nep-int New Economics Papers
on International Trade
Issue of 2011‒02‒19
thirteen papers chosen by
Alessia A. Amighini
University Amedeo Avogadro

  1. Intra-industry trade: The Pakistan experience By Shahbaz, Muhammad; Leitão, João
  2. The Italian firms between crisis and the new globalization By Antonio Accetturo; Anna Giunta; Salvatore Rossi
  3. Trade liberalization and poverty dynamics in Vietnam 2002-2006 By Barbara Coello; Madior Fall; Akiko Suwa-Eisenmann
  4. Regionalism and Developing Countries: A Primer By Jaime Melo De
  5. Regional Single Currency Effects on Bilateral Trade with the European Union By Joan Costa-i-Font
  6. Trade Patterns and Trade clusters: China, India, Brazil and South Africa in the Global trading system By Silvia Nenci; Luigi Montalbano
  7. Finance, Comparative Advantage, and Resource Allocation By Jaud Melise ,; Kukenova Madina; Strieborny Martin
  8. Recent Changes in Chinese and India's Agriculture and Implications on Global Trade of Agricultural Commodities By Tangen, Alyssa; Koo, Won W.; Taylor, Richard D.
  9. The Desire for (Danish) Quality in High and Low Income Countries By Daniel X. Nguyen
  10. The Quality Gravity Model with an Application to Chinese Imported Fruits By Xu Tian; Xiaohua Yu
  11. A Trade Agenda for the G-20 By Jeffrey J. Schott
  12. Economic Determinants for China's Industrial SO2 Emission: Reduced vs. Structural form and the role of international trade By Jie He
  13. Trade union structure with environmental concern and firms' technological choice By Asproudis, Elias

  1. By: Shahbaz, Muhammad; Leitão, João
    Abstract: The simultaneous exports and imports of a product within country or a particular industry called intra-industry trade (IIT) or two-way trade. In the recent years, the government of Pakistan had realized factors to liberalize the international trade. The literature of international economics demonstrates that this condition (trade liberalization) induces the IIT. The case study for Pakistan has been negligence in the economic literature. This manuscript analyses the Pakistan's intra-industry (IIT) during the period 1980-2006. This study uses country-specific characteristics as explanatory variables. The results indicate that IIT is a negative function of the difference in GDP per capita between Pakistan and their trade partners. Statistically strong evidence is also found that this trade is influence by the similar demand. We also introduce an economic dimension; this proxy confirms the positive effects of IIT. This result reveals the importance of scales economies and the variety of differentiated products. Our results also confirm the hypothesis that trade increases if the transportation costs decrease.
    Keywords: Intra-industry trade; Pakistan
    JEL: C20 F12
    Date: 2011–02–03
  2. By: Antonio Accetturo (Banca d'Italia); Anna Giunta (University of Rome - Roma tre); Salvatore Rossi (Banca d'Italia)
    Abstract: This paper analyzes the characteristics of Italian firms involved in global value chains (“intermediate” firms) by using the Bank of Italy survey on industrial companies. Intermediate firms show, on average, worse features than “final” firms: smaller size, lower share of white collars, lower productivity and export propensity. However we observe a strong heterogeneity, depending on the ability (and modalities) to upgrade along the value chains. There are wide differences between upgrading and non-upgrading (marginal) intermediate firms in terms of size, efficiency, human capital endowment and international competitiveness. During the 2008-09 crisis, marginal intermediate firms performed definitely worse; moreover, facing a collapse in world trade, firms that were upgrading by expanding their international linkages were more severely hit than those that were differentiating their internal functions.
    Keywords: fragmentation, offshoring, upgrading
    JEL: D23 L23 L24
    Date: 2011–01
  3. By: Barbara Coello (Banque Mondiale - Banque Mondiale); Madior Fall (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, Afristat - AFRISTAT); Akiko Suwa-Eisenmann (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: This paper shows the evolution of poverty in Vietnam during the deepening of trade liberalization and examines the impact of trade-related variables at the household level. The study is based on a panel dataset of households followed in 2002, 2004 and 2006. Trade-related variables at the household level are defined as the household specialization in terms of production and employment with respect to the type of jobs (wage earners or self-employed) and sectors (import-competing or exported manufactured goods, services, and in agriculture, rice, exported, subsistence and import-competing crops). For the poor, besides the expected positive impact of working in an export-related sector (in industry and in agriculture), diversification in self-employed non-farm activities appears to have been efficient at alleviating poverty. Moreover, the import-competing sectors (in industry and in agriculture) play also a positive role in poverty alleviation. The latter channel could be hindered in the near future, as Vietnam is now in the process of decreasing its import protection.
    Keywords: trade liberalization ; poverty dynamics ; Vietnam
    Date: 2010–05
  4. By: Jaime Melo De (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: The paper discusses regionalism from the standpoint of developing countries surveying the more significant recent contributions surrounding the contentious debate about identifying resulting benefits for Southern partners in the recent wave of North-South Preferential Trading Agreements (PTAs).
    Keywords: regional integration;Trade creation;Trade diversion;political economy
    Date: 2011–02–09
  5. By: Joan Costa-i-Font
    Abstract: The regional effects of sharing a single currency on bilateral trade with other European Union member states are a contentious question. This paper examines the regional effects on trade of the set up of the euro as a common currency. It takes advantage of a gravity specification of bilateral trade between the seventeen Spanish regions and EU-13 countries over the period 1997-2004 and accounts for two distinct effects depending on the temporal set up of the euro. That is, the exchange rate volatility effect (from exchange rate fixing of national currencies in 1999) is distinguished from the so-called common currency effect (resulting from the issuing of a new currency in 2002). Findings are suggestive of a regional concentration of currency union effects in a few regions, namely those relatively more open to trade, though such effects are found to fade away over time. Trade expansion for the set up of the euro ranges between 45 to 16% depending on the specification, but only the exchange rate volatility effect of a common currency was found significant, pure currency union effects were instead found to be almost negligible.
    Date: 2010–10–01
  6. By: Silvia Nenci; Luigi Montalbano
    Abstract: The present paper analyzes the evolution of the specialization and trade patterns of China, India, Brazil and South Africa (CIBS) and other WTO countries. It aims to provide an answer to the following questions: is there a tendency to a multi-polarization of trade patterns? If so, is CIBS’ rise leading to new clusters with or among CIBS or other emerging countries? Also, ultimately, does this multi-polarization have a regional element to it? The paper deals with the above questions by presenting: i) a world map of trade clusters involving WTO countries and CIBS; ii) a comparison of the above clusters and their key characteristics in the last decade; and iii) the key drivers of clusters’ trends. The novelty of this study is twofold: first, it adopts a more comprehensive dataset for a wide range of countries and trade dimensions; second, it provides an evolutionary look at the clusters’ trends. The empirical results do not show neither a remarkable phenomenon of multi-polarization, nor evidence of CIBS as a significant separate group and/or regional agglomeration.
    Keywords: CIBS, trade patterns, trade specialization, cluster
    JEL: F10 F14 F15
    Date: 2011–02
  7. By: Jaud Melise ,; Kukenova Madina; Strieborny Martin
    Abstract: The paper examines the interplay between financial development and comparative advantage in shaping the survival of exporting firms on foreign markets. Exports suffering from comparative disadvantage (labour-intensive products from capital-abundant countries) survive shorter on the competitive US market. Crucially, the pattern is stronger if the exporting country has a well-developed banking system. This suggests a positive role for finance in pushing the manufacturing sector towards export composition congruent with the comparative advantage of a given country. A strong financial sector can thus mitigate misallocation of resources arising from inefficient exporting patterns.
    Keywords: financial development; resource misallocation; comparative advantage
    JEL: G21 O16 F11
    Date: 2010–11
  8. By: Tangen, Alyssa; Koo, Won W.; Taylor, Richard D.
    Abstract: The objective of this study is to evaluate the changes in import and export demand in China and India on the United States and global agriculture in 2020. A spatial equilibrium model is developed to optimize production and trade in China, India, and other major importing and exporting regions in the world. This research focuses on four primary crops: wheat, corn, rice and soybeans. In the model, China and India are divided into 31 and 14 regions,respectively. The model also includes five exporting countries and ten importing countries/regions. The results indicate that India will be able to stay largely self-sufficient in 2020 and China will increase its soybean and corn imports to meet rising domestic demand. The research also gives perspectives on production and trade in the United States and other major exporting and importing countries.
    Keywords: Agribusiness,
    Date: 2011–01
  9. By: Daniel X. Nguyen (Department of Economics, University of Copenhagen)
    Abstract: We estimate the correlation between firm prices and sales within a CN8 product-country-year market. We do this for every market to which at least 16 different Danish firms exported between 1999 and 2006. Approximately 60% of Danish exports are to markets in which the price is negatively correlated with sales. These correlations are significantly different across destination countries within product categories, but across years for a given product-destination pair. While some existing theories perform better than others at predicting these patterns, none can reconcile the variation across countries. To fully explain the patterns, We introduce a model in which the price-sales correlation can be interpreted as the market's desire for high quality goods over low cost substitutes. We discover an inverted U shaped relation between a country's desire for quality and its per capita GDP, which we term a Quality Kuznets Curve. This curve has a turning point around 10 000 Euros for Danish exports. The Quality Kuznets Curve appears both when looking across products and within products.
    Keywords: exports; firm heterogeneity; quality; productivity; Kuznets
    JEL: F12
    Date: 2011–02
  10. By: Xu Tian (Georg-August-University Göttingen); Xiaohua Yu (Georg-August-University Göttingen)
    Abstract: Derived from unit value and the gravity model, this paper proposes a simple model to analyze the quality determinants of imported fruits in China, and finds that (1) both quantity and price are exogenous for quality, and quality decreases in quantity but increases in price; (2) the own-income elasticity of quality is 8.55 and the partner-income elasticity is only -0.08; and (3) distance and common boundary do not play significant roles in determining quality.
    Keywords: Gravity model; Quality index; Quality Gravity model
    Date: 2011–02–08
  11. By: Jeffrey J. Schott (Peterson Institute for International Economics)
    Abstract: G-20 summit planners seem to be giving trade issues short shrift on the already full agenda for their two scheduled meetings in 2010. Such complacency is unwarranted, argues Jeffrey J. Schott, given ongoing protectionist pressures fed by near double digit unemployment rates in the United States and Europe and the continuing impasse in the Doha Round negotiations. Instead, he recommends three concrete actions that G-20 leaders should take to demonstrate their commitment to deterring protectionism and advancing multilateral trade liberalization: "topping up" Doha offers, especially on services; expanding existing offers to provide duty-free/quota-free access for the poorest countries; and extending the G-20 trade standstill commitment by declaring a temporary moratorium on climate change related border measures.
    Date: 2010–05
  12. By: Jie He (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: In this paper, basing on panel data on Chinese provincial level from 1991-2000, we test, firstly, the existence of EKC for industrial SO2 emission density. Following, we decompose the economical determinants of this SO2 emission density into: income effect (GDPPC), scale effect (Industrial GDP per km2) and composition effect (industrial capitalistic ratio). And in the third step, we study the direct and indirect role of international trade intensity ((X+M)/GDP). Instead of a supposed EKC, we find ever-increasing trend in industrial SO2 emission density with respect to income growth for most Chinese provinces when the three largest cities (Beijing, Tianjin and Shanghai) directly under central government are taken off from our database. Following, confirming Grossman (1995), we succeed in decomposing industrial SO2 emission density into its three famous economic “effects”. However, different from our expectation, the composition effect, measured by industrial capitalistic ratio K/L in this paper, instead of being a pollution-increasing role as generally accepted idea, turns out to lead industrial SO2 density to reduce as a technology-reinforcing factor. For the role of trade, besides the positive direct impact on industrial SO2 density, we find equally some “pollution haven” evidences. In addition, our results show for most provinces, their comparative advantage stays still in labour-intensive sectors, increase in the capitalistic ratio is proven to be environment-friendly through its technological “pollution-abatement” effect until this ratio reach the level of 83333 yuan/person, which can be considered as the threshold to distinguish capital-intensive sector. Due to these different aspect's effects, corresponding to the conclusion of ACT (1998, 2001), the total effect of trade on industrial SO2 pollution does not turn out to be an important factor for industrial SO2 emission density. Including all these co-related economic determinants into a more general graphical analysis, we find that, for most provinces whose actual income and capitalistic ratio stay still at moderate level, further income growth and capital accumulation are generally environment-friendly factor in openness process. However, the further enlargement of openness degree will result in environment deterioration for the provinces that have relatively low income and too low or too high capitalistic ratio. The necessary policy to reduce this possible deterioration is to adopt besides the open policy, the complementary policies aiming at reinforcing public consciences on environment quality (through income effect) and encouraging R&D activities to increase technological efficiency in pollution abatement.
    Keywords: “pollution haven” hypothesis.;Decomposition;industrial SO2 emission;international trade;EKC;China
    Date: 2011–02–09
  13. By: Asproudis, Elias
    Abstract: I investigate the influence of the union structure on firms' environmental technological choice when the unions care for the environmental protection. Specifically, I compare the decentralised with the centralised structure under a Cournot duopoly. I show that the decentralised structure could always provide higher incentives to the firms for the adoption of a better (less polluting) technology. In addition, the firms prefer the decentralised unionisation than the centralised although the unions prefer the centralised structure. Furthermore, there is an inverse U-shape relation between the firm's emissions and the size of the market. Finally, the emissions could be less under the centralised case compared to the decentralised for relatively low market's size.
    Keywords: trade unions; environmental concern; emissions; technological choice
    JEL: O30 Q5 J51
    Date: 2011–01–24

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