The Role of Price and Non-price Factors in Predicting Australia’s Trade Performance
Kishor Sharma & P.J. Gunawardana
Working Paper No. 12/07
June 2007
About the Authors
- Kishor Sharma
School of Commerce
Charles Sturt University
- P.J. Gunawardana
School of Applied Economics & Centre for Strategic Economic Studies
Victoria University
Charles Sturt University – Faculty of Business Working Paper Series
Managing Editor: Associate Professor Jayne Bisman, School of Accounting, Bathurst
Editors: Dr P. Mathews, School of Commerce, Wagga Wagga
Associate Professor M. O'Mullane, School of Business, Albury
Dr R. Tierney, School of Marketing and Management, Bathurst
Dr D Ardagh, School of Commerce, Wagga Wagga
Ms K Mather, School of Computing and Mathematics, Wagga Wagga
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Table of Contents
- Abstract
- Introduction
- Modelling Trade Performance
- Data and Economic Procedures
- Results and Discussion
- Conclusion
- References
Abstract
Using quarterly data for March 1988 to June 2005, this paper investigates the role of price and non-price factors in predicting Australia’s trade performance in 34 manufacturing industries at the two-digit level. While our results tend to suggest that Australia’s trade performance is influenced by both price and non-price factors; the non-price factors, particularly R&D and FDI, are crucial in a larger number of industries both in the short-run and long-run. The policy implication of this is that there are dividends in terms of improved trade performance by increasing R&D expenditure and attracting FDI. Also, reducing effective rates of assistance and implementing appropriate policies to enhance price-competitiveness appear to improve trade performance.