nep-int New Economics Papers
on International Trade
Issue of 2012‒06‒25
forty-four papers chosen by
Alessia A. Amighini
University Amedeo Avogadro

  1. New Aspects of Intra-industry Trade in EU Countries By Tadashi Ito; Toshihiro Okubo
  2. Vertical Ownership and Trade: Firm-level evidence from France By Gaigne, Carl; Latouche, Karine; Turolla, Stephane
  3. Skill Premium and Trade Puzzles: A Solution Linking Production and Preferences By Caron, Justin; Fally, Thibault; Markusen, James R.
  4. German multiple-product, multiple-destination exporters: Bernard-Redding-Schott under test By Joachim Wagner
  5. Analyzing trade liberalization effect in egg sector using a dynamic gravity model By Tamini, Lota D.; Doyon, Maurice; Simon, Rodrigue
  6. Trade Engagement and Producer Performance By Gibson, Mark J.; Graciano, Tim A.
  7. Agricultural Trade Costs: 1965-2010 By Duan, Shuwen; Grant, Jason H.
  8. Does freer trade really lead to productivity growth? Evidence from Sub-Saharan Africa By Coxhead, Ian; Foltz, Jeremy D.; Mogues, Tewodaj
  9. International Pork Trade and Foot-and-Mouth Disease By Yang, Shang-Ho; Reed, Michael R.; Saghaian, Sayed H.
  10. Voluntary Standards and International Trade: A Heterogeneous Firms Approach By McGuire, William; Sheldon, Ian
  11. The micro evolution of trade and turnover in Turkey under the global crisis By Alessia LO TURCO; Daniela MAGGIONI
  12. Are Chinese Trade Flows Different? By Cheung, Yin-Wong; Chinn, Menzie D.; Qian, Xing Wang
  13. Reassessing the Evolution of World Trade, 1870-1949 By Klasing, Mariko; Milionis, Petros
  14. On the Pro-Trade Effects of Immigrants By Bratti, Massimiliano; De Benedictis, Luca; Santoni, Gianluca
  15. Changes in Agri-Food Trade of the New Member States since EU Accession – A Quantitative Approach By Torok, Aron; Jambor, Attila
  16. International trade of fruits between Portugal and the world By Vitor Joao Pereira Domingues Martinho
  17. Trade Policies in World Apple and Juice Markets By Devadoss, Stephen; Ridley, William; Sridharan, Prasana
  18. Estimating Gravity Equation Models in the Presence of Heteroskedasticity and Frequent Zeros By Xiong, Bo; Chen, Sixia
  19. Exposure to Low-wage Country Imports and the Growth of Japanese Manufacturing Plants By Anna Maria MAYDA; NAKANE Masato; STEINBERG, Chad; YAMADA Hiroyuki
  20. International Trade in Natural Resources: Practice and policy By Michele Ruta; Anthony J venables
  21. Why Do Trade Negotiations Take So Long? By Moser, Christoph; Rose, Andrew K
  22. Trading many goods with many countries: Exporters and importers from German manufacturing industries By Joachim Wagner
  23. Implications of the South Korea-U.S. Free Trade Agreement on South Korean Dairy Product Imports. By Jones, Keithly G.; Blayney, Don P.
  24. Impact on Western Australia’s sheep supply chain of the termination of live sheep exports By Nath, Tanmoy; Kingwell, Ross S.; Cunningham, Peter; Islam, Nazrul; Xayavong, Vilaphonh; Curtis, Kimbal; Feldman, David; Anderton, Lucy; Mahindua, Truphena
  25. Market Familiarity and the Location of South and North MNEs By Azemar, Celine; Darby, Julia; Desbordes, Rodolphe; Wooton, Ian
  26. A Simple Model of Trade, Job Task Offshoring and Social Insurance By Thede, Susanna
  27. Survival of the Fittest: Explaining Export Duration and Export Failure in the U.S. Fresh Fruit and Vegetable Market By Rudi, Jeta; Grant, Jason; Peterson, Everett B.
  28. International Standards and International Trade: Empirical Evidence from ISO 9000 Diffusion By Joseph A. Clougherty; Michal Grajek
  29. Nothing to Declare: Duty-free access to imports from LDCs By Vanzetti, David; Peters, Ralf
  30. Trade and the Environment: The Role of Firm Heterogeneity By Udo Kreickemeier; Philipp M. Richter
  31. Welfare Analysis in International Sugar Trade: The Case of the EU-ACP Sugar Protocol By Moyo, Sibusiso; Spreen, Thomas H.; Gao, Zhifeng
  32. A Global View of Cross-Border Migration By di Giovanni, Julian; Levchenko, Andrei A.; Ortega, Francesc
  33. International Trade and Sustainability: A survey By Louis Dupuy
  34. Effect of Tariff Liberalization on Mexico’s Income Distribution in the presence of Migration By Garduno-Rivera, Rafael; Baylis, Katherine R.
  35. Trade, innovation and productivity By Aranzazu Crespo Rodríguez
  36. Organizing the Global Value Chain By Pol Antràs; Davin Chor
  37. The Sophistication and Diversification of the African Agricultural Sector: A Product Space Approach By Badibanga, Thaddee Mutumba; Ulimwengu, John M.
  38. Does human capital endowment of FDI recipient countries really matter? Evidence from cross-country firm level data By Sumon Bhaumik; Ralitza Dimova
  39. Native language, spoken language, translation and trade By Mélitz, Jacques; Toubal, Farid
  40. The dispersion of customs tariffs in France between 1850 and 1913: discrimination in trade policy By Stéphane BECUWE (GREThA, CNRS, UMR 5113); Bertrand BLANCHETON (GREThA, CNRS, UMR 5113)
  41. Wage Effects of High-Skilled Migration: International Evidence By Grossmann, Volker; Stadelmann, David
  42. Investment Promotion and FDI Inflows: Quality Matters By Torfinn Harding; Beata Javorcik
  43. Globalization and protection of employment By Fischer, Justina A.V.; Somogyi, Frank
  44. The Product Space and the Middle-Income Trap: Comparing Asian and Latin American Experiences By Anna Jankowska; Arne Nagengast; José Ramón Perea

  1. By: Tadashi Ito (JETRO-IDE); Toshihiro Okubo (Faculty of Economics, Keio University)
    Abstract: This paper discusses some new evidences onintra-industry trade (IIT). In particular, we focus on EU trade with Eastern European countries, using trade data at HS eight-digit product level for the period 1988 - 2010. Our findings include Eastern European countries' rise up the quality ladder, and by contrast, the substantially lower prices of China's exports to EU countries vis-a-vis China's imports from them. Thecontrast between EU trade with Eastern Europeancountries and with China is present even in recent years.
    Date: 2012–06
  2. By: Gaigne, Carl; Latouche, Karine; Turolla, Stephane
    Abstract: In this paper, we study the impact of acquiring equity shares in intermediaries on ex- port performance. We develop a trade model with vertically linked industries where the decisions to export and to own its intermediary are endogenous that we test on French data at the firm level. We show that: forward acquisition enables manufacturers to man- age the double marginalization problem and to enjoy lower costs to foreign market access, so that the probability of exporting and export sales are higher for a firm with a par- ticipation in intermediaries. In addition, vertical ownership creates a market externality among manufacturers due to a reallocation of market shares from small firms to large firms forcing some low-productivity firms to exit from foreign markets.
    Keywords: Exports, Forward integration, Heterogeneous firms, Intermediary, International Relations/Trade, F12, L22,
    Date: 2012
  3. By: Caron, Justin; Fally, Thibault; Markusen, James R.
    Abstract: International trade theory is a general-equilibrium discipline, yet most of the standard portfolio of research focuses on the production side of general equilibrium. In addition, we do not have a good understanding of the relationship between characteristics of goods in production and characteristics of preferences. This paper conducts an empirical investigation into the relationship between a good's factor intensity in production and its income elasticity of demand in consumption. In particular, we find a strong and significant positive relationship between skilled-labor intensity in production and income elasticity of demand for several types of preferences, with and without accounting for trade costs and differences in prices. Counter-factual simulations yield a number of results. We can explain about half of “missing trade”, and show an important role for per-capita income in understanding trade/GDP ratios, the choice of trading partners, and the composition of trade. Furthermore, an equal rise in productivity in all sectors in all countries leads to a rising skill premium in all countries, with particularly large increases in developing countries.
    Keywords: gravity; income; missing trade; non-homothetic preferences; skill premium
    JEL: F10 F16 J31 O10
    Date: 2012–06
  4. By: Joachim Wagner (Leuphana University Lueneburg, Germany)
    Abstract: Export is dominated by enterprises that trade more than one good with customers in more than one destination country. Germany, one of the leading actors on the world market for goods, is a case in point. Theoretical models of multiple-product, multipledestination exporters that can guide empirical research of their production and export decisions are still rare. Recently, Bernard, Redding and Schott (QJE 2011) published a general equilibrium model that serves this purpose and find support for many of its implications in U. S. trade data. This note uses newly available transaction-level data for German manufacturing firms for an empirical test of implications of this model. Results are strikingly similar to findings reported for the United States.
    Keywords: multi-product exporters, multi-country exporters, Germany
    JEL: F14
    Date: 2012–06
  5. By: Tamini, Lota D.; Doyon, Maurice; Simon, Rodrigue
    Abstract: This study analyzes the effects of different liberalization scenarios in the international trade of eggs and egg products. We use a dynamic gravity model that takes into account the observed persistence of trading partners. The estimated parameters of the gravity model serve to quantify the impact of various liberalization scenarios on the probability of importing (extensive margin) and on trade volumes (intensive margin). The results indicate that even in the context of aggressive trade liberalization, trade gains at the extensive margin will be modest. Gains at the intensive margin of trade are present even in the context of partial liberalization - Doha-type - of trade.
    Keywords: Eggs and egg products; Persistence in trade; Trade liberalization; Gravity model; Random-effects dynamic Probit; Autoregressive panel
    JEL: F13 Q17
    Date: 2012–06–07
  6. By: Gibson, Mark J.; Graciano, Tim A.
    Abstract: Models of international trade increasingly emphasize the trade decisions of individual firms or plants. These decisions take two different forms: where to source inputs (import decisions) and where to sell output (export decisions). In the literature, these decisions are rarely considered jointly. This paper analyzes the extent to which there are complementarities between importing and exporting and quantifies the effects of trade status on producer performance. We develop an analytically tractable general equilibrium model of firms’ trade decisions that incorporates both decisions simultaneously. Our model quantitatively captures many important features of plant-level manufacturing data, including the size distribution and the large performance advantage associated with trade engagement.
    Keywords: International Relations/Trade,
    Date: 2012
  7. By: Duan, Shuwen; Grant, Jason H.
    Abstract: International trade costs are known to be large but difficult to measure. Using a microfounded gravity equation based on the framework in Novy (2011), this study estimates an indirect measure of multilateral trade costs for tradable goods in agriculture. Using production and bilateral trade data along with plausible values of the elasticity of substitution, we find that median global agricultural trade costs were 285 percent in 1965, on an ad-valorem equivalent basis, before declining dramatically to a 118 percent ad-valorem equivalent in 2010. There is considerable variation in agricultural trade costs, bilaterally, and within various policy arrangements such as regional integration and the GATT/WTO. Statistical analysis of the determinants of agricultural trade costs largely confirms this variation: bilateral and regional free trade initiatives lower international trade costs by 36 percent on average, whereas GATT/WTO membership lowers trade costs by nearly 20 percent.
    Keywords: trade costs, agriculture, gravity, regional trade agreements, GATT/WTO, International Relations/Trade,
    Date: 2012
  8. By: Coxhead, Ian; Foltz, Jeremy D.; Mogues, Tewodaj
    Abstract: Manufacturing is intensive in the use of reproducible factors and exhibits greater technological dynamism than primary production. As such its growth is central to long-run development in low-income countries. Sub-Saharan African countries are latecomers to industrialization, and barriers to manufacturing growth, including those that limit trade, have been slow to come down. What factors contribute most to increases in output and productivity growth in their manufacturing sectors? Recent trade-IO theory suggests that trade liberalization should raise average total factor productivity (TFP) among manufacturing firms (Melitz 2003), but these predictions are conditional on maintained assumptions about the nature of industries, factor markets and trade patterns that may be less suitable in a developing-country setting. Manufacturing industries and firms are heterogeneous, so this analysis demands disaggregated data. We use firm-level data from the World Bank’s Regional Program on Enterprise Development (RPED) covering Ghana, Kenya, Nigeria, and Tanzania, 1991-2003. Among other things, the data distinguish exports by destination (Africa and the rest of the world), which is important due to the spread of intra-Africa regional trade agreements (RTAs). Econometric results confirm well-known relationships, for example a positive association between export intensity and TFP. However, we also find the destination of exports to be important. Export firms are more productive but have experienced declining TFP growth, and this has occurred at different rates depending on the country and the export market addressed. We show that these differentials are consistent with predictions from a modified statement of the Melitz model. The TFP results add a new dimension to controversies over the development implications of trade liberalization and the promotion of intra-Africa RTAs.
    Keywords: International Development, Research and Development/Tech Change/Emerging Technologies, F14, O14, O33,
    Date: 2012
  9. By: Yang, Shang-Ho; Reed, Michael R.; Saghaian, Sayed H.
    Abstract: International pork trade has not only been influenced by trade agreements but also altered by consumer perceptions on disease-infected animals. This study uses a gravity model with fixed-effects to investigate how pork trade is affected by foot-and-mouth disease among 186 countries. Results confirm that pork export falls when an exporting country develops FMD. Exporters with a vaccination policy have larger negative impacts than those with a slaughter policy. Further, pork importers that develop FMD and institute a slaughter policy will import more pork, but importers with a vaccination policy import the same level of pork. In order to retain a position as a top pork exporter, a slaughter policy is often a better choice than a vaccination policy.
    Keywords: foot-and-mouth disease, pork exports, regional trade agreement, gravity model, zero-valued trade., Food Consumption/Nutrition/Food Safety, International Relations/Trade, Research Methods/ Statistical Methods, C52, Q17, Q18,
    Date: 2012
  10. By: McGuire, William; Sheldon, Ian
    Keywords: International Relations/Trade,
    Date: 2012
  11. By: Alessia LO TURCO (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali); Daniela MAGGIONI (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali)
    Abstract: We provide evidence on the effects of the recent financial and economic crisis on the Turkish manufacturing. We first decompose aggregate sales, exports and imports, dissecting the contribution of the extensive and intensive margins at the firmand firm-product level. Secondly, we investigate the determinants of both margins, inspecting the role of firm and product heterogeneity in the onset of the crisis, andwe support the demand shock explanation of the crisis. Our findings point at the prevalence of the intensive margin in the negative 2009 evolution of overall and exported sales. On the contrary, the drop in imports, which represents the most dramatic one, is importantly driven by the net exit of large and exporting firms and by the net dropping of products. More productive firms lead the slump in export sales and, among the products, capital and intermediate goods experience the sharpest demand decline. Also, importing favours exporting especially during the crisis. Finally, a stronger resilience emerges for exporters of own products compared to carry-along-trade exporters.
    Keywords: Turkey, crisis, exports, imports, turnover
    JEL: D22 F10 F14
    Date: 2012–06
  12. By: Cheung, Yin-Wong (BOFIT); Chinn, Menzie D. (BOFIT); Qian, Xing Wang (BOFIT)
    Abstract: We find that Chinese trade flows respond to economic activity and relative prices -- as represented by a trade weighted exchange rate -- but the relationships are not always precisely or robustly estimated. Chinese exports are generally well-behaved, rising with foreign GDP and decreasing as the Chinese renminbi (RMB) appreciates. However, the estimated income elasticity is sensitive to the treatment of time trends. Estimates of aggregate imports are more problematic. In many cases, Chinese aggregate imports actually rise in response to a RMB depreciation and decline with Chinese GDP. This is true even after accounting for the fact a substantial share of imports are subsequently incorporated into Chinese exports. We find that some of these counter-intuitive results are mitigated when we disaggregate the trade flows by customs type, commodity type, and the type of firm undertaking the transactions. However, for imports, we only obtain more reasonable estimates of elasticities when we allow for different import intensities for different components of aggregate demand (specifically, consumption versus investment), or when we include a relative productivity variable.
    Keywords: China; imports; exports; real exchange rate
    JEL: F14 F41
    Date: 2012–06–18
  13. By: Klasing, Mariko; Milionis, Petros
    Abstract: The typical narrative regarding the evolution of world trade prior to World War II refers to a secular rise that started around 1870 and a subsequent collapse that began in 1914. This narrative, though, is based on measures of trade openness that do not fully take into account purchasing power differences across countries, as in the literature non-PPP-adjusted trade data are typically denominated by PPP-adjusted GDP data. The present paper seeks to resolve this inconsistency by constructing new trade share estimates for 51 countries spanning the period from 1870 to 1949 by combining historical import and export data with non-PPP-adjusted GDP values that we estimate via the "short-cut" method. Our estimates indicate a much more pronounced rise and fall of world trade over this period with trade shares being on average 32% higher than previously documented and the world's level of openness to trade in 1913 being comparable to that in 1974. In addition, performing a similar correction for purchasing power differences in the context of standard gravity regressions for the 1870-1939 period we find that the existing literature has overestimated the importance of income movements during this period relative to tariffs changes and the evolution of the gold standard.
    Keywords: International Trade; Purchasing Power Differences
    JEL: F15 N10 N70 F01 F1 N7
    Date: 2012–06
  14. By: Bratti, Massimiliano (University of Milan); De Benedictis, Luca (University of Macerata); Santoni, Gianluca (University of Rome Tor Vergata)
    Abstract: In this paper we investigate the causal effect of immigration on trade flows, using Italian panel data covering very small geographical units (NUTS-3). Exploiting the very favorable setup offered by Italy's features – the very high number of countries of origin of immigrants ('super-diversity'), the high heterogeneity of social and economic characteristics of Italian provinces coupled with the absence of cultural (e.g. language) or historical (colonial ties) attractors for immigration –, controlling for a wide set of fixed effects, and dealing with the possible distortions generated by the inappropriate choice of the areal unit, we find a positive association between immigrants' stocks and both export and import flows, in line with the past literature. However, using instrumental variables based on migration enclaves, we show that immigrants have a positive and significant effect on imports only.
    Keywords: migration, trade, gravity model, super-diversity, MAUP, transplanted-home bias effect, business and social networks effects
    JEL: F10 F14 F22 R10
    Date: 2012–06
  15. By: Torok, Aron; Jambor, Attila
    Abstract: In 2004 and 2007 twelve New Member States (NMS) joined the European Union (EU), causing several changes in the field of agriculture. One of the major changes was the transformation of national agri-food trade. The aim of the paper is to analyse the effects of EU accession on NMS agri-food trade, especially considering revealed comparative advantages. Results suggest that the intensity of NMS agri-food trade has increased significantly after accession, though there was a serious deterioration in NMS agri-food trade balance in most cases. It has also become evident that NMS agri-food trade was highly concentrated by country and by product, though concentration has not changed significantly after EU accession. Moreover, our analyses highlight one of the most important characteristics of NMS agri-food trade structure - the focus on agri-food raw materials in export together with agri-food processed products in import. As to NMS agri-food trade specialisation, the diversity among member states becomes apparent. Almost all countries experienced a decrease in their comparative advantage after accession, though it still remained at an acceptable level in most cases. As for the stability of comparative advantage, results suggest a weakening trend, underpinned by the convergence of the pattern of revealed comparative advantage. By estimating the survival function to the sample, it is observable that the accession has radically changed the survival time of agri-food trade, meaning that revealed comparative advantage has not turned out to be persistent in the period analysed. From the policy perspective, there is a clear need for structural changes in NMS agriculture and agri-food sector in order to tackle the negative tendencies of national agri-food trade. The most important long-term goal should be the production and export of higher value-added processed products based on domestic raw materials.
    Keywords: EU accession, agri-food trade, New Member States, Agricultural and Food Policy, International Relations/Trade, Q17, Q18,
    Date: 2012
  16. By: Vitor Joao Pereira Domingues Martinho
    Abstract: For Portugal there are few or none works about the international trade of fruits between Portugal and the other countries. In this work it aims to analyze the more recent data for the Portuguese international trade of fruits. They were used data for the years from 2006 to 2010, available by the INE (Statistics Portugal), gently given by the AICEP (Trade & Investment Agency). To complement this data analysis they were made some estimations with several econometrics method and based in the neoclassical theory, with the absolute convergence model. It was concluded that the biggest relationship, in the international trade of fruits, is with the European countries and there are not statistical regularity in the estimations and the data are not stationary.
    Date: 2012–06
  17. By: Devadoss, Stephen; Ridley, William; Sridharan, Prasana
    Abstract: This study develops a theoretical model to examine the effects of trade liberalization in an intermediate and final good framework, and constructs a spatial equilibrium model of apple and juice markets to quantify the effects of free trade.
    Keywords: Apples, juice, trade model, International Relations/Trade, F13,
    Date: 2012–06
  18. By: Xiong, Bo; Chen, Sixia
    Abstract: Gravity equation models are widely used in international trade to assess the impact of various policies on the patterns of trade. Although recent literature provides solid micro-foundations for the gravity equation model, there is no consensus on how to estimate a gravity equation model in the presence of the two stylized features of trade data: frequent zeros and heteroskedasticity. We propose a Two-Step Nonlinear Least Square estimator that satisfactorily deals with both problems. Monte-Carlo experiments show that the proposed estimator strictly outperforms the Poisson Pseudo Maximum Likelihood (PPML), the Heckman sample selection model, and the E.T.-Tobit estimators, and that it weakly dominates the Truncated PPML model in the estimation of the intensive margin of trade. An empirical study of world trade in 1986 suggests that currency union and regional trade agreements facilitate trade primarily through improving market access, as opposed to intensifying pre-existing trade.
    Keywords: gravity equation, heteroskedasticity, zeros, nonlinear least square, intensive margin, extensive margin, market access, Two-Step Nonlinear Least Square, International Relations/Trade, Research Methods/ Statistical Methods, F1, Q1, C5,
    Date: 2012
  19. By: Anna Maria MAYDA; NAKANE Masato; STEINBERG, Chad; YAMADA Hiroyuki
    Abstract: Japan's trade structure has changed remarkably in the past two decades with an increase of imports of manufactured goods from low-wage countries, in particular China. This has contributed to the impression of a hollowing out effect in manufacturing. Against this background, we analyze the role of international trade in the reallocation of Japanese manufacturing within and across industries from 1989 to 2006. We estimate the impact of industry exposure to low-wage country imports on Japanese plants' survival and employment growth. The analysis is conducted with a panel dataset of over 4.5 million observations on Japanese manufacturing plants. Our results are broadly consistent with the factor proportions model of trade, as we find that plant survival and growth are negatively associated with industry exposure to low-wage country imports.
    Date: 2012–06
  20. By: Michele Ruta; Anthony J venables
    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: natural resources, trade, export tax, tariff escalation, OPEC, WTO, terms of trade
    JEL: F1 F13 Q3
    Date: 2012
  21. By: Moser, Christoph; Rose, Andrew K
    Abstract: The Doha multilateral round of trade negotiations sponsored by the WTO has been dragging on for over a decade, with no end in sight. In this short paper we assess empirically what determines the duration of trade negotiations, focusing on the span between the start of trade talks and their conclusion. We use data from 88 regional trade agreements between 1988 and 2009, and a semi-parametric Cox proportional hazards model. Four factors are robust determinants of the length of RTA negotiations. Negotiations are more protracted when there are more countries at the negotiation table, and when the countries are not from the same region. Negotiations between more open and richer countries are also finished more quickly.
    Keywords: Cox; data; duration; empirical; GATT; income; regional; survival; WTO
    JEL: F13 F51 F53
    Date: 2012–05
  22. By: Joachim Wagner (Leuphana University Lueneburg, Germany)
    Abstract: In Germany, for the reporting year 2009 transaction-level data on exports and imports of goods have been aggregated at the level of the exporting or importing firm for the first time. In these data the number of goods exported and imported and the number of countries exported to and imported from is reported, together with the values of these cross-border transactions. This paper uses these newly available data for firms from manufacturing industries to uncover new facts and to test theoretical hypotheses of the relationship between a core dimension of firm performance, namely productivity, and the number of goods traded and countries traded with.
    Keywords: Exports, Imports, manufacturing firms, Germany
    JEL: F14
    Date: 2012–06
  23. By: Jones, Keithly G.; Blayney, Don P.
    Abstract: This study empirically estimates the South Korean short-run and long-run import demand parameters for source-based dairy products and assess the impacts of the KORUS FTA on dairy product trade. These estimates were derived using a Central Bureau of Statistics (CBS) demand system. The impact of the tariff reductions associated with the free trade agreement was calculated. Based on the results, it appears that the free trade agreements open up the South Korean dairy product markets primarily by reducing prices which in turn increases competition among possible suppliers and results in an overall expansion of dairy product imports.
    Keywords: International Relations/Trade, Livestock Production/Industries, Research Methods/ Statistical Methods,
    Date: 2012
  24. By: Nath, Tanmoy; Kingwell, Ross S.; Cunningham, Peter; Islam, Nazrul; Xayavong, Vilaphonh; Curtis, Kimbal; Feldman, David; Anderton, Lucy; Mahindua, Truphena
    Abstract: Western Australia (WA) supplies around three-quarters of Australia’s exports of live sheep. The number of sheep exported live from WA has ranged from 4.5 million to 2.4 million with the trend in numbers exported being downwards. The future of this export trade appears to be increasingly vulnerable and uncertain, primarily because of the influence of animal welfare lobbyists. This paper uses scenario analysis to assess the impact on WA’s sheep supply chain of the termination of the live sheep export trade. The supply chain comprises three subsectors: farm production, processing/wholesale and retailing/export. The impacts of the trade termination on each of these sub-sectors are reported. These impacts are strongly linked to how producers respond to termination of the trade. If producers choose to exit the industry or reduce their sheep production in response to the likely lower prices that would follow a reduction in the live export trade, then the abattoirs eventually will suffer through reduced throughput and their support industries will have reduced demand for their services. Meat processors will benefit initially through access to sheep that previously would have been exported live, but these processors may not necessarily benefit in the longer term if the sheep population declines. Further, markets that currently accept live sheep may not necessarily accept the equivalent volume of chilled and frozen sheep meat and may not pay equivalent prices to those currently paid for live sheep. There are cultural, religious and economic preferences for live sheep in some Middle East markets so a simple substitution of chilled and frozen sheep meat for live sheep is not possible in some major markets.
    Keywords: Live sheep export, animal welfare, regional economic impacts, industry value chains, International Relations/Trade, Livestock Production/Industries,
    Date: 2012–02
  25. By: Azemar, Celine; Darby, Julia; Desbordes, Rodolphe; Wooton, Ian
    Abstract: We use a systematic empirical analysis of the determinants of South-South (SS) and North-South (NS) foreign direct investment (FDI) as a canvas to explore how multinational enterprises’ (MNEs) location decisions are shaped by better acquaintance with a foreign market resulting from bilateral ties, experience of international expansion, and knowledge of how to deal with poor governance. We find that these various aspects of market familiarity, which can interact together, are important to explain and differentiate the location behaviours of South MNEs (S-MNEs) and North MNEs (N-MNEs) in developing countries.
    Keywords: South-South FDI, governance, institutions, familiarity, distance,
    Date: 2012
  26. By: Thede, Susanna (Department of Economics, Lund University)
    Abstract: We provide a simple model of trade, job task offshoring and social insurance to identify economic mechanisms through which the interplay between insurance design, (final-goods) trade and job task offshoring determine domestic producer conditions. A skill-abundant home country that may have more productive workers relocates low-skill job tasks to a labor-abundant foreign country. Only the home country provides social insurance to its citizens. Using a simple conceptualization of social insurance targeting the main mechanisms through which insurance design impacts on producer conditions, we formalize productivity, wage-restrictive, compensation, cost-enhancing, cost-redistributive and labor-supply effects of insurance. The home country’s labor productivity is superior if the health status of the labor force is improved by health insurance. Generous unemployment insurance trigger binding reservation wages, giving rise to labor-supply effects that lead to a domestic overspecialization of production in trade equilibrium. This tendency is stronger with an insurance design that incorporates a cost-coverage link. Offshoring can introduce, enhance or reduce unemployment in the unskilled labor market depending on a combination of market-related factors and insurance design. In particular, offshoring may give rise to a combination of market-related effects that offset unskilled worker dependency on generous unemployment insurance. An insurance regulation that provides generous unemployment benefits and stipulates cost-redistribution can give rise to a compensation effect through which offshoring generates a high-skill wage reduction.
    Keywords: Heckscher-Ohlin; Producer conditions; Labor-market adjustments; Insurance design
    JEL: F11 F16 I18 J65
    Date: 2012–06–11
  27. By: Rudi, Jeta; Grant, Jason; Peterson, Everett B.
    Abstract: This study investigates the factors that impact the duration of trade relationships in U.S. fresh fruit and vegetable imports. We employ both the survival analysis (KM estimates and Cox PH model) as well as a count data model. The preliminary results indicate that SPS treatment requirements positively impact duration while new market access issued during the study period negatively impacts duration. Developed countries and countries located in North America experience longer duration. Other factors typically included in trade duration models were also investigated. Additionally, we employ a Heckman two-step procedure to understand the impact of duration on the probability of trading and trade volume, and find that both are positively impacted therefore suggesting that more stable trade relationships also tend to involve a higher volume of trade.
    Keywords: Fresh fruits and vegetable, U.S. imports, Survival Analysis, Count Data, Heckman Two-Step Model, International Relations/Trade, Productivity Analysis, Research Methods/ Statistical Methods, Risk and Uncertainty,
    Date: 2012
  28. By: Joseph A. Clougherty; Michal Grajek
    Abstract: Empirical scholarship on the standards-trade relationship has been held up due to methodological challenges: measurement, varied effects, and endogeneity. Considering the trade-effects of one particular standard (ISO 9000), we surmount methodological challenges by measuring standardization via national penetration of ISO 9000, allowing standardization to manifest via multiple (quality-signaling, information/compliance-cost, and common-language) channels, and using instrumental variable, multilateral resistance and panel data techniques to overcome endogeneity. We find evidence of common-language and quality-signaling augmenting country-pair trade. Yet, ISO-rich nations (most notably European) benefit the most from standardization, while ISO-poor nations find ISO 9000 to represent a trade barrier due to compliance-cost effects.
    JEL: C51 F13 L15
    Date: 2012–06
  29. By: Vanzetti, David; Peters, Ralf
    Abstract: Developed countries have agreed to provide duty free and quota free access to imports from LDCs covered by 97 per cent of tariff lines. However, LDCs would like to extend the agreement to 100 per cent coverage, since 3 per cent of tariff lines can cover a substantial proportion of LDC exports. Products of major interest include textiles and clothing and agricultural goods such as rice, oilseeds, sugar and bananas. The potential trade and welfare impacts of expanding the coverage are analysed using a global general equilibrium model. Updated estimates indicate LDCs stand to gain $4.2 billion in additional exports, the bulk of which accrues to Bangladesh, Cambodia and West Africa. A further $1.8 billion increase in exports could be obtained if LDCs had duty free access to the markets of China, India, Brazil and South Africa. However, non-LDC developing countries are likely to become worse off as a result of extension of preferences to LDCs.
    Keywords: WTO negotiations, trade, tariffs, International Relations/Trade,
    Date: 2012–02
  30. By: Udo Kreickemeier; Philipp M. Richter
    Abstract: This paper derives a new effect of trade liberalisation on the quality of the environment. We show that in the presence of heterogeneous firms the aggregate volume of emissions is influenced not only by the long-established scale effect, but also by a reallocation effect resulting from an increase in the relative size of more productive firms. We show how the relative importance of these effects, and hence the overall effect of trade liberalisation on the environment, is affected by the emission-intensity at the firm level: Aggregate emissions decrease when trade is liberalised if and only if firm-specific emission intensity decreases strongly with increasing firm productivity.
    Keywords: Trade and environment, monopolistic competition, heterogeneous firms, environmental effects
    JEL: F12 F18 Q56
    Date: 2012
  31. By: Moyo, Sibusiso; Spreen, Thomas H.; Gao, Zhifeng
    Abstract: Since its formation the European Union (EU) has employed a rather complicated policy to ensure high prices to domestic sugar growers and trade preferences to certain sugar exporting countries. One result of this policy is that the EU has been both the second largest importer and second largest exporter in the world market. Under pressure from the World Trade Organization (WTO), the EU agreed to reform its policies toward sugar in 2001, with the full effect of the reforms being fully implemented in 2006. In this paper, the impact of the EU sugar reform on global production, consumption, imports, and exports is examined. With a particular emphasis on the African Caribbean and Pacific (ACP) nations.
    Keywords: International Relations/Trade,
    Date: 2012–06–01
  32. By: di Giovanni, Julian (International Monetary Fund); Levchenko, Andrei A. (University of Michigan); Ortega, Francesc (Queens College, CUNY)
    Abstract: This paper evaluates the welfare impact of observed levels of migration and remittances in both origins and destinations, using a quantitative multi-sector model of the global economy calibrated to aggregate and firm-level data on 60 developed and developing countries. Our framework accounts jointly for origin and destination characteristics, as well as the inherently multi-country nature of both migration and other forms of integration, such as international trade and remittance flows. In the presence of firm heterogeneity and imperfect competition larger countries enjoy a greater number of varieties and thus higher welfare, all else equal. Because of this effect, natives in countries that received a lot of migration – such as Canada or Australia – are better off. The remaining natives in countries with large emigration flows – such as Jamaica or El Salvador – are also better off due to migration, but for a different reason: remittances. The quantitative results show that the welfare impact of observed levels of migration is substantial, at about 5 to 10% for the main receiving countries and about 10% for the main sending countries.
    Keywords: migration, remittances, international trade, welfare
    JEL: F12 F15 F22 F24
    Date: 2012–05
  33. By: Louis Dupuy (Larefi)
    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 consump- tion 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 liter- ature 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
    JEL: F11 F18 Q01 Q56
    Date: 2012–04
  34. By: Garduno-Rivera, Rafael; Baylis, Katherine R.
    Abstract: This paper studies how the North American Free Trade Agreement (NAFTA) affected income distribution within Mexico given internal migration. In low-skilled labor-abundant developing countries, trade liberalization should theoretically increase the income of low-skilled workers, decreasing income disparity. However, anecdotal evidence indicates that NAFTA increased the gap between rich and poor in Mexico, and empirical evidence is mixed (Chiquiar, 2005; Nicita, 2009; Hanson, 2007). Because trade may affect wages differently across regions within the country, accurate measures of wage effects must incorporate intra-national migration. We specifically consider rural to urban migration and find that working age men with low incomes get a boost from the NAFTA in their wages while NAFTA has a negative effect for those with high incomes. There is a slight increase in migration in the years after NAFTA. We also find that, workers far away from the US-Mexico border earn significantly lower wages in comparison to their counterparts in the border. But this effect diminishes after NAFTA, when tariffs decrease. As a result, we find that in urban areas, trade liberalization has reduced income inequalities among working age men.
    Keywords: Income Distribution, Regional Disparities, Trade Liberalization, Internal-Migration, International Relations/Trade, Labor and Human Capital,
    Date: 2012
  35. By: Aranzazu Crespo Rodríguez (Universidad Carlos III de Madrid)
    Abstract: Empirical evidence shows that trade liberalization improves productivity not just because of a selection eect but also because of productivity gains within rms. This paper proposes a model that allows for both channels, by adding the option to innovate to a trade model. In contrast to the existing literature, the process innovation is modeled as a continuous variable and there is both a xed and a variable cost to innovate. The interaction between the innovation and export choices is key to understand the dierent equilibria in the open economy and the outcomes following a trade liberalization. I calibrate the model to match the Spanish economy and explore the consequences of dierent trade policies. Simulations reveal that a trade policy that enhances innovation does not necessarily induce larger productivity gains.
    Keywords: process innovation; firm heterogeneity; trade policy
    JEL: F12 F14 O24 O31
    Date: 2012–05–30
  36. By: Pol Antràs; Davin Chor
    Abstract: We develop a property-rights model of the firm in which production entails a continuum of uniquely sequenced stages. In each stage, a final-good producer contracts with a distinct supplier for the procurement of a customized stage-specific component. Our model yields a sharp characterization for the optimal allocation of ownership rights along the value chain. We show that the incentive to integrate suppliers varies systematically with the relative position (upstream versus downstream) at which the supplier enters the production line. Furthermore, the nature of the relationship between integration and "downstreamness" depends crucially on the elasticity of demand faced by the final-good producer. Our model readily accommodates various sources of asymmetry across final-good producers and across suppliers within a production line, and we show how it can be taken to the data with international trade statistics. Combining data from the U.S. Census Bureau's Related Party Trade database and estimates of U.S. import demand elasticities from Broda and Weinstein (2006), we find empirical evidence broadly supportive of our key predictions. In the process, we develop two novel measures of the average position of an industry in the value chain, which we construct using U.S. Input-Output Tables.
    JEL: D21 D23 D57 F12 F23 L22 L23
    Date: 2012–06
  37. By: Badibanga, Thaddee Mutumba; Ulimwengu, John M.
    Abstract: We use the concept of the product space to analyze the key features of the transformation process in Africa with a focus on the agricultural sector. Between 1962 and 2008, we find that both specialization and diversification occur for the overall economy and across sectors. Our findings also confirm that the transformation of the African economy is driven primarily by the increasing specialization of nonagricultural exports. However, the transformation process is still moving more slowly than that of an emerging economy such as Brazil. The index of specialization of agricultural exports grew at a modest annual rate of 2.1 percent between 1962 and 2008, compared to 5.0 percent for nonagricultural exports and 4.1 percent for the overall economy. Although substantive achievements are observed in terms of product specialization or sophistication, the diversification of agricultural exports is rather insignificant. Compared to Africa, Brazil appears to have experienced a more balanced process in terms of both specialization and diversification of its agriculture. African countries’ specific transformation dynamics are heterogeneous, suggesting that a one-size-fits-all strategy to boost the agricultural sector in Africa is probably not the best option. Therefore, we advocate that the goals and principles of the Comprehensive Africa Agriculture Development Programme (CAADP) be adapted and customized to individual countries and incorporated into their strategies to enhance the transformation process of the African agricultural sector.
    Keywords: structural transformation, diversification, sophistication, growth, export, Africa, Agricultural and Food Policy, Crop Production/Industries, International Development, International Relations/Trade, Production Economics, Research and Development/Tech Change/Emerging Technologies, F19, O14, O33, O40,
    Date: 2012
  38. By: Sumon Bhaumik; Ralitza Dimova
    Abstract: The stylized literature on foreign direct investment suggests that developing countries should invest in the human capital of their labour force in order to attract foreign direct investment. However, if educational quality in developing country is uncertain such that formal education is a noisy signal of human capital, it might be rational for multinational enterprises to focus more on job-specific training than on formal education of the labour force. Using cross-country data from the textiles and garments industry, we demonstrate that training indeed has greater impact on firm efficiency in developing countries than formal education of the work force.
    Keywords: Human capital; Training; Firm-level efficiency; Multinational enterprises
    JEL: F23 I25
    Date: 2012–02–01
  39. By: Mélitz, Jacques; Toubal, Farid
    Abstract: We construct new series for common native language and common spoken language for 195 countries, which we use together with series for common official language and linguistic proximity in order to draw inferences about (1) the aggregate impact of all linguistic factors on bilateral trade, (2) whether the linguistic influences come from ethnicity and trust or ease of communication, and (3) in so far they come from ease of communication, to what extent translation and interpreters play a role. The results show that the impact of linguistic factors, all together, is at least twice as great as the usual dummy variable for common language, resting on official language, would say. In addition, ease of communication is far more important than ethnicity and trust. Further, so far as ease of communication is at work, translation and interpreters are extremely important. Finally, ethnicity and trust come into play largely because of immigrants and their influence is otherwise difficult to detect.
    Keywords: Bilateral Trade; Gravity Models; Language
    JEL: F10 F40
    Date: 2012–05
  40. By: Stéphane BECUWE (GREThA, CNRS, UMR 5113); Bertrand BLANCHETON (GREThA, CNRS, UMR 5113)
    Abstract: This contribution purpose an original and exhaustive measure of customs tariffs dispersion depending on the origin of imported products in France between 1850 and 1913. While a part of this dispersion is the result of a systematic structural effect linked to the compiling of nomenclatures for France’s general trade chart, it nevertheless reveals the existence of direct discriminatory practices applied to certain countries for certain products. The principle of this dispersion of tariffs (which was not specific to France) introduces uncertainty over the strengths of empirical work dealing with the correlation between customs tariffs and growth (the tariff-growth paradox), and over the way in which the theme of effective trade protection has been treated. In our opinion, it should pave the way to work that reintroduces the country dimension into the study of late 19th century commercial policy.
    Keywords: Trade policy, History of globalisation, Customs tariffs
    JEL: N7
    Date: 2012
  41. By: Grossmann, Volker (University of Fribourg); Stadelmann, David (University of Fribourg)
    Abstract: This paper argues that international migration of high-skilled workers triggers productivity effects at the macro level such that the wage rate of skilled workers may rise in host countries and decline in source countries. We exploit a recent data set on international bilateral migration flows and provide evidence which is consistent with this hypothesis. We propose different instrumentation strategies to identify the causal effect of skilled migration on log differences of GDP per capita, total factor productivity, and wages of skilled workers between pairs of source and destination countries. These address the endogeneity problem which potentially arises when international wage differences affect migration decisions.
    Keywords: international high-skilled migration, wage effects, total factor productivity
    JEL: F22 O30
    Date: 2012–05
  42. By: Torfinn Harding; Beata Javorcik
    Abstract: Information asymmetries constitute a significant obstacle to capital flows across international borders, and in particular to flows of foreign investment (FDI) to emerging markets. Many governments aim to reduce information barriers by emerging in investment promotion activities. Despite potentially large benefits of FDI and popularity of investment promotion intermediaries (IPIs), relatively little is known about their effectiveness. This study uses data collected through the Global Investment Promotion Benchmarking (GIPB) exercise to examine whether higher quality of IPI services translates into higher FDI inflows. The analysis, based on information on 156 countries, suggests that countries with IPIs able to handle investor inquiries in a more professional manner and IPIs possessing higher quality Web sites tend to attract greater volume of FDI. These results are robust to using sector-level data and instrumental variable approach.
    Keywords: Foreign direct investment, Investment promotion, Emerging markets, Information asymmetries, Red tape, Performance of public institutions
    JEL: F21 F23 H11
    Date: 2012
  43. By: Fischer, Justina A.V.; Somogyi, Frank
    Abstract: Unionists and politicians frequently claim that globalization lowers employment protection of workers. This paper tests this hypothesis in a panel of 28 OECD countries from 1985 to 2003, differentiating between three dimensions of globalization and two labor market segments. While overall globalization is shown to loosen protection of the regularly employed, it increases regulation in the segment of limited-term contracts. We find economic and political globalization to drive deregulation for the regularly employed, while political and social integration appear responsible for the better protection of workers in atypical employment, outweighing the negative effect of economic integration. We offer political economy arguments as explanations for these differential effects on labor market legislation.
    Keywords: Globalization; International trade; Employment protection; Labor standards
    JEL: F16 F15 J63 J68 C33
    Date: 2012–06–12
  44. By: Anna Jankowska; Arne Nagengast; José Ramón Perea
    Abstract: Rapid and sustained economic growth in the emerging world has brought new members, notably China, into the group of middle-income countries. Reaching this level of income, however, has historically presented countries with a new set of challenges to development, resulting in slowing growth and an entrapment in what is known as the middle-income trap. Limited income convergence in Latin America has at least partly been due to its reduced capacity to engage in a structural transformation conducive to higher productivity. In contrast, emerging Asia offers a few examples of these ‚virtuous. productive transformations. With these two references in mind, we build a comparative analysis based on the following points: First, we illustrate differences in the process of structural transformation, both with regard to sector productivity and employment absorption. Second, we adopt the Product Space methodology to compare the structural transformation that took place in both regions. Finally, we consider the role played by Productive Development Policies (PDP) in shaping the process of structural transformation, through a comparative review of these policies in Korea, Brazil and Mexico. In short, the analysis allows us to gauge the role that the economic specialisation of a country plays in facilitating transitions to more advanced stages of economic development.<BR>La croissance rapide et soutenue dans les économies émergentes a fait rentrer des nouveaux membres, dont la Chine, dans le groupe des pays à revenu intermédiaire. Cependant, atteindre ce niveau de revenu, a historiquement supposé pour ces pays de faire face à de nouveaux défis pour le développement, entraînant un ralentissement de la croissance et une situation de stagnation connue sous le nom de piège des revenus intermédiaires. La convergence toutefois limitée de l’Amérique latine est en partie expliquée par sa capacité réduite à s’engager dans des transformations structurelles vers une productivité plus élevée. En revanche, l’Asie émergente nous présente des exemples de ces vertueuses transformations productives. Tenant compte de ces deux différences, nous élaborons une analyse comparative basée sur les dimensions suivantes : D’abord, nous illustrons des différences dans le processus de transformation structurelle, à la fois par rapport à la productivité sectorielle et la relocalisation d’emplois. Par la suite, nous adoptons la méthodologie de Product Space pour comparer la transformation structurelle qui a eu lieu dans les deux régions. Finalement, nous considérons le rôle des politiques de développement productives (PDP) pour déterminer le processus de transformation structurel, à travers une révision comparative de ces politiques en Corée, au Brésil et au Mexique. En somme, l’analyse permet d’évaluer le rôle que la spécialisation économique d’un pays peut jouer pour faciliter la transition vers des phases de développement économique plus avancées.
    Keywords: exports, middle-income trap, product space, exportations, piège du revenu intermédiaire, espace produit
    JEL: F10 F40 L5 O4
    Date: 2012–05–11

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