nep-int New Economics Papers
on International Trade
Issue of 2012‒10‒20
twenty-six papers chosen by
Alessia A. Amighini
University Amedeo Avogadro

  1. Export superstars By Freund, Caroline; Pierola, Martha Denisse
  2. Exporters and importers of services: firm-level evidence on Italy By Stefano Federico; Enrico Tosti
  3. Exporters, Importers and Credit Constraints By Mirabelle Muûls
  4. Cross-Industry Heterogeneity in Export Participation: The Role of Scale Economies in R&D By Ferguson, Shon
  5. Income distribution and vertical comparative advantage Theory and evidence By Hélène LATZER; Florian MAYNERIS
  6. The granular nature of the great export collapse in German manufacturing industries, 2008/2009 By Wagner, Joachim
  7. Are Exporters More Environmentally Friendly than Non-Exporters? Theory and Evidence By Cui, Jingbo; Lapan, Harvey; Moschini, GianCarlo
  8. Carry-Along Trade By Andrew B. BERNARD; Emily J. BLANCHARD; Ilke VAN BEVEREN; Hylke Y. VANDENBUSSCHE
  9. What drives FDI from non-traditional sources? A comparative analysis of the determinants of bilateral FDI flows By Sosa Andrés, Maximiliano; Nunnenkamp, Peter; Busse, Matthias
  10. Credit constraints and exports: Evidence for German manufacturing enterprises By Joachim Wagner
  11. Facilitating international production networks : the role of trade logistics By Saslavsky, Daniel; Shepherd, Ben
  12. Prospects for Services Trade Negotiations By Jeffrey J. Schott; Minsoo Lee; Julia Muir
  13. Skill-biased labor market reforms and international competitiveness By Schmerer, Hans-Jörg
  14. A Global Database of Foreign Affiliate Sales By Fukui, Tani; Csilla Lakatos
  15. On the Volume and Variety of Intra-Bloc Trade in an Expanded European Union By Neil Foster
  16. Exports by Indian Manufacturing SMEs: Regional Patterns and Determinants By Pradhan, Jaya Prakash; Das, Keshab
  17. Financing constraints, firm dynamics, and international trade By Stephane Verani; Till Gross
  18. The new maritime trade world geography. Opportunities for Italy? By Margherita Paradisi
  19. Trade Structure, Transboundary Pollution and Multilateral Trade Liberalization: the Effects on Environmental Taxes and Welfare By Bruno Nkuiya
  20. Import Competition, Domestic Regulation and Firm-Level Productivity Growth in the OECD By Sarra Ben Yahmed; Sean Dougherty
  21. Innovation and Exports of German Business Services Enterprises: First evidence from a new type of firm data By Vogel , Alexander; Wagner, Joachim
  22. Regional Origin of Manufacturing Exports: Inter-State Patterns in India By Pradhan, Jaya Prakash; Das, Keshab
  23. WTO Accession and Performance of Chinese Manufacturing Firms By Brandt, Loren; Van Biesebroeck, Johannes; Wang, Luhang; Zhang, Yifan
  24. Industry dynamics and competition from low-wage countries: evidence on Italy By Stefano Federico
  25. EU-Ukraine DCFTA: the Model for Eastern Partnership Regional Trade Cooperation By Veronika Movchan; Volodymyr Shportyuk
  26. Firms, Destinations, and Aggregate Fluctuations By di Giovanni, Julian; Levchenko, Andrei A.; Mejean, Isabelle

  1. By: Freund, Caroline; Pierola, Martha Denisse
    Abstract: This paper shows that the top 1 percent of exporters critically shape trade patterns, using firm-level data from 32 countries. In particular, variation in average firm size (the intensive margin) explains over two thirds of the variation in the sector distribution of exports across countries, the remaining share is explained by variation in the number of firms (the extensive margin). Variation in average firm size across sectors is largely driven by variation in the sectoral distribution of exports from the top 1 percent of firms in a country -- export superstars. In contrast, the sectoral distribution of exports from the remaining 99 percent of firms is more similar across countries, and the distribution of the total number of firms across sectors is very similar across countries. This paper also finds that current export superstars typically entered the export market relatively large, reached the top 1 percent after less than three years of exporting, and account for more than half of a country's total exports, export growth and diversification. The results underscore the role of individual firms in determining both trade volumes and trade patterns.
    Keywords: Microfinance,Free Trade,Economic Theory&Research,Trade Policy,Small Scale Enterprise
    Date: 2012–10–01
  2. By: Stefano Federico (Bank of Italy); Enrico Tosti (Bank of Italy)
    Abstract: This work contributes to the small but growing body of literature on international trade in services at firm level. Our dataset, based on a new Bank of Italy survey, provides information on exports and imports of services (excluding transportation and travel) in 2008-09 for almost 3,000 Italian industrial and services firms, divided by partner country and type of service. We report a set of stylized facts on trade in services. We also analyze the choice between export and foreign direct investment in services at the firm level, thus innovating with respect to the previous literature using industry data. The main findings are as follows: the export and import of services is highly concentrated in just a few firms; firm-level variation in trade is positively correlated with firm size and productivity; country-level variation is to a large extent explained by the standard gravity variables; distance strongly reduces trade in services in spite of their intangibility; smaller and less productive firms choose to export rather than sell through foreign affiliates.
    Keywords: trade in services, firm heterogeneity, intensive and extensive margin, foreign affliates, export versus FDI
    JEL: F14 F23 L80
    Date: 2012–09
  3. By: Mirabelle Muûls
    Abstract: This paper analyses the interaction between credit constraints and trading behaviour. I construct a unique dataset containing firm-level trade transactions data, balance sheets and credit scores from an independent credit insurance company for Belgian manufacturing firms between 1999 and 2007. Firms are more likely to be exporting or importing if they enjoy lower credit constraints. Also, firms that have better credit rating export and import more, and more products to and from more countries. Whilst importing and exporting behavior are very similar in a static view, an analysis of how various margins of trade are related to credit constraints show a significant difference between the two. In the case of exports, it is the extensive margin of exports in terms of destinations that is significantly associated with credit constraints whereas for imports it is the extensive margin in terms of products.
    Keywords: Credit constraints, international trade, firms’ heterogeneity, imports, exports
    JEL: F10 F14 G01 G20
    Date: 2012–10
  4. By: Ferguson, Shon (Research Institute of Industrial Economics (IFN))
    Abstract: This paper shows that the R&D intensity of an industry plays an important role in determining international trade patterns via its e¤ect on scale economies. I first develop a model of trade with heterogeneous firms where firms compete with each other by spending on fixed product development costs such as R&D. The model predicts that a larger share of firms are exporters in industries where R&D is a large component of total costs. The model also predicts that R&D-intense industries are less sensitive to trade costs. I find empirical support for these predictions using firm-level data for Swedish manufacturing industries. The results also highlight the importance of controlling for firm size when measuring the firm extensive margin of exports.
    Keywords: International Trade; Trade Costs; Endogenous Sunk Costs
    JEL: F12 L11 O30
    Date: 2012–10–05
  5. By: Hélène LATZER (BETA, Université de Strasbourg and Université catholique de Louvain, Institut de Recherches Economiques et Sociales); Florian MAYNERIS (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and Center for Operations Research and Econometrics (CORE))
    Abstract: In this paper, we provide a general model discussing the impact of non-homothetic preferences on the vertical comparative advantage of countries, i.e. the existence of demand-based determinants of the quality content of production and exports. We show that while average income positively impacts the quality mix of a country’s exports, the impact of inequality depends on the shape of the income expansion path of consumption of high quality varieties. Along levels of income where the Engel curve for high-quality varieties is increasing and convex, inequality increases aggregate demand for high quality varieties, more and more rapidly along income. Our empirical results on the quality content of bilateral export flows within the enlarged EU confirm our theoretical predictions. We show that a country’s income distribution has a significant impact on the quality of its exports. Moreover, the impact of inequality on the quality of exports is all the more positive that the exporter is rich. Our estimations are robust to instrumentation and inclusion of controls for supply-side determinants. In a quantification exercise, we show that the positive effect of inequality can be substantial and is magnified when coupled with an increase in average income. This suggests that a growing middle class is decisive for internal demand to drive quality upgrading of production and exports of a country.
    Keywords: Product quality, Income distribution, Trade, Economies of scale
    JEL: F12 L15 O15
    Date: 2012–08–29
  6. By: Wagner, Joachim
    Abstract: This paper uses comprehensive high-quality panel data from official statistics for exporting enterprises to investigate the micro-structure of the recent export collapse in manufacturing industries in Germany during the crisis of 2008/2009. Almost all of the decline in exports was due to negative changes of exports in firms that continue to export (i.e. at the so-called intensive margin) while the decrease of exports due to export stoppers (at the so-called extensive margin) was tiny. It is shown that idiosyncratic shocks to very large firms played a decisive role in shaping the export collapse. --
    Keywords: exports,great trade collapse,granular economy,Germany
    JEL: F14 E23
    Date: 2012
  7. By: Cui, Jingbo; Lapan, Harvey; Moschini, GianCarlo
    Abstract: This paper studies the firm-level relationship between decision to export and environmental performance. To guide the empirical work, we introduce environmental pollution and technology choice into a trade model with heterogeneous firms. The model predicts that a productive firm is more likely to adopt emission-saving technology and to export. Using facility-level criteria air emission data in the U.S. manufacturing industry, for a variety of pollutants, empirical tests are supportive of our two primary theoretical predictions. First, facility productivity is negatively correlated with emission intensity, measured by emissions per value of sales. Second, conditional on the estimated facility productivity and the facility’s exposure to environmental regulation, exporters have lower emission per value of sales than non-exporters within the same industry.
    Keywords: Clean Air Act; export; Facility-Level Pollution; Heterogeneous Firms.
    JEL: F18 Q53 Q56
    Date: 2012–10–12
  8. By: Andrew B. BERNARD (Tuck School of Business at Dartmouth, Hanover and NBER); Emily J. BLANCHARD (Tuck School of Business at Dartmouth, Hanover); Ilke VAN BEVEREN (KU Leuven, Lessius Department of Business Studies); Hylke Y. VANDENBUSSCHE (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: Large multi-product firms dominate international trade flows. This paper documents new facts about multi-product manufacturing exporters that are not easily reconciled with existing multi-product models. Using novel linked production and export data at the firm-product level, we find that the overwhelming majority of manufacturing firms export products that they do not produce. Three quarters of the exported products and thirty percent of export value from Belgian manufacturers are in goods that are not produced by the firm, so-called Carry-Along Trade (CAT). The number of CAT products is strongly increasing in firm productivity while the number of produced products that are exported is weakly increasing in firm productivity. We propose a general model of production and sourcing at multi-product firms. While the baseline model fails to reconcile the relationships between firm productivity and the numbers of exported products observed in the data, several demand and supply-side extensions to the model are more successful. Looking at export price data, we find support for a novel theoretical extension based on demand-scope complementarities
    JEL: F12 F13 F14 L11
    Date: 2012–07–31
  9. By: Sosa Andrés, Maximiliano; Nunnenkamp, Peter; Busse, Matthias
    Abstract: Non-traditional source countries of FDI play an increasingly important role, notably in developing host countries. This raises the question of whether the location choices differ systematically between traditional and non-traditional source countries. We perform Logit and Poisson Pseudo Maximum Likelihood estimations to assess the determinants of bilateral FDI flows. We find that economic geography variables are more relevant for FDI from nontraditional sources. The risk aversion of non-traditional investors is not consistently weaker than that of traditional investors. Resource abundance and superior technology in the host countries represent minor pull factors of FDI from non-traditional sources. --
    Keywords: FDI flows,types of FDI,source-host country pairs,location choices,gravity-type models
    JEL: F21
    Date: 2012
  10. By: Joachim Wagner (Leuphana University Lueneburg, Germany)
    Abstract: This study uses newly available enterprise level data for firms from manufacturing industries in Germany to test for the link between credit constraints, measured by a credit rating score from the leading credit rating agency Creditreform, and exports. In line with hypotheses from theoretical model we find a positive link between a better credit rating score of a firm and both the probability that the firm is an exporter and a higher share of exports in total sales. This link, though statistically highly significant, is not very strong from an economic point of view. While empirical evidence for the hypothesis that credit constrained firms are less likely to start to export is at best weak, we find no evidence for a statistically significant difference in credit rating scores between firms that stopped to export and firms that continued to export.
    Keywords: Credit constraints, exports, Germany
    JEL: F14
    Date: 2012–10
  11. By: Saslavsky, Daniel; Shepherd, Ben
    Abstract: This paper shows that networked trade in parts and components is more sensitive to the importing country's logistics performance than is trade in final goods. In the baseline specification, the difference between the two trade semi-elasticities is around 45 percent, which suggests that the effect is quantitatively important. In addition, the analysis finds that logistics performance is particularly important for trade in the Asia-Pacific region, which is exactly where the emergence of international production networks has been most pronounced over recent years. The results suggest that policymakers can support the development of international production networks by helping improve trade logistics performance.
    Keywords: Free Trade,Economic Theory&Research,Trade Policy,Transport and Trade Logistics,Common Carriers Industry
    Date: 2012–10–01
  12. By: Jeffrey J. Schott (Peterson Institute for International Economics); Minsoo Lee (Asian Development Bank); Julia Muir (Peterson Institute for International Economics)
    Abstract: Trade and investment in services are difficult to measure, and the regulatory barriers that inhibit the free flow of services are hard to quantify. As a result, very little attention has been paid to dismantling barriers to services trade and investment in free trade negotiations. This paper examines what has been achieved in both regional and multilateral compacts by surveying international precedents involving Asian countries which have included services trade reforms. We then assess the prospects for services trade negotiations and explore how services trade negotiations could be pursued over the next decade through two distinct channels: the Trans-Pacific Partnership (TPP) and a plurilateral approach among groups of WTO countries. We find that in the case of developing Asia, free trade agreements have largely excluded services or have only committed to "lock in" current practices in a narrow subset of service sectors. This is also the case in agreements negotiated between developing countries, which have produced less substantial commitments to liberalize services than those negotiated between developing and developed countries. Multilateral negotiations on services have also underperformed, as substantive negotiations on services in the Doha Round never really got underway. We advocate a stronger effort by developing Asian countries to prioritize services negotiations in their regional arrangements, and to expand coverage of services in those pacts to a broad range of infrastructure services that are included in other FTAs in force or under construction in the Asia-Pacific region.
    Keywords: International trade, services, regional trade agreements, Association of Southeast Asian Nations, General Agreement on Trade in Services, Doha Round, Trans-Pacific Partnership, Asia-Pacific
    JEL: F10 F13 F14 F15 F23 F59 G28 H50 H70
    Date: 2012–10
  13. By: Schmerer, Hans-Jörg (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "This paper proposes a multi-industry trade model with integrated capital and goods markets. Labor market imperfections in line with Mortensen and Pissarides (1994) give rise to unemployment and a channel for the government to influence markets through institutional changes. Labor market interventions feedback into the product market through changes in a country's competitiveness. Moreover, the distinction between high- and low-skill workers facilitates the analysis of skill-biased institutional changes that have stronger impact on certain skill groups. The comparative static exercise in this paper shows that high-skilled benefit from low-skill biased labor market reforms through higher wages. Lower labor costs reduce unemployment of the low-skilled and increases the reforming country's competitiveness. One-sided labor market interventions have feedback effects through adjustments at the extensive margin, which affect all workers at home and abroad irrespective of their level of skill. Governments in the non-reforming countries may react to this loss in competitiveness by initiating cooperative labor market reforms instead." (Author's abstract, IAB-Doku) ((en))
    JEL: F16 E24 J6 F21
    Date: 2012–10–08
  14. By: Fukui, Tani; Csilla Lakatos
    Abstract: There is a severe lack of data describing foreign affiliate activity. To fill this gap, we produce a new dataset to further the literature on the behavior of multinational firms. Eurostat’s Foreign Affiliate Statistics database, with a large number of sector-level, bilateral observations on foreign affiliate sales, provides a basis from which to extrapolate the relationship between various host and source country factors and the foreign affiliate activity produced by them. This paper exploits the detailed level of the data by introducing sector-specific variables that in turn permit out of sample predictions. Further, the large number of excess zeros in the Eurostat dataset presents added complexity and is addressed using techniques borrowed from the trade literature, which also experiences a "zeros" problem. The dataset produced in this paper also serves as an input into the GTAP-based FDI model of Lakatos and Fukui (2012). This model integrates the foreign affiliate sales dataset produced in this paper into a framework that permits the analysis of the behavior of foreign affiliates within the context of a general equilibrium model.
    Date: 2012
  15. By: Neil Foster (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: This paper examines the development of exports within the expanded European Union over the period 2000-2007. The paper addresses the issues of how and why within-bloc exports have developed following accession. The paper shows that exports within CEFTA and within other accession countries have grown more quickly than those between old EU members, but that after accounting for traditional gravity determinants there has been no significant change in this behaviour following accession in 2004. As such, this is likely to reflect a natural realignment of trade patterns following the communist era, as well as the relatively stronger performance of the new entrants when compared with existing EU members. The results also indicate that much of the increase in exports within the accession countries has been due to an increase in the variety of products traded, rather than an increase in the volume of existing products.
    Keywords: trade, intensive and extensive margins, gravity model, EU accession
    JEL: F15
    Date: 2012–06
  16. By: Pradhan, Jaya Prakash; Das, Keshab
    Abstract: A unique firm level database was used to shed lights on national and regional patterns of SME export contribution in manufacturing activities. An eclectic conceptual framework for SME export performance was developed based on the reviews of extant theories of international trade, which incorporate firm-, sector-, policy- and region-specific variables. The model was estimated for using the Censored Quantile Regression. SMEs are found to have modest roles in the manufacturing exports from India during 1991–2008 and their exports is mostly dominated by low technology products. Regionally, SME manufacturing exports is heavily concentrated with Southern states alone accounting for half of it during 2000–08, followed by Western India. The export determinant analysis brought to the fore the significance of certain key physical and economic infrastructure for SMEs, particularly access to ports, power, telecommunications and loan finance. Local market conditions, namely the size, growth and per capita income of the host states also favourably affect SME export activities. SMEs are more dependent on foreign technologies for enhancing their exporting rather than in-house R&D. Apart from improving the key business supporting infrastructure, the state policy makers may better enhance export orientation of SMEs by networking them to R&D facilities and providing easier access to information on overseas markets. This is because SMEs are more dependent on foreign technologies for enhancing their exporting rather than in-house R&D. Relatively smaller enterprises need greater support as they are disadvantaged by their size.
    Keywords: Indian SMEs; Exports
    JEL: L11 F10
    Date: 2012–10–08
  17. By: Stephane Verani; Till Gross
    Abstract: There is growing empirical support for the conjecture that access to credit is an important determinant of firms' export decisions. We study a multi-country general equilibrium economy in which entrepreneurs and lenders engage in long-term credit relationships. Financial constraints arise in consequence of financials contracts that are optimal given information asymmetry. Consistent with empirical regularities, as firm age and size increase, the model implies decreasing mean and variance of fi rm growth and increasing fi rm survival. Exporters are larger, their survival in international markets increases with the time spent exporting, and the sales of older exporters are larger and more stable.
    Date: 2012
  18. By: Margherita Paradisi
    Abstract: Nowadays, global trade flows are characterized by new economic trends and changes in the trading composition, the launch of mega-vessels, together with the new role of the Countries involved, are defining a new global geography for maritime transportation. This paper seeks to understand which opportunities Italy can count on, in order to strengthen its role in the international trade flows and particularly in the Mediterranean basin.
    Keywords: feeder port, Italy, giant full containers, maritime transport, port geography
    JEL: L91 R40
    Date: 2012–01
  19. By: Bruno Nkuiya
    Abstract: This paper considers a trade situation where the production activities of potentially heterogeneous countries generate pollution which can cross borders and harm the well-being of all the countries involved. In each of those countries the policy market levies pollution taxes on the polluting firms and a tariff on imports in order to correct that distortion. The purpose of the paper is to investigate the effect of a reduction in the tariff on equilibrium pollution taxes and welfare. The existing literature has investigated this problem for trade between two identical countries. This paper analyzes the problem in the more realistic context where countries are not necessarily identical and trade can be multilateral. It becomes possible to show what bias is introduced when those two realities are neglected. I find that a tariff reduction can actually lower output; it can also lower welfare even if pollution is purely local.
    Keywords: Trade liberalization, Pollution taxes, Transboundary pollution, Heterogeneous countries, Imperfect markets
    JEL: D43 F18 H23 Q58
    Date: 2012
  20. By: Sarra Ben Yahmed; Sean Dougherty
    Abstract: This paper examines how import penetration affects firms' productivity growth taking into account the heterogeneity in firms' distance to the efficiency frontier and country differences in product market regulation. Using firm-level data for a large number of OECD countries, the analysis reveals non-linear effects of both sectoral import penetration and de jure product market regulation measures depending on firms' positions along the global distribution of productivity levels. The heterogeneous effects of international competition and domestic product market regulation on firm-level productivity growth are consistent with a neo-Schumpeterian view of trade and regulation. Close to the technology frontier, import competition has a strongly positive effect on firm-level productivity growth, with stringent domestic regulation reducing this effect substantially. However, far from the frontier, neither import competition nor its interaction with domestic regulation has a statistically significant effect on firm-level productivity growth. The results suggest that insufficient attention has been made in the trade literature to within-firm productivity growth.<P>Concurrence des importations, réglementation interne et croissance de la productivité niveau de l'entreprise dans les pays de l'OCDE<BR>Ce document explore les effets des importations sur la croissance de la productivité des entreprises, tout en tenant compte des différences de positionnement des entreprises par rapport à leur frontière technologique et des différences de réglementation des marchés des biens entre les pays. En utilisant des données de firmes pour un grand nombre de pays de l’OCDE, l’analyse fait apparaître des effets non linéaires des importations ainsi que des dispositions légales concernant les marchés des biens sur la croissance de la productivité des entreprises. Ce résultat est conforme à une conception néo-Schumpétérienne des effets des échanges et de la réglementation sur la productivité. Pour les entreprises proches de la frontière technologique, la concurrence étrangère a un effet fortement positif sur la croissance de la productivité, tandis qu’une réglementation interne stricte réduit sensiblement cet effet. En revanche, pour les entreprises loin de la frontière technologique, ni la concurrence étrangère ni son interaction avec la réglementation nationale n’ont d’effet statistiquement significatif sur la croissance de la productivité. Les résultats obtenus montrent que les analyses désagrégées, au niveau de la firme, sont un terrain prometteur pour la littérature qui a été jusque là davantage centrée sur les réallocations et la croissance au niveau sectoriel.
    Keywords: international trade, product market regulation, import competition, Firm productivity growth, behind-the-border regulatory barriers, échanges internationaux, Croissance de la productivité des entreprises, réglementation nationale des marchés des biens, concurrence étrangère
    JEL: F1 K2 L2 L5 O1
    Date: 2012–09–03
  21. By: Vogel , Alexander (Leuphana University Lueneburg); Wagner, Joachim (Leuphana University Lueneburg and IZA, Bonn)
    Abstract: This paper contributes to the literature by providing the first evidence on the link between innovation activities (measured by the share of engineers and scientists in the workforce) and exports of German business services firms based on a large representative longitudinal sample of enterprises. The data combine for the first time information at the firm-level that is taken from data produced by the Statistical Offices and by the Federal Labour Agency. We document that R&D activities are positively linked with exports, and that this link is present when observed firm characteristics (including firm size, productivity, and human capital intensity) and unobserved time-invariant firm characteristics are controlled for. From an economical point of view the effect is, however, rather small. Furthermore, we find some evidence for self-selection of innovative services firms on export markets. We have to admit, however, that the panel is too short, and that the number of firms that start to export and start to perform R&D during the period under investigation is too small, for any convincing attempt to investigate the direction of the causal link between exports and innovation activities.
    Keywords: Innovation; export; business services; Germany
    JEL: F14
    Date: 2012–10–11
  22. By: Pradhan, Jaya Prakash; Das, Keshab
    Abstract: Regardless of exports’ increasing roles in national and state level economic growth performance, there are hardly any studies that analyze inter-state disparities in export activities. Constructing a unique dataset from a variety of published and unpublished sources of information, the study has estimated state level manufacturing exports for 1991–2008. It is the first ever attempt on estimating state level exports focusing on plant information. The estimation derived with reference to plant size information and covering majority of sub-national entities in India, has offered preliminary but useful findings for furthering policy understanding on inter-state disparities in firms’ export activities.
    Keywords: Manufacturing exports; Indian states
    JEL: O53 O24 F10
    Date: 2012–10–07
  23. By: Brandt, Loren; Van Biesebroeck, Johannes; Wang, Luhang; Zhang, Yifan
    Abstract: China’s policy-makers argued that WTO accession and the accompanying trade liberalization would have a beneficial impact on the domestic economy. China’s import tariffs differed tremendously across industry in the earlier years, but converged to an almost uniform low level after WTO entry. We exploit sectoral variation in the extent of tariff reduction to identify the impact of increased import competition on firm performance and its contribution to the significant productivity growth over the 1995–2007 period. We find evidence of strong downward pressure on prices and mark-ups, but limited evidence that imports took away market share from domestic firms. Furthermore, much of the effects on sectoral productivity come from changes at the extensive margin. Sectors that liberalized most tend to attract especially productive entrants, private firms in particular, which can be rationalized by an increase in the minimum productivity threshold needed to survive in these sectors.
    Keywords: China; Productivity; Tariff; Trade liberalization
    JEL: F13 F14
    Date: 2012–10
  24. By: Stefano Federico (Bank of Italy)
    Abstract: This paper analyses the effect of competition from low-wage countries on domestic activity, using data on 230 Italian manufacturing sectors between 1995 and 2007. We find that low-wage import penetration is negatively related to employment and other measures of activity. The effect is significantly lower in more skill, capital and R&D-intensive sectors and in more vertically differentiated sectors. There is also evidence of significant effects of low-wage competition through inter-industry linkages: employment is negatively related to low-wage import penetration in downstream sectors but positively related to low-wage import penetration in upstream sectors.
    Keywords: import penetration; low-wage country competition; factor proportions; inter-industry linkages.
    JEL: F16 F14 L60 D57
    Date: 2012–09
  25. By: Veronika Movchan; Volodymyr Shportyuk
    Abstract: The EU has been one of the largest trade partners for so called Eastern Partnership (EaP) countries, namely Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine. Commodity turnover of these countries with the EU vary between 30% and 50% of total, but their access to the EU market is less preferential than for many other neighboring countries. They trade with the EU on the basis of MFN regime, and five EaP countries, with exemption of Belarus, use privileges provided by Generalized System of Preferences (GSP) or the GSP+ or autonomous trade preferences (Moldova). With the launch of EaP initiative in 2009, relations between the EU and the Eastern European countries (Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine) have received new impetus for development. The EaP offers upgrade of relations within three major dimensions, namely (a) the Association Agreement (AA), (b) Agreement on a Deep and Comprehensive Free Trade Area (DCFTA), and (c) Visa Facilitation and Readmission agreements. The AA talks have been launched with all EaP countries expect for Belarus, and four of them have been involved in the DCFTA talks. Ukraine has progressed the most, as after five years of negotiations the EU-Ukraine Association Agreement with embedded DCFTA has been initialed in 2012. The aim of this study is to assess gains and losses that could arise from the DCFTA with the EU for the EaP countries, using information about EU-Ukraine DCFTA as model case for EaP regional trade cooperation. The focus of the paper is on non-tariff (regulatory) component of the EU DCFTA and potential implications of regulatory approximation. Also, current level of harmonization of EaP countries’ regulatory framework with the EU acquis in the areas related to the DCFTA is analyzed.
    Keywords: EaP, DCFTA, Regional Integration, Ukraine
    JEL: F15
    Date: 2012–10
  26. By: di Giovanni, Julian; Levchenko, Andrei A.; Mejean, Isabelle
    Abstract: This paper provides a forensic account of the role of individual firms in generating aggregate fluctuations using data covering the universe of French firms for the period 1990–2007. We derive a theoretically-founded set of estimating equations that decompose firms’ annual sales growth rate into different components. The firm-specific component contributes substantially to aggregate sales volatility, mattering about as much as the components capturing shocks that are common across firms within a sector or country. We then decompose the firm-specific component to provide evidence on two mechanisms that generate aggregate fluctuations from microeconomic shocks: (i) when the firm size distribution is fat-tailed, idiosyncratic shocks to large firms contribute to aggregate fluctuations (Gabaix, 2011), and (ii) sizable aggregate volatility can arise from idiosyncratic shocks due to input-output linkages across the economy (Acemoglu et al., 2012). We find that firm linkages are approximately twice as important as granularity in driving aggregate fluctuations.
    Keywords: Aggregate Volatility; Firm-Level Shocks; Large Firms; Linkages
    JEL: E32 F12 F41
    Date: 2012–10

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