nep-int New Economics Papers
on International Trade
Issue of 2006‒02‒05
39 papers chosen by
Martin Berka
Massey University

  1. Responses to trade liberalization: changes in product diversification in foreign- and domestic-controlled plants By Baldwin, John R.; Caves, Richard; Gu, Wulong
  2. Trade Liberalization and Regional Inequality - Do Transportation Costs Impose a Spatial Poverty Trap? By Eduardo Haddad; Fernando Perobelli
  3. Trade liberalization: export-market participation, productivity growth and innovation By Baldwin, John R.
  4. Trade Credit and Credit Rationing in Canadian Firms By Cunningham, Rose
  5. Trade and Migration to New Zealand By John Bryant; Murat Genç; David Law
  6. Trade and the Skill-bias - It's not how much, but with whom, you trade. By Pushan Dutt; Daniel Traca
  7. Intertwined: FDI in Manufacturing and Trade in Services By Jonathan Gage; Molly Lesher
  8. Synergies Between Trade in Environmental Services and Trade in Environmental Goods By Dominique Drouet; Ronald Steenblik; George Stubbs
  9. Canada's trade with China By Roy, Francine
  10. The impact of regional trade agreements and trade facilitation in the Middle East and North Africa region By Dennis, Allen
  11. Trade liberalization, profitability, and financial leverage By Baggs, Jennifer; Brander, James A.
  12. Estimating trade restrictiveness indices By Olarreaga, Marcelo; Nicita, Alessandro; Kee, Hiau Looi
  13. Changing trade barriers and Canadian firms: survival and exit after the Canada-U.S. Free Trade Agreement By Baggs, Jennifer
  14. The integration process as a determinant of intra-industry trade By Lorena Skufliæ
  15. Trade, inequality, and the political economy of institutions By Levchenko, Andrei A.; Do, Quy-Toan
  16. Trade and Foreign Exchange Liberalization, Investment Climate and FDI in the MENA Countries. By Khalid Sekkat; Marie-Ange Veganzones-Varoudakis
  17. After the WTO Hong Kong Ministerial Meeting: What is at Stake? By Ken Heydon
  18. Linking international trade and transport - what are the determining factors? By Ole Kveiborg
  19. Entering the Union : European accession and capacity-building priorities By Broadman, Harry G.; Luo, Xubei; Wilson, John S.
  20. Distance Decay in International Trade Patterns - a Meta-analysis By Gert-Jan M. Linders
  21. Liberalising Trade in 'Environmental Goods': Some Practical Considerations By Ronald Steenblik
  22. Dumping on U.S. Farmers: Are There Biases in Global Antidumping Regulations? By Kara M. Reynolds
  23. Regional Business Cycles and National Economic Borders - What are the Effects of Trade in Developing Countries? By Christian Ariel Volpe Martincus; Andrea Molinari
  24. Structural change and poverty reduction in Brazil : the impact of the Doha Round By van der Mensbrugghe, Dominique; Lay, Jann; Mauricio; Bussolo
  25. The Intra Industry Trade between Portugal European Union, Portugal Spain, Portugal-France, Portugal Germany, Portugal-Ireland, Portugal-Greece and Portugal-Netherlands - a Dynamic Panel Data Analysis (1996 2000) By Horácio Faustino; Nuno Carlos Leitão
  27. The impact of trade liberalisation on adjustment of regional wages in Estonia By Grigori Fainstein
  28. Industrial competition, shifts in market share and productivity growth By Baldwin, John R.; Gu, Wulong
  29. Comparative Advantage in Tourism - A Supply-Side Analysis of Tourism Flows By Jie Zhang; Camilla Jensen
  30. Factors determining the success or failure of Canadian establishments on foreign markets: a survival analysis approach By Bosco Sabuhoro, Jean; Gervais, Yvan
  32. Quantifying the Trade and Economic Effects of Non-Tariff Measures By Michael Ferrantino
  33. Estimating interregional trade flows in Andalusia (Spain) By José Manuel Rueda-Cantuche
  34. Theories of New Economic Geography and Geographical Concentration of Manufacturing Industries in Japan By Takahiro Akita; Sachiko Miyata
  35. The Home Market Effect and the Agricultural Sector By Dao-Zhi Zeng; Toru Kikuchi
  36. Road to EU - Enlargement and Competitiveness of Western Balkan Companies By Zlatan Fröhlich
  37. Market Power and Commodity Prices: Brazil, Chile and the United States, 1820s-1930 By Marcelo de Paiva Abreu; Felipe Tamega Fernandes
  38. European Transport Policy and Cohesion - An Assessment by CGE Analysis By Johannes Bröcker; Nils Schneekloth
  39. Maritime Trade, Biological Invasions, and the Properties of Alternate Inspection Regimes By Amit Batabyal; Hamid Beladi; Won Koo

  1. By: Baldwin, John R.; Caves, Richard; Gu, Wulong
    Abstract: This paper studies the impact that a small country joining a regional trade agreement, but particularly a small country, might be expected to gain from the exploitation of scale economies. It makes use of the experience of Canada when it entered into the Canada-United States Free Trade Agreement (FTA) in the early 1990s. It finds that there was a general increase in the pace of plant commodity specialization around the time of implementation of the Free Trade Agreement. At the time of the treaty, plant diversity was found to be higher in larger plants and in industries with assets that are associated with scope economies. Diversity was also higher in industries that had higher rates of tariff protection. Over the 1980s and 1990s, plant diversity decreased with reductions in both U.S. and Canadian tariffs. And the decline was greater during the post FTA era than before, thereby suggesting that this treaty had an impact above and beyond that just engendered by the tariff reductions that were associated with it. The study also found that foreign-controlled plants tended to adjust more over the entire period.
    Keywords: Business enterprises, National accounts, Trade, Type of business, Economic conditions, Free trade
    Date: 2005–03–24
  2. By: Eduardo Haddad; Fernando Perobelli
    Abstract: This paper focuses on the spatial impacts of barriers to trade, in the form of tariffs, in a national economy. More specifically, we are concerned with the spatial impediments for the internal transmission of the potential benefits of trade liberalization, in the form of high transportation costs that the more remote regions face. The strategy adopted in this research utilizes a spatial CGE model integrated to a geo-coded transportation model to evaluate shifts in the economic center of gravity and regional specialization in the Brazilian economy due to further liberal tariff policies. Comparative advantage is grasped through the use of differential regional production technologies; geographical advantage is verified through the explicit modeling of the transportation services, as well as increasing returns associated to agglomeration economies; and cumulative causation appears through the operation of internal and external multipliers and interregional spillover effects.
    Date: 2005–08
  3. By: Baldwin, John R.
    Abstract: The paper examines how Canadian manufacturing plants have responded to reductions in tariff barriers between Canada and the rest of world over the past two decades.
    Keywords: Trade, National accounts, Science and technology, Exports, Productivity, Innovation
    Date: 2004–12–14
  4. By: Cunningham, Rose
    Abstract: Burkart and Ellingsen (2004) develop a model of trade credit and bank credit rationing which predicts that trade credit will be used by medium-wealth and low-wealth firms to help ease bank credit rationing. This paper tests this and other predictions of the Burkart and Ellingsen model using a large sample of more than 28,000 Canadian firms. The author uses an endogenous method to divide the firms into the appropriate wealth categories rather than arbitrarily selecting firms likely to be credit-rationed. The data support the main predictions of the model quite well. The author finds that medium-wealth firms substitute trade credit for bank credit consistent with using it to alleviate bank credit rationing. The low-wealth firms use trade credit but it is positively linked to bank credit, suggesting those firms are constrained in both bank credit and trade credit markets, and so cannot use trade credit to adjust as much to negative shocks. The findings also suggest that there are very few unconstrained, high-wealth Canadian firms. The author also finds low-wealth, declining and distressed firms supply proportionally more trade credit than firms with healthier balance sheets.
    Keywords: Business enterprises, Business finance, Business conditions
    Date: 2005–11–04
  5. By: John Bryant; Murat Genç; David Law
    Abstract: This paper examines the hypothesis that a greater stock of migrants in New Zealand from a particular country leads to more trade between that country and New Zealand. The literature suggests that migrants can stimulate trade by lowering transaction costs, and by bringing with them preferences for goods produced in their home country. We use panel data techniques within the framework of a standard gravity model of trade. Our sample includes an average of over 170 countries for the years 1981 to 2001. Previous studies of trade and migration have not dealt satisfactorily with problems of unobserved heterogeneity and selection bias. We address these problems using correlated random effects and selection models. Results suggest that larger migrant stocks are associated with higher trade flows.
    Date: 2005–08
  6. By: Pushan Dutt (INSEAD, Singapore); Daniel Traca (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels)
    Abstract: This paper explores the hypothesis that changes in trading patterns and partners of US industries have contributed to skill deepening through defensive, skill-biased innovation. It draws on Thoenig and Verdier's (2003) assertion that, since skill-intensive technologies are less likely to be imitated, increased exposure to international competition promotes skill-biased innovation, due to the rise in the intensity of imitation by foreign firms. Our main proposition is that the rate of growth of a trading partner is related to the intensity of imitation from firms operating in that country, implying that an increase in the rate of growth of an industry's representative trading partner should contribute to the rise in its skill-intensity. We find empirical evidence in support of this notion, showing that the rise in the average growth rate of the trading partners has contributed to about 20% of the skilldeepening within US industries. By contrast, we find evidence that measures of the volume of trade do not matter significantly for the rise in skill-intensity, in line with existing literature.
    Keywords: Trade and Wages, Skill Bias, Defensive Innovation.
    JEL: F14 F16 J31
    Date: 2005–09
  7. By: Jonathan Gage; Molly Lesher
    Abstract: This study analyses the complex relationship between manufacturing FDI and trade in services. An examination of how recent developments in the economic landscape have resulted in changes in the industrial organisation as well the structure of multinational enterprises is presented. This analysis serves as the foundation for a discussion of fragmentation—and the increased use of traded services in the fragmentation process—in four different manufacturing value chains (apparel, automobiles, semiconductors, and wood furniture). To complement the value chain assessments, the results of empirical work examining the relationship between the liberalisation of services and manufacturing FDI are included. Finally, the study outlines several policy implications that draw upon the analysis. In sum, this study highlights how the increasingly international nature of fragmentation, in part the result of services liberalisation, has redefined the way in which many manufacturing firms use services, interact with service suppliers, and make foreign direct investments.
    Keywords: investment, trade policy, services, FDI, manufacturing, value chain, fragmentation, outsourcing, off-shoring
    Date: 2005–12–05
  8. By: Dominique Drouet; Ronald Steenblik; George Stubbs
    Abstract: This paper examines the synergistic relationships between trade in environmental services and trade in environmental goods. It forms part of a series of OECD studies that analyse various issues related to Paragraph 31(iii) of the World Trade Organization’s 2001 Doha Development Agenda, which mandates negotiations at the WTO on “the reduction or, as appropriate, elimination of tariff and non-tariff barriers to environmental goods and services.” For the purpose of this study, environmental services are defined as wastewater management services, solid-waste management services, sanitation and similar services and other environmental services. Services related to the collection, purification and distribution of water are also discussed in the paper. After describing the nature of each environmental service, the paper identifies broad categories of goods used in the performance of those services, and notes that for some goods environmental services are what is driving growth in their markets. The analysis then draws on case studies of actual business-to-business exports of environmental services, mainly from OECD countries to developing countries, to form general insights into the kinds of environmental goods used by service providers, and how these goods are procured. The case studies provide qualitative evidence that many of the goods included on either the APEC or the OECD lists of environmental goods are used in the performance of environmental services. These include, in particular, items for holding, conveying, treating and filtering liquids, and instruments for monitoring and measuring. Many of these goods are procured from local suppliers, if not initially then over time as local demand for the associated services develops. The benefits to the businesses that engage environmental-service providers are many, allowing them to concentrate on their core activities, and to shift some of the liability of meeting environmental regulations to other companies. Local employment is also generated. The general implication of this study for developing economies is that the potential benefits to simultaneously liberalising trade in environmental services and in environmental goods are likely to be much greater than liberalising trade in only one or the other.
    Keywords: trade, developing countries, environmental goods, environmental services
    JEL: F14 F18 O33 Q56
    Date: 2005–07–19
  9. By: Roy, Francine
    Abstract: This article documents the evolution of Canada's trade with China over the last 15 years in the context of the broad shifts in China's trade with the world.
    Keywords: Trade, Exports, International trade, Imports
    Date: 2004–06–08
  10. By: Dennis, Allen
    Abstract: The Middle East and North Africa (MENA) region ' s trade performance over the past two decades has been disappointing. Efforts to boost trade through a plethora of regional trade agreements (RTAs) are underway. This study examines the potential contribution of regional trade agreements, as well as trade facilitation improvements, in enhancing the development prospects of the region. Using the Global Trade Analysis Project (GTAP) model and database, both intra-regional integration and integration with the European Union are observed to have a favorable impact on welfare in the MENA region. The welfare gains from integrating with the European Union are observed to be at least twice as much as intra-regional integration. Furthermore, these welfare gains are observed to at least triple when the implementation of the RTAs is complemented with trade facilitation improvements.
    Keywords: Free Trade,Trade Law,Trade Policy,Economic Theory & Research,Trade and Regional Integration
    Date: 2006–02–01
  11. By: Baggs, Jennifer; Brander, James A.
    Abstract: We investigate whether trade liberalization affects profitability and financial leverage, using Canadian data from the period following implementation of the Canada-U.S. Free Trade Agreement. We find that falling domestic tariffs are associated with declining profits and increasing leverage for import-competing firms, while falling foreign tariffs are associated with increasing profits and decreasing leverage for firms in export-oriented industries. This pattern is consistent with the "pecking order" theory of capital structure.
    Date: 2005–06–22
  12. By: Olarreaga, Marcelo; Nicita, Alessandro; Kee, Hiau Looi
    Abstract: The objective of this paper is to provide indicators of trade restrictiveness that include both measures of tariff and nontariff barriers for 91 develo ping and industrial countries. For each country, the authors estimate three trade restrictiveness indices. The first one summarizes the degree of trade distortions that each country imposes on itself through its own trade policies. The second one focuses on the trade distortions imposed by each country on its import bundle. The last index focuses on market access and summarizes the trade distortions imposed by the rest of the world on each country ' s export bundle. All indices are estimated for the broad aggregates of manufacturing and agriculture products. Results suggest that poor countries (and those with the highest poverty headcount) tend to be more restrictive, but they also face the highest trade barriers on their export bundle. This is partly explained by the fact that agriculture protection is generally larger than manufacturing protection. Nontariff barriers contribute more than 70 percent on average to world protection, underlying their importance for any study on trade protection.
    Keywords: Free Trade,Economic Theory & Research,Trade Policy,Consumption,Markets and Market Access
    Date: 2006–02–01
  13. By: Baggs, Jennifer
    Abstract: This paper considers the implications of changing trade barriers on the survival of Canadian manufacturing firms. A segmented market Cournot model was developed to describe the effects of trade liberalization for heterogeneous firms operating in diverse industries. The predictions of this model are tested empirically using firm-level data for both public and private corporations and tariff rates for both Canada and the United States. Our findings suggest that Canadian tariff reductions decreased the probability of the survival of Canadian firms while declines in American tariffs increased the probability. Combining these two effects, firms in two-thirds of Canadian manufacturing industries saw their probability of survival increase as a result of the tariff reductions mandated by the Canada-U.S. Free Trade Agreement. However, the sensitivity of individual firms to tariff changes was mitigated by the characteristics of those firms. In particular, productivity and leverage played substantial roles in determining a firm's vulnerability to failure as a result of trade liberalization.
    Keywords: Trade, Free trade
    Date: 2004–04–28
  14. By: Lorena Skufliæ
    Abstract: Trade structure is usually defined as inter or intra-industrial type. The pattern of production and trade that emerges after opening the economies of transition is partly driven by relative factor prices and endowment and partly by economies of scale and scope, but much depends on historical experiences. The first determinancy will lead to the increasing inter-industry trade, so the country which has labour force exports labour-intensive products and imports capital-intensive products because capital is its rare factor. The more dissimilar are countries endowment, the greater the volume of inter-trade will be. This concept of trade is based on Heckser-Ohlin theorem. The second factor will generate intra-industry trade, the exchange of similar manufactured goods, with companies specialized in different varities of similar goods. Economic theory predicts that the volume of intra-industry trade depends of two groups of determinants; first group is related to country and second to the industry. Determinants relate to the country are: level of the economic development, size of the market, distance between countries, trade orientation, economic integration and trade barriers. In this paper will be analyze some of before mentioned determinants. During research, it will be used the Grubel-Lloyd index to calculate the intensity of intra- industry trade at the 4-digit SITC levels to determine the relative importance of IIT as opposed to inter-industry trade in the trade exchange between Croatia and EU and Slovenia and EU. IIT would be estimated for whole trade and across industries on the case of Croatia and Slovenia. A time series approach would be used to estimate any trend in the ratio of intra industry trade to total trade in relation to the EU. These analyze has aim to consider how trade has changed in the period of trade liberalization and including in integration process. On the basis of collected statistical data,it will be calculate the intra-industry trade index, and inter-industry index and also analyze if there is vertical or horizontal intra-industry trade. According to the economic theory removal of trade barriers through bilateral and multilateral negotiations has positive impacts on IIT but the results do not proof hypo these especially in the case of Croatia, very IIT decreases as integration process goes on.
    Date: 2005–08
  15. By: Levchenko, Andrei A.; Do, Quy-Toan
    Abstract: The authors analyze the relationship between international trade and the quality of economic institutions such as contract enforcement, rule of law, or property rights. The literature on institutions has argued, both empirically and theoretically, that larger firms care less about good institutions and that higher inequality leads to worse institutions. Recent literature on international trade enables the authors to analyze economies with heterogeneous firms, and argue that trade opening leads to a reallocation of production in which large firms grow larger, while small firms become smaller or disappear. Combining these two strands of literature, the authors build a model that has two key features. First, preferences over institutional quality differ across firms and depend on firm size. Second, institutional quality is endogenously determined in a political economy framework. They show that trade opening can worsen institutions when it increases the political power of a small elite of large exporters that prefer to maintain bad institutions. The detrimental effect of trade on institutions is most likely to occur when a small country captures a sufficiently large share of world expor ts in sectors characterized by economic profits.
    Keywords: Economic Theory & Research,Free Trade,Trade Law,Trade Policy,Trade and Services
    Date: 2006–02–01
  16. By: Khalid Sekkat (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels); Marie-Ange Veganzones-Varoudakis (CERDI, Centre National de la Recherche Scientifique, Clermont Ferrand)
    Abstract: The paper assess the relative importance of trade and foreign exchange liberalization, infrastructure availability and economic and political stability in increasing Middle East and North African (MENA) countries attractiveness with respect to FDI. The analysis is conducted for total FDI and for FDI in manufacturing. The results show that trade and foreign exchange liberalization, infrastructure availability and sound economic and political conditions increase FDI inflows. Their effects are much higher for FDI in the manufacturing sector than for total FDI. This result is robust to alternative indicators of trade and foreign exchange liberalization, and to change in the specification. The message to MENA’s policy makers is twofold. First, efforts toward trade and foreign exchange liberalization should be initiated or further increased in order to make the region attractive to foreign investors. Second improvements in other aspects of the investment climate are important complements to liberalization and result in additional and sensitive increase of FDI inflows.
    Keywords: Reforms, MENA, FDI.
    JEL: F21 F15 K42
    Date: 2004–05
  17. By: Ken Heydon
    Abstract: The WTO Ministerial Meeting in Hong Kong in December 2005 made some progress in advancing the Doha Development Agenda. But much remains to be done, particularly in settling negotiating modalities in agriculture and NAMA and in putting some flesh onto the bones of the GATS. And where progress was made it was qualified, whether in dealing with the concerns of African cotton producers or in improving market access for the products of the least developed countries. Given the work still to do, it is not guaranteed that new deadlines will be met or that the DDA will be concluded on time. There is much at stake should the momentum of multilateral liberalisation stall; analysis at the OECD points to the risk of both major opportunities forgone and of systemic strains to the multilateral trading framework. Developing countries would be amongst the principal losers. Charting the way ahead will require that trade policy be seen in a broader domestic context which recognises that market opening works best when it is backed by sound macroeconomic policies, flexible labour markets, a culture of competition and strong institutions. Through this lens, trade reform can be promoted as a necessary tool of growth and development rather than as a concession paid to others.
    Keywords: growth, labour markets, development, services, liberalisation, trade barriers, agriculture, regionalism, structural adjustment, trade facilitation, cotton, goods, negotiating modalities, macroeconomic
    Date: 2006–01–18
  18. By: Ole Kveiborg
    Abstract: Historically there have been close relations between international trade and international transport. Development in trade is mirrored in the development in international transport. However, it is also well known that patterns of trade changes. The types of commodities that are traded today differ from the commodities that were traded ten years ago. Trade of services has increased and the trad-ing partners have changed. The opening of the European market towards Eastern Europe has changed the spatial pattern of where commodities are exported to and imported from. It is obviously not straightforward to tell how these changes influence the development in international transport. This paper investigates the impacts of some of the factors that play a role in the development of in-ternational freight transport. The included factors are trade of different commodities and countries, the weight of traded commodities, the model of transport and the weight of the conveyed goods. We do this using a decomposition method on Danish trade data over a period from 1988 to 2003 and a link from these data to data about international transports on heavy vehicles. We observe that the development in transport is composed of varying changes in the mentioned fac-tors of which some imply increasing transport and some imply declining transport. This finding in-dicates the importance of taking proper account of the various factors in modelling freight transport and the relation between freight and economic trade.
    Date: 2005–08
  19. By: Broadman, Harry G.; Luo, Xubei; Wilson, John S.
    Abstract: The authors examine the impact of trade facilitation on bilateral trade flows. They examine trade facilitation and capacity-building priorities in 12 countries in the Europe and Central Asia region-eight of the current members of the European Union: Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia, and three candidate members: Bulgaria, Romania, and Turkey. The results suggest that behind-the-border factors play an important role in determining bilateral trade flows (controlling for the effects of tariffs, development levels, distance, and regional characteristics of exporters and importers, among other factors). The development of new data sets to expand work related to trade facilitation, including strengthening the empirical work explored here, is a key priority without which intelligent policy and priorities cannot be made. The authors ' analysis is based on data from the World Economic Forum, Global Competitiveness Report 2001-2002, World Competitiveness Yearbook 2000, and Kaufmann, Kraay, and Zoido-Lobaton (2002). The results indicate that more gains in exports than in imports are expected should the values of three out of the four indicators (port efficiency, regulatory regimes, and information technology infrastructure) of the new and candidate member countries improve halfway to the EU15 average. These countries would expect large trade gains as well as improvements in trade balances as their integration into the EU continues. For example, the greatest absolute trade gains-$49 billion and $62 billion respectively-could be expected if their port efficiency and information technology infrastructure reach half the average level of the EU, and 70 percent of trade gains are associated with export expansion.
    Keywords: Economic Theory & Research,Trade and Regional Integration,Trade Policy,Transport and Trade Logistics,Common Carriers Industry
    Date: 2006–02–01
  20. By: Gert-Jan M. Linders
    Abstract: Trade costs remain an important barrier to international trade in today’s globalizing economy. Despite the popular discussion on the “death of distance”, distance is still an important source of trade costs and continues to have an irrevocable impact on the patterns of international trade. The literature identifies various factors that can explain the importance of geographical proximity for bilateral trade. First, transport costs and costs of timeliness increase with distance. Moreover, psychic distance increases as well. Because of cultural unfamiliarity and information costs, traders have less knowledge of distant markets. Empirical estimates of the distance effect in trade abound. The evidence indicates that distance still matters for trade. However, differences in estimated effects across the literature make generalizations about the distance effect and its development over time more difficult. This paper performs a meta-analysis of existing empirical studies of bilateral trade, in order to contribute to our understanding of distance decay in trade. Meta-analysis is a statistical analysis of a set of existing empirical results in a specific research area, in order to integrate the findings. It constitutes a quantitative survey of the literature that explicitly addresses the causes of cross-study variation in empirical outcomes. To perform the meta-analysis, a sample of gravity studies was constructed that is as representative as possible. For this purpose, a literature search has been conducted on the Internet, using the Econlit database. Using the search string “trade and/or distance, and gravity, in all fields”, a list of 214 applicable studies has been identified. From this list, 30 studies were randomly selected into the meta-analysis sample. The paper focuses on two key issues. First, it investigates cross-estimate variation in the distance effect according to differences in, e.g., time period concerned, data type used, or empirical specification and estimation method used. Then, we analyse whether the impact of distance has declined over time.
    Date: 2005–08
  21. By: Ronald Steenblik
    Abstract: This chapter explores some practical issues that have arisen in the WTO negotiations on environmental goods and services, especially issues pertaining to liberalising trade in environmental goods. Since environmental goods are not covered by a single chapter of the Harmonized Commodity Description and Coding System (HS) — the international basis for codifying trade and tariffs — an agreement on environmental goods must be defined by reference to an agreed list. In such a case, when the most detailed (6-digit) product level is insufficiently specific, it becomes necessary to agree to create common commodity descriptions at the 8- or 10-digit level in national tariff schedules. Another important concern is the so-called “dual use” problem: many goods with environmental uses also can be used for nonenvironmental purposes. Possible solutions to these problems are explored, drawing on past experience in negotiating and implementing sectoral liberalisation agreements. The chapter also discusses issues relating to separate tariff lines for whole plants and to goods distinguished by their superior environmental performance in use. Finally, it considers some procedural and institutional issues that will have to be addressed before an agreement is concluded, notably whether to allow for the periodic addition of new goods to the agreement, and how to deal with the problem of changes over time in the relative environmental performance of competing goods.
    Date: 2005–12–16
  22. By: Kara M. Reynolds (Department of Economics, American University)
    Abstract: The explosion of antidumping activity over the past 10 years has raised concern among agriculture analysts that antidumping regulations are biased toward imposing more protection on U.S. agricultural goods than other products. This research fails to find a statistically significant bias in the outcomes of antidumping investigations involving agricultural goods compared to other products, nor does it find significant evidence that foreign antidumping investigations into imports of food products have resulted in higher levels of protection than U.S. investigations. However, the results from a comprehensive case study analysis suggest that despite the lack of statistical evidence of bias, U.S. agricultural producers have reason to question the fairness of global antidumping regulations. Given these results, government officials should consider whether U.S. food producers could be better served by changes to both U.S. antidumping regulations and the World Trade Organization Antidumping Agreement.
    Keywords: antidumping, agriculture trade, import protection
    JEL: F13 Q17
    Date: 2006–01
  23. By: Christian Ariel Volpe Martincus; Andrea Molinari
    Abstract: Does trade lead to increased cross-country regional business cycle synchronization and reduced national economic borders? The theory does not really provide an unambiguous answer. Our paper addresses empirically this question using Argentina and Brazil as case studies of developing countries. These countries liberalized unilaterally trade since the mid-1980s and also established MERCOSUR (a regional integration agreement with Paraguay and Uruguay) in 1991. As a consequence, the intensity of trade between Argentina and Brazil rose significantly. The answer to the initial question is no. The increase in bilateral trade between Argentina and Brazil did not translate into significantly more synchronized regional business cycles. Using Gross Provincial Product for Argentina and Gross State Product for Brazil for the period 1961 to 2000, we find that within-country regional business cycle synchronization is substantially larger than cross-country regional business cycle synchronization. Moreover, this difference has increased over time. These results are mainly driven by Argentina’s behavior and hold even after controlling for factors such as distance, size, sectoral specialization, and the degree of regional fiscal policy coordination. The empirical evidence based on Brazilian states and Argentina as a whole suggests that the higher level of trade among regions within a country is an important factor to that accounts for the observed border effect. In the case of Argentina additional factors such as monetary and exchange rate policies and large country-specific shocks have also played a significant role.
    Date: 2005–08
  24. By: van der Mensbrugghe, Dominique; Lay, Jann; Mauricio; Bussolo
    Abstract: Over the medium time horizon, skill upgrading, differentials in sectoral technological progress, and migration of labor out of farming activities are some of the major structural adjustment factors shaping the evolution of an economy and its connected poverty trends. The main focus of the authors is understanding, for the case of Brazil, how a trade shock interacts with these structural forces and ascertaining whether it enhances or hinders medium-term poverty reduction. In particular, they consider the interactions between the migration of labor out of agriculture, a potentially important poverty reduction factor, and trade liberalization, which increases the price incentives to stay in agriculture. A recursive-dynamic computable general equilibrium model simulates Doha scenarios and compares them against a business as usual scenario. The authors estimate the poverty effects using a microsimulation model that primarily takes into account individuals ' labor supply decisions. Their analysis shows that trade liberalization does contribute to structural poverty reduction. But unless increased productivity and stronger growth rates are attributed to trade reform, its contribution to medium-term poverty reduction is rather small.
    Keywords: Economic Theory & Research,Labor Markets,Rural Poverty Reduction,Pro-Poor Growth and Inequality,Rural Development Knowledge & Information Systems
    Date: 2006–02–01
  25. By: Horácio Faustino; Nuno Carlos Leitão
    Abstract: Portugal’s main trade partners have been Spain, Germany and France. In this paper we analyse the intra industry trade in the manufacturing industry between Portugal Spain, Portugal-France, Portugal Germany, Portugal-Ireland and Portugal-Greece. We also present the results of intra industry trade (IIT) between Portugal and the European Union. The innovation, technological progress, human capital, and scale economies are some of the explicative variables of the intra industry trade phenomena. This type of trade is associated with the product differentiation. We consider the panel data models, which are commonly used in the literature, and the recent GMM estimator. One of the objectives of this paper is to verify the estimated models of intra industry trade (IIT), horizontal intra industry trade (HIIT), and vertical intra industry trade (VIIT), and to also verify if the results obtained are different for the partners in analysis. The second objective is to test if the relationship between HIIT and VIIT is determinate by comparative advantages. The third propose is to analyse the results for IIT,HIIT and VIIT with the GMM estimator, and to observe if the models have autocorrelation or specification problems. We will use the m statistics test of Arellano and Bond (1991) and the methodology of Blundell and Bond (1998,2000) to estimated the models.
    Date: 2005–08
  26. By: Inmaculada Martínez Zarzoso (Universitat Jaume I); Laura Márquez Ramos (Universitat Jaume I)
    Abstract: In this research, we estimate a gravity equation augmented with technological innovation and transport infrastructure variables in order to analyse the impact of these variables on international trade. According to our results, investing in transport infrastructure and technological innovation leads to the improvement and maintenance of the level of competitiveness. Moreover, our results support the hypothesis that countries tend to trade more when they are ¿closer¿ from a technological point of view and that the development of information technology has lowered the effect of geography on trade. En este trabajo, estimamos un modelo de gravedad ampliado con variables de innovación tecnológica y de infraestructura de transporte con el fin de analizar el impacto de estas variables sobre el comercio internacional. Según los resultados obtenidos, invertir en infraestructuras de transporte y en innovación tecnológica mejora y mantiene los niveles de competitividad alcanzados en los países. Nuestros resultados, también apoyan la hipótesis de que los países comercian más cuanto más similares son desde un punto de vista tecnológico y que el desarrollo de las tecnologías de la información ha reducido el efecto negativo de la distancia geográfica sobre el comercio internacional.
    Keywords: modelo de gravedad, tecnología, infraestructura, comercio internacional gravity model, technology, infrastructure, international trade
    Date: 2005–05
  27. By: Grigori Fainstein
    Abstract: The purpose of this paper is twofold. First, we aim at analysing the development of regional specialisation in Estonia since the beginning of trade liberalisation and integration into the EU in the early 1990s. Second, given the patterns of developments in specialisation, we analyse how trade liberalisation has affected structure of regional wages. The main data used in this study consist of a panel of 5 geographic regions aggregated at the NUTS3 level by the EU classification. For every region we calculated indices of regional industrial specialisation in 1990-2002. The indices are based on data for employment in manufacturing industries classified by two-digit NACE standard (total of 13 industries). The impact of integration with EU on regional development is based on the data for average wages in industry in regions at NUTS IV level (15 administrative units of Estonia). The analysis of industrial specialisation in Estonian NUTS III regions showed that the level of specialisation has increased on average by 1-1.5% a year. As for transition economy time is a fair proxy to integration, we may conclude that initial stages of establishing closer economic relations with EU and voluminous target investments into the regions stimulated specialisation. Econometric analysis of relationship between relative regional wages and distance to the capital suggests an explanation consistent with new economic geography hypothesis. Surprisingly, in spite of small size of Estonian territory, distance have essensial effect on variations in regional wages. Our estimates show that integration with EU and trade liberalisation minimises negative impact of distance.
    Date: 2005–08
  28. By: Baldwin, John R.; Gu, Wulong
    Abstract: This paper proposes a method for measuring the impact of plant turnover on productivity growth and outlines how this contribution has changed in Canada as a result of substantial trade liberalization in the 1990s.
    Keywords: National accounts, Business enterprises, Productivity, Business conditions
    Date: 2004–07–22
  29. By: Jie Zhang; Camilla Jensen
    Abstract: The purpose of the paper is to relate the tourism demand model with the traditional theories that explain international trade flows. In the existing tourism literature, tourism flows and tourism demand forecasts are typically explained by the demand-side variables. But in the traditional trade theories, international trade flows are explained from the supply-side variables, i.e. the comparative advantage of the exporting countries. A model is proposed in the paper, trying to explain in a modern and global economy, the factors that from a supply-side perspective can decide the comparative advantage of countries in a certain type of service activity. The preliminary results render a strong support for the relevance of certain supply-side factors in explaining international tourism flows such as both natural endowments and created assets associated with foreign investments, hotel capacity and level of development.
    Date: 2005–08
  30. By: Bosco Sabuhoro, Jean; Gervais, Yvan
    Abstract: This paper uses the 1993 to 2000 Exporter Registry of Statistics Canada to study the factors determining the success or exit of Canadian establishments on foreign markets. The survival analysis model is adopted to study the survival and hazard rates of exporting establishments, with the Cox proportional hazards regression used for the econometric analysis.
    Keywords: Trade, Exports
    Date: 2004–05–05
  31. By: Santiago J. Rubio (Universitat de València)
    Abstract: In this paper we model the case of an international non-renewable resource monopolist as a differential game between the monopolist and the governments of the importing countries, and we investigate whether a tariff on the resource importations can be advantageous for the importing countries. We find that the results depend crucially on the kind of strategies the importing country governments can play and on whether the monopolist chooses the price or the extraction rate. For a price-setting monopolist it is shown that the importing countries cannot use a tariff to capture monopoly rents if they are constrained to use open-loop strategies, even if the governments sign a tariff agreement. This result is drastically modified if the importing countries in the tariff agreement use Markov (feedback) strategies. For a quantity-setting monopolist the nature of the game changes and an open-loop tariff is advantageous for the importing countries. Moreover, in this case the importing countries in a tariff agreement enjoy a strategic advantage which allows them to behave as a leader.
    Keywords: tariffs, tariff agreements, non-renewable resources, depletion effects, price-setting monopolist, quantity-setting monopolist, differential games, open-loop strategies, linear strategies, Markov-perfect Nash equilibrium, Markov-perfect Stackelberg equilibrium
    JEL: C73 D41 D42 F02 H20 Q38
    Date: 2005–03
  32. By: Michael Ferrantino
    Abstract: Significant progress has been made in quantifying the effects of non-tariff measures since OECD commissioned its last major review of this topic in 1997. This paper reviews the literature of NTMs and assesses the different methods available. Additionally, the paper develops a series of questions to help determine which method of analysis is best given the interests of the researchers or policy makers. Of the possible avenues of future research, the trade costs approach is offered. This approach has the potential of shedding new light on the interactions among various policies and practices by assessing which areas offer the greatest potential for gains, and improving the precision of available estimates.
    Date: 2006–01–20
  33. By: José Manuel Rueda-Cantuche
    Abstract: Perhaps, one of the most relevant issues in constructing regional input-output tables is the estimation of interregional trade flows. Hence, the Regional Statistical Office of Andalusia (Spain) is promoting new research on survey-based estimates of trade flows between the own region and the rest of Spain. Especially, survey approach has been seen to result more reliable outcomes (Eding & Nijmeijer, 1998) than non-survey constructs. This paper will focus on survey design features, sample methods, treatment of sampling and non-sampling errors and others aspects concerning data collection and processing in the case of Andalusia (Spain).
    Date: 2005–08
  34. By: Takahiro Akita; Sachiko Miyata
    Abstract: This paper investigates the changing geographical pattern of manufacturing industries in Japan in the 1990s and explores factors of their geographical concentration. We start with an estimation of the geographical concentration of manufacturing industries using the coefficient of localization based on manufacturing employment and establishment data at the prefecture level. We then conduct a regression analysis to test some hypotheses of geographical concentration of manufacturing industries, which were derived from new theories of trade and economic geography that have been advanced by Fujita, Krugman, and Venables (1999). In the regression analysis, we consider the following three factors of geographical concentration: scale economies, transportation costs, and inter-industry linkages. We follow basically the approach used by Amiti (1998, 1999), which investigated the effects of scale economies and inter-industry linkages on the geographical concentration of manufacturing industries for EU countries using manufacturing employment and output data from EUROSTAT and UNIDO. As opposed to Amiti, we also consider transportation costs as a possible factor of geographical concentration. Furthermore, our analysis is based on regional data rather than country data. As a measure of plant-level scale economies, we use the ratio of total employment to the total number of establishments in each industry, while as a measure of the intensity of transportation costs, we use the ratio of intermediate transportation inputs to total inputs. To measure plant-level scale economies, we employ manufacturing data from the Statistics of Industry. On the other hand, to measure the intensity of transportation costs and inter-industry linkages, we use the national input-output tables. We expect that scale economies and inter-industry linkages have positive effects, while transportation costs have a negative effect, on the geographical concentration of manufacturing industries.
    Date: 2005–08
  35. By: Dao-Zhi Zeng; Toru Kikuchi
    Abstract: The "home market effect" (HME) is an essential topic of the new trade theory. Assuming the transport costs only for the manufacturing goods, Krugman (1980) shows that the country with bigger market size is a net exporter. The assumption of free transport of the agricultural good was shown mattering a great deal rather than being innocuous by Davis (1998). Particularly, when manufacturing and agricultural goods have identical transport costs, the HME disappears. However, we find that the homogeneous-agricultural-good assumption in Davis' model derives the discontinuity of inverse demand functions, which causes the disappearance of the HME. After establishing an analytical solvable model and assuming two differentiated agricultural goods in two countries, we find that the HME does exist even if the transport cost of the agricultural goods is positive.
    Date: 2005–08
  36. By: Zlatan Fröhlich
    Abstract: Non-tariff barriers limit trade within South East Europe, and many Western Balkan companies fear a negative impact of the recent EU enlargement. At the same time, companies in the Western Balkans can reap the benefits of further integration, provided they are better informed about relevant legislation. This is a key finding that will be discussed in the paper, based on Eurochambers survey. Survey has covered Albania, Bosnia and Herzegovina, Croatia, FYR of Macedonia and Serbia and Montenegro. Special emphasis in the paper will be focused to the Croatian companies, due to the fact that is only Croatia official candidate country for EU from the Western Balkan region. According to the survey, Western Balkan companies need to catch up with their knowledge on regulatory requirements in the EU in order to fully realize the potential of the market. Despite the fact that the Union is a major export destination and companies are interested to intensify business relations, 28% have no information on EU legislation at all. The companies in the region are very much concerned about the negative impact that the recent enlargement of the EU may have on their business prospects but they feel fairly optimistic about the benefits of their own countries’ membership in the EU. 69% of respondents expect easier access to the EU markets. The survey also showed that Western Balkan companies trying to do business with their south-east European neighbors or with the EU Member States suffer from bureaucratic customs procedures and lack of mutually recognized certification bodies. Every second company, on average, said that very few of their employees are able to work in a foreign language and that they have only one e-mail account for the company. However, companies in the Western Balkans do appreciate the importance of training their staff in a variety of skills and of investing into internationally recognized quality certification.
    Date: 2005–08
  37. By: Marcelo de Paiva Abreu (Department of Economics PUC-Rio); Felipe Tamega Fernandes
    Abstract: The paper focuses on market power by certain countries in specific commodity markets as a crucial factor in explaining the level of protection. It is argued that a country which is a price maker in the world market of a specific commodity might affect its world price through export taxes, import taxes and commodity stockpiling. Standard reduced form equations were estimated to test if significant market shares in international markets of Brazilian coffee, Chilean saltpetre and US cotton implied domestic variables were relevant for the determination of the corresponding world commodity prices. Results suggest the producers succeeded in passing through increases in internal costs to the relevant world commodity price.
    JEL: N71 N76 F13 F14
    Date: 2005–12
  38. By: Johannes Bröcker; Nils Schneekloth
    Abstract: This paper studies the spatial impact of two main aspects of European transport policy, namely infrastructure investments and pricing. In its "White Paper: European Transport Policy for 2010: Time to Decide" the European Commission has laid down a comprehensive programme of transport policy within the EU, aiming at increasing the efficiency of the transport industry, developing the so-called trans-European infrastructure network and bringing the prices of transport services closer to the true marginal social cost. It is an important political issue whether the policy will enhance spatial cohesion in Europe or run counter the objective of a balanced economic development in the entire area of the EU. For one thing this is because spatial development objectives are themselves prominent goals among the catalogue of objectives to be attained by transport policy. Particularly infrastructure investments which are co-financed by the structural funds, are regarded a means of regional policy supporting less favoured regions. Furthermore, transport policies motivated by efficiency or environmental reasons may have undesired regional side effects, that could generate political backlash, unless one offers some compensation. The spatial impact of the two named policies is studied with the help of a spatial computable general equilibrium model, called CGEurope. It is a static model with a large number of regions covering the whole area of the EU including the new member states, plus neighbouring countries, some of them also subdivided by regions. Regions interact by trade flows. Interregional trade is costly, with trade costs depending inter alia on the state of infrastructure and on gasoline prices and infrastructure charges. Transport policies are simulated by varying the costs of transport and quantifying the impact on the welfare of households brought about by changes in goods and factor prices. We develop a series of policy scenarios and evaluate their impact an spatial equality or inequality using a whole bundle of indicators of spatial inequality. The paper documents theses scenarios, explains the modelling framework in brief, discusses the inequality indicators to be used and maps and tabulates the main results.
    Date: 2005–08
  39. By: Amit Batabyal; Hamid Beladi; Won Koo
    Abstract: We analyze the problem of preventing biological invasions caused by ships transporting internationally traded goods between countries and continents. Specifically, we ask the following question: Should a port manager have a small number of inspectors inspect arriving ships less stringently or should this manager have a large number of inspectors inspect the same ships more stringently? We use a simple queuing-theoretic framework and show that if decreasing the economic cost of regulation is very important then it makes more sense for the port manager to choose the less stringent inspection regime. In contrast, if reducing the damage from biological invasions is more salient then the port manager ought to pick the more stringent inspection regime.
    Date: 2005–08

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