Emek Basker, an assistant professor at University of Missouri, has done research on Wal-Mart. She recently published an article on employment in towns after Wal-Mart opens(Click here for working paper). Checking last night, I see she has an interesting paper on China and Wal-Mart:
Retail chains and imports from developing countries have grown sharply over the past 25 years. Wal-Mart's chain, which currently accounts for 10% of U.S. imports from China, grew 10-fold and its sales 90-fold over this period, while U.S. imports from China increased 30-fold. We relate these trends using a model in which scale economies in retail interact with scale economies in the import process. Combined, these scale economies amplify the effects of technological change and trade liberalization. Falling trade barriers increase imports not only through direct reduction of imputs costs but also through an expanded chain and higher investment in technology. This mechanism can explain why a surge in U.S. imports followed relatively modest tariff declines and why Wal-Mart abandonded its "Buy American" campaign in the 1990s. Also consistent with these facts, we show that tariff reductions have a greater effect the more advanced the retailer's technology. The model has implications for the pace of the product cycle and sheds light on the recent apparent acceleration in foreign outsourcing.
However, she doesn't really address what I was searching for: the origin of the 70% number. She does mention it though, it was then I realized the origin. I will write up a piece about it later.
Posted by Bob on July, 31 2005 at 01:46 PM
