nep-int New Economics Papers
on International Trade
Issue of 2009‒12‒11
sixteen papers chosen by
Alessia A. Amighini
University Amedeo Avogadro

  1. Firms and Products in International Trade: Data and Patterns for Hungary By Gabor Bekes; Peter Harasztosi; Balazs Murakozy
  2. Do Firms Learn by Exporting or Learn to Export? Evidence from Small and Medium-Sized Enterprises (SMEs) in Swedish Manufacturing By Eliasson, Kent; Hansson, Pär; Lindvert, Markus
  3. Distance, Trade, and Income – The 1967 to 1975 Closing of the Suez Canal as a Natural Experiment By James Feyrer
  4. Effects of Bilateralism and the MFN Clause on International Trade – Evidence for the Cobden-Chevalier Network, (1860-1875) By Markus Lampe
  5. Trade, Technology and Inequality in a Developing Country: Theory and Evidence from China By Li, Muqun; Coxhead, Ian
  6. Exports and Financial Shocks By Mary Amiti; David E. Weinstein
  7. Have Countries with Lax Environmental Regulations a Comparative Advantage in Polluting Industries? By Quiroga, Miguel; Sterner, Thomas; Persson, Martin
  8. Why "Buy American'' is a Bad Idea but Politicians Still Like it By Mario Larch; Wolfgang Lechthaler
  9. Offshoring and Firm Performance: Self-Selection, Effects on Performance, or Both? By Wagner, Joachim
  10. Cross-Country Differences in Productivity: The Role of Allocation and Selection By Bartelsman, Eric; Haltiwanger, John C.; Scarpetta, Stefano
  11. The Impact of Approved Destination Status on Chinese Travel Abroad: An Economic Analysis By Shawn Arita; Christopher Edmonds; Sumner La Croix; James Mak
  12. FDI by Early Movers, Followers and Latecomers: Timing of Entry by German Firms during Transition in the Czech Republic By Henning Mühlen; Peter Nunnenkamp
  13. Effects of Global Fisheries on Developing Countries Possibilities for Income and Threat of Depletion By Eggert, Håkan; Greaker, Mads
  14. Market Share and Exchange Rate Pass-through:Competition among Exporters of the Same Nationality By Yushi Yoshida
  15. The Economic Partnership Agreement between Uganda and the EU: Trade and Poverty Impacts By Ole Boysen; Alan Matthews
  16. Brainy Africans to Fortress Europe: For Money or Colonial Vestiges? By Constant, Amelie F.; Tien, Bienvenue

  1. By: Gabor Bekes (Institute of Economics - Hungarian Academy of Sciences); Peter Harasztosi (Central Europan University); Balazs Murakozy (Institute of Economics - Hungarian Academy of Sciences)
    Abstract: This paper provides a detailed description of Hungarian trade data and key patters drawn at the firm and product level. The IEHAS-CEFiG Hungary dataset is an almost universal panel of balance sheet information (1992-2006) merged with firmproductcountry level customs data (1992-2003) taken until the 2004 EU accession. In the Bernard et al. (2007) tradition, statistics describe the prevalence of trading activity, typology of firms by internationalisation, concentration of trade volume within and across sectors as well as geographical features of activities. The aim of this paper is both to offer background statistics to existing studies and to stimulate future research on firms and trade by offering a great deal of descriptive statistics. After describing datasets, the prevalence of trading activity across sectors, concentration of trading volume across and within sectors, spatial distribution on trade and principal trading partners are described. Stylised facts show that trading activity is heavily concentrated, both exporters and importers show better performance than non-traders, and multi-product and multi-county firms are responsible for the bulk of trade volume.
    Keywords: international trade, exporting, firm-product level data
    JEL: F23 F14 D21 R12 R30
    Date: 2009–10
  2. By: Eliasson, Kent (Growth Analysis); Hansson, Pär (Growth Analysis); 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: 2009–11–27
  3. By: James Feyrer
    Abstract: The negative effect of distance on bilateral trade is one of the most robust findings in international trade. However, the underlying causes of this negative relationship are less well understood. This paper exploits a temporary shock to distance, the closing of the Suez canal in 1967 and its reopening in 1975, to examine the effect of distance on trade and the effect of trade on income. Time series variation in sea distance allows for the inclusion of pair effects which account for static differences in tastes and culture between countries. The distance effects estimated in this paper are therefore more clearly about transportation costs in the trade of goods than typical gravity model estimates. Distance is found to have a significant impact on trade with an elasticity that is about half as large as estimates from typical cross sectional estimates. Since the shock to trade is exogenous for most countries, predicted trade volume from the shock can be used to identify the effect of trade on income. Trade is found to have a significant impact on income. The time series dimension allows for country fixed effects which control for all long run income differences. Because identification is through changes in sea distance, the effect is coming entirely through trade in goods and not through alternative channels such as technology transfer, tourism, or foreign direct investment.
    JEL: F1 F15 F43 O4 O47
    Date: 2009–12
  4. By: Markus Lampe
    Abstract: This study contributes to a revised picture of nineteenth-century bilateralism. Employing a new disaggregated dataset, it argues that bilateral treaties did not implement general free trade, but instead reduced tariffs unevenly through commodity-specific preferences, especially favoring manufactured goods. Gravity model estimates show that specific liberalizations translated into systematic increases in exports of corresponding items, but not overall trade. Exporters of countries whose governments used bilateralism strategically to bring down partner tariffs benefitted most. Hence, the network in form and outcome is more properly identified with reciprocal liberalization practiced by the French than with British free trade ideology.
    Keywords: preferential trade agreements, Anglo-French treaty, bilateralism, liberalisation, gravity model
    JEL: N73 F13
    Date: 2009–02
  5. By: Li, Muqun (Samsung Economic Research Institute, Beijing); Coxhead, Ian (University of Wisconsin, Madison)
    Abstract: Could globalization--specifically, increased international trade and openness to foreign investment--increase inequality in developing countries? Empirical studies in many such economies show that expanding trade and FDI are associated with higher inequality in wages and regional incomes. However, there is no agreement regarding the cause of such increases. We present a theoretical model showing how interactions between factor mobility restrictions and different rates of technical progress (due to trade and FDI) in a regionally heterogeneous economy can explain the evolution of inequality. As favored regions benefit more from trade, their growing demand for skills drains skilled workers from disadvantaged areas, and average incomes in favored regions grow faster than in less favored regions. Moreover, this unbalanced regional growth may be the source of rising inequality within each region, and even of falling per capita incomes in the less favored region. We test our predictions with data from China's coastal and inland provinces. The results confirm that different regional growth rates have increased both interregional and intraregional inequality. In addition, growth of skills-based export industries in coastal regions, other things equal, is associated with lower incomes for the poor in inland provinces.
    JEL: F16 O15 R10
    Date: 2009–07
  6. By: Mary Amiti; David E. Weinstein
    Abstract: A striking feature of many financial crises is the collapse of exports relative to output. In the 2008 financial crisis, real world exports plunged 17 percent while GDP fell 5 percent. This paper examines whether the drying up of trade finance can help explain the large drops in exports relative to output. This paper is the first to establish a causal link between the health of banks providing trade finance and growth in a firm’s exports relative to its domestic sales. We overcome measurement and endogeneity issues by using a unique data set, covering the Japanese financial crises of the 1990s, which enables us to match exporters with the main bank that provides them with trade finance. Our point estimates are economically and statistically significant, suggesting that trade finance accounts for about one-third of the decline in Japanese exports in the financial crises of the 1990s.
    JEL: E32 E44 F40 G21
    Date: 2009–12
  7. By: Quiroga, Miguel (Department of Economics, School of Business, Economics and Law, Göteborg University); Sterner, Thomas (Department of Economics, School of Business, Economics and Law, Göteborg University); Persson, Martin (department of Energy and Environment, Chalmers University of Technology, Gothenburg)
    Abstract: We aim to study whether lax environmental regulations induce comparative advantages, causing the least-regulated countries to specialize in polluting industries. The study is based on Trefler and Zhu’s (2005) definition of the factor content of trade. For the econometrical analysis, we use a cross-section of 71 countries in 2000 to examine the net exports in the most polluting industries. We try to overcome three weaknesses in the empirical literature: the measurement of environmental endowments or environmental stringency, the possible endogeneity of the explanatory variables, and the influence of the industrial level of aggregation. As a result, we do find some evidence in favor of the pollution-haven effect. The exogeneity of the environmental endowments was rejected in several industries, and we also find that industrial aggregation matters.<p>
    Keywords: comparative advantage; environmental regulation; trade; pollution haven; Porter hypothesis
    JEL: F18 Q56
    Date: 2009–12–04
  8. By: Mario Larch; Wolfgang Lechthaler
    Abstract: When the world economy was recently hit by a severe recession, governments all over the world reacted by initiating stimulus packages. Some countries (among them, most notably, China and the US) tried to put special emphasis on their home industries by including ``Buy local'' clauses into the stimulus package. By analyzing the dynamics of transitory changes of trade barriers as a short-run response to an economic downturn, we show that beggar-thy-neighbor policy does not work. We then come up with two rationales that help to understand why countries nevertheless consider protectionism to be a good response to a recession: (i) the relationship between vulnerability and the degree of openness to trading partner countries, and (ii) the lobbying of domestic, non-exporting firms
    Keywords: Protectionism; trade liberalization; short term shocks
    JEL: F11 F12 F16
    Date: 2009–11
  9. By: Wagner, Joachim (Leuphana University Lüneburg)
    Abstract: This paper uses unique new data for German manufacturing enterprises from matched regular surveys and a special purpose survey to investigate the causal effect of relocation of activities to a foreign country on various dimensions of firm performance. Enterprises that relocated activities abroad in the period 2001-03 for the first time are compared to firms that did not relocate activities abroad before 2006. The comparison is performed for both 2004 (to document differences between the two groups of firms after some of them started to relocate abroad) and for 2000 (when none of them did relocate abroad). It turns out that, compared to non-offshoring firms, firms that relocated activities were larger and more productive, and had a higher share of exports in total sales. All these differences existed in 2000, the year before some firms started to relocate, and this points to self-selection of "better" firms into offshoring. This finding is in line with results from recent theoretical models and with results from other countries. To investigate the causal effects of relocation across borders on firm performance, six different variants of a matching approach of firms that did and did not start to relocate abroad in 2001-03 were performed based on a propensity score estimated using firm characteristics in 2000 and the change in the performance variable between 1997 and 2000. The performance of both groups was compared for 2004-06 when some firms were relocating firms and the others were not. Broadly in line with hypotheses derived from the literature there is no evidence that offshoring has a negative causal impact on employment in offshoring firms. The effect is positive and large for productivity, and weak evidence for a positive effect on the wage per employee, the proxy variable for human capital intensity used, is found. Contrary to what is often argued, therefore, we find no evidence for a negative causal effect of offshoring on employment in Germany or on other core dimensions of firm performance.
    Keywords: offshoring, Germany, enterprise panel data
    JEL: F23
    Date: 2009–12
  10. By: Bartelsman, Eric (VU University Amsterdam); Haltiwanger, John C. (University of Maryland); Scarpetta, Stefano (OECD)
    Abstract: This paper combines different strands of the productivity literature to investigate the effect of idiosyncratic (firm-level) policy distortions on aggregate outcomes. On the one hand, a growing body of empirical research has been relating cross-country differences in key economic outcomes, such as productivity or output per capita, to differences in policies and institutions that shape the business environment. On the other hand, a branch of empirical research has attempted to shed light on the determinants of productivity at the firm-level and the evolution of the distribution of productivity across firms within each industry. In this paper, we exploit a rich source of data with harmonized statistics on firm level variation within industries for a number of countries. Our key empirical finding is that there is substantial variation in the within-industry covariance between size and productivity across countries, and this variation is affected by the presence of idiosyncratic distortions. We develop a model in which heterogeneous firms face adjustment frictions (overhead labor and quasi-fixed capital) and idiosyncratic distortions. We show that the model can be readily calibrated to match the observed cross-country patterns of the within-industry covariance between productivity and size and thus help to explain the observed differences in aggregate performance.
    Keywords: allocation of resources, productivity, firm heterogeneity, distortions
    JEL: L11 L16 L2 L25 O4 O57
    Date: 2009–11
  11. By: Shawn Arita (Department of Economics, University of Hawaii at Manoa); Christopher Edmonds (Center on the Family, University of Hawaii at Manoa); Sumner La Croix (Department of Economics, University of Hawaii at Manoa); James Mak (Department of Economics, University of Hawaii at Manoa)
    Abstract: Since the early 1990s China’s government has negotiated Approved Destination Status (ADS) with 120 countries. The agreements allow government-approved travel agencies to market group tours and obtain visas in bulk to ADS destinations. We apply a gravity model framework to analyze how ADS has affected Chinese outbound tourist travel from China using Chinese visitor arrivals data from 61 main foreign destinations of mainland Chinese tourists (which account for vast majority of international departures from China) from 1995 to 2005. Fixed effects estimates indicate ADS resulted in significant increases in arrivals from China (averaging 52 percent over three years). We also find evidence of travel diversion as more countries received ADS.
    Keywords: China Outbound Travel, Approved Destination Status, Gravity Model, Tourism, International Agreements, Travel Liberalization
    Date: 2009–11–10
  12. By: Henning Mühlen; Peter Nunnenkamp
    Abstract: Theoretical considerations suggest that the option of waiting under conditions of uncertainty affects the relative importance of firm-level productivity and distance-related transaction costs as driving forces of FDI. Yet the timing of FDI has received little attention in the empirical literature on FDI determinants. To help close this gap we analyze FDI decisions by German firms with and without affiliates in the Czech Republic at different stages of transition. We find that FDI entry strongly depends on firm productivity immediately after the political and economic regime change, but less so with diminishing uncertainty. Likewise, distance-related transaction costs discourage FDI by latecomers considerably less than FDI by early movers
    Keywords: multinational enterprises, firm-level productivity, distance, timing of FDI
    JEL: F23
    Date: 2009–11
  13. By: Eggert, Håkan (Department of Economics, School of Business, Economics and Law, Göteborg University); Greaker, Mads (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: This study deals with fisheries and trade, focusing on developing countries. Fish is globally traded, and for many developing countries, it is an important net export good. In most of these countries, fisheries are often characterized by poorly defined property rights, accompanied by overcapitalization where too many vessels and fishermen catch too few fish from too small stocks. Management is often de facto open access, where vessels with or without permission to fish land as much as they can catch due to limited monitoring and enforcement activities. Even in developed countries, many fisheries are poorly managed, and recent studies indicate that marine ecosystems are in global decline. While trade generally is beneficial for growth and welfare, the combination of pure open access and trade liberalization may both reduce welfare and stocks for a country—an outcome that can be reinforced by the common use of bad subsidies. However, trade liberalization may have an additional positive impact by promoting the development of property rights in response to increased fish exploitation. The WTO can play a role by adopting a broader classification of subsidies to help eliminate bad subsidies, such as like public support of vessel construction, fuel subsidies, or fishing rights outside developing coastal countries provided at limited or zero cost. The WTO can also ssist by distinguishing good subsidies (e.g., improving fisheries management or improving monitoring and enforcement), which are desirable targets when rich countries allocate aid resource to developing countries.<p>
    Keywords: Fisheries; marine resources; property rights; trade and environment; WTO
    JEL: F18 Q20 Q22 Q56
    Date: 2009–11–30
  14. By: Yushi Yoshida (Faculty of Economics, Kyushu Sangyo University)
    Abstract: Using a sample from January 1988 to December 2005 for exports of five Japanese major ports to six destination countries, we examine the effect of market share (with respect to competitors from the same country) on exchange rate pass-through (henceforth, ERPT). Our dataset is unique, allowing us to control for market shares among competing exporters with the same nationality. We provide empirical evidence that the effect of market shares on exchange rate pass-through is consistent with the findings of Feenstra et al. (1996), who show a non-linear relationship between market share and exchange rate pass-through. However, our evidence also indicates that the relationship between market share and exchange rate sensitively relies on market characteristics. With regard to recent studies on declining ERPT, our evidence shows that the ERPTs of Japanese exports are relatively stable over the last two decades and any observed changes are of small magnitude. Especially for the U.S., our evidence indicates that Japanese exports do not account for the recent decline in ERPT of U.S. imports.
    Keywords: Exchange rate pass-through; Local ports; Market share
    JEL: F12 F14 F31 F41
    Date: 2009–11
  15. By: Ole Boysen (Institute for International Integration Studies, Trinity College Dublin; Department of Economics, Trinity College Dublin); Alan Matthews (Institute for International Integration Studies, Trinity College Dublin; Department of Economics, Trinity College Dublin)
    Abstract: This paper analyses the poverty impacts of an economic partnership agreement (EPA) between Uganda and the EU. As Ugandan exports are also eligible for duty-free access to the EU under the Everything But Arms scheme the main EPA-induced change will be the requirement to liberalise EU exporters' access to the Ugandan market. Fears have been raised that this could threaten the livelihoods of poor people through lower prices for agricultural commodities, crowding out of vulnerable industries, and loss of government revenue. In an attempt to address these concerns, we assess the impact potential of an EPA using descriptive statistics of Ugandan trade, social accounting matrix, and household budget survey data. Subsequently, we quantify the impacts on the economy and poverty, in particular, by conducting a simulation study based on a combined CGE-microsimulation model. The descriptive analysis suggests very limited scope for trade liberalisation with the EU and that the poor, in particular, have only weak links to formal markets. The results from the simulation of alternative EPA scenarios show minor but positive macroeconomic impacts indicating potentially low economic adjustment costs. Whether the very small poverty effects emerge positive or not depends on the selection of sensitive products in the EPA. Nevertheless, the very poorest appear to lose under all scenarios.
    Keywords: economic partnership agreements, Uganda, poverty, CGE, microsimulation
    JEL: D31 D58 F13 F14 I32 O55
    Date: 2009–11
  16. By: Constant, Amelie F. (DIW DC, George Washington University); Tien, Bienvenue (DIW DC)
    Abstract: Economic reasons along with cultural affinities and the existence of networks have been the main determinants explaining migration flows between home and host countries. This paper reconsiders these approaches combined with the gravity model and empirically tests the hypothesis that ex-colonial links can still play an important role in the emigration decision. We employ a general linear mixed model, and apply it to the case of skilled, educated and talented Africans, who migrate to Fortress Europe over the period of 1990 to 2001. While we find some differences in the exodus of skilled Africans by sub-regions, the magnitude of the colonial vestige in Africa is a significant determinant of emigration flows. Overall, Portugal is preferred to the UK which is preferred more than Belgium, Germany and Italy. Brainy Africans are, however, indifferent between the UK, France and Spain as a destination country. Established immigrant networks and higher standards of living with job opportunities in the host country are also very important drivers of the emigration of brainy Africans to the European ex-colonial powers.
    Keywords: skilled migration, Africa, colonization, networks, economic reasons
    JEL: F22 O15 J61
    Date: 2009–12

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