nep-int New Economics Papers
on International Trade
Issue of 2009‒11‒21
sixteen papers chosen by
Alessia A. Amighini
University Amedeo Avogadro

  1. Do Firms Learn by Exporting or Learn to Export? Evidence from Small and Medium-Sized Enterprises (SMEs) in Swedish Manufacturing By Hansson, Pär; Eliasson, Kent; Lindvert, Markus
  2. SMEs in Argentina: Who are the Exporters? By Gianmarco I. P. Ottaviano; Christian Volpe Martincus
  3. Trade-Revealed TFP By Andrea Finicelli; Patrizio Pagano; Massimo Sbracia
  4. Export promotion agencies revisited By Lederman, Daniel; Olarreaga, Marcelo; Payton, Lucy
  5. Gravity in the Weightless Economy By Wolfgang Keller; Stephen R. Yeaple
  6. U.S.-Japan and U.S.-China trade conflict : export growth, reciprocity, and the international trading system By Bown, Chad P.; McCulloch, Rachel
  7. Europe’s Internal Market at Fifty: Over the Hill? By Straathof, B.; Linder, G-J.
  8. Reconciling climate change and trade policy By Mattoo, Aaditya; Subramanian, Arvind; van der Mensbrugghe, Dominique; He, Jianwu
  9. On indirect trade-related R&D spillovers: the role of the international trade network By C. Franco; S. Montresor; G. Vittucci Marzetti
  10. Everything you always wanted to know about wto accession (but were afraid to ask) By Cattaneo, Olivier; Braga, Carlos A. Primo
  11. Sectorial Border Effects in the European Single Market: an Explanation through Industrial Concentration. By Gianluca Cafiso
  13. Trade in health services: what's in it for developing countries ? By Cattaneo, Olivier
  14. Competition and Quality Upgrading By Mary Amiti; Amit K. Khandelwal
  15. Firm Heterogeneity, Contract Enforcement, and the Industry Dynamics of Offshoring By Alireza Naghavi; Gianmarco I. P. Ottaviano
  16. Remittances and the brain drain revisited : the microdata show that more educated migrants remit more By Bollard, Albert; McKenzie, David; Morten, Melanie; Rapoport, Hillel

  1. By: Hansson, Pär (Department of Business, Economics, Statistics and Informatics); Eliasson, Kent (Department of Economics, Umeå University); Lindvert, Markus (Growth Analysis)
    Abstract: Using a matching approach, we compare the productivity trajectories of future exporters and matched and unmatched non-exporters. Future exporters have higher productivity than do unmatched non-exporters before entry into the export market, which indicates self-selection into exports. More interestingly, we also find a productivity increase among future exporters relative to matched non-exporters 1-2 years before export entry. However, the productivity gap between future exporters and matched non-exporters does not continue to grow after export entry. Our results suggest that learning-to-export occurs but that learning-by-exporting does not. In contrast to previous studies on Swedish manufacturing, we focus particularly on small and medium-sized enterprises (SMEs)
    Keywords: productivity; learning-to-export; learning-by-exporting; matching
    JEL: D24 F14
    Date: 2009–11–16
  2. By: Gianmarco I. P. Ottaviano (Bocconi University); Christian Volpe Martincus (Inter-American Development Bank)
    Abstract: There exists a growing body of literature which looks at export decisions made by firms. Most studies focus on developed countries and do not explore whether different behavioral patterns prevail over the firm size distribution. This paper aims at filling this gap in the literature by analyzing the export behavior of a statistically representative sample of 192 Small and Medium-Size Enterprises (SMEs) in a developing country, Argentina, over the period 1996-1998. We find that the level of employment, sourcing from abroad, investment in product improvement and average productivity are associated with a higher probability of exporting. Training activities for employees are important to export outside of MERCOSUR.
    Keywords: SME, Exports, Argentina
    JEL: F10 F14 D21 L60
    Date: 2009–11–17
  3. By: Andrea Finicelli (Bank of Italy); Patrizio Pagano (Bank of Italy); Massimo Sbracia (Bank of Italy)
    Abstract: We introduce a novel methodology to measure the relative TFP of the tradeable sector across countries, based on the relationship between trade and TFP in the model of Eaton and Kortum (2002). The logic of our approach is to measure TFP not from its "primitive" (the production function) but from its observed implications. In particular, we estimate TFPs as the productivities that best fit data on trade, production, and wages. Applying this methodology to a sample of 19 OECD countries, we estimate the TFP of each country's manufacturing sector from 1985 to 2002. Our measures are easy to compute and, with respect to the standard development-accounting approach, are no longer mere residuals. Nor do they yield common "anomalies", such as the higher TFP of Italy relative to the US.
    Keywords: Multi-factor productivity, TFP measurement, Eaton-Kortum model
    JEL: F10 D24 O40
    Date: 2009–10
  4. By: Lederman, Daniel; Olarreaga, Marcelo; Payton, Lucy
    Abstract: The number of national export promotion agencies has tripled over the past two decades. Although more countries made them part of their export strategy, studies criticized their efficacy in developing countries. The agencies were retooled, partly in response to these critiques. This paper studies the impact of today's export promotion agencies and their strategies, based on new survey data covering 103 developing and developed countries. The results suggest that on average they have a statistically significant effect on exports. The identification strategies highlight the importance of EPA services for overcoming foreign trade barriers and solving asymmetric information problems associated with exports of heterogeneous goods. There are also strong diminishing returns, suggesting that as far as export promotion agencies are concerned, small is beautiful.
    Keywords: Economic Theory&Research,Debt Markets,Trade Policy,Free Trade,Emerging Markets
    Date: 2009–11–01
  5. By: Wolfgang Keller; Stephen R. Yeaple
    Abstract: This paper studies the international mobility of technology through the lens of multinational firms. We show that gravity applies to the activity of multinational firms, and the strength of gravity is greatest in technologically-complex, research and development intensive industries. To explain gravity in the weightless economy, we develop a model in which a multinational's production can be fragmented into intermediates that vary in the codifiability of their technology. Poorly codified technology requires face-to-face communication to transfer accurately, leading to production inefficiencies that can be avoided if an affiliate instead imports intermediates embodying this technology from its parent firm. Because intermediate input trade incurs shipping costs, affiliates' sales are subject to the force of gravity, and this force is strongest in technologically complex industries. An additional implication of this mechanism is that affiliates are more constrained in their ability to substitute local production for intermediate imports in technologically complex industries. We confirm these predictions and show that trade costs increase the average technological complexity of intra-firm trade. Our analysis offers a new perspective on the mobility of technology, which is a topic crucial to a wide range of fields in economics.
    JEL: F1 F2 O33
    Date: 2009–11
  6. By: Bown, Chad P.; McCulloch, Rachel
    Abstract: First Japan and more recently China have pursued export-oriented growth strategies. While other Asian countries have done likewise, Japan and China are of particular interest because their economies are so large and the size of the associated bilateral trade imbalances with the United States so conspicuous. In this paper the authors focus on U.S. efforts to restore the reciprocal GATT/WTO market-access bargain in the face of such large imbalances and the significant spillovers to the international trading system. The paper highlights similarities and differences in the two cases. The authors describe U.S. attempts to reduce the bilateral imbalances through targeted trade policies intended to slow growth of U.S. imports from these countries or increase growth of U.S. exports to them. They then examine how these trade policy responses, as well as U.S. efforts to address what were perceived as underlying causes of the imbalances, influenced the evolution of the international trading system. Finally, the authors compare the macroeconomic conditions associated with the bilateral trade imbalances and their implications for the conclusions of the two episodes.
    Keywords: Free Trade,Trade Law,Economic Theory&Research,Trade Policy,Currencies and Exchange Rates
    Date: 2009–10–01
  7. By: Straathof, B. (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics); Linder, G-J.
    Abstract: For more than half a century, members of the European Union (EU) have pursued policies aimed at reducing the cost of cross-border transactions. Using a closed-form solution for the non-linear gravity system of Anderson and Van Wincoop (2003) we find that Internal Market policies have created trade between EU members, while diversion of trade with non members has been limited. Around 1995, 18 percent of total trade by EU15 countries can be attributed to the Internal Market. In the second half of the 1990’s the European advantage started to deteriorate relative to other trade flows: in 2005 the contribution of the Internal Market was just 9 percent. Most enlargements of the EU have had a positive impact on trade.
    Keywords: European Union, gravity equation, trade diversion
    JEL: F15 F10
    Date: 2009
  8. By: Mattoo, Aaditya; Subramanian, Arvind; van der Mensbrugghe, Dominique; He, Jianwu
    Abstract: There is growing clamor in industrial countries for additional border taxes on imports from countries with lower carbon prices. The authors confirm the findings of other research that unilateral emissions cuts by industrial countries will have minimal carbon leakage effects. However, output and exports of energy-intensive manufactures are projected to decline potentially creating pressure for trade action. A key factor affecting the impact of any border taxes is whether they are based on the carbon content of imports or the carbon content in domestic production. Their quantitative estimates suggest that the former action when applied to all merchandise imports would address competitiveness and environmental concerns in high income countries but with serious consequences for trading partners. For example, China’s manufacturing exports would decline by one-fifth and those of all low and middle income countries by 8 per cent; the corresponding declines in real income would be 3.7 per cent and 2.4 per cent. Border tax adjustment based on the carbon content in domestic production, especially if applied to both imports and exports, would broadly address the competitiveness concerns of producers in high income countries and less seriously damage developing country trade.
    Keywords: Climate Change Mitigation and Green House Gases,Climate Change Economics,Environment and Energy Efficiency,Energy and Environment,Transport Economics Policy&Planning
    Date: 2009–11–01
  9. By: C. Franco; S. Montresor; G. Vittucci Marzetti
    Date: 2009–10
  10. By: Cattaneo, Olivier; Braga, Carlos A. Primo
    Abstract: In this paper, the authors explore the complex, long, and unique process of accession to the World Trade Organization, with its intertwined economic, legal, and political dimensions. Referring to country case studies and sector-specific issues, the paper organizes some of the current reflections on the topic around three main themes. First, it explores the rationale of accession to the World Trade Organization: Why would new members join the WTO? And why would incumbent members let new members in? Second, it analyzes the World Trade Organization accession process in detail: What are the main characteristics and challenges of the accession process? Has it evolved over time, and how? Third, the paper looks at the implementation of World Trade Organization accession deals: Is accession the end or the beginning of the story? What are the implications for the participating countries and the multilateral trading system?
    Keywords: World Trade Organization,Economic Theory&Research,Trade and Services,Trade Law,Debt Markets
    Date: 2009–11–01
  11. By: Gianluca Cafiso (University of Catania, Economics Department, Corso Italia 55, Catania – Italy.)
    Abstract: The purpose of this paper is to explain the relation between the Border Effect and industrial concentration. This is achieved by founding this relation on the Home Market Effect and testing the robustness of this foundation through an application to the European Single Market. A sectorial Gravity Equation is estimated using different econometric estimators, in particular we discuss a recently suggested technique for the estimation of log-linear CES models. Overall, our findings suggest a steady relation between the Border Effect and industrial concentration. Besides, the analysis of industrial concentration through a synthetic index provides us with valuable insights into the structure of the European industry. JEL Classification: F10, F12, F15.
    Keywords: Trade, Border Effect, Industrial Concentration, Home Market Effect, European Single Market.
    Date: 2009–11
  12. By: Fernanda Ricotta (Dipartimento di Economia e Statistica, Università della Calabria)
    Abstract: Due to the emergence of global value chains, trade has increased in intermediates goods. The first objective of the paper is to provide a picture of Italian intermediate imports by industry and over time. Moreover, this paper attempts to study three possible factors than can influence the import of intermediate goods - global sourcing, outsourcing and MNE networks - using pooled cross-section data for the period 1985-2004 for Italian industries. The econometric results point to a different relationship for high and medium-high technology industries and medium-low and low technology industries relative to the role of inward and outward FDI in explaining the imported intermediate demand. The results suggest that outsourcing is important in explaining intermediate imports for medium-low and low technology industries. On the contrary, for high and medium-high technology industries the data give support to the global-sourcing hypothesis while the evidence for the MNE network hypothesis is weak.
    Keywords: Input-Output tables, Intermediate imports, Multinational firms
    JEL: D57 F14 F23
    Date: 2009–10
  13. By: Cattaneo, Olivier
    Abstract: This study summarizes the existing knowledge and relevant abstracts and case-studies on the design of health and/or trade reforms and policies. The study aims to contribute to the understanding of the potential benefits and risks - and ways to maximize the former and minimize the latter - of trade in the health sector. It is designed for non-trade (health) experts to understand how trade can help to improve health systems and access to health services, and for trade specialists to understand the specific characteristics of the health sector.
    Keywords: Health Monitoring&Evaluation,Health Systems Development&Reform,Health Law,Disease Control&Prevention,Health Economics&Finance
    Date: 2009–11–01
  14. By: Mary Amiti; Amit K. Khandelwal
    Abstract: How does competition affect innovation? We address this question by using a novel approach to measure quality -- an important component of innovation -- using highly disaggregated product data for a large set of countries. Constructing an internationally comparable measure of quality enables us to separate the effect of reducing import tariffs, our measure of competition, on quality upgrading from other country level differences in competitive environments, and product demand shocks. We base our analysis on recent theoretical frameworks that predict that the effect of competition on innovation depends on firms' proximity to the world technological frontier. As predicted by theory, we find that lower tariffs are associated with quality upgrading for products close to the world frontier; whereas lower tariffs discourage quality upgrading for varieties distant from the frontier.
    JEL: F1
    Date: 2009–11
  15. By: Alireza Naghavi (University of Bologna); Gianmarco I. P. Ottaviano (Bocconi University)
    Abstract: We develop an endogenous growth model with R&D spillovers to study the long run consequences of offshoring with firm heterogeneity and incomplete contracts. In so doing, we model offshoring as the geographical fragmentation of a firm’s production chain between a home upstream division and a foreign downstream one. While there is always a positive correlation between upstream bargaining weight and offshoring activities, there is an inverted U-shaped relationship between these and growth. Whether offshoring with incomplete contracts also increases consumption depends on firm heterogeneity. As for welfare, whereas with complete contracts an R&D subsidy is enough to solve the inefficiency due to R&D spillovers, with incomplete contracts a production subsidy is also needed.
    Keywords: o¤shoring, heterogeneous …rms, incomplete contracts, industry dynamics
    JEL: D23 F23 L23 O31 O43
    Date: 2009–11–17
  16. By: Bollard, Albert; McKenzie, David; Morten, Melanie; Rapoport, Hillel
    Abstract: Two of the most salient trends surrounding the issue of migration and development over the past two decades are the large rise in remittances, and an increased flow of skilled migration. However, recent literature based on cross-country regressions has claimed that more educated migrants remit less, leading to concerns that further increases in skilled migration will hamper remittance growth. This paper revisits the relationship between education and remitting behavior using microdata from surveys of immigrants in 11 major destination countries. The data show a mixed pattern between education and the likelihood of remitting, and a strong positive relationship between education and the amount remitted conditional on remitting. Combining these intensive and extensive margins gives an overall positive effect of education on the amount remitted. The microdata then allow investigation as to why the more educated remit more. The analysis finds that the higher income earned by migrants, rather than characteristics of their family situations, explains much of the higher remittances.
    Keywords: Population Policies,Remittances,Debt Markets,International Migration,Access&Equity in Basic Education
    Date: 2009–11–01

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