A Note on International Trade and Market Structure

Abstract

As exports become an increasing part of industry sales, the determinants of a firm's international position become increasingly important. Tests have supported single factors, such as, product life cycle [Lutz and Green 1983] as well as multi-factor models, to explain the determinants of industry imports and exports [Stern and Maskus 1981; Harkness and Kyle 1975; Baldwin 1971]. This study also presents a multi-factor analysis of the determinants of U.S. trade patterns. This study utilized the SPI (Strategic Planning Institute) data set which allows research at the business unit (product line) level. Results indicate that productivity and product development are the principal characteristics of high export percentage business units. These findings are especially true for nonconsumer industries. Thus to the degree that business are concerned over the short-term costs of product development, direct or indirect (for example, insurance) government aid may be required to promote U.S. export industries.