nep-int New Economics Papers
on International Trade
Issue of 2005‒07‒11
five papers chosen by
Martin Berka
University of British Columbia

  1. The EC in the WTO: The three-level game of decision-making. What multilateralism can learn from regionalism By Leal-Arcas, Rafael
  2. Trade types with developed and developing countries. What can we learn from Spanish data? By Juliette Milgram Baleix; Ana I Moro-Egido
  3. DETERMINANTS OF OUTSOURCING PRODUCTION: A Dynamic Panel Data Approach for Manufacturing Industries By Carmen Díaz Mora
  4. Does Trade Openness Affect the Speed of Output Convergence? Some Empirical Evidence By David E. Giles; Chad N. Stroomer
  5. A Simple and Flexible Dynamic Approach to Foreign Direct Investment Growth: The Canada-United States Relationship in the Context of Free Trade. By Peter J. Buckley; Jeremy Clegg; Nicolas Forsans; Kevin T. Reilly

  1. By: Leal-Arcas, Rafael
    Abstract: This paper is a comparative institutional analysis of the EC's decision-making process in trade policy by focusing on three variables, i.e., competence (whether national or EC competence in EC trade policy), control (who controls the EC's position in international trade negotiations: the Commission or the EU Member States?) and efficiency versus accountability (technocratic versus democratic trade policy) at the national and supranational levels. The empirical background is the World Trade Organization, to which the EC and its Member States are members and, more precisely, the Doha Development Agenda, where the position of the EC is analyzed. The EC institutions and their interaction with EU Member States' institutions and trade policy is the core of this paper. The problems that the enlarged EU will face in its internal decision-making process (such as transparency, efficiency, accountability) can be paralleled to the WTO's decision-making process, and thus the European experience can be used as a role or guidance in the WTO forum so that we can learn from the EC's benefits and, more importantly, avoid the mistakes of the European experience in the decision-making process of international trade fora . The paper concludes that EC trade policy, as well as WTO rules and policies, need to change to become more efficient and accountable at the same time as they address the issue of lack of transparency and legitimacy of the current system of governance, denounced by the Laeken European Council. Thus, more leadership is needed.
    Keywords: competences; international agreements; transparency; international trade; common commercial policy; trade policy; accountability; institutions; European Commission; European Parliament; Council of Ministers; WTO; political science; law
    Date: 2004–09–23
  2. By: Juliette Milgram Baleix; Ana I Moro-Egido
    Abstract: In this paper, we investigate the nature of Spanish intra-industry trade and find that intraindustry trade with CEEC, Asian and Mediterranean countries has increased considerably since the middle of the Nineties. The second aim of the paper is to study if the comparative advantage argument also explains vertical intra-.industry trade between different income countries. According to OLS estimations, technological differences do increase DVIIT while physical capital differences decreases it. Results obtained applying Heckman method support the idea that differences in physical capital reduce the probability of IIT to occur but the level of vertical and horizontal IIT is better explained by the proximity of partners, the similarity in development level and size of market than by differences in physical capital endowments. The variables considered, mostly country-specific do have the same impact on vertical and horizontal IIT with emergent countries.
  3. By: Carmen Díaz Mora
    Abstract: The present paper investigates the determinants of outsourcing production using a panel of 93 Spanish manufacturing industries for the period 1993-2002. Outsourcing is measured as production tasks which are contracting out to independent suppliers, a more direct and suitable indicator. After controlling for unobserved heterogeneity and simultaneity, our results show a high persistence of the outsourcing intensity. Moreover, outsourcing of production is positively related to unit labour costs, skills requirements and national ownership.
  4. By: David E. Giles (Department of Economics, University of Victoria); Chad N. Stroomer (Department of Economics, University of Victoria)
    Abstract: In this paper we develop flexible techniques for measuring the speed of output convergence between countries when such convergence may be of an unknown non-linear form. We then calculate these convergence speeds for various countries, in terms of half-lives, using a time-series data-set for 88 countries. These calculations are based on both nonparametric kernel regression and ‘fuzzy’ regression, and the results are compared with more restrictive estimates based on the assumption of linear convergence. The calculated half-lives are regressed, again in various flexible ways, on cross-section data for the degree of openness to trade. We find evidence that favours the hypothesis that increased trade openness is associated with a faster rate of convergence in output between countries.
    Keywords: Trade openness, output convergence, fuzzy clustering, robust regression, Lyapunov coefficient
    JEL: C14 C21 C22 F15 F43 O4
    Date: 2005–07–04
  5. By: Peter J. Buckley (Leeds University Business School); Jeremy Clegg (Leeds University Business School); Nicolas Forsans (Leeds University Business School); Kevin T. Reilly (Leeds University Business School)
    Abstract: This paper asks a simple question: Did Wilfred Laurier’s dream of free trade with the United States, when it came to fruition in 1989, also impact on foreign direct investment (FDI) into Canada by US multinationals? This paper argues that the customary static econometric approach found in the FDI literature, along with the assumption that policy changes influence only the intercept term, are inadequate to address the question. Instead we introduce an innovative dynamic framework to support the testing of hypotheses on behavioural changes in the variables using a structural break framework. A key conclusion is that prior to signing the free trade agreement US FDI responded only to current growth in the Canadian economy, in a unitary fashion, and current exchange rate shifts. This can be described as a static relationship. The implementation of the free trade agreements between Canada and the USA increased the responsiveness of US FDI to growth in the Canadian economy by a factor greater than two. Furthermore, dynamics are found in the form of a lagged effect for changes in the growth in the Canadian economy and interest rate differentials. These conclusions challenge the dominant view, including that in official policy circles, that the free trade agreement had no impact on US firms’ FDI decisions in Canada. Note: Previous versions of this paper were entitled: “A Simple and Flexible Dynamic Approach to Foreign Direct Investment Growth: Did Canada Benefit From the Free Trade Agreements with the United States?”
    Keywords: Canada-United States, foreign direct investment, empirical relationship
    JEL: F3 F4
    Date: 2005–07–04

This nep-int issue is ©2005 by Martin Berka. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.