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on International Trade |
| By: | Luciana Juvenal; Paulo Santos Monteiro |
| Abstract: | This paper examines the relationship between trade and investment in technology adoption when firms face demand uncertainty. Our model predicts that, for a given overall market size, exporting to several countries reduces firms' demand uncertainty and, hence, raises incentives to invest in productivity improvements. The effects of diversification are heterogeneous across firms: An additional foreign market matters more for firms exporting to fewer destinations. We test the proposed theory using a large sample of Argentinean manufacturing exporters. The predictions of the model find strong support in the data. |
| Keywords: | Trade ; Technology - Economic aspects ; Argentina |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:2013-015&r=int |
| By: | Marc J. Melitz; Stephen J. Redding |
| 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 heterogenous 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: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1200&r=int |
| By: | Filomena Pietrovito (University of Molise); Alberto Franco Pozzolo (University of Molise, Centro Studi Luca d’Agliano, MoFiR and CASMEF); Luca Salvatici (Roma Tre University) |
| Abstract: | Trade theory traces back different patterns of internationalization to heterogeneity between firms, measured both through differences in productivity levels and size. In this paper we analyze the link-between heterogeneity within sectors and internationalization choices, namely trade and foreign di-rect investments (FDI) for a large sample of countries and industries between 1994 and 2004. The focus of our paper is on the role played by average productivity level and the distribution of firms by size in explaining differences across sectors and countries in the extensive margin of internatio-nalization (i.e., the number of foreign nations where firms from a given sector and country have ex-panded abroad). By performing an ordered probit analysis, and controlling for other factors affect-ing the patterns of internationalization, we confirm that industries with higher productivity levels and with a distribution of firms shifted toward large firms are more prone to internationalize in for-eign markets through both trade and FDI. Moreover, the relative impact of average productivity and firm size on FDI is larger than that on trade. These results are robust to different measures of prod-uctivity and the distribution of firms. |
| Keywords: | exports, FDI, mergers and acquisitions, productivity, distribution of firms, ordered probit |
| JEL: | D24 F10 F14 F20 F23 |
| Date: | 2013–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:csl:devewp:349&r=int |
| By: | Teresa M. Greaney (Department of Economics University of Hawaii); Yao Li (School of Management and Economics University of Electronic Science and Technology of China) |
| Abstract: | We apply insights from the heterogeneous firms’ literature to an empirical investigation of wage inequality in China, focusing on the potential influences of FDI and trade. Using firm-level data, we examine intra-sectoral wage inequality in a major industrial region with firms identified according to five firm ownership types and three exporter status types. We find large ownership-type wage premiums separate from other observable influences on wages, including a firm’s exporter status. Our results indicate that ownership type matters more than exporter status as a determinant in explaining intra-sectoral wage inequality in China’s Yangtze River Delta. We also find evidence of asymmetric wage effects of firm type by exporter status and by other wage determinants. |
| Keywords: | Exporter, pure exporter, foreign direct investment, wage premium, manufacturing, China |
| JEL: | F16 F23 J31 L60 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:hai:wpaper:201306&r=int |
| By: | Julian Emami Namini (Erasmus University Rotterdam and Centro Studi Luca d\'Agliano); Giovanni Facchini (University of Nottingham, University of Milan, Centro Studi Luca d’Agliano, CEPR and CES–Ifo); Ricardo A. López (Brandeis University) |
| Abstract: | This paper uses plant–level data from Chile to show that an increase in sector–wide exports decreases the survival probability of exporters, but not that of non–exporters. We argue that this result can be explained by the fact that exporters and non-exporters use factors of production in different intensities. |
| Keywords: | Firm survival, Chile, manufacturing sectors, firm heterogeneity in factor intensities |
| JEL: | F14 F16 L11 O54 |
| Date: | 2013–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:csl:devewp:350&r=int |
| By: | MATSUURA Toshiyuki |
| Abstract: | This paper examines whether there is any link between export openness and the temporary workers ratio at firms. First, we investigate the effect of export openness on sales volatility using Japanese firm-level data. Next, we examine whether firms will increase the number of temporary workers as their sales volatility changes. Finally, we calculate to what extent changes in the temporary workers ratio are attributable to the sales volatility that is caused by exporting. We find statistically significant evidence that a foreign demand shock through exports affects the sales volatility at the firm level and that increases in the sales volatility induce the extensive use of temporary workers. Indeed, we find that those firms that incur a higher fixed employment cost make extensive use of temporary workers when the sales growth volatility rises. However, quantitative evaluation of the effects of exporting on the temporary workers ratio shows that the magnitude of these effects is quite small. We conclude that the impacts of firms' exporting status and export share on the temporary workers ratio are statistically significant but economically negligible in size. Thus, it is not appropriate to attribute the cause of increases in the temporary workers ratio to increased foreign shocks that occur because of exporting. |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:13036&r=int |
| By: | Giovanni Federico; Antonio Tena Junguito |
| Abstract: | The conventional wisdom about the early stages of modern economic growth in Italy is still heavily influenced by the work of L.Cafagna (1989). He argued that exports of primary products to industrializing North Western countries were the main source of growth and that exports of silk stimulated the industrialization of the North-West (the “industrial triangle”). However, the benefits did not extend to the rest of the country. In this paper we argue that this view is not supported by the trade data. Italian exports grew slowly relative to European and world trade and exports from the North grew less than the total. This view tallies well with some recent estimates of GDP per capita, which show no increase before the Unification (1861) |
| Keywords: | Industrial revolutionpPeriphery, Pre-unitary Italy, Foreign trade and integration, Growth |
| JEL: | F14 F15 N73 N14 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:cte:whrepe:wp13-02&r=int |
| By: | Basak Bayramoglu; Jean-François Jacques |
| Abstract: | There is an ongoing debate over the potential effects of international trade on fishery resources. In this study, we investigate whether the trade in fish and fish products contributed to the decline in a given number of fish species in Turkey. The overall purpose is to test the theoretical findings of Brander and Taylor (1997) who argue that trade openness decreases fish harvest in a small open economy characterized by a regime of open-access to fishery resources. To this end, we estimate a panel data model to measure the effects of trade openness on fish harvests in the case of 57 fish species observed from 1996 to 2009 in Turkey. We estimate Turkish fish harvests in terms of the relative importance of openness to trade as well as in terms of biological characteristics, in addition to economic and technological factors. Estimation results reveal a backward-bending supply curve for the fish harvest. Furthermore, we find that the indicator of openness to trade has a significant and positive impact on the fish harvest. Our results suggest that further openness to trade would put additional pressure on Turkey’s already declining fishery resources. |
| Keywords: | Openness to trade, Fish harvest, Fishery technology, Biological factors, Panel data model |
| JEL: | Q22 Q56 C33 |
| Date: | 2012–01–31 |
| URL: | http://d.repec.org/n?u=RePEc:apu:wpaper:2012/02&r=int |
| By: | Aaditya Mattoo (World Bank); Arvind Subramanian (Peterson Institute for International Economics) |
| Abstract: | Generating technological progress requires deploying the full range of policy instruments, including those related to trade policy. The authors consider four areas: subsidization of green goods and technologies; border-tax adjustments (BTAs) related to carbon content; restrictions on the export of fossil fuels, especially natural gas; and intellectual property protection of new technologies and products related to climate change. They propose changes to trade rules that would promote climate change goals. The proposed changes have an underlying political economy logic and consistency. Changes would allow global environmental "bads" to be penalized (by permitting border taxes on less clean imports), global environmental goods and technologies to be promoted (by relaxing the constraints on the use of production and export subsidies and strengthening IPR protection), and prevent global environmental "goods" being penalized (by eliminating the export restrictions on natural gas). |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:iie:pbrief:pb13-10&r=int |
| By: | Linda Goldberg; Cédric Tille |
| Abstract: | We develop a theoretical model of international trade pricing in which individual exporters and importers bargain over the transaction price and exposure to exchange rate fluctuations. We find that the choice of price and invoicing currency reflects the full market structure, including the extent of fragmentation and the degree of heterogeneity across importers and across exporters. Our study shows that a party has a higher effective bargaining weight when it is large or more risk tolerant. A higher effective bargaining weight of importers relative to exporters in turn translates into lower import prices and greater exchange rate pass-through into import prices. We show the range of price and invoicing outcomes that arise under alternative market structures. Such structures matter not only for the outcome of specific exporter-importer transactions, but also for aggregate variables such as the average price, the average choice of invoicing currency, and the correlation between invoicing currency and the size of trade transactions. |
| Keywords: | International trade ; Imports - Prices ; Foreign exchange rates |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:611&r=int |
| By: | Antonio Accetturo (Bank of Italy); Valter Di Giacinto (Bank of Italy); Giacinto Micucci (Bank of Italy); Marcello Pagnini (Bank of Italy) |
| Abstract: | Two main hypotheses are usually put forward to explain the productivity advantages of larger cities: agglomeration economies and firm selection. Combes et al. (2012) propose an empirical approach to disentangle these two effects and fail to find any impact of selection on local productivity differences. We theoretically show that selection effects do emerge when asymmetric trade and entry costs and different spatial scale at which agglomeration and selection may work are properly taken into account. The empirical findings confirm that agglomeration effects play a major role. However, they also show a substantial increase in the importance of the selection effect when asymmetric trade costs and a different spatial scale are taken into account. |
| Keywords: | agglomeration economies, firm selection, market size, entry costs, openness to trade |
| JEL: | C52 R12 D24 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_910_13&r=int |
| By: | Giovanni Facchini (University of Nottingham, University of Milan, Centro Studi Luca d’Agliano, CEPR and CES–Ifo); Anna Maria Mayda (Georgetown University, Centro Studi Luca d’Agliano, CEPR and IZA); Mariapia Mendola (University of Milan Bicocca and Centro Studi Luca d’Agliano) |
| Abstract: | Using census data for 1996, 2001 and 2007 we study the labor market effect of immigration to South Africa. The paper contributes to a small but growing literature on the impact of South-South migration by looking at one of the most attractive destinations for migrant workers in Sub–Saharan Africa. We exploit the variation – both at the district level and at the national one – in the share of foreign–born male workers across schooling and experience groups over time. At the district level, we estimate that increased immigration has a negative and significant effect on natives’ employment rates – and that this effect is more negative for skilled and white South African native workers – but not on total income. These results are robust to using an instrumental variable estimation strategy. At the national level, we find that increased immigration has a negative and significant effect on na-tives’ total income but not on employment rates. Our results are consistent with outflows of natives to other districts as a consequence of migration, as in Borjas (2006). |
| Keywords: | Immigration, Labor market effects, South Africa |
| JEL: | F22 J61 |
| Date: | 2013–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:csl:devewp:351&r=int |
| By: | Xu, Yongdeng |
| Abstract: | We propose a general form of vector Multiplicative Error Model (MEM) for the dynamics of duration, volume and price volatility. The vector MEM relaxes the two restrictions often imposed by previous empirical work in market microstructure research, by allowing interdependence among the variables and relaxing weak exogeneity restrictions. We further propose a multivariate lognormal distribution for the vector MEM. The model is applied to the trade and quote data from the New York Stock Exchange (NYSE). The empirical results show that the vector MEM captures the dynamics of the trivariate system successfully. We find that times of greater activity or trades with larger size coincide with a higher number of informed traders present in the market. But we highlight that it is unexpected component of trading duration or trading volume that carry the information content. Moreover, our empirical results also suggest a significant feedback effect from price process to trading intensity, while the persistent quote changes and transient quote changes affect trading intensity in different direction, confirming Hasbrouck (1988,1991). |
| Keywords: | Vector MEM; ACD; GARCH; intraday trading process; duration; volume; volatility |
| JEL: | C15 C32 C52 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:cdf:wpaper:2013/7&r=int |
| By: | Da Silva, Sergio |
| Abstract: | By combining basic concepts from economics and genetic economics, I elaborate a rationale for the mutual gains from the exchange of goods between siblings to moderate the famous parent-offspring conflict, an issue of interest for evolutionary psychology. The rationale also fills in the gaps of standard economic theory by justifying why trade (ultimately a cooperative endeavor) is made possible starting from egoistic utility-maximizers. |
| Keywords: | parent-offspring conflict |
| JEL: | A20 A22 B52 D1 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:46627&r=int |
| By: | Carlo Altomonte (Bocconi University and FEEM); Armando Rungi (Bocconi University and FEEM) |
| Abstract: | We explore the nature of Business Groups, that is network-like forms of hierarchical organization between legally autonomous firms spanning both within and across national borders. Exploiting a unique dataset of 270,474 headquarters controlling more than 1,500,000 (domestic and foreign) affiliates in all countries worldwide, we find that business groups account for a significant part of value-added generation in both developed and developing countries, with a prevalence in the latter. In order to characterize their boundaries, we distinguish between an affiliate vs. a group-level index of vertical integration, as well as an entropy-like metric able to summarize the hierarchical complexity of a group and its trade-off between exploitation of knowledge as an input across the hierarchy and the associated communication costs. We relate these metrics to host country institutional characteristics, as well as to the performance of affiliates across business groups. Conditional on institutional quality, a negative correlation exists between vertical integration and organizational complexity in defining the boundaries of business groups. We also find a robust (albeit non-linear) positive relationship between a group's organizational complexity and productivity which dominates the already known correlation between vertical integration and productivity. Results are in line with the theoretical framework of knowledge-based hierarchies developed by the literature, in which intangible assets are a complementary input in the production processes. |
| Keywords: | Production Chains, Hierarchies, Business Groups, Financial Development, Property Rights, Vertical Integration, Corporate Ownership, Organization of Production, Productivity |
| JEL: | F23 L22 L23 L25 D24 G34 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2013.33&r=int |