Putting a Smiley Face on the Dragon: Wal-Mart as Catalyst to U.S.-China Trade
Emek Basker and
Van Pham ()
No 506, Working Papers from Department of Economics, University of Missouri
Retail chains and imports from developing countries have grown sharply over the past 25 years. Wal-Marts chain, which currently accounts for 10% of U.S. imports from China, grew 10-fold and its sales 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. Falling trade barriers increase imports not only through direct reduction of input costs but also through an expanded chain and higher investment in technology. This mechanism can explain why a surge in U.S. imports followed relatively modest tariff declines and why Wal-Mart abandoned its Buy American campaign in the 1990s. Also consistent with these facts, we show that tariff reductions have a greater effect the more advanced the retailers technology. The model has implications for the pace of the product cycle and sheds light on the recent apparent acceleration in foreign outsourcing.
Keywords: Wal-Mart; Trade; Economies of Scale; China; Technological Change; Retail Chain (search for similar items in EconPapers)
JEL-codes: L11 L81 F12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int, nep-sea and nep-tra
Date: 2005-07-20, Revised 2005-10-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:umc:wpaper:0506
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 Valerie Kulp ().