nep-int New Economics Papers
on International Trade
Issue of 2014‒08‒02
eleven papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Terms-of-Trade Impacts of Trade Agreements and the Choice of Trade Policy By Joachim Jarreau
  2. Trade, Wages, and Collective Bargaining: Evidence from France. By J. Carluccio; D. Fougère; E. Gautier
  3. Measuring the Unequal Gains from Trade By Pablo D. Fajgelbaum; Amit K. Khandelwal
  4. Gone for Good? Subsidies with Export Share Requirements in China: 2002-2013 By Fabrice Defever; Alejandro Riaño
  5. Reconciling Observed Tariffs and the Median Voter Model By Swati Dhingra
  6. China's economic embrace of Africa: An international comparative perspective By Broich T.; Szirmai A.
  7. Asymmetric Technological Change in the Melitz Model: Are Foreign Technological Improvements Harmful? By Ehsan U. Choudhri; Antonio Marasco
  8. Does Rising Import Competition Harm Local Firm Productivity in Less Advanced Economies? Evidence from Vietnam's Manufacturing Sector By Tinh Doan; Son Nguyen; Tuyen Tran; Huong Vu; Steven Lim
  9. An unfinished business: Economic liberalization and structural change in Mexico By Padilla-Pérez, Ramón; Villarreal, Francisco G.
  10. Export diversity or focus? What strategy is best for first-time internationalizing SMEs from an emerging market? By Desislava Dikova; Andreja Jaklic; Anze Burger; Aliaz Kuncic
  11. To return permanently or to return temporarily?: Explaining migrants' intentions By Bilgili Ö.; Siegel M.

  1. By: Joachim Jarreau (Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS)
    Abstract: This paper studies the impacts and determinants of trade policy. I use data on applied tariff protection of world countries over 2001-2007 to estimate sector-level trade elasticities. I then calibrate a structural gravity model of world trade. I compute the impacts of trade agreements which were implemented and of those which were not. I find that expected real income gains predict the signing of PTAs. Decomposing these gains shows that domestic mill price increases, reflecting market access gains, have a larger impact than the impact on the consumer price index. I also find that larger expected gains from multilateral liberalization reduce the probability to engage in preferential agreements.
    Keywords: international trade, preferential trade agreements, counter-factual estimation, trade creation and diversion
    JEL: F13 F12 F47
    Date: 2014–07–11
  2. By: J. Carluccio; D. Fougère; E. Gautier
    Abstract: Using a unique French firm-level dataset, we study how international trade affects the wage bargaining process at the firm level. Using instrumental variables techniques, we find that exports shocks have a positive effect on the probability that a firm-level wage agreement is signed, while shocks increasing imports of finished goods have the opposite effect. Exports increase wages for all occupational categories, whereas offshoring has heterogeneous effects. In firms where wage agreements are frequently signed, the export wage premium is larger, and blue-collar workers are protected against the negative impact of offshoring on wages.
    Keywords: trade, wages, collective bargaining.
    JEL: F16 J51 E24
    Date: 2014
  3. By: Pablo D. Fajgelbaum; Amit K. Khandelwal
    Abstract: Individuals that consume different baskets of goods are differentially affected by relative price changes caused by international trade. We develop a methodology to measure the unequal gains from trade across consumers within countries that is applicable across countries and time. The approach uses data on aggregate expenditures across goods with different income elasticities and parameters estimated from a non-homothetic gravity equation. We find considerable variation in the pro-poor bias of trade depending on the income elasticity of each country's exports and imports. Non-homotheticities across sectors imply that trade typically favors the poor, who concentrate spending in more traded sectors.
    JEL: D63 F10
    Date: 2014–07
  4. By: Fabrice Defever; Alejandro Riaño
    Abstract: This paper presents a simple model of subsidies with export share requirements (ESR) in a heterogeneous firm environment. A two-country general equilibrium version of the model with a single 100% ESR is calibrated using firm-level data from the 2002 wave of the Business Environment and Enterprise Performance Survey collected by the World Bank for China. The calibrated model is used to gauge the change in subsidies with ESR that is consistent with the fall in the share of 'pure exporters', firms exporting all their output, observed in China, from 25.7% in 2002 to 11.1% in 2013. Our results indicate that a 6.9% reduction in the ad-valorem subsidy rate available to firms that export all their output is consistent with the observed fall in their share of exporting firms. Expenditure in subsidies (as a share of value-added) falls by 66% and welfare in China increases by 1.76% while real income in the rest of the world falls by 0.59%.
    Keywords: Trade Policy, Export Subsidies, Export Share Requirements, China
    JEL: F12 F13 O47
    Date: 2014–07
  5. By: Swati Dhingra
    Abstract: Median voter theory applied to trade policy predicts positive tariffs in capital-abundant countries and negative tariffs in labor-abundant countries. Negative tariffs are rare, and this paper reconciles the median voter theory with observed protectionism across countries. By considering large countries, I show the optimal tariff is a sum of the median voter component and a positive in terms of trade component. Positive terms of trade effects raise tariffs in all countries, and can overcome the negative median voter component in labor-abundant countries. Testing the tariff prediction with cross-section and panel data from the 1990s, I show the median voter component is negative in labor-abundant countries and positive in capital-abundant countries. As expected, terms of trade effects raise tariffs across all countries and are stronger among non-members of the WTO.
    Keywords: Median voter, trade policy, Heckscher Ohlin, terms of trade, WTO
    JEL: F11 F13 F59
    Date: 2014–07
  6. By: Broich T.; Szirmai A. (UNU-MERIT)
    Abstract: This paper discusses the entry of China into the game of foreign finance in Africa. It analyses the scope, destination and sectoral distribution of Chinese financial flows and trade in comparison with Western patterns and trends of aid, foreign direct investment FDI and trade. Chinas foreign aid and manufacturing investment flow to Africas physical infrastructure and productive sectors of agriculture and manufacturing fill the vacuum which emerged when Western financial flows shifted to other sectors and activities. In contrast, Chinas trade patterns with Africa highly resemble those of Africas leading Western trading partners. Africa imports manufactured goods and exports primary goods. Differences in relative factor endowments of labour, capital and natural resources are largely responsible for the pattern of Sino-African trade.
    Keywords: Trade: General; International Investment; Long-term Capital Movements; Foreign Aid; International Relations and International Political Economy: General; International Linkages to Development; Role of International Organizations; Economywide Country Studies: Asia including Middle East; Economywide Country Studies: Africa;
    JEL: F10 F21 F35 F50 O19 O53 O55
    Date: 2014
  7. By: Ehsan U. Choudhri (Department of Economics, Carleton University); Antonio Marasco (Lahore University of Management Sciences)
    Abstract: Foreign technological advance unambiguously reduces home welfare in a popular variant of the Melitz (2003) model that assumes the presence of a costlessly traded homogeneous good (Demidova, 2008). The present paper shows that this result is sensitive to the presence of such a good and is reversed in its absence. Indeed, in a generalized version of the Melitz model that adds a nontraded good and nests the original version as a special case, we show that foreign technological advance always improves home welfare. We derive relations that require information on only a few parameters to calibrate the model to data. These relations are used to calibrate an international trade model for the United States for quantitative analysis of the welfare effects. US is found to gain much less from foreign technological improvements than its trading partners from US improvements.
    Keywords: Heterogeneous Firms, Technological Change, Gains from Trade, Nontraded Goods
    JEL: F10 F12
  8. By: Tinh Doan (University of Waikato); Son Nguyen (VNU University of Economics and Business); Tuyen Tran (VNU University of Economics and Business); Huong Vu (University of Waikato); Steven Lim (University of Waikato)
    Abstract: This paper examines whether rising import penetration has an effect on the productivity of domestic firms. The study uses data on a 10-year unbalanced panel of firms in the manufacturing sector in Vietnam from 2000 to 2009. Panel and instrumental variable methods are used to control for firm heterogeneity and endogeneity of import penetration. We find significantly negative effects of import competition on local firms’ productivity. Further investigation on the basis of firm size and industry technology levels shows that SMEs are more adversely affected, but that industry technology level does not matter.
    Keywords: import penetration; productivity; Vietnam
    JEL: F19 L25 P45
    Date: 2014–07–11
  9. By: Padilla-Pérez, Ramón; Villarreal, Francisco G.
    Abstract: Mexico, as other Latin American countries, undertook far-reaching economic reforms in the 1980s and 1990s in a wide array of areas: trade and industrial policy, foreign investment and capital account, privatization of public enterprises and deregulation of economic activities, among others. As a result of the new economic model, the Mexican economy experienced outstanding export growth, successful insertion into international dynamic markets and shift towards medium and high-technology industries. Yet productivity growth has been insufficient, leading to low and volatile economic growth. This paper examines the dynamics of productivity growth and in particular analyzes whether inter- and intra-industry dynamics can account for sluggish productivity growth. It makes use of a shift-share analysis, taking advantage of a recently published industry-level database developed by the Mexican National Statistics Office as part of the LA-KLEMS project. The paper shows that Mexico has experienced an unfinished structural change, where productivity growth within sectors has been insufficient to close the gap with its main trading partner, the United States. Moreover, despite a significant reallocation of hours worked across industries, its aggregate impact has been hampered by the fact that flows have been from industrial sectors with high labor productivity growth towards sectors with lower, or contracting, productivity growth.
    Keywords: Structural Change, Growth, Aggregate Productivity
    JEL: N16 O11 O47
    Date: 2014–07–25
  10. By: Desislava Dikova; Andreja Jaklic; Anze Burger; Aliaz Kuncic (Institute for International Business/WU Vienna; Faculty of Social Sciences/University of Ljubliana; Faculty of Social Sciences/University of Ljubliana; Economic Development and Globalization Division/United Nations Economic and Social Commission for Western Asia)
    Abstract: The question how much internationalization is beneficial for emerging-market small and medium enterprises (EM SMEs) remains challenging for both international business (IB) scholars and managers. We explore export strategies of first time exporters and focus on the scope of EM SMEs internationalization activities. We tackle the question whether more focused or more diversified internationalization through exporting is beneficial for EM SMEs. We examine the impact of foreign market (geographic) diversification, product diversification and export intensity on firm performance of an entire population of EM SMEs from an emerging east European economy. In addition, we test whether a complex export strategy - an export strategy of simultaneous product- and geographic export diversification - is beneficial for EM SMEs. We use a panel population data of first time Slovenian exporters in the period 1994-2012. We find that diversified internationalization, both in terms of product- and foreign market diversity, and export intensity significantly improve productivity and sales performance for EM SMEs. Furthermore, EM SMEs with complex export strategies enjoy significantly improved productivity and sales performance.
    Keywords: first-time exporters, export performance, export diversification
    Date: 2014–07
  11. By: Bilgili Ö.; Siegel M. (UNU-MERIT)
    Abstract: This paper studies migrants intentions to return to their origin country by making the distinction between permanent return, temporary return and participation in temporary return programmes. Using survey data from first generation migrants in the Netherlands, we explore how migrants experiences regarding both the origin and destination countries are linked to their return intentions. We show that there are significantly more people interested in temporary return than permanent return. Moreover, we demonstrate that while economic integration has no clear link with return intentions, individuals with a lower socio-cultural integration are more likely to intend to return permanently. We also find that social homeland engagement predicts intentions for all types of return. Considering the potential positive impact of temporary return on development through the transfer of skills, financial resources and experiences, this research provides insight into the profile of migrants who could be the target of programmes and policies on return for development.
    Keywords: International Migration; Economics of Minorities, Races, and Immigrants; Non-labor Discrimination; Economic Development: Human Resources; Human Development; Income Distribution; Migration;
    JEL: F22 J15 O15
    Date: 2014

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