995. "The Case of the Missing Trade and Other Mysteries," American Economic Review, American Economic Association, vol. 85(5), pages 1029-1046, December.
    42. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685, December.
    43. Lai, Huiwen & Zhu, Susan Chun, 2007. "Technology, endowments, and the factor content of bilateral trade," Journal of International Economics, Elsevier, vol. 71(2), pages 389-409, April.
    44. Pollak, Robert A, 1985. "A Transaction Cost Approach to Families and Households," Journal of Economic Literature, American Economic Association, vol. 23(2), pages 581-608, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. D'Artis Kancs & Pavel Ciaian, 2010. "Factor content of bilateral trade: the role of firm heterogeneity and transaction costs," Agricultural Economics, International Association of Agricultural Economists, vol. 41(3‐4), pages 305-317, May.
    2. Anna Bandlerová & Jarmila Lazíková, 2016. "Land lease contract and prior right of lessee to concluding the new land lease contract - case of Slovakia," Juridical Tribune (Tribuna Juridica), Bucharest Academy of Economic Studies, Law Department, vol. 6(2), pages 304-320, December.
    3. d’Artis Kancs & Pavel Ciaian, 2012. "The Factor Content of Heterogeneous Firm Trade," The World Economy, Wiley Blackwell, vol. 35(3), pages 373-393, March.
    4. D'Artis Kancs & Pavel Ciaian, 2010. "Factor content of bilateral trade: the role of firm heterogeneity and transaction costs," Agricultural Economics, International Association of Agricultural Economists, vol. 41(3‐4), pages 305-317, May.
    5. Ciaian, Pavel & Kancs, d'Artis & Pokrivcak, Jan, 2011. "Comparative Advantages, Transaction Costs and Factor Content in Agricultural Trade: Empirical Evidence from the CEE - Vantaggi comparati, costi di transazione e contenuto dei fattori nel commercio agr," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 64(1), pages 67-101.

    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. Ciaian, Pavel & Kancs, d'Artis & Pokrivcak, Jan, 2011. "Comparative Advantages, Transaction Costs and Factor Content in Agricultural Trade: Empirical Evidence from the CEE - Vantaggi comparati, costi di transazione e contenuto dei fattori nel commercio agr," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 64(1), pages 67-101.
    2. García, Pablo Marcelo, 2005. "Measuring Willingness-to-Pay in Discrete Chice Models with Semi-Parametric Techniques," Revista Latinoamericana de Desarrollo Economico, Carrera de Economía de la Universidad Católica Boliviana (UCB) "San Pablo", issue 5, pages 83-100, Octubre.
    3. Yu, Wusheng, 2009. "Schemes for aggregating preferential tariffs, trade volume effects and African LDCs," Conference papers 331918, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    4. D'Artis Kancs & Pavel Ciaian, 2010. "Factor content of bilateral trade: the role of firm heterogeneity and transaction costs," Agricultural Economics, International Association of Agricultural Economists, vol. 41(3‐4), pages 305-317, May.
    5. d’Artis Kancs & Pavel Ciaian, 2012. "The Factor Content of Heterogeneous Firm Trade," The World Economy, Wiley Blackwell, vol. 35(3), pages 373-393, March.
    6. Daniel Bernhofen, 2010. "The Empirics of General Equilibrium Tade Theory: What Have we Learned?," CESifo Working Paper Series 3242, CESifo.
    7. Ján POKRIVČÁK & Pavel CIAIAN & d'Artis KANCS, 2011. "Modelling the factor content of agricultural trade," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 57(8), pages 370-383.
    8. 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.
    9. Elhanan Helpman, 1999. "The Structure of Foreign Trade," Journal of Economic Perspectives, American Economic Association, vol. 13(2), pages 121-144, Spring.
    10. Donald R. Davis & David E. Weinstein, 2001. "Do Factor Endowments Matter for North-North Trade?," NBER Working Papers 8516, National Bureau of Economic Research, Inc.
    11. James Cassing & Shuichiro Nishioka, 2015. "Per Capita Income and the Mystery of Missing Trade," Review of International Economics, Wiley Blackwell, vol. 23(3), pages 606-619, August.
    12. Donald R. Davis & David E. Weinstein, 2001. "An Account of Global Factor Trade," American Economic Review, American Economic Association, vol. 91(5), pages 1423-1453, December.
    13. James R. Markusen, 2021. "Putting per-capita income back into trade theory," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 10, pages 187-197, World Scientific Publishing Co. Pte. Ltd..
    14. Pavel Ciaian & d’Artis Kancs, 2011. "The Impact Of Food Price Shock On Heterogeneous Credit Constrained Firms," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 82(2), pages 115-137, June.
    15. Morrow, Peter M., 2010. "Ricardian-Heckscher-Ohlin comparative advantage: Theory and evidence," Journal of International Economics, Elsevier, vol. 82(2), pages 137-151, November.
    16. Keith E. Maskus & Shuichiro Nishioka, 2009. "Development‐related biases in factor productivities and the HOV model of trade," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 42(2), pages 519-553, May.
    17. Hausmann, Ricardo & Stock, Daniel P. & Yıldırım, Muhammed A., 2022. "Implied comparative advantage," Research Policy, Elsevier, vol. 51(8).
    18. Andrés Artal & Juana Castillo & Francisco Requena, 2006. "Contrastación empírica del modelo de dotaciones factoriales para el comercio interregional de España," Investigaciones Economicas, Fundación SEPI, vol. 30(3), pages 539-576, September.
    19. William R Kerr, 2018. "Heterogeneous Technology Diffusion and Ricardian Trade Patterns," The World Bank Economic Review, World Bank Group, vol. 32(1), pages 163-182.
    20. Donald R. Davis & David E. Weinstein, 2002. "What Role for Empirics in International Trade?," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 57(04), pages 441-468, December.

    More about this item

    Keywords

    International Relations/Trade;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:ags:eaae08:44135. 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: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/eaaeeea.html .

    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.