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on International Trade |
| By: | Lim, Jamus Jerome; Decker, Jessica Henson |
| Abstract: | The theoretical discussion on globalization has suggested that there are linkages between democracy and trade, although the direction of influence is less certain. Formal empirical studies remain scarce, and have often focused on the question of whether democratic regimes influence trade policy, as opposed to the actual relationship between democracy and trade. This paper seeks to answer the question, ``Do democracies trade more?'' by applying the gravity equation to a large dataset of bilateral trade data for the period 1948-1999, while taking into account the role of democracy. It finds that democracy has a positive effect on trade flows, but only after controlling for trade pair heterogeneity. In addition, it makes the case for studies of this nature to draw a distinction between trade flows in the pre- and post-1990s period of rapid democratization as well as between developed and developing countries. |
| Keywords: | Democracy; trade; gravity model |
| JEL: | F13 P51 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:6077&r=int |
| By: | Sebastian Krautheim |
| Abstract: | Distance effects in empirical gravity equations appear to be too high to be explained by transport costs alone. Moreover, despite the strong and ongoing reduction of transport costs, the estimated coefficients are rather increasing than decreasing over the last six decades. To address the two dimensions of this 'distance puzzle', this paper proposes a model of international trade in which heterogeneous firms create informational networks to reduce their fixed costs of exporting. Since the variable trade cost (distance) affects the number of exporters, which in turn affects the available information, the fixed cost of exporting is endogenously increasing in distance. The model thus delivers higher predictions for the level of distance effects and, in addition, a quality improvement of the networks over time implies increasing distance elasticities. Major implications of the model regarding the effects of firm heterogeneity and market structure on distance effects are supported by existing empirical evidence. An empirical gravity equation is used to estimate the effect of exporter networks on distance coefficients. In the light of the results the empirical findings on the role of distance on international trade appear considerably less puzzling. |
| Keywords: | gravity, heterogeneous firms, networks, trade costs, distance, information |
| JEL: | F10 F12 D85 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:eui:euiwps:eco2007/51&r=int |
| By: | Ilmakunnas, Pekka; Nurmi, Satu |
| Abstract: | We examine the process of internationalisation of firms, contributing to the knowledge on the factors behind a successful entry and operation in the export markets using duration analysis. Rich longitudinal microlevel data on Finnish manufacturing plants allow an indepth analysis of the life cycle of exporting plants over a time span of up to 25 years. In the first part of the analysis, we focus on the factors that explain the duration of time until entering plants start to export. The second part of the study concentrates on the duration of time until exit from the export markets. Our special focus is on the effects of foreign ownership, human capital and industry spillovers on export market entry and exit. |
| Keywords: | exports; foreign ownership; productivity; human capital; duration analysis |
| JEL: | L25 F23 F14 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:6060&r=int |
| By: | Stefanie Haller (Economic and Social Research Institute (ESRI)) |
| Abstract: | We use comparable micro level panel data for 14 countries and a set of identically specified empirical models to investigate the relationship between exports and productivity. Our overall results are in line with the big picture that is by now familiar from the literature: Exporters are more productive than non-exporters when observed and unobserved heterogeneity are controlled for, and these exporter productivity premia tend to increase with the share of exports in total sales; there is strong evidence in favour of self-selection of more productive firms into export markets, but nearly no evidence in favour of the learning-by-exporting hypothesis. We document that the exporter premia differ considerably across countries in identically specified empirical models. In a meta-analysis of our results we find that countries that are more open and have more effective government report higher productivity premia. However, the level of development per se does not appear to be an explanation for the observed cross-country differences. |
| Keywords: | Exports, productivity, micro data, international comparison |
| JEL: | F14 D21 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp220&r=int |
| By: | Michele Ca’ Zorzi (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Bernd Schnatz (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.) |
| Abstract: | From a conceptual point of view there is little consensus of what should be the “ideal indicator” of international cost and price competitiveness as each of the standard measures typically employed has its own merits and drawbacks. This calls for addressing the question from an empirical angle, searching for the indicator that best explains and helps forecast export developments. This paper constitutes a first attempt to systematically compare the properties of the alternative cost and price competitiveness measures of the euro area. Although they diverge sometimes, we find little evidence that there is one indicator consistently outperforming the other in terms of explaining and forecasting euro area exports. This suggests that the measures based on consumer and producer prices, which offer some advantages in terms of quality and timeliness, are good approximations of euro area price and cost competitiveness. JEL Classification: F17, F31, F41. |
| Keywords: | Real exchange rate, trade, exports, price competitiveness, euro area, forecast. |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20070833&r=int |
| By: | Badi H. Baltagi (Syracuse University and University of Leicester); Panicos O. Demetriades (University of Leicester); Siong Hook Law (University Putra Malaysia) |
| Abstract: | Utilising four annual panel datasets and dynamic panel data estimation procedures we find that trade and financial openness, as well as economic institutions are statistically important determinants of the variation in financial development across countries and over time since the 1980s. However, we find mixed support for the hypothesis that the simultaneous opening of both trade and capital accounts is necessary to promote financial development in a contemporary setting. |
| Keywords: | Financial development, Trade Openness, Financial Openness, Economic Institutions, Financial Liberalization, Dynamic Panel Data Analysis |
| JEL: | F19 G29 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:wef:wpaper:0022&r=int |