Assessing the displacement effect of exports with gravity trade model: China's textile and clothing case and OBOR implications
Gravity trade model, Textiles and clothing exports, One belt one road
This paper employs the gravity model to investigate how the growth of China’s textile and clothing (T&C) exports is displacing the exports of other Asian developing countries over the 1990-2015 period. Aggregate analyses were undertaken, and the endogeneity of Chinese exports were accounted by applying instrumental variables with country fixed effects. It was found that there was a negative impact of China’s emergence on T&C exports on other Asian developing countries. We further explored whether such displacement effect varies across Asian countries and the results showed that a more pronounced effect was found in low-income countries than high-income ones. Our findings suggest that the export competitiveness of China’s neighbors, i.e. both more and less developed Asian countries, are affected by the emergence of China in T&C Trade. The implications of China’s One Belt, One Road initiative are also discussed.
Journal of International Logistics and Trade
Lau, Y.,Chan, M.,& Nguyen, H. (2017). Assessing the displacement effect of exports with gravity trade model: China's textile and clothing case and OBOR implications. Journal of International Logistics and Trade, 15 (1), 19-32. Retrieved from https://repository.vtc.edu.hk/thei-fac-de-sp/154