nep-int New Economics Papers
on International Trade
Issue of 2013‒04‒20
eighteen papers chosen by
Alessia A. Amighini
Universita' Amedeo Avogadro

  1. The Role of extensive margins of exports in The Great Export Recovery in Germany, 2009/2010 By Wagner, Joachim
  2. Export entrepreneurship and trade structure in Latin America during good and bad times By Fernandes, Ana M.; Lederman, Daniel; Gutierrez-Rocha, Mario
  3. Trade Facilitation Indicators: The Potential Impact of Trade Facilitation on Developing Countries' Trade By Evdokia Moïsé; Silvia Sorescu
  4. Gains from Offshoring? Evidence from U.S. Microdata By Ryan Monarch; Jooyoun Park; Jagadeesh Sivadasan
  5. Are Exporters More Productive than Non-Exporters? By David A. Rivers
  6. Use of WIOD to analyse the impact of trade: employment generation vs. emissions responsibilities By Valeria Andreoni; Arto Inaki; Jose Manuel Rueda Cantuche; Genty Aurelien; Villanueva Krzyzaniak Alejandro; Ignazio Mongelli
  7. Asymmetric international transport costs and tax competition: the influence of a third country By Kyoko Hirose; Kazuhiro Yamamoto
  8. Does Aid for Education Attract Foreign Investors? An Empirical Analysis for Latin America By Julian Donaubauer; Dierk Herzer; Peter Nunnenkamp
  9. The Role of Services for Competitiveness in Manufacturing By Hildegunn Kyvik Nordås; Yunhee Kim
  10. Export variety, technological content and economic performance: The case of Portugal By Francisco Rebelo; Ester Gomes da Silva
  11. Untangling Trade and Technology: Evidence from Local Labor Markets By Autor, David; Dorn, David; Hanson, Gordon H.
  12. Skill-Biased Technological Change and Skill-Enhancing Trade in Turkey: Evidence from Longitudinal Microdata By Srour, Ilina; Taymaz, Erol; Vivarelli, Marco
  13. The Geography of Trade and Technology Shocks in the United States By Autor, David; Dorn, David; Hanson, Gordon H.
  14. Diversification through Trade By Silvana Tenreyro; Miklos Koren; Francesco Caselli
  15. Migration, Trade and Income By Ortega, Francesc; Peri, Giovanni
  16. What Determines Inward FDI in China? --An empirical study using firm-level data By Bin Ni
  17. Persistent Exporter Performance: The importance of internal, local and global knowledge By Lööf, Hans; Nabavi, Pardis; Cook , Gary; Johansson, Börje
  18. Export Restrictions: Benefits of Transparency and Good Practices By Osvaldo R. Agatiello; Barbara Fliess

  1. By: Wagner, Joachim (Leuphana University Lueneburg and CESIS, Stockholm)
    Abstract: This paper contributes to the literature by documenting for the first time the contribution of adding (and dropping) goods and destination countries to the sharp increase in exports of goods in the German economy as a whole during the Great Export Recovery in 2009/2010. The empirical investigation finds that firms that exported in both 2009 and 2010 are much more important for the export dynamics than export starters and export stoppers. Firms that increased their exports (and that were the drivers of the export boom) exported on average more goods and to more destination countries in 2009 than firms that decreased their exports, and they increased both extensive margins of exports on average while firms with decreased exports reduced both the number of goods exported and the number of countries exported to. These empirical regularities can be linked to recent theoretical models of multi-product, multiple-destination exporters that point to a positive link between firm productivity and both extensive margins of exports. Although the data do not allow a direct test of the hypothesis, the evidence at hand justifies that we can argue that the more productive firms with higher and increasing extensive margins of exports are the drivers of The Great Export Recovery of 2009/2010 in Germany.
    Keywords: Extensive margins of exports; The Great Export Recovery; Germany
    JEL: F14
    Date: 2013–04–08
  2. By: Fernandes, Ana M.; Lederman, Daniel; Gutierrez-Rocha, Mario
    Abstract: The authors use a new dataset on export transactions for a large set of Latin American and Caribbean and comparator countries to assess the extent of"export entrepreneurship"during periods of fast export growth (2005-2007) and depressed external demand (2008-2009). Export entrepreneurship is equated with the extensive margin of exports, namely the advent of new exporting firms, new export products, and new export market destinations. The main findings are: (1) annual exporter entry, exit, and survival rates in Latin America and the Caribbean are quite similar to what is observed in other countries, and entry rates across sectors are quite similar but survival rates appear to be highest in agriculture; (2) the relative size of entrants into export markets (relative to incumbents) tended to be lower for natural resource-abundant countries during 2005-2007, but less so during the crisis years of 2008-2009; (3) entry rates tend to be lower in sectors in which a country has revealed comparative advantage, however, exit rates and survival rates of new exporters are higher in those sectors; and (4) the low growth of exports during the global recession of 2008-2009 in Latin America and the Caribbean was due to lower growth in exports of incumbent firms'pre-existing products and destinations, while new products and destinations tended to attenuate the recession's effects. Overall, the data suggest that the Latin American and Caribbean region appears to be no less entrepreneurial in terms of the extensive margins of exports than comparator countries.
    Keywords: Currencies and Exchange Rates,Free Trade,Debt Markets,Export Competitiveness,Country Strategy&Performance
    Date: 2013–04–01
  3. By: Evdokia Moïsé; Silvia Sorescu
    Abstract: This report presents the findings of the OECD indicators for assessing the impact of specific trade facilitation measures on developing countries’ trade. Sixteen trade facilitation indicators (TFIs) have been constructed, corresponding to the main policy areas under negotiation at the WTO, with the aim to estimate the impact of addressing specific hurdles in the trade and border procedures of a given country. The policy areas that seem to have the greatest impact on trade volumes and trade costs not only for imports but also to export performance are the availability of trade-related information, the simplification and harmonization of documents, the streamlining of procedures and the use of automated processes. The combined effect of improvements in these areas is greater than the simple sum of the impact of individual measures, reaching almost 14.5% reduction of total trade costs for low income countries, 15.5% for lower middle income countries and 13.2% for upper middle income countries.
    Keywords: transparency, customs, trade facilitation, WTO, trade flows, trade costs, simplification
    JEL: F13 F14 H83 L51
    Date: 2013–03–04
  4. By: Ryan Monarch; Jooyoun Park; Jagadeesh Sivadasan
    Abstract: We construct a new linked data set with over one thousand offshoring events by matching Trade Adjustment Assistance program petition data to micro-data from the U.S. Census Bureau. We exploit this data to assess how offshoring impacts domestic firm-level aggregate employment, output, wages and productivity. A class of models predicts that more productive firms engage in offshoring, and that this leads to gains in output and (measured) productivity, and potential gains in employment and wages, in the remaining domestic activities of the offshoring firm. Consistent with these models, we find that offshoring firms are on average larger and more productive compared to non-offshorers. However, we find that offshorers suffer from a large decline in employment (32 per cent) and output (28 per cent) relative to their peers even in the long run. Further, we find no significant change in average wages or in total factor productivity measures at affected firms. We find these results robust to a variety of checks. Thus we find no evidence for positive spillovers to the remaining domestic activity of firms in this large sampleof offshoring events.
    Keywords: Outsourcing, employment, trade, productivity, firm performance
    JEL: F16 F14 F23
    Date: 2013–04
  5. By: David A. Rivers (University of Western Ontario)
    Abstract: In an effort to explain the observed heterogeneity in the exporting decisions of rms, the empirical trade literature has concluded that exporting rms are more productive than non-exporting rms. In this paper, I show that the foundation for this conclusion is weak, given that the productivity estimates used in the literature suffer from several sources of potential bias. I apply a new method for estimating production functions to control for these sources of bias. Using data on manufacturing rms in Colombia, I find that, while the measures of productivity used in the literature imply that exporters are more productive, once I correct for the bias, there is no correlation between productivity and export status. This result is inconsistent with productivity being the main determinant of entry into export markets, and suggests the importance of other sources of heterogeneity in explaining rm-level exporting decisions.
    Keywords: none available
    Date: 2013
  6. By: Valeria Andreoni (European Commission – JRC - IPTS); Arto Inaki (European Commission – JRC - IPTS); Jose Manuel Rueda Cantuche (Pablo Olavide University); Genty Aurelien (European Commission – DG Enterprise); Villanueva Krzyzaniak Alejandro (European Commission – JRC - IPTS); Ignazio Mongelli
    Abstract: Following the debate on the implications of international trade for global climate policy, this paper assess the economic benefits gained by exporting countries in products and services for exports against the emissions generated in their production. In 2008, 24% of global GHG emissions and 20% of the employment around the world were linked to international trade. China exported 30% of emissions and hosted 37.5% of the jobs generated by trade worldwide. The European Union and the United States of America were the destination of 25% and 18.4% of the GHG emissions embedded in trade. The imports of these two regions contributed to the creation of 45% of the employment generated by international trade. This paper proposes the idea of including trade issues in international negotiations, taking into account not only the environmental burden generated by developed countries when displacing emissions to developing countries through their imports, but also the economic benefits of developing countries when releasing the emissions to produce goods delivered to developed countries. By analysing these opposing aspects, we aim to show how global emissions could be reduced effectively and with lower costs.
    Keywords: Employment; Greenhouse gas emissions; Multiregional Input-Output Model.
    JEL: F24 Q56
    Date: 2012–09
  7. By: Kyoko Hirose (Faculty of Economics, Kyushu Sangyo University); Kazuhiro Yamamoto (Graduate school of Economics, Osaka University)
    Abstract: The purpose of this paper is to investigate the influence of a third country on the location of foreign direct investment (FDI). We focus on two determinants of FDI location. The first is the number of firms located in the third country. The second is the magnitude of demand for the good that the investing firm produces. We construct a three-country model, where two of the three countries are potential host countries and one has a geographic advantage in exports to the third country. Using this framework, we show that when the number of firms in the third country is sufficiently large, the farther (more distant) country is always the location of the plant. Furthermore, when the market size of the third country is large, it is possible for the nearer country to be the host country. In addition, we find that when the governments of the potential host countries use taxes or subsidies to attract FDI, the location of the firm investing is qualitatively the same as that without tax competition. However, the range over which the nearer country can attract the investing firm when tax competition is introduced is wider than otherwise. Finally, we reveal that when two potential host countries form a union that imposes a coordinated tax, the aggregate welfare of the union under the coordinated tax policy is higher than that under tax competition. However, conflict between the two countries may occur when the number of rival firms in the third country is neither too small nor too large.
    Keywords: transport costs, tax competition, regional coordination.
    JEL: F15 F23 H25
    Date: 2013–03
  8. By: Julian Donaubauer; Dierk Herzer; Peter Nunnenkamp
    Abstract: We address the question of whether foreign aid helps attract foreign direct investment (FDI). This could be achieved if well targeted aid removed critical impediments to higher FDI inflows. In particular, we test the hypothesis that aid for education is an effective means to increase FDI flows to host countries in Latin America where schooling and education appears to be inadequate from the viewpoint of foreign investors. We employ panel data techniques covering 21 Latin American countries over the period from 1984 to 2008. We find that aid for education has a statistically significant positive effect on FDI. This effect is robust to potential outliers, sample selection, alternative specifications and different estimation methods.
    Keywords: foreign aid, foreign direct investment, aid effectiveness, human capital
    JEL: E24 F21 F35 O15 O19
    Date: 2013–04
  9. By: Hildegunn Kyvik Nordås; Yunhee Kim
    Abstract: This study analyses the relationships between competitiveness in manufacturing and the quality of key supporting services. Three indicators of competitiveness are considered: the degree of product differentiation, unit prices obtained in export markets and the duration of trade. The density of telecoms networks and the reliability of electricity supply stand out as the most crucial for competitive manufacturing. In addition the ease at which contracts can be enforced and the time it takes to export and import goods are strongly related to competitiveness. Our methodology allows us to go beyond a one size fits all policy analysis. Interestingly, we find that in low-income countries, the impact of services quality and policy on competitiveness is highest in low-technology industries; in middle-income countries it is highest in medium-technology sectors and in high-income countries the impact is highest in medium-high and high-technology industries. This suggests that better services contribute to moving up the value chain in industries where a country already has technological capacity and comparative advantage, but better services alone may not stimulate product differentiation in sectors where a country is far from the competitive edge – at least not in the short run. Policy reforms needed are to simplify procedures for contract enforcement, liberalisation of FDI, strengthen pro-competitive regulation of network services, and eliminate tariffs. It is concluded that new ways of doing business where manufacturers build relationships with customers and compete on the basis of products they are willing to pay a premium for has the potential to become an important driving force for growth after the great recession, provided that adequate support from competitive services markets is in place.
    Keywords: telecommunications, electricity, tariffs, competitiveness, transport costs, new industrial revolution, services liberalisation, services regulatory reform, contract enforcement
    JEL: F12 F13 F14
    Date: 2013–04–05
  10. By: Francisco Rebelo (Faculdade de Economia, Universidade do Porto); Ester Gomes da Silva (Faculdade de Letras/ISFLUP; CEF.UP, Universidade do Porto)
    Abstract: Although the analysis of the relationship between international trade and economic growth has an important tradition in the economic literature, the specific focus on a related matter, the link between export variety and economic growth, remains a relatively unexplored field of research. Recently, a few studies have approached this issue, adopting a neo-Schumpeterian framework. In line with this general frame of analysis, in this paper we investigate the impact of export variety on economic growth, cross-relating the variety dimension with technological upgrading. Cointegration econometric results based on the Portuguese experience over the past four decades (1967-2010) show that increased related variety has led to a significant growth bonus, but only in the case of technology advanced sectors. The impact of export variety on economic performance seems, therefore, to be conditioned by the technological intensity of the products involved.
    Keywords: Trade; variety; economic growth; technical change; Portugal.
    JEL: F10 O11 O30 O52
    Date: 2013–04
  11. By: Autor, David (MIT); Dorn, David (CEMFI, Madrid); Hanson, Gordon H. (University of California, San Diego)
    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 non-manufacturing 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.
    Keywords: technological change, trade flows, import competition, skill demand, job tasks, local labor markets
    JEL: F16 J21 J23 O33
    Date: 2013–04
  12. By: Srour, Ilina (Università Cattolica del Sacro Cuore); Taymaz, Erol (Middle East Technical University); Vivarelli, Marco (Università Cattolica del Sacro Cuore)
    Abstract: This paper explores the causes of skill-based employment differentials within the Turkish manufacturing sector over the period 1980-2001. Turkey is taken as an example of a developing economy that, in that period, had been technologically advancing and becoming increasingly integrated with the world market. The empirical analysis is performed at firm level within a dynamic framework using a two-equation model that depicts the employment trends for skilled and unskilled workers separately. In particular, the System Generalized Method of Moments (GMM-SYS) procedure is applied to a panel dataset comprised of 17,462 firms. Our results confirm the theoretical expectation that developing countries face the phenomena of skill-biased technological change and skill-enhancing technology import, both leading to increasing the employment gap between skilled and unskilled workers. In particular, strong evidence of a relative skill bias emerges: both domestic and imported technologies increase the demand for skilled labor 5 to 6 times more than the corresponding demand for the unskilled labor. Finally, "learning by export" also appears to have a skill biased impact, but to a lesser extent.
    Keywords: skill-biased technological change, technology transfer, panel data, GMM-SYS
    JEL: F16 O33
    Date: 2013–03
  13. By: Autor, David (MIT); Dorn, David (CEMFI, Madrid); Hanson, Gordon H. (University of California, San Diego)
    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.
    Keywords: trade, technology, geography, local labor markets
    JEL: F16 O33 R12
    Date: 2013–04
  14. By: Silvana Tenreyro (London School of Economics); Miklos Koren (Central European University); Francesco Caselli (London School of Economics)
    Abstract: Existing wisdom links increased openness to trade to greater macroeconomic volatility, as trade induces a country to specialize, increasing its exposure to sector-specific shocks. Evidence suggests, however, that country-wide shocks are at least as important as sectoral shocks in shaping volatility patterns. We argue that if country-wide shocks are dominant, the impact of trade on volatility can be negative, because trade becomes a source of diversification. For example, trade allows domestic goods producers to respond to shocks to the domestic supply chain by shifting sourcing abroad. Similarly, when a country has multiple trading partners, a domestic recession or a recession in any one of the trading partners translates into a smaller demand shock for its producers than when trade is more limited. Using a calibrated version of the Eaton-Kortum and Alvarez-Lucas model, we quantitatively assess the impact of lower trade barriers on volatility since the 1970s in a broad group of countries.
    Date: 2012
  15. By: Ortega, Francesc (Queens College, CUNY); Peri, Giovanni (University of California, Davis)
    Abstract: This paper explores the relationship between openness to trade, immigration, and income per person across countries. To address endogeneity concerns we extend the instrumental-variables strategy introduced by Frankel and Romer (1999). We build predictors of openness to immigration and to trade for each country by using information on bilateral geographical and cultural distance (while controlling for country size). Since geography may affect income through other channels, we also control for climate, disease environment, natural resources, and colonial origins. Most importantly, we also account for the roles of institutions and early development. Our instrumental-variables estimates provide evidence of a robust, positive effect of openness to immigration on long-run income per capita. In contrast, we are unable to establish an effect of trade openness on income. We also show that the effect of migration operates through an increase in total factor productivity, which appears to reflect increased diversity in productive skills and, to some extent, a higher rate of innovation.
    Keywords: international migration, trade, income per person, productivity, geography, institutions, diversity
    JEL: F22 E25 J61
    Date: 2013–04
  16. By: Bin Ni (PhD Candidate, Graduate School of Economics, Osaka University)
    Abstract: Using firm-level data from an Enterprise Survey of World Bank, this paper is designed to test how policy variables can affect inward foreign direct investment ("FDI") in China. After excluding the problems of sample selection and endogeneity, the result shows that investment promotion agencies (IPAs) and investment incentive zones (IIZs) have significant positive effect on absorbing FDI in China. Other factors such as sales volume and R&D also have significant impact. I also found that both IPAs and IIZs play a more important role in inviting other foreign companies to come to China than they do to Hong Kong, Macau, and Taiwan ("HMT") enterprises. The last finding is that if the city has IPA only, its promotion effect actually outweighs the city with IPA or IIZ combined; on the other hand, if the city has IPA or IIZ, then its positive effect on absorbing FDI will be larger than the city with IIZ solely.
    Keywords: Investment promotion agency, firm-level data, sample selection, China
    JEL: F21 F23
    Date: 2013–04
  17. By: Lööf, Hans (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Nabavi, Pardis (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Cook , Gary (University of Liverpool); Johansson, Börje (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: In this paper we investigate how various innovation strategies, local knowledge sources and global knowledge pipe-lines influence the likelihood that a firm will be a persistent exporter and the productivity growth of such persistently exporting firms. Using a bivariate logit model and a dynamic GMM panel data estimator on Swedish manufacturing firms observed over 12 years, we find that the propensity to be a persistent exporter is strongly related to both highly frequent and more temporary innovativeness and the global openness of the regional industry in the firm’s own line of activity. The growth rate in total factor productivity of persistent exporters, however, increases with intensity of invention activities, accessibility to local business services and the openness of the same regional industry in which the firm operates.
    Keywords: Invention; innovation; productivity growth; exports; spillovers; persistence
    JEL: F21 O30 O31 R11
    Date: 2013–04–08
  18. By: Osvaldo R. Agatiello; Barbara Fliess
    Abstract: Recent years have witnessed an ever-increasing resort to export restrictions in the markets for raw materials, causing heightened uncertainty about supply availability together with friction among trading partners. Poor transparency can amplify and compound the effects of restrictive trade policies. This paper explores the issue of transparency with respect to the use of export restrictions, especially focusing on the question of what information governments applying them make publicly available. After explaining how transparency is operationalised in the conduct of trade policy and what its benefits are for trading firms, investors and other stakeholders, in importing countries inasmuch as in the economies applying export restrictions, the paper reviews applicable rules and commitments elaborated in GATT/WTO, regional trade agreements and other sources of rules. The review shows an evolutive, cumulative path towards greater transparency in trade policy over time and distills best-practice principles and tools specifically aiming at the provision of information. The last section of the paper applies a checklist of information elements consistent with these best practices to the study of actual national information policies. This is done by examining the content of public information on export restrictions in the minerals sector that is made available on the governmental websites of 33 countries that make use of such measures. The exercise suggests where national information policies appear to have gaps and could be improved. It also provides illustrations of country approaches for delivering such information in a comprehensive and efficient manner.
    Keywords: trade policy, transparency, WTO, information, export restrictions, export taxes, export quotas, GATT, minerals
    JEL: F13 F53 F55 K33
    Date: 2013–03–27

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