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on International Trade |
| By: | Joern Kleinert (Karl-Franzens-University, Universitätsplatz 3, 8010 Graz, Austria.); Nico Zorell (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.) |
| Abstract: | In this paper we provide a new explanation for the increase in world trade over the last two decades. We show analytically in a general equilibrium model with heterogeneous firms that a fall in variable offshoring costs boosts trade in differentiated final goods through an intra-industry reallocation of resources towards the more productive firms. That is what we call the export-magnification effect of offshoring. More specifically, lower barriers to offshoring reduce the average costs of inputs for offshoring firms and allow more firms to source cheap foreign intermediates, which improves firm-level price competitiveness. This, in turn, translates into higher export quantities of incumbent exporters (intensive margin) and the entry of new exporters (extensive margin). The increase in final goods trade comes on top of the boost to trade in intermediates. Hence the mechanism proposed in this paper is consistent with the fact that the share of intermediate goods in international trade has remained broadly stable over recent years. JEL Classification: F12, F15, F23. |
| Keywords: | offshoring, international trade, multinational firms. |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20121430&r=int |
| By: | Goh , Soo Khoon; Wong, Koi Nyen; Tham , Siew Yean |
| Abstract: | Developing and transition economies are an increasingly important source of outward foreign direct investment (OFDI). The objective of this paper is to fill the gap in the literature regarding outward foreign direct investment by adopting the well known gravity model to examine the relationship between trade (export and import), inward and outward FDI using Malaysia as a case. This contributes to the literature as previous studies on OFDI in Malaysia have focused primarily on the determinants of these outward flows, and there are no studies examining the impact of OFDI on trade. Our findings reveal that inward foreign direct investment (IFDI) conforms to the observed pattern of a complementary relationship between FDI and trade while OFDI and trade linkages are not significant. The empirical results also indicate that Malaysia has yet to follow the trajectory of developed economies in its shift from being a net capital importer to a capital exporter due to the lack of trade linkages between OFDI and trade. This further implies that the country may not be able to reap the potential benefits of OFDI that accrue through efficiency gains from specialization and scale advantages that are generated through trade channels. |
| Keywords: | Outward FDI; trade; multinationals; Malaysia |
| JEL: | F23 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:39715&r=int |
| By: | Youssouf KIENDREBEOGO (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I) |
| Abstract: | This study addresses on the relationship between export participation and firm-level productivity. Using comprehensive data for Egypt, we find that total factor productivity and labor productivity are significantly higher in exporters than in non-exporters. When we differentiate between pre-entry and post-entry differences in productivity performance and after controlling for potential endogeneity problem, we find that this exporter premia is driven by the learning-by-exporting hypothesis. We find no evidence that more productive firms self-select into export markets. Exporting makes firms more productive but more productive firms do not necessarily self-select into exporting. |
| Keywords: | Productivity Performance;Exports |
| Date: | 2012–06–21 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00710720&r=int |
| By: | Massimiliano Calì |
| Abstract: | The process of economic integration over the past two decades has been accompanied by an expanding income wedge between skilled and unskilled workers in many developing countries. This was also the case for Ugandan wage employees during the 1990s, which was a period of abrupt trade opening and market reforms. This is a surprising result for an unskilled labour abundant country like Uganda in light of a standard Heckscher-Ohlin (H-O) framework. But was the trade opening responsible for the increase in wage premia? By using a novel district-level analysis, I find that in fact increased trade reduced the returns to schooling in line with the H-O predictions. On the other hand, the intensification of domestic trade across districts during the period was associated with higher returns in those districts relatively endowed with skilled employees. This effect appears to be responsible for at least some of the rising returns to schooling among wage employees in Uganda. |
| Keywords: | Returns to education, wage inequality, Uganda, trade, market reforms |
| JEL: | F10 F14 F16 O12 O15 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sercdp:0114&r=int |
| By: | Joachim Wagner (Leuphana University Lueneburg, Germany) |
| Abstract: | This paper presents the first empirical test with German firm level data of a hypothesis derived by Bustos (AER 2011) in a model that explains the decision of heterogeneous firms to export and to engage in R&D. Using a non-parametric test for first order stochastic dominance it is shown that, in line with this hypothesis, the productivity distribution of firms with exports and R&D dominates that of exporters without R&D, which in turn dominates that of firms that neither export nor engage in R&D. These results are in line with findings for Argentina. The model, therefore, seems to be useful to guide empirical work on the relation between exports, R&D and productivity. |
| Keywords: | Exports, R&D, productivity, Germany |
| JEL: | F14 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:lue:wpaper:244&r=int |
| By: | Zhigang Li; Xiaohua Yu; Yinchu Zeng; Rainer Holst |
| Abstract: | Using unique survey data on agricultural traders in China in 2004, this study provides direct evidence on the significance of inter-regional trade barriers and their key components. Our major findings are as follows. (1) The trade barriers within China are fairly small, accounting for about 20 percent of trade value. (2) Transport-related costs and artificial barriers contribute about equally to the trade barriers. (3) Labor and government taxes are the two largest proportions of total transport costs, and account for 35% and 30%, respectively. (4) Road quality is crucial for reducing transport costs within China. Increasing transport speed by 1 km per hour would, mainly due to improved fuel-burning efficiency and reduced labor requirements, decrease total transport costs for Chinese agricultural traders by 0.6 percent. |
| Keywords: | Transport Costs, China, Agricultural Traders, Infrastructure |
| JEL: | E58 R21 R28 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:bbv:wpaper:1209&r=int |
| By: | Kreickemeier, Udo; Richter, Philipp M. |
| 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 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tuewef:36&r=int |
| By: | Melo, Oscar; Engler, Alejandra; Nahuelhual, Laura; Cofre, Gabriela; Barrena, Jose |
| Abstract: | Increasing awareness of food safety issues has brought a boost in sanitary and phytosanitary regulations and standards. Although is likely that these regulations have increased health and welfare in the countries that impose them, they may also have an important effect in exporting countries, affecting especially small producers in developing countries. Other papers have found that individual quantitative measures of regulatory stringency have an impact on trade, but none has looked into broader SPS regulation stringency indicators. Through a survey that asked Chilean fresh fruit exporters to evaluate the stringency for 16 countries and four fresh fruits, we create and index that incorporates several aspects of SPS regulation. Our estimations suggest that, on average, quality standards and packaging and labeling issues are considered the most stringent. We also estimate a gravity model and find that SPS regulatory stringency, measured by this broad index, has negative and significant effect on traded volume |
| Keywords: | Sanitary and Phytosanitary regulations, standards, non tariff barriers, gravity model, fruit trade, Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety, International Relations/Trade, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae12:125298&r=int |
| By: | Borchert, Ingo; Gootiiz, Batshur; Mattoo, Aaditya |
| Abstract: | Surprisingly little is known about policies that affect international trade in services. Previous analyses have focused on policy commitments made by countries in international agreements but these commitments do not in many cases reflect actual policy. This paper describes a new initiative to collect comparable information on services trade policies for 103 countries, across a range of service sectors and the relevant modes of service delivery. The resultant database reveals interesting patterns in policy. Across regions, some of the fastest growing countries in Asia and the oil-rich Gulf states have the most restrictive policies in services, whereas some of the poorest countries are remarkably open. Across sectors, professional and transportation services are among the most protected in both industrial and developing countries, while retail, telecommunications and even finance tend to be more open. An illustrative set of results suggests that trade policies matter for investment flows and access to services. In particular, restrictions on foreign acquisitions, discrimination in licensing, restrictions on the repatriation of earnings and lack of legal recourse all have a significant and sizable negative effect, reducing the expected value of sectoral foreign investment by $2.2 billion over a 7-year period, compared with"open"policy regimes. In terms of access to services, credit as a share of gross domestic product is on average 3.3 percentage points lower in countries with major restrictions on the establishment of foreign banks as compared with those that only impose operational restrictions. |
| Keywords: | Transport Economics Policy&Planning,Public Sector Corruption&Anticorruption Measures,Banks&Banking Reform,Emerging Markets,Trade and Services |
| Date: | 2012–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6109&r=int |
| By: | Giuseppe Francesco Gori (Department of Economics, University of Bologna, Italy); Luca Lambertini (Department of Economics, University of Bologna, Italy; The Rimini Centre for Economic Analysis (RCEA), Italy) |
| Abstract: | This paper investigates the impact of free trade on welfare in a two-country world modelled as an international Hotelling duopoly with quadratic transport costs and asymmetric countries, where a negative environmental externality is associated with the consumption of the good produced in the smaller country. Countries' relative sizes as well as the intensity of negative environmental externality affect potential welfare gains in trade liberalisation. In line with Lambertini (1997a) we show that, as long as no trade policy is undertaken by the government of the larger country, trade liberalisation is not feasible since the latter always loses from opening to trade. A subsidy policy in favour of the firm producing the clean good is, on the contrary, shown to give both countries the right incentives to liberalize trade. Allowing for redistributive transfers between countries further extends the parametric range for which trade liberalisation is feasible under the subsidy scheme. The alternative situation, in which the green firm is based in the larger country, is also briefly sketched to find that free trade does give rise to a global welfare increment with no need of accompanying trade policies. |
| Keywords: | International trade, geographical nation size, spatial competition, environmental externality |
| JEL: | F12 L13 H23 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:40_12&r=int |
| By: | Jose Antonio Rodriguez-Lopez (Department of Economics, University of California-Irvine) |
| Abstract: | I present a model of offshoring decisions with heterogeneous firms, random adjustment costs, and endogenous markups. The model shows an inverted-U relationship between firm-level productivity and the probability of offshoring; hence, the most productive firms are less likely to offshore than some lower-productivity firms. A tougher competitive environment has two opposing effects on firm-level offshoring likelihood: a Schumpeterian effect--accounting for the negative effect of competition on offshoring profits--and an escape-competition effect--accounting for the effect of competition on the incremental profits from offshoring. A productivity level separates non-offshoring firms according to the dominant effect, with the Schumpeterian effect dominating for the least productive firms. |
| Keywords: | Competition; Offshoring; Heterogeneous firms; Endogenous markups; Adjustment costs |
| JEL: | F12 F23 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:irv:wpaper:111213&r=int |