nep-int New Economics Papers
on International Trade
Issue of 2013‒08‒31
sixteen papers chosen by
Alessia A. Amighini
Universita' Amedeo Avogadro

  1. What drives the market share changes? Price versus non-price factors By Benkovskis , Konstantins; Wörz , Julia
  2. Services versus Goods Trade: Are They the Same? By Andrea ARIU
  3. A Gravity Model of Russian Trade: The Role of Foreign Direct Investment and Socio-Cultural Similarity By Iwasaki, Ichiro; Suganuma, Keiko
  4. The Role of Extensive Margin in Exports of Turkey : A Comparative Analysis By Altan Aldan; Olcay Yucel Culha
  5. Trade Performance of the Less Developed African Countries By Fontoura, Maria P.; Crespo, Nuno
  6. Export dynamics in large devaluations By George Alessandria; Sangeeta Pratap; Vivian Yue
  7. Montenegrin Trade Specialization Index By Mitchell H. Kellman; Yochanan Shachmurove
  8. Dynamic Selection and the New Gains from Trade with Heterogeneous Firms By Thomas Sampson
  9. Cointegration Analysis of Exports and Imports: The Case of Pakistan Economy By Ali, Sharafat
  10. The impact of trade, offshoring and multinationals on job loss and job finding By Semih Akcomak; Henri de Groot; Stefan Groot
  11. Exchange rate uncertainty and export performance: what meta-analysis reveals? By Bouoiyour, Jamal; Selmi, Refk
  12. Intra-Industry Trade in Dirty Goods and Environmental Policies By Sen, Anindita
  13. Decomposing patterns of emission intensity in the EU and China: how much does trade matter? By di Cosmo, Valeria; Hyland, Marie
  14. Imported Intermediate Inputs and Workforce Composition: Evidence from India's Tariff Liberalization By Shruti Sharma
  15. Response of local producers to agro-food port rejection : the case of Chinese vegetable exports By Yamada, Nanae; Sui, Shuyan
  16. Growth effect of FDI in developing economies: The role of institutional quality By JUDE, Cristina; LEVIEUGE, Gregory

  1. By: Benkovskis , Konstantins (BOFIT); Wörz , Julia (BOFIT)
    Abstract: The paper proposes a theoretical framework to explain gains and losses in export market shares by their price and non-price determinants. Starting from a demand-side model à la Armington (1969), we relax several restrictive assumptions to evaluate the contribution of unobservable changes in taste and quality, taking into account differences in elasticities of substitution across product markets. Using highly disaggregated trade data from UN Comtrade, our empirical analysis for the major world exporters (G7 and BRIC countries) reveals the dominant role of non-price factors in explaining the competitive gains of BRIC countries and concurrent decline in the G7’s share of world exports.
    Keywords: export market share decomposition; non-price competitiveness; real effective exchange rate
    JEL: C43 F12 F14 L15
    Date: 2013–08–12
  2. By: Andrea ARIU (FNRS and UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: In this paper we compare static and dynamic features of trade in goods and trade in services at the micro level. By using data from the same country, Belgium, and by making use of a common definition of transaction, we are able to enrich the existing qualitative comparisons with quantitative insights and to fill the existing gap in the literature. First, we analyze static features of trade such as participation rates, firms characteristics, heterogeneity, concentration and trade variation. Then, we explore dynamic aspects focusing on entry, exit, survival and growth strategy in foreign markets. From a static perspective, our results reveal that there are limited qualitative differences between trade in goods and trade in services and even the quantitative ones do not justify the need of different theoretical models. In the time dimension instead, some key peculiarities of services offer new insights for differentiating between the two.
    Keywords: Trade in Services, Trade in Goods, Trade Dynamics
    JEL: F10 F14 L80
    Date: 2013–07–20
  3. By: Iwasaki, Ichiro; Suganuma, Keiko
    Abstract: In this paper, we estimated a gravity model of Russian trade using panel data from Russia and 23 OECD member countries. Our estimation results indicate that foreign direct investment and socio-cultural similarity are determining factors in the trade volume between Russia and these developed economies. We also found that the trade and investment activities of Russian firms differ considerably from their counterparts in developed economies.
    Keywords: international trade, foreign direct investment, gravity model, Poisson regression, WTO, Russia
    JEL: F14 F21 P33
    Date: 2013–08
  4. By: Altan Aldan; Olcay Yucel Culha
    Abstract: Turkey successfully increased its share in the world exports in the last decades. We examine the role of extensive margin, in other words, new export products and destinations, on Turkish export performance between 1993 and 2011, in comparison with some other countries. Our results suggest that, Turkey was quite successful in extending its export products and markets compared to other developing countries. The success of Turkey in extensive margin mostly comes from entering new markets. Nevertheless, the share of Turkey’s export basket in world’s exports is still comparatively low as of 2011. Turkey still has important opportunities to increase her exports via extensive margin.
    Keywords: Turkey, Exports, Extensive margin, Comparative studies of countries
    JEL: F10 F14 F19 O57
    Date: 2013
  5. By: Fontoura, Maria P.; Crespo, Nuno
    Abstract: Adopting a long term perspective, we evaluate the trade performance of less developed African countries. Besides some general trade indicators, we apply a constant market share analysis in order to decompose export performance into several components with specific economic interpretation. Our main conclusions are: (i) the sectoral specialization structure of exports has remained heavy in commodities but the composition of the basket of goods exported has changed considerably with a very strong concentration in crude oil (mainly in the last two decades), (ii) the geographical structure of exports has also changed, with an important increase of the relative importance of China and USA, (iii) the countries under analysis not only show a negative competitiveness effect, but are also penalized by their sectoral and geographical specialization, and (iv) the most favorable evolution is observed in the most recent sub-period (2000-2007), but it is insufficient to reverse the previous negative trend.
    Keywords: Constant market share analysis, Trade, Less developed African countries
    JEL: F14 O55
    Date: 2013
  6. By: George Alessandria; Sangeeta Pratap; Vivian Yue
    Abstract: We study the source and consequences of sluggish export dynamics in emerging markets following large devaluations. We document two main features of exports that are puzzling for standard trade models. First, given the change in relative prices, exports tend to grow gradually following a devaluation. Second, high interest rates tend to suppress exports. To address these features of export dynamics, we embed a model of endogenous export participation due to sunk and per period export costs into an otherwise standard small open economy. In response to shocks to productivity, the interest rate, and the discount factor, we find the model can capture the salient features of export dynamics documented. At the aggregate level, the features giving rise to sluggish exports lead to more gradual net export reversals, sharper contractions and recoveries in output, and endogenous stagnation in labor productivity.
    Keywords: Exports
    Date: 2013
  7. By: Mitchell H. Kellman (Department of Economics, The City College of the City University of New York); Yochanan Shachmurove (The City College, The Graduate School and University Center, Department of Economics, The City University of New York)
    Abstract: Montenegro, newly independent since 2006, saw its commodity exports collapse in the worldwide financial crisis of 2008. It took three years for the volume of its exports to recover. Using one to four-digit Standard Industrial Trade Classification (SITC) commodity trade data, this paper analyzes trade patterns as they evolve, both globally, and within individual product sectors, since independence to the year 2012. The Kellman – Shachmurove Trade Specialization Index (TSI) is employed to study the degree of the Montenegrin specialization. The paper warns about high degree of specialization with overreliance on commodity exports of aluminum alloys.
    Keywords: Trade Specialization Indices; Concentration Ratios; Herfindahl-Hirshman Index; Machinery Exports; Montenegro
    JEL: O1 O14 F1 F14
    Date: 2013–08–21
  8. By: Thomas Sampson (LSE)
    Abstract: This paper develops an open economy growth model in which firm heterogeneity increases the gains from trade. Technology spillovers from incumbent firms to entrants cause the productivity threshold for firm survival to grow over time as competition becomes tougher. By raising the profits of exporters, trade increases the entry rate and generates a dynamic selection effect that leads to higher growth. The paper shows that the gains from trade can be decomposed into: static gains that equal the total gains from trade in an economy without technology spillovers, and; dynamic gains that are strictly positive. Since trade raises growth through selection, not scale effects, the positive growth effect of trade vanishes when firms are homogeneous. Thus, firm heterogeneity creates a new source of dynamic gains from trade. Calibrating the model to the U.S. economy implies that dynamic selection approximately triples the gains from trade.
    Date: 2013
  9. By: Ali, Sharafat
    Abstract: This paper analyzes the long run association between Pakistan’s exports and imports from 1972 to 2012. The results of both the Engle and Granger (1987) and Johansen (1991, 1995) cointegration reveal a long run relationship between the two variables. The error correction model results demonstrate that both of the variables converge towards long run equilibrium. This specifies the effectiveness of macrocosmic policies in stabilizing the international trade balance.
    Keywords: Exports, Imports, Cointegration, Budget Constraint
    JEL: C22 F14 F43
    Date: 2013–08
  10. By: Semih Akcomak; Henri de Groot; Stefan Groot
    Abstract: This contribution uses an extensive and unique set of combined Dutch micro-data to analyze the relationship between three dimensions of globalization and unemployment. These dimensions are firm level exports, offshorability of jobs, and working for a foreign-owned firm. Both the probability of getting fired and the time that is needed to find a new job after having been fired are studied. A large share of the variation in unemployment incidence is related to worker characteristics. Women, younger workers and foreign-born workers are more likely to become unemployed. After controlling for worker and firm heterogeneity, we find no evidence for a statistically significant relationship between exporting, working for a foreign firm and having an offshorable job, and the probability that an employee is fired. Furthermore, exposure to globalization prior to getting unemployed is not related to the probability of finding a new job after an employee has been fired.
    JEL: J64 J62 F16
    Date: 2013–08
  11. By: Bouoiyour, Jamal; Selmi, Refk
    Abstract: Are exchange rate uncertainty affect export performance? This paper assesses this question using meta-analysis on a sample of 56 studies from 1984 to 2013 for the purpose of cumulating the findings across studies in order to reconcile the conflicting results of prior researches. The total sample meta-analysis lends stronger support of the association of risk aversion and hedging instruments with the controversial relation between exchange volatility and exports widely expected either theoretically or empirically. Then, subgroup meta- analysis is used to provide further evidence on the results already obtained by decomposing our sample into four subgroups depending to the nature of countries and the models explored to determine volatility. The evidence from subgroups is not supportive of this association. Furthermore and contrary to expectations, neither differential price volatility, nor asymmetry, nor nonlinearities are significantly linked to conflicting results.
    Keywords: Exchange rate uncertainty, exports, meta-analysis.
    JEL: F0 F1
    Date: 2013–08
  12. By: Sen, Anindita
    Abstract: In this paper we study the effect of intra-industry trade in an environmental-quality differentiated good on the pollution level in a two-country framework when there are strategic interactions between the firms in the two countries. The pro-competitive effect of intra-industry trade expands the scale of production and, therefore, increases pollution in both the countries. Effect on the strategic choice of environmental qualities of the good is, on the other hand, asymmetric for the two producers. Impact of environmental policies like pollution content production tax and tariff on trade and pollution levels are also studied. .
    Keywords: Intra-Industry trade, environmental pollution, environmental standard
    JEL: F18 Q00
    Date: 2013–06–15
  13. By: di Cosmo, Valeria; Hyland, Marie
    Abstract: This paper uses data from the World Input Output Database (WIOD) to examine channels through which CO2 emissions are embodied within and imported into the European production process. We apply a metric to calculate sectoral emission intensity and thus rank countries and sectors in the EU in terms of their emission intensity, and look at the evolution of patterns of emission intensity in 2005 and in 2009. We use an input-output price model to simulate the effect that a rise in the price of EU-ETS allowances, from $17 to $25 /tonne, would have on the final price of goods in each EU country and sector. We find that all countries in the EU reduced the emission-intensity of their production processes from 2005 to 2009, and we find that the reduction was greatest in those sectors regulated under the ETS. Comparisons of emission intensity between countries show that industries in Central and Eastern Europe are more emission intensive than those of Northern Europe, where industries import emission-intensive goods rather than producing them domestically. Finally we examine the trade in intermediate goods from China into the EU to examine possible increases in carbon leakage from 2005 to 2009. Results show that while emissions embodied in imported intermediate goods have increased from 2005 to 2009, this increase is not limited to, nor particularly notable in, the sectors regulated by the ETS.
    Keywords: CO2 emissions/data/europe/Trade
    Date: 2013–07
  14. By: Shruti Sharma (University of California, Santa Cruz)
    Abstract: This paper extends the literature on trade liberalization and labour by investigating the relationship between imports of intermediate inputs and plant-level workforce composition during India’s tariff liberalization. Using detailed plant-level data from the Indian manufacturing sector, I first show that the increase in imports of intermediate inputs in response to input tariff liberalization has strong displacement effects on production workers employed by importing plants. Next, I decompose the impact of intermediate inputs on labour into “quality”, “variety”, and “scale” effects, based on the availability and prices of domestically-produced inputs. I find that the displacement of production workers is driven by lower-priced imported intermediate inputs, the “scale” effect. Finally, I examine the differential effect of tariff liberalization based on whether plants experience import competition or not. This analysis reveals that domestic plants facing import competition experience a displacement of both skilled and unskilled workers in response to tariff liberalization. Plants that switch from in-house production to importing some intermediate inputs however only displace production workers while retaining skilled workers. This suggests that skilled workers are indispensable to plants switching to importing as a productivity enhancing strategy.
    Date: 2013–06
  15. By: Yamada, Nanae; Sui, Shuyan
    Abstract: This paper analyzes the factors associated with the rejection of products at ports of importer countries and remedial actions taken by producers in China by taking as an example one of the most competitive agro-food products of China: frozen vegetables. This paper provides an overview of the vegetable production and distribution system in China and the way in which China has been participating in exports of these products. Later sections will examine in detail the frozen vegetable sector in China, identify the causes of port rejections, and the actions taken by the Chinese government and by producers, processors and exporters to improve the quality of frozen vegetable exports.
    Keywords: China, Vegetables, Food industry, Exports, Quality control, Frozen vegetables, Agro-food trade, Food safety, Port rejection
    JEL: F23 L66 Q13 Q17 Q18
    Date: 2013–02
  16. By: JUDE, Cristina; LEVIEUGE, Gregory
    Abstract: This paper investigates the effect of FDI on economic growth conditional on the institutional quality of host countries. We consider institutional heterogeneity to be an explanation for the mixed results of previous empirical studies and we develop several arguments to show that institutional quality modulates the intensity of FDI impact on growth. Using a comprehensive data set for institutional quality, we test this hypothesis on a sample of 94 developing countries over the period 1984-2009. The use of Panel Smooth Transition Regression (PSTR) allows us to identify both the heterogeneity and the threshold of institutional quality that influence the FDI growth effect. These results have significant implications for policy sequencing in developing countries. In order to benefit from FDI-led growth, the improvement of the institutional framework should precede FDI attraction policies. While some features of institutional quality have an immediate effect on fostering FDI-led growth, others need a consistent accumulation of efforts, therefore challenging the effectiveness of institutional reforms in developing countries.
    Keywords: FDI, growth, heterogeneity, institutional quality, PSTR, Developing economies
    JEL: C34 F21 F43 O16
    Date: 2013–08–26

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