Determinants of export trade in farm machinery and farm machinery components

The objective is to determine what factors promote greater exports of farm machinery components relative to exports of finished machinery. A generalized least squares regression model is used to analyze the impacts of various economic factors on U. S. farm machinery components trade. Secondary data for twenty countries from 1990 to 1994 were obtained for three segments of the farm machinery industry. Empirical results indicate that the U.S. farm machinery components trade is directly related to the developmental level of other nations' manufacturing industry, governmental purchasing policies, shipping costs, and tariffs. Exchange rate risk is a factor that favors the export of complete machinery. The econometric results were consistent with theory, but many effects were insignificant, largely due to data limitations.