Dataset Information

Modeling International Trade of Forest Products: Application of PPML to a Gravity Model of Trade.

ABSTRACT: To model international trade of forest products we use a gravity model of trade. In modeling trade, we estimate the impact of importer gross domestic product (GDP), exporter GDP, and distance between trading partners using Poisson pseudo-maximum likelihood (PPML). When estimating the log-linearized gravity model (ordinary least squares [OLS]), two issues arise. First, potential bias associated with truncation of all zero-trade observations due to the nonexistence of the natural log of zero. Second, heteroscedasticity can bias results from the log-linearized gravity model because of the multiplicative error term of the stochastic gravity model. To address these two issues, we propose avoiding the log-linearized gravity model and instead estimate the nonlinear gravity model via PPML. To estimate the model, trade data are compiled from the Food and Agriculture Organization of the United Nations. The observation window is from 1997 to 2014 and covers 13 product categories at a country-pair level. In our estimation, we find systematic differences in estimates from OLS in comparison with estimates from PPML. Using the estimated elasticities, in combination with estimates of future GDP from shared socioeconomic pathways, we project future US exports to the year 2030 for each item category in addition to total exports for Brazilian wood pulp, New Zealand industrial roundwood, and Canadian coniferous sawnwood. Using our approach, we provide a tool for policy makers and industry leaders alike to make informed decisions over prior estimates of forest product trade.

SUBMITTER: Larson J

PROVIDER: S-EPMC7147786 | biostudies-literature | 2018

REPOSITORIES: biostudies-literature

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Modeling International Trade of Forest Products: Application of PPML to a Gravity Model of Trade.

Larson Justin J Baker Justin J Latta Gregory G Ohrel Sara S Wade Christopher C

Forest products journal. 20180101 3

To model international trade of forest products we use a gravity model of trade. In modeling trade, we estimate the impact of importer gross domestic product (GDP), exporter GDP, and distance between trading partners using Poisson pseudo-maximum likelihood (PPML). When estimating the log-linearized gravity model (ordinary least squares [OLS]), two issues arise. First, potential bias associated with truncation of all zero-trade observations due to the nonexistence of the natural log of zero. Seco ...[more]

PMID: 32280136

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Project description:Objective The objective of this study was to identify factors influencing the development of China-ASEAN trade- from the total economic volume of both sides, distance, the population size of ASEAN countries, the construction of a free trade area, and the signing of the Belt and Road initiative, resource endowment per capita, the exchange rate between RMB and ASEAN countries, and the land area of ASEAN countries—to develop a conceptual framework for China-ASEAN trade potential. Study design This study uses panel data from 2001 to 2021 that is evenly distributed among 10 ASEAN countries to serve as the dataset. Firstly, the unit roots are checked and the cointegration relationships are examined, focusing on the heterogeneity test. Based on the classical trade gravity model, the innovative trade gravity model with key influencing factors is constructed. On the basis of the classical trade gravity model, an innovative trade gravity model of key influencing factors is constructed. The trade potential model is used to calculate the direct trade potential coefficient between China and ASEAN countries, which points out the direction for the sustainability of bilateral trade. Results This study finds that among the factors affecting China-ASEAN bilateral trade, the total economic output of both sides, distance, population size of ASEAN countries, the construction of the FTA, and the signing of the Belt and Road Initiative all have a positive impact on bilateral trade. Three influencing factors, namely per capita resource endowment, exchange rate between RMB and ASEAN countries, and the size of ASEAN countries, have a negative impact on bilateral trade, but to a lesser extent. The trade potential between China and Vietnam falls into the category of potential re-modelling, indicating that both sides are currently utilizing their trade potential to the greatest extent possible, that trade growth space is limited, and that new trade opportunities must be discovered. The trade potential index between China and nine ASEAN countries, excluding Vietnam, is in the potential-exploiting category, indicating that the potential has not been fully utilized by both sides and that there is still room for growth in the scale of trade between the two countries. Conclusion With the shift of the world’s economic center of gravity in the direction of Asia following COVID-19, China and ASEAN countries should seize the opportunity to strengthen their comprehensive strength and economic aggregates and further develop China’s constructive role in the regional organization. The signing of the Belt and Road Initiative and the construction of a free trade zone has had a positive effect on the development of bilateral trade. Propose that: positive trade factors should continue to be strengthened, trade barriers should be removed, and new dynamics of bilateral trade growth should be enhanced.

Project description:This study evaluated whether processing non-timber forest products (NTFPs) and establishing trade partnerships between forest communities and companies enhance the outcomes of NTFP commercialization. In particular, we evaluated whether product processing, partnerships, or their combination was associated with a number of outcomes related to the well-being of forest inhabitants and forest conservation. We based our analyses on ethnographic and quantitative data (i.e., survey and systematic observations) gathered at seven communities from five societies of the Brazilian and Bolivian Amazon. Our results indicated that product processing and partnerships do not represent a silver bullet able to improve the results of NTFP commercialization in terms of well-being and conservation indicators. Compared with cases without interventions, households adopting partnerships but not product processing were most often associated with improved economic proxies of well-being (total income, NTFP income, food consumption and gender equality in income). In comparison, the combination of product processing and partnerships was associated with similar outcomes. Unexpectedly, product processing alone was associated with negative outcomes in the economic indicators of well-being. All of the investigated strategies were associated with less time spent in social and cultural activities. With respect to forest conservation, the strategies that included a partnership with or without processing produced similar results: while household deforestation tended to decrease, the hunting impact increased. Processing alone was also associated with higher levels of hunting, though it did not reduce deforestation. Our results indicate that establishing partnerships may enhance the outcomes of NTFP trade in terms of the financial outcomes of local communities, but practitioners need to use caution when adopting the processing strategy and they need to evaluate potential negative results for indicators of social and cultural activities. With respect to conservation, the three strategies are promising for reducing deforestation, but more pervasive impacts, such as hunting, might increase.

Dataset Information

Modeling International Trade of Forest Products: Application of PPML to a Gravity Model of Trade.

Publications

Modeling International Trade of Forest Products: Application of PPML to a Gravity Model of Trade.

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