nep-int New Economics Papers
on International Trade
Issue of 2013‒06‒16
twenty-one papers chosen by
Alessia A. Amighini
Universita' Amedeo Avogadro

  1. Foreign Ownership and the Extensive Margins of Exports: Evidence for Manufacturing Enterprises in Germany By Raff, Horst; Wagner, Joachim
  2. Export Diversification: How Much Does the Choice of the Trading Partner Matter? By Julie Régolo; ;
  3. Export costs of visa restrictions By Natalia Kapelko; Natalya Volchkova
  4. Importing, productivity and SMEs: firm-level evidence from the Netherlands By Marcel van den Berg
  5. Financial Development and Sustainable Exports: Evidence from Firm-Product Data By Jaud, Melise; Kukenova, Madina; Strieborny, Martin
  6. Trade Openness and Cross-country Income Differences By Hepenstrick, Christian; Tarasov, Alexander
  7. The energy-bias of North-South technology spillovers: A global, bilateral, bisectoral trade analysis By Hübler, Michael; Glas, Alexander
  8. Exports and productivitgy: does destination matter? By Adriana Peluffo; Juan Barboni; Nicolás Ferrari; Hanna Melgarejo
  9. Exporting and Innovation: Theory and Firm-Level Evidence from the People's Republic of China By Lin, Faqin; Tang, Hsiao Chink
  10. Offshoring, Exporting, and Jobs By Jose L. Groizard; Priya Ranjan; Antonio Rodriguez-Lopez
  11. Multi-Product Firms and Exchange Rate Fluctuations. By Arpita Chatterjee; Rafael Dix-Carneiro; Jade Vichyanond
  12. Italian agri-food exports in the international arena By Carbone, A.; Henke, R.; Pozzolo, A. F.
  13. Finance, Comparative Advantage, and Resource Allocation By Jaud, Melise; Kukenova, Madina; Strieborny, Martin
  14. Developing country trade policies and market access issues : 1990-2012 By Michalopoulos, Constantine; Ng, Francis
  15. Do bilateral commercial relationships influence the distribution of CDM projects? By Valeria Costantini; Giorgia Sforna
  16. Trade Liberalization, Absorptive Capacity and the Protection of Intellectual Property Rights By Arghya Ghosh; Jota Ishikawa
  17. Trade and qualification : linking qualification needs to Germany's export flows By Mönnig, Anke; Zika, Gerd; Maier, Tobias
  18. Foreign direct investment, productivity, demand for skilled labour and wage inequality: an analysis for Uruguay By Adriana Peluffo
  19. Marginal Intra-industry Trade and Adjustment Costs in Labour Market By Nuno Carlos Leitão; Bogdan Dima; Dima (Cristea) Stefana
  20. Fire-Sale FDI or Business as Usual? By Ron Alquist; Rahul Mukherjee; Linda Tesar
  21. Export diversification in twelve European and Central Asian countries and the role of the commodity boom By Varela, Gonzalo J.

  1. By: Raff, Horst (Christian-Albrechts-University of Kiel, Kiel Institute for the World Economy and CESifo); Wagner, Joachim (Leuphana University Lueneburg, CESIS, Royal Institute of Technology, Stockholm)
    Abstract: We examine how foreign ownership of a firm affects the variety of goods that the firm exports and the number of countries it trades with. We construct a simple theoretical model of how foreign ownership may affect these extensive margins of exports and take this model to data from Germany, one of the leading actors on the world market for goods. In line with theoretical predictions we find that foreign-owned firms do export more goods to more countries after controlling for firm size, productivity and industry affiliation. These differences between foreign-owned firms and domestically controlled firms are highly statistically significant, and they are large from an economic point of view, with foreign-owned firms exporting up to 39% more goods to up to 31% more countries.
    Keywords: International trade; foreign ownership; multinational enterprise; foreign direct investment; extensive margins of exports; Germany
    JEL: F14 F23
    Date: 2013–06–12
  2. By: Julie Régolo; ;
    Abstract: This paper studies how a country’s export diversification varies across destination markets. It develops an extension of the Romalis (2004) model which yields two testable predictions. According to the first, exports between similarly endowed countries ("South-South" and "North-North") are more diversified than exports between differently endowed countries ("South-North" and "North-South"). The second implication is that low bilateral trade costs lead to greater export diversification. These predictions find empirical support in a panel of 102 trade partners and 4998 HS-6 industries over the period 1995-2007. Results show that similarities between trading partners in physical capital, land and human capital endowments per worker are associated with more diversified bilateral exports. Exports are also more diversified when bilateral trade costs are relatively low.
    Keywords: Export diversification, comparative advantage, trade costs, intra-industry trade, North-South trade
    Date: 2013
  3. By: Natalia Kapelko (New Economic School); Natalya Volchkova (New Economic School)
    Abstract: The paper studies the role visa restrictions play in determining export flows between Russian firms and their partners and explores the mechanism of this relationship. The specification of empirical model is derived from a heterogeneous firms’ model of trade. The existing visa restrictions are used as proxies for the costs the exporters incur while dealing with customers abroad. The results indicate that visas have a negative market access effect. Controlling for the choice of destination, visas have a significant negative effect on the value of relationship-specific exports as well. These results are consistent with informational and contractual nature of visa costs.
    Keywords: Heterogeneous firms, exports, visa restrictions, market access costs, extensive and intensive margins of trade
    JEL: F14 F42 F55
    Date: 2013–06
  4. By: Marcel van den Berg
    Abstract: Constructing a comprehensive data set covering Dutch firms over the years 2002-2008 I am the first to investigate the relationship between trade status, firm size and firm-level productivity in the Netherlands, thereby focusing particularly on small and medium sized enterprises (SMEs). The empirical evidence can be summarized in four stylized facts. The productivity ranking by trade status of Dutch manufacturing firms in increasing order of productivity is: non-traders, importers, exporters and two-way traders. Firm size and being controlled by a company located abroad are positively associated with firm-level productivity. The results point in the direction of self-selection of more productive manufacturing firms into importing, particularly for firms that did not trade altogether prior to the import start and for build-up periods of two and three years towards the import start. I do not find evidence that firms become more productive after an import start because of learning effects. I find considerable heterogeneity in the productivity premia of trade along the firm size distribution. The results suggest that exporting is more complex than sourcing inputs internationally for small firms relative to larger firms.
    Keywords: Micro data, firm heterogeneity, imports, exports, productivity, the Netherlands
    JEL: D22 F14 F23
    Date: 2013–06
  5. By: Jaud, Melise (World Bank); Kukenova, Madina (International Trade Centre, Geneva); Strieborny, Martin (Department of Economics, Lund University)
    Abstract: We combine a novel measure of export-related financial needs at the product level with a unique database of firm-product export data from five developing countries. Using the tools of survival analysis and controlling for firm and products fixed effects, we then examine the impact of financial development on the long-term trade. Finance matters for sustainable export performance, as goods with higher export-related financial needs disproportionately benefit from better financial development. Our results complement existing literature on finance and trade, which has relied on production-based measures of financial dependence at the industry or firm level.
    Keywords: fi…nance and trade; export survival; agri-food trade; SPS regulation
    JEL: F10 G10 O16
    Date: 2013–04–24
  6. By: Hepenstrick, Christian; Tarasov, Alexander
    Abstract: Development accounting literature usually attributes the observed cross-country variation in per capita income to differences in countries' factor endowments and total factor productivity (the Solow residual). While the former can be relatively straightforward interpreted and measured, the latter remains at least partly a black box. In this paper, we provide a structural interpretation for differences in total factor productivity across countries and quantitatively explore the role of trade barriers in explaining cross-country income differences. In particular, we find that giving all countries the same market entry costs or giving all country-pairs the same variable trade costs reduces inequality by around 13%.
    Keywords: General equilibrium; market access costs; development accounting; experiments
    JEL: F11 F12 O10 O40
    Date: 2013–05–29
  7. By: Hübler, Michael; Glas, Alexander
    Abstract: We examine variations in the South-North ratios (emerging vs. industrialized countries) of energy and labor intensities driven by imports. We use the novel World Input-Output Database (WIOD) that provides bilateral and bisectoral data for 40 countries and 35 sectors for 1995-2009. We find South-North convergence of energy and labor intensities, an energy bias of import-driven convergence and no robust difference between imports of intermediate and investment goods. Accordingly, trade helps emerging economies follow a 'green growth' path, and trade-related policies can enhance this path. However, the effects are economically small and require a long time horizon to become effective. Trade-related policies can become much more effective in selected countries and sectors: China attenuates labor intensity via imports of intermediate goods above average. Brazil reduces energy intensity via imports of intermediate and investment goods above average. Production of machinery as an importing sector in emerging countries can immoderately benefit from trade-related reductions in factor intensities. Electrical equipment as a traded good particularly decreases energy intensity. Machinery particularly dilutes labor intensity. Our main results are statistically highly significant and robust across specifications. --
    Keywords: Energy intensity,labor intensity,trade,technology diffusion,convergence,developing countries
    JEL: C23 F18 F21 O13 O33 O47 Q43
    Date: 2013
  8. By: Adriana Peluffo (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Juan Barboni (Despegar. Análisis de Riesgo); Nicolás Ferrari (Axiona. Sociedad de Soluciones); Hanna Melgarejo (Agencia de Gobierno Electrónico y Sociedad de la Información (AGESIC). Sistema De Compras y Contrataciones Estatales)
    Abstract: In this work we analyse the effect of export destinations on Total Factor Productivity (TFP) of manufacturing Uruguayan firms for the period 1997-2006. We study two effects: self-selection and learning by exporting. To this end, we work with a panel of firms –provided by the Instituto Nacional de Estadisticas- and the destiny of exports - provided by the Dirección Nacional de Aduanas-. We estimate TFP using the Levinsohn & Petrin (2003) methodology. Results for Pooled Ordinary Least Squares estimations show the association between firms with higher share of their total exports to developed countries and higher TFP than firms exporting to less developed countries. Nevertheless, applying the transition group methodology (Alvarez & López 2005) in order to mitigate endogeneity issues, there is no evidence that exporting to developed countries enhances productivity through learning by exporting. However, evidence of learning by exporting is found for those firms starting to export to less developed countries. These findings suggest an international strategy through which firms reach gains in productivity exporting to markets with lower entry cost, and once they have learnt and improved their productivity, are in a better position to enter into more developed countries.
    Keywords: Total factor productivity, exports, destiny of exports, auto-selection, learning by exporting
    JEL: D21 D24 F14 O54
    Date: 2013–05
  9. By: Lin, Faqin (Central University of Finance and Economics); Tang, Hsiao Chink (Asian Development Bank)
    Abstract: This paper investigates how exporting affects firm innovation. We embed innovation into a firm heterogeneity model with productivity, where in equilibrium the model shows that exporters invest more in innovation, such as research and development (R&D), than non-exporters. Using firm-level data from the People’s Republic of China (PRC), we apply the Levinsohn and Petrin (2003) method of estimating firm productivity and matching econometrics to control for endogeneity. The results show, on average, in contrast to non-exporters, exporters increase their R&D intensity by more than 5%, raise their R&D expenditure by more than 33%, and are 4% more likely to engage in R&D activity. In addition, we find exporting to have a smaller impact on innovation among firms that export processed goods, specifically, those in the electronics sectors, located in coastal provinces, and foreign-owned.
    Keywords: Exporting; innovation; firm heterogeneity; matching
    JEL: D21 F14 O31
    Date: 2013–04–01
  10. By: Jose L. Groizard (Universitat de les Illes Balears); Priya Ranjan (University of California, Irvine); Antonio Rodriguez-Lopez (University of California, Irvine)
    Abstract: We construct a heterogeneous-firm model with a continuum of inputs to study the impact of offshoring on job flows at both the intensive and extensive margins. We identify three channels through which a reduction in the cost of offshoring affects firm-level employment: a job-relocation effect, a productivity effect, and a competition effect. Whether there is net job creation or job destruction crucially depends on the elasticity of substitution between inputs: the greater the elasticity, the more likely it is that offshoring causes overall job destruction. When firms are allowed to export, a reduction in the cost of offshoring makes offshoring firms more productive in the export market, which leads to further job creation. This offshoring-induced job creation due to exporting possibilities increases the likelihood that the overall effect of offshoring on industry employment is positive.
    Keywords: heterogeneous firms, employment, offshoring costs.
    JEL: F12 F16
    Date: 2013
  11. By: Arpita Chatterjee (School of Economics, University of New South Wales); Rafael Dix-Carneiro (University of Maryland); Jade Vichyanond (International Monetary Fund)
    Abstract: This paper studies the effect of exchange rate shocks on export behavior of multi-product firms. We provide a theoretical framework illustrating how rms adjust their prices, quantities, product scope, and sales distribution across products in the event of exchange rate fluctuations. In response to a real exchange rate depreciation, firms increase markups for all products, but markup increases decline with firm-product-specic marginal costs of production. We find robust evidence for our theoretical predictions using Brazilian customs data containing destination-specic and product-specic export sales and quantities. The sample period covers the years 1997-2006, during which Brazil experienced a series of drastic currency fluctuations.
    Keywords: Multi-product firms, exchange rate pass-through, product ladder, local distribution costs.
    JEL: F12 F41
    Date: 2012–04
  12. By: Carbone, A.; Henke, R.; Pozzolo, A. F.
    Abstract: We study the performance over the last fifteen years of exports of typical, Made in Italy agri-food products. First, we estimate the aggregate elasticities of exports values with respect to world imports, export prices and the prices applied by our competitors. Second, we show that aggregate estimates hide very different values of the elasticities at the single product level. Third, we calculate an index of sophistication for each Made in Italy agri-food exports, capturing its position in the different layers of world supply, showing that Made in Italy agri-food exports are shifting towards higher levels of sophistication. Finally, we compare the elasticities with the changes in sophistication. Our results show that the strategy of Italian exporters varies according to the type of product and to the degree of market completion. In some cases, Italian exporters contrast increasing world competition by raising the quality of their products or their sophistication content; in other cases, price competition is chosen , by keeping AUVs at lower levels than those of our competitors. But in nearly all cases, these strategies are successful in allowing Italy to defend and sometimes even to increase its world market shares, in spite of a growing world competition.
    Keywords: exports’ elasticities, exports’ sophistication, made in italy, world demand, International Relations/Trade, Q17, F14,
    Date: 2013–06
  13. By: Jaud, Melise (Paris School of Economics and World Bank); Kukenova, Madina (University of Lausanne); Strieborny, Martin (Department of Economics, Lund University)
    Abstract: We show that exported products exit the US market sooner if they violate the Heckscher-Ohlin notion of comparative advantage. Crucially, this pattern is stronger when exporting country has a well-developed banking system, measured by a high ratio of bank credit over the GDP. Banks thus push firms away from exports that are facing an uphill battle on a competitive foreign market due to a suboptimal use of the domestic factor endowment. Our results imply a disciplining role for bank credit in terminating inefficient trade flows. This constitutes a new channel through which finance improves resource allocation in the real economy.
    Keywords: resource misallocation; …nance; comparative advantage; export survival
    JEL: F11 G21 G30 O16
    Date: 2013–04–22
  14. By: Michalopoulos, Constantine; Ng, Francis
    Abstract: The study presents a comprehensive review of developing country trade policies and market access issues as they evolved over the period 1990-2012. The main findings are, first, that applied tariffs as well as traditional core non-tariff measures have declined significantly over time in both developed and developing countries. Second, the instruments of protection used by developed and developing countries are becoming increasingly similar: trade remedies, especially anti-dumping are the instruments of choice for all except low-income developing countries. Third, agriculture is the main sector where developing countries face access problems in OECD markets. Fourth, regional and other preferential trade agreements are both a result and a cause of the lack of progress in multilateral trade negotiations. They violate the basic World Trade Organization tenet of most favored nation and thus pose a potential threat to the multilateral system and a potential stimulus to further multilateral collaboration. Fifth, sanitary and phytosanitary and technical barriers to trade are being increasingly used by both developed and developing countries but their protective intent is difficult to gauge. There is a need for increased vigilance, transparency, and reporting to ensure that they are not being used as a means of protection of economic interests. Sixth, the service sectors are the most promising area where efforts for further liberalization are needed and may produce significant benefits. And seventh, far less additional protection has been put in place following the 2008 financial crisis compared with what had been feared or what had happened in earlier crises.
    Keywords: Trade Policy,Free Trade,Economic Theory&Research,Debt Markets,Emerging Markets
    Date: 2013–05–01
  15. By: Valeria Costantini; Giorgia Sforna
    Abstract: This paper contributes to the issue of the uneven distribution of Clean Development Mechanism (CDM) projects among developing countries. By applying a gravity model to a panel dataset at bilateral country level, we find that well-established export flows from developed economies towards developing countries explain a large portion of the geographical distribution of CDM projects. The policy implication we derive is that a sort of lock-in effect in the CDM relationship should be avoided by enhancing the institutional framework in developing countries hosting CDMs as well as by reinforcing compulsory rules for CDM destination toward the least developed economies. On the contrary, if market forces are left free to influence CDM destination, cost effectiveness in abatement efforts is not the driving force influencing the decision on destination market, but other criteria based on private benefits seem to prevail.
    Keywords: Kyoto Protocol; Clean Development Mechanism, Export Flows; Gravity Model; Institutional Quality
    JEL: F14 F18 Q54 Q56
    Date: 2013–06
  16. By: Arghya Ghosh (School of Economics, the University of New South Wales); Jota Ishikawa (Faculty of Economics, Hitotsubashi University)
    Abstract: We examine how trade liberalization afects South’s incentive to protect intellectual property rights (IPR) in a North-South duopoly model where a low-cost North firm competes with a high-cost South firm in the South market. The extent of effective cost difference between North and South depends on South’s imitation, which in turn depends on South’s IPR protection and absorptive capacity and North firm’s location choice and masking effort, all of which are endogenously determined in our model. Even though innovation is exogenous to the model (and hence unffected by South’s IPR policy) we find that strengthening IPR protection in South can improve its welfare. The relationship between trade cost and the degree of IPR protection that maximizes South welfare is non-monotone. South does not have any incentive to protect IPR when trade costs are either zero or prohibitive, while for moderate values of trade cost, South government can strengthen IPR protection, induce FDI and increase South’s welfare. In an extension of the model, where North firm can mask its technology, we show that, even when trade costs are zero or prohibitive, strengthening IPR protection can improve South’s welfare by deterring the North firm from masking its technology. The relationships between location choice/masking decision and South’s investment in absorptive capacity are also explored.
    Keywords: intellectual property rights, absorptive capacity, FDI, oligopoly, imitation, masking
    JEL: F12 F13 D43
    Date: 2013–11
  17. By: Mönnig, Anke; Zika, Gerd (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Maier, Tobias
    Abstract: "Foreign markets determine success and failure of those industries that have be-come reliant on foreign demand, impair the demand for employment and invoke changes in occupational fields and qualification requirements. This paper aims to disclose the direct and indirect influence of major trading partners on Germany's production, employment, and qualification needs. It projects the effects by using the dynamic macro-econometric input-output model INFORGE. Industrialised economies are the most important determinants for employment in the manufacturing industries. Business-related services are highly indirectly affected. The growth impact of industrialised nations is declining while BRICS nations are gaining momentum. A shift towards higher qualification needs can be observed." (Author's abstract, IAB-Doku) ((en))
    JEL: F16 F17 F14
    Date: 2013–06–03
  18. By: Adriana Peluffo (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: This work analyses the impact of foreign direct investment (FDI) on productivity, the demand for skilled labour and wage inequality of the Uruguayan Manufacturing firms for the period 1997-2005. Firstly, we estimate the effects of FDI on productivity, relative wages and relative employment of skilled workers, through conventional pooled OLS. Then, we estimate quantile regressions, which reveal that consistently with firm heterogeneity, the response to foreign ownership is not homogenous, but varies over the conditional distribution of each dependent variable. Nevertheless, since we cannot attribute causality from the previous correlations we use discrete treatment effect techniques for analyzing causality. Our preliminary results seem to indicate that FDI is associated with higher productivity and an increased demand for skilled labour. Furthermore, though average wages are higher in foreign owned firms, the wage gap between skilled and unskilled workers is higher in foreign owned firms than in domestic ones. Then, it follows that promoting foreign investment enhances productivity. On the other hand, due to the higher demand for skilled workers policies such as training of workers would be conductive to further productivity improvements, while other social policies could help to mitigate wage inequality effects.
    Keywords: Fdi, Productivity, Labour markets
    JEL: F23 J23 J24 J31 O39
    Date: 2013–02
  19. By: Nuno Carlos Leitão (ESGTS, Polytechnic Institute of Santarém, CEFAGE, Évora University); Bogdan Dima (West University of Timisoara, Faculty of Economics and Business Administration, Finance Department); Dima (Cristea) Stefana (Vasile Goldis Western University of Arad)
    Abstract: The objective of this study is to provide some empirical evidences on the existence of labor market adjustments according to smooth adjustment hypothesis (SAH) under the impact of intra-industry trade (IIT) considering the Portuguese case over a time span between 1995 and 2006. The main methodological issue of this study consists in showing that it is preferable to use the GMM-System approach with orthogonal transformation of data. The key outcome consists in highlighting a negative linkage between marginal intra-industry trade and the amplitude of employment changes for this particular market. In addition, we find a negative correlation between changes of employment and changes in domestic consumption. Moreover, the relationship between growth of productivity and market structure is according to smooth adjustment hypothesis.
    Keywords: Intra-Industry Trade, Adjustment Costs, Portugal, Labour Market
    JEL: F12 C33
    Date: 2013–04
  20. By: Ron Alquist; Rahul Mukherjee; Linda Tesar
    Abstract: Using a new data set, we examine the characteristics and dynamics of cross-border mergers and acquisitions during emerging-market financial crises, that is, so-called “fire-sale FDI.” Our findings shed fresh light on whether the transactions undertaken during crisis periods differ in fundamental ways from those undertaken during more tranquil periods. The increase in foreign acquisitions during crises is mainly driven by non-financial acquirers targeting firms in the same industry rather than foreign financial firms. This increase in acquisition activity in a given industry is unrelated to the industry’s dependence on external finance. There is also no evidence of an increase in the size of stakes bought during crises. In terms of the effect of crises on emerging-market mergers and acquisitions, we find little evidence that foreign acquisitions are resold, or “flipped,” more frequently than domestic acquisitions. Moreover, flipping rates are uncorrelated with the industry’s dependence on external finance. Finally, the probability of being flipped to a domestic buyer does not differ across crisis and non-crisis periods. All of these results are robust to alternative empirical specifications, different definitions of crises, and the inclusion of macroeconomic controls. Contrary to conventional wisdom, fire-sale FDI and asset flipping by foreign firms appear to have been “business as usual.”
    Keywords: Financial markets; International financial markets; International topics
    JEL: F21 G01 G34
    Date: 2013
  21. By: Varela, Gonzalo J.
    Abstract: This paper examines export diversification along the product and market dimensions for selected countries in the Europe and Central Asia region and, more generally, export performance. While the latter is extraordinary, with average export growth rates above 10 percent, the evidence on diversification is less impressive, and hints at a role played by the interaction of natural resource abundance and the commodity price boom. A cross-country analysis including 171 economies suggests that the region's resource rich countries are less diversified than would be expected given their resource endowments, level of development, and size. The commodity boom period was associated with an increase in concentration for the resource rich along the product dimension: they did not increase the number of products exported and became more reliant on oil and gas. During the same period, the resource poor increased their export product scope while maintaining other concentration indices unchanged. A similar but milder pattern is found for diversification along the destination dimension.
    Keywords: Markets and Market Access,Agribusiness&Markets,Water and Industry,Economic Theory&Research,Access to Markets
    Date: 2013–06–01

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