nep-int New Economics Papers
on International Trade
Issue of 2007‒11‒24
sixteen papers chosen by
Martin Berka
Massey University

  1. Do Bilateral and Regional Approaches for Reducing Technical Barriers to Trade Converge Towards the Multilateral Trading System? By Caroline Lesser
  2. Regional Economies of Scale in Transportation and Regional Welfare By Alexandre Skiba
  3. Help or hindrance ? the impact of harmonized standards on african exports By Wilson, John S.; Shepherd, Ben; Czubala, Witold
  4. Trade and Entrepreneurship with Heterogeneous Workers By Oyama, Daisuke; Sato, Yasuhiro; Tabuchi, Takatoshi; Thisse, Jacques-François
  5. A Note on Trade Costs and Distance By Lawless, Martina; Whelan, Karl
  6. India's specialisation in IT exports: Offshoring can't defy gravity By Meyer, Thomas
  7. The Interaction between Investment and Services Chapters in Selected Regional trade Agreements By Marie-France Houde; Akshay Kolse-Patil; Sébastien Miroudot
  8. Transparency, trade costs, and regional integration in the Asia Pacific By Wilson, John S.; Shepherd, Ben; Helble, Matthias
  9. India and the Dutch economy By Wim Suyker; Henri L.F. de Groot; Piet Buitelaar; Jos Ebregt; Stefan Groot; Jan Möhlmann; Hugo Rojas-Romagosa; Bas Straathof
  10. The Inventory Channel of Trade Credit: Theory and Evidence By Spiros Bougheas; Simona Mateut; Paul Mizen
  11. Conflict of laws as constitutional form: Reflections on the International Trade Law and the Biotech Panel Report By Christian Joerges
  12. Product standards, harmonization, and trade : evidence from the extensive margin By Shepherd, Ben
  13. Export Dynamics in Colombia: Firm-Level Evidence By Jonathan Eaton, Marcela Eslava, Maurice Kugler, and James Tybout
  14. Globalisation and the Dutch Economy By Jessie Bakens; Henri de Groot
  15. Who Prices Locally? Survey Evidence of Swiss Exporters By Andreas M. Fischer; Matthias Lutz; Manueal Wälti
  16. The Impact of Exporting on Firm Productivity: A Meta-Analysis By Pedro S. Martins; Yong Yang

  1. By: Caroline Lesser
    Abstract: As part of its work on regionalism, the OECD Trade and Agriculture Directorate has completed a series of studies that compare rule-making provisions in regional trade agreements with those in the World Trade Organisation (e.g., in the area of services, investment and competition). This paper aims to complement existing studies, by examining legal provisions regarding "technical barriers to trade" (i.e., technical regulations, standards and conformity assessment procedures) in selected bilateral and regional trade agreements, and their degree of similarity and convergence with the WTO Agreement on Technical Barriers to Trade, and with each other. The study reveals that most provisions regarding technical barriers to trade (TBT) included in bilateral and regional trade agreements converge towards the multilateral trading system. When implemented effectively, agreements seeking deeper economic integration and regulatory cooperation, in particular, can complement and strengthen the implementation the WTO Agreements on Technical Barriers to Trade by setting the pace for improved regulatory practices and TBT-related infrastructure in member countries (e.g., through regional consultation fora and joint standardisation and accreditation bodies). Some caveats however remain. When overlapping agreements promote different criteria for the harmonisation of standard-related measures and when bilateral or regional initiatives are conducted in isolation from international efforts and divert attention from multilateral trade and standards-related negotiations, new obstacles may arise both for regulators and businesses. Such constraints are further magnified for low income countries afflicted by administrative and technical capacity-related problems. To remedy these potential problems, the study proposes a number of policy recommendations.
    Keywords: non-tariff barriers, standards, regionalism, regional trade agreements, technical barriers to trade, mutual recognition agreement, certification, regulatory measures, TBT, technical regulations, conformity assessment procedures, testing, metrology, WTO Agreement on Technical Barriers to Trade, equivalence, harmonisation, bilateral free trade agreements, custom unions, multilateral trading system
    Date: 2007–10–18
  2. By: Alexandre Skiba (Department of Economics, The University of Kansas)
    Abstract: A discriminatory tariff can be welfare superior to free trade in the presence of regional economies of scale. This is because a tariff on non-regional trade concentrates trade within a region, lowering the cost of transportation, so that the gains from economies of scale can theoretically offset the losses from the tariff. To complement the theoretical point I estimate the relation between transportation cost and regional volume of trade. The estimates suggest that a 10% increase in the volume of trade brings about 2.5% reduction in transportation cost in the long run.
    Keywords: regional economies of scale, transportation costs, preferential trade agreements, regional welfare
    JEL: F10 F12
    Date: 2007–09
  3. By: Wilson, John S.; Shepherd, Ben; Czubala, Witold
    Abstract: The authors test the hypothesis that product standards harmonized to de facto international standards are less trade restrictive than ones that are not. To do this, the authors construct a new da tabase of European Union (EU) product standards. The authors identify standards that are aligned with ISO standards (as a proxy for de facto international norms). The authors use a sample-selection gravity model to examine the impact of EU standards on African textiles and clothing exports, a sector of particular development interest. The authors find robust evidence that non-harmonized standards reduce African exports of these products. EU standards which are harmonized to ISO standards are less trade restricting. Our results suggest that efforts to promote African exports of manufactures may need to be complemented by measures to reduce the cost impacts of product standards, including international harmonization. In addition, efforts to harmonize national standards with international norms, including through the World Trade Organization Technical Barriers to Trade Agreement, promise concrete benefits through trade expansion.
    Keywords: Information Security & Privacy,Standards and Technical Regulations,Science Education,Scientific Research & Science Parks,Information and Records Management
    Date: 2007–11–01
  4. By: Oyama, Daisuke; Sato, Yasuhiro; Tabuchi, Takatoshi; Thisse, Jacques-François
    Abstract: This paper investigates the impacts of progressive trade openness, technological externalities, and heterogeneity of individuals on the formation of entrepreneurship in a two-country occupation choice model. We show that trade opening gives rise to a non-monotonic process of international specialization, in which the share of entrepreneurial firms in the large (small) country first increases (decreases) and then decreases (increases), with the global economy exhibiting first de-industrialization and then re-industrialization. When countries have the same size, we also show that strong technological externalities make the symmetric equilibrium unstable, generating equilibrium multiplicity, while sufficient heterogeneity of individuals leads to the stability and uniqueness of the symmetric equilibrium.
    Keywords: entrepreneurship; externality; heterogeneity; stability; trade liberalization
    JEL: F12 F16 J24 O14 R12
    Date: 2007–11
  5. By: Lawless, Martina; Whelan, Karl
    Abstract: One of the most famous and robust findings in international economics is that distance has a strong negative effect on trade. Bernard, Jensen, Redding, and Schott (2007) discuss how this can be decomposed into an effect due to the number of products and an effect due to average exports per product. Using US firm-level data, they show that distance has a strong negative effect on the number of products exported. However, they find that the intensive margin—average sales of individual products—is increasing with distance. We show that this apparently puzzling finding is consistent with models featuring firm heterogeneity in productivity and fixed costs associated with exporting to each market. We also show how evidence of this type can be used to derive new estimates of how distance affects fixed and variable trade costs and how these two costs combine to generate the distance effect on trade.
    JEL: F12 F14
    Date: 2007–08
  6. By: Meyer, Thomas
    Abstract: India’s actual export specialisation in IT services is unrivalled by any comparable country and it is evidence of a strong comparative advantage. This paper finds that India owes its IT specialisation in part to its reliance on offshoring - driven by the supply of well-educated, English-speaking and affordable workers - but also to a shift away from high-tech manufacturing exports. Going forward, India's specialisation on IT and other high-tech exports may decline as rising wages erode one of the reasons for offshoring.
    Keywords: International trade; comparative advantage; offshoring; India
    JEL: O1 O33 F1 F47
    Date: 2007–11–15
  7. By: Marie-France Houde; Akshay Kolse-Patil; Sébastien Miroudot
    Abstract: This report analyses the interactions between the investment and services chapters of 20 regional trade agreements. It classifies agreements into two broad categories of NAFTA-inspired and GATS-inspired agreements and identifies four major types of interaction between the investment and trade in services chapters. The report then looks at the implications of the services/investment interface for levels of investment protection and liberalisation.
    Keywords: investment, services, RTA, regional trade agreements, GATS, NAFTA, investment liberalization, investment protection, MFN
    JEL: F13 F21
    Date: 2007–06–19
  8. By: Wilson, John S.; Shepherd, Ben; Helble, Matthias
    Abstract: The authors show in this paper that increasing the transparency of the trading environment can be an important complement to traditional liberalization of tariff and non-tariff barriers. Our definition of transparency is grounded in a transaction cost analysis. The authors focus on two dimensions of transparency: predictability (reducing the cost of uncertainty) and simplification (reducing information costs). Using the Asia Pacific Economic Cooperation (APEC) member economies as a case study, the authors construct indices of importer and exporter transparency for the region from a wide range of sources. Our results from a gravity model suggest that improving trade-related transparency in APEC could hold significant benefits by raising intra-APEC trade by proximately USD 148 billion or 7.5 pecent of baseline trade in the region.
    Keywords: Economic Theory & Research,Free Trade,Emerging Markets,Debt Markets,Trade Policy
    Date: 2007–11–01
  9. By: Wim Suyker; Henri L.F. de Groot; Piet Buitelaar; Jos Ebregt; Stefan Groot; Jan Möhlmann; Hugo Rojas-Romagosa; Bas Straathof
    Abstract: India’s impressive economic performance over the past few decades has had a positive net impact on the Dutch economy. Peculiar for India is its relatively strong position on the global markets for services. Imports of cheap Indian products have slightly improved Dutch households’ purchasing power. Increasing Indian exports did not have a noticeable impact on the pace of restructuring in the Netherlands. Nor did this development lead to a marked widening of Dutch wage differentials. Concerning global competition, Indian export products tend to be more complements than substitutes for Dutch export products. The large Indian market yields interesting investment opportunities for Dutch firms. Over the next few decades, the Indian economy is expected to continue its rapid expansion. Increasing trade with India will continue and is expected to enhance Dutch welfare in the upcoming years and will continue to be associated with modest increases in competition and continued restructuring on some markets.
    Keywords: India; Dutch economy; globalisation; trade; foreign direct investment; scenario analysis
    JEL: F14 F23 F40 F47 J31 O40 O57
    Date: 2007–11
  10. By: Spiros Bougheas; Simona Mateut (Department of Economics, The University of Sheffield); Paul Mizen
    Keywords: Trade Credit, Inventories
    JEL: G31 G32
    Date: 2007–10
  11. By: Christian Joerges
    Abstract: Hardly anywhere is the trend towards a perfection of transnational governance arrangements and their legalization more visible than in international trade. Governance arrangements established through and alongside WTO law are both practically important and theoretically challenging. They do not just organise international trade relations. They also affect national and regional (European) regulatory policies partly directly, partly more indirectly. How can we explain and how should we evaluate their emergence? The WTO system of 1994, which replaced the GATT of 1947, responded to the ever increasing importance of non-tariff barriers to trade. These barriers reflect regulatory concerns especially in the fields of health and safety, consumer and environmental protection. There importance for WTO member is such that they cannot simply be abandoned for the sake of free trade. This is why the responses the new international trade system institutionalised by special agreements concerning non-tariff barriers to free trade such as the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS) and the Agreement on Technical Barriers to Trade (TBT) reflect a politicisation of international trade. Can we conclude that international markets have been re-regulated and that international trade law ensures their social embeddedness? The paper seeks yardsticks for an answer to these questions in the debates on transnational constitutionalism. It submits that constutionalisation can and should be based on a conflict-of approach. For its elaboration of this suggestion, the paper first contrasts the jurdification of transnational governance at the European and the international level. It then discusses the WTO panel report on the Biotech dispute. It concludes that the legalisation and judicialisation in that case have remained thin. What can be observed is a political rather than a social and legal embeddedness of markets.
    Keywords: international trade; legitimacy; multilevel governance; national autonomy; risk regulation; WTO
    Date: 2007–05–15
  12. By: Shepherd, Ben
    Abstract: The author uses a new database of EU product standards in the textiles, clothing, and footwear sectors to present the first empirical evidence that international standards harmonization is associated with increased partner country export variety. A 10 percentage point increase in the proportion of internationally harmonized standards is associated with a 0.2 percent increase in partner country export variety, whereas a 10 percent increase in the total number of standards is associated with a nearly 6 percent decrease in product variety. Although small, the harmonization elasticity is statistically significant, and proves highly robust to sample changes and instrumental variables estimation using instruments motivated by political economy considerations. Moreover, it is found to be around 50 percent higher for low income countries, which suggests that they may be particularly constrained in adapting products to meet multiple standards. Numerical simulations show that these findings are consistent with a heterogeneous firms model of trade in which harmonization is beneficial at the extensive margin provided that any increases in compliance costs are not too large.
    Keywords: Housing & Human Habitats,E-Finance and E-Security,Educational Technology and Distance Education,Mining & Extractive Industry (Non-Energy),E-Business
    Date: 2007–11–01
  13. By: Jonathan Eaton, Marcela Eslava, Maurice Kugler, and James Tybout (Wilfrid Laurier University)
    Abstract: Using transactions-level customs data from Colombia, we study firm-specific export patterns over the period 1996-2005. Our data allow us to track firms\' entry and exit into and out of individual destination markets, as well as their revenues from selling there. We find that, in a typical year, nearly half of all Colombian exporters were not exporters in the previous year. These new exporters tend to be extremely small in terms of their overall contribution to export revenues, and most do not continue exporting in the following year. Hence export sales are dominated by a small number of very large and stable exporters. Nonetheless, out of each cohort of new exporters, a fraction of firms go on to expand their foreign sales very rapidly, and over the period of less than a decade, these successful new exporters account for almost half of total export expansion. Finally, we find that new exporters survive, gradually expand into additional destinations. The geographic expansion paths they follow, and their likelihood of survival as exporters, depend on their initial destination market.
    Keywords: Export growth, market entry and experimentation, destination market expansion path
    JEL: F10
    Date: 2007–11
  14. By: Jessie Bakens; Henri de Groot
    Abstract: This paper investigates the impact of the emergence of China and Eastern Europe as increasingly important players on the world market for a small open economy such as the Netherlands. We describe and compare in detail revealed comparative advantages across the different country groups. This allows us to characterize the sectors in the Dutch economy that are most likely to experience enhanced competition in the face of globalization. This analysis is complemented with a gravity analysis that adds a second dimension to the competitive impact, viz. the extent to which markets are localized as opposed to global. We conclude that the overlap in revealed comparative advantages between China and the Netherlands is limited. The major impact of the emergence of China for Dutch trade is that it is likely to foster the position of the Netherlands as a gateway to Europe. Furthermore, we show that the overlap in comparative advantage between China and Eastern Europe is relatively large, implying that competition from Eastern Europe are likely to be stronger than from China.
    Keywords: revealed comparative advantage; gravity analysis; China; Eastern Europe; globalization
    JEL: F01 F10 N70 O57
    Date: 2007–10
  15. By: Andreas M. Fischer; Matthias Lutz; Manueal Wälti
    Abstract: Survey information on Swiss exporters is used to test the hypothesis that firm-specific factors, in particular firm size, are important determinants of pricing--to-market (PTM). The survey asked exporters whether they set different prices across markets and, if so, whether price segmentation occurred because of pricing conditions in the local market or other factors. The empirical analysis is based on a probit model that regresses a binary-choice variable of PTM on firm size and other control variables. The main empirical finding is that firm size and PTM are positively and significantly correlated. A further result is that while firms whose main export market is in the Euro area are less likely to engage in PTM, firm size plays a bigger role for them. These results are robust across different PTM classifications, regression specifications, export destinations, and industrial sectors.
    Keywords: Pricing to markets, local currency pricing, firm size
    JEL: F10 F14
    Date: 2007–10
  16. By: Pedro S. Martins; Yong Yang
    Abstract: We conduct a meta-analysis of more than 30 papers that study the causal relationship between exporting and firm productivity. Our results, robust to different specifications and to different weights for each observation, indicate that the impact of exporting upon productivity is higher 1) at developing economies (when compared to developed economies); 2) in the first year that firms start exporting (compared to later years); 3) with other estimators than OLS; and 4) when the sample used in the paper is not restricted to matched firms. Moreover, we find no evidence of publication bias.
    Keywords: Productivity, Globalisation, Publication Bias
    JEL: F15 F20
    Date: 2007–10

This nep-int issue is ©2007 by Martin Berka. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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