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Abstract - Quest for Global Competitiveness - Universidad de Puerto ...

Abstract - Quest for Global Competitiveness - Universidad de Puerto ...

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estimated coefficient as the elasticity of the variables and to avoid omitted variable biasas well as to capture the temporal dynamics of tra<strong>de</strong>. It has the following specification:Ln X it/ji = β 0 + β 1 ln PGDP it + β 2 ln PGDP jt - β 3 ln Dist it/jt + β 4 ln STRJ it/jt + β 5 INTCBI/LOME/CARICOM + U ijtWhere;Ln X it/ji is the natural log of real exports of FFP and FV from Guyana to the each of itstrading partners valued at US $‟000 at 2004 prices. Export data were obtained from theUnited Nations Commodity Tra<strong>de</strong> Statistics (COMTRADE) database and the Bureau ofStatistics, Guyana. The data was used at the 2 digit level of dis-aggregation based onrevision 1 of the standard industrial tra<strong>de</strong> classification system (S.I.T.C). Time seriesaverages were used to fill missing gaps in the data set <strong>for</strong> the years 1993 and 1995.Ln PGDP it and Ln PGDP jt are, respectively, the natural log of Guyana‟s real Per CapitaGDP and the Per Capita GDP of its trading partners, measured in US$‟000 at 2004prices. Data were obtained from the National Accounts Main Agrregate Database,United Nations Statistics Division 6 .The Per Capita GDP variables were used to measure the effect of income on tra<strong>de</strong>relations between Guyana and the USA. Income measures the economic size ofcountries and respectively reflects purchasing and output capacity of the importing an<strong>de</strong>xporting country. For the importing country, a larger per capita GDP translates into alarger purchasing capacity, and hence a greater <strong>de</strong>mand <strong>for</strong> imported goods (Kalbasi2001). Per capita GDP is also an indication of the level of <strong>de</strong>velopment of a country.Based on the specialization hypothesis proffered by the H-O theorem and theories ofeconomies of scale and product differentiation, economically larger countries areexpected to produce a variety of goods and tra<strong>de</strong> more (Evenett & Keller 1998;Deardorff 1995).The ceteris paribus effect of the per capita GDP is there<strong>for</strong>e assumed to be positive.6 http://unstats.un.org/unsd/snaama/selectionbasicFast.asp9

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