nep-int New Economics Papers
on International Trade
Issue of 2011‒01‒23
eleven papers chosen by
Alessia A. Amighini
University Amedeo Avogadro

  1. The duration of firm-destination export relationships: Evidence from Spain, 1997-2006 By Silviano Esteve-Pérez; Vicente Pallardó-López; Francisco Requena-Silvente
  2. Exports dynamics and information spillovers: evidence from Spanish firms By Juana Castillo-Giménez; Guadalupe Serrano; Francisco Requena-Silvente
  3. Country diversification, product ubiquity, and economic divergence By Ricardo Hausmann; Cesar A. Hidalgo
  4. Heterogeneity and the Structure of Exports and FDI: A cross-industry analysis of Japanese manufacturing By TANAKA Ayumu
  5. Gagnants ou perdants du commerce international : impact de l'ouverture commerciale sur la vulnérabilité de l'emploi By Adama Zerbo
  6. Towards a Theory of Trade Finance By Tim Schmidt-Eisenlohr
  7. Intellectual property infringements due to R&D abroad? A comparative analysis between firms with international and domestic R&D activities By Schmiele, Anja
  8. Can SME Policies Improve Firm Performance? Evidence from an Impact Evaluation in Argentina By Victoria Castillo; Alessandro Maffioli; Ana P. Monsalvo; Sofía Rojo; Rodolfo Stucchi
  9. An Evaluation of the Employment Effects of Barriers to Outsourcing By Bandyopadhyay, Subhayu; Marjit, Sugata; Yang, Lei
  10. The influence of international dispersed vs. home-based R&D on innovation performance By Peters, Bettina; Schmiele, Anja
  11. The innovative performance of German multinationals abroad By Kampik, Franziska; Dachs, Bernhard

  1. By: Silviano Esteve-Pérez (University of Valencia); Vicente Pallardó-López (University of Valencia); Francisco Requena-Silvente (University of Valencia)
    Abstract: This paper uses survival analysis to investigate the duration of Spanish firms’ trade relationships by destination over 1997-2006. Whereas firm export status is highly persistent, firms’ destination portfolio is very dynamic: a typical firm-country exporting relationship has a median duration of two years. Yet, if a firm manages to export to a country beyond two years the risk of exiting that market sharply falls afterwards. The results indicate that not only firm heterogeneity but also destination heterogeneity are crucial to explain survival in export markets. In particular, country (political) risk heavily shapes the effect of firm, product and other destination characteristics on the length of trade relationships. Whereas firm productivity, comparative advantage, partners’ GDP and proximity enhance duration of trade with low-risk countries, they have no effect on trade survival with high-risk countries. On the contrary, information spill-overs are particularly relevant to enhance survival of trade relationships with high-risk countries.
    Keywords: firm exports, export destinations, survival analysis
    JEL: C41 F10 F14
    Date: 2011–01
  2. By: Juana Castillo-Giménez; Guadalupe Serrano; Francisco Requena-Silvente
    Abstract: This paper investigates the determinants of a firm’s export decision and focuses on the identification of spillovers from neighbouring firms. We use a panel of Spanish firms that started to export to at least one of 95 countries over the 2000-2006 period. Detailed data on the location of firms as well as on the destinations of their exports allows us to analyze the presence of spillovers across firms exporting to different countries. Results show evidence of information spillovers, i.e. new exporters acquire valuable information from other local firms on foreign consumer tastes, product standards or customs administration in a particular market. However the selection of the most productive firms to the most difficult markets decreases the impact of spillovers on firms exporting to these countries.
    Keywords: export decision, export market, agglomeration, spillovers
    JEL: F1 R12 L25
    Date: 2011–01
  3. By: Ricardo Hausmann; Cesar A. Hidalgo
    Abstract: Countries differ in the diversification of their exports and products differ in the number of countries that export them -their ubiquity. We document a new stylized fact in the global pattern of exports: a relationship between the diversification of a country's exports and the ubiquity of its products. We argue that this is not implied by current theories of international trade and show that it is not a consequence of the heterogeneity in the level of diversification of countries or of the heterogeneity in the ubiquity of products. We account for this by constructing a model that assumes that each product requires a large number of non-tradable inputs, or capabilities, and that a country can only make the products for which it has all the requisite capabilities. Products differ in the number and specific nature of the capabilities they require, as countries differ in the number/nature of the capabilities they have. Products that require more capabilities are accessible to fewer countries (are less ubiquitous), while countries that have more capabilities have what is required to make more products (are more diversified). Our model implies that the return to the accumulation of new capabilities increases exponentially with the number of capabilities that a country has and that this convexity increases when either the total number of capabilities that exist in the world increases or the average complexity of products (the number of capabilities they require) increases. This defines a "quiescence trap" in which countries with few capabilities have negligible returns to the accumulation of new capabilities, while countries with many capabilities experience large returns to the accumulation of additional capabilities. We calibrate the model to three different sets and show that it reproduces the empirically observed distributions. We conclude that in our world the quiescence trap is strong.
    Date: 2011–01
  4. By: TANAKA Ayumu
    Abstract: The fraction of exporters and multinational enterprises (MNEs) varies substantially across industries. We extend the firm heterogeneity model presented by Helpman et al. (2004) to derive testable predictions about the prevalence of these internationalized modes. The model indicates that intra-industry firm heterogeneity and R&D intensity play large roles in inter-industry variation of the fraction of internationalized firms. We investigate whether these factors as well as import tariffs affect the structure of exports and foreign direct investment (FDI) using Japanese industry-level data. We obtain results that are consistent with the model. First, industries with larger productivity dispersion have a larger fraction of MNEs and a larger fraction of the sum of exporters and MNEs. Second, MNEs are heavily concentrated in R&D-intensive industries. In addition, we reveal that industries with lower import tariffs have a larger fraction of exporters and MNEs.
    Date: 2011–01
  5. By: Adama Zerbo (GED, Université Montesquieu Bordeaux IV)
    Abstract: Fondée sur le théorème de décomposition de l’élasticité de l’emploi par rapport à la croissance économique, cette étude a examiné l’impact de l’ouverture commerciale sur la vulnérabilité de l’emploi selon le niveau de revenu des pays. Les estimations économétriques effectuées sur des données de 35 pays du monde montrent que sous l’hypothèse d’un solde commercial proche de l’équilibre, plus une nation a un taux d’ouverture commerciale élevé et un excédent de la part de produits manufacturés échangés élevé, plus son ouverture commerciale est favorable à l’emploi. Par contre, plus elle a un taux d’ouverture commerciale élevé et un déficit de la part de produits manufacturés échangés élevé, plus son ouverture commerciale est défavorable à l’emploi. Ainsi, dans les pays à revenu élevé, compte tenu de l’excédent de la part de produits manufacturés échangés, l’ouverture commerciale est favorable à l’emploi. La balance de la part de produits manufacturés échangés étant déficitaire dans les pays à faible revenu, leur ouverture commerciale accentue la vulnérabilité de l’emploi. A cet égard, outre la réduction du déficit de la balance commerciale, parvenir à une situation excédentaire de la part de produits manufacturés échangés est une condition nécessaire dans les pays pauvres pour bénéficier des bienfaits du commerce mondial. Based on the decomposition theorem of employment elasticity in relation to economic growth, this study aimed to examine the impact of trade openness on employment vulnerability by countries level income. Econometric estimates on data from 35 countries worldwide show that if we assume a trade balance of close to balance, more a country has high rate of open trade and a high surplus of share of manufactured goods traded, more its trade openness is conducive to employment. For cons, more it has high rate of open trade and a high deficit of share of manufactured goods traded, more its trade openness is unfavourable to employment. Thus, in high income countries, given surplus of share of manufactured goods traded, trade openness is conducive to employment. Insofar as the balance of share of manufactured goods traded is deficit in low-income countries, their trade openness increases the vulnerability of employment. In this regard, in addition to reducing deficit of their trade balance, achieving a surplus of share of manufactured goods traded is a necessary condition for poor countries to take advantage of global trade. (Full text in french)
    JEL: F16 J23
    Date: 2011–01
  6. By: Tim Schmidt-Eisenlohr (Centre for Business Taxation, University of Oxford)
    Abstract: Shipping goods internationally is risky and takes time. Therefore, trading partners not only have to agree on the specification and the price of a good, but also on the timing of payments. To allocate risk and to finance the time gap between production and sale, a range of different payment contracts is utilized, broadly classified into exporter finance (Open Account), importer finance (Cash in Advance) and bank finance (Letter of Credit). I study the optimal choice between these three types of payment contracts considering one shot transactions, repeated transactions and implications for trade. The equilibrium contract is determined by financial market characteristics and contracting environments in both the source and the destination country. Trade increases in enforcement probabilities and decreases in financing costs. The latter effect is the larger, the longer the time needed for trade. I use a panel of bilateral trade flows to test these predictions, running gravity regressions that include interaction terms between distance and financing costs. Results are in line with the model, highly significant and economically relevant.
    Date: 2010
  7. By: Schmiele, Anja
    Abstract: This paper aims at analysing the risk of intellectual property (IP) infringements by competitors from abroad and in particular whether this risk is higher for international innovating firms. We distinguish three different types of IP infringements from abroad: the usage of firms' technical inventions, product piracy and copying of corporate names and designs. Our analysis rests on the German data from the Europe-wide Community Innovation Survey (CIS). We use a unique data set of about 900 observations which are retrieved from two survey waves. While the earlier wave contains information about international and domestic innovation activities the later wave reports IP infringements. In a second analysis, the likelihood of infringements from innovation host countries and no innovation host countries abroad is examined. Before the empirical analysis, an explorative study has been carried out in China with interviews of German firms with innovation activities in China and with a legal advisor for small and medium sized German enterprises. The results show that firms with international R&D activities are increasing their chances to lose technological knowledge to their local competitors abroad. R&D activities in countries with weak intellectual property rights increase the risk for all types of infringement. Infringements by competitors from the host country are driven by the production of innovations in this country. Export intensity is the major driver of infringements from no innovation host countries. R&D activities in China and North America also increase the risk of an infringement. However, firms that innovate only in their home country experience significantly more product piracy cases than internationally innovating firms. --
    Keywords: R&D,innovation,internationalisation,intellectual property,infringement
    JEL: O32 O34 F23
    Date: 2010
  8. By: Victoria Castillo (Ministry of Labor, Employment, and Social Security, Buenos Aires, Argentina); Alessandro Maffioli (Interamerican Development Bank, Washington, DC); Ana P. Monsalvo (Universidad Nacional de General Sarmiento, Buenos Aires, Argentina); Sofía Rojo (Ministry of Labor, Employment, and Social Security, Buenos Aires, Argentina); Rodolfo Stucchi (ECONFOCUS, Córdoba, Argentina)
    Abstract: This paper evaluates the impact of the Argentine SME support program PRE on employment, real wages, and exports. The program aimed at increasing the competitiveness of SMEs by co-financing up to fifty percent of expenditures in professional services and technical assistance. We use a unique panel dataset constructed with administrative records. We combine Propensity Score Matching and Difference in Differences methods to control for selection biases in the estimations. We find a positive and quantitatively important impact of the program on employment and a positive although smaller impact on real wages and the probability of exporting. We also find that the effect of the program on wages and the probability of exporting take place one year after beneficiaries receive the program. The effect of the program on employment takes place one, two, and even, three years after beneficiaries receive the program.
    Keywords: Public Policy Evaluation, SMEs, Employment, Wages, Exports, Argentina, Difference in Differences, Propensity Score Matching
    JEL: C23 H43 L25 O12 O54
    Date: 2010–12
  9. By: Bandyopadhyay, Subhayu (Federal Reserve Bank of St. Louis); Marjit, Sugata (Centre for Studies in Social Sciences, Calcutta); Yang, Lei (Hong Kong Polytechnic University)
    Abstract: Barriers to outsourcing that are being currently implemented in the US effectively tax its companies who "export" jobs through outsourcing. The objective is to raise domestic employment. Given that many of the important international markets where the US has a comparative advantage feature non-atomistic firms, we evaluate the implications of such policies in an oligopolistic context. We find that while an outsourcing tax favors domestic workers by causing firms to switch to a greater use of domestic sources (the substitution effect), the loss in international competitiveness has a negative volume effect (the output effect), which pulls in the other direction. First, we identify the conditions that determine the relative strengths of these effects, which inform us about the conditions under which such a tax achieves its stated objective. Next, we consider the international policy interdependence that arises when a competing nation also engages in such a policy. An interesting finding is that even if a unilateral tax by the US raises its employment, this may turn around in a Nash policy equilibrium, where the competing nation abandons free trade and also engages in unilateral outsourcing policies. Finally, we extend the basic model to look at the effects of credit shortage and product differentiation. Interesting findings are that both a credit crisis (as in recent years) and increased product differentiation tend to worsen the employment effects of the outsourcing tax. The qualitative nature of our findings is similar between Cournot and Bertrand competition, suggesting that our results are robust to the mode of strategic behavior.
    Keywords: outsourcing tax, employment effects, oligopolistic competition, product differentiation
    JEL: F13
    Date: 2011–01
  10. By: Peters, Bettina; Schmiele, Anja
    Abstract: Recent years have shown a surge of firms globalising their innovation activities in order to gain from international knowledge. This paper evaluates this strategy by investigating whether firms with international R&D are more innovative than firms doing R&D only in their home country. One main novelty is that we shed light on two competing hypotheses whether stronger dispersed international R&D activities hamper or stimulate innovation. Second, we employ two well-established market-based indicators for innovation (introduction of and sales growth rates due to new products) instead of looking at inventions (patents). Using German CIS data for about 2100 firms, the econometric results show that firms with international R&D are more likely to launch new products (firm and market novelties) than firms with home-based R&D only. They are also more successful in terms of higher sales growth with firm novelties. However, given the introduction of a market novelty, the location of R&D doesn't matter for the sales growth with market novelties. The results concerning the degree of R&D internationalisation are mixed: The likelihood of introducing firm novelties increases with a stronger dispersion of foreign R&D activities (for market novelties only up to a specific point). The relationship between degree of R&D internationalisation and innovation success turns out to be inverse u-shaped. --
    Keywords: R&D,Internationalisation,Innovation performance,Decentralisation
    JEL: O32 F23
    Date: 2010
  11. By: Kampik, Franziska; Dachs, Bernhard
    Abstract: This paper analyzes cross-country differences in innovation behavior of subsidiaries of German multinational enterprises. The analysis is based on data from Community Innovation Survey (CIS4) and covers 16 European countries. We find considerable differences in innovation input intensity and innovation output intensity between German subsidiaries located in different European countries. Multivariate analysis reveals that these differences are largely related to firm characteristics. A significant relationship between firm-level innovation and host country characteristics can only be found for innovation output.
    Keywords: Internationalization of innovation; German multinational firms; innovation performance; Community Innovation Survey
    JEL: F23 O32 O31
    Date: 2010–12

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