nep-int New Economics Papers
on International Trade
Issue of 2010‒03‒13
sixteen papers chosen by
Alessia A. Amighini
University Amedeo Avogadro

  1. International production, technology diffusion, and trade By Shikher, Serge
  2. Trade, instititutions and export specialization. By Crabbé, Karen; Beine, Michel
  3. Home Country Trade Effects of Outward FDI: an analysis of the Portuguese case, 1996-2007 By Miguel Fonseca; António Mendonça; José Passos
  4. Self-enforcing trade agreements : evidence from time-varying trade policy By Bown, Chad P.; Crowley, Meredith A.
  5. Why do within firm-product export prices differ across markets? By Holger Görg; Jonas Kauschke; László Halpern; Balász Muraközy
  6. The Elusive Impact of Investing Abroad for Japanese Parent Firms: Can Disaggregation According to FDI Motives Help? By Laura Hering; Tomohiko Inui; Sandra Poncet
  7. Accelerating Regional Integration: Issues at the Border By Brooks, Douglas H.; Stone, Susan F.
  8. Agglomeration and Trade: State-Level Evidence from U.S. Industries By Hakan Yilmazkuday
  9. Regional Trade Policy Cooperation and Architecture in East Asia By Chia, Siow Yue
  10. Investment, Production and Trade Networks as Drivers of East Asian Integration By Ralph Paprzycki; Keiko Ito
  11. How Do FTAs Affect Exporting Firms in Thailand? By Wignaraja, Ganeshan; Olfindo, Rosechin; Pupphavesa, Wisarn; Panpiemras, Jirawat; Ongkittikul, Sumet
  12. Learning-by-exporting: what we know and what we would like to know By Armando Silva; Ana Paula Africano; Óscar Afonso
  13. Does Material and Service Offshoring Improve Domestic Productivity? Evidence from Japanese manufacturing industries By ITO Keiko; TANAKA Kiyoyasu
  14. Estimating the import content of Argentine exports By Anos-Casero, Paloma; de Astarloa, Bernardo Diaz
  15. Trade Liberalisation and The Poverty of Nations: A Review Article By Prema-chandra Athukorala
  16. Does FDI intensify Economic Growth? Empirics from Bangladesh. By Ahamad, Mazbahul Golam; Tanin, Fahian; Ahmed, Zahir Uddin

  1. By: Shikher, Serge
    Abstract: The paper develops a general equilibrium model of international production and trade. Technology is carried across borders by multinational producers and the set of technologies being used in a particular country is endogenous. Production locations are chosen based on the costs of production and getting the product to market. The model incorporates vertical, horizontal, offshoring, and export-platform FDI. Estimated model parameters describe the states of technology in different countries, barriers to international investment, and trade costs. The model is used to quantify the welfare effects of international production and trade and to investigate the effects of free-trade agreements on offshoring.
    Keywords: international trade; international production; technology diffusion; foreign direct investment; barriers to trade; barriers to investment; heterogeneous producers
    JEL: F15 F23 F11 F17 F21 O33
    Date: 2009–09–01
  2. By: Crabbé, Karen; Beine, Michel
    Abstract: This paper studies whether trade integration between the EU15 and Central Europe has led to more export specialization in Central Europe. Moreover, we analyze the impact of institutional reforms in Central Europe on export specialization. The empirical analysis is set up for thirteen Central European countries over the period 1989-2000. Our results indicate that a reduction in tariffs between EU15 and Central Europe led to increased export specialization in Central Europe. In addition to trade integration, we show that institutional reforms and in particular enterprise reforms contributed to export specialization.
    Keywords: trade integration; tariffs; Herfindahl index; exports; institutions;
    Date: 2009–03–24
  3. By: Miguel Fonseca (University of Porto – Faculty of Economics); António Mendonça (Technical University of Lisbon – School of Economics and Business Administration); José Passos (Technical University of Lisbon – School of Economics and Business Administration)
    Abstract: Given the increased internationalisation of the Portuguese economy through outward Foreign Direct Investment (FDI), particularly on the Portuguese-speaking countries, our main objective is to discuss the empirical relationship between this outward FDI and trade. We use panel data analysis within a framework of gravity equations for exports and imports, with a sample composed by EU-15, U.S.A., Brazil, Angola, Japan and China, for the period 1996-2007. Our main conclusion is that the empirical evidence for Portugal is consistent with a substitution hypothesis between direct investment abroad and trade, and consequently we detect a negative trade balance effect with the majority of countries in our sample, excepting Angola and, in a lesser extension, Spain.
    Keywords: Foreign Direct Investment, Trade, Gravity Model, Portugal
    JEL: F21 C23 F14
    Date: 2010–03
  4. By: Bown, Chad P.; Crowley, Meredith A.
    Abstract: This paper estimates a model of a government making trade policy adjustments under a self-enforcing trade agreement in the presence of economic shocks. The empirical model is motivated by the formal theories of cooperative trade agreements. The authors find evidence that United States'use of its antidumping policy during 1997-2006 is consistent with increases in time-varying"cooperative"tariffs, where the likelihood of antidumping is increasing in the size of unexpected import surges, decreasing in the volatility of imports, and decreasing in the elasticities of import demand and export supply. The analysis finds additional support for the theory that some US antidumping use is consistent with cooperative behavior through a second empirical examination of how trading partners responded to these new US tariffs. Even after controlling for factors such as the expected cost and benefit to filing a WTO dispute or engaging in antidumping retaliation, the analysis find that trading partners are less likely to challenge such"cooperative"US antidumping tariffs that were imposed under terms-of-trade pressure suggested by the theory.
    Keywords: Free Trade,International Trade and Trade Rules,Trade Policy,Currencies and Exchange Rates,Economic Theory&Research
    Date: 2010–03–01
  5. By: Holger Görg; Jonas Kauschke; László Halpern; Balász Muraközy
    Abstract: In this paper we analyze the relationship between gravity variables and f.o.b. export unit values using Hungarian firm-product-destination data. By taking firm-product level selection into account we show that export unit values increase with distance even for particular firm-product level selection and constant markups. The differences are important quantitatively; price differences in Hungarian exports between Germany and the US are about 30%. We also show that unit values are positively related to GDP/capita and that there is a weak negative relationship between unit values and market size. We propose two possible explanations: first, firms may export different quality versions of the same product to different markets. Secondly, directly exporting firms may capture part of the markups on transport cots in their f.o.b. prices
    Keywords: export, price, selection, Hungary
    JEL: D40 F12
    Date: 2010–02
  6. By: Laura Hering; Tomohiko Inui; Sandra Poncet
    Abstract: In the present paper, we investigate whether previous findings of limited effects of investing abroad on the firm’s performance can be explained by the aggregation of heterogeneous effects depending on the FDI motives, sectors and locations. Results suggest, in line with previous work, that on average Japanese outward FDI has limited effects (whether positive or negative) on the activity of internationalizing firms. Fears of “Hollowing out” effects seem to be more justified in the case of FDI to low income countries, for which a contraction of employment and investment and exports is observed. By contrast, we observe a significant positive employment effect for FDI in services, presumably reflecting the operational complementarities between the affiliate and the parent. There is also some evidence of positive labour productivity gains deriving essentially from FDI in manufacturing in high GDP countries.
    Keywords: FDI; multinationals; offshoring; propensity score matching
    JEL: F14 F21 F23
    Date: 2010–01
  7. By: Brooks, Douglas H. (Asian Development Bank Institute); Stone, Susan F. (Asian Development Bank Institute)
    Abstract: The sharp decline in trade volume and value during the current economic crisis has contributed to lower transportation costs and reduced waiting times at border crossings, reducing the urgency of progress on trade facilitation. Meanwhile, greater trade is expected to play a key role in recovery, and in sustaining growth afterwards. The crisis offers an excellent opportunity to make progress on facilitating intra-Asian trade and boosting the region's contribution to global economic recovery. <p>This paper examines the status of, and challenges to, trade facilitation among the Asian Asia-Pacific Economic Cooperation members, and the roles of hard and soft infrastructure (including logistics) in improving that performance. Analysis with a computable general equilibrium framework indicates that even a relatively modest reduction in trade costs can yield significant gains. Gross domestic product in the region expands and countries move into a more diversified trading pattern. Of particular relevance for policy considerations is that the results vary considerably across bilateral trade routes and commodity categories.
    Keywords: asian apec members infrastructure; regional integration; trade facilitation
    JEL: F13 F15 F17 O24
    Date: 2010–02–25
  8. By: Hakan Yilmazkuday (Department of Economics, Temple University)
    Abstract: This paper investigates the connection between economic agglomeration and trade patterns within the U.S. at the industry level. On the consumption side, industry- and state-specific international imports and elasticities of substitution are shown to be systematically connected to consumption agglomeration effects, while on the production side, industry- and state-specific international exports and intermediate input trade are shown to be systematically connected to production agglomeration and specialization effects. Industry structures play an important role in the determination and magnitude of these effects.
    Keywords: Regional Trade, Intermediate Inputs, The United States
    JEL: R12 R13 R32
    Date: 2010–03
  9. By: Chia, Siow Yue (Asian Development Bank Institute)
    Abstract: The global financial and economic crisis has affected East Asia mainly through the trade channel. The region remains heavily dependent on export markets in Europe and North America through both direct exports to these destinations and indirect exports via the export of parts and components to other East Asian countries, particularly the People's Republic of China, which are then assembled and exported as final goods to Europe and North America. The need to rebalance growth in East Asia in the post-crisis era requires measures to strengthen domestic demand and emphasize intra-regional demand. Production networks have been integrating East Asia and this integration process is being hastened by the rapid growth of regional and bilateral trade and economic agreements since the late 1990s. The trigger point for regionalism in East Asia appears to be the 1997-1998 Asian financial crisis, and regionalism is being accelerated by the dismal outlook for the Doha Development Round, the economic rise of the People's Republic of China and India, and the ongoing global financial crisis. Proposals on regional trade architecture include Association of Southeast Asian Nations (ASEAN)+3 and ASEAN+6 for East Asia, the Free Trade Area of the Asia Pacific, and an extension of the Trans-Pacific Strategic Economic Partnership. The case for a new regional trade architecture includes improved competitiveness and economic dynamism from a large integrated market; increased intra-regional flows of trade, investment, and human resources; expansion and deepening of production networks; a rebalancing of growth towards regional demand; and a stronger and cohesive voice in international fora and organizations. Challenges include the pressures of protectionism in an economic recession, the question of whether there is a common political vision, the existence of multiple and overlapping free trade agreements with the accompanying problem of the noodle bowl, and the wide development gap among the region's economies.
    Keywords: fta asia restructuring; asean response financial crisis; rebalancing growth asia; regional trade policy cooperation; architecture east asia
    JEL: F13 F15
    Date: 2010–02–02
  10. By: Ralph Paprzycki; Keiko Ito
    Abstract: This paper shows that foreign direct investment (FDI), production and trade networks have been a principal driver of East Asian integration. A key element in this has been the role of production sharing, in which different stages of the production process are dispersed across countries in the region. The rise of such patterns of production has been facilitated by the unilateral liberalization of trade and investment by governments in the region to attract FDI. However, liberalization and the resulting pattern of regional integration have been heavily concentrated in a select number of industries (led by electrical machinery) and are largely confined to a particular form of supply]side integration (production sharing), and the region continues to depend on external demand.
    Date: 2010–02
  11. By: Wignaraja, Ganeshan (Asian Development Bank Institute); Olfindo, Rosechin (Asian Development Bank Institute); Pupphavesa, Wisarn (Asian Development Bank Institute); Panpiemras, Jirawat (Asian Development Bank Institute); Ongkittikul, Sumet (Asian Development Bank Institute)
    Abstract: Thailand-an outward-oriented regional production hub-is one of East Asia's most active users of free trade agreements (FTAs) as an instrument of commercial policy. By December 2009, Thailand had 11 concluded FTAs, and more were either under negotiation or proposed. Thai trade negotiators have striven to secure market access via FTAs, but little is known on how FTAs actually affect exporting firms. A survey of 221 exporters in leading sectors forms the basis for the first systematic study of the business impact of FTAs in Thailand. Key findings are as follows: (i) 24.9% of respondents used Thai FTAs as of 2007-2008, and this figure seems set to rise; (ii) 45.9% of respondents said that FTAs had influenced their business plans; (iii) 26.2% of firms felt that dealing with multiple rules of origin adds to business costs, and this is estimated to be less than 1% of export sales; (iv) more than half the sample firms have consulted with government and business associations on FTAs; and (v) a significant demand existed for business development services to adjust to FTAs, particularly for small and medium enterprises (SMEs). The findings suggest that Thailand should refine its FTA strategy to take better advantage of regional trade agreements. The study concludes with specific recommendations to improve business awareness of FTAs, encourage greater utilization of FTA preferences, increase competitiveness of local firms, and mitigate the potential effect of multiple rules of origin.
    Keywords: thailand fta impact; thailand afta business; thailand economy ftas
    JEL: F10 F15 O24
    Date: 2010–01–29
  12. By: Armando Silva (Faculdade de Economia, Universidade do Porto); Ana Paula Africano (CEF.UP, Faculdade de Economia, Universidade do Porto); Óscar Afonso (CEF.UP, OBEGEF, Faculdade de Economia, Universidade do Porto)
    Abstract: This paper revises the thesis that exporting firms learn to be more innovative and efficient as they have contact with certain information flows from their foreign activity (e.g., from buyers, suppliers or competitors). The paper begins by exploring the connections between two distinct concepts: Self-Selection (of more efficient firms into exports) and Learning-by-Exporting. The study then proceeds with a comparative analysis of the most recent literature and presents common facts and evidence, as well as key issues still open to debate. Learning-by-Exporting should be measured directly using firms´ innovative performance. However, given the lack of suitable data on firms’ innovative activities most studies have followed an indirect approach, using productivity measures. Several methodologies have been employed to estimate Total Factor Productivity and to test the Learning-by-Exporting hypothesis, but so far no final consensus has been reached on the best way to do it.
    Keywords: Learning-by-exporting, self selection, total factor productivity
    JEL: F10 F20 O47
    Date: 2010–02
  13. By: ITO Keiko; TANAKA Kiyoyasu
    Abstract: An increasing number of manufacturers are shifting some stages of the production process offshore. This study investigates the effects of offshoring on productivity in Japanese manufacturing industries for the period 1988-2004. Material offshoring, as measured by an import share of intermediate material inputs, has steadily increased during the period, with a pronounced increase in offshoring to Asian countries. In a wide range of specifications, we find significantly positive correlations between material offshoring and productivity at the industry level. The estimates are particularly robust for offshoring to Asia. These results suggest that Japanese manufacturing firms have developed an extensive international division of labor in East Asia, which in turn may have enhanced domestic productivity. In contrast, service offshoring, as measured by an import ratio of service inputs, is not associated with industry-level productivity. We find a positive correlation between offshoring and productivity only for information services, suggesting that in this segment, offshoring offers potential benefits.
    Date: 2010–02
  14. By: Anos-Casero, Paloma; de Astarloa, Bernardo Diaz
    Abstract: Despite recent efforts toward collecting evidence of vertical specialization for developed economies, scarce work has been dedicated to developing economies and to Argentina, in particular. The key contribution of this paper is to provide comparable estimates of vertical specialization as reflected in the imported content of exports in Argentina. Drawing on the 1997 input-output matrix for Argentina, the authors estimate that the imported content of the country’s exports is about 14.5 percent of total exports, lower than for other emerging economies. They also provide estimates of imported content for more disaggregated product categories.
    Keywords: Water and Industry,Transport Economics Policy&Planning,Commodities,Agribusiness&Markets,Rural Development Knowledge&Information Systems
    Date: 2010–03–01
  15. By: Prema-chandra Athukorala
    Abstract: This paper aims to contribute to the contemporary policy debate on the role of trade policy reforms in economic development and poverty reduction in developing countries through a review of Trade Liberalisation and The Poverty of Nations by A.P. Thirlwall and Penelope Pacheco-Lopez (Cheltenham, UK: Edward Elgar). It begins with a chapter-by-chapter summary of the book while emphasising the main strengths and novel contributions. This is followed by an evaluation of the key inferences in the context of an interpretative survey of the related literature.
    Keywords: trade policy, globalisation, poverty
    JEL: O19 O24 O50
    Date: 2010
  16. By: Ahamad, Mazbahul Golam; Tanin, Fahian; Ahmed, Zahir Uddin
    Abstract: Inward FDI to the middle-income countries has the evidence as a major stimulus to the economic growth; conventionally at export-oriented manufacturing sector. In point of fact, basic macro fundamentals like as growth of gross domestic capital formation, foreign reserve, infrastructure etc. accelerates the FDI inflows. This study reviews the long-run trend on the time scale of FDI to Bangladesh over the period 1975- 2006 and major factors determining foreign companies' decisions to invest, in associated with economic growth. Contents of the paper describe the theoretical development and extensive literature review to find out the appropriate variables to deter the foreign direct investment from time series data. On the basis of intricate link between foreign direct investment and growth, all explained determinants enhance the facilitation, turnover, and return in FDI concentrated sectors that promote long-term sustainable growth with specific shortcomings, directly or indirectly, in our labor-intensive economic activity. Reduced government’s ineffectiveness along with supporting policy framework makes Bangladesh as an attractive destination of FDI, that has a positive spillover and significant impacts affect over time through dynamic effects on economic growth.
    Keywords: FDI; Economic Growth; Bangladesh
    JEL: O16 F43
    Date: 2010–02–01

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