A tree-form constant market share analysis for modelling growth causes in international trade

This paper introduces a tree-form constant market share (CMS) analysis for modelling growth causes in international trade between a focus country and a single destination based on a complex data set classified at three levels. Basic properties of this model are investigated briefly. The application of this model is discussed in detail. The tree-form CMS is a collection of the CMS models at different levels, including the entire, branch- and leaf-models, which consists of a large amount of information and has a wide application spectrum. It is found that if the market shares for all commodities are both homogenous in the initial and final years, respectively, or if the market growth in all of the categories is the same, the three level-effects will all vanish. Then the tree-form CMS model is applied to analyze the growth causes of China’s exports to Germany, particularly in agricultural products. Our results indicate that the growth causes before China’s accession to WTO (or the 2008 financial crisis) and thereafter are clearly different. Our theoretical findings are also confirmed by those data examples. Finally, some of the outputs of the tree-form CMS model are further analyzed using suitable statistical approaches.