nep-int New Economics Papers
on International Trade
Issue of 2006‒11‒12
ten papers chosen by
Martin Berka
Massey University

  1. Trade Liberalisation, Process and Product Innovation, and Relative Skill Demand By Sebastian Braun
  2. Regional Integration and Internal Economic Geography - an Empirical Evaluation with Portuguese Data By Nuno Crespo; Maria Paula Fontoura
  3. Complementarity between Bilateral Trade and Financial Integration By Shin, Kwanho; Yang, Doo Yong
  4. Trade Pattern Persistence By Steven Husted; James Cassing
  5. The Geography of Trade on eBay and MercadoLibre By Ali Hortaçsu; F. Asís Martínez-Jerez; Jason Douglas
  6. Impact of Trade Liberalization on the Environment in Developing Countries: The Case of Nigeria By Feridun, Mete
  7. Immigration, Trade and Wages in Germany By Yaya, Mehmet-Erdem
  8. The Gains from Improved Market Efficiency: Trade Before and After the Transatlantic Telegraph By Mette Ejrnæs; Karl Gunnar Persson
  9. Econometric Evidence Regarding Education and Border Income Performance By Almada, Christa; Blanco-Gonzalez, Lorenzo; Eason, Patricia; Fullerton, Thomas
  10. The rising wage inequality in Mexico, 1984-2000: A distributional analysis By Popli, Gurleen

  1. By: Sebastian Braun (School of Business and Economics, Humboldt University of Berlin)
    Abstract: The interaction between trade liberalisation, product and process innovation, and relative skill demand is analysed in a model of international oligopoly. Lower trading barriers increase the degree of foreign competition. The competing enterprises respond by investing more aggressively in lowering marginal costs of production. Moreover, firms reduce the substitutability of their products through additional investment in product innovation. The paper also shows that the relative demand for skilled workers may increase as a result.
    Keywords: Intra-industry trade, process innovation, product innovation, relative skill demand, trade liberalisation
    JEL: F12 F15 F16 O32
    Date: 2006–10
  2. By: Nuno Crespo; Maria Paula Fontoura
    Abstract: The effects of the reduction of international trade costs on the internal economic geography of each country have been very scarcely studied in empirical terms. With data for Portugal since its adhesion to the European Union, we test the hypotheses put forward by the new economic geography concerning the evolution of the spatial concentration of the manufacturing industry as a whole and of the different industries individually considered. We consider alternative concentration concepts and data disaggregated both at the level of NUTS III (28 regions) and concelhos (275 regions). Results show a dispersion of total industry as a consequence of the reduction of international trade costs, in line with Krugman and Elizondo (1996)’s prediction. Individual industries show a similar tendency, in contrast with the theoretical hypothesis.
    Keywords: trade liberalization; industrial location; Portugal.
    JEL: F12 F15 R12
  3. By: Shin, Kwanho; Yang, Doo Yong
    Abstract: This paper explores the complementarities between bilateral trade in goods and financial assets. By utilizing a gravity model specification with an extended dataset in terms of time span and asset classification as well as alternative instrumental variables, we confirm the existence of positive evidence for complementarities. We find that common factors such as bilateral distance and other economic size variables that determine both cross-border trade and financial flows contribute to complementarity. However, the fact that the estimated coefficients of distance for financial transactions are about half the size of those for trade in goods suggests that physical distance is less important for financial transactions. Furthermore, the significance of distance in explaining bilateral transactions disappears when trade is added as an additional explanatory variable, indicating that distance may not directly influence financial flows. Finally, we also find that there exists another important factor that is responsible for the complementarities that exist between trade and financial integration. This additional factor is a direct causal relationship that acts from both directions between trade in goods and financial transactions, while the directional effects from trade in goods to financial transactions are much stronger.
    Keywords: Trade integration; Financial integration; Gravity model
    JEL: F15 F36
    Date: 2006–06
  4. By: Steven Husted; James Cassing
    Date: 2006–01
  5. By: Ali Hortaçsu (University of Chicago and NBER); F. Asís Martínez-Jerez (Harvard Business School); Jason Douglas
    Abstract: We analyze geographic patterns of trade using transactions data from eBay and MercadoLibre, two large online auction sites. We find that distance continues to be an important deterrent to trade between geographically separated buyers and sellers, though at a lesser extent than has been observed in studies of non-Internet commerce. We also find a strong “home bias” towards trading with counterparties located in the same city. Further analyses suggest that cultural factors and the possibility of direct contract enforcement in case of breach are the main reasons behind the same city bias.
    Date: 2006–09
  6. By: Feridun, Mete
    Abstract: This article aims at investigating the impact of trade openness on pollution and resource depletion in Nigeria. Results indicate that pollution is positively related to trade intensity and real GDP per square kilometer, while capital to labor ratio and GNP are negatively related to pollution. In addition, strong evidence suggests that trade intensity, real GDP per square kilometer and GNP are positively related to environmental degradation indicating that the technique, scale, and total effects of liberalization are detrimental to the environment. The composition effect of trade liberalization on natural resource utilization,on the other hand, is beneficial. A number of policy implications emerge from the study for Nigeria as well as other developing economies.
    Keywords: development; environmental degradation; environmental Kuznets Curve; trade liberalization
    Date: 2006–11–08
  7. By: Yaya, Mehmet-Erdem
    Abstract: This paper examines the effects of several macroeconomic variables such as GDP, imports, unemployment, immigration and emigration on the real wages and salaries of German laborers. Annual data for 49 years has been used to estimate twelve different regressions, trying to capture the effect of these variables on the real wages and salaries in Germany while considering the unification of West-East Germany with a dummy variable. The results are intriguing, and contradicting with most of the earlier literature. The paper concludes that wages are unresponsive to the macroeconomics changes most of the time while salaries are more sensitive to macroeconomic changes. The paper also contributes to the literature by investigating the effects of macroeconomic variables on the salary and wage changes of different gender groups.
    Keywords: Immigration; wages; international trade; Germany
    JEL: F16 F22
    Date: 2005–06
  8. By: Mette Ejrnæs (Department of Economics, University of Copenhagen); Karl Gunnar Persson (Department of Economics, University of Copenhagen)
    Abstract: This paper looks at the gains from improved market efficiency in long-distance grain trade in the second half of the 19th century when violations of the law of one price were reduced due to improved information transmission. Two markets, a major export centre, Chicago, and a major importer, Liverpool, are analyzed. We show that there was a law of one price equilibrium throughout the period but that markets displayed spells of demand- or supply-constrained trade when the law of one price was violated. Over time adjustments back to equilibrium, as measured by the half-life of a shock, become faster, violations of the law of one price become smaller and hence less persistent. There were also significant gains from improved market efficiency but that improvement took place after the information ‘regime’ shifted from pre-telegraphic communication to a regime with swift transmission of information in an era which developed a sophisticated commercial press and telegraphic communication. Improved market efficiency probably stimulated trade more than falling transport costs.
    Keywords: market integration; error correction; law of one price
    JEL: F1 C5 N7
    Date: 2006–10
  9. By: Almada, Christa; Blanco-Gonzalez, Lorenzo; Eason, Patricia; Fullerton, Thomas
    Abstract: This study examines the relationship between education and income in Texas counties that are located along the border with Mexico. Estimation results confirm ealrier research results for this region. Parameter heterogeneity underscores the increased importance of education in the service-oriented labor market that has emerged in recent years in the United States. Simulation results quantify the income gains that could potentially be realized if drop out rates were lowered in the border counties included in the sample.
    Keywords: Education; Texas border incomes; applied econometrics.
    JEL: J38 R11
    Date: 2006
  10. By: Popli, Gurleen
    Abstract: In this paper we look at the distribution of wages to examine the extent and cause of the increasing wage inequality in Mexico over the last two decades (1984 to 2000). To understand the causes of the increase in inequality over time we do a counterfactual analysis. We find that over the last two decades not only did the inequality increase, there also was an erosion of real wages, and it's the middle class which was affected the most. Main reason for the decrease in real wages was the declining unionization in the country. While the main reason for the rise in inequality was the changing distribution of skills.
    Keywords: kernel density estimation; counterfactual distribution ; unions; trade liberalization; changing distribution of skills
    JEL: C14 J31
    Date: 2006

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