nep-int New Economics Papers
on International Trade
Issue of 2012‒07‒14
twenty-one papers chosen by
Alessia A. Amighini
University Amedeo Avogadro

  1. Trade Facilitation and Country Size. By Mohammad Amin; Jamal Ibrahim Haidar
  2. Cross-Border and Foreign-Affiliate Sales of Services: Evidence From German Micro-Data By Kelle, Markus; Kleinert, Jörn; Raff, Horst; Toubal, Farid
  3. Revisiting the determinants of unit values By Ito, Tadashi
  4. Globalization and United States’ Intra-Industry Trade By Leitão, Nuno Carlos
  5. Trade and productivity : self-selection or learning-by-exporting in India. By Jamal Ibrahim Haidar
  6. Value Added and Factors in Trade: A Comprehensive Approach By Gaaitzen De Vries; Neil Foster; Robert Stehrer
  7. The Rise of the East and the Far East: German Labor Markets and Trade Integration By Dauth, Wolfgang; Findeisen, Sebastian; Suedekum, Jens
  8. Time zones matter: The impact of distance and time zones on services trade By Elisabeth Christen
  9. The Global Economics of Water: Is Water A Source of Comparative Advantage? By Debaere, Peter
  10. Modelling global trade flows: results from a GVAR model By Matthieu Bussière; Alexander Chudik; Giulia Sestieri
  11. Scanning the Ups and Downs of China’s Trade Imbalances By Françoise Lemoine; Deniz Ünal
  12. The impact of China on manufacturing exports of Italy and Germany By Giorgia Giovannetti, Marco Sanfilippo and Margherita Velucchi
  13. Intermediation in Networks By Jan-Peter Siedlarek
  14. The great synchronization of international trade collapse By Antonakakis, Nikolaos
  15. Organizing the Global Value Chain By Antràs, Pol; Chor, Davin
  16. Costing Global Trade Barriers, 1900 to 2050 By Kym Anderson
  17. Determinants of Labor-Intensive Exports by the Developing Countries: A Cross Country Analysis By Mottaleb Khondoker; Kaliappa Kalirajan
  18. Family Firm Internationalization: Influence of Familiness on the Spanish Firm Export Activity By Fernando Merino, Joaquín Monreal-Pérez, Gregorio Sánchez-Marín
  19. Trade in a 'Green Growth' Development Strategy Global Scale Issues and Challenges By Jaime de Melo
  20. Do Exporting Firms in the People’s Republic of China Innovate? By Wignaraja, Ganeshan
  21. Emerging multinationals, international knowledge flows and economic geography: a research agenda By Dirk Christian Dohse, Robert Hassink, Claudia Klaerding

  1. By: Mohammad Amin (World Bank - Enterprise Analysis Unit); Jamal Ibrahim Haidar (Centre d'Economie de la Sorbonne - Paris School of Economics)
    Abstract: It is argued that compared with large countries, small countries rely more on trade and therefore they are more likely to adopt liberal trading policies. The present paper extends this idea beyond the conventional trade openness measures by analyzing the relationship between country size and the number of documents required to export and import, a measure of trade facilitation. Three important results follow. First, trade facilitation does improve as the country size becomes smaller ; that is, small countries perform better than large countries in terms of trade facilitation. Second, the relationship between country size and trade facilitation is non-linear, much stronger for the relatively small than the large countries. Third, contrary to what the existing studies might suggest, the relationship between country size and trade facilitation does not appear to be driven by the fact that small countries trade more as a proportion of their GDP than the large countries.
    Keywords: Country size, trade facilitation, openness.
    JEL: F10 F13 F14 F15 F50 F55 H10 K00 L5 O20 O24
    Date: 2012–05
  2. By: Kelle, Markus; Kleinert, Jörn; Raff, Horst; Toubal, Farid
    Abstract: We merge German balance-of-payments and foreign-affiliate-trade statistics to obtain data about trade in commercial services at the firm level. We use these data to study export market participation and the choice of export mode: cross-border versus foreign-affiliate sales. We find that for firms in our sample productivity is both a statistically significant and economically important determinant of the export participation and export mode choice. We also identify the role of industry- and country-specific determinants.
    Keywords: commercial presence; firm heterogeneity; foreign direct investment; international trade; multinational enterprises; supply modes; trade in services
    JEL: F12 F15 L13
    Date: 2012–06
  3. By: Ito, Tadashi
    Abstract: This paper studies the issue of how traded quantities affect trade prices, which has been relatively unexplored in the trade literature. By reproducing previous literatures' regressions which are based on the general equilibrium trade theories, incorporating the role of traded quantities, this paper shows a possibility of prevalence of the second degree price discrimination (quantity discount) in international trade, rather than the pricing behaviour of the general equilibrium theories.
    Keywords: Trade theory, International trade, Heterogeneous firms trade model, Unit value, Second degree price discrimination, Quantity discount
    JEL: F14
    Date: 2012–06
  4. By: Leitão, Nuno Carlos
    Abstract: The recent trend of globalization has given rise to a new paradigm in international economics, i.e. the simultaneous exports and imports of a product within country or a particular industry called intra-industry trade (IIT) or two-way trade. This study examines country-levels determinants of intra-industry trade, in U.S. trade. The manuscript applies a static and dynamic panel data approach. In contrast to previous studies, this paper used a dynamic panel data to solve the problems of serial correlation and endogeneity. The results indicate that IIT occurs more frequently among countries that are similar in terms of factor endowments. We also introduce economic dimension; this proxy confirms the positive effect of IIT. Our results also confirm the hypothesis that trade increases if the transportation costs decrease.
    Keywords: Globalization; Intra-industry trade; Panel data; United States
    JEL: C20 F12
    Date: 2012–07–01
  5. By: Jamal Ibrahim Haidar (Centre d'Economie de la Sorbonne - Paris School of Economics)
    Abstract: Recent literature tried to explain the Indian growth miracle in different ways, ranging from trade liberalization to industrial reforms. Using data on Indian manufacturing firms, this paper analyzes the relationship between firm's productivity and export market participation during 1991-2004. While it provide evidence of the self-selection hypothesis by showing that more productive firms become exporters, the results do not show that entry into export markets enhances productivity. The paper examines the explanation of self selection hypothesis for total factor productivity differences across 33,510 exporting and non-exporting firms. It uses propensity score matching to test the learning-by-exporting hypothesis. In line with the prediction of recent heterogeneous firm models of international trade, the main finding of the paper is : more productive firms become exporters but it is not the case that learning by exporting is a channel fuelling growth in Indian manufacturing.
    Keywords: Trade, learning-by-exporting hypothesis, self-selection hypothesis, total factor productivity, causality, heterogeneous firm model.
    JEL: C12 F10 F20 F40 L1 L2 L6
    Date: 2012–05
  6. By: Gaaitzen De Vries; Neil Foster (The Vienna Institute for International Economic Studies, wiiw); Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Based on recent approaches measuring the factor content of trade when intermediates are traded this paper provides an approach to decompose the value added and factor (capital, high, medium and low educated labour) content of trade into foreign and domestic components. This adds to the literature by simultaneously considering both exports and imports allowing a focus on the patterns and changes of net trade and its components and generalizes the commonly applied vertical specialization measures based on exports only. It is further pointed out that a country’s trade balance in terms of value added content equals its trade balance in gross trade. Empirically, results of the proposed decomposition based on the recently compiled World Input-Output Database (WIOD) covering 40 countries and 35 industries over the period 1995-2009 are presented. The domestic value added content of exports tends to decrease over time, increasing again in the crisis. Splitting up by production factors, emerging economies tend to export relatively more capital and import labour in value terms, with the opposite pattern found for advanced economies. Splitting up labour by educational attainment the expected pattern of the advanced countries being relatively stronger net exporters of high-educated labor as compared to low-educated labour in value terms emerges. This provides a distinct view on the structure of trade deficits and surpluses across countries based on its factor content. Finally, it is shown that the role of services is more important than would be suggested by conventional trade statistics due to the value added created in service sectors for production of manufacturing exports.
    Keywords: value added trade, trade in factors,, vertical specialization, production net-works, services trade
    JEL: F1 F15 F19
    Date: 2012–06
  7. By: Dauth, Wolfgang (Institute for Employment Research (IAB), Nuremberg); Findeisen, Sebastian (University of Zurich); Suedekum, Jens (University of Duisburg-Essen)
    Abstract: We analyze the effects of the unprecedented rise in trade between Germany and "the East" – China and Eastern Europe – in the period 1988–2008 on German local labor markets. Using detailed administrative data, we exploit the cross-regional variation in initial industry structures and use trade flows of other high-income countries as instruments for regional import and export exposure. We find that the rise of "the East" in the world economy caused substantial job losses in German regions specialized in import-competing industries, both in manufacturing and beyond. Regions specialized in export-oriented industries, however, experienced even stronger employment gains and lower unemployment. In the aggregate, we estimate that this trade integration has caused some 493,000 additional jobs in the economy and contributed to retaining the manufacturing sector in Germany. We also conduct our analysis at the individual worker level, and find that trade had a stabilizing overall effect on employment relationships.
    Keywords: international trade, import competition, export opportunities, local labor markets, employment, China, Eastern Europe, Germany
    JEL: F16 J31 R11
    Date: 2012–06
  8. By: Elisabeth Christen
    Abstract: Using distance and time zone differences as a measure for coordination costs between service suppliers and consumers, we employ a Hausman-Taylor model for services trade by foreign affiliates. Given the need for proximity in the provision of services, factors like distance place a higher cost burden on the delivery of services in foreign markets. In addition, differences in time zones add significantly to the cost of doing business abroad. Decomposing the impact of distance into a longitudinal and latitudinal component and accounting for differences in time zones, it is possible to identify in detail the factors driving the impact of increasing coordination costs on the delivery of services through foreign affiliates. Working with a bilateral U.S. data set on foreign affiliate sales in services this paper examines the impact of time zone differences and East-West and North-South distance on U.S. outward affiliate sales. Both distance as well as time zone differences have a significant positive effect on foreign affiliate sales. By decomposing the effect of distance our results show that increasing East-West or North-South distance by 100 kilometers raises affiliates sales by 2%. Finally, focusing on time zone differences our findings suggest that affiliate sales increase the more time zones we have to overcome.
    Keywords: Foreign Affiliates Trade, International Trade in Services, Coordination Costs, Time zones
    JEL: F14 F21 F23 L80
    Date: 2012–07
  9. By: Debaere, Peter
    Abstract: Freshwater scarcity is bound to be a major challenge of the 21st century. Drawing on newly available data, I investigate to what extent countries make efficient use of the very uneven water resources on a global scale. In particular, I find that countries that are relatively water abundant tend to export more water-intensive products. This evidence supports the hypothesis that water is a source of comparative advantage. My findings also indicate that water contributes significantly less to the pattern of exports than the traditional production factors such as labor and physical capital. In light of climate change, this suggests relatively moderate disruptions to trade on a global scale due to changing precipitation patterns. My results do not provide consistent evidence that there is a difference in the extent to which water determines the pattern of trade between water-scarce and water-abundant countries.
    Keywords: Comparative Advantage; International Trade; Water
    JEL: F1
    Date: 2012–07
  10. By: Matthieu Bussière; Alexander Chudik; Giulia Sestieri
    Abstract: This paper uses a Global Vector Auto-Regression (GVAR) model featuring 21 emerging market and advanced economies to investigate the factors behind the dynamics of global trade flows, with a particular view on the issue of global trade imbalances and on the conditions of their unwinding. The GVAR approach enables us to make two key contributions: first, to model international linkages among a large number of countries, which is a key asset given the diversity of countries and regions involved in global imbalances, and second, to model exports and imports jointly. The latter proves to be very important due to the internationalization of production chains. The model can be used to gauge the effect on trade flows of various scenarios, such as an output shock in the United States, a shock to the US real effective exchange rate and shocks to foreign (e.g., German and Chinese) variables. Results indicate that changes in domestic and foreign demand have a much stronger effect on trade flows than changes in relative trade prices. In addition, we show how the model can be used to monitor trade developments, with an application to the Great Trade Collapse.
    Date: 2012
  11. By: Françoise Lemoine; Deniz Ünal
    Abstract: Since 2007 China has considerably reduced its external global imbalances. Its bilateral trade surpluses with the EU and the US have persisted because the rise of China’s import demand has mainly benefited its Asian neighbors and the resource rich countries. The rapid growth of China’s imports of consumption goods from advanced economies, especially from Europe, suggests that they would benefit from a reorientation of China’s domestic demand towards household consumption.
    Keywords: China, Growth model, FDI, Foreign trade, Domestic market
    JEL: F2 F1 F15 F23 O53
    Date: 2012–06
  12. By: Giorgia Giovannetti, Marco Sanfilippo and Margherita Velucchi
    Abstract: This paper analyses the impact of China on the export performance of Italy and Germany to their main trading partners in the OECD markets. Given a strong specialization in the manufacturing sector, these two countries are exposed to China’s competition. Italy, with a productive structure based on so-called “traditional” sectors, is likely to be more vulnerable to China’s competitive pressure. Using data for the period 1995-2009, this paper estimates the impact of China on Italy and Germany’s market shares at a very disaggregated sector level. Results show that China has affected Italy’s and Germany’s market shares in different ways, especially during the post-WTO accession period, being on average more harmful for the former.
    Keywords: China; Gravity Model; Market Shares; F-10; F-14
    Date: 2012–06–13
  13. By: Jan-Peter Siedlarek (Department of Economics, European University Institute)
    Abstract: This paper studies bargaining and exchange in a networked market with intermediation. Possibilities to trade are restricted through a network of existing relationships and traders bargain over the division of available gains from trade along different feasible routes. Using a stochastic model of bargaining, I characterize stationary equilibrium payoffs as the fixed point of a set of intuitive value function equations and study efficiency and the relationship between network structure and payoffs. In equilibrium, trade is never unduly delayed but it may take place too early and in states where delay would be efficient. The inefficiency arises from a hold-up threat and the inability of bargaining parties credibly to commit to a split in a future period. The model also shows how with competing trade routes as trade frictions go to zero agents that are not essential to a trade opportunity receive a payoff of zero.
    Keywords: Stochastic Games, Bargaining, Random Matching, Middlemen, Network
    JEL: C73 C78 L14
    Date: 2012–05
  14. By: Antonakakis, Nikolaos
    Abstract: In this paper we examine the extent of international trade synchronization during periods of international trade collapses and US recessions. Based on monthly data for the G7 economies over the period 1961-2011, our results suggest rather idiosyncratic patterns of international trade synchronization during international trade collapses and US recessions. During the great recession of 2007-2009, however, international trade experienced the most sudden, severe and globally synchronized collapse.
    Keywords: International trade collapse; Synchronization; Recession; Dynamic conditional correlation
    JEL: C32 F15 F41 F43
    Date: 2012–07–05
  15. By: Antràs, Pol; Chor, Davin
    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.
    Keywords: contractual frictions; downstreamness; global value chain; intrafirm trade; property rights; Sequential production
    JEL: D23 F12 F23 L22
    Date: 2012–06
  16. By: Kym Anderson
    Abstract: By how much did the cost of governmental barriers to trade change over the 20th century, and how might they change by the middle of the 21st century? This paper addresses that question by first reviewing evidence on the changing extent of global trade restrictions since 1900, particularly for agricultural and manufactured goods. It then assesses prospects for trade policy changes over the coming four decades by drawing on current political economy theory and evidence. The paper then provides crude estimates of the annual cost, in terms of economic welfare foregone in high-income and developing countries, of those trade-restricting policies.
    Keywords: welfare effects of trade restrictions, protectionist history, policy reform
    JEL: F13 F15 F17
    Date: 2012
  17. By: Mottaleb Khondoker; Kaliappa Kalirajan
    Abstract: While it is widely recognized that industrial development is imperative in developing countries to reduce poverty and to attain sustainable economic growth, there is no consensus on how to develop industries and where to start. Generally, the literature argues that developing countries should concentrate on promoting labour intensive industries and exports first due to their low capital stock and relatively abundant labor force. Though many developing countries are attempting to follow this path, the interesting observation is that not all developing countries are reaping the benefits of promoting labor intensive industries in terms of employment generation and sustaining economic growth. This raises an important question as to how it is possible for some developing countries to enjoy more benefits from labor intensive industries, while others are not able to do so. Using cross-country panel data in explaining heterogeneous performance in exporting labor intensive products by the developing countries, an attempt has been made in this paper to identify the important factors over and above the conventional factors such as low labor wages that contribute to the sustained growth of labor intensive exports from developing countries. The empirical findings of this paper emphasizes that even to initiate and sustain the growth of the low value added industries, such as garments, the developing countries should develop basic infrastructure and maintain a friendly business environment.
    Keywords: Developing Country, Garment and textile export, Infrastructure, Business environment, ASIA, Sub-Saharan Africa
    JEL: L67 F14 O14
    Date: 2012
  18. By: Fernando Merino, Joaquín Monreal-Pérez, Gregorio Sánchez-Marín
    Abstract: This paper studies the determinants of the export activity of family SMEs, disentangling the three main dimensions that comprise the concept of familiness: power, experience, and culture. The results, using the F-PEC scale over a sample of 500 Spanish SMEs, show that this approach identifies the determinants that explain the export activity of family SMEs better than a simple dichotomous approach. Specifically, we find that the expertise transmitted from different generations and the family culture orientation to the firm positively affect the international activities of family SMEs; however, the composition of the firm control–management does not have any significant influence on internationalization
    Keywords: Family SMEs, export activity, Familiness, Spanish firms, F-PEC scale
    JEL: D22 M16
    Date: 2012–04
  19. By: Jaime de Melo (University of Geneva and FERDI)
    Abstract: The paper surveys the state of knowledge about the trade-related environmental consequences of a country’s development strategy along three channels: (i) direct trade-environment linkages (overexploitation of natural resources and trade-related transport costs);(ii) ‘virtual trade’ in emissions resulting from production activities; (iii) the product mix attributes of a ‘green-growth’ strategy (environmentally preferable products and goods for environmental management). Main conclusions are the following. Trade exacerbates over-exploitation of natural resources in weak institutional environments, but there is little evidence that differences in environmental policies across countries have led to significant ‘pollution havens’. Trade policies to ‘level the playing field’ would be ineffective and result in destructive conflicts in the WTO. Lack of progress at the Doha round suggests the need to modify the current system of global policy making.
    Keywords: Environmental Goods, Natural Resources, Green Growth, Trade and Climate
    JEL: F18 Q56
    Date: 2012–06
  20. By: Wignaraja, Ganeshan (Asian Development Bank Institute)
    Abstract: This paper assesses factors driving firm-level export performance in Asia’s super exporter—The People’s Republic of China (PRC). While early studies suggested that innovation was important, there has been little research on opening up the black box of technology at firm-level in the PRC, the author undertakes econometric analysis of innovation, learning, and exporting in automobiles and electronics firms in the PRC using a large-scale dataset to identify the most appropriate innovation proxy. Drawing on recent literature on innovation and learning in developing countries, it tests two alternative proxies: (i) a technology index (TI) to capture a variety of minor activities involved in using imported technologies efficiently; and (ii) the research and development (R&D)-to-sales ratio, which represents formal technological efforts to create new products and processes, often at world frontiers.
    Keywords: prc; innovation; automobiles; electronics
    JEL: F23 L63 O31 O32 O57
    Date: 2012–07–04
  21. By: Dirk Christian Dohse, Robert Hassink, Claudia Klaerding
    Abstract: One of the most significant changes in the global economy today is the strong increase in outgoing foreign direct investment (OFDI) from emerging economies to industrialised countries. Whereas investment in less developed countries is often motivated by the sourcing of natural resources and cheap labour, knowledge and technology-seeking is an increasingly important motive for emerging multinationals investing in developed economies. The current paper is focussed on the role of emerging multinationals as knowledge-transfer agents and pursues three aims: First, to unravel the distinguishing features of emerging multinationals (as compared to ‘traditional’ multinationals), secondly, to critically discuss the usefulness of conventional theoretical concepts in explaining this new phenomenon and thirdly, to launch a research agenda for near-future research on emerging multinationals, with a particular focus on the economic geography of international knowledge flows
    Keywords: emerging multinationals, international knowledge flows, economic geography
    JEL: F21 F23 M16 O33
    Date: 2012–06

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