nep-int New Economics Papers
on International Trade
Issue of 2012‒11‒03
thirteen papers chosen by
Alessia A. Amighini
University Amedeo Avogadro

  1. Trade Between Similar Countries: The Role of Credit Market Imperfection By Marjit, Sugata
  2. Foreign Trade and FDI in the Austrian Regions – A new methodology to estimate regional trade and an analysis of the crisis effects By Roman Römisch
  3. Isolating the Network Effect of Immigrants on Trade By Aleksynska, Mariya; Peri, Giovanni
  4. Trade Costs, Wage Difference, and Endogenous Growth By TANAKA Akinori; YAMAMOTO Kazuhiro
  5. Imports, exports and the firm product scope: evidence from Turkey By Alessia LO TURCO; Daniela MAGGIONI
  6. Does trade foster employment growth in emerging markets? Evidence from Turkey By Alessia LO TURCO; Daniela MAGGIONI
  7. The Effects of FDI on Domestic Employment and Workforce Composition By TANAKA Ayumu
  8. How Localized is the Pro-trade Effect of Immigration? Evidence from Mexico and the United States By Michael Good
  9. The International Trade Network in Space and Time By Angela Abbate; Luca De Benedictis; Giorgio Fagiolo; Lucia Tajoli
  10. What Drives India’s Outward FDI? By Peter Nunnenkamp; Maximiliano Sosa Andrés; Krishna Chaitanya Vadlamannati; Andreas Waldkirch
  11. There goes gravity : how eBay reduces trade costs By Lendle, Andreas; Olarreaga, Marcelo; Schropp, Simon; Vezina, Pierre-Louis
  12. Easing trade costs within Mercosul By Reiss, Daniel G
  13. Industry and Ownership Structure of Chinese Overseas Direct Investment By Bijun WANG; Yiping HUANG

  1. By: Marjit, Sugata
    Abstract: We build up a simple Ricardian trade model with imperfection in the market for credit which affects the pattern of production. Workers/entrepreneurs are endowed with different levels “capital” and need to borrow to produce the credit intensive good. We argue that in such a framework identical countries will gain from trade without the assumption of comparative advantage.
    Keywords: Trade; Credit Market; Gains from Trade
    JEL: F11
    Date: 2012–08
  2. By: Roman Römisch
    Abstract: Foreign trade and foreign direct investments (FDI) are key elements for economic development and growth of both a country and its regions. This paper focuses on foreign trade and FDI in Austrian regions (Bundesländer). Unfortunately, data on regional trade in Austria is only available on a very limited basis. The aim of this study is to develop new methodologies for the estimation of exports and imports of Austrian regions and analyse the data generated by this methodology. The basic idea is to disaggregate national foreign trade data to the regional level by using national input-output, regional employment and other supplemental data. This allows estimating Austrian regional foreign trade for the years 1999 to 2009. The study shows a large variation in trade among regions. Lower Austria, Upper Austria, Styria and Vorarlberg are the regions with the highest export share. The importance of regional trade increases between 1999 and 2008; the crisis in 2009 had a strong negative impact. Furthermore, the competitiveness of regions differs considerably. Only three regions, Upper Austria, Styria and Vorarlberg, show trade surplus.
    Keywords: Austria, regions, Bundesländer, foreign trade, economic crisis
    JEL: C82 F10 F14 F16 R1 R12 R15
    Date: 2012–10
  3. By: Aleksynska, Mariya (ILO International Labour Organization); Peri, Giovanni (University of California, Davis)
    Abstract: Within the migration-trade nexus literature, this paper proposes a more carefully defined measure of migration business networks, and quantifies its impact on bilateral trade. Using cross-sectional data and controlling for the overall bilateral stock of migrants, the share of migrants employed in managerial/business-related occupations has a strong additional effect on trade, and especially on exports. Those immigrants should be the ones directly involved in the diffusion and transmission of information relevant for companies trading with other countries. Their presence is found to increase the volume of trade beyond the already known effect of immigrants or highly educated immigrants. When we control for the presence of highly educated immigrants, the share of immigrants in business network occupations shows a particularly large effect on trade in differentiated goods. Specifically, we find that highly educated individuals in business-related occupations are those contributing to export by the largest margin. Business network effects seem particularly important in stimulating exports to culturally different countries, such as those with different legal origin.
    Keywords: migration, international trade, business networks, differentiated goods
    JEL: F14 F16 F22
    Date: 2012–10
  4. By: TANAKA Akinori; YAMAMOTO Kazuhiro
    Abstract: In this paper, we develop an endogenous growth model with two countries in which the international trade of differentiated goods requires trade costs and equilibrium wages in the two countries are different. With this model, we show that both wage differences and market size have important effects on the location of manufacturing firms and the innovation sector as well as on economic growth.<br /> First, when trade costs are high, the share of manufacturing firms in the large country increases with a decline in trade costs because of market size. However, the share of firms then decreases with a decline in trade costs when trade costs are low because of wage differences. Finally, all firms agglomerate in the small country, since production costs there are low. In this process, the innovation sector shifts its location from the large-market, high-wage country to the small-market, low-wage country.<br />In this globalization process, growth rates first increase, then decrease, and finally increase with the reduction of trade costs. These results explain the process of the initial high growth of developed countries, location shift of manufacturing firms, and innovation sector from developed to developing countries, which has been observed in recent years.
    Date: 2012–10
  5. 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: Making use of an original firm-product level dataset for Turkish manufacturing, we dissect the role of importing, exporting and the joint involvement in both activities on the firm product scope and new product introduction. Within the bulk of overall exports, we identify and focus on foreign sales of own produced goods. From the comparison between a single and a multiple treatment approach, it emerges that the simultaneous entry in the import and export markets delivers the highest innovation rate. Even if we disclose the existence of important complementarities between the two trade activities, starting to export appears as the real driver of firm product innovation. On the contrary and differently from previous evidence, when moving to a multi-treatment setting, the impact of importing fades away.
    Keywords: Firm trade, Multiple Propensity Score Matching, Single Propensity ScoreMatching, product innovation
    JEL: D22 F14
    Date: 2012–10
  6. 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: This work investigates the impact of importing, exporting and two-way trading on the firm labour demand in Turkish manufacturing. Adopting multiple propensity score matching techniques and Difference in Difference estimator, we support the positive internationalisation effects on the firm employment growth for an emergent country. Our evidence reveals the existence of complementarity effects between exports and imports, which is strengthened for high trade intensity firms. Furthermore, only high intensity exporting seems to promote the workforce skill upgrading, as measured by the R&D worker share. The disclosed employment effect reflects the large positive impact of firminternationalisation on its production scale.
    Keywords: Exporter, Importer, Turkey, Two-way traders, employment, firm growth
    JEL: C41 F14 F16 J62
    Date: 2012–10
  7. By: TANAKA Ayumu
    Abstract: This study uses propensity score matching techniques to examine the effects on domestic employment of Japanese manufacturing, wholesale, and service sector firms that initiated foreign direct investment (FDI) during 2003-2005. Results reveal that, in all three sectors, employment growth was higher among firms that initiated FDI than those that remained exclusively domestic. Moreover, manufacturing firms experienced higher growth in the share of non-regular workers. In addition, empirical results indicate that FDI's positive employment effects were accompanied by positive impacts on overall sales and/or exports. Positive impacts on export sales in manufacturing and wholesale sectors and on overall sales in manufacturing and services sectors were found.
    Date: 2012–10
  8. By: Michael Good (Department of Economics, Florida International University)
    Abstract: I estimate the effect that immigrants have on international trade between states of current residence and states of origin. The pro-trade effect of immigrants has been thoroughly examined since the mid-1990s, connecting both destination countries with origin countries and destination sub-national divisions with origin countries, respectively. However, a recent emphasis on the importance of geographic proximity to the immigration-trade link leads me to pose the question of how localized the trade-enhancing effect of immigrants actually may be. In turn, my analysis provides the ?rst results as to the immigrant-trade nexus at the state level for both places of destination and origin, relying on a unique data set allowing the mapping of Mexican-born immigrants’ US states of residence to Mexican states of origin. I ?nd that immigrants indeed promote trade between their US states of residence and Mexican states of origin, estimating a statistically signi?cant elasticity of exports to immigration equal to 0.08. This ?gure is not only qualitatively but also quantitatively important, corresponding to $2467 extra annual exports between respective US and Mexican states associated with each additional immigrant.
    Date: 2012–10
  9. By: Angela Abbate; Luca De Benedictis; Giorgio Fagiolo; Lucia Tajoli
    Abstract: This paper studies how the structure of the International Trade Network (ITN) changes in geographical space and along time. We employ geographical distance between countries in the world to filter the links in the ITN, building a sequence of sub-networks, each one featuring trade links occurring at similar distance. We then test if the topological properties of ITN subnetworks change as distance increases. We find that distance strongly impacts, in non-linear ways, the topology of the ITN. We show that the ITN is disassortative at long distances while it is assortative at short ones. Similarly, the main determinant of the overall high ITN clustering level are triangular trade triples between geographically close countries. This means that trade partnership choices are differentiated over different distance ranges. Such evidence robustly arises over time and after one controls for the economic size and income of trading partners.
    Keywords: International Trade, Network Analysis, Distance
    Date: 2012–10–22
  10. By: Peter Nunnenkamp; Maximiliano Sosa Andrés; Krishna Chaitanya Vadlamannati; Andreas Waldkirch
    Abstract: We empirically assess the determinants of India’s FDI outflows across a large sample of host countries in the 1996-2009 period. Based on gravity model specifications, we employ Poisson pseudo maximum likelihood (PPML) estimators. Major findings include: India’s outward FDI is hardly affected by motives to access raw materials or superior technologies. Market-related factors appear to have dominated the location choices of Indian direct investors. A larger Indian diaspora in the host countries attracts more FDI. Finally, it seems that Indian direct investors are relatively resilient to weak institutions and economic instability in the host countries. However, we do not find robust evidence that India provides an alternative source of FDI for countries that traditional investors tend to avoid
    Keywords: FDI outflows, gravity model, PPML, India
    JEL: F21
    Date: 2012–10
  11. By: Lendle, Andreas; Olarreaga, Marcelo; Schropp, Simon; Vezina, Pierre-Louis
    Abstract: This paper compares the impact of distance, a standard proxy for trade costs, on eBay and offline international trade flows. It considers the same set of 62 countries and the same basket of goods for both types of transactions, and finds the effect of distance to be on average 65 percent smaller on the eBay online platform than offline. Using interaction variables, this difference is explained by a reduction of information and trust frictions enabled through online technology. The analysis estimates the welfare gains from a reduction in offline frictions to the level prevailing online at 29 percent on average. Remote countries that are little known, with weak institutions, high levels of income inequality, inefficient ports, and little internet penetration benefit the most, as online markets help overcome government and offline market failures.
    Keywords: Economic Theory&Research,Common Carriers Industry,Free Trade,E-Business,Trade Law
    Date: 2012–10–01
  12. By: Reiss, Daniel G
    Abstract: Abstract The paper describes the joint policy of Brazil and Argentina regarding the currency use in bilateral trade. The Local Currency Payment System (SML) framework is investigated as an instrument of reducing trade costs by providing new financial integration mechanisms and its implications according to usual trade issues debate. We cut across different issues related to the SML rationale. Additionally, we describe and analyze the data available for the system showing that the SML use is more common to Brazilian exports than to Argentine ones.
    Keywords: international trade; Mercosul; cost reduction; payment system
    JEL: F13 E42 F53 F36
    Date: 2012–10–23
  13. By: Bijun WANG (China Center for Economic Research); Yiping HUANG (Peking University)
    Abstract: We argue that the industry and ownership structure of Chinese ODI is firstly in-line with the country’s own industrial features and secondly mirrored in the investment motives behind. It is found that large Chinese investors are mainly driven by natural resource seeking and strategic assets seeking, while the SMEs are keen to facilitate Chinese exports. Nevertheless, we expect a different trend in future Chinese ODI as a result of both natural diversification process and the adaption to the transformation of Chinese economy. Key changes include but are not limited to : a much diversified ownership structure, targets and strategies; a decline of relative significance in resource investments; a more focus on consumption materials and needs; a larger weight in moving abroad industries China is losing comparative advantages; and more investments in lucrative services such as finance and insurance, healthcare and education, real estate and entertainment, construction and infrastructure building.
    Keywords: Chinese ODI, industry and ownership structure, SOEs, foreign direct investment
    Date: 2012–10

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