nep-int New Economics Papers
on International Trade
Issue of 2005‒04‒09
three papers chosen by
Martin Berka
University of British Columbia

  1. Price-Channel Effects of North-South Trade on the Direction of Technological Knowledge and Wage Inequality By Óscar Afonso; Álvaro Aguiar
  2. Reconsidering the Backward Vertical Linkage of Foreign Affiliates: Evidence from Japanese Multinationals By Kozo Kiyota; Toshiyuki Matsuura; Shujiro Urata; Yuhong Wei
  3. Trade Policy, Income Risk, and Welfare By Tom Krebs; Pravin Krishna; William Maloney

  1. By: Óscar Afonso (CEMPRE, Faculdade de Economia do Porto); Álvaro Aguiar (CEMPRE, Faculdade de Economia do Porto)
    Abstract: This paper develops a general equilibrium endogenous growth model that emphasizes the mechanisms, other than market size, through which trade-induced North-South technological knowledge diffusion influences the direction of technological progress and, thus, the path of intra and inter-country wage inequality. In contrast with the market-size effect, more common in previous literature on skill-biased technological change, the operation of the price channel, central to this paper, predicts an increasing high-skilled technological bias following openness, which is more in line with the recent trends observed in developed and developing countries.
    Keywords: North-South trade; Technological knowledge diffusion; Direction of technological progress; Wage inequality.
    JEL: F16 F43 O31 O33
    Date: 2005–03
  2. By: Kozo Kiyota; Toshiyuki Matsuura; Shujiro Urata; Yuhong Wei
    Abstract: This paper examined the determinants of the backward vertical linkages of Japanese foreign affiliates in manufacturing for the period 1994-2000, focusing on the local backward linkages, or local procurements. We found that the experience of the affiliate, which is measured by the length of operation, has positive impacts on local procurements in the affiliates in East and Southeast Asian countries but not so for the affiliates in developed countries. This result is robust even after we control for various factors, including government regulation on the local procurements, agglomeration effects, and unobservable firm heterogeneity.
    Date: 2005–03
  3. By: Tom Krebs; Pravin Krishna; William Maloney
    Abstract: This paper studies empirically the relationship between trade policy and individual income risk faced by workers, and uses the estimates of this empirical analysis to evaluate the welfare effect of trade reform. The analysis proceeds in three steps. First, longitudinal data on workers are used to estimate time-varying individual income risk parameters in various manufacturing sectors. Second, the estimated income risk parameters and data on trade barriers are used to analyze the relationship between trade policy and income risk. Finally, a simple dynamic incomplete-market model is used to assess the corresponding welfare costs. In the implementation of this methodology using Mexican data, we find that trade policy changes have a significant short run effect on income risk. Further, while the tariff level has an insignificant mean effect, it nevertheless changes the degree to which macroeconomic shocks affect income risk.
    JEL: F13 F16 D52 E21
    Date: 2005–04

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