nep-int New Economics Papers
on International Trade
Issue of 2008‒01‒05
thirty-one papers chosen by
Martin Berka
Massey University

  1. Pricing-to-market, trade costs, and international relative prices By Andrew Atkeson; Ariel Burstein
  2. Exporter and Non-Exporter Productivity Differentials: Evidence from Australian Manufacturing Establishments. By Alfons Palangkaraya; Jongsay Yong
  3. Structural gravity equations with intensive and extensive margins By Matthieu Crozet; Pamina Koenig
  4. Intra-Industry Trade, Multilateral Trade Integration and Invasive Species Risk By Anh Thuy Tu; John Beghin
  5. Foreign Direct Investment, Intra-Regional Trade and Production Sharing in East Asia By Nathalie AMINIAN; K. C. FUNG; IIZAKA Hitomi
  6. Trade Growth in a Heterogeneous Firm Model: Evidence from South Easten Europe By Kancs, d'Artis
  7. Trade Policy under Firm-Level Heterogeneity in a Small Economy By Svetlana Demidova; Andrés Rodríguez-Clare
  8. JETRO and Japan’s Postwar Export Promotion System: Messages for Latin American Export Promotion Agencies By Sakurai, Teiji
  9. Assessing the Impact of Development Cooperation: the Case of African Growth and Opportunity Act (AGOA) and U.S. Imports from Sub-Saharan Africa. By Bichaka Fayissa; Badassa Tadasse
  10. Developing countries and enforcement of trade agreements : why dispute settlement is not enough By Hoekmanm Bernard M.; Bown, Chad P.
  11. Technology Adoption and the Selection Effect of Trade By Antonio Navas-Ruiz; Davide Sala
  12. RTAs Formation and Trade Policy By Davide Sala
  13. Impact of the South Korea-U.S. Free Trade Agreement on the U.S. Livestock Sector By Jacinto F. Fabiosa; Dermot J. Hayes; Fengxia Dong
  14. The NAFTA Tide: Lifting the Larger and Better Boats By Angel Calderon-Madrid; Alexandru Voicu
  15. What Goods Do Countries Trade? New Ricardian Predictions By Arnaud Costinot; Ivana Komunjer
  16. Stuck in the middle? The structure of trade between South Africa and its major trading partners By Koen Smet
  17. Estimating Regional Trade Agreement Effects on FDI in an Interdependent World By Badi H. Baltagi; Peter Egger; Michael Pfaffermayr
  18. Trade Liberalisation, Exit, and Output and Employment Adjustments of Australian Manufacturing Establishments By Alfons Palangkaraya; Jongsay Yong
  19. Antidumping Protection and Productivity of Domestic Firms: A firm level analysis By Jozef Konings; Hylke Vandenbussche
  20. Productivity Growth, Bounded Marginal Utility, and Patterns of Trade By Philip Sauré
  21. China's Changing Trade Elasticities By Jahangir Aziz; Xiangming Li
  22. Optimal Choice of Product Scope for Multiproduct Firms under Monopolistic Competition By Robert Feenstra; Hong Ma
  23. The Shifting Structure of China's Trade and Production By Li Cui; Murtaza H. Syed
  24. ARE EXPORTS CAUSING GROWTH? EVIDENCE ON INTERNATIONAL TRADE EXPANSION IN CUBA, 1960-2004 By Fugarolas, Guadalupe; Mañalich, Isis; Matesanz , David
  25. Contribution of Trade Openness to Growth in East Asia: A Panel Data Approach By Rao, B. Bhaskara; Singh, Rup
  26. What Makes a Successful Export? By Görg, Holger; Kneller, Richard; Muraközy, Balázs
  27. Optimism, Pessimism, and the Gains from Trade By BLANCHARD, michel; PELTRAULT, frederic
  28. Exchange rate policy and export performance of WAMZ countries By Balogun, Emmanuel Dele
  29. Firm Level Heterogeneous Productivity and Demand Shocks: Evidence from Bangladesh By Hiau Looi Kee; Kala Krishna
  30. Globalization of International Relationships By Drobot, Elena
  31. The single currency’s effects on Eurozone sectoral trade: winners and losers? By Sergio de Nardis; Roberta De Santis; Claudio Vicarelli

  1. By: Andrew Atkeson; Ariel Burstein
    Abstract: Data on international relative prices from industrialized countries show large and systematic deviations from relative purchasing power parity. We embed a model of imperfect competition and variable markups in some of the recently developed quantitative models of international trade to examine whether such models can reproduce the main features of the fluctuations in international relative prices. We find that when our model is parameterized to match salient features of the data on international trade and market structure in the U.S., it reproduces deviations from relative purchasing power parity similar to those observed in the data because firms choose to price-to-market. We then examine how pricing-to-market depends on the presence of international trade costs and various features of market structure.
    Keywords: Prices ; Pricing ; Macroeconomics - Econometric models
    Date: 2007
  2. By: Alfons Palangkaraya (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Jongsay Yong (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)
    Abstract: We study the link between exporting and productivity using unpublished establishment level data of the Australian manufacturing from 1994 to 2000. We find there is significant difference in the first moment as well as the whole distribution of productivity between exporters and non-exporters. At the mean level, the average productivity differentials between Australian exporters and non-exporters are comparable to that of, for examples, the United States, Germany, or Taiwan. More importantly, as also found in almost all other countries, we find that the bigger and more productive firms appear to self-select into the export market. In addition, we also find that a higher intensity and longer period of export market exposure is associated with a higher level of productivity, indicating a possible learning-by-exporting effect. JEL Classification: D21; F21
    Keywords: Productivity; Exports, Australia; Manufacturing; Establishment; Exit; Employment.
    Date: 2007–02
  3. By: Matthieu Crozet; Pamina Koenig
    Abstract: New trade models with heterogeneous firms have had a consequent influence on gravity equations. According to Chaney (2007) and Melitz and Ottaviano (2005), the theoretical relationship between trade costs and trade flows is the sum of the effect of trade costs on the number of exporting firms (the extensive margin) and the value of individual exports (the intensive margin). The distinctive effect of distance on the two margins deeply modifies predictions of the trade literature, among which the sectoral effect of trade policies. Using French firms-level export data to 61 countries, on the period 1989-1992, we provide unbiased structural estimates of the three parameters governing trade elasticities with respect to distance. This dissection of the gravity equation provides consistent evidence in favor of heterogeneous firms models of trade.
    Keywords: Gravity equation, International trade, Firm heterogeneity.
    JEL: F12
    Date: 2007
  4. By: Anh Thuy Tu (Department of Economics, Foreign Trade University, Hanoi, Vietnam); John Beghin (Department of Economics at Iowa State University)
    Abstract: We analyze the linkage between protectionism and invasive species (IS) hazard in the context of two-way trade and multilateral trade integration, two major features of real-world agricultural trade. Multilateral integration includes the joint reduction of tariffs and trade costs among trading partners. Multilateral trade integration is more likely to increase damages from IS than predicted by unilateral trade opening under the classic Heckscher-Ohlin-Samuelson (HOS) framework because domestic production (the base susceptible to damages) is likely to increase with expanding export markets. A country integrating its trade with a partner characterized by relatively higher tariff and trade costs is also more likely to experience increased IS damages via expanded domestic production for the same reason. We illustrate our analytical results with a stylized model of the world wheat market.
    Keywords: Invasive species, Exotic pest, Trade protection, Trade cost, Trade integration, Two-way trade, Intra-industry trade, Liberalization
    Date: 2007
  5. By: Nathalie AMINIAN; K. C. FUNG; IIZAKA Hitomi
    Abstract: The aim of this paper is twofold. First, it examines the trend and nature of East Asian trade. The United Nations BEC classification is utilized to categorize total trade into trade in semi-finished goods, trade in components and parts, trade in capital goods as well as trade in final consumption goods. It shows that the increasing importance of East Asia as a trading region is due at least partially to the rising trade in components and parts. Next, it tries to find out if foreign direct investment plays a role in the import and export behavior of East Asian intra-regional trade. Using a gravity model, it evidences that in general FDI is important in explaining imports and exports of intra-East Asian trade. In particular, FDI is especially important in explaining trade in components and parts, followed by trade in capital goods. This helps confirm that FDI and trade associated with production fragmentation in East Asia are complementary.
    Date: 2007–12
  6. By: Kancs, d'Artis (London School of Economics and Catholic University of Leuven)
    Abstract: In 2007 a Free Trade Area (BFTA) will be created in the Balkans. In this paper we study the potential impact of BFTA on trade growth in the SEE. Given that welfare impacts associated with trade growth depend on the growth channels, more goods and varieties exported or at higher price or higher volume of goods and varieties are exported, in this paper we investigate the structure of integration-induced export growth in the Balkans. The empirical implementation of our analysis is complicated by the fact that firm-level trade data is not available for the SEE economies. In order to cope with this data paucity, we adopt a heterogeneous firm framework, which allows us to decompose the aggregate trade growth in two parts: the intensive margin of trade and the extensive margin of trade using only aggregate trade data. The empirical findings of our study suggest that the BFTA would primarily trigger trade growth through a growing number of exported goods (the extensive margin of trade). Thus, the actual welfare gains from trade growth in the Balkans might be larger than predicted by previous trade studies. We also found that a variable trade cost reduction would lead to higher export growth rates compared to a fixed trade cost reduction. These results allow us to draw detailed policy conclusions.
    Keywords: Balkans, export growth, regional integration, trade costs
    JEL: F12 F14 R12 R23
    Date: 2007–12
  7. By: Svetlana Demidova; Andrés Rodríguez-Clare
    Abstract: In this paper we explore the effect of trade policy on productivity and welfare in the now standard model of firm-level heterogeneity and product differentiation with monopolistic competition. To obtain sharp results, we restrict attention to an economy that takes as given the price of imports and the demand schedules for its exports (a "small economy"). We first establish that welfare can be decomposed into four terms: productivity, terms of trade, variety and curvature, where the latter is a term that captures heterogeneity across varieties. We then show how a consumption subsidy, an export tax, or an import tariff allow our small economy to deal with two distortions that we identify and thereby reach its first best allocation. We also show that an export subsidy generates an increase in productivity, but given the negative joint effect on the other three terms (terms of trade, variety and curvature), welfare falls. In contrast, an import tariff improves welfare in spite of the fact that productivity falls.
    JEL: F1 F12 F13
    Date: 2007–12
  8. By: Sakurai, Teiji
    Abstract: This paper tries to explain how the Japanese postwar export promotion system worked and what kind of roles JETRO played in this system. Two case studies of JETRO’s successful export promotion activities were also introduced. The paper also points out the themes to be solved by the TPO (Trade Promotion Organizations). Finally the paper shows four advices for Latin American Export Promotion Agencies, based upon JETRO's postwar experiences.
    Keywords: Export promotion, Investment promotion, TPO (Trade Promotion Organizations), Latin America, Japan, JETRO (Japan External Trade Organization), Trade policy, Exports
    JEL: F13 F14 F18
    Date: 2007–10
  9. By: Bichaka Fayissa; Badassa Tadasse
    Abstract: We evaluate the impact of the unilateral trade policy concession known as African Growth and Opportunity Act (AGOA) on U.S. imports from eligible Sub-Saharan African (SSA) countries. Using U.S.-SSA countries’ trade data that span the years 1991-2006, we find that AGOA has contributed to the initiation of new and the intensification of existing U.S. imports in both manufactured and non-manufactured goods and several product categories. However, compared to its import initiation impact, the import intensification effect of the Act has been marginal. Our results have important policy implication for further intensification of African exports to the U.S. markets.
    Keywords: AGOA, Trade Agreements, Trade Initiation, Trade Intensification
    JEL: F13 F14 F15
    Date: 2007–12
  10. By: Hoekmanm Bernard M.; Bown, Chad P.
    Abstract: Poor countries are rarely challenged in formal World Trade Organization trade disputes for failing to live up to commitments, reducing the benefits of their participation in international trade agreements. This paper examines the political-economic causes of the failure to challenge poor countries, and discusses the static and dynamic costs and externality implications of this failure. Given the weak incentives to enforce World Trade Organization rules and disciplines against small and poor members, bolstering the transparency function of the World Trade Organization is important for making trade agreements more relevant to trade constituencies in developing countries. Although the paper focuses on the World Trade Organization system, the arguments also apply to reciprocal North-South trade agreements.
    Keywords: Economic Theory & Research,Trade Law,Free Trade,Emerging Markets,World Trade Organization
    Date: 2007–12–01
  11. By: Antonio Navas-Ruiz; Davide Sala
    Abstract: The reallocation of output across plants and the productivity growth at individual plants are both important sources of productivity growth at the industry level. Recent evidence has shown that trade liberalization is related to both e..ects. While a trade model with firm heterogeneity can account for the first e..ect, it can not explain the second effect. We add to this model the option for firms to costly adopt more productive technologies and show that plant productivity actually rises in response to lower trade costs. Following trade liberalization, selection into exporting raises the market share only for some exporters. Therefore, a greater scale of operation amplifies their return from costly productivity-enhancement investments and leads a greater proportion of them to implement a more innovative technology.
    Keywords: International Trade, Technology Adoption, Productivity
    JEL: F12 F15 L11 O33 O47
    Date: 2007
  12. By: Davide Sala
    Abstract: From the mid-60s to the mid-80s there has been a gradual but fundamental change in the nature of trade protection. International trade has become increasingly restricted by quotas and other nontariff barriers, as the level of tariffs have fallen and governments have devised other forms of protection for sectors facing increased foreign competition. The paper shows such non-tariff barriers have very different effects and implications from tariff for the welfare outcome of a regional integration agreement. Indeed, binding quotas, differently from tariffs, succeed to preserve the trade volumes with the rest of the world, and lead to welfare improving customs unions and free trade areas since trade between the partners is not expanded at the expense of trade with the outside world. By relating the existence of welfare enhancing regional integration to the systematic change in the type of trade policy conducted by most countries, this paper emphasizes that the desirability of piecemeal reforms has increased through time and justifies a renewed and grown policy interest in preferential trade in the 90s, when NTBs had a greater weight in trade policies. This can contribute to explain the spurt of regionalism observed in the data.
    Keywords: Regional Integration Agreements, Tariffs, Volume quotas
    JEL: F13 F15
    Date: 2007
  13. By: Jacinto F. Fabiosa (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); Dermot J. Hayes (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); Fengxia Dong (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI))
    Abstract: The recently signed Korea-U.S. Free Trade Agreement (KORUS FTA) grants the U.S. livestock industry with preferential access to South Korea's import market. This study evaluates the likely impacts of the KORUS FTA on the U.S. livestock sector. Using the Food and Agricultural Policy Research Institute's modeling system, we find that livestock prices increase by 0.5% to 3.8% under the agreement. And together with an expansion by 381 to 883 million pounds in meat exports, the value of U.S. exports increase by close to U.S.$2 billion, or a 15.2% increase. Because of differential baseline starting market shares and differential rates and staging specifications, the beef sector results are primarily driven by trade diversion impacts, while a combination of trade diversion and trade creation characterizes the results in pork and poultry sectors.
    Keywords: dairy, free trade agreement, livestock, poultry, trade creation and diversion.
    Date: 2007–11
  14. By: Angel Calderon-Madrid (El Colegio de México); Alexandru Voicu (CUNY, College of Staten Island and IZA)
    Abstract: We use panel data on Mexican manufacturing plants to study the connection between plants’ responses to changes in the economic environment and their contributions to aggregate productivity growth in the period following the implementation of the North American Trade Agreement (NAFTA). In all industries, an overwhelming share of aggregate productivity growth is accounted for by a small number of plants which were larger and more productive before the implementation of NAFTA and expanded and became more productive following the implementation of NAFTA. Plants that exported before NAFTA and export continuously through 2000 and some of the new exporters are more likely to be among the top-performing plants. Exporting activity and performance of plants with similar exporting experience, however, display remarkable heterogeneity. This heterogeneity implies that trade liberalization provided growth opportunity to larger and more productive plants irrespective of their export status and provides an explanation for the lackluster average productivity performance of exporting plants.
    Keywords: NAFTA, trade liberalization, productivity, heterogeneity of plant-level performance
    JEL: C13 D24 F13 O47 O54
    Date: 2007–12
  15. By: Arnaud Costinot; Ivana Komunjer
    Abstract: Though one of the pillars of the theory of international trade, the extreme predictions of the Ricardian model have made it unsuitable for empirical purposes. A seminal contribution of Eaton and Kortum (2002) is to demonstrate that random productivity shocks are sufficient to make the Ricardian model empirically relevant. While successful at explaining trade volumes, their model remains silent with regards to one important question: What goods do countries trade? Our main contribution is to generalize their approach and provide an empirically meaningful answer to this question.
    JEL: F10
    Date: 2007–12
  16. By: Koen Smet (Department of Economics, Vienna University of Economics & B.A.)
    Abstract: This paper analyses the South African trade data from1992 until 2006 by means of a Grubel-Lloyd index, a measurement of marginal intra-industry trade and a revealed comparative advantage (RCA) indicator. During this period a lot happened that influenced the South African trade policy, e.g. the political transition in 1994, the formation of the World Trade Organisation in 1995, the rise of China as trading power, etc. The purpose is not only to analyse the current structure of South African trade, but also to examine its structural change over time. As a result this paper shows that South Africa is principally a supplier of natural resources to both industrialised and emerging economies. With respect to its African neighbours South Africa has a more advantageous trading position. More general this paper shows that an indicator reaches significant different values, if different trading partners or industries are analysed.
    JEL: F14
    Date: 2007–12
  17. By: Badi H. Baltagi (Center for Policy Research, Maxwell School, Syracuse University, Syracuse, NY 13244-1020); Peter Egger (University of Munich and CESifo, Poschingerstr. 5, 91679 Munich, Germany); Michael Pfaffermayr (Department of Economics, University of Innsbruck, Universitaetsstrasse 15, 6020 Innsbruck, Austrai; Austrian Institute of Economic Research, and CE Sifo)
    Abstract: Recent research on trade and multinationals highlights a novel issue with multinational firms. In particular, their integration strategies are complex and the degree of vertical integration varies in a multilateral world with many possible locations of activity. Multinationals may choose some plants to serve consumers locally only, whereas others engage in trade. Overall, this may explain the fact that a high percentage of world trade is actually controlled by multinational firms, although most of the foreign direct investment (FDI) occurs within the block of developed countries. The most important regional trade agreements (RTAs) are signed beween members of the very same block of economies. This gives rise to the question asked in the present paper: what is the impact of RTAs on FDI in an interdependent world? The paper focuses on the role of the Europe Agreements between the member countries of the European Union and ten Central and Eastern European countries. In doing so, recent spatial HAC estimation techniques are applied to both estimation and testing.
    Keywords: Regional trade agreements; Multinational firms; Spatial econometrics; Generalized moments (GM) estimators
    JEL: C23 F14 F15
    Date: 2007–12
  18. By: Alfons Palangkaraya (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Jongsay Yong (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)
    Abstract: We use unpublished establishment level data of Australian manufacturing from 1993-94 and 1996-97 censuses to study how trade liberalisation affects productivity. More specifically, we use the variation in the extent of trade liberalisation across four digit ANZSIC manufacturing industries classification to identify the link between trade liberalisation and three outcomes: establishments’ probability of exit, the change in the size of output and the change in employment. There is weak evidence that establishments in industries with greater reductions in effective rate of assistance are more likely to exit. We find strong evidence that they reduce employment. There is no evidence for economies of scale through output expansion. Together these indicate that the documented productivity gains of trade liberalisation may come more from the pro-competitive effects which forces establishments to reduce their slackness rather than from the exit of less efficient establishments.
    Keywords: Agglomeration; Australian Manufacturing; Industry assistance; Trade liberalisation; Entry and exit.
    JEL: R11 R12
    Date: 2007–05
  19. By: Jozef Konings; Hylke Vandenbussche
    Abstract: We analyze the relationship between Antidumping (AD) Protection and the productivity of EU domestic firms in import-competing industries. For this purpose we identify a panel of domestic firms between 1993 and 2003 that at some point during this period are affected by AD initiations. Using a difference-in-difference approach, we find that AD measures result in improvements of measured productivity for domestic firms. Total Factor Productivity (TFP) of protected firms increases by 2% in the short-run and by 5% to 13% in the long-run. However, there is substantial heterogeneity across firms. The effect of protection depends on the initial “distance-to-the-frontier firm” in the industry. While protection raises TFP of “laggard” domestic firms, it lowers TFP for “efficient” firms that operate close to the efficiency frontier. These results are consistent with recent theoretical work supporting the view that trade policy, under certain conditions, can induce technological catching-up. While this paper evaluates the effectiveness of AD policy it does not engage in a welfare analysis.
    Keywords: Total Factor Productivity, Antidumping protection, technological catching-up
    JEL: F13 L41 O30 C2
    Date: 2007
  20. By: Philip Sauré
    Abstract: The workhorse model of the New Trade Theory fails to explain four strong and central patterns of postwar trade data. These patterns are, first, the massive increase in trade volumes, second, the small fraction of traded varieties the average country imports, third the correlation between per capita income growth and trade growth, and fourth, the correlation between trade growth and growth in the number of source countries per imported good. The present paper shows that a small and reasonable change in the demand structure can reconcile the model with the data. It departs from standard theory by assuming that consumers derive bounded marginal utility from varieties. This implies that consumers purchase only the cheaper share of varieties and that expensive foreign varieties bearing high transport costs are not imported. Technological progress which increases per capita consumption of the varieties in the consumption basket decreases marginal utility derived from each of them and induces consumers to extend their consumption to more expensive varieties produced at more distant locations. This additional margin along which trade can expand induces a substantial increase in the trade share as productivity grows. Productivity change is thus identified as a joint determinant of trade shares, the number of source countries per good, and per capita income, explaining the trends and correlations in the data.
    Keywords: Trade Volume, Source Country
    JEL: F1 F4
    Date: 2007
  21. By: Jahangir Aziz; Xiangming Li
    Abstract: China's sectoral trade composition, product quality mix, and import content of processing exports have all changed substantially during the past decade. This has rendered trade elasticities estimated using aggregate data highly unstable, with more recent data pointing to significantly higher demand and price elasticities. Sectoral differences in these parameters are also very wide. All this suggests greater caution in using historical data to simulate the response of the China's economy to external shocks and exchange rate changes. Analyses based on models whose estimated coefficients largely reflect the China of the 1980s and 1990s are likely to turn out to be wrong, perhaps even dramatically.
    Keywords: Trade , China, People's Republic of , Balance of trade , Exchange rates ,
    Date: 2007–11–29
  22. By: Robert Feenstra; Hong Ma
    Abstract: In this paper we develop a monopolistic competition model where firms exercise their market power across multiple products. Even with CES preferences, markups are endogenous. Firms choose their optimal product scope by balancing the net profits from a new variety against the costs of "cannibalizing" their own sales. With identical costs across firms, opening trade leads to fewer firms surviving in each country but more varieties produced by each of those firms. With heterogeneous costs, the number of firms surviving in equilibrium is quite insensitive to the market size. When trade is opened, more firms initially enter, but the larger market size reduces the cannibalization effect and expands the optimal scope of products. As a result, the less efficient firms exit, and the larger market is accommodated by more efficient firms that produce more varieties per firm on average.
    JEL: F12 L1
    Date: 2007–12
  23. By: Li Cui; Murtaza H. Syed
    Abstract: This paper uses disaggregated trade data to assess how the expansion of China's production capacity and its changing production structure may be affecting its trade linkages with other countries. It finds that China is moving away from traditional assembly operations in its processing activities and its exports have started to rely more on domestically sourced components. In turn, China's imports and exports have begun to delink, with increased domestic sourcing contributing to the recent increase in its trade balance. In addition, as China moves up the value chain, both its imports and exports have become more sophisticated than in the past. As a result of these shifts, China may be becoming more exposed to fluctuations in the strength of the global economy, and changes in its exchange rate could have a bigger impact on the trade balance and the domestic economy than commonly believed.
    Keywords: Working Paper , Balance of trade , China , Production , Exchange rates , Imports , Exports , Exchange rate instability , Industrial structure ,
    Date: 2007–09–07
  24. By: Fugarolas, Guadalupe; Mañalich, Isis; Matesanz , David
    Abstract: Economic development in Cuban economy in the last 50 years has been involved in the so called socialist revolution time. In the external sector, the COMECON arrangements have determined its international specialization trade pattern and balance of payments position until 1989. When the Berlin Wall fell down, Cuban economy collapsed showing the malfunctions of the previous external regulated period. In this paper, we analyzed the role of exports as an engine of economic growth in Cuba considering essential events in its commercial policy-making in the long period from 1960 to 2004. Our results show that the export led growth (ELG) hypothesis is not an appealing phenomenon. Causality proofs on the basis of error correction and augmented level VAR modellings show the imperious necesssity to import for the Cuban development. The inclusion of imports not only evidences the weakness in the feedback and interrelation between economic growth and exports but also their expansion has been precisely causing growth in most of the considered periods.
    Keywords: Cuba; Export-led Growth; commercial agreements effects; cointegration; causality; error correction and augmented VAR modelling.
    JEL: C32 C52 F43
    Date: 2007–12
  25. By: Rao, B. Bhaskara; Singh, Rup
    Abstract: Panel data time series methods are used to estimate the contribution of trade openness to total factor productivity (TFP) of East Asia. Panel cointegration tests showed that there is a long run relation between output, trade ratio and capital. Growth accounting exercise showed that openness of trade contributed significantly to TFP.
    Keywords: Pedroni unit root and cointegration tests; Trade Openness; East Asia and Growth Accounting;
    JEL: O5 O4 O3
    Date: 2007–12
  26. By: Görg, Holger; Kneller, Richard; Muraközy, Balázs
    Abstract: We analyse a very rich and unique panel database which provides information on exports at the firm-product level. A stylised fact in the data is that many firms add as well as drop products from the export mix in any given year. Motivated by recent theory we investigate what determines the survival of products in the export mix. Estimating hazard models we find evidence that is consistent with the view that characteristics of the product as well as that of the firm matter. This suggests, in line with theory, that there are firm- as well as firm-product specific competencies that are important for shaping firms’ export mix.
    Keywords: competencies; export mix; product level; product survival
    JEL: F12 F14
    Date: 2007–12
  27. By: BLANCHARD, michel; PELTRAULT, frederic
    Abstract: This paper examines the debate over the gains from trade when international differences in the risk perception of heterogeneous managers provide the basis for trade: the relatively optimistic country exports the risky commodity whereas the relatively pessimistic country exports the certain commodity. We show that optimal trade policy depends on the choice of the welfare criterion, as ex-ante and ex-post criteria often lead to opposing conclusions. The more optimistic country is always better off ex-ante whereas it can end up worse off ex-post. The more pessimistic country may be worse off/better off ex-ante but better off/worse off according to the ex-post welfare criterion.
    Keywords: Idiosyncratic Risk; Optimism; Pessimism; Heterogeneity; Trade Losses; ex-ante and ex-post welfare.
    JEL: F13 D81 F11
    Date: 2007–12–18
  28. By: Balogun, Emmanuel Dele
    Abstract: This study examines the effect of independent exchange rate policy, relative to other determinants, on global export performance of WAMZ countries. The regression results show that exports originating from the Zone to the rest of the world are influenced positively by domestic output, export prices and exchange rate devaluations, but negatively by import price and economic performance of the major global trading partner, proxied by the US GDP. This result is not universal as the Gambia, Ghana and Guinea total exports functions show that exchange rate policy penalized exports contrary to the Nigerian case in which the coefficient estimate is significant and positive. The study infers that these results are consistent with theoretical expectation given the ironical divergence in export basket. Although they are all primary commodity exporters, Nigeria’s exports is mainly crude oil, and a priori expectation is that rapid economic growth or booms in the US should lead to increased demand for energy (healthy competitions). In conclusion, the study infers that since independent flexible exchange rate policy makes no difference to the Zonal export performance ex ante, but have great potential for global exports collectively, they could explore an OCA to enhance both intra- and global inter-regional export trade.
    Keywords: Exchange rate policy; export trade; panel data regression model; WAMZ
    JEL: F42 F1 F31
    Date: 2007–12–17
  29. By: Hiau Looi Kee; Kala Krishna
    Abstract: This paper looks at the predictions of a standard heterogeneous firm model regarding the exports of firms across markets in response to a particular trade policy "experiment" and compares these predictions to the data. A unique feature of our data is that it has information on the exports of the same firm to different markets which allows us to look for a new set of predictions of such models. We argue that while certain predictions seem consistent with the data, others are not. We then describe the patterns found in the data and argue that firm and market specific demand shocks help explain a number of these anomalies. These parsimoniously capture factors, like business contacts or networks, or even fashion shocks, that make buyers more attracted to one firm rather than another in a particular market.
    JEL: F12 F13
    Date: 2007–12
  30. By: Drobot, Elena
    Abstract: Globalization means enormous increase in scales of world trade and other processes of international exchange in open, integrated, borderless world economy. Thus, it means not only traditional overseas trade of goods and services, but also currency flows, capital movement, exchange of technology, information and know-how, migration. What consequences will globalization lead to in prospect? What positive consequences (the advantages) of global processes can we single out? And what are the threats of globalization for different cultures, nations and states? This scope of questions is discussed in the article.
    Keywords: Globalization; Globalism; types of global connectivity; liberalization; anti-globalization
    JEL: F50
    Date: 2007–12–14
  31. By: Sergio de Nardis (ISAE - Institute for Studies and Economic Analyses); Roberta De Santis (ISAE - Institute for Studies and Economic Analyses); Claudio Vicarelli (ISAE - Institute for Studies and Economic Analyses)
    Abstract: In this paper we study the effect of the single currency across industries for Euro Area members. This analysis may help to shed light on the main factors influencing the euro effect on trade flows. We intend to verify whether these factors are specific to individual sectors and/or countries or common to the entire euro area We use a dynamic specification of an augmented gravity equation. Following the most recent econometric literature, we apply a “System GMM” dynamic panel data estimator (Blundell and Bond, 1998) to avoid inconsistency and biases in the estimates, and introduce controls for heterogeneity . Our preliminary results indicate some heterogeneity at country level. Despite statistically pro-trade effects in the majority of the EMU members, at sectoral level there are some countries in which the impact of the euro has been negative. The pro trade effects are mainly concentrated in scale intensive industries. Industrial specialization and location of these industries, together with other factors (i.e. differences in factor endowments, product regulations across countries), may have determined “the winners and the losers” in the monetary integration process. These preliminary findings are in line with those of the few other studies on this issue. In particular, this recent literature seems consistent with Baldwin’s (2006) “new good” hypothesis. However, in our estimates the magnitude of these effects are lower, probably because of our empirical strategy. Moreover, the sector/country analysis points out that other specific factors have been in place in shaping differently the euro effect on trade.
    Keywords: International Trade, Currency Unions, Gravity models, Dynamic Panel Data Models, Bludell-Bond Estimates
    JEL: F14 F15 F4 F33 C33
    Date: 2007–12

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