nep-int New Economics Papers
on International Trade
Issue of 2008‒09‒13
thirteen papers chosen by
Alessia A. Amighini
University Amedeo Avogadro

  1. Exporting to Insecure Markets: a Firm-Level Analysis By Matthieu Crozet; Pamina Koenig; Vincent Rebeyrol
  2. Quality competition versus price competition goods: An empirical classification By Richard E. Baldwin; Tadashi Ito
  3. Trade diversion under selective preferential market access By Borchert, Ingo
  4. The anatomy of China's export growth By Amiti, Mary; Freund, Caroline
  5. Trade facilitation in ASEAN member countries : measuring progress and assessing priorities By Shepherd , Ben; Wilson, John S.
  6. Trade and investment linkages and coordination in Nepal: Impact on productivity and exports and business perceptions By Dilli Raj Khanal; Prakash Kumar Shrestha
  7. Economic partnership agreements and the export competitiveness of Africa By Brenton, Paul; Hoppe, Mombert; Newfarmer, Richard
  8. The Doha development agenda : what's on the table? By Martin, Will; Mattoo, Aaditya
  9. Safeguards and antidumping in Latin American trade liberalization By Finger, J. Michael; Nogues, Julio J.
  10. International Trade Price Indices By Guillaume Gaulier; Julien Martin; Isabelle Mejean; Soledad Zignago
  11. Border Effects of Brazilian States By Marie Daumal; Soledad Zignago
  12. Vertical specialisation in Europe: Evidence from the import content of exports By Emanuele Breda; Rita Cappariello; Roberta Zizza
  13. Imports-Exports Demand Functions and Balance of Payments Stability in Nigeria: A Co-integration and Error Correction Modeling By Shehu Usman Rano, Aliyu

  1. By: Matthieu Crozet; Pamina Koenig; Vincent Rebeyrol
    Abstract: This paper proposes an original approach to investigate the influence of insecurity and institutional quality on international trade. We emphasize that insecurity is hardly comparable with other trade barriers such as tariffs because it does not affect all firms similarly. We develop a monopolistic competition trade model with insecurity as a random additional sunk cost for exporting firms. A higher level of insecurity may dissuade large firms to export, while some smaller ones may be able to enter the export market. Hence, insecurity disrupts firms’ selection into export markets, and this has particular effects on trade margins. Two discriminating predictions are derived from the model and confronted to the data. Using individual French firms exports to 100 destination countries, we find clear evidence corroborating our theoretical predictions.
    Keywords: Insecurity; institutions; international trade; firm heterogeneity; trade margins
    JEL: F12 D8 K4
    Date: 2008–09
  2. By: Richard E. Baldwin; Tadashi Ito
    Abstract: Based on the recent trade models of the Heterogeneous Firms Trade (HFT) model and the Quality Heterogeneous Firms Trade (QHFT) model, we classify export goods (at the HS 6-digit level of disaggregation) by quality and price competition. We find a high proportions of quality-competition goods for the major EU countries and lower proportions for Canada, Australia and China. However, the overlap of these quality-competition goods is not large, which suggests that characteristics of export goods are substantially different across countries at the same HS 6-digit code.
    JEL: F14
    Date: 2008–09
  3. By: Borchert, Ingo
    Abstract: Through its diverse trade preference schemes, the European Union provides different groups of developing countries with different degrees of market access. This paper is the first to demonstrate empirically that such staggered market access induces sizable trade diversion to the detriment of relatively less preferred beneficiary countries. In particular, preferences granted to African, Caribbean and Pacific economies are shown to impair the export performance of seven developing countries whose products only qualify for basic preferences under the Generalized System of Preferences. Exports to the European Union decline by about 30 percent if the African, Caribbean and Pacific tariff falls by 10 percentage points. In terms of forgone trade volume, losses for these relatively disadvantaged countries amount on average to 9 percent of their total trade with the European Union, depending on the country and its main exports. These intra-developing country distortions are driven by highly substitutable, often labor-intensive commodities.
    Keywords: Free Trade,Trade Policy,Trade Law,Debt Markets,International Trade and Trade Rules
    Date: 2008–09–01
  4. By: Amiti, Mary; Freund, Caroline
    Abstract: Decomposing China's real export growth, of over 500 percent since 1992, reveals a number of interesting findings. First, China's export structure changed dramatically, with growing export shares in electronics and machinery and a decline in agriculture and apparel. Second, despite the shift into these more sophisticated products, the skill content of China's manufacturing exports remained unchanged, once processing trade is excluded. Third, export growth was accompanied by increasing specialization and was mainly accounted for by high export growth of existing products (the intensive margin) rather than in new varieties (the extensive margin). Fourth, consistent with an increased world supply of existing varieties, China's export prices to the United States fell by an average of 1.5 percent per year between 1997 and 2005, while export prices of these products from the rest of the world to the United States increased by 0.4 percent annually over the same period.
    Keywords: Economic Theory&Research,Free Trade,Trade Policy,Emerging Markets,Debt Markets
    Date: 2008–05–01
  5. By: Shepherd , Ben; Wilson, John S.
    Abstract: This paper reviews recent progress and indicators of trade facilitation in member countries of the Association of Southeast Asian Nations. The findings show that import and export costs vary considerably in the member countries, from very low to moderately high levels. Tariff and non-tariff barriers are generally low to moderate. Infrastructure quality and services sector competitiveness range from fair to excellent. Using a standard gravity model, the authors find that trade flows in Southeast Asia are particularly sensitive to transport infrastructure and information and communications technology. The results suggest that the region stands to make significant economic gains from trade facilitation reform. These gains could be considerably larger than those from comparable tariff reforms. Estimates suggest that improving port facilities in the region, for example, could expand trade by up to 7.5 percent or $22 billion. The authors interpret this as an indication of the vital role that transport infrastructure can play in enhancing intra-regional trade.
    Keywords: Transport Economics Policy&Planning,Free Trade,Economic Theory&Research,Trade Policy,Common Carriers Industry
    Date: 2008–05–01
  6. By: Dilli Raj Khanal; Prakash Kumar Shrestha (*Institute for Policy Research and Development, Nepal)
    Abstract: This research paper intends to analyse: (a) the impacts of ASEAN trade liberalization on the macroeconomy variables – gross domestic product (GDP), Terms of Trade (ToT), balance of trade, inflation and real wage – and agricultural industries (output, exports and imports) in the ASEAN 6 countries (Indonesia, Malaysia, the Philippines, Thailand, Singapore, and Viet Nam); and (b) the impact of trade liberalization on income distribution in Indonesia. A multi-country and multi-commodity computable general equilibrium (CGE) GTAP model has been used as the main tool of analysis.
    Keywords: Trade and Investment, Nepal, Impact on productivity
    JEL: F1
    Date: 2008–02
  7. By: Brenton, Paul; Hoppe, Mombert; Newfarmer, Richard
    Abstract: Trade can be a key driver of growth for African countries, as it has been for those countries, particularly in East Asia, that have experienced high and sustained rates of growth. Economic partnership agreements with the European Union could be instrumental in a competitiveness framework, but to do so they would have to be designed carefully in a way that supports integration into the global economy and is consistent with national development strategies. Interim agreements have focused on reciprocal tariff removal and less restrictive rules of origin. To be fully effective, economic partnership agreements will have to address constraints to regional integration, including both tariff and non-tariff barriers; improve trade facilitation; and define appropriate most favored nation services liberalization. At the same time, African countries will need to reduce external tariff peak barriers on a most favored nation basis to ensure that when preferences for the European Union are implemented after transitional periods, they do not lead to substantial losses from trade diversion. This entails an ambitious agenda of policy reform that must be backed up by development assistance in the form of"aid for trade."
    Keywords: Economic Theory&Research,Free Trade,Emerging Markets,Trade Policy,Trade Law
    Date: 2008–05–01
  8. By: Martin, Will; Mattoo, Aaditya
    Abstract: The outlines of a potential agreement, emerging after seven years of negotiations, imply that Doha offers three key benefits: reduced uncertainty of market access in goods and services; improved market access in agriculture and manufacturing; and the mobilization of resources to deal with the trade problems of least developed countries. WTO Members have offered to make large reductions in legally bound levels of protection in goods and services. The reductions in currently applied levels of protection are smaller. For the least developed countries, the proposed"duty free and quota free"access will only add significantly to their access under existing preferential access arrangements if industrial and developing country members include vital tariff lines. The initiatives on trade facilitation and aid for trade can play a valuable catalytic role in promoting reform and mobilizing assistance, but substantial effort is still needed to translate notional benefits into actual gain.
    Keywords: Free Trade,Agribusiness,Trade Policy,International Trade and Trade Rules,Debt Markets
    Date: 2008–07–01
  9. By: Finger, J. Michael; Nogues, Julio J.
    Abstract: The binding of tariff rates and adoption of the General Agreement on Tariffs and Trade/World Trade Organization-sanctioned safeguards and antidumping mechanisms provided the basis to remove a multitude of instruments of protection in the Latin American countries discussed in this paper. At the same time, they helped in maintaining centralized control over the management of pressures for protection in agencies with economy-wide accountabilities. The World Trade Organization's procedural requirements (for example, to follow published criteria, or participation by interested parties) helped leaders to change the culture of decision-making from one based on relationships to one based on objective criteria. However, when Latin American governments attempted to introduce economic sense - such as base price comparisons on an economically sensible measure of long-run international price rather than the more generous constructed cost concept that is the core of WTO rules - protection-seekers used the rules against them. They pointed out that World Trade Organization rules do not require the use of such criteria, nor do procedures in leading users (industrial countries) include such criteria. In sum, the administrative content of the rules supported liberalization; the economic content did not.
    Keywords: Economic Theory&Research,Free Trade,Trade Law,Emerging Markets,Trade Policy
    Date: 2008–07–01
  10. By: Guillaume Gaulier; Julien Martin; Isabelle Mejean; Soledad Zignago
    Abstract: Export and import price indices are useful instruments in international economics. We document here TradePrices, our database of aggregated and sectoral trade price indices for all countries, computed using unit values given by BACI, the CEPII’s database of international trade at the product-level covering the period 1995-2004. Its rich country dimension allow an international comparison of prices evolutions. We compute “common” Laspeyres and Paasche indices but also “superlative” Fisher and Tornqvist indices, in both chained and fixed-base forms (chained Laspeyres and Paasche are also provided in their geometric form). In a first part, we discuss the characteristics of these different aggregation methods. In particular, we highlight the links between statistical methods and economical assumptions about implicit elasticity of substitution between goods. In a second step we describe the data. An exhaustive sensitivity analysis is done in order to determine the appropriate way to deal with technical difficulties, such as the treatment of measurement errors in bilateral unit values. Finally, this paper provides some stylized facts illustrating the necessity to provide a trade price database allowing international comparison and the usefulness of both aggregated and sectoral trade price indices to study international economics. TradeP rices database and SAS programs are freely available online, offering to users the possibility to choose the most accurate index for each particular purpose.
    Keywords: International trade; price indices
    JEL: F12 F15
    Date: 2008–06
  11. By: Marie Daumal; Soledad Zignago
    Abstract: We estimate the degree of trade integration among Brazilian states and calculate the magnitude of the Brazilian states' engagement in international trade in the years 1991, 1997, 1998 and 1999 using the methodology of border effects. We show that the Brazilian market is rather highly fragmented but less than the Chinese market. Brazilian sub-national borders reduced interstate trade by a factor of 23 in 1991 and a factor of 13 in 1999, indicating an ongoing process of domestic integration. International trade integration of Brazilian states increased over the period 1991-1999 in conjunction with the strategy of outward orientation. Border effects differ greatly among Brazilian states: internal and international trade integration is low for Northern Regions (with the exception of Amazonas State) and high for Southern regions, the most domestically integrated states being also those most engaged in international trade.
    Keywords: Border effects; Brazil; international trade; domestic integration
    JEL: F14 F15
    Date: 2008–06
  12. By: Emanuele Breda (Bank of Italy, Economics and International Relations.); Rita Cappariello (Bank of Italy, Economics and International Relations.); Roberta Zizza (Bank of Italy, Economics and International Relations.)
    Abstract: We use input-output tables to estimate the import content (IC) of exports for several European countries, interpreting this as a measure of internationalisation. Between 1995 and 2000 the IC grew everywhere but in France; the transport equipment sector emerged as the most internationalised one. The change we detect for a set of EMU countries is remarkable when compared with previous estimates over the 20-year period between 1970 and 1990. Italy and Germany showed very different patterns, although both started from a very low level of IC. Italy experienced the weakest growth and Germany the most sizeable rise. We argue that Italian firms might have felt less pressured to transform their organisation due to the delayed effects of the 1992 and 1995 Lira crises.
    Keywords: external trade, outsourcing, import content, input-output analysis
    JEL: F14 C67
    Date: 2008–08
  13. By: Shehu Usman Rano, Aliyu
    Abstract: Abstract This paper assesses the determinants of import and export demand functions. The object is to empirically measure the relative strengths and weaknesses of the determinants import and export, and to examine, using the Marshall-Lerner hypothesis, the condition under which balance of payments adjustment works in the Nigerian economy. The analytical framework employed is an econometric methodology, which encompasses wide a range of tests for stationarity, cointegration and specification of an error correction model. Using data obtained from the Nigerian economy covering the period of 1970 to 2004, result of over-parameterized error correction model show significant causational relationships in the two models. Specifically, from the values of the coefficient of the current and past (lag) level of exchange rate in the two models, the paper knots balance of payments adjustment to regime of exchange rate stability in Nigeria. The paper, therefore, recommends exchange rate adjustment as potent instrument of achieving balance of payments stability in Nigeria.
    Keywords: Keywords: Imports; exports; stationarity; cointegration; Balance of Payments
    JEL: F10 F14
    Date: 2007–03–23

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