nep-int New Economics Papers
on International Trade
Issue of 2012‒01‒10
fifteen papers chosen by
Alessia A. Amighini
University Amedeo Avogadro

  1. Foreign direct investment, cost of war and trade in Pakistan By Syed, Hasanat Shah; Hasnat, Hafsa; Li, Junjian
  2. The Empirics of Firm Heterogeneity and International Trade By Bernard, Andrew B.; Jensen, J Bradford; Redding, Stephen J.; Schott, Peter K.
  3. Intermediaries in International Trade: Direct versus indirect modes of export By Andrew B. Bernard; Marco Grazzi; Chiara Tomasi
  4. The Causality and Economic Impact of FDI inflows from Trade Partners in Pakistan By Hasanat Shah, Syed; He, Bin; Li, Junjiang
  5. Exporting, R&D Investment and Firm Survival By Ratbek Dzhumashev; Vinod Mishra; Russell Smyth
  6. Selection effects with heterogeneous firms By Monika Mrazova; J. Peter Neary
  7. Export Prices of U.S. Firms By James Harrigan; Xiangjun Ma; Victor Shlychkov
  8. Cross-border coordination in the Madagascar-EU lychee chain: the role of GlobalGAP By Bignebat, C.; Vagneron, I.
  9. Estimations of Tariff Equivalents for the Services Sectors By Lionel Fontagné; Amélie Guillin; Cristina Mitaritonna
  10. The Balassa-Samuelson Effect Reversed: New Evidence from OECD Countries By Matthias Gubler; Christoph Sax
  11. The Wage Premium of Globalization: Evidence from European Mergers and Acquisitions By Oberhofer, Harald; Stöckl, Matthias; Winner, Hannes
  12. Reducing distortions in international commodity markets : an agenda for multilateral cooperation By Hoekman, Bernard; Martin, Will
  13. The Free Trade Area Of The Asia-Pacific: A Constructive Approach To Multilateralizing Asian Regionalism By Bergsten, C. Fred; Noland, Marcus; Schott, Jeffrey J.
  14. Corporate taxes and the location of FDI in Europe using firm-level data By Tomas Silva; Sergio Lagoa
  15. Trade And Industrialisation After Globalisation’s 2nd Unbundling: How Building And Joining A Supply Chain Are Different And Why It Matters By Richard Baldwin

  1. By: Syed, Hasanat Shah; Hasnat, Hafsa; Li, Junjian
    Abstract: This paper uses macro panel data and gravity model to examine the impact of FDI (Foreign Direct Investment) inflows from 20 trade partners and increasing war cost in Pakistan on import, export and trade deficit. The paper compares the effect and inflows of FDI in Pakistan before and after joining the war on terror in 2001. This research work confirms the complementary relationship between FDI and export and FDI and imports, however, the results of FDI impact on trade deficit is insignificant. Similarly, the impact of war cost on exports, imports and trade deficit is not significant.
    Keywords: Pakistan; gravity model; uncertainty; trade partners
    JEL: F40 F21 H56
    Date: 2011–06
  2. By: Bernard, Andrew B.; Jensen, J Bradford; Redding, Stephen J.; Schott, Peter K.
    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 international 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: Exporting; Heterogeneous Firms; Importing; Productivity
    JEL: F10 F12 F14
    Date: 2011–11
  3. By: Andrew B. Bernard; Marco Grazzi; Chiara Tomasi
    Abstract: This paper examines the factors that give rise to intermediaries in exporting and explores the implications for trade volumes. Export intermediaries such as wholesalers serve different markets and export different products than manufacturing exporters. In particular, high market-specific fixed costs of exporting, the (lack of) quality of the general contracting environment and product-specific factors play important roles in explaining the existence of export intermediaries. These underlying differences between direct and intermediary exporters have important consequences for trade flows. The ability of export intermediaries to overcome country and product fixed costs means that they can more easily respond along the extensive margin to external shocks. Intermediaries and direct exporters respond differently to exchange rate fluctuations both in terms of the total value of shipments and the number of products exported as well as in terms of prices and quantities. Aggregate exports to destinations with high shares of indirect exports are much less responsive to changes in the real exchange rate than are exports to countries served primarily by direct exporters.
    JEL: D22 F12 F14 L22 L23
    Date: 2011–12
  4. By: Hasanat Shah, Syed; He, Bin; Li, Junjiang
    Abstract: This paper examines causality between FDI, GDP, Exports and Domestic Investment by using Granger and multivariate Granger causality tests. The study also employs gravity based panel model to investigate the impact of FDI inflows from trade partners on GDP, trade and domestic investment in Pakistan. The results show that two-way causality runs between GDP, domestic investment and FDI, while unidirectional causality is detected from exports to FDI. Our panel data estimation confirms the positive role of FDI inflows in GDP and domestic investment while the results shows that the role of FDI is insignificant in case of exports and imports. Similarly, the concentration and sporadic FDI inflows from a few trade partners is adversely affecting GDP and increases imports without affecting domestic investment and exports. On the other hand minor FDI inflows from trade partners significantly contribute to GDP and decreases imports.
    Keywords: trade partners; causality; gravity model; concentration
    JEL: F14 F21
    Date: 2011
  5. By: Ratbek Dzhumashev; Vinod Mishra; Russell Smyth
    Abstract: This paper examines the effect of exporting on firm survival for a panel of Indian IT firms. We show that exporting has competing effects on firm survival. On the one hand, exporting and investing in productivity are complementary activities, while on the other exporting activity is an additional source of uncertainty for the firm. We show that both effects influence survival, but operate at different points in time. Specifically, the hazard facing exporters is higher than non-exporters in the initial phase following entry into the export market, reflecting the fact that exporters are particularly vulnerable to shocks in the start-up phase. However, over time, exporters benefit more from productivity gains than non-exporters and the hazard facing exporters falls below that confronting non-exporters.
    Keywords: India, Firm survival, Information Technology, R&D, Exports
    JEL: L25 L86 C41
    Date: 2011–12
  6. By: Monika Mrazova; J. Peter Neary
    Abstract: We provide a general characterization of which firms will select alternative ways of serving a market. If and only if firms’ maximum profits are supermodular in production and market-access costs, more efficient firms will select into the activity with lower market-access costs. Our result applies in a range of models and under a variety of assumptions about market structure. We show that supermodularity holds in many cases but not in all. Exceptions include FDI (both horizontal and vertical) when demands are “sub-convex” (i.e., less convex than CES), fixed costs that vary with access mode, and R&D with threshold effects.
    Keywords: Foreign direct investment (FDI), Heterogeneous firms, Proximity-concentration trade-off, R&D with threshold effects, Super- and Sub-convexity, Supermodularity
    JEL: F23 F15 F12
    Date: 2011
  7. By: James Harrigan; Xiangjun Ma; Victor Shlychkov
    Abstract: Using confidential firm-level data from the United States in 2002, we show that exporting firms charge prices for narrowly defined goods that differ substantially with the characteristics of firms and export markets. We control for selection into export markets using a three-stage estimator. We have three main results. First, we find that that highly productive and skill-intensive firms charge higher prices, while capital-intensive firms charge lower prices. Second, the very large correlation between distance and export prices found by Baldwin and Harrigan (2011) is largely due to a composition effect. Third, U.S. firms charge slightly higher prices to larger and richer markets, and substantially higher prices to markets other than Canada and Mexico.
    JEL: F1 F10 F23
    Date: 2011–12
  8. By: Bignebat, C.; Vagneron, I.
    Abstract: Madagascar has a tradition of agricultural trade (coffee, vanilla, cloves). In the 90s, the country started developing non-traditional exports, such as lychees, to the European Union (EU), thereby generating substantial cash revenues for small producers. In 2005, access to the EU market became more difficult, due to more stringent quality requirements and to the growing use of the private retailer standard GlobalGAP. Whereas the empirical literature on private standards presents GlobalGAP either as a success story or a threat for small producers, the case of Madagascar exhibits a specific dynamics: after booming in 2007, GlobalGAP is actually collapsing. The aim of this article is to disentangle the mechanisms of this evolution and to draw some conclusions regarding market access enhancement through private standards. This work is based on semi-structured interviews carried out with all stakeholders of the export chain, government agencies and programs supporting lychee production and on weekly data on lychee trade flows (2001-2010). Using a global value chain approach, we first show the importance of the chain structure: importers are identified as lead-firms (conversely to most studies dealing with private certification) in an environment characterized by low competition at the international level. We then evaluate the role of donors and trade facilitators as actors of the chain. After giving evidence for the collapse of GlobalGAP, we assess what is left of the GlobalGAP procurement system once it has been abandoned: stabilization of the relationship between exporters and producers and thus enhanced traceability, upgrading of private marketing infrastructures, improved management discipline. We conclude that in the Madagascar lychee chain, although GlobalGAP had little impact on market access.
    JEL: Q13 O19 L22
    Date: 2011
  9. By: Lionel Fontagné; Amélie Guillin; Cristina Mitaritonna
    Keywords: Market acces, Tarriffs, Services, International trade
    JEL: F13 A
    Date: 2011–12
  10. By: Matthias Gubler; Christoph Sax (University of Basel)
    Keywords: Real Exchange Rate, Balassa-Samuelson Hypothesis, Panel Data Estimation, Terms of Trade
    JEL: F14 F31 F41
    Date: 2011
  11. By: Oberhofer, Harald (University of Salzburg); Stöckl, Matthias (University of Salzburg); Winner, Hannes (University of Salzburg)
    Abstract: We provide evidence on the impact of globalization on labor market outcomes analyzing pay differences between foreign-acquired and domestically-owned firms. For this purpose, we use firm level data from 16 European countries over the time period 1999 to 2006. Applying propensity score matching techniques we estimate positive wage premia of cross-boarder merger and acquisitions (M&As), suggesting that foreign acquired firms exhibit higher short-run (post-acquisition) wages than their domestic counterparts. The observed wage disparities are most pronounced for low paying firms (with average wages below the median). Finally, we find systematic wage premia in Western European countries, but not so in Eastern Europe.
    Keywords: Globalization; mergers and acquisitions; wage effects; propensity score matching
    JEL: C21 F15 G34 J31
    Date: 2012–01–03
  12. By: Hoekman, Bernard; Martin, Will
    Abstract: Global commodity markets are affected by a variety of government policies that may expand or lower overall supply and as a result affect world prices for the specific products concerned. Market failures and market structures (market power along the value chain) also affect supply. This paper briefly reviews a number of factors that may distort international commodity markets with a view to identifying elements of an agenda for multilateral cooperation to reduce such distortions. Much of the policy agenda that arises is domestic and requires action by national governments. But numerous policies -- or absence of policy -- generate international spillovers that call for the negotiation of international policy disciplines. Independent of whether distortions are local or international in scope, the complexity of prevailing market structures and their impacts on efficiency call for much greater monitoring and analysis by the international community.
    Keywords: Markets and Market Access,Economic Theory&Research,Emerging Markets,Access to Markets,Free Trade
    Date: 2012–01–01
  13. By: Bergsten, C. Fred (Asian Development Bank Institute); Noland, Marcus (Asian Development Bank Institute); Schott, Jeffrey J. (Asian Development Bank Institute)
    Abstract: This paper examines the prospect of realizing regional economic integration via the mechanism of a Free Trade Area of the Asia-Pacific (FTAAP). The FTAAP initiative represents a politically ambitious, high potential benefit option for achieving Asian regional integration. Among its desirable attributes, the FTAAP initiative could help revive and promote a successful conclusion of the Doha Round negotiations; constitute a “Plan B” hedge if Doha fails; short-circuit the further proliferation of bilateral and sub-regional preferential agreements that create substantial new discrimination and discord within the Asia-Pacific region; defuse the renewed risk of “drawing a line down the middle of the Pacific” as East Asian, and perhaps the Western Hemisphere, initiatives produce disintegration of the Asia-Pacific region rather than the integration of that broader region that the Asia-Pacific Economic Cooperation (APEC) forum was created to foster; channel the People’s Republic of China-United States economic conflict into a more constructive and less confrontational context; and revitalize APEC, which is of enhanced importance because of the prospects for Asia-Pacific and especially the PRC-US fissures. An incremental approach to the FTAAP, explicitly embodying enforceable reciprocal commitments, offers the best hope delivering on the concept’s abundant benefits.
    Keywords: regional economic integration; asia-pacific; doha round negotiations
    JEL: F14 F23 F31
    Date: 2011–12–28
  14. By: Tomas Silva (Office for Strategy and Studies, Portuguese Ministry of Economy); Sergio Lagoa (Department of Political Economy, ISCTE - University Institute of Lisbon)
    Abstract: European countries are facing an ever-increasing competition for Foreign Direct Investment (FDI). This paper studies how corporate taxes affect the location of FDI in Europe. Firm-level data is used to estimate a conditional logit model. We start by analysing the impact of the level and volatility of three different tax rates on FDI. Next, we analyse how economic and monetary integration influences the effect of taxes on FDI. The interaction between taxes and the upward and downward cycles of FDI is also analysed. Finally, we focus on how the impact of taxes depends on project characteristics. We conclude that taxes play a significant role in attracting FDI, but the issues analysed imply that there are some nuances in this relation, many of them relevant for policy makers.
    Keywords: FDI, Location, Taxes, Conditional Logit Model
    JEL: F21 H25 H32
    Date: 2011–12
  15. By: Richard Baldwin
    Abstract: Revolutionary transformations of industry and trade occurred from 1985 to the late-1990s – the regionalisation of supply chains. Before 1985, successful industrialisation meant building a domestic supply chain. Today, industrialisers join supply chains and grow rapidly because offshored production brings elements that took Korea and Taiwan decades to develop domestically. These changes have not been fully reflected in “high development theory” – a lacuna that may lead to misinterpretation of data and inattention to important policy questions.
    JEL: F1 F2 F21 F23 F43
    Date: 2011–12

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