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on International Trade |
| By: | Guillaume Daudin (Université de Lille I); Christine Rifflart (Observatoire Français des Conjonctures Économiques); Danielle Schweisguth (Observatoire Français des Conjonctures Économiques) |
| Abstract: | For nearly two decades, the share of trade in inputs, also called vertical trade, has dramatically increased. This paper suggests a new measure of international trade: “value-added trade”. Like many existing estimates, “value-added trade” is net of double-counted vertical trade. It also reallocate trade flows to their original input-producing industries and countries and allows to answer the question “who produces for whom”. In 2004, 27% of international trade were "only" vertical specialization trade. The sector repartition of value-added trade is very different from the sector repartition of standard trade. Value-added trade is less regionalized than standard trade. |
| Keywords: | Globalization, Vertical trade, Regionalisation |
| JEL: | F15 F19 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fce:doctra:0918&r=int |
| By: | Elvira Sapienza |
| Abstract: | Historically, FDIs have long been considered as an alternative means for firms to internationalize. According to this line of thought, a substitution relationship between exports and FDIs would be expected. However, recent developments in new trade theory, emphasize that exports and FDIs can be positively correlated. On the home country side, the relevant question is whether national share of exports towards destination markets has been affected by FDIs undertaken in the same, in other words whether outward FDI raises or lowers home country exports. Taking into account that the prevalent type of FDI seems to be horizontal, we would expect that a substitution relationship prevails in empirical findings. This study adds to previous work presenting a review of the existing theoretical and empirical studies and underlining the discrepancy between the two. Finally, it tests the relationship between FDI and exports bilateral flows from EU15 towards CEEC countries using an extended gravity approach that includes labour costs. The results support the complementarity' hypothesis. |
| Keywords: | FDI, Multinational enterprises, Gravity Model, Europe. |
| JEL: | F15 F21 F23 O52 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:ufg:qdsems:13-2009&r=int |
| By: | Pete Liapis |
| Abstract: | This paper examines whether the growth in agricultural trade of 69 countries between 1996 and 2006 has taken place at the intensive or the extensive margin. The paper addresses the questions: have agricultural exports during this period expanded more through the intensive margin (more exports of established goods to traditional partners) or through the extensive margin (new trade flows in new products and/or to new partners)? At the intensive margin, do richer countries export greater volumes, or do they receive higher prices for their goods? At the extensive margin, are new trade flows the result of an expanded variety of products or the result of exporting established products to more destinations? |
| JEL: | C25 F14 F19 Q17 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:oec:agraaa:17-en&r=int |
| By: | Chiara Franco; Subash Sasidharan |
| Abstract: | The role of Foreign Direct Investments (FDI) in the process of economic development is of particular relevance since they bring in some specific technological assets that are not immediately available in the host country. The literature related to the microeconomic impact of FDI has been mainly concentrated in explaining the final effect on productivity, caused by the fact that Multinational Enterprises (MNEs) are not completely able to protect their superior assets from spilling over. However, there is a relatively unexplored effect that has recently been at the center of some studies that is the export spillover effect. Up to now, the literature has found out only mixed results with regard to the possibility that MNEs influence both export decision and export intensity of local firms. In the present paper, we provide some empirical evidence for that specific effect examining a case of an emerging economy, namely India for the period 1994-2006 by using a firm level dataset of more than 3000 firms belonging to manufacturing industries. In particular, we introduce the theoretical argument related to the MNEs heterogeneity which has not been properly investigated especially in empirical studies trying to understand whether, by using different measures characterizing MNEs behaviour, it is possible to distinguish between different impacts that MNEs have on export performance of local firms. We estimate the model through the Heckman selection technique after having built spillover variables that take into account five types of heterogeneity: the degree of involvement in trade networks, the level of embeddedness inside the innovation system of the host country, the asset seeking vs asset exploiting motivations(technological intensity), the type and amount of inputs sourced from abroad rather than from the host country and the percentage of the foreign equity stake. The second step of the analysis we perform is that of testing the relationship between the heterogeneity of MNEs with the heterogeneity of local firms splitting the sample according to the level of R&D intensity, the level of embeddness into the innovation system and the involvement in trade activities. Results confirm the hypothesis of different impacts caused by different MNEs behaviour especially with regard to the export intensity, while a greater impact on export decision is found when heterogeneity of local firms is accounted for. |
| Keywords: | Exports, spillover, MNCs |
| JEL: | F23 O14 O53 |
| Date: | 2009–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:mos:druwps:2009-06&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. |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:0908.1879&r=int |
| By: | Horst Raff ,; Joachim Wagner |
| Abstract: | This paper uses an oligopoly model with heterogeneous firms to examine how an industry adjusts to rising import competition. The model predicts that in the short run the least efficient firms in the industry become inactive, surviving firms face a fall in output, mark-ups and profits, and the average productivity of survivors increases. These pro-competitive effects of import penetration on the domestic industry disappear in the long run. The predictions for the short run are confirmed in an empirical study of the German clothing industry |
| Keywords: | international trade, firm heterogeneity, productivity, clothing industry |
| JEL: | F12 F15 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1557&r=int |
| By: | Kristian Behrens; Yasusada Murata |
| Abstract: | We present a general equilibrium model of monopolistic competition featuring pro-competitive effects and a competitive limit, and investigate the impact of trade on welfare and efficiency. Contrary to the constant elasticity case, in which all gains from trade are due to product diversity, our model allows for a welfare decomposition between gains from product diversity and gains from pro-competition effects. We then show that the market outcome is not efficient because too many firms operate at an inefficiently small scale by charging prices above marginal costs. Using pro-competitive effects and the competitive limit, we finally illustrate that trade raises efficiency by narrowing the gap between the equilibrium utility and the optimal utility. |
| Keywords: | Pro-competitive effects, competitive limit, excess entry, trade and efficiency, monopolistic competition |
| JEL: | D43 D51 F12 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:lacicr:0940&r=int |
| By: | Frankel, Jeffrey (Harvard University) |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp09-006&r=int |
| By: | Kinoshita, Soshichi |
| Abstract: | With the globalization of economic activity, the relative weight of foreign trade in national economic activities has increased, and the question of how to measure trends in the value and quantity of international trade has become an important issue for policy-makers and economists. This paper compares the chain-linked indices formulated by Masato Kuroko, based on HS this fiscal year for individual industry categories and countries with chain-linked indices based on SITC-R1 codes, in order to study how changes in the quality composition of the same products, which cannot be considered using unit value indices based on SITC-R1 codes, can be considered using unit value indices based on the more detailed HS product classifications. |
| Keywords: | Export value indices, Export unit value indices, SITC Code, HS Code, Quality change adjustment, Standard international trade classification |
| JEL: | C43 F15 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper213&r=int |
| By: | Subhayu Bandyopadhyay; Sajal Lahiri; Howard J. Wall |
| Abstract: | This paper examines the effect of cross-border lobbying on domestic lobbying and on external tariffs in both Customs Union (CU) and Free Trade Area (FTA). We do so by developing a two-stage game which endogenizes the tariff formation function in a political economic model of the directly unproductive rent-seeking activities type. We find that cross-border lobbying unambiguously increases both domestic lobbying and the equilibrium common external tariffs in a CU. The same result also holds for FTA provided tariffs for the member governments are strategic complements. We also develop a specific oligopolistic model of FTA and show that tariffs are indeed strategic complements in such a model. |
| Keywords: | Free trade ; Tariff |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:2009-041&r=int |
| By: | ANDO Mitsuyo; IRIYAMA Akie |
| Abstract: | This paper examines how international production/distribution networks provide individual firms with exporting/importing responsiveness to exchange rate movements. With the micro-data of Japanese manufacturing firms from 1994 to 2004, we find that firms' exports tend to respond to exchange rate movements, in particular (1) when firms are large in size, (2) when majority-owned affiliates are dominant among their foreign affiliates, and (3) when their intra-firm trade ratio is moderately high. Furthermore, these tendencies are more salient for machinery firms, one of the major players in international production networks in East Asia. The results suggest that Japanese manufacturing firms, particularly machinery firms, with greater foreign operations under their own corporate control would more fully absorb shocks of exchange rate movements by adjusting intra-firm transactions. We do not find such tendencies for imports, however. The study provides implications for international production networks, which have developed drastically in East Asia. |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:09049&r=int |
| By: | Matthieu Bussière (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Alexander Chudik (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Giulia Sestieri (University of Rome Tor Vergata, Via Columbia, 2, 00133 Roma, Italy.) |
| Abstract: | This paper uses a Global Vector Auto-Regression (GVAR) model in a panel of 21 emerging market and advanced economies to investigate the factors behind the dynamics of global trade flows, with a particular view on the issue of global trade imbalances and on the conditions of their unwinding. The GVAR approach enables us to make two key contributions: first, to model international linkages among a large number of countries, which is a key asset given the diversity of countries and regions involved in global imbalances, and second, to model exports and imports jointly. The latter proves to be very important due to the internationalisation of production and the high import content of exports. The model can be used to gauge the effect on trade flows of various scenarios, such as an output shock in the United States, a shock to the US real effective exchange rate and shocks to foreign (German and Chinese)variables. Results indicate in particular that world exports respond much more to a (normalised) shock to US output than to a real effective depreciation of the dollar. In addition, the model can be used to monitor trade developments, such as the sharp contraction in world trade that took place in the wake of the financial crisis. While the fall in imports seems well accounted for by the model,the fall in exports of several countries remains partly unexplained, suggesting perhaps that specific factors might have been at play during the crisis. JEL Classification: F10, F17, F32, C33. |
| Keywords: | International trade, global imbalances, global VAR, exchange rates, trade elasticities. |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20091087&r=int |
| By: | Abhijit Chakraborty; S. S. Manna |
| Abstract: | Using a model of wealth distribution where traders are characterized by quenched random saving propensities and trade among themselves by bipartite transactions, we mimic the enhanced rates of trading of the rich by introducing the preferential selection rule using a pair of continuously tunable parameters. The bipartite trading defines a growing trade network of traders linked by their mutual trade relationships. With the preferential selection rule this network appears to be highly heterogeneous characterized by the scale-free nodal degree and the link weight distributions and presents signatures of non-trivial strength-degree correlations. With detailed numerical simulations and using finite-size scaling analysis we present evidence that the associated critical exponents are continuous functions of the tuning parameters. However the wealth distribution has been observed to follow the well-known Pareto law robustly for all positive values of the tuning parameters. |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:0909.3984&r=int |
| By: | Giorgia Giovannetti (Università degli Studi di Firenze, Dipartimento di Scienze Economiche); Giorgio Ricchiuti (Università degli Studi di Firenze, Dipartimento di Scienze Economiche); Margherita Velucchi (Università degli Studi di Firenze, Dipartimento di Statistica “G. Parenti”) |
| Abstract: | Competition is increasingly crossing borders. However, location still matters: the most successful competitors in an industry often cluster in the same geographic areas and companies use the advantages of location to compete at a global level. When competing across borders, firms can coordinate among different activities in a variety of ways to harness network advantages. This paper analyses how Italian firms’ performance, proxied by their propensity to export, depends both on geographical and institutional context and on individual characteristics. Using a multilevel model, we estimate and distinguish the effect of individual (firm level) and context variables (province level) on the performance of internationalized Italian firms. |
| Keywords: | Exports, Multilevel Model, Heterogeneity |
| JEL: | C1 F1 F2 L1 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:frz:wpaper:wp2009_09.rdf&r=int |
| By: | Hayakawa, Kazunobu; Matsuura, Toshiyuki |
| Abstract: | In this paper we statistically test the validity of the mechanics of complex VFDI in Japanese machinery FDI to East Asia; we do this by estimating a multiple-spatial lag model. From the theoretical point of view, in complex VFDI, the production activity of affiliates in a given country is positively related to that in neighboring countries which have large differences in factor prices with the given country. Our empirical results show that such mechanics of complex VFDI work in Japanese FDI to East Asia, and that they work more strongly in the MNEs with higher productivity. These results have an important implication for the policies of developing countries in attracting FDI. |
| Keywords: | Third-country Effects, Complex VFDI, Spatial Lag Model, East Asia, Foreign Investments |
| JEL: | F21 F23 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper211&r=int |