nep-int New Economics Papers
on International Trade
Issue of 2009‒06‒17
eight papers chosen by
Alessia A. Amighini
University Amedeo Avogadro

  1. Exports and Profitability – First Evidence for German Business Services Enterprises By Alexander Vogel; Joachim Wagner
  2. Tourism and Exports as a means of Growth By Isabel Cortés-Jiménez; Manuela Pulina; Carme Riera i Prunera; Manuel Artís
  3. Does International Trade Catch up with National Trade of Countries? Yes. By Rolf J. Langhammer
  4. Trading Partners and Trading Volumes: Implementing the Helpman-Melitz-Rubinstein Model Empirically By J. M. C. Santos Silva; Silvana Tenreyro
  5. Trade, Foreign Investment, and Industrial Policy By Harrison, Ann E.; Rodriguez-Clare, Andres
  6. Trade Openness, Institutional Change and Economic Growth By Navas-Ruiz, Antonio
  7. Domestic Value Added and Employment Generated by Chinese Exports: A Quantitative Estimation By Chen, Xikang; Cheng, Leonard; Fung, K.C.; Lau, Lawrence J.; Sung, YunWing; Yang, C.; Zhu, K.; Pei, J.; Tang, Z.
  8. Spatial Localization in Manufacturing: A Cross-Country Analysis By Stefania Vitali; Mauro Napoletano; Giorgio Fagiolo

  1. By: Alexander Vogel (Institute of Economics, University of Lüneburg); Joachim Wagner (Institute of Economics, University of Lüneburg)
    Abstract: We use the unique recently released German business services statistics panel to conduct the first comprehensive empirical study on the relationship between exports and profitability for the business services sector. We document a negative profitability differential of services exporters compared to non-exporters that is statistically significant, though rather small, when observed firm characteristics and unobserved firm specific effects are controlled for. We find that export-starters in services are less profitable than non-starters, even two years before they begin to export, pointing to self-selection of less profitable firms into export markets. We use a recently developed continuous treatment approach to investigate the causal impact of exports on profits. The estimated dose-response function shows an s-shaped relationship between profitability in 2005 and firms’ export-sales ratio in 2004. Enterprises with a very small share of exports in total sales have a lower rate of profit than non-exporting firms. Then, with an increase in export intensity the rate of profit increases, too. However, even at the maximum the average profitability of the exporters is not, or only slightly, higher than the average rate of profit of the non-exporting firms. Given that Germany is one of the leading actors on the world market for services, the evidence provided here is interesting on its own. Furthermore, it can serve as a benchmark for future studies using comparable data for firms from services industries in other countries.
    Keywords: Exports, profitability, business services enterprises, Germany
    JEL: F14 D21 L80
    Date: 2009–05
  2. By: Isabel Cortés-Jiménez (Christel DeHaan Tourism and Travel Research Institute, Nottingham University Business School); Manuela Pulina (CRENoS Research Centre and D.E.I.R., Università di Sassari); Carme Riera i Prunera (Faculty of Economics, University of Barcelona); Manuel Artís (Faculty of Economics, University of Barcelona)
    Abstract: This study expands existing research by considering both exports and tourism as potential influencing factors for economic growth. While trade of goods has been proven as a means of growth for countries, inbound tourism as non-traditional exports, has been scarcely examined in the literature. Using data for Italy and Spain over the period 1954-2000 and 1964-2000 respectively, both exports of goods and tourism exports are included in the same model. Standard cointegration and Granger causality techniques are applied. The main results reveal the significance of both exports and tourism towards long-term growth with some peculiarities for each country.
    Keywords: Tourism, ELG Hypothesis, TLG Hypothesis, Trade, Growth
    Date: 2009–05
  3. By: Rolf J. Langhammer
    Abstract: The paper applies an index suggested by Jeffrey Frankel on how to measure the gap between the intensity of national versus international transactions of a country to more than 100 countries over four periods between 1990 and 2005. The gap stands for "incomplete" globalization. It is shown that the gap has steadily declined for most countries over the sample period irrespective of income levels. While larger economies are still less globalized than small economies, differences in domestic market size have become less important as a dividing linie between more and less globalized economies
    Keywords: Globalization, Market Integration, International Trade
    JEL: F15
    Date: 2009–05
  4. By: J. M. C. Santos Silva; Silvana Tenreyro
    Abstract: Helpman, Melitz, and Rubinstein (2008)-HMR-present a rich theoretical model to study thedeterminants of bilateral trade flows across countries. The model is then empiricallyimplemented through a two-stage estimation procedure. This note seeks to clarify someeconometric aspects of the estimation approach used by HMR and explore the consequencesof possible departures from the maintained distributional assumptions.
    Keywords: Gravity equation, Heteroskedasticity, Jensen’s inequality
    JEL: C13 C50 F10
    Date: 2009–06
  5. By: Harrison, Ann E.; Rodriguez-Clare, Andres
    Abstract: During the last three decades, developing countries have made enormous strides in opening up their protected domestic markets to international trade and foreign investment. Yet most countries have not simply opened up their markets. They have also instituted a range of policies to encourage exports, attract foreign direct investment(FDI), promote innovation, and favor some industries over others. This leads to the following question: is openness to trade and FDI alone sufficient to achieve high growth rates in developing countries? If harnessing the gains from globalization requires additional policies, can we identify them? While some types of complementary policies, such as building roads and ports, are not controversial, others are. Bhagwati's suggestion to "attract foreign funds" implies tilting incentives in favor of foreign investors, which means abandoning policy neutrality. Our goal in this chapter is to explore the popular but controversial idea that developing countries benefit from abandoning policy neutrality vis-a-vis trade, FDI and resource allocation across industries.
    Keywords: Trade; Foreign Investment; Industrial Policy; Developing Countries
    JEL: O25 F1
    Date: 2009
  6. By: Navas-Ruiz, Antonio (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.)
    Abstract: This paper explores the relationship between trade openness and economic growth through a change in institutions. To do so, the paper creates a theory of endogenous institutional change where there are three social groups, each one owns a specific production factor. An ellite (landowners) controlling the political power fix higher taxes to extract rents from the other groups of the society (capitalists). This reduces investment in capital, the source for endogenous growth. Endogenous institutional change is done by allowing the rival group (capitalists) to invest in a military action which expels out the group in power. The model studies optimal taxation, growth and institutional change under two scenarios, autarky and free trade. The model is calibrated according to the Western European experience in the Modern Age. Generally, economies opened to trade will experiment higher growth and earlier institutional change although economies specializing in manufacturing products tend to grow more and rise the institutional change earlier. These results are qualitatively very robust to change in parameter values.
    Keywords: Growth, Institutions, Trade Openness
    JEL: F43 O41 O43
    Date: 2009–06
  7. By: Chen, Xikang; Cheng, Leonard; Fung, K.C.; Lau, Lawrence J.; Sung, YunWing; Yang, C.; Zhu, K.; Pei, J.; Tang, Z.
    Abstract: We develop an input-output methodology to estimate how Chinese exports affect the country’s total domestic value added (DVA) and employment for 1995 and 2002. Total DVA generated by exports is obtained by subtracting all direct and indirect imported intermediate goods from the gross value of exports, and total employment is obtained by adding all direct and indirect employment generated by exports. To implement these estimations, we use hitherto unpublished Chinese government data to construct several completely new datasets, including an input-output table with separate input-output and employment-output coefficients for processing and non-processing exports. In 2002 (1995), for every US$1,000 dollar of Chinese exports, DVA and employment are estimated to be US$466 (US$545) and 0.242 (0.375) person-year, respectively.
    Keywords: Input-output tables; Chinese exports; employment; domestic value added
    JEL: P33 P45 F14
    Date: 2008–12
  8. By: Stefania Vitali; Mauro Napoletano; Giorgio Fagiolo
    Abstract: This paper employs a homogenous Þrms database to investigate industry localiza- tion in European countries. More speciÞcally, we compare, across industries and countries, the predictions of two of the most popular localization indices, i.e., the Ellison and Glaeser index (Ellison and Glaeser, 1997) and the Duranton and Over- man index (Duranton and Overman, 2005). We Þnd that, independently from the index used, localization is a pervasive phenomenon in all countries studied, but the degree of localization is very uneven across industries in each country. Furthermore, we Þnd that the two indices signiÞcantly diverge in predicting the intensity of the forces generating localization within each industry. Finally, we perform a cross- sectoral analysis of localized industries. We show that, in all countries, localized sectors are mainly ÒtraditionalÓ sectors (like jewelery, wine, and textiles) and sec- tors where scale economies are important. However, once one controls for countriesÕ industrial structures science-based sectors turn out to be the most localized ones.
    Keywords: Industry Localization, Manufacturing Industries, Localization Indices, Spatial Concentration, Spatial correlation, Cross-country studies
    JEL: R12 R3
    Date: 2009–06

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