|
on International Trade |
| By: | Paola Conconi; André Sapir; Maurizio Zanardi |
| Abstract: | This paper shows that uncertainty can lead firms to follow a gradual internationalizationprocess. We describe a model in which firms are uncertain abouttheir ability to earn profits in a foreign market and must decide whether or notto serve it, and whether to do so through exports or foreign affiliate sales. Weshow that a firm may first test the foreign market via exports, before engagingin foreign direct investment (FDI). To assess the evidence, we exploit a uniquedataset of firm-level exports and FDI in individual destination countries, coveringall Belgian companies over the 1998-2008 period. We show that a firm's FDI entryin a foreign market is almost always preceded by its export entry. More uncertainforeign market conditions lead new exporters to delay FDI entry decisions. Ouranalysis suggests that exports and FDI, although substitutes from a static perspective,may be complements over time, since the knowledge acquired throughexport experimentation can lead firms to start investing abroad. |
| Keywords: | uncertainty; experimentation; exports; FDI |
| JEL: | F10 D21 F13 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:eca:wpaper:2013/139596&r=int |
| By: | Filomena Pietrovito (Universit… del Molise); Alberto Franco Pozzolo (University of Molise, Centro Studi Luca d'Agliano); Luca Salvatici (Universit… di Roma Tre, Dipartimento di Economia) |
| Abstract: | Trade theory traces back different patterns of internationalization to heterogeneity between firms, measured both through differences in productivity levels and size. In this paper we analyze the link between heterogeneity within sectors and internationalization choices, namely trade and foreign direct investments (FDI) for a large sample of countries and industries between 1994 and 2004. The focus of our paper is on the role played by average productivity level and the distribution of firms by size in explaining differences across sectors and countries in the extensive margin of internationalization (i.e., the number of foreign nations where firms from a given sector and country have expanded abroad). By performing an ordered probit analysis, and controlling for other factors affecting the patterns of internationalization, we confirm that industries with higher productivity levels and with a distribution of firms shifted toward large firms are more prone to internationalize in foreign markets through both trade and FDI. Moreover, the relative impact of average productivity and firm size on FDI is larger than that on trade. These results are robust to different measures of productivity and the distribution of firms. |
| Keywords: | distribution of firms, exports, foreign direct investments, mergers and acquisitions, ordered probit, productivity |
| JEL: | D24 F10 F14 F20 F23 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:anc:wmofir:77&r=int |
| By: | Benjamin Bridgman (Bureau of Economic Analysis) |
| Abstract: | This paper provides intangible trade data for an important U.S. export industry during a period when official data are very thin. It examines what modes firms use to export intangible assets. It uses a novel data source that provides very detailed information on export modal choice and market entry costs. Motion picture exporters use different modes of entry across markets. Exporters use more intensive modes, those that require them to pay a higher share of distribution costs, in large markets. Markets with the largest sales are more costly to serve, since they require more extensive sales office networks. While costs are higher in large markets, they are compensated by higher revenue. |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:bea:wpaper:0089&r=int |
| By: | K.C. Fung; Alicia Garcia-Herrero; Mario Nigrinis Ospina |
| Abstract: | Given that commodity export concentration is likely to be unhelpful for economic development, we then ask the question of whether Latin America has been experiencing a more pronounced concentration of such exports. We then use different indicators to measure such concentration. Our measurements show that there may be an increase of commodity concentration exports in the last few years of this decade. This phenomenon leads us to ask the question: is the rise of China partly responsible for such an increase? We then ran formal regressions trying to explain an index of commodity export concentration across countries and over time. We control for standard explanatory variables including the relative price index of commodities, the endowment of commodities, the income effects and the quality of infrastructure. We test our hypothesis for alternative periods and using different econometric methodologies. Our results seem to indicate that there is some evidence of the China effect, i.e. the growing importance of China is positively and significantly related to increased commodity export concentration. |
| Keywords: | Export concentration, China economic rise, Latin America de-industrialization |
| JEL: | F14 F43 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:bbv:wpaper:1306&r=int |
| 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 level dataset, we explore the causal impact of innovation on the manufacturing firm export activity in Turkey. We model process and product innovation as separately - through cost savings and product quality improvements, respectively - affecting the firm profitability and, consequently, the firm export propensity. This modeling choice highlights heterogeneous effects across high and low income destination markets. In a Multiple Propensity Score Matching framework, we, then, test the impact of each innovation activity and of their joint adoption. We find that only the latter fosters the first time entry into exporting, when the destination market is high income. Nevertheless, innovation positively affects the firmexport propensity. New product introduction is more rewarding than process innovation, especially for exporting to lowincome economies. Process innovation, though, strengthens the positive role of product innovation for exporting to more advanced markets. |
| Keywords: | Turkey, export, process innovation, product innovation |
| JEL: | D22 F10 F14 O31 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:anc:wpaper:388&r=int |
| By: | Xuepeng Liu; Emanuel Ornelas |
| Abstract: | We study the relationship between participation in free trade agreements (FTAs) and the sustainability of democracy. Our model shows that FTAs can critically reduce the incentive of authoritarian groups to seek power by destroying protectionist rents, thus making democracies last longer. This gives governments in unstable democracies an extra motive to form FTAs. Hence, greater democratic instability induces governments to boost their FTA commitments. In a dataset with 116 countries over 1960-2007, we find robust support for these predictions. They help to rationalize the rapid simultaneous growth of regionalism and of worldwide democratization since the late 1980s. |
| Keywords: | Regionalism, rent destruction, political regimes, trade liberalization |
| JEL: | F13 D72 F53 F15 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1184&r=int |
| By: | Matt Ferchen; Alicia Garcia-Herrero; Mario Nigrinis Ospina |
| Abstract: | During the last decade, China’s growing economic importance has been considered a blessing for South America, given their still relatively high dependence on the US and commodity exports. However, this positive sentiment is starting to change. Concerns are being raised about potential adverse effects of Chinese demand for raw materials and “excessive†imports of cheap manufactured goods as substitutes of domestic production. In other words, there is a growing fear about extreme export concentration and, in turn, de-industrialization. We explore to what extent South America has become “Sinodependent†and the implications of such dependency. To that end, we create a dependency index and then assess the implications of high Chinese GDP growth rates on South American performance over the last decade. We focus on four countries (Brazil, Argentina, Chile and Peru) and four commodities (iron ore, soy, copper, and ores of non-ferrous metals). We find that each of the countries analyzed has become more exposed to Chinese demand for the commodities in question. In fact, in the past ten years, exposure to Chinese demand measured by our weighted dependency index has risen. This is much more the case for some specific countries and products such as Argentinean soy, Brazilian iron ore and soy, and Chilean copper exports. Despite this increased exposure, we find that Chinese demand has added less than 1 percentage point to GDP growth rates in these four economies in the last years. Although this contribution may be considered bellow expectations, there are secondary effects from the production and export of these commodities not fully captured by the statistics. For any given commodity, there are likely to be spin-off effects in that for any given country, one or two commodities may function as an important engine driving the domestic economy. In turn, any downturn in demand, especially if tied directly to China, would have negative implications beyond the marginal effect on GDP growth that we have calculated here. The combination of hopes and anxieties tied to South America’s decade-long boom in economic relations with China is likely to persist. The honeymoon period of South America-China economic relations may or may not be over, but what is clear is that commodities will continue to underpin the relationship for better or for worse. |
| Keywords: | Commodity exports, Latin America, China, Dependence |
| JEL: | F14 F15 F41 F50 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:bbv:wpaper:1305&r=int |
| By: | OKUBO Toshihiro; TOMIURA Eiichi |
| Abstract: | Exporters are more productive than non-exporters. Although this is a stylized fact, little is known on regional variations within a country. Based on plant-level longitudinal data covering all manufacturing industries in all regions of Japan, this paper finds that the productivity premium of exporters tends to be significantly smaller in regions proximate to the core and in regions with higher market potential. We have also confirmed that our principal findings are consistent with plant-level entry/exit dynamics. The export decision is not completely determined by the firm's own productivity; it is also affected by local market size and export costs. |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:13005&r=int |
| By: | Bouzahzah, Mohamed; El Menyari, Younesse |
| Abstract: | This study proposes to examine the impact of tourism activity on the economic growth of Morocco and Tunisia. We contribute here to the empirical literature on the tourism-led growth (TLG) hypothesis, by adopting the error correction model framework, the cointegration and Granger Causality tests between real tourism receipts, real effective exchange rate and economic growth in Morocco and Tunisia, for the annual period 1980-2010; two main results emerge from this analysis. First, contrary to the predictions of the TLG hypothesis, the Granger test results show that this hypothesis is only valid for short-term in the two countries of Maghreb. Second, the results show that in the long term, there is a strong unidirectional causality from economic growth to international tourism receipts. |
| Keywords: | TLG hypothesis; tourism receipts; economic growth; cointegration; Granger causality; Morocco and Tunisia |
| JEL: | C32 O57 L83 E01 F43 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:44102&r=int |