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on International Trade |
| By: | Nanno Mulder; Rodrigo Paillacar; Soledad Zignago |
| Abstract: | There is increasing empirical evidence that trade specialisation and competition takes place in varieties rather than in products or industries. This paper examines recent changes in the export specialisation of Latin America and the Caribbean (LAC) and their Asian competitors by looking at their vertical specialisation through prices. Three price (or quality) segments are distinguished to compare export performance between the two regions using our BACI database, which provides harmonised bilateral unit values for most countries in the world at the most disaggregated product-level (5,000 products) for the period 1995 to 2004. The technology-content of products is also taken into account. The evidence suggests that LAC is losing out on China which is gaining large market shares, notably in the low-quality segment and low-tech segment. However, LAC has retained its initial overall market share, by slightly upgrading the quality and technology content of its exports. Our estimates of similarities in export structures confirm that varieties exported by the two continents are very different. Moreover, LAC export prices are much higher than those of China, but relatively similar to the ones of other Asian nations. Finally, we analyse the determinants of unit values of Latin American and Asian exports. Econometric tests confirm that the type of global competition differs between the two regions: prices play a bigger role in the case of Asian exports, whereas Latin America competes more on quality in world markets. |
| Keywords: | Export unit values; vertical differentiation; Latin America; Asia |
| JEL: | F1 F4 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:cii:cepidt:2009-09&r=int |
| By: | Carmen Fillat Castejon (Department of Applied Economics and Economic History, University of Zaragoza); Julia Wörz (The Vienna Institute for International Economic Studies, wiiw); Joseph Francois (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | Working with a panel dataset of OECD countries over the decade 1994-2004, we examine linkages between cross-border trade and FDI in the services sectors. We first develop a consistent analytical framework for the application of the gravity model to both services trade and commercial presence (i.e. FDI), using a composite model of delivery that offers testable hypotheses about the roles of different modes of services supply as complements or substitutes. We further link our estimates to policy variables measuring market regulations that may act directly or implicitly as barriers to trade. We find robust evidence of complementary effects in the short run, which is reinforced in the long run by an increased potential for cross-border imports based on previous FDI inflows. A detailed analysis by individual services sectors highlights business, communication and financial services as showing the largest potential for cross-border trade when market regulations are reduced and when commercial presence increases. |
| Keywords: | FDI, imports, services, panel data, substitution and complementary effects |
| JEL: | F10 F14 F21 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:wii:wpaper:50&r=int |
| By: | Gordhan K Saini |
| Abstract: | This paper provides some important indicators of non-tariff measures in Indian textiles and clothing exports. The paper identifies major trading partners and HS codes to study the impact of Non Taiff Measures (NTMs) on Indian exports. F irst, using count measures i.e. frequency and coverage ratios, suggests that more than 60% of export value is affected by the NTMs in USA, EU-25 and Canada at various points in time. Second, it calculates Ad-Valorem Equivalents using price differential methods which are imposed in the SMART model under the partial equilibrium framework to know the trade impact of NTMs. A total trade loss of about billion 2.34 US$ (16.8% of base trade value) is estimated, while the zero tariff gains are roughly billion 1.36 US$ that’s 9.8% of base trade. Also this paper develops the framework for the primary research in the field of Non-Tariff Measures. [IGIDR WP NO 2] |
| Keywords: | "Non-Tariff Barriers; Ad-Valorem Equivalents of Non-Tariff Measures; Technical Measures to Trade; disguised protectionism; Exports; Textile & Clothing Sector |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:1963&r=int |
| By: | Gawande, Kishore; Krishna, Pravin; Olarreaga, Marcelo |
| Abstract: | Competition between opposing lobbies is an important factor in the endogenous determination of trade policy. This paper investigates empirically the consequences of lobbying competition between upstream and downstream producers for trade policy. The theoretical structure underlying the empirical analysis is the well-known Grossman-Helpman model of trade policy determination, modified suitably to account for the cross-sectoral use of inputs in production (itself a quantitatively significant phenomenon with around 50 percent of manufacturing output being used by other sectors rather than in final consumption). Data from more than 40 countries are used in our analysis. Our empirical results validate the predictions of the theoretical model with lobbying competition. Importantly, accounting for lobbying competition also alters substantially estimates of the "welfare-mindedness" of governments in setting trade policy. |
| Keywords: | Interest groups; Intermediate goods; Lobbies; Political Economy; Trade policy |
| JEL: | D72 D78 F12 F13 F14 |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7305&r=int |
| By: | Bayo, Alberto (Universidad Publica de Navarra); Galdon-Sanchez, Jose E. (UC-Santa Cruz); Gil, Ricard (UC-Santa Cruz) |
| Abstract: | In this paper we empirically examine the determinants of changes in the organization of production using detailed information on a data set from a new plant-level survey of 1003 plants covering the full range of manufacturing industries in Spain. In particular, and among many other things, survey respondents were asked how service outsourcing practices had changed in the last three years. The answer to this question is indicative of the changes in the importance of backward integration for each of the plants studied. Using other information provided in the survey, we relate the reported changes in outsourcing to changes in other relevant dimensions as possible determinants of the boundaries of the firm. These dimensions are: plant size, downstream market power, cost of inputs, price and quality of the final good and technological progress. Our findings show that outsourcing increases are strongly positively correlated with increases in market share and in market competition. We also find that outsourcing increases when plants face simultaneous increases in product quality and product prices and that it decreases when plants face simultaneous increases in market share and market competition. Finally, we find that multi-plant and one-plant firms adjust their outsourcing practices differently to outside changes. Since neither TCE nor PRT theories of vertical integration fully explain the patterns found in our data, we close this paper by following Adam Smith's claim that the extent of the market seems to be the only factor consistently limiting the degree of specialization in our setting. |
| Keywords: | outsourcing; vertical integration; competition; manufacturing plants; |
| JEL: | L22 L23 L60 |
| Date: | 2009–03–15 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0783&r=int |
| By: | Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw); Piero Esposito (University of Rome "La Sapienza") |
| Abstract: | In this paper we study the effects of high-tech capital, foreign direct investment flows and outsourcing on demand for labour differentiated by educational attainment levels in the manufacturing industries for two groups of countries over the period 1995-2004. These two groups of countries comprise Western and Eastern European countries respectively which are assumed to be differently affected by the European integration process. Using detailed trade data as a basis for measuring outsourcing we further distinguish the effects of trade and outsourcing on relative wages by different groups of partner countries. This allows to study the effects of 'inward' outsourcing and foreign direct investment flows to Central and Eastern European countries (which became quite important in this time) in the Western European countries and - conversely - to study the effects of 'outward' outsourcing and the increase in inward FDI stocks in the Central and Eastern European countries separately. |
| Keywords: | high-tech capital, outsourcing, foreign direct investment, demand for skills |
| JEL: | F15 F16 C23 |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:wii:wpaper:51&r=int |
| By: | Clinton R. Shiells; Joseph Francois (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | We offer a duality-based methodology for incorporating multi-sector effects of international trade into open economy macroeconomic models, developing the concepts of the dynamic factor price equalization set and the integrated intertemporal equilibrium. Under this approach, the aggregate production function depends on output prices and factor endowment stocks. It preserves all of the structure of a standard GDP function from the trade theory literature. In a two-country version of the model considered below, we examine the properties of the dynamic factor price equalization set. If the global economy is initially outside of this set, the equations of motion will pull the economy back into this set. Inside the dynamic FPE set, factor prices are equalized internationally, and with identical tastes and technology, the economy can be regarded as a fully integrated world equilibrium in a dynamic sense (the integrated intertemporal equilibrium). In this equilibrium, all of the standard properties of a closed economy one-sector neoclassical growth model hold, ruling out cycles and chaos, and allowing us to characterize the evolution of international inequality and the persistence of productivity and endowment shocks. Working from the integrated intertemporal equilibrium, we identify properties of persistence linked to inequality and real economic shocks. Cross-country differences in per capita incomes and wealth, and the factor content of trading patterns, may persist over time and even into the new steady state. This provides yet another reason why we might observe lack of income convergence internationally. In addition, real shocks in one country may be transmitted to the other country through factor markets and product prices, and may have persistent effects into the steady-state as well. The model can also generate an endogenous Balassa-Samuelson effect. |
| Keywords: | Neoclassical models of trade, economic growth of open economies, cross-country output convergence |
| JEL: | F41 O47 F11 F43 |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:wii:wpaper:52&r=int |