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Measuring and analyzing the agricultural trade cost elasticity between China and BRICS

ZHOU Dan1 LU Wanjun2

(1.Beijing University of Agriculture)
(2.Nanjing Agricultural University)

【Abstract】In this paper, translog gravity is revised and the domestic democratization as political factor is introduced into it from two paths of export and import. Based on the revised model, the paper measures the agricultural trade cost elasticity in 28 kinds between China and BRICS. The result shows all the elasticity is positive, which means reducing trade cost could increase the volume of trade for the BRICS. However, the difference value between export and import cost elasticity is negative, which implies China does not have a comparative advantage in general. As for the product structure, the superior products should be given priority to promote trade liberalization and facilitation. There exists the potential of intra-industry products trade between China and BRICS. China could deepen division of labor and cooperation with BRICS to reduce trade risk and realize diversification in sustainable development.

【Keywords】 BRICS; agricultural trade; revised translog gravity model; trade cost elasticity; BRICS; Agricultural Trade; Revised Translog Gravity Model; Trade Cost Elasticity;

【DOI】

【Funds】 National Social Science Fund Major Projects (11&ZD009) The Special Program for Promoting Comprehensive Reform of Personnel Training of Beijing University of Agriculture (BNRC&YX201405) The Research Base for New Rural Construction of Beijing

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    Footnote

    [1]. ① Trade cost elasticity: η = |dln(xij) / dln(tij)| , where xij is the amount of exports of country i to country j, and tij is the trade costs. [^Back]

    [2]. ① YU, M. Political Economics Analysis of International Trade (国际贸易的政治经济学分析), Peking University Press, (2009). [^Back]

    [3]. ① Each variable of Si is for country i only and has nothing to do with country j; therefore the Sirepresents the fixed effects of country i. [^Back]

    [4]. ① YU, M. Political Economics Analysis of International Trade (国际贸易的政治经济学分析), Peking University Press, (2009). [^Back]

    [5]. ① In this paper, we set σ to 8 with reference to the Novy (2013), for more details please see note 29 of Novy (2013). [^Back]

    [6]. ② Novy considers that and is respectively the fixed effect of the exporting and importing countries, and can be used as the control variable when estimating the equation: when the exporting country is the country i, assign it to 1; similarly, when the importing country is the country j, assign it to 1; therefore, there is no need to find the Pj or IIi. [^Back]

    [7]. ③ We select the time period after 2000 as the research sample of this paper; one important reason is that the time of proposal of the concept of “BRIC” is 2001; therefore we take the year 2000 as the beginning of time in this paper. [^Back]

    [8]. ④ For the HS1992 coding of international agricultural trade, please see the commodity information query website of the General Administration of Customs of the People's Republic of China, or see also the Table 4 in this paper. [^Back]

    [9]. ⑤ The traditional gravity model takes only the xij as the explanatory variable, so what it reflects is the change of the absolute amount. [^Back]

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This Article

ISSN:1000-3894

CN: 11-1087/F

Vol 32, No. 01, Pages 20-35

January 2015

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Article Outline

Abstract

  • 1 Introduction
  • I. Literature review
  • 2 Model improvement and measurement methods
  • 3 Samples, methods and data description
  • 4 Measurement results and analysis
  • 5 The main conclusion
  • Footnote

    References