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on International Trade |
| By: | Markusen, James R.; Rutherford, Thomas F. |
| Abstract: | Gains from productivity and knowledge transmission arising from the presence of foreign firms has received a good deal of empirical attention, but micro-foundations for this mechanism are weak . Here we focus on production by foreign experts who may train domestic unskilled workers who work with them. Gains from training can in turn be decomposed into two types: (a) obtaining knowledge and skills at a lower cost than if they are self-taught at home, (b) producing domestic skilled workers earlier in time than if they the domestic economy had to rediscover the relevant knowledge through “reinventing the wheel”. We develop a three-period model in which the economy initially has no skilled workers. Workers can withdraw from the labor force for two periods of self study and then produce as skilled workers in the third period. Alternatively, foreign experts can be hired in period 1 and domestic unskilled labor working with the experts become skilled in the second period. We analyze how production, training, and welfare depend on two important parameters: the cost of foreign experts and the learning (or “absorptive”) capacity of the domestic economy. |
| Keywords: | learning, transmission mechanism, multinationals, imported |
| JEL: | F13 F23 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdp1:3373&r=int |
| By: | Pascalis Raimondos-Møller; Alan D. Woodland |
| Abstract: | This paper introduces the concept of a steepest ascent tariff reform for a small open economy. By construction, it is locally optimal in that it yields the highest gain in utility of any feasible tariff reform vector of the same length. Accordingly, it provides a convenient benchmark for the evaluation of the welfare effectiveness of other well known tariff reform rules, as e.g. the proportional and the concertina rules. We develop the properties of this tariff reform, characterize the sources of the potential welfare gains from tariff reform, use it to establish conditions under which some existing reforms are locally optimal, provide geometric illustrations and compare welfare effectiveness of reforms using numerical examples. Moreover, being a general concept, we apply it to the issue of market access and examine its implications. Overall, the paper’s contribution lies in presenting a theoretical concept where the focus is upon the size of welfare gains accruing from tariff reforms rather than simply with the direction of welfare effects that has been the concern of the literature. |
| Keywords: | steepest ascent tariff reforms, piecemeal tariff policy, welfare, market access, small open economy |
| JEL: | F15 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1760&r=int |
| By: | Ann E. Harrison; Margaret S. McMillan |
| Abstract: | Critics of globalization claim that firms are being driven by the prospects of cheaper labor to shift employment abroad. Yet the evidence, beyond anecdotes, is slim. This paper focuses on the labor market decisions of US multinationals at home and abroad for the years 1977 to 1999. Using firm level data collected by the US Bureau of Economic Analysis (BEA), we separately estimate the impact on US manufacturing employment of affiliate activity abroad, imports and exports within multinational firms, and technological change. We begin by reporting correlations between US multinational employment at home and abroad. Evidence based on the operations of US multinationals suggests that the sign of the correlation depends upon the crucial distinction between affiliates in high-income and low-income countries. US employment and employment in low-income (high-income) countries are substitutes (complements). The complementarity is driven by an overall contraction in manufacturing employment both in the US and in affiliates based in high-income countries. We then develop an empirical framework which allows the firm to determine employment at home and abroad simultaneously. Using a variety of different theoretical approaches to estimating labor demand and a range of econometric techniques, we find that employment in low income countries substitutes for employment at home. Employment in high income affiliates, however, is generally complementary with US employment. Second, US capital investments in both high and low income affiliates are associated with lower employment in the United States. Finally, our results show that other factors have made important contributions to falling manufacturing employment in the United States, including technological change and import competition. Taken together, our results suggest that concerns over the impact of globalization on US jobs are grounded in reality. |
| JEL: | F16 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12372&r=int |
| By: | Buch, Claudia M.; Lipponer, Alexander |
| Abstract: | Globalization has effected business cycle developments in OECD countries and has increased activities of firms across national borders. This paper analyzes whether these two developments are linked. We use a new firm-level dataset on the foreign activities of German firms to test whether foreign activities are affected by business cycle developments. We aggregate the data by the sector of the reporting firm, the sector of the foreign affiliate, and the host country. Data are annual and cover the period 1989-2002. We find that German outward FDI increases in response to positive cyclical developments abroad and in response to a real depreciation of the domestic currency. |
| Keywords: | Business cycles, multinational activity, FDI |
| JEL: | E3 F23 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdp1:3369&r=int |
| By: | Stahn, Kerstin |
| Abstract: | The question as to whether changes in the external environment may have caused the importance of key determinants of German exports to shift since the 1990s is addressed by estimating Germany’s exports to EMU partner countries (intra exports) and to countries outside the euro area (extra exports). Analytically, this is done first by estimating single-equation error correction models across different samples. Second, an estimation applying the Saikkonen (1991) approach is carried out to test whether the long-run export behaviour of intra and extra exports has changed since the 1990s. Finally, simulations are conducted by means of error-correction models in order to reconstruct the adjustment process of both intra and extra exports following demand and price shocks. |
| Keywords: | intra and extra euro-area exports, export demand, price competitiveness, error correction model |
| JEL: | C22 F41 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdp1:4244&r=int |
| By: | Herzer, Dierk; Nowak-Lehmann D., Felicitas; Siliverstovs, Boriss |
| Abstract: | This study examines the export-led growth hypothesis using annual time series data from Chile in a production function framework. It addresses the limitations of the existing literature and focuses on the impact of manufactured and primary exports on productivity growth. In order to investigate if and how manufactured and primary exports affect economic growth via increases in productivity, several single-equation and system cointegration techniques are applied. The estimation results can be interpreted as evidence of productivity-enhancing effects of manufactured exports and of productivity-limiting effects of primary exports. |
| Keywords: | Export-led growth, Chile, cointegration |
| JEL: | C22 F43 O47 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:gdec05:3493&r=int |
| By: | Keller, Wolfgang; Yeaple, Stephen R. |
| Abstract: | We estimate international technology spillovers to U.S. manufacturing firms via imports and foreign direct investment (FDI) between the years of 1987 and 1996. In contrast to earlier work, our results suggest that FDI leads to substantial productivity gains for domestic firms. The size of FDI spillovers is economically important, accounting for about 11% of productivity growth in U.S. firms between 1987 and 1996. In addition, there is some evidence for imports-related spillovers, but it is weaker than for FDI. The paper also gives a detailed account of why our study leads to results different from those found in previous work. This analysis indicates that our results are likely to generalize to other countries and periods. |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdp1:2941&r=int |
| By: | Vivek Dehejia; Yiagadeesen Samy |
| Abstract: | This study is motivated by frequent calls to harmonize labor standards across countries, which result from the fear that economic integration (and the accompanying liberalization of trade flows) will lead to an erosion of working conditions, as countries deliberately try to reduce labor standards in order to maintain competitiveness. We examine the linkages between labor standards and economic integration in the European Union (EU) and, in particular, investigate the following questions. First, whether the conventional wisdom that labor standards are important determinants of trade performance holds, and second whether there has been a “race to the bottom” of standards across countries with deeper integration. We follow a neoclassical factor-proportions framework to conduct our empirical investigation, and unlike previous studies, which rely mostly on cross-sectional data, we use a fully-fledged panel data set to explore the relationship between labor standards and export performance. Our estimates based on data for the period 1980-2001 for EU-15 countries provides mixed evidence regarding the conventional wisdom, and we find that trade performance is largely based on factor endowments. We also find mixed evidence for “ó-convergence” in labor standards. |
| Keywords: | economic integration, labor standards, comparative advantage, ó-convergence |
| JEL: | J80 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1746&r=int |
| By: | Busse, Matthias; Spielmann, Christian |
| Abstract: | The paper empirically explores the international linkages between gender inequality and trade flows of a sample of 92 developed and developing countries. The focus is on comparative advantage in labour-intensive manufactured goods. The results indicate that gender wage inequality is positively associated with comparative advantage in labourintensive goods, that is, countries with a larger gender wage gap have higher exports of these goods. Also, gender inequality in labour force activity rates and educational attainment rates are negatively linked with comparative advantage in labour-intensive commodities. |
| Keywords: | Gender Inequality, Trade, Comparative Adva e |
| JEL: | F11 F16 J70 J80 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:gdec05:3481&r=int |
| By: | Stephen Tokarick |
| Abstract: | International trade theory has pointed out that factor accumulation could immiserize a country if it is sufficiently biased toward the export sector, or if it is biased toward an importcompeting sector in the presence of tariff protection. This paper analyzes the impact of aid, in the form of an increase in the capital stock used only in the nontraded sector, on real income. Yano and Nugent (1999) discussed this issue, but their analysis turned out to be incorrect. This paper demonstrates that whether aid in the form of an increase in capital specific to the nontraded sector reduces welfare depends on how aid affects the price of the nontraded good and on whether imports and the nontraded good are substitutes or complements in demand. |
| Keywords: | Development assistance , Tariffs , International trade , Economic models , |
| Date: | 2006–05–31 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:06/129&r=int |
| By: | Philip Borkin (The Treasury) |
| Abstract: | This paper looks at the importance of the terms of trade for the New Zealand economy by examining the impact of changes in the trend and volatility of the terms of trade on economic growth. It is found that the volatility in the terms of trade has had a negative impact on New Zealand’s economic growth between 1950 and 2005. However, it is found that rather than the level of the terms of trade having an impact on growth, it is the level of export prices that have had a significant positive effect with the level of import prices having an insignificant impact. This paper also examines the historical patterns in the trend and volatility to see if and why they have changed over time. As New Zealand is largely an exporter of primary commodities and importer of manufactures, the Prebisch- Singer hypothesis suggests that its terms of trade should have declined over time. However, this paper finds that the terms of trade has not declined and in fact, is showing an increasing trend since 1974. It is also found that the volatility in the terms of trade has declined over time. Using this evidence as well as other issues such as world trade reform and China, this paper draws conclusions as to future movements of New Zealand’s terms of trade as well as any possible economic growth implications. |
| Keywords: | Terms of trade; Commodity Prices; New Zealand; Economic Growth; Prebisch-Singer Hypothesis |
| JEL: | E30 F10 F41 F43 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:nzt:nztwps:06/09&r=int |
| By: | Gourdon, Julien; Maystre, Nicolas; de Melo, Jaime |
| Abstract: | Using tariffs as a measure of openness, the authors find consistent evidence that the conditional effects of trade liberalization on inequality are correlated with relative factor endowments. Trade liberalization is associated with increases in inequality in countries well-endowed in highly skilled workers and capital or with workers that have very low education levels and in countries relatively well-endowed in mining and fuels. Trade liberalization is associated with decreases in inequality in countries that are well-endowed with primary-educated labor. Similar results are also apparent when decile data are used instead of the usual Gini coefficient. The results are strongly supportive of the factor-proportions theory of trade and suggest that trade liberalization in poor countries where the share of the labor force with very low education levels (likely employed in nontradable activities) is high raises inequality. In the sample, countries with low education levels also have relatively scarce endowments of capital. Quantitatively capital scarcity is the dominating effect so that trade liberalization is accompanied by reduced income inequality in low-income countries. Within-country inequality is also positively correlated with measures of macroeconomic instability. Simulation results suggest that relatively small changes in inequality as measured by aggregate measures of inequality like the Gini coefficient are magnified when estimates are carried out using decile data. |
| Keywords: | Free Trade,Economic Theory & Research,Inequality,Trade Law,Pro-Poor Growth and Inequality |
| Date: | 2006–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3981&r=int |
| By: | Arnold, Jens Matthias; Hussinger, Katrin |
| Abstract: | This paper tests some of the predictions of recent advances in trade theory that have focused on different trade patterns of firms within the same sector. Helpman, Melitz and Yeaple (2005) develop a model in which innate productivity differences between firms determine the degree of international engagement of firms: The least productive firms produce for the domestic market, better performers engage in export activities, and the top firms establish foreign subsidiaries. Using German firm-level data from 1996 to 2002, we test this prediction using non-parametric methods, by examining the distribution functions of the three subsets of firms for stochastic dominance. Rather than just comparing first moments, this technique allows us to compare productivity over the entire distribution. Our results show robust support for the prediction from theory. |
| Keywords: | Export, FDI, Heterogeneous firms, Total Factor Productivity |
| JEL: | D21 D24 F10 F14 F21 F23 L60 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdp1:4241&r=int |
| By: | Mika Saito; Ichiro Tokutsu |
| Abstract: | This paper explores the effect of trade on the relative wage of less-skilled labor through its effect on world prices, which are typically exogenously given under the small open economy assumption. Using the 1995 international input-output data for APEC member countries, we numerically simulate a general equilibrium model to study the effects of abolishing existing tariffs under the assumption that each member country is large enough to affect the prices of goods and services produced in the region. We find that the responsiveness of prices plays an important role in easing a possible adverse effect of trade on relative wages. |
| Date: | 2006–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:06/155&r=int |
| By: | Egger, Peter; Pfaffermayr, Michael |
| Abstract: | This paper studies the determinants of Austrian bilateral intra-firm trade in a panel of industry-level intra-firm goods trade flows. Economic size, unit labor costs and the magnification effects originating from multiple border crossing of sequentially finished products are found to be the most important determinants of trade within multinational firms. Especially, our evidence lends support to multiple border crossing of sequentially finished products, an argument that recently has been put forward in the outsourcing literature. |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdp1:3371&r=int |
| By: | Schiff, Maurice |
| Abstract: | Mundell and Markusen each wrote classic papers on the relationship between trade and factor movement. Mundell showed that substitution holds in the Heckscher-Ohlin model. Markusen challenged the substitution result and showedin five different models that removing barriers to factor movement results in complementarity under free trade, identical factor endowments, and a change in any one of the other assumptions underlying the Heckscher-Ohlin model. The author generalizes Markusen's analysis by considering the liberalization of barriers to factor movement under any non-negative level of protection, and liberalizing trade barriers under factor mobility. He shows that (1) substitution holds at high protection levels, (2) complementarity holds at low protection levels, and (3) either substitution or complementarity hold under large tariff changes. |
| Keywords: | Free Trade,Trade Law,Economic Theory&Research,Trade Policy,International Trade and Trade Rules |
| Date: | 2006–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3974&r=int |
| By: | Gloria O. Pasadilla (Philippine Institute for Development Studies) |
| Abstract: | The paper analyzes how various preferential trading arrangements deal with agriculture liberalization and examines a few case studies highlighting the provisions on agriculture. It assesses the effect of preferential trade agreements on agriculture trade flows in the case of ASEAN. It finds that while the tariff reduction on all goods, including agriculture, in ASEAN provides a marked advantage from the MFN tariff rates, intra-ASEAN agriculture trade have not been all that significant. |
| Keywords: | Preferential Trading Agreements, Agricultural Liberalization |
| JEL: | F1 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:esc:wpaper:1106&r=int |
| By: | Yose Rizal Damuri (Centre for Strategic and International Studies) |
| Abstract: | As a member of WTO, Indonesia has been involved in the discussion of the WTO negotiating group on trade facilitation (NGTF). This study aims to examine the current situation of trade facilitation in Indonesia, as well to assess the needs and priorities of various measures related to the trade facilitation negotiations. |
| Keywords: | WTO, Trade Facilitation, Indonesia |
| JEL: | F1 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:esc:wpaper:1006&r=int |
| By: | Prabir De (Research and Information System Developing Countries) |
| Abstract: | Trade costs are often cited as an important determinant of the volume of trade. A growing literature has documented the negative impact of trade costs on the volume of trade. Most of these studies show that integration is the resultant of reduced costs of transportation in particular and other infrastructure services in general. Direct evidence on border costs shows that tariff barriers are now low in most countries across the world. Poor institutions and poor infrastructure penalize trade, differentially across countries. Therefore, today’s trade strategy goes beyond the traditional mechanisms of tariffs and quotas and includes “behind-the-border” issues, such as the role of infrastructure and governance in supporting a well-functioning trading economy. |
| Keywords: | Trade Costs, Trade Facilitation |
| JEL: | F1 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:esc:wpaper:706&r=int |
| By: | Wenjing Chen, Li Wei (Chinese Academy of International Trade and Economic Cooperation) |
| Abstract: | In 2004, China became the third largest trading economy in the world. Although official overall average import tariff rate was reduced to 9.9% as of January 2005, actual tariff rates are likely much lower. Although further tariff reductions may lead to renewed and expanded global trade growth, trade facilitation will play an increasingly important role in promoting global trade. Costs associated with implementation of trade facilitation measures may be classified into four categories: new regulations, institutional changes, training, and equipment and infrastructure. The study was generally not able to determine costs of specific trade facilitation measures in China. However, Customs and the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) are the two government departments that are most deeply involved in trade facilitation, and a review of their expenditures in this field provides useful information on equipment/infrastructure costs that may be associated with implementing modern trade facilitation systems. |
| Keywords: | GATT, WTO, Trade Liberalization |
| JEL: | F1 |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:esc:wpaper:506&r=int |
| By: | Pushpa Raj Rajkarnikar (Institute for Policy Research and Development) |
| Abstract: | Trade facilitation has been a longstanding and traditional feature of GATT, which is expected to have serious implication for developing member countries. This study aims to evaluate the need for and the cost of implementing trade facilitation measures in Nepal in the context of the ongoing WTO negotiation. Nepal initiated market oriented economic reforms in 1985. Trade liberalization under the economic reform was significant. However, trade facilitation has got due attention only in recent years. HMG introduced ASYCUDA in selected custom offices and implemented a three years (2003-2006) Customs Reform Action Plan in the process of TF. |
| Keywords: | GATT, WTO, Trade Liberalization |
| JEL: | F1 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:esc:wpaper:806&r=int |
| By: | Annabi, Nabil; Khondker, Bazlul; Raihan, Selim; Cockburn, John; Decaluwe, Bernard |
| Abstract: | The authors examine the effects of WTO agreements and domestic trade policy reforms on production, welfare, and poverty in Bangladesh. They use a sequential dynamic computable general equilibrium (CGE) model, which takes into account accumulation effects, allowing for long-run analysis. The study is based on the 2000 Social Accounting Matrix (SAM) of Bangladesh including 15 production sectors, four factors of production (skilled and unskilled labor, agricultural and nonagricultural capital), and nine household groups (five in rural areas and four in urban areas). To examine the link between the macroeconomic effects and microeconomic effects in terms of poverty, the authors use the representative household approach with actual intra-group income distributions. The study presents five simulations for which the major findings are: (1) The Doha scenario has negative implications for the overall macroeconomy, household welfare, and poverty in Bangladesh. Terms of trade deteriorate and consumer prices, particularly food prices, increase more than nominal incomes, especially among poor households. (2) Free world trade has similar, but larger, impacts. (3) Domestic trade liberalization induces an expansion of agricultural and light manufacturing sectors, favorable changes in the domestic terms of trade. Although the short-run welfare and poverty impacts are negative, these turn positive in the long run when capital has adjusted through new investments. Rising unskilled wagerates make the poorest households the biggest winners in terms of welfare and poverty reduction. (4) Domestic liberalization effects far outweigh those of free world trade when these scenarios are combined. (5) Remittances constitute a powerful poverty-reducing tool given their greater importance in the income of the poor. |
| Keywords: | Economic Theory&Research,Rural Poverty Reduction,Free Trade,Markets and Market Access |
| Date: | 2006–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3976&r=int |
| By: | Debapriya Bhattacharya; Syen Saifuddin Hossain (Centre for Policy Dialogue) |
| Abstract: | With the ongoing customs reforms in Bangladesh, the possible future negotiations on trade facilitation in the WTO will have a profound impact on Bangladesh, as well as on other LDC and developing countries. These countries will benefit greatly from new trade facilitation initiatives. Simultaneously, these countries may face enormous challenges in implementing their commitments in the area of trade facilitation. It is, thus, imperative for these countries to closely monitor the Doha negotiations in this area and be prepared to formulate their negotiating strategies. They should also continue with customs administration reform and trade facilitation capacity building programs in order to develop their own capacity. |
| Keywords: | WTO, Trade Facilitation, Bangladesh |
| JEL: | F1 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:esc:wpaper:906&r=int |
| By: | Finger, J. Michael; Wilson, John S. |
| Abstract: | Contrary to the prevailing view that the Doha negotiations have achieved little, the authors find that on trade facilitation much progress has been made. This is particularly true in regard to action by development banks and bilateral development agencies to meet client demand for assistance in reform. Active private sector participation has been an important factor driving change. Many agencies have been involved in this work. The authors find that their roles have been consistent with their comparative advantages. As to how the international community can best support continued progress, the authors conclude in favor of a cautious approach to the imposition of new WTO obligations in the area of trade facilitation. On the whole, this is the approach the WTO has taken, for example, by limiting its negotiations on trade facilitation to several specific provisions of the GATT. The WTO can continue to function as a catalyst for reform. It is perhaps uniquely placed to relate the trade facilitation agenda to the overall trade agenda. On design and construction of the relevant infrastructures and capacities to spur development, the development institutions, including bilateral agencies, should continue to lead. The authors find little evidence to support the need for a comprehensive new"platform"or mechanism to channel trade-related aid as part of implementation of any new agreement at the WTO on trade facilitation. They recommend, however, that an innovative approach to using the well established, but under utilized Trade Policy Review Mechanism be considered to increase transparency on where new aid is going over time and to expand understanding of where and how country-based progress has been achieved. |
| Keywords: | Economic Theory&Research,Trade Law,Trade Policy,Common Carriers Industry,Transport and Trade Logistics |
| Date: | 2006–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3971&r=int |
| By: | Herrmann, Sabine; Jochem, Axel |
| Abstract: | Given the large trade and current account deficits in some of the new EU member states the development of their external economic situation plays a role in assessing their aptitude to enter the European Monetary Union. The empirical analysis with aggregated data indicates that in the eight central and east European EU member states FDI and trade are complementary. This result is confirmed by an FDI enhanced gravity model which makes use of sectoral data provided by the Bundesbank’s micro database direct investment (MIDI). The net effect of FDI on the trade balance is ambiguous, but FDI in high-tech industries clearly stimulates exports more than imports. Technological spill-over and the conglomeration of human capital seem to be important factors for the export performance. Against this background the prospects for the Czech Republic, Hungary, Slovenia and the Slovak Republic look more favourable compared to the Baltic states. |
| Keywords: | foreign direct investment, trade balance, gravity model |
| JEL: | F14 F15 F21 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdp1:4235&r=int |
| By: | Uttam Kumar Deb (Centre for Policy Dialogue) |
| Abstract: | Many developed and developing countries have been offering special schemes to benefit least developed countries (LDCs) from trade through increased market access. However, effective utilization of market access opportunities by the LDCs may be constrained by the rules of origin (RoO) criteria and non-tariff measures (NTMs) applied by the preference-giving countries. This report deals with RoO applied and non-tariff barriers (NTBs) imposed by developed and developing countries for importing agricultural products from LDCs. |
| Keywords: | Rules of Origin, Non-Tariff Measures |
| JEL: | F1 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:esc:wpaper:1206&r=int |
| By: | Dean, Judith M.; Wainio, John |
| Abstract: | In recent debates, trade preference erosion has been viewed by some as damaging to developing countries, and by others as insignificant, except in a few cases. But little data have been available to back either view. The objective of this paper is to improve our measures of the size, utilization, and value of all U.S. nonreciprocal trade preference programs in order to shed light on this debate. Highly disaggregated data are used to quantify the margins, coverage, utilization, and value of agricultural and nonagricultural tariff preferences for all beneficiary countries in the U.S. regional programs and in the Generalized System ofPreferences. Results show that U.S. regional tariff preference programs are generally characterized by high coverage of beneficiary countries'exports, high utilization by beneficiary countries, and low tariff preference margins (except on apparel). For 29 countries, the value of U.S. tariff preferences was 5 percent or more of 2003 dutiable exports to the United States, even after incorporating actual utilization. Most of this value is attributable to nonagricultural tariff preferences, and to apparel preferences in particular. These results suggest that preference erosion may be significant for more countries than many had thought. |
| Keywords: | Free Trade,Trade Policy,Insurance&Risk Mitigation,Economic Theory&Research,Agribusiness&Markets |
| Date: | 2006–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3977&r=int |
| By: | Emily Blanchard |
| Abstract: | This paper demonstrates that international ownership can mitigate the terms of trade externalities that lead large countries to set inefficiently high tariffs, and may thereby substitute for negotiated tariff liberalization in eliminating the strategic manipulation of world prices. The policy prediction is unclear, however, since international cross-ownership also introduces an internal cost-shifting externality that can drive investment-host countries to expand local market access beyond efficient levels in an effort to extract rents from foreign investors. An immediate implication is that simply making large countries “act small” or completely diversify their global investment portfolios to neutralize traditionally understood terms of trade cost-shifting motives cannot ensure efficient trade policy regimes in an environment with international investment. At the same time, a modified version of the principle of reciprocity does continue to serve as an important guide to efficiency by balancing countries' external and internal pecuniary externalities. |
| JEL: | F01 F13 F15 F21 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1735&r=int |
| By: | Andrei A. Levchenko; Quý Toàn Ðo |
| Abstract: | We analyze the relationship between international trade and the quality of economic institutions, such as contract enforcement, rule of law, and property rights. In our model, firms differ in their preferences for institutional quality, which is determined endogenously in a political economy framework. We show that trade opening can worsen institutions when it increases the political power of a small elite of large exporters who 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 exports in sectors characterized by economic profits. |
| Date: | 2006–03–14 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:06/56&r=int |
| By: | Yann Duval (United Nations Economic and Social Commission for Asia and the Pacific) |
| Abstract: | This study suggests that the WTO may need to establish a long-term institutional mechanism to deal with evolving trade facilitation measures and issues. Countries may also agree on a subset of well-defined TFMs to be implemented by all, as well as on a complementary list of possibly more controversial TFMs from which countries would select, based on their own needs and specificity, a pre-determined number of measures for implementation. |
| Keywords: | WTO, Trade Facilitation |
| JEL: | F1 |
| Date: | 2006–01 |
| URL: | http://d.repec.org/n?u=RePEc:esc:wpaper:306&r=int |
| By: | Swapan K. Bhattacharya; Biswanath Bhattacharyay |
| Abstract: | The seven-nation Bay of Bengal Initiative for Multisectoral Technical and Economic Cooperation (BIMSTEC), comprising Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka and Thailand is emerging as one of the major subregional groups in Asia. Japan is the second largest trading partner for BIMSTEC countries. The paper discusses prospects for strengthening BIMSTEC countries and Japan’s cooperation and integration in trade, investment, and finance. It analyzes the trends and patterns of bilateral and subregional economic cooperation in Asia as well as BIMSTEC-Japan trade. It examines empirically whether BIMSTEC-Japan economic cooperation will increase intraregional trade using a gravity model. Japan-BIMSTEC cooperation will increase intraregional trade but not uniformly for all countries. The potential losses on trade for some countries will be compensated by gains in other areas, such as, stepped up resource transfer, foreign direct investment flows, technology transfer, and market access to services. The paper also presents the need for and possible areas of economic cooperation and integration in investment and finance. |
| JEL: | F02 F13 F15 F36 F40 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1725&r=int |
| By: | Raff, Horst; Schmitt, Nicolas |
| Abstract: | This paper shows that a manufacturer may benefit from parallel trade. In addition to an intuitive condition about the effect of demand shocks, this occurs when competitive retailers must order inventories before they know the realization of demand and for products whose sale value drops at the end of the demand period. For these types of products, letting retailers trade unsold inventories generally results in larger orders placed with the manufacturer, higher manufacturer profit and higher consumer surplus. The model provides a simple explanation as to why the volume of parallel trade is now very large and accepted by manufacturers for some products such as automobiles, clothes, toys, consumer electronics, musical recordings, cosmetics and perfumes. |
| Keywords: | parallel trade, distribution |
| JEL: | F12 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cauewp:2990&r=int |
| By: | Prema-chandra Athukorala |
| Abstract: | This paper examines the implications of international fragmentation of production for trade patterns in the Pacific Rim, with special emphasis on regional and global integration of countries in East Asia. The analysis reveals that the degree of dependence of East Asia on this new global division labour is much larger compared to the other countries in the Pacific Rim and Europe. Network- related trade in parts and components has certainly strengthened intra-regional economic interdependence among the East Asian countries, but this has not lessoned the dependence of growth dynamism of these countries on the global economy. The operation of cross-border production networks depends inexorably on trade in final goods with North America and the European Union. The paper also probes the challenges posed by the fragmentation-based international division of labour for the 'flying geese' approach to the analysis of growth patterns in East Asia. |
| Keywords: | production fragmentation, multinational production networks, economic transition in China |
| JEL: | F15 F23 O53 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pas:papers:2006-09&r=int |
| By: | Hubert Gabrisch |
| Abstract: | The paper analyses vertical intra-industry trade between EU and Accession countries, and concentrates on two country-specific determinants: Differences in personal income distribution and in technology. Both determinants have a strong link to national policies and to cross-border investment flows. In contrast to most other studies, income distribution is not seen as time-invariant variable, but as changing over time. What is new is also that differences in technology are tested in comparison with cost advantages from capital/labour ratios. The study applies panel estimation techniques with GLS. Results show country-pair fixed effects to be of high relevance for explaining vertical intraindustry trade. In addition, bilateral differences in personal income distribution and their changes are positive related to vertical intra-industry trade in this special regional integration framework; hence, distributional effects of policies matter. Also, technology differences turn out to be positively correlated with vertical intra-industry trade. However, the cost variable (here: relative GDP per capita) shows no clear picture, particularly not in combination with the technology variable. |
| Keywords: | Intra-industry trade, transition countries |
| JEL: | F14 F15 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:iwh:dispap:12-06&r=int |
| By: | Tamim Bayoumi; Martin Mühleisen |
| Abstract: | This paper describes potential benefits from Canada's expanding oil sands production, higher energy exports, and further improvements in the terms of trade. Contrary to the previous Canadian exchange rate literature, this paper finds that both energy and nonenergy commodity prices have an influence on the Canadian dollar, and some upward pressure on the exchange rate would therefore be expected. Model results suggest, however, that the impact on other tradable goods exports is limited. |
| Keywords: | Balance of payments , Canada , Trade , Exports , Commodity prices , Exchange rates , Oil production , |
| Date: | 2006–03–29 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:06/70&r=int |
| By: | Isabelle Mejean |
| Abstract: | This paper studies determinants of relative price levels in a New Trade framework. The model combines a Balassa-Samuelson mechanism, explaining Purchasing Power Parity (PPP) deviations in the non-traded good sector, and an endogenous location of firms leading to PPP deviations in the traded good sector. Calibrating the model with OECD data, I show that PPP deviations in the traded good sector can either lessen or strengthen the Balassa-Samuelson effect, depending on the share of traded goods in consumption. Moreover, in general equilibrium, the real exchange rate also depends on the relative size of countries, through the Home Market Effect. |
| Keywords: | Long-Run Real Exchange Rate; PPP deviations; Balassa-Samuelson effect; location decisions; relocation; international trade; new trade theory |
| JEL: | F1 F2 F4 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:cii:cepidt:2006-12&r=int |
| By: | Klytchnikova, Irina; Diop, Ndiame |
| Abstract: | This paper analyzes the distributional impacts of trade reforms in rural areas of Bangladesh. The liberalization of trade in irrigation equipment and fertilizer markets during the early 1990s has led to structural changes in the agricultural sector and a significant increase in rice productivity. A resulting increase in output has been associated with a decline in producer and consumer rice prices of approximately 25 percent. Using a combination of ex-post and ex-ante approaches, the authors investigate the implications of the changes in rice productivity and prices for the welfare of households. They find that the net effects of increased rice productivity and lower rice prices have benefited the poor. Regardless of the particular category analyzed, the poorest households emerged as being particularly positively affected by reforms in the 1990s. This mainly reflects the fact that they are predominantly net rice buyers in both urban and rural markets. In contrast, large net sellers of rice, among the better-off households in the rural areas, were the main losers. Since net buyers in rural areas tend to be poorer than net sellers, trade liberalization has benefited the poor. Although the authors are not able to test empirically what has happened to the welfare level of agricultural wage earners, secondary evidence suggests that they have gained from trade liberalization. |
| Keywords: | Rural Poverty Reduction,Economic Theory & Research,Markets and Market Access,Crops & Crop Management Systems |
| Date: | 2006–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3980&r=int |
| By: | Christiane Nickel; Katja Funke |
| Abstract: | This paper analyzes the empirical relationship between fiscal policy and the trade account. Research prior to this paper did not consider that the components of private and public demand in the import demand equation exhibit different elasticities. Using pooled mean group estimation for annual panel data of the G-7 countries for the years 1970 through 2002, we provide empirical evidence that the composition of overall demand-i.e., the distribution among public demand, private demand, and export demand-has an impact on the magnitude of the trade account deficit. |
| Date: | 2006–06–22 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:06/147&r=int |
| By: | Sachin Chaturvedi (Research and Information System for Developing Countries) |
| Abstract: | The study finds that in case of Article X, which basically deals with the publication and administration of trade regulations, India has already implemented most of the requirements. However comprehensive efforts are required to implement, the provision related to single inquiry point which may require software compatibility among various agencies involved apart from addressing the infrastructural constraints. In case of GATT Article VIII which deals with issues related to fees and charges and import and export formalities and documentation requirements most of the provisions are in place but efforts are required to improve the border agency coordination. In case of Articles X and VIII, the minimum cost is estimated at around Re. 2,016 million. This includes a major expenditure on equipments and infrastructure (82 per cent). The installation of electronic cargo clearance units is a major requirement at most of the leading ports in India. In Article V there is lot to be expected from India, the infrastructure requirements, especially for the physical infrastructure, deserve huge and urgent funding. This includes additional efforts required to support and strengthen the level of communication at the border points. Most of the Land Customs Stations (LCSs) require better infrastructure. There is need to attach greater priority to include various provisions of GATT Article V in the bilateral trade and transit treaties especially with land locked countries for greater facilitation of transit trade. |
| Keywords: | GATT, WTO, Trade Liberalization |
| JEL: | F1 |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:esc:wpaper:406&r=int |
| By: | Maria Isabel Serra; Maria Fernanda Pazmino; Genevieve Lindow; Gustavo Ramirez; Bennett Sutton |
| Abstract: | This paper presents empirical evidence on convergence of per capita output for regions within six large middle-income Latin American countries: Argentina, Brazil, Chile, Colombia, Mexico, and Peru. It explores the role played by several exogenous sectoral shocks and differences in steady states within each country. It finds that poor and rich regions within each country converged at very low rates over the past three decades. It also finds evidence of regional "convergence clubs" within Brazil and Peru- the estimated speeds of convergence for these countries more than double after controlling for different subnational levels of steady state. For the latter countries and Chile, convergence is also higher after controlling for sector-specific shocks. Finally, results show that national disparities in per capita output increased temporarily after each country pursued trade liberalization. |
| Keywords: | Economic growth , Argentina , Brazil , Chile , Colombia , Mexico , Peru , Latin America , Productivity , Production , |
| Date: | 2006–05–23 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:06/125&r=int |
| By: | Hing Vutha, Larry Strange and K.A.S. Murshid (Cambodia Development Resource Institute) |
| Abstract: | The informal meeting of core Asia-Pacific Research and Training Network on Trade (ARTNeT) research institutions organized by UNESCAP and IDRC in June 2004 in Bangkok highlighted the need for capacity building of research institutions from Least Developed Countries in the region. Llittle research or information is, however, available on what the needs of these research institutions are, their existing trade research capacity and how this differs across countries. This study sets out to address the key following issues: What are the existing trade research capacities of research institutions in LDCs and low-income developing countries in the Asia-Pacific region? What are their capacity-building needs in trade policy research? |
| Keywords: | Research Capacity, LDCs |
| JEL: | F1 |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:esc:wpaper:105&r=int |
| By: | Biswajit Dhar (Indian Institute of Foreign Trade (IIFT)) |
| Abstract: | In a series of papers published during the past few years, World Bank economists have provided detailed projections by simulating the possible outcomes of the Doha Round negotiations. The projections have been obtained by using the LINKAGE Model, which is considered to be a global dynamic computable general equilibrium (CGE) model. The latest version of the LINKAGE Model, viz. LINK6, which these papers have relied on, uses the Global Trade Analysis Program (GTAP). LINK6 incorporates 87 countries/regions and 57 sectors and uses a dataset that has been updated up to 2001. This latter feature of the model, according to the authors, has helped generation of far more realistic results than those that were using the earlier versions, which had incorporated data only up to 1997. This note attempts a critical assessment of the above-mentioned papers. At the outset, we would provide an analysis of the results that have been presented by looking at their implications for the developing countries in general and India, in particular. In the second part of the note, we would broadly allude to some of the methodological problems that are associated with the CGE models of the genre of the LINKAGE model. Our contention is that the limitations of these models, especially in terms of the assumptions on which they are based, deserve close scrutiny and that this dimension needs to be kept in view as the results obtained from studies are read. |
| Keywords: | Doha Round Negotiations, WTO |
| JEL: | F1 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:esc:wpaper:606&r=int |
| By: | Paul Sharp (Department of Economics, University of Copenhagen) |
| Abstract: | By documenting the legislative history of the Corn Laws from 1670 and using previously unused data to calculate annual Ad Valorem Equivalents for most years from 1814, it is possible to establish several important facts about British wheat protection. Statutory protection was only significant for a few years after 1815, the decline starting in the 1820s and continuing beyond the famous “repeal” in 1846. The level of protection prior to 1846 was, for many years, much lower than previous accounts have suggested. The annual time series of Ad Valorem Equivalents will allow for UK trade policy to play the important role it deserves in econometric analyses of the nineteenth century. |
| Keywords: | United Kingdom; Corn Laws; protectionism |
| JEL: | N43 N53 N73 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:kud:kuiedp:0614&r=int |
| By: | Chris Manning; Alexandra Sidorenko |
| Abstract: | This study assesses the extent of regulation of in-migration of professionals into ASEAN countries. The focus is on two selected sectors, health care and information technology (IT). Both sectors have been given special attention in regional trade negotiations which seek to increase the mobility of professionals in ASEAN. The study is set in the framework of rising demand for more skilled manpower, associated with rapid economic growth and a high income elasticity of demand for services. We develop measures to assess the extent of regulation of in-migration in recipient countries, as well as the depth of commitments to the mobility of professionals under Mode 4. The study links several indices of regulation to stages of economic development. It finds that the more advanced countries in ASEAN tend to have made more liberal commitments under Mode 4. They also had more liberal regimes for international movements of skilled manpower in both health and IT. However there was less difference between more and less developed countries regarding general visa and work permit arrangements. Finally, because of their greater social significance, regulations related to the migration of health professionals tended to be more restrictive than for IT professionals. |
| Keywords: | International Migration, Trade and Labour Markets, Professional Labour, Health Care Professionals |
| JEL: | F16 F22 I18 J44 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pas:papers:2006-08&r=int |
| By: | Lee Bransetter; Nicholas Lardy |
| Abstract: | As China has become an increasingly important part of the global trading system over the past two decades, interest in the country and its international economic policies has increased among international economists who are not China specialists. This paper represents an attempt to provide the international economics community with a succinct summary of the major steps in the evolution of Chinese policy toward international trade and foreign direct investment and their consequences since the late 1970s. In doing so, we draw upon and update a number of more comprehensive book-length treatments of the subject. It is our hope that this paper will prove to be a useful resource for the growing numbers of international economists who are exploring China-related issues, either in the classroom or in their own research. |
| JEL: | O53 O19 F43 F14 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12373&r=int |
| By: | Lin, Ping; Saggi, Kamal |
| Abstract: | This paper develops a two-tier oligopoly model in which the entry of a multinational firm results in technology transfer to its local suppliers and also impacts the degree of backward linkages in the local industry. The model endogenizes the multinational’s choice between anonymous market interaction with its suppliers and contractual relationships with them under which the multinational transfer technology to its suppliers who in turn agree to serve the multinational exclusively. The multinational’s entry under an exclusive contract has a de-linking effect that can reduce the degree of competition among suppliers thereby leading to a decline in the level of backward linkages and local welfare. With its emphasis on the supply-side effects of the multinational’s entry on local industry, this paper complements existing studies of backward linkages that focus more on demand-side effects. |
| Keywords: | Multinational Firms, Backward Li es, Vertical Technology Transfer, Exclusivity |
| JEL: | F12 F23 L13 O14 O19 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdp1:2943&r=int |