Mitchell H. Kellman

East Asian NIC manufactured intra-industry trade 1965–1990

Abstract This paper examines the intra-industry trade of the four East Asian Newly Industrialized Countries (Hong Kong, Singapore, South Korea and Taiwan) with European markets, Japan and the United States over the period 1965–1990. Five hypotheses are tested: (1) the effects of product differentiation; (2) the presence of scale economies; (3) the broadening of economic bases as the countrys GNP increases; (4) the influence of multinational corporations (MNCs); and (5) the income-similarity (Linder) Hypothesis. The paper notes the empirical relevance of Inter-Industry trade for NIC exports, and finds empirical support for several theoretical explanations of this phenomenon. ( JEL F14)

Import vulnerability of defense-related industries: An empirical model

Abstract This paper provides an examination of the concept of “foreign dependency,” with focus on defense-industry usage. The topic has taken on a new urgency as of late when it has been noted that the very hi-tech weapons, generally given credit in Desert Storm, consist of critical components and subsystems that are not, and perhaps cannot be produced in the United States. The problem is a relevant one across the technological spectrum. Thus, it may be as difficult for the United States to assure an adequate supply of chemically treated boots, as to provide the latest microchip sensors. We develop an empirical methodology that allows for a quantitative determination, resulting in a ranking of import dependence or vulnerability of products. This method takes into account most existing industrial plants, import surges, and the relative weight of defense usage in total national apparent consumption. It yields unique dependence profiles, identifying bottlenecks along the breakdown analysis dimension (i.e., subassemblies, components down to raw materials). The method is demonstrated in several applications across the technological spectrum.

The nature of Japan's comparative advantage, 1965-80

Abstract This paper compares the dynamic factor proportions theory to the product cycle theory in explaining Japans comparative advantage for the 1965-80 period. Three tests were used: (1) domestic Japanese relative prices of more and less competitive export commodities; (2) trends in capital-labour ratios, skill ratios, RD (3) price elasticities over time of Japans exports. The results suggest that: (1) the product cycle must be considered along with the factor proportions theory for the pre-oil shock period; (2) the product cycle theory is superior for the post-oil shock period.

The comparative homogeneity of the East Asian NIC exports of similar manufactures

Abstract The “Four Tigers” — South Korea, Hong Kong, Taiwan and Singapore serve as a model for successful export driven growth. This paper examines the degree to which their export growth followed similar or divergent patterns in response to income and price changes. Differing responses were found, in general, to characterize export growth of these four countries. However, similar patterns were found to describe the exports of certain sophisticated, research and development (R&D) intensive products. Several explanations are posited and empirically examined.

South Africa's International Competitiveness: A Product Level Analysis

As South Africa emerges from its Apartheid period, the evolution of its international trade is vital to the growth of the economy. This paper evaluates South Africa’s trade performance in three essential markets, namely United States, Europe and Japan. It examines the nation’s flexibility in the face of fluctuations in relative exchange rates in its markets. Using the Constant Market Share (CMS) model of international trade and the “Rising Stars” model, the particular areas of industrial structure in which South Africa is positioned to succeed are identified on the market as well as the product levels.

The Ability to Adapt and Overcome Obstacles: Machinery Exports of Poland

From 1980-2009 the Polish economy experienced structural dislocation. The growth and success of the Solidarity movement represented the shift in manufacturing from Soviet bloc trade to membership in the European Union. This paper examines four independent metrics that measure the changing “sophistication” of trade patterns during this modal shift. The common theme underlying the analysis of these indices is that the Polish economy is resilient and adaptable. Poland is expected to compete effectively in its new economic environment after a period of adjustment and progress.

Adam Smith Meets an Index of Specialization in International Trade

Development economists agree that increasing export diversification is a concomitant to economic development. An accepted explanation for Africa’s export stagnation is its dependence on monoculture, and on small number of commodities. Recently a large body of literature focuses on the relationship between economic growth and export specialization. However, there does not exist one generally acceptable measure or index for the concept of “Specialization in International Trade”. This paper suggest one such measure for specialization and its theoretical and conceptual framework are developed and applied to Singapore, South Korea, Malaysia, Mexico, Tunisia and Morocco, during the years of their take offs.

Comment on Gros and Gonciarz

Ž . Gross and Gonciarz 1996 find little potential for future trade expansion, since Ž . Ž . the relevant ratios were already by 1992 very close to those of other EU countries. Further, they note that per capita income enters the model with a positive parameter, since ‘‘as income increases, the share of tradeables in overall income should increase’’. Therefore, as CEE countries become richer, they should Ž increase their trade potential though the present prognoses for their future . economic expansions are bleak, as noted by the authors . I am uncomfortable with the reliance on the ‘Gravity Model’. There are both well-known empirical problems, as well as theoretical ones, associated with it. My experience with such models is that they tend to explain cross-section patterns well, but possess poor explanatory power with changes over time. Furthermore, they lack any sound economic logical basis. Their use tends to lead to ad hoc applications which, at times, may well yield interesting or perhaps intuitive results. However, being detached from any general economically logical behavioral model, the conclusions cannot easily be generalized. The methodological problem is well illustrated in the Gros–Gonciarz study. They justify the estimated positive coefficient by the statement, ‘‘as income increases, the share of tradeables in overall income should increase’’. But ‘should’ it indeed? I can think of no obvious theoretical basis for this assumption. Lacking any theoretical support, this fact Ž . Ž . and by implication the whole approach must rely on empirical numerical observations. That is, is it indeed correct that as per capita incomes increase, the tradeable ratios generally tend to increase? In order to test this proposition, I used the World Bank World Development Report 1993, to examine two subsets of countries. The first was a set of the Ž . poorest 35 countries. I ran a correlation and rank correlation between per-capita

The Propensity to Itemize in the Context of a Human Capital Model

The decision whether or not to utilize the “long-form” and itemize deductions depends on income and non-income factors. The distribution of these factors among the various States tends to be stable over long periods of time. It follows that the federal individual income tax (FIIT) may be associated with a systematic deviation from location—neutrality. This is argued to be especially germane in periods associated with major reforms in the tax codes. It is suggested that this phenomenon is explicable in terms of a human capital model. The decision in any given year to itemize is a function of past accumulation of specific and specialized human capital. The effect of a tax reform is a large scale destruction of such capital. Therefore, certain predictions concerning the time path of the “propensity to itemize deductions” (PID) follow. Empirical support for this model is found from cross-section data at the State level, from years both preceding and following the 1986 Tax Reform and Simplification Act (TRA).

Montenegrin Trade Specialization Index

Montenegro, newly independent since 2006, saw its commodity exports collapse in the worldwide financial crisis of 2008. It took three years for the volume of its exports to recover. Using one to four-digit Standard Industrial Trade Classification (SITC) commodity trade data, this paper analyzes trade patterns as they evolve, both globally, and within individual product sectors, since independence to the year 2012. The Kellman – Shachmurove Trade Specialization Index (TSI) is employed to study the degree of the Montenegrin specialization. The paper warns about high degree of specialization with overreliance on commodity exports of aluminum alloys.