nep-int New Economics Papers
on International Trade
Issue of 2011‒05‒24
twenty papers chosen by
Alessia A. Amighini
University Amedeo Avogadro

  1. Export Growth and Factor Market Competition: Theory and Evidence By Julian Emami Namini; Giovanni Facchini; Ricardo A. Lopez
  2. Reaping the Benefits of Deeper Euro-Med Integration Through Trade Facilitation By Yves, Bourdet; Persson, Maria
  3. Market Size, Competition, and the Product Mix of Exporters By Thierry Mayer; Marc Melitz; Gianmarco Ottaviano
  4. The Sensitivity of Export Quantities to Exchange Rates in the Context of Intra-Industry Trade By Yoko Oguro
  5. Trade policies, investment climate, and exports across countries By Seker, Murat
  6. Preference erosion and the developing countries exports to the EU: a dynamic panel gravity approach By Raimondi, Valentina; Scoppola, Margherita; Olper, Alessandro
  7. Does tariff escalation affect export shares: The case of cotton and coffee in global trade By Narayanan G, Badri; Khorana, Sangeeta
  9. Information Cost As A Prior Hurdle to Exporting By Wei, Xuan; Thornsbury, Suzanne
  10. Trade costs, wage difference, and endogenous growth By Akinori Tanaka; Kazuhiro Yamamoto
  11. Do Exports Raise Productivity? Plant-level Evidence from the Colombian Agri-food Industries By Kandilov, Ivan T.; Liu, Xiangping
  12. Exploring the Evolution of Trade Survival Since 1962 By Hess, Wolfgang; Persson, Maria
  13. Does every stone fall in the same way? new gravity evidence on world trade By Cunedioglu, Ekrem; Yucel, Eray
  14. Is Emission Trading Beneficial? By Jota Ishikawa; Kazuharu Kiyono; Morihiro Yomogida
  15. The Role of the Economy Structure in the U.S. - China Bilateral Trade Deficit By Tokovenko, Oleksiy; Koo, Won W.
  16. Are Exporters More Likely to Introduce Product Innovations? By Massimiliano Bratti; Giulia Felice
  17. Success and failure of African exporters By Cadot, Olivier; Iacovone, Leonardo; Pierola, Denisse; Rauch, Ferdinand
  18. The Environment, Trade and Innovation with Heterogeneous Firms: A Numerical Analysis By Cui, Jingbo; Ji, Yongjie
  19. Transactional innovation and the de-commoditization of the Brazilian coffee trade By Andriani, Pierpaolo; Herrmann-Pillath, Carsten
  20. International Trade and Worker Turnover – Empirical Evidence for Germany By Daniel Baumgarten

  1. By: Julian Emami Namini (Erasmus University of Rotterdam); Giovanni Facchini (Erasmus University of Rotterdam and Tinbergen Institute, University of Milan, LdA, CEPR and CES-Ifo); Ricardo A. Lopez (Brandeis University)
    Abstract: Empirical evidence suggests that sectoral export growth decreases exporters\' survival probability, whereas non{exporters are unaffected. Models with firm heterogeneity in total factor productivity predict the opposite. To solve this puzzle, we develop a two-factor framework where firms differ in factor shares. In this model, export growth increases competition for the factor used intensively by exporters, eliminating some of them, while non-exporters benefit. Our empirical analysis shows that the forces highlighted in the model drive the firm selection experienced by the Chilean manufacturing sector, suggesting that heterogeneity in factor shares is crucial to understand how firms react to trade liberalization.
    Keywords: Firm Dynamics, Two-Factor Trade Model, Firm Heterogeneity in Factor Shares, Chile, Manufacturing Industry
    JEL: F12 F14 F16 L11
    Date: 2011–05–09
  2. By: Yves, Bourdet (Department of Economics, Lund University); Persson, Maria (Department of Economics, Lund University)
    Abstract: The current political turmoil in the Arab world has contributed to renewed interest in the Barcelona Process and how it can be improved in order to promote inclusive growth in the non-EU Mediterranean countries. In this paper, we explore whether deeper integration in the form of trade facilitation – i.e. improved and simplified trade procedures – could be an important part of a reform agenda. Adopting a Southern perspective by focusing on exports from non-EU Mediterranean countries to the EU, we use data from the World Bank’s Doing Business Database on the efficiency of trade procedures to formally test whether the efficiency of trade procedures affects (i) bilateral volumes of exports, and (ii) the number of products that are exported. We find that improving export and import procedures to the best practice levels (for each group of countries) is likely to increase the value of non-EU Mediterranean exports by 34% and to increase the number of products exported by non-EU Mediterranean countries by 21%. A main implication of the results is therefore that more efforts should to be devoted to trade facilitation in order to reap the benefits of deeper integration between the two groups of countries.
    Keywords: Barcelona Process; Mediterranean Union; European Union; Deeper Integration; Trade Facilitation; Export volumes; Export Diversification
    JEL: C23 F15 O24
    Date: 2011–04–28
  3. By: Thierry Mayer; Marc Melitz; Gianmarco 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.
    Keywords: Product mix; competition; markups; multi-product firms
    JEL: J12
    Date: 2011–05
  4. By: Yoko Oguro
    Abstract: This paper adds to the literature that suggests that exports become less sensitive to exchange rate movements under certain circumstances. Focusing on the industry-specific sensitivity of export quantities to exchange rates in the context of intra-industry trade (IIT), this paper theoretically and empirically investigates this relationship. The model presented shows that the extent of bilateral IIT is higher the lower the elasticity of substitution between differentiated products and/or the smaller the gap in production costs between two countries. The empirical analysis investigates cross-country industry-panels for the bilateral trade of eight East Asian countries, Japan, and the United States with the EU, Asia, Japan, and North America. The results confirm that the sensitivity of export quantities to exchange rates declines as the extent of IIT increases. The policy implication of the results is that exchange rate revaluations become a less powerful tool to redress trade imbalances when substantial IIT exists.
    Keywords: trade, exchange rates, intra-industry trade, product differentiation
    JEL: F00 F10 F14 F19
    Date: 2011–02
  5. By: Seker, Murat
    Abstract: There is a large body of research that explores international trade as a source of the dispersion in income levels and growth performances across countries. The trade liberalization policies undertaken between 1950 and 2006 led to an almost 30 fold growth in the volume of international trade. However this increase has not been homogeneous across countries. This study investigates a possible reason that prevents convergence of countries in export performance. It shows that regulatory quality, customs efficiency, quality of infrastructure, and access to finance among other factors increase export performance. Furthermore, it shows that countries that are relatively more constrained in accessing to foreign markets benefit more from improvements in investment climate than the countries with easier foreign market access. Hence obtaining a favorable investment climate for private sector development should be an important policy objective for relatively closed economies to achieve convergence in export volumes with countries that have more liberal trade policies.
    Keywords: Free Trade,Debt Markets,Economic Theory&Research,Emerging Markets,Trade Law
    Date: 2011–05–01
  6. By: Raimondi, Valentina; Scoppola, Margherita; Olper, Alessandro
    Abstract: Since 2004 there has been a sharp decrease in border protection for the EU rice industry. Because the EU grants trade preferences to a considerable number of rice exporting developing countries, the reform implied preference erosion as well. By addressing the impact of preference erosion on developing countries rice exports to the EU, this paper contributes two original insights to the literature: first, by proposing a new empirical approach to compute the preference margin when tariff rate quotas are in force which is based on the assumption of the existence of fixed costs and economies of scale in international trade; second, by estimating the trade elasticities of preferences by means of a dynamic panel gravity equation to deal with the issues of endogeneity of preferences and persistency in bilateral trade flows. The results show that the way preference margins are calculated matters significantly when assessing the existence and extent of their erosion and the values of trade elasticities. Finally, the estimations highlight the fact that the impact of preferences is still very strong for some of the countries concerned.
    Keywords: Trade Preferences, Gravity Equation, Tariff Rate Quotas, EU Rice Policy, GMM, Agricultural and Food Policy, International Relations/Trade, F13, Q17, F14,
    Date: 2011
  7. By: Narayanan G, Badri; Khorana, Sangeeta
    Abstract: Many studies show that Tariff Escalation (TE) lowers export shares in many of the processing sectors, given their higher level of protection. However, there are instances when the export shares of processed sectors are higher despite the existence of TE. We examine both these contrasting cases of TE in this paper. On the one hand, there is TE in coffee and coffee products in developing countries, which lead in raw coffee exports and lag in roasted coffee exports. On the other hand, there is a similar pattern of TE in developing countries, which are leading exporters of cotton textiles, but not as much of raw cotton. This raises the question whether TE has a systematic impact on a countryâs export shares. We use a widely used economy-wide model named GTAP (Global Trade Analysis Project) and its accompanying Data Base 2004 version. We supplement the data with UN commodity statistics and other country-specific and industry-specific sources to split cotton, cotton textiles, coffee and coffee products from aggregated sectors in this dataset. We analyze different policy scenarios of bringing the tariffs for processing sectors to the levels of their raw materials for the value-chains of cotton and coffee. Our results focusing on export shares show that TE can lead to higher or lower export shares depending on various other factors such as the actual tariff differences across sectors and countries.
    Keywords: International Relations/Trade, F14-Country and Industry Studies of Trade, O57-Economywide Comparative Studies of Countries, L66-Food Beverages Cosmetics and Tobacco, L67- Clothing Textiles Shoes and Leather, N5 â Agriculture,
    Date: 2011
  8. By: Kotchoni, Rachidi; Larue, Bruno
    Keywords: International Relations/Trade,
    Date: 2011–05–03
  9. By: Wei, Xuan; Thornsbury, Suzanne
    Abstract: In this paper, we empirically assess how information cost, as one component of trade costs, impacts the decision of an individual firm to export. Firm-level data measuring the difficulty of obtaining information about technical regulations in the European Union (EU) and the United States is used as a proxy for information cost to evaluate reduction in firm incentives to export. Results suggest that information cost significantly reduces the likelihood of exporting to these two destinations. Negative impacts are relatively larger for a firm exporting to the United States than to the EU.
    Keywords: information cost, trade costs, non-tariff, technical barriers to trade, probit, International Relations/Trade, Political Economy, F14, L25,
    Date: 2011
  10. By: Akinori Tanaka (Graduate School of Economics, Osaka University); Kazuhiro Yamamoto (Graduate School of Economics, Osaka University)
    Abstract: In this paper, we develop an endogenous growth model with two coun- tries in which the international trade of differentiated goods requires dif- ferent trade costs and equilibrium wages in the two countries. If the labor productivity in one country's agricultural sector is higher than that of the other country, the wages will also be higher. In this model, there is a case in which the small country has a higher share of manufacturing firms than the larger country, and the innovation sector locates in the small country, since the cost for production of the manufacturing sector and innovation sector is higher in the large country than in the small country. First, when trade costs are high, the share of manufacturing firms in a large country increases with a decline in trade costs. However, the share then decreases with a decline in trade costs when trade costs are low. Finally, all firms agglomerate in the small country with lower production costs. If trade costs are very high, the innovation sector will locate in the small country. If trade costs take an intermediate value, it will locate in the large country. If trade costs become very low, it will re-locate in the small country. The growth rate moves non-monotonously in a W-shaped curve when there is a reduction in trade costs. This happens because the growth rate is affected by the number of manufacturing firms and the location of the innovation sector.
    Keywords: market size, wage differential, growth rates, innovation sector.
    JEL: F0 O31
    Date: 2011–05
  11. By: Kandilov, Ivan T.; Liu, Xiangping
    Abstract: Using detailed plant-level manufacturing Census data from the Colombian Agri-food industries, we show that exports raise plant-level productivity by about 15 to 20 percent. However, the estimates reveal that efficiency in plants that become persistent exporters, i.e. plants that service foreign markets at least 30 percent of the time during our sample years 1981-1991, increases about 30 percent upon their entry into foreign markets, while productivity in plants that become only occasional exporters does not change at all. Hence, the positive impact of exports on productivity for is driven by the large positive impact on persistent exporters. To identify the effect of exports on plant-level productivity we employ the Levinsohn-Petrin (2003) measure of total factor productivity and a difference-in-differences propensity score matching estimator. The estimates reveal that productivity in plants that become persistent exporters, i.e. plants that service foreign markets at least 30 percent of the time during our sample years 1981-1991, rises about 30 percent upon their entry into foreign markets. Productivity in plants that become only occasional exporters, on the other hand, does not change. We perform a number of robustness checks, all of which confirm our baseline results.
    Keywords: exports, productivity, difference-in-differences, propensity score matching, International Development, International Relations/Trade, Production Economics, Productivity Analysis, Q17, F12, Q12, O33,
    Date: 2011
  12. By: Hess, Wolfgang (Department of Economics, Lund University); Persson, Maria (Department of Economics, Lund University)
    Abstract: Aiming to explore how the survival of trade flows has evolved over time, we analyze a rich data set of detailed imports to individual EU15 countries from 140 non-EU exporters, covering the period 1962-2006. We find that short duration is a persistent characteristic of trade throughout the extended time period that we study: in general only 40 percent of trade flows survive the first year of service, and this share has not changed much since the 1960s. However, this observed constancy is the result of two underlying trends that work in opposite directions. On the one hand, positive trends in several of the observed explanatory variables -- which in turn influence the hazard of trade flows dying in a negative direction -- imply that the hazard tends to decrease over calendar time. On the other hand, there is also a positive trend in the hazard due to calendar year-specific unobserved factors. Holding all observed determinants constant, the probability of a trade flow dying in its first year increases from 34% at the beginning of the period to 90% at the end.
    Keywords: Duration of Trade; Survival; Entry and Exit; European Union; Discrete-Time Hazard Models
    JEL: C41 F10 F14
    Date: 2011–04–18
  13. By: Cunedioglu, Ekrem; Yucel, Eray
    Abstract: In this paper, we examine a series of questions about bilateral trade flows in the light of a rich and up-to-date panel data set. The analyses performed reveal that (1) globalization process has been functioning in a number of ways, (2) functioning of economic regions display alternative results based on model specification, (3) distance is an important factor in the functioning of economic regions, (4) trade relationships do strengthen when countries move toward stronger degrees of their regimes, regardless of democratic or autocratic, (5) the same polity direction implies a higher degree of trade between countries, (6) given the joint regime strength (common direction of regimes) of trade partners, common direction of regimes (higher joint regime strength) implies lower trade, (7) partners belonging to the same religion trade less, (8) partners with the same language trade more among themselves, (9) given that partners are of the same religion (language), same language (religion) implies lower trade.
    Keywords: International trade; Gravity; Globalization; Economic regions; Institutions; Cultures
    JEL: C51 C23 F17 Z10 R11
    Date: 2011–05–11
  14. By: Jota Ishikawa; Kazuharu Kiyono; Morihiro Yomogida
    Abstract: We develop a two-country (North and South), two-good, general equilibrium model of international trade in goods and explore the effects of domestic and international emission trading under free trade in goods. Whereas domestic emission trading in North may result in carbon leakage by expanding South's production of the emission-intensive good, international emission trading may induce North to expand the production of the emission-intensive good by importing emission permits. Emission trading may deteriorate global environment. North's (South's) emission trading may not benefit South (North). International emission trading improves global efficiency but may not benefit both countries.
    Keywords: global warming, emission quota, emission trading, carbon leakage, Kyoto Protocol
    JEL: F18
    Date: 2011–03
  15. By: Tokovenko, Oleksiy; Koo, Won W.
    Abstract: This study investigates the effect of the economy structure on the U.S. - China bilateral trade deficit as alternative to the influence of the exchange rate fluctuation. The revealed comparative advantage indices are proposed as the measure of the relative structural differences between two countries due to factor endowments and technology. A Bayesian Stochastic Search Variable Selection method is applied to the U.S. - China annual trade data for 57 commodity groups at the SITC 2-digit industry aggregation level to obtain empirical variable inclusion probabilities. Based on the data, we found no conclusive evidence against the hypothesis of the short-run effect of either of the explanatory factors, while the long-run influence is revealed to be insignificant in most of the cases.
    Keywords: International Relations/Trade,
    Date: 2011
  16. By: Massimiliano Bratti (University of Milan and IZA); Giulia Felice (University of Milan and Centro Studi Luca d\'Agliano)
    Abstract: We analyze the relationship between a firm\'s export status and its product innovation activity by using a rich firm-level survey on Italian manufacturing. We find that the positive association between exporting and product innovativeness is robust to controlling for many sources of firm\'s observable heterogeneity. Use of an instrumental variables strategy allows us also to conclude that this association can be qualified as a causal relation: a firm\'s export status induces product innovations (learning by exporting). This effect emerges over and above the correlation accounted for by some of the main channels commonly emphasized by the existing literature. In the light of this evidence, we discuss the sources from which the residual effect of exporting on product innovation that we observe may originate.
    Keywords: Exporters, Firms, Italy, Manufacturing, Product Innovation
    JEL: F1 L2 O3
    Date: 2011–05–09
  17. By: Cadot, Olivier; Iacovone, Leonardo; Pierola, Denisse; Rauch, Ferdinand
    Abstract: Using a novel dataset with transactions level exports data from four African countries (Malawi, Mali, Senegal and Tanzania), this paper uncovers evidence of a high degree of experimentation at the extensive margin associated with low survival rates, consistent with high and middle income country evidence. Consequently, the authors focus on the questions of what determines success and survival beyond the first year and find that survival probability rises with the number of firms exporting the same product to the same destination from the same country, pointing towards the existence of cross-firm synergies. Accordingly the evidence is consistent with the hypothesis that those synergies may be driven by information spillovers. More intuitively and consistently with multi-product firms models, the analysis also finds that firms more diversified in terms of products, but even more in terms of markets, are more likely to be successful and survive beyond the first year.
    Keywords: Markets and Market Access,Microfinance,Economic Theory&Research,Debt Markets,E-Business
    Date: 2011–05–01
  18. By: Cui, Jingbo; Ji, Yongjie
    Abstract: We employ a two-sector heterogeneous firms model in the presence of endogenous innovation and environmental constraints. We perform simple numerical simulations concerning the implication of a stringent environmental policy and trade cost differences between dirty and clean inputs. Our objective is to highlight the effects of these policy proposals on the process innovation, trade pattern, and productivity dynamics.
    Keywords: Cap and Trade, Heterogeneous Firms, Process Innovation, Trade Pattern, Environmental Economics and Policy, International Relations/Trade, Research and Development/Tech Change/Emerging Technologies, F18, Q55, Q56, C63,
    Date: 2011–05
  19. By: Andriani, Pierpaolo; Herrmann-Pillath, Carsten
    Abstract: Recent research into international trade has highlighted the role of trade costs in determining the geography of trade. We propose that the notion of comparative advantage has to be expanded to include different capacities to transact and the pertinent factor endowments (organizational and social capital). In a 'transactional regime', sets of transaction-enabling tasks (TETs) are arranged to overcome a given pattern of trade resistances. We argue that transactional regimes impact the flows and contents of information that guide the decision making of producers and therefore also shape the resulting international division of labour. Transactional regimes can be classified according to a three-dimensional state space of trade resistances covering certain most generic aspects of information. We apply this approach to analyze the case of the Brazilian coffee business that has evolved into a bifurcated 'commoditized' and 'de-commoditized' regime in the past twenty years, triggered by the entrepreneurial action of a single company, illycaffè. An entirely new business model has resulted into a shift of the transactional regime in coffee trade, with implications for the distribution of the gains from trade. --
    Keywords: trade costs,trade in tasks,transactional regime,entrepreneurship in international trade,coffee,illycaffè
    JEL: F14 F19
    Date: 2011
  20. By: Daniel Baumgarten
    Abstract: Using a linked employer-employee data set for Germany, this paper studies how worker turnover is related to establishments‘ international trade involvement. The descriptive analysis shows that trading establishments have lower worker turnover rates than non-traders, suggesting a higher degree of employment stability. Conditional on an extensive set of control variables, exporting is further associated with a higher net job flow rate, which is almost entirely due to a lower separation rate (particularly for highskilled workers and transitions into non-employment). In contrast, an increase in import intensity is associated with a lower accession rate (particularly for low-skilled workers and their accessions out of non-employment). These results are more pronounced for smaller establishments, and they partly lose statistical significance once unobservable establishment characteristics are taken into account.
    Keywords: International trade; worker turnover; job turnover; linked employer-employee data
    JEL: F16 J21 J23 J63
    Date: 2010–11

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