nep-int New Economics Papers
on International Trade
Issue of 2015‒03‒22
thirty-six papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Economic implications of a potential free trade agreement between India and the United States By Fukase,Emiko; Martin,William J.
  2. Regional Trade Agreements and Cross-Border Lobbying: Empirical Evidence from the Canada-US Free Trade Agreement Negotiations By Andrey Stoyanov
  3. The layers of the IT Agreement's trade impact By Henn, Christian; Gnutzmann-Mkrtchyan, Arevik
  4. Trade Liberalization, Quality, and Export Prices By Haichao Fan; Yao Amber; Stephen R. Yeaple
  5. Services and global value chains: Some evidence on servicification of manufacturing and services networks By Lanz, Rainer; Maurer, Andreas
  6. Trade and Productivity: The Family Connection Redux By Klaus Prettner; Holger Strulik
  7. Trade, Wages, and Collective Bargaining: Evidence from France By Carluccio, Juan; Fougère, Denis; Gautier, Erwan
  8. The Effect of the Exchange Rate on Industry-Level Trade Flows in Czechia By Jana Å imáková; Daniel Stavárek
  9. The growing dependence of Britain on trade during the Industrial Revolution By Kevin Hjortshøj O'Rourke; Gregory Clark; Alan M. Taylor
  10. No Way to Meet Commitments for Norway’s Meat Imports: An Assessment of WTO Disciplines on Market Access in Agriculture By Garcia, Roberto J.
  11. The Impact of South-South Trade Agreements on FDI By Mondher Cherif; Christian Dreger
  12. Policy and performance in customs : evaluating the trade facilitation agreement By Hillberry,Russell Henry; Zhang,Xiaohui
  13. A note on the link between firm size and exports By Hernández, Pedro J.
  14. Specialization across goods and export quality By Alcalá, Francisco
  15. The Role of Trade and Offshoring in the Determination of Child Labour By Cigno, Alessandro; Giovannetti, Giorgia; Sabani, Laura
  16. Impact of Extensive and Intensive Margins of FDI on Corporate Domestic Performance: Evidence from Japanese automobile parts suppliers By MATSUURA Toshiyuki
  17. Asymmetric industrial energy prices and international trade By Misato Sato; Antoine Dechezleprêtre
  18. Export quality in advanced and developing economies: Evidence from a new dataset By Henn, Christian; Papageorgiou, Chris; Spatafora, Nikolas
  19. Trade effects of customs reform : evidence from Albania By Fernandes,Ana Margarida; Hillberry,Russell Henry; Mendoza Alcantara,Alejandra
  20. Credit constraints and the extensive margins of exports: First evidence for German manufacturing By Wagner, Joachim
  21. Analysis of Specific Legal and Trade-related Issues in a Possible PH-EU Economic Partnership: The Philippine Constitution, Competition Policy, Government Procurement, Intellectual Property Rights, Dispute Settlement, and Trade Remedies By Barcenas, Lai-Lynn Angelica B.
  22. Survival in Export Markets By Facundo Albornoz; Juan Carlos Hallak; Sebastián Fanelli
  23. Adoption of ISO9001 through supply chain in Vietnam : impacts of FDI and product-related environmental regulation By Iguchi, Hakaru; Arimura, Toshi H.; Michida, Etsuyo
  24. Retailing and international trade: A survey of the literature By Raff, Horst; Schmitt, Nicolas
  25. China’s Salmon Sanction By Chen , Xianwen; Garcia, Roberto J.
  26. Why are American Workers getting Poorer? China, Trade and Offshoring By Avraham Ebenstein; Ann Harrison; Margaret McMillan
  27. Population Aging and Comparative Advantage By Jie Cai; Andrey Stoyanov
  28. Carbon emissions embodied in Russia’s trade By Igor A. Makarov; Anna K. Sokolova
  29. How Are Firms Responding to Philippine Free Trade Agreements? By Aldaba, Rafaelita M.; Medalla, Erlinda M.; Yap, Josef T.; Rosellon, Maureen Ane D.; del Prado, Fatima; Mantaring, Melalyn C.; Ledda, Veredigna M.
  30. Services Liberalization in the Philippines: A Capacity Needs Assessment for AEC 2015 By Aldaba, Rafaelita M.; Aldaba, Fernando T.
  31. The Impact of Trade Liberalization and Economic Integration on the Logistics Industry: Maritime Transport and Freight Forwarders By Llanto, Gilberto M.; Navarro, Adoracion M.
  32. Managing the ASEAN Economic Integration Process in the Philippines: An Assessment of Progress in Trade Liberalization and Facilitation By Medalla, Erlinda M.
  33. Globalization: A Woman's Best Friend? Exporters and the Gender Wage Gap By Beata Javorcik; Esther Ann Boler; Karen Helene Ulltveit-Moe
  34. Regional Integration, Inclusive Growth, and Poverty: Enhancing Employment Opportunities for the Poor By Tabuga, Aubrey D.; Mina, Christian D.; Reyes, Celia M.; Asis, Ronina D.
  35. Re-visiting the Distance Coefficient in Gravity Model By Haonan Wu
  36. Production sharing, demand spillovers and CO2 emissions : the case of Chinese regions in GVCs By Pei, Jiansuo; Meng, Bo; Wang, Fei; Xue, Jinjun

  1. By: Fukase,Emiko; Martin,William J.
    Abstract: This paper explores the economic implications of a potential free trade agreement between India and the United States. A series of simulations is conducted assuming 100 percent ad valorem equivalent tariff cuts for goods and 50 percent cuts for services. The overall impacts are likely to be positive for the United States and India. While gains from trade creation are offset by trade diversion on the import side, both countries appear to gain from improved access on the export side. The United States is likely to gain largely through terms of trade improvements for its goods and services, as initial protection in India is particularly high. India would experience an expansion of exports and output, especially in textiles and apparel. As the United States and India are negotiating other free trade agreements, such as the Trans-Pacific Partnership and India's agreement with the Association of Southeast Asian Nations, the paper also explores how the effects of an India-United States free trade agreement are affected by prior free trade agreements. Adding an India-United States free trade agreement to prior agreements tends to bring additional welfare benefits to both countries. India would also gain substantially if it concluded a free trade agreement with the United States and then extended it to other partners. The results suggest that an India-United States free trade agreement might become a building block toward more liberal trade regimes.
    Keywords: Economic Theory&Research,Trade Law,Trade Policy,Free Trade,Emerging Markets
    Date: 2015–03–10
  2. By: Andrey Stoyanov (York University, Department of Economics, Faculty of Liberal Arts and Professional Studies)
    Abstract: This paper documents participation of special interest groups in negotiations of the Canada-US Free Trade Agreement. Using data on the tari§ reduction schedules mandated by the agreement, it shows that industries represented by strong lobby groups were faced with more favorable tari§ reduction paths in both countries: phase-out periods were longer at home and shorter in the partner country. This result provides evidence on the involvement of industry lobbying in negotiation of regional trade agreements and suggests that countries negotiating trade agreements are responsive to the interests of lobbying groups from across the border. Both results provide important implications for the political economy theory of trade agreements.
    Keywords: Free Trade Agreements, Lobbying, Trade policy, Canada-US FTA
    JEL: F13 F14 F15 D72
    Date: 2015–03–11
  3. By: Henn, Christian; Gnutzmann-Mkrtchyan, Arevik
    Abstract: The WTO's plurilateral Information Technology Agreement (ITA) reduced tariffs to zero on many IT products. This paper presents a comprehensive study of its trade impacts by incorporating recent insights from both the global value chain (GVC) and time in trade literatures. Inserting tariffs directly into the gravity equation breaks the ITAs impact down into four layers. Import demand elasticities are found to be non-linear: Tariff reduction (layer 1) has relatively small impacts, while complete tariff elimination (layer 2) has high impacts, especially for intermediate goods. Beyond that, ITA accession has positive non-tariff effects on both imports (layer 3) and exports (layer 4). These commitment effects suggest that higher trade policy certainty affects investment and sourcing decisions in favour of signatories: Their ITA exports performed better relative to other ICT and machinery exports, unlike non-members. But "passive signatories" - which joined mainly as a by-product of a larger policy objective - reaped the most benefits. Featuring a smaller ITA sector upon accession, their final good exports increased also in absolute terms due to downstream GVC integration. However, such impacts are strongly heterogeneous with respect to countries' geographical remoteness, education levels, business environment and institutions. China stands out with especially strong post-accession export increases, also extending to intermediate goods.
    Keywords: tariffs,trade policy certainty,value chains,fragmentation,WTO Information Technology Agreement,gravity equation,product-level trade,non-linearity
    JEL: F13 F14 L63
    Date: 2015
  4. By: Haichao Fan; Yao Amber (Department of Economics, Hong Kong University of Science and Technology; Institute for Emerging Market Studies, Hong Kong University of Science and Technology); Stephen R. Yeaple (Department of Economics, Pennsylvania State University)
    Abstract: This paper presents theory and evidence from highly disaggregated Chinese data that tariff reductions induce exporters to upgrade product quality. The paper documents two stylized facts and develops a simple analytic framework to predict that import tariff reductions induce an incumbent importer/exporter to increase the quality of its exports and to raise its export price in industries where the scope for quality differentiation is large while to lower its export price in industries where the scope for quality differentiation is small. The predictions are consistent with the stylized facts based on Chinese data and robust to various estimation specifications.
    Keywords: trade
    JEL: F42
    Date: 2015–01
  5. By: Lanz, Rainer; Maurer, Andreas
    Abstract: This paper analyses the role of services in international trade through the lens of global value chains (GVCs). Services account for more than 70% of world GDP but only for around 20% of world trade in balance of payments terms. In value added terms, accounting for services embodied in exported goods, services account for 40% of world trade. However, the international supply of services is not only represented through cross-border transactions. Services are also traded through the movement of labour and capital. The latter contributes to the GDP of the domestic country. The services value added of foreign affiliates in selected EU countries account, on average, for a quarter of domestic services value added. The role of services as input into manufacturing production often termed servicification of manufacturing, is substantial with services value added accounting for almost a third of manufacturing exports in developed countries and 26% in developing economies. While the share of foreign services content in manufacturing exports is close to 12% in both developed and developing countries, the latter add significantly less domestic services value to their manufacturing exports. Services industries increasingly produce in networked or "fragmented" arrangements. The paper lays out conceptual and measurement issues related to services networks and provides evidence based on trade in value added statistics and on a case study on the film industry. In contrast to goods value chains, services networks appear less fragmented internationally based on trade in value added statistics and survey evidence. However, to better capture the international services fragmentation, advances in statistics by enterprise characteristics and by mode of supply, i.e. taking into account the movement of labour and capital, are required.
    Keywords: trade in value added,global value chains,services networks,trade in services
    JEL: D57 F14 F23 L23 L80 L82
    Date: 2015
  6. By: Klaus Prettner; Holger Strulik
    Abstract: We investigate the effects of human capital accumulation on trade and productivity by integrating a micro-founded education and fertility decision of households into a model of international trade with firm heterogeneity. Our theoretical framework leads to two testable implications: i) the export share of a country increases with the education level of its population, ii) the average profitability of firms located in a country also increases with the education level of its population. We find that these implications are supported by empirical evidence for a panel of OECD countries from 1960 to 2010.
    Keywords: firm heterogeneity, international competiveness, education, fertility decline
    JEL: F12 F14 I20 J11
    Date: 2015–03
  7. By: Carluccio, Juan (Banque de France); Fougère, Denis (CREST); Gautier, Erwan (LEMNA - University of Nantes)
    Abstract: We estimate the impact of international trade on wages using data for French manufacturing firms. We instrument firm-level trade flows with firm-specific instrumental variables based on world demand and supply shocks. Both export and offshoring shocks have a positive effect on wages. Exports increase wages for all occupational categories while offshoring has heterogeneous effects. The impact of trade on wages varies across bargaining regimes. In firms with collective bargaining, the elasticity of wages with respect to exports and offshoring is higher than in firms with no collective bargaining. Wage gains associated with collective bargaining are similar across worker categories. Keywords: exports, offshoring, firm-level wages, collective bargaining.
    Keywords: exports, offshoring, firm-level wages, collective bargaining
    JEL: F16 J51 E24
    Date: 2015–02
  8. By: Jana Å imáková (Department of Foreign Affairs, School of Business Administration, Silesian University); Daniel Stavárek (Department of Finance and Accounting, School of Business Administration, Silesian University)
    Abstract: This paper is the first study to use the disaggregated data of the Czech foreign trade to examine the effect of exchange rate levels and volatility on trade flows. We analyze the period from 1993 to 2013 and disaggregate the data according to trading partner and product category. The detailed results obtained from empirical estimations clearly show that the relationship between exchange rates and foreign trade in Czechia does not completely correspond with the theoretical assumptions. We revealed that domestic currency depreciation worsens in the long-term trade balance in substantial parts of the Czech foreign trade, such as in the trade of machinery and transport equipment with Germany, Austria and France. We also found that an increased exchange rate volatility does not necessarily reduce foreign trade turnover, as the results for crude materials, fuels, chemical and manufactured products indicate. Therefore, although Czechia is a small, open economy, the exchange rate effects on foreign trade significantly differ in magnitude and direction across the trading partners and product groups.
    Keywords: exchange rate, industry-level data trade balance, cointegration, vector error correction model, gravity model
    JEL: F14 F31
    Date: 2015–02–16
  9. By: Kevin Hjortshøj O'Rourke; Gregory Clark; Alan M. Taylor
    Abstract: Many previous studies of the role of trade during the British Industrial Revolution have found little or no role for trade in explaining British living standards or growth rates.  We construct a three-region model of the world in which Britain trades with North America and the rest of the world, and calibrate the model to data from the 1760s and 1850s.  We find that while trade had only a small impact on British welfare in the 1760s, it had a very large impact in the 1850s.  This contrast is robust to a large range of parameter perturbations.  Biased technological change and population growth were key in explaining Britain's growing dependent on trade during the Industrial Revolution.
    Keywords: British Industrial Revolution, Great Divergence, trade, colonies, growth, specialization
    JEL: F11 F14 F43 N10 N70 O40
    Date: 2014–03–10
  10. By: Garcia, Roberto J. (School of Economics and Business, Norwegian University of Life Sciences)
    Abstract: WTO trade disciplines and commitments on market access (MA) are assessed for their ability to foster agricultural liberalization and policy reform in four Norwegian meat markets (beef, pork, lamb/sheep and chicken). The analysis addresses three issues: (1) the role that non-trade barriers played relative to the tariff regime in the overall MA of meats; (2) the changes in the composition of trade by product sub-categories and source country (and the role that quotas may have played); and (3) a comparison of the cost of imported meats and the average domestic price of the like good at the HS 6-digit level. The results suggest that MA opportunities required and created by the WTO have not initiated a process of liberalization or reform in the context of Norwegian meat markets. Only a limited scope of import penetration was permitted and was often use in collaboration with other bilateral and preferential quotas. The net effect of the policy mix continues to resemble a variable levy that limits/controls the volume imported and maintains/stabilizes prices. The analysis of the comparison of the cost of imported meat, inclusive of relevant border, with the average domestic price generally shows that imports under non-discriminating MA entered the domestic market within a 10% margin of the domestic price. There is little indication that rents are generated on imports under multilateral MA, but substantial rents could have been earned under preferential MA quotas.
    Keywords: Norway; meat product markets; market access; WTO commitments; non-tariff barriers; bound tariffs; preferential quotas; cost of imports; domestic prices
    JEL: F13 F14 Q17 Q18
    Date: 2015–03–16
  11. By: Mondher Cherif; Christian Dreger
    Abstract: The integration of emerging markets into the global economy is heavily promoted by foreign direct investment (FDI) inflows. Within the factors driving the location of FDI, regional trade agreements (RTAs) become increasingly relevant for emerging markets. We explore the impact of South-South trade agreements on FDI by dynamic panel models. The MENA countries are compared to the better performing regions in Latin America and Southeast Asia. Several striking results emerge from the analysis. First, agglomeration effects are weaker for the MENA region. Second, the impact of the RTA is important. However, RTAs do not generally rise the attractiveness of the region for foreign investors, as the effect interacts with business-friendly regulations. Third, financial deepening in the host country is a crucial factor, often again in combination with the institutional framework. Furthermore, institutional conditions may not be relevant per se, but only in terms of its interaction with the macroeconomic determinants
    Keywords: MENA Region, foreign investment, South-South trade agreements
    JEL: F15 F21 E22
    Date: 2015
  12. By: Hillberry,Russell Henry; Zhang,Xiaohui
    Abstract: The 2013 World Trade Organization ministerial in Bali produced a comprehensive framework agreement on trade facilitation. If fully implemented, the agreement should increase the speed and reduce the cost of moving goods across international borders. But which reforms are most likely to improve these outcomes, how much improvement should be expected, and what might such improvements be worth? This paper adopts the Organisation for Economic Co-operation and Development's trade facilitation indicators as quantitative descriptions of trade facilitation policy. It estimates the impact of the indicators and other variables on the time necessary to clear customs, the associated cost, and a customs performance index. Of the 12 policy bundles, the good governance and impartiality indicator is most clearly related to customs clearance time. A move to best practice in all policies by all World Trade Organization members would reduce the predicted time spent in customs by an average of 1.6 days for imports and 2 days for exports. Using a conservative estimate of the value of time in trade, such comprehensive reforms imply a mean tariff equivalent reduction of 0.9 percentage points on imports and 1.2 percentage points on exports. The same estimates are used to calculate welfare gains of policy reform by World Trade Organization members. Reform in China alone accounts for roughly one-fourth of the global benefits from the Trade Facilitation Agreement.
    Keywords: Customs Administration and Reform,Economic Theory&Research,E-Business,Trade Policy,Transport and Trade Logistics
    Date: 2015–03–10
  13. By: Hernández, Pedro J. (Fundamentos del Análisis Económico)
    Abstract: This paper re-examines the link between firm size and exports in order to study the proposal that consists of increasing the firm size to raise exports as a way out of the current economic crisis. The elasticity of export propensity (percentage of exported sales) with respect to firm size depends on several firm characteristics. The new heories of international trade emphasize the firm heterogeneity as the theoretical basis of this behaviour. In the context of such heterogeneity, this paper uses the quantile regression methodology to analyze the effect of firm size on export propensity of the firms, confirming the existence of a positive relationship that becomes less important as export propensity increases. The traditional estimate of this elasticity on the average of the export propensities distribution underestimates the effect in the bottom of the distribution and overestimates the effect on most of it.
    Keywords: Firms size, export
    JEL: D12 R23
    Date: 2013–12
  14. By: Alcalá, Francisco (Fundamentos del Análisis Económico)
    Abstract: This paper explores the link between international specialization across goods and within goods along the quality dimension. The analysis is performed in a multi-country model with an integer number of efficiency heterogeneous firms producing each good and under reasonably general assumptions on the shape of firm efficiency distributions and market structure. In equilibrium, each country exports a range of qualities for each good that overlaps with the ranges of other countries following patterns that relate to differences in wages, trade frictions and absolute advantage. If firm efficiency is quality biased (i.e., the relative productivity of more efficient firms is higher when producing higher quality) then, conditional on wages, the average quality of the exports within an industry increases with the country's international specialization in that industry.
    Keywords: comparative advantage, absolute advantage, quality, vertical differentiation
    JEL: D12 R23
    Date: 2014–05
  15. By: Cigno, Alessandro (University of Florence); Giovannetti, Giorgia (University of Florence); Sabani, Laura (University of Florence)
    Abstract: Incorporating family decisions in a two-period-model of the world economy, we show that trade liberalization may reduce child labour in developing countries where the initial share of skilled workers in the adult workforce – though not as large as in developed countries – is nonetheless large enough to attract skill-intensive FDI from the latter. If the production activities so relocated are more skill-intensive than those carried out in the destination countries before liberalization, that will in fact tend to offset the downwards pressure on the ratio of skilled to unskilled wage rates (Stolper-Samuelson effect), and thus on the incentive for parents to invest in their children's education, associated with international specialization. The hypothesis is not rejected by the data, and thus helps to explain why child labour has not risen in all developing countries, but risen in some and fallen in others.
    Keywords: trade barriers, FDI, skill endowment, skill premium, school enrolment, child labour
    JEL: D13 D33 F16 J13 J24
    Date: 2015–02
  16. By: MATSUURA Toshiyuki
    Abstract: This study investigates the impact of foreign direct investment (FDI) on domestic corporate performance using firm-level data on Japanese automobile parts suppliers. While previous studies used the propensity score matching method and focused mainly on the impact of the extensive margin of FDI, this study uses data on the automobile makers' FDI as an instrumental variable for suppliers' FDI and estimates the impact of both extensive and intensive margins of FDI on domestic corporate performance. Our empirical results reveal that while the impact of intensive margins of FDI has no significant impact on corporate performance, FDI in both developed and developing countries has a positive impact on sales and total factor productivity (TFP) in the case of extensive margins. Furthermore, the impact of the first flow of FDI is more profound than that of subsequent flows.
    Date: 2015–03
  17. By: Misato Sato; Antoine Dechezleprêtre
    Abstract: This paper measures the response of bilateral trade flows to differences in industrial energy prices across countries. Using a panel for the period 1996-2011 including 42 countries, 62 sectors and covering 60% of global merchandise trade, we estimate the short-run effects of sector-level energy price asymmetry on trade. We find that changes in relative energy prices have a statistically significant but very small impact on imports. On average, a 10% increase in the energy price difference between two country-sectors increases imports by 0.2%. The impact is larger for energy-intensive sectors. Even in these sectors however, the magnitude of the effect is such that changes in energy price differences across time explain less than 0.01% of the variation in trade flows. Simulations based on our model predict that a €40-65/tCO2 price of carbon in the EU ETS would increase Europe’s imports from the rest of the world by less than 0.05% and decrease exports by 0.2%.
    Date: 2015–01
  18. By: Henn, Christian; Papageorgiou, Chris; Spatafora, Nikolas
    Abstract: This paper develops new estimates of export quality, far more extensive than previous efforts, covering 178 countries and hundreds of products during the period 1962-2010. It finds that quality upgrading is particularly rapid during the early stages of development, with the process largely completed as a country reaches upper middle-income status. There is significant crosscountry heterogeneity in the growth rate of quality. Within any given product line, quality converges over time to the world frontier. Institutional quality, liberal trade policies, FDI inflows, and human capital all promote quality upgrading, although their impact varies across sectors. The results suggest that reducing barriers to entry into new sectors can allow economies to benefit from rapid quality convergence over time.
    Keywords: Volumes,Export prices,Quality ladders,Upgrading,Sector development
    JEL: F14 L15 O11 O14
    Date: 2015
  19. By: Fernandes,Ana Margarida; Hillberry,Russell Henry; Mendoza Alcantara,Alejandra
    Abstract: Despite enormous academic interest in international trade costs and keen policy interest in efforts to mitigate them, so far there is very little hard evidence on the impacts of trade facilitation efforts. This paper exploits a dramatic reduction in the rate of physical inspections by Albanian customs to estimate the effects of fewer inspection-related delays on the level and composition of imports. In this setting, the paper finds evidence that the expected median number of days spent in Albanian customs falls by 7 percent when the probability that a shipment is inspected falls from 50 percent or more to under 50 percent. In turn, this reduction in time produces a 7 percent increase in import value. The paper finds evidence that the reforms favored imports from preferential trading partners, especially the European Union. There are also reform-induced changes in the composition of trade, including increases in average quantities and unit prices, the number of shipments, and the number of importing firms per product-country pair and the number of countries per firm-product pair. A back-of-the-envelope calculation suggests that the estimate of 7 percent import growth along an intensive margin is roughly consistent with a 0.36 percentage point reduction in average tariff equivalent trade costs. Applying this figure to the value of Albania's non-oil imports produces a reform-induced trade cost savings estimate of approximately US$12 million in 2012.
    Keywords: Customs Administration and Reform,E-Business,Trade Policy,Transport and Trade Logistics,Common Carriers Industry
    Date: 2015–03–10
  20. By: Wagner, Joachim (Leuphana University Lueneburg & Centre of Excellence in Science & Innovation Studies (CESIS), Stockholm)
    Abstract: This paper uses a unique newly constructed data set to investigate for the first time the link between credit constraints and the extensive margins of exports in Germany, one of the leading actors on the international market for goods. In line with theoretical considerations and comparable results reported for a small number of other countries we report a negative impact of credit constraints on both the number of goods exported and the number of export destination countries that is both statistically highly significant and large from an economic point of view.
    Keywords: Credit constraints; exports; extensive margins
    JEL: F14
    Date: 2015–03–13
  21. By: Barcenas, Lai-Lynn Angelica B.
    Abstract: This paper provides an overview of the Philippines` defensive and offensive interests in a free trade agreement with the European Union in the areas of competition policy, government procurement, intellectual property rights, dispute settlement, and trade remedies. It examines these interests in accordance with the mandate of the Philippine Constitution, and the Philippine position vis-a-vis the goals and strategies of the European Union with respect to its trade relations with its trading partners.
    Keywords: Philippines-EU free trade agreement, trade negotiations, Philippine Constitution, competition, government procurement, intellectual property rights, dispute settlement, anti-dumping, countervailing measures, safeguards
    Date: 2015
  22. By: Facundo Albornoz (Department of Economics, Universidad de San Andres & CONICET); Juan Carlos Hallak (Department of Economics, Universidad de San Andres & CONICET); Sebastián Fanelli (MIT)
    Abstract: This paper explores the determinants of firm survival in export markets. Our theoretical framework includes a geometric Brownian motion for firm profitability, market-specific sunk and fixed exporting costs that are common across firms, and firm- and market-specific profitability shifters that are constant over time. We derive the probability of survival upon entry in an export market. We show that this probability increases with the ratio of sunk to fixed costs and is insensitive to the profitability shifters. Also, we show that the survival probability is unaffected by fixed costs if sunk costs are zero. Combining our theoretical results with observed patterns of survival among Argentine exporters, we infer the impact of distance and experience on the magnitude of sunk and fixed costs. In our data set, survival rates upon entry decrease with distance and increase with experience. Hence, we infer that fixed costs increase more with distance than sunk cost while fixed costs fall with experience sufficiently strongly to dominate the fall in sunk costs. These results carry implications on parametrizations of theoretical models of export dynamics and serve as a benchmark to assess structural estimates of fixed and sunk costs.
    Keywords: survival, export dynamics, fixed cost, sunk cost, productivity, firm heterogeneity, geometric Brownian motion
    JEL: F10 F12 F14
    Date: 2014–08
  23. By: Iguchi, Hakaru; Arimura, Toshi H.; Michida, Etsuyo
    Abstract: The objective of the present study is to examine the determinants of ISO 9001 certification, focusing on the effect of Product-related Environmental Regulations on Chemicals (PRERCs) and FDI using the answers to several questions in our Vietnam survey conducted from December 2011 to January 2012. Our findings suggest that PRERCs may help with the improvement in quality control of Vietnamese firms. If Vietnamese manufacturing firms with ISO 9001 certification are more likely to adopt ISO 14001, as well as firms in developed countries, our results indicate that the European chemical regulations may assist in the reduction of various environmental impacts in Vietnam. In addition, we found that FDI promotes the adoption of ISO 9001. If FDI firms in Vietnam certify ISO 14001 after the adoption of ISO 9001, as in the case of Malaysia and the developed economies, FDI firms may also be able to improve environmental performance as a result of ISO 14001.
    Keywords: Vietnam, International trade, Environmental protection, Foreign investments, Business enterprises, ISO 9001, FDI, Product-related Environmental Regulation
    JEL: F18 Q56 D22
    Date: 2015–03
  24. By: Raff, Horst; Schmitt, Nicolas
    Abstract: This paper reviews the literature on how retailers, by their individual behavior or as a group, influence international trade flows, and on how trade affects the structure of the retail industry. After reviewing the evidence, we discuss theoretical contributions set in an oligopolistic, game-theoretic framework. An important message coming from these contributions is that when trade liberalization occurs, there is a strong incentive to use vertical restraints to soften price competition in order to mitigate the pro-competitive impact of trade liberalization. We then review contributions that consider retailing at the industry level to discuss what we know about the impact of trade liberalization on structural changes in retailing, such as changes in market concentration and the size distribution of retail firms, on retailers' assortments and even on upfront payments by manufacturers, such as slotting allowances, to gain access to retail shelves. We conclude by discussing some directions for future research.
    Keywords: retailing,international trade,vertical restraint
    Date: 2015
  25. By: Chen , Xianwen (School of Economics and Business, Norwegian University of Life Sciences); Garcia, Roberto J. (School of Economics and Business, Norwegian University of Life Sciences)
    Abstract: Angered by the Norwegian Nobel Committee’s awarding of the 2010 Peace Prize to a Chinese dissident, China signalled its displeasure by allegedly applying more stringent regulatory measures and import licensing procedures on Norway’s iconic product, salmon. This has been widely reported in the media internationally, but not formally investigated by the scientific community. Through interviews with stakeholders in the Norway-China salmon trade and examination of trade data, personal accounts corroborate the evidence from trade data that nontariff border measures have been disproportionately applied against Norwegian salmon. These measures have distorted China’s fresh/chilled whole salmon market since 2011, and are likely to have long-term consequences in terms of trade patterns, re-routing and smuggling of salmon, and for quality concerns. Accounting for the transhipped and the smuggled Norwegian salmon via Hong Kong and Vietnam, we challenge the popular misbelief that Norway has lost its majority share in China’s fresh/chilled whole salmon market, but rather has increased its exports, suggesting that these measures have failed to prevent more salmon from entering mainland China’s market. However, the Norwegian government’s refusal to meet the Dalai Lama in May 2014 suggests that the full effect of China’s salmon sanction has made its way upstream to affect Norway’s policy.
    Keywords: China; economic sanction; regulatory border measures; import licensing procedures; non-tariff barriers; trade patterns; transhipment
    JEL: F14 F51 Q22 Q27
    Date: 2015–03–12
  26. By: Avraham Ebenstein; Ann Harrison; Margaret McMillan
    Abstract: We suggest that the impact of globalization on wages has been missed because its effects must be captured by analyzing occupational exposure to globalization. In this paper, we extend our previous work to include recent years (2003-2008), a period of increasing import penetration, China’s entry into the WTO, and growing US multinational employment abroad. We find significant effects of globalization, with offshoring to low wage countries and imports both associated with wage declines for US workers. We present evidence that globalization has led to the reallocation of workers away from high wage manufacturing jobs into other sectors and other occupations, with large declines in wages among workers who switch, explaining the large differences between industry and occupational analyses. While other research has focused primarily on China’s trade, we find that offshoring to China has also contributed to wage declines among US workers. However, the role of trade is quantitatively much more important. We also explore the impact of trade and offshoring on labor force participation rates. While offshoring to China has a negative impact on US labor force participation, other factors such as increasing computer use and substitution of capital for labor are significantly more important determinants of US employment rates across occupations.
    JEL: F16
    Date: 2015–03
  27. By: Jie Cai (University of New South Wales, School of Economics, Australian School of Business); Andrey Stoyanov (York University, Department of Economics, Faculty of Liberal Arts and Professional Studies)
    Abstract: In this paper we show that demographic di§erences between countries are a source of comparative advantage in international trade. Since many skills are age-dependent, population aging decreases the relative supply and increases the relative price of skills which depreciate with age. Thus, industries relying on skills in which younger workers are relatively more efficient will be more productive in countries with younger labor force and less productive in countries with older populations. Building upon the behavioral and economics literature, we construct industry-level measures of intensities in various age- dependent skills and show that population aging leads to specialization in industries which use age-appreciating skills intensively and erodes comparative advantage in industries for which age-depreciating skills are more important.
    Keywords: trade patterns; comparative advantage, population aging, cognitive skills
    JEL: F14 F16 J11 J24
    Date: 2015–02–03
  28. By: Igor A. Makarov; Anna K. Sokolova
    Abstract: According to current international climate change regime countries are responsible for greenhouse gas (GHG) emissions, which result from economic activities within national borders, including emissions from producing goods for exports. At the same time imports of carbon intensive goods are not regulated by international agreements. In this paper emissions embodied in exports and imports of Russia were calculated with the use of inter-country input-output tables. It was revealed that Russia is the second largest exporter of emissions embodied in trade and the large portion of these emissions is directed to developed countries. The reasons for high carbon intensity of Russia’s exports are obsolete technologies (in comparison to developed economies) and the structure of commodity exports. Because of large amount of net exports of carbon intensive goods the current approach to emissions accounting does not suit interests of Russia. On the one hand, Russia, as well as other large net emissions exporters, is interested in the revision of allocation of responsibility between producers and consumers of carbon intensive products. On the other hand, current technological backwardness makes Russia vulnerable to the policy of “carbon protectionism”, which can be implemented by its trade partners.
    Keywords: global climate change, carbon emissions, virtual carbon, carbon intensity of trade, Russia’s trade, input-output analysis, Kyoto protocol
    JEL: F18
    Date: 2015–03
  29. By: Aldaba, Rafaelita M.; Medalla, Erlinda M.; Yap, Josef T.; Rosellon, Maureen Ane D.; del Prado, Fatima; Mantaring, Melalyn C.; Ledda, Veredigna M.
    Abstract: The Philippines has been more cautious in its policy toward free trade agreements (FTAs) than other ASEAN member-states, having signed, so far, only one bilateral agreement with Japan in addition to the various ASEAN+1 agreements. While the government is expected to progressively reduce preferential tariffs to zero, Philippine firms have historically been slow to take advantage of FTAs. This survey reaffirms that this awareness and the usage of FTAs need significant improvement among both manufacturing and services sector firms. Identified as the main source of information for FTAs, the government needs to increase the efficiency, scope, and reach of its promotional and technical training programs and to rely further on technology to deliver results. These efforts to enhance FTA utilization are directly linked with the easing of rules of origin (ROOs) compliance and administration. At the national level, these efforts include reforms toward electronic Certificates of Origin and self-certification, and linkage to the national single window. This will improve timelines and ease the entry of micro, small, and medium enterprises. Regional efforts to harmonize ROOs can increase FTA utilization across ASEAN member-countries and pave the way for the forthcoming Regional Comprehensive Economic Partnership.
    Keywords: Philippines, free trade agreements (FTAs), Certificate of Origin, FTA utilization
    Date: 2015
  30. By: Aldaba, Rafaelita M.; Aldaba, Fernando T.
    Abstract: The paper aims to assess and determine the capacity-building needs required to liberalize trade in services in the Philippines. Through the ASEAN Framework Agreement on Services, the Philippines has committed to liberalize various sectors including air transport, maritime transport, construction, financial services, and telecommunications. The overall progress of services liberalization has been modest compared to trade in goods due mainly to constitutional restrictions, limitations on market access, and application of the national treatment principle. Apart from these constitutional and legal constraints, the other obstacles to services liberalization include high cost of doing business, inadequate infrastructure, and governance issues affecting the competitiveness of industries, among others. Clear gaps in the capacity of national agencies and regulators to effectively implement the country`s services liberalization commitments exist. To address these, the paper suggests capacity building and technical assistance as part of a comprehensive trade strategy covering both goods and services, formulating roadmaps for the various services sectors, and enhancing current coordination mechanisms among government agencies, private sector, and civil society.
    Keywords: ASEAN, capacity building, Philippines, ASEAN Economic Community (AEC), services
    Date: 2014
  31. By: Llanto, Gilberto M.; Navarro, Adoracion M.
    Abstract: The ASEAN Economic Community (AEC) Blueprint targets an ASEAN single market in 2015. This is an ambitious reform agenda that seeks to ensure the free flow of services, investment, and skilled labor, along with the free flow of goods and the freer flow of capital, in the ASEAN region. For logistics services, the target is supposed to be achieved by 2013. An assessment of whether this has been achieved or not is yet to be done. Liberalization and deregulation efforts in the Philippine maritime transport industry are already heading into the direction of greater participation in ASEAN economic integration even though the AEC measures have not yet been formally sanctioned by all members. This paper examines the current status of the logistics industry in the Philippines and finds out how the opening of the economy to global markets through trade and services liberalization and the ongoing process toward economic integration through AEC 2015 impact on the structure, conduct, and performance of the logistics industry. The industry is responding to the changes in a positive way notwithstanding its characterization as a concentrated industry dominated by a few domestic firms. Firms have become more innovative in offering quality service to consumers such as better passenger accommodation, improved ticketing system, and availability of fast craft ferries. Freight forwarders, at least those surveyed for this study, equip themselves with information on how to adjust to a more liberalized and integrated environment. They are aware of the changes that will be brought about by the full implementation of the AEC measures and they also have a good idea of the challenges they will face, such as differences in commercial practices, legal systems, and contracting procedures, when they decide to locate in an ASEAN member-country. The way forward involves continuing the market-oriented reforms, especially liberalization of trade in services, while ensuring a healthy balancing of domestic industry interests with the requirements of regional economic integration.
    Keywords: Philippines, maritime transport, trade facilitation, logistics, ASEAN Economic Community (AEC)
    Date: 2014
  32. By: Medalla, Erlinda M.
    Abstract: This paper is part of the Philippine study for the Mid-Term Review (MTR) of the ASEAN Economic Community (AEC) Blueprint, a project of the Economic Research Institute for ASEAN and East Asia (ERIA). A milestone in ASEAN economic cooperation is the Cebu Declaration on the Acceleration of the Establishment of an ASEAN Community by 2015 during the 12th ASEAN Summit in 2007, and subsequently the passing of the ASEAN Charter. A midterm review of where the member-countries are in moving toward the AEC is thus timely. At the core of ASEAN integration is the free flow of trade in goods. Accordingly, an essential part of the midterm review is an assessment of progress in the area of trade liberalization and facilitation. Toward this end, two sets of surveys were undertaken: (1) the MTR Questionnaire for Government Officials, and (2) the Firm MTR Survey on Import/Export and Customs Clearance. The questionnaire for government officials gathered information on aspects of ASEAN customs development and integration and the implementation of the national single window and the ASEAN Single Window. The survey of firms provided the view from users, particularly their experiences on the customs clearance and permit release process in other government agencies. This yielded a number of recommendations on the ways forward.
    Keywords: trade liberalization, economic integration, ASEAN, Philippines, trade facilitation
    Date: 2014
  33. By: Beata Javorcik; Esther Ann Boler; Karen Helene Ulltveit-Moe
    Abstract: While the impact of globalization on income inequality has received a lot of attention, little is known about its effect on the gender wage gap (GWG).  This study argues that there is a systematic difference in the GWG between exporting firms and non-exporters.  By the virtue of being exposed to higher competition, exporters require greater commitment and flexibility from their employees.  If commitment is not easily observable and women are perceived as less committed workers than men, exporters will statistically discriminate against female employees and will exhibit a higher GWG than non-exporters.  We test this hypothesis using matched employer-employee data from the Norwegian manufacturing sector from 1996 to 2010.  Our identification strategy relies on an exogenous shock, namely, the legislative changes that increased the length of the parental leave that is available only to fathers.  We argue that these changes have narrowed the perceived commitment gap between the genders and show that the initially higher GWG observed in exporting firms relative to non-exporters has gone down after the changes took place.
    Keywords: Exporters, Globalization, Gender Wage Gap
    JEL: F10 F14 F16 J16
    Date: 2015–03–10
  34. By: Tabuga, Aubrey D.; Mina, Christian D.; Reyes, Celia M.; Asis, Ronina D.
    Abstract: Regional economic integration in East Asia is characterized initially as a market-driven process of increased trade and foreign direct investment inflows, and eventually by formal arrangements to liberalize trade and integrate economic activities through free trade agreements among East and Southeast Asian countries. This has led to more intensified regional production networks in which East and Southeast Asian countries, including the Philippines, participated. Set against the backdrop of continuing economic integration in the region, economic growth in the Philippines has not been as inclusive as in the other countries as manifested in the increase in the magnitude of poverty incidence. This paper examines how the Philippines can improve its record on poverty reduction by looking at how it can generate greater demand for the labor services of the poor. Specifically, this paper looks into the linkage between regional production networks and inclusive growth in the Philippines through employment generation for the poor. The manufacturing sector can provide employment opportunities for the poor and can offer relatively higher wages. However, expected high-productivity employment opportunities from the manufacturing sector were not fully realized due to some bottlenecks in the sector. This partly explains the persistence of poverty in the Philippines. To promote inclusive growth and reduce poverty, the manufacturing sector has to be made more competitive and, at the same time, productivity in the agriculture sector (the major employer of the poor) has to be increased.
    Keywords: poverty, Philippines, employment, regional economic integration, agriculture, inclusive growth
    Date: 2014
  35. By: Haonan Wu
    Abstract: This paper revisits the classic gravity model in international trade and reexamines the distance coefficient. As pointed out by Frankel (1997), this coefficient measures the relative unit transportation cost between short distance and long distance rather than the absolute level of average transportation cost. Our results confirm this point in the sense that the coefficient has been very stable between 1991-2006, despite the obvious technological progress taken place during this period. Moreover, by comparing the sensitivity of these coefficients to change in oil prices at short periods of time, in which technology remained unchanged, we conclude that the average technology has indeed reduced the average trading cost. The results are robust when we divide the aggregate international trades into different industries.
    Date: 2015–03
  36. By: Pei, Jiansuo; Meng, Bo; Wang, Fei; Xue, Jinjun
    Abstract: This study adopts the perspective of demand spillovers to provide new insights regarding Chinese domestic-regions' production position in global value chains and their associated CO2 emissions. To this end, we constructed a new type of World Input-Output Database in which China's domestic interregional input-output table for 2007 is endogenously embedded. Then, the pattern of China's regional demand spillovers across both domestic regions and countries are revealed by employing this new database. These results were further connected to endowments theory, which help to make sense of the empirical results. It is found that China's regions locate relatively upstream in GVCs, and had CO2 emissions in net exports, which were entirely predicted by the environmental extended HOV model. Our study points to micro policy instruments to combat climate change, for example, the tax reform for energy inputs that helps to change the production pattern thus has impact on trade pattern and so forth.
    Keywords: China, International trade, Input-output tables, Environmental protection, Climatic change, Taxation, Energy tax, Carbon tax, Climate change, CGE model, Energy intensive industry
    JEL: C65 Q56 R15
    Date: 2015–02

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