Wal-Mart as Catalyst to U.S.-China Trade

Emek Basker and Van Pham

No 710, Working Papers from Department of Economics, University of Missouri

Abstract: Retail chains and the volume of imports of consumer goods from developing countries have grown sharply over the past 25 years. Wal-Marts sales, which currently account for 15% of U.S. imports of consumer goods from China, grew 90-fold over this period, while U.S. imports from China increased 30-fold. We relate these trends using a model in which scale economies in retail interact with scale economies in the import process. Combined, these scale economies amplify the effects of technological change and trade liberalization, creating a two-way relationship between the chains size and its sourcing choice. Falling trade bar- riers increase imports not only through direct reduction of input costs but also through an expanded chain and higher investment in technology. Calculations based on our model suggest that the existence of the chain more than doubles the sensitivity of imports to tariff reductions. Technological innovations account for approximately 60% of Wal-Marts growth from 19842004 and reductions in input cost, due to tariff reductions and changes in sourcing, account for 40% of this growth.

Keywords: Wal-Mart; Trade; Economies of Scale; China; Technological Change; Retail Chain (search for similar items in EconPapers)
JEL-codes: F12 L11 L81 (search for similar items in EconPapers)
Pages: 54 pgs.
Date: 2007-05-15
New Economics Papers: this item is included in nep-cna and nep-int
References: Add references at CitEc
Citations: View citations in EconPapers (24)

Downloads: (external link)
https://drive.google.com/file/d/1TUeN6r2LcFPoCOiC0 ... JXp/view?usp=sharing (application/pdf)

Related works:
Working Paper: Wal-Mart as Catalyst to U.S.-China Trade (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:umc:wpaper:0710

Access Statistics for this paper

More papers in Working Papers from Department of Economics, University of Missouri Contact information at EDIRC.
Bibliographic data for series maintained by Chao Gu ().