nep-int New Economics Papers
on International Trade
Issue of 2013‒03‒23
sixteen papers chosen by
Alessia A. Amighini
Universita' Amedeo Avogadro

  1. Product Standards and Margins of Trade: Firm Level Evidence By Lionel Fontagné; Gianluca Orefice; Roberta Piermartini; Nadia Rocha
  2. Estimating the elasticity of trade: the trade share approach By Mauro Lanati
  3. Similarity of income distributions and the extensive and intensive margin of bilateral trade flows By Claudia Bernasconi
  4. From Mine to Coast; Transport infrastructure and the direction of trade in developing countries By Roberto Bonfatti; Steven Poelhekke
  5. Trade Theory with Numbers: Quantifying the Consequences of Globalization By Arnaud Costinot; Andrés Rodríguez-Clare
  6. Examining the non-linear relationship between migration and trade By Guadalupe Serrano-Domingo; Francisco Requena-Silvente
  7. Intellectual Property Rights and Skills Accumulation: A North-South Model of FDI and Outsourcing By Chen, Hung-Ju
  8. The Implications of Natural Resource Exports for Non-Resource Trade By Torfinn Harding; Anthony J Venables
  9. Adding Input Demands to Partial Equilibrium Agricultural Trade Models By Zeitsch, John
  10. Exchange rate pass-through, firm heterogeneity and product quality: a theoretical analysis By Zhi Yu
  11. The roots of export diversification By Michael Jetter; Andrés Ramírez Hassan
  12. Spatial Equilibrium Modelling of Trade in Quasi-homogeneous Commodities: The Case of Wool By Byombalirwa, Emmanuel R.
  13. Liquefied Natural Gas Exports: An Opportunity for America By Gary Clyde Hufbauer; Allie E. Bagnall; Julia Muir
  14. External competitiveness of EU candidate countries By Lucia Orszaghova; Li Savelin; Willem Schudel
  15. Endogenous Structure of Cities: Trade, Commuting, Communication By Sidorov Alexander
  16. International Knowledge Spillovers through High-Tech Imports and R&D of Foreign-Owned Firms By Heike Belitz; Florian Mölders

  1. By: Lionel Fontagné; Gianluca Orefice; Roberta Piermartini; Nadia Rocha
    Abstract: This paper analyses the trade effects of restrictive product standards on the margins of trade for a large panel of French firms. To focus on restrictive product standards only, we use a new database compiling the list of measures that have been raised as concerns in dedicated committees of the WTO. We restrict our analysis to the subset of Sanitary and Phyto-Sanitary (SPS) regulatory measures and analyse the effects of product standards on three variables: (i) probability to export and to exit the export market (firm-product extensive margins), (ii) value exported (firm-product intensive margin) and (iii) export prices. In particular we study whether firms size, market shares and export orientation modify the effect of SPS measures. We find that SPS measures discourage exports. We also find a negative effect of SPS imposition on the intensive margins of trade. Finally, the negative effects of SPS measures on the extensive and intensive margins of trade are attenuated for big firms.
    Keywords: International trade;firm heterogeneity;multi-product exporters;non-tariff barriers
    JEL: F12 F15
    Date: 2013–02
  2. By: Mauro Lanati
    Abstract: Recent theoretical work on international trade emphasizes the importance of trade elasticity as the fundamental statistic needed to conduct welfare analysis. Eaton and Kortum (2002) proposed a two-step method to estimate this parameter, where exporter fixed effects are regressed on proxies for technology and wages. Within the same Ricardian model of trade, the trade share provides an alternative source of identication for the elasticity of trade. Following Santos Silva and Tenreyro (2006) both trade share and EK models are estimated using OLS and Poisson PML to test for the presence of heteroskedasticity-type-of-bias. The evidence from both specifications suggests that the bias in the OLS estimates significantly impacts the magnitude of trade cost elasticity. The welfare analysis reveals that the resulting extreme variability of the trade cost elasticity and the imposition of a common manufacturing share parameter for all countries generate substantial distortions in the calculation of benefits from trade. Key words: Multinational corporations, spillovers, human rights, developing countries.
    Keywords: trade cost elasticity, gravity model, competitiveness equation, trade share,gains from international trade.
    JEL: F10 F11 F14
    Date: 2013–03–01
  3. By: Claudia Bernasconi
    Abstract: This paper investigates empirically how similarity of demand structures - approximated by similarity of income distributions - affects trade patterns along both the extensive and intensive margin. The idea that similarity of demand structures intensifies trade goes back to the well-known Linder hypothesis. Based on a sample of 102 countries, I find that bilateral trade volumes are increasing in the overlap of two countries income distributions. This effect is driven by both the extensive and intensive margin. I establish two novel measures of income similarity - the average income level of the overlap area and the range of incomes for which two distributions overlap - and document that both are important determinants of bilateral trade margins. My analysis shows that the positive relationship between similarity of income distributions and bilateral trade margins is present at the aggregate and disaggregate level of trade flows.
    Keywords: Similarity of income distributions, Linder hypothesis, nonhomothetic preferences, extensive and intensive margin of trade, gravity equation
    JEL: F10 D31 F14
    Date: 2013–02
  4. By: Roberto Bonfatti; Steven Poelhekke
    Abstract: Mine-related transport infrastructure specializes in connecting mines to the coast, and not so much to neighboring countries. This is most clearly seen in developing countries, whose transport infrastructure was originally designed to facilitate the export of natural resources in colonial times. We provide first econometric evidence that mine-to-coast transport infrastructure matters for the pattern of trade of developing countries, and can help explaining their low level of regional integration. The main idea is that, to the extent that it can be used not just to export natural resources but also to trade other commodities, this infrastructure may bias a country's structure of transport costs in favor of overseas trade, and to the detriment of regional trade. We investigate this potential bias in the context of a gravity model of trade. Our main ndings are that coastal countries with more mines import less than average from their neighbors, and this effect is stronger when the mines are located in such a way that the related infrastructure has a stronger potential to affect trade costs. Consistently with the idea that this effect is due to mine-to-coast infrastructure, landlocked countries with more mines import less than average from their non-transit neighbors, but more then average from their transit neighbors. Furthermore, this effect is specific to mines and not to oil and gas fields, arguably because pipelines cannot possibly be used to trade other commodities. We discuss the potential welfare implications of our results, and relate these to the debate on the economic legacy of colonialism for developing countries.
    Keywords: Mineral Resources, Transport Infrastructure, Regional Trade Integration, Gravity Model, Economic Legacy of Colonialism
    JEL: F14 F54 Q32 R4
    Date: 2013
  5. By: Arnaud Costinot; Andrés Rodríguez-Clare
    Abstract: We review a recent body of theoretical work that aims to put numbers on the consequences of globalization. A unifying theme of our survey is methodological. We rely on gravity models and demonstrate how they can be used for counterfactual analysis. We highlight how various economic considerations—market structure, firm-level heterogeneity, multiple sectors, intermediate goods, and multiple factors of production—affect the magnitude of the gains from trade liberalization. We conclude by discussing a number of outstanding issues in the literature as well as alternative approaches for quantifying the consequences of globalization.
    JEL: F11 F12 F13 F15 F17
    Date: 2013–03
  6. By: Guadalupe Serrano-Domingo (University of Valencia); Francisco Requena-Silvente (University of Valencia)
    Abstract: The migration-trade link has been studied extensively since the mid nineties, finding a positive impact through different channels. Based on the generalized propensity score (GPS) methodology, we estimate a dose-response function, depicting a non-linear impact of immigration on exports using regional data for Spain and Italy. For both countries the elasticity of province exports to immigration from a given nationality is always positive. However, it is magnitude varies with the level of immigrants: increasing with less than 100 immigrants; decreasing between 100 and 1500; increasing again with more than 1500. In contrast to previous studies that use country-level data, we find no exhaustion point in the effectiveness of the immigration networks on regional exports.
    Keywords: Immigration, exports, generalized propensity score, dose-response function, Spanish provinces, Italian provinces
    JEL: C21 F14 F22
    Date: 2013–03
  7. By: Chen, Hung-Ju
    Abstract: This study investigates the effects of stronger intellectual property rights (IPR) protection in the South on innovation, skills choice, wage inequality and patterns of production based on a North-South general-equilibrium model with foreign direct investment (FDI) and international outsourcing. We find that stronger IPR protection in the South raises the extent of outsourcing and reduces the extent of FDI. This raises the proportion of Southerners being unskilled and mitigates wage inequality in the South. In the North, stronger Southern IPR protection raises the proportion of Northerners being skilled and wage inequality. The effects of international specialization, R&D cost and Northern population are also examined.
    Keywords: FDI; Outsourcing; Quality ladder; Skill; Wage inequality.
    JEL: F12 F23 O31
    Date: 2013–03–14
  8. By: Torfinn Harding; Anthony J Venables
    Abstract: Foreign exchange windfalls such as those from natural resource revenues change non-resource exports, imports, and the capital account. We study the balance between these responses and, using data on 41 resource exporters for 1970-2006, show that the response to a dollar of resource revenue is, approximately, to decrease non-resource exports by 75 cents and increase imports by 25 cents, implying a negligible effect on foreign saving. The negative per dollar impact on exports is larger for countries which have good institutions and higher income levels. These countries have a higher share of manufacturing in their non-resource exports, and we show that manufactures are more susceptible than other products to being crowded out by resource exports.
    Keywords: natural resources, Dutch disease, resource curse, trade, exports, imports
    JEL: E21 E62 F43 H63 O11 Q33
    Date: 2013
  9. By: Zeitsch, John
    Keywords: International Relations/Trade,
    Date: 2013–02–21
  10. By: Zhi Yu
    Abstract: This paper theoretically explores how exchange rate pass-through depends on firm heterogeneity in productivity and product differentiation in quality. Using an extended version of the Melitz and Ottaviano (2008) model, I show that exporting firms absorb exchange rate changes by adjusting both their markups and product quality, which leads to an incomplete exchange rate pass-through. Moreover, the absolute value of exchange rate absorption elasticity (the percentage change in the export prices denominated in the currency of the exporting country in response to a one percent change in the exchange rate rate) negatively depends on firm productivity for products with high scope for quality differentiation, but positively depends on firm productivity for products with low scope for quality differentiation.
    Keywords: Trade ; Markets
    Date: 2013
  11. By: Michael Jetter; Andrés Ramírez Hassan
    Abstract: Countries with diversi ed export baskets take advantage of various bene ts, which are said to foster and stabilize economic growth directly and through indirect channels (e.g. reduced income volatility, positive externalities, spillover e ects). This is especially important in the context of developing economies. However, identifying the true determinants of export diversifi cation is di cult as there exists no comprehensive theoretical or empirical framework to capture all potential factors in their entirety. This paper uses Bayesian Model Averaging to uncover the true long-term roots of export diversi cation among 43 potential determinants,and thus 2 potential models. Our results suggest that only four factors are important in predicting export diversi cation levels over the long run: natural resource rents as a percentage of GDP (100 % posterior inclusion probability), primary school enrollment rates (96 %), population size (25 %), and foreign direct investment levels (17 %). Many prominent candidates turn out to be insigni cant in determining diversi cation levels. Neither policy-related variables (e.g. tari s, freedom from trade regulations or democracy) nor macroeconomic factors (such as trade openness, terms of trade or domestic investment levels) nor geographical remoteness (whether the country is an island or landlocked) play a role. Various robustness checks con rm our results.
    Date: 2013–01–21
  12. By: Byombalirwa, Emmanuel R.
    Keywords: International Relations/Trade,
    Date: 2013–03–04
  13. By: Gary Clyde Hufbauer (Peterson Institute for International Economics); Allie E. Bagnall (Peterson Institute for International Economics); Julia Muir (Peterson Institute for International Economics)
    Abstract: Prohibitions or restrictions on US exports of liquefied natural gas (LNG) are a bad idea. LNG exports will deliver economic benefits to the US economy. The US Department of Energy should approve pending LNG export applications for projects at an advanced planning stage, in conjunction with appropriate regulation to limit environmental dangers from wells to ports. Three strong considerations support this recommendation: (1) The United States regularly opposes export restraints on natural resources by other countries; (2) contrary action by the United States would violate World Trade Organization rules and lead foreign nations to ignore the rules as well; and (3) LNG export restrictions would contradict the Obama administration’s stated goal of growing US exports.
    Date: 2013–02
  14. By: Lucia Orszaghova (European Central Bank; Národná banka Slovenska); Li Savelin (European Central Bank); Willem Schudel (European Central Bank)
    Abstract: As the current financial crisis has shown, macroeconomic imbalances such as persistent current account and trade deficits, can seriously undermine a country’s resilience to economic shocks. Maintaining and enhancing external competitiveness has thus become of increasing concern, particularly to European Union (EU) candidate countries whose economic growth models have been challenged in recent years. Drawing on previous studies, this paper assesses developments in the external competitiveness of EU candidate countries between 1999 and 2011. Taking a broad approach to the issue of competitiveness, the paper considers various indicators of both short and long-term competitiveness, including those related to domestic prices and costs, export performance, and institutional and structural issues. In the context of EU integration, comparisons are drawn with developments in the EU12. We find that, during the pre-crisis period, all candidate countries experienced robust export market growth, but also suffered losses in price and cost competitiveness. In terms of export characteristics, progress has been heterogeneous and also fairly slow when compared with the EU12. All candidate countries have increased their number of export products and trading partners, but only a few have been able to export more complex products. As regards structural issues such as corruption and bureaucratic efficiency, all countries have performed quite poorly with the exception of Iceland. JEL Classification: F1, F43, O52, P22
    Keywords: EU candidate countries, external competitiveness, export growth, export specialisation, export product complexity, extensive and intensive margins, intra-industry trade, foreign direct investment, structural characteristics
    Date: 2013–01
  15. By: Sidorov Alexander
    Abstract: The purpose of paper is to investigate how the interplay of trade, commuting and communication costs shapes economy at both inter-regional and intra-urban level. Specifically, we study how trade affects the internal structure of cities and how decentralizing the production and consumption of goods in secondary employment centers allows firms located in a large city to maintain their predominance. The feature of approach is using of two-dimensional city pattern instead of the “long narrow city” model.
    JEL: F12 F22 R12 R14
    Date: 2013–11–03
  16. By: Heike Belitz; Florian Mölders
    Abstract: The international transmission of knowledge through import spillovers, as a source of TFP growth, has received much attention in the literature. We investigate two additional direct channels through which R&D disseminates: the import of high-technology goods and the internationalization of business R&D. Building on an extensive dataset, covering both developing and industrial countries, we add foreign owned patents as a proxy for R&D activities of multinationals. While we confirm the significance of import spillovers for all countries included, we find additional spillovers for developing countries through the import of high-technology goods. Only developed economies seem to benefit from the diffusion of knowledge that originates through cross-border cooperation in R&D by multinationals.
    Keywords: Productivity growth, technology diffusion, multinational enterprise
    JEL: F14 F23 O47
    Date: 2013

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