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of the world, and as opposed to having a negative impact on exports of the ROW to
the spokes there could be a positive impact.
Ultimately then this is an empirical issue, and is one which are modelling strategy can
capture. Hence, one of the dummy coefficients we included in our estimations is
precisely a RoW-Spoke dummy in order to investigate this. The results for this
coefficient are given in Table 3. The results are very interesting. For no industry is
there a statistically significant negative impact on Row-Spoke trade arising from the
introduction of the PECS system. Conversely, for experiment one, for 15 of the 27
industries is there statistically significant and positive impact, and for experiment 2,
this is true for 12 out of the 27 cases.
Table 3: Impact of cumulation on RoW–Spoke trade
ISIC Industry Experiment 1 Experiment 2
311 Food 0.071 0.137
313 Beverages 0.012 -0.052
314 Tobacco -0.018 -0.197
321 Textiles 0.380*** 0.365***
322 Clothing 0.509*** 0.438***
323 Leather 0.010 0.035
324 Footwear -0.139 -0.044
331 Wood and cork 0.105 -0.045
332 Furniture -0.038 -0.026
341 Paper 0.114 0.004
342 Printing 0.115 0.122
351 Industrial chemicals 0.148* 0.080
352 Other chemicals 0.198** 0.072
353 Petroleum refineries 0.212 0.286*
355 Rubber products 0.553*** 0.435***
356 Plastic products 0.262*** 0.100
361 Pottery, china… 0.145 0.137*
362 Glass products 0.240*** 0.115
369 Non-met minerals 0.281*** 0.157*
371 Iron and steel 0.098 0.029
372 Non-ferrous metals 0.295*** 0.292***
381 Fabricated metals 0.496*** 0.237***
382 Machinery 0.407*** 0.295***
383 Electrical machinery 0.652*** 0.415***
384 Transport equipment 0.238** 0.224**
385 Prof. & scientific 0.233*** 0.194**
390 Other manufacturing 0.171** 0.001
Note that this coefficient is also likely to be picking up on the on-going process of
trade liberalisation by the cumulating spoke countries with the rest of the world, and
is therefore not simply picking up the external impact of diagonal cumulation.
However, the results do not suggest that there is any evidence that there was a
negative impact. This can be explored a little further. Remember the hypothesis is that
the greater cumulation possibilities for the PECS countries may have allowed them to
source a greater quantity of intermediates therefore from the rest of the world, while