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

  1. The effect of foreign service on trade volumes and trade partners By Rubén Segura-Cayuela; Josep M. Vilarrubia
  2. Impact of foreign trade on productivity within sectors in Tunisia: the case of manufacturing industry By Derbel, Hatem; Abdelkafi, Rami; Chkir, Ali
  3. Forecasting world trade. Direct versus "bottom-up" approaches. By Stéphane Dées; Matthias Burgert
  4. Trade and Income Inequality Nexus in Pakistan: Under Investigation of Alternative Techniques By Shahbaz, Muhammad; Butt, Sabihuddin; Aamir, Naveed

  1. By: Rubén Segura-Cayuela (Banco de España); Josep M. Vilarrubia (Banco de España)
    Abstract: It has been emphasized that international promotion activities such as state visits or the presence of embassies, consulates and export promotion agencies help foster trade when there are search costs and/or uncertainty. In this paper we try to disentangle the differential effect that foreign service (embassies and consulates) has on both the establishment of trade links with countries, and the effect on trade volumes with already existing trading partners (the extensive and intensive margins at the country level). Using the estimation procedure suggested by Helpman, Melitz and Rubinstein (2007) and a cross-section of 21 exporters and 162 importers as in Rose (2005), we find that the presence of a foreign service office in a given country increases the probability of trading with that partner between 11% and 18%, but that it has no effect on the volume of trade with already existing trading partners. We then proceed to evaluate the importance of the extensive margin at the sectoral level, finding that these probabilities are substantially larger for more differentiated sectors.
    Keywords: foreign service, uncertainty, extensive margin, intensive margin, gravity
    JEL: F12 F13 F15
    Date: 2008–04
  2. By: Derbel, Hatem; Abdelkafi, Rami; Chkir, Ali
    Abstract: This paper provides an empirical evidence of the impact of foreign trade on the sectorial productivity for the Tunisian manufacturer sector. The objective is to show that the insufficiency of the traditional theory in the explanation of the impact of the international trade on the labour market can be explained by the presence of an intrasectorel component that results from the reaction of firms facing the competition. Using recent unit root procedures applied to panel data regressions (Im, Pesaran & Shin’s (1997) and coïntegration tests (Pedroni’s (1999)), the results exhibit a positive impact of value added and trade on the productivity of the manufacturer sector. The survey by sector shows that the value added acts positively on all sectors whereas for trade a positive and statistically significant effect exist only for the ICH and IMD sectors.
    Keywords: Commerce extérieur; marché du travail; productivité sectorielle.
    JEL: C13 F10 F12 F14
    Date: 2007–03
  3. By: Stéphane Dées (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Matthias Burgert (Humboldt University, Berlin and ENSAE. Address - ENSAE, 3, avenue Pierre Larousse, 92245 Malakoff Cedex, France.)
    Abstract: In a globalised world economy, global factors have become increasingly important to explain trade-flows at the expense of country-specifc determinants. This paper shows empirically the superiority of direct forecasting methods, in which world trade is directly forecasted at the aggregate levels, relative to "bottom-up" approaches, where world trade results from an aggregation of country-specifc forecasts. Factor models in particular prove rather accurate, where the factors summarise large-scale datasets relevant in the determination of trade-flows. JEL Classification: C53, C32, E37, F17.
    Keywords: World trade, Factor models, Forecasts, Time series models.
    Date: 2008–03
  4. By: Shahbaz, Muhammad; Butt, Sabihuddin; Aamir, Naveed
    Abstract: After long discussions on this hot issue of trade-inequality nexus in the case of a small developing economy like Pakistan; we may conclude this relationship after the employment of advance techniques like FMOLS, ARDL and DOLS for robustness of long relationship and ECM short run dynamics in the case of Pakistan utilizing time series data 1971-2006. All techniques suggested that there exists a stable long run relationship among the concerned variables. Our findings showed that trade openness and income inequality move in the same direction and there exists Leontief Paradox in the case of Pakistan along with occurrence of Laffer curve insignificantly. Economic growth also worsens income distribution and Kuznets’ curve exists in Pakistan. Foreign direct investment, human capital formation and remittances all deteriorate income distribution in a long span of time. Finally, inflation declines income inequality through macro-economic channels. Government spending, modern sector and political instability have also appeared to push income inequality upwards while land per worker improves income distribution in the case of Pakistan.
    Keywords: Trade; Income Inequality
    JEL: B22
    Date: 2007–10–22

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