| The study examines the effect of changes in the exchange rate and commodity prices on the competitiveness of U.S. export of wheat, corn, and soybean.;The basic model states that export volume is jointly determined by "market share" and "market size", and that market share is independent of market size. Therefore, for a given market size, market share determines export volume. In any given market, competing rational exporters will tend to focus more on those variables that affect their shares of the market than on those that affect market size. This study examines the effect of two such variables: the exchange rate, and commodity price.;The study is carried out for the U.S. in the Japanese and world markets for wheat, corn, and soybean, and covers the period 1950-1981. The basic findings are that increases in the exchange rate and commodity prices have significant negative impacts on U.S. competitiveness in the two markets studied. The exchange rate is found to have a much stronger adverse impact on competitiveness than commodity price. Both variables affect competitiveness more adversely in the world market than in the Japanese market.;The link between interest rates and the exchange rate is also examined over the period January, 1974 through July, 1984. The basic finding is that an increase in U.S. interest rates raises the U.S. dollar exchange rate--because foreign interest rates are generally insensitive to changes in U.S. interest rates.;Competitiveness is defined as "ability to gain market share". Therefore, a rise in the exchange rate, or commodity price is said to reduce competitiveness only if it leads to a loss of market share. |
