nep-int New Economics Papers
on International Trade
Issue of 2014‒06‒07
six papers chosen by
Luca Salvatici
Universita' di Roma 3

  1. Export and the Labor Market: a Dynamic Model with on-the-job Search By Suverato, Davide
  2. Inattentive Importers By Kunal Dasgupta; Jordi Mondria
  3. Migrant Networks and Trade: The Vietnamese Boat People as a Natural Experiment By Pierre-Louis Vezina; Christopher Parsons
  4. Wirtschaftliche Partnerschaftsabkommen (EPAs) der EU mit Afrika: Dominanz der EU Exportinteressen statt Partnerschaft auf Augenhöhe By Kohnert, Dirk
  5. Growth, Trade, and Inequality By Gene Grossman; Elhanan Helpman
  6. Exploring the interplay, differences, and commonalities between global production networks and global innovation networks of two multinational companies By Liu, Ju; Chaminade, Cristina

  1. By: Suverato, Davide
    Abstract: This paper develops a two-sector, two-factor trade model with labor market frictions in which workers search for a job also when they are employed. On the job search (OJS) is a key ingredient to explain the response to trade liberalization of sectoral employment, unemployment and wage inequality. OJS generates wage dispersion and it leads to a reallocation of workers from less productive firms that pay lower wages to more productive ones. Following a trade liberalization the traditional selection effects are more severe than without OJS and the tradable sector experiences a loss of employment, while the opposite is true for the non tradable sector. Starting from autarky, the opening to trade has a positive effect on employment but it increases wage inequality. For an already open economy, a further increase of trade openness can, however, lead to an increase of unemployment. The dynamics of labor market variables is obtained in closed form. The model predicts overshooting at the time of implementation of a trade liberalization, then the paths of adjustment follow a stable transitional dynamics.
    Keywords: International Trade; Unemployment; Wage Inequality; Firm Dynamics
    JEL: F12 F16 E24
    Date: 2014–05–27
  2. By: Kunal Dasgupta; Jordi Mondria
    Abstract: Importers rarely observe the price of every good in every market because of information frictions. In this paper, we seek to explain how the presence of such frictions shape the flow of goods between countries. To this end, we introduce rationally inattentive importers in a multi-country Ricardian trade model. Under specific assumptions about preferences and technology, we provide an information-theoretical foundation of the gravity equation that links bilateral trade flows with the cost of processing information faced by importers. A distinguishable feature of our model is that importers buy the same good from several countries. In a more general setting, we analyze how small reductions in observable trade costs may have large effects on trade flows as importers endogenously process different amounts of information across countries. We also show that, unlike traditional trade costs, information costs have non-monotonic implications for bilateral trade flows. Finally, we contribute to the rational inattention literature by providing a closed-form solution to a discrete choice problem with asymmetric prior beliefs.
    Keywords: Gravity, Trade, Information, Magnification, Rational Inattention
    JEL: D83 F10 F15
    Date: 2014–05–30
  3. By: Pierre-Louis Vezina; Christopher Parsons
    Abstract: We provide cogent evidence for the causal pro-trade effect of migrants and in doing so establish an important link between migrant networks and long-run economic development.� To this end, we exploit a unique event in human history, the exodus of the Vietnamese Boat People to the US.� This episode represents an ideal natural experiment as the large immigration shock, the first wave of which comprised refugees exogenously allocated across the US, occurred over a twenty-year period during which time the US imposed a complete trade embargo on Vietnam.� Following the lifting of trade restrictions in 1994, the share of US exports going to Vietnam was higher and more diversified in those US States with larger Vietnamese populations, themselves the result of larger refugee inflows 20 years earlier.
    Keywords: Migrant Networks, US Exports, Natural Experiment
    JEL: F14 F22
    Date: 2014–05–07
  4. By: Kohnert, Dirk
    Abstract: In view of the global run on African resources the EU is at pains to conclude Economic Partnership Programs with African states up to October 2014. The EPAs are meant not just to liberalize trade but also to promote economic development in Africa and thus creating a win-win situation in a partnership on eye-level. However, many Africans suspect the EU of double talk and of promoting selfish export interest at the expense of inclusive growth in African countries. Taking the proposed ECOWAS EPAs as example, analyses reveal that tensions are due to both the gap between discourse and practice of EU trade and aid policy as well as different hidden interest of different EU directorates and member states. The growing preparedness of African states to challenge EU mercantile interest has been effectively backed by long lasting proactive agitation of NGOs and civil society groups inside and outside Africa.
    Keywords: EU, Africa, ACP, ECOWAS, international trade, trade liberalization, aid, development, regional integration, civic agency,
    JEL: F02 F13 F15 O17 O24 O43 O55
    Date: 2014–05–26
  5. By: Gene Grossman; Elhanan Helpman
  6. By: Liu, Ju (CIRCLE, Lund University); Chaminade, Cristina (CIRCLE, Lund University)
    Abstract: The recent wave of globalisation has been characterised not only by an increased number of cross-border production networks but also by an increasing number of cross-border innovation networks. However, most literature treats global innovation networks (GINs) as an extension of global production networks (GPNs). Taking a network perspective and based on primary data, this paper explores the composition of and relations between the GPNs and GINs of two multinational companies (MNCs). It finds that the case firms’ GINs and GPNs interplay and the interplay is to a greater extent in the ICT case firm than in the automobile case firm. The case firms’ GINs have more diverse actors and are more centralised than their GPNs but the reason is different in two cases. Meanwhile, the GINs and GPNs share the same relational pattern in both case firms. The paper suggests that theoretically considering GPN and GIN as two different but interwoven layers of a MNCs’ global value creation network may provide better conceptual clarity and may generate more precise implications for practitioners and policymakers.
    Keywords: Global production network; Global innovation network; Multinational companies; Social network analysis; Sweden
    JEL: M16 O32
    Date: 2014–05–23

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