Changing Import Preferences and Their Impact on The Effects of Trade Liberalization

TZU HANYANG, HAN PANGSU

Journal of International Logistics and Trade

ISSN: 1738-2122

Open Access. Article publication date: 31 December 2015

Issue publication date: 31 December 2015

615
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Abstract

In the last two decades, the dependence of Taiwan’s manufacturing production on imported intermediate inputs has steadily risen. Meanwhile, the market share of imported consumable manufacture products has also increased. The steady rise of both import shares may not be explained by price fact or since the relative import prices have shown no decreasing trend. The scenario of constantly buying more imported goods when they are not cheaper can be treated as a preference change in favor of imported goods, which may be caused by the popularity of outsourcing, increasing product varieties and persistent trade barriers, as literatures indicated. Traditional macroeconomic models primarily consider the price mechanism in their import demand estimates, with no concern for changes in import preferences. Neglecting changing import preferences in a rapid globalization environment may yield biased empirical results. In this article, we incorporate the import preference factor into a single-country Computable General Equilibrium (CGE) model and use it firstly to quantify the scale of preferences change and then to test how the preferences change affects the effects of trade policy. The empirical results with and without the concern of import preferences change are compared to yield the scale of bias caused by neglecting the change.

Keywords

Citation

HANYANG, T. and PANGSU, H. (2015), "Changing Import Preferences and Their Impact on The Effects of Trade Liberalization", Journal of International Logistics and Trade, Vol. 13 No. 3, pp. 75-111. https://doi.org/10.24006/jilt.2015.13.3.75

Publisher

:

Emerald Publishing Limited

Copyright © 2015 Jungseok Research Institute of International Logistics and Trade

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This is an Open-Access article distributed under the terms of the Creative Commons Attribution Non-Commercial License (http://creativecommons.org/licenses/by-nc/4.0/) which permits unrestricted non-commercial use, distribution, and reproduction in any medium, provided the original work is properly cited


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