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on International Trade |
| By: | Estrella Gómez (Universidad de Granada, Departamento de Teoría e Historia Económica); Juliette Milgram Baleix (Universidad de Granada, Departamento de Teoría e Historia Económica) |
| Abstract: | In this article we explore the impact of the euro adoption and the effect of the volatility of the real exchange rate on trade both on intra EMU trade and on EMU trade with third countries. To this end, we use a large database covering 93% of world trade that includes 80 countries during the period 1980-2009. We estimate a gravity equation using one of the most complete specifications in the literature to isolate the euro effect from other factors affecting trade, as regional trade agreements or exchange rate volatility. Our results show that the elimination of the volatility boosted export per se especially before 1999 and therefore, the possibility to peg to the euro could boost trade of third countries and between these third countries. |
| Keywords: | Gravity equation, International trade, Exchange rate |
| Date: | 2012–05–25 |
| URL: | http://d.repec.org/n?u=RePEc:gra:wpaper:10/26&r=int |
| By: | Thierry Mayer; Marc J. Melitz; Gianmarco I. P. Ottaviano |
| Abstract: | We build a theoretical model of multi-product firms that highlights how competition across market destinations affects both a firm's exported product range and product mix. We show how tougher competition in an export market induces a firm to skew its export sales towards its best performing products. We find very strong confirmation of this competitive effect for French exporters across export market destinations. Theoretically, this within firm change in product mix driven by the trading environment has important repercussions on firm productivity. A calibrated fit to our theoretical model reveals that these productivity effects are potentially quite large. |
| Keywords: | trading partners, multi product firms, trade models |
| JEL: | F0 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1146&r=int |
| By: | David Córcoles (University of Castilla-La Mancha); Carmen Díaz-Mora (University of Castilla-La Mancha); Rosario Gandoy (University of Castilla-La Mancha) |
| Abstract: | This paper focuses on the survival capacity of the trade flows in international production networks, extending the limited empirical evidence. Firstly, we emphasize that these trade relationships are longer-lived than trade in final goods. Secondly, we try to delimit the factors that explain this. Using time-discrete duration models, which control for the existence of unobservable heterogeneity, we find that variables such as initial value of the trade flow, geographic and product diversification, institutional quality, geographic and linguistic proximity and membership in a regional integration agreement play an important role for stability of global production systems. Our results highlight that the high sunk entry costs and the need for trust and reliability in global value chains are factors dissuading radical alterations in the network configuration. |
| Keywords: | International Production Networks, Export Survival, Time-Discrete Duration Models |
| JEL: | F10 F14 C41 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:aee:wpaper:1203&r=int |
| By: | Mariam Camarero (Universitat Jaume I, Departament d'Economia); Estrella Gómez (Universidad de Granada, Departamento de Teoría e Historia Económica); Cecilio Tamarit (Universidad de Valencia, Departamento de Economía Aplicada II.) |
| Abstract: | In this article we present evidence of the long-run effect of the euro on exports for the twelve initial EMU countries for the period 1967-2008 from a double perspective. First, we pool all the bilateral combinations of export flows among the EMU countries in a panel cointegration gravity specification. Second, we estimate a gravity equation for each of the EMU-members vis-à-vis the other eleven partners. Whereas the joint gravity equation provides evidence on the aggregate effect of the euro on intra-European exports, by isolating the individual countries we assess which of them have obtained a larger benefit from the euro. Moreover, this strategy permits to check the robustness of the aggregate results and to find possible asymmetries. Finally, we repeat both the aggregated and individual analysis for the bilateral exports of EMU members to third countries. From an econometric point of view, we apply panel cointegration techniques based on factor models that account for cross-dependence and structural breaks. |
| Keywords: | Gravity models; exports; euro; panel cointegration; structural breaks; crosssection dependence. |
| Date: | 2012–05–25 |
| URL: | http://d.repec.org/n?u=RePEc:gra:wpaper:10/25&r=int |
| By: | Kox, Henk L.M. |
| Abstract: | The paper tests the role of agglomeration effects on the export decision of services firms. Recent theories on trade with heterogeneous firms predict that export participation goes along with sunk market-entry costs. Only the more productive firms will be able to overcome these sunk costs. This leads to a process of - ex ante - self selection. These predictions are tested for the services industry, with due account for the possible role of agglomeration effects in large-city areas. Standard empirical tests of the new trade models consistently find productivity-based ex ante self selection by exporters, and this effect is mostly explained by unobserved sunk entry costs that exporters have to absorb in new foreign markets. Recent research by urban economists (e.g. Combes et al., 2012) suggests, however, that operating in large-city areas also goes along with positive productivity sorting. Ignoring this leads to upwardly biased estimates of the effect of foreign market entry costs. A large set of micro-data for establishments in Dutch services is used to investigate this hypothesis. I find evidence that positive productivity self-selection is based on the combined effects of agglomeration and anticipated market-entry cost for export starters. This effect is strongest in markets with more or less homogeneous products. I also find evidence that the productivity self-selection effect (of exporters compared to non-traders) is stronger in non-urban areas and smaller agglomerations. |
| Keywords: | services; export; heterogeneous firms; agglomeration effects; productivity |
| JEL: | L8 F12 R12 D4 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:39127&r=int |
| By: | Chinhui Juhn; Gergely Ujhelyi; Carolina Villegas-Sanchez |
| Abstract: | This paper studies the effect of trade liberalization on an under-explored aspect of wage inequality – gender inequality. We consider a model where firms differ in their productivity and workers are differentiated by skill as well as gender. A reduction in tariffs induces more productive firms to modernize their technology and enter the export market. New technologies involve computerized production processes and lower the need for physically demanding skills. As a result, the relative wage and employment of women improves in blue-collar tasks, but not in white-collar tasks. We test our model using a panel of establishment level data from Mexico exploiting tariff reductions associated with the North American Free Trade Agreement (NAFTA). Consistent with our theory we find that tariff reductions caused new firms to enter the export market, update their technology and replace male blue-collar workers with female blue-collar workers. |
| JEL: | F1 J2 J31 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18106&r=int |
| By: | Elisaveta Archanskaia (Observatoire Francais des Conjonctures Economiques); Guillaume Daudin (Observatoire Francais des Conjonctures Economiques) |
| Abstract: | This paper shows that reduced heterogeneity of exporter-specific goods can provide a direct explanation of the distance puzzle. Using COMTRADE 4-digit bilateral trade data we find that the elasticity of trade to distance has increased by 8% from 1962 to 2009. Theoretical foundations of the gravity equation indicate that the distance coefficient is the product of the elasticity of trade costs to distance and a measure of heterogeneity, e.g. the substitution elasticity between exporter-specific goods in the Armington framework. This parameter has increased by at least 12-29% from 1962 to 2009. The evolution of the distance coefficient is thus compatible with a 4-16% reduction in the elasticity of trade costs to distance. |
| Keywords: | gravity equation, distance puzzle, trade elasticity, trade costs |
| JEL: | F15 N70 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:fce:doctra:1217&r=int |
| By: | Thiemann, Franziska; Fleming, Euan M.; Mueller, Rolf A.E. |
| Abstract: | Globalization results when markets become more integrated because of reduced transaction and transport costs. These costs have fallen because of sustained advances in transport technology and, more dramatically, in digital information and communication technology (ICT). Although communication costs tend to be a minor component of total trading costs, reductions in these costs may strongly stimulate international trade. The empirical evidence in support of this effect is, however, scant and its strength may depend on the composition of ICT and the nature of the product being traded. We test the hypothesis of an ICT effect on trade in bananas, oranges, tomatoes, and vegetables and fruit in general. We employ a gravity model of international trade between major exporting and importing countries for the period 1995 to 2009. The model explains the value of trade in terms of export and import countries’ levels of internet and mobile phone penetration, and of a broad range of factors that might also affect bilateral trade. We test whether a fixed effects model or random effects model best suits the data; results suggest a fixed effects model is appropriate. Model results suggest that mobile phone penetration significantly stimulates trade in vegetables and fruit and oranges by exporting countries. , but its impact is less than that of fixed telephone usage which has an unexpected negative influence on banana imports. Internet usage has only a positive effect on trade in imports of tomatoes. Internet usage in exporting countries for fruit and vegetables are negatively associated. |
| Keywords: | Gravity model, information and communication technology (ICT), international trade, fruit and vegetables, International Relations/Trade, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae12:123840&r=int |
| By: | Rudy Rahmaddi (Graduate School for International Development and Cooperation, Hiroshima University); Masaru Ichihashi (Graduate School for International Development and Cooperation, Hiroshima University) |
| Abstract: | This study sought to elucidate the existence of a link between foreign direct investment (FDI) and exports in the manufacturing sectors of Indonesia. It contributes to the literature by investigating the sector-based impact of inward FDI on a host country's exports, using disaggregated data of manufacturing sectors categorized by factor intensity from 1990 to 2008. So doing enables one to test an FDI-substitute or FDI-complementary effect on sector-based export performance. The FDI theory proposes the possibility of an export-promoting effect in host economies. Employing panel analysis on the full sample and subsamples, and by later applying a differentiated cross-section effect, we found that FDI flows significantly crowd-in manufacturing exports in most panel observations. Interestingly, such an export effect is even stronger in physical capital, human capital, and technology-intensive sectors, without any significant evidence of a crowd-out effect in natural resource-intensive and unskilled labor-intensive industries, sectors in which Indonesia has a comparative advantage. In addition, this study uncovered the importance of other determinants of export performance. The findings draw some main policy implications, namely the importance of targeted sector-based policy, competitive exchange rate management, and further development of industrialization towards high value-added activities. |
| Keywords: | Exports performance, foreign direct investment, Indonesia, panel analysis |
| JEL: | F14 F21 F23 O53 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:hir:idecdp:2-10&r=int |
| By: | Dilek Seymen (Dokuz Eylül University); Baþak Gümüþtekin (Republic of Turkey Ministry of Economy) |
| Abstract: | This paper aims to measure trade competitiveness of Research and Development (R&D) intensive goods of Turkey in the European Union (EU) market, using different trade indices. Concentration Ratio (Michaely, 1958), Export-Import Commodity Composition Index (Muscatelli, 1991), Intra-Industry Trade Index (Grubel, Lloyd, 1971) and Sectoral-Bilateral Trade Intensity Ratios (Seymen, 2009) are calculated to analyze the technology composition of manufacturing goods trade between Turkey and the EU27. Revealed Comparative Advantage Index (Balassa, 1965), Marginal Intra-Industry Trade Index (Brulhart, 1994), and Sectoral-Bilateral Competitiveness Index (Seymen, 2009) are employed to gain insight about the bilateral competition between two parties. Thus, once the general situation related to the R&D intensive goods trade between Turkey and the EU is detected, it will be possible to draw some policy implications through a future study in the following phase, by identifying the value added structures, exterior input dependence and vertical-horizontal specialization levels of the goods revealed to have competitive advantage in this study. |
| Keywords: | R&D intensive goods trade, competitiveness, Turkey & EU Trade |
| JEL: | F10 F14 F15 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:tek:wpaper:2012/24&r=int |
| By: | Mariam Camarero (Department of Economics, Jaume I University, Castellón); Estrella Gómez (Department of Economic Theory, University of Granada); Cecilio Tamarit (Department of Applied Economics II, University of Valencia) |
| Abstract: | In this paper we present new evidence on the euro effect on trade. We use a data set containing all bilateral combinations in a panel of 26 OECD countries during the period 1967-2008. From a methodological point of view, we implement a new generation of tests that allow solving some of the problems derived from the non-stationary nature of the data. To this aim we apply panel tests that account for the presence of cross-section dependence as well as discontinuities in the non-stationary panel data. We test for cointegration between the variables using panel cointegration tests, especially the ones proposed by Banerjee and Carrióni- Silvestre (2010). We also efficiently estimate the long-run relationships using the CUP-BC and CUP-FM estimators proposed in Bai et al. (2009). We argue that, after controlling for cross-section dependence and deterministic trends and breaks in trade integration, the euro appears to generate lower trade effects than predicted in previous studies. |
| Keywords: | Gravity models; trade; panel cointegration; common factors; structural breaks, cross-section dependence |
| JEL: | C12 C22 F15 F10 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:eec:wpaper:1209&r=int |
| By: | Suedekum, Jens (University of Duisburg-Essen); Nowak, Verena (University of Duisburg-Essen); Schwarz, Christian (University of Duisburg-Essen) |
| Abstract: | Recent studies indicate that firms often outsource standard and simple tasks, while keeping complex and important inputs inside their boundaries. This observation is difficult to reconcile with the property rights approach of the firm, which suggests that important components should be outsourced in order to properly incentivize the respective suppliers. In this paper we introduce economies of scope into a property rights model where a producer contracts with two suppliers. The organizational decision is driven by two countervailing effects: the ownership rights effect favors outsourcing, while the "indirect" effect via the suppliers' costs favors vertical integration of both inputs. If production is highly component intensive, and if one input is much more important than the other, we show that vertical integration of the "more important" and outsourcing of the "less important" supplier is chosen in equilibrium. We also consider an open economy setup where the producer decides whether to offshore inputs. |
| Keywords: | multinational firms, outsourcing, intra-firm trade, property rights approach |
| JEL: | D23 F12 L23 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6564&r=int |
| By: | Lodefalk, Magnus (Department of Business, Economics, Statistics and Informatics) |
| Abstract: | Manufacturing firms increasingly focus on services. This trend is evident in their composition of input, in-house production and seemingly also in total sale. Firms’ services intensity may affect their productivity, and thereby competitiveness abroad. Services are also instrumental in connecting to the foreign market and can help firms to differentiate their offers. However, only bits and pieces of the relation between services and manufacturing’s exports have been analysed in previous literature. This study contributes by discussing the role of services for the firm, arriving at some conjectures and testing them empirically. Export intensity is regressed on two services parameters, applying a fractional model to a rich panel of firms in Sweden in the period 2001-2007. The microeconometric results suggest that there is an effect of services inputs, while controlling for covariates and firm heterogeneity. Raising the proportion of services in in-house production, on average, yields higher export intensity. Buying-in more services is associated with higher export intensity for firms in selected industries. Overall, the study provides new firm-level evidence of the role of services as inputs in manufacturing. |
| Keywords: | firm; export intensity; manufacturing; services; intangibles; innovation |
| JEL: | F14 L24 L25 L60 O33 |
| Date: | 2012–05–24 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:oruesi:2012_010&r=int |
| By: | Ralph Ossa |
| Abstract: | I show that accounting for cross-industry variation in trade elasticities greatly magnifies the estimated gains from trade. The main idea is as simple as it is general: While imports in the average industry do not matter too much, imports in some industries are critical to the functioning of the economy, so that a complete shutdown of international trade is very costly overall. |
| JEL: | F10 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18113&r=int |
| By: | Kadow, Alexander |
| Abstract: | Fair Trade (FT) products such as coffee and textiles are becoming increasingly popular with altruistic consumers all over the world. This paper seeks to understand the economic effects of this grassroots movement which directly links ethically-minded consumers in industrialised countries with marginalised producers in developing economies. We extend the Ricardian trade model and introduce a FT sector in developing South that offers a fair wage – the FT premium. There are indeed positive welfare effects from FT but those come at the expense of rising inequalities within South which are in turn a rational by-product of FT. The degree of inequalities depends on the specifics of the cooperative structures in the FT sector. Given the rigidities and inequalities FT introduces and rests upon, this form of alternative trade appears to be only sustainable as niche movement. |
| Keywords: | Fair Trade, comparative advantage, wage premium, inequalities, ethical consumerism, cooperative, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:edn:sirdps:252&r=int |
| By: | Louis Dupuy (Larefi - Laboratoire d'analyse et de recherche en économie et finance internationales - Université Montesquieu - Bordeaux IV : EA2954) |
| Abstract: | This paper aims at reviewing the literature on international trade and sustainability. In the neoclassical sense sustainability is interpreted as the imperative to maintain constant consumption over time. The literature provides several indicators to assess sustainability empirically. Theoretical and empirical studies alike usually consider the world either as an integrated econ- omy where international is no di erent from intra-national trade and can be neglected or a juxtaposition of closed national economies. Some useful insights can be drawn from the literature on trade and the environment to nally understand the impact of international trade on all the dimensions of sustainability. |
| Keywords: | Sustainability, International Trade, Environmental Accounting |
| Date: | 2012–04–26 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00701426&r=int |
| By: | Marconi, Nicholas G.; DiMarcello, Nicholas, III; Hooker, Neal H. |
| Abstract: | The global Fair Trade market has experienced substantial growth over the past 13 years, as measured by both share and number of innovations. This has developed into a new worldwide market segment, and has helped improve the lives of hundreds of thousands of people. This report compiles data from Mintel’s Global New Product Database (www.gnpd.com), which records food, beverage, health and beauty products launched throughout the world. The company archives extensive information about each product, permitting users to explore emerging marketing strategies. From 1999 through 2011, GNPD recorded 4,465 Fair Trade innovations. These products were sold in over 40 countries. This paper provides a descriptive and comparative statistical analysis of Fair Trade trends throughout the world. Explored topics include certifiers, claims, product categories, and trade blocs. The most common Fair Trade categories are hot beverages, chocolate confectionery, and skin care products. Fairtrade Labeling Organizations International affiliates certified nearly 60% of all Fair Trade products since 1999, making this umbrella organization the largest certifier. The USA and EU dominate Fair Trade product introductions. |
| Keywords: | Fair Trade, Third party certifiers, Organic, Food Consumption/Nutrition/Food Safety, F13, F16, F18, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaeafe:123530&r=int |
| By: | Diagne, Mandiaye; Abele, Steffen; Diagne, Aliou; Seck, Papa A. |
| Abstract: | Regionalism and food security is a relatively neglected topic with very limited literature. We use a Ricardian trade model with multiple goods and countries which embeds a structure of gravity equation and yield variability. Our study shows that integration with African markets of staple foods is associated with higher growth, underpinning the need for growth strategies to emphasize scaling up and diversifying exports within Africa. Africa needs to unlock its high potential untapped land and fill up the yield gap. We found as well that enhanced competitiveness and reduced barriers to trade are the two critical areas of action. |
| Keywords: | Ricardian model, yield variability, agricultural trade, staple foods, Africa, Agricultural and Food Policy, Food Security and Poverty, International Relations/Trade, |
| Date: | 2012–05–24 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae12:123842&r=int |
| By: | Miguel Manjón (Universitat Rovira i Virgili); Juan A. Mañez (Universitat de València); María E. Rochina-Barrachina (Universitat de València); Juan A. Sanchis-Llopis (Universitat de València) |
| Abstract: | Self-selection and learning-by-exporting are the main explanations for the higher productivity of exporting firms. But, whereas evidence on self-selection is largely undisputed, results on learning-by-exporting are mixed and far from conclusive. However, recent research (De Loecker, 2010) has shown that the conclusions from previous learning-by-exporting studies may have been driven by strong assumptions about the evolution of productivity and the role of export status. Relaxing these assumptions turns out to be critical to find evidence of learning-byexporting in a representative sample of Spanish manufacturing firms. Our results indicate that the yearly average gains in productivity are around 3% for at least four years. |
| Keywords: | learning-by-exporting, productivity |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:eec:wpaper:1208&r=int |
| By: | Gianmarco I. P. Ottaviano; Giovanni Peri; Greg C. Wright |
| Abstract: | How do offshoring and immigration affect the employment of native workers? What kinds of jobs suffer, or benefit, most from the competition created by offshore and immigrant workers? In contrast to the existing literature that has mostly looked at the effects of offshoring and immigration separately, we argue that one can gain useful insights by jointly investigating the interactions among native, immigrant and offshore workers. We develop our argument in three steps. First, we present some new facts on 58 U.S. manufacturing industries from 2000 to 2007. Second, we build on Grossman and Rossi-Hansberg (2008) to design a model of task assignment among heterogeneous native, immigrant and offshore workers that fits those facts. Third, we use the model to draw systematic predictions about the effects of immigration and offshoring on native workers and we test these predictions on the data. We find that, within the manufacturing sector, immigrants do not compete much with natives, as these two groups of workers are relatively specialized in tasks at opposite ends of the skill intensity spectrum. Offshore workers, on the other hand, seem to be specialized in tasks of intermediate skill intensity. We also find that offshoring has no effect on native employment in the aggregate, while the effect of immigration on native employment is positive. This hints at the presence of a "productivity effect" whereby offshoring and immigration improve industry efficiency, thereby creating new jobs. |
| Keywords: | Employment, production tasks, immigrants, offshoring |
| JEL: | F22 F23 J24 J61 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1147&r=int |
| By: | Grossman, Gene M. (Princeton University); Horn, Henrik (Research Institute of Industrial Economics (IFN)) |
| Abstract: | This study is part of The American Law Institute (ALI) project Legal and Economic Principles of World Trade Law. The project aims to analyze the central instrument in the World Trade Organization (WTO) Agreement for the regulation of trade in goods – The General Agreement on Tariffs and Trade GATT). The present study is one of two background studies for this project*. The first study, The Genesis of the GATT, appraises the rationale for the creation of the GATT, and tracks its development from a historical and legal perspective. This second study provides an overview of the economics of trade agreements. * There is a second leg to the ALI project, in which economists and lawyers jointly analyze the emerging case law from the WTO dispute-settlement mechanism. |
| Keywords: | Trade agreements; GATT; WTO |
| JEL: | F13 |
| Date: | 2012–05–23 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0916&r=int |
| By: | Heyman, Fredrik (Research Institute of Industrial Economics); Gustavsson Tingvall, Patrik (The Ratio Institute) |
| Abstract: | In this paper, we analyze how the offshoring of services by Swedish firms is affected by corruption in target economies. The results suggest that firms avoid corrupt countries and that corruption reduces the amount of offshored services. In addition, the sensitivity to corruption is highest for poor countries, and large and internationalized firms are the ones that tend to be the most sensitive to corruption. |
| Keywords: | Corruption; Services; Offshoring; Gravity model; Firm level data |
| JEL: | C23 D22 F23 L24 |
| Date: | 2012–05–29 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ratioi:0192&r=int |
| By: | Colyer, Dale |
| Abstract: | Numbers of free trade ageements and those with environmental provisons have grownn rapidly. Enviomental measures include those to protect and enhance the environment, environmental cooperation and citizen particpation activties. Many appear to have made important contributions to environmental activities although often constrained by limited funds. |
| Keywords: | free trade, trade agreements, environment, Agricultural and Food Policy, Environmental Economics and Policy, International Relations/Trade, F13, F18, |
| Date: | 2012–05–22 |
| URL: | http://d.repec.org/n?u=RePEc:ags:wvucps:123723&r=int |