nep-int New Economics Papers
on International Trade
Issue of 2013‒02‒16
eleven papers chosen by
Alessia A. Amighini
Universita' Amedeo Avogadro

  1. Cost of Trade Impact on Transition Country Exports By Gaytaranov, Jalal A.; Gunter, Lewell F.; Stegelin, Forrest E.
  2. Firm Productivity and Exports in the Wholesale Sector: Evidence from Japan By TANAKA Ayumu
  3. Critical Review of East Asia – South America Trade By Hamanaka, Shintaro; Tafgar, Aiken
  4. Heterogeneous Workers and International Trade By Gene M. Grossman
  5. Multinational Firms and the Structure of International Trade By Pol Antràs; Stephen R.Yeaple
  6. Multilateral Stability and Efficiency of Trade Agreements: A Network Formation Approach By Jorzik, Nathalie; Mueller-Langer, Frank
  7. Dynamic endogenous formation of trade agreements: flexibility versus coordination By James Lake
  8. Preferential market access design: evidence and lessons from African apparel exports to the us and the EU By de Melo, Jaime; Portugal-Perez, Alberto
  9. Time Zones Matter: The Impact of Distance and Time Zones on Services Trade By Elisabeth Christen
  10. Bilateralism and Multilateralism: a Network Approach By PAPACCIO, Anna
  11. Why Some Firms Export? An Empirical Analysis for Manufacturing Firms in the MENA Region By Fakih, Ali; Ghazalian, Pascal L.

  1. By: Gaytaranov, Jalal A.; Gunter, Lewell F.; Stegelin, Forrest E.
    Abstract: This paper reports the results from the estimation of an export determination model for transition countries for 2005-2011. We found that higher internal export fees had small negative impact on exports from countries not adjacent to the EU and that FDI had larger impacts on exports of resource rich countries.
    Keywords: Exports, transition countries, trade facilitation, International Relations/Trade,
    Date: 2013–01–18
  2. By: TANAKA Ayumu
    Abstract: Recent works show that wholesale exporters play a large role in international trade. Wholesalers provide intermediate services for manufacturers and account for a substantial portion of total export values for Italy, Japan, and the United States. This study seeks to provide the first evidence on the link between firm productivity and exports by wholesalers, using Japanese firm-level data. Empirical analysis reveals that wholesale firms are heterogeneous and that exporters are more productive than non-exporters in the wholesale sector, as is seen in the manufacturing sector. In addition, the analysis provides the evidence that exporters with foreign subsidiaries tend to be more productive than those without and that they outperform the latter in terms of other measures such as average exports, export-sales ratio, and the extensive margin of exports. These results are in line with the firm heterogeneity model of exports and are similar with the previous empirical studies on manufacturing.
    Date: 2013–02
  3. By: Hamanaka, Shintaro (Asian Development Bank); Tafgar, Aiken (Asian Development Bank)
    Abstract: There is a general consensus that trade between East Asia and South America is becoming increasingly important. However, we know little about the actual dynamic development of this inter-regional trade. This paper examines whether the trend of East Asia–South America trade is a general phenomena or a country- and commodity-specific issue, and whether the increase in trade values has a solid basis in terms of commodity diversification and/or price and quantity effects. While South America has an overall trade surplus with East Asia, detailed country and commodity analysis of inter-regional trade reveal several potential weaknesses in South America’s trade with East Asia. Our research finds that (i) the increase in trade between the two regions can be explained mainly by the increase in the People’s Republic of China’s (PRC) trade with South America, (ii) the increase in the PRC’s imports from South America is limited to a few commodities, (iii) the increase in East Asia’s imports from South America is due partly to commodity price increases, and (iv) the PRC has started to export various types of electronics and machinery products to South America. Overall, East Asia’s exports to South America seem to show more promising signs of growth than South America’s exports to East Asia.
    Keywords: Regional integration/cooperation; trade policy; inter-regional trade; East Asia trade; South America trade
    JEL: F13 F14 F15 O24
    Date: 2013–01–01
  4. By: Gene M. Grossman
    Abstract: In this paper, I survey the recent theoretical literature that incorporates heterogeneous labor into models of international trade. The models with heterogeneous labor have been used to study how talent dispersion can be a source of comparative advantage, how the opening of trade affects the full distribution of wages, and how trade affects industry productivity and efficiency via its impact on sorting and matching in the labor market. Some of the most recent contributions also introduce labor market frictions to study the effects of trade on structural unemployment and on mismatch between workers and firms.
    JEL: F11 F16
    Date: 2013–02
  5. By: Pol Antràs; Stephen R.Yeaple
    Abstract: This article reviews the state of the international trade literature on multinational firms. This literature addresses three main questions. First, why do some firms operate in more than one country while others do not? Second, what determines in which countries production facilities are located? Finally, why do firms own foreign facilities rather than simply contract with local producers or distributors? We organize our exposition of the trade literature on multinational firms around the workhorse monopolistic competition model with constant-elasticity-of-substitution (CES) preferences. On the theoretical side, we review alternative ways to introduce multinational activity into this unifying framework, illustrating some key mechanisms emphasized in the literature. On the empirical side, we discuss the key studies and provide updated empirical results and further robustness tests using new sources of data.
    JEL: D2 D21 D22 D23 F1 F12 F2 F23 L2
    Date: 2013–02
  6. By: Jorzik, Nathalie; Mueller-Langer, Frank
    Abstract: We study the endogenous network formation of bilateral and multilateral trade agreements by means of hypergraphs and introduce the equilibrium concept of multilateral stability. We consider multi-country settings with a firm in each country that produces a homogeneous good and competes as a Cournot oligopolist in each market. Under endogenous tariffs, we find that the existence of a multilateral trade agreement is always necessary for the stability of the trading system and that the formation of preferential trade agreements is always necessary for achieving global free trade. We also find that global free trade is efficient but not necessarily the only multilaterally stable trade equilibrium when countries are symmetric (heterogeneous) in terms of market size. We derive conditions under which such a conflict between overall welfare efficiency and stability occurs.
    Keywords: Preferential trade; multilateral trade agreements; multilateral stability; GATT; network formation
    JEL: F13 F12 D85 C72
    Date: 2013–02
  7. By: James Lake (Southern Methodist University)
    Abstract: Unlike the previous literature, this paper endogenizes the choice between any type of trade agreement -- Customs Union (CU), Free Trade Agreement (FTA) or Most Favored Nation (MFN) agreement-- and shows how the presence of Preferential Trade Agreements (i.e. CU or FTA) affects the possibility of free trade. The dynamic nature of the model captures an important tradeoff between the equilibrium type of Preferential Trade Agreement (PTA): while CU members coordinate tariffs imposed on nonmembers, individual FTA members have the flexibility of forming future PTAs with nonmembers. CUs can emerge in equilibrium because of this coordination benefit. However, in such cases, CUs may not lead to free trade implying that PTAs can prevent free trade in that free trade will only be attained if PTAs are banned. Nevertheless, a path of FTAs leading to free trade can emerge in equilibrium because of the FTA flexibility benefit. Thus, FTAs play an important role in limiting the destructive role of PTAs. Moreover, surprisingly, FTA free riding incentives strengthen the extent that FTAs limit the destructive role of PTAs.
    Keywords: Preferential Trade Agreement, Free Trade Agreement, Customs Union, coordination, flexibility, free riding, networks, farsighted.
    JEL: C71 F12 F13
    Date: 2013–02
  8. By: de Melo, Jaime; Portugal-Perez, Alberto
    Abstract: Least developed countries rely on preferential market access. Proof of sufficient transformation has to be provided to customs in importing countries by meeting Rules of Origin requirements to benefit from these preferences. These Rules of Origin have turned out to be complicated and burdensome for exporters in the least developed countries. Starting around 2001, under the United States Africa Growth Opportunity Act, 22 African countries exporting apparel to the United States can use fabric from any origin (single transformation) and still meet the criterion for preferential access (the so-called Special Rule), while the European Union continued to require yarn to be woven into fabric and then made into apparel in the same country (double transformation). This paper uses panel estimates over 1996-2004 to exploit this quasi-experimental change in the design of preferences. The paper estimates that this simplification contributed to an increase in export volume of about 168 percent for the top seven beneficiaries or approximately four times as much as the 44 percent growth effect from the initial preference access under the Africa Growth Opportunity Act without the single transformation. This change in design also mattered for diversity in apparel exports, as the number of export varieties grew more rapidly under the Africa Growth Opportunity Act special regime.
    Keywords: Free Trade,Markets and Market Access,Trade Policy,Economic Theory&Research,Debt Markets
    Date: 2013–02–01
  9. By: Elisabeth Christen (WIFO)
    Abstract: Using distance and time zone differences as a measure for coordination costs between service suppliers and consumers, we employ a Hausman-Taylor model for services trade by foreign affiliates. Given the need for proximity in the provision of services, factors like distance place a higher cost burden on the delivery of services in foreign markets. In addition, differences in time zones add significantly to the cost of doing business abroad. Decomposing the impact of distance into a longitudinal and latitudinal component and accounting for differences in time zones, it is possible to identify in detail the factors driving the impact of increasing coordination costs on the delivery of services through foreign affiliates. Working with a bilateral US data set on foreign affiliate sales in services this paper examines the impact of time zone differences and East-West and North-South distance on US outward affiliate sales. Both distance as well as time zone differences have a significant positive effect on foreign affiliate sales. By decomposing the effect of distance our results show that increasing East-West or North-South distance by 100 kilometers raises affiliate sales by 2 percent. Finally, focusing on time zone differences our findings suggest that affiliate sales increase the more time zones we have to overcome.
    Date: 2013–02–08
  10. By: PAPACCIO, Anna (CELPE - Centre of Labour Economics and Economic Policy, University of Salerno - Italy)
    Abstract: The deadlock in the Doha Round and the proliferation of regional and bilateral trade agreements has given rise to a new interest in the potential relationship between regionalism and multilateralism. This paper has two main aims. First, the formation of free trade agreements amongst symmetric and asymmetric countries has been studied by means of the network formation theory. Second, we have focused on the connection between bilateralism and multilateralism and we have evaluated the efficiency of the equilibrium configurations. In order to characterize and distinguish between bilateral and multilateral outcomes we have used two different network stability notions, that is, pairwise stability and strong stability. Moreover, from the analysis of pairwise and strong stability we have also obtained insights on the relationship between bilateralism and multilateralism.
    Keywords: Free Trade Agreements; Multilateralism; Network Formation Games
    JEL: D85 F10 F13
    Date: 2013–01–31
  11. By: Fakih, Ali (Lebanese American University); Ghazalian, Pascal L. (University of Lethbridge)
    Abstract: This paper analyzes the exporting behaviour of manufacturing firms located in the Middle East and North Africa (MENA) region using data from the World Bank's Enterprise Surveys Database. It specifically examines the factors that determine the probability of exporting and the export intensity of these firms. The empirical specification is represented through a country-specific effect model and through a model with country variables. The empirical results reveal significant positive effects of private foreign ownership, information and communication technology, and firm size on the probability of exporting and on export intensity of MENA manufacturing firms. Government ownership and the relative labour compositions of firms in terms of skilled production workers and in terms of non-production workers tend to exert negative effects on firms' propensity to export. The empirical results from the model with country variables underscore the enhancing effects of national economic development factors on the probability of exporting and on export intensity. Also, they indicate that the propensity to export of these firms decreases with larger domestic market size. The empirical analysis reveals considerable variations in the effects of the determining factors when carrying out the estimation for individual countries.
    Keywords: exporting decision, export intensity, probit model, fractional logit model, MENA region
    JEL: F1 F4 F14
    Date: 2013–01

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