nep-int New Economics Papers
on International Trade
Issue of 2013‒03‒02
fourteen papers chosen by
Alessia A. Amighini
Universita' Amedeo Avogadro

  1. Are low-productive exporters marginal exporters? Evidence from Germany By Joachim Wagner
  2. A Panel Data Analysis of Trade Creation and Trade Diversion Effects: The case of ASEAN-China Free Trade Area (ACFTA) By Shanping Yang; Inmaculada Martínez-Zarzoso
  3. Private Labels and International Trade: Trading Variety for Volume By Emily Blanchard; Tatyana Chesnokova; Gerald Willmann
  4. Estimating the Effects of the Container Revolution on World Trade By Bernhofen, Daniel M.; El-Sahli , Zouheir; Kneller, Richard
  5. Trade, Education, and The Shrinking Middle Class By Emily Blanchard; Gerald Willmann
  6. Gravity, Scale and Exchange Rates By James E. Anderson; Mykyta Vesselovsky; Yoto V. Yotov
  7. Preferential Trade Agreements Proliferation: Sorting out the Effects By Sami Bensassi; José de Sousa; Joachim Jarreau
  8. Trade Preferences from a Policy Perspective By Persson, Maria
  9. Trade and Labour Market Adjustment By Susan Stone; Patricia Sourdin; Clarisse Legendre
  10. How much do tariffs matter? Evidence from the customs union of Belarus, Kazakhstan and Russia By Asel Isakova; Zsoka Koczan; Alexander Plekhanov
  11. Has Globalization Affected Collective Bargaining? An Empirical Test, 1980-2009. By Zohal Hessami; Thushyanthan Baskaran
  12. Estimating the Constraints to Agricultural Trade of Developing Countries By Evdokia Moïsé; Claire Delpeuch; Silvia Sorescu; Novella Bottini; Arthur Foch
  13. Geography and Intra-National Home Bias: U.S. Domestic Trade in 1949 and 2007 By Nicholas Crafts; Alexander Klein
  14. Modelling Firm-Product Level Trade: A Multi-Dimensional Random Effects Panel Data Approach By Daria Pus; László Mátyás; Cecilia Hornok

  1. By: Joachim Wagner (Leuphana University Lueneburg, Germany)
    Abstract: A stylized fact from the emerging literature on the micro-econometrics of international trade and a central implication of the heterogeneous firm models from the new new trade theory is that exporters are more productive than non-exporters. It is argued that this exporter productivity premium is due to extra cost of exporting that can be covered profitably by more productive firms only. Germany is a case in point - exporting firms from manufacturing industries are more productive than non-exporting firms from the same 4-digit industry both on average and over the whole productivity distribution. However, many firms from the lower end of this distribution are exporters. This paper report that these low-productivity exporters are not marginal exporters defined according to the share of exports in total sales, or export participation over time, or the number of goods exported, or the number of countries exported to.
    Keywords: Exports, productivity, low-productive exporters
    JEL: F14
    Date: 2013–02
  2. By: Shanping Yang (Faculty of Economics Sciences, University of Goettingen / Germany); Inmaculada Martínez-Zarzoso (Ibero-America Institute for Economic Research, Goettingen / Germany)
    Abstract: This study uses a theoretically justified gravity model of trade to examine the impact of the ASEAN-China Free Trade Agreement (ACFTA) on exports, focusing on trade creation and diversion effects. The model is tested on a sample of 31 countries over the period dating from 1995 to 2010 using aggregate and disaggregated export data for agricultural raw materials, manufactured goods and chemical products, as well as machinery and transport equipment. In order to obtain unbiased estimates, multilateral resistance terms are included as regressors and the endogeneity bias of the FTA variables is addressed by controlling for the unobserved specific heterogeneity that is specific to each trade flow. The results indicate that ACFTA leads to substantial and significant trade creation. Using disaggregated data, the significant and positive relationship between exports and ACFTA can be confirmed in the case of both manufactured goods and also chemical products.
    Keywords: Gravity Model, Panel Data, Trade Creation and Trade Diversion Effects, ACFTA
    JEL: F14 F15
    Date: 2013–02–19
  3. By: Emily Blanchard; Tatyana Chesnokova; Gerald Willmann
    Abstract: This paper explores the role of pooled-producer, e.g. private label, trade intermediation in shaping the range and diversity of exports. Direct sales maintain a firm's unique product characteristics (`brand equity'), whereas trade through an intermediary can take two forms — either a wholesaling arrangement that (also) maintains the exporter's unique brand but imposes a higher marginal cost (via double marginalization), or a `private label' contract under which the firm's product is pooled with other firms' output and re-sold under a new private label brand created by the intermediary. This paper focuses on the latter, and shows that the availability of the private label option results in greater total export volumes and lower average prices for consumers, but fewer independent varieties available in equilibrium. Welfare implications are mixed: consumers trade variety for volume, firms face greater competition from the new pooled-products, and intermediaries capture much of the gains from trade
    Keywords: Private Labels, Export Mode, Intermediaries, Heterogeneous Firms, International Retailers
    JEL: F13 F16 D72 E60
    Date: 2013–02
  4. By: Bernhofen, Daniel M. (University of Nottingham); El-Sahli , Zouheir (Department of Economics, Lund University); Kneller, Richard (University of Nottingham)
    Abstract: The introduction of containerization triggered complementary technological and organizational changes that revolutionized global freight transport. Despite numerous claims about the importance of containerization in stimulating international trade, econometric estimates on the effects of containerization on trade appear to be missing. Our paper fills this gap in the literature. Our key idea is to exploit time and cross-sectional variation in countries’ adoption of port or railway container facilities to construct a time-varying bilateral technology variable and estimate its effect on explaining variations in bilateral product level trade flows in a large panel for the period 1962-1990. Our estimates suggest that containerization did not only stimulate trade in containerizable products (like auto parts) but also had complementary effects on non-containerizables (like automobiles). As expected, we find larger effects on North-North trade than on North-South or South-South trade and much smaller effects when ignoring railway containerization. Regarding North-North trade, the cumulative average treatment effects of containerization over a 20 year time period amount to about 700%, can be interpreted as causal, and are much larger than the effects of free trade agreements or the GATT. In a nutshell, we provide the first econometric evidence for containerization to be a driver of 20th century economic globalization.
    Keywords: containerization; 20th century global transportation infrastructure
    JEL: F13
    Date: 2013–02–15
  5. By: Emily Blanchard; Gerald Willmann
    Abstract: We develop a new model of trade in which educational institutions drive comparative advantage and determine the distribution of human capital within and across countries. Our framework exploits a multiplicity of sectors and the continuous support of human capital choices to demonstrate that freer trade can induce crowding out of the middle occupations towards the skill acquisition extremes in one country, and simultaneous expansion of middle-income industries in another. Individual gains from trade may be non-monotonic in workers' ability, and middle ability agents can lose the most from trade liberalization. Comparing trade and education policy, we find that targeted education subsidies are more effective than tariffs as a means to preserve "middle class" jobs, while uniform educational subsidies have no effect
    Keywords: Trade and Education Policy, Skill Acquisition, Education, Income Distribution
    JEL: F11 F13 F15 F16
    Date: 2013–02
  6. By: James E. Anderson; Mykyta Vesselovsky; Yoto V. Yotov
    Abstract: We develop a structural gravity model that introduces scale effects in bilateral trade. Scale effects and incomplete passthrough give two channels through which exchange rates have real effects on trade patterns. Estimates from Canadian provincial trade data identify these effects through their interaction with the US border. We find statistically and quantitatively significant economies of scale in cross-border trade in almost 2/3 of sectors. Real effects of exchange rate changes on trade are found for 12 of 19 goods sectors and none of 9 services sectors.
    JEL: F10 F4
    Date: 2013–02
  7. By: Sami Bensassi; José de Sousa; Joachim Jarreau
    Abstract: This paper studies the implications of Preferential Trade Agreements (PTAs) proliferation. Using counterfactual estimation, we disentangle the treatment effect of one PTA on members’ trade and real income, from the externalities created by concurrent trade policy changes. Results, focusing on the MENA region between 2001 and 2007, reveal that the concurrent trade policy changes greatly weakened the trade creation effects of a PTA taken in isolation. However, countries do gain in real income from signing PTAs, even in the cases where trade creation is small; while non-members are negatively impacted. Thus, we confirm that most countries have benefited overall from tariff reductions in our period of study, but we show that this is true only because PTAs proliferate: countries offset adverse effects of non- membership, by signing new agreements with existing PTA members.
    Keywords: International trade;Armington hypothesis;Counterfactual Estimation;Trade creation and diversion
    JEL: F13 F12 F47
    Date: 2013–02
  8. By: Persson, Maria (Department of Economics, Lund University)
    Abstract: The aim of this paper is to offer a comprehensive overview of non-reciprocal trade preferences. Legal and economic aspects are discussed, and in particular, focus is put on how the specific design of preference programs influence whether or not preferences will have their intended effects. The paper starts by summarizing the historical and legal background of non-reciprocal trade preferences, and thereafter discusses how preferences are intended to work from an economic point of view. Further, the paper discusses ways to determine whether or not preferences meet their intended targets, and outlines in some detail how preference programs differ in their design. The question of how trade preferences could have negative effects for recipient and non-recipient countries is explored, and the paper concludes by discussing whether trade preferences will be a useful policy alternative in the future.
    Keywords: Unilateral trade preferences; non-reciprocal trade agreements; GSP
    JEL: F13 F15
    Date: 2013–02–07
  9. By: Susan Stone; Patricia Sourdin; Clarisse Legendre
    Abstract: While it is widely accepted that there are adjustment costs associated with the reallocation of resources in response to freer trade, in most models these costs are assumed to be very small. However, more recent evidence is casting doubt on this assumption. This paper develops a unique dataset based on harmonised labour force surveys for six economies, facilitating the comparison of short term labour market impacts from trade across countries. Data are reported at the individual worker level, allowing a comparison of impacts at both the industry and occupation levels. While the results of this empirical analysis at the industry level are very much in line with established research, the results at the occupation level are more varied. Overall, and as expected, impacts are generally larger for occupations than at the industry level. These results are consistent with modern trade theory which posits that an expanding export sector rewards mostly high skilled workers and that some workers may find it more difficult to switch occupations than to switch industries. Outcomes can also be explained in the context of labour market frictions and highlight the important role of labour market policy – as well as trade policy – in structural adjustment. Our results are consistent with sticky sector-specific human capital and information asymmetries, especially with respect to opportunities in different regions within the same country. A wide range of policies can be employed to address these labour market frictions to improve worker mobility and reduce adjustment costs. Further efforts to specify appropriate policies to accompany trade openness is warranted; doing so would go a long way towards improving employment outcomes and generating more inclusive growth.
    Keywords: unemployment, trade policy, trade, panel analysis, micro data, labour market policies, adjustment, labour market, occupations, labour force survey, duration
    JEL: F16 F23 J08
    Date: 2013–02–07
  10. By: Asel Isakova (EBRD); Zsoka Koczan (University of Cambridge); Alexander Plekhanov (EBRD)
    Abstract: This paper looks at how the formation of a customs union between Belarus, Kazakhstan and Russia and associated changes in import schedules affected the structure of imports of the three member countries. The results suggest that the benefits of the new tariff policy to member countries are limited at best. Larger benefits could come from a gradual removal of non-tariff barriers.
    Keywords: customs union, imports, exports, tariffs, regional integration
    JEL: F14 F15
    Date: 2013–01
  11. By: Zohal Hessami (Department of Economics, University of Konstanz, Germany); Thushyanthan Baskaran (Department of Economics, University of Göttingen, Germany)
    Abstract: Theoretical models predict that globalization changes the nature of collective bargaining. Yet, the extant empirical evidence is inconclusive. We investigate the influence of globalization on three aspects of collective bargaining (degree of decentralization, union density, extent of government intervention) in industrialized and transition countries. Our innovations over the existing empirical literature are (i) the reliance on a more comprehensive dataset (44 countries from 1980 to 2009) and (ii) the use of dynamic panel data estimators. We find that economic globalization has depressed unionization rates, while the extent of decentralization and government intervention in collective bargaining have not been affected.
    Keywords: Globalization, collective bargaining, government intervention, trade unions
    JEL: J5 H11
    Date: 2013–02–26
  12. By: Evdokia Moïsé; Claire Delpeuch; Silvia Sorescu; Novella Bottini; Arthur Foch
    Abstract: Agricultural trade is widely considered as an important contributor to developing countries‘ economic growth, poverty alleviation and food security. This report identifies and analyses some of the most important supply-side constraints to developing countries‘ exports of agricultural products, in order to inform prioritisation and sequencing of domestic policy reforms as well as targeting of donor interventions. The analysis is supplemented by case studies of Aid for Trade programmes supporting agricultural trade expansion in Indonesia, Zambia and Mozambique. The report confirms that developing countries‘ agricultural exports are highly responsive to the quality of transport and trade-related infrastructure, while tariffs still have a significant negative impact. The analysis also highlights the importance of complementary policies such as education and political stability on developing countries‘ agricultural trade performance. In the poorest countries of the sample, significant trade expansion could be achieved by easing constraints related to governance and infrastructure quality, as well as by lifting constraints related to the efficient use of existing freshwater resources. The case studies illustrate the impact on agricultural exports of constraints related to standards and conformity assessment or access to credit, in particular as regards small and medium agricultural producers, processors and traders. They also show the contribution of donor supported programmes promoting private sector initiatives to poverty reduction through increased employment and the promotion of production adapted to local endowments.
    Keywords: developing countries, agricultural trade, poverty reduction, aid for trade, trade expansion, food security, binding constraints
    JEL: F13 O13 O19 Q17
    Date: 2013–01–31
  13. By: Nicholas Crafts; Alexander Klein
    Abstract: This paper examines home bias in U.S. domestic trade in 1949 and 2007. We use a unique data set of 1949 carload waybill statistics produced by the Interstate Commerce Commission, and 2007 Commodity Flow Survey data. The results show that home bias was considerably smaller in 1949 than in 2007 and that home bias in 1949 was even negative for several commodities. We argue that the difference between the geographical distribution of the manufacturing activities in 1949 and that of 2007 is an important factor explaining the differences in the magnitudes of home-bias estimates in those years.
    Keywords: intra-national home bias; spatial clustering; manufacturing belt; gravity equation
    JEL: F14 F18
    Date: 2013–02
  14. By: Daria Pus; László Mátyás; Cecilia Hornok
    Abstract: The paper deals with the problems of formalizing econometric models on firm-product level trade data sets, or similar economic flows. A multi-dimensional random effects panel data approach is adopted. Several models are introduced taking into account different types of specific effects, interactions and cross correlations. The respective covariance matrixes are derived, as well as procedures to estimate the unknown variance and covariance components, in order to make the Feasible Generalized Least Squares estimation operational. Whenever possible, the spectral decomposition of the covariance matrixes is also provided to make the estimation procedure simpler to implement. Both balanced and unbalanced data sets are considered.
    Date: 2013–02–21

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