| This study had two main objectives: (1) to develop theoretically plausible and empirically useful international demand and supply equations for major forest products, and (2) to apply them to investigate the effects of the global trade liberalization on production, exports and price of tropical timber products and on the economic welfare of tropical exporting countries. International demand models for forest products were developed and estimated with data from 64 countries from 1973 to 1997, and international price models with data from up to 18 countries from 1975 to 1995. Dynamic and static versions of the models were tested. The estimation methods were: Ordinary least squares pooling of country data, least squares with country dummy variables, between group pooling, and error-component models. However, rejection of the hypothesis of homogeneity of elasticities across countries led to the investigation of two shrinkage estimators: the Stein rule, and the iterative empirical Bayes estimator. The static models estimated by the least squares with dummy variables (LSDV) appeared to be the best among the methods investigated here: the signs and magnitude of the elasticities were plausible in terms of theoretical expectations, and the within sample prediction errors were among the lowest.; The demand for forest products was found to be price inelastic and income elastic, while the prices of products were influenced mostly by the price of labor, and to a much lesser extent by the rise in the prices of materials and energy.; A partial equilibrium model of the international trade of tropical timber products was developed and used to investigate the effects of a hypothetical removal of import tariffs on production, consumption, exports, prices and economic welfare of the International Tropical Timber Organization (ITTO) tropical exporting countries, from 1975 to 1995. The results suggested that removing tariffs would have increased plywood and sawnwood production and exports, and decreased their prices. However, although the welfare of ITTO tropical exporting countries would have increased, only a few producer countries would have benefited from tariff liberalization. Their increase in welfare would have been negligible compared with that obtained by ITTO consumer countries. |
