Agriculture & New New Trade Theory
Theoretical, Methodological, and Empirical Issues
by Sören Prehn
Date of Examination:2012-05-15
Date of issue:2013-03-27
Advisor:Prof. Dr. Bernhard Brümmer
Referee:Prof. Dr. Bernhard Brümmer
Referee:Prof. Dr. Stephan von Cramon-Taubadel
Persistent Address:
http://dx.doi.org/10.53846/goediss-3787
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Abstract
English
In this thesis, I dealt with the question if the so-called 'New New Trade Theory' can also be applied to the agricultural sector, and if so, which recommendations arise. The thesis consists of five discussion papers dealing with a special problem each. While the first two papers focus on theoretical issues, the third as well as fourth focus on methodological issues and the fifth on empirical subjects. In summary, the are no compelling reasons neither from a theoretical point of view nor from a methododological standpoint why the 'New New Trade Theory' should not be applied to the agricultural sector. In order to apply models of agricultural trade which assume heterogeneous agricultural enterprises to the agricultural sector, the necessary theoretical conditions can be justified theoretically as well as empirically. Furthermore, neither from a theoretical standpoint nor from a methodological point of view there is nothing to be said against applying the 'New New Trade Theory' to the agricultural sector because corresponding models can be integrated in an intermediated trade structure. The standard estimation approach for economietric trade models, Poisson Pseudo Maximum Likelihood estimator, is also applicable to disaggregate trade models without restrictions. The positive statistical properties of the estimator remain unaffected. There is empirical evidence of the statistical and the economic relevance of the 'New New Trade Theory' for the practical agricultural market analysis. From the political point of view, there are also serious reasons to apply the 'New New Trade Theory' to the agricultural sector. According to the 'New New Trade Theory', trade policies have not only a direct influence on agricultural trade, but also on the productivity of agricultural enterprises, and therefore on the structural change in agriculture. Policies aiming at either increasing the productivity in agriculture or shaping the structural change in agriculture should take these interrelations into considerations. Contradicting policies should be avoided beforehand. Furthermore, the hitherto estimations of elasticities of trade flows have been too low, the trade elasticities should significantly higher. Conversely, higher elasticities of trade flows imply higher welfare gains by free trade emphazising the importance of liberalization policies in agricultural trade. As a result of this thesis, it can be said that the 'New New Trade Theory' is not only applicable to the agricultural sector, but it also should be applied from the perspective of agricultural market policy. The 'New New Trade Theory' provides new insights from which especially policy consulting should benefit. But there still is a need for further research because the theory has not been fully developed yet, and only a few studies have been conducted which have proved empirically the significance of the 'New New Trade Theory' for the agricultural sector.
Keywords: New New Trade Theory; Heterogeneous Firms; Gravity Model; Poisson Pseudo Maximum Likelihood; Agricultural Sector Analysis; Common Agricultural Policy