|
on International Trade |
| By: | Gourdon, Julien |
| Abstract: | The relationship between trade liberalization and inequality has received considerable attention in recent years. The primary purpose of this paper is to present new results on the sources of wage inequalities in manufacturing taking into account South-South (S-S) trade. Globalization not only leads to increasing North-South (N-S) trade, but the direction and composition of trade has also changed. More trade is carried out between developing countries. We observe increasing wage inequality is more due to the South-South trade liberalization than to the classical trade liberalization with northern countries. The second purpose is to elucidate the link between the direction of trade and technological change, arguing that it might explain why we obtain different results for South-South trade and North-South trade on wage inequality. A part of this increasing wage inequality due to S-S trade comes from the development of N-S trade relationship in S-S trade which increases wage inequality in middle income developing countries. However the fact that S-S trade is more skill intensive sector oriented increase wage inequality for all developing countries. |
| Keywords: | International Trade; Wage Inequality; Skill-biased technical change |
| JEL: | O3 J3 F1 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:4177&r=int |
| By: | Ponce, Aldo Fernando |
| Abstract: | This paper sheds lights the on the performance of Latin American governments in attracting foreign direct investment (FDI) through trade policies, specifically by signing free trade agreements with other countries. The relationship between FDI and trade for Latin America has previously been analyzed. In these studies, the relationship between the degree of ÃÂâÃÂÃÂÃÂÃÂopennessÃÂâÃÂÃÂÃÂà(imports plus exports divided by the domestic product) and FDI has not been conclusive. At the same time, the effect of specific trade policies on FDI flows has not been extensively studied. Some state policies on trade could produce a significant impact in attracting FDI. Specifically, through the implementation of several free trade agreements, several Latin American countries have been able to attract greater flows of foreign direct investment. The implementation of these free trade agreements was part of a more general plan of economic reforms that Latin American countries launched since the mid-1980s. The goals of these reforms were to adjust their economies and improve their competitiveness by liberalizing trade, privatizing, and deregulating their markets. Those countries that signed more free trade agreements ÃÂâÃÂÃÂÃÂàor signed them with the largest economies in the world ÃÂâÃÂÃÂÃÂÃÂincreased their effectiveness in attracting FDI. I test the impact of this policy on the behavior of FDI flows through a panel data model for seventeen Latin American countries and for the period ranging from 1985 to 2003. |
| Keywords: | free trade agreements; foreign direct investment; Latin America |
| JEL: | F59 F12 F15 |
| Date: | 2006–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:4187&r=int |
| By: | Long, Ngo Van; Raff, Horst; StÃÂÃÂÃÂähler, Frank |
| Abstract: | This paper develops an oligopolistic model of international trade with heterogeneous firms and endogenous R&D to examine how trade liberalization affects firm and industry productivity, as well as social welfare. We identify four effects of trade liberalization on productivity: (i) a direct effect through changes in R&D investment; (ii) a scale effect due to changes in firm size; (iii) a selection effect due to inefficient firms leaving the market; and (iv) a market-share reallocation effect as efficient firms expand and inefficient firms reduce their output. We show how these effects operate in the short run when market structure is fixed, and in the long run when market structure is endogenous. Among the robust results that hold for any market structure are that trade liberalization (i) increases (decreases) aggregate R&D for low (high) trade costs; (ii) increases expected firm size if trade costs are high; and (iii) raises expected social welfare if trade costs are low. |
| Keywords: | international trade, firm heterogeneity, R&D, productivity, market structure |
| JEL: | F12 F15 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cauewp:5686&r=int |
| By: | Gourdon, Julien |
| Abstract: | Integration to world markets is expected to help developing countries to access prosperity. At the same time, increasing opportunities to trade are likely to affect income distribution and whether or not increasing openness to trade is accompanied by a reduction or an increase inequality is highly controversial. This paper brings new evidence on this issue in using a data set covering a large sample of developing countries and a model with improved controls for omitted variables and a new index of trade openness. Trade liberalization increases inequality in countries that relatively well-endowed in capital. Our model assumes that it might be fruitful to breakdown unskilled labor into non-educated and primary-educated as suggested by Wood (1994). The results show that trade liberalization increases inequality in highly educated abundant countries whereas it decreases inequality in primary educated abundant countries. However it increases inequality in non educated abundant countries, suggesting that this part of population does not benefit from trade openness since it is not included in export oriented sectors. |
| Keywords: | International Trade; Income Distribution; Poverty |
| JEL: | F11 F16 D3 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:4176&r=int |
| By: | Garcia-Alvarez-Coque, Jose Maria; MartÃÂÃÂÃÂÃÂ-Selva, Maria-Luis |
| Abstract: | The paper is intended to draw on a gravity methodology to assess the impact of EuroMediterranean Association Agreement on Fruit and Vegetable trade from Mediterranean Partner Countries (MPC) to the EU. The Association Agreements appear to be significant as an explanatory of both fruit and vegetablesÃÂâÃÂÃÂÃÂàtrade flows to the EU. However, while the impact of such arrangements has contributed to boost MPCÃÂâÃÂÃÂÃÂÃÂs horticultural exports, it has not been sufficient to compensate the export loss related to the nature of MPCs as third countries. MPCs may have obtained gains from the EuroMed Agrements but the Barcelona process is still far to achieve its initial goals, at least concerning crucial products for the MPCsÃÂâÃÂÃÂÃÂàexport strategy. The presented approach supplies a method to monitor future developments in the EuroMediterranean process. |
| Keywords: | agricultural trade; Euro-Mediterranean agreements; fruit and vegetables |
| JEL: | F15 Q18 Q17 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:4124&r=int |
| By: | GÃÂÃÂÃÂörg, Holger; Hijzen, Alexander; Manchin, Miriam |
| Abstract: | Cross-border mergers and acquisitions (M&As) have increased dramatically over the last two decades. This paper analyses the role of trade costs in explaining the increase in the number of cross-border mergers and acquisitions. In particular, we distinguish horizontal and non-horizontal M&As and investigate whether trade costs affect these two types of mergers differently. We analyse this question using industry data for 23 OECD countries for the period 1990-2001. Our findings suggest that while in the aggregate trade costs affect cross-border merger activity negatively its impact differs importantly across horizontal and non-horizontal mergers. The impact of trade costs is less negative for horizontal mergers, which is consistent with the tariff-jumping argument. |
| Keywords: | FDI; gravity; mergers and acquisitions; trade costs |
| JEL: | F02 F15 F21 F23 |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6397&r=int |
| By: | Verhoogen, Eric A. |
| Abstract: | This paper proposes a new mechanism linking trade and wage inequality in developing countries --- the quality-upgrading mechanism --- and investigates its empirical implications in panel data on Mexican manufacturing plants. In a model with heterogeneous plants and quality-differentiated goods, only the most productive plants in a country like Mexico enter the export market, they produce higher-quality goods to appeal to richer Northern consumers, and they pay high wages to attract and motivate a high-quality workforce. An exchange-rate devaluation leads initially more-productive, higher-wage plants to increase exports, upgrade quality, and raise wages relative to initially less-productive, lower-wage plants within each industry. Using the late-1994 peso crisis as a source of variation and a variety of proxies for plant productivity, I find that initially more-productive plants increased the export share of sales, white-collar wages, blue-collar wages, the relative wage of white-collar workers, and ISO 9000 certification more than initially less-productive plants during the peso crisis period, and that these differential changes were greater than in periods without devaluations before and after the crisis period. A factor-analytic strategy that relies more heavily on the theoretical structure and avoids the need to construct proxies finds similar results. These findings support the hypothesis that differential quality upgrading induced by the exchange rate shock tended to increase within-industry wage inequality. |
| Keywords: | exchange-rate shock; quality upgrading; trade and wages; wage inequality |
| JEL: | F16 J31 L11 O12 |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6385&r=int |
| By: | Deborah L. Swenson |
| Abstract: | This paper studies the relationship between multinational firm proximity and the formation of new export connections by private Chinese exporters between 1997 and 2003. The results indicate that growth in the presence of multinational firms is positively associated with the formation of new trade by local Chinese firms. Further exploration suggests that information spillovers may drive this result, as the positive association due to own-industry multinational presence is particularly strong in contexts where information improvements may be the most helpful. Thus, it appears that a growing presence of multinational firms may enhance the export capabilities of local domestic firms. |
| JEL: | F1 F23 |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13271&r=int |
| By: | Fryges, Helmut; Wagner, Joachim |
| Abstract: | A recent survey of 54 micro-econometric studies reveals that exporting firms are more productive than non-exporters. On the other hand, previous empirical studies show that exporting does not necessarily improve productivity. One possible reason for this result is that most previous studies are restricted to analysing the relationship between a firmÃÂâÃÂÃÂÃÂÃÂs export status and the growth of its labour productivity, using the firmsÃÂâÃÂÃÂÃÂàexport status as a binary treatment variable and comparing the performance of exporting and non-exporting firms. In this paper, we apply the newly developed generalised propensity score (GPS) methodology that allows for continuous treatment, that is, different levels of the firmsÃÂâÃÂÃÂÃÂàexport activities. Using the GPS method and a large panel data set for German manufacturing firms, we estimate the relationship between a firmÃÂâÃÂÃÂÃÂÃÂs export-sales ratio and its labour productivity growth rate. We find that there is a causal effect of firmsÃÂâÃÂÃÂÃÂàexport activities on labour productivity growth. However, exporting improves labour productivity growth only within a subinterval of the range of firmsÃÂâÃÂÃÂÃÂàexport-sales ratios. |
| Keywords: | Export-sales ratio, labour productivity, continuous treatment, dose-response function |
| JEL: | F14 F23 L60 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:5691&r=int |
| By: | Jones, Nicola; Nguyen, Ngoc Anh; Nguyen, Thu Hang |
| Abstract: | Following extensive economic and market reforms and more than a decade of negotiations, Vietnam became the latest country to accede to the World Trade Organization in November 2006. While it is expected that greater liberalisation will boost VietnamÃÂâÃÂÃÂÃÂÃÂs economic growth and contribute to the countryÃÂâÃÂÃÂÃÂÃÂs ongoing transition towards a market economy, there are concerns about potentially negative impacts on vulnerable sectors of the population, including remote rural populations, women and children. In order to explore the possible impacts of VietnamÃÂâÃÂÃÂÃÂÃÂs trade liberalisation on children in poor communities, this paper examines key mediating factors that impact child welfare and the ways that trade liberalisation could affect these variables. It focuses on three key aspects of child well-being ÃÂâÃÂÃÂÃÂàchild work (domestic and extra-household), educational attainment and health status. It applies a mixed methods approach: econometrics analysis using data from the first wave of the Young Lives Vietnam longitudinal survey on childhood poverty combined within in-depth qualitative analysis of two key agricultural commodity sectors, aquaculture and sugarcane, that are expected to be significantly impacted by VietnamÃÂâÃÂÃÂÃÂÃÂs integration into the world economy. Our main quantitative findings point to significant differences in child well-being outcomes based on ethnicity, household poverty status and vulnerability to declining living standards, parental (especially maternal) education levels, childrenÃÂâÃÂÃÂÃÂÃÂs involvement in work activities, and access to public services. Our qualitative findings highlight the implications of caregiversÃÂâÃÂÃÂÃÂàshifting time inputs to productive and care economy work on child well-being, familial coping strategies in the context of economic shocks, the importance of social capital in mediating economic opportunities as well as differences in livelihood patterns among majority and minority ethnic groups. The paper concludes by discussing why mixed methods research can play an important role in focusing greater policy attention on the linkages between economic globalisation and childrenÃÂâÃÂÃÂÃÂÃÂs experiences of poverty. |
| Keywords: | Vietnam; Intrahousehold dynamics; Trade liberalisation; q2 analysis; Young lives; |
| JEL: | F49 I0 |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:4206&r=int |
| By: | James E. Anderson (Boston College; NBER) |
| Abstract: | Contract enforcement is probabilistic, but the probability depends on rules and processes. A stimulus to trade may induce traders to alter rules or processes to improve enforcement. In the model of this paper, such a positive knock-on effect occurs when the elasticity of supply of traders is sufficiently high. Negative knock-on is possible when the elasticity is low. Enforcement strategies in competing markets are complements (substitutes) if the supply of traders is sufficiently elastic (inelastic). The model provides a useful structure of endogenous enforcement that gives promise of explaining patterns of institutional development. |
| Keywords: | trade, contract enforcement, institutional development |
| JEL: | F10 O17 K42 |
| Date: | 2007–07–21 |
| URL: | http://d.repec.org/n?u=RePEc:boc:bocoec:672&r=int |
| By: | Alexeeva-Talebi, Victoria; Anger, Niels |
| Abstract: | Given the coexistent EU priorities concerning the competitiveness of European industries and international emissions regulation at the company level, this paper assesses the efficiency and competitiveness implications of linking the EU Emissions Trading Scheme (ETS) to emerging trading schemes outside Europe. Currently, countries like Canada, Japan or Australia are contemplating the set up of domestic ETS with the intention of linking up to the European scheme. While a stylized partial-market analysis suggests that the integration of trading systems is always beneficial in efficiency terms, our applied general equilibrium approach shows that the aggregate welfare impacts of linking the EU ETS are rather limited. We further find that the trade-based competitiveness effects of linking the European ETS crucially depend on the linked trading system: Although EU economy-wide competitiveness varies only moderately across linking scenarios, the sectoral decomposition of these aggregate effects shows that European industries are much more sensitive to the linking constellation. Similarly, the incentives for non-EU regions to join the European system display considerable heterogeneity. A stricter allowance allocation within domestic ETS can, however, substantially improve the overall prospects for establishing supra-European emissions trading schemes. |
| Keywords: | Emissions Trading, EU ETS, Linking, Competitiveness, CGE model |
| JEL: | D58 H21 H22 Q48 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:5697&r=int |