An Empirical Research On The Impact Of Time On International Trade

With the ever-decreasing tariff level of every country and the prevalence of international fregmented production, trade time in international trade is pushed to an important position that never reaches before. The research of the relationship between time and international trade is still in its infancy, most of which come from economics and management literature. In this paper, the relationship between time and international trade is specifically and systematically researched. The effects of time on international trade are systematically analysed theoretically and empirically through theoretical synthesis, model deduction, economatric analysis method.The research of the effects of time on international trade mainly depends on international trade theory and theories regarding international supply chain. The effects of time on international trade can be expressed by several aspects below. Firstly, like tariff and non-tariff barriers, time can be act as trade barrier that affects the probability and volume of international trade. This kind of effect becomes more obvious under the current international fregmented production situation. Secondly, besides that the interaction of increasing returns and transportation cost can lead to agglomeration under the perspective of new economic geography, time can also lead to agglomeration. Time cost is enlarged significantly under the international fragmented production situation. The cost caused by the delay of international distribution increases constantly along the supply chain and even jeopardizes the operation of the whole international supply chain. Companies in time-sensitive sector may cluster together to deal with the cost and crisis caused by time delay. Thirdly, since time becomes more and more important in international trade, the transport mode choice becomes a sub-subject in international trade research. The difference in the extent of time-sensitiveness among various products decides the decision of transport mode choice. Both the demand variaty and international fragmented production make more and more products become time-sensitive. Air transport therefore is used more extensively. Fourthly, there is time-sensative factor in international trade commodities. This factor interacts with the difference of geographical location of countries and the choice of transport mode, which makes time affect international trade pattern. The regions near market have comparative advantage in producing time-sensitive products. Advanced air transport is helpful to break geographical barrier and to create new types of international trade pattern. Lastly, from micro-enterprise point of view, international companies can acquire competitive advantage in international trade through time competition, which has become a new source of profit of multinational companies.Based on relating literature and the hypothesize of the preference of rapidness and timeliness by consumers, this paper constructs a theoretical model regarding the relationship of transport mode and international trade pattern and a global purchasing model based on uncertainty and time cost. In the first theoretical model, besides country-specific factors such as productivity and wage level, factors affecting export also includes product-specific factor such as time-sensitiveness. The model supports that the higher a country's relative productivity and the lower of this country's relative wage level and the relative transport cost including timeliness are, the higher the probability for this country winning the market of the import country. When the air transport cost of developing countries decreases, the export product structure will become more similar as developed countries. In the second theoretical model, purchasers have to make cost trade-off during supplier selection or during production facility location in global sourcing process. The further from market of the supplier, purchasers will more likely select those suppliers who have more optimistic cost structure. However, more transport cost (including time cost and monetary cost) will be paid in this scenario. On the other hand, purchasers may select suppliers near market to spare transport cost, but more purchasing or production cost is usually paid by this way. When considering time cost, purchasers will emphasize time cost even more during global sourcing process. The lowering of time cost of supplier or the country that the supplier locates becomes more and more important to the development of international trade.In this paper, the effect of time on international trade is also empirically analysed. According to different nature of trade time, empirical analysis includes two parts. Firstly, the effects of trade time on East Asia trade are researched by using extended gravity model. In this part, trade time is divided into trade facilitation time and logistics time according to the nature of trade time. Trade facilitation time includes document processing time and customs time, which is affected by a country's soft circumstance such as policy and institution. Logistics time includes inland transportation time and port operation time. Logistics time is detemined by a country's infrastructure and belongs to hard circumstance. The econometric results reveal that both trade facilitation time and logistics time significantly affect the probability of international trade, but the effects of logistics time are more significant than that of trade facilitation time. As to the effect of total trade time on international trade, a country's export volume will reduce5%when this country's total trade time increase10%. The results from difference-in-difference model reveal that when the relative total trade time between two countries increases10%, the relative export volume of time-sensative products will decrease5.5%and the relative export volume of parts will decrease7.7%. The second part of empiricl analysis mainly investigates the relationship between international trade and transport mode choice from the perspective of international transportation time. The analysis focuses on the effects of product demand nature and international fragmented production on the transportation mode choice. Through the econometric analysis of detailed HS9China and Japan trade data provided by Japanese Customos, the increase of product demand uncertainty, unit product value and the share of intra-industry trade will result in the probability and the share of air transport usage. In addition, compared with the regression results from all mechanical and electrical products, the intra-industry trade of parts has more significant effect on the share of air transport uasge.Lastly, based on the theoretical and empirical analysis, this paper provides the policies and suggestions as how China can participate in international trade competitively in the new international trade situation. The policies and suggestions include improving bilateral trade efficiency through strengthening international economic cooperation; making rapid development of the construction of air transport system and international air port; improving trade facilitation and the competitiveness of infrastructure; implementing global trade management approach to improve the competitiveness of foreign trade companies; improving the ability of international trade integration through encouraging international integrated third party logistics business.