Essays in International Trade: Cotton, Seafood, and Meat

Abstract

The dissertation consists of three essays as three chapters and it focuses on agricultural trade. Each essay studies a separate agricultural product and applies a different research method. Chapter 1 applies a Muth-type model to assess the likely effects of labor costs increase on China’s cotton yarn industry. The model considers i) product differentiation at the yarn level; ii) imperfect competition in the markets for cotton yarn and raw cotton fiber, iii) input substitution between raw cotton fiber, labor, and capital; and iv) offsetting increases in the demand for cotton yarn caused by rising consumer income. Results suggest the effects of rising labor costs on the supply chain are modest, and easily swamped or obscured by the effects of rising income. Increases in industry market power (both oligopoly and oligopsony) have the same effect on the supply chain as increases in labor costs, raising prices to consumers of cotton yarn, and lowering prices to input suppliers, including foreign suppliers of raw cotton fiber. The combined effects of increases in labor costs and income have increased the factor shares for labor and to a lesser extent capital at the expense of raw cotton fiber. Chapter 2 exams seafood exports of the Association of Southeast Asian Nations (ASEAN) from 1996 to 2014 with approach of survival analysis. Trade duration measures the number of consecutive time periods (e.g., years or months) with non-zero exports of a certain product to one specific market. ASEAN seafood trade duration has a mean value of 4.42 years, which varies by product and trade partner. Frequently traded seafood products have significantly higher survival rates and longer trade durations. Increasing seafood production supports longer trade duration. Sub-Saharan African countries have the smallest mean and median seafood trade durations with ASEAN countries. Our findings suggest refining policies to increase ASEAN seafood exports: supporting sustaining seafood production growth, particularly aquaculture development; encouraging participation in international trade agreements; and implementing efficient cross border policies help lengthen trade duration. Chapter 3 studies the global trade pattern of aggregate meat and imported pork demand in China. It applies absolute version of Rotterdam demand system to estimate import demand elasticity. It also calculates Hicksian compensating variation and tax incidence to examine Chinese consumers welfare changes because the US-China trade war. The data set covers quarterly export and import quantity and trade value from January 2005 to December 2017, which are collected from the International Trade Center. Results show that (i) meats are price inelastic in the global market; (ii) Meat products of European Union are income elastic, while others are income inelastic; (iii) European Union holds largest marginal expenditure share of in the global market (55.8%), and the United States has the largest marginal expenditure share of in Chinese pork imports market (61.8%); (iv) Chinese pork imports consumers pay 70% of the tariff and suffer from consumer welfare loss.