nep-int New Economics Papers
on International Trade
Issue of 2014‒10‒17
thirty papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Trade Performance of Free Trade Zones By Jean-Marc Siroën; Ayçil Yücer
  2. "Made in China" - How Does it Affect Measures of Competitiveness? By Konstantins Benkovskis; Julia Woerz
  3. Credit Constraints, Heterogeneity of Firms and International Trade: An Empirical Analysis of Exports Determinants for India By Madhu BALA
  4. Trade Liberalization, Agglomeration and Public Policies: the Case of the European Regional Policies By Susana IRANZO
  5. The Impact of Trade Reforms on Mexico’s Imports By PACHECO-LÓPEZ Penélope
  6. Economic Implications of Deeper South Asian–Southeast Asian Integration : A CGE Approach By Ganeshan Wignaraja; Peter Morgan; Michael Plummer; Fan Zhai
  7. Trade Openness and Growth: Does Sector Specialization Matter? By MALEK MANSOUR Joffrey
  8. Trade Policy Analysis of Edible Oil Imports of India under CGE framework By KM Shivakumar; S.Kombairaju; M.Chandrasekaran
  9. The Development of Trade and Foreign Direct Investment under the Influence of the Barcelona Process – An Initial Assessmentt By Arno BAECKER
  10. The micro patterns of export diversification under financial constraints By Angelo Secchi; Federico Tamagni; Chiara Tomasi
  11. The Economic Consequences of Trade and Immigration for Local Labor Markets By Hanson, Gordon
  12. The Economic Effects of Bilateral Free Trade Areas among ASEAN, China, Japan and Korea By HONG Yiseok
  13. How much can foreign multinationals affect the Chinese economy? A dynamic general equilibrium analysis of Japanese FDI By María C. Latorre; Nobuhiro Hosoe
  14. Adjustment to an Export Expansion-Trade-off Between Real Wage and Real Exchange Rates Creation Date: 1982 By G.L. Murray
  15. Does Trade Liberalization Cause a Long Run Economic Growth in Turkey? By UTKULU Utku; OZDEMIR Durmus
  16. The impact of EU trade preferences on the extensive and intensive margins of agricultural adn food products. FOODSECURE working paper no. 22 By Margherita Scoppola; Valentina Raimondi; Alessandro Olper
  17. Heterogeneous Firms and Homogenising Standards in Agri-Food Trade - the Polish Meat Case By Frank VAN TONGEREN; Marie-Luise RAU
  18. Administrative Costs and Optimal Diversions from Free Trade in a Small Open Economy By MUNK Knud
  19. Australian Trade Liberalisation, APEC, and the GATT Creation Date: 1994 By D. Vines
  20. The Impact of Non-Tariff Barriers on Export Strategies: Evidence from India By Sangeeta KHORANA; Thanos VEROUSIS; Nicholas PERDIKIS
  21. Exchange Rate Volatility and Iran's Bilateral Imports from Turkey By Reza Mohammadpour; Hassan HEIDARI; Reza MOHAMMADPOUR; Vahid KAFILI
  22. Firms' Export Behavior and the Role of Bank' Overseas Information By INUI Tomohiko; ITO Keiko; MIYAKAWA Daisuke; SHOJI Keishi
  23. An Assessment of the Distributional Impact of Agricultural Trade Policies in the Triad By BOUËT Antoine; DHONT-PELTRAULT Estelle
  24. Voluntary Export Restraints (VERs) and the Question of Quality Upgrading By Ahmed EL-SHAARAWI
  25. Thailand's Openness and Implications for Economic and Trade Policy: An Econometric Study By Thanet WATTANAKUL
  26. Impact Assessment of Thailand’s Promotion of Strategic Export Industries: A Computable General Equilibrium Model (CGE) Approach By Kriengsak CHAREONWONGSAK
  27. Foreign direct investment and institutional quality By Alessandro Borin; Riccardo Cristadoro; Elena Mattevi
  28. Does Foreign Direct Investment Promote Growth? Recent Evidence from Latin America By BENGOA Marta; SANCHEZ-ROBLES Blanca
  29. The Effects of the Doha Round Non-Agricultural Market Access Negotiations in Brazil By Sergio Goldbaum; Allexandro Mori Coelho; Samir Cury
  30. Impact of China’s WTO Accession on East Asia By IANCHOVICHINA Elena; WALMSLEY Terrie

  1. By: Jean-Marc Siroën (PSL, Université Paris-Dauphine,LEDa, IRD UMR DIAL, 75016 Paris, France); Ayçil Yücer (University of Dokuz Eylül,Department of Economics, Izmir 35160 Turkey, PSL, Université Paris-Dauphine, LEDa, IRD UMR DIAL, 75016 Paris, France)
    Abstract: Free trade zones (FTZ) have become widespread with the liberalisation of international trade and investment. They are a key player in the deepening of the global value chain (GVC). However, little is known about their contribution to world trade due to a lack of information on their location and status. This paper sets out to improve knowledge in this area by analysing the trade performance of FTZ countries at macro-level with a focus on FTZ externalities and distortive costs. We have built an original database of FTZs where we define them as processing zones benefiting from import tariff incentives. We show that FTZs raise trade only by easing the negative impact of protection. As importers of components and raw materials, they raise the rest of the world’s exports. This confirms the contribution of FTZs to the GVC. This result is robust to a change in the model specification, errors and bias due to data collection issues and sample composition. _________________________________ Les zones de libre-échange (ZFE) ont proliféré avec la libéralisation du commerce et de l’investissement. Elles jouent un rôle clé dans l’approfondissement de la chaîne mondiale de valeur. Toutefois, leur contribution au commerce international est peu connue, du fait du manque d’informations sur leur localisation et leur statut. Cet article tente d’améliorer leur connaissance en analysant les performances commerciales des pays abritant des ZFE avec un focus sur les externalités et les coûts dus aux distorsions. Nous avons ainsi construit une base de données originale sur les ZFE définies comme des zones de transformation industrielle bénéficiant d’incitations sur les droits de douane. Nous montrons que les ZFE ne contribuent à augmenter le commerce du pays qu’en réduisant l’impact négatif du protectionnisme. En tant qu’importateurs de composants et de matières premières, elles augmentent les exportations des autres pays, ce qui confirme la contribution des ZFE à la chaîne globale de valeur. Ce résultat est robuste avec d’autres spécifications du modèle, les erreurs et les biais dus aux problèmes de collecte des données et de composition de l’échantillon.
    Keywords: Free Trade Zones, Export Processing Zones, Trade Policy, Gravity Models, Zones franches commerciales, Zones franches de transformation pour l'exportation, Politique commerciale, Modèle de gravité.
    JEL: F13 F14 F23 F43
    Date: 2014–09
  2. By: Konstantins Benkovskis; Julia Woerz
    Abstract: We propose a comprehensive analysis of a country's price and non-price competitiveness that accounts for changes in the value added content of trade by combining two datasets – highly disaggregated trade data from UN Comtrade and internationally integrated supply and use tables from the WIOD. When we focus attention on the traditional measure of gross exports of goods, the analysis shows that advanced economies lost non-price competitiveness relative to emerging economies over the period from 1995 to 2011. This picture changes when the fragmentation of production is considered. We find that the relative quality of production from the US, Canada, Germany and the UK, when tracing value added in exports, remained unchanged or even increased over this period. Likewise, the seemingly unchanged or improving relative quality of Brazil, Russia and India's export goods largely arose from outsourcing rather than from improvements in the quality of domestic production. However, gains in Chinese non-price competitiveness remain impressive even after accounting for global value chain integration.
    Keywords: value added content of trade, fragmentation, non-price competitiveness, China, BRIC, G7
    JEL: C43 F12 F15 L15 O47
    Date: 2014–09–22
  3. By: Madhu BALA
  4. By: Susana IRANZO
  5. By: PACHECO-LÓPEZ Penélope
  6. By: Ganeshan Wignaraja (Asian Development Bank Institute (ADBI)); Peter Morgan; Michael Plummer; Fan Zhai
    Abstract: South and Southeast Asian economic integration via increased trade flows has been increasing significantly over the past 2 decades, but the level of trade continues to be relatively low. This underperformance has been due to both policy-related variables—relatively high tariff and non-tariff barriers—and high trade costs due to inefficient “hard†and “soft†infrastructure (costly transport links and problems related to trade facilitation). The goal of this study is to estimate the potential gains from South Asian–Southeast Asian economic integration using an advanced computable general equilibrium (CGE) model. The paper estimates the potential gains to be large, particularly for South Asia, assuming that the policy- and infrastructure-related variables that increase trade costs are reduced via economic cooperation and investment in connectivity. As Myanmar is a key inter-regional bridge and has recently launched ambitious, outward-oriented policy reforms, the prospects for making progress in these areas are strong. If the two regions succeed in dropping inter-regional tariffs, reducing non-tariff barriers by 50%, and decreasing South Asian–Southeast Asian trade costs by 15%—which this paper suggests is ambitious but attainable—welfare in South Asia and Southeast Asia would rise by 8.9% and 6.4% of gross domestic product, respectively, by 2030 relative to the baseline. These gains would be driven by rising exports and competitiveness, particularly for South Asia, whose exports would rise by two thirds (64% relative to the baseline). Hence, the paper concludes that improvements in connectivity would justify a high level of investment. Moreover, it supports a two-track approach to integration in South Asia, i.e., deepening intra-regional cooperation together with building links to Southeast Asia.
    Keywords: South Asian–Southeast Asian Integration, CGE approach, intra-regional cooperation, South Asia, Southeast Asia
    JEL: C68 F12 F13 F15 F17
    Date: 2014–08
  7. By: MALEK MANSOUR Joffrey
  8. By: KM Shivakumar; S.Kombairaju; M.Chandrasekaran
  9. By: Arno BAECKER
  10. By: Angelo Secchi; Federico Tamagni; Chiara Tomasi
    Abstract: Combining detailed data on export transactions and an informative firm level measure of financing constraints, this paper provides new evidence on the extent and dynamics of product and geographical diversification of constrained exporters. Financial constraints associates with: (i) narrower product/destination margins; (ii) higher probability to drop products and destinations, (iii) higher loss of export value associated to dropping product or destination markets; (iv) higher probability to discard products with relatively high share in firm total export values, and (v) higher likelihood to drop country markets that are bigger, richer, geographically closer and with a relatively high share in total firm export value.
    Keywords: financial constraints, product-country extensive margins, product-country dropping, product attributes, gravity variables
    Date: 2014–09–22
  11. By: Hanson, Gordon
    Keywords: Agricultural and Food Policy, International Relations/Trade,
    Date: 2013–12
  12. By: HONG Yiseok
  13. By: María C. Latorre (Universidad Complutense de Madrid, Dpto.); Nobuhiro Hosoe (National Graduate Institute for Policy Studies)
    Abstract: We analyze the impacts of a sharp fall Japanese of foreign direct investment (FDI) to China that occurred after the worldwide financial crisis in 2009. The study is conducted by means of a three-region (Japan, China, and the rest of the world (ROW)) recursive dynamic computable general equilibrium (CGE) model with multinational enterprises (MNEs) driven by FDI. Our simulation experiment showed that the FDI fall would cause price rises of Japanese affiliates’ goods and a depreciation of the renminbi. These two forces with the FDI fall would heavily reduce exports and production of Japanese MNE affiliates, while increasing those in Chinese manufacturing. This, however, does not mean that China would be a gainer, because it would experience a contraction in its service sector. Its losses in its service sector would exceed the gains in the manufacturing sectors. Therefore, overall China would lose due to the FDI fall.
    Date: 2014–09
  14. By: G.L. Murray
  15. By: UTKULU Utku; OZDEMIR Durmus
  16. By: Margherita Scoppola; Valentina Raimondi; Alessandro Olper
    Abstract: In this paper we study the trade creation effects of the EU preferential trade agreements (PTAs) in the agriculture and food sectors for a large sample of developing countries in the period 1990-2006. Main results show that the EU PTAs positively affect agricultural extensive margins, especially through other than tariff impacts linked with the PTA, while in the food industry the results are more sensitive to the estimator used. As far as the intensive margin is concerned, the PTA effect is only driven by the role of tariffs, while other effects of the PTAs do not exert any relevant impact on agricultural and food products.
    JEL: Q18 C0
  17. By: Frank VAN TONGEREN; Marie-Luise RAU
  18. By: MUNK Knud
  19. By: D. Vines
  20. By: Sangeeta KHORANA; Thanos VEROUSIS; Nicholas PERDIKIS
  21. By: Reza Mohammadpour; Hassan HEIDARI; Reza MOHAMMADPOUR; Vahid KAFILI
    Abstract: To explain the impact of exchange rate volatility on international trade flows many empirical studies have investigated. Most empirical findings, which are primarily concerned with exports, confirm that an increase in exchange rate volatility tends to generate uncertainty which may have a negative impact on trade flows. The current study tends to estimate the impact of exchange rate volatility on demand for bilateral imports for Iran, using bilateral import data from selected external source of Iran. Although the effectiveness of import policy depends on the magnitude of each country’s import elasticity with respect to income, price, exchange rate and volatility of exchange rate, the current policies might not be more effective unless they meet import elasticity of particular trading partner countries. Hence, the main objective of this study is to offer that different policies should be implemented for trading partners instead of a single trade policy to improve trade balance. For policy perspective, it is important because trade policies based on aggregate import elasticity might be deceptive, if bilateral import elasticity is different from those of aggregate import demand model. (Alam and Ahmad, 2011) There have been numerous studies carried out across the globe focusing on the relationship between exchange rate volatility and bilateral import. To the best of our knowledge, there is not any study investigating the relationship between exchange rate volatility and bilateral import for Iranian economy. The objective of the present study is to investigate the effect of exchange rate volatility on Iran’s bilateral import from her selected trading partner country, Turkey, during 2003Q1 to 2012Q4. The selection of the country is justified by the fact that Iran’s imports from this neighbor country is increasing and Turkey is one of Iran's major trading partner countries. On the other hand, these two countries are planning to come up 30 billion dollars in their bilateral trade up to 2015. The reason for sample period started from 2003Q1 is approval of equalization in exchange rate. The present empirical study differs from previous research for Iran in various dimensions. We employ ARDL approach to detect short-run and long-run impact of exchange rate volatility on aggregate demand for imports. The paper uses real effective exchange rate to construct the measure of exchange rate volatility. We also apply GARCH process for estimating volatility of real effective exchange rate. Our results show that income elasticity is significant and exchange rate volatility is negative and statistically significant for Iran’s bilateral import from Turkey in long run.Our data set covers the period from 2003Q1 to 2012Q4. The Data series of bilateral imports were taken for selected importing country of Iran namely Turkey which were collected from the IMF's Direction of Trade Statistics (DOTS). Gross domestic product, consumer price index, unit value index of import and real effective exchange rate for Iran were compiled from the IMF's International Financial Statistics (IFS). All real values are measured on base of year 2005 and all of the series are transformed into natural log form. Log transformation can trim down the problem of heteroskedasticity (Gujarati, 2003). The impact of volatility in the exchange rate on Iran's bilateral imports from selected source is estimated by using the ARDL approach. This paper does not include all dimensions of dynamic relationships between Iran's bilateral imports and real effective exchange rate volatility but limited to the following variables: Dependent variable • Real bilateral imports is a ratio calculated by dividing the bilateral import over unit value index of import. Independent variables • Real gross domestic product is the ratio of nominal gross domestic product to consumer price index. Expected sign for this variable is positive, because an increase in real income, increases domestic demand for import. • Relative price of imports is a ratio calculated by dividing the unit value index of import over consumer price index. It is expected to find a negative relationship between real bilateral imports and relative price of imports. • Real effective exchange rate measures the changes in the competitiveness of a country by taking into account the changes in the relative prices between the countries involved. (Pelinescu and Caraiani, 2006). This index is expected to have a positive relationship with real bilateral imports. • Real effective exchange rate volatility is a measure that intends to capture the risk faced by traders due to unpredictable fluctuations in the exchange rate. The study used GARCH models for this variable. The effect of this variable on the import demand depends on whether the trader is risk-neutral or risk-adverse.The dynamic relationship between bilateral import demand for Iran and exchange rate volatility as well as some important explanatory variables with Turkey has been examined by applying the ARDL approach, suggesting a long-run relationship among selected explanatory variables over the sample period for Iran’s bilateral imports from Turkey. The income elasticity of imports is positive and significant which indicates that as real income growth occurs in Iran, it demands more imports from Turkey. The result also shows that relative price elasticity for bilateral imports significantly and negatively affects bilateral imports from Turkey, suggesting that import of goods decrease by increasing import price. The present study also confirms that devaluation has significant contraction effect on Iran’s bilateral imports. The result further suggests that exchange rate volatility reduces the demand for Iran’s bilateral import from selected partner in the long run. This study concludes that short run disequilibrium converges very soon in the long-run. Finally, for policy makers, the present study suggests that a single trade policy is not too effective. Policy makers should make separate policies for neighbor trading partners, according to their trade relations with Iran and in the light of present analysis.
    Keywords: Iran, Trade issues, Other issues
    Date: 2014–10–01
  22. By: INUI Tomohiko; ITO Keiko; MIYAKAWA Daisuke; SHOJI Keishi
    Abstract: This paper examines how firms’ decision to start exporting is affected by the availability of information on export markets. Unlike existing studies which focus on information sharing among firms, we are interested in the information provided by firms’ main bank. Specifically, using a unique dataset containing information on both Japanese firms’ export activities and their main banks’ experience in transacting with other exporting firms, we examine whether main banks act as a conduit of information on export markets. We find that information spillovers through main banks positively affect client firms’ decision to start exporting (extensive margin), implying that information on foreign markets provided by banks substantially reduces the fixed entry cost of exporting. On the other hand, we do not find any evidence that information provided by banks has an effect on the export volume or on the growth rate of exports (intensive margin). Our results highlight that channels of information spillovers other than those examined in the literature so far may be of considerable importance.
    Date: 2013–03
  23. By: BOUËT Antoine; DHONT-PELTRAULT Estelle
  24. By: Ahmed EL-SHAARAWI
  25. By: Thanet WATTANAKUL
  26. By: Kriengsak CHAREONWONGSAK
  27. By: Alessandro Borin (Bank of Italy); Riccardo Cristadoro; Elena Mattevi (Bank of Italy)
    Abstract: Several factors contribute to attracting foreign investment: cyclical, such as demand fluctuations; structural, such as industrial specialization or the presence of natural resources; fiscal policy, including taxes; political, such as social stability and country governance; and finally, the overall quality of institutions. According to our estimates, the quality of institutions - measured by the World Bank’s Doing Business indicators - has a positive and significant effect in attracting foreign investment, even controlling for other relevant characteristics of the target countries. The time and complexity of procedures, rather than their costs, are key determinants in foreign investors’ choices. Italy, which receives less FDI than countries with similar economic characteristics, lags behind in those indicators of institution quality that most affect the allocation of investment. According to our analysis, if Italian institutions had been qualitatively in line with the euro-area average, foreign investment inflows would have been 15% (about 16 billion euros) higher during the 2006-2012 period.
    Keywords: foreign direct investment, FDI, Ease of Doing Business, institutions
    JEL: C33 F21 K20 O43
    Date: 2014–09
  28. By: BENGOA Marta; SANCHEZ-ROBLES Blanca
  29. By: Sergio Goldbaum; Allexandro Mori Coelho; Samir Cury

This nep-int issue is ©2014 by Luca Salvatici. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.