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on International Trade |
| By: | Maria Bas; Pamela Bombarda |
| Abstract: | Recent findings in international trade using detailed firm level surveys emphasize the microeconomic effects of trade liberalization episodes. A unilateral trade reform has two opposite effects on firms’ export patterns: (i) expansion of export opportunities for foreign firms exporting to that destination and (ii) intensification of foreign competition in the liberalized market. The main contribution of this paper is to investigate this trade-off between market access growth and tougher competitive pressures in the export market. Using detailed firm-product-destination data for French firms (1999-2005), we explore how the margins of French exports react to unilateral trade liberalization of Asian countries, with particular attention given to China. We exploit the exogenous variation in Chinese import tariff cuts relative to tariff changes in other Asian countries. Our findings suggest that French firms expanded the range of their exported products and the volume of exports to China relative to other Asian destinations after Chinese tariff liberalization. These results are robust when we explicitly account for foreign competition of third countries in the liberalized market. Quantitatively, a 7 percent declined of Chinese tariff on average during the period 1999-2005, results in almost 6 log points expansion of a firm’s export product scope and 14 log points of firms’ export sales. |
| Keywords: | MARKET ACCESS, Unilateral trade liberalization, foreign competition, export margins, Multi-product exporters |
| JEL: | F12 F13 L11 |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:cii:cepidt:2011-18&r=int |
| By: | Hayakawa, Kazunobu |
| Abstract: | In this paper, we examined back-and-forth international transactions through tariff reduction by estimating modified gravity equations for finished goods and intermediate goods separately. Our main findings are as follows. Exports of finished machinery products are negatively associated with not only the importer's tariff rates on finished machinery products but also the exporter's tariff rates on machinery parts. Similarly, exports of machinery parts are negatively associated with not only the importer's tariff rates on machinery parts but also the exporter's tariff rates on finished machinery products. These results imply that tariff reduction in only one production process in an industry has the potential to drastically change the magnitude of trade in the whole industry. |
| Keywords: | International trade, Tariff, Gravity, Finished Goods Trade, Intermediate Goods Trade |
| JEL: | F10 F14 F15 |
| Date: | 2011–08 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper304&r=int |
| By: | Hélène Latzer; Florian Mayneris |
| Abstract: | This paper contributes to the understanding of the determinants of country-level comparative advantages in terms of quality. More precisely, while the literature has mainly focused so far on supply-side determinants of such comparative advantages, we investigate both theoretically and empirically the role played by income distribution (average income and level of inequalities) of a country on the quality of its exports. Doing so, we provide new insights on the existence of demand-based determinants of the quality content of a country’s exports, in line with the Linder (1961) hypothesis, claiming that firms produce and export goods suited to the specific tastes of their local consumers. We build a model with economies of scale where non-homothetic preferences and within-country income differences determine the quality composition of production and exports. Having neutralized any supply-side comparative advantage, we show that richer countries produce and export higher quality goods, while the level of inequalities has an heterogenous impact, positively affecting the quality content of exports for rich enough countries only. We then corroborate our theoretical predictions on bilateral trade data for the enlarged European Union (EU), an integrated market displaying significant heterogeneity in terms of both average income and within-country inequalities of its members. Furthermore, we are able to show that in terms of magnitude of the effects, inequalities are a second-order demand-based determinant of the quality of exports as compared to average income. |
| Keywords: | Product quality, Income distribution, Trade, Economies of scale, European Union. |
| JEL: | F12 L15 O15 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2011-21&r=int |
| By: | Andrew B. Bernard; J. Bradford Jensen; Stephen J. Redding; Peter K. Schott |
| Abstract: | This paper reviews the empirical evidence on firm heterogeneity in international trade. A first wave of empirical findings from micro data on plants and firms proposed challenges for existing models of inter- national trade and inspired the development of new theories emphasizing firm heterogeneity. Subsequent empirical research has examined additional predictions of these theories and explored other dimensions of the data not originally captured by them. These other dimensions include multi-product firms, offshoring, intra-firm trade and firm export market dynamics. |
| Keywords: | Heterogeneous firms, exporting, importing, productivity |
| JEL: | F10 F12 F14 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1084&r=int |
| By: | Pablo D. Fajgelbaum; Gene M. Grossman; Elhanan Helpman |
| Abstract: | We study patterns of FDI in a multi-country world economy. First, we present evidence for a broad sample of countries that firms direct FDI disproportionately to markets with income levels similar to their home market. Then we develop a model featuring non-homothetic preferences for quality and monopolistic competition in which specialization is purely demand-driven and the decision to serve foreign countries via exports or FDI depends on a proximity-concentration trade-off. We characterize the joint patterns of trade and FDI when countries differ in income distribution and size and show that FDI is more likely to occur between countries with similar per capita income levels. The model predicts a Linder Hypothesis for FDI, consistent with the patterns found in the data. |
| JEL: | F12 F23 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:17550&r=int |
| By: | Arita, Shawn; Tanaka, Kiyoyasu |
| Abstract: | This paper develops a micro-simulation framework for multinational entry and sales activities across countries. The model is based on Eaton, Kortum, and Kramarz's (2010) quantitative trade model adapted towards multinational production. Using micro data on Japanese manufacturing firms, we first stylize the empirical regularities of multinational entry and sales activity and estimate the model's structural parameters with simulated method of moments. We then demonstrate that our adapted model is able to replicate important dimensions of the in-sample moments conditioned in our estimation strategy. Importantly, it is able to replicate activity under an economic period with a far different level of FDI barriers than was conditioned upon in our estimation sample. Overall, our research highlights the richness of the simulation framework for performing counterfactual analysis of various FDI policies. |
| Keywords: | International business enterprises, Foreign investments, Multinational firms, FDI, Firm heterogeneity, Simulation, Model validation |
| JEL: | F10 F23 L25 R12 R30 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper296&r=int |
| By: | Alessandro Barattieri |
| Abstract: | The large current account deficit of the U.S. is the result of a large deficit in the goods balance and a modest surplus in the service balance. The opposite is true for Japan, Germany and China. Moreover, I document the emergence from the mid-nineties of a strong negative relation between specialization in export of services and current account balances in a large sample of OECD and developing countries. Starting from these new stylized facts, I propose in this paper a “service hypothesis” for global imbalances, a new explanation based on the interplay between the U.S. comparative advantage in services and the asymmetric trade liberalization process in goods trade versus service trade that took place in the last 15 years. First, I use a structural gravity model to show that service trade liberalization lagged behind goods trade liberalization, and I quantify the extent of this asymmetry. Second, I show that a simple two-period model can rationalize the emergence of current account deficits in the presence of such asymmetric liberalization. The key inter-temporal mechanism is the asymmetric timing of trade policies, which affects savings decisions. Finally, I explore the quantitative relevance of this explanation for global imbalances. A multi-period version of the model, fed with the asymmetric trade liberalization path found in the data, generates a current account deficit of about 1% of GDP (roughly 20% of what was observed in the U.S. in 2006). |
| Keywords: | Comparative Advantage, Service Trade, Global Imbalances |
| JEL: | F1 F32 F40 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:lacicr:1134&r=int |
| By: | Bojnec, Štefan; Fertő, Imre; Fogarasi, József |
| Abstract: | Agro-food trade between the BRIC countries has increased. Brazil and China contributed to the rapid increase of agro-food trade. The Russian Federation experienced the stagnating and the most volatile agro-food trade over time. The composition of agro-food trade for the BRIC countries varies by the BEC agro-food trade categories and over time. The prevailing in the composition of agro-food trade are BEC122 and BEC111 for Brazil and the Russian Federation, and BEC122 and BEC112 for India and China. Brazil and India have strengthened their market shares in agro-food trade between the BRIC countries, while the Russian Federation has experienced the most severe deterioration. The number and the share of trading partners that have traded every year vary between the BRIC countries and the BEC agro-food trade categories over time. Agro-food trade between the BRIC countries is positively associated with the GDP size and population size in importing countries, but negatively associated with the GDP size and population size in exporting countries as well as with distance. Mixed results are found for border effect, institutional quality and institutional similarity depending on the BEC agro-food trade categories. -- |
| Keywords: | agro-food trade,BRIC countries,adapted gravity model,institutions |
| JEL: | F14 Q17 C23 O57 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iamo11:19&r=int |
| By: | Hayakawa, Kazunobu; Tsubota, Kenmei |
| Abstract: | Unlike most existing studies, this paper examines the location choices of MNEs in developing countries. Specifically, we investigate the location choices of Japanese MNEs among East Asian developing countries by estimating a four-stage nested logit model at the province level. Noteworthy results of location elements are as follows. As is consistent with the mechanics of cheap labor-seeking FDI, Japanese MNEs are more likely to invest in locations with low income and low tariff rates on products from Japan. Also, accessibility to other locations and/or ports matters in attracting Japanese MNEs because it is crucial in importing materials and exporting their products. In addition, WTO membership and bilateral investment treaties are important because these contribute to the settlement of trade and investment disputes, which is more likely to be necessary in developing countries. |
| Keywords: | Southeast Asia, China, Japan, Malaysia, Indonesia, Cambodia, Laos, Myanmar, Vietnam, Thailand, Philippines, Foreign investments, Industrial management, Location Choice, Multinational Firms, Nested-logit Model |
| JEL: | F15 F21 F23 |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper301&r=int |
| By: | Chin Hee Hahn; Chang-Gyun Park |
| Abstract: | This paper examines the role of exports in skill upgrading in the Korean manufacturing sector during the 1990s utilizing a unique plant-level panel data set. The empirical results indicate the important role of exports on relative employment on skilled versus unskilled workers. The main findings are as follows. Firstly, this paper documents the significant degree of skill upgrading that occurred during the 1990s in the Korean manufacturing sector. Secondly, a large part of the increase in the aggregate non-production employment share was due to the \within. effect, rather than the \between. effect. This tendency becomes stronger when we use plant-level, rather than industry-level data. Thirdly, most of the \within. changes were accounted for by the skill-upgrading of exporters, especially those exporters that were either R&D active or large. This is suggestive of the positive interactive effects between exporting and R&D expenditure in skill upgrading. Fourthly, regression analysis shows that both the \within. and \between. components of skill composition changes at plant level are strongly and positively correlated with exporting activities, while R&D expenditure is correlated only with the \within. components. |
| Keywords: | trade, employment, wages, inclusive growth |
| JEL: | F16 |
| Date: | 2011–10–20 |
| URL: | http://d.repec.org/n?u=RePEc:oec:traaab:128-en&r=int |
| By: | Oyamada, Kazuhiko; Uchida, Yoko |
| Abstract: | One of the key factors behind the growth in global trade in recent decades is an increase in intermediate input as a result of the development of vertical production networks (Feensta, 1998). It is widely recognized that the formation of production networks is due to the expansion of multinational enterprises' (MNEs) activities. MNEs have been differentiated into two types according to their production structure: horizontal and vertical foreign direct investment (FDI). In this paper, we extend the model presented by Zhang and Markusen (1999) to include horizontal and vertical FDI in a model with traded intermediates, using numerical general equilibrium analysis. The simulation results show that horizontal MNEs are more likely to exist when countries are similar in size and in relative factor endowments. Vertical MNEs are more likely to exist when countries differ in relative factor endowments, and trade costs are positive. From the results of the simulation, lower trade costs of final goods and differences in factor intensity are conditions for attracting vertical MNEs. |
| Keywords: | Developing countries, Developed countries, Foreign investments, International business enterprises, Foreign Direct Investment, Knowledge-Capital Model |
| JEL: | F21 F23 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper290&r=int |
| By: | Sheng, Liugang (University of California, Davis); Yang, Dennis Tao (Chinese University of Hong Kong) |
| Abstract: | We study the effects of policy reforms in the South on the decisions of intrafirm and arm's length production transfers by Northern firms. We show theoretically that relaxing ownership controls and improving contract enforcement can induce multinational companies to expand product varieties to host developing countries, and that a combination of the two reforms has an amplifying effect on product transfers. Consistent with these implications, we find that ownership liberalization and judicial quality played an important role in raising the extensive margin of processing exports in China for the period of 1997-2007. Our findings imply that institutional reforms in developing countries can effectively speed up the product cycle. |
| Keywords: | product cycle, ownership structure, contract environment, export variety, processing trade, China |
| JEL: | D23 F14 L24 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6054&r=int |
| By: | Nilsson, Lars; Dotter, Caroline |
| Abstract: | Previous work has shown that a significant number of preference eligible goods are imported into the EU from developing countries at relatively small values and that the rate of preference utilisation of these imports are low and in many cases zero. This fact is unobserved in the aggregate figures and thus rarely noticed. This paper examines this phenomenon further by using monthly data on EU imports from African LDCs at the lowest level of (publicly) available aggregation thereby coming close to transaction level data. It identifies the average values of preference eligible imports, utilising and not utilising preferences, by country and product category and test their empirical relevance for explaining the African LDCs' preference utilisation rates. -- |
| Keywords: | trade preferences,preference utilisation,small trade flows,compliance costs,LDCs |
| JEL: | F13 F15 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:201142&r=int |
| By: | Nicole Alice Sindzingre (EconomiX - CNRS : UMR7166 - Université de Paris X - Nanterre) |
| Abstract: | The paper analyses the economic relationships between China and Sub-Saharan African countries, including original contractual relationships that link exports from Sub-Saharan Africa to China and investment by Chinese firms in Sub-Saharan Africa. Unlike the 'traditional' partners of Sub-Saharan African economies (European countries, USA), these relations inextricably combine trade, aid and investment, which may create 'lock-in' effects. China's trade and investment focus on the commodities that are produced by African countries, which are crucial inputs in China's growth, with the risk of a growing dependence of African economies on the exports of raw materials and the negative effects that are associated with such dependence, especially in oil-exporting countries. Chinese investment, however, increasingly involves other sectors, such as the manufacturing sector. In addition, Chinese investment and aid have positive effects, such as the improvement of infrastructure, the lack of which being one of the key factors of the stagnation of African economies. The rise of China in Sub-Saharan Africa also implies significant additional resources and a welcome increase in the number of 'players'. The article thus shows the ambivalence of the impacts of China, which moreover substantially vary according to countries' export structure and the nature of their political institutions. |
| Keywords: | Sub-Saharan Africa; China; trade; investment; aid |
| Date: | 2011–09–14 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00636022&r=int |
| By: | Michida, Etsuyo; Atici, Cemal; Kojima, Michikazu |
| Abstract: | This paper sheds light on the iron and steel (IS) scrap trade to examine how economic development affects the quality demanded of recyclable resource. A simple model is presented that show a mechanism of how scrap quality impacts the direction of trade due to comparative advantage. We find that economic development in both importing and exporting countries has a positive effect on the quality of traded recyclables. Developed countries that intend to improve the domestic recovery of recyclables should raise the quality of separating recyclables while developing countries should tighten environmental regulations to help decrease the import of recyclables that cause pollution. |
| Keywords: | Recycling (waste, etc.), Iron, International trade, Environmental problems, Developing countries, Developed countries, Iron and steel, Scrap, Environment, Trade |
| JEL: | F18 O13 Q53 Q56 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper282&r=int |
| By: | Francis Kramarz |
| Abstract: | This paper examines, in France, the relationship between imports – and trade more generally – and employment. It builds on the burgeoning literature relating trade and labour markets, taking into account theories of firm-level trade and previous empirical work. The analysis in the paper draws on three data sources to establish a matched firm-level data set covering trade, economic variables and employment for the time period from 1995 to 2004. The data set covers manufacturing firms. The paper develops estimates of the relationship between employment and trade activity at the firm level, first on an aggregate basis and then at industry level. Additional assessments are made with respect to the firms’ experience with changes in imports of finished goods and intermediates. The conclusion sums up the results and relates these to previous work on the relationship of trade and employment in France, pointing to some possible explanations and areas for further research. |
| Keywords: | trade, employment, wages, inclusive growth |
| JEL: | F16 |
| Date: | 2011–10–21 |
| URL: | http://d.repec.org/n?u=RePEc:oec:traaab:124-en&r=int |
| By: | Van Der Marel, Erik; Shepherd, Ben |
| Abstract: | Regulatory measures constitute a significant barrier to cross-border services trade in sectors including transport, communications, business services, insurance, and recreation. However, regulation has weaker effects on trade in financial services, distribution, and construction. Entry barriers and conduct regulations have heterogeneous effects across sectors, as do particular measures such as licensing requirements, economic needs tests, restrictions on business form, and limitations on advertising. In addition, regional trade agreements (RTAs) are trade creating in communications, finance, and distribution, but have only weak effects in other sectors. Contrary to findings for goods markets, trade diversion is relatively limited for services RTAs. |
| Keywords: | Trade in services; Non-tariff measures; Regional integration |
| JEL: | F15 F13 |
| Date: | 2011–09–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:34343&r=int |
| By: | Holger Breinlich |
| Abstract: | This paper presents novel empirical evidence on key predictions of heterogeneous firm models by examining stock market reactions to the Canada-United States Free Trade Agreement of 1989 (CUSFTA). Using the uncertainty surrounding the agreement's ratification, I show that the pattern of abnormal returns of Canadian manufacturing …firms was broadly consistent with the predictions of a class of models based on Melitz (2003). Increases in the likelihood of ratification led to stock market gains of exporting firms relative to non-exporters. Moreover, gains were higher in sectors with larger cuts in U.S. import tariffs. Decreases in the likelihood of ratification led to opposite stock market reactions. Results for the impact of Canadian tariff reductions are less conclusive but most specifications suggest that exporters also gained relative to non-exporters in response to such reductions. Translating stock market gains into implied profit changes, I find that CUSFTA increased expected per-period profits of exporters by around 6-7% relative to non-exporters. |
| Keywords: | Heterogeneous firm models, stock market event studies, Canada-U.S. free tradeagreement |
| JEL: | F12 F14 G14 |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1085&r=int |
| By: | da Silva, Orlando Monteiro; Drumond, Rafael Rodrigues; de Almeida, Fernanda Maria |
| Abstract: | This study aimed to calculate the patterns of similarity and income content of Brazilian, Russian, Chinese and Indian exports by means of indexes, and compare those patterns with those of OECD countries, covering a period between 2000 and 2009. The results indicate that Brazilian, Russian, Chinese and Indian exports became more similar between 2000 and 2006, but that similarity has declined ever since. Exports from China and India, in turn, are increasingly similar to each other and less different from the exports of OECD countries. Export sophistication has increased over the years, with higher growth rates in China and India. India and Russia's sophistication indexes surpassed that of Brazil in 2007, which signal that those countries currently export products with higher content of income. The study also indicated that Brazil has been losing market share for China and India as an exporter of sophisticated products. -- |
| Keywords: | Exports,Brazil,Russia,China,India,similarity,income content |
| JEL: | F14 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iamo11:17&r=int |
| By: | Borodin, Konstantin; Strokov, Anton |
| Abstract: | The paper investigates interrelations between the dynamics of national central banks' interest rates and international trade within the BRIC countries. It shows that countries with lower interest rates experience growth of the share of machinery industry exports rather than agriculture and food products, and, on the contrary, in countries with higher interest rates the share of agriculture and food exports increases and the share of machinery industry products declines. The investigation has shown that a relative shift in the interest rate can affect the specialization of countries. -- |
| Keywords: | Central banks' interest rate,Exports,Specialization |
| JEL: | F1 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iamo11:18&r=int |
| By: | Pall, Zsombor; Perekhozhuk, Oleksandr; Teuber, Ramona; Glauben, Thomas |
| Abstract: | Significant changes have taken place on the world wheat market over the last decade. Russia, a former net wheat importer has become a leading exporter with a world market share of 13.8 percent in 2009/2010. Though there are several studies on the pricing behaviour of Canadian and US wheat exporters, there is none on the pricing behaviour of Russian wheat exporters. The present paper tries to fill this lack of research by providing a quantitative analysis of the pricing behaviour of Russian wheat exporters. We employ a pricing-to-market (PTM) model on annual Russian wheat export data, covering the period 2002-2009 and 22 export destinations. Our findings indicate that Russian wheat exporters behave rather competitively and exercise pricing to market behaviour only in five export destinations. -- |
| Keywords: | Russia,wheat export,international trade,pricing to market |
| JEL: | L13 Q17 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iamo11:15&r=int |
| By: | Raymundo Miguel Campos-Vázquez; José Antonio Rodríguez-López |
| Abstract: | We analyze the effects of trade liberalization on Mexican employment at an occupational level for the period from 1992 to 2009, ranking occupations by skill level. We find that the reduction in trade costs associated with Mexico's entry to NAFTA is related to larger employment expansions in low-skill occupations. This evidence runs counter to a story of skilled-biased technological change in Mexico, and in favour of a heterogeneous-firm model of trade in tasks where the offshoring cost of an occupation is positively related to its skill level. After NAFTA, labour demand for unskilled workers has increased and labour demand for skilled workers has been stagnant, even though supply of skilled workers has increased in the last 20 years. We provide intuitive evidence to identify a number of relevant bottlenecks in the Mexican economy that may be associated with these developments. |
| Keywords: | trade, employment, wages, inclusive growth |
| JEL: | F16 |
| Date: | 2011–10–19 |
| URL: | http://d.repec.org/n?u=RePEc:oec:traaab:129-en&r=int |
| By: | Tsunehiro Otsuki (Osaka School of International Public Policy, Osaka University) |
| Abstract: | This paper assesses the performance and progress of the ASEAN economies in trade facilitation, and the effect of improved trade facilitation on the regionfs manufacturing trade with a focus on port efficiency, customs environment, regulatory environment and service sector infrastructure. Under a scenario of raising the below-average countries halfway to the global average, ASEANfs trade is estimated to increase by $99 billion, three-quarters of which comes from the regionfs own improvements. Also, regulatory reforms, for example, enhancing transparency of trade-related regulations and ensuring law-abiding operations of the regulatory authorities, are found to be most effective. |
| Keywords: | regional integration, trade facilitation, gravity model |
| JEL: | F15 H54 L51 |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:osp:wpaper:11e006&r=int |
| By: | Jorge Friedman; Nanno Mulder; Sebastián Faúndez; Esteban Pérez Caldentey; Carlos Yévenes; Mario Velásquez; Fernando Baizán; Gerhard Reinecke |
| Abstract: | This paper examines the relationship between wages and levels of trade and FDI openness in twenty-nine sectors of the Chilean economy. Over the last four decades, this country almost fully liberalized its trade and foreign direct investment, which accelerated growth of flows in both areas and contributed to important changes in the labour market. Using cluster analysis, we divide 29 sectors into three groups of high, medium and low levels of trade and foreign direct investment penetration in 2003 and 2008. Subsequently, an average wage equation is estimated for salaried workers in each group based on their characteristics (gender, education, work experience and union membership) using microdata of the Supplementary Income Survey (SIS) database. Differences between average wages of the three groups are decomposed with the Oaxaca-Blinder method. The results confirm that the group of most open sectors pays a “wage premium” to its workers. It is also shown that most of this premium is accounted for by higher levels of labour unionisation compared to other sectors. An alternative grouping of sectors into two categories of tradable and non-tradable sectors based on export intensity only yields similar results. |
| Keywords: | trade, employment, wages, Chile, inclusive growth, openness, unionisation, wage gap, Oaxaca-Blinder method |
| JEL: | F16 |
| Date: | 2011–10–31 |
| URL: | http://d.repec.org/n?u=RePEc:oec:traaab:134-en&r=int |
| By: | Christensen, Jonas Gade (Universitetet i Bergen, Norway) |
| Abstract: | Introducing capital market imperfections to a 'footloose capital'’model, I show how such distortions may explain the observed phenomena of an industrialized north and an underdeveloped south. Further, I show that with inter-generational savings internationalization will cause a crowding out of manufacturing firms in the south, increasing the share of the southern population that are credit-constrained, and also reducing total income in the country. This should not, however, be taken as an argument for protectionism, as welfare may indeed be higher with trade than in autarky, if trade costs are sufficiently low. |
| Keywords: | Capital constraints; Home market effect; Gain from trade |
| JEL: | F11 F12 F21 |
| Date: | 2011–02–02 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bergec:2011_005&r=int |
| By: | Haq, Zahoor; Meilke, K. D.; Cranfield, John |
| Abstract: | and this is a problem when estimating log-linear gravity equations. This has caused many researchers to either ignore the zero trade flows or to replace the zero with a small positive number. Both of these actions bias the resulting parameter estimates of the gravity equation. In this study we correct for this misspecification by using the Heckman selection model to estimate bilateral trade flows for 46 agrifood products, for the period 1990 to 2000, for 52 countries. In our sample, selection bias rarely affects the signs of variables but often has a substantial effect on the magnitude, statistical significance and economic interpretation of the marginal effects. Hence, treating zero trade flows properly is important from both a statistical and an economics perspective. |
| Keywords: | Gravity model, selection bias, Agrifood Trade, Heckman Selection Model, marginal effects, Agricultural and Food Policy, Demand and Price Analysis, International Relations/Trade, Research Methods/ Statistical Methods, |
| Date: | 2011–08 |
| URL: | http://d.repec.org/n?u=RePEc:ags:catpwp:116851&r=int |
| By: | Laura Munro |
| Abstract: | This report provides a summary of the literature on the relationship between trade and informality in developing countries, with an emphasis on the BRIICS. While main conclusions of the ILO and WTO (2009) literature review are highlighted, the report focuses on additional and more recent literature. The report investigates four key issues in the literature on trade and informal labour markets: (1) theoretical predictions for trade and informality; (2) how trade liberalisation affects informal labour markets; (3) how trade flows affect the informal economy; and (4) what implications informality has for trade and growth. The main conclusion from this review is that empirical evidence on the relationship between trade and informality is complex and context-specific. Several of the empirical analyses reviewed in this report suggest that this variation is due to country-specific characteristics (in particular, labour market rigidity, capital mobility, level of economic development and heterogeneity of the informal workforce). Variation can also be partly explained by the fact that different methodologies are used and different measures of informality are employed across studies. |
| Keywords: | trade, employment, wages, inclusive growth |
| JEL: | F16 |
| Date: | 2011–10–19 |
| URL: | http://d.repec.org/n?u=RePEc:oec:traaab:132-en&r=int |
| By: | Jiandong Ju; Kang Shi; Shang-Jin Wei |
| Abstract: | Sticky (or slow-adjusting) current accounts are observed in many countries. This paper explores the role of domestic factor market flexibility in understanding the phenomenon. To do so, we consider multiple tradable sectors with different factor intensities and allow substitution between intertemporal trade (current account adjustment) and intra-temporal trade (goods trade) in a dynamic general equilibrium model. An economy’s response to a shock generally involves a combination of a change in the composition of goods trade and a change in the current account. Flexible factor markets reduce the need for the current account to adjust. On the other hand, the more rigid the factor markets, the larger the size of current account adjustment relative to the volume of goods trade, and the slower the speed of adjustment of the current account towards its long-run equilibrium. We present empirical evidence in support of the theory. |
| JEL: | F30 F41 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:17549&r=int |
| By: | Bogdanov, Andrej; Petuchova, Tamara |
| Abstract: | This study explores trends and perspectives of Lithuania's trade in agricultural and food products with the BRIC countries. Agriculture is one of the priority sectors of Lithuania's economy and plays an important economic and social role. The share of agricultural and food products within the overall foreign trade of Lithuania is significant, and exports to the BRIC countries account for nearly one third of the Lithuanian agricultural and food products exports. BRICs economic development and growing population leads to the increasing food consumption. The potential of these markets is attractive for Lithuania's foreign trade. Therefore, consideration of trade flow in food and agricultural products between Lithuania and the BRIC countries is currently very topical. The econometric forecasting model of Lithuania's Export and Import flows, created by the authors, was applied to predict trade with the BRIC countries in the medium-term period. The authors analyzed the structure of Lithuania's trade in agricultural and food products with the specific BRIC countries, estimated influence of external and internal factors changes. -- |
| Keywords: | foreign trade in agricultural and food products,econometric model,forecast,Lithuania,BRIC |
| JEL: | F17 F47 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iamo11:21&r=int |
| By: | Michelle R. Garfinkel (Department of Economics, University of California-Irvine); Stergios Skaperdas (Department of Economics, University of California-Irvine); Constantinos Syropoulos (Department of Economics and International Business, Drexel University) |
| Abstract: | We augment the canonical neoclassical model of trade to allow for interstate disputes over land, oil, water, or other resources. The trade regime in place has important implications for the costs of such disputes in terms of arming. Depending on world prices, free trade can intensify arming incentives to such an extent that the additional security costs swamp the traditional gains from trade and thus render autarky more desirable for one or both rival states. Furthermore, contestation of resources can reverse a country's apparent comparative advantage relative to its comparative advantage in the absence of conflict. And, where such con ict is present, comparisons of autarkic prices to world prices could be inaccurate predictors of trade patterns. |
| Keywords: | Trade openness; Property rights; Interstate disputes; Conflict; Security policies |
| JEL: | D30 D70 D72 D74 F2 F10 |
| Date: | 2011–08 |
| URL: | http://d.repec.org/n?u=RePEc:irv:wpaper:111201&r=int |
| By: | Peter Gallagher; Ysé Serret |
| Abstract: | This document sets out a framework for evaluating the implementation of environmental provisions in Regional Trade Agreements. The checklist approach to the evaluation of countries‘ experience of implementation complements the OECD‘s Checklist for Negotiators (2008). Among the issues addressed are institutional arrangements, co-operation, capacity building, public participation, resolution of differences and assessment. |
| Keywords: | trade policy, regional trade agreements, trade and environment, free trade agreements, environmental provisions |
| JEL: | F13 F18 N50 Q56 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:oec:traaaa:2011/6-en&r=int |
| By: | Yoshino, Hisao |
| Abstract: | In a strategic trade policy, it is assumed, in this paper, that a government changes disbursement or levy method so that the reaction function of home firm approaches infinitely close to that of foreign firm. In the framework of Bertrand-Nash equilibrium, Eaton and Grossman[1986] showed that export tax is preferable to export subsidy. In this paper, it is shown that export subsidy is preferable to export tax in some cases in the framework of Bertrand-Nash equilibrium, considering the uncertainty in demand. Historically, many economists mentioned non-linear subsidy or tax. However, optimum solution of it has not yet been shown. The optimum solution is shown in this paper. |
| Keywords: | Trade policy, Exports, Taxation, Strategic trade policy, Non-linear subsidy, Bertrand-Nash equilibrium, Stackelberg equilibrium |
| JEL: | F13 F12 L52 C72 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper287&r=int |
| By: | Bruno César Araújo; Marco Vivarelli; FrancescoBogliacino |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:anp:en2009:143&r=int |
| By: | Tiziano Squartini; Giorgio Fagiolo; Diego Garlaschelli |
| Abstract: | The international trade network (ITN) has received renewed multidisciplinary interest due to recent advances in network theory. However, it is still unclear whether a network approach conveys additional, nontrivial information with respect to traditional international-economics analyses that describe world trade only in terms of local (first-order) properties. In this and in a companion paper, we employ a recently proposed randomization method to assess in detail the role that local properties have in shaping higher-order patterns of the ITN in all its possible representations (binary/weighted, directed/undirected, aggregated/disaggregated by commodity) and across several years. Here we show that, remarkably, the properties of all binary projections of the network can be completely traced back to the degree sequence, which is therefore maximally informative. Our results imply that explaining the observed degree sequence of the ITN, which has not received particular attention in economic theory, should instead become one the main focuses of models of trade. |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1103.1243&r=int |
| By: | Amikuzuno, Joseph |
| Abstract: | Cross-border trade in food commodities within sub-regional economic blocks in Sub-Sahara Africa (SSA) is believed to be faster, cheaper, more convenient and welfare-enhancing than overseas trade between SSA countries and the USA, EU and the BRIC countries. The difficulty of commodity arbitrage across international borders SSA is however a fundamental constraint to price transmission, market integration and the realisation of the welfare enhancing role of cross-border trade in Africa. This study examines the impact of border and distance on price transmission between tomato markets in Ghana and Burkina-Faso. Theanalysis applies a regime-switching vector error correction model to estimate semi-weekly, wholesale prices of tomato in four tomato markets in Ghana and a production centre in Burkina-Faso. Estimated parameters of price transmission contain evidence of border and distance effects. This is expected since high transfer costs, including cross-border tariffs are incurred by traders in moving tomato across the border. Moreover, the perishable nature of tomato, and the poor quality of roads and transportation facilities may imply additional costs of risks to arbitrageurs. The findings have both theoretical relevance and practical implications for facilitating cross-border trade in West Africa, especially for trade between landlocked countries like Burkina-Faso and coastal ones like Ghana. -- |
| Keywords: | Price Transmission,Border,Tomato,Ghana,Burkina-Faso |
| JEL: | C32 Q11 Q13 Q17 Q18 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iamo11:9&r=int |
| By: | Sónia Cabral; Cristina Manteu |
| Abstract: | This paper estimates the price elasticity of external demand of Portuguese exports in the period 1995-2009 and compares it with those of other euro area countries. This proxy of the export price elasticity is computed as a weighted average of the import demand elasticities in each individual country-product destination market, using the elasticities of substitution across imported varieties of Broda et al. (2006). Overall, Portugal tends to export to individual markets which have, on average, a lower price elasticity than the markets where other euro area countries export to. Therefore, the product and geographical composition of Portuguese exports reduces their exposure to relative price fluctuations.<br> |
| JEL: | F12 F14 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ptu:wpaper:w201127&r=int |
| By: | Christensen, Jonas Gade (University of Bergen) |
| Abstract: | I develop a theoretical model of firms’sourcing decisions along the productivity dimension as in Antrás and Helpman (2004), while also incorporat- ing task trade as in Grossman and Rossi-Hansberg (2008). The combination of these two effects permits a framework for sourcing strategies along two dimensions, which generates results where firms spread the production process of the final good over several different sources simultaneously. While reproducing the results from the aforementioned models, my model contributes refined and more detailed predictions. Testing these on firm-level data for Spanish manufacturing firms, I find strong empirical support for the model's predictions. |
| Keywords: | Outsourcing; Productivity; Production processes |
| JEL: | F21 F23 L23 |
| Date: | 2011–02–02 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bergec:2011_007&r=int |
| By: | Tomas Havranek; Zuzana Irsova |
| Abstract: | The voluminous empirical research on horizontal productivity spillovers from foreign investors to domestic firms has yielded mixed results. In this paper, we collect 1,205 estimates of horizontal spillovers from the literature and examine which factors influence spillover magnitude. To identify the most important determinants of spillovers among 43 collected variables, we employ Bayesian model averaging. Our results suggest that horizontal spillovers are on average zero, but that their sign and magnitude depend systematically on the characteristics of the domestic economy and foreign investors. The most important determinants are the technology gap between domestic and foreign firms and the ownership structure in investment projects. Foreign investors who form joint ventures with domestic firms and who come from countries with a modest technology edge create the largest benefits for the domestic economy. |
| Keywords: | Bayesian model averaging, determinants, foreign direct investment, meta-analysis, productivity spillovers. |
| JEL: | F23 O12 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:cnb:wpaper:2011/07&r=int |
| By: | Geishecker, Ingo; Görg, Holger |
| Abstract: | This paper investigates the effects of services offshoring on wages using individual-level data combined with industry information on offshoring for the United Kingdom. Our results show that services offshoring affects the real wage of low- and medium-skilled individuals negatively. By contrast, skilled workers may benefit from services offshoring in terms of higher real wages. Hence, offshoring has contributed to a widening of the wage gap between skilled and less skilled workers. This result is obtained while controlling for individual and sectoral observed and unobserved heterogeneity. In particular, our empirical model also controls for the impact of technological change and offshoring of materials. |
| Keywords: | individual level; services offshoring; wages |
| JEL: | C23 F16 J31 |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:8628&r=int |
| By: | João Rebelo Barbosa (Faculdade de Economia, Universidade do Porto); Rui Henrique Alves (CEF.UP, Faculdade de Economia, Universidade do Porto) |
| Abstract: | As the euro is on its second decade, the European sovereign debt crisis and the ever more evident disparities in competitiveness among member states are prompting many to question whether monetary union is bringing more benefits than costs. The optimum currency area (OCA) theory provides a framework with several criteria for such analysis. Most literature focuses either or on OCA individual criteria or on an aggregate analysis of these criteria, using meta-properties. Differently, we start by a descriptive analysis of the first twelve euro countries under six criteria between 1999 and 2009. We detect signs of labour geographic mobility. However, nominal wages growth largely outpaced productivity growth in some periphery countries, resulting in losses of competitiveness. Financial markets seem to be deeply integrated. Total intra-EMU trade increased, though core countries seem to have benefited more, as their relative competitiveness improved. We detect no increased homogeneity of exports structures of EMU countries. Inflation rates alternated between periods of convergence and of divergence, though prices levels consistently converged between EMU countries. Finally, budgetary indiscipline was frequent preventing several countries from having fiscal room to face asymmetrical shocks.We conclude by estimating the impact of five OCA criteria on countries’ relative competitiveness, using real effective exchange rates as a proxy. Differences in the growth of unit labour costs, the dissimilarity of trade and the differences in output growth were found to be significant. With a higher confidence level, bilateral trade is significant and points towards the specialization paradigm. Thus, we identify some causes of the divergent competitiveness between some EMU countries that contributed to weaker economic growth in parts of the euro area. |
| Keywords: | Optimum currency area, Euro Area; Economic and Monetary Union (EMU), Competitiveness |
| JEL: | E42 E63 F15 F33 F41 |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:por:fepwps:436&r=int |
| By: | Tiziano Squartini; Giorgio Fagiolo; Diego Garlaschelli |
| Abstract: | Based on the misleading expectation that weighted network properties always offer a more complete description than purely topological ones, current economic models of the International Trade Network (ITN) generally aim at explaining local weighted properties, not local binary ones. Here we complement our analysis of the binary projections of the ITN by considering its weighted representations. We show that, unlike the binary case, all possible weighted representations of the ITN (directed/undirected, aggregated/disaggregated) cannot be traced back to local country-specific properties, which are therefore of limited informativeness. Our two papers show that traditional macroeconomic approaches systematically fail to capture the key properties of the ITN. In the binary case, they do not focus on the degree sequence and hence cannot characterize or replicate higher-order properties. In the weighted case, they generally focus on the strength sequence, but the knowledge of the latter is not enough in order to understand or reproduce indirect effects. |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1103.1249&r=int |
| By: | Ron Sandrey; Cecilia Punt; Hans Grinsted Jensen; Nick Vink |
| Abstract: | This report provides an overview of policy changes in South African agriculture over the past three decades, and of some of the associated impacts on output, trade patterns and employment. In agriculture, the story is one of widespread substitution of labour for capital. While the sector has shed more than a million jobs over the past four decades, the paper highlights its continuing role as an employment creator in rural areas, albeit mainly in low-wage occupations. As for its principal analytical contribution, this paper considers future trade liberalisation in the agricultural sector. Using two different economic models, we find a remarkably consistent pattern whereby agricultural trade liberalisation in the region is predicted to increase agricultural employment. |
| Keywords: | trade, employment, wages, inclusive growth |
| JEL: | F16 |
| Date: | 2011–10–19 |
| URL: | http://d.repec.org/n?u=RePEc:oec:traaab:130-en&r=int |