ECON 3110H. Trade Report-El Salvador vs. Mexico and Spain
Please write all the contents according to the requirements in the document. / Please write all the contents according to the requirements in the file.
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DEPARTMENT OF ECONOMICS ECON 3110H – INTERNATIONAL TRADE Trade Report Due date: November 14 Instructions: Your report is not to exceed ten (10) typed, double-spaced pages, 12pt font, including tables and references. You must submit using SafeAssign via Blackboard by the due date. Trade Patterns: You are to characterize the trading patterns of an assigned country and identify the nature of its comparative advantage. You will present trade data for your country in tables, and describe the patterns of trade by item that your tables show. You will then use the theories we studied and apply them to a particular country’s bilateral trade patterns. You must use a primary source for your trade data (two are listed below) and you must present your data in appropriately formatted and properly labeled tables. Tables showing the distribution of trade by good category are most informative when exports and imports and lined up by good category in separate columns. To select your country, follow the instructions on the next page “How to Generate Country Key”, then use this key to match the key in the file “countries.xlsx” posted to Blackboard. Your report will address the following questions: 1. Show the composition of trade by good in a table for your country with the world. Show values and the distribution by percentage of the total for each good category. What are the major import and export commodities? How important is service trade? In describing these trade patterns, you should attempt to aggregate commodity groupings in a reasonable way while still showing sufficient detail – see discussion on trade data categories below. 2. Show the distribution of trade by countries of the world in a table for your chosen country. Report values and the distribution by percentage of the total for each country. Which countries are your country’s major trading partners? In your discussion, you will indicate what you consider to be ‘major.’ Usually we consider those countries whose trade makes up more than a minimum percentage of trade. 3. In well-formatted tables, show the bilateral import and export patterns between your country and two of its trading partners. Line up categories so that exports and imports of the same goods category are shown in a row. Show values and the distribution by percentage of the total with each country. Choose one of the two trading partners as one distant from your country. Do bilateral trade patterns differ for these two trading partners? Make sure to highlight differences in these trade patterns for the two countries. 4. Provide reasonable explanations for these trade patterns (in parts b. and c. above) based on the theories we have studied (factor endowments, technology, etc)? Contrast trading patterns by discussing at least two examples (i.e. Canada <-> U.S vs. Canada <-> Japan). Support your conclusions with facts and evidence from other studies where appropriate. Any information you can get on endowment differences might help. Simple data might be population density as an indicator of land abundance. Trade data are available from the UN Comtrade Database. See note on trade data at end of assignment for details on usage. An alternate source for the same data is here: Trade Map. Switch selection box between“Product” and “Service”. Other sources of data to measure endowments: • World Bank’s World Development Indicators Database. Population, geographic measures of land area, arable land, resources, national accounts, and much much more. • Penn World Table. Capital Stock (ck), labour force (emp), population (pop). ECON 3110H - TRADE REPORT How to Generate Country Key • using your sid, drop the leading “0”, then add up the next five digits. example sid “0234567”, so add up 2+3+4+5+6 = 20. • multiply the sum from above by (1 + the last digit of sid on the right). 20×(1+7) = 20×8 = 160. • divide this result by 3, and drop all digits to the right of the decimal. 160/3 = 53.33, so key = 53. • use this key to match the country key column in file “countries.xlsx” key 53 matches Kazakhstan. Notes on Using Comtrade Trade Database • Go to UN Comtrade data webpage: http://comtrade(dot)un(dot)org/data. 1. Type of product: choose “goods” or “services”. You will use both for assignment. 2. Frequency: leave as “Annual” 3. Classification: leave as “HS: As reported” 4. Select desired data – For all entry boxes, you may either click in box and type your entry, or choose from selections. Entry box has auto-complete so start typing and see what happens. – Periods: Try 2017, could use earlier year if you like. If query comes up blank, it may be that data are not yet available for 2017 for your country, so back up a year until you get results. – Reporters: * first click on the “x” in “All” to remove that box. * type in name of country. As you type the input cell will autocomplete. Click on the one you want when it comes up. * type in name of trade partner, same things happens. You may enter up to 5 reporters, but we need 3. Put selected country and two trading partners in this cell. – Partners: same process as Reporters above. Again, you want both countries listed here. – Trade Flows: Set as appropriate to “Export” and/or “Import”. For bilateral flows, with three countries entered in both Reporters and Partners entry boxes, choose “Import” as import data are more precise. – HS (as reported) commodity codes: keep totals, and add “AG2”. 5. See the results: click on “Download CSV” • Each line of the data is one bilateral trade flow by HS2 commodity code. You can delete columns that are unnecessary. The columns that are necessary are: reporter, partner, commodity code, commodity, and trade value. You will want to sort your data by reporter, partner, and commodity code. • Commodity Code: numbers from 1-99. These are the Harmonized System (HS) commodity codes. To see code definitions, go to http://www(dot)foreign-trade(dot)com/reference/hscode.htm. These 99 categories can be further aggregated into 16 as shown in the foreign-trade reference webpage. 2
Trade Report-El Salvador vs. Mexico andSpain
Name
ECON 3110H – International Trade
Date
Imports/exports with world
El Salvador imported products valued at USD 10,935,489, 000 in 2018, with the single largest import being the electrical machinery and equipment, followed by plastics and the essential oils (Trademap.org, 2019). Under the machinery/ electrical category the value was $871,166,000 for electrical machinery and 658,524,000 for mechanical machinery and appliances where machinery/ electrical account for 14% of the imports and the category with the least value was “Beverages, spirits and vinegar” at USD 118,563,000 (Trademap.org, 2019).
El Salvador’s main exports to the world in 2018 was textiles, specifically “articles of apparel and clothing accessories, knitted or crocheted”, valued at USD 1,210,827, 000 and accounting for 26.08% of the total exports and considering all the items under the textile category accounted for more than 35% of the total exports The value of these exports to Mexico was US $ 19,459,000, which was 29.8% of the total exports to Mexico. There was a trade imbalance of USD ($6,292,799, 000) whereby products categorized transportation was the main import (Trademap.org 2019).
The imported value of service in USD thousand for the years 2014 to 2018 were USD 1,457,774,000, then 1,517,752, 000 followed by 1,741,364, 000 then 1,823,844,000 in 2017 and the imported value was USS $ 1,997,407, 000 in 2018 (trademap.org, 2019). The exported value of service from 2014 to 2018 respectively was USD 2,325,778, 000 then 2,477,082, 000 in 2015, then 2,548,883 in 2016 , 2,557,317, 000 in 2017 and 2,797,749, 000 in 2018 (trademap.org, 2019). The imported and exported value of services increased in the years 2014 to 2015 and in those five years the exported value of services was higher than the imported value with the balance being U.S. $ 800,342,000 in 2018 (trademap.org, 2019). Export and import of goods and services and the trade balance are foreign trade indicators.
Trade partners
The United States is the biggest trade partner for many countries in the North and South American markets, but El Salvador also trades extensively with her neighbors, Guatemala, Honduras and Nicaragua. . The major export partners for El Salvador are the US, Honduras, Guatemala, Nicaragua and Costa Rica, while the importers are the United States, China, Guatemala, Mexico and Honduras (World Bank). The US, Mexico, and neighboring countries are the major trading partners and changes in the economies of these countries has a more direct impact on El Salvador’s economy than countries , which trade less with El Salvador . While El Salvador trades with Spain which colonized the countries, El Salvador’s mainly trades with countries in the Americas.
The determination of whether a country is a major trading partner is the value of export and imports and the share of these exports and imports to the total value. 34% of exported products in 2018 were to the US compared to 36.84% of the imported value. The United States had a trade surplus with El Salvador of USD 2,446,602,000 in 2018 (Trademap. org, 2019). El Salvador imported mineral fuels, electrical machinery and mechanical machinery from the top major trading partners the share of exports to Spain is 1.2% and considering the other trade partners and value of the trade makes Spain a top ten trading partner even as the share of trade is low.
There was USD 10,935,489 thousand worth of products imported in 2018 in El Salvador and 4,642,690 thousand exported products in 2018, and both increased from 2017 as was the imports and exports of services. The main services exported were business services such as accounting, legal services and management and there was also travel, transportation as well as computer and information services. The main services that were exported were commercial services, travel and manufacturing services. The main services imported are commercial services transport and travel services, where the productive, industrial and commercial activities were considered in the exports and imports of services.
El Salvador top 5 Export and Import partners, 2017
Imports
USD '000'
% of imports
Exports
USD '000'
% of exports
United States
3,371
31.83%
United States
2,588
44.94%
China
1,447
13.66%
Honduras
797
13.83%
Guatemala
1,048
9.89%
Guatemala
792
13.75%
Mexico
878
8.29%
Nicaragua
431
7.48%
Honduras
585
5.52%
Costa Rica
262
4.55%
Source: https://wits.worldbank.org/CountrySnapshot/en/SLV
Bilateral Trade
El Salvador‘s imports from Mexico were USD 802,938, 000 in 2018 where products in the chemicals & allied industries imported from Mexico 161,185,000 and accounted for 20.075 of all the imports the machinery and electrical category were valued at 160,098,000, which accounted for 20% of all the imports from Mexico, this was followed by food stuffs imports at 12,11% . On the other hand, the share of mineral products imported was lowest at USD 1,627,000 and represents 0.20% (Trademap, 2019). The single largest export to Mexico in 2018 was Articles of apparel including clothing accessories that were either knitted or crocheted valued at USD 19,459 thousands under the vegetable products category.
when considering all the exports to Mexico, slightly more the half the exports to Mexico were textile precuts , while exporting products related to transportation was at 0%, while animal & animal products were at 0.01% and valued at us $ 7,000. El Salvador mainly exports textiles and raw materials, while importing machinery, plastics, manufactured products and essential oils least share of imports from Mexico was animal & animal products. Manufactured products are the major drivers of international trade flows in Mexico’s trade with El Salvador, but El Salvador is exporting primacy products and low cost manufacturing products in the form of textiles.
When considering El Salvador's imports from Spain the country imported both electrical and mechanical machinery valued at USD 119,382 000, accounting for 50% of the total imports from Spain. On the other hand, El Salvador‘s export of electrical and mechanical machinery to Spain was less than 1% of the total exports to the country. More than 60% of the total exports to Spain was food stuffs at 29,933,000 and unlike Mexico where textiles were the major exports they accounted for 3.52% of the exports to Spain valued at US $1,718,000. El Salvador's importation of vehicles from Spain was mainly the parts and accessories to vehicles and tractors. Metals were the third major import from Spain at US $23,597,000 (Trademap, 2019).
Mineral products valued at 11,588,000 were exported to Spain in 2018, while animal and animal produces wee valued at $4,006,000, but the share of exports of the other industries were below 1%. Spain is one of the main trading partners of El Salvador in Europe, but there has been rapid growth in imports from Spain and growth in exports has been slow, which has widened the trade deficit between the two countries. This is especially because El Salvador exports products with low or no value addition. Mexico only had a trade surplus with Spain in the foodstuffs and mineral products categories and the largest trade deficit was in machinery / electrical at ($119,197, 000), and this was followed by the chemicals & allied industries category (Trademap, 2019).
Mexico
Spain
Export
Import
Export
Import
Animal & Animal Products
7
1,627
4,006
10,705
Vegetable Products
233
29,188
454
6,495
Foodstuffs
1,545
97,266
29,933
6,226
Mineral Products
2,189
11,824
11,858
2,993
...
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