Time Differences, Trade and Communication
2010 – 2012
Project Status: Completed
What Impact do time differences have on international trade? On the one hand, time differences raise the costs of travel and communication, by causing jet-lag among travellers and by reducing the amount of tie in the normal working day in which simultaneous communications (e.g. telephone conversations, video-conferencing) can take place. If travel and simultaneous communication are important for trade – for example, by helping to establish and maintain trust by spreading information about trading opportunities, of by facilitating the flow of complex, tactile know-how among vertically disintegrated production networks – greater time difference should lead to less trade. On the other hand, time different time zones, firms can work on product design and development around the clock, thereby reducing product turnaround times.
It builds on two previous studies of this issue by including a wider set of control variables, a longer time period, and by testing a series of additional related hypotheses. The main results indicate that time differences have a negative and statistically significant impact on overall trade. There is also evidence that the negative impact of time differences reduce international communication, in the form of bilateral telephone traffic. These results are consistent with the hypothesis that time differences reduce trade by raising the non-pecuniary costs of travel and communication.
DEV Key Contact:
Anderson, E., 2011, ‘Longitude Matters II: New Evidence of the Impact of Time Differences on International Trade and Communication’, Working Paper 36, DEV Working paper Series, The School of International Development, UEA