nep-int New Economics Papers
on International Trade
Issue of 2012‒12‒10
nine papers chosen by
Alessia A. Amighini
University Amedeo Avogadro

  1. Input Trade and Job Flows By José Luis Groizard; Priya Ranjan; José Antonio Rodríguez-López
  2. Cross-Border Mergers and Greenfield Foreign Direct Investment By Ignat Stepanok
  3. International Experience in Export Promotion By Nadezhda Volovik; Sergey Prikhodko; Alexander Pakhomov
  4. International trade and economic growth in Mexico By Fullerton, Thomas M., Jr.; Kababie, Kababie; Boehmer, Charles R.
  5. Export dynamics and sales at home. By Berman, N.; Berthou, A.; Héricourt, J.
  6. Innovation, Exports and Productivity: Learning and Self selection in Chile By Claudio Bravo-Ortega; Jose Miguel Benavente; Álvaro González
  7. Determinants of Greenfield Investment in Knowledge Intensive Business Services By Martin Falk
  8. Cross-border M&As vs. Greenfield Investments: Does Corruption Make a Difference? By Ayca, Tekin-Koru

  1. By: José Luis Groizard (Universitat de les Illes Balears); Priya Ranjan (University of California Irvine); José Antonio Rodríguez-López (University of California Irvine)
    Abstract: We present theory and evidence of the impact of input trade costs on job flows. We construct a heterogeneous-firm model of trade in intermediate inputs that derives effects of input trade costs on both the extensive (due to births and deaths of firms) and intensive (due to expansions and contractions of firms) margins of employment. After a decline in input trade costs, the model predicts job destruction by death and contraction for non importing firms, an ambiguous response for importing firms, a decline in the number of firms, and overall job destruction. Using a longitudinal database containing the universe of manufacturing establishments in California from 1992 to 2004, we find the relationship between job flows and input trade costs to be largely consistent with the theoretical predictions of our model. .
    Keywords: input trade costs, offshoring, heterogeneous firms, job flows
    JEL: F12 F14 F16
    Date: 2012
  2. By: Ignat Stepanok
    Abstract: I present a model of international trade and foreign direct investment (FDI), where FDI is comprised of greenfield FDI and mergers and acquisitions (M&A). Working in a monopolistically competitive environment, merging firms do not reduce competition. Mergers are motivated by efficiency gains and transfer of technology and expertise. Following empirical evidence, I model greenfield investors as the more productive group relative to M&A firms, which are in turn more productive than exporters. The model has two symmetric countries and generates two-way flows of both M&A and greenfield FDI. Greater proximity to a market makes more firms choose greenfield FDI over M&A when investing there. Empirical evidence supports this result
    Keywords: Foreign direct investment, mergers, acquisitions, greenfield, firm heterogeneity
    JEL: F12 F23
    Date: 2012–11
  3. By: Nadezhda Volovik (Gaidar Institute for Economic Policy); Sergey Prikhodko (Gaidar Institute for Economic Policy); Alexander Pakhomov (Gaidar Institute for Economic Policy)
    Abstract: Over recent years Russia has actually become a monoculture exporter: three types of energy resources (crude oil, oil products and natural gas) ensure about 60% of the overall export volume. In the circumstances of such high export concentration over a small group of commodities, Russia’s room for maneuver regarding foreign economic ties becomes significantly narrower and its vulnerability with respect to negative changes towards global fluctuations is growing significantly.
    Keywords: international trade, exports, Russian economy
    JEL: F10 F13 F19
    Date: 2012
  4. By: Fullerton, Thomas M., Jr.; Kababie, Kababie; Boehmer, Charles R.
    Abstract: This study empirically examines on the role of international trade on economic growth in Mexico. To allow for potentially dynamic, as well as endogenous, patterns often associated with exports, imports, and growth, the analysis relies upon time series approaches involving causality and vector error correction methods. Results indicate that imports play a more critical role than exports do for economic growth in Mexico. As such, the outcomes contribute to the growing body of international evidence regarding import led growth in the global economy.
    Keywords: International Trade; Growth; Mexico; Dynamic Models
    JEL: O54 F43
    Date: 2012–09–11
  5. By: Berman, N.; Berthou, A.; Héricourt, J.
    Abstract: How do firms' sales interact across markets? Are foreign and domestic sales complements or substitutes? Using a large French firm-level database that combines balance-sheet and product-destination-specific export information over the period 1995-2001, we study the interconnections between exports and domestic sales. We identify exogenous shocks that affect the firms' demand in foreign markets to instrument yearly variations in exports. We use alternatively as instruments product-destination specific imports or tariffs changes, and large foreign shocks such as financial crises or civil wars. Our results show that exogenous variations in foreign sales are positively associated with domestic sales, even after controlling for changes in domestic demand. A 10% exogenous increase in exports generates a 1.5 to 3% increase in domestic sales in the short-term. This result is robust to various estimation techniques, instruments, controls, and sub-samples. It is also supported by the natural experiment of the Asian crisis in the late 1990's. We discuss various channels that may explain this complementarity.
    Keywords: Export dynamics, domestic sales, liquidity.
    JEL: F10 F44 L20
    Date: 2012
  6. By: Claudio Bravo-Ortega; Jose Miguel Benavente; Álvaro González
    Abstract: Since long ago economists have shown that research and development (R&D) and business innovation are key factors for the growth of firms and the development of the economies. There is also some consensus that greater degrees of trade openness are beneficial for the long-term growth of countries. Nonetheless, there is still no evidence on the combined impact of both factors even though the link between them seem of particular relevance, especially for developing countries. This article examines the relationship between productivity, expenditure in R&D and exports at a plant level for the case of Chile. The main results show that firms that actually spend on R&D are considerably more likely to export but the reverse is not true. Moreover, we observe that both R&D and exports have a joint effect on the improvement in productivity in the Chilean plants. These results allow us to recover the private return to R&D and to learning by exporting across different sectors.
    Date: 2012–12
  7. By: Martin Falk
    Abstract: This study investigates the determinants of bilateral Greenfield FDI projects and flows in knowledge intensive business services from OECD/BRIC countries to the EU countries for the period 2003-2010. Greenfield FDI projects are distinguished by type of activity: (i) business services, (ii) design, development and testing activities, (iii) headquarters activities and (iv) R&D services. Another aim of this study is to provide new empirical evidence on the patterns of Greenfield investments in knowledge intensive business services over time, source country and destination country. For Austria, the number of Greenfield investments in headquarter functions remains stable over time whereas Greenfield investments in R&D and related activities declined during the sample period. The same holds true for the number of jobs generated through greenfield investments. The results using panel count data models show that wage costs, tertiary education, corporate taxes, having a common border and sharing a common language all play a significant role in determining bilateral Greenfield FDI projects in knowledge intensive services. However, the impact of corporate taxation and labour costs differs widely across the functions and does not play a role in Greenfield investments in R&D and development, design and testing services.
    Keywords: Greenfield foreign direct investment, knowledge intensive business services, headquarter functions, R&D activities, gravity equation, panel data, FDI determinants
    JEL: F23
    Date: 2012–12
  8. By: Ayca, Tekin-Koru
    Abstract: This paper disentangles the effects of corruption on entry mode decision by carrying out an empirical analysis with rich, firm-level data on the activities of Swedish MNCs around the globe in manufacturing sectors from 1987 to 1998. A number of hypotheses emerge from a simple theoretical framework. The panorama of the results from the empirical part supports these hypotheses: (i) Corruption has a direct negative impact on greenfield investments and a weak positive impact on M&As. (ii). There are complex, asymmetric, secondary effects of corruption on the mode of entry. (iii). International experience dampens the effects of corruption on the choice of entry. (iv) The results are robust to differences in measures of corruption.
    Keywords: Corruption; Foreign direct investment; Multinational firms; M&As; Greenfield investments
    JEL: F23
    Date: 2012–10
  9. By: Amelia U. Santos-Paulino
    Abstract: The paper surveys the theoretical and empirical research on how trade and trade liberalization affect poverty and income distribution. The impact of globalization on poverty reduction has been uneven but the findings in the literature are sensitive to modelling choices. Trade liberalization improves aggregate welfare but the gains are small and unequally distributed. The welfare effects are measured basically through price changes, focusing on the effect on the relative demand for domestic factors of production and, in particular, the demand for skilled relative to unskilled labour. The literature shows that poverty constraints originate from various sources including infrastructure, skills, incomplete markets, and policy.
    Date: 2012

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