Assessing the displacement effect of exports with gravity trade model: China's textile and clothing case and OBOR implications. Issue 1 (30th April 2017)

• Record Type: Journal Article
• Authors: Lau, Yui-Yip; Chan, Man-Hin; Nguyen, Hong-Oanh
• Is Part Of: Journal of international logistics and trade. Volume 15:Issue 1(2017)
• Page Start: 19
• Page End: 32
• Publication Date: 2017-04-30
• Subjects: China -- Asian developing countries -- Gravity model -- Textile and clothing exports; International trade -- Periodicals; Business logistics -- Periodicals; Commerce international -- Périodiques; Logistique (Organisation) -- Périodiques; Business logistics; International trade; Periodicals; 382.05
• DOI: 10.24006/jilt.2017.15.1.019
• Languages: English
• ISSNs: 1738-2122

Abstract

Abstract : 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.