nep-int New Economics Papers
on International Trade
Issue of 2014‒06‒28
sixteen papers chosen by
Luca Salvatici
Universita' di Roma 3

  1. Does anti-competitive service sector regulation harm exporters? Evidence from manufacturing firms in Spain By Monica Correa Lopez; Rafael Domenech
  2. EU agri-food trade with the BRICSs: The case of Brazil By Hubbard, Carmen; Alvim, Augusto Mussi; Mattos, Ely Jose de; Hubbard, Lionel
  3. EU Antidumping and Tariff Cuts: Trade Policy Substitution? By Tobias D. Ketterer
  4. The Nexus between Antidumping Petitions and Exports during the Global Financial Crisis: Evidence on the People’s Republic of China By Lin, Faqin; Tang, Hsiao Chink; Wang, Lin
  5. Determinants of Foreign Direct Investment in Fast-Growing Economies: A Study of BRICS and MINT By Akpan, Uduak; Isihak, Salisu; Asongu, Simplice
  6. Comparative advantage, international trade, and fertility By Do, Quy-Toan; Levchenko, Andrei; Raddatz, Claudio
  7. Assessing the Environmental Impact of Liberalising Agricultural Trade – With Special Reference to EU-Mercosur By Revell, Brian; Saunders, John; Saunders, Caroline
  8. The Effect of Trade Liberalization on Manufacturing Price Cost Margins: The Case of Mexico, 1994-2003 By Gabriela López Noria
  9. Foreign direct investment drivers and growth in Central and Eastern Europe in the aftermath of the 2007 global financial crisis By R. Jimborean; A. Kelber
  10. Exporters During the Trade Collapse: The (Surprising) Resiliency of the Small Exporter By Rahul Giri; Enrique Seira; Kensuke Teshima    
  11. Analysis of Informal Obstacles to Cross-Border Economic Activity in Kazakhstan and Uzbekistan By Vakulchuk, Roman; Irnazarov, Farrukh
  12. The trade-reducing effects of restrictions on liner shipping By Bertho, Fabien; Borchert, Ingo; Mattoo, Aaditya
  13. Livestock product trade and highly contagious animal diseases By Niemi, Jarkko K.; Lehtonen, Heikki
  14. Causality between trade openness and energy consumption: What causes what in high, middle and low income countries By Muhammad M. Shahbaz; Samia S. Nasreen; Chong Hui C.H. Ling; Rashid Sbia
  15. Transportation Costs and the Spatial Organization of Economic Activity By Stephen J. Redding; Matthew A. Turner
  16. Global Value Chains and Effective Exchange Rates at the Country-Sector Level By Nikhil Patel; Zhi Wang; Shang-Jin Wei

  1. By: Monica Correa Lopez; Rafael Domenech
    Abstract: In a panel study of firm-level data from Spanish manufacturers, we show that reducing anti-competitive regulation in the provision of upstream services has a positive and sizeable effect on the volume of exports of downstream firms. Our estimates indicate that deregulation is very beneficial for the export performance of large corporations, especially if they are foreign-owned multinationals, while the evidence for SMEs is much weaker. Hence, firm characteristics matter for the connection between regulation and exports. Simulation exercises suggest that large firms increased their volume of exports by an average of 49% as a result of deregulation, such that the industries that benefited the most were typically more dependent on service inputs. The improvements in the regulatory framework of transportation services and energy provision that took place over the 1990s and 2000s in Spain had particularly strong effects on the volume of foreign sales.
    Keywords: Exports, Service regulation, Margins of trade, Firm size
    JEL: F14 L43 F23 D24
    Date: 2014–06
  2. By: Hubbard, Carmen; Alvim, Augusto Mussi; Mattos, Ely Jose de; Hubbard, Lionel
    Abstract: International trade between countries can be categorised as inter-industry or intra-industry. Intra-industry trade, particularly of vertically differentiated products, has expanded significantly since the 1960s, especially in Europe. However, Fontagné et al. (2006) note that inter-industry trade has made something of a comeback since 2000, due to the increasing participation of emerging economies in world trade. Accordingly, this paper asks whether such a change is evident in the bilateral agri-food trade between the EU and Brazil which is the largest of all exporters of agri-food products to the EU. Trade types are categorised in the paper following Fontagné and Freundenberg (1997). Results suggest that whilst the majority of agri-food trade between Brazil and the EU is of an inter-industry nature, its relative importance has not increased, although there is evidence that inter-industry trade of other primary products has become more important, which accords with the observation of Fontagné et al. (2006). A better understanding of the changing nature and pattern of trade should inform on-going international negotiations between the EU and Brazil.
    Keywords: Industrial Organization, International Relations/Trade,
    Date: 2014–04
  3. By: Tobias D. Ketterer
    Abstract: The world trading system in its current form aims at reducing multilateral trade barriers across the board. Indeed, the last successfully concluded multilateral trade negotiations led to substantial tariff concessions on the part of most developed economies. What, however, happened to other forms of import protection? Have substantial tariff concessions subsequently been replaced by the use of alternative forms of import protection? In this paper we empirically investigate the relationship between negotiated external tariff cuts and the subsequent use of antidumping actions by the EU. Evidence is found for larger Uruguay Round tariff cuts increasing the probability of subsequent antidumping investigations.
    Keywords: External tariff liberalisation, anti-dumping protection, European Union.
    Date: 2014
  4. By: Lin, Faqin (School of International Trade and Economics); Tang, Hsiao Chink (Asian Development Bank); Wang, Lin (Institute of Economics of the Chinese Academy of Social Sciences)
    Abstract: This paper quantifies how the People’s Republic of China’s (PRC) export volume to its major trading partners during the global financial crisis affects the antidumping (AD) petitions filed by the trading partners against the PRC. Focusing on the AD petitions at the Harmonized System (HS) Code 8-digit level and the PRC’s exports at the HS 2-digit level, we construct three instrument variables at the same HS level for export volume. These instruments—documents required, time taken, and container charges incurred for goods traded across borders—represent trade costs obtained from the World Bank’s Doing Business Project. We find rising exports from the PRC lead to rising AD petitions against the country. Instrumental variable estimates indicate that a 1 percentage point rise in the PRC’s export volume raises the number of AD petitions against the country by about 0.3 percentage point, and the probability of receiving AD petitions by 3.6 %. These estimates are about 10 times larger than those found in ordinary least square regressions. Their quantitative significance underlines why it is important to consider the issue of export endogeneity in the estimation. Moreover, it highlights the failure of the current trade statistics to account for the true value-added of traded goods, and how this has particularly disadvantaged the PRC, given its position as the factory of the world.
    Keywords: International trade; antidumping; instrument variable; People’s Republic of China
    JEL: F13 F14 F59
    Date: 2014–05–01
  5. By: Akpan, Uduak; Isihak, Salisu; Asongu, Simplice
    Abstract: This study employs panel analysis to examine the determinants of foreign direct investment (FDI) in Brazil, Russia, India, China, and South Africa (BRICS) and Mexico, Indonesia, Nigeria, and Turkey (MINT) using data for eleven years i.e. 2001 – 2011. First, it uses pooled time-series cross sectional analysis to estimate the model on determinants of FDI for three samples: BRICS only, MINT only, and BRICS and MINT combined; then, random effects model is also employed to estimate the model for BRICS and MINT combined. The results show that market size, infrastructure availability, and trade openness play the most significant roles in attracting FDI to BRICS and MINT while the roles of availability of natural resources and institutional quality are insignificant. Given that FDI inflow to a country has the potential of being mutually beneficial to the investing entity and host government, the challenge is on how BRICS and MINT can sustain the level of FDI inflow and ensure it results in economic growth and socio-economic transformation. To sustain the level of FDI inflow, governments of BRICS and MINT need to ensure that their countries remain attractive for investment. BRICS and MINT also need to ensure that their economies absorb substantial skills and technology spillovers from FDI inflow to promote sustainable long-term economic growth by investing more in their human capital. The study is significant because it contributes to literature on determinants of FDI by extending the scope of previous studies which often focus only on BRICS.
    Keywords: FDI, determinants, fast-growing economies, BRICS, MINT
    JEL: E0 F0 O1
    Date: 2014–01–04
  6. By: Do, Quy-Toan; Levchenko, Andrei; Raddatz, Claudio
    Abstract: This paper analyzes theoretically and empirically the impact of comparative advantage in international trade on fertility. It builds a model in which industries differ in the extent to which they use female relative to male labor and countries are characterized by Ricardian comparative advantage in either female labor or male labor intensive goods. The main prediction of the model is that countries with comparative advantage in female labor intensive goods are characterized by lower fertility. This is because female wages and therefore the opportunity cost of children are higher in those countries. The paper demonstrates empirically that countries with comparative advantage in industries employing primarily women exhibit lower fertility. The analysis uses a geography-based instrument for trade patterns to isolate the causal effect of comparative advantage on fertility.
    Keywords: Economic Theory&Research,Labor Policies,Population Policies,Labor Markets,Trade Policy
    Date: 2014–06–01
  7. By: Revell, Brian; Saunders, John; Saunders, Caroline
    Abstract: A bi-lateral trade agreement between the EU and the South American trading bloc known as Mercosur has been under consideration since 1995, with periodic hiatuses in negotiations since their inception. During the past twelve years there have been concurrent multilateral negotiations taking place under the WTO Doha Development Agenda. This work examines the potential production, trade and environmental outcomes for the EU and Mercosur that could arise under each of the trade negotiations using the Lincoln Trade and Environment Model, a multi-commodity and multi-country partial equilibrium model focused on projecting changes in international markets for agricultural products, and the greenhouse gas and nitrate implications from the outputs of these markets. The Scenarios presented include trade liberalisation, both global and EU/Mercosur specific, those which have been proposed under the Doha Development Agenda ranging around the 2008 Revised Draft Modalities document, and the 2004 and 2006 EU bi-lateral trade offer to Mercosur.
    Keywords: International Trade, Partial Equilibrium Modelling DDA, EU, Mercosur, Environmental Impact, Environmental Economics and Policy, International Relations/Trade, Production Economics, Q17, Q18, Q56,
    Date: 2014–04
  8. By: Gabriela López Noria
    Abstract: This paper analyzes the effect of the North American Free Trade Agreement (NAFTA) on Mexican manufacturing price cost margins (PCMs) for the period 1994-2003. Taking into account the sensitivity of each industry to the speed of the tariff reductions under NAFTA, the results show that PCMs immediately decreased once the second round of trade liberalization in Mexico had commenced in 1994. However, in subsequent years, no clear pattern emerges for these PCMs. Additionally, the paper accounts for the sensitivity of each industry to the initial level of its tariff and presents evidence showing that while NAFTA had an effect on the PCMs of the group of industries that liberalized in 10 years, no robust effect was found for the group of industries that liberalized in 5 years. The results on the group of industries that liberalized in 10 years suggest that NAFTA sharpened competition and exerted market discipline by forcing firms with market power to set prices closer to marginal costs. The findings on the group of industries that liberalized in 5 years suggest that additional factors may be also playing a role in the containment of their market power.
    Keywords: PCMs, Trade Liberalization, NAFTA
    JEL: F13 F15 L11
    Date: 2013–08
  9. By: R. Jimborean; A. Kelber
    Abstract: In the context of the recent deceleration of growth in emerging Europe, we reassess empirically the effect of foreign direct investment (FDI) inflows on economic growth in Central and Eastern European countries (CEECs) through an analysis carried out over the period 1993-2013. In a first step, we show that the main domestic determinants of FDI inflows are the market size, risk premia, unit labour costs, the openness, as well as progress in structural reforms (mainly related to privatisation process and banking sector) and institutional reforms (namely the lack of trade barriers, the ability for individuals to accumulate private property and progress in fighting corruption) in the host economy. Moreover, the macroeconomic conditions in the euro area also play an important role in explaining FDI flows to the region. In a second step, we analyse the impact of FDI inflows on economic growth. Our findings add to the strand of literature pointing out a positive effect of FDI inflows on growth. We consider the occurrence of the 2007 and 2011 crises and show their negative impact on the FDI - economic growth link, both crises reducing the positive impact of FDI on economic growth.
    Keywords: foreign direct investment; Central and Eastern Europe.
    JEL: F21 O52 P33
    Date: 2014
  10. By: Rahul Giri; Enrique Seira; Kensuke Teshima    
    Abstract: How did small exporters fare relative to large exporters during the 2008-09 crisis? Examining the performance of Mexican exporters reveals that the crisis did not make smaller exporters more likely to exit, grow less, or expand less their product line relative to larger exporters. Workhorse models of trade would predict the opposite. The same models, however, are consistent with the data before the crisis: within industry, (i) firm exit rate is decreasing in size; (ii) conditional on survival, export growth is decreasing in size; (iii) product line expansion is increasing in size.
    Keywords: Peer effects, education, social networks, inequality
    JEL: I21 I24 O1
    Date: 2014–03
  11. By: Vakulchuk, Roman (Norwegian Institute of International Affairs (NUPI)); Irnazarov, Farrukh (Central Asian Development Institute (CADI))
    Abstract: The barriers to trade in developing countries constitute one of the major obstacles to economic development and growth. This study aims at addressing the issues surrounding the prevalence of informal trade barriers in Kazakhstan and Uzbekistan. While it appears to be logical that the strongest economies of Central Asia should increase trade volume with neighboring countries, in reality the potential for intensifying cross-border trade is barely being realized. This paper attempts to shed light on trade barriers in key industries in both countries, including manufacturing, transport, and agriculture. As can be seen from this study, these industries experience different types of restrictions and varying degrees of state intervention in Kazakhstan and Uzbekistan. The paper places special emphasis on informal barriers and the tools companies use to overcome those barriers. The paper is based on a survey of a total of 108 companies in both countries and the output of a roundtable discussion in Kazakhstan with representatives of companies and other experts in the above-mentioned industries.
    Keywords: Kazakhstan; Uzbekistan; trade; formal and informal barriers; cross-border activity
    JEL: D80 F10 F20 L10 L20
    Date: 2014–05–01
  12. By: Bertho, Fabien; Borchert, Ingo; Mattoo, Aaditya
    Abstract: This paper examines how policy governing the liner shipping sector affects maritime transport costs and seaborne trade flows. The paper uses a novel data set and finds that restrictions, particularly on foreign investment, increase maritime transport costs, strongly but unevenly. The cost-inflating effect ranges from 24 to 50 percent and trade on some routes may be inhibited altogether. Distance increases maritime transport costs, but also attenuates the cost impact of policy barriers. Overall, policy restrictions may lower trade flows on specific routes by up to 46 percent and therefore deserve greater attention in national reform programs and international trade negotiations.
    Keywords: Transport Economics Policy&Planning,Economic Theory&Research,Common Carriers Industry,Free Trade,Emerging Markets
    Date: 2014–06–01
  13. By: Niemi, Jarkko K.; Lehtonen, Heikki
    Abstract: An outbreak of foot and mouth disease (FMD) can distort livestock markets. In this paper we have simulated welfare effects due to the risk of a hypothetical FMD outbreak and trade distortions associated with the disease. The analysis was carried out with stochastic dynamic partial-equilibrium models characterizing the Finnish pig and cattle sectors. The models maximise the aggregate welfare of consumers, producers and taxpayers arising from the domestic and two export markets, imported goods and direct costs caused by disease eradication measures. The duration of trade distortions and the probability of occurrence of disease are stochastic and unknown beforehand. The results suggest that if a disease outbreak with trade distortions occurs, the losses are likely to be primarily by excess supply of pigmeat, butter and cheese. Consumers can occasionally benefit if a disease outbreak with a trade ban results in the saturation of the domestic markets and falling prices. Although there are limited opportunities to adjust production rapidly, the meat sector is able to reduce losses through premature slaughter and reduced insemination of animals whereas in the dairy sector the largest potential seems to be in adjusting the processing quantities of milk products.
    Keywords: Foot and mouth disease, dynamic programming, supply, price, trade, risk, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Health Economics and Policy, Livestock Production/Industries, Research Methods/ Statistical Methods, C61, Q11, Q17,
    Date: 2014–04
  14. By: Muhammad M. Shahbaz; Samia S. Nasreen; Chong Hui C.H. Ling; Rashid Sbia
    Abstract: This paper explores the relationship between trade openness and energy consumption using data of 91 high, middle and low income countries. The study covers the period of 1980-2010. We have applied panel cointegration to examine long run relationship between the variables. The direction of causal relationship between trade openness is investigated by applying Homogenous non-causality, Homogenous causality and Heterogeneous causality tests.Our variables are integrated at I(1) confirmed by time series and panel unit root tests and cointegration is found between trade openness and energy consumption. The relationship between trade openness and energy consumption is inverted U-shaped in high income countries but U-shaped in middle and low income countries. The homogenous and non-homogenous causality analysis reveals the bidirectional causality between trade openness and energy consumption. This paper opens up new insights for policy makers to design a comprehensive economic, trade and policies for sustainable economic growth in long run following heterogeneous causality findings. 2014 Elsevier Ltd.
    Keywords: Causality; Energy; Trade
    Date: 2014
  15. By: Stephen J. Redding; Matthew A. Turner
    Abstract: This paper surveys the theoretical and empirical literature on the relationship between the spatial distribution of economic activity and transportation costs. We develop a multi-region model of economic geography that we use to understand the general equilibrium implications of transportation infrastructure improvements within and between locations for wages, population, trade and industry composition. Guided by the predictions of this model, we review the empirical literature on the effects of transportation infrastructure improvements on economic development, paying particular attention to the use of exogenous sources of variation in the construction of transportation infrastructure. We examine evidence from different spatial scales, between and within cities. We outline a variety of areas for further research, including distinguishing reallocation from growth and dynamics.
    JEL: F15 R12 R40
    Date: 2014–06
  16. By: Nikhil Patel; Zhi Wang; Shang-Jin Wei
    Abstract: The real effective exchange rate (REER) is one of the most cited statistical constructs in international macroeconomics. With the rising importance of offshoring and outsourcing, the standard measures are increasingly flawed. In addition, because different sectors within a country may participate in international production sharing at different stages, sector level variations are also important. We develop a theoretical framework to compute REER at both the sector and country levels. It nests the existing measures in the literature and addresses their shortcomings. As an application, we exploit the recently available World Input-Output Database (WIOD) to study the properties of the new measures of the REER for 40 countries, 35 sectors, over 1995-2011.
    JEL: F1 F3
    Date: 2014–06

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