nep-int New Economics Papers
on International Trade
Issue of 2011‒07‒02
fourteen papers chosen by
Alessia A. Amighini
University Amedeo Avogadro

  1. Exports and international logistics By Behar, Alberto; Manners, Phil; Nelson, Benjamin
  2. Success and Failure of African Exporters By Olivier Cadot; Leonardo Iacovone; Denisse Pierola; Ferdinand Rauch
  3. Export quality dynamics By Krishna, Pravin; F. Maloney, William
  4. Exporting from a small landlocked economy : an assessment of firm-product-destination survival rates in the Lao PDR By Stirbat, Liviu; Record, Richard; Nghardsaysone, Konesawang
  5. Taking Keller seriously: trade and distance in international R&D spillovers By Andrea Fracasso; Giuseppe Vittucci Marzetti
  6. Volatility and Irish Exports By Don Bredin; John Cotter
  7. The role of product variety and quality and of domestic supply in foreign trade By Panayiotis P. Athanasoglou
  8. High quality exports and consumers’ trust: a development perspective By Nadia Cuffaro; Marina Di Giacinto
  9. Can we really trust offshoring indices? By Davide, Castellani; De Benedictis, Luca; Horgos, Daniel
  10. Turkey: Temporary Trade Barriers as Resistance to Trade Liberalization with the European Union? By Baybars Karacaovali
  11. Sectoral Composition of Foreign Direct Investment and External Vulnerability in Eastern Europe By Yuko Kinoshita
  12. Manufacturers and Retailers in the Global Economy By Horst Raff; Nicolas Schmitt
  13. MNE’s Regional Location Choice - A Comparative Perspective on East Germany, the Czech Republic and Poland By Andrea Gauselmann; Philipp Marek; J. P. Angenendt
  14. Understanding Foreign Direct Investment in East Asia By Thorbecke, Willem; Salike, Nimesh

  1. By: Behar, Alberto; Manners, Phil; Nelson, Benjamin
    Abstract: Do better international logistics reduce trade costs, raising a developing country's exports? Yes, but the magnitude of the effect depends on the country's size. The authors apply a gravity model that accounts for firm heterogeneity and multilateral resistance to a comprehensive new international logistics index. A one-standard deviation improvement in logistics is equivalent to a 14 percent reduction in distance. An average-sized developing country would raise exports by about 36 percent. Most countries are much smaller than average however, so the typical effect is 8 percent. This difference is chiefly due to multilateral resistance: it is bilateral trade costs relative to multilateral trade costs that matter for bilateral exports, and multilateral resistance is more important for small countries.
    Keywords: Economic Theory&Research,Free Trade,Trade Policy,Common Carriers Industry,Trade Law
    Date: 2011–06–01
  2. By: Olivier Cadot; Leonardo Iacovone; Denisse Pierola; Ferdinand Rauch
    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 crossfirm 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: Africa, export survival
    JEL: F10 F14 O55
    Date: 2011–06
  3. By: Krishna, Pravin; F. Maloney, William
    Abstract: Country export quality (measured by unit values) is correlated with income level suggesting that studying quality dynamics potentially offers insights into the development process. This paper uses highly disaggregated trade data to explore the export quality (unit value) dynamics of goods exported to the United States over the 1990-2000 period. In addition to finding considerable heterogeneity in the relative quality of exports across countries and across goods within countries, the authors find that the rate of quality growth varies substantially across countries, as well. Specifically, the fastest growth is seen in exports from the richer (OECD) countries, implying an evolving divergence in product quality across regions. This divergence obtains despite evidence of conditional convergence in quality over time- goods with lower initial relative quality levels experience faster growth in quality. The data suggest that part of this divergence is driven by the product mix itself -- OECD exported products experience intrinsically higher growth rates. This is consistent with the argument of Hausmann, Hwang and Rodrik (2007) that what countries export does matter for growth. However, it is partly driven by a higher growth rate of quality in the richer countries independent of convergence effects, suggesting that other country-specific factors impeding overall convergence are at work. Finally, there is very limited technological"leap-frogging"by countries across product lines as the relative quality of new exports, on average, is roughly the same as incumbent exports, both in richer countries and elsewhere.
    Keywords: Economic Theory&Research,Transport and Trade Logistics,Common Carriers Industry,Poverty Monitoring&Analysis,Achieving Shared Growth
    Date: 2011–06–01
  4. By: Stirbat, Liviu; Record, Richard; Nghardsaysone, Konesawang
    Abstract: This paper analyzes previously unreleased firm-level customs transaction data from the Lao PDR in order to assess the determinants of cohort survival among exporters. The authors find that export flows in value terms are dominated by the intensive margin, with large firms continuing to supply the same products to the same markets. On the extensive margin, new export spells for firms, products and firm-product-destination units are very small and short-lived, suggesting that although there is significant experimentation and discovery by firms, there is only limited capacity to stay in markets once an entry is made. Regression analyses of the factors that influence survival past the first year reveal that this is positively correlated with the initial dollar value (starting big makes a difference) and is helped by the firm's experience with the product and the destination, but hindered by a lack of focus. Agglomeration of exporters in the same destination with the same product is beneficial, an effect analogous to external economies of scale. The authors conclude by recommending that the focus of export promotion activity should be on helping existing exporters find and stay in new markets.
    Keywords: Markets and Market Access,Microfinance,E-Business,Economic Theory&Research,Water and Industry
    Date: 2011–06–01
  5. By: Andrea Fracasso; Giuseppe Vittucci Marzetti
    Abstract: In a much cited paper, Wolfgang Keller (Are international R&D spillovers trade-related? Analyzing spillovers among randomly matched trade partners, European Economic Review, 48, 1469-1481, 1998) claims that international R&D spillovers are global and trade-unrelated. In following works, Keller revisits his position and maintains that spillovers are localized because the tacit nature of knowledge favors the direct interaction among agents. Whether the international R&D spillovers are global and trade-related still remains a debated issue in the empirical literature. By adopting two empirical specifications that nest Keller’s models, we i) reject the hypothesis that international R&D spillovers are global and ii) show that these latter depend on both geographical distance and international trade.
    Keywords: International R&D spillovers, International technology diffusion,Localized knowledge spillovers, Total Factor Productivity
    JEL: C23 F01 O30 O47
    Date: 2011
  6. By: Don Bredin (University college Dublin); John Cotter (University College Dublin, Ireland)
    Abstract: We analyse the impact of volatility per se on exports for a a small open economy concentrating on Irish trade with the UK and the US. An important element is that we take account of the time lag between the trade decision and the actual trade or payments taking place by using a flexible lag approach. Rather than adopt a single measure of risk we also adopt a spectrum of risk measures and detail varied size characteristics and statistical properties. We find that the ambiguous results found to date may well be due to not taking account of the timing effect which varies substantially depending on which volatility measure is used. However, the foreign exchange volatility effect is consistently positive, indicating the dominance of exporters expectations of possible profitable opportunities from future cash flows. The potential negative aspects of trade, the entry and exit costs, are accounted for by a negative influence of income volatility on trade.
    Keywords: Exports, risk measurement, distributed lags
    JEL: G10 G12 G15
    Date: 2011–06–24
  7. By: Panayiotis P. Athanasoglou (Bank of Greece)
    Abstract: The study examines the behaviour of imports of goods in the Greek economy during the last five decades and their determinants, with an emphasis on consumer’s preferences for “variety and quality” of the imported goods as well as on the demand and supply conditions of these goods in the domestic market. The estimated equations provide strong evidence for the importance of these two factors for import demand, and also explain significantly the stylized facts as well as long- and short-term movements in trade.
    Keywords: effective demand for imports; New Trade Theory; product variety and quality
    JEL: F14 F41 E21 C22
    Date: 2011–04
  8. By: Nadia Cuffaro (University of Cassino); Marina Di Giacinto (University of Cassino)
    Abstract: We analyze the impact of the effectiveness of internal regulation for the development of internal and export markets for credence goods, particularly for a developing country which is an exporter (or a potential exporter). In the model, since goods of actual different quality can be sold as high quality goods, expected quality is a function of consumers’ beliefs about the effectiveness of regulation. Foreign consumers, who cannot observe foreign regulation as closely as domestic ones, may partly base their expectations on the level of development of the exporting country. Low effectiveness, negative stereotype and low consumers’ trust may cause a failure in the market for high quality, and there may be a trap of underdevelopment and no high quality exports. The main policy implications are that increasing the effectiveness of regulation improves export prospects; standard setting and enforcement by external actors, such as supermarkets, or NGOs in the case of certain niche markets, is likely to be beneficial
    JEL: L15 F13 O12
    Date: 2011–06–21
  9. By: Davide, Castellani (University of Perugia); De Benedictis, Luca (University of Macerata); Horgos, Daniel (Helmut Schmidt University, Hamburg)
    Abstract: This paper argues that indices of (business) service and material offshoring built on sectoral input-output data may actually measure something different than what we think they should. Applying shift-share analysis we decompose the variation over time of a commonly used class of such indices into two components: one related to the intensity in the import of intermediate inputs, and the other associated with the use of such inputs in the production of manufacturing goods. Using data from input-output tables of 21 European countries from 1995 to 2006, we show that in the case of service offshoring, in most countries a larger part of the variance is driven by the raising share of (domestically produced) services used in manufacturing production, while the share of imported services contributes to a much smaller extent. When we focus on the subset of business services, evidence shows a relatively larger tendency towards relying on imported rather domestically produced inputs. Instead, in the case of material offshoring there is evidence that foreign suppliers have substituted domestic ones. However, this pattern is strongest in countries, such as Estonia, Hungary and Slovenia, where incoming multinationals, rather than domestic firms offshoring production may be the driving force.
    Keywords: outsourcing; import penetration; offshoring; index; measurement
    JEL: F10 F14
    Date: 2011–06–20
  10. By: Baybars Karacaovali (Department of Economics, University of Hawaii at Manoa)
    Abstract: Turkey has been an active user of antidumping since the 1990s and more recently added safeguards and countervailing duties to its temporary trade barriers (TTBs). Turkey is a founding member of the World Trade Organization and formed a customs union with the European Union (EU) in 1996. It has also signed numerous preferential trade agreements the EU has been involved in as part of its EU candidacy. The drastic intra and extra-group trade liberalization brought by the relations with the EU seems to be important determinants in the rise of Turkey’s contingent protection over the last decade. Moreover, apart from an increase in the number of initiations, the higher rate of initiations finding support and sluggishness in the removal of TTBs over time appear to have played a role in their build-up. Turkey has been significantly affected by the 2008-9 global economic crisis and at the same time kept increasing the use of TTBs. The increase as of 2009 was in line with the recent upward trend but the response to the crisis may come with a lag. In general, Turkey does not target established EU members with TTBs although there is no restriction. Turkey mainly targets developing countries, especially China, at rates disproportional to their import market share.
    Keywords: Temporary trade barriers, antidumping, safeguards, countervailing duties, Turkey
    JEL: F13 F14 F15
    Date: 2011–06–09
  11. By: Yuko Kinoshita
    Abstract: In the run up to the global crisis, countries in Central Eastern and Southeastern Europe attracted large capital inflows and some of them built up large external imbalances. This paper investigates whether these imbalances are linked to the sectoral composition of FDI. It shows that FDI in the tradable sectors leads to an improvement of the external balance. We also find that the countries with large market size, good infrastructure, greater trade integration, and educated labor force are more likely to receive more FDI in the tradable sectors.
    Date: 2011–05–31
  12. By: Horst Raff; Nicolas Schmitt
    Abstract: We develop a general-equilibrium model to capture key features of the retailing and of the manufacturing industry in order to understand how these two industries interact and how labor is allocated between them. We show that the observed shift in employment from manufacturing to retailing, the rise in retailer product assortment and the emergence of slotting allowances in many retail markets are consistent with the global integration of product markets, while higher retail market concentration is best explained by technological change in retailing. We also identify a novel benefit from market integration consisting of efficiency gains in the vertical distribution chain
    Keywords: international trade, product variety, retailing, slotting allowance, multi-product firms
    JEL: F12 F15 L13
    Date: 2011–06
  13. By: Andrea Gauselmann; Philipp Marek; J. P. Angenendt
    Abstract: The focus of this article is the empirical identification of factors influencing Foreign Direct Investment (FDI) in transition economies on a regional level (NUTS 2). The analysis is designed as benchmark between three neighboring post-communist regions, i.e. East Germany, the Czech Republic and Poland. Their different transition paths have not only resulted in economic differences. We can also observe today that the importance of pull factors for FDI varies significantly across the regions. This analysis shows that in comparison with Poland and the Czech Republic, East Germany’s major benefit is its purchasing power, its geographical proximity to West European markets, and its modern infrastructure. Furthermore, the analysis suggests that intra-industry linkages such as specialization and agglomeration economies are relevant factors for the location decision of foreign investors. This result can help to explain the regional divergence of FDI streams in transition economies.
    Keywords: multinational enterprises, international business, regional economic activity: growth, development, and changes, discrete choice
    JEL: F23 R11 C25
    Date: 2011–06
  14. By: Thorbecke, Willem (Asian Development Bank Institute); Salike, Nimesh (Asian Development Bank Institute)
    Abstract: The authors recount East Asia’s experience with foreign direct investment (FDI). They document that, contrary to the Rybczynski theorem, capital flows in the region cause the host country’s labor-intensive industry to expand and its capital-intensive industry to decline. They also present narrative evidence that sheds light on how FDI is affected by the host’s country’s locational advantages, whether Asian FDI is footloose, and how the PRC has become the center of Factory Asia. Finally, they show that the evolution of production networks in the region can be explained partly by changes in the service cost of linking geographically separated production blocks relative to the cost saving arising from slicing up the value chain.
    Keywords: east asia; foreign direct investment; production networks
    JEL: F21 F23 O53
    Date: 2011–06–24

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