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on International Trade |
| By: | Andrew Bernard; Stephen Redding; Peter Schott |
| Abstract: | This paper develops a general equilibrium model of international trade that features selection across firms, products and countries. Firms’ export decisions depend on a combination of firm “productivity” and firm-product-country “consumer tastes”, both of which are stochastic and unknown prior to the payment of a sunk cost of entry. Higher-productivity firms export a wider range of products to a larger set of countries than lower-productivity firms. Trade liberalization induces endogenous reallocations of resources that foster productivity growth both within and across firms. Empirically, we find key implications of the model to be consistent with U.S. trade data. |
| Keywords: | heterogeneous firms, endogenous product scope, love of variety, core competency |
| JEL: | F12 F13 L11 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:09-21&r=int |
| By: | Juan Carlos Hallak; Jagadeesh Sivadasan |
| Abstract: | We develop a model of international trade with export quality requirements and two dimensions of firm heterogeneity. In addition to "productivity", firms are also heterogeneous in their "caliber" {the ability to produce quality using fewer fixed inputs. Compared to singleattribute models of firm heterogeneity emphasizing either productivity or the ability to produce quality, our model provides a more nuanced characterization of firms' exporting behavior. In particular, it explains the empirical fact that firm size is not monotonically related with export status: there are small firms that export and large firms that only operate in the domestic market. The model also delivers novel testable predictions. Conditional on size, exporters are predicted to sell products of higher quality and at higher prices, pay higher wages and use capital more intensively. These predictions, although apparently intuitive, cannot be derived from singleattribute models of firm heterogeneity as they imply no variation in export status after size is controlled for. We find strong support for the predictions of our model in manufacturing establishment datasets for India, the U.S., Chile, and Colombia. |
| Keywords: | Productivity, quality, exports, firm heterogeneity |
| JEL: | F10 F12 F14 |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:09-13&r=int |
| By: | Andrew Bernard; J Bradford Jensen; Stephen Redding; Peter Schott |
| Abstract: | Recent research in international trade emphasizes the importance of firms extensive margins for understanding overall patterns of trade as well as how firms respond to specific events such as trade liberalization. In this paper, we use detailed U.S. trade statistics to provide a broad overview of how the margins of trade contribute to variation in U.S. imports and exports across trading partners, types of trade (i.e., arm’s-length versus related-party) and both short and long time horizons. Among other results, we highlight the differential behavior of related-party and arm’s-length trade in response to the 1997 Asian financial crisis. |
| Keywords: | Heterogeneous firms, Product differentiation, Product market entry and exit |
| JEL: | F1 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:09-18&r=int |
| By: | Pamina Koenig |
| Abstract: | This paper analyzes the effect of immigrants' networks on the decision of individual firms to starting exporting to the immigrants' home country. Existing evidence on the trade-creating effect of immigrants show a robust effect, however at the national or regional level. Using French exports at the firm-level to 61 countries, I find that increasing the number of foreign immigrants in the region by 10 % increases the probability that a firm starts exporting to the immigrants' home country by 1.2%. More, the effect of immigrants is enhanced when immigrants are older or more educated. The effect of immigrants also varies among origin countries. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pse:psecon:2009-31&r=int |
| By: | Giorgio Fagiolo |
| Abstract: | This paper begins to explore the determinants of the topological properties of the international - trade network (ITN). We fit bilateral-trade flows using a standard gravity equation to build a ''residual'' ITN where trade-link weights are depurated from geographical distance, size, border effects, trade agreements, and so on. We then compare the topological properties of the original and residual ITNs. We find that the residual ITN displays, unlike the original one, marked signatures of a complex system, and is characterized by a very different topological architecture. Whereas the original ITN is geographically clustered and organized around a few large-sized hubs, the residual ITN displays many small-sized but trade-oriented countries that, independently of their geographical position, either play the role of local hubs or attract large and rich countries in relatively complex trade-interaction patterns. |
| Keywords: | International Trade Network; Gravity Equation; Weighted Network Analysis; Topological Properties; Econophysics |
| JEL: | F10 D85 |
| Date: | 2009–08–31 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2009/08&r=int |
| By: | Raúl Serrano (Department of Business Administration,Universidad de Zaragoza); Vicente Pinilla (Department of Applied Economics and Economic History, Universidad de Zaragoza) |
| Abstract: | This study examines the reasons for changes in the composition of international trade in agricultural and food products. We use a Gravity Model to compare the impact of the key factors in bilateral agri-food trade, which we split into three main product groups, between 1963 and 2000 for a representative sample of 40 countries. Our results show how intervention and/or protectionism, the level of participation in intra-industrial trade and the effects of national and per capita income growth have determined the rise in high value-added products and processed goods and the declining share of traditional, basic commodities. |
| Keywords: | Agri-food trade, Gravity Model, GATT, Regional Trade Agreements, home market effect |
| JEL: | F14 F10 N70 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:ahe:dtaehe:0905&r=int |
| By: | Matteo Barigozzi; Giorgio Fagiolo; Diego Garlaschelli |
| Abstract: | We study the topological properties of the multi-network of commodity-specific trade relations among world countries over the 1992-2003 period, comparing them with those of the aggregate-trade network, known in the literature as the international trade network (ITN). We show that link-weight distributions of commodity-specific networks are extremely heterogeneous and (quasi) log-normality of aggregate link-weight distribution is generated as a sheer outcome of aggregation. Commodity-specific networks also display average connectivity, clustering and centrality levels very different from their aggregate counterpart. We also find that ITN complete connectivity is mainly achieved through the presence of many weak links that keep commodity-specific networks together, and that the correlation structure existing between topological statistics within each single network is fairly robust and mimics that of the aggregate network. Finally, we employ cross-commodity correlations between link weights to build taxonomies of commodities. Our results suggest that on the top of a relatively time-invariant ''intrinsic'' taxonomy (based on inherent between-commodity similarities), the roles played by different commodities in the ITN have become more and more dissimilar, possibly as the result of an increased trade specialization. |
| Keywords: | Weighted directed networks; International trade network; Multi-networks; Commodity-specific trade; Econophysics |
| JEL: | F10 D85 |
| Date: | 2009–08–31 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2009/09&r=int |
| By: | Holger Görg; Henning Mühlen; Peter Nunnenkamp |
| Abstract: | In addition to firm and industry characteristics, the heterogeneity of foreign direct investment (FDI) has to be taken into account when analyzing the determinants of outward FDI. We combine two firm-specific datasets on German firms with subsidiaries and joint ventures in the Czech Republic, compared to a control group of German firms without FDI in this host country. The impact of firm and industry characteristics on FDI decisions is assessed by estimating two-step Heckman models. We find that larger, more productive and more experienced firms are more likely to invest in the Czech Republic. Firm characteristics also affect the size of FDI in manufacturing. The relevance of both firm and industry characteristics critically depends on whether FDI is horizontal or vertical |
| Keywords: | multinational enterprises, firm heterogeneity, industry characteristics, sector-specific FDI, vertical and horizontal FDI |
| JEL: | F23 L25 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1544&r=int |
| By: | Maoz, Yishay; Peled, Dan; Sarid, Assaf |
| Abstract: | Rebelo's two-sector endogenous growth model is embedded within a two-country international trade framework. The two countries bargain over a trade agreement that specifies: (i) the size of the foreign aid that the richer country gives to the poorer one; (ii) the terms of the international trade that takes place after the aid is given. The aid is given not because of generosity, but because it improves the capital allocation across the world and thus raises total world production. This world production surplus enables the rich country to raise its equilibrium consumption and welfare beyond their no-aid levels. To ensure it, the rich country uses a trade agreement to condition the aid on favorable terms of trade. |
| Keywords: | International trade; Aid; Balanced Growth; Trade Agreement |
| JEL: | O41 P45 F43 |
| Date: | 2009–08–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:17064&r=int |
| By: | Mélise Jaud; Olivier Cadot; Akiko Suwa-Eisenmann |
| Abstract: | This paper documents a decreasing trend in the geographical concentration of EU agro-food imports. Decomposing the concentration indices into intensive and extensive margins components, we find that the decrease in overall concentration indices results from two diverging trends: the pattern of trade diversifies at the extensive margin (EU countries have been sourcing their agri-food products from a wider range of suppliers), while geographical concentration increases at the intensive-margin (EU countries have concentrated their imports on a few major suppliers). This leads to an increasing inequality in market shares between a small group of large suppliers and a majority of small suppliers. We then move on to exploit a database of food alerts at the EU border that had never been exploited before. After coding it into HS8 categories, we regress the incidence of food alerts by product on determinants including exporter dummies as well as HS8 product dummies. Coefficients on product dummies provide unbiased estimates of the intrinsic vulnerability of exported products to food alerts, as measured at the EU border. We incorporate the product risk coefficient as an explanatory variable in a regression of geographical concentration and show that concentration is higher for risky products. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pse:psecon:2009-28&r=int |
| By: | Prema-chandra Athukorala; Archanun Kohpaiboon |
| Abstract: | This paper examines the export experience of East Asian economies in the aftermaths of the global financial crisis against the backdrop of pre-crisis trade patterns. The analysis is motivated by the ‘decoupling’ thesis, which was a popular theme in the Asian policy circles in the lead-up to the onset of the recent financial crisis, and aims to probe three key issues: Was the East Asian trade integration story that underpinned the decoupling thesis simply a statistical artifact or the massive export contraction caused by an overreaction of traders to the global economic crisis and/or by the drying up of trade credit, which overpowered the cushion provided by intra-regional trade? What are the new policy challenges faced by the East Asian economies? Is there room for an integrated policy response that marks a clear departure from the pre-crisis policy stance favoring export-oriented growth? The findings caution against a possible policy backlash against openness to foreign trade arising from the new-found enthusiasm for rebalancing growth, and make a strong case for a long-term commitment to non-discriminatory multilateral and unilateral trade liberalization. |
| Keywords: | production networks, trade patterns, global financial crisis |
| JEL: | E32 F15 F40 O53 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pas:papers:2009-09&r=int |