nep-int New Economics Papers
on International Trade
Issue of 2009‒04‒05
eleven papers chosen by
Alessia A. Amighini
University Amedeo Avogadro

  1. Trade, Institutions and Export Specialization By Karen Crabbé; Michel Beine
  2. The Causes and Effects of International Migrations: Evidence from OECD Countries 1980-2005 By Francesc Ortega; Giovanni Peri
  3. The Micro Dynamic of Exporting-Evidence from French Firms By Ines Buono; Harald Fadinger; Stefan Berger
  4. Sustained Comparative Advantage and Semi-Endogenous Growth By Petsas, Iordanis
  5. Technological Diffusion and Dynamic Gains from Trade By Eleonora Cavallaro; Marcella Mulino
  6. The Law of One Price Without the Border: The Role of Distance Versus Sticky Prices By Mario J. Crucini; Mototsugu Shintani; Takayuki Tsuruga
  7. Sustained Comparative Advantage in a Model of Schumpeterian Growth without Scale Effects By Petsas, Iordanis
  8. The Limits to Integration By Michele Fratianni; Francesco Marchionne
  9. The Trade-Growth Nexus in the Developing Countries: a Quantile Regression Approach By Gilles Dufrenot; Valerie Mignon; Charalambos Tsangarides
  10. Temporary Trade By Balázs Muraközy; Gabor Bekes
  11. Determinants of Export Behaviour of German Business Services Companies By Alexander Eickelpasch; Alexander Vogel

  1. By: Karen Crabbé; Michel Beine
    Abstract: This paper studies whether trade integration between the EU15 and Central Europe has led to more export specialization in Central Europe. Moreover, we analyze the impact of institutional reforms in Central Europe on export specialization. The empirical analysis is set up for thirteen Central European countries over the period 1989-2000. Our results indicate that a reduction in tariffs between EU15 and Central Europe led to increased export specialization in Central Europe. In addition to trade integration, we show that institutional reforms and in particular enterprise reforms contributed to export specialization.
    Keywords: trade integration, tariffs, Herfindahl index, exports, institutions
    JEL: F14 F15 R12
    Date: 2009
  2. By: Francesc Ortega; Giovanni Peri
    Abstract: This paper contains three important contributions to the literature on international migrations. First, it compiles a new dataset on migration flows (and stocks) and on immigration laws for 14 OECD destination countries and 74 sending countries for each year over the period 1980-2005. Second, it extends the empirical model of migration choice across multiple destinations, developed by Grogger and Hanson (2008), by allowing for unobserved individual heterogeneity between migrants and non-migrants. We use the model to derive a pseudo-gravity empirical specification of the economic and legal determinants of international migration. Our estimates clearly show that bilateral migration flows are increasing in the income per capita gap between origin and destination. We also find that bilateral flows decrease when destination countries adopt stricter immigration laws. Third, we estimate the impact of immigration flows on employment, investment and productivity in the receiving OECD countries using as instruments the "push" factors in the gravity equation. Specifically, we use the characteristics of the sending countries that affect migration and their changes over time, interacted with bilateral migration costs. We find that immigration increases employment, with no evidence of crowding-out of natives, and that investment responds rapidly and vigorously. The inflow of immigrants does not seem to reduce capital intensity nor total factor productivity in the short-run or in the long run. These results imply that immigration increases the total GDP of the receiving country in the short-run one-for-one, without affecting average wages and average income per person.
    JEL: E25 F22 J61
    Date: 2009–04
  3. By: Ines Buono; Harald Fadinger; Stefan Berger
    Abstract: This paper describes the dynamics of rms' exports to dierent countries. Using a panel of almost 19,000 French exporters, we dene an export-relation as an observed positive export ow from a French rm to a destination. We establish the following facts: 1. There is a great deal of dynamics in rms' export relations that washes out at a more aggregate level; 2. Export values shipped by individual rms to specic 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 rm level ; 3. Export ows 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 rms 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 rm-country specic 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 ndings could be related to dierent kinds of heterogeneous rm models and to a relation-specic trade model, arguing that the second one seems to t more naturally all the documented facts.
    JEL: F14 F12
    Date: 2008–12
  4. By: Petsas, Iordanis
    Abstract: This paper constructs a two-country (Home and Foreign) general equilibrium model of Schumpeterian growth without scale effects. The scale effects property is removed by introducing a distinct specification in the knowledge production function which generates semi-endogenous growth. In this model of semi-endogenous growth, an increase in the rate of population growth rate raises Home’s relative wage and lowers its range of goods exported to Foreign. An increase in the size of innovations increases Home’s relative wage but with an ambiguous effect on its comparative advantage. The model generates a unique steady-state equilibrium in which there is complete specialization in both goods and R&D production within each country.
    Keywords: Comparative advantage; Trade; Schumpeterian growth; Scale effects; R&D races.
    JEL: F0 O30 O10 O40
    Date: 2009–01
  5. By: Eleonora Cavallaro; Marcella Mulino
    Abstract: We consider a technologically backward country and analyse the implications on competitiveness and long-run growth of the quality content of traded goods. We build an endogenous growth model where quality improvements stem from research activity taking place in the R&D sector, and where the relative quality content of goods matter for export and import demand functions. We show that the possibility of an optimal growth with a balanced current account and no adverse terms-of-trade effects is closely related to the evolution of the country’s technological distance with respect to the trade partner: with an unfavourable quality-dynamics the country cannot engage successfully in “non-price” competition. Thus, long-run growth is coupled with an adverse export to import ratio, and a balanced trade requires a continuous offsetting fall in relative prices, either through devaluations or wage deflations. We then allow for international knowledge spillovers that increase the productivity of labour resources devoted to research in a way which is proportional to the technological distance between the countries. We show that the greater the country’s ability to absorb foreign knowledge and improve upon foreign technologies, the greater the gains in competitiveness, and the benefits to long-run growth. A numerical simulation confirms our findings.
    Keywords: Vertical innovation; Technological change and catching up; Economic growth of open economies
    JEL: O33 F43
    Date: 2009–02
  6. By: Mario J. Crucini; Mototsugu Shintani; Takayuki Tsuruga
    Abstract: We examine the role of nominal price rigidities in explaining the deviations from the Law of One Price (LOP) across cities in Japan. Focusing on intra-national relative prices isolates the border effect and thus enables us to extract the pure effect of sticky prices. A two-city model with nominal rigidities and transportation costs predicts that the variation of LOP deviations is lower for goods with less frequent price adjustment after controlling for the distance separating the cities. Using retail price data for individual goods and services collected in Japanese cities, we find strong evidence supporting this prediction. Adapting the Engel and Rogers (1996) regression framework to our theoretical setting, we quantify the separate roles of nominal rigidities and trade costs (proxied by distance) in generating LOP variability. Our estimates suggest that the distance equivalent of nominal rigidities can be as large as the `width' of the border typically found in the literature on international LOP deviations. The findings point to both the utility of the regression framework in identifying qualitative effects (i.e., sign of a coefficient) and the challenges interpreting their quantitative implications.
    JEL: D4 F40 F41
    Date: 2009–04
  7. By: Petsas, Iordanis
    Abstract: This paper constructs a two-country (Home and Foreign) general equilibrium model of Schumpeterian growth without scale effects. The scale effects property is removed by introducing two distinct specifications in the knowledge production function: the permanent effect on growth (PEG) specification, which allows policy effects on long-run growth; and the temporary effects on growth (TEG) specification, which generates semi-endogenous long-run economic growth. In the present model, the direction of the effect of the size of innovations on the pattern of trade and Home’s relative wage depends on the way in which the scale effects property is removed. Under the PEG specification, changes in the size of innovations increase Home’s comparative advantage and its relative wage, while under the TEG specification, an increase in the size of innovations increases Home’s relative wage but with an ambiguous effect on its comparative advantage.
    Keywords: Comparative advantage; Trade; Schumpeterian growth; Scale effects; R&D races.
    JEL: F10 O30 O4
    Date: 2008–01–01
  8. By: Michele Fratianni (Indiana University, Kelly School of Business, Bloomington US, Univ. Plitecnica Marche - Dept of Economics, MoFiR); Francesco Marchionne (Universit… Politecnica delle Marche)
    Abstract: Distance and national borders are a big hurdle to the expansion of cross-border trade. Further constraints on integration come from heterogeneity in culture and institutions and from the forces of geography, defined as continents and oceans. Of the three sets of factors, the forces of geography are the most potent on integration. Continents act as 'natural' integrators and oceans as common water border. Countries in the same continent trade a quarter more than those located in different continents; and countries sharing the same ocean trade a half more than those that do not have a common water border. A certain degree of substitution exists between the effects on trade of continents and regional trade agreements (RTAs). This substitution is most evident in the presence of political blocs like the Soviet Union. With an active political bloc, the continent loses some of its integration property, leaving more room for the sub-continental RTA to enhance trade. When the political bloc withers away, on the other hand, the continent rises as an integration force relative to the RTA.
    Keywords: continental blocs, culture, geography, inrtegration, institutions, regional trade agreements
    JEL: F13 F15 F18
    Date: 2009–03
  9. By: Gilles Dufrenot; Valerie Mignon; Charalambos Tsangarides
    Abstract: This paper applies quantile regression techniques to investigate how the impact of trade openness on the growth rate of per capita income varies with the conditional distribution of growth. Using formal robustness analyses, we first identify robust variables affecting economic growth (investment, government balance, terms of trade, inflation, and population growth) which we then use as controls in the quantile regression estimations. Our findings suggest a heterogeneous trade-growth nexus: for both the long-run and the short-run, the effect of openness on growth is higher in countries with low growth rates compared to those of high growth rates. Our results cast doubt on earlier literature that finds little effect of openness on growth, and suggest that the implications of parameter heterogeneity in the openness-growth relationship need to be considered before prescribing policies.
    Keywords: Quantile regression; growth-trade nexus; developing countries
    JEL: C23 F13 O11
    Date: 2009–03
  10. By: Balázs Muraközy (Institute of Economics - Hungarian Academy of Sciences); Gabor Bekes (Institute of Economics - Hungarian Academy of Sciences)
    Abstract: Most trade theories assume bilateral trade relationships are forged on the basis of some comparative advantages, scale considerations, market structure or some productivity advantage of firms. Since these factors change slowly, bilateral trade relationships should be stable. However, we argue that over half of the non-zero bilateral trade relationships are of temporary nature: they last for a short period only or appear and disappear in an erratic fashion. With a very detailed country-product transaction level dataset on Hungarian exports, evidence is provided for the importance of temporary trade relationships at the bilateral level. A large share of bilateral trade flows are driven by just a few firms, and results indicate that temporary trade is important for all kinds of firms and products. In terms of empirical applications, we show that gravity equations suggest important differences between the determinants of permanent and temporary trade; and the extensive and intensive margins of trade can also be very sensitive to changes in temporary trade.
    Keywords: international trade, duration of trade, firm-product level data
    JEL: F12 F14 D21 D24
    Date: 2009–03
  11. By: Alexander Eickelpasch (Deutsches Institut für Wirtschaftsforschung, Department of Innovation, Manufacturing, Service); Alexander Vogel (Institute of Economics, University of Lüneburg)
    Abstract: The determinants of export behaviour at firm level have been widely investigated for manufacturing companies. By contrast, what has remained largely neglected is a detailed investigation in the service sector. As aggregate statistics show, international trade in services has grown significantly over the last few years. However, it is unclear why some companies export and others do not. This paper presents some initial results about the German business services sector at firm level. Using a unique panel dataset of enterprises from the business services sector (transport, storage and communication, real estate, renting and business activities) for the years 2003 to 2005, we analysed the impact of several firm-specific characteristics such as size, productivity, human capital, experience on the national market in Germany, etc. on the firms’ export performance. Further, we used the pooled fractional probit estimator, recently introduced by Papke & Wooldridge, an approach that considers both the special nature of the export intensity variable and in addition unobserved time-invariant characteristics. When there is no control for fixed enterprise effects the overall results are in line with previous studies. When there is a control for unobserved heterogeneity, the positive effects of productivity and human capital disappear, indicating that these variables are not per se positively related to export performance, but rather to time-constant characteristics that are unobserved. Size and product diversification still have a positive and significant effect.
    Keywords: Business services sector, export behaviour, firm performance
    JEL: F14 F23 L80
    Date: 2009–03

This nep-int issue is ©2009 by Alessia A. Amighini. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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