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on International Trade |
| By: | Ana Fernandes (University of Sussex); Heiwai Tang (Tufts University and Centro Studi Luca d’Agliano) |
| Abstract: | Using detailed product-level export data for China and a variant of the Antràs and Helpman (2004) model that includes investments in component search, we examine the sectoral determinants of foreign direct investment (FDI) versus foreign outsourcing in export processing trade. We exploit the coexistence of two regulatory export processing regimes in China, which specify who owns and controls the imported components for export processing. We find that in the regime that Chinese plants own the imported components, the share of exports from vertically integrated plants is increasing in the intensity of headquarter inputs across sectors, and is decreasing in the contractibility of inputs. These results are consistent with the property- rights theory of intra-firm trade. However, in the regime that foreign firms own the imported components, no significant relationship is found between the prevalence of vertical integration, headquarter intensity and input contractibility across sectors. The positive relationship between productivity dispersion and the export share of integrated plants across sectors, as suggested by the existing literature, is found only in the regime that foreign firms own the imported components. These results are consistent with our model, which considers ownership of imported components as an alternative to asset ownership to alleviate the hold-up problem by the export-processing plant. |
| Keywords: | Intra rm trade, Vertical integration, Export processing, Outsourcing |
| JEL: | F14 F23 L14 L33 |
| Date: | 2010–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:csl:devewp:289&r=int |
| By: | Emanuele Forlani (Université catholique de Louvain – CORE) |
| Abstract: | This paper will assess the importance of internal firm resources in overcoming sunk entry costs associated with export. When firms are not able to raise additional external funds for investments, they are credit-constrained, and in such a case, new exporters have to rely on their internal liquidity to pay sunk costs. Using a data set of small and medium size Italian enterprises (SMEs), we find that entry probability in the export market is affected by the level of cash stock for constrained firms. We propose a methodology used to identify a priori constrained firms, employing index analysis as used in business economics. The estimation of the Euler equation for investments confirms the fitness of our classification. In addition we find that exporters show higher liquidity if they raise the number of destinations. Finally, we do not find evidence that entry in the export market improves firm\'s financial health, while ex-ante new entrants are found to be relatively more leveraged. |
| Keywords: | Productivity, Credit constraints, Heterogenous firms, Trade |
| JEL: | C14 D24 F10 F12 F13 F19 M40 |
| Date: | 2010–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:csl:devewp:291&r=int |
| By: | Maren Lurweg; Nicole Uhde |
| Abstract: | This paper studies the impact of international trade on individual labour market outcomes in the German manufacturing sector for the period 1995-2006. Combining micro-level data from the German Socioeconomic Panel and industry-level trade data from input-output tables, we examine the impacts on (1) job-to-unemployment transitions and (2) annual earnings. The probability of becoming unemployed rises when workers are employed in Trade Sensitive industries and decreases for workers in Trade Gaining industries. Wage effects are statistically significant for three of four trade-exposed groups of industries, but they are relatively small. The personal characteristics of workers seem to exert a substantial effect on employment status and earnings level. |
| Keywords: | International trade, employment status, individual wages |
| JEL: | F16 C23 J31 J63 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp297&r=int |
| By: | Marianna Belloc; Samuel Bowles |
| Date: | 2010–04–27 |
| URL: | http://d.repec.org/n?u=RePEc:cla:levarc:661465000000000051&r=int |
| By: | INSEL, Aysu; SUNGUR CAKMAK, Nesrin |
| Abstract: | This paper examines the link between migration and trade, focusing on Turkey as a “sending” country and the selected trading partners, Austria, Belgium, Denmark, Finland, France, Germany, Holland, Italy, Norway, Spain, Sweden, Switzerland and the UK, as the “receiving” countries in Europe. The research question is: “Do Turkish emigrants have positive impacts on the exports and imports of Turkey through preference and/or network channels.” The investigation methodology involves the fixed effect panel data analysis, and the estimation technique is the Least Squares under the assumption of the presence of cross section heteroskedasticity and the robust standard errors. This paper includes the 1980-2007 period, as well as two sub-periods, 1980-1995 and 1996-2007, in order to test the impact of the 1995 December Customs Union agreement between Turkey and EU countries. The trade function has been determined by the stock of Turkish population, per capita real income, real exchange rate, and the lagged dependent variable. It has been found that Turkish emigrants have significantly positive effect on trade mainly after the Custom Union Agreement, through the preference and network channels. |
| Keywords: | Migration; Trade; Panel data; Dynamic models; Turkey |
| JEL: | F22 C23 F14 |
| Date: | 2010–04–14 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:22100&r=int |
| By: | Riccardo De Bonis (Banca d'Italia, Economics and International Relations Area); Giovanni Ferri (Universit… degli Studi di Bari); Zeno Rotondi (UniCredit Group, Head of Research and Competitors Benchmarking,, Retail Division) |
| Abstract: | We show that a longer relationship length with the main bank fosters Italian firms' foreign direct investment (FDI) and, weakly, production off-shoring abroad. Possibly, longer bank relationships help secure external financing for these companies, which have become more opaque because of their internationalization. In contrast, other than for smaller-sized companies, we detect no impact on firms' propensity to export, suggesting that exporting alters enterprises' financial set-up less than shifting production internationally. We also find a link between the internationalization of the main creditor bank and firm FDIs. Our evidence suggests that reexisting strong bank-firm relationships support manufacturing firms' production internationalization. |
| Keywords: | bank-firm relationships, export, external finance, foreign direct investments, internationalization, off-shoring |
| JEL: | D21 F10 F21 F23 G21 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:anc:wmofir:37&r=int |
| By: | Thomas J. Holmes; John J. Stevens |
| Abstract: | There is wide variation in the sizes of manufacturing plants, even within the most narrowly defined industry classifications used by statistical agencies. Standard theories attribute all such size differences to productivity differences. This paper develops an alternative theory in which industries are made up of large plants producing standardized goods and small plants making custom or specialty goods. It uses confidential Census data to estimate the parameters of the model, including estimates of plant counts in the standardized and specialty segments by industry. The estimated model fits the data relatively well compared with estimates based on standard approaches. In particular, the predictions of the model for the impacts of a surge in imports from China are consistent with what happened to U.S. manufacturing industries that experienced such a surge over the period 1997--2007. Large-scale standardized plants were decimated, while small-scale specialty plants were relatively less impacted. |
| JEL: | F10 L11 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15957&r=int |
| By: | Daniel Horgos (Centro Studi Luca d’Agliano and Helmut Schmidt University) |
| Abstract: | Empirical contributions on service offshoring show less pronounced labor market implications than with material offshoring. Since no formal model exists investigating service offshoring in particular, empirical examinations are not based on properly defined hypothesis. This contribution formalizes service offshoring within a Ricardo-Viner specific factors model. As service offshoring is assumed to expand the range of possible offshoring scenarios,results differ from those of material offshoring. The different scenarios have opposite implications and sum up to marginal effects in the aggregate. This theoretical contribution thus is capable of explaining empirical findings so far and provides clear testable hypotheses for future research. |
| Keywords: | service offshoring; trade in services; specific factors model |
| JEL: | F16 F40 |
| Date: | 2010–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:csl:devewp:290&r=int |
| By: | Subramanian Ravi; Sachdeva Charu; Morris Sebastian |
| Abstract: | This paper discusses the trends in India's outward FDI over the last decade and then attempts to identify the driving factors for the same. The aim is to provide policy makers with insights regarding levers which would help in encouraging FDI outflows and to stimulate further research in foreign investment from emerging economies. The analysis is based on 287 instances of foreign investment from India by top Indian companies across 17 sectors. The paper draws on the "eclectic" paradigm to study the impact of ownership, location and internalization variables on India's foreign investment. A sector wise analysis of mode of entry, intent of entry and geographic concentration has been performed. At an aggregate level, it has been found that acquisitions have been the predominant mode of entry for Indian firms investing abroad and seeking new markets the primary intent of investment. A regression model was also developed to understand the impact and relative importance of owndership variables such as distribution system, need for resources, factor of production, post sales service requirement, presence of IP and brand on foreign investment from India. It was found that high distribution expenses and need for resources had a very positive influence on foreign investment. The paper also discusses the key policy changes that impacted outward FDI from India in the last decade and relationship of outward FDI with other macroeconomic indicators such as GDP and Fischer Open Differential. |
| Date: | 2010–03–26 |
| URL: | http://d.repec.org/n?u=RePEc:iim:iimawp:wp2010-03-01&r=int |
| By: | Thomas Richter (GIGA German Institute of Global and Area Studies) |
| Abstract: | This paper argues that trade and capital account reforms within autocracies underlie the primacy of foreign currency procurement. A longitudinal comparison of four countries (Morocco, Tunisia, Egypt and Jordan) in the Middle East and North Africa region shows a historical sequencing of reforms. In the 1960s and 1970s, the foreign exchange scarcity was managed primarily by rising restrictions, accumulation of debt and a number of unilateral country-specific strategies, including broader economic openings (infitah) and isolated capital account liberalizations. However, IMF-friendly reforms (orthodox trade liberalization) only became a political option in the context of the extreme fiscal scarcity of the 1980s and 1990s, after the failure of these earlier policies and the drying up of alternative unconditional finance. Additionally, the time differences regarding when orthodox reforms are implemented within autocracies mainly relate to global and regional cycles of different external windfall gains. These findings complement recent debates about the rush to free trade in at least two regards. First, they point to distinct causal mechanisms depending on the type of political regime (for example, autocracy versus democracy), explaining the beginning of trade and capital account liberalizations among developing countries. Second, they reveal the conditional historical influence of neoliberal ideas among structurally similar autocracies. |
| Keywords: | Autocracy, trade and capital account liberalization, Morocco, Tunisia, Egypt,Jordan |
| JEL: | F23 L14 O14 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:gig:wpaper:131&r=int |
| By: | Matthias Busse; Peter Nunnenkamp; Mariana Spatareanu |
| Abstract: | The paper analyses the impact of fundamental labor rights on bilateral FDI flows to 82 developing countries. The results indicate that investments by multinationals are significantly higher in countries that adhere to labor rights, thereby refuting the hypothesis that repression of these rights fosters FDI. |
| Keywords: | FDI, Labor Rights, Developing Countries |
| JEL: | F21 F23 J50 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:run:wpaper:2010-002&r=int |