nep-int New Economics Papers
on International Trade
Issue of 2009‒04‒18
seven papers chosen by
Alessia A. Amighini
University Amedeo Avogadro

  1. Putting the "New" into New Trade Theory: Paul Krugman's Nobel Memorial Prize in Economics By Peter Neary
  2. Regional Trade Integration and Multinational Firm Strategies By Pol Antràs; C. Fritz Foley
  3. Extensive Margins in Agriculture By Pete Liapis
  4. Human Capital and Wages in Exporting Firms By Munch, Jakob Roland; Rose Skaksen, Jan
  5. Globalisation, concentration and footloose firms: in search of the main cause of the declining labour share By Damiaan Persyn; John Hutchinson
  6. The Olympic effect By Andrew K. Rose; Mark M. Spiegel
  7. General Purpose Technologies and their Implications for International Trade By Petsas, Iordanis

  1. By: Peter Neary
    Abstract: This paper reviews the scientific contributions of Paul Krugman to the study of international trade, on the occasion of his receipt of the 2008 Nobel Memorial Prize in Economics. A simplified exposition is presented of some of his principal findings, including: the effects of trade on firm scale and product diversity in a general model of monopolistic competition; the integration of monopolistic competition with factor endowments theory; the implications of transport costs, including home-market effects and the possibility of agglomeration in models of economic geography; and the positive and normative consequences of oligopolistic trade.
    Keywords: Economic geography, Imperfect competition, Intra-industry trade, Monopolistic competition, Oligopoly and trade, Product differentiation
    JEL: F12
    Date: 2009
  2. By: Pol Antràs; C. Fritz Foley
    Abstract: This paper analyzes the effects of the formation of a regional trade agreement on the level and nature of multinational firm activity. We examine aggregate data that captures the response of U.S. multinational firms to the formation of the ASEAN free trade agreement. Observed patterns guide the development of a model in which heterogeneous firms from a source country decide how to serve two foreign markets. Following a reduction in tariffs on trade between the two foreign countries, the model predicts growth in the number of source-country firms engaging in foreign direct investment, growth in the size of affiliates that are active in reforming countries both before and after the tariff reduction, and an increase in the extent to which the sales of affiliates in reforming countries are directed towards other reforming countries. Analysis of firm-level responses to the creation of the ASEAN free trade agreement yields results that are consistent with these predictions.
    JEL: F13 F21 F23
    Date: 2009–04
  3. By: Pete Liapis
    Abstract: This paper examines whether the growth in agricultural trade of 69 countries between 1996 and 2006 has taken place at the intensive or the extensive margin. The paper addresses the questions: have agricultural exports during this period expanded more through the intensive margin (more exports of established goods to traditional partners) or through the extensive margin (new trade flows in new products and/or to new partners)? At the intensive margin, do richer countries export greater volumes, or do they receive higher prices for their goods? At the extensive margin, are new trade flows the result of an expanded variety of products or the result of exporting established products to more destinations?
    JEL: C25 F14 F19 Q17
    Date: 2009–04
  4. By: Munch, Jakob Roland (Department of Economics, Copenhagen Business School); Rose Skaksen, Jan (Department of Economics, Copenhagen Business School)
    Abstract: This paper studies the link between a firms education level, export performance and wages of its workers. We argue that firms may escape intence competition in international markets by using high skilled workers to differentiate their products. This story is consistent with our empirical results. Osing a very rich matched worker-firm longitudinal dataset we find that firms with high export intensities pay higher wages. However, an interaction term between export intensity and skill intensity has a positive impact on wages and it absorbs the direct effect of the export intensity. That is, we find an export wage premium, but it accrues to workers in firms with high skill intensities. Keywords: Exports, Wages, Human Capital, Rent Sharing, Matched Worker-Firm Data JEL Classification: J30, F10, I20
    Keywords: na
    JEL: G10
    Date: 2009–04–07
  5. By: Damiaan Persyn; John Hutchinson
    Abstract: Over the last two decades the share of national income which accrues to labour has followed a marked downward trend across a host of industrialised countries. This paper attempts to assess the importance of several potential causes of this phenomenon. We investigate compositional effects, the effect of declining trade costs, changes in the market structure (concentration) and the effect of low-wage competition between countries. Overall, the findings suggest that lower trade costs and factors related to economic integration such as industry concentration, the market power of firms and increased international low-wage competition indeed affect the labour share. However, their effect has been quite limited when compared to changes in the sectoral composition, the effects of technological change, cyclical factors and changes in the prices of intermediary goods.
    Keywords: factor shares, globalisation
    JEL: J30 E25
    Date: 2009
  6. By: Andrew K. Rose; Mark M. Spiegel
    Abstract: Economists are skeptical about the economic benefits of hosting "mega-events" such as the Olympic Games or the World Cup, since such activities have considerable cost and seem to yield few tangible benefits. These doubts are rarely shared by policymakers and the population, who are typically quite enthusiastic about such spectacles. In this paper, we reconcile these positions by examining the economic impact of hosting mega-events like the Olympics; we focus on trade. Using a variety of trade models, we show that hosting a mega-event like the Olympics has a positive impact on national exports. This effect is statistically robust, permanent, and large; trade is around 30% higher for countries that have hosted the Olympics. Interestingly however, we also find that unsuccessful bids to host the Olympics have a similar positive impact on exports. We conclude that the Olympic effect on trade is attributable to the signal a country sends when bidding to host the games, rather than the act of actually holding a mega-event. We develop a political economy model that formalizes this idea, and derives the conditions under which a signal like this is used by countries wishing to liberalize.
    Keywords: Trade ; Exports ; Economic development
    Date: 2009
  7. By: Petsas, Iordanis
    Abstract: General purpose technologies (GPTs) are drastic innovations, such as electrification, the transistor, and the Internet, that are characterized by the pervasiveness in use, innovational complementarities, and technological dynamism. The model develops a two-country (Home and Foreign) dynamic general equilibrium framework and incorporates general purpose technology diffusion within Home that exhibits endogenous Schumpeterian growth. The model studies the effects of the diffusion of the general purpose technology on the pattern of trade and Home’s relative wage. Based on specific assumptions, the adoption of a GPT by a particular industry generates an increase in the productivity of manufacturing workers at Home. By assumption, the diffusion of a GPT across industries is governed by S-curve dynamics, and the diffusion of the GPT within an industry at Home is considered exogenous. The model analyzes the long-run and transitional dynamic effects of a new GPT on the pattern of trade and relative wage between the two countries.
    Keywords: General purpose technologies; Schumpeterian growth; comparative advantage; scale effects; R&D races.
    JEL: L2 F10 O3 O4 L1
    Date: 2009–03–15

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