nep-int New Economics Papers
on International Trade
Issue of 2009‒10‒17
eight papers chosen by
Alessia A. Amighini
University Amedeo Avogadro

  1. The Multifaceted Impact of Corruption on International Trade By Thede, Susanna; Gustafson, Nils-Åke
  2. Immigration-Trade Links: the Impact of Recent Immigration on Portuguese Trade By Horácio C. Faustino; João Peixoto
  3. Assessing the impact of the EU-sponsored trade liberalization in the MENA countries By Hagemejer, Jan; Cieslik, Andrzej
  4. Liberalizing air cargo services in APEC By Geloso Grosso, Massimo; Shepherd, Ben
  5. Product variety and the export pattern of Poland 1999-2006 By Tomasz Brodzicki
  6. Barriers to Internationalization: Firm-Level Evidence from Germany By Christian Arndt; Claudia Buch; Anselm Mattes
  7. Terms of Trade Effects: Theory and Methods of Measurement By Marshall Reinsdorf
  8. Home market determinants of FDI outflows from developing and transition economies By Kayam, Saime Suna

  1. By: Thede, Susanna (Department of Economics, Lund University); Gustafson, Nils-Åke (Department of Economics, Lund University)
    Abstract: The purpose of this paper is to perform a detailed examination of corruption effects on trade based on corruption characteristics known to affect economic exchange within the corruption research field. These characteristics are the level, prevalence, customs location, function and predictability of corruption. The multifaceted corruption impact on trade is empirically examined using a corruption-augmented gravity equation. The equation is estimated using a Heckman version of a GMM instrumental variable method. Our results provide strong evidence of that import flows vary systematically with the investigated corruption characteristics and enable the identification of channels through which corruption affects international trade. The empirical investigation clearly indicates the need to examine the multifaceted role of corruption to properly assess the trade effects of corruption.
    Keywords: Bilateral trade; Corruption; GMM Estimations
    JEL: D73 F10 K40
    Date: 2009–10–07
  2. By: Horácio C. Faustino; João Peixoto
    Abstract: This study analyzes Portuguese immigration during the period 1995-2006 and estimates the effects of an increase in the stock of immigrants and of the increased percentage of highly-skilled immigrants employed in manufacturing industry. Furthermore, the effects are estimated of immigrant entrepreneurs active in manufacturing industry on Portugal’s bilateral trade with 38 countries. The latter group includes, in addition to the member-countries of the EU27, five African countries with Portuguese as their official language, and known as PALOPs. In 2006, these two blocs combined accounted for 83% of Portugal’s trade in goods and 89% of its immigrant stock. Panel data is used to conduct an econometric analysis. The study finds that a 10% increase in the immigrant stock will produce the following effects on Portugal’s bilateral trade with these countries: an increase of 2.8% in exports, an increase of 2.66% in imports, an increase of 1.87% in IIT, an increase of 4.01% in HIIT and an increase of 1.48% in VIIT. In addition, we conclude that higher percentages both of highly skilled immigrant workers and immigrant employers in manufacturing industry have a positive effect on exports, IIT and VIIT.
    Keywords: Immigration; trade; skills; entrepreneurship; panel data; Portugal.
    JEL: C33 F11 F12 F22
    Date: 2009–10
  3. By: Hagemejer, Jan; Cieslik, Andrzej
    Abstract: The EU-sponsored Barcelona conference in 1995 set the ambitious goal of creating the Euro-Mediterranean Free Trade Area (EUROMED) that would include the European Union and the MENA countries by 2010. The intermediate steps towards building the EUROMED have involved bilateral “vertical” trade liberalization between the EU and the particular MENA countries as well as “horizontal” trade liberalization among themselves. In this paper we evaluate empirically the effects of the new EU Association Agreements with the MENA countries using the augmented gravity equations derived from a variety of neoclassical and new trade theory models and panel data for the period 1980-2004. We find that while these agreements increased significantly imports of the MENA countries from the EU they had no positive impact on their exports to the EU which can be attributed to the asymmetry in trade liberalization between the EU and the MENA countries.
    Keywords: bilateral trade; gravity equation; preferential trade liberalization
    JEL: F11 F12
    Date: 2009–06
  4. By: Geloso Grosso, Massimo; Shepherd, Ben
    Abstract: This study aims at assessing the link between a more liberal air cargo regime and increased bilateral merchandise trade in the Asia Pacific region, under the auspices of APEC. Using the gravity model and employing the Air Liberalisation Index (ALI) developed by the WTO Secretariat, this paper finds strong support for two hypotheses. First, more liberal air services policies are positively, significantly and robustly associated with higher bilateral trade in merchandise. The results also show that air transport policy matters more for some sectors than for others. A particularly strong relationship is found between bilateral liberalisation and trade in manufactured goods, time sensitive products, and parts and components. Considering the sector found to be most sensitive to the degree of aviation liberalisation, the estimates imply that a one point increase in the ALI is associated with an increase of 4% in bilateral parts and components trade, prior to taking account of general equilibrium effects. These findings have important policy implications. In particular, economies actively seeking greater integration in international production networks could greatly benefit from a more liberal aviation policy regime.
    Keywords: Aviation; international trade in services; liberalization; international trade in goods; parts and components trade; production networks; APEC.
    JEL: L93 F15 F13
    Date: 2009–10–07
  5. By: Tomasz Brodzicki (Faculty of Economics, University of Gdansk)
    Abstract: The goal of this article is to investigate the role of product variety and changes in the product variety in the patter of exports of Poland a middle-sized open economy in the second phase of economic transition to a benchmark group of countries – EU15. The analysis covers the period 1999-2006 and is carried out on highly disaggregated trade data. In the analysis we utilize both simple index of variety of products as well as an index of relative variety of products. Attention is given to the scope and structure of intra-industry trade. The overall product variety in exports to EU15 as measured by simple product counts is found to have decreased while relative product variety in comparison to EU15 Member States remained at roughly unchanged level. Furthermore we investigate the link between the changes in export variety and the growth of TFP in Polish manufacturing industry sectors. The conclusions are drawn from dynamic panel data model controlling for several features suggested by the literature of the subject. The results are rather intriguing and need further robustness tests.
    Keywords: product variety, productivity, horizontal differentiation, system GMM estimator
    JEL: F11 F12 F14 C23
    Date: 2009–10
  6. By: Christian Arndt; Claudia Buch; Anselm Mattes
    Abstract: Exporters and multinationals are larger and more productive than their domestic counterparts. In addition to productivity, financial constraints and labor market constraints might constitute barriers to entry into foreign markets. We present new empirical evidence on the extensive and intensive margin of exports and FDI based on detailed micro-level data of German firms. Our paper has three main findings. First, in line with earlier literature, we find a positive impact of firm size and productivity on firms’ international activities. Second, small firms suffer more frequently from financial constraints than bigger firms, but financial conditions have no strong effect on internationalization. Third, labor market constraints constitute a more severe barrier to foreign activities than financial constraints. Being covered by collective bargaining particularly impedes international activities.
    Keywords: foreign direct investment, exports, firm heterogeneity, productivity,financial constraints, labor market constraints
    JEL: F2 G2
    Date: 2009–09
  7. By: Marshall Reinsdorf (Bureau of Economic Analysis)
    Abstract: Changes in export and import prices that increase the opportunity for trading gains raise real income, and changes in these prices that reduce trading gains reduce real income. Even though trade is less important for the US economy than it is for many other economies, trading gains have a median absolute effect on US real GDI of 0.2 percentage points in annual data.
    JEL: E60
    Date: 2009–01
  8. By: Kayam, Saime Suna
    Abstract: Outward foreign direct investments (FDI) from developing countries and transition economies have picked up in the last decade. This study examines the home country factors that determine the outward foreign investments from 65 developing and transition countries in the period 2000-2006. The main hypothesis tested is that the small market size, trade conditions, costs of production and local business conditions are the main drivers of outward FDI. In order to examine the effects of these factors, the fixed effects estimation technique is employed using variables that measure income, trade, infrastructure, labour market conditions and economic stability. Proxies for the institutional environment such as bureacracy, corruption, investment risk are also used to reflect both the political and economic push factors on FDI. The preliminary findings reveal that outward FDI from developing countries increases with foreign competition in the domestic market augmented by inward FDI. As government stability, investment profile and bureaucracy quality in the home country improves, outflows of capital decreases. In other words, developing country transnational corporations are formed as a result of escape response from the economic and political conditions in the home countries.
    Keywords: outward FDI; push factors; developing countries
    JEL: F23 C23 F21
    Date: 2009–06

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