The role of price and nonprice factors in predicting Australia's trade performance

Kishor Sharma, P J Gunawardana

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Abstract

This article investigates the role of price and nonprice factors in predicting Australia's trade performance. Results broadly suggest that Australia's trade performance is largely explained by the nonprice factors namely, R&D, reliability of domestic supply, aggregate world demand and Foreign Direct Investment (FDI) flows in long run. Price factors such as, relative price of Australian exports and domestic prices are also important predictors of trade competitiveness. The policy implications of these findings are that there are dividends in terms of improved trade performance by encouraging R&D expenditure, attracting FDI, improving domestic supply and implementing appropriate policies to improve price competitiveness.
Original languageEnglish
Pages (from-to)2679-2686
Number of pages8
JournalApplied Economics
Volume44
Issue number21
DOIs
Publication statusPublished - 2012
Externally publishedYes

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