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:
Matt McGowan | Newswise
Microtechnology industry is hiring – positive developments of past years continue
09.04.2018 | IVAM Fachverband für Mikrotechnik
RWI/ISL-Container Throughput Index with minor decline on a high overall level
20.03.2018 | RWI – Leibniz-Institut für Wirtschaftsforschung
Moving into its fourth decade, AchemAsia is setting out for new horizons: The International Expo and Innovation Forum for Sustainable Chemical Production will take place from 21-23 May 2019 in Shanghai, China. With an updated event profile, the eleventh edition focusses on topics that are especially relevant for the Chinese process industry, putting a strong emphasis on sustainability and innovation.
Founded in 1989 as a spin-off of ACHEMA to cater to the needs of China’s then developing industry, AchemAsia has since grown into a platform where the latest...
The BMBF-funded OWICELLS project was successfully completed with a final presentation at the BMW plant in Munich. The presentation demonstrated a Li-Fi communication with a mobile robot, while the robot carried out usual production processes (welding, moving and testing parts) in a 5x5m² production cell. The robust, optical wireless transmission is based on spatial diversity; in other words, data is sent and received simultaneously by several LEDs and several photodiodes. The system can transmit data at more than 100 Mbit/s and five milliseconds latency.
Modern production technologies in the automobile industry must become more flexible in order to fulfil individual customer requirements.
An international team of scientists has discovered a new way to transfer image information through multimodal fibers with almost no distortion - even if the fiber is bent. The results of the study, to which scientist from the Leibniz-Institute of Photonic Technology Jena (Leibniz IPHT) contributed, were published on 6thJune in the highly-cited journal Physical Review Letters.
Endoscopes allow doctors to see into a patient’s body like through a keyhole. Typically, the images are transmitted via a bundle of several hundreds of optical...
Light detection and control lies at the heart of many modern device applications, such as smartphone cameras. Using graphene as a light-sensitive material for...
Water molecules exist in two different forms with almost identical physical properties. For the first time, researchers have succeeded in separating the two forms to show that they can exhibit different chemical reactivities. These results were reported by researchers from the University of Basel and their colleagues in Hamburg in the scientific journal Nature Communications.
From a chemical perspective, water is a molecule in which a single oxygen atom is linked to two hydrogen atoms. It is less well known that water exists in two...
13.06.2018 | Event News
08.06.2018 | Event News
05.06.2018 | Event News
15.06.2018 | Materials Sciences
15.06.2018 | Ecology, The Environment and Conservation
15.06.2018 | Power and Electrical Engineering