Consumer goods and export during economic slowdowns: The experience from the Great Recession

Abstract

Purpose

The difference in the export performance of different countries during the Great Recession 2008-2009 attracted some attention. It was frequently argued that the differences in export concentration were responsible for the differences in export performance: countries with more concentrated export portfolio suffered more during the recession compared to countries with more diversified export portfolio. Empirical evidence frequently failed to hold up this hypothesis, especially in the case of commodity concentration of export. Using disaggregated trade data and resorting to well-known theories of consumption demand, this paper argues that one of the main reasons for the difference in the export performance of different countries during the recession lay in the composition of the export basket and the general nature of the demand for different types of commodities.

Design/methodology/approach

Graphs and tables are first used to give a visual confirmation of the hypotheses advanced by the paper. Some theoretical arguments (proof) are advanced why consumer goods export should be less susceptible to recession. Finally cross-country data are used for regression analysis to test the export instability hypothesis.

Findings

All empirical evidence lend strong support to the hypothesis. Countries whose export basket comprised greater proportion of consumer goods suffered relatively less during the recession.

Research limitations/implications

The research could be enriched by using both time series and cross-section data and making a distinction between different types of consumer goods, namely, agricultural and manufactured goods. Data limitations did not permit this: United Nations Conference on Trade and Development (UNCTAD) data, used for this study, do not differentiate between these types of goods.

Practical implications

Export of more consumer goods may help reduce export revenue instability along business cycles.

Originality/value

To the best of the authors’ knowledge, there is no study that had ever attributed greater export stability to consumer goods export except those by the author(s).

Citation

Taslim, M.A. and Hossain, M.A. (2016), "Consumer goods and export during economic slowdowns: The experience from the Great Recession", International Journal of Development Issues, Vol. 15 No. 2, pp. 153-167. https://doi.org/10.1108/IJDI-12-2015-0075