Studies on Time Zones and International Trade:An Introductory Overview

Trade in services has become an active area in the international scene of the modern economy. In addition, recent advancement of the information communication technology (ICT) such as the Internet has brought about revolutionary changes in the ways through which international services transactions are made. In relation to this global trend, the notion of “time zone difference’’ has come into play as a new driver of international transactions. In this article we give an overview of the studies concerning the time zone difference and international trade. Theoretical literature emphasizes a positive, trade - facilitating effect (i.e., “continuity effect’’) of the time zone difference. In addition to the continuity effect, empirical literature finds some pieces of evidence of an opposite effect (i.e., “synchronization effect’’) that suppresses trade between countries. Empirical literature also finds that the continuity effect is more important in services sector (than in goods sector) and for those countries that enjoy higher levels of ICT infrastructure.