Peers and Tiers and US High-Tech Export Controls: A New Approach to Estimating Export Shortfalls
In this study, we employ a diff erence-in-diff erence, gravity-equation approach to quantifying the trade impact of hightechnology export controls that are motivated by national security. We estimate the eff ect of controls on high-tech export performance of the United States, of its traditional rival (peer) exporters, and of emerging exporters. Using an 11-year panel of seven high-tech sectors from 1994 through 2004, we fi nd that the United States under-exports to “high-threat” importers. We fi nd, more surprisingly, that the United States over-exports to “medium-threat” importers and to a large “trusted” group of importers, both relative to a norm (default group) of importers. We fi nd that traditional peer exporters under-export to the trusted group of importers, and along with emerging exporters, under-export to most medium-threat importers. Th ese fi ndings, robust in a comparable dataset ending in 2011, suggest high substitutability between export suppliers and export markets for high-tech products. Th e same peer exporters over-export to high-threat importers, suggesting their less stringent enforcement of multilateral export controls and also undermining to a certain extent, the security objective of the very strictest of these controls. Overall, importers deemed security threats import only half of their high-tech potential from the 10 exporters on which we focus. Our study underlines the importance of current American eff orts to reform the export control regime to make it more target-eff ective.
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