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on International Trade |
| By: | Kareem, Fatima Olanike; Brümmer, Bernhard; Martinez-Zarzoso, Inmaculada |
| Abstract: | We examine the impact of two important non-tariff measures presumed to simultaneously affect firms’ decisions to export to the European Union (EU). As a novelty to the literature, we analyse the impacts of EU pesticide standards on African exports alongside a complementary non-tariff measure in the form of a minimum entry price control measure which aims to protect EU growers of certain fruits and vegetables against international competition. We represent these trade costs in the context of a Melitz firm heterogeneity framework using Helpman, Melitz and Rubenstein (2008) method. Analysis was based on Africa’s exports of tomatoes to the EU from 2008 to 2013, using the gravity model of trade. Our results show that at both the extensive and intensive margins of trade, the high stringency of EU pesticide standard prevents new entry into the EU market, drives less productive firms away, and discourages existing exporters from expanding their market base. Furthermore, we find the EU entry price system acts like an export tax, inhibiting tomatoes export to the EU, but only at the intensive margin. |
| Keywords: | EU food regulations, Pesticide standards, Entry price control, African exports, Gravity model, Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety, International Development, International Relations/Trade, C13, C33, F10, F13, |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:gagfdp:198719&r=int |
| By: | Anne Célia Disdier; Charlotte Emlinger; Jean Fouré |
| Abstract: | Trade liberalization of the agri-food sector is a sensitive topic in both TTIP (Transatlantic Trade and Investment Partnership) and TPP (Trans-Pacific Partnership) discussions. This paper first provides an overview of the current flows and trade barriers. Using a general equilibrium model of international trade (the MIRAGE model), it then assesses the potential impact of these two agreements on agri-food trade and value added. Results suggest that the US would gain from both agreements for their agri-food sectors, while almost all their partners and third countries would benefit less and even register losses in some sectors. The two agreements however do not compete much one with the other, since all defensive and offensive interests of contracting parties are complementary. Finally, the Atlantic trade may be impacted by the inclusion of standards harmonization within the Pacific Agreement but not by its extension to additional members (e.g. China or India). |
| Keywords: | Mega-trade deals;Agri-food;CGE model;Transatlantic Trade and Investment Partnership;Trans-Pacific Partnership |
| JEL: | F13 F15 Q17 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:cii:cepidt:2015-10&r=int |
| By: | Peter S. Eppinger; Nicole Meythaler; Marc-Manuel Sindlinger; Marcel Smolka |
| Abstract: | We provide novel evidence on the micro-structure of international trade during the 2008 financial crisis and subsequent global recession exploring a rich firm-level data set from Spain. The analysis is motivated by the surprisingly strong export performance of Spain in the aftermath of the great trade collapse (dubbed by some as the “Spanish export miracle”). The focus of our analysis is on changes at the extensive and intensive firm-level margins of trade, as well as on performance differences (jobs, productivity, and firm survival) across firms that differ in their export status. We find no adverse effects of the financial crisis on foreign market entry or exit, but a considerable increase in the export intensity of firms after the financial crisis. Moreover, we find that those firms that entered the crisis as exporters (and continued exporting throughout the crisis years) were more resilient to the crisis than those firms that restricted their sales to the domestic market. Finally, in contrast to exporters, non-exporters experienced a significant deterioration in their total factor productivity, which led to an overall decline in the productivity of a significant number of industries in Spanish manufacturing. |
| Keywords: | international trade, financial crisis, manufacturing, firm-level data,Spain |
| JEL: | F10 F14 G01 D24 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:iaw:iawdip:120&r=int |
| By: | Angela Cheptea; Charlotte Emlinger; Katrine Latouche |
| Abstract: | We explore the link between globalization of the retail sector and the export activity of firms from their origin country. In a previous paper (Cheptea et al., 2015), we showed that exporting firms from countries with internationalized retail companies benefit more from this process than firms from other countries. Two mechanisms can explain this effect: a trade cost advantage for retailers’ domestic suppliers, or a shift in foreign demand from which benefit all origin country firms. In this paper we question which of the two mechanisms dominates. For that, we test whether retailers’ supplying firms benefit more from the overseas expansion of retailers than other origin country firms. We employ French firm-level data to evaluate the effect for the two types of firms. We identify retailers’ suppliers as firms that sell their products under French retailers’ brands or labels, i.e. French firms certified with the IFS standard. Our empirical objective is to estimate whether firms with IFS certification have better export performance on markets where French retailers operate. We find that certified French firms are more likely to export, and export larger volumes, than non-certified firms to markets where French retailers established outlets. We also show that when French retailers close down their activities in a market, IFS firms face a drop in exports to this market in the subsequent years. The results are robust to the use of different sets of firm- and country-specific fixed effects, are unaffected by possible selection and endogeneity biases, and the presence in export markets of other retailers. This difference in behavior for certified and non-certified exporting firms confirms the trade cost advantage of retailers’ suppliers, which is lost when French retailers exit from the destination country. |
| Keywords: | Mulitnational retailers, firm-level exports, Private standards |
| JEL: | F12 F14 F23 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:iaw:iawdip:121&r=int |
| By: | Andrew Hudson (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)) |
| Abstract: | The Korea-Australia Free Trade Agreement (KAFTA) entered into force on 12 December 2014,expanding trade opportunities among two of the Asia-Pacific’s largest trading economies. This policy brief summarizes the process of concluding a Free Trade Agreement (FTA) and moving to implementation from the perspective of Australian experience. |
| Keywords: | Free trade agreement, declaration of intent, Joint Standing Committee on Treaties |
| JEL: | F1 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:unt:arpobr:apb44&r=int |
| By: | Pedro J. Martinez Edo (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)); Adam Heal (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)) |
| Abstract: | Trade is an important component of many Least Developed Countries’ (LDCs) development strategies. The ability of LDCs to expand export earnings depends on growing world trade, market access and the ability to diversify export products. LDCs, already facing internal supply constraints, need to be able to export without undue barriers; market access is therefore a crucial factor in countries ability to participate in global and regional trade. Recognizing this, a number of particular initiatives within the multilateral trading system have been introduced to improve market access for developing countries and for LDCs in particular, for example under the Generalized System of Preferences (GSP). |
| Keywords: | Duty-Free, Quota-free, least developed countries, trade |
| JEL: | F1 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:unt:arpobr:apb36&r=int |
| By: | Balistreri, Edward J.; Jensen, Jesper; Tarr, David |
| Abstract: | Despite the fact that many modern preferential trade agreements include commitments to foreign investors in imperfectly competitive services sectors, the literature has not established conditions under which these agreements are beneficial or harmful. The authors fill that void by developing a model with monopolistic competition and foreign direct investment in services with Dixit-Stiglitz endogenous productivity effects from additional varieties. They specify a numerical model, with probability distributions of all parameters. The model is executed 30,000 times, and results are reported as probability of an outcome, based on the sample distribution. In order to ground the results in reality, the authors apply the model to Kenya. They show that preferential commitments in services could be immizerising. Losses are more likely the greater the share of initial rent capture on the services barriers in our home country and the more technologically advanced are the excluded regions relative to the partner region. |
| Keywords: | immizerising services liberalization,preferential liberalization,multinationals,monopolistic competition,foreign direct investment,endogenous productivity effects |
| JEL: | F12 F13 F14 F15 F23 F47 C68 L16 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:201547&r=int |
| By: | INUI Tomohiko; ITO Keiko; MIYAKAWA Daisuke |
| Abstract: | This paper examines the determinants of firm survival in export markets by explicitly taking into account the impact of firms' previous export market experience and their product differentiation. Utilizing a 16-year panel data set for Japanese manufacturing firms obtained from the Basic Survey of Japanese Business Structure and Activities compiled by the Ministry of Economy, Trade and Industry, we employ both hazard and panel probit estimations to examine the likelihood of exit from export markets. The results of our estimations show, first, that the exit probability from export markets decreases over the export duration. Second, the probability of exiting from export markets tends to be lower when firms are more research and development (R&D) intensive both prior to and after starting exports. Third, firms in industries that manufacture differentiated products (e.g., machinery) also experience higher survivability in export markets. These results imply that learning from exporting plays an important role in firms' survival in export markets. In addition, our results imply that firms producing differentiated products likely have a greater incentive to make up-front investments to start exporting, and that these investments in turn enable such firms to survive in export markets for a longer period. |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:15086&r=int |
| By: | Angélica Guerra-Barón; Álvaro Méndez |
| Abstract: | Colombia, Indonesia, Vietnam, Egypt, Turkey, and South Africa (CIVETS) have shaped their foreign economic policies in line with the Washington Consensus and have implemented strategies to attract foreign investment as a possible way out of the current financial crisis. Once multilateral trade rules were agreed under the WTO, these countries revised their domestic trade policies in order to cope with both the organisational principles and the international investment standards promoted by international financial institutions. Despite the fact that transnational economic groups have been focussing their attention on these ‘new investment miracles’ since the coining of the term CIVETS in 2009, the CIVETS governments have shown no interest in coordinating their foreign economic policies on investment issues. In this paper we argue that the emerging economies of CIVETS exemplify a case of unintended foreign economic policy convergence, facilitated by systemic causes. These include their common need to overcome historic processes of adverse economic transition while getting inserted successfully into world trade; as well as domestic variables like the similar ideas of CIVETS policy makers. |
| Keywords: | foreign economic policies; CIVETS; convergence; emerging economies; foreign direct investment (FDI); negotiating strategies; free trade agreements (FTAs); bilateral investment treaties (BITs) |
| JEL: | J1 R14 J01 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:62636&r=int |
| By: | José de Sousa; Laura Hering; Sandra Poncet |
| Abstract: | We use recent detailed Chinese data on trade and pollution emissions to assess the environmental consequences of China’s integration into the world economy. We rely on a panel dataset covering 235 Chinese cities over the 2003-2012 period and examine whether environmental repercussions from trade openness depends on whether it emanates from processing or ordinary activities. In line with our theoretical predictions, we find a negative and significant effect of trade on emissions that is magnified for processing trade and activities undertaken by foreign firms: much lower environmental gains result from either ordinary trade activities or domestic firms, even though these are today the main drivers of China’s export and import growth. This result invites caution about the prospects for pollution in a context of decline role of processing trade. |
| Keywords: | Trade openness;Pollution;SO2 emissions;China |
| JEL: | F10 F14 O14 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:cii:cepidt:2015-11&r=int |
| By: | Adam Heal (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)); Teodora Mladenovic (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)) |
| Abstract: | This policy brief provides information including that Kazakhstan joined the Eurasian Customs Union (ECU) with Russia and Belarus in 2010 leading to changes in Kazakhstan’s tariff schedule and non-tariff measures (NTMs).By 2015, tariffs will nearly have doubled on a trade-weighted basis from 2009.NTMs have also become more trade restrictive. This has led to some trade diversion towards ECU partners and away from other trading partners, in particular the European Union and China. In addition, Kazakhstan has been negotiating World Trade Organization (WTO) membership since 1996. Eurasian Customs Union membership has further complicated negotiations over WTO accession. |
| Keywords: | Eurasian Customs Union, economic diversification, tariff, tariff-rate quotas |
| JEL: | F1 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:unt:arpobr:apb39&r=int |
| By: | Michael J. Dickstein; Eduardo Morales |
| Abstract: | Much of the variation in international trade volume is driven by firms' extensive margin decision to participate in export markets. To understand this decision and predict the sensitivity of export flows to changes in trade costs, we estimate a standard model of firms' export participation. In choosing whether to export, firms weigh the fixed costs of exporting against the forecasted profits from serving a foreign market. We show that the estimated parameters and counterfactual predictions from the model depend heavily on how the researcher specifies firms' expectations over these profits. We therefore develop a novel moment inequality approach with weaker assumptions on firms' expectations. Our approach introduces a new set of moment inequalities --odds-based inequalities-- and applies the revealed preference inequalities introduced in Pakes (2010) to a new setting. We use data from Chilean exporters to show that, relative to methods that require specifying firms' information sets, our approach generates estimates of fixed export costs that are 65-85% smaller. Counterfactual reductions in fixed costs generate gains in export participation that are 30% smaller, on average, than those predicted by existing approaches. |
| JEL: | F14 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21351&r=int |
| By: | Díaz-Bonilla, Eugenio; Laborde Debucquet, David |
| Abstract: | This paper discusses the different agreements and decisions reached in the Bali Ministerial Conference and the potential implications for the post-Bali work program. The results of the Bali Ministerial Conference are analyzed taking the perspective of the developing countries (though recognizing that this is a heterogeneous group). Because agricultural topics—in particular, food security—have been key issues in the negotiations, they receive a more detailed treatment. It is recognized, however, that discussing agricultural issues in isolation will not provide an adequate picture of the Bali negotiations. Therefore, this paper provides some historical and conceptual background on each of the topics negotiated, while also including enough legal detail regarding the texts and specific trade discussions to serve as a basic reference. Besides the specific substance of the agreements and decisions, a general important consideration is that, given the fears that a failure in Bali would have led to further fragmentation of the global trading system and the marginalization of many developing countries due to increasing imbalances in negotiating power, the Bali agreements and the November 2014 decision reinforce the WTO as the multilateral anchor of the global trade system. Notwithstanding potential criticisms about the limitations of the Bali agreements, developing countries should consider the strengthening of the multilateral system as a positive development: to the extent that individually many of them remain small players in the global arena, they should have a strong interest in a transparent, rule-based multilateral trading system that limits old-style power politics in global trade. |
| Keywords: | World Trade Organization (WTO), trade, developing countries, international trade, international trade policies, trade agreements, Doha round, Bali round, |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:1444&r=int |
| By: | Bouët, Antoine; Vaubourg, Anne-Gaël |
| Abstract: | The goal of this paper is to examine how financial constraints affect firms’ decisions to export when the mode of intra-sectoral competition is endogenous. We propose an extension of Neary and Tharakan’s (2012) model, in which firms resort to external funders to finance fixed export costs and investments in production capacities. We assume that sectors differ in financial constraint and that the cost of capital increases with the level of financial constraint. We first show that less financially vulnerable sectors are more likely to export. On the one hand, a high level of financial health allows firms to finance fixed export costs at a lower interest rate. On the other hand, financial health reduces the cost of investing in capacities, allowing firms to adopt a Cournot (rather than a Bertrand) pricing scheme and generate a high duopoly profit. We also exhibit a new transmission channel of financial crisis that affects both the extensive and intensive margins of trade. By increasing the cost of external finance, a financial shock increases the financial cost of exporting and reduces firms’ production capacities and exports (intensive margin). By making it more difficult to engage in a (highly profitable) Cournot pricing policy, such a shock also reduces firms’ duopoly profit and probability of exporting (extensive margin). |
| Keywords: | finance, trade, exports, international trade policies, investment, oligopolistic competition, financial constraints, |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:1438&r=int |
| By: | Inkyo Cheong (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)) |
| Abstract: | This policy brief reviews the Republic of Korea’s experience in implementing Free Trade Agreements (FTAs) with a particular focus on measures taken to increase the utilization of preferences available under FTAs by Korean exporters. |
| Keywords: | Utilization rates, free trade agreement, small and medium-sized enterprise |
| JEL: | F1 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:unt:arpobr:apb42&r=int |
| By: | Duong Tran (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)); Adam Heal (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)) |
| Abstract: | The November 2014 Asia-Pacific Economic Cooperation (APEC) leaders’ meeting in Beijing has generated momentum behind the proposed Free Trade Area of the Asia-Pacific (FTAAP). This note reviews the prospects for the FTAAP which are strongly linked to progress in two other large regional trade agreements currently under discussion: the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP). |
| Keywords: | Free trade area, noodle bowl, tariff, trade |
| JEL: | F1 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:unt:esctis:tis4&r=int |
| By: | Tan, Yong; Lin, Faqin; Hu, Cui |
| Abstract: | In this paper, we build a dynamic game model of quantity competition to explain the price difference between continuing exporters and exits. Continuing exports are forward looking and they may intentionally set a lower price in the export market at current stage to crowd out the competitors to maximize the overall expected profit in their total life period. Using a large sample of matched panel data of Chinese firms from firm-level production data and product-level trade data, we find that after controlling the most important determinants of export price as well as the firm-year-specific effects, continuing exporters charge a price 42.4%-54.0% lower than the price level charged by future exits in China. |
| Keywords: | Export prices, Dynamic game, Quantity competition |
| JEL: | C73 F10 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:65534&r=int |
| By: | Robert A. Blecker |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:amu:wpaper:2015-07&r=int |
| By: | ITO Koji; HIRANO Daisuke; YUKIMOTO Tadashi |
| Abstract: | Using panel data of the Census of Manufactures from the Ministry of Economy, Trade and Industry, this paper analyzes the export trend of the Japanese manufacturing industry from 2008-2010. After classifying plants into four categories—(i) non-exporter, (ii) export entry, (iii) export exit, (iv) continuing exporter—based on the record of exporting from 2008-2010, we decomposed the decrease of Japanese manufacturing export value into extensive margin (contribution by (ii) and (iii)) and intensive margin (contribution by (iv)).Exports by the Japanese manufacturing industry decreased by 14.41% during the two-year period. Our research revealed that the intensive margin contributed dominantly to the decrease (-16.20 percentage points) relative to the extensive margin (1.78 percentage points), on one hand, and the number of plants exiting from export markets reached a certain size—1,472—compared to the number of continuing exporters, 6,560, on the other hand.Furthermore, our estimation of the exporting probability using panel data of exporting plants in 2008 clarified that plants' internal factors such as productivity, plant size, and capital labor ratio have a significant effect on the exporting probability even among exporting plants with relatively high-level performance. |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rdpsjp:15037&r=int |
| By: | Yann Duval (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)); Pamela Bayona (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)) |
| Abstract: | This issue of the Trade Insights series provides analysis of notifications submitted as part of the preparation for the implementation under the WTO Trade Facilitation Agreement. Fifteen economies in the Asia-Pacific region have already submitted Category A notifications, i.e., the list of substantive provisions they have either already implemented or are committed to implement by the time the Agreement enters into force. |
| Keywords: | Trade Facilitation Agreement, Asia-Pacific economies,freedom of transit, paperless trade |
| JEL: | F1 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:unt:esctis:tis7&r=int |
| By: | Alin Horj (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)); Mariya Pekarskaya (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)); Adam Heal (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)) |
| Abstract: | This policy brief, issued as part of the Trade Insights series, reviews the recent usage of non-tariff measures (NTMs) in the automotive sector in the Republic of Korea, with a specific focus on technical barriers to trade (TBTs). It finds that, despite provisions to reduce TBTs in recent trade agreements with the US and EU, TBTs and other non-tariff barriers remain a substantial barrier to entry in the Korean automotive market. The Trade Insights series summarizes current trade related issues; offers examples of good practice in trade policymaking; and helps disseminate key research findings of relevance to policy. The series is intended to inform both trade and development practitioners and the general public. |
| Keywords: | Trade, technical barrier, tariff, automotive, financial crisis |
| JEL: | F1 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:unt:esctis:tis1&r=int |
| By: | Chris M Wilson (School of Business and Economics, Loughborough University) |
| Abstract: | There is widespread evidence that geographical borders reduce trade volumes. This paper presents a theoretical model capable of providing a succinct comparison of three broad explanations for this well-known 'border effect' or 'home bias', involving i) trade costs, ii) localized tastes, and iii) information frictions. Despite being traditionally under-researched as an explanation, it finds that information frictions often provide the relatively more powerful marginal effect in determining the border effect, and associated welfare. |
| Keywords: | Home Bias, Information Frictions, Search Costs, Localized Tastes, Trade Costs |
| JEL: | F10 L13 D83 |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:lbo:lbowps:2015_02&r=int |
| By: | Angel Versetti (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)); Adam Heal (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)) |
| Abstract: | This policy brief, issued as part of the Trade Insights series, examines the evolving economic partnership between Japan and the Association of South-East Asian Nations (ASEAN) and reviews prospects for the future in light of the establishment of the ASEAN Economic Community (AEC) in 2015. |
| Keywords: | Economic partnership, ASEAN, merchandise trade, service trade, FDI |
| JEL: | F1 |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:unt:esctis:tis5&r=int |
| By: | V. Kandiah; H. Escaith; D. L. Shepelyansky |
| Abstract: | Using the new data from the OECD-WTO world network of economic activities we construct the Google matrix $G$ of this directed network and perform its detailed analysis. The network contains 58 countries and 37 activity sectors for years 1995, 2000, 2005, 2008, 2009. The construction of $G$, based on Markov chain transitions, treats all countries on equal democratic grounds while the contribution of activity sectors is proportional to their exchange monetary volume. The Google matrix analysis allows to obtain reliable ranking of countries and activity sectors and to determine the sensitivity of CheiRank-PageRank commercial balance of countries in respect to price variations and labor cost in various countries. We demonstrate that the developed approach takes into account multiplicity of network links with economy interactions between countries and activity sectors thus being more efficient compared to the usual export-import analysis. Our results highlight the striking increase of the influence of German economic activity on other countries during the period 1995 to 2009 while the influence of Eurozone decreases during the same period. We compare our results with the similar analysis of the world trade network from the UN COMTRADE database. We argue that the knowledge of network structure allows to analyze the effects of economic influence and contagion propagation over the world economy. |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1507.03278&r=int |
| By: | Giovanni Palmioli (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)); Adam Heal (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)) |
| Abstract: | This note reviews the emerging imbalances in the Chinese economy and the attendant need for structural reforms, including financial sector and services liberalization. The role that the recently launched Shanghai Free Trade Zone could play in accelerating these reforms is then considered, alongside an assessment of progress to date. |
| Keywords: | Economic growth, Shanghai Free Trade Zone, economic reform, foreign investment |
| JEL: | F1 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:unt:esctis:tis3&r=int |
| By: | Witada Anukoonwattaka (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)); Marco Scagliusi (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)); Mia Mikic (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)) |
| Abstract: | "Servicification" is most simply defined as an increased use of services in manufacturing processes. The impact of servicification on the competitiveness of the industrial sector has not been adequately addressed, especially in policy discussions, because of limited data availability. However, the OECD-WTO TiVA database now fills this gap for a selected number of economies. This issue of Trade Insights considers how developments in the service sector have encouraged and promoted industrial exports from Asia-Pacific economies. |
| Keywords: | servicification, global value chains, TiVA, Asia-Pacific economies |
| JEL: | F1 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:unt:esctis:tis10&r=int |
| By: | Berthoumieu, Julien; Bouët, Antoine |
| Abstract: | This research paper is aimed at understanding why border trade policies are today complemented with behind-the-border policies like output subsidies, R&D subsidies, and public R&D investments. This is a new type of protectionism that becomes prominent since the 2006-2008 economic crisis. In this paper we analyze the impact of various policies on domestic cost-reducing research and development (R&D) expenditures using an international duopolistic model with uncertainty regarding the result of the R&D process. We examine the impact of “at-the-border†policies (import tariffs, import quotas, voluntary export restraints, and minimum price agreements) as well as “behind-the-border†policies (output subsidies, R&D subsidies, and public R&D investments). We demonstrate new theoretical findings, in particular the increasing then decreasing impact of quotas on R&D, as well as the impact of production subsidies, public R&D investments, and minimum price agreements on private R&D. We conclude that R&D subsidies are appealing policy instruments because they support not only domestic R&D expenditures but also domestic production and profits without reducing consumers’ surplus. |
| Keywords: | Agricultural research, trade, trade policies, tariffs, subsidies, Agricultural policies, Prices, tariff on imports, output subsidy, R&, D subsidy, research and development, |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:1425&r=int |
| By: | Sugata Marjit; Punarjit Roychowdhury |
| Abstract: | In this paper we present a version of the Mitra and Trindade (CJE, 38: 1253-1271, 2005) model to examine how differences in preexisiting levels of inequality between countries may determine the pattern of international trade when individual preferences are non-homothetic. In particular, using a standard 2x2x2 Heckscher-Ohlin framework, we propose a behavioral linkage between asset inequality and trade pattern by endogenizing non-homotheticity in terms of status dependent preferences. We show that for sufficiently high ratios of capital to labor earnings, there exists a critical level of inequality such that specificities of the pattern of trade that emerge between the two countries are contingent upon whether the inequality levels prevailing in the countries are above or below this level. For sufficiently low ratios of capital to labor earnings, however, the trade pattern is independent of the exisiting levels of inequality relative to the critical level. Based on our model, we examine the impact of the resultant trade pattern on the levels of income inequality. Finally, we discuss some interesting international spillover effects of redistributive policies. |
| Keywords: | Heckscher-Ohlin Model, Income Inequality, Non-homothetic preferences, Social Status, Status good, Trade pattern. JEL Classification: D11, F11, Z13 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:not:notgep:15/08&r=int |
| By: | Adam Heal (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)); Giovanni Palmioli (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)) |
| Abstract: | To integrate further least developed countries (LDCs) into the global and regional economies, a number of countries have introduced Duty-Free Quota-Free (DFQF) schemes for LDCs, allowing their imports to enter without paying tariffs. This note reviews those schemes and finds that Asia-Pacific LDCs are increasing their share of global exports, but while improved market access through DFQF schemes is useful, the developmental benefits will be limited unless the schemes are made relevant and usable. |
| Keywords: | least developed countries, Duty-Free Quota-Free, major markets, exports |
| JEL: | F1 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:unt:esctis:tis9&r=int |
| By: | ITO Tadashi; IWAHASHI Roki; ISHIKAWA Yoshifumi; NAKAMURA Ryohei |
| Abstract: | Using economic tools, this paper analyzes how the recently launched cargo hub at Naha Airport can contribute to an expansion of Japan's trade with Asian countries and also to sustainable development of Okinawa prefecture. As to the first issue of trade with Asia, we conducted a simulation analysis on an increase of exports by estimating both the transport cost and transport time elasticities of demand using the most disaggregated export customs data of Japan. The simulation result shows that the export value will increase by 11% in the case of a 30% reduction in transport time and no change in transport cost. As to the second issue of sustainable development, we computed the ripple effects of Naha Airport's cargo hub using an input-output table for Okinawa prefecture which we constructed, finding that the sum of the ripple effect and an increase in exports of made-in-Okinawa goods reaches a mere 0.3% of the prefecture's gross domestic product (GDP). |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rdpsjp:15036&r=int |
| By: | Silvia Bertarelli; Chiara Lodi |
| Abstract: | This paper provides an empirical analysis about the relationship among innovation, productivity and exporting propensity within manufacturing firms of seven Eastern European Union countries. We analyse marginal effects of product, process and organisational-marketing innovations and test complementarity among them when the objective function is represented by the exporting propensity of a firm. Analysing CIS2008 data, we obtain that productivity improves exporting propensity; the more firms innovate the higher is their exporting probability; complementarity between process and organisational-marketing innovations is accepted in medium high and high technology firms. Complementary innovation strategies are detected for Bulgarian firms, even if Bulgaria is one of the least innovative Eastern European countries. |
| Keywords: | Propensity to export; Eastern Europe countries; Productivity; Complementarity; Product innovations; Process innovations; Organisational/Marketing innovations |
| JEL: | F14 O33 |
| Date: | 2015–07–10 |
| URL: | http://d.repec.org/n?u=RePEc:udf:wpaper:2015104&r=int |
| By: | Mia Mikic (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)); Da In Lee (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)) |
| Abstract: | This policy brief, issued as part of the Trade Insights series, reviews the role of safeguards in the Asia-Pacific region and discusses whether such measures promote or hinder liberalization. It finds that the use of safeguard measures by developing Asia-Pacific economies has been on the rise. The majority of Asia-Pacific countries implement their safeguard measures through an increase of specific tariffs on sectors associated with chemicals and base metals. |
| Keywords: | Safeguard meaasures, liberalization, Asia-Pacific countries, preferential |
| JEL: | F1 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:unt:esctis:tis2&r=int |
| By: | Aman Saggu (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)); Witada Anukoonwattaka (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)) |
| Abstract: | This issue of the Trade Insights series identifies Asia-Pacific LDCs and LLDCs with export-portfolios and economies which are at greatest risk from the recent collapse in global commodity prices. Asia-Pacific LDCs and LLDCs account for less than 2% of global commodity exports and just 7% of Asia-Pacific commodity exports; however many these economies have export-portfolios which are highly concentrated in one or two major commodities: mainly crude oil, natural, gas, aluminum, iron ore/steel, cotton and copper. |
| Keywords: | Commodity price, revenue, export, economies |
| JEL: | F1 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:unt:esctis:tis6&r=int |
| By: | Chihiro Inaba (Department of Economics, Kobe University); Katsufumi Fukuda (Graduate School of Social Science, Hiroshima University, Japan and Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan) |
| Abstract: | We construct a dynamic general-equilibrium North-South growth model with international trade with both homogenous and heterogeneous firms, endogenous northern economic growth, and unemployment. Unemployment is emerged from the imbalance between the endogenous labor supply and the firms' labor demand under binding the minimum wage policy. The north produces two goods, high-tech good and low-tech good, while the South produces only low-tech good by the scarcity of technology. Both goods are traded between the countries. The production of the high-tech good needs R&D activity for variety creation, which is a source of economic growth. In this setting, we analyze the southern policy change that increases the southern minimum wage, and show that the increase in the southern minimum wage affects the structure of international trade and the northern growth rate and unemployment. |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:kob:dpaper:dp2015-29&r=int |
| By: | Birg, Laura |
| Abstract: | This paper studies interaction of pharmaceutical regulation and parallel trade in a North-South framework. An innovative Örm located in the North can sell its drug only in the North or in both countries. Governments may limit reimbursement for the drug. Reimbursement limits reduce the Örmís incentive to supply the South, with the threat of withdrawal from the South being larger if both countries regulate as compared to only the South limiting reimbursement. Stricter regulation, i.e. a lower reimbursement limit in the Northern country increases the incentive to sell in the South. Under parallel trade, the welfare maximing reimbursement limit in the North is lower than under segmented markets, while the reimbursement limit in the South is not a§ected. If both countries cooperate in reimbursement policies, both of them adopt less strict reimbursement regimes. Cooperation results in a decrease in social welfare in the North but in an increase in welfare in the South. |
| Keywords: | pharmaceutical regulation,reimbursement limit,parallel trade |
| JEL: | F12 I11 I18 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cegedp:253&r=int |
| By: | Vishalkumar Jani; Dholakia, Ravindra H. |
| Abstract: | The effect of globalization, especially economic liberalization, on socioeconomic development has long been debated in development economics. There is a view that globalization is not beneficial to the underdeveloped and developing world. Africa is always put forward as an example. So it is important to see what is really the impact of international integration and increasing trade on countries of Africa. Evidence for this is very limited and inconclusive. The present study attempts to decipher how health status of African countries is impacted by the economic liberalization. It aims to bridge the gap between the two strands of literature: (i) impact of economic liberalization on growth, and (ii) effect of economic growth on health status. The findings show a positive effect of globalization on the health status of African countries with those having lower income and underdeveloped status in initial period benefiting more. |
| URL: | http://d.repec.org/n?u=RePEc:iim:iimawp:13664&r=int |
| By: | Paul Bergin (Economics Department University of California-Davis); Giancarlo Corsetti (Faculty of Economics University of Cambridge) |
| Abstract: | Motivated by the long-standing debate on the pros and cons of competitive devaluation, we propose a new perspective on how monetary and exchange rate policies can contribute to a country’s international competitiveness. We refocus the analysis on the implications of monetary stabilization for a country’s comparative advantage. We develop a two-country New-Keynesian model allowing for two tradable sectors in each country: while one sector is perfectly competitive, firms in the other sector produce differentiated goods under monopolistic competition subject to sunk entry costs and nominal rigidities, hence their performance is more sensitive to macroeconomic uncertainty. We show that, by stabilizing markups, monetary policy can foster the competitiveness of these firms, encouraging investment and entry in the differentiated goods sector, and ultimately affecting the composition of domestic output and exports. Panel regressions based on worldwide exports to the U.S. by sector lend empirical support to the theory. Constraining monetary policy with an exchange rate peg lowers a country’s share of differentiated goods in exports between 4 and 12 percent. |
| Keywords: | monetary policy, production location externality, firm entry, optimal tariff |
| JEL: | F41 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:cfm:wpaper:1516&r=int |
| By: | Kelbore, Zerihun Getachew |
| Abstract: | This paper examines the poverty reduction effects of trade openness and structural transformation in Africa. The study uses a panel data covering the period from 1981 to 2010 and constituting 43 African countries. Using System generalized methods of moments, findings show that trade openness initially exacerbates poverty by about 1.3% and after one period lag, it reduces it by about 1.2%. Structural transformation lagged two periods, on the other hand, led to poverty reduction of about 3%. Further, the results show that infrastructure development and fostering the participation of the private sector in the continent greatly contribute towards poverty reduction. The study also confirms the famous 'Bhagwati hypothesis' that growth is good for the poor, as an increase in GDP per capita found to have a proportionate reduction in poverty levels (0.7 to 1%). The study also investigated the causality between trade openness and structural transformation, and the results demonstrated that there is a bi-causality relationship between the two variables. As a robustness check, the results were validated using fixed effects, random effects, and panel vector auto regression (PVAR) models. Thus, the implication is that despite the initial costs inflicted on the poor, African economies need to focus on reforms that help them achieve structural transformation in its broader sense and boost international trade. |
| Keywords: | Trade openness, structural transformation, Poverty, GMM, Africa |
| JEL: | C13 F1 F14 O1 O43 |
| Date: | 2015–06–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:65537&r=int |
| By: | Riccardo Crescenzi; Carlo Pietrobelli; Roberta Rabellotti |
| Abstract: | This paper investigates the geography of multinational corporations’ investments in the EU regions. The ‘traditional’ sources of location advantages (i.e. agglomeration economies, market access and labour market conditions) are considered together with innovation and socio-institutional drivers of investments, captured by means of regional ‘social filter’ conditions. This makes it possible to empirically assess the different role played by such advantages in the location decision of investments at different stages of the value chain and disentangle the differential role of national vs. regional factors. The empirical analysis covers the EU-25 regions and suggests that regional socio-economic conditions are crucially important for the location decisions of investments in the most sophisticated knowledge-intensive stages of the value chain. |
| Keywords: | Innovation; multinationals; systems of innovation; value chains; regions; European Union |
| JEL: | F21 F23 O33 R12 R58 |
| Date: | 2014–08–12 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:51482&r=int |