From the Editor

The International Trade Journal, Vol. 33, No. 4 (July – August 2019)

Dear Readers,

Welcome to the fourth issue of The International Trade Journal (ITJ)’s thirty-third volume. The articles in this issue look at how firms’ decisions to offshore production affect whether they offshore research and development (R&D); the evidence for a J-curve effect for trade between the United States and Africa; how global supply chains have evolved since the 1990s; and how Vietnam’s specialization in agricultural trade goods has changed since the 1990s.

The first paper in this issue, by Kuang-Chung Hsu, Yungho Weng, Hui-Chu Chiang, and Fang-Chiu Tu, looks at the relationship between R&D and production offshoring.¹ They do this using firm-level data from Taiwanese multinationals. They find that multinationals that offshore a larger share of production also offshore a larger share of their R&D. But their results suggest it matters how offshoring takes place. Firms that offshore production to supply foreign markets offshore a greater share of R&D than firms that offshore production to supply Taiwanese markets. They argue that this is because firms use R&D in foreign countries to better customize their products for consumers in those markets.

The second article, by Mohsen Bahmani-Oskooee and Augustine C. Arize, looks at whether there is an asymmetric J-curve for the United States’ trade balance with 20 African countries.² They find little evidence for a J-curve when they use a linear model – they find evidence for one in only three of the 20 countries. In contrast, they find stronger support when they use a non-linear model, which allows appreciations and depreciations to have asymmetric effects. When they use a non-linear model, their results show a J-curve for eight of the 20 countries. In addition, they find short-run asymmetric effects in almost all of their non-linear models.

The third article, by Manuel Garcia-Ramos and Gerardo Fujii-Gambero, describes how global value networks evolved between 1995 and 2011. Using the Trade-in-Value Added database, the authors construct several measures of how well countries are integrated into global value networks. They show most countries became more integrated over this period, but the biggest change was for China. By 2011, China had become a key node in the international network.

The fourth article, by Viet V. Hoang, looks at Vietnamese imports and exports of agricultural goods. It uses the Lafay Index (LFI) to measure how Vietnam’s trade specialization in agricultural markets changed between 1997 and 2014. The author concludes that the LFI values were mostly stable over this period; Vietnam remained specialized in 2014 in sectors like coffee, rice, and crustaceans that it was already specialized in as early as 1997. The author also found no evidence that the 2008 financial crisis affected agricultural trade specialization.

As usual, we would like to thank the people without whom the ITJ would not succeed. We would like to thank the authors who contribute their papers, the anonymous referees who give detailed and timely comments, the team at the International Trade Institute at Texas A&M International University who process submissions quickly and efficiently, our Editorial Board who guide the journal, and our publisher, Taylor and Francis, who ensures the ITJ keeps its high standards.

Notes

¹ Another recent article in the ITJ has explored offshoring decisions. Nicolini (2019) finds that institutions in the host country affect offshoring decisions by U.S. multinationals.

² Several recent articles in the ITJ have looked for evidence to support the J-curve hypothesis in different countries. Cergibozan and Ari (2018) and Ari, Cergibozan, and Cevik (2019) look at Turkey, Bahmani-Oskooee and Harvey (2015) look at trade between the US and Indonesia, and Bahmani-Oskooee and Harvey (2018) look at Malaysia. Two of these articles (Ari, Cergibozan, and Cevik 2019; Bahmani-Oskooee and Harvey 2018) estimate models that allow for asymmetric effects.