nep-int New Economics Papers
on International Trade
Issue of 2013‒12‒06
forty-two papers chosen by
Luca Salvatici
Universita' di Roma 3

  1. Firms' export dynamics: experience vs. size By Berthou, Antoine; Vicard, Vincent
  2. Tariff Liberalization and Trade Integration of Emerging Countries By Anne-Célia Disdier; Lionel Fontagné; Mondher Mimouni
  3. The duration of Dutch export relations: decomposing firm, country and product characteristics By Arjan Lejour
  4. Crowding-out or co-existence? the competitive position of EU members and China in global merchandise trade By Benkovskis, Konstantins; Silgoner, Maria; Steiner, Katharina; Wörz, Julia
  5. The optimal tariff in the presence of trade-induced productivity gains By Hübler, Michael; Pothen, Frank
  6. Trade Performance and Potential of the Philippines: An Application of Stochastic Frontier Gravity Model By Deluna, Roperto Jr
  7. Informal Jobs and Trade Liberalisation in Argentina By Montes-Rojas, G.; Acosta, P.
  8. Using the new products margin to predict the industry-level impact of trade reform By Timothy J. Kehoe; Jack Rossbach; Kim J. Ruhl
  9. Does cross-border regulation really influence cross-border trade? Evidence from the Services Trade Restrictions Index By Marine George
  10. Transatlantic Trade: Whither Partnership, Which Economic Consequences? By Lionel Fontagné; Julien Gourdon; Sébastien Jean
  11. Positive welfare effects of trade barriers in a dynamic equilibrium model By Tuinstra, Jan; Wegener, Michael; Westerhoff, Frank
  12. Stages of Diversification in a Neoclassical World By Batista, Catia; Potin, Jacques
  13. Price Discrimination and Limits to Arbitrage in Global LNG Markets By Robert Ritz
  14. Relative Prices, Hysteresis, and the Decline of American Manufacturing By Campbell, Douglas L.
  15. Internal and External Knowledge Sources of New Export Products By Johansson, Börje; Warda, Peter
  16. What Did Happen in the DDA? Quantifying the Role of Negotiation Modalities By Yvan Decreux; Lionel Fontagné
  17. Exchange Rates, Wages, and Export Price Dynamics By Fromlet, Pia
  18. Fragmentation, incomes and jobs: an analysis of European competitiveness By Timmer, Marcel P.; Los, Bart; Stehrer, Robert; de Vries, Gaaitzen
  19. Home is where your art is: the home bias of art collectors By Lasse Steiner; Bruno S. Frey; Magnus Resch
  20. Non-price competitiveness of exports from emerging countries By Benkovskis, Konstantins; Wörz, Julia
  21. The Most-Favoured-Nation Treatment Obligation: Trends Leading to its Marginalisation and whether a Threat to the Multilateral Trading System By Mua, Afuh George
  22. FDI spillovers and time since foreign entry By Merlevede, Bruno; Schoors, Koen; Spatareanu , Mariana
  23. Outward FDI from the Central and Eastern European Transition Economies – A Discrete Choice Analysis of Location Choice within the European Union By Cantner, Uwe; Günther, Jutta; Hassan, Sohaib Shahzad; Jindra, Björn
  25. Natural-resource or market-seeking FDI in Russia? An empirical study of locational factors affecting the regional distribution of FDI entries By Ksenia Gonchar; Philipp Marek
  26. On the measurement of foreign direct investment and its relationship to activities of multinational corporations By Wacker, Konstantin M.
  27. Trade arrival dynamics and quote imbalance in a limit order book By Alexander Lipton; Umberto Pesavento; Michael G Sotiropoulos
  28. The scope of the freedom to provide services: prohibited restrictions By Elena Postnikova
  29. United Arab Emirates FDI Outlook By Mina, Wasseem
  30. Revisiting Linkages between Financial Development, Trade Openness and Economic Growth in South Africa: Fresh Evidence from Combined Cointegration Test By Polat, Ali; Shahbaz, Muhammad; Ur Rehman, Ijaz; Satti, Saqlain Latif
  31. Volatility in the Mexican offshoring industry By Myriam Alejandra Gómez Cárdenas
  32. Foreign Direct Investments in Southeast Asia By Sjöholm, Fredrik
  33. Guest Workers in the Underground Economy By Djajic, S.; Mesnard, A.
  35. Remittances and Migration Intentions of the Left-Behind By Piracha, Matloob; Saraogi, Amrita
  36. Immigration in Europe: Trends, Policies and Empirical Evidence By Sara de la Rica; Albretch Glitz; Francesc Ortega
  37. Immigrant Diversity and Economic Development in Cities: A Critical Review By Thomas Kemeny
  38. Are Global Food Prices Becoming More Volatile and More Persistent? By Hyeongwoo Kim
  39. Global food price hike is a burden to the poor By Mohajan, Haradhan
  40. On the Pigouvian Tax Rule in an Open Economy: Opening the Gate to the Eco-industry By Idrissa Sibailly
  41. The Balassa-Samuelson effect and the channels of its absorption in the Central and Eastern European Countries By Karolina Konopczak
  42. Relational policy spaces in border regions By DÖRRY Sabine; WALTHER Olivier

  1. By: Berthou, Antoine; Vicard, Vincent
    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. JEL Classification: F14
    Keywords: international trade
    Date: 2013–11
  2. By: Anne-Célia Disdier; Lionel Fontagné; Mondher Mimouni
    Abstract: This paper investigates how tariff liberalization has affected exporting in emerging countries. We use a highly disaggregated (6 digit level of the harmonized system – HS – classification) bilateral measure of market access to compare tariffs applied in 1996 and 2006, which includes the timing of the Uruguay Round and episodes of bilateral liberalization. Our econometric estimations consider impacts on both the extensive and intensive margins of trade. The reduced tariffs imposed on emerging countries have contributed to growth in their exports of differentiated goods at the intensive margin; they have not affected the probability of recording new flows. Growth in emerging countries’ exports at the extensive margin of trade has been due mainly to an upward shift in their comparative advantage and improvements to their infrastructure.
    Keywords: tariffs;trade liberalization;emerging countries;margins of trade
    JEL: F13 F15
    Date: 2013–11
  3. By: Arjan Lejour
    Abstract: Using Dutch transaction-level data on international trade we find that the intensive margin drives Dutch trade growth year by year. After 6 years, new trade relations cover about 50 percent of Dutch exports. Each year 40 percent of the relations are new, but only 25 percent survives after two years. We distinguish several firm-country-product (FCP) relations characterised by the export familiarity of the firm, country or product to identify differences in survival rates. The estimates show that the hazard rates of trade relations with new exporting firms or incumbent firms to new countries are about 15 percent lower. EU membership decreases the hazard rate by 40 percent. Initial sales are also important. Relations with an initial export value of about 50 thousand euro do not survive, while those with an initial value of 200 thousand euro exist after a few years. Exports with homogeneous goods tend to have higher initial trade values and the hazard is about 10 percent lower than those with heterogeneous goods.
    JEL: F10 D22
    Date: 2013–11
  4. By: Benkovskis, Konstantins; Silgoner, Maria; Steiner, Katharina; Wörz, Julia
    Abstract: In this paper, we analyse export competition between individual EU Member States and China in third-country goods markets. We find that competitive pressure from China is strongest for small and peripheral EU members, especially for the Southern periphery, Ireland and Central, Eastern and South-eastern European EU members. While we find no hard evidence for "cut-throat" competition between China and EU countries, we see an increasing tendency of smaller EU exporters leaving markets that are increasingly served by China. We base our findings on traditional market share analysis, the exploration of intensive versus extensive margin export growth and on a Dynamic Trade Link Analysis. The latter, a newly developed tool, identifies different types of competitive pressure at the detailed product-destination market level. We use UN Comtrade data at the highest level of disaggregation (6-digit HS) for 75 world exporters and importers over the period 2000-2011. JEL Classification: F14, F15, O57
    Keywords: China, competitiveness, European Union, extensive margin, sectoral market shares, trade links
    Date: 2013–11
  5. By: Hübler, Michael; Pothen, Frank
    Abstract: We scrutinize the impact of international productivity gains (spillovers) induced by imports and exports on optimal tariffs. First, we solve a stylized 2x2 trade model of a large open economy and show that (a) productivity gains via exports and imports both reduce the strategically optimal tariff, (b) there exists a certain strength of productivity gains such that the incentive to manipulate the terms of trade strategically vanishes, (c) the welfare gain that can be achieved via a tariff is lower in the presence of productivity gains than in their absence, and (d) these results even hold without power on international markets. Second, we apply this model to a panel data set covering 40 countries, 29 sectors and the years 1995 to 2009. We find that importdriven productivity gains are stronger than export-driven productivity gains. Third, we extend our 2x2 model to a multi-region, multi-sector model that we calibrate to the data set used in the econometric analysis and to the econometrically estimated productivity gains. Optimal tariffs are reduced by 17% for the US and China and 40% for Brazil when taking trade-induced productivity gains into account. The USA are the only model region that gains from European optimal tariff policy. Thus, trade-induced productivity gains have empirically relevant effects on optimal tariffs. --
    Keywords: trade,optimal tariff,productivity gains,technology spillovers
    JEL: F12 F14 F17 O33 O40
    Date: 2013
  6. By: Deluna, Roperto Jr
    Abstract: This study was conducted to investigate the issue of what Philippine merchandise trade flows would be if countries operated at the frontier of the gravity model. The study sought to estimate the coefficients of the gravity model. The estimated coefficients were used to estimate merchandise export potentials and technical efficiency of each country in the sample and these were also aggregated to measure impact of country groups, RTAs and inter-regional trading agreements. Result of the study shows that technical efficiency for all sample countries is relatively large with standard deviation from the mean of 35.02% suggesting that the frontier is not so distant. The most efficient countries in the sample which recorded more than 90% efficiency were Canada, Australia, New Zealand, USA, Singapore, Denmark, Hongkong, Sweden and UK. In terms of country groups, RTA and Inter-regional trading agreements, APEC recorded as the most efficient trade agreement of the Philippines. The Philippines was also able to established strong link among countries in East Asia, members of AFTA. ASEAN and EU posed export potential. In a country level, China and members of the ASEAN such as Vietnam, Indonesia, Thailand, Cambodia and Malaysia posed the highest export potential for merchandise exports. The significant determinants of these potentials are the expanding market of developing economies and lower trade cost. Then dominance of APEC countries in trade efficiency was verified by the result of the trade inefficiency effect model. Factors reducing technical inefficiencies were membership to APEC, reduction of corruption, and freer business environment. Membership to ASEAN and WTO turns out insignificant in reducing trade inefficiencies of the Philippine exports to member countries.
    Keywords: Merchandise exports, Gravity, Stochastic, export potential, Philippine Trade
    JEL: F0 F1 F13 F14 F15 F4 F47
    Date: 2013–04–30
  7. By: Montes-Rojas, G.; Acosta, P.
    Abstract: Rapid trade liberalisation can exert profound effects on labour markets. Domestic firms, to sustain competitiveness for survival, could react through cutting labour benefits to achieve cost reductions. Alternatively, trade liberalisation may alter the industry composition of firms changing the aggregate formality rates. This paper studies the relationship between trade liberalisation and informality in Argentina. Using manufacturing industry-level data for 1992-2003, the results confirm the hypothesis that trade increases informality in industries that experience sudden foreign competition. This explains about a third of the increase in informality. Sectors with higher investment ratios are able to neutralize and reverse this effect.
    Keywords: informality; trade liberalization; Argentina
    Date: 2013
  8. By: Timothy J. Kehoe; Jack Rossbach; Kim J. Ruhl
    Abstract: This paper develops a methodology for predicting the impact of trade liberalization on exports by industry (3-digit ISIC) based on the pre-liberalization distribution of exports by product (5-digit SITC). Using the results of Kehoe and Ruhl (2013) that much of the growth in trade after trade liberalization is in products that are traded very little or not at all, we predict that industries with a higher share of exports generated by least traded products will experience more growth. Using our methodology, we develop predictions for industry-level changes in trade for the United States and Korea following the U.S.-Korea Free Trade Agreement (KORUS). As a test for our methodology, we show that it performs significantly better than the applied general equilibrium models originally used for the policy evaluation of the North American Free Trade Agreement (NAFTA).
    Keywords: Trade ; North American Free Trade Agreement ; Korea
    Date: 2013
  9. By: Marine George (UP1 UFR02 - Université Paris 1, Panthéon-Sorbonne - UFR d'Économie - Université Paris I - Panthéon-Sorbonne - PRES HESAM)
    Abstract: This paper uses the recent Services Trade Restrictions Database and the Services Trade Restrictons Index provided by the World Bank to assess the specific impact of Mode 1 regulation on crossborder services trade. The article follows an augmented gravitational model to evaluate the determinents of imports and exports between country pairs, and to assess their correlation with Mode 1 regulation of both the home country and the partner country. At the aggregated level, there is evidence of a negative correlation between services trade values and the level of restrictions of both the home country and the partner country. The partner country regulation doesn't keep its impact at the sectoral level.
    Keywords: règlementations transfrontalières, commerce transfrontalier
    Date: 2013
  10. By: Lionel Fontagné; Julien Gourdon; Sébastien Jean
    Abstract: The Transatlantic Trade and Investment Partnership (TTIP) is much more than another preferential trade agreement project: it aims to link the world’s two biggest economic entities. The initiative seems motivated by the stalemate in multilateral negotiations, the competition between trade agreements, and the willingness of the two partners to retain their leading positions in world trade, or at least to limit their loss of influence. Given the limited average level of the import tariffs – 2% in the US and 3% in the EU – these duties in most cases are not the most important stake (exceptions are a few sensitive products, mainly some dairy products, some clothing and footwear, and some steel items for the US, and meat products in the EU). Much more significant at the macroeconomic level are negotiations on non-tariff measures, regulation in services, public procurement, geographical indications, and investment, all of which are contentious. We first review the main issues at stake in each case and then use a computable general equilibrium model to assess the economic impacts of an agreement. Not all aspects of the negotiations can be incorporated in the model but it does account for the restrictive impact of non-tariff measures on trade in goods and of regulatory measures on trade in services. The corresponding levels of protection provided by the non-tariff measures are much higher on average than those provided by the tariffs, and they differ significantly across sectors, confirming their sensitivity in these negotiations. Our central scenario combines progressive but complete phasing-out of tariff protection accompanied by an across-the-board 25% cut in the trade restrictiveness of non-tariff measures, for both product and service sectors with the exception of public and audiovisual services. We find that trade between the two signing regions in goods and services would approximately increase 50% on average, including an upsurge of 150% for agricultural products. Eighty percent of the expected trade expansion would stem from lowered non-tariff measures. Both partners to the proposed agreement would reap non-negligible GDP gains, in the long run, corresponding to an annual increase in national income of $98bn for the EU and of $64bn for the US.
    Keywords: Trade Policy;International Trade Organizations;Computable General Equilibrium Models
    JEL: F13 C68
    Date: 2013–09
  11. By: Tuinstra, Jan; Wegener, Michael; Westerhoff, Frank
    Abstract: We develop a simple two-region, cobweb-type dynamic equilibrium model to demonstrate the existence of optimal trade barriers. A pure comparative statics analysis of our model suggests that a reduction of trade barriers always enhances welfare. However, taking a dynamic perspective reveals that nonlinear trade interactions between the two regions may generate endogenous price fluctuations which can hamper both consumer and producer surplus. Finally, we allow special interest groups, such as consumers or producers from the two regions, to lobby for a particular level of trade barriers. Our model predicts that time-varying trade barriers may be another channel for market instability. --
    Keywords: cobweb dynamics,market interactions,optimal import tariffs,welfare analysis,political economy of trade barriers
    JEL: D72 F13 H21
    Date: 2013
  12. By: Batista, Catia (Universidade Nova de Lisboa); Potin, Jacques (ESSEC Business School)
    Abstract: Recent research has documented a U-shaped industrial concentration curve over an economy's development path. How far can neoclassical trade theory take us in explaining this pattern? We estimate the production side of the Heckscher-Ohlin model using industry data on 44 developed and developing countries for the period 1976-2000. Decomposing the implied changes in industrial concentration over time shows that at least one third of these changes seems to be explained by a Rybczynski effect. This result suggests that capital accumulation led poor countries to diversify their industrial production, while rich countries made their production more concentrated in highly capital-intensive industries.
    Keywords: economic growth and international trade, Heckscher-Ohlin, diversification, specialization, industrial concentration, structural change
    JEL: F11 L16 O40
    Date: 2013–11
  13. By: Robert Ritz
    Abstract: Gas prices around the world vary widely despite being connected by international trade of LNG. Some industry observers argue that major exporters (e.g., Qatar) have acted irrationally by failing to engage in price arbitrage. This is also difficult to reconcile with a perfectly competitive model in which price differences exist solely because of transport costs. We show that a model with market power can rationalize observed price differentials and trade flows. We highlight how different features of the LNG market limit the ability and/or incentive of other players to arbitrage, and discuss the potential impact of US LNG exports.
    Keywords: International trade, limits to arbitrage, LNG pricing, market power, natural gas, price discrimination
    JEL: D40 F12 L95
    Date: 2013–11–27
  14. By: Campbell, Douglas L.
    Abstract: This study uses new measures of real exchange rates to investigate the decline of American manufacturing employment in the early 2000s, comparing it to the smaller decline in the 1980s. I find that US manufacturing sectors with greater initial exposure to trade in the 1970s were disproportionately affected by the ensuing dollar appreciation in the 1980s, and that more open sectors in the 1990s also suffered comparative declines in output and employment when US unit labor costs appreciated relative to US trading partners. Employment losses in both the 1980s and in the early 2000s were due to increased job destruction and suppressed job creation, and appear to exhibit hysteresis. Additionally, more open sectors experienced relative declines in shipments, value-added, investment, production worker wages, and total factor productivity as US relative unit labor costs in manufacturing rose. I explain the persistent effects of exchange rate movements on manufacturing using a Melitz model extension with sunk fixed costs, which leads to a dynamic gravity equation whereby shocks to trade have persistent effects that decay over time. The appreciation of US relative unit labor costs can plausibly more than two-thirds of the decline in manufacturing employment in the early 2000s.
    Keywords: Exchange Rates, American Manufacturing, Hysteresis, Trade
    JEL: E62 F1 F16 L60 N6 N60
    Date: 2013
  15. By: Johansson, Börje (Jönköping International Business School (JIBS), Center of Excellence for Science and Innovation Studies (CESIS) KTH, and Center for Innovation, Research and Competence in the Learning Economy (CIRCLE), Sweden); Warda, Peter (Jönköping International Business School (JIBS), Center of Excellence for Science and Innovation Studies (CESIS) KTH, Sweden)
    Abstract: This study examines how firms’ internal and external knowledge sources affect the introduction of new export products with regard to value, number, average unit price and average quantity. Previous studies of this kind suggest that firms’ export performance is influenced by internal knowledge, and the knowledge potential in the local and regional environment. In the present study the knowledge milieu of the exporting firm is the local and regional knowledge potential that is represented by the presence of Knowledge-Intensive Manufacturing Industries (KIMI). The empirical analysis demonstrates that a firm’s internal knowledge has a positive effect on the value, number, average unit price, and average quantity of new export products. The knowledge milieu of the exporting firm, represented by the access to local and intra-regional KIMI-employment, has: i) a negative effect on the value and the average quantity, and ii) a positive effect on the number and the average unit price, of new export products, respectively.
    Keywords: New export products; accessibility; manufacturing; knowledge; human capital
    JEL: D21 D24 F23 L60 R30
    Date: 2013–11–28
  16. By: Yvan Decreux; Lionel Fontagné
    Abstract: Negotiators may reach a trade deal on a limited series of issues WTO Ministerial Conference in Bali (3–6 December 2013), one of these being trade facilitation. Based on a quantitative assessment taking into account the detail of the last proposals circulated, we argue however that the design of the negotiation led the DDA to a dead end. This quantification is performed with a dynamic computable general equilibrium model of the world economy, while liberalisation of tariffs is taken into account at the product level in order to address exceptions, flexibilities as well as the non-linear design of the formulas. A reduction in domestic support and the phasing out of export subsidies in agriculture are taken into account, as well as trade facilitation. Importantly, we evaluate the impact of the Spring 2011 sectoral initiatives.
    Keywords: Doha Development Round;Computable General Equilibrium Model;Trade facilitation
    JEL: F13 F17
    Date: 2013–11
  17. By: Fromlet, Pia (National Institute of Economic Research)
    Abstract: In this paper, the effects on export prices (in the currency of the exporter) of shocks to the exchange rate, the exporting firms' costs and foreign prices are investigated. The theoretical analysis is done with alternative assumptions regarding the currency in which prices are set and the desired markup. After that, a VAR-framework is used to analyze which theory predicts actual outcome the best. The results indicate that export prices (in the currency of the exporter) respond strongly to exchange rate shocks and the effects seem to be in line with the theory of producer currency pricing and pricing to market. Wage shocks have insignificant effects.
    Keywords: Vector autoregression; exchange rates; export prices; local currency pricing; producer currency pricing; pricing to the market
    JEL: E31 F14 F31
    Date: 2013–11–26
  18. By: Timmer, Marcel P.; Los, Bart; Stehrer, Robert; de Vries, Gaaitzen
    Abstract: Increasing fragmentation of production across borders is changing the nature of international competition. As a result, conventional indicators of competitiveness based on gross exports become less informative and new measures are needed. In this paper we propose an ex-post accounting framework of the value added and workers that are directly and indirectly related to the production of final manufacturing goods, called "manufactures GVC income" and "manufactures GVC jobs". We outline these concepts and provide trends in European countries based on a recent multi-sector input-output model of the world economy. We find that since 1995 revealed comparative advantage of the EU 27 is shifting to activities related to the production of non-electrical machinery and transport equipment. The workers involved in manufactures GVCs are increasingly in services, rather than manufacturing industries. We also find a strong shift towards activities carried out by high-skilled workers, highlighting the uneven distributional effects of fragmentation. The results show that a GVC perspective is needed to better inform the policy debates on competitiveness. JEL Classification: F6, J2, O47, O57
    Keywords: European competitiveness, fragmentation, incomes and jobs
    Date: 2013–11
  19. By: Lasse Steiner; Bruno S. Frey; Magnus Resch
    Abstract: This paper analysis the global distribution of art collections and collectors´ biases with respect to the origin of artworks. Employing a unique dataset we find that the greatest number of private art collections are located in Europe, North America and Asia. There are relatively few collections in Latin America and Africa. The artists whose oeuvres dominate the markets for collected art come from North America, followed by Asian and European artists. The home bias in private art collections turns out to be strong in all continents and countries. It is highest for Asian and African collections and smaller for European and North American collections. The home bias can partly be accounted for by high export and import restrictions.
    Keywords: Art collection, home bias, trade restrictions, artists
    JEL: Z11 F14 K20
    Date: 2013–11
  20. By: Benkovskis, Konstantins; Wörz, Julia
    Abstract: Building on the methodology pioneered by Feenstra (1994) and Broda and Weinstein (2006), we construct an export price index that adjusts for changes in the set of competitors (variety) and changes in non-price factors (quality in a broad sense) for nine emerging economies (Argentina, Brazil, Chile, China, India, Indonesia, Mexico, Russia and Turkey). The highly disaggregated dataset covers the period 1996?2011 and is based on the standardised 6-digit Harmonized System (HS). Our method highlights notable differences in non-price competitiveness across markets. China shows a huge gain in international competitiveness due to non-price factors. Similarly, Brazil, Chile, India and Turkey show discernible improvements in their competitive position when accounting for non-price factors. Oil exports account for strong improvement in Russia's non-price competitiveness, as well as the modest losses of competitiveness for Argentina and Indonesia. Mexico's competitiveness deteriorates prior to 2006 and improves afterwards. JEL Classification: C43, F12, F14, L15
    Keywords: emerging countries, non-price competitiveness, quality, relative export price
    Date: 2013–11
  21. By: Mua, Afuh George
    Abstract: The Most-Favoured- Treatment Obligation is a fundamental principle under the multilateral trading system of the World Trade Organisation. The principle requires Members to accord the same tariff and regulatory treatment given to the product of any one Member at the time of import or export of “like products” to all other Members. However, recent trends show deviation from this rule so much so that it is most often applied as an exception rather than as a general rule. This paper examines the MFN Treatment Obligation, trends leading to the importance of its marginalisation and whether with the recent retreat its marginalisation is a threat to the multilateral trading system or merely an evolutionary step on the path to greater trade liberalisation.
    Keywords: MFN,WTO,Exceptions to MFN,Multilateral Tade,Marginalisation
    JEL: K29
    Date: 2013–11–26
  22. By: Merlevede, Bruno (BOFIT); Schoors, Koen (BOFIT); Spatareanu , Mariana (BOFIT)
    Abstract: This study measures the effect of foreign direct investment (FDI) on the productivity of local firms. Unlike earlier studies, our empirical approach does not require that FDI manifests immediate or permanent effects. We find that foreign entry initially affects productivity of local competitors negatively, but is more than offset by a permanent positive effect on local competitors once majority-foreign-owned firms have been present for a while. The effect on the productivity of local suppliers, in contrast, is transient. The entry of majority-foreign-owned firms boosts productivity of local suppliers after a short adaption period, but then fades. The positive impact of minority-foreign-owned firms on local suppliers is immediate, but smaller and transient.
    Keywords: FDI; spillovers; dynamics; timing
    JEL: F23
    Date: 2013–11–04
  23. By: Cantner, Uwe; Günther, Jutta; Hassan, Sohaib Shahzad; Jindra, Björn
    Abstract: The location determinants of outward foreign direct investment (OFDI) have received extensive attention in contemporary literature, largely from the perspective of advanced economies. Less attention has been focused on OFDI from emerging economies. This applies, in particular, to Central and East European Countries (CEEC). Apart from traditional OFDI motives such as market-seeking, there is a growing debate regarding the relevance of knowledge-seeking as an investment motive for firms from catch-up economies. We apply a conditional-logit approach to assess OFDI location factors at the host country level for a sample of 1,036 firms from 10 CEEC that entered the EU between 1995 and 2010. We find that firms from CEEC primarily target economies characterized by high growth rates and geographic proximity, i.e., often other transition economies within the EU. The impact of market size increases significantly after EU accession, when more firms are located in advanced economies (EU15 countries). In terms of knowledge-seeking, we find that firms from CEEC seem to be primarily attracted by human capital endowment rather than by the R&D intensity of other EU economies.
    Keywords: Outward FDI, Conditional-logit, Location Choice, Transition Economies, Knowledge Seeking, CEEC
    JEL: F23
    Date: 2013–01–18
  24. By: Justin R. Pierce; Peter K. Schott
    Abstract: This paper finds a link between the sharp drop in U.S. manufacturing employment beginning in 2001 and a change in U.S. trade policy that eliminated potential tariff increases on Chinese imports. Industries where the threat of tariff hikes declines the most experience more severe employment losses along with larger increases in the value of imports from China and the number of firms engaged in China-U.S. trade. These results are robust to other potential explanations of the employment loss, and we show that the U.S. employment trends differ from those in the EU, where there was no change in policy.
    Date: 2013–12
  25. By: Ksenia Gonchar (National Research University Higher School of Economics); Philipp Marek (Institute for Economic Studies – Halle)
    Abstract: This paper conducts an empirical study of the factors that affect the spatial distribution of foreign direct investment (FDI) across regions in Russia; in particular, this paper is concerned with those regions that are endowed with natural resources and market-related benefits. Our analysis employs data on Russian firms with a foreign investor during the 2000-2009 period and linked regional statistics in the conditional logit model. The main findings are threefold. First, we conclude that one theory alone is not able to explain the geographical pattern of foreign investments in Russia. A combination of determinants is at work; market-related factors and the availability of natural resources are important factors in attracting FDI. The relative importance of natural resources seems to grow over time, despite shocks associated with events such as the Yukos trial. Second, existing agglomeration economies encourage foreign investors by means of forces generated simultaneously by sector-specific and inter-sectoral externalities. Third, the findings imply that service-oriented FDI co-locates with extraction industries in resource-endowed regions. The results are robust when Moscow is excluded and for subsamples including only Greenfield investments or both Greenfield investments and mergers and acquisitions (M&A)
    Keywords: foreign direct investment, location, regional development
    JEL: F23 R11 Q34
    Date: 2013
  26. By: Wacker, Konstantin M.
    Abstract: This paper discusses the different concepts of measuring multinational corporations' activities to provide empirical researchers helpful guidelines about which measures to use in their work. I discuss which economic relations exist between the measures and show that a tight relationship can be established in theory and is indeed present in the actual data. A main conclusion is that foreign direct investment (FDI) stock data is generally recommendable to measure the importance of multinational firms but the preferred measure depends on the analytical question under investigation. The second part of the paper argues that estimating the determinants of multinational firms by using static equilibrium models can be quantitatively misleading and hence be problematic for our understanding of multinational firms and for the design of policy. In this context, I suggest some guidelines how data on multinationals could and should be used for empirical estimation. JEL Classification: C51, F2, E01
    Keywords: balance of payments, FDI, measurement, multinationals
    Date: 2013–11
  27. By: Alexander Lipton; Umberto Pesavento; Michael G Sotiropoulos
    Abstract: We examine the dynamics of the bid and ask queues of a limit order book and their relationship with the intensity of trade arrivals. In particular, we study the probability of price movements and trade arrivals as a function of the quote imbalance at the top of the limit order book. We propose a stochastic model in an attempt to capture the joint dynamics of the top of the book queues and the trading process, and describe a semi-analytic approach to calculate the relative probability of market events. We calibrate the model using historical market data and discuss the quality of fit and practical applications of the results.
    Date: 2013–12
  28. By: Elena Postnikova (National Research University Higher School of Economics (Moscow, Russia))
    Abstract: The freedom to provide services is one of the four fundamental freedoms of the European Union (EU) internal market. Interstate trade in services is impeded by different obstacles consisting of the high level national regulation. The objective of this paper is to reveal the nature of prohibited restrictive national measures. The research is based on the analysis of the Treaty of Rome (now the Treaty on the functioning of the European Union), secondary EU law, the evolution of EU case-law, and a range of doctrinal views. It is argued that the definition of prohibited restrictions is the most complex aspect of the case-law on services. The research compares the concept of the restrictions that are to be abolished within the scope of the freedom to provide services and of other freedoms. This study also investigates the correlation between EU and World Trade Organization (WTO) legal mechanisms in the sphere of the provision of services
    Keywords: European Union, services, freedom to provide services, internal market, discrimination, non-discriminatory restrictions, Court of Justice of the EU, market access
    JEL: K33
    Date: 2013
  29. By: Mina, Wasseem
    Abstract: FDI is important in building a sustainable and diversified knowledge-based UAE economy. The stock of FDI grew at an average annual growth rate of 45.3 percent over the past decade reaching US$ 95 billion or nearly 27 percent of GDP in 2012. FDI flows have not recovered from the global financial crises. Most FDI stock is concentrated in finance, construction, and real estate. Recent greenfield FDI is concentrated in construction, while more than half of top M&A deals took place in finance, transportation, communications and utilities. The list of top OECD home countries for FDI flows to the UAE include Italy, Germany, Chile, United Kingdom, Luxembourg, France, United States, and Belgium. Though UAE investment policy limits foreign investment and reduces competition, the Government has undertaken reforms and contracted investment treaties that have encouraged investment. Efforts are under way to speed up the ratification of a new foreign investment law, which removes several of the current legal barriers to FDI and offers foreign investors similar rights to those of UAE nationals. The UAE has high FDI potential with plenty of room for improving FDI performance and benefiting the economy.
    Keywords: FDI; Outlook; UAE
    JEL: F21 F23 F53
    Date: 2013–11–29
  30. By: Polat, Ali; Shahbaz, Muhammad; Ur Rehman, Ijaz; Satti, Saqlain Latif
    Abstract: This study revisits the impact of financial development on economic growth in South Africa by incorporating trade openness in the production function. The paper covers the period of 1970-2011. We apply the Bayer-Hanck combined cointegration approach to examine the long run relationship between the variables. Our results indicate that financial development stimulates economic growth. Capital use adds in economic growth but trade openness impedes economic growth. The demand-side hypothesis is validated in South Africa. This paper suggests that government should redirect trade policies to reap optimal fruits of financial development for long run economic growth.
    Keywords: financial development, trade openness, economic growth, South Africa
    JEL: C5
    Date: 2013–11–20
  31. By: Myriam Alejandra Gómez Cárdenas (UP1 UFR02 - Université Paris 1, Panthéon-Sorbonne - UFR d'Économie - Université Paris I - Panthéon-Sorbonne - PRES HESAM)
    Abstract: This paper studies how volatility in the Mexican maquiladora employment and wages are allocated between the number of plants operating each month (extensive margin) and the average employment per plant (intensive margin) among different groups of sectors, through a decomposition exercise. Then, the paper analyzes the impact of foreign affiliates located in Mexican regions on business cycle comovements based on the theory of the granular origins of aggregate fluctuations. For the first objective, the main contribution of this paper is to extend the work done by Bergin, Feenstra, and Hanson (2009) in two directions: sector coverage and timeperiod. We find that for the most representative maquila sectors (apparel, chemicals, electronics, electrical equipment, furniture, and transportation equipment), adjustments in the number of plants are larger than for the least representative sectors (food processing, footwear, machinery, and toys), in particular during a period comprising a crisis. Thus, the least representative sectors are less volatile and less dependent on global production sharing. Moreover, the current paper also presents a decomposition exercise for wages in the maquiladora industry, which was not previously analyzed. The purpose of this additional exercise is to show how volatility in wages is allocated between the number of plants (extensive margin) and the mean wages (intensive margin) for different groups of sectors. We find empirical evidence suggesting that for the most representative maquila sectors, adjustments in the number of plants are larger than for the least representative sectors. Once again, the least representative sectors are less volatile and less dependent on global production sharing. For the second objective, the idea is to show how shocks experienced by a few large multinational enterprises have the potential to generate fluctuations on Mexican states' GDP. The analysis focuses on the largest 100 multinational enterprises engaged in offshoring activities with affiliates established in Mexican regions. We find empirical evidence supporting the claim that the presence of foreign affiliates in Mexican regions significantly increases the correlation between the fluctuations of the regions' GDP and the GDP of the source country.
    Keywords: finances, volatilité, Mexique, externalisation à l'étranger
    Date: 2013
  32. By: Sjöholm, Fredrik (Department of Economics, Lund University)
    Abstract: Foreign direct investment has been of large importance in economic growth and global economic integration over the last decades. South East Asia has been part of this development with rapidly increasing inflows of FDI. However, there are large variations over time and between countries in the region as regard to the policies towards FDI, and in actual inflows of FDI. This chapter aims at examining the size of FDI in South East Asia and the trends in it. The main determinants of FDI in Southeast Asia as well as their effect on the host countries are also discussed and examined.
    Keywords: Foreign direct investment; multinational firms; Southeast Asia; economic development
    JEL: F21 F23 O53
    Date: 2013–11–11
  33. By: Djajic, S.; Mesnard, A.
    Abstract: Guest-worker programs have been providing rapidly growing economies with millions of temporary foreign workers over the last couple of decades. With the duration of stay strictly limited by program rules in most of the host countries and wages paid to guest workers often set at sub-market levels, many of the migrants choose to overstay and seek employment in the underground economy. This paper develops a general-equilibrium model that relates the flow of guest workers transiting to the underground economy to the rules of the program, enforcement measures of the host country and market conditions facing migrants at home and abroad.
    Date: 2013
  34. By: Justin R. Pierce
    Abstract: This paper examines the effect of antidumping duties on the restructuring activities of protected plants. Using a dataset that contains the full population of U.S. manufacturers, I find that protected plants increase their capital intensities modestly relative to unprotected plants, but only when antidumping duties have been in place for a sufficient duration. I find little effect of antidumping duties on a proxy for the skilled labor intensity of protected plants.
    Date: 2013–12
  35. By: Piracha, Matloob (University of Kent); Saraogi, Amrita (Bunge Ltd)
    Abstract: Migration and the consequent flow of remittances are like a double-edged sword; while keeping many out of poverty, they can also result in further brain drain and demographic imbalance for the country. Using a large household survey data from Moldova and employing simultaneous equations model we show that there exists a dual causality between receipt of remittances by non-migrants and their migration intentions. Moreover, we add a novel element to the empirical literature by being the first to be able to specify the mechanism behind the link between remittances and migration. We find evidence that remittances not only relieve credit constraints in the home country but also act as a signalling device of success in the host country. These results provide a fresh outlook on the role of remittances in shaping migration flows in the migrant sending countries.
    Keywords: migration intentions, remittances, simultaneity, Moldova
    JEL: F22 F24 J1
    Date: 2013–11
  36. By: Sara de la Rica; Albretch Glitz; Francesc Ortega
    Abstract: This chapter summarizes the main trends, policies and empirical evidence regarding immigration in Europe. We start by providing descriptive evidence on long-term immigration trends and current characteristics of the immigrant populations in various important European destination countries and Europe as a whole. We then discuss key policy issues in the European context, focusing on access to citizenship, asylum seeking, border enforcement, amnesties and policies to attract talent. In the second part of the chapter, we provide a survey of the large and growing literature on the recent European immigration experience, focusing on two key questions: what has been the socio-economic performance of immigrants in their destination countries and how has immigration impacted these countries’ economies and native populations. We find large and highly persistent gaps in the economic performance of immigrants relative to natives in most destination countries, with only few instances of encouraging progress. Overall, there is little evidence of a detrimental effect of immigration on the economies of the host countries, which appear to respond to immigrant inflows through mechanisms more complex than simple factor price adjustments.
    Date: 2013–11
  37. By: Thomas Kemeny
    Abstract: This paper reviews a growing literature investigating how 'immigrant' diversity relates to urban economic performance. As distinct from the labor-supply focus of much of the economics of immigration, this paper reviews work that examines how growing heterogeneity in the composition of the workforce may beneficially or harmfully affect the production of goods, services and ideas, especially in regional economies. Taking stock of the existing literature, the paper argues that the low-hanging fruit in this field has now been picked, and lays out a set of open issues that need to be taken up in future research in order to fulfil the promise of this work.
    Keywords: diversity, immigration, cities, regional economic performance
    JEL: O4 O15 O18 O31 R0 J28 J31
    Date: 2013–11
  38. By: Hyeongwoo Kim
    Abstract: Global food prices have recently exhibited highly volatile and very persistent dynamics. Greater fluctuations in food commodities than manufacturing goods often put more serious hardship to poor countries that tend to specialize in raw commodity industries. The present paper attempts to identify the factors that help explain recent phenomena in world commodity markets. We first document strong dynamic correlations (Engle, 2002) between food commodity prices and the US dollar exchange rate. Employing the PANIC method (Bai and Ng, 2004), we then estimate a latent common factor from 27 food and beverage commodity prices, which seem to be closely related with the exchange rate. Once controlled for the effect of the common latent factor, idiosyncratic components of food commodity prices show substantially lower volatilities and persistence. Recent trends in global food commodity prices, therefore, seem to be well explained by a fairly simple but influential factor, that is, highly volatile and persistent movements of the US exchange rate since the recent financial crisis. Other than that, we do not see any compelling evidence of higher volatility or greater persistence in price dynamics. Our findings also call for special attention on the importance of financial markets in addition to factors that influence economic fundamentals.
    Keywords: Global Food Prices; Volatility; Persistence; US Dollar Exchange Rate; DCC; PANIC
    JEL: C51 F31 Q02
    Date: 2013–11
  39. By: Mohajan, Haradhan
    Abstract: This paper discusses the global food price hike and the effects of it among the poor of developing countries. Increase of food price became severe during 2007 and 2008, which was high in the last fifty years and more than half of the populations of the world affected due to this price hike. Biofuels production is one of the main causes of food price increase. Rapid increase of world population is another cause of soar of food price. Global supply and demand of food commodities, low harvest and natural calamities are also some other causes of increasing of the food prices. Soaring food prices have generated global concern about threats to food security, shaking the satisfaction created by many years of comparatively low commodity prices. Right of food is a fundamental right of every citizen of the state; unfortunately citizens of the most countries are deprived from this right. Many developing countries use food price subsidies or price controls to mitigate hunger and improve the nutrition of the poor but this is not a permanent solution to control food price hike.
    Keywords: Child malnutrition, Biofuels, Food prices, Inflation, Poverty, Subsidies in food.
    JEL: I15
    Date: 2013–10–10
  40. By: Idrissa Sibailly (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X, LEI - Laboratoire d'Economie Industrielle - Centre de Recherche en Économie et STatistique (CREST))
    Abstract: This note investigates the impact of (international) technology transfer on optimal pollution taxation. To use a patented pollution abatement technology, the polluters subject to the emissions tax only pay fixed license fees to an (international) eco-industry (whose profits are shared among national and foreign suppliers). The second-best emissions tax is shown to decrease as the exogenous share of imported technology increases. When the domestic polluting industry is imperfectly competitive, this tax is always lower than the marginal damage. In contrast, when the polluting industry is perfectly competitive, the second-best emissions tax is lower than the marginal damage only in the case of incoming technology transfer. If the technology is transferred domestically, the second-best emissions tax is equal to the marginal damage. These results contrast with the literature on the impact of market power in the eco-industry on optimal policy design, initiated by David and Sinclair-Desgagné (2005).
    Keywords: Pigouvian Taxes, Eco-Industry, Technology Transfer, International Trade
    Date: 2013–11–29
  41. By: Karolina Konopczak (Warsaw School of Economics and Institute for Market, Consumption and Business Cycles Research)
    Abstract: The aim of the study is to estimate the magnitude of the Balassa-Samuleson effect as well as the effectiveness of the labour and the product market in its absorption in Poland, the Czech Republic, Hungary and Slovakia. The obtained results allowed to determine the magnitude of the systematic component of inflation differentials relative to the euro area, hence to assess the risk of common monetary policy inadequacy with respect to these economies. The obtained estimates suggest that the catching-up driven inflationary pressure is a non-negligible issue in the context of the CEECs integration with the euro area, since the systematic inflation differentials were comparable in size to those experienced by the so-called peripheral member states in the first decade after the introduction of the euro. Moreover, in the case of Poland none of the potential absorption mechanisms of the Balassa-Samuelson effect seemed to mitigate the convergence-induced inflationary pressure over the sample period. The outcomes suggest that ignoring the non-fulfilment of theoretical model assumptions regarding wages and markups, which is common in the literature, distorts estimation results.
    Keywords: Balassa-Samuelson hypothesis, monetary integration, real convergence, panel cointegration
    JEL: F41 E31 C33
    Date: 2013
  42. By: DÖRRY Sabine; WALTHER Olivier
    Abstract: In European border regions, policy networks steer processes of politico-economic integration and de-bordering. Policy networks integrate actors belonging to different decisional levels and countries. Actors tend to coordinate actions and communications in policy networks to formulate common policies; however, this is subject to a long process, aggravated by the actors? distinct policy cultures. They further have to agree on a common network space to efficiently enforce policy measures. An overrepresentation of certain network spaces due to some actors? dominant network positions may lead to imbalanced policy decisions. By focussing on transport policies in the border regions of Basel and Luxembourg, we analyse measures of persistency of national preferences among policy actors, mapping their perceived ?policy spaces of action? and conceptualising these ?policy spaces? as relational. Based on a combination of in-depth interviews, cognitive maps, and social network analysis, we show that large spatio-cultural differences are still prevailing among network actors, thus potentially impacting decisions taken in policy networks.
    Keywords: Social network analysis; Public transport; Mental maps; Basel; Policy networks; Luxembourg; Border studies; Policy cultures
    Date: 2013–11

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