Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

In Global Trade, Too Much of a Good Thing Can Be a Bad Thing

18.01.2013
A multitude of trade products is good for a country – up to a point

In today’s dynamic global economic environment, companies or countries consider everything when it comes to expanding their economies.

Researchers at the University of Arkansas examined the relationship between products in global trade and the characteristics of a country’s product specialization pattern and discovered that having a multitude of similar products can be beneficial to growth — up to a point, after which the benefit declines.

Raja Kali and Javier Reyes, associate professors in the Sam M. Walton College of Business; Josh McGee, vice president of public accountability at the Laura and John Arnold Foundation and Walton College doctoral graduate of economics; and Stuart Shirrell, a former Bodenhamer Fellow and 2011 magna cum laude graduate of the U of A, performed the study.

The researchers discovered that interaction between products plays an important role in economic growth. In the early stages of product development, these synergies allow for a quick growth rate. Specialization in a certain area, such as electronics, establishes the base for similar products to be developed and exported.

Kali and his colleagues use Ireland as an example of this growth pattern.

“We know that Ireland experienced a trade and economic growth acceleration episode in 1985, and from our data we can examine Ireland’s country-level product specialization before and after the growth acceleration period,” he said.

Ireland experienced increases in its chemical industry, manufactured goods, machinery and transportation and commercial manufacturing, all of which overlapped with food and animal production and crude materials. The researchers believe the inter-related nature of these industries played a key role in Ireland developing new products and expanding its export base.

A contrasting example is Greece, which had a high level of interaction within the manufactured goods industry, did not expand this interaction into other high-density industries. As a result, over the ten-year period studied, 1980-1990, the country experienced a relative decrease in synergies between it’s export products

While inter-relatedness between products can help a country expand its economy, it can also cause an adverse effect, the researchers found.

“Essentially, one could say that too much of a good thing makes you fat and happy, and that ultimately is not so good for a country,” Kali said.

The researchers developed a way of measuring density at the product and country level. Product density is the number of links between a single product and the other products in a country’s export set, divided by the total number of links between that product and every other product, regardless of whether it is in the country’s product set or not. Country density is computed by weighting the density of each product that a country exports.

As density increases, “inertia” becomes stronger, making the jump to new products more difficult. An increase in network proximity more proportionate than product density is required to maintain growth acceleration.

The researchers defined product space as the relatedness between products in global trade. This space can be thought of as a network in which each product represents a node, and the relationships between them represent the linkages. In their study, each country’s network was superimposed on the country’s specialization pattern.

The information allowed the researchers to “measure” the density of the links and to develop a measure of the proximity of the country’s specialization to the products themselves. The proximity of the products indicated how easily a country could move from its current specialization to new products.

The researchers’ study was published in the Journal of Development Economics. The study is available online at http://www.sciencedirect.com/science/article/pii/S0304387812000983.

CONTACTS:
Raja Kali, associate professor, economics
Sam M. Walton College of Business
479-575-6219, rkali@walton.uark.edu
Javier Reyes, associate professor, economics
Sam M. Walton College of Business
479-575-6079, jreyes@walton.uark.edu
Matt McGowan, science and research communications officer
University Relations
479-575-4246, dmcgowa@uark.edu

Matt McGowan | Newswise
Further information:
http://www.uark.edu

More articles from Business and Finance:

nachricht Paper or plastic?
08.07.2016 | University of Toronto

nachricht Gearing up for the future: Digital Business Innovation
05.07.2016 | Fraunhofer-Institut für Arbeitswirtschaft und Organisation IAO

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: First quantum photonic circuit with electrically driven light source

Optical quantum computers can revolutionize computer technology. A team of researchers led by scientists from Münster University and KIT now succeeded in putting a quantum optical experimental set-up onto a chip. In doing so, they have met one of the requirements for making it possible to use photonic circuits for optical quantum computers.

Optical quantum computers are what people are pinning their hopes on for tomorrow’s computer technology – whether for tap-proof data encryption, ultrafast...

Im Focus: OLED microdisplays in data glasses for improved human-machine interaction

The Fraunhofer Institute for Organic Electronics, Electron Beam and Plasma Technology FEP has been developing various applications for OLED microdisplays based on organic semiconductors. By integrating the capabilities of an image sensor directly into the microdisplay, eye movements can be recorded by the smart glasses and utilized for guidance and control functions, as one example. The new design will be debuted at Augmented World Expo Europe (AWE) in Berlin at Booth B25, October 18th – 19th.

“Augmented-reality” and “wearables” have become terms we encounter almost daily. Both can make daily life a little simpler and provide valuable assistance for...

Im Focus: Artificial Intelligence Helps in the Discovery of New Materials

With the help of artificial intelligence, chemists from the University of Basel in Switzerland have computed the characteristics of about two million crystals made up of four chemical elements. The researchers were able to identify 90 previously unknown thermodynamically stable crystals that can be regarded as new materials. They report on their findings in the scientific journal Physical Review Letters.

Elpasolite is a glassy, transparent, shiny and soft mineral with a cubic crystal structure. First discovered in El Paso County (Colorado, USA), it can also be...

Im Focus: Complex hardmetal tools out of the 3D printer

For the first time, Fraunhofer IKTS shows additively manufactured hardmetal tools at WorldPM 2016 in Hamburg. Mechanical, chemical as well as a high heat resistance and extreme hardness are required from tools that are used in mechanical and automotive engineering or in plastics and building materials industry. Researchers at the Fraunhofer Institute for Ceramic Technologies and Systems IKTS in Dresden managed the production of complex hardmetal tools via 3D printing in a quality that are in no way inferior to conventionally produced high-performance tools.

Fraunhofer IKTS counts decades of proven expertise in the development of hardmetals. To date, reliable cutting, drilling, pressing and stamping tools made of...

Im Focus: Launch of New Industry Working Group for Process Control in Laser Material Processing

At AKL’16, the International Laser Technology Congress held in May this year, interest in the topic of process control was greater than expected. Appropriately, the event was also used to launch the Industry Working Group for Process Control in Laser Material Processing. The group provides a forum for representatives from industry and research to initiate pre-competitive projects and discuss issues such as standards, potential cost savings and feasibility.

In the age of industry 4.0, laser technology is firmly established within manufacturing. A wide variety of laser techniques – from USP ablation and additive...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

Laser use for neurosurgery and biofabrication - LaserForum 2016 focuses on medical technology

27.09.2016 | Event News

Experts from industry and academia discuss the future mobile telecommunications standard 5G

23.09.2016 | Event News

ICPE in Graz for the seventh time

20.09.2016 | Event News

 
Latest News

New switch decides between genome repair and death of cells

27.09.2016 | Life Sciences

Nanotechnology for energy materials: Electrodes like leaf veins

27.09.2016 | Physics and Astronomy

‘Missing link’ found in the development of bioelectronic medicines

27.09.2016 | Life Sciences

VideoLinks
B2B-VideoLinks
More VideoLinks >>>