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on International Trade |
| By: | Arnaud Costinot; Lindsay Oldenski; James E. Rauch |
| Abstract: | What determines the boundary of multinational firms? According to Williamson (1975), a potential rationale for vertical integration is to facilitate adaptation in a world where uncertainty is resolved over time. This paper offers the first empirical analysis of the impact of adaptation on the boundary of multinational firms. To do so, we first develop a ranking of sectors in terms of their "routineness" by merging two sets of data: (i) ratings of occupations by their intensities in "problem solving" from the U.S. Department of Labor's Occupational Information Network; and (ii) U.S. employment shares of occupations by sectors from the Bureau of Labor Statistics Occupational Employment Statistics. Using U.S. Census trade data, we then demonstrate that, in line with adaptation theories of the firm, the share of intrafirm trade tends to be higher in less routine sectors. This result is robust to inclusion of other variables known to influence the U.S. intrafirm import share such as capital intensity, R&D intensity, relationship specificity, intermediation and productivity dispersion. Our most conservative estimate suggests that a one standard deviation decrease in average routineness raises the share of intrafirm imports by 0.26 standard deviations, or an additional 7% of import value that is intrafirm. |
| JEL: | F23 L14 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14668&r=int |
| By: | Andrew B. Bernard; J. Bradford Jensen; Stephen J. Redding; Peter K. Schott |
| Abstract: | Recent research in international trade emphasizes the importance of firms' extensive margins for understanding overall patterns of trade as well as how firms respond to specific events such as trade liberalization. In this paper, we use detailed U.S. trade statistics to provide a broad overview of how the margins of trade contribute to variation in U.S. imports and exports across trading partners, types of trade (i.e., arm's-length versus related-party) and both short and long time horizons. Among other results, we highlight the differential behavior of related-party and arm's-length trade in response to the 1997 Asian financial crisis. |
| JEL: | F1 F23 F43 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14662&r=int |
| By: | Susana Iranzo (Universitat Rovira Virgili); Giovanni Peri (University of California, Davis and NBER) |
| Abstract: | The remarkable increase in trade flows and in migratory flows of highly educated people are two important features of globalization of the last decades. This paper extends a two-country model of inter- and intra-industry trade to a rich environment featuring technological differences, skill differences and the possibility of international labor mobility. The model is used to explain the patterns of trade and migration as countries remove barriers to trade and to labor mobility. We calibrate the model to match the features of the Western and Eastern European members of the EU and analyze first the effects of the trade liberalization which occurred between 1989 and 2004, and then the gains and losses from migration which would occur if barriers to labor mobility are reduced. The lower barriers to migration result in significant migration of skilled workers from Eastern European countries. Interestingly, this would not only benefit the migrants and most Western European workers but, via trade, it would also benefit the workers remaining in Eastern Europe. |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:0905&r=int |
| By: | Buono, Ines; Fadinger, Harald; Berger, Stefan |
| Abstract: | This paper describes the dynamics of firms' exports to different countries. Using a panel of almost 19,000 French exporters, we define an export-relation as an observed positive export flow from a French firm to a destination. We establish the following facts: 1. There is a great deal of dynamics in firms' export relations that washes out at a more aggregate level; 2. Export values shipped by individual firms to specific destinations are very volatile: most of the changes occur within established export relations (intensive margin), with new relations or relations that are terminated (extensive margin)contributing little to adjustments in export value at firm level ; 3. Export flows within a newly-created relation involve very small values, often inferior to 1000 euros; 4. Export-relations are also very volatile. Moreover, from year to year single firms create and destroy relations simultaneously, and countries are simultaneously involved in the formation and termination of relations; 5. Formation or termination of export relations and changes in export values are explained mostly by firm-country specific shocks; 6. The share of relations continued from one year to the next is correlated with country characteristics: it is higher in bigger and closer markets. We discuss how those findings could be related to different kind of heterogeneous firm models and to a relation-specific trade model, arguing that the second one seems to fit more naturally all the documented facts. |
| Keywords: | firm level trade; trade dynamics; state dependence; extensive/intensive margin |
| JEL: | F14 F1 F19 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:12940&r=int |
| By: | Alain N. Kabundi; Francisco Nadal-De Simone |
| Abstract: | Recently, the export performance of France relative to its own past and relative to a major trading partner, Germany, deteriorated. That deterioration seems related to the geographical destination and product composition of trend exports. Faced with an increase in unit labor costs or in its terms of trade, France adjusts relatively less via price and wage changes, and more via employment changes. Given that SMIC convergence resulted in a significant increase in unit labor costs, foreign sector difficulties might be structural. Trade flows relevance and euro area policy constraints highlight the importance of structural reforms that increase markets flexibility. |
| Keywords: | Export competitiveness , Performance indicators , Terms of trade , International trade , Exports , Trade models , Productivity , Euro Area , |
| Date: | 2009–01–12 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:09/2&r=int |
| By: | Yin-Wong Cheung; Menzie D. Chinn; Eiji Fujii |
| Abstract: | We examine whether the Chinese exchange rate is misaligned and how Chinese trade flows respond to the exchange rate and to economic activity. We find, first, that the Chinese currency, the renminbi (RMB), is substantially below the value predicted by estimates based upon a cross-country sample, when using the 2006 vintage of the World Development Indicators. The economic magnitude of the mis-alignment is substantial -- on the order of 50 percent in log terms. However, the misalignment is typically not statistically significant, in the sense of being more than two standard errors away from the conditional mean. However, this finding disappears completely when using the most recent 2008 vintage of data; then the estimated undervaluation is on the order of 10 percent. Second, we find that Chinese multilateral trade flows respond to relative prices -- as represented by a trade weighted exchange rate -- but the relationship is not always precisely estimated. In addition, the direction of the effects is sometimes different from what is expected a priori. For instance, Chinese ordinary imports actually rise in response to a RMB depreciation; however, Chinese exports appear to respond to RMB depreciation in the expected manner, as long as a supply variable is included. In that sense, Chinese trade is not exceptional. Furthermore, Chinese trade with the United States appears to behave in a standard manner -- especially after the expansion in the Chinese manufacturing capital stock is accounted for. Thus, the China-US trade balance should respond to real exchange rate and relative income movements in the anticipated manner. However, in neither the case of multilateral nor bilateral trade flows should one expect quantitatively large effects arising from exchange rate changes. And, of course, these results are not informative with regard to the question of how a change in the RMB/USD exchange rate would affect the overall US trade deficit. Finally, we stress the fact that considerable uncertainty surrounds both our estimates of RMB misalignment and the responsiveness of trade flows to movements in exchange rates and output levels. In particular, the results for trade elasticities are sensitive to econometric specification, accounting for supply effects, and for the inclusion of time trends. |
| JEL: | F3 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14673&r=int |