nep-int New Economics Papers
on International Trade
Issue of 2015‒11‒15
thirty-two papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. The EU-Korea free trade agreement: Anticipation, trade policy uncertainty and impact By Csilla, Lakatos; Lars, Nilsson
  2. Offshoring and Skill-upgrading in French Manufacturing: A Heckscher-Ohlin-Melitz View By Juan Carluccio; Alejandro Cuñat; Harald Fadinger; Christian Fons-Rosen
  3. The impact of 3D printing on trade and FDI By Abeliansky, Ana L.; Martínez-Zarzoso, Imnaculada; Prettner, Klaus
  4. Quality and the Great Trade Collapse By Chen, Natalie; Juvenal, Luciana
  5. Impacts of Emerging Asia on African and Latin American Trade: Projections to 2030 By Kym Anderson; Anna Strutt
  6. Growth and Trade with Frictions: A Structural Estimation Framework By Anderson, James; Larch, Mario; Yotov, Yoto
  7. Export Decision under Risk By Carl Gaigne; Anne-Celia Disdier; Jose de Sousa
  8. On the stability of intra-industry trade By Hayakawa, Kazunobu; Okubo, Toshihiro; Ito, Tadashi
  9. Dark Costs, Missing Data: Shedding Some Light on Services Trade By Anderson, James; Borchert, Ingo; Mattoo, Aaditya; Yotov, Yoto
  10. Does A Regional Trade Agreement Lessen or Worsen Growth Volatility? An Empirical Investigation By Kangni KPODAR; Patrick IMAM
  11. The Impact of Trade on Wage Inequality in Developing Countries: Technology vs. Comparative Advantage By Nathalie Scholl
  12. On the effects of non-tariff measures on brazilian exports By Ferraz, Lucas Pedreira do Couto; Ribeiro, Marcel; Monasterio, Pedro
  13. Trade in parts and components across Europe By Frensch, Richard; Hanousek, Jan; Kocenda, Evzen
  14. When and How Country Reputation Stimulates Export Volume By Korschun, Daniel; Dimitrova, Boryana; Yotov, Yoto
  15. The manufacturing industry in Brazil in the era of global value chains By Ferraz, Lucas Pedreira do Couto; Gutierre, Leopoldo; Cabral, Rodolfo Arruda
  16. Tracking wage inequality trends with prices and different trade models : evidence from Mexico By Halliday,Timothy; Lederman,Daniel; Robertson,Raymond
  17. FDI, Aid, Terrorism: Conditional Threshold Evidence from Developing Countries By Asongu, Simplice; Efobi, Uchenna; Beecroft, Ibukun
  18. Capital account liberalization and Moroccan macroeconomic performances By EZZAHID, Elhadj; MAOUHOUB, Brahim
  19. Effect of Foreign Affiliates on Exporting and Markups By ZHANG Hongyong; ZHU Lianming
  20. Evaluation of Latvia's Re-Exports Using Firm-Level Data By Konstantins Benkovskis; Santa Berzina; Liva Zorgenfreija
  21. Growing through trade: the role of foreign growth and domestic tariffs By Carmen D. Álvarez-Albelo; Antonio Manresa; Monica Pigem-Vigo
  22. Balanced Growth Despite Uzawa By Gene M. Grossman; Elhanan Helpman; Ezra Oberfield; Thomas Sampson
  23. FDI, Intermediate Inputs and Firm Performance: Theory and Evidence from Italy By Michele Imbruno; Rosanna Pittiglio; Filippo Reganati
  24. Pay-off to Participation in Global Value Chains: How Much are New EU Member States Lagging behind the Rest of EU Countries in Terms of Domestic Value Added in Exports? By Vrh, Nataša
  25. Immigration: the link to international trade in services By Gianmarco Ottaviano; Giovanni Peri; Greg C. Wright
  26. Global value chains and the effects of outsourcing and offshoring on firms: Evidence from matched firm-employee data By Lindic, Mojca
  27. International Agricultural markets after the war, 1945-1960 By Ángel Luis González; Vicente Pinilla; Raúl Serrano
  28. An Empirical Analysis of Japanese Industrial Agglomeration and Factors of Supply Chain Internationalization in East Asia: A case of Japanese food, electronics, and automobile firms (Japanese) By TOKUNAGA Suminori; AKUNE Yuko; IKEGAWA Maria; OKIYAMA Mitsuru
  29. Intellectual Property Protection and the Industrial Composition of Multinational Activity By Olena Ivus; Walter Park; Kamal Saggi
  30. Trans-Pacific Partnership and Foreign Ag Subsidies By Dermot J. Hayes
  31. Trade, Inequality, and Morocco By Uri Dadush
  32. Border Adjustments for Economywide Policies That Impose a Price on Greenhouse Gas Emissions By Congressional Budget Office

  1. By: Csilla, Lakatos (World Bank); Lars, Nilsson (DG Trade)
    Abstract: Anticipatory trade effects of free trade agreements (FTAs) have been documented in various papers. That is, trade between two partners appears to increase before an FTA between them has entered into force. Several reasons have been put forward trying to explain this phenomenon; among them reduced trade policy uncertainty. Firstly, using an econometric framework, this paper is one of the first to explore the role of anticipation and trade policy uncertainty (e.g. the presence of unbound tariffs and lower applied tariffs than bound tariffs) in the case of a recently concluded deep and comprehensive EU FTA, including significant behind the border measures. We do so by separately considering the impact of the FTA during different periods of time. Secondly, we use monthly data at a lower level of aggregation (8-digit level) compared to previous studies and we account for changes in the EU product classification over time. Thirdly, we distinguish between the impact on products which are actually subject to liberalisation under the FTA as opposed to those which are already duty-free and, finally, we examine the effects on both the extensive margin (probability to export products) and the intensive margin (change in the value of products exported). As far as the EU is concerned, the figures indicate that the FTA has increased the probability to export by about 11.2% while the value of exports has been boosted by 10.7%. In case of Korea, the impact is smaller. The average probability to export has increased by 4.8% while the value of Korean exports has risen by 2.0% as a result of the agreement.
    Keywords: trade policy uncertainty; anticipation; FTA; EU-Korea
    JEL: F13
    Date: 2015–06–01
  2. By: Juan Carluccio; Alejandro Cuñat; Harald Fadinger; Christian Fons-Rosen
    Abstract: We present a factor-proportions trade model in which heterogeneous firms can offshore intermediate inputs subject to fixed offshoring costs. In the skill-abundant country, high- productivity firms offshore a larger range of labor-intensive inputs to the labor-abundant countries than low-productivity firms. Differently from the traditional versions of factor- proportions trade theory, Heckscher-Ohlin forces operate at the within-industry level, leading to endogenous variation in skill intensity across firms that is positively correlated with firm productivity. Using French firm-level data for the years 1996 to 2007, we provide empiri- cal support for the factor proportions channel through which offshoring to labor-abundant countries affects the firm-level skill intensities of French manufacturers.
    Date: 2015–09–29
  3. By: Abeliansky, Ana L.; Martínez-Zarzoso, Imnaculada; Prettner, Klaus
    Abstract: This paper analyzes the effects of 3D printing technologies on the volume of trade and on the structure of FDI. A standard model with firm-specific heterogeneity generates three main predictions. First, 3D printers are introduced in areas with high economic activity that also face high transport costs. Second, technological progress related to 3D printing machines leads to a gradual replacement of FDI that relies on traditional production structures with FDI based on 3D printing techniques. At this stage international trade stays unaffected. Finally, at later stages, with 3D printing machines being widely used, further technological progress in 3D printing leads to a gradual replacement of international trade. Empirical evidence indicates that countries subject to higher transport costs and with high levels of economic activity are indeed among the ones that import more 3D printers. Anecdotal evidence also supports the second and third predictions of the model.
    Keywords: 3D printing,FDI,trade,technological change,transport costs
    JEL: F10 F23 O33
    Date: 2015
  4. By: Chen, Natalie; Juvenal, Luciana
    Abstract: We explore whether the global financial crisis has had heterogeneous effects on traded goods differentiated by quality. Combining a dataset of Argentinean firm-level destination-specific wine exports with quality ratings, we show that higher quality exports grew faster before the crisis, but this trend reversed during the recession. Quantitatively, the effect is large: up to nine percentage points difference in trade performance can be explained by the quality composition of exports. This flight from quality was triggered by a fall in aggregate demand, was more acute when households could substitute imports by domestic alternatives, and was stronger for smaller firms' exports.
    Keywords: Exports; Heterogeneity; Multi-product firms; Quality; Trade collapse; Unit values; Wine
    JEL: F10 F14 F41
    Date: 2015–11
  5. By: Kym Anderson; Anna Strutt
    Abstract: Rapid growth in Asia’s emerging economies has boosted export earnings of resource-rich economies over the past decade. Whether or not those high growth rates continue, how will structural changes in Asia alter the relative importance of their imports of primary products? This paper projects production and trade patterns of Africa and Latin America to 2030 under various growth and policy scenarios in Asia, using the GTAP model of the global economy. We compare a projection assuming relatively conservative economic growth in China and India with a projection in which those economies continue to grow rapidly (albeit slower than in the previous decade). We then compare our conservative growth baseline with two alternative scenarios: one assuming Africa and Latin America choose to invest more in public agricultural R&D to take advantage of Asian import growth; the other assuming China and India dampen that import growth by restricting their imports of key foodgrains (following the historical pattern of economies such as Japan and Korea). The final section summarizes the results and draws out policy implications for Latin America and Africa.
    Keywords: Global economy-wide model projections; Asian economic growth and structural change; booming sector economics; food security
    JEL: D58 F13 F15 F17 Q17
    Date: 2015
  6. By: Anderson, James (Department of Economics and NBER); Larch, Mario (Rechts- und Wirtschaftswissenschaftliche Facultät); Yotov, Yoto (School of Economics, ERI-BAS & CESifo)
    Abstract: We build and estimate a structural dynamic general equilibrium model of growth and trade. Trade affects growth through changes in consumer and producer prices that in turn stimulate or impede physical capital accumulation. At the same time, growth affects trade, directly through changes in country size and indirectly through altering the incidence of trade costs. The model combines structural gravity with a capital accumulation specification of the transition between steady states. Theory translates into an intuitive econometric system that identifies the causal impact of trade on income and growth, and also delivers estimates of the key structural parameters in our model. Counterfactual experiments based on the estimated model give evidence for strong dynamic relationships between growth and trade, resulting in doubling of the static gains from trade liberalization.
    Keywords: Trade; Growth; Income; Trade Liberalization; Capital Accumulation
    JEL: F10 F43 O40
    Date: 2015–07–10
  7. By: Carl Gaigne (INRA); Anne-Celia Disdier (Paris School of Economics-INRA); Jose de Sousa (University of Paris-Sud)
    Abstract: Does demand volatility matter for exports? How do exporting firms deal with skewed demand? A simple model of risk aversion shows that exporters react to an increase in demand volatility in destination markets by increasing their export prices and decreasing their export volumes. In sharp contrast, exporters decrease prices and increase volumes when demand skewness rises. We also show that the moments of the distribution of demand affect the extensive margin of trade. These theoretical predictions are put to the test by using French firm-level exports across destination markets with different levels of demand volatility and skewness. The firm-level results, over the period 2000-2009, are broadly consistent with our predictions.
    Date: 2015
  8. By: Hayakawa, Kazunobu; Okubo, Toshihiro; Ito, Tadashi
    Abstract: This paper presents the novel finding that two-way intra-industry trade (IIT) in product–country pairs is very unstable over time by using disaggregated trade data of OECD countries. Many products frequently switch among two-way, one-way and zero trade over time. To measure the stability of two-way trade, we propose a measure that we refer to as the "IIT stability index". Our estimation results using the proposed measure show that two-way trade involving markets of different sizes and long distance are likely to be unstable. In addition, primary products are more unstable than manufactured products.
    Keywords: International trade, Industry, Two-way trade, Intra-industry trade, Stability
    JEL: F10 F14
    Date: 2015–10
  9. By: Anderson, James (Department of Economics and NBER); Borchert, Ingo (Department of Economics); Mattoo, Aaditya (Economics Research Group (DECTI),); Yotov, Yoto (School of Economics)
    Abstract: A structural gravity model is used to estimate barriers to services trade across many sectors, countries and time. Since the disaggregated output data needed to infer border barriers are often missing for services, we derive a novel methodology for projecting output data. The empirical implementation sheds light on the role of institutions, geography, size and digital infrastructure as determinants of border barriers. We find that border barriers have generally fallen over time but there are differences across sectors and countries. Notably, border effects for the smallest economies have remained stable, giving rise to a divergent pattern across countries.
    Keywords: Gravity; Services Trade; Trade Costs in Services; Home Bias; Border e ffects
    JEL: F13 F14 F16
    Date: 2015–10–12
  10. By: Kangni KPODAR (International Monetary Fund (IMF)); Patrick IMAM (FERDI)
    Abstract: This paper assesses how regional trade agreements (RTAs) impact growth volatility on a worldwide sample of 170 countries with data spanning the period 1978-2012. Notwithstanding concerns that trade openness through RTAs can heighten exposure to shocks, in particular when it leads to increased product specialization, RTAs through enhanced policy credibility, improved policy coordination, and reduced risk of conflicts can ease growth volatility. Empirical estimations suggest the benefits outweigh the costs as RTAs are consistently associated with lower growth volatility, after controlling for trade openness and other determinants of growth volatility. Furthermore, regression results also suggest that countries that are more prone to shocks are more likely to join a RTA, in particular with countries with relatively less volatile growth, additionally enhancing the stabilization effect.
    JEL: F13 F15 F43
    Date: 2015–11
  11. By: Nathalie Scholl (Georg-August-University Göttingen)
    Abstract: Since the expansion of world trade in the 1980s, measures of inequality have risen not only in developed countries, but also throughout the developing world. This stylized fact is contrary to the predictions of classical trade theory that in countries with high endowments of unskilled labor, their wages should rise relative to those of skilled labor. This paper empirically tests the effects of trade on wage inequality in a differentiated panel framework where countries are classified according to their relative human capital endowments, constituting also the relevant comparative advantage in trade. Employing a newly constructed measure of technological change, an important source of omitted variable bias, not yet addressed in the literature, is removed. With the inclusion of this measure, several effects otherwise attributed to trade disappear, underscoring the importance of controlling for technological change. Technology transfer as well as technological change is found to take place particularly in industries and trade flows classified as medium-technology intensive. Evidence is also found for pure “trade”- effects, supporting the Heckscher-Ohlin predictions of the effects of trade on wage inequality once the heterogeneity of the trading partners and the traded goods is taken into account.
    Keywords: Wages; Inequality; Trade; Technology Transfer
    JEL: F14 F16 J31
    Date: 2015–11–05
  12. By: Ferraz, Lucas Pedreira do Couto; Ribeiro, Marcel; Monasterio, Pedro
    Abstract: This article proposes an alternative methodology for estimating the effects of non-tariff measures on trade flows, based on the recent literature on gravity models. A two-stage Heckman selection model is applied to the case of Brazilian exports, where the second stage gravity equation is theoretically grounded on the seminal Melitz model of heterogeneous firms. This extended gravity equation highlights the role played by zero trade flows as well as firm heterogeneity in explaining bilateral trade among countries, two factors usually omitted in traditional gravity specifications found in previous literature. Last, it also proposes a economic rationale for the effects of NTM on trade flows, helping to shed some light on its main operating channels under a rather simple Cournot’s duopolistic competition framework.
    Date: 2015–09–10
  13. By: Frensch, Richard; Hanousek, Jan; Kocenda, Evzen
    Abstract: Using the factor-proportion based gravity framework we identify driving forces for trade in parts and components. We test our model empirically by using a detailed and large data set of European trade in parts and components of capital goods and show that such trade between East and West Europe is driven by relative supply-side country differences, compatible with models of incomplete specialization and trade. We take our results as evidence for the existence of international East-West production networks in Europe, driven by trade-offs between wages and coordination costs. Our results also reveal that in response to stronger relative wage differences trade in parts and components across Europe is predominantly realized along the extensive margin.
    Keywords: European Union; gravity model; international trade; panel data; production networks
    JEL: C23 F14 F23
    Date: 2015–11
  14. By: Korschun, Daniel (Department of Marketing); Dimitrova, Boryana (Department of Marketing); Yotov, Yoto (School of Economics, ERI-BAS & CESifo)
    Abstract: We examine the linkage between country reputation and export volume by matching data from a global survey in twenty countries around the world with actual export data to fifty of their trading partners. We argue that country reputation can be a novel means to reduce quality uncertainty and relational uncertainty, thereby enhancing export volume. We test the hypotheses using the well-established structural model of international trade. We find that each improvement in a world ranking of a country’s reputation for products in a target country is associated with a 2% increase in exports to that particular country (an effect equivalent to the importing country decreasing a tariff by as much as 2.9%). Furthermore, different aspects of country reputation – for its products and its people – attenuate distinct forms of uncertainty, and thereby stimulate export volume in distinct ways. We examine the linkage between country reputation and export volume by matching data from a global survey in twenty countries around the world with actual export data to fifty of their trading partners. We argue that country reputation can be a novel means to reduce quality uncertainty and relational uncertainty, thereby enhancing export volume. We test the hypotheses using the well-established structural model of international trade. We find that each improvement in a world ranking of a country’s reputation for products in a target country is associated with a 2% increase in exports to that particular country (an effect equivalent to the importing country decreasing a tariff by as much as 2.9%). Furthermore, different aspects of country reputation – for its products and its people – attenuate distinct forms of uncertainty, and thereby stimulate export volume in distinct ways.
    Keywords: Country Reputation; International Trade; Gravity
    JEL: F13 F14 F16
    Date: 2015–10–01
  15. By: Ferraz, Lucas Pedreira do Couto; Gutierre, Leopoldo; Cabral, Rodolfo Arruda
    Abstract: This article presents a comprehensive and detailed overview of the international trade performance of the manufacturing industry in Brazil over the last decades, emphasizing its participation in Global Value Chains. It uses information from recent available global inputoutput tables such as WIOD (World Input-output database) and TIVA (Trade in Value Added, OECD) as well as complementary information from the GTAP 8 (Global Trade Analysis Project) database. The calculation of a broad set of value added type indicators allows a precise contextualization of the ongoing structural changes in the Brazilian industry, highlighting the relative isolation of its manufacturing sector from the most relevant international supply chains. This article also proposes a public policy discussion, presenting two case studies: the first one related to trade facilitation and the second one to preferential trade agreements. The main conclusions are twofold: first, the reduction of time delays at customs in Brazil may significantly improve the trade performance of its manufacturing industry, specially for the more capital intensive sectors which are generally the ones with greater potential to connection to global value chains; second, the extension of the concept of a “preferential trade partner” to the context of the global unbundling of production may pave the way to future trade policy in Brazil, particularly in the mapping of those partners whose bilateral trade relations with Brazil should receive greater priority by policy makers.
    Date: 2015–09–10
  16. By: Halliday,Timothy; Lederman,Daniel; Robertson,Raymond
    Abstract: Mexican wage inequality rose following Mexico's accession to the General Agreement on Tariffs and Trade/World Trade Organization in 1986. Since the mid-1990s, however, wage inequality has been falling. Since most trade models suggest that output prices can affect factor prices, this paper explores the relationship between output prices and wage inequality. The rise of inequality can be explained by the evolution of the relative price of skill-intensive goods relative to unskilled-intensive goods, but these prices flattened by 1999 and thus cannot explain the subsequent decline in wage inequality. An alternative trade model with firm heterogeneity driven by variations in the relative price of tradable relative to non-tradable goods can explain the decline in wage inequality. The paper compares this model?s predictions with Mexican inequality statistics using data on output prices, census data, and quarterly household survey data. In spite of the model's simplicity, the model?s predictions match Mexican variables reasonably well during the years when wage inequality fell.
    Keywords: Economic Theory&Research,Trade Policy,Emerging Markets,Labor Policies,Markets and Market Access
    Date: 2015–11–03
  17. By: Asongu, Simplice; Efobi, Uchenna; Beecroft, Ibukun
    Abstract: We investigate how foreign aid dampens the effects of terrorism on FDI using interactive quantile regressions. The empirical evidence is based on 78 developing countries for the period 1984-2008. Bilateral and multilateral aid variables are used, while terrorism dynamics entail: domestic, unclear, transnational and total number of terrorist attacks. The following findings are established. First, while the effects of multilateral aid are consistently significant with positive threshold evidence, bilateral aid is only positively significant in bottom quantiles. Second, with the slight exception of transnational terrorism in bilateral aid regressions, the impacts of terrorism dynamics are unexpectedly positive, in: (i) bottoms quantiles with domestic terrorism and the 0.25th quantile with total terrorism, for bilateral aid regressions, and (ii) the 0.25th quantile with domestic terrorism and bottom quantiles of transnational terrorism, for multilateral aid regressions. Third, interactions between terrorism and foreign aid dynamics unexpectedly yield negative effects in: (i) bilateral aid and domestic terrorism in bottom quantiles and (ii) multilateral aid and domestic (transnational) terrorism in the 0.25th(bottom) quantile(s). The modifying threshold value of bilateral aid is higher than that of multilateral aid. Fourth, there is positive threshold evidence from GDP growth, infrastructural development and trade openness. Policy implications are discussed.
    Keywords: FDI; Foreign aid; Terrorism; Quantile regression
    JEL: C52 D74 F23 F35 O40
    Date: 2015–05
  18. By: EZZAHID, Elhadj; MAOUHOUB, Brahim
    Abstract: Moroccan economic policy was oriented since mid-1980s to open and liberalize the economy. The openness policy was reinforced with trade flows liberalization in 1993 with accession to article VIII of IMF status. In a new step, the opening of the economy is reached after accession to the GATT and WTO and the conclusion of many bilateral free trade agreements in the end of 1990s and the beginning of the new millennium. Recently, the openness is accelerated in the area of capital flows liberalization with the objective to eliminate the restrictions on capital inflows and then on capital outflows. Thus, the recent capital account dynamics lead us to attempt to evaluate their effects on main macroeconomic variables. For this, we start the discussion by recalling the theoretical debate around external financial liberalization and lessons obtained from the recent experience. After this, we discuss the opportunity for Morocco, as small and open economy, to integrate international financial markets. Methodologically, we use a Structural Vector Auto-Regressive (SVAR) model to explore the interaction between capital flows and macroeconomic variables. The period of study is from 1980 to 2012. The results allow us to conclude that capital account liberalization has a major effect on real effective exchange rate. Capital inflows lead to a temporary depreciation of the real effective exchange rate during the first year and, then, to an appreciation starting from the second year. Precisely, the results confirmed that the conduct of capital account liberalization policy under a fixed exchange rate regime is conducive to the risk of real appreciation.
    Keywords: Capital account liberalization, Capital flows, macroeconomic performance, SVAR, Morocco.
    JEL: F31 F36 G15
    Date: 2015–11
  19. By: ZHANG Hongyong; ZHU Lianming
    Abstract: In this paper, we empirically investigate the effect of foreign affiliates on the relationship between exports and markups of Chinese firms. After recovering quantity-based firm markups by correcting for both output and input price biases, we find evidence that exporters charge higher markups than non-exporters, and this effect is substantially less pronounced for foreign affiliates. We further decompose markups into a price and cost effect and find that the cost effect accounts for the lower markups of foreign-owned exporters. Our results suggest that foreign-owned exporters have a price premium but higher marginal costs on average.
    Date: 2015–11
  20. By: Konstantins Benkovskis (Bank of Latvia); Santa Berzina (Bank of Latvia); Liva Zorgenfreija (Bank of Latvia)
    Abstract: We use an anonymised firm-level trade database provided by the CSB to evaluate Latvia's re-exports. We obtain estimates of re-export flows and the corresponding re-export mark-ups by solving a linear maximisation problem for each firm-product pair. We find that the share of re-export flows in the total merchandise exports and imports is significant and follows an increasing trend. The share of re-exports is especially important in product groups, such as transport vehicles, plastics, mineral products, as well as machinery and electrical equipment. The majority of re-export flows is directed to Latvia's closest neighbours Lithuania and Estonia, suggesting that the country serves as a sort of a regional transport hub. We also find that the average re-export mark-ups were sizeable allowing us to conclude that re-export operations may also provide an important contribution to Latvia's GDP.
    Keywords: re-exports, firm-level data, Latvia, simplex
    JEL: D22 F14
    Date: 2015–11–09
  21. By: Carmen D. Álvarez-Albelo (University of La Laguna); Antonio Manresa (CREB, Universitat de Barcelona); Monica Pigem-Vigo (CREB, Universitat de Barcelona)
    Abstract: This paper studies the role of trading partner’ growth and a domestic import tariff in the possibility of growing through trade. To this purpose, a Ricardian model is developed in which a backward economy seeks to increase its long-run growth rate simply by trading with a faster growing partner. It is found that domestic growth may be either negatively affected or unaffected by a domestic import tariff, while it is always positively impacted by foreign growth. Furthermore, convergence in growth rate can emerge both with an import tariff and under free trade. Ours results are consistent with the empirical evidence.
    Keywords: Growing through trade, technological differences, trading partner’ growth, import tariff
    JEL: F43 O24 O41
    Date: 2015–11
  22. By: Gene M. Grossman; Elhanan Helpman; Ezra Oberfield; Thomas Sampson
    Date: 2015–01
  23. By: Michele Imbruno; Rosanna Pittiglio; Filippo Reganati
    Abstract: This paper theoretically and empirically studies – using data from Italian manufacturing firms – how the foreign presence in the intermediate good sector (i.e. input FDI) affects firm efficiency and aggregate productivity within final good sector. We show that an important role is played by the absorptive capacity. More specifically, if all firms are able to use intermediate inputs from foreign-owned suppliers, then all of them will enjoy productivity gains from input FDI without any reallocation effect. Conversely, if only the most productive firms can use intermediate inputs from foreign-owned suppliers, while these firms can enhance further their efficiency, the other firms might suffer productivity losses from input FDI, causing some reallocation effects within final good sector.
    Keywords: Heterogeneous firms, multinationals, FDI, intermediate inputs, productivity
    Date: 2015
  24. By: Vrh, Nataša
    Abstract: The phenomenon of global value chains highlighted the issue of domestic value-added in exports (DVA) and led to the development of alternative trade measures in value-added terms. These, inter alia, enabled an estimation that shows that New EU countries from Central and Eastern Europe (NMS-10) experience an approximately 5 percentage points lower DVA share as compared to old EU countries (EU-15). The lag is on average the highest in knowledge-intensive manufacturing sectors (8 percentage points) and the lowest in knowledge-intensive services (0.3 percentage points). However, this paper follows the assumption that NMS-10 have acquired new knowledge by participating in Global Value Chains (GVCs), and thus gradually started increasing their DVA. Based on the empirical application of the EU trade data, I found that convergence in terms of DVA in exports can be observed in manufacturing, and especially in the services sectors. Additionally, I find that for NMS-10 countries negative relationship between participation in GVCs and DVA in exports is slightly decreasing over time in both sectors.
    Keywords: global value chains, international trade, value added in exports
    JEL: C67 F02 F14
    Date: 2015–11
  25. By: Gianmarco Ottaviano; Giovanni Peri; Greg C. Wright
    Abstract: Two notable features of globalisation are the growth of immigration and the growth of international trade in services. Exploring links between these phenomena, Gianmarco Ottaviano, Giovanni Peri and Greg Wright find that immigrants play a key role in promoting UK exports of business and legal services - not just to their home countries but across the world.
    Keywords: immigration, services trade
    Date: 2015–11
  26. By: Lindic, Mojca
    Abstract: This paper studies the effects of outsourcing and offshoring on the skill structure of firms. The study verifies whether controlling for both activities in one model alters previous empirical studies, which controlled only for one factor in their models; whether controlling for destination country of outsourcing and offshoring brings new insights; and whether controlling for occupational level of workers when defining skills brings additional contribution to the results. Regarding the latter, besides the conventional approach for defining skills, i.e. the educational level, skills are also defined by three major occupational groups; Managers, Professionals and Technicians. To empirically estimate the abovementioned hypotheses, a matched employer-employee dataset for Slovenian manufacturing and service firms during 1997 to 2010, and the methods for panel data analysis were used. Results of the model on average show a positive impact of offshoring on the skill share of firms, while the results for outsourcing are uncommon. When controlling for high- and low-income countries, the results for manufacturing firms show a positive and similar effect of offshoring to both groups of countries on the share of skilled employees. In service firms, results show a weaker impact of offshoring to high-income countries on the relative employment of skilled, compared to offshoring to low-income countries. When taking into account also occupational levels for defining skills, the results show that the impact of education differs between occupational groups, indicating that firms differentiate between more and less educated individuals within the same occupational group.
    Keywords: offshoring, outsourcing, skill structure of firms
    JEL: F14 F16
    Date: 2015–11
  27. By: Ángel Luis González (Universidad de Salamanca, Salamanca, Spain); Vicente Pinilla (Universidad de Zaragoza, Zaragoza, Spain); Raúl Serrano (Universidad de Zaragoza, Zaragoza, Spain)
    Abstract: The objective of the present study is to offer a general overview of the evolution of international trade in agricultural and food products between 1945 and 1960. The developed countries not only maintained policies of stimulating agricultural production implemented during the war, but also deepened their intervention and support with regard to the agricultural sector. The culmination of such policies was, in the case of Western Europe, the creation of the European Economic Community in 1957 and the implementation of the Common Agricultural Policy. This was one of the first community-wide policies and had a notable impact on international agricultural trade.To achieve the objective proposed we concentrate on two principal themes. On the one hand a reconstruction will be performed of the international flows of agricultural trade for that period. Furthermore, we shall attempt to analyse the principal determinants of the development of agricultural trade, paying special attention to the political economy which led to the taking of crucial decisions for its evolution, such as its exclusion from the GATT agreements.
    Keywords: Agrifood trade, GATT, Agricultural protectionism, Agricultural trade policies, Post-war agricultural policies
    JEL: F13 N50 N70 Q17
    Date: 2015–10
  28. By: TOKUNAGA Suminori; AKUNE Yuko; IKEGAWA Maria; OKIYAMA Mitsuru
    Abstract: In the first part of this paper, we found positive but weak agglomeration economies resulting from agglomeration and coagglomeration in Japan's manufacturing industry during 1995-2010 using panel data of two-digit and four-digit Standard Industrial Classification of Census of Manufactures and Ellison and Glaeser's (1997) agglomeration index with the same industry and coagglomeration index with different industry groups. On the other hand, in the latter part of this paper, based on the new economic geography (NEG) model, we examined location decision, particularly market potential which appropriate way to take into account the spatial distribution of demand in location choice, supplier access, and agglomeration effects. Especially, we used a Krugman's type market potential using the data of bilateral trade from 1995-2009 in East Asia. After calculating this Krugman market potential and supplier access data, we conducted the logit estimation of country choice of Japanese food, electronics, and automobile firms in 11 East Asia countries including China (mainland), Hong Kong, India, Indonesia, Korea, Malaysia, Philippines, Singapore, Taiwan, Thailand, and Vietnam, and analyzed the determinants of the location choice for Japanese electronics firms. From the estimated results, we found wage, infra, Krugman market potential as market demand and supplier access as market supply, and vertical agglomerations such as Japanese final goods and intermediate goods affiliates agglomeration which show agglomeration economies have affected Japanese industry investment in East Asia.
    Date: 2015–11
  29. By: Olena Ivus (Queen's University); Walter Park (American University); Kamal Saggi (Vanderbilt University)
    Abstract: In a North-South model with endogenous FDI, we examine the impact of Southern IPR protection on the mode and industrial composition of international technology transfer. A novel feature of the model is that, due to technological reasons, industries differ with respect to their susceptibility to imitation. In equilibrium, licensing occurs in industries where the risk of imitation is low and FDI where it is of intermediate magnitude. Stronger IPRs in the South (i) alter the industrial composition of multinational activity towards licensing at the expense of FDI; (ii) reduce local imitation; and (iii) increase licensing and, to a lesser extent, FDI.
    Keywords: trade, intellectual property rights, licensing, FDI, technology transfer
    JEL: F1 O3
    Date: 2015–11–06
  30. By: Dermot J. Hayes (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI))
    Abstract: Testimony before the House Committee on Agriculture
    Date: 2015–11
  31. By: Uri Dadush
    Abstract: International trade has become a pervasive feature of our lives, yet it remains controversial and resisted across the world.High and rising income inequality, which is often blamed on international trade, especially trade with China, is one reason.But the main driver of inequality is new technology, not international trade. Although trade interacts with new technology in ways that often lead to higher inequality, trade and technology also lie at the root of economic advance. So the solution is to adapt to them, not to stop them. In Morocco, improved education outcomes are very important in this regard.
    Keywords: Trade, inequality, globalization, growth, labor, technology, industry, manufacturing, Morocco, integration
    Date: 2015–10
  32. By: Congressional Budget Office
    Abstract: A carbon tax or cap-and-trade program could make emission-intensive U.S. products less competitive and increase emissions overseas. Import tariffs related to emissions could reduce those effects but would be hard to implement.
    Date: 2013–12–19

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