nep-int New Economics Papers
on International Trade
Issue of 2015‒03‒05
39 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. The Roles of Import Competition and Export Opportunities for Technical Change By Claudia Steinwender
  2. Tariff reductions, trade patterns and the wage gap By Francesco Di Comite; Antonella Nocco; Gianluca Orece
  3. Impacts of the World Trade Organization on Chinese Exports By WAKASUGI Ryuhei; ZHANG Hongyong
  4. Coverage and enforceability of investment rules in PTAs: the role of global value chain trade and regulatory differences By Dominique Bruhn
  5. Loss shocks and the quantity and price of private export credit insurance: Evidence from a global insurer By Koen van der Veer
  6. Comparative Advantage, Monopolistic Competition, and Heterogeneous Firms in a Ricardian Model with a Continuum of Sectors By ARA Tomohiro
  7. A contribution to a multidimensional analysis of trade competition By Sandrina Moreira; Nádia Simões; Nuno Crespo
  8. Non-Tariff Measures and Standards in Trade and Global Value Chains By Beghin, John C.; Miet Maertens; Johan Swinnen
  9. Agricultural Specific Trade Facilitation Indicators: An Overview By Peter Liapis
  10. European High-End Varieties in International Competition By Lionel Fontagné; Sophie Hatte
  11. Automobile Exports: Export price and retail price By YOSHIDA Yushi; SASAKI Yuri
  12. Opening Up Markets to Neighbors : Gains for Smaller Countries in South Asia By Sanjay Kathuria; Sohaib Shahid
  13. The Foreign Investment Effects of Tax Treaties By Arjan Lejour
  14. Uruguay y la Primera Globalización. On the accuracy of export performance, 1870-1913 By Nicolás Bonino-Gayoso; Antonio Tena-Junguito; Henry Willebald
  15. Distance, Time since Foreign Entry, and Knowledge Spillovers from Foreign Direct Investment By Bruno Merlevede; Victoria Purice
  16. The Global Labor Market Impact of Emerging Giants: a Quantitative Assessment By Andrei A. Levchenko; Jing Zhang
  17. Does electoral strength affect politician's trade policy preferences? Evidence from Japan By Ito, Banri
  18. Historical trade integration: Globalization and the distance puzzle in the long 20th century By Samuel Standaert; Stijn Ronsse; Benjamin Vandermarliere
  19. Capital account openness, political institutions and FDI in the MENA region: An empirical investigation By Gammoudi, Mouna; Cherif, Mondher
  20. Optimal Rules of Origin with Asymmetric Compliance Costs under International Duopoly By Naoto Jinji; Yoshihiro Mizoguchi
  21. What Does FDI Inflow Mean For Emerging African Economies? Measuring the Regional Effects of FDI in Africa. By George, Emmanuel; Ojeaga, Paul; Adekola, Adetunji; Matthews, Oluwatoyin
  22. The Central European Manufacturin Core: What is Driving Regional Production Sharing? By Rober Stehrer; Roman Stöllinger
  23. Aid for Trade and Global Growth By NAITO Takumi
  24. China’s Growing Demand for Agricultural Imports By Gale, Fred; Hansen, James; Jewison, Michael
  25. Multinational Networks, Domestic,and Foreign Firms in Europe By Bruno Merlevede; Matthijs De Zwaan; Karolien Lenaerts; Victoria Purice
  26. International Specialization in Research & Development By Evrin, Alperen
  27. Japanese Investment in the United States: Superior Performance, Increasing Integration By Theodore H. Moran; Lindsay Oldenski
  28. Recent Trends in Regional Financial Integration and Trade Liberalization in Maghreb Countries: A Multivariate Threshold Autoregressive Analysis By Soumia Zenasni
  29. Benefits of the ECOWAS CET and EPA Will Outweigh Costs in Nigeria, but Competitiveness is the Real Issue By Antoine Coste; Erik von Uexkull
  30. Political influence in commercial and financial oil trading : the evidence from US firms By Kashcheeva, Mila; Tsui, Kevin K.
  31. Multinational resilience or dispensable jobs? : German FDI and employment in the Czech Republic around the Great Recession By Eisermann, Merlind; Moritz, Michael; Stockinger, Bastian
  32. Latin American Export Structure and the US Growth Spillover Effect in the Great Recession By Gonzalo Hernández Jiménez
  33. The Economic Scope and Future of US-India Labor Migration Issues By Jacob Funk Kirkegaard
  34. Aid, Infrastructure, and FDI: Assessing the Transmission Channel with a New Index of Infrastructure By Julian Donaubauer; Birgit Meyer; Peter Nunnekamp
  35. Economic Growth and Migration By Jan Ditzen
  36. North African countries (NACs) production and export structure: Towards diversification and export sophistication strategy By Jouini, Nizar; Oulmane, Nassim; Peridy, Nicolas
  37. Strategies and counter-strategies: China in the Andean region of South America By Ádam Chimienti; Benjamin Creutzfeldt
  38. Globalisation, Structural Change and Labour Productivity Growth in BRICS Economy By Jagannath Mallick
  39. Managing integration for better jobs and shared prosperity in the ASEAN Economic Community the case of Thailand's automotive sector By Techakanont, Kriengkrai

  1. By: Claudia Steinwender
    Abstract: A variety of empirical and theoretical trade papers have suggested and documented a positive impact of trade on the productivity of firms. However, there is less consensus about the underlying mechanism at work. While trade papers focus on access to export markets, other papers stress the importance of import competition. Since imports and exports (and even tariffs affecting either) are usually highly correlated, it is unclear which mechanism the existing empirical papers uncover. This paper conducts a "horse race" between export opportunities and import competition. Using Spanish firm level data, instrumenting for exports and imports with tariff changes and controlling for selection, I find robust evidence that access to export markets leads to productivity increases, but only for firms that were already highly productive before. The evidence on import competition is weaker. If anything, initially low-tech firms manage to increase their productivity in response to increased competition from abroad. The latter finding is at odds with most trade models, so I propose a model incorporating non-profit maximizing managers to reconcile theory with the evidence. Empirically, I find that all productivity upgrades are driven by increased R&D, patenting, and product innovation. Access to export markets also leads to the adaptation of foreign technologies. There is no evidence that either mechanism leads to increased full time employment, instead full time workers seem to be replaced by part-time or temporary workers.
    Keywords: Import competition, technical change, productivity, exporting
    JEL: F12 F13 F14 L25
    Date: 2015–02
  2. By: Francesco Di Comite (European Commission,Joint Research Centre and Institute for Prospective Technological Studies (IPTS)); Antonella Nocco (University of Salento, Department of Management, Economics, Mathematics and Statistics, Ecotekne); Gianluca Orece (CEPII)
    Abstract: This paper studies the impact of trade liberalization on labor market outcomes. First, we find that bilateral trade liberalization does not affect exports towards third countries. To accommodate this novel result, we deviate from existing literature and rely on a three-country monopolistic competition framework with variable elasticity of substitution and vertical linkages in fixed costs. The resulting model predicts that trade liberalization is associated with an increase in the skill-driven wage gap and a reduction in unskilled employment. This prediction is empirically validated using EU-KLEMS data on country-sector wage by skill level on 17 OECD countries from 1996 to 2005.
    Keywords: PTAs, Vertical linkages, Trade diversion, Trade creation, Wage gap
    JEL: F12 F16 J31
  3. By: WAKASUGI Ryuhei; ZHANG Hongyong
    Abstract: Chinese exports dramatically increased in the early 2000s as China reformed its economy to become more free and open via its entry into the World Trade Organization (WTO), which clearly affected the productivity and exports of Chinese firms. This paper, using firm-level panel data from the Chinese electric machinery, electronics equipment, and telecommunications equipment industries, confirms that after the entry into the WTO, the export decision of Chinese firms was accelerated by a rise in productivity that was not uniform among the ownership structures. By disaggregating the firms into three groups—private domestic firms (PDFs), state-owned enterprises (SOEs), and foreign invested enterprises (FIEs)—our empirical estimation reveals that the economic reform via the entry into the WTO had a "productivity effect" on Chinese exports which commonly enhanced firms' exports according to their productivity levels, but had an asymmetric "ownership effect" on their exports among the three groups, which was less favorable for exports of SOEs in comparison with that of FIEs and PDFs.
    Date: 2015–02
  4. By: Dominique Bruhn
    Abstract: Against the background of a changing landscape of trade and investment governance in the 21st century, characterised by the proliferation of deep preferential trade agreements (PTAs), this paper econometrically tests the importance of global value chain trade and regulatory differences in explaining the likelihood of a country pair to include an (enforceable) investment provision in the PTA. The spatial probit analysis, based on Bayesian Monte Carlo Markov Chain simulation, reveals that higher production network trade and strongly differing legal frameworks are indeed associated with a higher likelihood of including (enforceable) investment provisions. This is true even when controlling for interdependence between countries and conducting a variety of sensitivity checks, underscoring the importance of deep integration in the context of global value chains. However, when excluding EU countries from the sample, investment coverage and enforceability is rather driven by positive spatial interdependence between countries, raising the question whether the focus on global value chain trade and regulatory differences is something characteristic of EU trade policy making.
    Keywords: preferential trade agreement, investment, global value chain, production network trade, spatial probit, Bayesian econometrics
    JEL: F13 F14 F15
    Date: 2015–02
  5. By: Koen van der Veer
    Abstract: Private trade credit insurance - covering the risk of non-payment - plays an important role in facilitating domestic and international trade, especially within Europe. Due to lack of data, however, very little is known about the influence of shocks on the market for private trade credit insurance. This paper studies the influence of claims on the availability and price of export credit insurance, using unique bilateral country- level data covering worldwide insurance underwriting by a global trade credit insurer from 1992 to 2006. Country-pair and time-varying country fixed effects allow me to control for bilateral heterogeneity and country-specific insurance supply-and-demand shocks in both exporting and destination countries. In doing so, I find that a doubling of claims results, on average, in a decline in the share of bilateral exports insured by about 11% and rise in premium level by about 4%. These claims effects increase when the insurer makes a loss and further rise with the size of the loss. I also find evidence indicating that the global trade credit insurer transmits extreme losses across countries by reducing its supply of export credit insurance. Overall, these results help our understanding of potential trade finance constraints in times of crisis, such as during the 2008-09 global trade collapse.
    Keywords: trade credit insurance; export credit insurance; claims; international trade
    JEL: F14 G01 G22
    Date: 2015–02
  6. By: ARA Tomohiro
    Abstract: Why does the fraction of firms that export vary with countries' comparative advantage? To address this question, I develop a general-equilibrium Ricardian model of North-South trade in which both institutional quality and firm heterogeneity play a key role in determining international trade flows. Because of contractual frictions that vary across countries and sectors, North with better institutions produces and exports relatively more in sectors where production is more institutionally dependent. In addition, institution-induced comparative advantage makes it relatively easier for Northern heterogeneous firms to incur export costs in more contract-dependent sectors, thereby leading to a higher exporters' percentage.
    Date: 2015–02
  7. By: Sandrina Moreira; Nádia Simões; Nuno Crespo
    Abstract: International trade grew substantially throughout the last decades and international relations became more important for the economic performance of the countries. Simultaneously new poles emerged in the international arena leading to growing competition for higher market shares. Therefore, trade competition is a critical dimension of analysis for applied international trade studies. We propose a conceptual framework for measuring this phenomenon by combining some critical previous contributions to build a multidimensional and more comprehensive concept, which defines trade competition as a function of the degree of both structural similarity and total exports overlap. Moreover, structural similarity should take into account three elements: sectoral shares similarity, inter-sectoral similarity (evaluating how different the distinct sectors are), and intra-sectoral similarity (proximity in terms of quality ranges exported). Several measures are proposed to empirically capture the concept suggested. Finally, we present an example including the exports of the three largest European economies to 122 destination markets in order to illustrate the application of the concept and the measures suggested.
    Keywords: trade competition, index, structural similarity, total exports overlap
    JEL: F10 F14
    Date: 2015–03–03
  8. 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: value chain; supply chain; standards; nontariff measures; SPS; NTM; trade; Welfare; North-South
    JEL: F13 F15 Q17 Q19
    Date: 2015–09–30
  9. By: Peter Liapis
    Abstract: Trade facilitation matters. Estimates of trade friction costs from border and custom procedures are relatively high. Trade facilitation to allow for the speedy movement of traded goods may be more important for agricultural, especially perishable, products than for other goods because of their time sensitivity, especially for developing countries. Data suggest that many countries across the geographic and income spectrum have improved their performance on several trade facilitation variables. Concurrently, agricultural trade has grown substantially, especially from low and lower middle income countries. The data suggest that further improvements to trade facilitation in many low and lower middle income countries are needed for them to catch up with best practices. Impediments to trade remain, as indicated by the relatively high tariff equivalent of trade costs, especially on agricultural products.
    Keywords: agricultural trade, trade facilitation, developing countries, trading time, sanitary and phytosanitary standards, perishable products
    Date: 2015–03–04
  10. By: Lionel Fontagné; Sophie Hatte
    Abstract: We study international competition in high-end varieties for 416 detailed HS6 product categories marketed by the leading French luxury brands. We construct a world database of trade flows for these products, computing unit values of related bilateral trade flows and analyzing competition among the main exporters. We use the observed distribution of unit values to define a high-end market segment. Exports of high-end varieties are shown to be less sensitive to distance, and found more sensitive to destination country wealth than other varieties, but only in relation to countries already producing a large range of luxury brands, pointing to a first-mover advantage.
    Keywords: Product Differentiation;Market Shares;Unit Values
    JEL: F12 F15
    Date: 2015–01
  11. By: YOSHIDA Yushi; SASAKI Yuri
    Abstract: Given the recent theoretical emphasis on firm-level heterogeneity in international trade, we examine the price-setting behaviors of Japanese automobile exporting firms as they correspond with the fluctuations of foreign exchange rates. We do so by employing international trade datasets revitalized by the use of the geographical locations of exporting firms within an exporting country. With this technique, we transform a national-level dataset into a quasi-firm-product-level dataset. First, by restricting the dataset to the two exporting ports, we are able to estimate the price-setting behaviors of one particular Japanese automaker. Consistent with the multi-product exporter model, we find heterogeneity among auto-models in the exchange rate pass-through (ERPT) even when we restrict the dataset to a single automaker. Second, coupled with the manufacturer's suggested retail price (MSRP) in the US market, we examine the dynamic behaviors of model-specific price margins for US distributors and Japanese automakers. The price margins for US distributors have shrunk substantially, particularly when the US dollar depreciated after the global financial crisis.
    Date: 2015–02
  12. By: Sanjay Kathuria; Sohaib Shahid
    Keywords: International Economics and Trade - Free Trade International Economics and Trade - Trade Policy Law and Development - Trade Law Macroeconomics and Economic Growth - Economic Theory & Research Private Sector Development - Emerging Markets
    Date: 2015–01
  13. By: Arjan Lejour (CPB Netherlands Bureau for Economic Policy Analysis)
    Abstract: We examine the impact of bilateral and multilateral tax treaties on bilateral FDI stocks. First, we present panel regressions of the effects of treaties on FDI based on an extensive database of all OECD countries from 1985 onwards. We use geographic instruments to correct for the endogeneity of tax treaties. In contrast to many papers we find that these treaties increase bilateral FDI significantly. The incrase is about 16 percent and for new treaties this is even 21 percent. Moreover, the EU parent subsidiary directive doubles bilateral FDI stocks. Second, we analyse the effects of treaty shopping on FDI using the number of tax treaties as proxy for the attractiveness of a country for establishing a holding. This indicator has a significant impact on FDI: twenty extra tax treaties increase bilateral FDI stocks by about 50 percent. Lower withholding tax rates of dividends do also attract FDI.
    Keywords: bilateral tax treaties, instrumental variables, FDI, treaty shopping
    JEL: F21 F23 H25
    Date: 2014
  14. By: Nicolás Bonino-Gayoso (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Antonio Tena-Junguito (Universidad Carlos III (Madrid). Departamento de Ciencias Sociales); Henry Willebald (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: In order to understand Uruguayan long-run economic evolution it becomes crucial to interpret its export performance during the First Globalization. The lack of accuracy of official figures, especially official prices used, calls for an adjustment of Uruguayan exports series. We have used empirical evidence to test the accuracy of quantities and values of exports’ records, first, according to import partners’ records and, second, according to international market prices. Results show a general undervaluation of official export values during the period along with severe distortions in the registers caused by transit trade. We reconstructed new Uruguayan export f.o.b values and export price index, which present an export evolution more unstable and less dynamic than the one showed by its neighbor Argentina.
    Keywords: bilateral trade, accuracy indices, exports, uruguay, first globalization
    JEL: F14 N76
    Date: 2015–02
  15. By: Bruno Merlevede; Victoria Purice (-)
    Abstract: This paper investigates the effect of foreign direct investment on the productivity of local firms. We decompose traditional country-wide spillover measures in different components according to both distance between foreign and domestic firms and timesince- foreign-entry. We find larger and faster spillover effects for local suppliers of foreign firms at shorter distance, driven mainly by recent foreign entrants. Irrespective of distance, foreign firms of medium maturity generate backward spillover effects that fade away with longer presence. A positive effect on local competitors is not significantly affected by distance and requires the presence of mature foreign firms.
    Keywords: FDI, Spillovers, Dynamics, Timing, Regions, Distance
    JEL: F2 D24
    Date: 2014–12
  16. By: Andrei A. Levchenko (University of Michigan and NBER); Jing Zhang (Federal Reserve Bank of Chicago)
    Abstract: This paper investigates both aggregate and distributional impacts of the trade integration of China, India, and Central and Eastern Europe in a quantitative multi-country multi-sector model, comparing outcomes with and without factor market frictions. Under perfect within-country factor mobility, the gains to the rest of the world from trade integration of emerging giants are 0.37%, ranging from -0.37% for Honduras to 2.28% for Sri Lanka. Reallocation of factors across sectors contributes relatively little to the aggregate gains, but has large distributional effects. The aggregate gains to the rest of the world are only 0.065 percentage points lower when neither capital nor labor can move across sectors within a country. On the other hand, the distributional effects of the emerging giants' trade integration are an order of magnitude larger, with changes in real factor returns ranging from -5% to 5% across sectors in most countries. The workers and capital owners in emerging giants' comparative advantage sectors such as Textiles and Wearing Apparel experience greatest losses, while factor owners in Printing and Medical, Precision and Optical Instruments normally gain the most.
    Keywords: factor markets, Ricardian models of trade, welfare, distributional impact
    JEL: F11 F15 F16
  17. By: Ito, Banri
    Abstract: This study examines the effect of electoral strength on politician's trade policy preferences using data of candidates running for the members of the House of Representatives in Japan. The results reveal that the electoral strength measured by the margin of vote affects candidates' trade policy preferences after controlling attributes of candidates and constituencies. Specifically, candidates who face a close race in election are more likely to be protectionist than those who are expected to be elected by a substantial majority, suggesting that electoral competitions deter politicians from supporting trade liberalization. This result is robust to the model with the margin of vote as an endogenous variable.
    Keywords: Trade policy; policy preferences; electoral competition
    JEL: D72 F13
    Date: 2015–03–02
  18. By: Samuel Standaert; Stijn Ronsse; Benjamin Vandermarliere (-)
    Abstract: This paper studies the structure and the evolution of worldwide trade integration from 1880 up to 1995. Starting from historical trade and GDP data we use a state-space model to construct a bilateral historical trade index. This index is subsequently used to study globalization and the distance puzzle. The increased coverage of this index allows us to expand the period of analysis to include both the first and second globalization waves. We find that the first wave was marked by a strong diversification in the formation of trade links as well as a strong decrease in the effect of distance. The second globalization wave started with a strong decrease in the importance of distance which leveled out in the 1960s. While we do find some evidence of an increase in the importance of distance from the 1960s onwards, this is dwarfed by the strong decrease preceding it.
    Keywords: Trade integration, Globalization, Distance puzzle, State-space
    JEL: F15 C4 F14
    Date: 2014–12
  19. By: Gammoudi, Mouna; Cherif, Mondher
    Abstract: This paper examines how capital account liberalization (CAL) affects Foreign Direct Investment (FDI) inflows. The authors use the System Generalized-Method-of-Moments (GMM) estimator developed for the dynamic panel model for a sample of 17 Middle East and North Africa (MENA) countries from 1985 to 2009. Their findings reveal that the positive impact of CAL on FDI depends on the political stability in a host country. Furthermore, the results show that enhancing democratic institutions, enforcing property rights, reducing the risk of expropriation and religious tension seem to be some of the most promising policies to attract FDI to the region. The authors also find that foreign investors value the quality of institutions more than the level of corruption or bureaucratic quality in the location choice. Their results are robust to using different indicators of institutional quality. The findings are relevant for MENA countries given that many of them have engaged in a process of liberalization and have weak institutions.
    Keywords: capital account liberalization,foreign direct investment,institutional quality,GMM-system
    JEL: C23 D73 F21 F43
    Date: 2015
  20. By: Naoto Jinji; Yoshihiro Mizoguchi
    Abstract: We examine the optimal rules of origin (ROO) in a free trade area/agreement (FTA). We incorporate compliance costs of the ROO into the model. In particular, compliance costs are higher for a firm located in a non-member country of the FTA than for a firm located in an FTA member country, whereas marginal production costs are lower for the former. An importing country within the FTA imposes tariffs on imports that do not comply with the ROO. We show that the optimal ROO may have a protectionist bias or cause low utilization of FTAs depending on parameter values.
    Keywords: free trade area/agreement; rules of origin; compliance costs; oligopoly; double rent-shifting
    JEL: F12 F15
    Date: 2015–02
  21. By: George, Emmanuel; Ojeaga, Paul; Adekola, Adetunji; Matthews, Oluwatoyin
    Abstract: Can foreign direct investment (FDI) promote growth in Africa? What does the inflow of investment hold for African emerging economies? Are the determinants of FDI different for different regional blocs in Africa? This study reviews the implication of FDI for different regional blocs in Africa. FDI was found to have a significant effect on growth in North Africa but had no significant effect in East, Southern and West Africa. FDI was also found not to be driving growth in the whole of Africa in a significant manner. The implications of the findings are that even though trade openness seems to be a major factor driving FDI. Poor domestic markets were still preventing many African economies from taking full advantage of the gains from foreign direct investment. The study results could be useful to scholars who study the dynamics surrounding FDI disbursement and strategies on how FDI can drive growth in developing countries.
    Keywords: Africa, Political Economy, FDI, Regional Policy and Markets
    JEL: C23 C7 C70 E61 F42 G28 H5 L16
    Date: 2015–01
  22. By: Rober Stehrer; Roman Stöllinger
    Abstract: There is evidence that Europe’s manufacturing activity is increasingly concentrated in a Central European (CE) core which the IMF in a recent publication also refers to as the German-Central European supply chain. This CE manufacturing core is dominated by Germany and in addition comprises Austria and the four Visegrád countries (the Czech Republic, Slovakia, Hungary and Poland). The case of Austria is particularly interesting because it is neither the primary technology leader within the country group, nor is it an offshoring destination and therefore takes an intermediate position. This study provides further empirical evidence for the growing concentration of European industrial production in the CE manufacturing core and explores in detail the structure and development of the regional supply chains over the period 1995-2011. This includes an analysis of the impact of international production integration on the value added share of manufacturing in the economy. The econometric results point towards differentiated effects for the members of the CE manufacturing core and the remaining EU Member States. Focusing on value added generated by the manufacturing sector, the industries which build the backbone of this regional manufacturing cluster are identified. Finally, the report investigates which factors are conducive to the intensification of international production sharing. In line with the notion of a production-investment-services nexus, it is found that (inward) FDI in the manufacturing sector is associated with higher degrees of production integration. Again, the econometric evidence suggests that some of the factors explaining international production sharing, such as the level of export sophistication, have differentiated effects for the members of the CE manufacturing core as compared to the other EU countries.
    Keywords: European manufacturing, production integration, global value chains, structural change
    JEL: F14 F15 L16
    Date: 2015–02
  23. By: NAITO Takumi
    Abstract: Aid for trade increases a recipient's public services, which lower its import and export transport costs. Formulating a two-country endogenous growth model, we obtain two main results. First, a permanent increase in the donor's aid/GDP ratio raises the steady-state growth rate as well as both countries' long-run fractions and cost shares of imported varieties if and only if it lowers the product of transport costs. Second, under a plausible condition, there exists a unique interior growth-maximizing aid/GDP ratio. These results are robust to alternative specifications for congestion and stock-flow nature of public goods.
    Date: 2015–03
  24. By: Gale, Fred; Hansen, James; Jewison, Michael
    Abstract: This report examines China’s recent emergence as a major agricultural importer and its implications for global markets. It analyzes trade patterns employing U.S. and Chinese trade statistics, summarizes alternative projections of future imports, and discusses how Chinese officials are adjusting their strategic approach to agricultural trade as imports grow. A strong agricultural trading partnership has developed between China and the United States that is likely to persist into the future. However, Chinese interventions to preserve self-reliance create volatility and uncertainty that can disrupt markets.
    Keywords: China, agricultural imports, soybeans, grain, meat, dairy, projections, policy, Agricultural and Food Policy, International Relations/Trade,
    Date: 2015–02
  25. By: Bruno Merlevede; Matthijs De Zwaan; Karolien Lenaerts; Victoria Purice (-)
    Abstract: This paper introduces two datasets, AUGAMA, a panel of European firms for the period 1996-2011, and EUMULNET, a European Multinational Network data set. These datasets are constructed on the basis of the Amadeus database issued by Bureau Van Dijk Electronic Publishing. We document the process of building these data sets from the raw Amadeus data for 26 European countries. We show that the data sets adequately approximate the structure of the European economy across countries, regions, and industries as portrayed by data from Eurostat (Structural Business Statistics) and Cambridge Econometrics. As an illustration of possible application, we use the datasets to test a number of results from the theoretical literature regarding the productivity of multinational firms vis-a-vis domestic firms.
    Keywords: multinationals, firm performance, total factor productivity, firm-level data
    JEL: F23
    Date: 2015–02
  26. By: Evrin, Alperen
    Abstract: In this paper, I examine the effects of implementing tighter Intellectual Property Rights in a model of International Trade. In my model, firms in different countries have the choice of committing their resources to introducing new products (product innovation) or to imitating and improving upon current products (process innovation). I analyze the impact of stronger patents on innovation decisions, overall welfare and the distribution of welfare among countries. I show that, depending on parameter values, firms in developed countries (North) may altogether specialize in product innovation or may attain incomplete specialization in the sense that some innovate and some imitate. Welfare analysis will depend on the degree of specialization. In the case of incomplete specialization, tighter IPRs increase the incentives for product innovation in the North but, at the same time, increase the imitation done in the South. This finding is contrary to the conventional argument that states the reverse for imitation rates. In the case of complete specialization, stronger patents do not affect the rate of product innovation but reduce the rate of imitation, and welfare is nonmonotonic in IPRs. Finally, I examine the case of Foreign Direct Investment (FDI) and predict that stronger patents will increase the FDI while lowering the wages worldwide.
    Keywords: Patent Policies, Foreign Direct Investment
    JEL: F43 O31 O34 O38
    Date: 2013–12–12
  27. By: Theodore H. Moran (Peterson Institute for International Economics); Lindsay Oldenski (Peterson Institute for International Economics)
    Abstract: Japan is reemerging as the most important source of foreign direct investment (FDI) in the United States. In 2013 Japanese firms were the largest source of new inflows of FDI into the United States for the first time since 1992, injecting almost $45 billion of fresh investment into the US economy in that year alone. Moran and Oldenski show how Japanese investment in the United States differs from that of other countries along several dimensions. These differences not only make FDI by Japanese firms especially valuable but point to some important policy goals for attracting it. Although the automotive sector is the single largest industry for Japanese investment in the United States, the focus should not be on competing to attract the auto industry in particular nor should any active industrial policy of “picking winners” be pursued. Japanese investment is unique because of its research and development intensity, manifested across a number of industries in which Japanese multinationals invest other than automobiles. US policy should focus on reinforcing and expanding the factors that attract high-performing firms and high-value production stages to the United States, regardless of industry.
    Date: 2015–02
  28. By: Soumia Zenasni
    Abstract: Increased globalization over the last two decades has led to strong growth in international business activity and international financial integration. This phenomenon covers a wide array of economic activities, including regional and international integration, investment and trade, international financial shocks and disturbances. This paper takes stock of current trends in regional financial integration and trade liberalization processes for the case of Maghreb countries. It aims also to examine the effects of these recent trends on economic growth in an era of growing globalization and frequent financial shocks. Using Multivariate Threshold Vector Autoregressive (MVTAR) estimation with data from 1990 to 2012, this study argues that the greater and deeper regional financial integration and trade will have positive repercussions for each Maghreb country. In addition, estimation results show that the regional financial integration process plays a positive role in enlarging the borders of countries as well as the market size of each country and, consequently, in stimulating economic growth. Finally, we can assert that the study argues that political and structural impediments continue to hamper regional integration.
    Keywords: Regional financial integration, trade libaralization, globalization, Maghreb countries, multivariate threshold analysis
    JEL: F36 E44 G01 C3
    Date: 2015–02
  29. By: Antoine Coste; Erik von Uexkull
    Keywords: International Economics and Trade - Free Trade International Economics and Trade - Trade Policy Economic Theory and Research Finance and Financial Sector Development - Debt Markets Law and Development - Trade Law Macroeconomics and Economic Growth
    Date: 2015–01
  30. By: Kashcheeva, Mila; Tsui, Kevin K.
    Abstract: International politics affects oil trade. But do financial and commercial traders who participate in spot oil trading also respond to changes in international politics? We construct a firm-level dataset for all U.S. oil-importing companies over 1986-2008 to examine how these firms respond to increases in "political distance" between the U.S. and her trading partners, measured by divergence in their UN General Assembly voting patterns. Consistent with previous macro evidence, we first show that individual firms diversify their oil imports politically, even after controlling for unobserved firm heterogeneity. However, the political pattern of oil imports is not entirely driven by the concerns of hold-up risks, which exist when oil transactions via term contracts are associated with backward vertical FDI that is subject to expropriation. In particular, our results indicate that even financial and commercial traders significantly reduce their oil imports from U.S. political enemies. Interestingly, while these traders diversify their oil imports politically immediately after changes in international politics, other oil companies reduce their oil imports with a significant time lag. Our findings suggest that in designing regulations to avoid harmful repercussions on commodity and financial assets, policymakers need to understand the nature of political risk.
    Keywords: United States, Petroleum, International trade, Foreign investments, Energy policy, International politics, FDI-based imports, Hold-up risk, Energy security
    JEL: F13 F51 F59 Q34
    Date: 2015–02
  31. By: Eisermann, Merlind (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Moritz, Michael (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Stockinger, Bastian (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: This article investigates the employment development of Czech-based firms in German ownership in the years around the Great Recession of 2008/2009. The intense involvement of German firms in the economy of the neighboring country via foreign direct investment (FDI) raises the question whether under the conditions of a historically deep global downturn, Czech employees in multinational companies were confronted with an increased volatility of their jobs. Using a unique firm-level dataset, we contrast the affiliates of German investors with purely Czech-owned enterprises. Our findings indicate that in the years before the crisis, firms with German capital exhibited a noticeably more positive employment development. The results from the year 2008 onwards give reason to the conclusion that German-owned firms played a stabilizing role for the Czech labor market during the recession.
    JEL: F23 J21 G01
    Date: 2015–03–02
  32. By: Gonzalo Hernández Jiménez
    Abstract: Using panel data analysis, and focusing on export-structure related aspects of the Latin American economies, this paper finds that output fluctuations in Latin America are synchronized with the United States’ business cycle in the period 1961-2012. Moreover, non-primary commodity exporters and Latin American countries whose exports have mainly been destined for the US market display an intensified output fluctuation co-movement with the US. These findings have crucial implications to address the uneven performance of Latin American economies in the Great Recession as a consequence of the real GDP contraction in the United States in 2009.
    Keywords: export-structure, business cycles, Great Recession, Latin America
    JEL: F44 O54
    Date: 2015–02–24
  33. By: Jacob Funk Kirkegaard (Peterson Institute for International Economics)
    Abstract: This paper empirically investigates US-India labor migration and finds that it dominates permanent and temporary employment-based migration to the United States. The true economic value of temporary high-skilled Indian workers in the United States, based on a new visa data based methodology, is estimated to exceed $45 billion in recent years, surpassing the value of US cross-border imports of goods or services from India. The paper analyzes the impact of a potential US immigration reform on US-India bilateral labor migration relations and finds the 2013 Senate Bill S-744 to ease access for Indian individuals to the US labor market, while making it harder for some Indian high-tech firms to operate in the US markets.
    Keywords: Temporary Labor Migration, High-Skilled Workers, US-India Relations, Immigration Reform
    JEL: F16 F24 J61
    Date: 2015–05
  34. By: Julian Donaubauer; Birgit Meyer; Peter Nunnekamp
    Abstract: We raise the hypothesis that aid specifically targeted at economic infrastructure helps developing countries attract higher FDI inflows through improving their endowment with infrastructure in transportation, communication, energy and finance. By performing 3SLS estimations we explicitly account for dependencies between three structural equations on the allocation of sector-specific aid, the determinants of infrastructure, and the determinants of FDI. We find fairly strong and robust evidence that targeted aid promotes FDI indirectly through the infrastructure channel. In addition, aid in infrastructure appears to have surprisingly strong direct effects on FDI.
    Keywords: aid effectiveness, sector-specific aid, foreign direct investment, infrastructure
    JEL: F21 F35 O18
    Date: 2015–02
  35. By: Jan Ditzen (Heriot-Watt University)
    Abstract: The literature on growth theory lacks a precise sense of why there are interactions and dependencies between countries. Correspondingly, the spatial econometrics literature on growth empirics accounts for endogenous cross-country interactions, but lacks crucial insights from economic theory as to how such linkages should be precisely modeled. I address this weakness, by proposing a new economic model as a combination of an endogenous Romer-style growth model and a New Economic Geography model. The model admits two distinct sources of interactions between countries: mobility of high skilled workers and inter-country trade. Both of these sources develop from the New Economic Geography models, while the engine of the growth process is adapted from the endogenous growth literature. Motivated by higher wages, highly skilled workers migrate to the richer country, and there they work in the R&D sector. This in turn contributes towards economic growth in the richer country, and leads to divergence between the two countries. Trade in the manufactured good increases the difference between the two countries further. In its focus on both migration of highly skilled labour and its conclusion of divergence, the model captures the phenomenon of the Great Divergence in the 19th century. It is also consistent with evidence of club convergence in the 20th century. The implications of the model are verified by simulation.
    Keywords: Economic growth, New Economic Geography, Cross-country interactions, Convergence, Migration, Trade
    JEL: O41 F22 F43 O31 N10
    Date: 2014
  36. By: Jouini, Nizar; Oulmane, Nassim; Peridy, Nicolas
    Abstract: The North African countries (NACs) production and export structure is suffering from double constraints: insufficient diversification along with excessively weak sophistication. This study establish a deeper link between diversification/sophistication on and growth in the NACs. The study assesses the impact of these variables on the growth of these countries so as to verify whether the current export structure is indeed a constraint to the economic development. The approach used consists in estimating a growth model as a Barro's regression (conditional -convergence model) using panel data. The paper identify the factors determining diversification and sophistication of exports so as to find the various levers and actions which would firstly allow NACs to diversify their exports to higher added value products and secondly to take the existing products to a higher level of sophistication. The last part of this study proposes recommendations in terms of economic policies based on obtained results, highlighting the role of various stakeholders, and different policies.
    Keywords: Export diversification, sophistication, North Africa.
    JEL: F15 F43 O14
    Date: 2014
  37. By: Ádam Chimienti; Benjamin Creutzfeldt
    Abstract: By employing a comparative method that analyzes China’s increasing presence in different Latin America countries, this study explores key features and implications of Beijing’s approach towards this region. Colombia, Ecuador and Peru are used as case studies to evaluate China’s diplomatic rhetoric and the degree to which trade and investment realities live up to the goals proclaimed. Each of the countries examined seeks a more balanced relationship with external actors and recognizes China’s increased presence in the domestic political economy. Beijing seeks to distinguish itself as a soft power and “South-South” partner, and yet its ability to maintain this stance is complicated by the inevitable asymmetry that a rising China implies. The paper argues that China’s economic involvement in terms of trade, aid, loans and investment is indisputably important, but just one opportunity amongst many for these countries to achieve the political and economic goals that they have set for themselves.
    Keywords: China relations with South America; neoliberal economics; win-win; South-South cooperation; Washington Consensus; FDI.
    JEL: F23 O12 O54 Q33 Q56
    Date: 2014
  38. By: Jagannath Mallick
    Abstract: Globalisation, has intensified the demand preference for quality labour, that embodies more knowledge and competency/skill to maximise the production in one hand, and it has also changed the life style and consumption behavior of the society on the other. As a consequence, this has led to significant changes in the composition and structure of the economy, and also, the reallocation of labour. The study examines the reallocation effect (or structural change) and the direct effect of globalization on labour productivity growth in BRICS countries. The study also examines the relative role of consumption factors and other factors for the structural development during globalization. The study uses shift–share analysis, dynamic panel data method and input-output tables for the empirical analysis during 1990-91 to 2011-12. The findings show that the contribution of structural change is relatively significant in China and India. The globalization measures including international trade and FDI are found to have significant impact on the upsurge of labour productivity growth in BRICS, where the consumption demand predominates among the factors of structural development.
    Keywords: Globalisation, FDI, Trade, Labour productivity, Structural Change, BRICS
    JEL: F1 J01 J08 R1
    Date: 2015–02
  39. By: Techakanont, Kriengkrai
    Abstract: This paper examines the socio-economic impact of regional integration through evidence-based analysis and projections for Thailand’s automotive industry. The paper discusses issues related to industrial and structural changes that will affect the labour market in Thailand after the ASEAN Economic Community 2015 takes effect. Thailand’s key macroeconomic variables in recent years indicate that there exists significant pressure on rising wage rates, tightness in the labour market and sluggish labour productivity. The greater ASEAN Community will enhance connectivity within and beyond the region, which will help Member States become more dynamic and competitive. In terms of the ASEAN automobile industry, production and sales have been expanding due to economic development and the investment strategy of Japanese carmakers. A higher degree of trade and investment integration will occur after investment and trade regimes are liberalized. New investment or the relocation of existing production from high-cost to low-cost production locations will take place; existing supply chains and production networks need to be adjusted. Skill development and productivity improvements will be critical ingredients for prosperity in the ASEAN Economic Community. Public and private collaboration at both the country and regional levels will be indispensible.
    Keywords: labour market, interindustry shift, economic integration, regional cooperation, motor vehicle industry, Thailand, ASEAN countries, marché du travail, mutation interindustrielle, intégration économique, coopération régionale, industrie du véhicule à moteur, Thaïlande, pays de l'ANASE, mercado de trabajo, desplazamiento industrial, integración económica, cooperación regional, industria de vehículos a motor, Tailandia, países del ASEAN
    Date: 2014

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