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on International Trade |
| By: | Rosario Crinò (Institut d’Analisi Economica CSIC, Barcelona); Paolo Epifani (Department of Economics, and KITeS, Bocconi University, Milan) |
| Abstract: | We study, both theoretically and empirically, how export intensity (the ratio of exports to sales) is related to firm productivity. Using a representative sample of Italian manufacturing firms, we find that Total Factor Productivity (TFP) is strongly negatively correlated with export intensity to low-income destinations and uncorrelated with export intensity to high-income destinations, conditional on exporting. To account for these facts, which are not easily predicted by existing heterogeneous-firms models, we extend the Melitz’s (2003) model by allowing for endogenous product quality and for non-iceberg trade costs. Under plausible assumptions, our model predicts that the elasticity of export intensity to productivity is increasing in per capita income of the foreign destinations and decreasing in their distance. We find that these two variables can jointly explain the sign, size and ranking of the TFP elasticities of export intensity across individual foreign destinations. |
| Keywords: | Export Intensity; TFP; Heterogeneous Firms; Product Quality; Per Unit Trade Costs. |
| JEL: | F1 |
| Date: | 2009–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:csl:devewp:271&r=int |
| By: | Giovanni Peri (UC Davis, CESifo and NBER); Francisco Requena (Universitat de Valencia) |
| Abstract: | There is abundant evidence that immigrants’ networks are associated with larger trade flows between countries of origin and the country (or province) where they settle. The causality of such relation and its magnitude, however, have not been proven beyond reasonable doubt. We use the simple predictions of the model by Chaney (2008) and treat networks of migrants as a device that reduces fixed bilateral trade costs. In so doing we have strong predictions on the effect of immigrants on total exports, exports by category of goods, and on the extensive and intensive margin of trade. We test these predictions using the remarkable and uneven increase of immigration to Spanish provinces between 1993 and 2008. The richness of our data, a panel of import and export by sector between 50 Spanish provinces and 77 countries over fifteen years, allows us to control for a very large set of covariates and fixed effects and to use an instrumental variable strategy so that we can isolate the trade-creation effect of new immigrants. We are also able to qualify the effect of immigration on bilateral trade of homogeneous and differentiated goods, and its impact on the intensive and extensive margin of trade. Our findings support all the implications of the Chaney model showing that migration network indeed seems to decrease the fixed costs of trade. Finally by decomposing the effect across provinces and over time we find evidence that the elasticity of trade creation to new immigrant is larger once a critical mass has been reached. |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:200915&r=int |
| By: | Maureen Lankhuizen (VU University Amsterdam); Henri L.F. de Groot (VU University Amsterdam); Gert-Jan M. Linders (VU University Amsterdam) |
| Abstract: | To serve foreign markets, firms can either export or set up a local subsidiary through horizontal Foreign Direct Investment (FDI). The conventional proximity-concentration theory suggests that FDI substitutes for trade if distance between countries is large, while exports become more important if scale economies in production are large. This paper investigates empirically the effect of different dimensions of distance on the choice between exports and FDI. We find that different dimensions of distance affect exports and FDI differently. There is clear evidence of a proximity-concentration trade-off in geographical terms: the share of FDI sales in total foreign sales (exports and FDI sales) increases with geographical distance. The positive relation between import tariffs and FDI intensity provides further evidence for a trade-off resulting from trade costs. On the other hand, the share of FDI decreases with language differences and cultural and institutional barriers. The latter dimensions of distance thus affect FDI more strongly than exports. |
| Keywords: | cultural distance; institutions; FDI and trade; spatial interaction models |
| JEL: | F14 F21 F23 |
| Date: | 2009–06–04 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20090050&r=int |
| By: | Sarah Stolting |
| Abstract: | This paper develops an endogenous growth model with heterogeneous firms to analyze the impact of intra-industry trade on productivity growth. Growth is generated by selection, and sustained by entrants imitating successful incumbents. Firms are subject to idiosyncratic productivity shocks and some firms, mostly those with relatively low productivity levels, are forced to exit. This results in an increase in average productivity of the economy. The intraindustry effect of trade works through self-selection of the most productive firms into the export market. It leads to a reallocation of resources towards more efficient firms. Since the effect of selection and imitation on growth is amplified by the trade-induced selection process, opening up to trade increases the growth rate of productivity. |
| Keywords: | Endogenous growth, Intra-industry trade, Heterogeneous firms, Selection |
| JEL: | F10 L11 O40 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:eui:euiwps:eco2009/21&r=int |
| By: | Avraham Ebenstein; Ann Harrison; Margaret McMillan; Shannon Phillips |
| Abstract: | In this paper, we link industry-level data on offshoring activities of U.S. multinational firms, import penetration, and export shares with individual level worker data from the Current Population Surveys. We examine whether increasing globalization through offshoring or trade has led to reallocation of labor, both within and out of manufacturing, and measure its impact on the wages of domestic workers. We also control for the “routineness†of individual occupations. Our results suggest that (1) offshoring to high wage countries is positively correlated with U.S. manufacturing employment (2) offshoring to low wage countries is associated with U.S. employment declines (3) wages for workers who remain in manufacturing are generally positively affected by offshoring; in particular, we find that wages are positively associated with an increase in U.S. multinational employment in high income locations (4) much of the negative effects of globalization operate through downward pressure on wages of workers who leave manufacturing to take jobs in agriculture or services and (5) the downward pressure on aggregate U.S. wages operating through import competition has been quite important for some occupations. This effect has been overlooked because it operates across, not within, industries. |
| JEL: | F15 F16 F23 J23 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15107&r=int |
| By: | Matilde Bombardini; Giovanni Gallipoli; Germán Pupato |
| Abstract: | Is skill dispersion a source of comparative advantage? While it is established that a country's aggregate endowment of human capital is an important determinant of comparative advantage, this paper investigates whether the distribution of skills in the labor force can play a role in the determination of trade flows. We develop a multi-country, multi-sector model of trade in which comparative advantage derives from (i) differences across sectors in the complementarity of workers' skills, (ii) the dispersion of skills in the working population. First, we show how higher dispersion in human capital can trigger specialization in sectors characterized by higher substitutability among workers' skills. We then use industry-level bilateral trade data to show that human capital dispersion, as measured by a standard international metric, has a significant effect on trade flows. We find that the effect is of a magnitude comparable to that of aggregate endowments. The result is robust to the introduction of several controls for other proximate causes of comparative advantage. |
| JEL: | F12 F16 J82 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15097&r=int |
| By: | Vivien Procher; Dirk Engel |
| Abstract: | The decision of companies to enter international markets, either via exports or foreign direct investment (FDI), has been postulated by the self-sorting model of Helpman, Melitz and Yeaple (HMY, 2004). In the strict sense, the theoretical predictions of HMY only apply to firms that become engaged in marketdriven (horizontal) FDI. Hence, in this paper we apply more precise methodologies to test the HMY hypothesis. First, we classify MNEs according to the underlying motives for investing abroad (market-driven vs. resource-driven FDI). Second, we highlight the role of productivity growth in the post-entry period.Our findings suggest that productivity affects the FDI decision considerably whereas expected feedback and learning effects of FDI on productivity are remarkably lower.We further detect that more market-driven MNEs exhibit a higher productivity than comparatively less market-driven MNEs. |
| Keywords: | Foreign direct investment, horizontal and vertical FDI, multinational enterprises, productivity |
| JEL: | F10 F23 D21 D24 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:rwi:repape:0111&r=int |