Won W. Koo

A gravity model analysis of meat trade policies

The conventional gravity model is revised for a single commodity and applied to meat markets to determine factors affecting trade flows of meat. This study demonstrates that the gravity model for a single agricultural commodity can be parameterized more effectively by using time series and cross-section data rather than cross-section data alone. This study reveals that trade policies and subsidies used by exporting and importing countries, livestock production capacity in countries, and distances play an important role in determining trade flows of meat. Long-term agreements achieve the highest performance toward enhancing international meat trade. Import quotas and the hoof-and-mouth disease on beef greatly impair meat trade.

International Trade and Foreign Direct Investment: Substitutes or Complements?

International agricultural trade has evolved over time. Processed foods and developing countries have become major growth markets for U.S. agricultural exports, and foreign direct investment (FDI) has become even more important than exports as a means of accessing foreign markets. The critical question is whether FDI is a substitute for or a complement of exports. This research builds upon an existing theoretical FDI model and contributes to the literature through the development of a simultaneous equation system for FDI and exports, which is estimated using two-stage least squares. Empirical analyses were used to examine the relationship between U.S. FDI and exports of processed foods into East Asian countries - China, Japan, Singapore, South Korea, and Taiwan - from 1989 to 1998. The results indicated that a complementary relationship between FDI and exports. Additionally, these results indicated that interest rates, exchange rates, gross domestic product (GDP), and compensation rates are important variables that influence U.S. FDI in East Asian countries, while GDP, exchange rates, and export prices are important export determinants.

Optimal Stochastic Control of U.S. Wheat Stocks and Exports

A stochastic dynamic programming model was developed to estimate optimal strategies for U.S. wheat reserves policy using the results of an econometric model which reflects the complex dynamics of supply response. Empirical results indicated that U.S. producers are the beneficiaries of a wheat storage program, while domestic and foreign consumers are relatively small and large losers, respectively. Another result is that wheat storage capacity in excess of 2 billion bushels is difficult to justify economically.

A Dynamic Approach to the FDI-Environment Nexus: The Case of China and India

The cointegration analysis and a vector error-correction (VEC) model are applied to examine the short- and long-run relationships among foreign direct investment (FDI), economic growth, and the environment in China and India. The results show that FDI inflow plays a pivotal role in determining the short- and long-run movement of economic growth through capital accumulation and technical spillovers in the two countries. However, FDI inflow in both countries is found to have a detrimental effect on environmental quality in both the short- and long-run, supporting pollution haven hypothesis. Finally, it is found that, in the short-run, there exists a unidirectional causality from FDI inflow to economic growth and the environment in China and India - a change in FDI inflow causes a consequence change in environmental quality and economic growth, but the reverse does not hold.

Maritime trade, biological invasions, and the properties of alternate inspection regimes

We analyze the problem of preventing biological invasions caused by ships transporting internationally traded goods between countries and continents. Specifically, we ask the following question: should a port manager have a small number of inspectors inspect arriving ships less stringently or should this manager have a large number of inspectors inspect the same ships more stringently? We use a simple queuing-theoretic framework and show that if decreasing the economic cost of regulation is very important then it makes more sense for the port manager to choose the less stringent inspection regime. In contrast, if reducing the damage from biological invasions is more salient then the port manager ought to pick the more stringent inspection regime.

Alternative U.S. and EU Sugar Trade Liberalization Policies and their Implications

This study analyzes the impacts of alternative trade liberalization policies in the United States and the European Union (EU) on the U.S. sugar industry. A global sugar policy simulation model was used for this analysis. The study results indicate that the U.S. sugar industry may be able to survive if both the United States and the EU liberalize their sugar trade. However, if only the United States eliminates its sugar programs, all U.S. sugar- producing regions would be threatened.

Productivity Growth, Technology Progress, And Efficiency Change in Chinese Agricultural Production From 1984 to 1993

This study applies a Data Envelopment Analysis (DEA) approach to analyze total factor productivity, technology, and efficiency changes in Chinese agricultural production from 1984 to 1993. Twenty- nine provinces in China were classified into advanced-technology and low-technology categories. The Malmquist productivity measures were decomposed into two components: technical change index and efficiency change index. The results showed that total factor productivity has risen in most provinces for both technology categories. Technical progress has been the most important factor to Chinese agricultural productivity growth since 1984 and will remain crucial to productivity growth in low-technology provinces. Low efficiency in many important agricultural provinces indicates a great potential for China to increase productivity through improving technical efficiency. Continuously expanding market economy and enhancing rural education may also help farmers to improve technical efficiency and productivity in agricultural production.

Maritime Trade, Biological Invasions, and the Properties of Alternate Inspection Regimes

We analyze the problem of preventing biological invasions caused by ships transporting internationally traded goods between countries and continents. Specifically, we ask the following question: Should a port manager have a small number of inspectors inspect arriving ships less stringently or should this manager have a large number of inspectors inspect the same ships more stringently? We use a simple queuing-theoretic framework and show that if decreasing the economic cost of regulation is very important then it makes more sense for the port manager to choose the less stringent inspection regime. In contrast, if reducing the damage from biological invasions is more salient then the port manager ought to pick the more stringent inspection regime.

Exchange Rate Dynamics and the Bilateral Trade Balance: The Case of U.S. Agriculture

This study examines the dynamic effects of changes in exchange rates on bilateral trade of agricultural products between the United States and its 15 major trading partners. Special attention is paid to investigate whether or not the J-curve hypothesis holds for U.S. agricultural trade. For this purpose, an autoregressive distributed lag (ARDL) approach to cointegration is applied to quarterly time-series data from 1989 and 2007. Results show that the exchange rate plays a crucial role in determining the short- and long-run behavior of U.S. agricultural trade. However, we find little evidence of the J-curve phenomenon for U.S. agricultural products with the United States’ major trading partners.

A spatial equilibrium port cargo projection model

A mathematical spatial programming model developed to analyse changes in international and hinterland commodity flows through a regional port system is applied to wheat shipments through the U.S. Pacific Northwest port system. Two scenarios, one focusing on a Chinese quarantine on wheat shipments from the Pacific Northwest and the other on possible closure of barge transportation on the Columbia-Snake River, illustrate the capacity of the model to evaluate the impacts of international and hinterland shocks on the regional port system.