From the Editor

The International Trade Journal, Vol. 31, No. 2 (April–June 2017)

Dear Readers,

Welcome to the second issue of The International Trade Journal (ITJ)’s thirty-first volume. The four articles in this issue discuss the effect of exchange rate uncertainty on trade between the U.S. and Pakistan; the acculturation of Hispanic consumers in the U.S.; technology diffusion between northern and southern firms; and how exposed different Indian firms are to exchange rate uncertainty.

The first article in this issue, by Mohsen Bahmani-Oskooee, Misbah Nosheen, and Javed Iqbal, looks for direct effects and indirect third-party effects of exchange rate uncertainty on trade between the U.S. and Pakistan.¹ Using disaggregated industry-level data, the authors find that exchange rate volatility between the U.S. dollar and the Pakistani rupee and between the rupee and the Chinese yuan have long- and short-run effects on trade between the U.S. and Pakistan. In particular, they find evidence of a third-party effect due to volatility in the yuan-rupee exchange rate in more than half of the industries which they study. Many large U.S. exporting industries, but no large U.S. importing industries, are affected by volatility in the yuan-rupee exchange rate.

The second article in this issue, by Arturo Z. Vasquez-Parraga and Humberto Valencia, looks at the acculturation process for Hispanic adults in the United States. The article develops continuous measures of cultural awareness and ethnic loyalty and uses this to classify Hispanic adults into four groups. The authors note that there is also a fifth transitional state in the acculturation process, which consists of resilient consumers. The authors argue that acculturation is best understood when characteristics of both cultural awareness and ethnic loyalty are taken into account as continuous processes.

One of the most important benefits of trade is the diffusion of technologies across countries.² In the third article in this issue, Julien Berthoumieu presents a theoretical model of technology diffusion between advanced firms in the North and less advanced firms in the South. He shows that Northern governments have various tools at their disposal, including patent subsidies and production subsidies, which can slow diffusion down, giving Northern firms more time to exploit their technological monopolies. Southern governments, on the other hand, have tools that can do the reverse.

The final article in this issue, by Sonali Madhusmita Mohapatra and Badri Narayan Rath, looks at how exposed different Indian firms are to exchange rate risk. They find that exporters and small firms tend to be more exposed to exchange rate risk than non-exporters and large firms. They also find that firms with a high market-to-book ratio tend to be more exposed to exchange rate risk.

As usual, we would like to acknowledge the people without whom the ITJ would not succeed. We would like to thank the authors for their contributions, the anonymous referees for the detailed and timely comments they provide, the team at the International Trade Institute at Texas A&M International University that ensures that submissions are processed quickly and efficiently, our Editorial Board for their expert guidance, and our publisher, Taylor and Francis, for ensuring the high quality of the ITJ.

Notes

¹ Many studies have looked at the effect of exchange rate volatility on trade. Bouoiyour and Selmi (2016) provide a recent meta-analysis of these studies. Bahmani-Oskooee and Bolhassani (2014) look at whether there is a third-party effect on trade between the U.S. and Canada due to exchange rate volatility between the U.S. dollar and the Mexican peso.

² Trade in intermediate goods is thought to be especially important for the diffusion of technology. For example, Sharma (2014) finds that Indian firms that import more intermediate inputs are more productive than firms that import less.