|
on International Trade |
| By: | Christian Soegaard |
| Abstract: | Why are trade agreements regional? I address this question in a model of oligopoly featuring product variety. Tariffs have the effect of manipulating a country's terms of trade and shifting profits towards the domestic market at the expense of foreign trade partners. Countries endogenously form into regional trade agreements or global free trade in a framework where any agreement must be sustained by repeated interaction. A crucial parameter determining the degree of regionalism is product variety. I demonstrate that for a given trade cost and discount factor, increases in product variety leads to greater scope for global free trade relative to regional trade agreements. |
| Keywords: | trade policy ; self-enforceability ; trade costs ; regional trade agreements. |
| JEL: | F13 F15 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa14p598&r=int |
| By: | Menon, Jayant (Asian Development Bank) |
| Abstract: | The rise of mega-regionals such as the Regional Comprehensive Economic Partnership (RCEP) and the Trans-Pacific Partnership (TPP) suggests that the world trade system is fragmenting to the point it appears more like a jigsaw puzzle than a spaghetti bowl. There are both regional and global jigsaw puzzles to be solved—in that order—to clean up the world trade system. But is this even likely? The difficulties of free trade agreement (FTA) consolidation at the regional level are well known, while piecing together the blocs around the world to form a coherent whole is even more challenging. In this context, a way forward is to return to the most widely used modality of trade liberalization—unilateral actions—but this time involving the multilateralization of preferences rather than unreciprocated reductions in tariff rates. As more and more FTAs are negotiated, reference erosion sets in, reducing the resistance of FTA partners to multilateralization. Multilateralization of references may then present a practical way forward in addressing the disarray in the world trade system. |
| Keywords: | multilateralization of preferences; mega-regionals; FTA; TPP; RCEP; reciprocity |
| JEL: | F13 F14 F17 |
| Date: | 2014–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbrei:0140&r=int |
| By: | Bown, Chad P.; Reynolds, Kara M. |
| Abstract: | This paper introduces a new data set and establishes a set of basic facts and patterns regarding the ‘trade’ that countries fight about under WTO dispute settlement. It characterizes the scope of products, as well as the levels of and changes to the trade values, market shares, volumes, and prices for those goods that eventually become subject to WTO litigation. The first result is striking heterogeneity in the level of market access at stake across disputes: e.g., 14 percent of cases over disputed import products feature bilateral trade that is less than $1 million per year, and another 15 percent feature bilateral trade that is more than $1 billion per year. Nevertheless, some strong patterns emerge from a more detailed examination of the data. Both high- and low-income complainants tend to suffer important losses in foreign market access in the products that ultimately become subject to dispute. Furthermore, while the respondent’s imposition of an allegedly WTO-inconsistent policy is associated with reductions, on average, to trade values, volumes and exporter-received prices, there is some evidence of differences in the size of these changes across both the different types of policies under dispute and the potential exporter country litigants. Finally, these different types of policies under dispute can have dissimilar trade effects for the complainant relative to other (non-complainant) exporters of the disputed product, and this is likely to affect the litigation allegiance of third countries. |
| Keywords: | dispute settlement; trade agreements; WTO |
| JEL: | F13 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10164&r=int |
| By: | Alessandro Borin (Banca d'Italia); Riccardo Cristadoro |
| Abstract: | Since the early 1990s internationalization has moved forward very rapidly. With the reorganization of production processes on a global scale, the average growth rate of foreign direct investment (FDI) has exceeded that of GDP and trade, and its geographical and sectoral distribution has changed. In 2012, for the first time FDI flows to developing countries outpaced those to developed countries. Italy lags behind as a destination for FDI inflows and also as an originator of FDI outflows. The expansion of Italian multinationals in the '90s was largely driven by investment in traditional industries and in Eastern European economies. During the last decade a larger share of Italian FDI has been directed towards the most dynamic markets and innovative sectors. ItalyÂ’s industrial structure, which largely consists of small firms, is a factor in ItalyÂ’s delay in pursuing stable internationalization strategies. Compared with Germany and France, Italian firms show a significantly higher propensity to make use of arm's length and sub-contracting agreements rather than establishing production facilities abroad. |
| Keywords: | foreign direct investment, FDI, multinational firms. |
| JEL: | F21 F23 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_243_14&r=int |
| By: | Bastos, Paulo; Silva, Joana; Verhoogen, Eric A |
| Abstract: | This paper examines the extent to which the destination of exports matters for the input prices paid by firms, using detailed customs and firm-product-level data from Portugal. We use exchange-rate movements as a source of variation in export destinations and find that exporting to richer countries leads firms to charge more for outputs and pay higher prices for inputs, other things equal. The results are supportive of the hypothesis that an exogenous increase in average destination income leads firms to raise the average quality of goods they produce and to purchase higher-quality inputs. |
| Keywords: | inputs; international trade; Portugal; prices; product quality |
| JEL: | F1 L1 O1 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9985&r=int |
| By: | Vaishnavi venkatesh (School of Public Policy,George Mason University,3351 N Fairfax Dr, Arlington, VA 22201, United States. phone-+1 703-993-2280); Ranajoy Bhattacharyya (Indian Institute of Foreign Trade, Kolkata, India) |
| Abstract: | A careful assessment of intra-regional and extra-regional ASEAN trade volumes from 1970 to 2010 reveals that there has been no significant change during the pre- and post-AFTA era. However, researchers working on the effectiveness of the ASEAN Free Trade Agreement have consistently reported positive trade creationary effects of AFTA. By reassessing the impact of AFTA through the Balassa method of estimating trade creation and diversion, and applying it to traditional gravity estimates, we find that (a) while ASEAN countries have spent more money per dollar earned on foreign goods in the post-AFTA period, this is generally true for all countries in the world, and (b) being a small region with significant historic trade ties, ASEAN, as a whole has always traded more amongst themselves, when compared to the world average, and this fact has been misrepresented as the trade creationary effects of AFTA. By comparing the coefficients of the regionalism dummies of ASEAN, within the scope of the gravity model, we find that there has been no significant change in these coefficients, when the sample is divided into the pre-and post-AFTA years. We thus conclude that the free trade agreement in question has had no significant impact on intra-ASEAN trade. |
| Keywords: | ASEAN, Free trade agreement, Trade creation, trade diversion, Regional trade. |
| JEL: | F12 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:ift:wpaper:1425&r=int |
| By: | Álvarez, Roberto; Sáez, Camila |
| Abstract: | This paper analyzes the performance of Chilean exporting firms during the period after the financial crisis of 2008 and 2009. After the crisis, world imports increased sustainably, which was used by Chilean firms in particular and the country in general. Specifically, larger firms, and those that had lower external financing needs, were benefited the most from the new international context, increasing their exports to markets that already exported before and recovering the markets they lost during the crisis. While the recovery is mainly due to the intensive margin, the present work shows that the larger firms also increased their export destinations, so that recovery takes place in the 2 types of margins. Finally, in a survival analysis, the results indicate that larger firms needed less time to regain its level of exports that have before the financial crisis. |
| Keywords: | Global Trade, Export Finance, Firm Size, Intensive and extensive margins, Financial crisis |
| JEL: | F14 F19 F34 G01 |
| Date: | 2014–07–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:60637&r=int |
| By: | Peter S. Eppinger |
| Abstract: | Services offshoring is on the rise. Due to recent innovations in communication technologies, many services that used to be non-tradable can be delivered from distance today. Still, German services imports have grown much slower than exports over the past decades, indicating under-exploitation of the potential for services offshoring. To understand this development, the paper uses a newly combined dataset on German firms’ services trade, balance sheets, and foreign affiliates during 2001-2012. Estimation of a firm-level gravity model confirms that more productive firms offshore more, reveals complementarities between services imports and exports, and points towards the importance of intra-firm services trade. The paper establishes that the level of services offshoring is lower in industries with greater offshoring potentials, as captured by their task compositions, but offshoring growth tends to be higher there. These findings indicate that there exists a sizeable potential for services offshoring due to remaining trade barriers, which is yet to be exploited. |
| Keywords: | offshoring, services trade, offshoring potential, trade in tasks |
| JEL: | F10 F1 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:iaw:iawdip:108&r=int |
| By: | Ouraich, Ismail; Dudu, Hasan; Tyner, Wallace E.; Cakmak, Erol |
| Abstract: | This paper examines the interaction of globalization through trade liberalization and climate change, globally with a special focus on Morocco and Turkey. We use the GTAP model, which is a global general equilibrium model, to investigate trade liberalizat |
| Keywords: | climate change, adaptation, uncertainty, CGE model, trade liberalization |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp2014-100&r=int |
| By: | Alexander Knobel (Gaidar Institute for Economic Policy); Bekhan Chokaev (RANEPA) |
| Abstract: | This paper investigates the possible economic effects of Russia-EU free trade agreement, implying a mutual zero import tariffs in the trade of the Customs Union and the EU. Analysis of the effects is made using CGE Globe v1 model. We estimate the impact of an FTA on the economies, both at the level of the entire economy and at the industry level. The sensitivity analysis is made. It is shown that, in both relative and absolute terms, Russia potentially more benefits from the agreement than the EU. The cumulative gain of the CU is strictly positive, but the benefits and costs are unevenly distributed among its members, with negative effect for Belarus. |
| Keywords: | Customs Union, European Union, Free Trade Agreement, CGE |
| JEL: | C68 F15 F17 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:gai:wpaper:0107&r=int |
| By: | Michał BURZYŃSKI (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES), FRS-FNRS and Poznan University of Economics, KEM) |
| Abstract: | The paper investigates the welfare consequences of liberalizing migration and trade between the OECD countries. The key findings are that the aggregate welfare gains from zeroing the trade barriers in OECD are moderate (+ 1,5% in real GDP), whereas the impact of reducing the barriers for migration in OECD is substantially more pronounced (+ 2,0% in real GDP). Removing trade barriers is beneficial for every country in our sample (especially for the less integrated economies), whereas eliminating migration barriers provides positive outcomes for only a few destinations and increases the between and within-country inequality. Consequently, liberalizations of trade and migration have similar implications for aggregate welfare, but very different distributive effects across the OECD countries. Furthermore, we consider bilateral liberalization scenarios between the EU and the US as well as between the EU and Turkey, which are of major importance in the current political debates. As a by-product of our numerical experiments, we examine the relations between trade and migration, concluding that their sign and magnitude extensively depend on the type of shock imposed in a general equilibrium system. |
| Keywords: | migration, international trade, computational general equilibrium, liberalization |
| JEL: | C68 F22 J24 |
| Date: | 2014–11–18 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvir:2014022&r=int |
| By: | Fedoseeva, Svetlana |
| Abstract: | Each time the Euro starts appreciating, a discussion on how painful this might hit European exporters arises in media, making politician and economists work out the ways to mitigate possible shocks. Still, in his recent study, Verheyen (2013a) using aggregated European exports to the US as an example, showed, that in the long run exports react on exchange rate changes in a nonlinear way. Particularly his analysis revealed, that a positive impact on trade during the Euro depreciation seem to outweigh the losses caused by its appreciations. In this paper, I test whether this holds true for agri-food exports as well. To address this question, I apply a partial sum decomposition approach and the NARDL framework of Shin et al. (2013) to aggregated agri-food exports as well as to total exports of eleven European countries to the US, which is currently the major partner of the EU in agri-food trade. The outcomes suggest, that the exchange rate nonlinearities are even more pronounced in agri-food than in total exports. Despite the ongoing discussion regarding the nocent effect of a strong national currency on exports, the estimation results suggest that European agri-food exporters have found their way to cope with such negative effects. European exporters seem to benefit more from Euro depreciation, than its appreciation harm them. I interpret this finding as a sign of pricing strategies application (e.g., pricing-to-market) to the European agri-food exports. |
| Keywords: | agri-food exports,asymmetry,asymmetry, exchange rate nonlinearity,export demand,NARDL |
| JEL: | C22 F14 L66 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zeudps:66&r=int |
| By: | Martina Sartori; Stefano Schiavo |
| Abstract: | We analyze the link between virtual water trade, that is, the flow of water embodied in the international trade of agricultural goods, and vulnerability to external shocks from the vantage point of network analysis. While a large body of work has shown that virtual water trade can enhance water saving on a global scale, being especially beneficial to arid countries, there are increasing concerns that more openness makes countries more dependent on foreign food suppliers and especially more susceptible to external shocks. Our evidence reveals that the increased globalization witnessed in the last 30 years is not associated with the increased frequency of adverse shocks (in either precipitation or food production). Furthermore, building on recent advances in network analysis that connect the stability of a complex system to the interaction between the distribution of shocks and the network topology, we find that the world is more interconnected, but not necessarily less stable. |
| Keywords: | virtual water trade, vulnerability, complex network, shocks. |
| JEL: | F14 F18 Q25 Q56 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:bcu:iefewp:iefewp73&r=int |
| By: | Michele Bernini (University of Sheffield); Chiara Tomasi (University of Trento) |
| Abstract: | Using Italian firm-level data for the period 2000-2006, this paper investigates the role of the quality of imported inputs and exported output in determining the heterogeneous response of exporters' prices to real exchange rate fluctuations. The analysis confirms previous findings that the imports of intermediate inputs and the quality of the exported output increase an exporter's ability to reduce the exchange rate pass-through into the prices perceived by foreign consumers. Our novel finding is that the `intermediate imports channel' has a weaker negative impact on the exchange rate pass-through into the price of higher quality exported varieties. The paper shows that this finding is consistent with the predictions of a model where both the suppliers of high quality intermediate inputs and the exporters of high quality final goods follow pricing strategies that offset exchange rate variations. |
| Keywords: | Importers, Exporters, Quality, Exchange Rate Disconnect |
| JEL: | F12 F14 F31 F41 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:shf:wpaper:2014020&r=int |
| By: | Javorcik, Beata; Poelhekke, Steven |
| Abstract: | The literature has documented a positive effect of foreign ownership on firm performance. But is this effect due to a one-time knowledge transfer or does it rely on continuous injections of knowledge? To shed light on this question we focus on divestments, that is, foreign affiliates that are sold to local owners. To establish a causal effect of the ownership change we combine a difference-in-differences approach with propensity score matching. We use plant-level panel data from the Indonesian Census of Manufacturing covering the period 1990-2009. We consider 157 cases of divestment, where a large set of plant characteristics is available two years before and three years after the ownership change and for which observationally similar control plants exist. The results indicate that divestment is associated with a drop in total factor productivity accompanied by a decline in output, markups as well as export and import intensity. The findings are consistent with the benefits of foreign ownership being driven by continuous supply of headquarter services from the foreign parent. |
| Keywords: | divestment; foreign direct investment; Indonesia; productivity |
| JEL: | F23 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10077&r=int |
| By: | Victoria Golikova; Boris Kuznetsov |
| Abstract: | We present some preliminary empirical results on impact of international certification on export behavior of Russian manufacturing firms. Our research is motivated, first, by the fact that little is known about the impact of ISO certification on the performance of Russian firms and, second, by unclear role of ISO certificate in week local institutional environment (where some firms simply buy these certificates without real audit and modernization of business processes). Russian medium and large enterprises in manufacturing are lagging far behind European peers both in terms of exporting activity and ISO certification level. We are trying to estimate the impact of international certification on the probability of a firm to be involved in foreign trade. We follow the general logic and methodology proposed in papers of Grajek (2004), Clougherty and Grajek (2008), Swann (2010), Otsuki (2011), Martincus et al. (2010), Masacure et al. (2009), Potoski and Prakash (2009). Empirical data comes from two rounds of nation-wide survey on the competitiveness of Russian manufacturing enterprises conducted in 2005 and 2009. We use a panel data from two rounds on approximately 500 firms in eight manufacturing industries. This gives us a unique opportunity to track the history of both availability of ISO certificate and exporting status of the firm. We use several different empirical models to examine the effect of certification on export activity and to control for possible endogeneity by estimating systems of simultaneous equations. We find evidence that ISO certification has a significant positive impact on probability of export if we control for self-selection effect for both export and ISO certification. Firms self-select for ISO by size and productivity as well as by being a supplier of a foreign-owned company in Russia. Then we compared two effects on export performance ? networking with foreign partners and ISO certification. We found out that while there is a direct positive impact of networking with foreign partners and certification on propensity to export, we were unable to find any significant impact of ISO certification on networking with foreign partners as a signal of "common language" that facilitate establishing partnership relations. We conclude that in the period analyzed these two institutions, both being important facilitators of exporting, worked individually. |
| Keywords: | ISO certification; export; manufacturing firms; Russia |
| JEL: | F14 L14 P23 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa14p1721&r=int |
| By: | Prema-chandra Athukorala; Raveen Ekanayake |
| Abstract: | A widely-held view in the lead-up to the abolition of the Multi-fiber Arrangement (MFA) quotas in 2005 was that, in a quota-free global market, large low cost countries (in particular China and India) and countries in proximity to the major markets (such as Mexico, Turkey and countries in the European periphery) would crowd out export performance of the other developing countries. The post-MFA world apparel trade has, however, brought in many surprises: a number of 'predicted losers' have maintained or increased their market shares, while some 'predicted gainers' have performed poorly. This paper aims to broaden our understanding of the determinants of these inter-country differences through a case study of the export-oriented apparel industry in Sri Lanka. The evidence suggests that apparel is a bundle of differentiated products, not a homogenous commodity as commonly assumed by the trade flow modelers, and individual exporting countries have room for carving out a niche in specific products. Sri Lankan apparel industry has managed to maintain growth dynamism through specialization in fashion-basic products, in particular intimate apparel (lingerie) and upmarket casualwear. |
| Keywords: | multi-fiber arrangement (MFA), apparel industry, global value chain (GVC), Sri Lanka |
| JEL: | F13 F53 O24 O53 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:pas:papers:2014-17&r=int |
| By: | Hal Hill; Jayant Menon |
| Abstract: | This paper provides an analytical review of World Trade Organization, Trade Policy Review: Cambodia, the first such report undertaken for the country. The report highlights Cambodia's rapid economic growth after one of the world's worst cases of genocide in the second half of the twentieth century. This growth has been underpinned by open trade and investment policies, in the context of dynamic neighbourhood growth effects. The trade regime is mainly tariff-based, with modest inter-sectoral variations in rates. Cambodia has limited trade policy space. It is a signatory to the 10-nation ASEAN Free Trade Agreement, soon to become the ASEAN Economic Community. Moreover, given its long and porous borders with the much larger, dynamic economies of Thailand and Vietnam, any major cross border price differences will quickly result in informal trade with these economies, and nearby China. Most of the country's trade policy challenges are to do with 'behind the border' issues, a legacy of its generation of civil war and conflict. These include weak bureaucratic capacity, high levels of corruption, poor infrastructure, and limited human capital. |
| Keywords: | Cambodia, trade policy, ASEAN, globalization, weak institutions. |
| JEL: | F14 O53 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:pas:papers:2014-12&r=int |
| By: | Jean Château; Lionel Fontagné; Jean Fouré; Åsa Johansson; Eduardo Olaberría |
| Abstract: | This paper presents long-term trade scenarios for the world economy up to 2060 based on a modelling approach that combines aggregate growth projections for the world with a detailed computable general equilibrium sectoral trade model. The analysis suggests that over the next 50 years, the geographical centre of trade will continue to shift from OECD to non-OECD regions reflecting faster growth in non-OECD countries. The relative importance of different regions in specific export markets is set to change markedly over the next half century with emerging economies gaining export shares in manufacturing and services. Trade liberalisation, including gradual removal of tariffs, regulatory barriers in services and agricultural support, as well as a reduction in transaction costs on goods, could increase global trade and GDP over the next 50 years. Specific scenarios of regional liberalisation among a core group of OECD countries or partial multilateral liberalisation could, respectively, raise trade by 4% and 15% and GDP by 0.6% and 2.8% by 2060 relative to the status quo. Finally, the model highlights that investment in education has an influence on trade and high-skill specialisation patterns over the coming decades. Slower educational upgrading in key emerging economies than expected in the baseline scenario could reduce world exports by 2% by 2060. Lower up-skilling in emerging economies would also slow-down the restructuring towards higher value-added activities in these emerging economies.<P>Tendances des échanges dans l'économie mondiale à l'horizon 2060<BR>Ce document présente des scénarios à long terme sur les échanges dans l’économie mondiale jusqu’en 2060, selon une approche de modélisation qui associe des prévisions globales de croissance dans le monde et un modèle d’équilibre général calculable détaillé pour les échanges sectoriels. L’analyse fait apparaître que le centre géographique des échanges continuera de se déplacer dans les 50 prochaines années de la zone de l’OCDE vers des régions hors OCDE dont la croissance plus rapide est ainsi mise en évidence. L’importance relative des régions sur les différents marchés à l’exportation devrait évoluer considérablement dans le demi-siècle à venir, les économies émergentes gagnant des parts des marchés à l’exportation de produits manufacturiers et de services. La libéralisation des échanges, en particulier la suppression progressive des droits de douane, des obstacles réglementaires aux échanges de services et du soutien à l’agriculture, ainsi que la baisse des coûts de transaction sur les produits pourraient se traduire par une hausse des échanges et du PIB à l’échelle mondiale. Les scénarios spécifiques de libéralisation régionale dans un noyau de pays de l’OCDE ou de libéralisation multilatérale partielle pourraient entraîner respectivement des hausses de 4 % et de 15 % des échanges et de 0.6 % et 2.8 % du PIB par rapport au statu quo. Enfin, le modèle fait ressortir le rôle de l’investissement en faveur de l’éducation dans les tendances des échanges et de la spécialisation à haut niveau de qualification dans les décennies à venir. Si le relèvement des niveaux d’instruction dans les grandes économies émergentes était plus lent que ne le prévoit le scénario de référence, les exportations mondiales pourraient être réduites de 2 % en 2060. Un renforcement moins sensible des compétences dans ces économies freinerait aussi leur redéploiement vers des activités à plus forte valeur ajoutée. |
| Keywords: | trade liberalisation, general equilibrium trade model, long-term trade and specialisation patterns, libéralisation des échanges, modèle général d’équilibre pour les échanges, tendances à long-terme des échanges et de la spécialisation |
| JEL: | E23 E27 F02 F17 F47 |
| Date: | 2014–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1142-en&r=int |
| By: | Estrella Gomez (European Commission – JRC - IPTS); Bertin Martens (European Commission – JRC - IPTS); Geomina Turlea (University of Minnesota) |
| Abstract: | The objective of this paper is to document the evolution of cross-border music trade patterns in this transition period and to explain what drives digital music trade patterns. The shift from analogue to digital music distribution has substantially reduced trade costs and has enlarged the choice sets of music consumers around the world. Using comprehensive data on digital track sales in the US, Canada, and 16 European countries, 2006-2011, we document patterns of music trade in the digital era and contrast it with what’s known from elsewhere about trade in popular music for the past half century. While home bias in music consumption among the top 100 songs had grown in the pre-digital distribution period prior to 2006, home bias has declined since then. We find that the share of imported songs in music consumption has grown in all countries except in the US. Moreover, although the number of European songs available has risen faster than the number of US songs, the market share of the US in digital music sales has increased while the market shares of European repertoires have fallen. US repertoire holds the largest market share in almost every country. Home bias is lower in the long tail than at the top end of the distribution. We consider four candidate explanations for the shift away from domestic music: a) that growth in availability of particular repertoires explains their growth in total sales and market shares, b) that changes in the effect of distance-related trade costs on trade made possible by digitization explain changed patterns of trade, c) that changed preferences toward particular origin repertoires explains changed patterns, and d) that recent vintages of particular repertoires have grown more appealing to world consumers. We conclude that a combination of c) and d) offers the most credible explanation for the observed patterns. |
| Keywords: | digital music, online trade, music downloads, trade in cultural products, gravity model, cultural diversity |
| JEL: | F15 O52 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:decwpa:2014-04&r=int |
| By: | Maria Stella Chiaruttini |
| Abstract: | The last decades have witnessed the rise of a new wave of economic regionalism, the most remarkable example of which is the European Union. Regional economic integration is generally interpreted either as an attempt to resist the centrifugal forces of globalisation by strenghtening economic ties within a narrower area or as an intermediate step towards deeper integration at worldwide level. The ongoing evolution of the European Union makes it difficult to ascertain its real nature. At present, however, notwithstanding recent enlargements, the intra-EU trade share on total EU exchanges is declining while the dependence of the area on external markets, among which Russia, is increasing. The study of the economic and geopolitic relations between EU and Russia is rather intricate due to the overlapping of several scenarios. On the one hand there are the growing interconnections between EU and Russia which have led to envisage the creation of a Common Economic Space or even of a free trade zone, moving towards a pan-Eurasian economic block bridging the historic East-West divide. On the other hand there is the progressive penetration of the EU into the former Soviet space parallel to Russia's attempt to maintain its leading role in the East. From this perspective the EU may appear as a Western hegemon seeking to englobe an evergrowing periphery at the expense of a marginalised Russia. In this light the launching of the Customs Union of Belarus, Kazakhstan and Russia but especially the project of the Eurasian Economic Union would represent a Russia-inspired version of the EU in direct competition with the latter for the control of the post-Soviet space. Thus, instead of fading borders there would be two rival projects of regional integration. This interpretation is consistent with a view of regionalism as resistance not just to globalisation but specifically to EU's expansion. According to a different perspective, however, Eurasian integration might be seen as an intermediate stage alternative to an inclusion into the EU economic space. Leaving aside political considerations, the inclusion of a country into a regional block should be in principle motivated by a preexisting, although partial, de facto economic integration, to be furthered after formal accession. This contribution aims at providing an overview on the trade links between EU, Russia and the other transition economies, offering a background for the debate on the reshaping of the post-Soviet space. The questions to answer are: to what extent Russian and EU markets are interdependent; how far trade integration of the new accession countries inside the EU has progressed in comparison to that with Russia; and finally to which of the two regional blocks, the European or the Eurasian Economic Union, post-Soviet countries appear to be closer trade partners. |
| Keywords: | economic regionalism; European Union; post-Soviet states; transition economies |
| JEL: | F14 F15 P2 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa14p764&r=int |
| By: | Lars Boerner; Battista Severgnini |
| Abstract: | This paper uses the spread of disease as a proxy to measure economic interactions. Based on a case study of the Black Death (1346-51) in the Mediterranean region and Europe, we find geographic, institutional, and cultural determinants of trade. To achieve this we create and empirically test a trade model between cities. Our findings allow us to create a new methodology to measure economic interaction and shed light on open questions in economics, especially pertaining to trade, economic history, and growth |
| Keywords: | trade; Black Death; gravity model; Poisson pseudo maximum likelihood; spatial regression discontinuity |
| JEL: | N0 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:wpaper:60382&r=int |
| By: | Chiara Bentivogli (Bank of Italy); Giacomo Oddo (Bank of Italy); Valeria Pellegrini (Bank of Italy) |
| Abstract: | The paper presents an overview of available statistics on the internationalization of the Italian economy. The different sources are compared in terms of completeness, consistency and compatibility, timeliness, relevance and frequency of revisions, presence of systematic biases and significant discontinuities. The data representing the internationalization of the Italian productive system are not always consistent with each other. To address some deep questions, widely debated in the scientific literature, there is still a need to improve and enrich the production of statistics. The best answer to this type of information requirements is to be found in microdata, in which, as far as economically burdensome their production, investments are needed in order to understand a phenomenon of increasing complexity that has now gone beyond the information capacity of macroeconomic statistics. Such data would also be very useful for an effective economic policy, in which you feel a strong need, to enhance the attractiveness of the region for foreign investment, to improve the productivity of enterprises, to support the internationalization. |
| Keywords: | data on international trade and FDI, foreign direct investment |
| JEL: | F21 F23 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_239_14&r=int |
| By: | Anderson, Kym; Jensen, Hans G. |
| Abstract: | When prices spike in international grain markets, national governments often reduce the extent to which that spike affects their domestic food markets. Those actions exacerbate the price spike and international welfare transfer associated with that terms of trade change. Several recent analyses have assessed the extent to which those policies contributed to the 2006-08 international price rise, but only by focusing on one commodity or using a back-of-the envelope (BOTE) method. This paper provides a more-comprehensive analysis using a global economy-wide model that is able to take account of the interactions between markets for farm products that are closely related in production and/or consumption, and able to estimate the impacts of those insulating policies on grain prices and on the grain trade and economic welfare of the world’s various countries. Our results support the conclusion from earlier studies that there is a need for stronger WTO disciplines on export restrictions. |
| Keywords: | commodity price stabilization; distorted incentives; domestic market insulation; international price transmission |
| JEL: | F14 Q17 Q18 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10076&r=int |
| By: | Hottman, Colin; Redding, Stephen J.; Weinstein, David E. |
| Abstract: | We estimate a structural model of heterogeneous multiproduct firms to examine the sources of firm heterogeneity emphasized in the recent trade and macro literatures. Using Nielsen barcode data on prices and sales, we estimate elasticities of substitution within and between firms, and use the estimated model to recover unobserved qualities, marginal costs and markups. We find that variation in firm quality and product scope explains at least four fifths of the variation in firm sales. Most firms are well approximated by the monopolistic competition benchmark of constant markups, but the largest firms that account for most of aggregate sales depart substantially from this benchmark. Although the output of multiproduct firms is differentiated, cannibalization is quantitatively important for the largest firms. This imperfect substitutability of products within firms, and the fact that larger firms supply more products than smaller firms, implies that standard productivity measures are not independent of demand system assumptions and probably dramatically understate the relative productivity of the largest firms. |
| Keywords: | cannibalization effects; firm heterogeneity; multiproduct firms; productivity |
| JEL: | L11 L21 L25 L60 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10133&r=int |
| By: | Laura Resmini |
| Abstract: | This paper examines patterns of FDI inflows to Southern European (SE) regions, which seem to be at the margin of the FDI attraction game accounting for a very small share of total inward FDI in the EU. In order to understand why these regions attracted such a low number of foreign investors, this contribution provides the following analysis: i) an overall picture of the main characteristics of patterns of inward FDI in SE regions at geographical and sectoral level; ii) the factors that drive FDI flows into EU regions; iii) as assessment of the potential of attractiveness of SE regions, both in absolute terms and with respect to other EU regions. The main results indicate that SE regions are definitively less attractive than other EU regions, though a lot of variation does exist at both geographical and sectoral level. In order to improve their capacity to attract FDI SE regions should improve their factors of attractiveness by implementing several structural reforms |
| Keywords: | foreign direct investment; Southern European periphery; spatial econometrics |
| JEL: | F23 R12 C21 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa14p543&r=int |
| By: | Grossman, Gene; Helpman, Elhanan |
| Abstract: | We introduce firm and worker heterogeneity into a model of innovation-driven endogenous growth. Individuals who differ in ability sort into either a research sector or a manufacturing sector that produces differentiated goods. Each research project generates a new variety of the differentiated product and a random technology for producing it. Technologies differ in complexity and productivity, and technological sophistication is complementary to worker ability. We study the co-determination of growth and income inequality in both the closed and open economy, as well as the spillover effects of policy and conditions in one country to outcomes in others. |
| Keywords: | endogenous growth; income distribution; income inequality; innovation; trade and growth |
| JEL: | D33 F12 F16 O41 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10235&r=int |
| By: | Ayadi, Mohamed; Mattoussi, Wided |
| Abstract: | In this paper, we explore the link between firm productivity and exporting using three firm level datasets of 1323 Tunisian manufacturing firms from 2004 to 2006. In particular, we examine whether more productive firms self-select into export markets, and |
| Keywords: | manufacturing industry, learning by exporting, self-selection, innovation, Tunisia |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp2014-098&r=int |
| By: | Rashmi Rastogi (Centre for International Trade and Development,Jawaharlal Nehru University); Aparna Sawhney (Centre for International Trade and Development,Jawaharlal Nehru University) |
| Abstract: | In this paper we examine the pattern of inward FDI at the disaggregated industry level (NIC 3- digit), and test for the industry-specific characteristics that have been significant in attracting foreign investment in India during 2000-10. Since highly polluting industries (based on Central Pollution Control Board classification) have accounted for a substantive share of the FDI inflows, we control for these industries to discern the differential impact of industry characteristics in the dirty manufacturing sector. Our analysis of the FDI inflows focuses on a panel of top ten investing countries, as well as individual countries with relatively stringent environmental norms. Our results indicate that, on the whole (as well as from Japan), FDI inflows are significant in capital-intensive industries with high growth rate. In case of the US, the foremost industrialized country investing in India, the composition of FDI has shifted significantly towards less energy-intensive industries and labor-intensive non-polluting industries, while inflows within polluting industries have been towards the capital intensive industries with large market size. |
| URL: | http://d.repec.org/n?u=RePEc:ind:citdwp:13-02&r=int |
| By: | Daniela MAGGIONI (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali); Alessia LO TURCO (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali); Mauro GALLEGATI (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali) |
| Abstract: | With this paper we provide, for the first time to our knowledge, micro-level evidence on the negative linkage between firm complexity and volatility. A higher sophistication level of a firm's export basket reduces its output fluctuations. When focusing on a sample of exporting and non exporting firms, the average complexity of the production mix equally affects stability of sales of both groups. The stabilising role of firms' production sophistication is driven by complex products' higher income elasticity, technological diversification and market entry barriers. |
| Keywords: | Capabilities, Demand and supply channels, Output fluctuations, Product Sophistication |
| JEL: | D22 E32 F43 O12 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:anc:wpaper:407&r=int |
| By: | yukiko sawada |
| Abstract: | This paper presents a simple two country model in which firms in manufacturing sector choose a technology level (high or low). I show how trade integration and productivity differential affect technology choice clearly. In particular, if the gap of productivity of high technology is medium, firms locating in country employ high technology and other firms in developing country do low technology. In this case, increasing productivity of high technology makes the welfare level of a consumer in low technology country decrease. |
| JEL: | F10 F12 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa14p1069&r=int |
| By: | Cali, Massimiliano; Mulabdic, Alen |
| Abstract: | This paper revisits and expands the evidence on the impact of trade shocks on intra-state conflict with a large sample of developing countries in the 1960-2010 period. The results suggest that increases in the prices of a country's exported commodities raise the country's risk of civil conflict and its duration. The effect on conflict risk is mainly driven by the price of point-source commodities, in line with the rapacity effect theory of conflict. However, the paper does not find support for the opportunity cost theory via exported commodities. The analysis also finds that intense trading with contiguous countries is associated with lower duration of intra-state conflict, consistent with the idea that such trade reduces the incentive of contiguous countries to fuel conflict in their neighbor. Trading with neighbors is also associated with a lower risk of conflict, when such trade occurs under trade agreements. By contrast, neither imported commodity prices nor the economic cycle in export markets appears to exert any influence on the probability or duration of conflict. The paper identifies several conditions under which changes in the value of exported commodities cease to matter for conflict probability. |
| Keywords: | Emerging Markets,Post Conflict Reconstruction,Economic Theory&Research,E-Business,Social Conflict and Violence |
| Date: | 2014–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:7125&r=int |
| By: | Atkin, David; Khandelwal, Amit; Osman, Adam |
| Abstract: | We conduct a randomized control trial that generates exogenous variation in the access to foreign markets for rug producers in Egypt. Combined with detailed survey data, we causally identify the impact of exporting on firm performance. Treatment firms report 15-25 percent higher profits and exhibit large improvements in quality alongside reductions in output per hour relative to control firms. These findings do not simply reflect firms being offered higher margins to manufacture high-quality products that take longer to produce. Instead, we find evidence of learning-by-exporting whereby exporting improves technical efficiency. First, treatment firms have higher productivity and quality after accounting for rug specifications. Second, when asked to produce an identical domestic rug using the same inputs, treatment firms receive higher quality assessments despite no difference in production time. Third, treatment firms exhibit learning curves over time. Finally, we document knowledge transfers with quality increasing most along the specific dimensions that the knowledge pertained to. |
| Keywords: | exports; learning-by-exporting; market access; productivity; quality |
| JEL: | D24 F10 F14 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10276&r=int |
| By: | Laura Resmini; Laura Casi |
| Abstract: | Do regional identities determine different levels of FDI-induced growth? This paper analyses the impact of FDI on the growth rates of European regions. In so doing, it discusses the role of different components of territorial capital in magnifying or daunting such an impact. The paper starts from a very simple theoretical framework that clarifies how territorial capital can shape the returns to foreign direct investments. The subsequent empirical analysis uses data from the European Value Study to identify 3 soft components of territorial capital that define the identity of a region and can be relevant in shaping the impact of foreign capital on local growth. Using data from Eurostat and FDIregio database, the paper studies the impact of FDI induced spillovers on regional growth in European regions, controlling for possible endogeneity. Results indicate that technological spillovers are an important source of regional growth, but they take place only if the level of trustworthiness/generalized morality is widespread in the region, supporting the idea that low free-riding attitudes increase efficiency of transaction and effectiveness of cooperation between multinational and the regional economic system. The effect of relational capital is more ambiguous. A more disaggregated analysis reveals that some effects vary depending on the origin (intra vs extra European FDI) and on the type of economic activity (manufacturing vs service FDI). |
| Keywords: | FDI; regional growth; territorial capital |
| JEL: | F23 O18 O52 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa14p540&r=int |
| By: | Leonardo Baccini (Princeton University, Woodrow Wilson School of Public and International Affairs); Johannes Urpelainen (Columbia University) |
| Abstract: | How do domestic politics influence the formation of international institutions, and what are the effects of international institutions on domestic politics? In this policy paper, we examine how leaders use preferential trading agreements (PTAs) with the European Union and the United States to promote liberal economic policies. We argue that under democratization, new leaders would benefit the most from credible commitment and side payments to compensate vulnerable domestic constituencies for their losses. Our empirical analysis shows that under democratization, leader change greatly increases the probability that the government of a developing country begins treaty negotiations. We also demonstrate that PTAs induce liberalization in different sectors of the economy. |
| Keywords: | trading agreements, developing countries, economic reforms |
| URL: | http://d.repec.org/n?u=RePEc:crv:opaper:1&r=int |
| By: | Anna Gladysheva; Tatiana Ratnikova |
| Abstract: | Observed and unobserved regional determinants of FDI inflows: micro level analysis of the food industry firms in Russia The development of Russian food industry is strategically important. Theoretically, the foreign capital inflow will help to renovate, modernize it and increase the productivity. But is it also interesting for foreign investors? What do foreign companies take into account when they invest in Russian food industry enterprises? Could it be special aspects of regional development (observed or unobserved) or only firm level data matters? Does the institutional environment in Russian regions significantly stimulate the inflow of foreign direct investment in Russian food industry enterprises or is the investor interested only in the size of a market? Two samples for 2009 and 2012 years of correspondingly about 5000 and about 7000 food industry companies of different subindustries from different Russian regions are analyzed to give the answer to these questions. The main idea of this investigation is to determine significant regional factors which effect the distribution of the FDI or to show that these items are not important for foreign investors. Russia has more than 80 regions and all of them are highly heterogeneous in terms of climate, geographical characteristics, level of economic and institutional development, industrial specialization, etc. Moreover, enterprises of different industries and subindustrues are different. In this research we take into account these facts investigating a hierarchical structure of the FDI distribution levels. This research consists of several parts: the theoretical part with hypotheses and the overview of the background and the empirical part with testing whether different regional characteristics like the infrastructure, taxation and the regulations in the region and in the neighboring ones play an important role. Spatial effects of these factors and of the economic development are also of our interest. The estimation of a multilevel binary model with spatial effects of analyzed factors gives the idea for the possible solution on the problem discovered above. The comparison of the results for two samples for different years and the investigation of dynamics also are taken into consideration. Keywords: foreign direct investment; food industry enterprises in Russia; Russian regions; multilevel binary model; spatial effects. JEL classification: C21; C25; D92; L66; O18; R12. |
| Keywords: | foreign direct investment; food industry enterprises in Russia; Russian regions; multilevel binary model; spatial effects. C21; C25; D92; L66; O18; R12. |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa14p111&r=int |
| By: | Çürük, M. (Tilburg University, School of Economics and Management) |
| Abstract: | This thesis deals with a range of topics in economic growth and international trade. The first part investigates the role of geographic and occupational immobility in determining the spatial variation in the degree of labor specificity in the short-run. The second part takes a longer time-perspective and provides a theory to rationalize the observed changes in the rate and direction of technological progress and labor allocation across broad sectors over the course of development. The third part focuses on the interaction between the institutional setting and pre-modern economic forces to understand the diffusion of German Reformation in the 16th century. Finally, the last part documents a positive relationship between trade with technology leaders and inter-sectoral markup variation for developing countries and provides a model which underscores the importance of technology diffusion to understand the observed patterns. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiutis:323b2713-dc19-4ce8-940e-1f243656dd58&r=int |