Trade flows of rtas signed between developing economies - Free Essay Example

Sample details Pages: 22 Words: 6523 Downloads: 3 Date added: 2017/06/26 Category Statistics Essay Did you like this example? Abstract This paper studies the effect on trade flows of RTAs signed between developing economies. It uses a variation of the gravity model of trade to asses five RTAs: Mercosur, The Andean Community, SICA, the EU, Chile-China. Contents Abstract iii Don’t waste time! Our writers will create an original "Trade flows of rtas signed between developing economies" essay for you Create order List of Figures vi List of Tables vi List of Formulas vi 1. Introduction viii 1.1Background viii 1.2 Problem definition x 1.3 Research Objective x 1.3.1 Major research question x 1.3.2 Minor research question xi 1.4 Theoretical Framework xi 1.4.1 The Gravity model of trade xi 1.4.2 Research Methodology and Design xii 1.4.3 Research Assumptions xii 1.4.4 Research Limitations xii 1.5 Thesis Structure xiii 2. Literature Review xiii 2.1 Trade Creation and Trade Diversion xiv 2.1.1 Trade Creation xiv 2.1.2 Trade Diversion xvii 2.1.3 Gross Trade Creation xviii 2.2 Empirical Evidence from SS RTAs xx 3.Theoretical Framework and Research Methodology xxi 3.1 Theoretical Framework xxi 3.1.1 Multiple Regression Analysis and Model Building xxi 3.1.2 Regression Model Diagnosis xxii 3.1.3 The Gravity Model of Trade xxiii 3.1.4 Research Assumptions xxvii 3.1.5 Research Limitations xxvii 3.2 Research Methodology xxvii 3.2.1 Research Type and Approach xxvii 3.2.2 Data Collection xxx 4. Findings and Results xxxi 4.1 The effect of RTAs xxxi 5. Conclusions xxxiii 6. Appendix xxxiv 7. References xxxvii List of Figures Figure 1 à ¢Ã¢â€š ¬Ã¢â‚¬Å" Trade Creationà ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦. Figure 2 à ¢Ã¢â€š ¬Ã¢â‚¬Å" Trade Diversion Figure 3 à ¢Ã¢â€š ¬Ã¢â‚¬Å" Trade Creation Proper vrs. Gross Trade Creation Figure 4 à ¢Ã¢â€š ¬Ã¢â‚¬Å" Multiple regression hyperplane List of Tables Table 1 à ¢Ã¢â€š ¬Ã¢â‚¬Å" Dummy Variable Interpretationà ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦.. Table 2 à ¢Ã¢â€š ¬Ã¢â‚¬Å" RTAs assessed and Members Table 3 à ¢Ã¢â€š ¬Ã¢â‚¬Å" Regression results of individual years Table 4 à ¢Ã¢â€š ¬Ã¢â‚¬Å" Regression results of PCS List of Formulas Formula 1 à ¢Ã¢â€š ¬Ã¢â‚¬Å" Gravity model equationà ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦ Formula 2 à ¢Ã¢â€š ¬Ã¢â‚¬Å" Log linear form of the gravity modelà ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦ Formula 3 à ¢Ã¢â€š ¬Ã¢â‚¬Å" Current gravity specificationsà ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦.. Abbreviations CGE: Computable General Equilibrium COMESA: Common Market for Eastern and Southern Africa FTA: Free Trade Agreement GATT: General Agreement on Tariffs and Trade GDP: Gross Domestic Product MERCOSUR: Mercado ComÃÆ' ºn del Sur à ¢Ã¢â€š ¬Ã¢â‚¬Å" RTA signed between Brazil, Argentina, Uruguay and Paraguay NAFTA: North American Free Trade Agreement OLS: Ordinary Least Squares PCS: Pooled Cross-Section PTA: Preferential Trade Agreement RIA: Regional Integration Agreement RTA: Regional Trade Agreement SICA: Sistema de IntegraciÃÆ' ³n Centro Americana à ¢Ã¢â€š ¬Ã¢â‚¬Å" RTA between Honduras, Costa Rica, El Salvador, Guatemala, Nicaragua Panama and Belize SS: South-South UNCTAD: United Nations Conference on Trade and Development WB: World Bank WITS: World Integrated Trade Solution WTO: World Trade Organization 1. Introduction Background Four hundred and sixty two RTAs have been notified to the WTO up to February 2010 (WTO,2010). From 1948-1994 the GATT received one hundred and twenty four notifications of RTAs, and since its creation in 1995, the WTO has received over 300 RTA notifications, (WTO,2010). This trend of forming trading blocs is likely to become stronger as more RTAs are currently under negotiation. Of particular interest to economists, and the focus of this paper, are South-South RTAs, that is, RTAs signed between countries of low income levels. There are reasons to believe that SS RTAs may not only fail to stimulate economic growth among member countries, but also hinder growth for these countries. In their book Regional Integration and Development, Winters and Schiffer (2003) state that à ¢Ã¢â€š ¬Ã…“there is some evidence that North-South RTAs stimulate economic growth in the southern partner, little evidence that North-North RTAs stimulate growth and NO evidence that South-South RTAs do so.à ¢Ã¢â€š ¬? Specifically they argue that SS RTAs do not provide partners with access to technology or knowledge that is characteristic of rich countries; SS RTAs are unlikely to add credibility to government policies and may even hinder investment if not accompanied by liberalization of trade with the rest of the world; and, SS RTAs are à ¢Ã¢â€š ¬Ã…“likely to generate only trade diversion and no trade creationà ¢Ã¢â€š ¬? Mayda and Steinberg (2006) argue that SS RTAs are unlikely to provide the positive effects of competition and economies of scale because partner countries are both small and poor. In addition, the loss of fiscal revenues harms the member country economiesà ¢Ã¢â€š ¬Ã¢â€ž ¢ and finally, SS RTAs are more likely to divert trade rather than create trade. Willmore (1976) and Nicholls (1998) make similar points using the Central American Common Market as an example. Trade creation and trade diversion are concepts that were introduced by Jacob Viner in 1950. Both terms refer to the redirection of trade flows as a consequence of an RTA. In trade creation, goods that were previously produced by a local economy are instead imported from more efficient producers in countries within the RTA. Trade diversion refers to the redirecting of trade from the more efficient producer to a less efficient producer within the RTA. In both cases, trade creation and trade diversion, the trade flows are affected by the reduction of tariffs to member countries typical of RTAs. Trade creation and trade diversion are explained with more detail in section 2.1 of this paper. A number of studies have been conducted to assess the effects of SS RTAs in partner countries à ¢Ã¢â€š ¬Ã¢â‚¬Å"most of them attempt to determine if the RTAs were trade creating or trade diverting à ¢Ã¢â€š ¬Ã¢â‚¬Å" e.g. Evans (1998), Lewis et al. (1999), Flores (1997), Cernat (2001,2003)), Subramanian and Tamirisa (2001), Mayda and Steinberg (2006). Different methods have been used and the results are mixed. As a reference, this paper focuses on the results of Cernat (2001, 2003), Flores (1997), and Mayda and Steinberg (2006). Different methods were used in these studies and the results were mixed. Cernat (2001) used the log-linear form of the gravity equation to assess nine SS RTAs. He finds evidence that suggests that SS RTAs are à ¢Ã¢â€š ¬Ã…“less trade diverting than theoretically predictedà ¢Ã¢â€š ¬?. Cernat (2001) findings suggest that Mercosur and the Andean Community were overall, trade diverting. On the other hand Flores (1997), using a CGE analysis, concluded that Mercosur was trade creating. Mayda and Steinberg (2006) use a difference-in-difference estimation strategy at commodity level to assess the impact of COMESA on Ugandan imports. They present evidence that à ¢Ã¢â€š ¬Ã…“South-South trade agreements create positive but little economic gains, through changes in trade patterns, for their members.à ¢Ã¢â€š ¬? This is different from Cernat (2001) results, which indicate that à ¢Ã¢â€š ¬Ã…“imports into COMESA members from third countries were on average 30 per cent higher than those predicted without the trade diversion dummy variableà ¢Ã¢â€š ¬?. Mayda and Steinberg (2006) find evidence that no trade diversion takes place in COMESA. The mixed results from these studies, the increasing number of SS RTAs underway and the high number of countries wanting to join completely or in part in these RTAs poses the following questions: Why do policy makers from these countries advocate in favor of these RTAs? Should these RTAà ¢Ã¢â€š ¬Ã¢â€ž ¢s be pursued?, and the still not categorically answered question: Are South-South Regional Trade Agreements trade creating or trade diverting? Using the gravity model, this paper aims to get evidence from SS RTAs from the Americas. 1.2 Problem definition Do South-South Regional Trade Agreements create trade or divert trade? The literature on this topic is vast and contradictory. Everybody thinks that SS-RTAs are trade diverting. Some papers present evidence of this. Other present evidence that they are actually trade creating. Finally others find evidence of very little trade creation and no significant evidence of trade diversion. With so many RTAS in place and many others underway, it is important to understand the effects of creating these trade blocs. Should poor countries pursue RTAs with poor countries? Are SS RTAs building blocks or stumbling stones towards the world liberalization of trade? 1.3 Research Objective The main objective of this paper is to determine if MERCOSUR, Andean Community, and SICA were trade creating or trade diverting in the years 1995, 1998, 1999, 2003, 2007. 1.3.1 Major research question Is there significant evidence of trade creation or trade diversion on the years 1995,1998,1999,2003,2007 for Mercosur, Andean Community and SICA? 1.3.2 Minor research question Is there significant evidence that suggests that RTA members of the above mentioned RTAs increased trade between them and their partners? Is there significant evidence that suggests that members of the above mentioned RTAs increased trade between them and third countries? Is there significant evidence that suggests that the increase in trade between RTA partners of the above mentioned RTAs is higher than the decrease in trade between RTA members and third countries? 1.4 Theoretical Framework 1.4.1 The Gravity model of trade The gravity model uses Newtonian gravity principles to study human behavior. It is widely used by economists and social scientists to predict flows of trade, people, goods, money, and other variables as an effect of changes in economic policies, fiscal policies, new laws, bans and other distortions to the flow of a given variable. The original gravity model of trade assumes that two countries will trade more or less depending on the sizes of their economies and the distance between their economic centers. It was created independently by Tinbergen (1962) and PÃÆ' ¶yhÃÆ' ¶nen (1963) and augmented in later years to include other independent variables that may cause a change in trade flows. These augmented versions of the basic gravity model may include: population of the two countries, presence of common borders, same language, common colonizer, and others that the researcher regards as relevant. The gravity model specifications used in this paper are similar to those of Cernat(2001) and Cheng Hall (2003). These specifications are used to run OLS regressions on trade data of 1995, 1998, 1998, 2003 and 2007. One set of pooled data including the years mentioned is analyzed using the same gravity specifications. The results of these regressions provide evidence of gross trade creation and diversion as specified by Balassa (1967) 1.4.2 Research Methodology and Design The paper uses standard OLS analysis, with bilateral imports as a dependent variable and 17 independent variables: GDP of the importing country, GDP of the exporting country, Population of the importing country and population of the exporting country, distance between the capital cities of each country pair, Intra_x dummy variable for each RTA, Extra_x dummy variable for each RTA. The values of GDPs, distance and populations are used in their logarithmic form. GDPs and population data was collected from the WB databank. Trade data was collected from UNCTADà ¢Ã¢â€š ¬Ã¢â€ž ¢s database using the WB bankà ¢Ã¢â€š ¬Ã¢â€ž ¢s WITS application. 1.4.3 Research Assumptions Costs of transportation are proportional to the great circle distance between economic centers of countries studied All countries have one economic center, namely their capital cities. The error coefficient of the log-linear gravity model used in this paper is normally distributed with a mean of zero and constant variance for all observations. It is also assumed that error pairs are uncorrelated. GDPs, population, and trade data collected belongs to the population 1.4.4 Research Limitations 1.5 Thesis Structure The remainder of this paper is organized as follows: Chapter 2 presents a literature review that explains trade creation and trade diversion, the effect of both and findings of previous papers that assess RTAs. Chapter 3 explains the gravity model used on the paper, how data was collected and organized, and the considerations in analyzing data. Chapter 4 summarizes the findings and Chapter 5 concludes. 2. Literature Review There is extensive literature on RTAs. This literature either predicts the effects of a RTAs using a computable-general equilibrium analysis or they measure the effects of an FTA using aggregate data or commodity level data. The concern of most authors, and the reason why they conduct their research, is that FTAs and specially SS FTAs may divert trade rather than create it. In the former case, purchases from an efficient producing country are replaced by purchases of a less efficient FTA partner. This section serves three purposes: 1. It explains trade creation and trade diversion to the reader so she can better understand the methodology used to assess the selected RTAs. 2. It presents the reader with the results of previous findings so that the reader can compare the results of this paper with previous results of other authors. 3. It gross trade creation and diversion so that the reader can understand the results of the research. 2.1 Trade Creation and Trade Diversion Trade creation and trade diversion as defined by Viner (1950), refer to changes in flow of trade between nations. Trade creation happens when trade is switched from less efficient producers of one country to more efficient producers in another country à ¢Ã¢â€š ¬Ã¢â‚¬Å" a better allocation of resources. In trade diversion trade is shifted from more efficient producers in one country to less efficient producers in another country à ¢Ã¢â€š ¬Ã¢â‚¬Å"a worsening in the allocation of resources. 2.1.1 Trade Creation Trade creation can be defined as the net welfare gain that results from the initiation of an RTA, both on the production and on the consumption side. Some economists though, think that it is more precise to think of trade creation only as the increase in welfare from the production side (Senior-Nello S, 2010). In this paper the former definition of welfare is considered. To understand trade creation, imagine the following scenario (Figure 1): The country in question, Country X, say Honduras, imports product Q from country M (United States) at price Pw+t, which includes an ad valorem tax and is the same price offered by other nations in the world, including country E (El Salvador). At this price, Honduras imports 20 units and consumes 60. The remaining 40 units are imported from the US. This is illustrated by the Honduran supply and demand lines in Figure 1 and the perfectly elastic supply curve with free trade of El Salvador. It is understood that a change in Honduran imports of product Q cannot affect the world price of product Q. Figure 1. Trade Creation If Honduras signed an RTA with El Salvador and the price of product Q from El Salvador dropped to PE, Honduras would now produce 10 units of product Q, consume 70, and import the difference of 60 units. Because El Salvador now offers a lower price for product Q, Honduras now imports this product from El Salvador and not from the US. The consumer surplus gains of this RTA are represented by areas a+b+c+d. The loss in producer surplus is indicated by area a. The loss of tariff revenue for Honduras is area c. Therefore the net welfare increase of this RTA between El Salvador and Honduras is indicated by triangles b and d. Triangle b represents the amount of production that was shifted from less efficient producers in Honduras to more efficient producers in El Salvador à ¢Ã¢â€š ¬Ã¢â‚¬Å" a better allocation of resources. Triangle d represents the increase in consumption of product Q. 2.1.2 Trade Diversion Trade Diversion is illustrated in figure 2. Again the supply and demand lines are those of Honduras for product Q. Line S1 and S2 are the perfectly elastic supply curves of USA and El Salvador respectively, and lines S1+t and S2+t are the tax inclusive supply curves of the same two countries. Figure 2. Trade Diversion Honduras imports product Q from the US at tax inclusive price Pw+t. El Salvador offers product Q at price PE+t and thus does not benefit from Honduran purchases. At price Pw+t Honduras produces 20 units, consumes 60, and imports 40 from the US. If Honduras and El Salvador now form an RTA and do not include the US, tariffs will be removed on imports from El Salvador but not from imports from the US. After forming the RTA Honduras would produce 10 million units, consume 80 million and import 60 million units of product Q from El Salvador at price PE. The RTA has diverted trade from more efficient producers in the US to less efficient producers in El Salvador, so there is a worsening in the allocation of resources. On the other hand 10 million units are now imported from El Salvador instead of being produced at home in Honduras. At the same time 40 million units that were previously imported from the US are now being imported from El Salvador. The welfare loss from trade diversion is reflected rectangle f. The 40 million units that were imported from more efficient producers in the US whose free trade price is $1.00 are now imported from El Salvador at $2.00. The welfare loss is $40 million. The welfare gain from the customs union is calculated as the areas of triangles b and d. Triangle b is the welfare gain in the production side: $5 million. Triangle d is the welfare gain in the consumption side: $10 million. The total impact on welfare as a result of the RTA is given by the sum of the areas of triangles b and d minus the area of rectangle f (b+d-f): welfare gain minus welfare loss. In this case the RTA generated a welfare loss of $25 million. Figure 2 illustrates that the idea of trade creation and trade diversion can be misleading. If, for example, the sum of areas of triangles b and d would be greater than the area of rectangle f, the RTA would cause a net welfare gain. In this scenario, although trade has been diverted from more efficient producers in one country to less efficient producers in another, the RTA increased welfare for the RTA signing country. 2.1.3 Gross Trade Creation Following the lead of Jacob Viner, Balassa (1967) evaluated the effects of the European Common Market with reference to its trade creating and trade diverting effect using Tinbergen (1962) and PÃÆ' ¶yhÃÆ' ¶nen (1963) model à ¢Ã¢â€š ¬Ã¢â‚¬Å"the gravity model. In his work he developed model that captured substitution of less efficient domestic and foreign suppliers for more efficient foreign suppliers à ¢Ã¢â€š ¬Ã¢â‚¬Å" gross trade creation; which is different than Vinerà ¢Ã¢â€š ¬Ã¢â€ž ¢s definition of trade creation according to which trade is created only at the expense of local producers. To illustrate the difference gross trade creation and trade creation proper as defined by Viner (1950), consider three trading partners of one particular product à ¢Ã¢â€š ¬Ã¢â‚¬Å" countries A, B, and C, product Q (See Figure 3). Before signing a RTA with country B, Country A imports product Q from both, Country B and Country C in equal amounts and has 4 local producers of the same product (Figure 3a). In the case of trade creation proper (Figure 3b), after signing a RTA with country B, Country A continues to import equal amounts of product Q from countries B and C but has reduced the number of local producers of the same product. More efficient producers in Country B have absorbed market share from local producers in Country A à ¢Ã¢â€š ¬Ã¢â‚¬Å" trade creation proper. Gross trade creation on the other hand (Figure 3c), considers that trade is created not only when local producers are substituted, but also when producers in third countries are substituted. In this case, after signing a RTA with country B, Country A decreases its imports of product Q from Country C and increases imports of the same product from Country B while keeping the same number of local producers. It is important to note that gross trade creation assumes that substituted producers in Country C were less efficient than producers in country B; the contrary would constitute trade diversion. Figure 3. Trade Creation Proper vrs Gross Trade Creation Like in Cernat (2001), this paper evaluates the gross trade creating effects of the assessed RTAs. In his paper, Balassa (1967) provides evidence of trade creation in the European Common Market during six years since the Marketà ¢Ã¢â€š ¬Ã¢â€ž ¢s establishment. Again, trade creation applies to the substitution of any less efficient producer for a more efficient one, independent of the producerà ¢Ã¢â€š ¬Ã¢â€ž ¢s base country. The why of the expected differences between the results of developed country RTAs and SS RTAs is explained in the next section. 2.2 Empirical Evidence from SS RTAs A number of studies have been conducted to assess the effects of SS RTAs in partner countries à ¢Ã¢â€š ¬Ã¢â‚¬Å"most of them attempt to determine if the RTAs were trade creating or trade diverting à ¢Ã¢â€š ¬Ã¢â‚¬Å" e.g. Evans (1998), Lewis et al. (1999), Flores (1997), Cernat (2001), Subramanian and Tamirisa (2001), Cernat (2003), Mayda and Steinberg (2006). Different methods have been used and the results are mixed. This paper uses methods similar to Cernat (2001) and Cheng Wall (2003). In his paper, Cernat(2001) used the log-linear form of the gravity equation to asses nine SS RTAs. He finds evidence that suggests that SS RTAs are à ¢Ã¢â€š ¬Ã…“less trade diverting than theoretically predictedà ¢Ã¢â€š ¬?. Cernatà ¢Ã¢â€š ¬Ã¢â€ž ¢s(2001) findings suggest that Mercosur and the Andean Community were overall, trade diverting. Mayda and Steinberg(2006) use a difference-in-difference estimation strategy at commodity level to assess the impact of COMESA on Ugandan imports. They present evidence that à ¢Ã¢â€š ¬Ã…“South-South trade agreements create positive but little economic gains, through changes in trade patterns, for their membersà ¢Ã¢â€š ¬? (Mayda and Steinberg, 2003). This is different from Cernatà ¢Ã¢â€š ¬Ã¢â€ž ¢s(2001) results, which indicate that à ¢Ã¢â€š ¬Ã…“imports into COMESA members from third countries were on average 30 per cent higher than those predicted without the trade diversion dummy variableà ¢Ã¢â€š ¬?. Mayda and Steinberg (2006) find evidence that no trade diversion takes place in COMESA. The mixed results from these studies, the increasing number of SS RTAs underway and the high number of countries wanting to join completely or in part in these RTAs poses the following questions: Why do policy makers from these countries advocate in favor of these RTAs? Should these RTAà ¢Ã¢â€š ¬Ã¢â€ž ¢s be pursued?, and the still not categorically answered question: Are South-South Regional Trade Agreements trade creating or trade diverting? Using the gravity model, this paper aims to get evidence from SS RTAs from the Americas. Theoretical Framework and Research Methodology ***Intro*** Problem Definition Research Objective Research Questions 3.1 Theoretical Framework 3.1.1 Multiple Regression Analysis and Model Building Figure 4. Regression Hyperplane Multiple regression analysis is a method of inferential statistics that measures the relationship between two or more independent variables and one dependent variable. The multiple regression model is given by: Where: y = dependent variable = regression constant of the population = regression coefficient for each variable xj=1,2,à ¢Ã¢â€š ¬Ã‚ ¦k k = number of independent variables = error of the model Different from a simple regression equation à ¢Ã¢â€š ¬Ã¢â‚¬Å"which forms a straight line in a two-dimensional space to represent the linear relationship between two variables à ¢Ã¢â€š ¬Ã¢â‚¬Å" the multiple regression model forms a hyperplane in a multidimensional space (Figure 4). This hyperplane represents the relationship between the dependent variable and k independent variables. To build a multiple regression model, that is, to construct a mathematical equation that represents the relationship between independent and dependent variables, a researcher must decide: The question that needs to be answered The potential independent variables What is a representative sample of the population à ¢Ã¢â€š ¬Ã¢â‚¬Å" should be at least four times the number of independent variables (Groebner, et al, 2008) The model used in this paper is well known and widely used by social scientists to measure the flow of various types of variables. This model is explained in section 3.1.3. 3.1.2 Regression Model Diagnosis To ensure the significance of an OLS regression analysis results, the following evaluation criteria are usually used (Groebner, et al, 2008): The coefficient of determination (R2 and R2 adjusted) Significance of the overall model (F-test) Significance of individual variables (t-tests) Size of the standard deviation of the model Multicollinearity of variables The coefficient of determination measures the proportion of variation in the dependent variable that can be explained with the independent variables used by the model. The value of R2 may range from 0-1, with 1 representing a perfect linear relationship between dependent and independent variables. Higher values of R2 are preferred as they would indicate that the chosen independent variables explain better the variations in the dependent variables. A derivate indicator, called adjusted R2, takes into account the number of independent variables in the model, and their contribution the variations in the dependent variable. Because R2 increases when independent variables are added to the model, even if the new variables have no relationship with the dependent variable, adjusted R2 evaluates the model more precisely. The Significance of the overall model can be determined by comparing the Significance F value given in the regression output of a statistical software application, and the critical value for a given alpha level. The critical value for a given alpha level is determined using t-tables and statistical procedures explained in Groebner (2008). The Significance of individual variables is determined by comparing their calculated t-values with the critical t-value of the model. If their calculated t-values are greater than their critical t-values the variable is considered significant. To determine the critical t-values of independent variables, degrees of freedom need to be calculated and interpolated with the desired level of significance in a t-table. For detailed explanations see Groebner (2008). The size of the standard deviation of the model measures the dispersion of observed values of the dependent variable, and the predicted values for the same variable. It is up to the researcher to determine an acceptable range for the standard error estimation. Multicollinearity occurs when two variables provide overlapping information to explain the variation in the dependent variable. To measure multicollinearity the researcher can use the VIF as an indicator. Generally, if the VIF 5 for a particular independent variable, multicollinearity is not considered a problem (Groebner, 2008). 3.1.3 The Gravity Model of Trade Following Isaac Newtonà ¢Ã¢â€š ¬Ã¢â€ž ¢s principle of gravity, according to which two bodies will attract each other more when their sizes are increased and the distance between them is shortened; the gravity model explains trade flow between two countries based on the size of their economies and the distance between their economic centers. The equation representation of the gravity model of trade is: (Formula 1) Where Fg represents trade flow, G is the constant, m1 and m2 are the economic dimensions of the two countries in question, and d is the distance between the two countries. In its basic log-linear form, the gravity equation is as follows: (Formula2) Where is the bilateral trade flow between countries i and j at time t, ÃŽÂ ± is the constant, is the natural logarithm of the GDP of country i, is the natural logarithm of the GDP of country j, is the natural logarithm of the distance between country i and country j, and ÃŽÂ µ is the normally distributed error. This basic gravity model is usually augmented by including other variables like adjacency, common language, colonial links, common currency, and RTA membership among others. Different authors have suggested many different specifications for the gravity model of trade[1], however there is no consensus about which model specification is more accurate and serves best in assessing RTAs. Moreover other authors have suggested that the gravity model is biased due to endogeneity and reverse causality (Magee, 2003) and have led others to use entirely different methods to asses RTAs (Mayda Steinberg (2006). This paper uses a gravity model specification that is similar to Cernat (2001) but considers Cheng Walls (2003) suggestions of eliminating dummy variables that might capture unintended trade distorting variables. To assess trade creation and trade diversion in nine RTAs, Cernat(2001) adds two dummy variables to an already augmented specification of the model: Intra_RTA and Extra_RTA. The Intra_RTA dummy becomes a 1 when both, the importing and the exporting countries, are partners in the RTA being assessed by the two dummies. The Extra_RTA dummy becomes one when the importing country is part of the assessed RTA but the exporter is a third country. The model uses bilateral trade flows as a dependent variable and 18 independent variables: GDP of importing country, GDP of the exporting country, GDP per capita of the importing country, GDP per capita of the exporting country, Population of the importing country, population of the exporting country, distance between the capital cities of both countries, an adjacency dummy variable, a common language dummy variable, nine Intra_RTA dummy variables (one for each RTA assessed), and nine Extra_RTA dummy variables (one for each RTA assessed). All non-dummy variables expressed in their logarithmic form. In theory, the Intra_RTA dummies will capture the effect that the assessed RTA had on trade between partners of the RTA; and the Extra_RTA dummy captures the effect of the same RTA on trade of RTA members with third countries. To diagnose a RTA as trade crating or trade diverting, Cernat (2001) designed an Intra-Extra coefficient table (Table# in this paper). According to this table, if a trade agreement increased trade between its partners at the expense of third countries à ¢Ã¢â€š ¬Ã¢â‚¬Å"diverted trade, the Intra_RTA dummy should be positive and the Extra_RTA dummy negative. If the agreement created trade instead, the coefficients of both dummies would be positive. Coefficient Extra_RTA Intra_RTA Sign + + Trade creation and trade expansion Trade diversion Trade expansion Trade contraction Table 1: Dummy Variable Interpretation Cheng Wall (2003) use a fixed-effect panel data analysis to measure the effect on trade of RTAs over time. Their proposed model allegedly controls the heterogeneity bias in the gravity model of trade. In it, Cheng Wall (2003) drop all dummy variables and even drop the distance variable. They argue that these variables bias the gravity model and they motivate their argument in a number of ways. First, they reason that economic distances are too hard to measure with accuracy because big countries have many economic centers, that are thousands of miles apart and that serve as trade centers for different countries. Moreover, in many cases transportations costs are not proportional to distance and costs can differ significantly if goods are transported by land or by sea. Second à ¢Ã¢â€š ¬Ã¢â‚¬Å" and a point considered in this paper, they argue that the effects that dummy variables try to capture, like that of common language, colonial history, common cultures, etc. are too difficult to observe and to quantify. In addition, the heterogeneity bias that they attempt to reduce is more severe in countries that have little in common, so they donà ¢Ã¢â€š ¬Ã¢â€ž ¢t think that these variables can eliminate the bias. Lastly, in the case of the adjacency dummy, Cheng Wall (2003) consider that even though adjacency is an important factor, much trade occurs from people crossing the border and this trade is unaccounted for. More importantly, they reject that contiguity is equivalent in terms of its effect on trade considering that contiguous countries like Canada/US and Argentina/Chile have very different levels of trade that can be seemingly attributed to adjacency. 3.1.3.1 Expected Results Each variable in the gravity model has predictable effects (Oguledo Macphee, 1994): The GDP variables are expected to affect trade flow positively and thus result with positive coefficients in the regression analysis. All else remaining constant, an increase in GDP in the exporting country indicates greater production, that is, more products available for export. An increase in the importing countryà ¢Ã¢â€š ¬Ã¢â€ž ¢s GDP would lead, given a high marginal propensity to import, to an increase in imports. The population variable affects trade flows indeterminately. à ¢Ã¢â€š ¬Ã…“On one hand a large population may indicate large resource endowment, self sufficiency, and less reliance on international trade. On the other hand a large domestic population may promote division of labor and thus opportunities of trade in a larger variety of goods (Oguledo Macphee, 1994). Coefficient signs of population variables may be positive or negative. The distance variable is expected to have a negative effect on trade flows and thus a negative coefficient sign in the regression results. 3.1.4 Research Assumptions Costs of transportation are proportional to the great circle distance between economic centers of countries studied All countries have one economic center, namely their capital cities. The error coefficient of the log-linear gravity model used in this paper is normally distributed with a mean of zero and constant variance for all observations. It is also assumed that error pairs are uncorrelated. 3.1.5 Research Limitations 3.2 Research Methodology 3.2.1 Research Type and Approach The research done for this thesis is qualitative and inductive. The author uses standard OLS multiple regression analysis to study the effect of 7 independent variables on a single dependent variable. The regression model used is a variation of the gravity model of trade similar to Cernat (2001) and it is designed to produce results for six different RTAs (listed on Table 2). To avoid falling in the dummy variable trap, the author included an additional RTA à ¢Ã¢â€š ¬Ã¢â‚¬Å"USA and Israel à ¢Ã¢â€š ¬Ã¢â‚¬Å" for which no findings are reported. An Intra_RTA dummy variable was included in the model for this additional RTA to prevent it from distorting the regression results. The model used in this paper is: (3) Where, ln= natural logarithm Y= imports ÃŽÂ ± = constant ÃŽÂ ² = coefficient = GDP of country i in year t = GDP of country j in year t = Population of country i in year t = Population of country j in year t = Distance between capital cities of country i and j = normally distributed error Intra_RTA = dummy variable, takes value of 1 if both countries are members of the same RTA, zero otherwise Extra_RTA= dummy variable, takes value of 1 if the importing country is member of the assessed RTA and the exporting country is a non-member, zero otherwise To obtain statistically significant results, RTAs of developed countries were included in the model; however a greater emphasis is placed on analyzing the results of SS RTAs: SICA, MERCOSUR and The Andean Community. A Total of five years of trading data were analyzed: 1995, 1998, 1999, 2003, and 2004. For each year more than 1,000 observations were analyzed and 6264 observations for the PCS analysis. The model specifications used are similar to Cernat (2001) in that it uses Intra/Extra dummy variables to measure the impact of a particular RTA in the trade flow of a country, allows only one intercept, has different coefficients for each variable, and includes the distance variable. It differs in that it does not include adjacency and language dummies to control for heterogeneity bias as suggested by Cheng Wall (2003). It also does not use GDP per capita to avoid collinearity[2]with GDP and population variables. Table 2: RTAs Assessed Andean Bolivia, Colombia, Ecuador, Peru, Venezuela European Union Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, United Kingdom MERCOSUR Argentina, Brazil, Paraguay, Uruguay NAFTA Canada, Mexico, United States SICA Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama CC China, Chile Considering Cheng Wall (2003) reasoning of the biasing effect of adding independent variables to the gravity model; this paper has dropped all dummy variables except for the Intra_RTA and Extra_RTA, which capture the trade creating and trade diverting effect that the research pretends to measure. The à ¢Ã¢â€š ¬Ã‹Å"distanceà ¢Ã¢â€š ¬Ã¢â€ž ¢ variable was kept however, for two reasons: first, this variable is widely used and accepted as a significant one in the economics literature[3]. Second, dropping original variables of the gravity model to investigate the effect of new variables makes it more likely that the new variables will prove (falsely) significant (Anderson, Ferrantino Schaefer, 2004) 3.2.2 Data Collection GDPs and population totals of all countries used in the model were downloaded from the WB databank. Trade totals between all countries included in the model were downloaded using from UNCTAD using the WB WITS application. Physical distances between capital cities (measured as great circle distance) are provided at https://privatewww.essex.ac.uk/~ksg/data-5.html. To guarantee the fidelity of this source, distances of 50 random city pairs were selected and compared with data available at https://www.indo.com/distance and Google Earth software. The distances provided by the three sources were comparable and had only minor differences. The data used is available at: https://docs.google.com/leaf?id=0B1bFYu9Cjb-SMjhhZDM0ZTctNDE1YS00YWQ4LWE3NWMtM2QzYmYwMTMzNGZlhl=enauthkey=CJ-88uoI 4. Findings and Results The results of the OLS multiple regression analysis for all sets of data are displayed in Table 4 and Table 5 of the Appendix. Table 4 shows the results of the individual year regressions and Table 5 shows the results of the PCS analysis of all years considered. This section provides a brief description of the results. At 0.00, the calculated F significance for all regressions was less than the alpha critical value of 0.05 with a 95% confidence level à ¢Ã¢â€š ¬Ã¢â‚¬Å" the model is overall significant. Adjusted R2 ranged from 0.812 to 0.834 à ¢Ã¢â€š ¬Ã¢â‚¬Å" the model explains a high percentage of the variation in the log of imports. Standard errors ranged from 1.314 to 1.487[4]. In the individual year regression results, distance coefficients are, as expected, consistently negative over time and highly significant; showing the negative impact of distance on trade. The coefficients of GDP for importing and exporting countries have consistent positive signs and show a downward trend over time. The coefficients of population are inconsistent and show negative signs in 1995 and 1998 and positive signs in 2003 and 2007. In 1999 the population coefficient of importing countries is positive and the one for exporting countries is negative. In the Pooled Cross-Section data regression results, coefficients for GDPs and populations are positive and significant, except for the coefficient of populations of the exporting countries, which is not significant. Distance was negatively signed and significant. 4.1 The effect of RTAs Andean Community Coefficients for Intra_Andean are positive and significant across all years, except for 2007, when the coefficient is not significant. The Extra_Andean coefficient is negative but not significant in all years except 1998, when it is positive and not significant. In the pooled cross-section analysis the Intra dummy was positive and significant, and the Extra dummy was negative but not significant. These results suggest that Andean Community was mainly trade. European Community Intra_EU coefficients are negative and significant in 1995 and 1998 but not significant in the other three years. Extra_EU coefficients were not significant in all five years and had changing signs. In the pooled cross-section the Intra dummy was negative and significant while the Extra dummy was positive but not significant; suggesting that the EU has been overall trade expanding. Chile-China In 2007, the only year in which this RTA is evaluated, both Intra and Extra dummies are not significant. In the PCS analysis however, the Intra dummy is positive and significant and the Extra is positive but still not significant. This evidence suggests that over time, this RTA is trade creating and trade expanding. Mercosur Evidence suggests that this RTA has been trade diverting. Intra coefficients were consistently positive and Extra coefficients consistently negative across all years and in the PCS analysis. NAFTA The coefficients for both dummies of this RTA are not significant in all individual years and in the PCS analysis with changing signs; suggesting that trade between member countries of this RTA and third countries included in this research has not been significantly affected. SICA For 1995 and 1998 the Intra dummy are positive and significant while the Extra dummy was negative but not significant. For all other years both coefficients are positive with the Extra dummy remaining not significant. The PCS analysis shows a positive sign for both coefficients and significant results only for the Intra dummy. In this case evidence suggests that the RTA was trade creating. 5. Conclusions 6. Appendix Table 4: Regression results of individual years    1995 1998 1999 2003 2007    Coef t-value Coef t-value Coef t-value Coef t-value Coef t-value Constant -30.728 -25.75 -31.188 -24.88 -32.982 -26.89 -32.247 -25.82 -31.562 -22.43 Distance -1.22329 -17.04 -1.23281 -16.74 -1.2172 -17.37 -1.09701 -15.96 -1.20662 -15.89 GDP I 1.00612 16.02 1.01011 14.99 0.98304 14.62 0.84344 11.48 0.73006 8.79 GDP E 1.13967 31 1.22413 31.2 1.16704 31.44 0.98887 28.21 0.96548 24.03 Pop I -0.04471 -0.73 -0.10361 -1.59 0.0338 0.54 0.22958 3.35 0.34328 4.21 Pop E -0.08754 -1.92 -0.14715 -3.03 -0.06492 -1.48 0.12563 2.99 0.22845 4.72 Intra_MS 0.7473 1.75 1.0875 2.48 1.2544 2.84 1.8183 4.14 1.098 2.07 Extra_MS -0.4913 -2.68 -0.4225 -2.26 -0.2488 -1.34 -0.8515 -4.51 -0.8198 -2.68 Intra_Nafta 0.0618 0.11 0.2367 0.4 0.1977 0.33 0.01 0.02 -0.1709 -0.25 Extra_Nafta -0.3528 -1.69 0.033 0.15 0.034 0.16 -0.0101 -0.05 0.1 0.33 Intra_Andean 1.2305 3.55 1.6644 4.65 1.7798 4.92 1.5363 4.3 0.6243 1.33 Extra_Andean -0.1899 -1.04 0.0506 0.27 -0.1216 -0.64 -0.2313 -1.22 -0.6169 -1.95 Intra_Sica 1.7336 5.2 2.0986 6.14 2.1202 6.27 2.0059 6.07 1.8532 4.31 Extra_Sica -0.3447 -1.71 -0.2416 -1.17 0.2008 0.99 0.1906 0.95 0.0805 0.25 Intra_EU -0.911 -3.74 -0.6941 -2.79 -0.4583 -1.89 -0.1507 -0.61 -0.1917 -0.61 Extra_EU -0.016 -0.08 0.107 0.55 0.236 1.22 -0.0609 -0.3 0.0828 0.3 Intra_CC 2.123 1.94 Extra_CC -0.1856 -0.55 Observations 1168 1173 1298 1306 1309 Parameters* 16 16 16 16 18 Adjusted R2 0.834 0.827 0.827 0.832 0.812 F Significance 0.000 0.000 0.000 0.000 0.000 Std. Error 1.315 1.355 1.376 1.356 1.487 All non-dummy variables are in log form Table 5: Regression results of pooled data    Pooled 5 years    Coef t-value Constant -32.5621 -56.9 Distance -1.19108 -36.71 GDP importing 0.93588 30.36 GDP exporting 1.08886 64.27 Population im 0.0798 2.71 Population ex 0.02259 1.1 Intra_MS 1.3317 6.6 Extra_MS -0.47453 -5.39 Intra_Nafta 0.0892 0.33 Extra_Nafta -0.0158 -0.16 Intra_Andean 1.4615 8.77 Extra_Andean -0.13324 -1.48 Intra_CC 2.8009 2.84 Extra_CC 0.1894 1.03 Intra_Sica 2.0804 13.38 Extra_Sica 0.09169 0.96 Intra_EU -0.4565 -4.01 Extra_EU 0.08788 0.96 Y95 0.52427 8.57 Y98 0.44138 7.35 Y99 0.42669 7.26 Y03 0.35962 6.25 Observations 6254 Parameters* 22 Adjusted R2 0.825 F Significance 0.000 Std. Error 1.487 All non-dummy variables are in log form

Alexander Bain and the First Fax

Faxing is by definition a method of encoding data, transmitting it over a ​telephone line or radio broadcast, and receiving a hard copy of the text, line drawings, or photographs at a remote location. The technology for fax machines was invented a long time. However, fax machines did not become popular with consumers until the 1980s. Alexander Bain The first fax machine was invented by Scottish mechanic and inventor Alexander Bain. In 1843, Alexander Bain received a British patent for â€Å"improvements in producing and regulating electric currents and improvements in timepieces and in electric printing and signal telegraphs†, in laymens terms a fax machine. Several years earlier, Samuel Morse had invented the first successful telegraph machine and the fax machine closely evolved from the technology of the telegraph. The earlier telegraph machine sent Morse code (dots and dashes) over telegraph wires that was decoded into a text message at a remote location. More About Alexander Bain Bain was a  Scottish  philosopher and  educationalist  in the  British school of empiricism  and a prominent and innovative figure in the fields of  psychology,  linguistics,  logic,  moral philosophy  and  education reform. He founded  Mind, the first ever journal of psychology and analytical philosophy, and was the leading figure in  establishing  and applying the  scientific method  to  psychology. Bain was the inaugural  Regius Chair  in Logic and  Professor of Logic  at the  University of Aberdeen, where he also held Professorships in  Moral Philosophy  and  English Literature  and was twice elected  Lord Rector. How Did Alexander Bains Machine Work? Alexander Bains fax machine transmitter scanned a flat metal surface using a stylus mounted on a pendulum. The stylus picked up images from the metal surface. An amateur clockmaker, Alexander Bain combined parts from clock mechanisms together with telegraph machines to invent his fax machine. Fax Machine History Many inventors after Alexander Bain, worked hard on inventing and improving fax machine type devices. Here is a brief timeline: In 1850, a London inventor named F. C. Blakewell received a patent what he called a copying telegraph.In 1860, a fax machine called the Pantelegraph sent the first fax between Paris and Lyon. The Pantelegraph was invented ​by Giovanni Caselli.In 1895, Ernest Hummel a watchmaker from St. Paul, Minnesota invented his competing device called the Telediagraph.In 1902, Dr. Arthur Korn invented an improved and practical fax, the photoelectric system.In 1914, Edouard Belin established the concept of the remote fax for photo and news reporting.In 1924, the telephotography machine (a type of fax machine) was used to send political convention photos long distance for newspaper publication. It was developed by the American Telephone Telegraph Company (ATT) worked to improve telephone fax technology.By 1926, RCA invented the Radiophoto that faxed by using radio broadcasting technology.In 1947, Alexander Muirhead invented a successful fax machine.On March 4, 1955, the first radio fax tran smission was sent across the continent.

The Great Gastby Free Essays

Abstract As the spokesman of the â€Å"Jazz Age†, F. Scott Fitzgerald , referred to his own experience, wrote his masterpiece-The Great Gatsby. Through abundant symbols, Fitzgerald profoundly depicted the society of Jazz Age and successfully displayed the disillusionment of American Dream, which existed in the majority of American in 1920s. We will write a custom essay sample on The Great Gastby or any similar topic only for you Order Now To describe the restlessness of the â€Å"lost generation† in the â€Å"roaring twenties†, the author created several typical tragic characters. This paper, based on some symbolic theories, focuses on how the author brought his attitude to the surface to reveal the theme. And by analyzing the symbolic meanings of some leading characters, it further probes into the failure of American Dream. Key words Symbolism; characters; American Dream; disillusionment 1 Introduction 1. 1 Plot and characters review Jay Gatsby, formerly Jake Gatz, is a successful bootlegger with desire of being accepted in the highest social circles of Long Island. Once he has done this, Gatsby spares no effort to win back the love of his former girlfriend Daisy, now married to a boorish â€Å"old-money† millionaire, Tom Buchanan. Gatsby’s obsession with Daisy and his pursuit of this unworthy dream results in disillusionment and, ultimately, tragedy. Sidelines observer Nick Carraway, recounts the whole story. 1. 2 The spokesman of the â€Å"Jazz Age† F. Scott Fitzgerald is widely regarded as one of the greatest American writers of the 20th century. He was both a representative of his era and a severe critic of society. In his short life, Fitzgerald experiences overnight fame and wealth in 1920s but suffers a lot in 1930s, which shares much resemblance with American society. Furthermore, with a lot of works describing the expectation and disilluionment of the American young generation, he gained irreplaceable position in the history of American literature and was often called the spokesman of â€Å"Jazz Age†. The Great Gatsby, for which he was known, is somewhat a reflection of his experience and his attitude towards the American Dream. The novel shows the anomie following the First World War. During the â€Å"roaring† 1920s, American society enjoyed unprecedented levels of prosperity as the economy soared. At the same time, Prohibition, the ban on the sale and manufacutre of alcohol as mandated by the 18th century, made many bootleggers millionaires and led to an increase in organized crime. Although Fitzgerald, like Nick Carraway in his novel, idolized the riches of the age, he was uncomfortable with the unlimited materialism and the lack of morality that went with it. The value of money was mostly exaggerated during that age. The connection of the â€Å"old money† and â€Å"new money† is presented in geographical symbols of the novel: East Egg is the place where the established aristocracy lived, and West Egg – â€Å"the self-made rich†. Using his narrator–Nick, the author told about his views of American Dream – it was â€Å"originally about discovery, individualism, and the pursuit of happiness† . 2 Symbolism in characters In the Great Gatsby, Fitzgerald skillfully selected diffirent people, such as Jay Gatsby, Daisy Buchanan, Tom Buchanan and Nick Carraway. This part will analyze the four main characters in detail and discuss their function in symbolism. 2. 1 Jay Gatsby Through the whole life of Gatsby we can see that he is the representative of the people who pursue the American dream. At first when Gatsby falls in love with Daisy, he is frustrated for the huge gap between their social status and wealth. Gatsby is a poor immigrant of low status but Daisy comes from an old wealthy American family. They belong to two totally different worlds under that condition where people all pursue money and material content. So their love is actually desperate and not realistic. He falls into great agony because he lost Daisy and he thinks they didn’t get married just because he is not rich enough. In Gatsby’s opinion, his dream of loving Daisy is ruined by the difference in their respective backgrounds, so he resorts to crime to make adequate money so as to impress Daisy and win her back. To some degree, he makes it. He gets the money he needs and then, through building up a large house and holding luxury parties and banquets, he successfully attracts Daisy’s attention. Daisy comes back to him, dating with him again. Gatsby is so happy to see that they finally return to their old days. But in fact, this is all his illusion, as their love is based on material possessions. He has lived not for himself, but for his dream, for his vision of the good life inspired by the beauty of a lovely rich girl. † The green light situated at the end of East Egg dock and visible from Gatsby’s West Egg lawn may be the best symbol of his unattainable dream. â€Å"He stretched out his arms toward the dark water in a curious way, and far as I was from him I could have sw orm he was trembling. Involuntarily I glanced seaward—and distinguished nothing except a single green light, minute and far away, that might have been the end of a dock. In the end when Gatsby dies for the sake of Daisy, she just leaves him behind and goes to Europe with her husband to spend their holiday. Gatsby’s dream of a perfect Daisy and a happy life totally breaks up until now. The falling down of Gatsby’s dream represents the falling down of American Dream. Then why the dream fails in such a miserable way? First, Gatsby builds up an illusionary dream. He is fascinated with Daisy’s grace and charm, but blinds her shortcomings. â€Å"He gives Daisy an idealistic perfection that she cannot possess in reality† . Alhough later he comes to know that Daisy is not what she used to be and that she doesn’t love him, he cannot stop dreaming and continues to recall the old days. Gatsby’s dream is ruined by the unworthiness of its object, just as the American Dream in the 1920s is ruined by the unworthiness of its object—money and pleasure. Second, from the beginning he uses a wrong way to achieve his dream and this would inevitably lead to his dream’s coming into failure at last. He has made his fortune through racketeering and conducting suspicious business, regardless of the moral principles. The American dream of Gatsby corrupts as the unrestrained desire for money and pleasure surpasses those noble goals. More importantly, the sharp contrast between the ideal and the reality is due to result in the breakup of the dream. In some senses, Gatsby’s dream originated from the past, and made him sincerely persist. But when he was addicted into the past, he made efforts to find various possibilities in the future. He makes the historical past transform to the future in the vain hope. The green light representing his ideal future, which also indicates the whole American ones, is unattainable. The American Dream destroys not only because of the profound social and historical reasons, but also being deeply concerned with the self-destructive characters of Gatsby. When Gatsby’s simple and naive characters are confronted with the cold society and moral decay of America, there will be no place for Gatsby to escape but die. In the end, the author wrote, â€Å"Gatsby believed in the green light, the orgiastic future that year by year recedes before us. It eluded us then, but that’s no matter – tomorrow we will run faster, stretch out our arms farther †¦ And one fine morning – So we beat on, boats against the current, borne back ceaselessly into the past† . Gatsby goes back ceaselessly into the past because the future is far too cruel to imagine. This is the tragedy of Gatsby: he himself lives in the past and is making a beautiful but illusionary dream of the future, so do the Americans. 2. 2 Daisy Buchanan Throughout the book, Daisy is described almost in a fairytale tone. She is the princess in the castle, the wonderful girl that every man dreams of possessing. She is beautiful and rich and innocent and pure in her whiteness. â€Å"She dressed in white, and had a little white roadster †¦Ã¢â‚¬  . But that whiteness is mixed with the yellow of gold and the unavoidable corruption that money brings. Just as Gatsby once comments after their reunion, â€Å"her voice is full of money. † . Her love for Gatsby is conditioned by his wealth. When she saw Gatsby’s fabulous pile of shirts, she could not help crying:† I’ve never seen such — such beautiful shirts before. . For Daisy, her love associated closely with stable and extravagant life. Daisy proves her real nature when she chooses Tom over Gatsby, then allows Gatsby to take the blame for killing Myrtle Wilson even though she herself was driving the car. Finally, rather than attend Gatsby’s funeral, Daisy and Tom move away, leaving no forwarding address. Daisy lived in â€Å"a material world without being real, where poor ghosts, breathing like air. † Actually, Daisy stands for youth, gold and status, which many young Americans regard as their dreams. Yet, the dream has already became a nightmare, as it generates those money-oriented and power-persuing minds. As a social satire, Daisy is also a reflection on moral decadence in modern Amercian society. It is concerned with the corruption of values and the decline of spiritual life. Since the Industry Revolution, Americans have fallen in , not only the way of life through which they seeking for more luxurious enjoyment, but also wealth and status at the expense of moral decay. As a consequence, American Dream has totally failed to bring any kind of fulfillment, either spiritual or material. . 3 Tom Buchanan Tom Buchnan, the dude form Yale, is a liar, a hypocrite, and a bully. Being born into a wealthy family has made him a spoiled man. He hasn’t really worked his entire life and instead, spends his days in indulgence and ease. All Tom’s feelings and actions are self-directed. He has a shameless affair with Myrtle because it satisfies his needs. He flaunts their relatio nship in public for he is a careless man who isn’t bothered by the sufferings he causes. This also attributes to he and Daisy’s escape in a situation where they would have to face. Tom is the typical character of his class. His social attitudes are laced with racism and sexism, and he never ever considers trying to live up to the moral standard he supposed to. Tom is â€Å"a scion of the great robber barons of the Gilded Age who seize the land, gutted the forests, laid the railroads, and turned the cities into vast urban fortresses for the purpose of protecting their own moneyed interests† . He represents descendants of those early pioneers, frontiersman and later settlers who attempted to transform the Virgin Land into a New World Garden. These later empire-builders of the post-Civil War period, who were eager to replace crops with machines, set aside morality as easily and quickly as they attempted to buy up civilization. 2. 4 Nick Caraway Although Nick is not the hero in the novel, his importance as the narrator and a functional character makes him almost as much a central figure as Gatsby. He is Gatsby’s neighbor, Daisy’s cousin once removed, Tom’s classmate in college and the sweetie of Daisy’s close fried, Jordan. He is a tie, who connects many contradictions and conflicts among characters, and a key figure in the complicated relaion net. Nick uses his curious eyes to view Gatsby’s actions and holds sympathy to suppose Gatsby’s thoughts. As a witness who â€Å"has strong flexibility and broad and various information† , he can observe Gatsby’s actions standing far from him and take a neutral and calm viw to value the story. Using â€Å"I† as witness to narrative the story, Fitzgerald let readers feel things directly while hid himself behind the case. Nick resembles Fitzgerald in such aspects as age, family background, education record, literary interest, military experience and seeks of fortune. â€Å"If Gatsby represents one part of Fitzgerald’s personality, the flashy celebrity who pursued and praised wealth in order to impress the woman he loved, then Nick represents another part: the quiet, reflective Midwesterner adrift in the lurid East† . So this may fully explain why Nick senses, understands and sympathizes Gatsby. The similarities between Nick and Fitzgerald make Nick voice more than the author. As a moral symbol he is the embodiment of a hope for moral and spiritual growth. Functioning as Fitzgerald’s speaker in making his ultimate value judgements, Nick realizes that the fast-paced, fun-driven lifestyle of New York is grotesque and damaging; an ideal based on materialism rather than a fulfilment of American Dream. Knowing the truth of the East, Nick quickly goes back without any hesitation. At the end, Nick is the only person escaping from the illusory American Dream and unfolds this tragic story to us all. 3 Conclusion In the Great Gatsby, by using symbolic images, F. Scott Fitzgerald reveals the contradiction and inner conflict of the characters as well as displays his intelligence and excellent writing skill. The entire story is about the effect brought by the roaring age of reshaping people’s value , causing the deterioration of morality and running after money even one undeserved. Gatsby deadly accumulated great wealth in illegal way to get Daisy’ love, but he didn’t recognize people’s ugly inward—greedy of money and mean of kindness, and finally he died with everything lost. References [1] F. Scott Fitzgerald. The Great Gatsby. Jiangsu:YiLing Press, 1997 [2] Miller James E. Jr. F. Scott Fitzgerald: His Art and Technique. New York: New York University Press, 2001 [3] Wang Qiong. The Narrative Technique in â€Å"The Great Gatsby† from the Point View of Narration. Shanghai:Journal of Huzhou Teachers College, 2004 [4] Garrett George. Fire and Freshness: A Matter of Style in the Great Gatsby. In Matthew J. Broccoli (Ed), 2002 [5] Ernest H. Lockridge ed. Twentieth century interpretations of The Great Gatsby: A Collection of Critical Essays. Prentice-Hall, 1968 [6] Leech Geoffrey N Short Michael H. New Essays on the Great Gatsby. New York: Cambridge University Press, 1985 [7] Zhang Tianjing. the Deeply Moving America Tragedy–Analysis the Great Gatsby. Journal of Xianyang Normal University, 2004 [8] Zhao Hongwei. Disillusionment of Gatsby’s† American Dream† From the Perspective of Society–Analysis of â€Å"The Great Gatsby†. Journal of Harbin University, 2003 [9] Mizener Arthur ed. F. Scott Fitzgerald: A Collection of Critical Essays, Englewood Cliffs. N. J: Prentice-Hall, 1963 How to cite The Great Gastby, Papers

Divorce Essay Introduction Example For Students

Divorce Essay Introduction Broken families are on since the beginning of humanity. In fact, divorce, which has been very common in todays societies, is the major cause that leads to family devastation. However, although, in some cases, divorce is the only solution for a family to live in peace, one must think many times before taking such decision, and that is because of many . When life becomes unbearable between a women an her husband, they may think of divorce as being a fair solution for both of them to get their independence and live a normal life, they may even think that it is suitable for their children. However, this is not the case , divorce may have some serious consequences that can affect the whole society . Many religions disapprove of divorce. For instance, Islam is against divorce, and even if it is tolerated, it must be the last alternative to do. As we know from the Quran, it was never gods plan for families to experience such devastation, and that is because of many consequences that many affect not only the divorced couple or their children, but also the whole society. A community where divorce is common doesnt have strong links and relationships among its people, and hence will lack of solidarity and unity. Beside, divorce and failure of marriages make people lose confidence in marriage and behave against the religious and ethical ideals to satisfy their natural desires. For these reasons, Islam has given to men the right to marry four women; this may prevent men, at least, from divorcing if they want to get married another time. Other religions are stricter concerning divorce; Christianity, for example, and for the same reasons Listed before, forbids a couple to divorce no matter what happens which means that a wife and a husband are linked forever. As declared before, divorce must remain the last decision to take by a couple, because of its dreadful consequences on the whole family. Women, for instance, undergo enormous pain as a result of divorce. In most cases, law gives divorced women custody. Consequently, they find themselves alone with their children, and hence obliged to look after them in a society where divorced women may be looked in a bad way. Besides, most of divorced women dont have regular income, as they were financially depending on their husbands before divorce, so they have to work outside home, without neglecting their duties toward their children, and this is very difficult to accomplish especially with the sexual harassment that becomes very common. Emotionally speaking, a divorced woman feels as she was betrayed by her ex-husband .She may also start to hate all men, and this can have direct effects on the way she rises her children. It is believed that men are the least affected by divorce. However this doesnt mean that they do not suffer at all. Indeed, men suffer financially from divorce; they are obliged to support their children as well as their ex-wives. And because before divorce the responsibility was shared by both husband and wife, divorced men cannot always afford to pay alimony, thus they may be taken into alimony arrest and jailed. Apart from finance, men also experience a feeling of loneliness when they are separated from their children. Children from broken families suffer much pain from their parents action. When parents get divorced, their children become complex; a loss of family identity often makes them feel incomplete, if not inferior to others. For example, if a child is separated from his mother and one of his friends asks him: Its mothers day today, where is your mum? or How come sometimes you are contacted at this number and other times at another one? he will feel different from the others. Such innocent questions will force the child to face the painful reality of his family situation over and over again. Children also can feel guilty and responsible for their parents divorce. .u77de3da98547566c6553d034a2850d43 , .u77de3da98547566c6553d034a2850d43 .postImageUrl , .u77de3da98547566c6553d034a2850d43 .centered-text-area { min-height: 80px; position: relative; } .u77de3da98547566c6553d034a2850d43 , .u77de3da98547566c6553d034a2850d43:hover , .u77de3da98547566c6553d034a2850d43:visited , .u77de3da98547566c6553d034a2850d43:active { border:0!important; } .u77de3da98547566c6553d034a2850d43 .clearfix:after { content: ""; display: table; clear: both; } .u77de3da98547566c6553d034a2850d43 { display: block; transition: background-color 250ms; webkit-transition: background-color 250ms; width: 100%; opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #95A5A6; } .u77de3da98547566c6553d034a2850d43:active , .u77de3da98547566c6553d034a2850d43:hover { opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #2C3E50; } .u77de3da98547566c6553d034a2850d43 .centered-text-area { width: 100%; position: relative ; } .u77de3da98547566c6553d034a2850d43 .ctaText { border-bottom: 0 solid #fff; color: #2980B9; font-size: 16px; font-weight: bold; margin: 0; padding: 0; text-decoration: underline; } .u77de3da98547566c6553d034a2850d43 .postTitle { color: #FFFFFF; font-size: 16px; font-weight: 600; margin: 0; padding: 0; width: 100%; } .u77de3da98547566c6553d034a2850d43 .ctaButton { background-color: #7F8C8D!important; color: #2980B9; border: none; border-radius: 3px; box-shadow: none; font-size: 14px; font-weight: bold; line-height: 26px; moz-border-radius: 3px; text-align: center; text-decoration: none; text-shadow: none; width: 80px; min-height: 80px; background: url(https://artscolumbia.org/wp-content/plugins/intelly-related-posts/assets/images/simple-arrow.png)no-repeat; position: absolute; right: 0; top: 0; } .u77de3da98547566c6553d034a2850d43:hover .ctaButton { background-color: #34495E!important; } .u77de3da98547566c6553d034a2850d43 .centered-text { display: table; height: 80px; padding-left : 18px; top: 0; } .u77de3da98547566c6553d034a2850d43 .u77de3da98547566c6553d034a2850d43-content { display: table-cell; margin: 0; padding: 0; padding-right: 108px; position: relative; vertical-align: middle; width: 100%; } .u77de3da98547566c6553d034a2850d43:after { content: ""; display: block; clear: both; } READ: Lying to a Nco Essay This could be due to the fights that the parents may have over them. Sometimes parents openly declare to them that they are splitting up because of irreconcilable differences on parenting. Other parents may blame the children for their breakup because they