nep-int New Economics Papers
on International Trade
Issue of 2013‒04‒13
33 papers chosen by
Alessia A. Amighini
Universita' Amedeo Avogadro

  1. The Internationalization Process of Firms: from Exports to FDI By Conconi, Paola; Sapir, André; Zanardi, Maurizio
  2. Heterogeneous Firms and Trade By Melitz, Marc J; Redding, Stephen J.
  3. Roads and Trade: Evidence from the US By Duranton, Gilles; Morrow, Peter; Turner, Matthew A
  4. Trade Effects of Export Taxes By Olga Solleder
  5. Heterogeneous Workers and International Trade By Grossman, Gene
  6. Firm Heterogeneity and Aggregate Welfare By Melitz, Marc J; Redding, Stephen J.
  7. Trade Theory with Numbers: Quantifying the Consequences of Globalization By Costinot, Arnaud; Rodriguez-Clare, Andres
  8. Selection Effects With Heterogeneous Firms By Mrázová, Monika; Neary, J Peter
  9. From Mine to Coast: Transport Infrastructure and the Direction of Trade in Developing Countries By Roberto Bonfatti; Steven Poelhekke
  10. Chinese firms'entry to export markets : the role of foreign export spillovers By Mayneris, Florian; Poncet, Sandra
  11. Trade Adjustments to Exchange Rate Changes by Japanese Manufacturing MNEs: Intra-firm and arm's length transactions By ANDO Mitsuyo; KIMURA Fukunari
  12. Geography and the Determinants of Firm Exports in Indonesia By Farole, Thomas; Rodríguez-Pose, Andrés; Tselios, Vassilis; Winkler, Deborah
  13. India-Pakistan Trade Liberalization: A CGE Modelling Apporach By Pohit, Sanjib
  14. Portuguese Trade and European Union: The Gravity Model By Leitão, Nuno Carlos; Tripathi, Sabyasachi
  15. The implications of natural resource exports for non-resource trade By Harding, Torfinn; Venables, Anthony J
  16. Panel Export Taxes (PET) Dataset: New Data on Export Tax Rates By Olga Solleder
  17. Uncertainty and Trade Agreements By Limão, Nuno; Maggi, Giovanni
  18. Assessing the Dynamics of Terms of Trade in a Model of Cumulative Causation and Structural Change By Araujo, Ricardo
  19. Gravity Modeling: International Trade and Innovations By Josheski, Dushko; Fotov, Risto
  20. Free Trade Agreements and the Consolidation of Democracy By Liu, Xuepeng; Ornelas, Emanuel
  21. Trade, Transboundary Pollution and Market Size By Forslid, Rikard; Okubo, Toshihiro; Sanctuary, Mark
  22. The Impacts of Post-TRIPS Patent Reforms on the Structure of Exports By Keith E. MASKUS; Lei YANG
  23. Firm Heterogeneity and FDI in Distribution Services By TANAKA Kiyoyasu
  24. FDI and the labor share in developing countries: A theory and some evidence By Paul Maarek; Bruno Decreuse
  25. Export-led growth in Europe: Where and what to export? By Paula Gracinda Santos; Ana Paula Ribeiro; Vitor Manuel Carvalho
  26. The Clothing Export Performance and Prospects for Advanced and Emerging Economies: Evidence from a Panel Data Analysis By Donatella Baiardi; Carluccio Bianchi; Eleonora Lorenzini
  27. Location factors of export-platform foreign direct investment: Evidence from Vietnam By Huu Thanh Tam Nguyen; Med Kechidi; Alexandre Minda
  28. Multinational Firms and Plant Divestiture By Norback, Pehr-Johan; Tekin-Koru, Ayca; Waldkirch, Andreas
  29. The Geography of Trade and Technology Shocks in the United States By David H. Autor; David Dorn; Gordon H. Hanson
  30. Untangling Trade and Technology: Evidence from Local Labor Markets By David H. Autor; David Dorn; Gordon H. Hanson
  31. Trade, competition and quality-upgrading: A theory with evidence from Colombia By Daniel Yi Xu; Ana Cecilia Fieler; Marcela Eslava
  32. Geography and Intra-National Home Bias: U. S. Domestic Trade in 1949 and 2007 By Crafts, Nicholas; Klein, Alexander
  33. What's Holding Back EU Exports to China? By Evenett, Simon J; Fritz, Johannes; Wermelinger, Martin

  1. By: Conconi, Paola; Sapir, André; Zanardi, Maurizio
    Abstract: This paper shows that uncertainty can lead firms to follow a gradual internationalization process. We describe a model in which firms are uncertain about their ability to earn profits in a foreign market and must decide whether or not to serve it, and whether to do so through exports or foreign affiliate sales. We show that a firm may first test the foreign market via exports, before engaging in foreign direct investment (FDI). To assess the evidence, we exploit a unique dataset of firm-level exports and FDI in individual destination countries, covering all Belgian companies over the 1998-2008 period. We show that a firm’s FDI entry in a foreign market is almost always preceded by its export entry. More uncertain foreign market conditions lead new exporters to delay FDI entry decisions. Our analysis suggests that exports and FDI, although substitutes from a static perspective, may be complements over time, since the knowledge acquired through export experimentation can lead firms to start investing abroad.
    Keywords: experimentation; exports; FDI; uncertainty
    JEL: D21 F10 F13
    Date: 2013–02
  2. By: Melitz, Marc J; Redding, Stephen J.
    Abstract: This paper reviews the new approach to international trade based on firm heterogeneity in differentiated product markets. This approach explains a variety of features exhibited in disaggregated trade data, including the higher productivity of exporters relative to non-exporters, within-industry reallocations of resources following trade liberalization, and patterns of trade participation across firms and destination markets. Accounting for these empirical patterns reveals new mechanisms through which the aggregate economy is affected by trade liberalization, including endogenous increases in average industry and firm productivity.
    Keywords: firm heterogeneity; international trade; productivity
    JEL: F10 F12 F14
    Date: 2013–01
  3. By: Duranton, Gilles; Morrow, Peter; Turner, Matthew A
    Abstract: We estimate the effect of interstate highways on the level and composition of trade for us cities. Highways within cities have a large effect on the weight of city exports with an elasticity of approximately 0.5. We find little effect of highways on the total value of exports. Consistent with this, we find that cities with more highways specialize in sectors producing heavy goods.
    Keywords: interstate highways; trade and specialisation; transport costs
    JEL: F14 R41 R49
    Date: 2013–03
  4. By: Olga Solleder (IHEID, The Graduate Institute of International and Development Studies, Geneva)
    Abstract: Export taxes usage has recently risen. They are widely presumed to affect trade, but the lack of data has prevented a systematic evaluation of their trade effects. Based on a new dataset of tax rates at the product level, this paper estimates the distortionary trade effects of export taxes. The results, which are based on theory-consistent estimation of a structural gravity model, indicate that the elasticity of trade quantities to tax is -1.8 on average, rising to -5.5 for extractive sectors. The effects are driven by homogeneous goods. The results suggest that the burden of export taxes is shared by exporters and importers and that export taxes play a role in the rise of world prices.
    Keywords: Export taxes, export duties, export restrictions, export policy, trade policy, panel gravity models, GATT/WTO
    JEL: F13 F42 O24 H23
    Date: 2013–04–08
  5. By: Grossman, Gene
    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.
    Keywords: heterogeneous labor; international trade; matching; productivity; sorting; wage distribution
    JEL: F11 F16
    Date: 2013–02
  6. By: Melitz, Marc J; Redding, Stephen J.
    Abstract: We examine how firm heterogeneity influences aggregate welfare through endogenous firm selection. We consider a homogeneous firm model that is a special case of a heterogeneous firm model with a degenerate productivity distribution. Keeping all structural parameters besides the productivity distribution the same, we show that the two models have different aggregate welfare implications, with larger welfare gains from reductions in trade costs in the heterogeneous firm model. Calibrating parameters to key U.S. aggregate and firm statistics, we find these differences in aggregate welfare to be quantitatively important (up to a few percentage points of GDP). Under the assumption of a Pareto productivity distribution, the two models can be calibrated to the same observed trade share, trade elasticity with respect to variable trade costs, and hence welfare gains from trade (as shown by Arkolakis, Costinot and Rodriguez-Clare, 2012); but this requires assuming different elasticities of substitution between varieties and different fixed and variable trade costs across the two models.
    Keywords: firm heterogeneity; welfare gains from trade
    JEL: F12 F15
    Date: 2013–03
  7. By: Costinot, Arnaud; Rodriguez-Clare, Andres
    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.
    Keywords: counterfactual analysis; globalization; gravity models; trade policy; welfare analysis
    JEL: F11 F12 F13 F15 F17
    Date: 2013–03
  8. By: Mrázová, Monika; Neary, J Peter
    Abstract: We characterize how firms select between alternative ways of serving a market. ``First-order" selection effects, whether firms enter or not, are extremely robust. "Second-order" ones, how firms serve a market conditional on entry, are less so: more efficient firms will select into the entry mode with lower market-access costs, if and only if firms' maximum profits are supermodular in production and market access costs. Supermodularity holds in many cases but not in all. Exceptions include FDI (both horizontal and vertical) when demands are "sub-convex" (i.e., less convex than CES), fixed costs that vary with access mode, and R&D with threshold effects.
    Keywords: Foreign Direct Investment (FDI); Heterogeneous Firms; Proximity-Concentration Trade-Off; R\&D with Threshold Effects; Super- and Sub-Convexity; Supermodularity
    JEL: F12 F15 F23
    Date: 2013–01
  9. By: Roberto Bonfatti (University of Nottingham); Steven Poelhekke (VU University Amsterdam, and De Nederlandsche Bank)
    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 findings are that coastal countries with more mines import less than average from their neighbors, and this effect is s tronger 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: 2013–03–07
  10. By: Mayneris, Florian; Poncet, Sandra
    Abstract: In this paper, the effect of proximity to multinational exporters on the creation of new export linkages (the extensive margin of trade) is debated. Using panel data from Chinese customs for 1997-2007, the capacity for Chinese domestic firms to begin exporting new varieties to new markets is shown to respond positively to the export activity of neighboring foreign firms. These spillovers are shown to be product and country specific. This conclusion is robust to fixed effects and instrumental variable specifications that control for both supply and demand shocks that could bias the estimations. The impact is sizable. The marginal impact of product-country-specific foreign export spillovers is five times as large as the effect of a 10 percent increase in the demand for the product in the destination country. Foreign export spillovers are also shown to be primarily limited to ordinary trade activities. Overall, our findings suggest that even for a country with an important cost-advantage such as China, there is room for initiatives from policy-makers that will diffuse best practices regarding export experience among exporters.
    Keywords: Tax Law,Economic Theory&Research,Foreign Trade Promotion and Regulation,Water Resources Assessment,Water Conservation
    Date: 2013–04–01
  11. By: ANDO Mitsuyo; KIMURA Fukunari
    Abstract: This paper examines how Japanese manufacturing multinational enterprises (MNEs) adjust to exchange rate changes. Using the micro-data of Japanese manufacturing MNEs from 1994 to 2010, we find that exports tend to respond to exchange rate changes, in particular when wholly or majority-owned affiliates are dominant among their foreign affiliates and when intra-firm trade ratios are higher. Moreover, the responsiveness to exchange rate changes is higher for intra-firm exports than for total exports. The results suggest that Japanese manufacturing MNEs with greater foreign operations under their own corporate control would more fully absorb shocks of exchange rate movements by adjusting intra-firm transactions. We do not find such tendencies for imports, however. Our results also show that, among all manufacturing sectors, the exporting/importing responsiveness is lower in the electric machinery sectors and higher in the transport equipment sectors due to different types of international division of labor. Furthermore, our results show that the size of the firm does not matter in terms of the responsiveness for total exports, although it does for intra-firm exports only.
    Date: 2013–04
  12. By: Farole, Thomas; Rodríguez-Pose, Andrés; Tselios, Vassilis; Winkler, Deborah
    Abstract: This paper uses data from the Indonesian manufacturing census in order to uncover the determinants of firm exports over the period 1990-2005. We examine to what extent differences in firm export propensity and intensity are a consequence of firm-level (microeconomic), of place-based (macroeconomic) first- and second-nature geography characteristics, or of a combination of the two. The results indicate that both internal and external factors matter. Second-nature, rather than first-nature, geography makes an important difference. The conditions of a firm’s province and those of neighboring provinces shape firm exports. Agglomeration effects, education and transport infrastructure endowment play a particularly relevant role in Indonesian firms’ export propensity, while export spillovers increase export intensity.
    Keywords: Asia; Export intensity; Export propensity; Geography; Indonesia; Macro-factors; Micro-factors
    JEL: F1 F2 R1
    Date: 2013–02
  13. By: Pohit, Sanjib
    Abstract: This study makes an attempt to assess the impact of bilateral trade liberalization on their respective economies and also on the rest of the South Asia. Our results indicate that there exist significant gains from India, Pakistan mutual trade liberalization. However, these gains are realized only when productivity gain occur in the modes of transport service engaged in trade between these two countries. This is expected given the logistics problems in trade between India and Pakistan
    Keywords: India, Pakistan, Trade Liberalization
    JEL: F12 F14 F15
    Date: 2013
  14. By: Leitão, Nuno Carlos; Tripathi, Sabyasachi
    Abstract: This research examines the determinants of bilateral trade between Portugal and European Union countries (EU-27) for the period 2000-2010, using a panel data. In this study we revisited the recent contribution as in Charoensukmongkol and Sexton (2011), Samy and Dehejia (2011), Serrano and Pinilla (2012), and Faustino and Proença (2011). The findings show that Portuguese trade flows are according the Linder hypothesis. The international trade is explained by Heckscher-Ohlin theorem. The empirical results demonstrate that geographical distance has a negative and significant effect on bilateral trade, i.e., there is a bilateral trade increase when trade partners are close. The economic dimension and common border are positively correlated with bilateral trade. Our results also support the hypothesis that physical capital endowment has a positive effect on bilateral trade.
    Keywords: Gravity model, panel data, common border, geographical distance and factor endowment.
    JEL: C20 C30 F12
    Date: 2013–04
  15. By: Harding, Torfinn; Venables, Anthony J
    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: Dutch disease; exports; imports; natural resources; resource curse; trade
    JEL: E21 E62 F43 H63 O11 Q33
    Date: 2013–01
  16. By: Olga Solleder (IHEID, The Graduate Institute of International and Development Studies, Geneva)
    Abstract: This paper describes a newly collected dataset on export tax rates, which provides comprehensive coverage for 20 countries, 2 time periods and all products at HS6 level. Export tax rates are based on national government documentation, including preferential provisions for partner countries. The data are organized in a harmonized and comparable format, including ad-valorem equivalents of specific taxes. The dataset can contribute to the empirical analysis of export taxes – an increasingly applied trade policy instrument, which merits further attention from academia and policy makers alike. Furthermore, the paper contains literature review and stylized facts highlighting various aspects of export taxes.
    Keywords: Export taxes, trade taxes, taxation of exports, export levies, export duties, export tax rates, export tax data, export tax agreements, export restrictions
    JEL: C81 F13 F42 H21 Y10
    Date: 2013–04–04
  17. By: Limão, Nuno; Maggi, Giovanni
    Abstract: In this paper we explore the potential gains that a trade agreement (TA) can provide by regulating trade-policy uncertainty, in addition to the more standard gains from reducing the mean levels of trade barriers. We show that in a standard trade model with income-risk neutrality there tends to be an uncertainty-increasing motive for a TA. With income-risk aversion, on the other hand, the uncertainty-managing motive for a TA is determined by interesting trade-offs. For a given degree of risk aversion, an uncertainty-reducing motive for a TA is more likely to be present when the economy is more open, the export supply elasticity is lower and the economy is more specialized. Governments have stronger incentives to sign a TA when the trading environment is more uncertain. As exogenous trade costs decline, the gains from decreasing trade-policy uncertainty tend to become more important relative to the gains from reducing average trade barriers. We also derive simple
    Keywords: Agreements; Investment; Policy Uncertainty; Trade
    JEL: F1 F13 F5 O19
    Date: 2013–01
  18. By: Araujo, Ricardo
    Abstract: Following a structural economic dynamic approach, this paper examines the potential impact of cumulative causation on the dynamics of terms of trade between North-South countries. Cumulative causation although being responsible for generating technical progress may cause leakage of some productivity gains from the exporting sectors to abroad. In this vein possibilities exist that the laggard countries benefit from this effect but the final outcome depends on structural economic dynamics of both developed and underdeveloped nations. The overall dynamics of the terms of trade is then shown to be strongly affected both by demand and supply considerations.
    Keywords: Structural economic dynamics, terms of trade, cumulative causation.
    JEL: F10 O24 O3
    Date: 2013
  19. By: Josheski, Dushko; Fotov, Risto
    Abstract: In this paper issue of gravity modeling in international trade has been investigated. Standard gravity equation augmented with other variables to control for transportation cost, whether trade partners are neighbors and whether country is landlocked, or countries participants in trade have had colonial history together. Also in our model we control whether traded commodities are homogenous, differentiated or high tech , as well referenced. Variable to denote technology are :TAI index, which stands for technological achievement index, also variables for creation and diffusion of technology , as measured by the number of patents from the residents and royalty and license fees receipts, by the foreign citizens. Results are as expected and the show that trade is highly dependent on the exporters and importers levels of technology --
    Keywords: gravity model,bilateral trade
    JEL: F11 F41
    Date: 2013–03–26
  20. By: Liu, Xuepeng; Ornelas, Emanuel
    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: political regimes; Regionalism; rent destruction; trade liberalization
    JEL: D72 F13 F15 F53
    Date: 2013–01
  21. By: Forslid, Rikard; Okubo, Toshihiro; Sanctuary, Mark
    Abstract: This paper uses a monopolistic competitive framework with many sectors to study the impact of trade liberalization on local and global emissions. We focus on the interplay of the pollution haven effect and the home market effect and show how a large-market advantage can counterbalance a high emission tax, implying that trade liberalization leads to lower global emissions. Generally, our results suggest that relative market size, the level of trade costs, the ease of abatement, and the degree of product differentiation at the sector level are relevant variables for empirical studies on trade and pollution.
    Keywords: market size; trade liberalization; transboundary pollution
    JEL: F12 F15
    Date: 2013–03
  22. By: Keith E. MASKUS; Lei YANG
    Abstract: We study the effects of reforms in the legal scope of patent rights (PRs) on the international pattern of sectoral exports, before and after implementation of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement at the World Trade Organization (WTO), in a generalized factor-proportions framework. We find that, conditional on factor endowments and intensities, a country with stronger PRs tends to have greater exports to the United States in patent-intensive sectors. These effects are significantly positive throughout the sample but are considerably larger in the post-TRIPS era. These impacts grow over time in developing economies, roughly in line with the implementation of TRIPS obligations. There is also evidence that changes over time in national PRs positively affect growth in exports. These results hold after controlling for alternative determinants of international trade and correcting for endogeneity.
    Date: 2013–04
  23. By: TANAKA Kiyoyasu
    Abstract: Distribution services play a large role in intermediating production and consumption across borders. Using firm-level data on Japanese multinationals in the wholesale and retail sectors, this paper examines foreign direct investment (FDI) decisions of distribution firms for local distribution services at the extensive and intensive margin. Consistent with the model of heterogeneous firms on multinational production, productive multinationals are more likely than less productive ones to enter a larger number of markets, penetrate less attractive markets, and generate larger sales per market. While these findings are consistent with previous evidence on manufacturing multinationals, there are some distinctive determinants of FDI in distribution services.
    Date: 2013–04
  24. By: Paul Maarek; Bruno Decreuse (THEMA, Universite de Cergy-Pontoise; Aix-Marseille School of Economics)
    Abstract: We address the effects of FDI on the labor share in developing countries. Our theory relies on the impacts of FDI on wage and labor productivity in a frictional labor market. FDI have two opposite effects on the labor share: a negative force originated by technological advance, and a positive force due to increased labor market competition between firms. We test this theory on aggregate panel data through fixed effects and IV estimates. We examine the relationship between the labor share in the manufacturing sector and the ratio of FDI stock to GDP. We show that FDI have decreased the labor share in the host countries of our dataset. This impact amounts to between 10% to 20% of the mean labor share in our sample.
    Keywords: FDI; Matching frictions; Firm heterogeneity; Technological advance
    JEL: E25 F16 F21
    Date: 2013
  25. By: Paula Gracinda Santos (Faculdade de Economia, University of Porto); Ana Paula Ribeiro (Faculdade de Economia, University of Porto, and CEF.UP – Center for Economics and Finance at UP); Vitor Manuel Carvalho (Faculdade de Economia, University of Porto, and CEF.UP – Center for Economics and Finance at UP)
    Abstract: From the late 70s onwards, the literature has produced numerous studies, mostly for developing countries, relating exports and economic growth. Since several European Union (EU) countries face strong recessions in the sequence of the economic crisis and the related fiscal consolidation measures, exports emerge as a meaningful source of growth for developed countries with rather stagnant domestic markets. In this context, we assess if and how the product and the destination structures of exports shape the growth dynamics for the EU countries. Using panel data estimation to 23 of the 27 EU members over the period 1995-2010, we find that economic growth is foster through export specialization in high value-added products, such as manufactures and high-technology. Moreover, we find evidence that higher growth is fostered by export diversification across partners while enlarging the portfolio of partners, mainly to less developed and more distant countries, has negative impacts on European growth. Unambiguously, relative concentration of exports should be directed towards higher growth countries.
    Keywords: Economic growth; Product structure of exports; Exports’ destination; European Union; Panel data.
    JEL: C23 F10 O40 O52
    Date: 2013–01
  26. By: Donatella Baiardi (Department of Economics and Management, University of Pavia); Carluccio Bianchi (Department of Economics and Management, University of Pavia); Eleonora Lorenzini (Department of Economics and Management, University of Pavia)
    Abstract: This paper studies the clothing export performance of twelve top exporting countries (China, Honk Kong, France, Germany, India, Indonesia, Italy, Netherlands, Spain, Turkey, UK and USA) in the period between 1992 and 2011. Price and income elasticities are estimated for each country, after controlling for nonstationarity, cointegration and Granger causality. Price elasticities estimates are used, together with market shares and unit values dynamics, to assess the export performance and prospects of the various countries. A multifarious picture emerges from the analysis, whereby China plays the role of uncontested leader, but not all the advanced European countries, which are supposed to be more severely hit by the competition of the low-labour costs countries, definitely lose competitiveness, since different outcomes are possible according to the specific price and quality strategies adopted.
    Keywords: Clothing, Price elasticity, Income elasticity, Export Performance, Product Quality, Panel Granger causality
    JEL: F10 F14 O10
    Date: 2013–03
  27. By: Huu Thanh Tam Nguyen (EPEE, Université d’Evry Val d’Essonne); Med Kechidi (LEREPS, Université Toulouse 1 Capitole); Alexandre Minda (LEREPS, Université Toulouse 1 Capitole)
    Abstract: The purpose of this paper is to examine the export-platform foreign direct investment as a strategic behavior of multinational firms. First, we use a three-country model to identify the main location factors of this investment. These factors are relative labor cost between the host country and the home country and/or the third country, technological transfer cost of host country, intra-regional transport cost and the market size of third country. Particularly, this kind of investment is preferred rather than other entry modes, if and only if, the third market size is high enough. Second, the model is tested for export oriented industries in Vietnam. The integration of the Vietnamese economy into regional or international markets has a positive impact on the choice of export-platform foreign direct investment strategy. In particular, in this country, the first motivation is to access to large markets (ASEAN, U.S., European Union). Other motivations concern low cost of technological transfer and real exchange rate.
    Keywords: Export-platform foreign direct investment, location factors, three-country model, multinational firm, Vietnam
    JEL: F15 F16 F23
    Date: 2013–03
  28. By: Norback, Pehr-Johan; Tekin-Koru, Ayca; Waldkirch, Andreas
    Abstract: Multinational enterprises frequently start, acquire, close and divest affiliates. There is a large literature on restructuring, which focuses on start-ups and acquisitions. The empirical literature on plant survival usually provides evidence from a single country. In contrast, this paper uses detailed survey data of Swedish multinationals to examine the characteristics that result in plant divestiture at the affiliate, firm, industry, country and regional level. We provide propositions drawn on a straightforward model from Berg et al (2012) in which the primary motive to divest an affiliate is to finance other investments in the network of the MNC. In line with conclusions from our model, we find that larger affiliates are more likely to be divested and these affiliates are small relative to the other operations of the firm in the same country or region. We also find that divestiture begets divestiture, but acquisition does not, thus casting doubt on the notion of footloose multinationals. Several firm, industry and country characteristics also matter.
    Keywords: Foreign Direct Investment, Multinationals, Divestiture
    JEL: F21 F23
    Date: 2013–03
  29. By: David H. Autor; David Dorn; Gordon H. Hanson
    Abstract: This paper explores the geographic overlap of trade and technology shocks across local labor markets in the United States. Regional exposure to technological change, as measured by specialization in routine task-intensive production and clerical occupations, is largely uncorrelated with regional exposure to trade competition from China. While the impacts of technology are present throughout the United States, the impacts of trade tend to be more geographically concentrated, owing in part to the spatial agglomeration of labor-intensive manufacturing. Our findings suggest that it should be possible to separately identify the impacts of recent changes in trade and technology on U.S. regional economies.
    JEL: F16 O3 R1
    Date: 2013–04
  30. By: David H. Autor; David Dorn; Gordon H. Hanson
    Abstract: We juxtapose the effects of trade and technology on employment in U.S. local labor markets between 1990 and 2007. Labor markets whose initial industry composition exposes them to rising Chinese import competition experience significant falls in employment, particularly in manufacturing and among non-college workers. Labor markets susceptible to computerization due to specialization in routine task-intensive activities experience significant occupational polarization within manufacturing and nonmanufacturing but no net employment decline. Trade impacts rise in the 2000s as imports accelerate, while the effect of technology appears to shift from automation of production activities in manufacturing towards computerization of information-processing tasks in non manufacturing.
    JEL: F16 J21 J23 O33
    Date: 2013–04
  31. By: Daniel Yi Xu (Duke University); Ana Cecilia Fieler (University of Pennsylvania); Marcela Eslava (Universidad de Los Andes)
    Abstract: We use a panel data on manufacturing plants in Colombia to estimate the model and evaluate its predictions regarding a counterfactual decrease in tariffs.
    Date: 2012
  32. By: Crafts, Nicholas; Klein, Alexander
    Abstract: This paper examines home bias in U. S. domestic trade in 1949 and 2007. We use a unique dataset 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 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: gravity equation; intra-national home bias; manufacturing belt; spatial clustering
    JEL: F14 N72
    Date: 2013–01
  33. By: Evenett, Simon J; Fritz, Johannes; Wermelinger, Martin
    Abstract: Access to the fast-growing Chinese economy is prized by policymakers and business people. Concerns that European firms are missing out on the Chinese boom have caused soul-searching in Europe about "competitiveness" and led to accusations of Chinese protectionism. For the first 15 members to join the European Union this paper estimates the factors affecting the share of each country’s exports going to China from 2000 to 2010. China’s growing share of world spending is found to be the most important factor but labour cost differentials within Europe, two forms of commercial diplomacy, and crisis-era murky protectionism by China contributed too.
    Keywords: China; commercial diplomacy; competitiveness; European Union; exports; protectionism
    JEL: F14
    Date: 2013–03

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