nep-int New Economics Papers
on International Trade
Issue of 2009‒08‒08
five papers chosen by
Alessia A. Amighini
University Amedeo Avogadro

  1. Trade Complexity and Productivity By Carlo Altomonte; Gabor Bekes
  2. The Impact of Trade Liberalization on Productivity Within and Across Industries: Theory and Evidence By Josh Ederington; Phillip McCalman
  3. Gravity Equation for Different Product Groups: A study at product level By Thuy Nguyen; Jean-Louis Arcand
  4. Disaggregated Data and Trade Policy Analysis: The Value of Linking Partial and General Equilibrium Models By Narayanan, Badri; Hertel, Thomas; Horridge, Mark
  5. The evolution of knowledge and trade networks in the global wine sector: a longitudinal study using social network analysis By Lorenzo Cassi; Andrea Morrison; Anne Ter Wal

  1. By: Carlo Altomonte (Department of Institutional Analysis and Public Management University Bocconi); Gabor Bekes (Institute of Economics Hungarian Academy of Sciences)
    Abstract: We exploit a panel dataset of Hungarian firms merged with product-level trade data for the period 1992-2003 to investigate the relation between firms' trading activities (importing, exporting or both) and productivity. We find important self-selection effects of the most productive firms induced by the existence of heterogeneous sunk costs of trade, for both importers and exporters. We relate these sunk costs of trade to the relationship-specific nature of the trade activities, entailing a certain degree of technological and organizational complexity as measured by a number of proxies. We also show that, to the extent that imports and exports are correlated within firms, failing to control for the importing activity leads to overstated average productivity premia of exporters.
    Keywords: trade openness, firms' heterogeneity, productivity
    JEL: F12 F14 L25
    Date: 2009–07
  2. By: Josh Ederington; Phillip McCalman
    Abstract: Numerous studies have investigated the link between trade policy and firm productivity. Despite justifying firm level analysis on the basis of considerable heterogeneity between firms within narrowly defined industries, these studies typically constrain all firms to have the same expected response to changes in trade policy. In this paper we develop a theoretical model that accounts for the existence of firm level heterogeneity within industries and predicts that the equilibrium response to changes in trade policy will also be heterogeneous in terms of both sign and size. The variation in firm level reaction is shown to be determined by both firm and industry characteristics and therefore the equilibrium response to trade policy is predicted to vary not only within industries but also across industries. These results allow us to use both sources of variation in the data. We examine these predictions on a firm level data set for the Colombian manufacturing sector in the 1980’s and find strong support for them.
    Keywords: tariffs, technology diffusion, productivity.
    JEL: F10 F12 F13 F14
    Date: 2009–08
  3. By: Thuy Nguyen (Graduate Institute of International and Development Studies, Geneva, Switzerland); Jean-Louis Arcand (Graduate Institute of International and Development Studies, Geneva, Switzerland)
    Abstract: Do homogeneous and heterogeneous goods response the same way to changes in income and different measures of distance? Running country-fixed-effect gravity equation for different product groups, I find that homogeneous goods are less responsive to changes in income than heterogeneous goods. I also find that export volume of all product types is significantly hindered by geographical distance between countries. However, exports of homogeneous goods are not affected by social distance measures such as common language and colonial relationship, while exports of heterogeneous goods significantly improve if trading parties speak the same official language and have colonial relationship. Fixed effect quantile estimation (Koenker 2004) with bootstrapped standard errors confirms the above finding for income and geographical distance. Regarding two social distance measures, common language and colonial relationship, median quantile (Tobit) estimation suggests that common language does not have impact on exports of any product type, while colonial relationship significantly influences export of heterogeneous goods. At higher levels of quantiles the impact of common language increases for all product types, and even strongest on exports of homogeneous goods. Colonial relationship loses its impact as being evaluated at 90th percentile.
    Date: 2009–06
  4. By: Narayanan, Badri; Hertel, Thomas; Horridge, Mark
    Abstract: Computable General Equilibrium (CGE) models are now routinely utilized for the evaluation of trade policy reforms, yet they are typically quite highly aggregated, which limits their usefulness to trade negotiators who are often interested in impacts at the tariff line. On the other hand, Partial Equilibrium (PE) models, which are typically used for analysis at disaggregate levels, deprive the researcher of the benefits of an economy-wide analysis, which is required to examine the overall impact of broad-based trade policy reforms. Therefore, a PE-GE, nested modeling framework has the prospect of offering an ideal tool for trade policy analysis. In this paper, we develop a PE model that captures international trade, domestic consumption and output, using Constant Elasticity of Transformation (CET) and Constant Elasticity of Substitution (CES) structures, market clearing conditions and price linkages, nested within the standard GTAP Model. In particular, we extend the welfare decomposition of Huff and Hertel (2001) to this PE-GE model in order to contrast the sources of welfare gain in PE and GE analyses. To illustrate the usefulness of this model, we examine the contentious issue of tariff liberalization in the Indian auto sector, using PE, GE and PE-GE models. Both the PE and PE-GE models show that the imports of Motorcycles and Automobiles change drastically with both unilateral and bilateral tariff liberalization by India, but the PE model does a poor job predicting the overall size and price level in the industry, post-liberalization. On the other hand, the GE model overestimates substitution between regional suppliers due to false competition and underestimates the welfare gain, due to the problem of tariff averaging in the aggregated model. These findings are shown to be robust to wide variation in model parameters. We conclude that the linked model is superior to both the GE and PE counterparts.
    Date: 2009
  5. By: Lorenzo Cassi; Andrea Morrison; Anne Ter Wal
    Abstract: Throughout the last two decades or so the global pattern of wine production has undergone fundamental changes. New players have emerged and technological and organizational changes have reshaped the way wine is produced and marketed. The aim of this study is to increase our understanding into these processes. We map and compare trade and knowledge networks using social network techniques in order to show how globalization has affected this particular sector, and how the main actors of this industry have responded to these challenges. We are able to give account of the structural changes that have characterised the industry at global level over more than three decades and relate them to the features of the main trade and knowledge blocks.
    Keywords: trade network, knowledge network, social network analysis, wine sector
    JEL: R0 R1 R12
    Date: 2009–06

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