Trade with Time Zone Differences: Factor Market Implications

The main purpose of this study is to illustrate, with a simple two‐factor (skilled and unskilled labor) model, how a time‐saving improvement in business‐services trade benefitting from differences in time zones can have an impact on national factor markets. In doing so, we intend to capture the situation where the night‐shift work in one country is replaced by the day‐shift work in another country. In other words, we will show that trade with time zone differences will result in shifts of the relative supplies and demands for skilled labor around the globe.     

NETWORK EXTERNALITIES AND COMPARATIVE ADVANTAGE

In this article, I examine how the network externalities of communications activities and trading opportunities interact to determine the structure of comparative advantage. These interactions are examined by constructing a two‐country, three‐sector model of trade involving a country‐specific communications network sector. The role of the connectivity of network providers, which allows users of a network to communicate with users of another network, is also explored.     

Interconnectivity of communications networks and international trade

Abstract In this study a multi‐country model of trade is developed that captures the role of country‐specific communications network interconnectivity, which enhances trade in intermediate business services. The number of countries connected to internationally interconnected networks is found to determine the structure of comparative advantage. That is, countries with interconnected networks have a comparative advantage in the good that requires business services provided via networks. In connected countries, producers of that good benefit from the efficient transmission of business services. This research also demonstrates that countries whose country‐specific networks are not connected to the interconnected networks may become worse off as the result of trade. JEL Classification: D43, F12
Interconnectivité des réseaux de communication et commerce international Ce mémoire développe un modèle de commerce international impliquant plusieurs pays qui cerne le rôle de l'interconnectivité des réseaux de communication de chaque pays. Cette interconnectivité enrichit les flux de commerce dans les services intermédiaires d'affaires. Il appert que le nombre de pays connectés aux réseaux internationalement connectés détermine la structure de l'avantage comparatif. Ce qui veut dire que les pays qui ont des réseaux interconnectés ont un avantage comparatif dans le bien qui requiert les services d'affaires fournis par les réseaux. Dans les pays connectés, les producteurs de ces biens bénéficient de la transmission efficace de ces services d'affaires. La recherche montre aussi que les pays dont les réseaux nationaux ne sont pas connectés aux réseaux interconnectés peuvent voir leur situation s'empirer en conséquence du commerce international.     

Virtual integration and endogenous growth in the world economy

This study develops a three-country model of endogenous growth that captures the role of the interconnection of country-specific communications networks (i.e., virtual integration), which affects the productivity of R&D activity through an increase in stock of knowledge capital. The number of countries connected to internationally interconnected networks is found to determine the structure of dynamic comparative advantages. That is, countries with interconnected networks have a dynamic comparative advantage in differentiated products that require communication and activities. In the connected countries, researchers gain from efficient activity through the utilization of the greater stock of knowledge capital. The author acknowledges the comments from the participants at the 56th International Atlantic Economic Conference, held October 16–19, 2003, in Quebec City, Canada. The author is also grateful to the anonymous referee of this journal for helpful comments and suggestions.     

A New Dynamic Trade Model of Increasing Returns and Monopolistic Competition

This paper formulates a two‐country by two‐factor by two‐good dynamic Chamberlin–Heckscher–Ohlin model of international trade with endogenous time preferences. After proving the existence, uniqueness and local saddle‐point stability of the steady state, we examine the relationship between initial factor endowment and trade patterns in the steady state. It will be shown that (i) given that the representative household in each country supplies an equal amount of labor, only intra‐industry trade occurs in the steady state and (ii) other things being equal, the country with higher labor efficiency becomes the net exporter of the labor‐intensive good.     

Minimum investment requirement,financial market imperfection and self-fulfilling belief

We develop a model in which a strategic complementarity in saving decisions arises due to a minimum investment requirement and financial market imperfection. We explore the role of self-fulling beliefs in determining the long run dynamics. The model exhibits a wide range of dynamic phenomena such as a poverty trap, a big push and a sunspot equilibrium, depending on the level of financial market imperfection. They account for excessive volatility and a sudden change in the saving rate and its macroeconomic consequences without any shocks to fundamentals.     

Competing Industrial Standards and the Impact of Trade Liberalization

The main purpose of this study is to illustrate, with simple trade theory, the relationship between competing industrial standards and trade liberalization. We assume that there are two competing industrial standards in an international context, each of which applies to a group of differentiated products. A product can be used only in combination with other products based on the same industrial standard. We examine the impact of trade liberalization (i.e., a decline in trade costs) on consumers’ choice of a standard. It will be shown that the degree of indirect network effects, captured with substitution between differentiated products, plays an important role as a determinant of the impact of trade liberalization.     

Endogenous inequality and fluctuations in a two-country model

We study a two-country version of Matsuyama's [K. Matsuyama, Financial market globalization, symmetry-breaking, and endogenous inequality of nations, Econometrica 72 (2004) 853-884] world economy model. As in Matsuyama's model, symmetry-breaking can be observed, and symmetry-breaking generates endogenously determined levels of inequality. In addition, we show that when the countries differ in population size, their interaction through credit markets may lead to persistent endogenous fluctuations.     

Growth with time zone differences

We propose a two-country growth model of intermediate business-services trade that captures the role of time zone differences. It is shown that a time-saving improvement in intermediate business-services trade involving production in different time zones can have a permanent impact on productivity.