nep-int New Economics Papers
on International Trade
Issue of 2011‒07‒27
twenty-one papers chosen by
Alessia A. Amighini
University Amedeo Avogadro

  1. CEECs Integration into Regional Production Networks. Trade Effects of EU-Accesion By Martínez-Zarzoso, Inmaculada; Voicu, Anca M.; Vidovic, Martina
  2. Multi-membership and effectiveness of regional trade agreements in Western and Southern Africa: a comparative study of ECOWAS and SADC By Afesorgbor, Sylvanus Kwaku; van Bergeijk, Peter A.G.
  3. Export Competitiveness of Developing Countries and U.S. Trade Policy By Hakobyan, Shushanik
  4. Distributive Effects of Regional Trade Agreements on the "Small Trading Partners": Mercosur and the case of Uruguay and Paraguay By Borraz, Fernando; Rossi, Máximo; Ferrés, Daniel
  5. The Impact of Aid for Trade Facilitation on the Costs of Trading By Königer, Jens; Busse, Matthias; Hoekstra, Ruth
  6. Trade Persistence and the Limits of Trade Agreements By Moelders, Florian
  7. Trade Crisis ? What Trade Crisis ? By Kristian Behrens; Gregory Corcos; Giordano Mion
  8. Does Aid translate into Bilateral Trade? Findings for Recipient Countries By Nowak-Lehmann D., Felicitas; Martínez-Zarzoso, Inmaculada; Cardozo, Adriana; Herzer, Dierk
  9. Financial constraints and exports: An analysis of Portuguese firms during the European monetary integration By Filipe SIlva; Carlos Carreira
  10. The relationship between trade credit, bank credit and financial structure : from firm-level non-linearities to financial development heterogeneity. A study on MENA firm-level data By Jézabel Couppey-Soubeyran; Jérôme Héricourt
  11. Agri-food exports and the enlarged european union By Alessandro Antimiani; Anna Carbone; Valeria Costantini; Roberto Henke
  12. Trade Liberalization and Poverty: A Macro-Micro Analysis in Ethiopia By Kebede, Sindu; Fekadu, Belay; Aredo, Dejene
  13. Preferential vs. Full Trade Liberalisation: A Dynamic CGE Model with Heterogeneous Households for Jordan By Feraboli, Omar
  14. Production versus Distribution-oriented FDI By Jörn Kleinert; Farid Toubal
  15. The Long-Run Relationship between Outward FDI and Total Factor Productivity: Evidence for Developing Countries By Herzer, Dierk
  16. FDI and the labor share in developing countries: A theory and some evidence By Maarek, Paul; Decreuse, Bruno
  17. Export Behaviour and Propensity to Innovate in a Developing Country: The Case of Tunisia By Mohieddine Rahmouni; Murat Yildizoglu; Mohamed Ayadi
  18. Trade, Competition, and Efficiency (revised version) By Kristian Behrens; Yasusada Murata
  19. Real and Nominal Foreign Exchange Volatility Effects on Exports – The Importance of Timing By John Cotter; Don Bredin
  20. Multinationals in the Services and Manufacturing Sectors: A firm-level analysis using Japanese data By TANAKA Ayumu
  21. Trade credit contracts By Klapper, Leora; Laeven, Luc; Rajan, Raghuram

  1. By: Martínez-Zarzoso, Inmaculada; Voicu, Anca M.; Vidovic, Martina
    Abstract: This paper examines the effect of the two most recent European Union enlargements on CEECs trade of intermediate and final products separately. A theoretically justified gravity model which incorporates the extensive margin of trade and accounts for firm heterogeneity is estimated using highly disaggregated trade data for the period 1999 to 2009. We hypothesize that the CEECs have a comparative advantage on the assembly of final goods and evaluate the effect of the EU-accession on CEECs imports in intermediates products and on CEECs export of final goods to OECD countries. To capture the importance of production networks, imported intermediate products from the OECD are added as a determinant of the corresponding exports of final goods. We find a positive and significant effect of accession on CEECs trade of intermediate and final goods. In particular, deeper integration and the consequent elimination of behind the border trade barriers have had a positive impact not only in terms of increasing trade volumes, but also in terms of increasing trade varieties between the two parts of the European continent. --
    Keywords: exports,gravity equation,panel data,production networks,economic integration,trade flows
    JEL: F10 F14 D31
    Date: 2011
  2. By: Afesorgbor, Sylvanus Kwaku; van Bergeijk, Peter A.G.
    Abstract: Using a gravity model for 35 countries and the years 1995-2006 we estimate the impact of regional trade agreements in Africa (in particular ECOWAS and SADC) and compare this to the a benchmark of North South trade integration (Europe's preferential trade agreement). We find that - ECOWAS and SADC membership significantly increases bilateral trade flows (and by more than for example preferential trade agreements with the EU do), - SADC membership has a stronger impact compared to ECOWAS and - that the impact of multi-membership critically depends on the characteristics of the overlapping RTA We find a positive impact if an additional membership complements the integration process of the original RTA: overlapping memberships had a significant positive effect on bilateral trade within the ECOWAS bloc but it is insignificant for SADC. --
    Keywords: Sub Sahara Africa,regional economic integration,South-South trade,North-South trade intra-regional trade,gravity model,international trade,multi-membership
    Date: 2011
  3. By: Hakobyan, Shushanik
    Abstract: We examine the impact of revocation of tariff exemptions on exports of developing countries, using data from the cases of Competitive Needs Limits (CNL) built into the Generalized System of Preferences (GSP). CNLs are arguably imposed on super competitive GSP beneficiaries and aim to limit their exporting capacity. We exploit the variation in the timing of the implementation of the CNLs across countries to identify the impact. We find that being excluded from the GSP due to a CNL induces a large and significant drop in imports from excluded countries, both in value and in their share in imports from all sources. Contrary to the policy objectives of CNLs, the excluded countries do not appear to be super competitive. In addition, we find some evidence of exporters increasing their exports of related products to the US after the CNL exclusion applies. Finally, our findings suggest that much of the benefits of CNLs accrue to non-GSP countries, rather than other GSP beneficiaries. --
    Keywords: Generalized System of Preferences (GSP),Competitive Needs Limits,export competitiveness,trade policy,developing countries
    JEL: F13 F14 O12 O19
    Date: 2011
  4. By: Borraz, Fernando; Rossi, Máximo; Ferrés, Daniel
    Abstract: Although trade integration has potential benefits for developing countries, it is disputed whether trade liberalization processes are, per se, sufficient for poverty reduction and inequality abatement. Abundant work has analyzed the link between tariff reduction, poverty levels and inequality in both developed and developing countries. Gains from trade are generally observed. Still, those benefits from integration are generally unevenly distributed.In our analysis we explore how gains from trade have been distributed in the two minor trade partners of MERCOSUR: Uruguay and Paraguay. We study the link between trade, poverty and inequality by analyzing the impact of trade liberalization through two main transmission channels: prices and income. Our papers show that in the case of Mercosur, the effect of trade on poverty (and income inequality) varies per country and per region. In particular, we conclude that trade integration policies cannot be regarded as a poverty-alleviating policy, per se. --
    Keywords: regional trade agreements,poverty,inequality
    JEL: F14 F16 D30 Q17
    Date: 2011
  5. By: Königer, Jens; Busse, Matthias; Hoekstra, Ruth
    Abstract: There have been ongoing discussions within the WTO Doha Round on Trade Facilitation and the wider Aid for Trade agenda to assist developing countries in reducing behind-the-border restrictions and to help them benefit from trade reform. Our paper contributes to this debate by analyzing the impact of foreign aid spent on Aid for Trade and Trade Facilitation on the costs of trading. In our empirical investigation, we conduct a panel data estimation for a sample of 99 developing countries for the period 2004-2009. Overall, we find that our aid measures have a negative effect on the costs of trading. --
    Keywords: Trade Facilitation,Aid for Trade,Trade Costs
    JEL: F13 F35 O19
    Date: 2011
  6. By: Moelders, Florian
    Abstract: International trade ows reveal strong persistence over time. This paper is concerned with the role of trade agreements in this persistent environment. The data reveal a high level of heterogeneity of the trade- creating effect along the trade volume and per-capita income distributions. If controlled for persistence in bilateral trade ows, I find that higher per- capita incomes are associated with smaller increases in bilateral trade ows if an agreement is present, compared to lower-income countries. This gives rise to a re-assessment of trade agreements and hence of economic policy. While they are a powerful tool for trading partners at the lower end of the per-capita income distribution, they are less so at the upper end. --
    Keywords: Trade agreements,Gravity model,Trade persistence
    JEL: F10 F13 F15
    Date: 2011
  7. By: Kristian Behrens; Gregory Corcos; Giordano Mion
    Abstract: We investigate the dramatic 2008-2009 trade collapse using microdata from a small open economy, Belgium. Belgian trade essentially fell because of reduced quantities and unit prices, rather than fewer firms involved in international transactions, fewer trading partners per firm, or fewer products traded. Our difference-in-difference results point to a fall in the demand or tradables – especially durables and capital goods – as the main driver of the recent collapse. Finance and involvement in global value chains player only minor roles. Firm-level exports-to-turnover and imports-to-intermediates – as well as exports-to-production and imports-to-production – ratios reveal a comparable collapse of domestic and cross-border operations. Access to credit affected both types of activities to the same extent. Overall, our results point to a general fall in demand and not a crisis of Belgian cross-border trade per se.
    Keywords: 2008-2009 trade collapse, trade crisis, margins of trade, firm-level analysis, Belgium
    JEL: F01 F10 F14
    Date: 2011
  8. By: Nowak-Lehmann D., Felicitas; Martínez-Zarzoso, Inmaculada; Cardozo, Adriana; Herzer, Dierk
    Abstract: This paper uses the gravity model of trade to investigate the link between foreign aid and exports in recipient countries. Most of the theoretical work emphasizes the negative impact of aid on recipient countries' exports primarily due to exchange rate appreciation, disregarding possible positive effects of aid in overcoming supply bottlenecks and promoting bilateral trade relations. Our empirical findings -all based on endogeneity-proof techniques (such as Dynamic OLS or more refined techniques) - depend very strongly on whether bilateral trade relations and autocorrelation of the disturbances are controlled for. When not controlling for these phenomena, the impact of aid is quite substantial (especially in Asia, Latin America & Caribbean) but when sound estimation techniques are applied the net impact of aid on recipient countries' exports becomes insignificant in the full 130-country sample and the subsamples: Sub-Saharan Africa & MENA, Asia and Latin America & the Caribbean. However, this rather disappointing finding is in line with the small macroeconomic impact of aid found in earlier studies. --
    Keywords: International trade,foreign aid,recipient exports,bilateral trade relations
    JEL: F10 F35
    Date: 2011
  9. By: Filipe SIlva (Faculdade de Economia/GEMF, Universidade de Coimbra); Carlos Carreira (Faculdade de Economia/GEMF, Universidade de Coimbra)
    Abstract: Financial constraints are a key determinant that hinders firms' ability to export. This paper analyses the nexus between these constraints and firms' engagement in international trade, as well as it explores the impact of the European monetary integration process upon firms' financial constraints. Therefore, we estimate cash to cash-flow sensitivities for different periods (1996-2000 and 2001-2004) and different groups of firms, according to their exporting and importing activity. Our results indicate that, depending on their international openness, the European monetary integration seems to have generally helped reducing the degree of financial constraints faced by Portuguese firms. Additionally, our findings suggest that, rather than unconstrained firms self-selecting into exporting, firms' constraints were reduced after they started exporting.
    Keywords: : Financial constraints; Exports; European financial integration; Firm-level studies; Portugal.
    JEL: D92 F14 F36 G32 L00 L2
    Date: 2011–07
  10. By: Jézabel Couppey-Soubeyran (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Jérôme Héricourt (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EQUIPPE - Université de Lille - Université des Sciences et Technologies de Lille - Lille I)
    Abstract: Using a database of more than 1,100 firms in the MENA region, this article looks at the determinants of demand for trade credit, particularly access to bank credit, size, age and the quality of the firm's financial structure. We show that the difficulty of gaining acces to bank credit positively influences the use of trade credit, and thus demonstrate the substitutability of bank credit and trade credit. Besides, firm's non-financial characteristics, namely age and size do not influence similarly the probability of having trade credit and the volume of trade credit raised. Additional investigations strongly support the existence of non-linearities in the relationship between trade credit and firm's financial structure and size. Finally, financial development emerges as a key feature of the demand for trade credit. Indeed, we show that most firm-level characteristics lose their influence on trade credit when financial development is high enough. With financial development, trade credit gets primarily driven by trade relationships and does not appear any more as a palliative solution when bank credit access is difficult.
    Keywords: Trade credit, bank credit, financial constraints, financial development.
    Date: 2011–02
  11. By: Alessandro Antimiani; Anna Carbone; Valeria Costantini; Roberto Henke
    Abstract: This paper explores agri-food export dynamics in New Member States (NMS) and Old Member States (OMS) of the European Union during the enlargement process. A quality-oriented survey is conducted by developing an original analytical framework which combines information from trade similarity analysis with elements from the sophistication literature. Country and sector specific features seem to emerge, revealing a more complex picture than that produced by aggregated trade analysis. While for some NMS agri-food exports, patterns converge towards OMS with regard to size, competitiveness and quality improvement process, for other NMS, a low-quality trap seems to prevail.
    Keywords: Agri-food sector, export dynamics, EU enlargement, quality upgrading
    JEL: F14 F15 Q17
    Date: 2011–07
  12. By: Kebede, Sindu; Fekadu, Belay; Aredo, Dejene
    Abstract: Using a CGE model, this study analyses the impact of trade liberalization on poverty at the household level taking Ethiopia as a case. Two scenarios (complete tariff cut and uniform tariff scheme) suggest that further liberalization of trade has little short-run effect on the overall economy. However, the agriculture-based manufacturing sector (in particular, textile and leather) is likely to be strongly affected by further tariff reduction. Reductions in import prices of textiles and leather products increase imports of these goods implying that trade liberalization is likely to dampen domestic production of textile and leather products. Poverty shows a slight increase in both scenarios. At the national level, a complete tariff cut results in an increase in poverty by 2.8 percent, while a uniform tariff scheme raises poverty by 2.3 percent. Similarly, it is found that poverty gap and poverty severity indices show a slight increase. Comparing the effect of trade reform on different household groups, i.e. farm households, wage earner households and entrepreneur households, poverty in entrepreneur households increases by a higher percentage change (3.2 percent) in the complete tariff cut scenario. Poverty incidence increases by 1.7 and 1.5 percent for farm households and wage earners, respectively, under the complete tariff cut scenario. This comparison holds consistently when looking at the more realistic uniform tariff scheme. Entrepreneur households are at a disadvantage due to trade liberalization shown in the poverty gap and poverty severity indices. This is consistent with the theoretical argument that previously protected infant industries are highly affected by trade liberalization. --
    Keywords: trade liberalization,poverty,CGE,import duties,macro-micro simulation
    Date: 2011
  13. By: Feraboli, Omar
    Abstract: This paper deals with the economic effects and the policy implications of trade liberalisation on the Jordanian economy, with emphasis on welfare, income distribution and real wages of heterogeneous households, by using a neoclassical dynamic computable general equilibrium (CGE) model. Specifically the paper assesses the impacts of preferential trade liberalisation with the European Union (EU) and compare them with those brought about by broad and non-discriminatory trade liberalisation. --
    Keywords: Dynamic CGE Models,Heterogeneous households,Trade liberalisation,Jordan
    JEL: C68 F11 I32 D31
    Date: 2011
  14. By: Jörn Kleinert (University of Tübingen - Univeristy of Tübingen); Farid Toubal (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: The business literature has long recognized the importance of multinationals' distribution networks. The empirical analysis of distribution-oriented FDI has, however, received little attention which is at least partly due to the lack of appropriate data. We present a slightly modified version of Helpman, Melitz, and Yeaple (2004) that explicitly models the possibility for a multinational firm to export through its wholesale trade affiliate. We analyze the multinational firms' choice between foreign production and foreign distribution. Our empirical analysis uses different discrete choice models and alternative specifications for several sub-samples of multinational firms. We consider complex foreign sales strategies and correct for the sample selection bias that arises because we only observe firms that have foreign affiliates. Our results show that the decision between distribution and production-oriented FDI is based on the trade-off between fixed and variable costs
    Keywords: Multinational firms, Wholesale sales, Discrete choice
    Date: 2010–10–31
  15. By: Herzer, Dierk
    Abstract: This paper examines the long-run relationship between outward foreign direct investment (FDI) and total factor productivity for a sample of 33 developing countries over the period 1980-2005. Using panel cointegration techniques, we find that: (i) outward FDI has, on average, a positive long-run effect on total factor productivity in developing countries, (ii) increased factor productivity is both consequence and a cause of increased outward FDI, and (iii) there are large differences in the long-run effects of outward FDI on total factor productivity across countries. Cross-sectional regressions indicate that these cross-country differences in the productivity effects of outward FDI are significantly negatively related to cross-country differences in labor market regulation, whereas there is no statistically significant association between the productivity effects of outward FDI and the level of human capital, the level of financial development, or the degree of trade openness in the home country. --
    Keywords: outward FDI,total factor productivity,developing countries,panel cointegration
    JEL: F21 O11 F23 C23
    Date: 2011
  16. By: Maarek, Paul; Decreuse, Bruno
    Abstract: We address the effects of FDI on the labor share in developing countries. Our theory relies on the impacts of FDI on productive heterogeneity in a frictional labor market. FDI have two opposite effects: a negative force originated by technological advance, and a positive force due to increased labor market competition between …firms. We test this theory on aggregate panel data through …fixed effects and system-GMM estimations. We …find a U-shaped relationship between the labor share in the manufacturing sector and the ratio of FDI stock to GDP. Most countries are stuck in the decreasing part of the curve. --
    Keywords: FDI,Matching frictions,Firm heterogeneity,Technological advance
    JEL: E25 F16 F21
    Date: 2011
  17. By: Mohieddine Rahmouni (GREThA - Groupe de Recherche en Economie Théorique et Appliquée - CNRS : UMR5113 - Université Montesquieu - Bordeaux IV); Murat Yildizoglu (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579); Mohamed Ayadi (ISG - Institut supérieur de gestion - Université de Tunis, Ecole Supérieure des Sciences Economiques et Commerciales de Tunis - Université de Tunis)
    Abstract: The relation between export behaviour and the propensity to innovate is an important question for a developing economy. This article dedicated to this question through the analysis of the first innovation survey of Tunisian firms. We analyze the relationship between the export behaviour and the innovation propensity of the firms as it can be qualified using econometric estimations (mainly probit models) and non-parametrical regression trees on the results of the first community innovation survey in Tunisia. Our results show that firms that address both the domestic and foreign demands (partial- exporters) have the highest propensity to innovate, and they better benefit from external knowledge sources, as well as a diversified demand. We find that external knowledge sources, internal R&D efforts and some types of cooperative agreements are complementary for product innovations, but the first play an essential role, in the sense that firms must benefit from at least one external knowledge source to attain a significant innovation propensity. We show that innovation behaviour of three subsets of firms are strongly contrasted: pure exporters who only address the foreign demand, pure domestic firms, and partial exporters.
    Keywords: Innovation; exports; openness; development; absorptive capacity
    Date: 2011–07–12
  18. By: Kristian Behrens; Yasusada Murata
    Abstract: We present a general equilibrium model of monopolistic competition featuring pro-competitive effects and a competitive limit, and investigate the impact of trade on welfare and efficiency. Contrary to the constant elasticity case, in which all gains from trade are due to product diversity, our model allows for a welfare decomposition between gains from product diversity and gains from pro-competitive effects. We show that the market outcome is not efficient because too many firms operate at an inefficiently small scale by charging too high markups. We further illustrate that trade raises efficiency by narrowing the gap between the equilibrium utility and the optimal utility. As the population gets arbitrarily large in the integrated economy, the equilibrium utility converges to the optimal utility because of the competitive limit. We finally extend the variable elasticity model to a multi-sector setting, and show that intersectoral distortions are eliminated in the limit. The multi-sector model allows us to illustrate some new aspects arising from intersectoral and intrasectoral allocations, namely that trade leads to structural convergence, rather than sectoral specialization, and that trade induces domestic exit in the nontraded sector.
    Keywords: Pro-competitive effects, competitive limit, excess entry, trade and efficiency, monopolistic competition
    JEL: D43 D51 F12
    Date: 2011
  19. By: John Cotter (University College Dublin); Don Bredin (University College Dublin)
    Abstract: This paper compares real and nominal foreign exchange volatility effects on exports. Using a flexible lag version of the Goldstein-Khan two-country imperfect substitutes model for bilateral trade, we identify the overall effect into both a timing as well as a size impact. We find that the size impact of forecasted foreign exchange volatility does not vary according to the measure used in terms of magnitude and direction. However, there are very different timing effects, when we compare real and nominal foreign exchange rate volatility.
    Keywords: Exports, Volatility, Real & Nominal effects
    JEL: C32 F31
    Date: 2011–07–21
  20. By: TANAKA Ayumu
    Abstract: Using Japanese firm-level data, I investigate multinational enterprises (MNEs) in the services and manufacturing sectors. I examine whether MNEs are more productive than non-MNEs in the services sector as they are in the manufacturing sector. I employ the Kolmogorov-Smirnov (KS) test to compare the overall distribution of productivity by internationalized status, after estimating the productivity premia of MNEs. The results indicate that MNEs are more productive than non-MNEs in the services sector as they are in the manufacturing sector and suggest that the standard firm heterogeneity model can well explain foreign direct investment (FDI) by firms in the services sector.
    Date: 2011–07
  21. By: Klapper, Leora; Laeven, Luc; Rajan, Raghuram
    Abstract: The authors 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. The authors 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 non-financial reasons.
    Keywords: Debt Markets,Access to Finance,Investment and Investment Climate,Bankruptcy and Resolution of Financial Distress,Economic Theory&Research
    Date: 2011–07–01

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