Peers and Tiers and US High-Tech Export Controls: A New Approach to Estimating Export Shortfalls

Working Paper
June 2013

Sundaram and Richardson employ a difference-in-difference, gravity-equation approach to quantifying the trade impact of high-technology export controls that are motivated by national security. They estimate the effect of controls on high-tech export performance of the United States, of its traditional rival (peer) exporters, and of emerging exporters. Using an 11-year panel of seven high-tech sectors, the authors find that the United States under-exports to high-threat importers. They find, more surprisingly, that the United States over-exports to medium-threat importers and to a large trusted group of importers, both relative to a norm (default group) of importers. These findings suggest high substitutability between export suppliers and export markets for high-tech products. The study underlines the importance of current American efforts to reform the export control regime.