Elisabeth Christen,
"Time zones matter: The impact of distance and time zones on services trade"
, 7-2012
Original Titel:
Time zones matter: The impact of distance and time zones on services trade
Sprache des Titels:
Englisch
Original Kurzfassung:
Using distance and time zone differences as a measure for coordination
costs between service suppliers and consumers, we employ a Hausman-
Taylor model for services trade by foreign affiliates. Given the need for
proximity in the provision of services, factors like distance place a higher
cost burden on the delivery of services in foreign markets. In addition,
differences in time zones add significantly to the cost of doing business
abroad. Decomposing the impact of distance into a longitudinal and latitudinal
component and accounting for differences in time zones, it is possible
to identify in detail the factors driving the impact of increasing coordination
costs on the delivery of services through foreign affiliates. Working
with a bilateral U.S. data set on foreign affiliate sales in services this paper
examines the impact of time zone differences and East-West and North-
South distance on U.S. outward affiliate sales. Both distance as well as
time zone differences have a significant positive effect on foreign affiliate
sales. By decomposing the effect of distance our results show that increasing
East-West or North-South distance by 100 kilometers raises affiliates
sales by 2%. Finally, focusing on time zone differences our findings suggest
that affiliate sales increase the more time zones we have to overcome.
Keywords: Foreign Affiliates Trade, International Trade in Services, Coordination
Costs, Time zones
JEL codes: F14, F21, F23, L80