nep-int New Economics Papers
on International Trade
Issue of 2007‒08‒08
thirty-six papers chosen by
Martin Berka
Massey University

  1. Do unilateral trade preferences help export diversification? An investigation of the impact of European unilateral trade preferences on the extensive and intensive margin of trade. By Elisa Gamberoni
  2. Impact of Trade Liberalization on Foreign Direct Investment in Indian Industries By Bishwanath Goldar; Rashmi Banga
  3. Evolving Trade Patterns in the CIS: The Role of Manufacturing By Robert Shelburne; Oksana Pidufala
  4. Productivity and Firm Selection: Intra- vs International Trade By Gregory Corcos; Massimo Del Gatto; Giordano Mion; Gianmarco I.P. Ottaviano
  5. Country Size, Trade, and Productivity: An Analysis of Heterogenous Firms and Differential Beachhead Costs By Akerman, Anders; Forslid, Rikard
  6. The Evolution of the World Trade Web By Giorgio Fagiolo; Javier Reyes; Stefano Schiavo
  7. The Impact of Pro-Competitive Reforms on Trade in Developing Countries By Sébastien Miroudot; Enrico Pinali; Nicolas Sauter
  8. Strategic Export Promotion By Federico Etro
  9. The Effects of Agricultural Trade Liberalisation under the Doha Development Agenda with Special Reference to the Asia Pacific Region: A Brief Survey By Jayatilleke S. Bandara
  10. Remittances, trade liberalisation, and poverty in Pakistan: The role of excluded variables in poverty change analysis By Siddiqui, Rizwana; Kemal, A.R.
  11. Globalisation and Technology Intensity as Determinants of Exports By Ray Barrell; Olga Pomerantz
  12. Re-exports: international comparison and implications for performance indicators By Martin Mellens; Herman Noordman; Johan Verbruggen
  13. Real GDP and the Purchasing Power of Provincial Output By Macdonald, Ryan
  14. Services Trade and Domestic Regulation By henk Kox; Hildegunn Kyvik Nordas
  15. Customs Mapping and Analysis of South Asian Agricultural Trade Liberalization Effort By Parakrama Samaratunga; Manoj Thibbotuwawa
  16. Linkage Between foreign Direct Investment, Trade and Trade Policy: An Economic Analysis with Application to the Food Sector in OECD Countries and Case Studies in Ghana, Mozambique, Tunisia and Uganda By Norbert Wilson; Joyce Cacho
  17. Oil shocks and external adjustment By Martin Bodenstein; Christopher J. Erceg; Luca Guerrieri
  18. Import Growth, Globalisation and the Impact of Trade Liberalisation By Ray Barrell; Iana Liadze; Olga Pomerantz
  19. Openness and Technological Innovations in Developing Countries: Evidence from Firm-Level Surveys By Rita Almeida; Ana Margarida Fernandes
  20. The Effects of Agricultural Trade Liberalisation under the Doha Development Agenda with Special Reference to the Asia Pacific Region: A Brief Survey By Dionisius A. Narjoko; Raymond Atje
  21. Trade, Quality Upgrading and Wage Inequality in the Mexican Manufacturing Sector By Eric A. Verhoogen
  22. The education bias of 'trade liberalization' and wage inequality in developing countries By Mamoon, Dawood; Murshed, S. Mansoob
  23. Assessing Barriers to Trade in Education Services in Developing Asia - Pacific Countries:An Empirical Exercise By Ajitava Raychaudhuri; Prabir De
  24. Modeling the impact of external factors on the euro area’s HICP and real economy - a focus on pass-through and the trade balance By Luigi Landolfo
  25. Trade Policy By Murray Gibbs
  26. Exchange Rate Uncertainty and Trade Growth - A Comparison of Linear and Nonlinear (Forecasting) Models By Helmut Herwartz; Henning Weber
  27. Technology, International Trade, and Pollution from U.S. Manufacturing By Arik Levinson
  28. The Political Economy of Pre-industrial Trade in Northeast Asia By Hun-Chang Lee
  29. Regulatory Reform and Market Openness:: Processes to Assess Effectively the Trade and Investment Impact of Regulation By David Shortall
  30. Trade Liberalization and Development in ICT Sector and its impact on household welfare in Viet Nam By Tran Quoc Trung; Nguyen Tungm; Le Thuc Duc; Nguyen Cao Duc; Tran Hao Hung
  31. Skill Premiums of Trading in International Markets and Equity: Some Lessons for Pro Poor Education Policies in Developing Countries By Mamoon, Dawood
  32. The Chinese economy, seen from Japan and the Netherlands By Wim Suyker
  33. "Dual' gravity: Using spatial econometrics to control for multilateral resistance" By Kristian Behrens; Cem Ertur; Wilfried Koch
  34. International Trade and Financial Integration: A Weighted Network Analysis By Giorgio Fagiolo; Javier Reyes; Stefano Schiavo
  35. Institutions, Geography and Trade: A Panel Data Study By Jeffry Jacob; Thomas Osang
  36. United States Courts and the Optimal Deterrence of International Cartels: A Welfarist Perspective on Empagran By Alvin K. Klevorick; Alan O. Sykes

  1. By: Elisa Gamberoni (IUHEI, The Graduate Institute of International Studies, Geneva)
    Abstract: We analyze the impact of the EU unilateral trade preferences on both the intensive and the extensive margin of trade. Using a tobit and probit estimation we find that the impact of unilateral trade preferences on both margins is strictly linked to the sector under analysis and to the type of preferences a country benefits from. In particular, we find an anti-diversification effect along with a concentration of exports in agricultural products in the case of more stable preferential schemes, as represented by the African Caribbean and Pacific trade preferences. We also confirm that the Generalized System of Preferences (GSP) for least developing countries did not change the beneficiaries' export pattern, while the traditional GSP and the regime to combat drug production tend to promote diversification of exports.
    Keywords: Extensive margin, Melitz model, Generalized System of Preference.
    JEL: F12 F13 O19
    Date: 2007–07
  2. By: Bishwanath Goldar; Rashmi Banga (University of Delhi Enclave)
    Abstract: The paper undertakes analyses at three levels and the results arrived at different levels indicate that trade liberalization has had a favourable effect on FDI flows in India. It is also found that the regions having greater extent of international trade are able to attract greater amount of FDI. Some evidence is found that point to differential effects of trade associated with international vertical integration and intra-industry trade. Though liberalization has led to a substantial increase in intra-industry trade, much of the intra-industry being horizontal in nature in India is not found to have a strong favourable effect on FDI.
    Keywords: Trade Liberalization, Foreign Direct Investmetn, India, Indian Industries
    JEL: F1
    Date: 2007–06
  3. By: Robert Shelburne (United Nations Economic Commission for Europe); Oksana Pidufala (Brookings Institution)
    Abstract: The paper analyzes the trade flows of the CIS countries with an emphasis on manufactured goods. An abstract in Russian is also provided. Manufactured exports were particularly hard hit by the breakup of the Soviet Union and the CMEA. The study examines trends in the volume of this trade and its geographical and commodity distribution. The CIS countries currently under-rely on the other CIS for their imports of manufactures but over-rely on them as a destination for their exports. CIS exports of manufactures are concentrated primarily of products in SITC 6 produced with medium or low-skilled labor and technology. Nevertheless they export manufacures that are typically exported by countries much richer than themselves although the prices they recieve are much lower. The level of intra-industry trade, as well as marginal intra-industry, of these countries is remarkably low. Generally each of the CIS exports a different set of goods so there is limited competition between them. The study also describes the current trade policy issues facing the region concerning their preferential trading arrangements and WTO accession. The longer-run prospects for manufacturing and policy options for promoting this sector are explored.
    Keywords: CIS, manufactures, trade, Russia, transition economies, intra-industry, comparative advantage, trade policy
    JEL: F14 O14 P27 P33
    Date: 2006–10
  4. By: Gregory Corcos; Massimo Del Gatto; Giordano Mion; Gianmarco I.P. Ottaviano
    Abstract: Recent theoretical models predict gains from international trade coming from intra-industry reallocations, due to a firm selection effect. In this paper we answer two related questions. First, what is the magnitude of this selection effect, and how does it compare to that of intra-national trade? Second, would the removal of ’behind-the-border’ trade frictions between integrated EU countries lead to large productivity gains? To answer these questions, we extend and calibrate the Melitz and Ottaviano (2005) model on productivity and trade data for European economies in 2000, and simulate counterfactual trade liberalization scenarios. We consider 11 EU countries and a total of 31 economies, including 21 French regions. Our first result is that, in the French case, international trade has a sizeable impact on aggregate productivity, but smaller than that of intra-national trade. Second, substantial productivity gains (around 20%) can be expected from ’behind-the-border’ integration. In both experiments, we predict the corresponding variations in average prices, markups, quantities and profits. We show that the model fits sales and exports data reasonably well, and we perform a number of robustness checks. We also suggest some explanations for the substantial cross-economy and cross-industry variations in our estimates of productivity gains, highlighting the importance of accessibility and competitiveness.
    Keywords: European integration, intra-national trade, firm-level data, firm selection, gains from trade, total factor productivity
    JEL: F12 R13
    Date: 2007
  5. By: Akerman, Anders (Dept. of Economics, Stockholm University); Forslid, Rikard (Dept. of Economics, Stockholm University)
    Abstract: This paper modifies the heterogenous firms and trade model by Melitz (2003) by explicitly modelling the beachhead cost of a firm in a new market as a function of market size. This leads to several new predictions compared to the standard model. In particular, the productivity of non exporters and exporters depends on market size. Moreover, manufacturing export shares vary inversely with market size. However, export shares converge (upwards) as markets are integrated. The empirical part of the paper offers support for our model specification.
    Keywords: Heterogenous Firms; Market Size; Beachhead Costs
    JEL: H32 P16
    Date: 2007–07–30
  6. By: Giorgio Fagiolo; Javier Reyes; Stefano Schiavo
    Abstract: This paper empirically studies the statistical properties of the world trade web (WTW) and its evolution over time using a weighted network approach. Previous works have characterized the WTW as a binary network, where countries play the role of nodes and a link is in place between any two countries if there exists a sufficiently large amount of trade between them. On the contrary, we exploit the heterogeneity of trade relationships and weight each existing link by some measure of the actual amount of trade carried through that link. Our results indicate that the WTW is a strongly symmetric network, where the majority of trade relationships (and their intensities) are reciprocated. We also find that: (i) the majority of countries hold many weak trade relationships and coexist with a few countries holding less but more intense export relationships; (ii) countries that hold more intense trade relationships preferably trade with poorly-connected countries, but are typically more clustered; (iii) rich countries tend to form more intense trade links and to be more clustered. Furthermore, all structural properties of the WTW display a remarkable stationarity across years. From a methodological point of view, our paper suggests that a weighted network approach is able to provide more precise conclusions than a binary analysis. Many implications that are indeed valid in binary networks are reversed in our weighted analysis. Finally, we show that all our main results are robust to alternative weighting procedures.
    Keywords: Networks; World trade web; international trade; weighted network analysis; integration; trade openness; globalization
    Date: 2007–07–16
  7. By: Sébastien Miroudot; Enrico Pinali; Nicolas Sauter
    Abstract: This report proposes an analysis of the mutually reinforcing relationship between trade, investment and competition policies and how together they impact trade in developing countries. An index of pro-competitive reforms is provided for 82 countries over the period 2001-2005. The index synthesises 13 indicators of the policy stance of countries with regard to trade, investment and competition. It is then used in quantitative analysis to determine the impact of barriers to competitive markets on trade. The results shows that there are substantial gains for developing countries in market and regulatory reforms in terms of higher trade flows and higher income per capita. Moreover, the paper further examines pro-competitive reforms in key services sectors and the extent to which trade agreements can promote them through the experience of the WTO telecoms Reference Paper. The analysis highlights that countries achieved a high degree of liberalisation in the telecoms sector and that regulatory principles of the Reference Paper were useful in promoting sound policies under domestic regulatory reforms of the sector.
    Keywords: telecommunications, regulatory reforms, indicators, trade liberalisation, trade and competition, trade and investment, pro-competitive reforms, gravity, reference paper, telecoms, gains
    JEL: F12 F14 L50 L96
    Date: 2007–06–15
  8. By: Federico Etro (Department of Economics, University of Milan-Bicocca)
    Abstract: This paper provides a general characterization of optimal export promoting policies for foreign competitive markets and apply it to strategic trade policy and exchange rate policy. Contrary to the ambiguous results of strategic trade policy under barriers to entry in the third market, I find that it is always optimal to subsidize exports as long as entry is free (under both strategic substitutability and complementarity) and I explicitly derive the optimal export subsidies under Cournot and Bertrand competition. Finally, I show that there is always a strategic incentive to implement competitive devaluations when entry in foreign markets is free, but not otherwise.
    Keywords: Export Promotion, Strategic Trade policy, Export Subsidies, Competitive Devaluation
    JEL: F12 F13 F31
    Date: 2006–10
  9. By: Jayatilleke S. Bandara (Griffith Business School, Australia)
    Abstract: The main purpose of this paper is to survey the results of recent quantitative studies on the effects of Agricultural Trade Liberalization with special reference to the Asia-Pacific region under the July Framework Agreement or the “July Package” of the Doha Development Agenda, DDA (the decision adopted by the General Council of the WTO on 1 August 2004, see WTO, 2004, WT/L/579).
    Keywords: Agricultural Trade Liberalization, Doha Development
    JEL: F1
    Date: 2007–02
  10. By: Siddiqui, Rizwana; Kemal, A.R.
    Abstract: This paper explores the impact of two shocks, trade liberalisation policies and decline in remittances, on welfare and poverty in Pakistan. It begins by reviewing the economy, which reveals that during the Nineties although import tariffs were reduced by 55 percent, poverty however remained higher in this period than in the Eighties. At the same time, Pakistan has experienced a slow down in the inflow of remittances, which reduces the incomes of households and puts pressure on the exchange rate resulting in reduction in the inflow of imports despite a reduction in import duties. Thus, in the absence of the effects of decline in remittances, the analysis of the impact of trade liberalisation policies may render biased results. This study overcomes this constriction and analyses the impact of trade liberalisation policies in the absence and presence of decline in remittances in a CGE framework with all the features necessary for trade policy analysis with poverty and remittances linkages. The simulation results show that a decline in remittances reduces the gains from trade liberalisation. The negative impact of remittance decline dominates the positive impact of trade liberalisation in urban areas. But, the positive impact of trade liberalisation dominates the negative impact of a decline in remittances in the case of rural areas. Poverty rises in Pakistan as a whole. It shows that the decline in remittance inflows is a major contributory factor in explaining the increase in poverty in Pakistan during the Nineties.
    Keywords: Pakistan; Remittances; Trade Policy; CGE; Poverty
    JEL: C68 F24 F1
    Date: 2002–10
  11. By: Ray Barrell; Olga Pomerantz
    Abstract: This paper augments traditional equations for estimating export demand with a measure of technology intensity of output, and several variables capturing the impact of regional integration and global trade liberalisation programmes. Using data for a panel of 20 OECD countries it is shown that the augmented long run relationships cointegrate and can be embedded into equilibrium correction form. The effects of technology and trade liberalisation were found to be stronger at times than the impact of competitiveness and together these variables help explain large changes in export shares in the presence of relatively little shifts in competitiveness.
    Date: 2007–05
  12. By: Martin Mellens; Herman Noordman; Johan Verbruggen
    Abstract: Since the mid eighties, re-exports in the Netherlands is booming, with the exception of a short interruption in 2001 and 2002. This research shows that a relatively strong growth of re-exports is not just a Dutch phenomenon, but that there is an international trend going on. Re-exported products are at least doubly counted in world trade figures. This international re-exports trend contributes to the fact that world trade volume is growing faster than the volume of world export production. Besides, there are some serious implications for the indicators of countries’ exports performances. If one doesn’t take account of the implications of the international reexports trend, the relevant export market growth for Dutch manufactures as well as the loss of market share of Dutch industrialists are overestimated.
    Keywords: re-exports; export performance; market performance and loss of market share
    JEL: F14 F17 F47
    Date: 2007–07
  13. By: Macdonald, Ryan
    Abstract: This paper examines the impact of import and export price changes on economic welfare in Canada, and in each of the provinces. It examines how terms of trade shifts and fluctuations in the ratio of traded to non-traded goods prices affect the purchasing power of domestic production. Terms of trade shifts are shown to have a larger impact in the short-run. Moreover, the paper shows that failing to account for terms of trade shifts, when analysing macroeconomic data, can lead to misinterpretations about the sources of growth or decline in consumption, investment and imports. The magnitude and direction of terms of trade fluctuations, and their impacts, vary by province and over time. Changes in commodity prices are shown to have important effects. The effect of terms of trade shifts is largest in Alberta and Newfoundland and Labrador, while Manitoba is relatively unaffected.
    Keywords: International trade, Economic accounts, Gross domestic product, Income and expenditure accounts
    Date: 2007–07–24
  14. By: henk Kox; Hildegunn Kyvik Nordas
    Abstract: This paper argues that regulatory measures affect the fixed cost of entering a market as well as the variable costs of servicing that market. Moreover, differences in regulation among countries often imply that firms have to incur entry costs in every new market. Indicators of regulatory intensity and heterogeneity are introduced in a gravity model and their impact on market entry and subsequent trade flows estimated for total services, business services and financial services. It is found that regulatory heterogeneity has a relatively large negative impact on both market entry and subsequent trade flows. Further, regulatory barriers have a negative effect on the local services sectors’ export performance. Finally it is found that regulations that aims at correcting market failure can have a positive impact on trade. It is concluded that services trade liberalization and regulatory reforms are complementary in creating competitive services markets.
    Date: 2007–02–14
  15. By: Parakrama Samaratunga; Manoj Thibbotuwawa (Institute of Policy Studies)
    Abstract: This paper maps the agricultural trade liberalization effort of the South Asian Economies(SAEs) and it consists of four sections. The second section presents the nature of agricultural trade in the SAEs. The third section presents the agricultural policy changes and employs various approaches to measure the levels of agricultural trade liberalization. The forth section presents institutional development that has led to agricultural trade liberalization of SAEs and the final section presents conclusions, based on the findings of the previous sections.
    Keywords: South Asia, Agricultural Trade Liberalization
    JEL: F1
    Date: 2006–12
  16. By: Norbert Wilson; Joyce Cacho
    Abstract: Through empirical analysis and case studies, this document explores the relationships amongst foreign direct investment (FDI), trade and trade-related policies in OECD and four African countries (Ghana, Mozambique, Tunisia and Uganda). In OECD countries, tariffs and market price support may have an effect on how FDI is distributed geographically. FDI may be used to avoid or "jump" tariffs. Also, investors in a home country may invest in a host country to exploit the preferential tariffs that the host has with a third country. Participation in a regional trading agreement or customs union, e.g. NAFTA or the EU, may create investment opportunities. Market price support to agriculture may encourage outward investment and discourage inward investment. In aggregate, FDI and trade appear to complement one another. The four case studies in Africa highlight the interactions amongst regulations, foreign investment and trade. For example, FDI is useful in helping the firm develop the resources to meet the standards of OECD markets. Investment promotion agencies and export processing zones appear to prepare countries to attract FDI. Preferential trading agreements like the Everything but Arms with EU and the African Growth Opportunity Act with the US may have an impact on trade and investment. Beyond trade policies, other policies and factors contribute substantially to the location and distribution of FDI. As seen amongst OECD countries, factors like the GDP of a country (i.e. market size) and cost of production and transport can have an effect on FDI. Another factor that influences FDI is the degree of market competitiveness. For the four African countries, the country risk and the level of infrastructure can influence the volume of FDI attracted.
    Keywords: academic libraries
    Date: 2007–03–02
  17. By: Martin Bodenstein; Christopher J. Erceg; Luca Guerrieri
    Abstract: This paper investigates how oil price shocks affect the trade balance and terms of trade in a two country DSGE model. We show that the response of the external sector depends critically on the structure of financial market risk-sharing. Under incomplete markets, higher oil prices reduce the relative wealth of an oil-importing country, and induce its nonoil terms of trade to deteriorate, and its nonoil trade balance to improve. The magnitude of the nonoil terms of trade response hinges on structural parameters that affect the divergence in wealth effects across oil importers and exporters, including the elasticity of substitution between oil and other inputs in production, and the discount factor. By contrast, cross-country wealth differences effectively disappear under complete markets, with the implication that oil shocks have essentially no effect on the nonoil terms of trade or the nonoil trade balance.
    Date: 2007
  18. By: Ray Barrell; Iana Liadze; Olga Pomerantz
    Abstract: Abstract Liberalisation of the trading environment, through regional integration and the formation of WTO, is shown to increase trade growth relative to GDP. The impact of trade liberalisation compounded over time and added about 1.5 per cent per annum to world trade growth during the last decade. Trade, demand and competitiveness without trade liberalisation variables do not cointegrate in the long run and on their own cannot provide a coherent structural explanation of the growth of world trade. Results obtained from standard panel techniques, augmented with CCE estimator, point to strong commonalities across countries.
    Date: 2007–04
  19. By: Rita Almeida (World Bank and IZA); Ana Margarida Fernandes (World Bank)
    Abstract: This paper examines international technology transfers using firm-level data across 43 developing countries. Our findings show that exporting and importing activities are important channels for the transfer of technology. Majority foreign-owned firms are less likely to engage in technological innovations than minority foreign-owned firms or domestic firms. We interpret this finding as evidence that the technology transferred from multinational parents to majorityowned subsidiaries is more mature than that transferred to minority-owned subsidiaries. Our findings also suggest that foreign-owned subsidiaries rely mostly on the direct transfer of technology from their parents and that firms that import intermediate inputs are more likely to acquire new technology from their machinery suppliers.
    Keywords: innovation, technology adoption, exports, imports, foreign ownership, firm level data
    JEL: F1 F2 O3
    Date: 2007–07
  20. By: Dionisius A. Narjoko; Raymond Atje (Centre for Strategic and International Studies)
    Abstract: This study attempts to fill this gap and aims to draw some lessons from Indonesia’s experience, by examining the export-supply response of firms in Indonesian manufacturing. The study asks two questions. First, what is the picture of export-supply response of firms in Indonesian manufacturing during and after the 1997/98 economic crisis?, and second, which factors determine the firms’ export-supply response?
    Keywords: Export, Indonesia, Indonesian Manufacturing
    JEL: F1
    Date: 2007–02
  21. By: Eric A. Verhoogen (Columbia University, BREAD, CEPR and IZA)
    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: trade and wage inequality, quality upgrading, exchange-rate shock
    JEL: F16 J31 O12 L11
    Date: 2007–07
  22. By: Mamoon, Dawood; Murshed, S. Mansoob
    Abstract: The aim of this paper is to examine the impact of increased trade on wage inequality in developing countries, and whether a higher human capital stock moderates this effect. We look at the skilled-unskilled wage differential. High initial endowments of human capital imply a more egalitarian society. When more equal societies open up their economies further, increased trade is likely to induce less inequality on impact because the supply of skills better matches demand. But greater international exposure also brings about technological diffusion, further raising skilled labour demand. This may raise wage inequality, in contrast to the initial egalitarian level effect of human capital. We attempt to measure these two opposing forces. We also employ a broad set of openness indicators to measure trade liberalization policies as well as general openness, which is an outcome, and not a policy variable. We further examine what type of education most reduces inequality. Our findings suggest that countries with a higher level of initial human capital do well on the inequality front, but human capital which accrues through the trade liberalization channel has inegalitarian effects. One explanation could be that governments in developing countries invest more in higher education at the expense of primary education in order to gain immediate benefits from globalization; thus becoming prone to wage inequality after increased international trade. Our results also have implications for the speed at which trade policies are liberalized, the implication being that better educated nations should liberalize faster.
    Keywords: trade liberalization, wages, economic disparity, skills development, education, human resources
    JEL: F15 I3
  23. By: Ajitava Raychaudhuri; Prabir De (Jadavpur University)
    Abstract: The study, thus, touches only tip of an iceberg in terms of its analytical power to explain movement of students across nations. It points out to the definite existence of country specific barriers and from a pilot case study in India, highlights some of these possible barriers. However, future studies should be attempted to understand the extent of barriers to trade in education services through more intensive primary survey and bilateral country studies.
    Keywords: Trade in Education Services, Asia-Pacific
    JEL: F1
    Date: 2007–05
  24. By: Luigi Landolfo (Department of Economics, University of Warwick, Coventry, CV4 7AL, United Kingdom.)
    Abstract: This paper aims to analyze the impact of external factors, such as the nominal effective exchange rate, foreign demand and the terms of trade, on the euro area real economy. In particular, the paper estimates the quantitative impact that changes in these factors have on net trade, real GDP and the Harmonized Consumer Price Index (HICP). To this end, we estimate a Dynamic Simultaneous Equation Model (DSEM) accounting for the presence of key exogenous variables. The tool utilized here to measure the impact of various shocks on the real economy is the impulse response function. The study is also conducted at sub-components level. First, we estimate the model replacing net trade with its sub-components, namely, the volume of exports and the volume of imports. Then, we re-estimate the model by dividing the terms of trade index into import and export prices. Overall, we estimate three models. Two of these models show consistent results. We found that the nominal effective exchange rate and foreign demand are the main determinants of the trade balance. Nevertheless, while foreign demand strongly affects real GDP, the nominal effective exchange rate affects it only slightly. Among the external factors, foreign demand has the strongest impact on real GDP. Regarding the impact of the nominal effective exchange rate on import prices and HICP, we found that the exchange rate pass-through for the euro area is not very high. This result is broadly in line with the findings presented in Hahn (2003). JEL Classification: C32, E52.
    Keywords: Net trade, Real economy, ECB.
    Date: 2007–07
  25. By: Murray Gibbs
    Abstract: This United Nations Policy Note on Trade Policy provides practical guidance on how to operationalize alternative equitable and employment-generating trade policies in National Development Strategies. This Policy Note has been developed in cooperation with UN agencies, and has been officially reviewed by distinguished academics/ development specialists such as Jose Antonio Ocampo, Jomo K.S. and Nobel Laureate Joseph Stiglitz.
    Keywords: trade policy, poverty, development planning
    JEL: O1 O2 F1
    Date: 2007–07
  26. By: Helmut Herwartz; Henning Weber
    Abstract: A huge body of empirical and theoretical literature has emerged on the relationship between foreign exchange (FX) uncertainty and international trade. Empirical findings about the impact of FX uncertainty on trade figures are at best weak and often ambiguous with respect to its direction. Almost all empirical contributions assume and estimate a linear relationship. Possible nonlinearity or state dependence of causal links between FX uncertainty and trade has been mostly ignored yet. In addition, widely used regression models have not been evaluated in terms of ex-ante forecasting. In this paper we analyze the impact of FX uncertainty on sectoral categories of multilateral exports and imports for 15 industrialized economies. We particularly provide a comparison of linear and nonlinear models with respect to ex-ante forecasting. In terms of average ranks of absolute forecast errors nonlinear models outperform both, a common linear model and some specification building on the assumption that FX uncertainty and trade growth are uncorrelated. Our results support the view that the relationship of interest might be nonlinear and, moreover, lacks of homogeneity across countries, economic sectors and when contrasting imports vs. exports.
    Keywords: Exchange Rate Uncertainty, GARCH, Forecasting, International Trade, Nonlinear Models.
    JEL: F14 F17
    Date: 2007–07
  27. By: Arik Levinson (Department of Economics, Georgetown University)
    Abstract: Total pollution emitted by U.S. manufacturers declined over the past 30 years, while manufacturing output increased. This improvement must result from one of two trends: (1) change in production or abatement processes ("technology"); or (2) change in the mix of goods manufactured in the U.S, which itself may result from increased net imports of pollution-intensive goods ("international trade"). This paper first shows that most of the decline in pollution from U.S.manufacturing has been due to changing technology, rather than changes in the mix of goods produced, although the pace of that technological change has slowed over time. Second, the paper provides evidence that increases in net imports of pollution-intensive goods are too small to explain more than about half of the pollution reductions from the changing mix of goods produced in the U.S. Together, these two findings demonstrate that shifting polluting industries overseas has played at most a minor role in the cleanup of the U.S. manufacturing sector. Classification-JEL Codes: F14, F18, and F22
    Keywords: International Trade, Pollution Haven, Industrial Flight
    Date: 2007–07–05
  28. By: Hun-Chang Lee
    Abstract: This paper examines why the countries of Northeast Asia (China, Korea, and Japan) in the early nineteenth century traded much less (as measured by the proportion of trade to GDP) than most countries in other parts of the world. It is argued that the most important reason for this are government policies that suppressed private trade. It is shown that these restrictive trade policies were designed to maximize the total net benefit from trade, covering not only economic net benefits but also non-economic benefits in the fields of diplomacy, defense, culture, and internal politics.
    Keywords: trade policy, Northeast Asia, tribute system, private trade, maritime ban, geography, culture
    Date: 2007–08
  29. By: David Shortall
    Abstract: Evidence suggests that differences in regulatory requirements of individual economies may actually impede gains from trade liberalization, while a smooth functioning, transparent regulatory system can have positive effects on trade and investment flows. This has increasingly induced policy makers to pay closer attention to the complementarities and interconnectedness between domestic regulatory reform and market openness. This study focuses on identifying regulatory processes, tools and policies adopted in order to support market openness and improve trade and investment opportunities. Although the elaboration of a market openness assessment toolkit is still at early stages, a number of promising approaches do come out, even if a number of issues call for further attention and work, on which the trade policy community might wish to focus in the future.
    Date: 2007–02–09
  30. By: Tran Quoc Trung; Nguyen Tungm; Le Thuc Duc; Nguyen Cao Duc; Tran Hao Hung (Ministry of Planning and Investment)
    Abstract: The ICT sector in Viet Nam had not been developed until the 1980s. However, over the last decade of rapid growth, it has had a powerful impact on many aspects of life in this country. Although the ICT sector is still at an early stage of development and lags behind many other countries in the region, the government of Viet Nam made strong commitments to upgrade the nation’s ICT capability and implemented significant reforms in terms of trade and investment liberalization in ICT sector over the last decade.
    Keywords: Trade Liberalization, ICT, Household welfare, Viet Nam
    JEL: F1
    Date: 2007–02
  31. By: Mamoon, Dawood
    Abstract: The aim of this paper is to examine whether the human capital accumulation, that is a result of increased trade, further exacerbates industrial wage differentials. We find that level of education is one of the key determinants in explaining wage inequalities. Though countries which have a higher level of human capital do well on the inequality front, our results suggest that post liberalization human capital accumulation is associated with higher premiums to skilled labor thus increasing wage gaps. In this context, governments in developing countries may need to increase the mean level of human capital to achieve equity in labor markets.
    Keywords: Integration; Trade Liberalization; Wage Inequality.
    JEL: J01 I20 F16
    Date: 2007–08–01
  32. By: Wim Suyker
    Abstract: This paper assesses the consequences of the rapid Chinese economic development for Japan and the Netherlands. China has become the most important supplier of import goods for Japan and the fourth most important one for the Netherlands. With two-thirds of Dutch imports from China being re-exported, the emergence of China has enhanced the role of the Netherlands as European distribution centre. As for exports, China is now a major market for Japan, but not for the Netherlands. This is in line with gravity models of foreign trade. The same holds for differences in foreign direct investment (FDI), with Japan the biggest investor in China and the Netherlands a minor one. The emergence of China has increased purchasing power of Japanese and Dutch households, while its effects on labour markets and income distribution are relatively modest. In spite of differences between Japan and the Netherlands, the consequences for economic policy of the increasing role of China are very similar.
    Keywords: China; Dutch economy; Japan; globalisation; trade; scenario analysis; FDI
    JEL: F14 F23 F40 F47 J31 O40 O57
    Date: 2007–07
  33. By: Kristian Behrens (CORE, Universite catholique de Louvain); Cem Ertur (LEO, Universite d'Orleans, France); Wilfried Koch (LEG, Universite de Bouugogne, France)
    Abstract: We propose a quantity-based 'dual' version of the gravity equation that yields an estimating equation with both cross-sectional interdependence and spatially lagged error terms. Such an equation can be concisely estimated using spatial econometric techniques. We illustrate this methodology by applying it to the Canada-U.S. data set used previously, among others, by Anderson and van Wincoop (2003) and Feenstra (2002, 2004). Our key result is to show that controlling directly for spatial interdependence across trade flows, as suggested by theory, significantly reduces border effects because it captures 'multilateral resistance'. Using a spatial autoregressive moving average specification, we find that border effects between the U.S. and Canada are smaller than in previous studies: about 8 for Canadian provinces and about 1.3 for U.S. states. Yet, heterogeneous coefficient estimations reveal that there is much variation across provinces and states.
    Date: 2007–06
  34. By: Giorgio Fagiolo; Javier Reyes; Stefano Schiavo
    Abstract: In this paper we compare the patterns of trade and financial integration by exploit- ing network analysis. Our results show that, by combining binary and weighted network analysis, it is possible to deliver more precise and thorough insights on the topological structure and properties of the international trade and financial net- works (ITN and IFN). We find that the ITN is more densely connected than the IFN and that the degree of international financial integration varies with asset type. Our results also indicate that richer countries are better linked and form groups of tightly interconnected nodes. This can be seen as a sign of the persistent relevance of local relations. Yet, the growing importance of global links is testified by the disassortative feature of both the ITN and the IFN: poorly connected nodes tend to connect to central ones and use them as hubs to access the rest of the network.
    Keywords: International Trade, International Financial Flows, Globalization, Complex Weighted Networks, Dynamics.
    Date: 2007–07–16
  35. By: Jeffry Jacob (Bethel University); Thomas Osang (SMU)
    Abstract: A number of recent papers study the impact of institutions, trade and geography known as “deep determinants” of economic development using cross-section data. This paper instead employs a panel data approach to examine the impact of these three determinants on per capita income. Our approach enables us to account for unobserved heterogeneity across countries, an issue that cannot be addressed in a cross-section framework. Moreover, employing the Hausman and Taylor (1981) approach allows us to obtain direct parameter estimates of the time invariant explanatory variables like geography or some institutional measures, making our results comparable to the existing cross-section iterature. Also, by using lagged explanatory variables whenever possible we can account for contemporaneous correlation between these variables and the idiosyncratic error term. We find that the quality of institutions and openness to trade both have positive and statistically significant coefficient estimates throughout most specifications, while geography, captured by malaria ecology measure, has negative estimates that are often, but not always statistically significant. In terms of their economic impact, institutional measures appear to have the strongest impact, followed by openness to trade measures. In comparison, geography measures have rather small elasticity estimates.
    Keywords: Development, Institutions, Openness, Geography, panel data
    JEL: O1 N1 H1 F1
  36. By: Alvin K. Klevorick (Yale University); Alan O. Sykes (Stanford University)
    Abstract: E. Hoffmann-La Roche Ltd. v. Empagran S.A. concerned a private antitrust suit for damages against a global vitamins cartel. The central issue in the litigation was whether foreign plaintiffs injured by the cartel’s conduct abroad could bring suit in U.S. court, an issue that was ultimately resolved in the negative. We take a welfarist perspective on this issue and inquire whether optimal deterrence requires U.S. courts to take subject matter jurisdiction under U.S. law for claims such as those in Empagran. Our analysis considers, in particular, the arguments of various economist amici in favor of jurisdiction and arguments of the U.S. and foreign government amici against jurisdiction. We explain why the issue is difficult to resolve, and identify several economic concerns, which the amici did not address, that may counsel against jurisdiction. We also analyze the legal standard enunciated by the Supreme Court and applied on remand by the DC Circuit, and we argue that its focus on "independent" harms and "proximate" causation is problematic and does not provide an adequate economic foundation for resolving the underlying legal issues. A revised version of this paper is forthcoming in ANTITRUST STORIES from Foundation Press, edited by Daniel Crane and Eleanor Fox.
    Keywords: Antitrust, Cartels, Competition policy, International trade
    JEL: F13 K21 L41
    Date: 2007–07

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