IDEAS home Printed from https://ideas.repec.org/p/ags/catpwp/46629.html
   My bibliography  Save this paper

Differentiated Agri-Food Product Trade and the Linder Effect

Author

Listed:
  • Haq, Zahoor Ul
  • Meilke, Karl D.

Abstract

Using a generalized gravity equation, this study tests for the Linder effect in differentiated agrifood product trade, i.e. as the demand structures of two countries become more similar, their trade intensity increases. Two proxies of demand structure, the Balassa index and the absolute value of the difference in per capita GDPs of trading partners, are used to capture the Linder effect. In addition, two measures of bilateral trade, the Grubel and Lloyed index, and the value of bilateral trade are used as the dependent variable. The study investigates the role of the Linder effect in explaining the trade of 37 differentiated agri-food and beverage products categorized into eight product groups: cereals; fresh fish; frozen fish; vegetables; fresh fruit; processed fruit; tea and coffee; and alcoholic beverages. The data covers trade across 52 developed and developing countries from 1990 to 2000. The type of proxy used for the Linder effect and the way in which bilateral trade is measured influence the outcome of the statistical tests for the Linder effect. The Linder effect for cereals, frozen fish, vegetables, processed fruits, and tea and coffee, using the value of trade as the dependent variable, is often accepted but it is generally rejected when the GL index is used as the measure of trade intensity. In brief, the results do not provide strong support for the Linder effect in the trade of differentiated agri-food products.---------------------------------------------------------------------------Revised and published as: Haq, Ul Zahoor and Karl D. Meilke. 2009. “Does the Linder effect hold for differentiated agri-food and beverage product trade?” Applied Economics 43(27):4095-4109.

Suggested Citation

  • Haq, Zahoor Ul & Meilke, Karl D., 2008. "Differentiated Agri-Food Product Trade and the Linder Effect," Working Papers 46629, Canadian Agricultural Trade Policy Research Network.
    • Handle: RePEc:ags:catpwp:46629
    DOI: 10.22004/ag.econ.46629
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/46629/files/Working_Paper_2008-07R.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.46629?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    2. Antonio Aquino, 1978. "Intra-industry trade and inter-industry specialization as concurrent sources of International Trade in manufactures," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 114(2), pages 275-296, June.
    3. David Hummels & James Levinsohn, 1995. "Monopolistic Competition and International Trade: Reconsidering the Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(3), pages 799-836.
    4. Carmen Fillat-Castejon & Jose Ma Serrano-sanz, 2004. "Linder Revisited: Trade and Development in the Spanish Economy," International Review of Applied Economics, Taylor & Francis Journals, vol. 18(3), pages 323-348.
    5. Thursby, Jerry G & Thursby, Marie C, 1987. "Bilateral Trade Flows, the Linder Hypothesis, and Exchange Risk," The Review of Economics and Statistics, MIT Press, vol. 69(3), pages 488-495, August.
    6. Balassa, Bela & Bauwens, Luc, 1987. "Intra-industry Specialisation in a Multi-country and Multi-industry Framework," Economic Journal, Royal Economic Society, vol. 97(388), pages 923-939, December.
    7. Gert-Jan M. Linders & Henri L.F. de Groot, 2006. "Estimation of the Gravity Equation in the Presence of Zero Flows," Tinbergen Institute Discussion Papers 06-072/3, Tinbergen Institute.
    8. Bergstrand, Jeffrey H, 1989. "The Generalized Gravity Equation, Monopolistic Competition, and the Factor-Proportions Theory in International Trade," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 143-153, February.
    9. Hallak, Juan Carlos, 2006. "Product quality and the direction of trade," Journal of International Economics, Elsevier, vol. 68(1), pages 238-265, January.
    10. Francois, Joseph F & Kaplan, Seth, 1996. "Aggregate Demand Shifts, Income Distribution, and the Linder Hypothesis," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 244-250, May.
    11. Bergstrand, Jeffrey H, 1990. "The Heckscher-Ohlin-Samuelson Model, the Linder Hypothesis and the Determinants of Bilateral Intra-industry Trade," Economic Journal, Royal Economic Society, vol. 100(403), pages 1216-1229, December.
    12. Michael McPherson & Michael Redfearn & Margie Tieslau, 2001. "International trade and developing countries: an empirical investigation of the Linder hypothesis," Applied Economics, Taylor & Francis Journals, vol. 33(5), pages 649-657.
    13. Hirschberg, Joseph G. & Sheldon, Ian M. & Dayton, James R., 1992. "An Analysis of Bilateral Intra-Industry Trade in the Food Processing Sector," Occasional Papers 233083, Regional Research Project NC-194: Organization and Performance of World Food Systems.
    14. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November.
    15. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-116, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jošić Hrvoje & Metelko Matej, 2018. "Testing the validity of the Linder hypothesis for Croatia," Croatian Review of Economic, Business and Social Statistics, Sciendo, vol. 4(1), pages 62-73, June.
    2. Sapa, Agnieszka & Kryszak, Łukasz, 2021. "Processed Food Trade Of European Union Countries – The Gravity Approach," Roczniki (Annals), Polish Association of Agricultural Economists and Agribusiness - Stowarzyszenie Ekonomistow Rolnictwa e Agrobiznesu (SERiA), vol. 2021(2).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Haq, Zahoor Ul & Meilke, Karl D. & Cranfield, John A.L., 2011. "The Gravity Model and the Problem of Zero's in Agrifood Trade," Working Papers 116851, Canadian Agricultural Trade Policy Research Network.
    2. Zhang, Daowei & Li, Yanshu, 2009. "Forest endowment, logging restrictions, and China's wood products trade," China Economic Review, Elsevier, vol. 20(1), pages 46-53, March.
    3. Ari Kokko & Patrik Gustavsson Tingvall, 2014. "Distance, Transaction Costs, and Preferences in European Trade," The International Trade Journal, Taylor & Francis Journals, vol. 28(2), pages 87-120, June.
    4. Juan Carlos Hallak, 2010. "A Product-Quality View of the Linder Hypothesis," The Review of Economics and Statistics, MIT Press, vol. 92(3), pages 453-466, August.
    5. Thomas L. Vollrath & Mark J. Gehlhar & Charles B. Hallahan, 2009. "Bilateral Import Protection, Free Trade Agreements, and Other Factors Influencing Trade Flows in Agriculture and Clothing," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(2), pages 298-317, June.
    6. Paas, Tiiu, 2002. "Gravity Approach for Exploring Baltic Sea Regional Integration in the Field of International Trade," Discussion Paper Series 26379, Hamburg Institute of International Economics.
    7. Yongcheol Shin & Laura Serlenga, 2004. "Gravity Models of the Intra-EU Trade: Application of the Hausman-Taylor Estimation in Heterogeneous Panels with Common Time-specific Factors," Econometric Society 2004 Far Eastern Meetings 671, Econometric Society.
    8. Alan V. Deardorff, 2011. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," World Scientific Book Chapters, in: Robert M Stern (ed.), Comparative Advantage, Growth, And The Gains From Trade And Globalization A Festschrift in Honor of Alan V Deardorff, chapter 24, pages 267-293, World Scientific Publishing Co. Pte. Ltd..
    9. Sylvain Petit & Neelu Seetaram, 2018. "Measuring the Effect of Revealed Cultural Preferences on Tourism Exports," Post-Print hal-02133249, HAL.
    10. Philip Sauré, 2012. "Bounded Love of Variety and Patterns of Trade," Open Economies Review, Springer, vol. 23(4), pages 645-674, September.
    11. Sylvain Petit & Neelu Seetaram, 2019. "Measuring The Effect Of Revealed Cultural Preferences On Measuring The Effect Of Revealed Cultural Preferences On Tourism Exports," Post-Print hal-01924443, HAL.
    12. A. Cheptea & A. Gohin & Marilyne Huchet, 2008. "Applying the gravity approach to sector trade: who bears the trade costs?," Post-Print hal-00742046, HAL.
    13. Tamaş Anca, 2020. "Why should the gravity model be taught in business education?," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 14(1), pages 422-433, July.
    14. Xuepeng Liu, 2009. "Trade and income convergence: Sorting out the causality," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 18(1), pages 169-195.
    15. Paola Montero Ledezma, 2017. "The Growth of World Trade: The Robustness of the Evidence," Investigación & Desarrollo, Universidad Privada Boliviana, vol. 2(1), pages 5-19.
    16. Campbell, Douglas L., 2010. "History, culture, and trade: a dynamic gravity approach," MPRA Paper 24014, University Library of Munich, Germany.
    17. Paas, Tiiu, 2002. "Gravity approach for exploring Baltic Sea regional integration in the field of international trade," HWWA Discussion Papers 180, Hamburg Institute of International Economics (HWWA).
    18. Baier, Scott L. & Bergstrand, Jeffrey H., 2001. "The growth of world trade: tariffs, transport costs, and income similarity," Journal of International Economics, Elsevier, vol. 53(1), pages 1-27, February.
    19. Yongcheol Shin & Laura Serlenga, 2007. "Gravity models of intra-EU trade: application of the CCEP-HT estimation in heterogeneous panels with unobserved common time-specific factors," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(2), pages 361-381.
    20. Lionel Fontagné & Michaël Pajot & Jean-Michel Pasteels, 2002. "Potentiels de commerce entre économies hétérogènes : un petit mode d'emploi des modèles de gravité," Economie & Prévision, La Documentation Française, vol. 0(1), pages 115-139.

    More about this item

    Keywords

    Agricultural and Food Policy; International Relations/Trade;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:catpwp:46629. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/catprca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.