nep-int New Economics Papers
on International Trade
Issue of 2016‒03‒23
27 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. EU Accession and Foreign Owned Firms in Bulgaria By Zadia M. Feliciano; Nadia Doytch
  2. Understanding UK trade agreements with the EU and other countries By Minford, Patrick
  3. The Impact of Trade Agreements on Consumer Welfare By Berlingieri, Giuseppe; Breinlich, Holger; Dhingra, Swati
  4. Distribution Costs, Product Quality, and Cross-Country Income Differences By Bernardo Blum; Sebastian Claro; Kunal Dasgupta; Ignatius Horstmann
  5. Accounting for the New Gains from Trade Liberalization By Chang-Tai Hsieh; Nicholas Li; Ralph Ossa; Mu-Jeung Yang
  6. Revisiting growth accounting from a trade in value-added perspective By Escaith, Hubert
  7. Foreigners Knocking on the Door: Trade in China During the Treaty Port Era By Wolfgang Keller; Javier Andres Santiago; Carol H. Shiue
  8. The Purpose of Trade Agreements By Grossman, Gene
  9. Bank internationalization and firm exports: evidence from matched firm-bank data By Raffaello Bronzini; Alessio D'Ignazio
  10. Optimal environmental border adjustments under the General Agreement on Tariffs and Trade By Edward Balistreri; Daniel Kaffine; Hidemichi Yonezawa
  11. Impact of Trade Openness and Sector Trade on Embodied Greenhouse Gases Emissions and Air Pollutants By Islam, Moinul; Kanemoto, Keiichiro; Managi, Shunsuke
  12. Terrorism, Trade and Welfare: Some Paradoxes and a Policy Conundrum By Bandyopadhyay, Subhayu; Sandler, Todd; Younas, Javed
  13. A tale of two globalizations : gains for trade and openness 1800-2010 By Tena Junguito, Antonio; Federico, Giovanni
  14. Do environmental policies affect global value chains?: A new perspective on the pollution haven hypothesis By Tomasz Koźluk; Christina Timiliotis
  15. International Trade with Indirect Additivity By Paolo Bertoletti; Federico Etro; Ina Simonovska
  16. Do political institutions influence international trade? Measurement of institutions and the Long-Run effects By Krenz, Astrid
  17. Vertical Differentiation, Uncertainty, Product R&D and Policy Instruments in a North-South Duopoly By Julien Berthoumieu; Viola Lamani
  18. An equilibrium displacement approach to analyzing the effects of tariff reduction on farmers' profits: The Korea-Chile FTA's effects on Korean grape producers By Ahn, Byeong-il; Im, Jeong-bin
  19. Fringe Benefits and Import Competition By Tempesti, Tommaso
  20. Special and Differential Treatment for Developing Countries By Emanuel Ornelas
  21. Globalization and Political Structure By Gancia, Gino A; Ponzetto, Giacomo AM; Ventura, Jaume
  22. The Global Diffusion of Ideas By Francisco J. Buera; Ezra Oberfield
  23. The China Shock: Learning from Labor Market Adjustment to Large Changes in Trade By David H. Autor; David Dorn; Gordon H. Hanson
  24. The trade impacts of a food scare: The Fonterra contamination incident By Stojkov, Katarina; Noy, Ilan; Sağlam, Yiğit
  25. R&D Competitions and Firms'International Expansions By Maria Luisa Petit; Francesca Sanna-Randaccio
  26. International Discipline on SOEs: Development of fair competition rules (Japanese) By TOJO Yoshizumi
  27. Markup responses to Chinese imports By Meinen, Philipp

  1. By: Zadia M. Feliciano; Nadia Doytch
    Abstract: Bulgaria signed the Europe Association Agreement (EAA) in 1995 and the European Union accession treaty in 2005. Accession had the effect of increasing FDI in Bulgaria. We analyze World Bank BEEPS firm level data for 2007 to better understand characteristics and performance of foreign firms in Bulgaria. We estimate linear probability and logit models to determine the likelihood a firm is foreign in Bulgaria. Regressions show foreign manufacturing firms in Bulgaria are larger than domestic firms, have lower capital to labor ratios and are more likely to export. Foreign service sector firms are larger than domestic firms, have lower capital to labor ratios, are more likely to export and to locate in Sofia, the capital. Our analysis points to limited success of foreign firms in Bulgaria. Regressions show foreign manufacturing firms do not have higher sales growth and made less capital investments than domestic firms. Foreign firms in the service sector did not experience faster sales growth or had greater capital investments than domestic firms. Institutional indicators show manufacturing and service sector firms with larger fractions of exports relative to sales had a greater number of visits from tax officials. This suggests that exporting firms receive larger scrutiny than other firms, which represents a challenge to foreign firms in Bulgaria.
    JEL: F15 F21 F23
    Date: 2016–01
  2. By: Minford, Patrick (Cardiff Business School)
    Abstract: Recent work has exposed the extent of EU protectionism within the single market Customs Union. If the UK leaves the EU customs union for unilateral free trade, as a small country within the world market, it will therefore make gains according to the standard trade model. Should it do so, trade agreements with other small countries would simply divert UK trade to these markets without affecting UK trade or output overall – hence while harmless they are also pointless. Trade agreements with large countries or country-blocs should be treated with care, since while they might give scope for UK industries to enjoy higher prices on all their output by diverting trade to these markets, they could come at a cost in higher prices for imports as in the case of the EU customs union. If having left the EU the UK finds a large country willing to offer a beneficial free trade agreement, it is likely to be easier to conclude with the UK outside the EU than with it as part of the EU, because of the complex and varied industrial interests of the EU as whole compared with the more limited interests of the UK. Already in services which are in general not governed by EU trade rules UK trade takes place under WTO rules and is also closely integrated with other countries’ markets such as the US and most Commonwealth countries.
    Date: 2016–03
  3. By: Berlingieri, Giuseppe; Breinlich, Holger; Dhingra, Swati
    Abstract: A central tenet of international economics is that trade liberalization provides welfare gains. This paper contributes to the literature on gains from trade by estimating how trade agreements impact the consumer price index, and by quantifying the sources of their impact on welfare. We infer quality of imported products by estimating demand-side elasticities for the European Union (EU) between 1993 and 2013. Having inferred quality, we estimate the contribution of lower prices, better quality and greater variety to welfare gains from trade agreements. Joining a trade agreement increases welfare through access to higher quality imports. Quality rises by 7% on average, which translates into a cumulative reduction in the consumer price index of 0.18% during the period. Ignoring the quality channel under-estimates the gains from trade agreements because unit values were not significantly impacted by the new agreements.
    Keywords: Elasticity; FTA; Quality; Trade agreement; Unit Values; Variety
    JEL: F1 F5 L6
    Date: 2016–03
  4. By: Bernardo Blum; Sebastian Claro; Kunal Dasgupta; Ignatius Horstmann
    Abstract: We show that the efficiency of countries’ distribution systems help determine the quality of goods produced and traded, i.e., is a source of comparative advantage in quality. Using the structure of our model and shipment-level imports data from Chile, we estimate the efficiency of trade distribution systems for a sample of 86 countries. We find that the implied efficiency of distribution systems vary widely across countries, with the 90th percentile value of per- shipment costs being almost 150 percent larger than the 10th percentile value. After calibrating the parameters of the model, we show that differences in the efficiency of distribution systems can generate more than half of the observed (in the data) elasticity of export prices with respect to per capita income. Moreover, the welfare effects of reducing inefficiencies in distribution systems via quality upgrading are larger than the effects via trade volumes.
    Keywords: Distribution cost, per-shipment cost, quality, comparative advantage
    JEL: F10 F12
    Date: 2016–03–11
  5. By: Chang-Tai Hsieh; Nicholas Li; Ralph Ossa; Mu-Jeung Yang
    Abstract: We measure the "new" gains from trade reaped by Canada as a result of the Canada-US Free Trade Agreement (CUSFTA). We think of the "new" gains from trade of a country as all welfare effects pertaining to changes in the set of firms serving that country as emphasized in the so-called "new" trade literature. To this end, we first develop an exact decomposition of the gains from trade which separates "traditional" and "new" gains. We then apply this decomposition using Canadian and US micro data and find that the "new" welfare effects of CUSFTA on Canada were negative.
    Keywords: Gains from trade, trade liberalization, CUSFTA
    JEL: F10 F12 F14
    Date: 2016–03
  6. By: Escaith, Hubert
    Abstract: Global Manufacturing and International Supply Chains changed the way trade and international economics are understood today. The present essay builds on recent statistical advances to suggest new ways of looking at the demand and supply side approaches when Global Value Chains (GVCs) - articulating supply and demand chains from an international perspective - are taken into consideration. This pilot case focuses on the G-20 countries, a group of leading developed and developing economies which took a prominent role in fostering and managing global economic governance. The paper is organised into two independent parts. The demand dynamics is first analysed through a growth-accounting decomposition, then through the long term determinants of income elasticity of imports. The second part looks at the implications of global manufacturing for our understanding of the supply-side growth dynamics, privileging a trade perspective: the definition of comparative advantages and the potential for value-chain upgrading.
    Keywords: global value chains,trade and development,growth accounting,import elasticity,revealed comparative advantages,competitiveness benchmarking
    JEL: C18 C67 F14 F19 F43 O11 O19 O41 O47 O57
    Date: 2016
  7. By: Wolfgang Keller; Javier Andres Santiago; Carol H. Shiue
    Abstract: We employ a new, commodity-level dataset on the flow of goods between fifteen major treaty ports to estimate a general-equilibrium trade model for China around the year 1900. The distribution of welfare effects depends critically on each port’s productivity, China’s economic geography because it affects trade costs, and the extent of regional diversity in production because this affects the potential gains from trade. We utilize this framework to quantify the size and distribution of welfare effects resulting from new technology and lower trade costs that came with the treaty ports. Findings show that domestic markets resulted in ripple effects which transmitted the effect of the international trade opening beyond the foreign concessions. However, because differences in relative productivity across regions were relatively low, the welfare gains from domestic trade improvements were limited.
    JEL: F11 F15 N15 O1
    Date: 2016–01
  8. By: Grossman, Gene
    Abstract: This paper reviews the literature on governments' motivations for negotiating and joining international trade agreements. I discuss both normative explanations for trade agreements and explanations based on political-economy concerns. Most of the paper focuses on the purpose of multilateral agreements, but I do discuss briefly the reasons we might see governments forming preferential or regional trade agreements that exclude some countries.
    Keywords: international cooperation; multilateralism; regionalism; Trade agreements; trade pacts
    JEL: F13 F53 K33
    Date: 2016–03
  9. By: Raffaello Bronzini (Bank of Italy); Alessio D'Ignazio (Bank of Italy)
    Abstract: In this paper we investigate whether new exporter firms have a higher probability of starting to export to the countries where their financing banks have already established their branches. The underlying mechanism we hypothesize is based on the transmission of foreign market knowledge from banks to firms, so as to cut down information barriers to international trade. In those countries where such information is arguably more precious to the firm, we found a significant positive relationship between a firm’s probability of beginning to export to one market, and the presence in the same market of a branch of the firm’s financing bank. Coherently with the mechanism hypothesized, we find a stronger effect for closer firm-bank relationships, and when banks have established their branches abroad over a longer time period.
    Keywords: internationalization, export, bank-firm relationships
    JEL: F10 G21
    Date: 2016–02
  10. By: Edward Balistreri (Colorado School of Mines); Daniel Kaffine (University of Colorado Boulder); Hidemichi Yonezawa (ETH Zurich, Switzerland)
    Abstract: A country's optimal environmental border policy includes a strategic component that is inconsistent with commitments under the General Agreement on Tariffs and Trade (GATT). We extend the theory to include GATT compliance. Theory supports optimal border adjustments on carbon content that are below the domestic carbon price, because price signals sent through border adjustments encourage consumption of emissions intensive goods in unregulated regions. The theory is supported in our applied numeric simulations. Countries imposing border adjustments at the domestic carbon price will be extracting rents from unregulated regions at the expense of ecient environmental policy and consistency with international trade law.
    Keywords: climate policy, border tax adjustments, carbon leakage, trade and carbon taxes
    JEL: F13 F18 Q54 Q56
    Date: 2016–03
  11. By: Islam, Moinul; Kanemoto, Keiichiro; Managi, Shunsuke
    Abstract: The production of goods and services generates greenhouse gases (GHGs) and air pollution both directly and through the activities of the supply chains on which they depend. The analysis of the latter—called embodied emissions—in the cause of internationally traded goods and services is the subject of this paper. We find that trade openness increases embodied emissions in international trade (EET). We also examine the impact of sector trade on EET. By applying a fixed-effect model using large balanced panel data from 187 countries between 1990 and 2011, we determine that each unit of increase in trade openness results in a 10% to 23% increase in GHG embodied emissions (EE). The sector trade effect is also significant for the EE of carbon dioxide (CO2), methane (CH4) nitrous oxide (N2O), carbon monoxide (CO), non-methane volatile organic compounds (NMVOCs), particulates (PM10 ) and sulfur dioxide (SO2). Our findings also clearly indicate that the impact of the GDP on the EE of exports is positive, increasing emissions, but that it is negative on the EE of imports. We suggest that countries monitor trade sector emissions and trade openness to mitigate global embodied GHG emissions and air pollutants.
    Keywords: environmental economics; greenhouse gases (GHGs); industrial ecology; input-output analysis; international trade; trade and environment
    JEL: F1 F18 L52
    Date: 2016–03–08
  12. By: Bandyopadhyay, Subhayu (Federal Reserve Bank of St. Louis); Sandler, Todd (University of Texas at Dallas); Younas, Javed (American University of Sharjah)
    Abstract: We present a standard trade model and show that terrorism can be trade inducing, starting from autarky. In addition, terrorism can be shown to be welfare augmenting for a group of nations. Finally, we present some qualitative conditions that identify when a nation’s trade volume may rise (or fall) in response to a greater incidence of terrorism. Our trade and welfare results point to potential difficulties in international coordination of counterterrorism policy because of terrorism’s differential impact across nations.
    Keywords: Terrorism; Trade; Welfare
    JEL: F11 F52 H56
    Date: 2016–03–01
  13. By: Tena Junguito, Antonio; Federico, Giovanni
    Abstract: This paper compares the wave of globalization before the outbreak of the Great Recession in 2007 with its alleged historical antecedent before the outbreak of World War One. We describe trends in trade and openness, estimate the gains from trade and investigate the proximate causes of the growth of openness. We argue that the conventional wisdom has to be revised. The first wave of globalization started around 1820 and culminated around 1870. In the next century, trade continued to grow, with the exception of the Great Depression, but openness and gains fluctuated widely. Growth resumed in the early 1970s. By 2007, the world was more open than a century earlier and its inhabitants gained from trade substantially more than their ancestors did. The current wave of globalization, in spite of some similarities with previous trends, has no historical antecedents.
    Keywords: 19th and 20th Century; Gains of trade; Openness; Globalization
    JEL: N10 F14
    Date: 2016–02–01
  14. By: Tomasz Koźluk; Christina Timiliotis
    Abstract: Increasing international fragmentation of production has reinforced fears that industrial activity may flee to countries with laxer environmental policies – in line with the so-called Pollution Haven Hypothesis (PHH). If PHH effects are strong, domestic responses to environmental challenges may prove ineffective or meet strong resistance. Using a gravity model of bilateral trade in manufacturing industries for selected OECD and BRIICS countries over 1990s-2000s, this paper studies how exports are related to national environmental policies. Environmental policies are not found to be a major driver of international trade patterns, but have some significant effects on specialisation. More stringent domestic policies have no significant effect on overall trade in manufactured goods, but are linked to a comparative disadvantage in “dirty” industries, and a corresponding advantage in “cleaner” industries. The effects are stronger for the domestic component of exports than for gross exports, yet notably smaller than the effects of e.g. trade liberalisation. Les politiques environnementales ont-elles une incidence sur les chaînes de valeur mondiales ? : Un nouveau point de vue sur l'hypothèse du havre de pollution La fragmentation internationale croissante de la production a renforcé les craintes de voir l’activité industrielle migrer vers des pays dotés de politiques environnementales plus laxistes – selon ce qu’il est convenu d’appeler « l’hypothèse du havre de pollution » (HHP). Si cette hypothèse se vérifie effectivement, les efforts déployés au niveau national pour faire face aux défis environnementaux pourraient se révéler inopérants ou se heurter à une forte résistance. À l’aide d’un modèle gravitationnel des échanges commerciaux bilatéraux appliqué aux industries manufacturières de certains pays de l'OCDE et des BRIICS sur la période 1990-2009, ce rapport étudie le lien entre les exportations et les politiques environnementales nationales. Il en ressort que les politiques environnementales n’ont pas d’incidence déterminante sur les exportations globales, mais ont un effet significatif sur le spécialisation. Cependant, en modifiant les prix relatifs des intrants, les politiques nationales plus rigoureuses vont de pair avec un désavantage comparatif dans les industries « polluantes », et un avantage correspondant dans les industries « plus propres ». Ces effets sont particulièrement perceptibles pour la composante de valeur ajoutée nationale des exportations, mais sensiblement moins que ceux de la libéralisation des échanges, par exemple.
    Keywords: trade, competitiveness, global value chains, comparative advantage, Pollution Haven Hypothesis, environmental policy stringency, chaînes de valeur mondiales, compétitivité, hypothèse du havre de pollution, échanges commerciaux, politique environnementale
    JEL: F14 F18 Q56 Q58
    Date: 2016–03–10
  15. By: Paolo Bertoletti; Federico Etro; Ina Simonovska
    Abstract: We develop a general equilibrium model of monopolistic competition and trade based on indirectly additive preferences and heterogenous firms. It generates markups independent from destination population but increasing in destination per capita income, as documented empirically. Trade liberalization delivers an increase in consumed variety and incomplete cost pass-through. This leads to welfare gains that can be much lower than those predicted by comparable models with different preferences. We introduce a tractable utility function that further predicts that small firms grow more during trade liberalization and pass through cost changes more than do large firms. Once we estimate the model to match moments from cross-firm and cross-country data we (i) find quantitatively large differences in the welfare gains from trade relative to models based on homothetic preferences, and (ii) evaluate the gains and losses from the Transatlantic Trade and Investment Partnership agreement.
    JEL: D11 D43 F12 L11
    Date: 2016–02
  16. By: Krenz, Astrid
    Abstract: The past literature presents ambiguous evidence about the bidirectional and causal influences between countries´ institutional framework and their trading activity. In our analysis, we investigate the relationship between institutions and trade constructing a measure of institutions from the information given by the International Country Risk Guide and using a methodology that can control for omitted variables bias, endogeneity in the regressors, as well as cross-country heterogeneity. We examine the long-run effects of the political institutional framework on trade for a panel of 87 countries for the period from 1990 to 2007. We employ recent panel econometric methods for testing and estimating in the presence of non-stationarity, investigate panel causality and use methods that are robust to slope heterogeneity. Our results imply that an improved political institutional framework is a cause of increased trading activity.
    Keywords: political institutions,international trade,panel co-integration,cross-country heterogeneity
    JEL: F14 C10
    Date: 2016
  17. By: Julien Berthoumieu (Larefi - Laboratoire d'analyse et de recherche en économie et finance internationales - Université Montesquieu - Bordeaux 4); Viola Lamani (Larefi - Laboratoire d'analyse et de recherche en économie et finance internationales - Université Montesquieu - Bordeaux 4)
    Abstract: This paper analyzes the impact of several trade policy instruments on product Research and Development (R&D) investment in a North-South duopoly where a Northern firm competes in prices with a Southern firm on both markets. The Northern firm invests in product R&D owing to a competitive disadvantage compared to the Southern firm which benefits from a lower labor cost. The outcome of the R&D activity is uncertain. If successful, vertical differentiation occurs in both markets. The Northern country’s government is the only one policy active and may implement the following trade policy instruments: an import tariff, a production subsidy, an R&D subsidy, a standard of quality, a minimum-price, and an import quota. The results show that the Northern firm’s R&D expenditures increase with each policy instrument except for the import quota. The paper also provides a welfare analysis in order to verify whether or not the Northern government is encouraged to implement these policy instruments.
    Keywords: Trade Policy Instruments, Product Research and Development, North-South Duopoly, Vertical Differentiation.
    Date: 2016
  18. By: Ahn, Byeong-il; Im, Jeong-bin
    Abstract: The present study develops an equilibrium displacement model (EDM) to evaluate the impacts of a free trade agreement (FTA) on the profits of individual farmers. The parameters representing the share of profit within revenue and the elasticity of cost with respect to quantity in the cost function play key roles in assessing the change in individual farmers' profit. The application of the developed EDM to assess the impacts of the Korea-Chile FTA indicates that this FTA has little impact on the Korean grape market and grape producers in Korea.
    Keywords: EDM,simulation,tariff reduction,farm profit,cost function
    JEL: F13 F14 Q17
    Date: 2016
  19. By: Tempesti, Tommaso
    Abstract: In the United States fringe benefits are now more than 30% of compensation. While many studies have focused on the impact of trade with developing countries on U.S. wages, not much attention has been given to the impact of such trade on other components of compensation. But if trade affects the share of benefits in compensation, the studies which focus on wages and ignore fringe benefits likely give us biased estimates of the effect of trade on workers’ total compensation and consumption. I use data about individual workers’ fringe benefits from the NLSY79. I focus on workers who worked in manufacturing in 1991 and I follow them up to 2006. I then combine this individual level dataset with a measure of exposure to Chinese imports at the industry level and with an instrument for it, as in Autor et al. (2014). I estimate the effect of Chinese import competition on fringe benefits to be positive and economically and statistically significant. The results are robust to the inclusion of several individual and industry level control variables. Differently from previous studies, my results suggest a more optimistic view of the effect of trade with China on U.S. workers’ overall compensation.
    Keywords: Fringe Benefits; Trade Flows; Compensation
    JEL: F16 I13 J32
    Date: 2015–12–30
  20. By: Emanuel Ornelas
    Abstract: Special and Differential Treatment for Developing Countries (SDT) constitutes a central feature of the GATT/WTO system. Its formal goal is to foster export-led growth in developing countries. Its theoretical foundations and empirical support are, however, weak at best. In particular, SDT conflicts with the GATT's two key principles of reciprocity and nondiscrimination, compromising the efficiency of the multilateral trading system. Still, if SDT provisions help those who most need help, sacrificing economic efficiency may be justifiable. However, there are numerous criticisms, on theoretical and empirical grounds, to the premises and the achievements of SDT-based disciplines, casting serious doubt on its effectiveness in helping developing countries trade and grow. For researchers, the good news is that there is plenty of room for progress, with several important areas where our understanding remains unsatisfactory but progress is feasible---that is, where the expected return to research effort seems unusually high
    Keywords: generalized System of Preferences, preferential tariffs, trade policy, World Trade Organization, terms of trade, firm delocation, export-led growth
    JEL: F13 F55 O19 O24
    Date: 2016–03
  21. By: Gancia, Gino A; Ponzetto, Giacomo AM; Ventura, Jaume
    Abstract: The first wave of globalization (1830-1914) was accompanied by a decline in the number of countries from 125 to 54. The second wave of globalization (1950-present) has led instead to an increase in the number of countries to a record high of more than 190. This paper develops a theoretical framework to study the interaction between globalization and political structure. We show that political structure adapts to expanding trade opportunities in a non-monotonic way. Borders hamper trade. In its early stages, the political response to globalization consists of removing borders by increasing country size. In its later stages, however, the political response to globalization is to remove borders by creating economic unions, and this leads to a reduction in country size.
    Keywords: Globalization; international unions; political structure; size of countries
    JEL: D71 F15 F55 H77 O57
    Date: 2016–03
  22. By: Francisco J. Buera; Ezra Oberfield
    Abstract: We provide a tractable theory of innovation and technology diffusion to explore the role of international trade in the process of development. We model innovation and diffusion as a process involving the combination of new ideas with insights from other industries or countries. We provide conditions under which each country's equilibrium frontier of knowledge converges to a Frechet distribution, and derive a system of differential equations describing the evolution of the scale parameters of these distributions, i.e., countries' stocks of knowledge. In particular, the growth of a country's stock of knowledge depends only on its trade shares and the stocks of knowledge of its trading partners. We use the framework to quantify the contribution of bilateral trade costs to cross-sectional TFP differences, long-run changes in TFP, and individual post-war growth miracles.
    JEL: F1 F43 O33 O47
    Date: 2016–01
  23. By: David H. Autor; David Dorn; Gordon H. Hanson
    Abstract: China’s emergence as a great economic power has induced an epochal shift in patterns of world trade. Simultaneously, it has challenged much of the received empirical wisdom about how labor markets adjust to trade shocks. Alongside the heralded consumer benefits of expanded trade are substantial adjustment costs and distributional consequences. These impacts are most visible in the local labor markets in which the industries exposed to foreign competition are concentrated. Adjustment in local labor markets is remarkably slow, with wages and labor-force participation rates remaining depressed and unemployment rates remaining elevated for at least a full decade after the China trade shock commences. Exposed workers experience greater job churning and reduced lifetime income. At the national level, employment has fallen in U.S. industries more exposed to import competition, as expected, but offsetting employment gains in other industries have yet to materialize. Better understanding when and where trade is costly, and how and why it may be beneficial, are key items on the research agenda for trade and labor economists.
    JEL: F14 J23 J31
    Date: 2016–01
  24. By: Stojkov, Katarina; Noy, Ilan; Sağlam, Yiğit
    Abstract: This paper presents the results of an investigation into the economic implications for New Zealand of the 2013 Whey Protein Concentrate contamination incident. It assesses the impact of this incident on dairy exports using synthetic control methods. A synthetic counterfactual scenario where the incident did not occur is developed using weighted information from other countries unaffected by the scare. We find that there was an initial negative shock to the exports of products that were thought to have been contaminated, but that there were no significant sustained impacts on other dairy products. The affected products made up only a small proportion of New Zealand dairy exports, with the vast majority of dairy exports being unaffected. Infant formula exports appear to have recovered somewhat in the more than a year after the scare, however whey product exports (the contaminated product) remain lower than they otherwise would have been.
    Date: 2016
  25. By: Maria Luisa Petit (La Sapienza University of Rome); Francesca Sanna-Randaccio (Sapienza University of Rome)
    Abstract: This paper examines the impact of the firms'mode of foreign expansion on the incentive to innovate as well as the effects of R&D activities and technological spillovers on the firms' international strategy. We consider a two country imperfect competition model where the firms' face three different type of decisions: how to expand abroad, how much to spend in R&D and how much to sell in each market Market structure is therefore endogenously determined as the equilibrium solution of a three stage game. It is shown that the firm that invests more in research is the one which is a MNE while the rival is an exporter, whereas the firm that invests less is the one that exports while the rival is a MNE. The results indicate that there is a positive relationship between multinational expansion and R&D investment and that, in turn, investment in research leads oligopolistic firms'towards multinational expansion. The value of the spillover parameter too can be an important determinant of firms'international strategy.
    Keywords: Multinational firm. export, direct investment, R&D, innovation, intellectual property rights.
    JEL: F12 F23 L10
  26. By: TOJO Yoshizumi
    Abstract: This paper analyzes a recent development of international discipline on state-owned enterprises (SOEs) and enterprises that were granted exclusive rights or privileges, especially focusing on fair competition rules. One traditional rationale for disciplining SOEs is to prevent sovereign states from circumventing their international obligation through SOEs (an anti-circumvention rule). In addition, a recent criticism has targeted unfair/anti-competitive practices by SOEs which enjoy various competitive advantages granted by the government (a fair competition rule). While a legal nature of regulation on SOEs under the World Trade Organization (WTO) law is principally an anti-circumvention rule, competition chapters of preferential trade agreements (PTAs) have developed fair competition rules. Examining what kind of fair competition rules should be applied, it is important to distinguish between inbound/outbound competition markets. In an inbound competition market, the rule should pay certain respect to SOEs' legitimate practices because SOEs are often entrusted with tasks to attain public policy goals such as public services. In contrast, in an outbound competition market, it would be understandable that the artificial competitive advantages of SOEs should be offset and trade distortion should be eliminated more straightforwardly. The European Union's TFEU Article 106(2) model offers a rule which has flexibility to grope for an appropriate balance between the public interest of the state in establishing SOEs and the interest of fair competition in inbound competition markets.
    Date: 2016–03
  27. By: Meinen, Philipp
    Abstract: This paper analyzes markup responses of Danish firms to Chinese imports. Besides negative markup responses due to competitive pressure, we present some evidence for marginal cost savings related to Chinese intermediate goods imports which tend to raise firm-level markups.
    Keywords: Chinese Imports,Markups
    JEL: D22 F14 L25
    Date: 2016

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