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on International Trade |
| By: | Smeets, Valérie (Department of Economics, Aarhus School of Business); Warzynski, Frédéric (Department of Economics, Aarhus School of Business) |
| Abstract: | In this paper, we analyze the relationship between exporting/importing status and firm productivity. We use a rich product-firm-level dataset providing both revenue and quantities of all products for a large panel of Danish manufacturing firms over the period 1998-2005 and link it to another dataset describing firms’ international trade transactions by product. We use our detailed product level information to compute a firm level deflator and avoid the criticism of biased estimates due to the use of industry level deflator. We find that both importing and exporting behaviours are strongly associated with productivity, but firms involved in both importing and exporting are the most productive. We also find evidence of a self-selection into importing and exporting but no learning effect. Finally, we try to distinguish between cost effect and product quality effect by analyzing the importance of the origin of imports and the destination of exports. We find that both imports from countries with abundant and cheap labor like China and from countries with similar level of development matter, although the mechanism through which productivity is affected is likely to be different. In addition, exporting to more distant OECD economies is more strongly associated to productivity than exporting to neighboring or other EU countries, especially when controlling for the price specific effect |
| Keywords: | no; keywords |
| JEL: | F10 |
| Date: | 2010–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:aareco:2010_013&r=int |
| By: | Yalta, A. Yasemin; Demir, Ishak |
| Abstract: | We analyze the extent and the direction of trade misinvoicing in the context of the new policy environment that has affected the Turkish economy in the post 1990 period. Utilizing bilateral partner country statistics between Turkey and its major trading partners, we observe persisting export overinvoicing and an oscillating pattern of import misinvoicing at the aggregate level. Country-specific data reveal different patterns. As opposed to the general trend in misinvoicing, exports to China are underinvoiced and imports are overinvoiced. We also analyze how the liberalization policies and the customs union agreement with the European Union countries affect trade misinvoicing. We find that, with trade liberalization policies, import misinvoicing has decreased at the aggregate level. However, contrary to the expectations, customs union agreement did not help decrease the extent of trade misinvoicing in Turkey. |
| Keywords: | International trade; trade misinvoicing; foreign trade statistics; Turkey. |
| JEL: | F01 F14 F1 |
| Date: | 2010–04–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:30186&r=int |
| By: | Thierry Mayer; Marc J. Melitz; Gianmarco I.P. Ottaviano |
| Abstract: | We build a theoretical model of multi-product firms that highlights how market size and geography (the market sizes of and bilateral economic distances to trading partners) affect both a firm's exported product range and its exported product mix across market destinations (the distribution of sales across products for a given product range). We show how tougher competition in an export market induces a firm to skew its export sales towards its best performing products. We find very strong confirmation of this competitive effect for French exporters across export market destinations. Trade models based on exogenous markups cannot explain this strong significant link between destination market characteristics and the within-firm skewness of export sales (after controlling for bilateral trade costs). Theoretically, this within firm change in product mix driven by the trading environment has important repercussions on firm productivity and how it responds to changes in that trading environment. |
| JEL: | F12 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:16959&r=int |
| By: | Philip Du Caju (National Bank of Belgium, Boulevard de Berlaimont 14, 1000 Brussels, Belgium.); François Rycx (Université Libre de Bruxelles (ULB), Belgium.); Ilan Tojerow (DULBEA Université Libre de Bruxelles (ULB), Belgium.) |
| Abstract: | In the last decades, international trade has increased between industrialised countries and between high- and low-wage countries. This important change has raised questions on how international trade affects the labour market. In this spirit, this paper aims to investigate the impact of international trade on wage dispersion in a small open economy. It is one of the few to: i) use detailed matched employer-employee data to compute industry wage premia and disaggregated industry level panel data to examine the impact of changes in exports and imports on changes in wage differentials, ii) examine the impact of imports according to the country of origin. Looking at the export side, we find a positive effect of exports on the industry wage premium. The results also show that import penetration from low–income countries has a significant and negative impact on the inter-industry wage differentials, while imports from high-income countries seem to have a more ambiguous impact on the wage structure. The results suggest that trade with low-income and high-income countries has different effects on the inter-industry wage differentials. JEL Classification: F16, J31. |
| Keywords: | Wage Structure, Inter-industry Wage Differentials, International Trade, Matched Employer-employee Data. |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20111325&r=int |
| By: | Giordano Mion; Luca David Opromolla |
| Abstract: | This paper investigates whether the arrival of managers with export experience, i.e. experience acquired through participation in the export activity of previous employers, is related to firms’ international trade status and to what extent this relationship is of a causal nature. We construct a worker-firm matched panel dataset which enables us to track managers across different firms over time and observe firms’ trading stance as well as a large set of workers’ and firms’ characteristics. Contrary to blue and white collars, we find that managers are paid a sizeable premium for export experience which has both a level and a trend component. Conditioning for the firm past trade status, we find that a one standard deviation increase in the firm’s share of managers’ with export experience corresponds to about 35% more chances of starting to export. The impact is stronger for larger firms and is roughly of the same order of magnitude of the firm productivity effect. On the contrary, export experience acquired by managers from previous employers positively affects the capacity to keep exporting in small firms only. To give a causality flavor to our findings, we use in a final step an IV strategy that mimics a random matching between managers with export experience and firms. IV estimations indicate that export experience matters even more for entry while it has no effect on exit. |
| JEL: | F10 L25 J31 J60 M50 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ptu:wpaper:w201104&r=int |
| By: | Gita Gopinath; Brent Neiman |
| Abstract: | We empirically characterize the mechanics of trade adjustment during the Argentine crisis using detailed firm-level customs data covering the universe of import transactions during 1996-2008. Our main findings are as follows: First, the extensive margin defined as the entry and exit of firms or of products (at the country level) plays a small role during the crisis. Second, the sub-extensive margin defined as the churning of inputs within firms plays a sizeable role in aggregate adjustment. This implies that the true increase in input costs exceeds that imputed from conventional price indices. Third, the relative importance of these margins and of overall trade adjustment varies with firm size. Motivated by these facts, we build a model of trade in intermediate inputs with heterogenous firms, fixed import costs, and round-about production to evaluate the channels through which a collapse in imports effects TFP in manufacturing. Measured aggregate productivity in the sector depends on within-firm adjustments to the varieties imported as well as the joint distribution of each firm's technology and the share of imports in its total spending on inputs. We simulate an imported input cost shock and show that these mechanisms can deliver quantitatively significant declines in manufacturing TFP. |
| JEL: | E32 F4 O47 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:16958&r=int |
| By: | Roberto Álvarez; Hasan Faruq; Ricardo A. López |
| Abstract: | Recent models of international trade show that trade costs are important determinants of exporting decisions and productivity dynamics. By assuming that these costs are exogenous and constant across firms, these theories do not take into account that experienced firms may have lower trading costs or that new exporters may reduce these costs by observing the decisions of other exporters. This study argues that firms with previous experience exporting a product to a particular market are more likely to start exporting the same product to another market, or a different product to the same market. The paper also contends that the previous experience of other exporters can significantly influence a firm’s decision to introduce a new product to a new market. Using a firm-level dataset from Chile with information on exports by product and destination market, the paper finds that an increase in the cumulative value exported by a firm increases the probability that the firm will export a previously exported product to a different market or a different product to a market to which the firm already exported a product. The results also show that an increase in the cumulative value exported of a product, or to a foreign market, by other exporters raises the probability that firms will export new products and/or to new markets. Our findings are consistent with the idea that previous exporting experience may help reduce the firm’s entry costs to international markets. The rich dataset used in this study allows the identification of these effects controlling for various time-varying observed and unobserved characteristics which may create a spurious correlation between firms’ export decisions, their previous exporting experience, and the export activity of other exporters |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:chb:bcchwp:599&r=int |
| By: | Marie Stack; Eric Pentecost |
| Abstract: | Examining the trade prospects for the new European Union (EU) member states and the EU associated partner countries is an important issue in the context of European eastward enlargement and greater economic integration with its immediate neighbours. An out-ofsample approach to projecting trade volumes for twenty countries of interest is adopted using a gravity equation for a panel data set of bilateral export flows from twelve EU countries to twenty OECD trading partners over the 1992-2003 period. The potential trade volumes are calculated from a gravity model of new trade theory (NTT) determinants. The selected twenty countries’ prospects for further trade integration vis-à-vis the EU can be gauged by expressing the trade volume projections as a ratio of actual trade volumes for each pair of countries. The projected trade ratios for the ten new member states are found to be multiples of actual 2003 levels, indicating that trade expansion looks set to continue. Near unity values, however, are more frequent among the Mediterranean countries, indicating fewer opportunities for further trade integration with the EU. |
| Keywords: | Panel data, Gravity model, Trade integration |
| JEL: | F14 F15 C23 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbs:wpaper:2010/11&r=int |
| By: | Ulf Lewrick; Lukas Mohler; Rolf Weder (University of Basel) |
| Keywords: | Variety gains, margins of trade, lambda ratio, U.S. manufacturing |
| JEL: | F10 F12 F14 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:bsl:wpaper:03/11&r=int |
| By: | Manuel R. Agosin; Roberto Alvarez; Claudio Bravo-Ortega |
| Abstract: | Using a large dataset of countries, covering the period 1962-2000, this paper analyzes the main determinants of export diversification (concentration). We explore the role of several factors and we use three different indicators of export concentration. We find robust evidence across specifications and indicators that trade openness induces higher specialization. In contrast, financial development does not seem to help countries to diversify their exports. Looking at the effects of exchange rates, in some of our results we find a positive effect of real exchange rate volatility on concentration, but not significant effects of exchange rate overvaluation. We also find evidence that human capital accumulation contributes positively to diversify exports and that increasing remoteness tends to reduce export diversification. We also explore the role of terms-of-trade shocks. Most of our results suggest an interesting interaction between this variable and human capital: improvements in the terms of trade tend to concentrate exports, but this effect is lower for those countries with higher levels of human capital. This evidence suggests that countries with higher education can take advantage of positive terms of trade shocks to increase export diversification. |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:chb:bcchwp:605&r=int |
| By: | Ariel Burstein; Marc J. Melitz |
| Abstract: | In this paper, we analyze the transition dynamics associated with an economy's response to trade liberalization. We start by reviewing the recent literature that incorporates firm dynamics into models of international trade. We then build upon that literature to characterize the role of firm dynamics, export-market selection, firm-level innovation, and firms' expectations regarding the time path of liberalization in generating those transition dynamics following trade liberalization. These modeling ingredients generate substantial aggregate transition dynamics as they shift and shape the endogenous distribution of firms over time. Our results show how the responses of trade volumes, innovation, and aggregate output can vary greatly over time depending on those modeling ingredients. This has important consequences for many issues in international economics that rely on predictions for the effects of globalization over time on those key aggregate outcomes. |
| JEL: | F1 F4 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:16960&r=int |
| By: | Dan Ciuriak; Beverly Lapham (Queen`s University); Robert Wolfe (Queen`s University); Terry Collins-Williams (Carelton and Ottawa Universities); John M. Curtis (Center for International Governance Innovation) |
| Abstract: | When national competitiveness is invoked as a policy objective, trade experts have learned to retort that countries don`t trade, firms do. This focus on the importance of the firm in international trade is consistent with the most recent developments in trade theory, but policy needs to catch up. Recognizing the growing anomalies in observed trade patterns relative to traditional models of trade based on national comparative advantage, the "new trade theory" of the 1980s looked at industries not countries, leading Nobel prize-winner Paul Krugman, a pioneer in this literature, to suggest the need for a new trade policy. Recent work on what some call the "new-new trade theory" focuses on the trading behaviour of individual firms, making a tight link between trade and productivity. In this paper we demonstrate how focusing on firms should be the foundation for a new-new trade policy, one that creates exciting opportunities for trade and investment promotion strategies, along with the need for much more targeted consultation strategies. We also discuss the implications of the new-new theory for regulatory coordination, and on new ways to cooperate with interlocutors in developing countries on the evolution of 21st century trade policy. |
| Keywords: | New-new Trade Theory, Trade Policy |
| JEL: | F00 F10 F12 F13 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:qed:wpaper:1263&r=int |
| By: | Matías Berthelon |
| Abstract: | The paper presents a detailed description of the evolution of non-copper exports in the 1990-2007 period and decomposes its evolution in terms of the intensive and extensive margins. I document a significant export diversification in terms of markets and products. In the product dimension, diversification has occurred both for overall exports but also within the main exporting markets. In addition, the decomposition of exports growth into intensive margin (persistent exports) and extensive margins (new exports) indicates that export growth at the extensive margin contributed significantly to overall non-copper export growth, and particularly in the first half of the period. |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:chb:bcchwp:615&r=int |
| By: | Kari E.O. Alho |
| Abstract: | The paper considers whether Sweden should join the EMU as based on general equilibrium (GE) effects through reduced trade barriers linked to the single cur-rency. We use in this evaluation a gravity model for trade in Europe derived and estimated in the paper, and the estimates of trade barriers linked to EMU reached in the literature. First, we present an alternative derivation of the gravity equation for foreign trade, which is explicitly based on monopolistic competition in the export markets. In contrast to the usual specification, our model allows for the realistic assumption of asymmetry in mutual trade flows. We then present a straightforward methodology how to carry out a simulation, based on the estimated model, of GE effects related to a change in a trade barrier. Numeri-cally, we apply this to analyse the effects of a possible Swedish entrance into EMU. The effects are quite clearly in favour of EMU enlargement, and do not indicate a trade diver-sion effect either for the incumbent EMU countries or the rest of the European countries. However, a stochastic simulation of the effects reveals that there is a substantial uncer-tainty related to the effects of such a change in policies. |
| Keywords: | EMU, Sweden, gravity model, general equilibrium effects, trade barriers |
| JEL: | F12 F15 |
| Date: | 2011–04–13 |
| URL: | http://d.repec.org/n?u=RePEc:rif:dpaper:1245&r=int |
| By: | Mélise Jaud (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, World Bank - Banque Mondiale - France); Madina Kukenova (HEC Lausanne - Université de Lausanne) |
| Abstract: | This paper investigates the link between export survival of agri-food products and financial development. Our hypothesis is that financial developement differentially affects the survival of exports across products based on their need of external finance. We propose a test for the role of financial development by examining whether exports of products that are relatively more reliant on external capital survive longer when initiated in more financially developped countries. Our results suggest that agri-food products that require more external finance indeed sustain longer in foreign markets when exported from more financially developed countries. |
| Keywords: | Financial development ; external finance dependence ; agri-food trade ; SPS regulation ; product risk index duration of trade |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00586320&r=int |