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Explaining the Shifts of International Trade in Pulp and Paper Industry

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The pulp and paper industry is currently facing broad structural changes because of global shifts in demand and supply. These changes have significant impacts on national economies worldwide. In this article, we describe the recent trends in pulp and recovered paper (RP) production and estimate augmented gravity models of bilateral trade for chemical pulp and RP exports with panel data. According to our results, there is some variation in the effects of the traditional gravity model variables between pulp grades and RP. The results imply also that, in comparison with export supply, import demand plays a larger role in determining the volume of exports. Finally, it is evident that Asia, particularly China, is the most important driver of chemical pulp and RP trade: China is hungry for fiber and must import to satisfy its growing needs. Moreover, the speed of China's growth in chemical pulp and RP imports has been driving the increased significance of planted forests in the export of hardwood pulp as well.
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Keywords: Hausman-Taylor estimator; bilateral trade; gravity model of international trade; panel data; pulp and paper industry

Document Type: Research Article

Publication date: 2013-04-16

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