nep-int New Economics Papers
on International Trade
Issue of 2011‒05‒07
seven papers chosen by
Alessia A. Amighini
University Amedeo Avogadro

  1. Financial Development and International Trade: Regional and Sectoral Analysis By Susanto, Dwi; Rosson, C. Parr; Costa, Rafael
  2. Diplomatic Intervention in Civil War : Trade for All or Trade for One? By Mathieu COUTTENIER; Raphael SOUBEYRAN
  3. Reciprocal Trade Agreements: Impacts on Bilateral Trade Expansion and Contraction in the World Agricultural Marketplace By Vollrath, Thomas L.; Hallahan, Charles B.
  4. Economic integration in the EuroMed: current status and review of studies By Joachim Jarreau
  5. What is wrong with virtual water trading? By Gawel, Erik; Bernsen, Kristina
  6. Selected Trade Agreements and Implications for U.S. Agriculture By Wainio, John; Gehlhar, Mark; Dyck, John
  7. The Trade Unit Values Database By Antoine Berthou; Charlotte Emlinger

  1. By: Susanto, Dwi; Rosson, C. Parr; Costa, Rafael
    Abstract: Financial development has been argued as a potential source of comparative advantage and its relationships with trade has been theoretically developed. This theory posits that countries that are well financially developed should experience greater volumes of international trade. We empirically investigate the effects of financial development on trade of both agricultural and manufactured products. The results show a positive impact of financial development on bilateral trade flows for the manufacturing sector, which enjoys a greater impact than the agricultural sector. The impacts differ across regions. In most cases, developing countries (Asia, Latin America, MENA and SSA) experience greater impacts of financial development on exports in both agriculture and manufacturing sectors than do advanced countries.
    Keywords: agricultural sector, comparative advantage, financial development, international trade, manufacturing sector, International Development, International Relations/Trade,
    Date: 2011
  2. By: Mathieu COUTTENIER; Raphael SOUBEYRAN
    Abstract: This paper looks at whether diplomatic intervention in civil war has affected trade over the post World War II period. We show that the intervener derives no commercial advantage from diplomatic intervention ; trade between the intervener and the target country does not increase more than trade between the target country and its other partners. However, we find that diplomatic intervention has a positive and persistent effect on trade between the target country and all its partners. Keywords : Civil War, Trade, Foreign Influence, Gravity Equation.
    Date: 2011–04
  3. By: Vollrath, Thomas L.; Hallahan, Charles B.
    Abstract: The rapid increase in the number of bilateral and regional free-trade agreements since 1995 is a striking development. The proliferation of these agreements has raised questions about whether they have, in fact, opened markets, created trade, promoted economic growth, and/or distorted trade. This study uses panel data from 1975 to 2005 and a gravity framework model to identify the infl uence of reciprocal trade agreements (RTAs) on bilateral trade in the world agricultural marketplace. A benchmark, Heckman sample-selection and two generalized models, one of which accounts for RTA phase-in effects, are used to gauge the impact on partner trade of mutual as well as asymmetric RTA membership. Empirical results show that RTAs increase agricultural trade between member countries but decrease trade between member and nonmember countries. Interestingly, RTAs were found to be particularly effective at expanding agricultural trade and opening markets in developing countries when developing- country trading partners are part of the same agreement.
    Keywords: trade policy, reciprocal trade agreements, bilateral, regional, missing trade, gravity models, Agricultural and Food Policy, International Development, International Relations/Trade,
    Date: 2011–04
  4. By: Joachim Jarreau
    Abstract: This article draws a picture of the current status of the liberalization process in the Euro-Mediterranean region, and reviews existing studies of this process. Economic integration among the South-Med countries (SMCs) has started in the middle 1990s through intra-regional agreements (GAFTA, Agadir Agreement) and bilateral agreements with the EU. Econometric studies using gravity models generally found important trade creation effects for intra-regional trade, but smaller and asymmetric effects from EU-Med agreements, with an increase of export flows from the EU but no increase of flows in the other direction. Simulations with CGE models shows the main sources of gains (trade creation) and of losses (trade diversion, terms of trade) for SMCs. Studies also suggest that a dismantling of non-tariff barriers and of barriers in services trade could yield substantial gains for SMCs. A table with existing agreements and a picture of economic flows in the region can be found in the annex.
    Keywords: Economic integration; EuroMed; Gravity models; Computable general equilibrium
    JEL: F15 F17 O24 O53 O55
    Date: 2011–03
  5. By: Gawel, Erik; Bernsen, Kristina
    Abstract: So-called virtual water, the water embedded in internationally traded goods, has come under discussion. The amount of quantitative studies which attempt to estimate volumes and flows of virtual water in relation to agricultural trade is rising rapidly, while the concept has been recognized by large firms and international institutions. From the viewpoint of economic trade theory, the endowment with abundant water resources gives countries a comparative advantage in the export of waterintensive goods, while water scarce countries gain the option to alleviate stress on domestic water resources by substituting the production of water?intensive goods by imports. However, fairness implications are seen to arise in the reallocation of water resources through the means of mostly agricultural trade. In this perspective, moral problems can be attached to both imports and exports, and even to a country's own consumption of virtual water. Global institutional arrangements are therefore suggested, to regulate virtual water flows in a "fair" and "efficient" manner. This paper will give a short overview of the concept's history and findings, and subsequently analyse it from the perspective of economic trade and resource theory. The contribution of this paper will be to examine the concept of virtual water in terms of the problems it evokes, its informative value and the policy suggestions which are made in this context. It must be concluded that the concept is unspecific and inconsistent, implying governance schemes which will neither improve efficiency nor sustainability in today's trade patterns. --
    Keywords: virtual water,water footprint,international trade,global water governance
    JEL: F18 Q25 Q27 Q56
    Date: 2011
  6. By: Wainio, John; Gehlhar, Mark; Dyck, John
    Abstract: Since 2001, the United States has concluded negotiations with 13 countries, resulting in 8 trade agreements (TAs). Three additional agreements have been negotiated but not yet ratifi ed by Congress, as of March 2011. Other countries have become increasingly active in negotiating their own trade pacts. This proliferation of TAs between key partners and competitors may have raised concerns among U.S. exporters, whose share in established markets could be eroded by such deals. In this study, ERS examines how recently concluded TAs between ASEAN (Southeast Asia) countries and China and Australia/New Zealand, as well as pending TAs between the United States and Korea, Colombia, and Panama, will likely affect U.S. agricultural trade. Model results suggest that TAs between ASEAN countries and China and ASEAN countries and Australia/New Zealand would result in moderate losses to U.S. agricultural exports of about $350 million to those countries, but losses would be partially offset by gains in other markets. U.S. agricultural exports to Korea would expand by an estimated $1.9 billion per year if the U.S. TA with Korea were implemented. The U.S.-Colombia TA would result in an estimated $370 million in additional U.S. exports per year. U.S. exports would realize smaller gains of about $50 million per year under the pact with Panama. Empirical results confirm theoretical fi ndings that trade created under TAs exceeds trade diverted, but that results depend on the specific circumstances of each agreement.
    Keywords: market access, free trade agreements, tariffs, trade agreements, trade creation, trade diversion, trade promotion agreements, GTAP model., International Relations/Trade,
    Date: 2011–04
  7. By: Antoine Berthou; Charlotte Emlinger
    Abstract: Trade unit values are commonly used as proxies for trade prices in empirical research in international economics. Existing datasets providing international trade unit values for a large number of countries typically suffer from a number of statistical biases, due to the aggregation of unit values and the harmonization of quantity information. These biases reduce the reliability of unit values as a proxy for trade prices. This paper presents the Trade Unit Values dataset, a new database developed to circumvent these statistical issues. Bilateral trade unit values are computed at a very high level of disaggregation before aggregation into Harmonized-System 6-digits categories to allow for cross-country comparability. Our processing strategy improves the differentiation of trade prices within product categories, as compared to existing worldwide datasets. A simple econometric analysis shows that unit values in our database are well explained by economic aggregates.
    Keywords: Unit value; trade price; international trade
    JEL: E3 F1 F4
    Date: 2011–04

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