nep-int New Economics Papers
on International Trade
Issue of 2013‒09‒13
fourteen papers chosen by
Alessia A. Amighini
Universita' Amedeo Avogadro

  1. Firms' Export Dynamics: Experience vs. Size. By Berthou, A.; Vicard, V.
  2. Myanmar's non-resource export potential after the lifting of economic sanctions : a gravity model analysis By Kubo, Koji
  3. Coping with the Crisis: Recent Evolution in Danish Firms' International Trade Involvement, 2000-2010 By Kaleb Girma Abreha; Valérie Smeets; Frédéric Warzynski
  5. Do Overseas investments create or replace trade? New insights from a macro-sectoral study on Japan By Raphaël Chiappini
  6. Trade Protectionism and Intra-industry Trade: A USA - EU Comparison By Ferreira-Lopes, Alexandra; Sousa, Cândida; Carvalho, Helena; Crespo, Nuno
  7. Are the EU trade preferences really effective? A Generalized Propensity Score evaluation of the Southern Mediterranean Countries' case in agriculture and fishery By Emiliano Magrini; Pierluigi Montalbano; Silvia Nenci
  8. Firms leverage and export quality:evidence from France By Michele Bernini; Sarah Guillou; Flora Bellone
  9. Endogenous Trade Participation with Incomplete Exchange Rate Pass-Through By Yuko Imura
  10. The Trade Agreement Embarrassment, Second Version By Wilfred J. Ethier
  11. International Trade Price Stickiness and Exchange Rate Pass-through in Micro Data: A Case Study on US-China Trade By Mina Kim,; Deokwoo Nam,; Jian Wang; Jason Wu,
  12. The impact of chinese import penetration on the south african manufacturing sector By Lawrence Edwards; Rhys Jenkins
  13. The dynamics of firms’ export portfolio: A network analysis with an application to Mexico and Bulgaria By Juan de Lucio; Raúl Mínguez; Asier Minondo; Francisco Requena
  14. Outsourcing, Offshoring and Innovation: Evidence from Firm-level Data for Emerging Economies By Ursula Fritsch; Holger Görg

  1. By: Berthou, A.; Vicard, V.
    Abstract: This paper provides evidence about the impact that size and experience in exporting have on firms' dynamics, a critical input in models of firms dynamics. The analysis uses a census of French exports by firm-destination-product over the period 1994-2008 with a monthly frequency. We first uncover a large calendar year bias: the growth of exporters between the first and the second year of export is biased upwards because new exporters may start exporting late during the year. This incomplete calendar year reduces export revenue by 32\% on average for the first year of export. We then show that, controlling for size, export experience is negatively related to net growth of exports for surviving exporters. Controlling for export experience, the relationship between average size and net growth of exports shows no systematic pattern. Finally, churning in foreign markets is decreasing with export experience and (sharply) with size.
    Keywords: International trade, Firms' heterogeneity, Firms' dynamics, Churning.
    JEL: F14
    Date: 2013
  2. By: Kubo, Koji
    Abstract: Easing of economic sanctions by Western countries in 2012 augmented the prospect that Myanmar will expand its exports. This study projects Myanmar’s export potential by calculating counterfactual exports with gravity equation regressions using data from 10 Asian countries. Its empirical results indicate that Myanmar’s actual exports of non-resource goods during 2005–2010 were one–fifth of their potential, implying that exports to neighbouring countries did not compensate for exports lost to Western sanctions. Restored access to the U.S. market is expected to enhance Myanmar’s exports, particularly of apparel.
    Keywords: Myanmar, International trade, Economic sanctions, Exports, Gravity model
    JEL: F14 F17 F51 O53
    Date: 2013–08
  3. By: Kaleb Girma Abreha (Department of Economics and Business, Aarhus University); Valérie Smeets; Frédéric Warzynski (Department of Economics and Business, Aarhus University)
    Abstract: Using a highly disaggregated firm-product-destination level data from Denmark, we document salient features of Danish international production in the recent decade. These include systematic variation in export participation of firms across industries, positive correlation between the scope (number of products exported and markets served) and scale of exporting activities, considerable dominance of multi-product and multi-destination firms, existence of carry-along trade, the prevalence of core and peripheral products in exports, a small role of economy-wide entry and exit of firms and products, and a sizable role of firm-level adding and dropping of products and product-destination combinations as a margin of trade adjustment. Finally, we show that firms responded to the latest economic shock mainly by adjusting the scale of exports and imports. At the same time, changing their products and productdestination combinations helped them to mitigate the negative effects of the shock.
    Keywords: Foreign trade, Trade collapse, Margins of Trade, Denmark
    JEL: F14 L60
    Date: 2013–09–04
  4. By: Aleksandra Parteka (Gdansk University of Technology, Gdansk, Poland); Massimo Tamberi (Universita’ Politecnica delle Marche, Ancona, Italy)
    Abstract: This paper contributes to trade diversification literature by comparing changes in relative (i.e. assessed in comparison with world patterns) heterogeneity of import and export structures in the process of economic development. In particular, by focusing on the diversification of imports, we add a missing piece to already analysed export trends. We use highly disaggregated trade statistics (4963 product lines) for 163 countries (1988-2010) and find that, despite differences in levels (imports being typically more diversified than exports, particularly at lower stages of economic development), they follow a similar path of evolution in the development process. Progressing relative diversification (despecialisation) of both import and export structures accompanies economic growth, while re-specialisation is plausible only in case of few specific countries (very rich, small ones, abundant in oil/petrol). We also show that even though while diversifying countries increase the degree of import-export similarity in terms of product categories, imported and exported goods differ in terms of within-product characteristics.
    Keywords: diversification, specialisation, trade, economic development
    JEL: F14 O11
    Date: 2013–08
  5. By: Raphaël Chiappini (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis [UNS])
    Abstract: This paper investigates the relationship between outward foreign direct investment (FDI) and both exports and imports from Japan. Using the Poisson pseudomaximum likelihood (PPML) estimator developed by Santos Silva and Tenreyro (2006) to deal with the problem of zero trade flows when estimating a gravity equation, we show that the complementary relationship between FDI and exports is overestimated when using the Ordinary Least Square (OLS) estimator. The PPML method also allows sectoral estimation of the relationship. We find that whether outward FDI creates or replaces trade depends on the industry under scrutiny. Our results indicate that the complementary relationship between FDI and trade is dominant in the Japanese manufacturing sector, especially in electric machinery, transportation equipement and precision machinery. We find also that Japanese overseas investments substitute for exports in chemicals products and for both exports and imports in general machinery.
    Keywords: Exports, imports, outward foreign direct investment (FDI), Poisson pseudo-maximum likelihood (PPML)
    Date: 2013
  6. By: Ferreira-Lopes, Alexandra; Sousa, Cândida; Carvalho, Helena; Crespo, Nuno
    Abstract: The aim of this work is to find patterns for products included in the customs tariffs of the USA and the EU (composed of over 5000 products disaggregated at the 6 digit-level) which share similarities, defined by a set of international trade variables, namely the index of revealed comparative advantages (RCA), the Grubel-Lloyd index, and other indicators of international trade. There is a recent strand in the literature advancing a theory that links the degree of intra-industry trade with the level of protectionism. In order to test this theory we use cluster analysis as a method of data analysis and the Grubel-Lloyd index as a classification variable between groups. For each of the analyzed regions we obtain four different groups. Thereafter each of these four clusters are further characterized with the help of the other international trade indicators and the tariffs. Finally, we establish a comparison between the two regions by examining possible differences and similarities. The results show a significant difference in the tariffs applied between the USA and the EU, with the USA presenting a lower level of protectionism. Additionally, the results for the USA show a positive relationship between the degree of intra-industry trade and a lower level of protectionism, while for the EU the results are not conclusive.
    Keywords: Trade Policy, Customs Tariff, USA, EU, Intra-industry Trade, Cluster Analysis
    JEL: C38 F12 F13 F14
    Date: 2013–07–31
  7. By: Emiliano Magrini (European Commission - JRC-IPTS - AGRILIFE Unit (Sevilla, ES)); Pierluigi Montalbano (Sapienza, University of Rome); Silvia Nenci (University of ROme 3)
    Abstract: The aim of this work is to assess the trade impact of preferential schemes in agriculture and fishery granted by the European Union (EU) to the Southern Mediterranean Countries (SMCs). This analysis presents several methodological improvements to previous works. First of all, we rely on a continuous treatment - i.e., preferential margins - to capture the ``average treatment effect'' of trade preferences rather than on a binary treatment based on dummy variables. Second, we apply non parametric matching techniques for continuous treatment, namely a generalized propensity score matching (GPS) technique, to assess the average causal effects of preferences on trade flows. Third, we use highly disaggregated data at sectoral level in order to evaluate properly the preferential treatment which is conceived to be applied at the product level. Our results show how the impact of EU preferences in agriculture and fishery granted to SMCs is positive and significant and better evaluated using impact evaluation techniques. We also assess the functional form of the relationship between EU-SMCs preferences and bilateral trade flows as well as the optimal level of preferential margin above which the marginal impact decreases.
    Keywords: International trade, EU-MED integration, Preferential trade agreement, Impact evaluation, Matching econometrics.
    JEL: C21 F10 F13 F15
  8. By: Michele Bernini (University of Trento,School of intenational Studies Italie); Sarah Guillou (Ofce sciences-po); Flora Bellone (University of Nice Sophia Antipolis, France)
    Abstract: Is corporate financial structure a determinant of non-price competitiveness in export mar- kets? In this paper we provide a positive answer to this question by finding that among illiquid exporters leverage is negatively correlated with the quality of their exported goods.This result is obtained on a sample including over 120,000 export flows of 6,229 French firms exporting within six HS6 products categories. The main methodological contribu- tion of our study is the use of a flow-level measure of export quality obtained from the estimation of a structural model of demand Berry, 1994; this estimator enhance the validity of our approach by avoiding the drawbacks of proxying for quality using export prices, as it is common practice in the trade literature.We argue that the negative impact of leverage on quality is consistent with theoretical contributions in the financial literature predicting a negative impact of debt financing on firms’ incentive to undertake quality upgrading investments.
    Date: 2013–09
  9. By: Yuko Imura
    Abstract: This paper investigates the implications of endogenous trade participation for international business cycles, trade flow dynamics and exchange rate pass-through when price adjustments are staggered across firms. I develop a two-country dynamic stochastic general equilibrium model wherein firms make state-dependent decisions on entry and exit in the export market and the frequency of price adjustment is time-dependent. Consistent with recent empirical findings, producers of traded goods in this model differ in their productivities, trade status and prices. At the aggregate level, quantitative properties of the model successfully reproduce some important characteristics of international business cycle moments in data. In contrast to previous findings in the literature, my model reveals that the inclusion of exporter entry and exit generates large, immediate responses in the number of exporters, export volumes and the export price index following aggregate shocks. I trace this result to the micro-level price stickiness present in my model but absent in existing models of endogenous trade participation. Moreover, I show that productivity heterogeneity rather than price age differences plays a dominant role in firms’ export decisions, and hence the additional realism of endogenous trade participation in the model does not mitigate incomplete exchange rate pass-through arising from nominal rigidity. This suggests that exporter characteristics, market structure and pricing conventions may be critical in analyzing the role of endogenous trade participation for international business cycles and exchange rate pass-through.
    Keywords: Business fluctuations and cycles; Exchange rates; International topics
    JEL: F44 F12
    Date: 2013
  10. By: Wilfred J. Ethier (Department of Economics, University of Pennsylvania)
    Abstract: The dominant academic literature about trade agreements maintains that they are only about national terms-of-trade manipulation and not at all about purely political concerns. Non-academic economists, commentators, and diplomats by contrast think that trade agreements are all about political concerns. There are two substantive and important distinctions between the two views. i Practitioners maintain that policymakers care virtually not at all about the terms of trade or about trade-tax revenue ii Practitioners, unlike academics, maintain that trade-agreement negotiations themselves change the underlying political economy. Observation of actual trade policy measures, though not conclusive, suggests that the practitioners are right and that the academics are wrong.
    Keywords: Multilateralism, Standard Academic Model, Practitioners’ Conventional Wisdom, terms of trade, political economy
    JEL: F10 F13
    Date: 2013–05–27
  11. By: Mina Kim, (U.S. Bureau of Labor Statistics); Deokwoo Nam, (City University of Hong Kong); Jian Wang (Federal Reserve Bank of Dallas); Jason Wu, (Federal Reserve Board)
    Abstract: The interaction between the exchange rate regime, trade firms' price-setting behavior, and exchange rate pass-through (ERPT) is an important topic in international economics. This paper studies this using a goods-level dataset of US-China trade prices collected by the US Bureau of Labor Statistics. We document that the duration of US-China trade prices has declined almost 30% since China abandoned its hard peg to the US dollar in June 2005. A benchmark menu cost model that is calibrated to the data can replicate the documented decrease in price stickiness. We also estimate ERPT of RMB appreciation into US import prices between 2005 and 2008. Goods-level data allows us to estimate that the lifelong ERPT is close to one for goods that have at least one price change, but less than one-half when all goods are included. This nding can be attributed to the fact that around 40% of the goods in never experience a price change, and supports the hypothesis that price changes that take the form of product replacements may bias ERPT estimates downwards.
    Keywords: Price Stickiness, Menu cost model, International trade prices, RMB, Exchange rate pass- through
    JEL: E31 F14 F31
    Date: 2013–08
  12. By: Lawrence Edwards (School of Economics, University of Cape Town); Rhys Jenkins (School of International Development, University of East Anglia)
    Abstract: The rapid growth in imports from China over the past decade is seen as a key factor contributing towards the relatively slow growth in output and the decline in employment in South African manufacturing during this period. Yet the effects of Chinese trade may be complex and differentiated across sectors. To account for these differential effects, this analysis draws on a database of 44 manufacturing industries covering the period 1992-2010. Two approaches – a Chenery-type decomposition and econometric estimation – are used to evaluate the impact of Chinese trade on prices, production and employment in South African manufacturing. Chinese penetration of the South African market is shown to have increased rapidly over the past decade, in part due to displacement of imports from other countries, but more importantly at the expense of local production. Exports of manufactures to China did not add significantly to industrial growth in South Africa, whereas labour-intensive industries were particularly badly affected by Chinese imports implying that the negative impact on employment was more than proportional to the output displacement. However, we also find evidence that Chinese imports contributed towards lower producer price inflation in South Africa, which in turn will have moderated increases in consumer prices and helped to curtail production cost increases.
    Date: 2013
  13. By: Juan de Lucio (High Council of Spanish Chambers of Commerce); Raúl Mínguez (High Council of Spanish Chambers of Commerce); Asier Minondo (Deusto Business School); Francisco Requena (University of Valencia)
    Abstract: In this paper we use network-analysis tools to identify communities in the web of Bulgarian and Mexican exporters' destinations. We show that the network-based community measure is superior to extended gravity measures to predict the dynamics of firm's export-portfolio. This superiority stems from the fact that community is a revealed measure, is country-specific and can be calculated at the industry level. We show that a one unit increase in the number of destinations previously served by the exporter within a community rises between 49% and 66% the probability of selecting a new export destination in that community. The networkbased community variable improves the accuracy of the model between 8% and 17% relative to a model that only includes gravity and extended-gravity variables. We also show that industry-specific communities and general communities play similar roles in determining the dynamics of Bulgarian and Mexican exporters' portfolio.
    Keywords: export market, network analysis, modularity, extended gravity, Mexico, Bulgaria
    JEL: F1
    Date: 2013–07
  14. By: Ursula Fritsch; Holger Görg
    Abstract: It is striking that by far the lion’s share of empirical studies on the impact of outsourcing on firms considers industrialized countries. However, outsourcing by firms from emerging economies is far from negligible and growing. This paper investigates the link between outsourcing and innovation empirically using firm-level data for over 20 emerging market economies. We find robust evidence that outsourcing is associated with a greater probability to spend on research and development and to introduce new products and upgrade existing products. The effect of offshoring on R&D spending is significantly higher than the effect of domestic outsourcing. However, only domestic outsourcing increases the probability to introduce new products. We also show that the results crucially depend on the level of protection of intellectual property in the economy. Firms increase their own R&D effort in the wake of outsourcing only if they operate in an environment that intensively protects intellectual property
    Keywords: outsourcing, offshoring, innovation, emerging economies
    JEL: F14 O31 O34
    Date: 2013–08

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