scholarly journals Testing the Validity of Linder Hypothesis Using Gravity Model: The Case of Turkey and Selected Transition Economies

2019 ◽  
Author(s):  
Harun Bal ◽  
Müge Manga ◽  
Esma Erdoğan
Keyword(s):  
Foreign Trade ◽  
Capita Income ◽  
Transition Countries ◽  
Trade Flows ◽  
Gravity Models ◽  
Per Capita Income ◽  
Turkish Economy ◽  
Per Capita ◽  
Linder Hypothesis ◽  
Import Intensity

In this study, the validity of the Linder Hypothesis has been tested based on export and import intensity of foreign trade flows between Turkish economy and selected Transition Countries. According to this hypothesis, the more similar the demand structures and per capita income levels of countries, the more they will trade with one another. The hypothesis uses the difference between the per capita income of countries engaged in foreign trade as the main parameter and indicates that a fall in income difference between two countries increases the validity of the Linder hypothesis by increasing the intensity of foreign trade of the countries. The study considers selected Transition Countries having rising share of foreign trade with Turkey during the period 2001-2017 to examine the validity of Linder Hypothesis in the context of foreign trade flows employing Gravity Models that shows "Aggregate Linder Demand Effect" and panel data analysis. Test results does not support Linder hypothesis in terms of export and import intensity of foreign trade flows between Turkish economy and selected Transition Countries during 2001-2017, rather factor endowment does matter for inter-industry foreign trade.

scholarly journals Intra-industry trade in the Visegrad countries: Does the linder hypothesis hold?

2016 ◽  
Vol 66 (2) ◽  
pp. 283-306 ◽  
Author(s):  
Martin Grančay ◽  
Nóra Grančay ◽  
Jolita Vveinhardt
Keyword(s):  
Gravity Model ◽  
Capita Income ◽  
Intraindustry Trade ◽  
Per Capita Income ◽  
Trade Theory ◽  
Income Levels ◽  
Factor Endowments ◽  
Per Capita ◽  
Linder Hypothesis ◽  
Visegrád Countries

In 1961, Staffan Linder attacked mainstream trade economics by diverging from the generally accepted factor endowments theory and focusing on alternative explanations of why countries trade with each other. He was among the first economists to recognise the growing importance of intraindustry trade and presented his hypothesis that the more similar the per capita income levels of countries, the more they tend to trade with each other. This observation has since become one of the main pillars of modern trade theory. The present paper assesses the empirical validity of the Linder hypothesis in the Visegrad countries. Using a variant of the gravity model, it finds that when controlling for other factors, the Visegrad countries tend to trade more with countries with similar per capita income levels than with significantly richer or poorer countries. This observation is consistent with the Linder hypothesis. OLS regressions, Tobit regressions, and robustness checks all support the hypothesis.

scholarly journals An Analysis Of The Determinants Of Intra-Industry Trade: The Case Of Spanish Foreign Trade

2011 ◽  
Vol 4 (3) ◽  
Author(s):  
Joaquín Turmo ◽  
Hugo M. Hervitz ◽  
Carlos Moslares
Keyword(s):  
Foreign Trade ◽  
Capita Income ◽  
Theoretical Models ◽  
Econometric Analysis ◽  
Per Capita Income ◽  
Industry Trade ◽  
Eu Membership ◽  
Alternative Hypotheses ◽  
Per Capita

This paper analyzes the patterns of intra-industry trade observed in Spanish foreign trade and assesses the merits of alternative hypotheses in explaining the determinants of such trade. The results of the econometric analysis support the predictions of the theoretical models. These results show that Spanish intra-industry trade is positively correlated with per capita income, the size of the economies, the existence of a common border and EU membership, while it is negatively correlated with distance and differences in per capita income.

Intra-Industry, Intra-Product, and Inter-Product Trade

2017 ◽  
Vol 17 (3) ◽  
pp. 20170024
Author(s):  
Michael Michaely ◽  
David Wajnryt
Keyword(s):  
Empirical Analysis ◽  
Capita Income ◽  
Manufacturing Sector ◽  
Trade Flows ◽  
Geographical Region ◽  
Per Capita Income ◽  
Half Century ◽  
Industry Trade ◽  
Per Capita ◽  
The Empirical Analysis

The study starts with clarifying the distinction between intra-product and inter-product trade as origins of intra-industry trade. The empirical analysis shows that over the last half century intra-industry trade has strongly intensified, though this trend became less pronounced during the last two decades. Intra-industry trade characterizes the trade flows of Europe distinctly more than of any other major geographical region. It is clearly related to a country’s level of per-capita income; to its size, as measured by aggregate income; to the share of the manufacturing sector in the country’s trade; and, most strongly, to the level of commodity diversification of a country’s trade.

scholarly journals An Empirical Investigation on the Validity of Linder Hypothesis for Manufacturing Exports from Turkey to Eurozone Countries

2021 ◽  
Author(s):  
Emrah Eray Akça ◽  
Harun Bal
Keyword(s):  
Capita Income ◽  
Bilateral Trade ◽  
Similarity Index ◽  
Per Capita Income ◽  
Capita Gross Domestic Product ◽  
Efficient Tool ◽  
Per Capita ◽  
Manufacturing Trade ◽  
Linder Hypothesis ◽  
Cost Differences

Linder's hypothesis expresses that non-homogenous manufacturing trade has been determined by the consumers’ tastes and preferences rather than production cost differences between countries. Also, it is claimed that the consumers’ tastes and preferences relate positively to the level of per capita income of the relevant country. Accordingly, the country pairs which have similar levels of per capita income trade each other more than other country pairs. This study analyses the validity of the Linder hypothesis in manufacturing exports from Turkey to 19 Eurozone countries for the period of 2002-2018. In compliance with the bilateral trade structure, an augmented gravity model is constructed with variables representing the Linder effect. Generally, convergence between country pairs in terms of per capita income is taken while testing the Linder hypothesis into account. Therefore, while testing the Linder hypothesis, the study considers per capita gross domestic product differences between Turkey and Eurozone countries. Besides, as a more salient and efficient tool, a similarity index representing the Linder effect is constructed. By doing so, whether the Linder hypothesis is valid or not can be demonstrated more robustly. Empirical results prove the existence of the Linder effect for Turkey's manufacturing exports to Eurozone countries. In other words, on the contrary of factor endowment differences, demand similarities between Turkey and Eurozone countries encourage this type of trade. In this regard, the exporters who target more manufacturing exports should monitor the course of consumer behaviors and adapt their product structure according to consumer's tastes and preferences in Eurozone countries.

The Problem of Agricultural Taxation in West Pakistan and an Alternative Solution: A Comment (Notes & Comments)

1973 ◽  
Vol 12 (4) ◽  
pp. 433-437
Author(s):  
Sarfaraz Khan Qureshi
Keyword(s):  
Capita Income ◽  
Agricultural Sector ◽  
Central Government ◽  
Policy Implications ◽  
Farm Size ◽  
Per Capita Income ◽  
Tax Rate ◽  
Water Rate ◽  
Per Capita ◽  
The Government

In the Summer 1973 issue of the Pakistan Development Review, Mr. Mohammad Ghaffar Chaudhry [1] has dealt with two very important issues relating to the intersectoral tax equity and the intrasectoral tax equity within the agricultural sector in Pakistan. Using a simple criterion for vertical tax equity that implies that the tax rate rises with per capita income such that the ratio of revenue to income rises at the same percentage rate as per capita income, Mr. Chaudhry found that the agricultural sector is overtaxed in Pakistan. Mr. Chaudhry further found that the land tax is a regressive levy with respect to the farm size. Both findings, if valid, have important policy implications. In this note we argue that the validity of the findings on intersectoral tax equity depends on the treatment of water rate as tax rather than the price of a service provided by the Government and on the shifting assumptions regard¬ing the indirect taxes on imports and domestic production levied by the Central Government. The relevance of the findings on the intrasectoral tax burden would have been more obvious if the tax liability was related to income from land per capita.

A Successful Population Policy: Potentials and Constraints (Distinguishedl Lecture)

1993 ◽  
Vol 32 (4I) ◽  
pp. 411-431
Author(s):  
Hans-Rimbert Hemmer
Keyword(s):  
Developing Countries ◽  
Economic Development ◽  
Population Growth ◽  
Capita Income ◽  
Population Policy ◽  
Mortality Rates ◽  
Per Capita Income ◽  
Access To Health Services ◽  
Industrial Countries ◽  
Per Capita

The current rapid population growth in many developing countries is the result of an historical process in the course of which mortality rates have fallen significantly but birthrates have remained constant or fallen only slightly. Whereas, in industrial countries, the drop in mortality rates, triggered by improvements in nutrition and progress in medicine and hygiene, was a reaction to economic development, which ensured that despite the concomitant growth in population no economic difficulties arose (the gross national product (GNP) grew faster than the population so that per capita income (PCI) continued to rise), the drop in mortality rates to be observed in developing countries over the last 60 years has been the result of exogenous influences: to a large degree the developing countries have imported the advances made in industrial countries in the fields of medicine and hygiene. Thus, the drop in mortality rates has not been the product of economic development; rather, it has occurred in isolation from it, thereby leading to a rise in population unaccompanied by economic growth. Growth in GNP has not kept pace with population growth: as a result, per capita income in many developing countries has stagnated or fallen. Mortality rates in developing countries are still higher than those in industrial countries, but the gap is closing appreciably. Ultimately, this gap is not due to differences in medical or hygienic know-how but to economic bottlenecks (e.g. malnutrition, access to health services)

Income-Based Poverty among Non-Farm Households in Rural Punjab

2020 ◽  
pp. 204-210
Keyword(s):  
World Bank ◽  
Capita Income ◽  
Poverty Line ◽  
Farm Households ◽  
Farm Household ◽  
Expert Group ◽  
Per Capita Income ◽  
Service Category ◽  
Self Employment ◽  
Per Capita

This paper focuses upon the magnitude of income-based poverty among non-farm households in rural Punjab. Based on the primary survey, a sample of 440 rural non-farm households were taken from 44 sampled villages located in all 22 districts of Punjab.The poverty was estimated on the basis of income level. For measuring poverty, various methods/criteria (Expert Group Criteria, World Bank Method and State Per Capita Income Criterion) were used. On the basis of Expert Group Income criterion, overall, less than one-third of the persons of rural non-farm household categories are observed to be poor. On the basis, 40 percent State Per Capita Income Criteria, around three-fourth of the persons of all rural non-farm household categories are falling underneath poverty line. Similarly, the occurrence of the poverty, on the basis of 50 percent State Per Capita Income Criteria, showed that nearly four-fifths of the persons are considered to be poor. As per World Bank’s $ 1.90 per day, overall, less than one-fifth of rural non-farm household persons are poor. Slightly, less than one-fourth of the persons are belonging to self-employment category, while, slightly, less than one-tenth falling in-service category. On the basis of $ 3.10 per day criteria, overall, less than two-fifth persons of all rural non-farm household categories were living below the poverty line.

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