A Comparative Analysis of the Competitive Geographical Trade Performances of the Usa, Frg, and Japan: The Markets and Marketers Hypothesis

Abstract

The recent competitive trade performances of the USA, FRG, and Japan are examined within the context of a markets and marketers hypothesis of international trade. The hypothesis is drawn from the theory of differentiated markets and encompasses both the export and import sides of international bilateral markets. Generally, the results of an indirect test support the markets and marketers hypothesis. Particular results suggest that the current American trade deficit is largely due to the inability of the USA to export well, and not to the USA being an easy import market. In addition, particular results indicate that Japan's trade surplus is due not only to superior Japanese export bundle differentiation but also to the inability of its trade partners to adequately differentiate their export bundles for Japan's import market.