|
on International Trade |
| By: | James E. Anderson (Boston College); Yoto V. Yotov (Drexel University) |
| Abstract: | This paper infers the terms of trade effects of Free Trade Agreements (FTAs) with the structural gravity model. Using panel data methods to resolve two way causality between trade and FTAs, we estimate direct FTA effects on bilateral trade volume in 2 digit manufacturing goods from 1990-2002. We deduce the terms of trade changes implied by these volume effects for 40 countries plus a rest-of-the-world aggregate. Some gain over 10%, some lose less than 0.2%. Overall, using a novel measure of the change in iceberg melting, global efficiency rises 0.62%. |
| Keywords: | Free Trade Agreements, Gravity, Terms of Trade, Coefficient of Resource Utilization |
| JEL: | F13 F14 F16 |
| Date: | 2011–09–29 |
| URL: | http://d.repec.org/n?u=RePEc:boc:bocoec:780&r=int |
| By: | Nitsch, Volker |
| Abstract: | A potential vehicle to move capital unrecorded out of a country is the misinvoicing of international trade transactions. Exporters may understate the export revenue on their invoices and importers may overstate import expenditures, while their trading partners are instructed to deposit the balance for their benefit in a foreign account. Aiming to quantify the extent of trade mispricing, studies have analyzed asymmetries in matched partner trade statistics or examined price anomalies in transaction level price data. This paper critically reviews these empirical approaches and briefly describes an alternative methodology. Overall, the accuracy and reliability of estimates of illicit financial flows based on trade mispricing are questioned. In particular, it is argued that estimates of trade mispricing are critically dependent on assumptions on how to interpret observed asymmetries in trade statistics. For instance, various reasons for discrepancies in bilateral trade statistics are discussed, and incentives for faking trade invoices other than capital flight are highlighted. Also, aggregate trade data may mask considerable variation in trade discrepancies at the transaction level. Most notably, the importance of trade mispricing as a method for the unrecorded cross-border transfer of capital is generally unclear. |
| Date: | 2011–09–15 |
| URL: | http://d.repec.org/n?u=RePEc:dar:ddpeco:54540&r=int |
| By: | Philippidis, George; Resano-Ezcaray, Helena; Sanjuan-Lopez, Ana Isabel |
| Keywords: | International Relations/Trade, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaae11:114760&r=int |
| By: | Malchow-Møller, Nikolaj (University of Southern Denmark); Munch, Jakob Roland (University of Copenhagen); Skaksen, Jan Rose (Copenhagen Business School) |
| Abstract: | While most countries welcome (and some even subsidise) high-skilled immigrants, there is very limited evidence of their importance for domestic firms. To guide our empirical analysis, we first set up a simple theoretical model to show how foreign experts may impact on the productivity and wages of domestic firms. Using matched worker-firm data from Denmark and a difference-indifferences matching approach, we then find that firms that hire foreign experts – defined as employees eligible for reduced taxation under the Danish "Tax scheme for foreign researchers and key employees" – both become more productive (pay higher wages) and increase their exports of goods and services. |
| Keywords: | foreign experts, export, immigrants, productivity, difference-in-differences matching |
| JEL: | F22 J24 J31 J61 L2 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6001&r=int |
| By: | Alexander Massara; Luca Errico |
| Abstract: | The paper focuses on systemically important jurisdictions in the global trade network, complementing recent IMF work on systemically important financial sectors. Using the IMF’s Direction of Trade Statistics (DOTS) database and network analysis, the paper develops a framework for ranking jurisdictions based on trade size and trade interconnectedness indicators using data for 2000 and 2010. The results show a near perfect overlap between the top 25 systemically important trade and financial jurisdictions, suggesting that these ought to be the focus of risk-based surveillance on cross-border spillovers and contagion. In addition, a number of extensions to the approach are developed that can provide a better understanding of trade dynamics at the bilateral, regional, and global levels. |
| Keywords: | Cross country analysis , Direction of trade , International trade , Trade integration , |
| Date: | 2011–09–14 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:11/214&r=int |
| By: | Tobal, Martin |
| Abstract: | This paper develops a New Trade Theory model modified with entry barriers, thereby creating a link between the traditional interests of development and industrial organization economists and research on international trade. I show that entry barriers cause the market size to become endogenous by creating rents. Furthermore, I prove that the endogeneity of market size has four implications. First, governments can use trade policy to shift foreign rents to their countries and enlarge their home markets. Second, endogenous market size magnifies the standard home-market effect. Third, the endogeneity of market size interferes with the unambiguous Pareto optimality of trade agreements. In particular, if rents are suffciently large and the country size is suffciently small, a trade agreement will negatively affect the country in question. Therefore, I consider a new research question: what are consequences of trade agreements in terms of welfare redistribution? Finally, I show that an increase in entry barriers increases the market size of large countries. If the market size increase is suffciently large, the country benefits. These results challenge the idea that higher entry barriers decrease welfare. |
| Keywords: | international trade, macro, International Economics, Macroeconomics |
| Date: | 2011–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:ucsdec:2277987&r=int |
| By: | Revoredo-Giha, Cesar; Philippidis, George; Toma, Luiza; Renwick, Alan W. |
| Keywords: | International Relations/Trade, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaae11:114802&r=int |
| By: | Ferto, Imre; Fogarasi, Jozsef |
| Abstract: | This paper explores the effect of exchange rate volatility and of the institutional quality on international trade flows of transition economies in Central European Countries by applying a gravity model of balance panel between 1999 and 2008. The results show that nominal exchange rate volatility has had a significant negative effect on trade by applying Psuedo- Maximum-Likelihood (PML) estimator method over this period. The institutional quality need to be improved in case of size of government and the quality of regulation. The negative effect of exchange rate volatility on agricultural exports suggests that joining Central European Countries to the euro zone can reduce the negative effects of exchange rate volatility on trade. |
| Keywords: | international trade, gravity model, exchange rate volatility, institutions, International Relations/Trade, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaae11:114351&r=int |
| By: | Hajderllari, Luljeta; Karantininis, Kostas; Lawson, Lartey |
| Keywords: | Agribusiness, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaae11:114771&r=int |
| By: | Kuhlgatz, Christian; Abdulai, Awudu |
| Abstract: | This paper investigates the determinants of farm householdsâ participation in export cropping and the impact of export cropping on household welfare, using cross-sectional data obtained from the Ghanaian living standards survey 2005-6. Given the problem of selectivity bias that arise when households self-select into export cropping, we employ the full information maximum likelihood approach to analyze the participation decision, and generalized propensity matching approach to examine the welfare impacts of participation. The empirical results indicate that farmers facing lower transport costs and having better access to credit facilities are more likely to participate in export cropping. Estimates of the welfare impacts of export cropping generally reveal a positive relationship between engagement in export cropping and farm household welfare. However, a consideration of the impact of extent of export cropping shows a non-linear relationship with household welfare indicators, with per capita expenditures rising and poverty declining only at higher levels of export specialization. |
| Keywords: | Export crops, Farm households, Household welfare, Poverty, Generalized propensity score, Crop Production/Industries, International Relations/Trade, |
| Date: | 2011–09–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaae11:114692&r=int |
| By: | Latouche, Karine; Rouviere, Elodie |
| Abstract: | There is little discussion in the literature about trade intermediaries because data is rare. Using very original data, our article sheds light on the behavior of trade intermediaries when importing fresh fruit and vegetables in France. To do so, we distinguish among direct and indirect imports respectively operated through brokers or retailers. We then investigate the impact of country level data on the share of indirect/direct Âows of imports by country of origin at the 8-digit level that enter the french market. We show that brokers are more likely to operate in context when  xed and variable costs to trade are high whereas retailers are sensitive to tari¤s and product sensitivity. |
| Keywords: | Agribusiness, International Relations/Trade, Q17, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaae11:114398&r=int |
| By: | Cheptea, Angela |
| Abstract: | Emerging countries have been winning large market shares since the early 1990s. Among these, China stands out with the most remarkable performance: it almost tripled its world market share since 1994 reaching 16.1% in 2007. The present paper attempts to identify the countries that have profited the most from this increase in the size of the Chinese market. I use an econometric shift-share methodology, that permits to identify for each trade flow the share of growth arising from the capacity to target the products and markets with the highest increase in demand, and the share due exclusively to exporterâs performance. |
| Keywords: | China, Export Performance, Shift-Share, International Relations/Trade, F12, F15, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaae11:114299&r=int |
| By: | Schmitz, Christoph; Lotze-Campen, Hermann |
| Abstract: | Like agricultural trade, deforestation has increased tremendously throughout the past five decades. We analyse the linkage between both factors by applying trade and forest policy scenarios to the global land-use model MAgPIE ("Model of Agricultural Production and its Impact on the Environment"). The model predicts global landuse patterns in a spatially explicit way and uses endogenously derived technological change and land expansion rates. Our study is the first which combines global trade analysis with a spatially explicit mapping of deforestation. By implementing self-sufficiency rates in the regional demand and supply equations, we are able to simulate different trade settings. Our baseline scenario fixes current trade patterns until the year 2045. The three liberalisation scenarios assume a path of increasing trade liberalisation which ends with no trade barriers in 2045 and they differ by applying different forest protection policies. Regions with comparative advantages like Latin America for oilcrops and China for cereals will export more. Whereas, Latin America will buy this competitiveness by converting large parts of its Amazonian rainforest into cropland, China will benefit most due to its decreasing food demand after 2025. In contrast, regions like the Middle East, North Africa and South Asia face the highest increases of imports. Forest protection policies lead to higher technological change rates. In absence of such policies, investments in agricultural Research & Development are the most effective way for protecting the forest. |
| Keywords: | International Relations/Trade, Resource /Energy Economics and Policy, |
| Date: | 2011–09–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaae11:115993&r=int |
| By: | Hess, Sebastian |
| Abstract: | The global trend of industrializing agriculture increasingly transforms farms and firms into specialized component suppliers within a multi-stage food processing chain, which creates intraindustry trade between- and within geographical regions. This can be analyzed within the framework of a hypothetical multiregional food-processing firm that benefits from outsourcing various âtasksâ to other sub-contracting regions, in order to utilize lower production cost there. This is modeled as a multi-output cost minimization problem of the processing firm, and it is argued that with respect to agriculture, the outsourcing opportunities for the firm are determined by economies of diversification. Trade is implicitly reflected as the movement of intermediate factors towards the processing firm, and firm-level specialization of the sub-contractors is an observable outcome. This framework is applied to pig production in 1150 municipalities in southern Germany. The estimated multi-output production frontier is decomposed according to a primal measure of diversification economies. Results show that pig farms located closer to slaughterhouses tend to specialize more in one of the tasks âpiglet productionâ, ârearingâ or âfatteningâ, while farms in regions distant from slaughterhouses tend to in-source all of these tasks. Future research may extend the framework towards comparative static analyses of relevant policies. |
| Keywords: | Outsourcing, Trade of Tasks, Economies of Diversification, Pig Production, International Relations/Trade, Livestock Production/Industries, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaae11:114537&r=int |
| By: | Marcias, Manuel; Chevassus-Lozza, Emmanuelle; Latouche, Karine |
| Keywords: | International Relations/Trade, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaae11:114370&r=int |
| By: | EDAMURA Kazuma; Laura HERING; INUI Tomohiko; Sandra PONCET |
| Abstract: | We investigate whether previous findings of only limited effects of investing abroad on the performance of parent firms can be explained by the aggregation of heterogeneous effects depending on the motive for foreign direct investment (FDI), sector, and location. Our results suggest, in line with previous work, that on average outward Japanese FDI has limited effects (either positive or negative) on the activity of internationalizing firms at home in the initial years after investment. However, our empirical findings confirm previous insights that the effect of moving abroad is heterogeneous depending on the affiliate sector (manufacturing versus non-manufacturing) and region of location (in USA or Europe versus in Asia). For FDI in the non-manufacturing sector located in USA or Europe, we find a positive impact on parent firm productivity. Further, we find a negative impact on parent firm employment from FDI in Asia. |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:11069&r=int |
| By: | Anania, Giovanni; Scoppola, Margherita |
| Keywords: | International Relations/Trade, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaae11:114222&r=int |
| By: | Susana Assunção (Faculdade de Economia, Universidade do Porto); Aurora A. C. Teixeira (CEF.UP, Faculdade de Economia, Universidade do Porto; INESC Porto; OBEGEF); Rosa Forte (CEF.UP, Faculdade de Economia, Universidade do Porto) |
| Abstract: | The vast existing empirical literature on Foreign Direct Investment (FDI) puts forward an extensive list of determinants that may explain the investment of multinational firms in a particular location. However, only a small fraction of these studies concerns the importance of natural resources in attracting FDI. Despite their valuable scientific contribution, the few studies that deal with these two themes are limited in two regards: their focus on specific geographical regions (e.g., Central and Eastern Europe, Central Asia, Sub-Saharan Africa, Middle East and North African countries); and their neglect of Non-Renewable Energy Resources (NRER). In this context, this paper intends to add empirical evidence to this research area. Specifically, it analyzes the impact of countries’ endowments of NRER (introducing here a new measure - proven reserves of coal, gas and oil) in attracting FDI in a wide set of countries, controlling for other factors that are traditionally considered as influencing FDI (e.g., market size, human capital, openness of the economy, political stability). Examining 125 host countries (75 of which have proven reserves of NRER), the empirical results show that a country’s endowment of NRER does not matter for FDI attraction whereas some ‘traditional’ factors, most notably, human capital and openness of the economy emerge as critical determinants of FDI. These results have important and encouraging policy implications for countries’ development, in particular for less developed countries that are not endowed by nature with NRER. Indeed, our results firmly indicate that development, through FDI attraction, is possible as long as countries intentionally devote resources to the enhancement of their human capital and convincing efforts are made to open up their economies to international trade. |
| Keywords: | FDI, Eclectic Paradigm, determinants of FDI, Non-Renewable Energy Resources |
| JEL: | F21 F23 C4 O13 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:por:fepwps:430&r=int |
| By: | Lipsey, Robert E. (City University of New York); Sjöholm, Fredrik (Department of Economics, Lund University) |
| Abstract: | This paper attempts to measure the size of South-South FDI in developing East Asia and the trends in it, and the characteristics of the investing countries and the investments themselves. It also summarizes the findings of studies in individual countries of the effects of these investments. The studies of individual countries will be used to try to find some consensus on differences between South-South FDI and North-South FDI. Among the comparisons of the two types of FDI we try to summarize are be findings about their industrial composition, their effects on their host countries and their host-country firms’ productivity, wages, and employment, and how these differ across industries. |
| Keywords: | FDI; East Asia; South-South; Economic development; Multinational firms |
| JEL: | F21 F23 O19 |
| Date: | 2011–09–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lunewp:2011_030&r=int |
| By: | Li, Zhigang; Yu, Xiaohua; Zeng, Yinchu |
| Abstract: | costs: Evidence from Chinese agricultural traders |
| Keywords: | Transportation Costs, China, Agricultural Traders, Infrastructure, International Relations/Trade, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaae11:114384&r=int |
| By: | Lipsey, Robert E. (NBER); Sjöholm, Fredrik (Research Institute of Industrial Economics (IFN)) |
| Abstract: | This paper attempts to measure the size of South-South FDI in developing East Asia and the trends in it, and the characteristics of the investing countries and the investments themselves. It also summarizes the findings of studies in individual countries of the effects of these investments. The studies of individual countries will be used to try to find some consensus on differences between South-South FDI and North-South FDI. Among the comparisons of the two types of FDI we try to summarize are be findings about their industrial composition, their effects on their host countries and their host-country firms’ productivity, wages, and employment, and how these differ across industries. |
| Keywords: | FDI; East Asia; South-South; Economic development |
| JEL: | F21 F23 O19 |
| Date: | 2011–10–06 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0885&r=int |
| By: | Bruce A. Blonigen; Lindsay Oldenski; Nicholas Sly |
| Abstract: | Bilateral tax treaties (BTT) are intended to promote foreign direct investment and foreign affiliate activity through double taxation relief. However, BTTs also typically contain provisions that facilitate sharing of tax information between countries intended to curtail tax avoidance by multinational firms. These provisions should disproportionately affect firms that intensively use inputs for which an arms-length price is easily observed, since strategic transfer practices that manipulate tax liabilities are no longer effective with information sharing between countries. Using BEA firm-level data we are able to separately estimate the impacts of double-taxation relief and sharing of tax information on investment behavior of US multinational firms. We find a significant positive effect of new tax treaties on foreign affiliate activity between member nations that is offset (and even reversed) the more a firm relies on inputs traded on an organized exchange (i.e., inputs for which the arms-length price is easily observed). We find these opposing BTT effects for both the intensive margin (sales of existing affiliates) and the extensive margin (entry of new affiliates). |
| JEL: | F21 F23 H25 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:17480&r=int |