nep-int New Economics Papers
on International Trade
Issue of 2012‒03‒28
forty-four papers chosen by
Alessia A. Amighini
University Amedeo Avogadro

  1. Intermediaries in International Trade: Direct versus indirect modes of export By Bernard, Andrew B.; Grazzi, Marco; Tomasi, Chiara
  2. Preferential Trade Agreements and Manufactured Goods Exports: Does It Matter Whom You PTA With? By Demir, Firat; Dahi, Omar S.
  3. Wholesalers and Retailers in U.S. Trade (Long Version) By Andrew B. Bernard; J. Bradford Jensen; Stephen J. Redding; Peter K. Schott
  4. The impact of FTAs on MENA trade By María Dolores Parra Robles; Inmaculada Martínez-Zarzoso; Celestino Suárez Burguet
  5. Technological Change, Trade in Intermediates and the Joint Impact on Productivity By Bøler, Esther Ann; Moxnes, Andreas; Ulltveit-Moe, Karen-Helene
  6. Service Trade and Occupational Tasks: An Empirical Investigation By Ariu, Andrea; Mion, Giordano
  7. Trade and Investment under Policy Uncertainty: Theory and Firm Evidence By Handley, Kyle; Limão, Nuno
  8. On the Measurement of Trade Costs: Direct vs. Indirect Approaches to Quantifying Standards and Technical Regulations By Chen, Natalie; Novy, Dennis
  9. Trade flows, exchange rate uncertainty and financial depth: evidence from 28 emerging countries By Demir, Firat; Caglayan, Mustafa; Dahi, Omar S.
  10. Verti-zontal Differentiation in Monopolistic Competition By Di Comite, Francesco; Thisse, Jacques-François; Vandenbussche, Hylke
  11. Measuring the Upstreamness of Production and Trade Flows By Antràs, Pol; Chor, Davin; Fally, Thibault; Hillberry, Russell
  12. Institutions and Export Dynamics By Araujo, Luis; Mion, Giordano; Ornelas, Emanuel
  13. North-South Standards Harmonization and International Trade By Cadot, Olivier; Disdier, Anne-Célia; Fontagné, Lionel
  14. Preferential Trade Agreements and the Labor Market By Ornelas, Emanuel
  15. Regulatory Entry Barriers and Trade By Tobal, Martin
  16. The Effects of Internationalization on Innovation: Firm-Level Evidence for Transition Economies By Martijn A. Boermans; Hein Roelfsema
  17. How Wages and Employment Adjust to Trade Liberalization: Quasi-Experimental Evidence from Austria By Marius Brülhart; Céline Carrère; Frederico Trionfetti
  18. Is china climbing up the quality ladder? By Gabor Pula; Daniel Santabárbara
  19. Shanghai’s Trade, China’s Growth: Continuity, Recovery, and Change since the Opium War By Keller, Wolfgang; Li, Ben; Shiue, Carol Hua
  20. Italy’s Comparative Advantage: A Long-Run Perspective By Federico, Giovanni; Wolf, Nikolaus
  21. International trade and collective bargaining outcomes : Evidence from German employer-employee data By Felbermayr, Gabriel; Hauptmann, Andreas; Schmerer, Hans-Jörg
  22. Does Trade Globalization Induce or Inhibit Corporate Transparency? Unbundling the Growth Potential and Product Market Competition Channels By Tong, Hui; Wei, Shang-Jin
  23. The Theory of the Firm goes Global By Marin, Dalia
  24. Export Credit Guarantees and Export Performance. Evidence from Austrian Firm-Level Data By Harald Badinger; Thomas Url
  25. How Exports Matter: Trade Patterns over Development Stages By Audretsch, David B; Sanders, Mark; Zhang, Lu
  26. A Re-examination of the Relation between Democracy and International Trade The Case of Africa By Balding, Christopher
  27. On the connection between intra-temporal and intertemporal trade By Ju, Jiandong; Shi, Kang; Wei, Shang-Jin
  28. International trade in natural resources: Practice and policy By Ruta, Michele; Venables, Anthony J
  29. Factor Intensity, Product Switching, and Productivity: Evidence from Chinese Exporters. By Yue Ma; Heiwai Tang; Yifan Zhang
  30. The determinants of intra-industry trade in the tourism services By Leitão, Nuno Carlos
  31. Exports vs. foreign direct investment: evidence from cross-country industry data By Pietrovito, Filomena; Pozzolo, Alberto Franco; Salvatici, Luca
  32. Import Prices, Income, and Inequality By Bekkers, Eddy; Francois, Joseph; Manchin, Miriam
  33. Bilateral Exchange Rates and Jobs By Bekkers, Eddy; Francois, Joseph
  34. The Organization of European Multinationals By Marin, Dalia; Rousová, Linda
  35. A Rationale For Evidence On Service Offshoring By Tobal, Martin
  36. Prices, Markups and Trade Reform By De Loecker, Jan; Goldberg, Pinelopi Koujianou; Khandelwal, Amit; Pavcnik, Nina
  37. Trade and industrialisation after globalisation’s 2nd unbundling: How building and joining a supply chain are different and why it matters By Baldwin, Richard
  38. Trading Up the Happiness Ladder By Dluhosch, Barbara; Horgos, Daniel
  39. Trade causes growth in Sub-Saharan Africa By Brückner, Markus; Lederman, Daniel
  40. Foreign direct investment and globalization By Leitão, Nuno Carlos
  41. Technological Upgrading in China and India: What Do We Know? By Jaejoon Woo
  42. International trade, technical change and wage inequality in the U.K. economy By Engelmann, Sabine
  43. Determinants of FDI inflows to developing countries: a panel data analysis By Khachoo, Ab Quyoom; Khan, Mohd Imran
  44. The impact of trade on economic growth By Leitão, Nuno Carlos

  1. By: Bernard, Andrew B.; Grazzi, Marco; Tomasi, Chiara
    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.
    Keywords: exchange rates; export entry costs; heterogeneous firms; intermediation; international trade; product adding and dropping; wholesalers
    JEL: D22 F12 F14 L22 L23
    Date: 2012–01
  2. By: Demir, Firat; Dahi, Omar S.
    Abstract: This paper explores two questions. First, can Preferential Trade Agreements (PTAs) affect industrial development in developing countries? Second, does it matter for developing countries whom they sign the PTAs with? We find that the answer to both questions is yes. Using bilateral manufactured goods exports data from 28 developing countries during 1978-2005, we find that South-South PTAs have a significantly positive effect on manufactured goods exports. In contrast, no such effect is detected in the case of South-North PTAs. We confirmed the robustness of these findings to estimation methodology, sample selection, time period, zero trade flows, and multilateral trade resistance.
    Keywords: Manufactured goods exports; Preferential Trade Agreements; South-South and South-North trade; Gravity equation; Industrial development; Developing countries
    JEL: F15 F13 O24 F14 O14 L60
    Date: 2012–01–01
  3. By: Andrew B. Bernard; J. Bradford Jensen; Stephen J. Redding; Peter K. Schott
    Abstract: International trade models typically assume that producers in one country trade directly with final consumers in another. In reality, of course, trade can involve long chains of potentially independent actors who move goods through wholesale and retail distribution networks. These networks likely affect the magnitude and nature of trade frictions and hence both the pattern of trade and its welfare gains. To promote further understanding of the means by which goods move across borders, this paper examines the extent to which U.S. exports and imports flow through wholesalers and retailers versus producing and consuming firms.
    Keywords: Wholesaler, Retailer, Intermediary, International Trade
    JEL: F10 F14
    Date: 2012–02
  4. By: María Dolores Parra Robles (Universitat Jaume I de Castelló / Spain); Inmaculada Martínez-Zarzoso (Georg-August-Universität Göttingen / Germany); Celestino Suárez Burguet (Universitat Jaume I de Castelló / Spain)
    Abstract: The present work analyses the impact of free trade agreements (FTAs) on the improvement of trade flows for ten Middle East and North African Countries (MENA) for the period 1990-2010. An extended gravity model is estimated to analyse the average and individual impact of six FTAs (four North-South-FTAs and three South- South-FTAs) on exports and imports of Morocco, Algeria, Tunisia, Libya, Egypt, Jordan, Israel, Lebanon, Syria and Turkey. The trade effect of the customs union between Turkey and the EU is also analysed. With the aim of obtaining more information about the real impact of the agreement, the analysis is undertaken not only for aggregated trade but also for trade in industrial products and trade in agricultural products separately. In this way, the fact that the text of such agreements distinguishes between industrial and non-industrial products to establish schedules of liberalization is taken into account. The findings indicate that the Euromed FTA has a positive and significant impact on exports from the EU to MENA countries but not the other way around. The only agreement that has a positive and significant impact on both imports and exports is the customs union between the EU and Turkey.
    Keywords: Free Trade Agreements, International Trade, Mediterranean integration, MENA countries, Gravity Equation, Panel Data
    Date: 2012–03–07
  5. By: Bøler, Esther Ann; Moxnes, Andreas; Ulltveit-Moe, Karen-Helene
    Abstract: This paper examines the interdependence between innovation and imports of intermediates, and their joint impact on productivity. We do so by developing a quantitative model with heterogeneous firms and international trade where firms can invest in R&D and source inputs internationally. Innovating firms on average become more productive, thereby enabling them to cover the fixed costs of sourcing foreign inputs, which in turn also has a benign impact on measured productivity. Using Norwegian firm-level data on R&D and trade in intermediates, we structurally estimate the model and find that both imports and R&D investment play a key role in explaining firm-level productivity growth. Moreover, the estimated returns to R&D are significantly lower after controlling for the complementarity between R&D investments and imports. We exploit the introduction of an R&D tax credit scheme in Norway in 2002, which lowered the marginal cost of R&D substantially. The estimated structural model can explain most of the observed increase in trade in intermediates as more firms started to innovate, underscoring the quantitative importance of our theoretical mechanism. Moreover, one fifth of measured productivity growth among new innovators came from increased foreign sourcing, rather than technology upgrading, illustrating how trade can amplify productivity gains. An implication of our work is that lower input trade barriers promote technological change. Hence, our work offers a new mechanism through which imports increase productivity, which may help explain why a number of studies find firm-level productivity gains associated with input trade liberalization.
    Keywords: Imports; innovation; intermediate inputs; productivity; R&D
    JEL: F10 F12 F14 O30 O33
    Date: 2012–03
  6. By: Ariu, Andrea; Mion, Giordano
    Abstract: Using micro data for Belgium we investigate the relationship between occupational tasks changes and the rise of service trade. We focus the analysis on the extensive margin and look at the heterogeneous proliferation of firms involved in exports and imports of services across sectors characterized by different tasks changes patterns. Occupational tasks changes display an extremely consistent relationship with participation to service trade across firm groups pointing to strong churning effects. The change in analytical (interactive and routine cognitive) tasks intensity has a positive (negative) impact across the board meaning that, in industries characterized by larger changes, firms have experienced both higher (lower) likelihood of entry and exit. The negative relationship between the change in interactive tasks and service exports participation underlines the special role that proximity between demand and supply plays for services. Interestingly, we find exactly the opposite result (a positive relationship) between the extensive margin of goods exports and interactive tasks. Moreover, our analysis suggests that the change in IT use per se does not strike as being a key underlying force behind the increase in the extensive margin of service exports.
    Keywords: extensive margin; occupational tasks; technological change; trade in services
    JEL: F14 F16 L80 O33
    Date: 2012–01
  7. By: Handley, Kyle; Limão, Nuno
    Abstract: We provide theoretical and empirical evidence that policy uncertainty can significantly affect firm level investment and entry decisions in the context of international trade. When market entry costs are sunk, policy uncertainty can create a real option value of waiting to enter foreign markets until conditions improve or uncertainty is resolved. Using a dynamic, heterogeneous firms model we show that: (i) investment and entry into export markets is reduced when trade policy is uncertain, and (ii) preferential trade agreements (PTAs) are valuable to exporters even if applied trade barriers are currently low or zero. We derive a structural equation that predicts how firm entry responds to changes in applied tariffs and a theory-based measure of policy uncertainty. Our novel approach using observable trade policies allows us to estimate the impact of policy uncertainty and quantify its aggregate implications. We apply this method to Portugal's accession to the European Community in 1986 using new firm-level trade data. We find that (i) the trade policy reform accounted for a large fraction of the observed Portuguese exporting firms' entry and sales upon accession (ii) the accession removed uncertainty about future preferences and (iii) this uncertainty channel accounted for a large fraction of the predicted growth. These results have broader implications for other PTAs and our approach can be applied to analyze other sources of policy uncertainty.
    Keywords: Investment; Policy; Trade; Uncertainty
    JEL: D8 D92 E22 F02 F1 F5 H32 O24
    Date: 2012–02
  8. By: Chen, Natalie; Novy, Dennis
    Abstract: In this article, we review the literature on the measurement of trade costs in international trade with a special emphasis on nontariff measures and in particular on standards and technical regulations. We distinguish 'direct' from 'indirect' approaches. The direct approach collects observable data or proxy variables on trade cost components which are then typically used as regressors in a gravity equation of trade. Instead, the indirect approach infers the extent of trade impediments from trade flows. It compares actual trade flows to the trade flows predicted by a hypothetical frictionless benchmark scenario based on a micro-founded trade model, attributing the deviation of actual from predicted trade flows to trade frictions. We argue that economists and policymakers can gain useful insights from both approaches.
    Keywords: Gravity; Measurement; Nontariff Measures; Product Standards; Technical Barriers to Trade; Technical Regulations; Trade Costs
    JEL: F10 F15
    Date: 2012–03
  9. By: Demir, Firat; Caglayan, Mustafa; Dahi, Omar S.
    Abstract: This paper investigates the effects of real exchange rate uncertainty on manufactures exports from 28 emerging economies, representing 82\% of all developing country manufactures exports, and explores the sources of heterogeneity in the uncertainty effects by controlling for the direction of trade (South-North or South-South), and the level of financial development of the exporting country. The empirical results show that for more than half of the countries the uncertainty effect is unidirectional, either South-South or South-North, and the median impact is negative. In addition, while we find that financial development augments trade, exchange rate shocks can negate this effect. Last but not the least, trade among developing economies improves export growth under exchange rate shocks.
    Keywords: Trade flows; Exchange rate uncertainty; South-South trade; Financial depth; Manufactured goods trade; Dynamic panel data
    JEL: F15 G15 E44 F31 O14
    Date: 2012–01–01
  10. By: Di Comite, Francesco; Thisse, Jacques-François; Vandenbussche, Hylke
    Abstract: The pattern of trade observed from firm-product-country data calls for a new generation of models. To address the unexplained variation in the data, we propose a new model of monopolistic competition where varieties enter preferences non-symmetrically, capturing both horizontal and vertical differentiation in an unprecedented way. Together with a variable elasticity of substitution, competition effects, varying markups and prices across countries, this results in a tractable model that rationalizes the empirical finding that firm-product quantities show systematically more variability than prices across export destinations. Accounting for unexplained data variation, our model can thus be used to improve demand identification.
    Keywords: heterogenous firms; horizontal differentiation; monopolistic competition; non-symmetric varieties; vertical differentiation
    JEL: D43 F12 F14 L16
    Date: 2012–01
  11. By: Antràs, Pol; Chor, Davin; Fally, Thibault; Hillberry, Russell
    Abstract: We propose two distinct approaches to the measurement of industry upstreamness (or average distance from final use) and show that they yield an equivalent measure. Furthermore, we provide two additional interpretations of this measure, one of them related to the concept of forward linkages in Input-Output analysis. On the empirical side, we construct this measure for 426 industries using the 2002 US Input-Output Tables. We also verify the stability of upstreamness across countries in the OECD STAN database, albeit with a more aggregated industry classification. Finally, we present an application that explores the determinants of the average upstreamness of exports at the country level using trade flows for 2002.
    Keywords: input-output tables; international trade; production line position; upstreamness
    JEL: F10 F14 L16 L23 O14
    Date: 2012–02
  12. By: Araujo, Luis; Mion, Giordano; Ornelas, Emanuel
    Abstract: We study the role of contract enforcement in shaping the dynamics of international trade at the firm level. We develop a theoretical model to describe how agents build reputations to overcome the problems created by weak enforcement of international contracts. We find that, all else equal, exporters start their activities with higher volumes and remain as exporters for a longer period in countries with better contracting institutions. However, conditional on survival, the growth rate of a firm's exports to a country decreases with the quality of the country's institutions. We test these predictions using a rich panel of Belgium exporting firms from 1995 to 2008 to every country in the world. We adopt two alternative empirical strategies. In one specification we use firm-year fixed effects to control for time-varying firm-specific characteristics. Alternatively, we model selection more explicitly with a two-step Heckman procedure using
    Keywords: Contract enforcement;; Contracting institutions; Firm dynamics; Firm exports
    JEL: F10 F12 L14
    Date: 2012–01
  13. By: Cadot, Olivier; Disdier, Anne-Célia; Fontagné, Lionel
    Abstract: Recent years have seen a surge in regional trade agreements (RTAs) and the development of non-tariff measures (NTMs). As a consequence, a growing number of RTAs include provisions on NTMs. This paper investigates the effect of standards-harmonization clauses contained in many North-South Agreements on international trade. Using a gravity equation, we find that (i) North-South harmonization of technical regulations reinforces a hub-and-spoke trade structure potentially detrimental to the development of South-South trade and (ii) harmonization on regional standards hurts Southern exports to the North. Thus, standards-harmonization provisions included in many recent North-South RTAs miss their target and contribute to marginalize Southern countries in the world economy.
    Keywords: harmonization; Regional trade agreement; South-South trade; technical regulations
    JEL: F13 F15
    Date: 2012–01
  14. By: Ornelas, Emanuel
    Abstract: Labor market consequences are at the forefront of most debates on the merits of trade liberalization. Preferential trade agreements (PTAs) have become the primary form of trade liberalization in most countries, and several studies have shown that discriminatory and non-discriminatory trade liberalization can lead to very different outcomes. Yet to date there has not been any attempt to study the specific labor market implications of preferential liberalization. In this article I argue that the labor market consequences of unilateral or multilateral non-discriminatory trade liberalization and those stemming from integration in the context of PTAs can indeed be quite distinct, and therefore the latter must be given closer scrutiny. I provide a short summary of both the theoretical literature on trade and the labor market and the literature on preferential liberalization. Relying on the insights from those two—largely independent—lines of research, I then discuss why liberalization through PTAs can have consequences for the labor market that are considerably different from the effects of lowering trade barriers in a non-discriminatory fashion. Examples of areas where those differences are likely to be meaningful include the nature of labor market adjustment costs, the incentives for firms to start exporting, and the effects on “job rents.”
    Keywords: labor frictions; trade diversion; trade liberalization; unemployment
    JEL: F13 F15 F16
    Date: 2012–01
  15. 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
  16. By: Martijn A. Boermans; Hein Roelfsema
    Abstract: It is well-documented that international enterprises are more productive. Only few studies have explored the effect of internationalization on productivity and innovation at the firm-level. Using propensity score matching we analyze the causal effects of internationalization on innovation in 10 transition economies. We distinguish between three types of internationalization: exporting, FDI, and international outsourcing. We find that internationalization causes higher levels of innovation. More specifically, we show that (i) exporting results in more R&D, higher sales from product innovation, and an increase in the number of international patents (ii) outward FDI increases R&D and international patents (iii) international outsourcing leads to higher sales from product innovation. The paper provides empirical support to the theoretical literature on heterogeneous firms in international trade that argues that middle income countries gain from trade liberalization through increases in firm productivity and innovative capabilities.
    Keywords: Firm heterogeneity, Internationalization, Innovation, Transition economies
    JEL: D22 F14 F23 O12
    Date: 2012–03
  17. By: Marius Brülhart; Céline Carrère; Frederico Trionfetti
    Abstract: We study the response of regional employment and nominal wages to trade liberalization, exploiting the natural experiment provided by the opening of Central and Eastern European markets after the fall of the Iron Curtain in 1990. Using data for Austrian municipalities, we examine differential pre- and post-1990 wage and employment growth rates between regions bordering the formerly communist economies and interior regions. If the ‘border regions’ are defined narrowly, within a band of less than 50 kilometers, we can identify statistically significant liberalization effects on both employment and wages. While wages responded earlier than employment, the employment effect over the entire adjustment period is estimated to be around three times as large as the wage effect. The implied slope of the regional labor supply curve can be replicated in an economic geography model that features obstacles to labor migration due to immobile housing and to heterogeneous locational preferences.
    Keywords: trade liberalization, spatial adjustment, regional labor supply, natural experiment
    JEL: F15 R11 R12
    Date: 2012–02
  18. By: Gabor Pula (European Central Bank); Daniel Santabárbara (Banco de España)
    Abstract: There is an ongoing debate in the literature about the quality content of Chinese exports and to what extent China poses a threat to the market positions of advanced economies. While China’s export structure is very similar to that of the advanced world, its export unit values are well below the level of developed economies. Building on the assumption that unit values reflect quality, the prevailing view of the literature is that China exports low quality varieties of the same products as its advanced competitors. This paper challenges this view by relaxing the assumption that unit values reflect quality. We derive the quality of Chinese exports to the European Union by estimating disaggregated demand functions from a discrete choice model. The paper has three major findings. First, China’s share of the European Union market is larger than would be justified only by its low average prices, implying that the quality of Chinese exports is high compared to many competitors. Second, China has gained quality relative to other competitors since 1995, indicating that China is climbing up the quality ladder. Finally, our analysis of the supply side determinants reveals that the relatively high quality of Chinese exports is related to processing trade and the increasing role of global production networks in China.
    Keywords: Chinese exports, vertical product differentiation, quality ladder, global production networks, discrete choice model, COMEXT database
    JEL: F1 F12 F14 F15 F23
    Date: 2012–02
  19. By: Keller, Wolfgang; Li, Ben; Shiue, Carol Hua
    Abstract: In this paper, we provide aggregate trends in China’s trade performance from the 1840s to the present. Based on historical benchmarks, we argue that China’s recent gains are not exclusively due to the reforms since 1978. Rather, foreign economic activity can be understood by developments that were set in motion in the 19th century. We turn our focus to Shanghai, currently the world’s largest port. Shanghai began direct trade relations with western nations starting in 1843. By 1853, Shanghai already accounted for more than half of China’s foreign trade. In tracking the levels and growth rates of the city’s net and gross imports and exports, foreign direct investment, and foreign residents over more than a century, we find that Shanghai’s level of bilateral trade today with the United States, the United Kingdom, or Japan, for example, are by no means high given Shanghai’s 19th century experience. This paper argues that a regional approach that embeds national trading destinations within an international trading system provides a meaningful approach to understanding the history of China’s trade.
    Keywords: colonialism; foreign direct investment; institutions; international migration; re-exports; treaty port
    JEL: F10 F22 F23 N65 N70 N95
    Date: 2012–01
  20. By: Federico, Giovanni; Wolf, Nikolaus
    Abstract: The growth of the Italian economy over the past 150 years since unification was accompanied by a dramatic increase in the country’s integration with European and global commodity markets: foreign trade in the long run grew on average faster than the overall economy. Behind the dynamics of aggregate trade, Italy’s comparative advantage changed fundamentally over the last 150 years. The composition of trade, in terms of both commodities imported and exported and in terms of trading partners, developed from a high concentration of a few trading partners and a handful of rather simple commodities into a wide diversification of trading partners and more sophisticated commodities. In this paper we exploit a new long-term database on Italian foreign trade at a high level of disaggregation to document and analyze these changes. We conclude with an assessment of Italy’s growth prospects from a historical perspective.
    Keywords: 19th and 20th century; comparative advantage; international trade; Italy
    JEL: F14 N73 N74
    Date: 2012–01
  21. By: Felbermayr, Gabriel; Hauptmann, Andreas (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Schmerer, Hans-Jörg (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "In theoretical trade models with variable markups and collective wage bargaining, export exposure may reduce the exporter wage premium. We test this prediction using linked German employer-employee data from 1996 to 2007. To separate the rent-sharing mechanism from assortative matching, we exploit individual worker information to construct profitability measures that are free of skill composition. We find that rent-sharing is less pronounced in more export intensive firms or in more open industries. The exporter wage premium is highest for low productivity firms. In line with theory, these findings are unique to the subsample of plants covered by collective bargaining." (Author's abstract, IAB-Doku) ((en))
    JEL: F16 J51 E24 J3
    Date: 2012–03–20
  22. By: Tong, Hui; Wei, Shang-Jin
    Abstract: How does increasing globalization affect corporate transparency? Freer trade represents two facets and in theory has ambiguous effects on corporate transparency. On the one hand, by exposing firms to more product market competition, it could discourage discretionary disclosure. On the other hand, by opening up foreign markets and enhancing firms’ growth opportunities, it may promote more transparency. Rather than simply estimating a net effect, this paper pursues an approach that allows separate estimation of the two potentially opposing channels. We employ three different measures of corporate transparency and track their evolutions for 4061 firms in 49 countries during 1992-2005. By using detailed product-level tariff schedules for these countries, we construct a measure of growth opportunities enabled by foreign tariff liberalizations at the sector-country-year level, and a second measure of globalization-induced product market competition based on a country’s own tariff liberalization (again at the sector--country-year level). We find strong evidence that higher growth opportunities engendered by globalization promotes corporate transparency, especially in industries that depend heavily on external financing. At the same time, we find somewhat weaker evidence that greater product market competition engendered by globalization discourages corporate transparency. The results demonstrate the importance of disentangling the multiple and potentially conflicting effects of globalization.
    Keywords: disclosure; globalization; trade liberalisation; transparency
    JEL: G3
    Date: 2012–02
  23. By: Marin, Dalia
    Abstract: What insights can be gained from bringing the theory of the firm to the global economy? I discuss several new features of the world economy that can be explained by incorporating the theory of the firm into the theory of international trade. Among the new features I discuss are the move to flatter corporate hierarchies and the decentralization of authority in firms, the "war for talent", the rise of CEO pay in rich countries, organizational convergence across countries, and firm heterogeneity.
    Keywords: corporate organisation across countries; empirical test of the theory of the firm; international trade with endogenous organisation
    JEL: D23 F12 F14 L22
    Date: 2012–03
  24. By: Harald Badinger (WIFO); Thomas Url (WIFO)
    Abstract: This paper provides an economic assessment of export credit guarantee commitments by the Austrian export credit agency, using firm-level data on a cross-section of 178 Austrian exporting firms for the year 2008. In a first step, we estimate the relative importance of various determinants of export guarantee usage. Results suggest that the most crucial determinants are: firm size, whether or not the firm is part of a multinational enterprise, exposure to revenue risk, and R&D intensity. In a second step, we investigate the effects of export guarantees on export performance. Identification is achieved by using as instruments the exogenous determinants of export guarantee usage identified in the first step. We find that there are economically and statistically significant effects of export credit guarantee usage on firm-specific export performance ranging from some 80 to 100 percent compared with the control group of non-users.
    Keywords: Exports, public export credit guarantees
    Date: 2012–03–16
  25. By: Audretsch, David B; Sanders, Mark; Zhang, Lu
    Abstract: In this paper we first propose a proxy for the maturity of a country’s export bundle based on product life cycle theory. Employing a conditional latent class model, we then examine the effect of maturity of countries’ exports on their economic growth for 98 countries over the period 1988 to 2005. We find that this effect is different across three endogenously determined growth regimes and that real GDP per capita predicts the regime membership. We show that the richest countries grow faster when they specialize in less mature products in an advanced country regime. The effect of maturity turns insignificant for the least advanced countries in our developing country regime. And at intermediate levels of GDP per capita, in an emerging country regime, countries grow faster and exhibit strong convergence by exporting more mature products. Our results confirm earlier evidence that what you export matters for growth. But more importantly, our analysis shows that when you export matters too. Countries in early stages of development should focus on acquiring market share in mature markets with routine technologies whereas emerging economies face the challenge of at some point switching from mature to new products as they approach the technology frontier. At that frontier they must join the advanced economies who continuously switch into (increasingly) less mature innovative products to stay ahead of increasing competition from abroad.
    Keywords: Conditional Latent Class Model; Economic Growth; Export Dynamics; Maturity; Product Cycle
    JEL: F14 O00
    Date: 2012–02
  26. By: Balding, Christopher
    Abstract: Scholars and policy makers believe that democracy will bring prosperity through integration into the global economy via increased international trade. This study tests two theories as to why democracies might trade more. First, political freedom may be correlated with economic freedom, thus prompting higher levels of economic activity, thereby driving states to trade more. Second, democracy implies higher quality governance either through institutions or policy-making procedures. I utilize a bilateral gravity trade model covering approximately 150 countries from 1950 to 1999, with fixed effects for time, importers and exporters. I find the theory that democracy, and many of its components, promotes international trade unconvincing. Economic freedom does not have the expected impact on international trade levels, but quality of governance variables have broad economic and statistical significance.
    Keywords: trade, democracy, governance, Africa, gravity model
    Date: 2011
  27. By: Ju, Jiandong; Shi, Kang; Wei, Shang-Jin
    Abstract: Sticky (or slow-adjusting) current accounts are observed for 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.
    Keywords: current account; intertemporal trade; labor market rigidity; trade balance
    JEL: F3 F4
    Date: 2012–02
  28. By: Ruta, Michele; Venables, Anthony J
    Abstract: Natural resources account for 20% of world trade, and dominate the exports of many countries. Policy is used to manipulate both international and domestic prices of resources, yet this policy is largely outside the disciplines of the WTO. The instruments used include export taxes, price controls, production quotas, and domestic producer and consumer taxes (equivalent to trade taxes if no domestic production is possible). We review the literature, and argue that the policy equilibrium is inefficient. This inefficiency is exacerbated by market failure in long run contracts for exploration and development of natural resources. Properly coordinated policy reforms offer an avenue to resource exporting and importing countries to overcome these inefficiencies and obtain mutual gains.
    Keywords: export tax; natural resources; OPEC; tariff escalation; terms of trade; trade; WTO
    JEL: F1 F13 Q3
    Date: 2012–03
  29. By: Yue Ma; Heiwai Tang; Yifan Zhang
    Abstract: This paper analyzes the causal relations between firms' productivity, factor intensity and export participation. Using propensity score matching techniques and firm level panel data for Chinese manufacturing firms over the 1998-2007 period, we find strong evidence of domestic firms self selecting into export markets with higher productivity ex ante, and enhanced productivity ex post. No such pattern is observed among foreign invested firms. We also find that both domestic and foreign new exporters exploit China's low labor costs and specialize in their core competence, that is, firms become less capital intensive after exporting, relative to the matched non exporting counterparts in the same industry. To rationalize these results that contrast with most findings in the existing literature, we develop a variant of the multi-product model of Bernard, Redding, and Schott (2010) to consider varying capital intensity across products. Using transaction level export data, we find evidence that Chinese exporters add new products that are more labor intensive than existing products and drop products that are less labor intensive, supporting the model predictions. Firms with a bigger decline in capital intensity after exporting are found to have a larger increase in measured TFP.
    Keywords: Exporters, Productivity, Factor Intensity, Multi product firms
    JEL: F11 L16 O53
    Date: 2011
  30. By: Leitão, Nuno Carlos
    Abstract: Purpose- This manuscript examines the determinants of intra-industry trade (IIT) in the tourism services by Portugal. The trade in this sector between Portugal and 17 countries was examined between 2002 and 2009. Design/methodology/approach- The paper formulates theoretical hypothesis that may explain the intra-industry trade in the tourism services. These hypotheses are tested using a dynamic panel data analysis. Findings- The result show that intra-industry trade occurs more frequently among countries that are similar in terms of factor endowments. The economic dimension and border confirm the positive impact in IIT. Our results also show that intra-industry trade increases if transportation costs decrease. Originality of the research-This article confirms relevant theoretical hypotheses on the causes of intra-industry trade. The results obtained with the Arellano and Bond GMM system estimator suggest that the building of dynamic theoretical models will be of interest to academic researchers in tourism services.
    Keywords: Intra-industry trade; tourism services; dynamic panel data; Portugal
    JEL: C23 L70
    Date: 2012–03–19
  31. By: Pietrovito, Filomena; Pozzolo, Alberto Franco; Salvatici, Luca
    Abstract: The recent process of globalization has been characterized by a rapid increase of foreign direct investments (FDIs), outpacing the simultaneous expansion of arms-length trade (exporting). Trade theory traces back different patterns of internationalization to differences in productivity levels between firms. As in Helpman et al. (2004), we argue that differences in productivity are affected by heterogeneity in firm size. However, we explicitly consider the number of large firms in a sector rather than the size dispersion. Moreover, previous literature performs single country analysis, whereas we extend our analysis to several developed as well as developing countries. By using comprehensive cross-section data on bilateral exports and FDIs (proxied by mergers and acquisitions) over the period 1994-2004, we explain differences across 57 manufacturing sectors in the relative incidence of trade and FDIs. Controlling for other factors affecting the patterns of internationalization and performing several sample splits and robustness tests, our results confirm that sectors with a higher number of large firms are associated with stronger incidence of FDIs relative to trade., Il recente processo di globalizzazione è stato caratterizzato dal'incremento degli investimenti diretti esteri (IDE) che ha superato di gran lunga la rapida e simultanea espansione delle esportazioni. La teoria sul commercio internazionale spiega i patterns di internazionalizzazione attraverso le differenze nei livelli di produttivita' tra le imprese. Compatibilmente con i risultati di Helpman et al. (2004), questo lavoro argomenta che le differenze di produttivita' tra le imprese sono determinate dall'eterogeneia' tra le imprese in termini di dimensione. Tuttavia, questo lavoro considera esplicitamente il numero di imprese di grandi dimensioni presenti in ciascun settore, anziché la dispersione della dimensione. Inoltre, la letteratura esistente compie analisi specifiche per singoli paesi, mentre il nostro lavoro estende l'analisi a diversi paesi, sia sviluppati che in via di sviluppo. Utilizzando un dataset cross-section sulle esportazioni e gli IDE (misurati attraverso il valore delle fusioni e acquisizioni) bilaterali, per il periodo 1994-2004, il lavoro spiega le differenze nell'incidenza del commercio sugli IDE, tra 57 settori manifatturieri. Controllando per diversi fattori che incidono sui patterns di internazionalizzazione e riportando i risultati di diversi test di robustezza, il lavoro conferma che i settori caratterizzati da una maggiore presenza di imprese di grandi dimensioni presentano una più elevata incidenza degli IDE rispetto alle esportazioni.
    Keywords: exports, foreign direct investment, mergers and acquisitions, large firms
    JEL: D24 F10 F14 F20 F23
    Date: 2012–02–13
  32. By: Bekkers, Eddy; Francois, Joseph; Manchin, Miriam
    Abstract: We compare three theoretical explanations for the positive empirical relationship between importer income per capita and traded goods prices. A first explanation is that consumers with higher incomes demand higher quality goods with higher prices. A second explanation is that wealthier people exhibit an increased willingness to pay for necessary goods as more goods enter the consumption set in a hierarchic demand system, and can thus be charged higher markups. A third explanation is that consumers with higher incomes are more finicky regarding their preferred variety in an ideal variety framework and can thus be charged higher markups. We discriminate between these three theories by focusing on the e↵ect of income inequality on trade prices. Based on a large dataset with bilateral HS6 level data on 1260 final goods categories from more than 100 countries between 2000 and 2004, we find a highly significant negative effect of income inequality on unit values. This contradicts both the demand for quality and finickyness theories, while providing support for the increased willingness to pay theory linked to hierarchic demand. These findings on income inequality do not falsify the quality expansion model and the ideal variety model per se. However, the results do argue for place of importance of hierarchic demand.
    Keywords: Hierarchic Demand; Ideal Variety; Importer Characteristics; Quality Expansion; Unit Values
    JEL: F12
    Date: 2012–03
  33. By: Bekkers, Eddy; Francois, Joseph
    Abstract: We study the labor market effects of bilateral exchange rate realignment. We place emphasis on the composition of trade, the role of in- termediates, and the underlying conditions of the labor market. Employment effects hinge on the fraction exported to and imported from the trading partner. A larger fraction exported to and a smaller fraction imported from the trading partner make it more likely that appreciation has beneficial effects. Furthermore, more sticky price expectations in wage formation, a smaller fraction of intermediates in the production process, and a lower rate of importer pass through make it more likely that appreciation of the exchange rate of the trade partner has positive employment effects. At a more technical level, the scope for substitution away from higher priced inputs, either toward other sources of supply, or toward value added, is also important to the direction and magnitude of changes in employment.
    Keywords: bilateral exchange rates; devaluation; exchange rates and trade; trade and employment
    JEL: F32 F41
    Date: 2012–03
  34. By: Marin, Dalia; Rousová, Linda
    Abstract: Recent literature on international trade has established that the most productive firms become multinationals. But our data reveal a startling variation in productivity levels of foreign affiliates across the countries in Eastern Europe of the same European multinational parent firms suggesting that not all multinationals transplant their home productivity advantage to the new EU Member States and Emerging Europe. One candidate for this startling difference in productivity levels among foreign affiliates is the ability of European multinationals to transport their business model abroad. This paper examines the conditions under which European multinationals give autonomy to their subsidiaries and delegate authority to them. We also analyse the conditions under which European multinationals transplant their business model to Eastern Europe. We collect original and unique matched parent and affiliate data on the internal organization of 660 German and Austrian parent firms and 2200 of their subsidiaries in Eastern Europe including the former Soviet Union. We test the hypothesis that the ability of European multinationals to transplant their business model to foreign affiliates is determined by the organization of European multinationals on the one hand and the market environment their affiliate firms face in Eastern Europe on the other hand. We show that the business culture of parent firms accounts for about 50 percent of the variation of the organization of subsidiaries, while the market environment of subsidiaries contributes the rest.
    Keywords: level of decentralisation; multinational firms with endogenous organisation; organisational transfer across countries; trust
    JEL: D21 F23 L22 O1
    Date: 2012–03
  35. By: Tobal, Martin
    Abstract: On the one hand, empiricists debate on which and how many labor dimensions are relevant for understanding the employment effects of the 1990's service offshoring boom. On the other hand, theorists pursue trade theory's traditional goal: to explain wage-responses to the shock. This paper rationalizes recent evidence on employment and reconciles theory with a current empirical debate. To this purpose, the article derives employment responses that are continous in occupations' off shoring costs and depend on two labor dimensions: skill-intensities and tradeability characteristics. Furthermore, the paper yields intutitive wage-respsonses and addresses theorists' traditional concern. In particular, under the assumption that knowledge is occupation-specific, the article derives wage- responses that are not fully explained by skill-levels. More precisely, service offshoring deteriorates the wage of "many" skilled workers whose tasks have relatively low offshoring costs.
    Keywords: labor; wages, Labor Economics
    Date: 2011–09–01
  36. By: De Loecker, Jan; Goldberg, Pinelopi Koujianou; Khandelwal, Amit; Pavcnik, Nina
    Abstract: This paper examines how prices, markups and marginal costs respond to trade liberalization. We develop a framework to estimate markups from production data with multi-product firms. This approach does not require assumptions on the market structure or demand curves faced by firms, nor assumptions on how firms allocate their inputs across products. We exploit quantity and price information to disentangle markups from quantity-based productivity, and then compute marginal costs by dividing observed prices by the estimated markups. We use India’s trade liberalization episode to examine how firms adjust these performance measures. Not surprisingly, we find that trade liberalization lowers factory-gate prices. However, the price declines are small relative to the declines in marginal costs, which fall predominantly because of the input tariff liberalization. The reason is that firms offset their reductions in marginal costs by raising markups. This limited pass-through of cost reductions attenuates the reform’s impact on prices. Our results demonstrate substantial heterogeneity and variability in markups across firms and time and suggest that producers benefited relative to consumers, at least immediately after the reforms. To the extent that higher firm profits lead to the new product introductions and growth, long-term gains to consumers may be substantially higher.
    Keywords: input tariffs; markups; pass-through; productivity; trade liberalization
    JEL: F01
    Date: 2012–03
  37. By: Baldwin, Richard
    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.
    Keywords: import substitution; production unbundling; trade and industrialisation
    JEL: F23 O14 O19
    Date: 2012–01
  38. By: Dluhosch, Barbara (Helmut Schmidt University, Hamburg); Horgos, Daniel (Helmut Schmidt University, Hamburg)
    Abstract: How globalization affects happiness is highly disputed. Several studies use an index that amalgamates globalization’s different dimensions into a single variable. Unlike previous studies and in order to better illuminate its facets, we adopt a disaggregated perspective on trade (policy) data. Distinguishing actual trade flows and the option value of trade, we find the former to slightly depress happiness, the latter to significantly promote happiness. Segmentation of WVS-data shows that the positive connotation is concentrated in low-income countries still in the process of climbing the income ladder, thus backing the notion of a shift in values.
    Keywords: Happiness; Well-Being; International Trade
    JEL: F13 I31
    Date: 2012–03–01
  39. By: Brückner, Markus; Lederman, Daniel
    Abstract: In the 1990s the mainstream consensus was that trade causes growth. Subsequent research shed doubt on the consensus view, as evidence suggested that the identification of the effect of trade on growth was problematic in the existing literature. This paper contributes to this debate by focusing on growth in Sub-Saharan Africa. It estimates the effect of openness to international trade on economic growth with panel data. Employing instrumental variables techniques that correct for endogeneity bias, the empirical evidence suggests that within-country variations in trade openness cause economic growth: a 1 percentage point increase in the ratio of trade over gross domestic product is associated with a short-run increase in growth of approximately 0.5 percent per year; the long-run effect is larger, reaching about 0.8 percent after ten years. These results are robust to controlling for country and time fixed effects as well as political institutions.
    Keywords: Economic Theory&Research,Achieving Shared Growth,Free Trade,Trade Policy,Trade Law
    Date: 2012–03–01
  40. By: Leitão, Nuno Carlos
    Abstract: This paper aims to examine the relationship between foreign direct investment and the globalization. The Portuguese economy has been a net recipient of FDI. Understanding the main determinants of FDI inflows is important to take the macroeconomic policy decisions. The manuscript analyses the determinants of FDI in Portugal for the period 1990- 2008. Instrumental variable estimation of a dynamic panel model within a system generalized methods moments framework allows us to control for potential correlation issues and endogeneity bias. The results show that the market size and globalization have a positive impact on FDI. Openness trade and urban population are also statistically significant. The paper confirms some relevant theoretical hypotheses on the causes of the FDI. The good results obtained with the GMM system estimator suggest that the building of dynamic theoretical model will be of interest to academic researches in FDI theory.
    Keywords: Foreign Direct Investment; Globalization; Panel Data
    JEL: C23 F21
    Date: 2012–03–18
  41. By: Jaejoon Woo
    Abstract: This paper studies sources of technological upgrading in China and India. What is striking about the impressive growth of China and (to a lesser degree) India is that they export products associated with a high productivity level that is much higher than a country at their income level. China’s export bundle has changed dramatically, diversifying into technologyintensive products. China is now the largest exporter of high-technology products in the world. Exports of India are still significantly less technologically sophisticated, while India has been more successful in exports of business and information technology (IT) services. It presents empirical evidence on the important role of FDI inflows and imported capital goods that embody new technology for TFP growth in a large panel of advanced and developing countries over 1970-2007. Consistent with the cross-country evidence, micro-data and case studies strongly suggest that FDI and import of capital goods have contributed to rapid technological upgrading especially in China. Puzzlingly, however, the TFP level in China is much lower than would be expected from its score on Index of Technological Sophistication of exports, raising a doubt about whether the shift in export bundle towards high-technology products is associated with a technological sophistication of domestic contents of export products. An important explanation appears to be China’s prime role as a final assembler of international production network. The magnitude of reversal in net export position of China across the two categories, intermediate and finished goods, is striking, which implies that more and less developed economies are being affected very differently by China’s rise. With a view to upgrading the capability to absorb advanced technologies and innovate, China and India have increasingly emphasised human capital, skill-intensive industries and R&D efforts. Nonetheless, our analysis shows that there is still an enormous scope for technological catching-up over the next decades.<P>Modernisation technologique en Chine et en Inde : Que savons-nous?<BR>Ce papier étudie les sources de modernisation technologique en Chine et Inde. Ce qui est frappant dans la croissance impressionnante de la Chine et, dans une moindre mesure, de l’Inde est que ces pays exportent des produits associés à un haut niveau de productivité qui est bien plus grand qu’un pays de leur niveau de revenu. La structure des exportations de la Chine a fondamentalement changé, se diversifiant en produits intensifs en technologie. La Chine est dorénavant le plus grand exportateur du monde de produits de haute technologie. Les exportations de l’Inde restent significativement moins sophistiquées technologiquement, quoique l’Inde ait connu davantage de succès dans les exportations de services de technologie du commerce ainsi que de l’information et de la communication (TIC). Ce papier présente des preuves empiriques du rôle important des flux entrants d’IDE et des biens de capital importés comprenant la nouvelle technologie pour la croissance de PGF pour un large panel de pays avancés ou en développement sur la période 1970-2007. En ligne avec les preuves longitudinales, données microéconomiques et études de cas, il suggère fortement que les IDE et importations de biens de capital ont contribué à la rapide modernisation de technologie, particulièrement en Chine. Curieusement, cependant, le niveau de PGF en China est bien plus bas qu’espéré au regard de son Indice de Sophistication Technologique des Exportations, faisant naître le doute que la transformation de la structure des exportations vers des produits de haute-technologie est associée avec à une sophistication technologique du contenu national des produits d’exportation. Une explication importante réside dans le rôle de premier plan de la Chine en tant qu’assembleur final de la chaîne de production mondiale. La magnitude du revirement de la position nette des exportations de la China entre les deux catégories, produits intermédiaires et finaux, est saisissante, ce qui implique que les économies développées sont plus ou moins affectées et de façon très différente par la montée de la Chine. Dans l’optique d’améliorer la capacité d’absorber les technologies avancées et les innovations, la Chine et l’Inde ont mis l’accent sur le capital humain, les industries intensives en compétences et les efforts en R&D. Néanmoins, notre analyse montre qu’il reste une place énorme pour le rattrapage technologique dans les prochaines décennies.
    Keywords: growth, FDI, technology diffusion, technological upgrading, TFP, technological classification of export, export processing, international production network, croissance, transfert de technologie, modernisation technologique, PGF, classification technologique des exportations, traitement des exportations, chaine mondiale de production
    JEL: F15 F21 O33 O47 O53
    Date: 2012–03–01
  42. By: Engelmann, Sabine
    Abstract: "This paper examines the joint impact of international trade and technical change on U.K. wages across different skill groups. International trade is measured as changes in product prices and technical change as total factor productivity (TFP) growth. We take account of a multi-sector and multi-factor of production economy and use mandated wage methodology to offer a close theoretical-empirical relationship. We use data of the EU KLEMS database and analyse the impact of both, product price changes and TFP changes of 11 U.K. manufacturing sectors on factor rewards of high-, medium- and low-skilled workers. Results show that real wages of skill groups are driven by the sector bias of price change and TFP growth of selected sectors of production. Furthermore, for each year 1970-2005 we estimate the share of the three different skill groups on added value which indicate structural change in the U.K. economy. Empirical results show a structural change in the U.K. economy by the declined share of low-skilled workers and the increased share of medium-skilled and high-skilled workers over the years." (Author's abstract, IAB-Doku) ((en))
    JEL: F11 F16 J31
    Date: 2012–03–20
  43. By: Khachoo, Ab Quyoom; Khan, Mohd Imran
    Abstract: The aim of this paper is to identify, by estimating a panel econometric model, the factors determining FDI inflows to developing countries over a long period. The study is based on a sample of 32 developing countries. In our analysis, FDI inflows are modeled as a function of the market size, total reserves, infrastructure, labour cost and degree of openness for the host countries. Using data from 1982 to 2008, a panel data estimator suggests that the market size, total reserves, infrastructure and labour costs are the main determinants of FDI inflows to developing countries.
    Keywords: FDI Inflows; Fully Modified Ordinary Least Squares (FMOLS); Pedroni’s Panel Cointegration Methodology; Developing Countries
    JEL: F23 C23 F21
    Date: 2012–02
  44. By: Leitão, Nuno Carlos
    Abstract: The purpose of this article is to investigate the impact of marginal intra-industry trade on economic growth. The manuscript questions the economic growth exogenous models. It introduces new proxies to explain the economic growth as in marginal intra-industry trade, foreign direct investment and globalization index. The results indicate that economic growth is a dynamic process. The change of intra-industry has a positive impact on economic growth. This paper confirms relevant theoretical hypothesis as foreign direct investment and globalization promote the economic growth. The good results obtained with GMM system estimator suggest that the building of dynamic theoretical models will be of interest to academic researchers the link between marginal intra-industry trade and economic growth.
    Keywords: Endogenous models; Panel Data; and United States
    JEL: N1 C23
    Date: 2012–03–18

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