Time Zone Differences and Service Trade

Mandal, Biswajit; Prasad, Alaka Shree

doi:10.1007/978-981-13-9996-1_7

Digitalisation and Development 2019

DOI: 10.1007/978-981-13-9996-1_7

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Time Zone Differences and Service Trade

Biswajit Mandal

Alaka Shree Prasad

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2024

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Cited by 3 publications

References 22 publications

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A simple model of time zone differences, virtual trade and informality

Mandal

Prasad

2020

IGDR

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Purpose This paper aims to strive to model virtual trade resulting from time zone differences in an otherwise Heckscher–Ohlin set up which is absent in the literature. So, the paper adds some value to the existing literature on time zones (TZ) and trade. Design/methodology/approach A competitive general equilibrium model is developed first to capture the effect of TZ differences on virtual trade. Then the authors examine, in brief, if distance can be accommodated in such framework. Finally, the authors extend the model to incorporate informality. Findings It is seen that exploitation of time zone difference benefits skilled labor and hurts capital under reasonable assumption. In what follows, time zone difference exploiting sector expands, whereas the other sector contracts. Then, the model has been extended to examine how distance may also lead to similar outcomes. In addition, the model is further modified to explore the effect of virtual trade in an informality and associated extortion ridden economy. Interestingly, virtual trade turns out to be beneficial to unskilled workers as well, and leads to a fall in the number of extortionists, though informal production is augmented. Research limitations/implications This model is a competitive model that may not clearly reflect the realistic world. However, interestingly this may form the basis of looking into some other appealing dimensions of the real world. Originality/value TZ and related communication-cost-driven trade arguments are relatively less explored theoretically. Therefore, the work adds some value to the theoretical understanding of outsourcing in service trade that uses day-night differences across the globe.

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A simple model of time zone differences, virtual trade and informality

Mandal

Prasad

2020

IGDR

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Variation in labor skills and offshoring across time zones

Prasad,

Mandal

2024

Scottish J Political Eco

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We check the role of time‐zone difference on offshoring of service tasks when the skill of labors varies between the partner countries. We frame a model where partner countries are located in non‐overlapping time zones, and the skill level of the partner‐country labors is lower. In our model, service production is divided into two sequential stages, and output is a supermodular function of the skill of labors and time. The problem of the producers is to choose between domestic production and offshoring. Domestic production employs high‐skill labors though the time management is inefficient. On the other hand, offshoring to a non‐overlapping time zone helps to work round the clock and reduce the cost, but the lower expertise of skilled labor lowers the output. In such a framework, we check conditions for beneficial offshoring. The condition derived in our analysis provides combinations of skill and time that can make offshoring beneficial. Results show that offshoring across time zones is beneficial even when the complexity of stages of production vary. However, only the relatively less‐critical task is offshored. We further find that availability of domestic low‐skill labor does not benefit the firm, while foreign low‐skill labor may be beneficially utilized through time‐zone exploitation.

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The Role of Time Zone Differences on Bilateral Service Flows from Kenya

Majune,

Gathiaka,

Ndwiga

2024

Journal of African Development

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This study investigates the effect of time zone differences on service exports (total and nine categories—travel, transport, computer and information, construction, financial, insurance, government, other business services, and personal, cultural, and recreational services) from Kenya. Estimates from the Poisson Pseudo-Maximum Likelihood (PPML) estimator of the gravity model on bilateral service exports data from Kenya to 176 countries, for the period 2005–2019, show that the effects of time zone differences between Kenya and partner countries is positive and statistically significant in technology-sensitive service exports (computer and information) while negative for construction and government service exports. Further analysis shows that these results are robust when an alternative model is employed and overlapping workday hours are used. The authors also find that the effect of time zone differences on services is nonlinear and sensitive to regulations and physical infrastructure (particularly mobile subscriptions). Attracting investment in technology-sensitive sectors should be encouraged through appropriate policy, given the positive impact of time zone differences on their exports. Traders in these sectors can also create networks with foreign firms. Deregulating and developing information and communication infrastructure, to expand mobile subscriptions, should also be encouraged.

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Time Zone Differences and Service Trade

Cited by 3 publications

References 22 publications

A simple model of time zone differences, virtual trade and informality

A simple model of time zone differences, virtual trade and informality

Variation in labor skills and offshoring across time zones

The Role of Time Zone Differences on Bilateral Service Flows from Kenya

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