nep-int New Economics Papers
on International Trade
Issue of 2008‒08‒14
nine papers chosen by
Alessia A. Amighini
University Amedeo Avogadro

  1. The core periphery model with asymmetric inter-regional and intra-regional trade costs By Vasco Leite; Sofia B.S.D. Castro; João Correia-da-Silva
  2. Border Barriers in Agricultural Trade and the Impact of their Elimination: Evidence from East Asia By Hayakawa, Kazunobu; Chang, Kuo-I
  3. Offshoring and Occupational Wages: Some empirical evidence By Bigsten, Arne; Durevall, Dick; Munshi, Farzana
  4. The expected benefits of trade liberalization for world income and development: Opening the “black box” of global trade modeling By Bouet, Antoine
  5. An investigation on the effect of real exchange rate movements on OECD bilateral exports By Antoine Berthou
  6. Policy Liberalization and FDI Growth, 1982 to 2006 By Matthew Adler; Gary Clyde Hufbauer
  7. Foreign direct investment and environmental taxes By Roberto A. De Santis; Frank Stähler
  8. The Vietnam’s terms of accession and distributional impact of WTO membership By Jean-Pierre Cling; Mohamed Ali Marouani; Mireille Razafindrakoto; Anne-Sophie Robilliard; François Roubaud
  9. Empirical Analysis of Structural Change in Turkish Exports By Faruk Aydin; Hulya Saygili; Mesut Saygili

  1. By: Vasco Leite (Faculdade de Economia, Universidade do Porto.); Sofia B.S.D. Castro (CMUP and Faculdade de Economia, Universidade do Porto.); João Correia-da-Silva (CEMPRE and Faculdade de Economia, Universidade do Porto.)
    Abstract: We generalize the model of Krugman (1991) to allow for asymmetric trade costs between regions and for (asymmetric) trade costs that are internal to the regions. We find that industrial activity, in a region, is enhanced by higher costs of importing and lower costs of exporting (more precisely, by a higher ratio between the two trade costs). This suggests that countries may impose tariffs on imported goods and seek to remove the import tariffs in other countries (unilateral protectionism) in order to foster industrial activity. Industrial activity is also promoted by lower domestic internal trade costs and higher foreign internal trade costs (more precisely, by a lower ratio between the two trade costs).
    Keywords: New Economic Geography, Core-Periphery, Trade costs, Unilateral protectionism.
    JEL: F12 F15 F21 R12 R13
    Date: 2008–08
  2. By: Hayakawa, Kazunobu; Chang, Kuo-I
    Abstract: Abstract: By means of a GTAP based-CGE model, we investigate the impact of the elimination of import tariffs and non-tariff policy barriers (NTPBs) on agricultural trade towards East Asian FTAs. To do that, we first measure the NTPBs by employing a widely-used method derived from the literature on border effects. Next, by adding into the GTAP database our estimates on the NTPBs, which the original GTAP database by its nature does not succeed in incorporating, we compute the impact of the entire elimination of policy barriers (the complete reduction of import tariffs and of NTPBs) on GDP.
    Keywords: Border barrier, Agricultural trade, GTAP, East Asia
    JEL: F13 F14 Q17
    Date: 2008–06
  3. By: Bigsten, Arne (Department of Economics, School of Business, Economics and Law, Göteborg University); Durevall, Dick (Department of Economics, School of Business, Economics and Law, Göteborg University); Munshi, Farzana (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Offshoring has changed the pattern of international competition; labor in specific occupations rather than whole firms and sectors are now facing competition. Accordingly, wages in offshorable occupations are affected in new ways. In this paper we investigate the effects of offshoring of electronically traded services on relative occupational wages in 13 countries in the 1990-2003 period. Our findings show that increased exports of IT-related services lead to higher relative wages in offshorable occupations, whereas increased imports of such service reduce them. There is also some evidence that the impact of offshoring on relative wages is larger the lower the level GDP per capita.
    Keywords: Offshoring; globalization; occupational wages; service trade
    JEL: F15 F16 J31
    Date: 2008–08–05
  4. By: Bouet, Antoine
    Abstract: "Trade liberalization is expected to act positively on world economic development and poverty alleviation, both of which have become high priorities of the international community. This emphasis explains why numerous studies have focused on assessing the expected benefits of trade liberalization on development. The main empirical tools for these assessments have been the use of spatial and nonspatial partial equilibrium models, gravity equations, and single- and multicountry computable general equilibrium models (CGEMs). Multicountry CGEMs, however, have produced strikingly divergent results. As demonstrated by recent studies, the associated increase in world welfare from full trade liberalization ranges from 0.2 to 3.1 percent—results that differ by a factor of 15! The objective of this study is to examine the efficiency of trade modeling in capturing the benefits from trade liberalization. It provides a survey of methodologies utilized to assess the impact of trade liberalization, putting an emphasis on multicountry CGEMs, and examines the extent to which such assessments diverge. The survey also demonstrates the benefits of “complementary analysis,” which utilizes different methodologies to study a specific topic. The report presents global modeling results using a general equilibrium model—the modeling international relations under applied general equilibrium (MIRAGE) model—the results of which are compared to those obtained in recent studies. Using the MIRAGE model,1 full trade liberalization is estimated to increase world real income by US$100 billion (+0.33 percent) after 10 years of implementation. This trade reform would be development-friendly, as it entails a larger growth rate of real income for developing countries and especially for least-developed countries." "Authors' Abstract
    Keywords: Trade modeling, Poverty alleviation, Assessment, trade liberalization, Computable general equilibrium (CGE) modeling, Development, agricultural sector, Agricultural prices, Globalization,
    Date: 2008
  5. By: Antoine Berthou (CES, University Paris 1 and Paris School of Economics, 106-112, Bd de l’Hôpital - 75647 Paris Cedex 13, France.)
    Abstract: The reaction of exports to real exchange rate movements can differ according to the nature of the destination country. We derive and estimate a gravity equation for 20 OECD exporting countries and 52 developed and developing importing countries. We test how trade costs dampen the effect of real exchange rate movements on bilateral exports, and show that the elasticity on the real exchange rate is reduced when (i) the destination country has a low quality of institutions, (ii) this country is more distant, and (iii) the efficiency of customs is low in both the importing and exporting countries. These results are highly consistent with the existence of an hysteresis effect of real exchange rate movements on trade, as suggested by Baldwin and Krugman (1989). JEL Classification: F10, F32, D73.
    Keywords: Trade, Exchange Rate Movements, Institutions.
    Date: 2008–07
  6. By: Matthew Adler (Peterson Institute for International Economics); Gary Clyde Hufbauer (Peterson Institute for International Economics)
    Abstract: Over the last three decades the global economy has expanded in a remarkable fashion. While nominal world GDP has increased four times, world bilateral trade flows have grown more than six-fold, and the stock of foreign direct investment (FDI) has grown by roughly 20 times since 1980. The sources of global trade and investment growth are well known—general economic expansion, policy liberalization, and better communications and technology—but the impact of each source is unclear. In this paper we attempt to uncover the contribution of policy liberalization to the rising ratios of US inward and outward FDI stocks to GDP over the last three decades. The role of policy liberalization in fostering FDI expansion since the 1980s is murky. Policies related to FDI have undoubtedly been liberalized since the 1980s, but the changes are not easily quantified, making an assessment of their impact on FDI difficult. To get around this obstacle, we rely on stylized facts about US inward and outward FDI stocks and an unorthodox calculation method to approximate the role of policy liberalization on FDI growth.
    Keywords: Foreign direct investment, Policy liberalization, International economic integration
    JEL: F13 F21 F23 F29
    Date: 2008–08
  7. By: Roberto A. De Santis (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Frank Stähler (Corresponding author: Department of Economics, University of Otago, PO Box 56, Dunedin, New Zealand.)
    Abstract: This paper studies the effect of foreign direct investment (FDI) on environmental policy stringency in a two-country model with trade costs, where FDI could be unilateral and bilateral and both governments address local pollution through environmental taxes. We show that FDI does not give rise to ecological dumping because the host country has an incentive to shift rents away from the source country towards the host country. Environmental policy strategies and welfare effects are studied under the assumption that parameter values support FDI to be profitable. JEL Classification: F12, F18, F23.
    Keywords: Foreign direct investment, environmental taxes, multinational enterprises, plant location.
    Date: 2008–07
  8. By: Jean-Pierre Cling (DIAL); Mohamed Ali Marouani (Université Paris1-Sorbonne/IEDES, DIAL et ERF); Mireille Razafindrakoto (DIAL, IRD, Paris); Anne-Sophie Robilliard (DIAL, IRD, Paris); François Roubaud (DIAL, IRD, Paris)
    Abstract: (english) The strong growth of the Vietnamese economy over the last two decades has brought about sweeping economic and social changes. In particular, there has been a sharp downturn in poverty along with an upturn in social inequalities (albeit not as sharp as in China). This makes the question of the distributional impact of the country’s WTO accession (January 2007) a particularly keen one. The first simulations made using our micro-simulation model point to mainly four types of redistributive effects induced by WTO membership: job gains (especially industrial jobs), growth in real wages, reduction in gender inequalities, and increase in inequalities between rural and urban areas (but slight drop in overall inequalities). Our findings demonstrate the importance of flanking measures to accompany WTO accession and making the most the opportunities that arise, especially in the area of training, domestic migration, regional policies and assistance to wage earners affected by restructuring. _________________________________ (français) La forte croissance de l’économie vietnamienne au cours des deux dernières décennies s’est accompagnée de profondes transformations économiques et sociales. En particulier, on a observé une forte réduction de la pauvreté, accompagnée d’une progression des inégalités sociales (quoique moins accentuée qu’en Chine). Dans ce contexte, la question de l’impact distributif de l’adhésion à l’OMC intervenue en janvier 2007 se pose avec acuité. Les premières simulations effectuées à l’aide de notre modèle de micro-simulation comptable indiquent que l’adhésion à l’OMC aura principalement quatre types d’effets redistributifs : gains d’emplois (en particulier industriels) ; croissance des salaires réels ; réduction des inégalités de genre ; progression des inégalités entre zones rurales/urbaines (mais tassement des inégalités globales). Nos résultats montrent l’importance de prendre des mesures pour accompagner l’entrée à l’OMC et saisir les opportunités offertes, en particulier dans le domaine de la formation, des migrations internes, des politiques régionales et de l’aide aux salariés touchés par les restructurations.
    Keywords: International Trade; WTO; Labour; Inequalities; Vietnam, Commerce international; OMC; Emploi; Inégalités; Vietnam.
    JEL: F16
    Date: 2008–08
  9. By: Faruk Aydin; Hulya Saygili; Mesut Saygili
    Date: 2007

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