Trading with Asia's Giants
The United States' large and sustained trade deficit with Asia raises concerns in the United States about its competitiveness in the region. In contrast to the current public policy debate, which has focused on imports from Asia, this chapter seeks to examine how the economies of China and India compare as markets for US exporters. The chapter begins by noting that US exports to both countries do appear low relative to the performance of Japan and the EU-15. It examines potential explanations for the weak exports from three different perspectives: (1) the commodity composition of US exports to these economies; (2) the role of multinational corporations in facilitating trade flows; and (3) the use of ‘gravity equations’ to estimate bilateral trade patterns while controlling for a variety of country-specific characteristics.
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