nep-int New Economics Papers
on International Trade
Issue of 2010‒03‒06
fifteen papers chosen by
Alessia A. Amighini
University Amedeo Avogadro

  1. Kyoto and the carbon content of trade By Aichele, Rahel; Felbermayr, Gabriel
  2. Notes on Detecting the Effects of Non Tariff Measures By Céline CARRERE; Jaime MELO DE
  3. Export Diversification: What's behind the Hump? By Céline CARRERE; Olivier CADOT; Vanessa STRAUSS-KHAN
  4. The Duration of Trade Revisited. Continuous-Time vs. Discrete-Time Hazards By Hess, Wolfgang; Persson, Maria
  5. Pricing to market when quality matters By Roberto Basile; Sergio de Nardis; Alessandro Girardi
  6. Intermediation and Economic Integration By Pol Antràs; Arnaud Costinot
  7. Intermediated Trade By Pol Antràs; Arnaud Costinot
  8. Self-Selection and International Migration: New Evidence from Mexico By Robert Kaestner; Ofer Malamud
  9. Labor Market Frictions as a Source of Comparative Advantage, with Implications for Unemployment and Inequality By Elhanan Helpman
  10. Environmental Product Standards in North-South Trade By Jota ISHIKAWA; Toshihiro OKUBO
  11. The Current Trade Paradigm and Women's Health Concerns in India: With Special Reference to the Proposed EU-India Free Trade Agreement By Ranja Sengupta; Narendra Jena
  13. Non-Tariff Measures: What do we Know, What Should be Done? By Jaime MELO DE; Céline CARRERE
  14. The Impact of International Trade Flows on the Growth of Brazilian States By Marie Daumal; Selin Ozyurt
  15. The impact of trade openness on regional inequality : the cases of India and Brazil By Marie Daumal

  1. By: Aichele, Rahel; Felbermayr, Gabriel
    Abstract: A unilateral tax on CO2 emissions may drive up indirect carbon imports from non-committed countries, leading to carbon leakage. Using a gravity model of carbon trade, we analyze the effect of the Kyoto Protocol on the carbon content of bilateral trade. We construct a novel data set of CO2 emissions embodied in bilateral trade flows. Its panel structure allows dealing with endogenous selection of countries into the Protocol. We find strong statistical evidence for Kyoto commitments to affect carbon trade. On average, the Kyoto protocol led to substantial carbon leakage but its total effect on carbon trade was only minor. --
    Keywords: Carbon leakage,gravity model,international trade,climate change,embodied emission,input-output analysis
    JEL: F18 Q54 Q56
    Date: 2010
  2. By: Céline CARRERE (Centre d'Etudes et de Recherches sur le Développement International); Jaime MELO DE (Université Genève)
    Abstract: Alternative approaches to estimating the effects of non-tariff measures (NTMs) on trade flows are discussed and evaluated critically. Recent econometric studies point to three results: (i) NTM restrictiveness measures based on an aggregate of ‘core' NTMs are more restrictive than existing tariffs and, because of export composition towards agricultural products, in the aggregate, these ‘core' NTMs limit market-access most for low-income countries; (ii) Proxies for individual NTMs, have a negative effect on the volume of bilateral trade for the detailed product under scrutiny; (iii) harmonization of standards is trade enhancing. Case studies confirm several of these patterns, and also that perceived severity of NTMs varies across products and across destinations for a given product. Across broadly-defined imports at the section level, NTMs are more restrictive than the corresponding tariffs with two-thirds of the AVE estimates in the 25%-50% range. Technical regulations and non-automatic licensing are the most used single-NTM measures and the restrictiveness of technical regulations increases with income per capita.
    Keywords: Export diversification, Latin America, international trade
    JEL: O11 F1
    Date: 2009–12
  3. By: Céline CARRERE (Centre d'Etudes et de Recherches sur le Développement International); Olivier CADOT (HEC Lausanne); Vanessa STRAUSS-KHAN
    Abstract: The paper explores the evolution of export diversification patterns along the economic development path. Using a large database with 156 countries over 19 years at the HS6 level of disaggregation (4'991 product lines) we look for action at the "intensive" and "extensive" margins (diversification of export values among active product lines and by addition of new product lines respectively) using various export concentration indices and the number of active export lines. We also look at new product introduction as an indicator of "export-entrepreneurship". We find a hump-shaped pattern of export diversification similar to what Imbs and Wacziarg (2003) found for production and employment. Diversification and subsequent re-concentration take place mostly along the extensive margin, although the intensive margin follows the same pattern. This hump-shaped pattern is consistent with the conjecture that countries travel across diversification cones, as discussed in Schott (2003, 2004) and Xiang (2007).
    Keywords: Export diversification, international trade
    JEL: F1 O11
    Date: 2009–11
  4. By: Hess, Wolfgang (Department of Economics, Lund University); Persson, Maria (Department of Economics, Lund University)
    Abstract: The recent literature on the duration of trade has predominantly analyzed the determinants of trade flow durations using Cox proportional hazards models. The purpose of this paper is to show why it is inappropriate to analyze the duration of trade with continuous-time models such as the Cox model, and to propose alternative discrete-time models which are more suitable for estimation. Briefly, the Cox model has three major drawbacks when applied to large trade data sets. First, it faces problems in the presence of many tied duration times, leading to biased coefficient estimates and standard errors. Second, it is difficult to properly control for unobserved heterogeneity, which can result in spurious duration dependence and parameter bias. Third, the Cox model imposes the restrictive and empirically questionable assumption of proportional hazards. By contrast, with discrete-time models there is no problem handling ties; unobserved heterogeneity can be controlled for without difficulty; and the restrictive proportional hazards assumption can easily be bypassed. By replicating an influential study by Besedeš and Prusa from 2006, but employing discrete-time models as well as the original Cox model, we find empirical support for each of these arguments against the Cox model. Moreover, when comparing estimation results obtained from a Cox model and our preferred discrete-time specification, we find significant differences in both the predicted hazard rates and the estimated effects of explanatory variables on the hazard. In other words, the choice between models affects the conclusions that can be drawn.
    Keywords: Duration of Trade; Continuous-Time versus Discrete-Time Hazard Models; Proportional Hazards; Unobserved Heterogeneity
    JEL: C41 F10 F14
    Date: 2010–02–19
  5. By: Roberto Basile (ISAE - Institute for Studies and Economic Analyses); Sergio de Nardis (ISAE - Institute for Studies and Economic Analyses); Alessandro Girardi (ISAE - Institute for Studies and Economic Analyses)
    Abstract: We build a model of price differentiation with firm heterogeneity, which allows for imperfect competition and market segmentation in the presence of flexible exchange rates as well as horizontal and vertical differentiation and different tastes of consumers in destination markets. We empirically assess the main predictions of our theoretical framework by using firm-level data surveyed by ISAE. We document that export-domestic price margins are significantly affected by price and quality competitiveness even controlling for foreign demand conditions, size, export intensity, destination markets and unobservables. Finally, we provide evidence of a strong heterogeneity across firms in their reaction to price and quality competitiveness.
    Keywords: Pricing to market, qualitative choice models, firm heterogeneity.
    JEL: D21 F10 C23 C25
    Date: 2009–12
  6. By: Pol Antràs; Arnaud Costinot
    Abstract: The theory of international trade has paid scant attention to market institutions. Neither neoclassical theory nor new trade models typically specify the process by which supply and demand meet. Yet in the real world, intermediaries play a central role in materializing the gains from exchange outlined by standard trade theories. In Antràs and Costinot (2010), we have developed a stylized but explicit model of intermediation in trade. In this short paper, we present a variant of this model that illustrates the potential role of intermediaries in facilitating the realization of the gains from trade.
    JEL: D3 D4 F10 F15 O1
    Date: 2010–02
  7. By: Pol Antràs; Arnaud Costinot
    Abstract: This paper develops a simple model of international trade with intermediation. We consider an economy with two islands and two types of agents, farmers and traders. Farmers can produce two goods, but in order to sell these goods in centralized (Walrasian) markets, they need to be matched with a trader, and this entails costly search. In the absence of search frictions, our model reduces to a standard Ricardian model of trade. We use this simple model to contrast the implications of changes in the integration of Walrasian markets, which allow traders from different islands to exchange their goods, and changes in the access to these Walrasian markets, which allow farmers to trade with traders from different islands. We find that intermediation always magnifies the gains from trade under the former type of integration, but leads to more nuanced welfare results under the latter, including the possibility of aggregate losses. These welfare losses may be circumvented, however, through policies that discriminate against foreign traders in a way that minimizes the margins charged by domestic traders.
    JEL: D3 D4 F10 F15 O1
    Date: 2010–02
  8. By: Robert Kaestner; Ofer Malamud
    Abstract: This paper uses data from the Mexican Family Life Survey (MxFLS) to examine the patterns of selection of male, Mexican migrants to the United States. We confirm previous findings that Mexican migrants are selected from the middle of the education distribution, but show that there is no evidence for selection of migrants on cognitive ability. We demonstrate that migrants are also selected from the middle of the observed skill distribution, as measured by predicted wages. However, controlling for proxies of the costs of migration, we find substantially less evidence of "intermediate selection" on observed skill. We find little evidence for selection on unobserved skill, with or without controls for the costs of migration. Finally, we show directly that the decision to migrate is highly correlated with differential returns to observable skill and the costs of migration. Overall, these findings are consistent with the predictions of the canonical model of migration.
    JEL: J24 J61
    Date: 2010–02
  9. By: Elhanan Helpman
    Abstract: Recent research has emphasized firm heterogeneity as a source of comparative advantage. Combining this approach with labor market frictions and worker heterogeneity provides a framework for studying the impact of trade on unemployment and inequality. This paper reviews this approach and reports a number of results from recent studies.
    JEL: F12 F16 J64
    Date: 2010–02
  10. By: Jota ISHIKAWA (Hitotsubashi University and RIETI); Toshihiro OKUBO (Research Institute for Economics and Business Administration, Kobe University)
    Abstract: One channel through which environment is damaged is consumption. To protect environment, various product standards are introduced all over the world. By using a new economic geography framework, this paper explores the effects of environmental product standards on environment in a North-South trade model. We examine a situation in which North unilaterally introduces an environmental product standard. Specifically, those products that do not meet the standard are not allowed to be sold in the North market. We find that such a standard may worsen North environment but improve South environment through firm relocation.
    Keywords: environmental product standards, compliance costs, firm location, footloose capital model
    JEL: F18 Q54
    Date: 2010–03
  11. By: Ranja Sengupta; Narendra Jena
    Abstract: India is currently negotiating a Free Trade Agreement with the European Union, which includes not only liberalization of commodity trading, but also a wide range of chapters including deep services trade liberalization, full investment liberalization, and stricter IPR conditions than the TRIPS norms. An analysis and evaluation of health impacts of this FTA on Indian women is necessary. The need to indicate suitable policy interventions, both in the trade agreement and in the domestic socio economic environment, to maintain and encourage women’s access to health and healthcare, is undeniable. This study is an attempt to provide such an analysis in simple terms. [Paper II].
    Keywords: liberalization, healthcare, socio economic environment, trade, women's, health, India, European Union, EU, FTA, free trade agreement, policy, state, domestic,
    Date: 2010
  12. By: Jaan Masso; Tõnu Roolaht; Urmas Varblane
    Abstract: A growing literature is trying to analyse the productivity gap between domestic and foreign firms with differences in innovation indicators. In our paper we analyse the relationship between inward and outward FDI at either company or industry level and the innovation behaviour of companies in Estonia. We use company-level data from three waves of the Community Innovation Surveys, which are combined with financial data from the Estonian Business Register and FDI data from the balance of payments statistics. For the analysis we apply a structural model involving equations on innovation expenditure, innovation outcome and productivity, and also innovation accounting and propensity score matching approaches. Our results show that the higher innovation output of foreign owned companies vanishes after various company characteristics are controlled for, but there were significant differences in innovation inputs such as the higher use of knowledge sourcing and the lower importance of various impeding factors. Outward investment has a positive influence on innovativeness among both domestic and foreign owned companies.
    Keywords: innovation, internationalisation, foreign direct investments, catching-up countries
    JEL: F10 F23 O30
    Date: 2010
  13. By: Jaime MELO DE (Université Genève); Céline CARRERE (Centre d'Etudes et de Recherches sur le Développement International)
    Abstract: With the reduction in tariff barriers, Non-tariff and behind-the-border measures (NTM and BTB) have increased in importance. This paper surveys the state of knowledge with the view to drawing implications for policy suggestions to reduce those NTM barriers that are welfare reducing. Following a description of data bases and their shortcomings, the paper reviews the state of understanding on the effects of NTMs on trade flows. The more difficult issue of translating these effects into welfare implications are covered next. The paper concludes with different approaches at reducing NTMs.
    Date: 2009–12
  14. By: Marie Daumal (Université Paris 8 Vincennes-Saint-Denis, Université Paris-Dauphine, LEDa, UMR DIAL); Selin Ozyurt (Université Paris-Dauphine)
    Abstract: The aim of this paper is to explore the impact of Brazil’s trade openness on regional inequalities by estimating the effect of international trade flows on growth of Brazilian states, depending on their income level. For this purpose, we run dynamic growth regressions, using the system GMM estimator, on a panel data set including 26 Brazilian states for the 1989 - 2002 period. Growth rates of Brazilian states are regressed on control variables and on Brazilian states’ trade openness variables. All variables vary across both states and year. The results indicate that trade openness benefits more the Brazilian states with higher levels of per capita income, thereby tending to increase regional inequalities in Brazil. Besides, we find that trade openness advantages more the states with a good level of human capital as well as the industrialized states rather than the states whose main activity is agriculture. The problem that this study reveals is that international trade seems to provide additional advantages to already well developed Brazilian states while one of the priorities of the Brazilian federal government is to achieve a better territorial balance in Brazil. _________________________________ Ce travail a pour objectif d’estimer l’impact des flux de commerce international sur la croissance des Etats brésiliens. A l’aide de l’estimateur GMM, le taux de croissance des Etats brésiliens est régressé sur divers déterminants de la croissance et sur leur taux d’ouverture commerciale. La base de données en panel contient les 26 Etats brésiliens sur la période 1989 - 2002. Les estimations de l’équation de croissance montrent que les flux de commerce international des Etats favorisent davantage la croissance des Etats riches que celle des Etats les moins développés. Nous montrons également qu’il existe au Brésil une convergence conditionnelle. Les Etats pauvres ont un taux de croissance plus élevé que les Etats riches mais il semble que leurs états stationnaires soient très différents les uns des autres, ce qui nous amène à penser que les inégalités régionales resteront importantes dans l’avenir.
    Keywords: International trade, growth equation, GMM estimator, Brazilian states, Commerce international, équation de croissance, estimateur GMM, Etats brésiliens.
    JEL: F43 R11
    Date: 2010–01
  15. By: Marie Daumal (Université Paris 8 Vincennes-Saint-Denis, Université Paris-Dauphine, LEDa, UMR DIAL)
    Abstract: Regional inequalities are large in India and Brazil and represent a development challenge. This paper aims to determine whether regional disparities are linked to countries’ trade openness. An annual indicator of regional inequalities is constructed for India over the period 1980-2003 and for Brazil over 1985-2003. Results from time series regressions show that Brazil’s trade openness contributes to the reduction in regional inequalities in Brazil. The opposite result is found for India. India’s trade openness is an important factor aggravating income inequality among Indian states. In both countries, the inflows of foreign direct investment are found to increase regional disparities. _________________________________ Dans les années 90, les inégalités régionales ont fortement augment´e en Inde. Les inégalités entre Etats brésiliens sont importantes et constituent un problème politique majeur pour la fédération brésilienne. En 1991, ces deux pays se sont progressivement ouverts au commerce international. L’objectif du papier est de déterminer s’il existe ou non un lien entre les inégalités régionales et l’ouverture commerciale dans les cas de l’Inde et du Brésil. J’ai construit un indicateur, l’index Gini, qui est une mesure des inégalités régionales, sur la période 1980-2004 pour l’Inde et sur la période 1985-2004 pour le Brésil. Cet indicateur des inégalités régionales est ensuite régressé sur divers déterminants dont l’ouverture commerciale des pays, en utilisant la technique des séries temporelles et des modèles vectoriels à correction d’erreur. Je trouve que l’ouverture commerciale de l’Inde a fortement aggravé les inégalités existant entre l’Inde du Nord, de plus en plus pauvre, et l’Inde du Sud de plus en plus riche. Or ces inégalités régionales croissantes sont maintenant une source de tension et de conflits au sein de la fédération indienne, les Etats du Sud ne voulant plus “payer” pour le Nord du pays. Au contraire, l’ouverture du Brésil semble avoir entraîné une diminution des inégalités entre Etats brésiliens.
    Keywords: Trade openness, regional inequality, India, Brazil, time series regression, Ouverture commerciale, inégalités régionales, Inde, Brésil, séries temporelles.
    JEL: F43 R11
    Date: 2010–02

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