nep-int New Economics Papers
on International Trade
Issue of 2011‒06‒25
ten papers chosen by
Alessia A. Amighini
University Amedeo Avogadro

  1. Trade intermediation and the organization of exporters By Felbermayr, Gabriel J.; Jung, Benjamin
  2. Exports, Imports and Profitability: First Evidence for Manufacturing Enterprises By Wagner, Joachim
  3. Trade Facilitation in India: An Analysis of Trade Processes and Procedures By Prabir De
  4. Utilization of Trade Agreements in Sri Lanka: Perceptions of Exporters vs. Statistical Measurements By Suwendrani Jayaratne; Deshal De Mel; Dharshani Premaratne
  5. ASEAN’s Free Trade Agreements with the People’s Republic of China, Japan, and the Republic of Korea: A Qualitative and Quantitative Analysis By Estrada, Gemma; Park, Donghyun; Park, Innwon; Park, Soonchan
  6. Rules of origin in GSP schemes and their impact on Nepal’s exports: a case study of tea, carpets, pashmina and handicrafts products By Dilli Raj Khanal
  7. What Should the United States Do about Doha? By Jeffrey J. Schott
  8. Corruption and Multinational Companies’ Entry Modes.Do Linguistic and Historical Ties Matter? By Marlene Grande; Aurora A.C. Teixeira
  9. Tariffs dispersion in France between 1850 and 1913, contribution to tariff growth paradox (In French) By Stéphane BECUWE (GREThA, CNRS, UMR 5113); Bertrand BLANCHETON (GREThA, CNRS, UMR 5113)
  10. Trade Credit Contracts By Leora F. Klapper; Luc Laeven; Raghuram Rajan

  1. By: Felbermayr, Gabriel J.; Jung, Benjamin
    Abstract: The business literature and recent descriptive evidence show that exporting firms typically require the help of foreign trade intermediaries or need to set up own foreign wholesale affiliates. In contrast, conventional trade theory models assume that producers can directly access foreign consumers. This paper introduces intermediaries in an international trade model where producers differ with respect to productivity as well as regarding their varieties' perceived quality and tradability. We assume that trade intermediation is prone to frictions due to the absence of enforceable cross-country contracts while own wholesale subsidiaries require capital investment. We derive the sorting pattern of firms according to their degree of competitive advantage and show how the relative prevalence of intermediation depends on the degree of heterogeneity among producers, on the importance of market-specificity of goods, or on expropriation risk. We use US export data for 50 sectors and 133 destination countries to check the empirical validity of this predictions and find robust empirical support. --
    Keywords: Trade intermediation,international trade, heterogeneous firms,incomplete contracts
    JEL: F12 F23
    Date: 2011
  2. By: Wagner, Joachim (Leuphana University Lüneburg)
    Abstract: This paper documents for the first time the relationship between profitability and three types of international trade activities – exports, imports and two-way trade. It uses unique new representative data for manufacturing enterprises from Germany, one of the leading actors on the world market for goods, that merge information from surveys performed by the Statistical Offices and administrative data collected by the Tax Authorities. Descriptive statistics and regression analysis (with and without controlling for unobserved firm heterogeneity and the role of outliers) point to the absence of any statistically significant and economically large effects of trade activities on profits. This demonstrates that any productivity advantages of trading firms are eaten up by extra costs related to selling and buying on foreign markets.
    Keywords: exports, imports, profitability
    JEL: F14
    Date: 2011–06
  3. By: Prabir De (Research and Information System for Developing Countries)
    Abstract: This study undertakes Business Process Analysis (BPA) to help assess the trade processes and procedures. One of the research objectives in BPA is to identify administrative and procedural barriers that unnecessarily impede the participation of more firms and more countries in regional and global trade, and propose solutions.
    Keywords: Trade Cost, Trade Facilitation, India
    JEL: F1
    Date: 2011–02
  4. By: Suwendrani Jayaratne; Deshal De Mel; Dharshani Premaratne (Institute of Policy Studies)
    Abstract: This study will explore several areas, (i) the extent and the degree to which the Sri Lankan exporters use the preferences negotiated in various trade agreements, (ii) the benefits and costs of using trade agreements (iii) impact of multiple RoO on industries, and (iv) measures that can be taken to increase utilization of trade agreements will be observed.
    Keywords: Trade agreement, Sri Lanka, Trade Facilitation
    JEL: F1
    Date: 2011–03
  5. By: Estrada, Gemma (Asian Development Bank); Park, Donghyun (Asian Development Bank); Park, Innwon (Division of International Studies); Park, Soonchan (Department of Economics and International Trade)
    Abstract: Expanding trade with East Asia’s “Big Three” economic giants—the People’s Republic of China (PRC), Japan, and the Republic of Korea—offers a new potential source of growth for ASEAN in the post-global-crisis period. In fact, ASEAN has been actively pursuing trade liberalization with the Big Three. The central objective of this paper is to qualitatively and quantitatively assess the different permutations of ASEAN’s free trade agreements (FTAs) with the Big Three (e.g., ASEAN–PRC, ASEAN–Japan, ASEAN–Republic of Korea, and ASEAN+3). Our qualitative analysis is based on the theory of economic integration, and our quantitative analysis is based on a CGE model. The two types of analyses both suggest that an ASEAN+3 FTA would deliver the largest benefits for the region.
    Keywords: ASEAN; People’s Republic of China (PRC); Japan; Republic of Korea; trade; free trade agreement; free trade area; CGE model
    JEL: F10 F14 F15
    Date: 2011–03–01
  6. By: Dilli Raj Khanal (Institute for Policy Research and Development)
    Abstract: The objective of this study is to find out how preferential rules of origin are applied to Nepalese exports and examine the effects of rules of origin criteria in augmenting carpet, pashmina, handicrafts and tea exports from Nepal to the EU, Japan and the USA under duty free quota free (DFQF) facilities, a special category of preferential non-reciprocal trade treatment granted to least developed countries (LDCs). For implementation of these facilities, so-called “preferential” rules of origin are used.
    Keywords: Rule of origian, GSP, Nepal's exports
    JEL: F1
    Date: 2011–04
  7. By: Jeffrey J. Schott (Peterson Institute for International Economics)
    Abstract: Doha Round "doctors" have prescribed a wide range of treatments for what ails the trade talks, ranging from placebo pills to euthanasia. In essence, the treatment options fall into three broad categories: (1) declare victory and sign the deal "on the table"; (2) "declare failure and go home"; or (3) recognize that the talks cannot conclude in the current environment and that the Doha Round needs a "time-out." Under either option 2 or 3, US officials would receive a large share of the blame for Doha's woes. So what should the United States do now to deflect such criticism, minimize damage to the World Trade Organization, and advance US trading interests? Schott recommends that the United States needs to keep open the multilateral option while accelerating bilateral and regional trade initiatives. The former requires, as a practical matter, making a down payment (in the form of provisional implementation of specific reforms) on a future Doha package that is more ambitious and balanced than what is now "on the table" in Geneva; the latter requires working particularly with the European Union, Brazil, and India to resolve problems that can subsequently be "locked in" WTO schedules.
    Date: 2011–06
  8. By: Marlene Grande (Faculdade de Economia do Porto, Universidade do Porto); Aurora A.C. Teixeira (CEF.UP, Faculdade de Economia do Porto, Universidade do Porto; INESC Porto; OBEGEF)
    Abstract: Extant literature on FDI entry modes and corruption tend to convey the idea that corruption leads to the choice of low equity, i.e. joint-ventures with local partners, or non-equity modes, namely export and contracting, in order to avoid the contact with corrupt state officials. Recently, some studies argument that despite corruption, linguistic and historical ties between home and host countries guide MNCs to prefer high equity modes. Focusing on a rather unexplored setting, the African countries, most specifically the PALOP (Países Africanos de Língua Oficial Portuguesa), which includes countries with both very high (e.g., Guinea-Bissau, and Angola), high (e.g., Mozambique, Sao Tome and Principe) and middle (e.g., Cape Verde) levels of corruption, and that maintain quite close linguistic and historical ties with Portugal, we found that FDI entry mode is associated to the less corrupt markets. Thus, our results do not support the content that cultural and historical links are likely to perform an intermediating role in helping, through fostering foreign direct investment, African countries to overpass the dismissal growth that some have been facing in the last decades. On the contrary, our findings highlight the pressing need for these countries to combat corruption if higher economic growth via FDI attraction is envisioned.
    Keywords: Corruption, Emerging Economies, Entry mode
    JEL: F21 F23 K42
    Date: 2011–06
  9. By: Stéphane BECUWE (GREThA, CNRS, UMR 5113); Bertrand BLANCHETON (GREThA, CNRS, UMR 5113)
    Abstract: This contribution reveals for the first time to our knowledge, the existence of a dispersion of tariffs of France by origin of goods between 1850 and 1913. If any part of this dispersion results from bias in the constitution of the classifications of General-Table of Trade of France, it nevertheless reveals the existence of discriminatory practices against certain countries for certain products. The principle of this tariff dispersion (which is not specific to France) introduces doubts about the robustness of the empirical work conducted on the theme of the correlation between growth and customs tariff (tariff-growth paradox) and how which was treated the theme of effective protection. We believe it should pave the way for work to reintroduce the country dimension in the study of trade policy late nineteenth century.
    Keywords: trade policy, tariff growth paradox, tariff rates
    JEL: N7
    Date: 2011
  10. By: Leora F. Klapper; Luc Laeven; Raghuram Rajan
    Abstract: We employ a novel dataset on almost 30,000 trade credit contracts to describe the broad characteristics of the parties that contract together, the key contractual terms such as the discount for early payment and the days by when payment is due. Whereas prior work has typically used information on only one side of the buyer-seller transaction, this paper utilizes information on both. We find that the largest and most creditworthy buyers receive contracts with the longest maturities from smaller suppliers, with the latter extending credit to the former perhaps as a way of certifying product quality. Discounts for early payment seem to be offered to riskier buyers to limit the potential nonpayment risk when credit is extended for these non-financial reasons.
    JEL: G32
    Date: 2011–06

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