nep-int New Economics Papers
on International Trade
Issue of 2013‒08‒05
eighteen papers chosen by
Alessia A. Amighini
Universita' Amedeo Avogadro

  1. Green investment strategies and export performance: A firm-level investigation By Antonietti,Roberto; Marzucchi,Alberto
  2. Who Benefits from Aid for Trade? Comparing the Effects on Recipient versus Donor Exports By Philipp Hühne; Birgit Meyer; Peter Nunnenkamp
  3. Trade and technology: New evidence on the productivity sorting of firms By Bertschek, Irene; Hogrefe, Jan; Rasel, Fabienne
  4. Firm Heterogeneity and Aggregate Welfare By Marc J. Melitz; Stephen J. Redding
  5. New directions of trade for the agri-food industry: a disaggregated approach for different income countries, 1963-2000 By Raúl Serrano; Vicente Pinilla
  6. The Buyer Margins of Firms' Exports By Jerónimo Carballo; Gianmarco I. P. Ottaviano; Christian Volpe Martincus
  7. Empirical Studies of Trade Marks: The Existing Economic Literature By Philipp Schautschick; Christine Greenhalgh
  8. Export price adjustments under financial constraints By Angelo Secchi; Federico Tamagni; Chiara Tomasi
  9. Importing, exporting and firm-level employment volatility By Christopher Kurz; Mine Z. Senses
  10. Skill premium and trade puzzles: A solution linking production factors and demand By Thibault FALLY
  11. Asymmetric Trade Liberalisation, Sector Heterogeneity and Innovation By Antonio Navas Ruiz
  12. Are Internet and Face-to-Face Contacts Complements or Substitutes? Evidence from Internet Traffic between Cities By David Cuberes
  13. Contingent Trade Policy and Economic Efficiency By Phillip McCalman; Frank Stähler; Gerald Willmann
  14. Allocative Efficiency, Mark-ups, and the Welfare Gains from Trade By Thomas J. Holmes; Wen-Tai Hsu; Sanghoon Lee
  15. The Hyperglobalization of Trade and Its Future By Arvind Subramanian; Martin Kessler
  16. Opening a Pandora's Box: Modelling World Trade Patterns at the 2035 Horizon By Lionel Fontagné; Jean Fouré
  17. Competition in tourism arrivals – A multidimensional index of geographical structural similarity By Nuno Crespo; Nádia Simões; José Duarte
  18. International Technology Diffusion of Joint and Cross-border Patents By Michael McAleer; Chia-Lin Chang; Ju-Ting Tang

  1. By: Antonietti,Roberto; Marzucchi,Alberto
    Abstract: In this paper we empirically investigate the relationship between investments in environmentally-oriented equipment and firms’ export performance. Drawing on Porter hypothesis and firm heterogeneity theory, we adopt a structural model where first we estimate the impact of green investment strategies on the level of productive efficiency (TFP), and second we assess whether induced productivity influences the extensive and intensive margin of exports. Relying on a rich firm-level dataset on Italian manufacturing, our results show that firms with higher productivity, induced among other factors by green investment involving environmental protection and reduction in the use of raw materials, have increased commitment to, and profits from, exports, especially towards countries adopting a more stringent environmental regulatory framework. Our evidence provides a ‘green investment-based’ explanation for the link between TFP-heterogeneity and trade.
    Keywords: Exports, Firm Heterogeneity, Green Investment Strategy, Total Factor Productivity
    JEL: Q55 Q56 F14 F18
    Date: 2013–07–31
  2. By: Philipp Hühne; Birgit Meyer; Peter Nunnenkamp
    Abstract: Recent studies offer an ambiguous picture on the effectiveness of foreign aid in strengthening the export capacity of recipient countries. Moreover, the literature on aid for trade (AfT) has often neglected that exporters in the donor countries may be among the main beneficiaries. We hypothesize that AfT is as much in the self-interest of donor countries as it may have promoted the exports of recipient countries. We simultaneously estimate and compare the effects of AfT on trade in both directions. We find that AfT increases recipient exports to donors as well as recipient imports from donors. The first effect tends to dominate the latter, which contradicts the skeptical view that donors grant AfT primarily to promote their own export interests
    Keywords: aid effectiveness, aid for trade, recipient exports, donor exports
    JEL: F35 F14
    Date: 2013–06
  3. By: Bertschek, Irene; Hogrefe, Jan; Rasel, Fabienne
    Abstract: Using a unique German firm-level data set, we provide empirical evidence for a productivity sorting along two dimensions: international activity and technology choice. We consider domestic and exporting firms and measure technology choice by firms' actual use of advanced information technology (IT). For manufacturing firms, the observed sorting pattern is consistent with recent theories of heterogeneous firms and technology choice: Only the relatively more productive ones among internationally active firms are also highly technology intensive. For service sector firms we find similar evidence, yet the results seem to depend on the trade cost of certain services. In general, recent theoretical advances regarding trade and technology adoption thus seem to better fit the manufacturing sector. --
    Keywords: exports,productivity,sorting,information technology,firm-level data
    JEL: F14 F23 L23
    Date: 2013
  4. By: Marc J. Melitz (Department of Economics); Stephen J. Redding (Princeton University)
    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 di↵erent 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
  5. By: Raúl Serrano (Department of Business Administration, Faculty of Economics and Business Studies, Universidad de Zaragoza); Vicente Pinilla (Department of Applied Economics and Economic History, Faculty of Economics and Business Studies, Universidad de Zaragoza)
    Abstract: The objective of the present study is to explain the fundamental changes experienced by agricultural trade in the second half of the XX century. The first of these was a progressive concentration of this trade among developed countries, while the second was a significant boom in agricultural trade among developing countries, since the final decade of the last century.Our gravity model underlines that, the agricultural products exported by the Southern countries to any destination had a demand elasticity which was negative and statistically signficant. Furthermore, this model has also permitted verification that Regional Trade Agreements have significantly encouraged agricultural trade among developed countries. In contrast, the developing countries were faced with highly protected markets and a relative initial failure in their attempts to liberalize their regional markets. The boom from the final decade of the XX century in South-South agricultural trade can be explained, by the stimulus provided by the new RTAs among developing countries.
    Keywords: Agri-food trade, gravity equation, regional trade agreements, agri-food industry
    JEL: F14 N50 N70 Q17
    Date: 2013–02
  6. By: Jerónimo Carballo; Gianmarco I. P. Ottaviano; Christian Volpe Martincus
    Abstract: We use highly disaggregated firm-level export data from Costa Rica, Ecuador, and Uruguay over the period 2005-2008 to provide a precise characterization of firms' export margins, across products, destination countries, and crucially customers. We show that a firm's number of buyers and the distribution of sales across them systematically vary with the characteristics of its destination markets. While most firms serve only very few buyers abroad, the number of buyers and the skewness of sales across them increases with the size and the accessibility of destinations. We develop a simple model of selection with heterogeneous buyers and sellers consistent with these findings in which tougher competition induces a better alignment between consumers' ideal variants and firms' core competencies. This generates an additional channel through which tougher competition leads to higher productivity and higher welfare and hints at an additional source of gains from trade as long as freer trade fosters competition.
    Keywords: Buyer margins, market segmentation, competition, markupsbuyer margins, market segmentation, competition, markups
    JEL: F12
    Date: 2013–07
  7. By: Philipp Schautschick (Ludwig Maximilians University, Munich; and Munich Center for Innovation and Entrepreneurship at the Max Planck Institute for Intellectual Property and Competition Law); Christine Greenhalgh (Oxford Intellectual Property Research Centre and St Peter's College, Oxford)
    Abstract: This paper surveys empirical studies employing trade mark data that exist in the economic literature to date. Section 1) documents the use of trade marks by firms in several advanced countries including Australia, the United Kingdom and the United States, 2) reviews different attempts to gauge the function of a trade mark as indicator of innovation and product differentiation, and 3) provides an overview of the association of trade marks with dimensions of firm performance and productivity. Sections 4) and 5) give accounts of studies that focus on the social costs and value of trade marks, namely their importance for firm survival, their impact on demand, and firms' incentives to innovate but also to raise rivals' costs. Section 6) covers first endeavours to investigate the interplay between different types of intellectual property rights, while 7) briefly concludes.
    Keywords: Intellectual property, trade marks, empirical studies
    JEL: O33 O34
    Date: 2013–07
  8. By: Angelo Secchi (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, Laboratory of Economics and Management (LEM) - Scuola Superiore Sant'Anna); Federico Tamagni (Laboratory of Economics and Management (LEM) - Scuola Superiore Sant'Anna); Chiara Tomasi (Laboratory of Economics and Management (LEM) - Scuola Superiore Sant'Anna, Università di Trento - Dipartimento di Economia e Management)
    Abstract: By exploring a rich dataset that links international trade transactions to a panel of Italian manufacturing firms, this paper provides new evidence on the role of financial constraints on price variations across exporting firms. After controlling for relevant firm characteristics and potential endogeneity of financial constraints, we find that constrained firms charge higher prices than unconstrained firms exporting in the same product-destination market. The positive price difference increases with the degree of horizontal differentiation of products, while it is smaller for vertically differentiated products, where there is more scope for quality adjustment. Our results are consistent with a scenario where constrained firms exploit demand rigidities to push up their prices to sustain revenues and keep operations going in the attempt to escape the constraints.
    Keywords: Financial constraints; export prices; horizontal and vertical differentiation; quality adjustment
    Date: 2013–07
  9. By: Christopher Kurz; Mine Z. Senses
    Abstract: In this paper, we use detailed trade and transactions data for the U.S. manufacturing sector to empirically analyze the direction and magnitude of the association between firm-level exposure to trade and the volatility of employment growth. We find that, relative to purely domestic firms, firms that only export and firms that both export and import are less volatile, whereas firms that only import are more volatile. The positive relationship between importing and volatility is driven mainly by firms that switch in and out of importing. We also document a significant degree of heterogeneity across trading firms in terms of the duration of time and intensity with which firms trade, the number and type of products they trade and the number and characteristics of their trading partners. We find these factors to play an important role in explaining the differential impact of trading on employment volatility experienced by these firms.
    Date: 2013
  10. By: Thibault FALLY (University of Colorado at Boulder)
    Abstract: International trade theory is a general-equilibrium discipline, yet most of the standard portfolio of research focuses on the production side of general equilibrium. In addition, we do not have a good understanding of the relationship between characteristics of goods in production and characteristics of preferences. This paper conducts an empirical investigation into the relationship between a good's factor intensity in production and its income elasticity of demand in consumption. In particular, we nd a strong and signicant positive relationship between skilled-labor intensity in production and income-elasticity of demand for several types of preferences, with and without accounting for trade costs and dierences in prices. Counter-factual simulations yield a number of results. We can explain one third or more of "missing trade", and show an important role for per-capita income in understanding trade/GDP ratios, the choice of trading partners, and the composition of trade. Furthermore, an equal rise in productivity in all sectors in all countries leads to a rising skill premium in all countries, with particularly large increases in developing countries.
    Date: 2012
  11. By: Antonio Navas Ruiz (Department of Economics, The University of Sheffield)
    Abstract: Innovation, mark-ups and the degree of trade openness vary substantially across sectors. This paper builds a multi-sector endogenous growth model to study the influence of asymmetric trade liberalisation and sectoral differences in the degree of product market competition on the effect that trade has on R&D investments at a firm level. I find that differences in the degree of competition generate large differences in firm innovative responses to trade liberalisation. A movement from autarky to free trade promotes innovation and productivity growth in those sectors which are initially less competitive. However, when the initial tariff level is common across sectors, a homogeneous tariff reduction promotes innovation in those sectors which are initially more competitive. The paper suggests that trade liberalisation could be a source of industry productivity divergence: firms that are located in industries with greater exposure to foreign trade, invest a greater amount in R&D contributing to industry productivity growth. Finally the paper outlines the importance of reallocation effects within industry and across industries that are the result of these asymmetries. An asymmetric trade liberalisation has a small but negative impact on aggregate productivity growth.
    Keywords: sectorial productivity, international trade, innovation
    JEL: F12 O43
    Date: 2013
  12. By: David Cuberes (Department of Economics, The University of Sheffield)
    Abstract: This paper uses a new dataset on Internet flows between cities around the world to study whether electronic communication and face-to-face contacts are substitutes or complements. In order to test these competing hypotheses I estimate a regression of bilateral Internet traffic on physical distance between pairs of cities and several city and country-specific variables that include a control for cities’ population, countries’ population and per capita GDP, the number of Internet users, the intensity of trade between countries, and several dummies that aim to capture city specific effects and the degree of familiarity between residents of different countries. The estimates reveal a strong and robust negative effect of distance on the intensity of electronic communications, suggesting that Internet and face-to-face contacts are more likely to be complements than substitutes.
    Keywords: cities; Internet; face-to-face contacts; death of distance
    JEL: R12
    Date: 2013
  13. By: Phillip McCalman; Frank Stähler; Gerald Willmann
    Abstract: This paper develops an efficiency theory of contingent trade policies. We model the competition for a domestic market between one domestic and one foreign firm as a pricing game under incomplete information about production costs. The cost distributions are asymmetric because the foreign firm incurs a trade cost to serve the domestic market. We show that the foreign firm prices more aggressively to overcome its cost disadvantage. This creates the possibility of an inefficient allocation, justifying the use of contingent trade policy on efficiency grounds. Despite an environment of asymmetric information, contingent trade policy that seeks to maximize global welfare can be designed to avoid the potential inefficiency. National governments, on the other hand, make excessive use of contingent trade policy due to rent shifting motives. The expected inefficiency of national policy is larger (smaller) for low (high) trade costs compared to the laissez-faire case. In general, there is no clear ranking between the laissez-faire outcome and a contingent national trade policy
    Keywords: Contingent Trade Policy, Efficiency
    JEL: F12 F13
    Date: 2013–07
  14. By: Thomas J. Holmes; Wen-Tai Hsu; Sanghoon Lee
    Abstract: This paper develops an index of allocative efficiency that depends upon the distribution of mark-ups across goods. It determines how changes in trade frictions affect allocative efficiency in an oligopoly model of international trade, decomposing the effect into the cost-change channel and the price-change channel. Formulas are derived shedding light on the signs and magnitudes of the two channels. In symmetric country models, trade tends to increase allocative efficiency through the cost-change channel, yielding a welfare benefit beyond productive efficiency gains. In contrast, the price-change channel has ambiguous effects on allocative efficiency.
    JEL: D61 F10 L13
    Date: 2013–07
  15. By: Arvind Subramanian (Peterson Institute for International Economics); Martin Kessler (Peterson Institute for International Economics)
    Abstract: This paper describes seven salient features of trade integration in the 21st century: Trade integration has been more rapid than ever (hyperglobalization); it is dematerialized, with the growing importance of services trade; it is democratic, because openness has been embraced widely; it is criss-crossing because similar goods and investment flows now go from South to North as well as the reverse; it has witnessed the emergence of a mega-trader (China), the first since Imperial Britain; it has involved the proliferation of regional and preferential trade agreements and is on the cusp of mega-regionalism as the world's largest traders pursue such agreements with each other; and it is impeded by the continued existence of high barriers to trade in services. Going forward, the trading system will have to tackle three fundamental challenges: In developed countries, the domestic support for globalization needs to be sustained in the face of economic weakness and the reduced ability to maintain social insurance mechanisms. Second, China has become the world's largest trader and a major beneficiary of the current rules of the game. It will be called upon to shoulder more of the responsibilities of maintaining an open system. The third challenge will be to prevent the rise of mega-regionalism from leading to discrimination and becoming a source of trade conflicts. We suggest a way forward--including new areas of cooperation such as taxes--to maintain the open multilateral trading system and ensure that it benefits all countries.
    Keywords: Globalization, Convergence, Inequalities, Multilateral Trading System, China
    JEL: F42 F15
    Date: 2013–07
  16. By: Lionel Fontagné; Jean Fouré
    Abstract: Economic projections for the world economy, particularly in relation to the construction of Computable General Equilibrium (CGE) baselines, are generally rather conservative and take scant account of the wide range of possible evolutions authorized by the underlying economic mechanisms considered. Against this background, we adopt an ‘open mind’ to the projection of world trade trajectories. Taking a 2035 horizon, we examine how world trade patterns will be shaped by the changing comparative advantages, demand, and capabilities of different regions. We combine a convergence model fitting three production factors (capital, labour and energy) and two factor-specific productivities, alongside a dynamic CGE model of the world economy calibrated to reproduce observed elasticity of trade to income. Each scenario involves three steps. First, we project growth at country level based on factor accumulation, educational attainment and efficiency gains, and discuss uncertainties related to our main drivers. Second, we impose this framework (demographics, gross domestic product, saving rates, factors and current account trajectories) on the CGE baseline. Third, we implement trade policy scenarios (tariffs as well as non-tariff measures in goods and services), in order to get factor allocation across sectors from the model as well as demand and trade patterns. We show that the impact of changing baselines is greater than the impact of a policy shock on the order of magnitude of changes in world trade patterns, which points to the need for care when designing CGE baselines.
    Keywords: Growth;Macroeconomic Projections;Dynamic Baselines
    JEL: E23 E27 F02 F17 F47
    Date: 2013–07
  17. By: Nuno Crespo; Nádia Simões; José Duarte
    Abstract: Given the economic importance of the tourism sector, countries actively compete for attracting tourism flows. In a bilateral perspective, an important determinant of the degree of competition is the geographical structure of tourism inflows, i.e., the relative importance of the different source countries. A higher overlap of these flows indicates greater competition. The goal of the present study is to propose a methodological approach to quantify this overlap. Taking some indicators traditionally used in international trade analysis as inspiration, we propose a methodology that measures, for each pair of countries, the degree of similarity between the geographical structures of tourism inflows. The methodology takes a multidimensional concept of structural similarity in order to incorporate relevant dimensions of international tourism flows today.
    Keywords: Tourism flows; Arrivals; Geographical similarity; Competitiveness; Index
    JEL: F14 L83
    Date: 2013–07–26
  18. By: Michael McAleer; Chia-Lin Chang; Ju-Ting Tang (University of Canterbury)
    Abstract: With the advent of globalization, economic and financial interactions among countries have become widespread. Given technological advancements, the factors of production can no longer be considered to be just labor and capital. In the pursuit of economic growth, every country has sensibly invested in international cooperation, learning, innovation, technology diffusion and knowledge. In this paper, we use a panel data set of 40 countries from 1981 to 2008 and a negative binomial model, using a novel set of cross-border patents and joint patents as proxy variables for technology diffusion, in order to investigate such diffusion. The empirical results suggest that, if it is desired to shift from foreign to domestic technology, it is necessary to increase expenditure on R&D for business enterprises and higher education, exports and technology. If the focus is on increasing bilateral technology diffusion, it is necessary to increase expenditure on R&D for higher education and technology.
    Keywords: International Technology Diffusion, Exports, Imports, Joint Patent, Cross-border Patent, R&D, Negative Binomial Panel Data
    JEL: F14 F21 O30 O57
    Date: 2013–07–20

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