nep-int New Economics Papers
on International Trade
Issue of 2015‒02‒28
forty-six papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Bridging Trade Barriers: Evaluating Models of Multi-Product Exporters By Arnarson, Björn Thor
  2. SME Internationalization through Global Value Chains and Free Trade Agreements: Malaysian Evidence By Arudchelvan, Menaka ; Wignaraja, Ganeshan
  3. Towards Trade Policy Analysis 2.0: From National Comparative Advantage to Firm-Level Trade Data By Cernat, Lucian
  4. Service Trade and Productivity (Japanese) By MORIKAWA Masayuki
  5. Innovation and Trade in the Presence of Credit Constraints By Foellmi, Reto ; Legge, Stefan ; Tiemann, Alexa
  6. Use of FTAs from Thai Experience By Archanun KOHPAIBOON ; Juthathip JONGWANICH
  7. Greenfield versus Merger & Acquisition FDI: Same Wine, Different Bottles? By Ronald B Davies ; Rodolphe Desbordes ; Anna Ray
  8. The internationalization of the Italian productive system By Riccardo Cristadoro ; Stefano Federico
  9. FTA in international finance : impacts of exchange rates on FTA utilization By Hayakawa, Kazunobu ; Kim, HanSung ; Yoshimi, Taiyo
  10. Non-Tariff Measures and Standards in Trade and Global Value Chains By Beghin, John C. ; Miet Maertens ; Johan Swinnen
  11. Tracing CO2 emissions in global value chains By Meng, Bo ; Peters, Glen ; Wang, Zhi
  12. FDI in China and global production networks: Assessing the role of and impact on big world players (East Asia, Japan, EU28 and U.S.) By Zhou, Jing ; Latorre, María C.
  13. The Global Diffusion of Ideas By Francisco Buera
  14. The Impact of an EU-US TTIP Agreement on Biofuel and Feedstock Markets By Beghin, John ; Bureau, Jean-Christophe ; Gohin, Alex
  15. Trade Dimensions of Food Security By Jonathan Brooks ; Alan Matthews
  16. The Domestic Segment of Global Supply Chains in China under State Capitalism By Heiwai Tang ; Fei Wang ; Zhi Wang
  17. Do Borders Really Slash Trade? A Meta-Analysis By Tomáš Havránek ; Zuzana Iršová
  18. FDI and Heterogeneous Performance of European Enterprises By Valeria Gattai ; Giorgia Sali
  19. Tariffs and STEs in ASEAN Rice Trade: Impacts of Removing Trade Barriers Using a Partial Equilibrium Approach By Hoang, Hoa ; Meyers, William
  20. The Revenue Implications of Trade Liberalization in Tanzania By Epaphra, Manamba
  21. Virtual Trade and Growth By Sugata Marjit
  22. Terms of trade and non-traditional exports: a microeconometric analysis By Ruth Marcela Aparicio
  23. Catching up of Emerging Economies: The Role of Capital Goods Imports, FDI Inflows, Domestic Investment and Absorptive Capacity By Alexander Glas ; Michael Hübler ; Peter Nunnenkamp
  24. The gravity model, global value chain and the brazilian states By Joachim Guilhoto ; Jean-Marc Siroën ; Ayçil Yücer
  25. Export Diversification: Is There Anything to the Hump? By Chris Papageorgiou ; Christopher F. Parmeter
  26. Structure and Performance of Ethiopia’s Coffee Export Sector By Minten, Bart ; Tamru, Seneshaw ; Kuma, Tadesse ; Nyarko, Yaw
  27. How does foreign demand activate domestic value added? A comparison among the largest euro-area economies By Rita Cappariello ; Alberto Felettigh
  28. Supporting WTO and Pathways to the Free Trade Area of the Asia Pacific (FTAAP) By Medalla, Erlinda M. ; Maddawin, Angelica B.
  29. Conflict and Trade: Implications for Agriculture and Food Security By D'Souza, Anna
  30. International Trade and Labor Market Discrimination By Richard Chisik ; Julian Emami Namini ;
  31. Options for Canada's Dairy Sector: The Potential for Exports By Barichello, Rick ; Grant, Michael ; Liew, Mark
  32. The Potential Budgetary Costs and WTO Implications of the New Farm Bill By Glauber, Joseph ; Westhoff, Pat
  33. Transatlantic Trade and Investment Partnership: international trade law, health systems and public health By Usman Khan ; Robert Pallot ; David Taylor ; Panos Kanavos
  34. Volatility and Dynamics in Agricultural and Trade Policy Impact Assessment – Modelling Advances Needed By Heckelei, Thomas
  35. The Zollverein and the Sequence of a Customs Union By Florian Ploeckl
  36. The Impact of NAFTA on the Sugar Markets in Mexico and the United States By Lewis, Karen
  37. Public and Private Standards for Food Safety and Quality in Global Value Chains By Hobbs, Jill E.
  38. Boundaries of firms and catching up by latecomers in global production networks : the case of a Mexican auto-parts manufacturer By Hoshino, Taeko
  39. Drivers of FDI in Fast Growing Developing Countries: Evidence from Bundling and Unbundling Governance By Simplice Asongu ; Jacinta C. Nwachukwu
  40. The China (Shanghai) Pilot Free Trade Zone: Background, Developments and Preliminary Assessment of Initial Impacts By Daqing Yao ; John Whalley
  41. APEC 2015: Global Value Chains and Services By Serafica, Ramonette B.
  42. Clarification of Evolution of the Principle of Non-Discrimination under the WTO Agreement: Recent developments in case law and their implications for Members' policy space (Japanese) By KAWASE Tsuyoshi
  43. The returns to foreign R&D By Belderbos R.A. ; Lokshin B. ; Sadowski B.
  44. Foreign direct investment, economic growth and structural transformation: The case of West African Economies and Monetary Union Countries By Sandjong Tomi, Diderot Guy D'Estaing
  45. The Quality of Distance: Quality sorting, Alchian-Allen effect, and geography By TAKECHI Kazutaka
  46. Migration, Labor Tasks and Production Structure By Giuseppe De Arcangelis ; Edoardo Di Porto ; Gianluca Santoni

  1. By: Arnarson, Björn Thor (Department of Economics, Lund University )
    Abstract: In this paper we investigate the impact of a decrease in trade costs on firm decisions to export. The main contribution of this paper is to evaluate empirically the theoretical predictions of several models of multi-product exporters. The focus is on the firm export entry decision and the within firm adjustment regarding product scope and intensity. For identification, a quasi-natural experiment, the introduction of the Öresund bridge between southern Sweden and Denmark, is used to analyse the impact on firm behaviour. Using a difference-in-difference methodology, firms in the ’treated’ municipality, Malmö, are compared to firms in the more geographically distant Gothenburg ('control'). For the 'treated' firms a theoretically consistent positive effect is found on firm entry into exporting, aggregate firm trade flow and the number of products exported. While the models of multi-product exporters evaluated do not provide a clear theoretical prediction regarding the impact on average trade value per product, we find a sizeable significant effect. Decomposing the results, we find that the main effects are driven by firms in the manufacturing sectors. The results are robust to extending the sample to include Stockholm as well as exports to alternative destinations.
    Keywords: International Trade; Multi-Product Firms; Infrastructure; Market Access; Quasi-Natural Experiment; Trade Costs
    JEL: F10 F13 F14 F15
    Date: 2015–02–11
  2. By: Arudchelvan, Menaka (Asian Development Bank Institute ); Wignaraja, Ganeshan (Asian Development Bank Institute )
    Abstract: Growing internationalization of firms in Asia through participation in global value chains (GVCs) and free trade agreements (FTAs) has focused attention on small and medium-sized enterprises (SMEs). Yet there is scant literature on the characteristics of SMEs involved in GVCs and FTAs. Malaysia is reputed for its engagement in GVCs and is actively pursuing FTAs. Drawing on a survey of Malaysian enterprises, this paper examines the characteristics of SMEs in GVCs and FTAs and explores the policy implications. It finds that even among SMEs, firm size matters for participation in GVCs and FTAs. But size is not the whole story for SME internationalization. Licensing of foreign technology and investment in research and development are also positively associated with SMEs joining GVCs. Furthermore, increased exposure to international trade, knowledge of FTA provisions and central location positively affects the use of FTAs by SMEs. More business support for SMEs can help them to engage in GVCs and FTAs.
    Keywords: internationalization; global value chains. utilization of free trade agreement; firm-level analysis
    JEL: F13 F14 F15
    Date: 2015–02–18
  3. By: Cernat, Lucian (Asian Development Bank Institute )
    Abstract: This paper makes the case for the need to "upgrade" current analytical tools used for trade policy analysis and complement them with more detailed firm-level data. Such an upgrade should be based on the latest intellectual advancements in trade theories and the latest firm-level trade statistics that are now becoming widely available. An upgraded "Trade Policy Analysis 2.0" could contribute to several trade policy priorities and to a better understanding of the benefits from international trade for firm competitiveness, job creation, and consumer welfare.
    Keywords: future of trade policy; firm competitiveness; job creation
    JEL: F13 F16 F17
    Date: 2015–02–23
  4. By: MORIKAWA Masayuki
    Abstract: Studies on the globalization of firm activities have been progressing rapidly, but empirical studies on service trade using firm level data have been scarce. This paper, using panel data for Japanese firms, analyzes the relationship between service trade and firm characteristics such as productivity. 1) The number of firms engaged in service trade is far fewer than those in goods trade, and the ratio of service trade value to total sales is also very small. 2) The share of service trade with overseas affiliate firms is larger than that of goods trade. 3) Productivity and wage level of service trading firms are higher than that of domestic firms and goods trading firms. 4) Productivity of firms exporting services beyond the boundary of their firm groups is higher than those exporting services only to their affiliate firms. Collectively, the results suggest that fixed costs to start service trade are larger than those for goods exports, indicating the important role of policies to liberalize and facilitate service trade.
    Date: 2015–02
  5. By: Foellmi, Reto ; Legge, Stefan ; Tiemann, Alexa
    Abstract: This paper examines how trade liberalization affects investments in R&D at the firm level. In a model where entrepreneurs are heterogeneous in their wealth endowment, they rely differently on external funds. In the presence of capital market imperfections, this implies heterogeneous access to external funds such that poor entrepreneurs run smaller firms, are less likely to invest in R&D, and more likely to exit the market. Decreasing trade costs resulting from tariff reductions exacerbate these characteristics. Using firm-level panel data on seven Latin American countries for 2006 and 2010, we find support for our theoretical predictions. While recent studies emphasize a positive impact of trade liberalization on firms' productivity-enhancing activities, we provide novel evidence showing that financial constraints can impair the effect on R&D efforts. To address potential endogeneity concerns, we verify our findings using external financial dependence based on U.S. firms. These results suggest that imperfect capital markets can prevent welfare gains from trade liberalization to materialize.
    Keywords: financial constraints; innovation; trade liberalization
    JEL: F14 O12 O16
    Date: 2015–02
  6. By: Archanun KOHPAIBOON (Faculty of Economics, Thammasat University ); Juthathip JONGWANICH (School of Management, Asian Institute of Technology )
    Abstract: TThis paper examines in depth the use of free trade agreements (FTAs) in Thailand to shed light on the ongoing negotiation of the Regional Comprehensive Economic Partnership (RCEP). The key finding is that while certificate of origin records significantly increased over the period in consideration, their value remained less than one-third of total trade. The ASEAN Free Trade Area (AFTA) and its successor, ASEAN Economic Community (AEC), accounted for the largest share with a noticeably declining relative importance. Products that are often traded under an FTA preferential trade scheme are highly concentrated, dominated by automotive (both vehicles and auto parts), electrical appliances, petrochemical products, and processed foods. Firms in these sectors are generally large in size and their products have a high level of local content. Evidence that the top 15 items are usually subject to high tariff margins suggests the presence of costs incurred to firms when applying for a certificate of origin. Our analysis suggests that we should be avoid maximizing a number of signed FTAs as a mercantilism style policy tool kit to open up market as well as maximize net export earnings as we tried in the early years of the new millennium. Instead, FTAs could be used as a gradual step in making a progress of unfinished business in trade and investment policy reform. To encourage firms to use the signed FTA, policy focus should be on the rules of origin and their related administrative procedures.
    Keywords: Thailand, Free Trade Agreement, Asian Economic Community, Regional Comprehensive Economic Partnership
    JEL: F15 O24 O53
    Date: 2015–01
  7. By: Ronald B Davies (University College Dublin ); Rodolphe Desbordes (University of Strathclyde ); Anna Ray (Paris School of Economics )
    Keywords: Foreign Direct Investment; Mergers and Acquisitions; Greenfield Investment; Multinational Firms
    JEL: F21 F23
    Date: 2015–02–03
  8. By: Riccardo Cristadoro (Bank of Italy ); Stefano Federico (Bank of Italy )
    Abstract: This work presents, in a single framework, the results of several recent studies, carried out by Bank of Italy researchers, on the internationalization of the Italian productive system. The notion of internationalization is considered not only from the perspective of direct investments abroad but also in the context of trade flows and of the capacity to attract foreign direct investments. In any case, internationalization has increased very rapidly in the last twenty years, globally as well as in Italy. However, our country is characterized by lower direct investment flows and stocks, both outgoing and incoming, compared to the other main European countries. The research discusses the recent trends in direct investment flows, the costs and benefits of direct investment, the effects of the crisis, the role of international procurement, the reasons behind Italy’s lag and, finally, the system of public policies and institutions supporting the process of internationalization.
    Keywords: firms' internationalization, foreign direct investment, exports
    JEL: F23 F14 L60
    Date: 2015–01
  9. By: Hayakawa, Kazunobu ; Kim, HanSung ; Yoshimi, Taiyo
    Abstract: This paper investigates how exchange rates affect the utilization of a free trade agreement (FTA) scheme in trading. Changes in exchange rates affect FTA utilization by two ways. The first way is by changing the excess profits gained by utilizing the FTA scheme, and the second way is by promoting the compliance of rules of origin. Our theoretical models predict that the depreciation of exporters' currency against that of importers enhances the likelihood of FTA utilization through those two channels. Furthermore, our empirical analysis, which is based on rich tariff-line-level data on the utilization of FTA schemes in Korea's imports from ASEAN countries, supports the theoretical prediction. We also show that the effects are smaller for more differentiated products.
    Keywords: Asia, Southeast Asia, South Korea, International trade, Foreign exchange, International economic integration, Free trade agreement, Exchange rates, Exchange rate pass-through, Rules of origin
    JEL: F13 F15 F31 F36
    Date: 2015–02
  10. By: Beghin, John C. ; Miet Maertens ; Johan Swinnen
    Abstract: We assess the literature on public and private quality standards and their impact in food markets, international trade, and global supply chains. We focus on their effects on welfare, trade, industrial organization, and labor markets and with special attention to the North-South context. We also attempt to better characterize when these measures constitute protectionism, a complicate task. We look at studies investigating public and private standards and across various quantitative approaches and countries. These standards have complex effects. The evidence is mixed regarding standards as catalyst for or impediment against trade and development, reflecting the complexity of these effects and their specificity to industries and countries. The analysis of standard-like nontariff measures and their impacts does not lead to sweeping prescriptions for policy reforms. We identify more modest prescriptions and make some recommendations for fruitful research directions.
    Keywords: standards; SPS; NTM; trade; Welfare; value chain; supply chain; nontariff measures; North-South
    JEL: F F13 F15 O19 Q17
    Date: 2015–02–24
  11. By: Meng, Bo ; Peters, Glen ; Wang, Zhi
    Abstract: This paper integrates two lines of research into a unified conceptual framework: trade in global value chains and embodied emissions. This allows both value added and emissions to be systematically traced at the country, sector, and bilateral levels through various production network routes. By combining value-added and emissions accounting in a consistent way, the potential environmental cost (amount of emissions per unit of value added) along global value chains can be estimated. Using this unified accounting method, we trace CO2 emissions in the global production and trade network among 41 economies in 35 sectors from 1995 to 2009, basing our calculations on the World Input–Output Database, and show how they help us to better understand the impact of cross-country production sharing on the environment.
    Keywords: Developing countries, China, Developed countries, International trade, Trade policy, Air pollution, Environmental problems, Environmental policy, Value-added, Embodied emissions, Global value chains
    JEL: E01 F1 F14 F18 Q5 Q56
    Date: 2015–01–13
  12. By: Zhou, Jing ; Latorre, María C.
    Abstract: This paper analyzes several effects of FDI accruing to Textiles, Chemicals, Electronics and Machinery in China. Though the four sectors have contrasting production technologies and vary largely in trade patterns, the related Chinese exports and imports still follow a general trend: East Asia and Japan are the main intermediate suppliers while the rest of regions play more the role of final markets. The paper describes the networks among big regions, providing their relative importance across different levels (local industry, global industry, host economy and world economy). It also estimates a rich set of regional impacts after the rising FDI inflows.
    Keywords: Multilevel analysis, Globalization, Industrial Organization, MNEs and Economic Growth in Emerging Markets
    JEL: C68 F14 F21
    Date: 2015–02–20
  13. By: Francisco Buera (University of California at Los Angeles )
    Abstract: We provide a tractable theory of innovation and diffusion of technologies to explore the role of international trade and foreign direct investment (FDI). We model innovation and diffusion as a process involving the combination of new ideas with insights from other industries or countries. We provide conditions for the equilibrium distribution of productivity in each country to be Frechet, and derive a system of differential equations describing the evolution of the scale parameter of these distributions, i.e., the stock of ideas. In particular, the growth of the stock of ideas in a countries is a weighted sum of the stock of ideas in all countries, where the weights are given by trade and FDI shares. We use this framework to quantify the dynamics gains from trade and FDI.
    Date: 2014
  14. By: Beghin, John ; Bureau, Jean-Christophe ; Gohin, Alex
    Abstract: We assess the impact of a potential TTIP bilateral free trade agreement on the EU and US bio-economies (feedstock, biofuels, by-products, and related competing crops) and major trade partners in these markets. The analysis develops a multi-market model that incorporates bilateral trade flows (US to EU, EU to US, and similarly with third countries) and is calibrated to OECD-FAO baseline for 2013–2022 to account for recent policy decisions. The major policy reforms from a TTIP involve tariff and TRQ liberalization and their direct contractionary impact on US sugar supply, EU biofuel production, and indirect negative effect on US HFCS production. EU sugar and isoglucose productions expand along with US ethanol and biodiesel and oilseed crushing. EU sugar would flow to the US, US biofuels and vegetable oil to the EU. We further quantify nontariff measures (NTM) affecting these trade flows between the EU and the US. EU oilseed production contracts, and EU crushing expands with improving crushing margins following reduced NTM frictions. Our analysis reveals limited net welfare gains with most net benefits reaped by Brazil and not the two trading partners of the TTIP.
    Keywords: TTIP, bilateral trade agreement, biofuel, ethanol, biodiesel, sugar, nontariff measure, International Relations/Trade, Resource /Energy Economics and Policy, F13, Q17, Q42, Q48,
    Date: 2014–11
  15. By: Jonathan Brooks ; Alan Matthews
    Abstract: This report examines the different channels through which trade openness (and reforms to achieve it) can affect a country’s food security. The overall conclusion is that trade openness has a positive net impact on food security, although specific constituencies, including some poor households, could see their immediate food security threatened by the withdrawal of trade protection. The challenge for policymakers is to design flanking policies which enable countries to reap aggregate gains yet mitigate specific losses. Those policies include social protection and the provision of risk management tools, allied with investments in productivity so that average incomes rise to the extent that any adverse shock to incomes is unlikely to jeopardise food security. Developing countries are increasingly able to deploy such targeted instruments. Lessons are also being learned with respect to the political economy of trade reform, such that changes can be introduced in a way that minimises adjustment stresses and helps build the consensus needed to lock in the benefits of trade policy reform.
    Keywords: trade, food security, liberalisation, agriculture
    JEL: F10 F13 F14 Q17 Q18
    Date: 2015–02–23
  16. By: Heiwai Tang (Johns Hopkins University and Hong Kong Institute for Monetary Research ); Fei Wang (University of International Business and Economics ); Zhi Wang (United States International Trade Commission )
    Abstract: This paper proposes methods to incorporate firm heterogeneity in the standard input-output table¡Vbased approach to portray the domestic segment of global value chains in a country. The analysis uses Chinese firm census data for the manufacturing and service sectors, along with constrained optimization techniques. The conventional input-output table is split into sub-accounts, which are used to estimate direct and indirect domestic value added in exports of different types of firms. The analysis finds that in China, state-owned enterprises and small and medium domestic private enterprises have much higher shares of indirect exports and ratios of value-added exports to gross exports compared with foreign-invested and large domestic private firms. Based on input-output tables for 2007 and 2010, the paper finds increasing value-added export ratios for all firm types, particularly for state-owned enterprises. It also finds that state-owned enterprises are consistently more upstream while small and medium domestic private enterprises are consistently more downstream within industries. These findings suggest that state-owned enterprises still play an important role in shaping China¡¦s exports.
    Keywords: Value-Added Trade, Global Supply Chain, Intra-National Trade, State Capitalism
    JEL: F1 C67 C82
    Date: 2015–02
  17. By: Tomáš Havránek (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nábreží 6, 111 01 Prague 1, Czech Republic ; Czech National Bank ); Zuzana Iršová (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nábreží 6, 111 01 Prague 1, Czech Republic )
    Abstract: National borders reduce trade, but most estimates of the border effect seem puzzlingly large. We show that major methodological innovations of the last decade combine to shrink the border effect to a one-third reduction in international trade flows worldwide. The bor- der effect varies across regions: it is substantial in emerging countries, but relatively small in OECD countries. For the computation we collect 1,271 estimates of the border effect reported in 61 studies, codify 32 aspects of study design that may influence the estimates, and use Bayesian model averaging to take into account model uncertainty in meta-analysis. Our results suggest that methods systematically affect the estimated border effects. Espe- cially important is the level of aggregation, measurement of internal and external distance, control for multilateral resistance, and treatment of zero trade flows. We find no evidence of publication bias.
    Keywords: Bayesian model averaging, bilateral trade, borders, gravity, meta- analysis, publication selection bias
    JEL: F14 F15
    Date: 2015–02
  18. By: Valeria Gattai ; Giorgia Sali
    Abstract: This paper investigates the link between internationalization and performance in Europe. It takes a microeconomic perspective and studies how Foreign Direct Investment (FDI) experience relates with European firms’ economic, innovation and financial performance. Drawing on a large longitudinal database, our multinomial logit estimates suggest that FDI really matters. Indeed, firms experiencing some FDI (either inward, outward or both) enjoy a superior performance compared with purely domestic enterprises. Moreover, within the class of FDI players, firms engaged in inward and outward FDI turn out to be better than those engaged only in outward FDI, which are better than those engaged only in inward FDI. These results are robust to several performance measures and alternative specifications including firm, industry and country controls.
    Keywords: FDI, Heterogeneous firms, Europe
    JEL: F23 L25 O52
    Date: 2015–02
  19. By: Hoang, Hoa ; Meyers, William
    Keywords: International Relations/Trade,
    Date: 2014–12
  20. By: Epaphra, Manamba
    Abstract: This paper examines the argument that trade liberalization depresses the import duty revenue, and consequently adversely affects the total tax revenue. The study is thought to be significant because Tanzania experiences difficulty in replacing import duty revenue loss as a consequence of trade reform by strengthening its consumption tax system. In the course of analysis, cointegration analysis and error correction modelling are employed over the 1979/80-2009/10 period. The empirical results show that import duty revenue-to-GDP ratio is positively related to tariff rates, implying that a reduction in the tariff rates results in a significant loss of import duty revenue. The results also show that the removal of protectionist policies led to an increase in import-to-GDP ratio which in turn led to rising shares of import duty revenue in GDP. Finally, the results generate some policy implications. The proper issue in tax design under trade liberalization, Tanzania needs to strengthen the domestic tax system and raise tax revenue without increasing tax rates by reinforcing tax and customs administrations so as to maintain fiscal stability.
    Keywords: Import Duty Revenue; Trade Liberalization
    JEL: F1 H2
    Date: 2014
  21. By: Sugata Marjit
    Abstract: The purpose of this paper is to propose a model where trade has a direct and positive impact on growth rate of two trading nations beyond the level effect. We use the idea of virtual trade in intermediates induced by non- overlapping time zones and show how trade can increase the equilibrium optimal rate of growth. In this structure the trade impact goes beyond the level effect and directly causes growth. Typically standard models of trade cannot generate an automatic growth impact. Virtual trade may allow production to continue for 24x7 in separated time zones such as between US and India and that can lead to higher growth for both countries. Later we extend the model to incorporate accumulation of skill which becomes necessary for sustaining steady state growth.
    Keywords: International trade, time zone, growth
    JEL: F10 F43
  22. By: Ruth Marcela Aparicio
    Abstract: Since 2004 some economies in Latin America, including Bolivia, have experienced an improvement in their terms of trade. In this research we investigate the causal effect of this improvement on nontraditional exports. We focus on before and after the increase in terms of trade and analyze how this improvement affects export performance. To identify this causal effect we rely on dynaic analysis and we use four different microeconometric techniques: Difference in differences, Kernel propensity score matching, difference in differences combined with propensity score matching and synthetic control method. Each one of these improves estimation of the counterfactual outcome. Thus, this paper reviews theory of these impact evaluation methodologies and also analyzes the way in which the theory has developed toward a more systematic methodology to construct the counterfactual. Our estimation results show that nontraditional exports would have increased if these counties had not improvement in their terms of trade.
    Keywords: Terms of trade, nontraditional exports, difference in differences, propensity score matching.
    JEL: C39
    Date: 2014–09
  23. By: Alexander Glas ; Michael Hübler ; Peter Nunnenkamp
    Abstract: We assess the role of capital goods imports and inflows of foreign direct investment (FDI) as transmission channels through which major emerging economies (BRICs, i.e., Brazil, Russian Federation, India and China) could catch up with advanced source countries in terms of total factor productivity (TFP). We find that the importance of these transmission mechanisms depends on the BRICs’ local capacity to absorb superior technologies and on domestic investment
    Keywords: total factor productivity; imports; foreign direct investment; absorptive capacity; BRICs
    JEL: F14 F21 O47
    Date: 2015–01
  24. By: Joachim Guilhoto (Department of Economics, FEA, University of São Paulo ); 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: The WTO and the OECD along with many other organizations, suggest trade in value-added is a “better” measuring system than gross value in order to better understand the impact of trade on employment, growth and production . When it comes to the "domestic" value chain and internal specializations, internal trade statistics are rarely available. In this work we use a gravity model based on the estimation of exports of the Brazilian states, considered as trade entities, both in traditional terms of gross value and in terms of value-added. Our method is based on an Input-Output table for 2008. The results of the bilateral gravity model for the Brazilian states' exports show that the main determinants (GDP, distance etc.) are fairly similar when exports are estimated in gross or value-added terms. _________________________________ L'OMC et l'OCDE ainsi que de nombreuses organisations internationales, suggèrent que l’évaluation du commerce en valeur ajoutée est «meilleure» que celle en valeur brute car elle permet de mieux saisir l'impact du commerce sur l'emploi, la croissance et la production. Quand il s’agit de la chaîne de valeur "domestique" les statistiques commerciales internes sont rarement disponibles. Dans ce travail, nous utilisons un modèle de gravité qui estime les exportations des États brésiliens, considérés comme des entités commerciales, à la fois en termes traditionnels de valeur brute et en termes de valeur ajoutée. Notre méthode est basée sur une table d'entrées-sorties pour 2008. Les résultats du modèle de gravité pour les exportations des États brésiliens montrent que les principaux déterminants du commerce (PIB, distance, etc.) ont des élasticités similaires lorsque les exportations sont estimées en valeur brute ou en valeur ajoutée.
    Keywords: Vertical Specialization, Global supply-chain, Input-Output Analysis, Brazil, Intranational trade, Spécialisation verticale, chaîne globale de valeur, analyse Input-Output, Brésil, Commerce international.
    JEL: F12 F14 F15 R12 R15
    Date: 2015–01
  25. By: Chris Papageorgiou (International Monetary Fund ); Christopher F. Parmeter (Department of Economics, University of Miami )
    Abstract: Recent research documents a hump in the trade diversification-income relationship. We show that when time variation is accounted for that the appearance of this hump is much less obvious.
    Keywords: Time-effects, Panel Data, Theil Index Publication Status: Under Review
    JEL: C23 F10 F14 F15
    Date: 2015–02–09
  26. By: Minten, Bart ; Tamru, Seneshaw ; Kuma, Tadesse ; Nyarko, Yaw
    Abstract: We study the structure and performance of the coffee export sector in Ethiopia, Africa’s most important coffee producer, over the period 2003 to 2013. We find an evolving policy environment leading to structural changes in the export sector, including an elimination of vertical integration for most exporters. Ethiopia’s coffee export earn-ings improved dramatically over this period, i.e. a four-fold real increase. This has mostly been due to increases in international market prices. Quality improved only slightly over time, but the quantity exported increased by 50 percent, seemingly explained by increased domestic supplies as well as reduced local consumption. To further improve export performance, investments to increase the quantities produced and to improve quality are needed, including an increase in washing, certification, and traceability, as these characteristics are shown to be associ-ated with significant quality premiums in international markets.
    Keywords: Crop Production/Industries, International Relations/Trade,
    Date: 2014–06
  27. By: Rita Cappariello (Bank of Italy ); Alberto Felettigh (Bank of Italy )
    Abstract: We propose an analysis for the largest euro-area countries (France, Germany, Italy and Spain), based on the framework developed by Koopman et al. (2014) for tracing value added in a country’s exports by source and use. We integrate their approach by introducing an additional dimension: the domestic-sector origin of value added embodied in exports. While providing an accurate picture of these countries’ participation in global value chains, we estimate the impact on their GDP of a shock to foreign demand and disentangle individual contributions along a geographical dimension in a period running from the introduction of the euro to the beginning of the sovereign debt crisis.
    Keywords: global value chains, final internal demand, domestic value added activation, trade in value added
    JEL: F14 F15
    Date: 2015–01
  28. By: Medalla, Erlinda M. ; Maddawin, Angelica B.
    Abstract: The discussions on the Free Trade Area of the Asia Pacific (FTAAP) have evolved in the Asia-Pacific Economic Cooperation (APEC) meetings since 2004 when the APEC Business Advisory Council (ABAC) presented a study suggesting a possible integration of the Asia-Pacific region. The most recent development in this regard is the support of China during its hosting and the formulation of a roadmap about the APEC`s Contribution to the Realization of the FTAAP. The paper revisits the factors that could shape the way forward, and some implications on what position the Philippines should take. In particular, it looks at the emerging mega blocks in the APEC region--the Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RCEP), and possible scenarios. The paper highlights the important role of APEC as venue for discussions to steer the region toward regional integration that is supportive of the WTO and APEC goals, and act as a mechanism for enhancing ECOTECH and capability-building efforts to prepare less developed countries in deeper and wider areas of liberalization.
    Keywords: World Trade Organization, Free Trade Area of the Asia Pacific, Asia-Pacific Economic Cooperation (APEC), Trans-Pacific Partnership, Regional Comprehensive Economic Partnership, 2015 APEC hosting
    Date: 2015
  29. By: D'Souza, Anna
    Keywords: Agricultural and Food Policy, Food Security and Poverty, International Relations/Trade,
    Date: 2014
  30. By: Richard Chisik (Department of Economics, Ryerson University, Toronto, Canada ); Julian Emami Namini (Erasmus University );
    Abstract: We embed a competitive search model with labor market discrimination into a two-sector two-country framework in order to analyze the relationship between international trade and labor market discrimination. Discrimination reduces the matching probability, and output, in the skilled-labor differentiated-product sector so that the country with more discriminatory firms has a comparative advantage in the simple sector. As countries alter their production mix in accordance with their comparative advantage, trade liberalization can then reinforce the negative effect of discrimination on development in the more discriminatory country and reduce its effect in the country with fewer discriminatory firms. Similarly, the relative profit difference between non-discriminatory and discriminatory firms will increase in the less discriminatory country and shrink in the more discriminatory one. In this way trade can further reduce discrimination in a country where it is less prevalent and increase it where it is more firmly entrenched.
    Keywords: Discrimination, Nepotism, International Trade, Competitive Search
    JEL: F16 J71
  31. By: Barichello, Rick ; Grant, Michael ; Liew, Mark
    Keywords: International Relations/Trade, Livestock Production/Industries,
    Date: 2014
  32. By: Glauber, Joseph ; Westhoff, Pat
    Keywords: Agricultural and Food Policy, International Relations/Trade,
    Date: 2014–12
  33. By: Usman Khan ; Robert Pallot ; David Taylor ; Panos Kanavos
    Abstract: The London School of Economics and Political Science study Free trade agreements (FTAs) have the declared aim of seeking to increase global trade and promote economic growth. Historically, economic growth has led to improved population health. Yet this link is now weakening, and attention is being focussed on assessing the effect of FTAs on health and the ability of government to mitigate against negative impact. Within this context, this study presents an assessment of the health impact of the proposed FTA between the United States and the European Union.
    JEL: L81
    Date: 2015–01
  34. By: Heckelei, Thomas
    Keywords: Agricultural and Food Policy, International Relations/Trade,
    Date: 2014
  35. By: Florian Ploeckl (School of Economics, University of Adelaide )
    Abstract: The Zollverein was the first international customs union, essentially defining these particular trade agreements. This paper utilizes the predictions of a game theoretic model to analyse the observed sequence of accessions into this union. Coalition externalities, the effects the accession of one state has on states remaining on the outside, are the central mechanisms explaining the negotiations between Prussia, the agenda setter, and other German states. This is demonstrated by detailing these financial, strategic and political externalities and demonstrating their influence on trade policy decisions.
    Keywords: Customs Union, Germany, Coalition Externalities, Trade Negotiations
    JEL: F13 N43
    Date: 2015–02
  36. By: Lewis, Karen
    Keywords: Crop Production/Industries, International Development, International Relations/Trade,
    Date: 2014–12
  37. By: Hobbs, Jill E.
    Keywords: Food Consumption/Nutrition/Food Safety, International Development, International Relations/Trade,
    Date: 2014–12
  38. By: Hoshino, Taeko
    Abstract: For manufacturing firms in developing countries, there are high barriers to entry and to catching up with competitors in their global production networks (GPNs). This paper examines the case of a Mexican auto-parts manufacturer that succeeded in catching up in the automotive GPN. The author proposes that the door to GPNs is open thanks to frequent changes in the boundaries of firms, and also stresses the importance of the necessary conditions that generate opportunities, including institutional settings that facilitate market entry and catching up, and capability building by firms hopeful of entry.
    Keywords: Mexico, Automobile industry, Business enterprises, Industrial policy, Exports, Boundary of firms, Global production network (GPN), Auto-parts, ISI, Export industrialization, Nemak, Alfa, Ford
    JEL: L22 L52 L62 N66 N86 O33
    Date: 2015–02
  39. By: Simplice Asongu (Yaoundé/Cameroun ); Jacinta C. Nwachukwu
    Abstract: We assess drivers of FDI in a panel of BRICS and MINT countries for the period 2001-2011. We bundle and unbundle governance determinants using a battery of contemporary and non-contemporary estimation techniques. The following findings are established. First, for both contemporary and non-contemporary specifications, while determinants for gross FDI are significant, they are not for net FDI. Second, for contemporary specifications, the significance of the governance dynamics is as follows in increasing order of magnitude: general governance, political governance, economic governance, political stability, regulation quality and government effectiveness. The motivation to bundle governance variables is articulated by the effect of political governance. Third, for non-contemporary specifications, the significance of governance variables is as follows in ascending order of magnitude: economic governance, institutional governance, general governance, corruption-control, political governance and political stability. The importance of combining governance indicators is captured by the effects of political governance, economic governance and institutional governance. The results indicate that the simultaneous implementation of the various components of governance clarifies a country’s attractiveness for FDI location. Policy implications are discussed with particular emphasis on the timing of FDI and its targeting.
    Keywords: Foreign direct investment, emerging countries, governance
    JEL: C52 F21 F23 P37 P39
    Date: 2015–02
  40. By: Daqing Yao ; John Whalley
    Abstract: The China (Shanghai) Pilot Free Trade Zone (SPFTZ) founded one year ago is a trial for China’s new round of reform and opening out, which has promised liberalization on capital account and trade facilitation as its main objectives. Here we discuss the differences between the SPFTZ and other free trade areas, and the developments of the SPFTZ in the past year. We also make a preliminary assessment of the SPFTZ’s initial impacts, especially of its impact on China’s capital account opening and financial liberalization. It is possible that the successful practice of the SPFTZ and more pilot policies replicated in China will give rise to a more balanced Chinese economy in the following decade.
    JEL: F49
    Date: 2015–02
  41. By: Serafica, Ramonette B.
    Abstract: APEC 2015 provides an opportunity for the Philippines to advance its economic interests in services and contribute to regional integration by focusing on global value chains (GVCs) which are now believed to account for more than 50 percent of global trade. This paper looks at the GVC phenomenon and presents measures of GVC participation at the aggregate level. It then discusses the role of services in GVCs and proposes that further analytical work on services value chains in the Asia-Pacific region be undertaken. This will contribute to a better understanding of how individual economies can maximize GVC participation and how APEC can create the appropriate policy environment conducive to the growth of services value chains.
    Keywords: global value chains, APEC Philippine hosting, APEC services, competitive services
    Date: 2015
  42. By: KAWASE Tsuyoshi
    Abstract: The General Agreement on Tariffs and Trade (GATT) articles I, III, XX all provide for the principle of non-discrimination (Most-favored nation treatment (MFN) and national treatment) which forms the foundation of the WTO law aquis, and a series of quisi judicial adjudications have attempted to clarify their texts in abstract and generic terms since era of the GATT 1947. We can observe delicate fluctuations in trends of these adjudications periodically, which has been going back and forth between the bipolar goals of complete accomplishment of non-discriminatory, free and multilateral trade and assurance of flexible policy space for Members. In relatively early days of the WTO, its establishment of the WTO through around 2000, the Appellate Body presented notable rulings in these respects, and trends in the adjudications seemed constant for some time. In 2010's, however, the Appellate Body has successively issued the adjudications relating to these GATT articles, as well as art. 2.1 of TBT Agreement that has a close relationship with the formers, and some changes and developments in their interpretation of these articles are observable.This paper will follow the evolution of the relevant case law with respect to every issue on which important developments in the interpretation of the non-discriminatory principle are cognizable, in order to examine how the WTO strikes a balance between accomplishing free trade and policy space for Members. So far, panels and the Appellate Body have decided that the non-discriminatory principle amounts to a prohibition of origin-based discrimination. On the other hand, through flexible understanding of the normative structure of article XX of the GATT, they seem to have attempted to positively appreciate non-trade regulatory purposes that are pursued by a discriminatory measure in question. Also, in interpreting the non-discriminatory principle provided in the TBT Agreement, they have shown deference to Members' policy discretion as much as possible, by inquiring whether discriminatory treatment in question embodies a legitimate regulatory distinction.
    Date: 2015–02
  43. By: Belderbos R.A. ; Lokshin B. ; Sadowski B. (GSBE )
    Abstract: Extant research on RD internationalization has not examined how effective foreign RD investments are in generating positive returns for the investing firms, in particular in comparison and conjunction with the effects of domestic RD investments. We examine the effectiveness of international knowledge sourcing through foreign RD in an empirical analysis of the productivity effects of foreign and domestic RD investments in a large panel of firms based in the Netherlands. We argue that foreign and domestic RD will exhibit complementarity in their effects on productivity, but that the roles of domestic and foreign RD depend on the relative position of the home country with respect to the global technology frontier and the related relative opportunities for knowledge sourcing abroad. We estimate a dynamic panel data model derived from a knowledge stock augmented production function framework allowing for productivity convergence and declining returns to RD. We confirm that for firms active in industries in which the home country is behind the global technology frontier, foreign RD provides positive returns and has a complementary relationship with domestic RD. For industries at the global technology frontier, in contrast, domestic RD is the primary source of productivity growth.
    Keywords: Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity; Management of Technological Innovation and R&D; Technological Change: Choices and Consequences; Diffusion Processes;
    JEL: O32 O33 D24
    Date: 2015
  44. By: Sandjong Tomi, Diderot Guy D'Estaing
    Abstract: This article examines the long run relationship and the causality between the growth of GDP per capita and FDI in WAEMU countries. Thereafter, it measures the impact of FDI on Total Factor of Productivity (TFP) in the short and long run, for different values of the depreciation of capital stock. Using observation between 1970 and 2012, the econometric analysis provides three key results. First, there is a strong evidence of long run relationship between the growth of GDP per capita and the ratio of FDI inflows. Second, there is bidirectional causality between these two variables. Third, there is a positive and significant effect of FDI on TFP in the long run, conditional on low level of depreciation of capital stock. Therefore, for policy implications, WAEMU countries should intensify their investment in education and health in order to boost the quality of human capital stock and sufficient absorptive capacity necessary to acquire technological transfer from FDI. They should also strengthen their openness, to attract FDI inflows, and invest in infrastructure to better control the depreciation of physical capital stock.
    Keywords: FDI, Economic growth, structural transformations, WAEMU
    JEL: E65 R11
    Date: 2015–02–17
  45. By: TAKECHI Kazutaka
    Abstract: Either quality sorting or the presence of a specific cost (the so-called Alchian-Allen effect) is considered to be the main mechanism for the positive relationship between product quality and the distance to market. However, the reduced-form regressions found in the literature generally fail to reveal which of these two mechanisms (or even whether both are) is the main driving force. In this study, we employ unique Japanese individual goods price data to identify separately the effects of quality sorting and specific costs. Our empirical analysis shows that while high-cost producers produce high-quality goods, as suggested in Baldwin and Harrigan (2011), the quality-sorting mechanism solely is not sufficiently strong to account for the purported positive link between quality and distance. Moreover, we do find that the technology parameter that relates costs to quality is overestimated in the absence of specific costs. On this basis, we confirm that the presence of specific costs is significant, which may generate the positive relationship between quality and distance. We also find that the specific-cost components in transport costs are more distance elastic than any ad valorem components, a finding qualitatively consistent with the trade cost specification in Hummels and Skiba (2004). Finally, our results are robust with respect to various measures of distance and specification.
  46. By: Giuseppe De Arcangelis (Sapienza University of Rome ); Edoardo Di Porto (Università di Napoli Federico II, CSEF and UCFS, Uppsala University ); Gianluca Santoni (CEPII )
    Abstract: We assess the effect of migrants' stock on the production structure of the Italian provinces (NUTS3) in 1995-2006. Although the investigated time span is very short, the effect is small but statistically significant: a doubling in the ratio of foreign-born residents to the province population induces a significant increase in manufactures' value added with respect to services' value added between 12 and 21 per cent. These effects are more intense when considering an increase in foreign-born populations drawn from countries more different to Italy (in terms of GDP per capita and educational attainment). These results are compatible with the reduced form of a two-sector model where we assume that production is performed with one mobile factor and two sector-specific CES labor composites of simple and complex tasks. If migrants and natives have different productivity when performing simple or complex tasks, an inflow of migrants induces production restructuring in favor of the simple-task intensive sector.
    Keywords: Rybczynski Effect, International Migration, Province Labor Markets, Specific Factor Model, Productive Tasks
    JEL: F22 C25
    Date: 2015–02–17

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