nep-int New Economics Papers
on International Trade
Issue of 2012‒12‒15
nine papers chosen by
Alessia A. Amighini
University Amedeo Avogadro

  1. Multinational Retailers and Home Country Exports By Angela Cheptea; Charlotte Emlinger; Karine Latouche
  2. Exchange Rate Volatility, Financial Constraints and Trade: Empirical Evidence from Chinese Firms By Jérôme Héricourt; Sandra Poncet
  3. How do Firms in Argentina get Financing to Export? By Tomás Castagnino; Laura D´Amato; Máximo Sangiácomo
  4. Tracing Value-added and Double Counting in Gross Exports By Robert Koopman; Zhi Wang; Shang-Jin Wei
  5. Concording EU Trade and Production Data over Time By Ilke Van Beveren; Andrew B. Bernard; Hylke Vandenbussche
  6. Impact of exchange rate movements on exports: an analysis of Indian non-financial sector firms By Cheung, Yin-Wong; Sengupta, Rajeswari
  7. Native language, spoken language, translation and trade By Jacques Melitz; Farid Toubal
  8. The Offshoring of Production Activities in European Manufacturing By Dachs, Bernhard; Borowiecki, Marcin; Kinkel, Steffen; Schmall, Thomas Christian
  9. Offshoring and Directed Technical Change By Daron Acemoglu; Gino Gancia; Fabrizio Zilibotti

  1. By: Angela Cheptea; Charlotte Emlinger; Karine Latouche
    Abstract: This paper questions whether the overseas expansion of a country’s retailers fosters overall bilateral exports towards these host markets. To address this question, we consider an empirical trade model, where the foreign sales of multinational retailers reduce the fixed and variable trade costs of their conational firms towards the same destination markets. We test our model with data on bilateral exports on a large panel of countries and the foreign sales of world’s largest one hundred retail companies over the 2001-2010 decade. We find a strong positive effect of the overseas presence of retailers of a given country on its exports to those markets. This outcome is far from being trivial, as most products sold in retailers foreign outlets are locally-produced. It testifies that the overseas presence of a country’s retail companies contributes to the reduction of trade costs towards these markets for other firms of the origin country. Our result is robust to different specifications, the use of different sets of instrumental variables and econometric approaches.
    Keywords: International Trade;Multinational Retailers
    JEL: F10 F12 F14 F23
    Date: 2012–12
  2. By: Jérôme Héricourt; Sandra Poncet
    Abstract: This paper studies how firm-level export performance is affected by RER volatility and investigates whether this effect depends on existing financial constraints. Our empirical analysis relies on export data for more than 100,000 Chinese exporters over the period 2000-2006. We confirm a trade-deterring effect of RER volatility. We find that firms tend to export less and fewer products to destinations with higher exchange rate volatility and that this effect is magnified for financially vulnerable firms. As expected, financial development does seem to dampen this negative impact, especially on the intensive margin of export.
    Keywords: Exchange rate volatility;financial development;exports
    JEL: F10 R12 L25
    Date: 2012–12
  3. By: Tomás Castagnino (Central Bank of Argentina); Laura D´Amato (Central Bank of Argentina); Máximo Sangiácomo (Central Bank of Argentina)
    Abstract: This paper delves into the importance of access to financing for the performance of firms in export markets. Based on a unique microeconomic database that combines data on Argentine firms´ characteristics and export performance with information on their domestic and external financing, we provide a rich insight into their financing patterns. Through the use of a descriptive and econometric analysis, we find that: i) having more access to bank credit facilitates firms´ entry into export markets, ii) once they become exporters, it is the access to foreign financing what seems to matters for their success in foreign markets. Also, to study the duration of firms in export markets, we estimate survival functions by firm size, using the Kalpan-Meier estimator. We find that the probability of firms´survival in export markets increases with their size in the earlier years of exporting. Once firms become regular exporters, their permanece in export markets seems to less dependent on their size.
    Keywords: credit constraints, bank credit, international trade
    JEL: F10 F13 G20 G28
    Date: 2012–11
  4. By: Robert Koopman; Zhi Wang; Shang-Jin Wei
    Abstract: This paper proposes a framework for gross exports accounting that breaks up a country’s gross exports into various value-added components by source and additional double counted terms. By identifying which parts of the official trade data are double counted and the sources of the double counting, it bridges official trade (in gross value terms) and national accounts statistics (in value added terms). Our parsimonious framework integrates all previous measures of vertical specialization and value-added trade in the literature into a unified framework. To illustrate the potential of such a method, we present a number of applications including re-computing revealed comparative advantages and the magnifying impact of multi-stage production on trade costs.
    JEL: F10
    Date: 2012–11
  5. By: Ilke Van Beveren; Andrew B. Bernard; Hylke Vandenbussche
    Abstract: This paper provides concordance procedures for product-level trade and production data in the EU and examines the implications of changing product classifications on measured product adding and dropping at Belgian firms. Using the algorithms developed by Pierce and Schott (2012a,b), the paper develops concordance procedures that allow researchers to trace changes in coding systems over time and to translate product-level production and trade data into a common classification that is consistent both within a single year and over time. Separate procedures are created for the eight-digit Combined Nomenclature system used to classify international trade activities at the product level within the European Union as well as for the eight-digit Prodcom categories used to classify products in European domestic production data. The paper further highlights important differences in coverage between the Prodcom and Combined Nomenclature classifications which need to be taken into account when generating combined domestic production and international trade data at the product level. The use of consistent product codes over time results in less product adding and dropping at continuing firms in the Belgian export and production data.
    JEL: C81 F1 L2
    Date: 2012–12
  6. By: Cheung, Yin-Wong; Sengupta, Rajeswari
    Abstract: We explore the real effective exchange rate (REER) effects on the share of exports of Indian non-financial sector firms for the period 2000 to 2010. Our empirical analysis reveals that, on average, there has been a strong and significant negative impact of currency appreciation as well as currency volatility on Indian firms’ export shares. While the firm-level accounting information and other macro variables have limited implications, there is evidence that these Indian firms respond asymmetrically to exchange rates. For instance, the REER change effect is likely to be driven by a negative appreciation effect but not so much a depreciation effect. Also, the Indian firms that have smaller export shares tend to have a stronger response to both REER change and volatility. Compared with those exporting goods, the firms that export services are more affected by exchange rate fluctuations. The findings, especially those on asymmetric responses, have important policy implications.
    Keywords: F1; F4
    JEL: F4 F2 F1
    Date: 2012–12–06
  7. By: Jacques Melitz; Farid Toubal
    Abstract: We construct new series for common native language and common spoken language for 195 countries, which we use together with series for common official language and linguis-tic proximity in order to draw inferences about (1) the aggregate impact of all linguistic factors on bilateral trade, (2) whether the linguistic influences come from ethnicity and trust or ease of communication, and (3) in so far they come from ease of communication, to what extent trans-lation and interpreters play a role. The results show that the impact of linguistic factors, all together, is at least twice as great as the usual dummy variable for common language, resting on official language, would say. In addition, ease of communication is far more important than ethnicity and trust. Further, so far as ease of communication is at work, translation and inter-preters are extremely important. Finally, ethnicity and trust come into play largely because of immigrants and their influence is otherwise difficult to detect.
    Date: 2012
  8. By: Dachs, Bernhard; Borowiecki, Marcin; Kinkel, Steffen; Schmall, Thomas Christian
    Abstract: We investigate production offshoring – the relocation of production activities to locations abroad – of European firms. The analysis employs data from the European Manufacturing Survey (EMS). Offshoring activity is declining across most countries, sectors, and firm sizes between the periods 2004/06 and 2007/09. Regression analysis reveals that this decline is also significant after controlling for firm characteristics. Long-term data for Germany indicate that this decrease is part of a longer trend which already started in 2003. Despite the general decrease in offshoring, far-shoring to Asia in general and to China in particular has increased. In contrast, near-shoring to EU member states in Middle and Eastern Europe (EU-12) became less attractive. The EU-12, however, is still the most important target region for offshoring activities of European firms. The dominant motive for offshoring is the wish to reduce labour costs. Expected labour cost reductions explain offshoring to the EU-12, Asia and China in particular. Vicinity to customers and market expansion follow as a motive with a wide margin. However, in contrast to the EU-12, where the offshoring decision is solely dominated by potential labour cost savings, offshoring activities to Asia and China are also significantly related to market expansion motives.
    Keywords: Offshoring; foreign direct investment; internationalisation; production
    JEL: F23 F21
    Date: 2012–12
  9. By: Daron Acemoglu; Gino Gancia; Fabrizio Zilibotti
    Abstract: To study the short-run and long-run implications on wage inequality, we introduce directed technical change into a Ricardian model of offshoring. A unique final good is produced by combining a skilled and an unskilled product, each produced from a continuum of intermediates (tasks). Some of these tasks can be transferred from a skill-abundant West to a skill-scarce East. Profit maximization determines both the extent of offshoring and technological progress. Offshoring induces skill-biased technical change because it increases the relative price of skill intensive products and induces technical change favoring unskilled workers because it expands the market size for technologies complementing unskilled labor. In the empirically more relevant case, starting from low levels, an increase in offshoring opportunities triggers a transition with falling real wages for unskilled workers in the West, skill-biased technical change and rising skill premia worldwide. However, when the extent of offshoring becomes sufficiently large, further increases in offshoring induce technical change now biased in favor of unskilled labor because offshoring closes the gap between unskilled wages in the West and the East, thus limiting the power of the price effect fueling skill-biased technical change. The unequalizing impact of offshoring is thus greatest at the beginning. Transitional dynamics reveal that offshoring and technical change are substitutes in the short run but complements in the long run. Finally, though offshoring improves the welfare of workers in the East, it may benefit or harm unskilled workers in the West depending on elasticities and the equilibrium growth rate.
    JEL: F43 O31 O33
    Date: 2012–12

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