nep-int New Economics Papers
on International Trade
Issue of 2016‒05‒08
forty papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. The Impact of Free Trade Agreements on International Agricultural Trade: A Gravity Application on the Dairy Product Trade and the ASEAN-China-FTA By Schaak, Henning
  2. Indirect Exports and Wholesalers: Evidence from interfirm transaction network data By FUJII Daisuke; ONO Yukako; SAITO Yukiko
  3. Tariff Liberalization and Trade Integration of Emerging Countries By Anne-Célia Disdier; Lionel Fontagné; Mondher Mimouni
  4. Trade competitiveness in table grapes: a global view By Seccia, Antonio; Santeramo, Fabio Gaetano; Nardone, Gianluca
  5. Do the rich (really) consume higher-quality goods? Evidence from international trade data By Vincenzo Merella; Daniel Santabárbara
  6. Trade Liberalization on the EU-US GMO Agreement: A Political Economy Approach By Qianqian, Shao; Maarten, J. Punt; Justus, Wesseler
  7. Trade Policy and the Welfare of Southeast-Asian Timber Exporters: Some Implications for Forest Resources By May Arunanondchai
  8. Changing Structure of China's Meat Imports By Cheng, Yahao; Gao, Zhifeng; Seale, James L. Jr.
  9. Optimal Trade Policy With Monopolistic Competition and Heterogeneous Firms By Anthony J. Venables; Jan I. Haaland
  10. Making (Small) Firms Happy. The Heterogeneous Effect of Trade Facilitation Measures By Lionel Fontagné; Gianluca Orefice; Roberta Piermartini
  11. Does Service Trade Liberalization Benefit Agriculture and Food Industry? By Seok, Jun Ho; Saghaian, Sayed H.
  12. GVCs, Jobs And Routine Content Of Occupations By Luca Marcolin; Sébastien Miroudot; Mariagrazia Squicciarini
  14. Rethinking the Africa-China Trade: Some Policy Considerations and Implications By Rakotoarisoa, Manitera A.; Fang, Cheng
  15. Two-sided heterogeneity and Trade By Andrew B. Bernard; Andreas Moxnes; Karen Helene Ulltveit-Moe
  16. Does Trade Liberalization with China Influence U.S. Elections? By Che, Yi; Lu, Yi; Pierce, Justin R.; Schott, Peter K.; Tao, Zhigang
  17. Cost and benefits from regional cooperation on grain reserves: The case of ECOWAS By Kornher, Lukas; Kalkuhl, Matthias
  18. Quantifying the Effects of Trade Liberalisation in Brazil: A Computable General Equilibrium Model (CGE) Simulation By Sónia Araújo; Dorothee Flaig
  19. The effects of market integration: trade and welfare during the first globalization, 1815-1913 By David Chilosi; Giovanni Federico
  20. Increased trade openness, productivity, employment and wages: a difference-in-differences approach By Silvia Adriana Peluffo Geronazzo
  21. India’s Grain Security Policy in the Era of High Food Prices: A Computable General Equilibrium Analysis By Yu, Wusheng; Bandara, Jayatilleke S
  22. Determinants of Trade Duration of Kazakhstan's Wheat Exports By Imamverdiyev, Nizami; Anders, Sven; Glauben, Thomas; Perekhozhuk, Oleksandr; Prehn, Soren
  23. The Heckscher-Ohlin-Samuelson model and the Cambridge capital controversies By Kazuhiro Kurose; Naoki Yoshihara
  24. The Impact of Trade Liberalization on Industrial Pollution: Empirical Evidence from Vietnam By Pham Thai Hung; Bui Anh Tuan; Nguyen The Chinh
  25. The impact of international trade on environmental quality in transition countries: evidence from time series data during 1991-2013. By Halicioglu, Ferda; Ketenci, Natalya
  26. Effect of import time on export patterns By Hayakawa, Kazunobu; Laksanapanyakul, Nuttawut; Yoshimi, Taiyo
  27. Optimal Tariffs with Smuggling: A Spatial Analysis of Nigerian Rice Policy Options By Johnson, Michael; Dorosh, Paul
  28. Global Agreements in Agriculture: A Network Approach with Market Intermediaries By May, Daniel; McCorriston, Steve
  29. International Diffusion of Food Safety Standards: The Role of Domestic Certifiers and International Trade By Mohammed, Rezgar; Zheng, Yuqing
  30. Beef Cattle in the MERCOSUR bloc: Integrated or Separate Markets? By Lanfranco, Bruno A.; Ferraro, Bruno; Rostan, Francisco
  31. Is foreign farm labor a blessing or a curse? Evidence from Israel By Kimhi, Ayal
  32. Shipping in dire straits: New evidence on trends and cycles in coal freights from Britain, 1919-1939. By Klovland, Jan Tore
  33. Market Integration and Price Transmission in the World Rice Export Markets By Chen, Bo; Saghaian, Sayed H.
  34. Rice value chain upgrading in Vietnam: Towards increasing sustainability By Rutsaert, Pieter; Demont, Matty
  35. Does ICT Development Flatten the Globe? Evidence from International Trade Costs Data By Keita, Moussa
  36. Cross-border regulatory spillovers: How much? How important? What sectors? Lessons from the United Kingdom By Hills, Robert; Reinhardt, Dennis; Sowerbutts, Rhiannon; Wieladek, Tomasz
  37. Agricultural support and vulnerability of food security to trade in developing countries By Laroche-Dupraz, Cathie; Huchet-Bourdon, Marilyne
  38. How Migration Can Change Income Inequality? By Assaf Razin; Efraim Sadka
  39. National Borders and Urban Growth: Evidence from the Annexation of Alsace and Lorraine By Iakov T. Kuga
  40. Has foreign growth contributed to stagnation and inequality in Japan? By Kazuki Tomioka; Rod Tyers

  1. By: Schaak, Henning
    Abstract: This paper uses a gravity model to analyse the impact of the ASEAN-China-FTA on the international trade of dairy products. It uses a multinomial PML estimator with country fixed effects and a suitable framework to differentiate between trade creation and trade diversion effects in terms of imports and exports. The used dataset contains disaggregated data for 36 countries, including the ASEAN member countries, China and the 25 largest dairy exporting countries from 1995 until 2013. The dataset contains data on the three SITC dairy product groups as well as their aggregate. The estimates of the model include significant values for all framework effects. They indicate that there are trade creation, import diversion and export diversion effects for all four commodity groups. The estimated overall net trade effect is negative. Hence the current implementation of the FTA should be critically evaluated with respect to dairy products.
    Keywords: Gravity Model, Agricultural Trade, ACFTA, Trade creation and trade diversion effects, Dairy products, International Relations/Trade,
    Date: 2015
  2. By: FUJII Daisuke; ONO Yukako; SAITO Yukiko
    Abstract: A substantial fraction of international trade is facilitated by wholesalers, which enable manufacturers to indirectly export their products to foreign markets. Using large-scale Japanese interfirm transaction network data, this paper unveils the features of both indirect and direct exporters. We first build a simple Melitz-type model of trade in which firms can also export indirectly via intermediaries. The model predicts sorting of firms to direct, indirect, and non-exporters along the size dimension. This pattern is confirmed in the data as the distributions of sales, in-degree (the number of suppliers), out-degree (the number of customers), and labor productivity are ordered for direct, indirect, and non-exporters in terms of first order stochastic dominance. We then perform multinomial logit analysis for the three modes of export. Consistent with the model, the estimated intercept is lower and slope of sales is steeper for direct exporting. We also find that in-degree raises the probability of direct exporting, implying a cost sharing mechanism of firms with more suppliers. Out-degree raises the probability of exporting in general (both indirect and direct). This implies a higher product appeal and broader demand base for firms which have more customers in the domestic market. Industry heterogeneity in the propensity of indirect and direct exporting is also analyzed.
    Date: 2016–04
  3. By: Anne-Célia Disdier (PSE - Paris-Jourdan Sciences Economiques - ENS Paris - École normale supérieure - Paris - EHESS - École des hautes études en sciences sociales - Institut national de la recherche agronomique (INRA) - École des Ponts ParisTech (ENPC) - CNRS - Centre National de la Recherche Scientifique); Lionel Fontagné (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique); Mondher Mimouni (Office National de la Météorologie (Tamanrasset) - Office National de la Météorologie)
    Abstract: This paper investigates how tariff liberalization has aected exporting at the product-destination level in emerging countries. We use a highly disaggregated (6 digit level of the harmonized system HS classication) bilateral measure of market access to compare taris applied in 1996 and 2006, which includes the timing of the Uruguay Round and episodes of bilateral liberalization. Our econometric estimations consider impacts of tari cuts on three components of the trade margins: extensive margin of entry (new trade relationships at the product-destination level), extensive margin of exit (disappearance of existing relationships) and intensive margin of trade (deepening existing relationships). Our main estimates indicate that a reduction of bilateral applied taris of 1 percentage point increases the extensive margin of entry by 0.1% and the intensive one by 2.09%, while it reduces the extensive margin of exit by 0.25%.
    Keywords: tariffs,trade liberalization,emerging countries,margins of trade
    Date: 2015–07–24
  4. By: Seccia, Antonio; Santeramo, Fabio Gaetano; Nardone, Gianluca
    Abstract: International trade in table grapes has expanded tremendously over the last few decades, with out-of season fresh produce now being traded and consumed globally. Trade intensification has been driven by emerging traders that have changed the economic geography of table grapes.Improving competiveness in global markets is a main goal for entrepreneurs and policymakers. However, whilst the global trade in table grapes has become very important, empirical papers on the topic are limited. In this study, we empirically investigate the global dynamics in trade of table grapes between 1961 and 2011 and characterize the time series properties of the market shares for the leading table grape exporting countries. Our analysis shows how trends in market shares of historical exporters and emerging countries have differed over the last few decades. Our comparative analysis provides useful insights to forecast the prospects for the international fresh food trade.
    Keywords: Export; Import; Fruit; Market share; Trends; Convergence
    JEL: F13 F14 Q17 Q18
    Date: 2015–01–01
  5. By: Vincenzo Merella (University of Cagliari and BCAM); Daniel Santabárbara (Banco de España)
    Abstract: Using average import prices (unit values) as proxies for quality, a large body of the international trade literature finds both theoretical and empirical support for the positive relationship between importer income and quality of imports. Several authors, however, argue that the empirical evidence of the link between income and product quality might be spurious, since import prices could be affected by other factors than product quality. This paper takes into account this issue with a new theoretical and empirical approach. Building on Khandelwal’s (2010) discrete choice model approach, where quality is inferred by quantitative market shares as well as unit values, we develop a model that allows for willingness to pay for quality to vary with income. We empirically validate the theoretical relationship between importer income and product quality by using the Eurostat’s COMEXT database, which collects customs data reported by EU countries at 8-digit disaggregation. Our estimations support the positive link between consumer income and product quality, which is also robust across sectors.
    Keywords: quality, consumer income, import shares, unit values, nested logit demand.
    JEL: F12 F14 L15
    Date: 2016–04
  6. By: Qianqian, Shao; Maarten, J. Punt; Justus, Wesseler
    Abstract: The EU and the US launched negotiations on a Transatlantic Trade and Investment Partnership (TTIP) in July 2013. Among the TTIP aims, there are negotiable terms under which the EU would import more genetically modified (GM) products and change its labeling regulations on GM Organisms (GMOs). This paper discusses a trade agreement of agricultural products between two countries, with different GM regulatory regimes from a political economy perspective. We find the negotiation equilibrium of the GMO Trade Agreement and compare it with a stricter trade policy. We find that if the trade agreement leads to a lenient GM regulation, lobbying intensifies. However, this effect is moderated if there are exports of non-GM products.
    Keywords: Political Economy, GMOs, international trade, International Relations/Trade, Political Economy,
    Date: 2015
  7. By: May Arunanondchai (Department of Economics, University of Warwick)
    Abstract: An applied general equilibrium model of the global trade in forest products has been used to assess the impact of tariff and export tax reductions on forestry, the wood processing sector and the agricultural sector. The focus of this study is on Malaysia and Indonesia and the implications for their forest resources. Three key results have emerged: firstly, trade liberalisation does not necessarily lead to increased log production since the real producer’s price does not always rise. Secondly, the Uruguay Round tariff changes may make forestry a less-attractive form of land use when compared with agriculture. Thirdly, the proliferation of log export barriers amongst tropical countries has a cartel-like effect; thus elimination of such barriers may be detrimental to tropical exporters.
    Keywords: Trade Policy,Welfare,Timber Exporters,Forest Resources
    Date: 2016–04
  8. By: Cheng, Yahao; Gao, Zhifeng; Seale, James L. Jr.
    Abstract: This paper discusses the determinants of meat imports of China. Results indicate that import demand is mostly determined by import price and real GDP. Imported price has a negative effect and real GDP has a positive influence on import quantity. Tariff does not have a significant effect. As GDP and consumption capacity increases, China has a large potential demand for meat imports. Some countries may gain if China’s economy continues expanding, while others, like the United States, are the most sensitive to the trade policy of China.
    Keywords: meat import demand, China, price elasticity, income elasticity, pork, beef, poultry, International Development, International Relations/Trade, Livestock Production/Industries,
    Date: 2015
  9. By: Anthony J. Venables; Jan I. Haaland
    Abstract: Abstract: This paper derives optimal trade and domestic taxes for a small open economy containing a monopolistically competitive (MC) sector in which firms may have heterogeneous productivity levels. Analysis encompasses cases in which the domestic MC sector is able to expand or contract flexibly, or is constrained to be of fixed size. In the former case domestic protection can bring gains by increasing the number of product varieties on offer; these gains (and the corresponding rates of domestic subsidy or of import tariffs) are reduced by heterogeneity of foreign exporters some of whom may withdraw from the market. In the latter case gains from protection arise from terms-of-trade effects; since various margins of substitution are switched off, only the relative values of domestic taxes, import tariffs and export taxes matter. In general, policies work through both a terms-of-trade and a variety effect, and the paper shows how the relative importance of each depends on the structure of the economy.
    Keywords: trade policy, monopolistic competition, heterogeneous firms, terms of trade, variety, productivity.
    JEL: F12 F13
    Date: 2016–02–16
  10. By: Lionel Fontagné; Gianluca Orefice; Roberta Piermartini
    Abstract: This paper considers the asymmetric effect of Trade Facilitation Agreement (TFA) policies on heterogeneous exporters, based on matching a detailed panel of French firm exports to a new database of Trade Facilitation Indicators (TFIs) released recently by the Organisation for Economic Cooperation and Development (OECD). We analyze the effect of these TFIs on three trade-related outcomes: (i) exported value (firm intensive margin), (ii) number of products exported (product extensive margin) and (iii) average export value per product exported (product intensive margin). We find strong evidence of a heterogeneous effect of trade facilitation across firm size. While better information availability, advance ruling and appeal procedures mainly benefit small firms, the simplification of documents and automation tend to favor large firms' trade. This is coherent with the idea that while some elements of the TFA simply reduce the fixed cost of exporting (favoring small firms in particular), other chapters in the TFA reduce the scope for corruption at borders, making large firms less reluctant to serve corrupt countries.
    Keywords: Trade Facilitation;Heterogeneous Firms;Extensive Margin;Intensive Margin
    JEL: F13 F14
    Date: 2016–04
  11. By: Seok, Jun Ho; Saghaian, Sayed H.
    Abstract: Service sectors are really important since most of service sectors are used by other sectors (forward linkage). In this reason, the service trade may have huge effects on domestic industries. There has been the scare research between the service trade and domestic industries especially in agricultural and food industry sector since there is scare in data. The purpose of this paper is that figures out the relationship between the service trade and the TFP (Total Factor Productivity) of domestic agri-food industry. Moreover, this paper checks the difference between effect of service trade on the agricultural sector and the food sector since the food sectors has the processed industry characteristics compared to agricultural sector. Using multilevel model and STAN data set in OECD, this paper finds that the service trade has a positive effect on the domestic food industry considering the forward linkage of service sectors on food sectors. According to the result of random effect, the country with higher competitive in food industry has a small coefficient of service linkage on food sector compared to the country with lower competitive in food industry.
    Keywords: Service Trade, Total Factor Productivity (TFP), Multilevel Model, International Relations/Trade,
    Date: 2016–02
  12. By: Luca Marcolin; Sébastien Miroudot; Mariagrazia Squicciarini
    Abstract: This work addresses the role of global value chains (GVCs), workforce skills, ICT, innovation and industry structure in explaining employment levels of routine and non-routine occupations. The analysis encompasses 28 OECD countries over the period 2000-2011. It relies on a new country-specific measure of routine intensity built using individual-level information from the OECD Programme for the International Assessment of Adult Competencies (PIAAC) survey, as well as on new industry-level Trade in Value Added (TiVA) indicators of offshoring and domestic outsourcing. The results suggest that employment in all types of occupations positively relate to innovation. With respect to offshoring patterns, a positive correlation is observed between the offshoring of inputs and domestic outsourcing with more routine-intensive jobs. Taken together, the results point to the existence of complex interactions between the routine content of occupations, skills, technology and trade, which do not allow for a neat identification of “winners” and “losers” in a GVC context.
    Keywords: employment, outsourcing, technology, global value chains, offshoring
    JEL: F16 F23 J24 O33
    Date: 2016–04–26
  13. By: Rueda-Cantuche , José M. (JRC); Sousa, Nuno (DG Trade)
    Abstract: KEY FINDINGS • As trade agreements create the conditions for an increase in EU exports they also foster more and better job opportunities for European citizens. From 1995 to 2011 the number of jobs in the EU that were supported by exports of goods and services to the rest of the world increased by 67% to reach around 31 million. These represented 1 in 7 jobs across the 27 EU Member States (up from 1 in 11 jobs in 1995). They tended to be high-skilled and were on average better paid. • In order to remain competitive EU exporters increasingly rely also on foreign inputs. This means that the employment they support progressively spans beyond the EU's borders. In 2011 about 19 million jobs outside the EU depended on EU exports. This means that in 2011 a total of 50 million people around the world had jobs thanks to the EU exporting industries. • Exports are important for employment in all Member States. In 2011 only in Greece (7%), Portugal (8%) and Spain (9%) did the EU exports to the rest of the world support less than 10% of total employment. In Luxembourg they supported a third of all jobs; in Ireland 25%. • Increasingly the jobs supported by EU exports are related to services. Services exports are growing fast but that is not the whole story. The importance of services sectors as suppliers of inputs to the production of the goods for export (“mode 5 services” exports) also stands out from the data. In 2011, 40% of the employment supported by the exports of the primary and manufacturing sectors was in fact in services. • The sales of goods and services to the US market were responsible for 15% of the EU employment supported by EU exports; other key markets to sustaining export-related jobs in the EU were China (10%), Russia (6%) and Turkey (4%).
    Keywords: EU exports; income; employment
    JEL: F16
    Date: 2016–02–01
  14. By: Rakotoarisoa, Manitera A.; Fang, Cheng
    Abstract: Trade between China and Sub-Saharan Africa (SSA) is characterized by China’s importing mining and extraction from SSA and SSA’s importing manufactured goods from China. We perform accounting and simulation exercises to analyze how trade policy and productivity shocks will reduce SSA's dependency on raw material export to China. Scenarios include tariff elimination by China, common external tariff in SSA, and free regional trade in SSA. We also include shifts in labour productivity in SSA’s agriculture and manufacturing sectors and simulate technology spillover from SSA imports from China. Results show that tariff elimination by China increases SSA’s employment and welfare. Raising tariffs on manufactured goods from China reduces welfare and employment by harming consumers and the agriculture sectors dependent on intermediate goods from China. Increase in labour productivity and technical progress in SSA’s manufacturing sectors improve welfare but will not alter the high share of mining and extraction export to China.
    Keywords: Agricultural and Food Policy, International Relations/Trade,
    Date: 2015
  15. By: Andrew B. Bernard; Andreas Moxnes; Karen Helene Ulltveit-Moe
    Abstract: This paper develops a multi-country model of international trade that provides a simple micro-foundation for buyer-seller relationships in trade. We explore a rich dataset that identifies buyers and sellers in trade and establish a set of basic facts that guide the development of the theoretical model. We use predictions of the model to examine the role of buyer heterogeneity in a market for firm-level adjustments to trade shocks, as well as to quantitatively evaluate how firms' marginal costs depend on access to suppliers in foreign markets.
    Keywords: Heterogeneous firms, exporters, importers, sourcing costs, trade elasticity
    JEL: F10 F12 F14
    Date: 2016–04
  16. By: Che, Yi; Lu, Yi; Pierce, Justin R.; Schott, Peter K.; Tao, Zhigang
    Abstract: This paper examines the impact of trade liberalization on U.S. Congressional elections. We find that U.S. counties subject to greater competition from China via a change in U.S. trade policy exhibit relative increases in turnout, the share of votes cast for Democrats and the probability that the county is represented by a Democrat. We find that these changes are consistent with Democrats in office being more likely than Republicans to support legislation limiting import competition or favoring economic assistance.
    Keywords: China ; Voting ; Elections ; Import Competition ; Normal Trade Relations ; World Trade Organization
    JEL: F13 F16 D72
    Date: 2016–03
  17. By: Kornher, Lukas; Kalkuhl, Matthias
    Abstract: In the wake of the 2007/2008 international food crisis, public food reserve re-gained the attention of policy makers. However, they come at high economic and fiscal costs. On the other hand, the imperfect correlation of supply shocks across neighboring countries entails the potential to reduce regional market volatility through intra-regional trade integration and storage cooperation. In this chapter, optimal reserve levels are theoretical derived in order to assess costs and benefits from regional storage cooperation. The model is then applied to the West African region which is in the process of establishing a region-wide reserve. Accordingly, regional stocks under cooperation in an emergency reserve can be 40 percent less than without cooperation. Limited intra-regional trade reduces the need for stock releases significantly. Full market integration would diminish regional consumption variability to 3.4 percent, less than for every other individual West African country, but is not effective in dampening severe supply shortfalls. Cooperation in a stabilization reserve in addition to trade integration has only limited impact on consumption stability, and thus storage cooperation shall be restricted to an emergency reserve.
    Keywords: Agricultural and Food Policy, Crop Production/Industries,
    Date: 2015
  18. By: Sónia Araújo; Dorothee Flaig
    Abstract: Brazil remains a fairly closed economy, with small trade flows relative to its share of world income. This paper explores the effects of three possible policy reforms to strengthen Brazil’s integration into global trade: a reduction in import tariffs, less local content requirements and a full zero-rating of exports in indirect taxes. A simulation analysis using the OECD Multi-Region Trade CGE model suggests that current policies are holding back exports, production and investment in Brazil. The model simulations suggest significant scope for trade policy reforms to strengthen industrial development and export competitiveness. Results also show that the expansion of investment and production would be accompanied by significant employment gains. Moreover, employment growth is higher for low-skilled occupations, implying that a major trade and tax policy reform aiming at liberalising trade flows would particularly help those at the lower end of the income distribution. L'impact de la libéralisation du commerce au Brésil : Modélisation EGC et simulations Le Brésil reste une économie relativement fermée, avec des flux commerciaux faibles par rapport à sa part dans le revenu mondial. Ce document examine les effets de trois reformes politiques qui permettraient au Brésil de renforcer son intégration dans le commerce mondial: une baisse des barrières tarifaires à l’importation, une réduction des exigences en contenu local et un taux zéro sur les impôts indirects pour les exportations. L’analyse de simulations utilisant le modèle EGC de commerce Multi-Régions de l'OCDE suggère que les politiques actuelles freinent les exportations, la production et l’investissement au Brésil. Les simulations du modèle suggèrent un rôle important pour des réformes de la politique commerciale visant à renforcer le développement industriel et la compétitivité des exportations. Les résultats suggèrent aussi que l'expansion de l’investissement et de la production serait accompagnée par des gains d’emplois significatifs. En outre, la croissance de l'emploi serait plus élevée pour les emplois peu qualifiés, ce qui implique qu’une réforme majeure des politiques commerciales et fiscales visant à libéraliser le commerce aiderait particulièrement les populations aux plus faibles revenus.
    Keywords: trade policy, CGE modelling, global value chains, politique commerciale, chaînes de valeur mondiales, Modélisation EGC
    JEL: F13 F47 F61 F62 F66
    Date: 2016–04–19
  19. By: David Chilosi; Giovanni Federico
    Abstract: We investigate the effect of the decline in trade costs on trade, terms of trade and welfare of Europe (the United Kingdom and the Netherlands) and three large exporters (India, Indonesia and the United States) during the first globalization using a ‘bottom-up’ approach. We measure total route and product specific trade costs for a representative sample of commodities with price gaps predicted by observed trade costs. We use a simple microeconomic model and we buttress our findings with additional econometric testing. We find that price convergence accounted for almost all the improvement in terms of trade of producing countries and increased significantly welfare in both producing and especially consuming countries, while its positive effect on bilateral trade was often swamped by other factors. The findings caution against the substation of proxies to actual measures of trade costs.
    Keywords: market integration; trade costs; terms of trade; trade; welfare; first globalization
    JEL: N0
    Date: 2016–04
  20. By: Silvia Adriana Peluffo Geronazzo (Universidad de la República)
    Abstract: This paper analyses the effects of increased competition resulting from the creation of the Southern Common Market (MERCOSUR) on productivity, employment and wages for the Uruguayan manufacturing sector at the plant level. We use impact evaluation techniques, namely regressions and matching and difference-in-differences estimation for the period 1988-1995. One of the most robust findings is that increased trade liberalization seems to improve total factor productivity. Furthermore, we find reductions in employment driven mainly by the decrease in blue collars, increases in wages and a reduction in the wage gap between white and blue collars as a result of increased trade exposure. Thus, the increase in productivity along with the unemployment of unskilled workers would indicate a room for training, labour and social policies in order to countervail the negative impact of trade liberalization on less qualified workers.
    Keywords: trade policy, productivity, employment, wages.
    JEL: F13 O12 J2 J3
    Date: 2016–04–01
  21. By: Yu, Wusheng; Bandara, Jayatilleke S
    Abstract: This study evaluates the fiscal and welfare costs of India’s food policy during the 2007-08 global food crisis. India’s domestic grain price stabilization through consumer and producer subsidies and export restrictions is shown to have caused huge fiscal costs and equally large welfare costs, an outcome that is almost always the worst as compared to alternative policy mixes examined. While the most efficient and cost-effective alternatives may not be feasible due to political economy considerations, we argue that there exist some feasible and superior “middle-ground” policy mixes featuring partial relaxations of domestic subsidizations and/or less restrictive border policies.
    Keywords: India, food security policy, trade policy, agriculture subsidy, computable general equilibrium, Crop Production/Industries, Food Security and Poverty, International Development,
    Date: 2015
  22. By: Imamverdiyev, Nizami; Anders, Sven; Glauben, Thomas; Perekhozhuk, Oleksandr; Prehn, Soren
    Abstract: The objective of this study is to analyze the trade duration patterns of Kazakhstan’s wheat exports between 1995 and 2012. Using 4-digit HS code trade flow data we employ a discrete-time duration framework and probit models controlling for unobserved heterogeneity across bilateral trade relationships. The empirical results indicate that trade cost, local production factors, price competitiveness and experience significantly explain the short duration of Kazakhstan’s wheat exports. We find that the stability and thus sustainability of Kazakhstan’s wheat exports critically depends on maintaining good trade relationships and free of export restrictions with traditional trading partners, especially post-Soviet Union economies.
    Keywords: Wheat exports, trade duration analysis, probit, Kazakhstan, Crop Production/Industries, C41, Q17,
    Date: 2015
  23. By: Kazuhiro Kurose (Tohoku University); Naoki Yoshihara (Department of Economics, University of Massachusetts Amherst)
    Abstract: This paper examines the validity of the factor price equalisation theorem (FPET) in relation to capital theory. Additionally, it presents a survey of the literature on Heckscher–-Ohlin-–Samuelson (HOS) models that treat capital as a primary factor, beginning with Samuelson (1953). Furthermore, this paper discusses the Cambridge capital controversy, which contends that marginal productivity theory does not hold when capital is assumed to be as a bundle of reproducible commodities instead of as a primary factor. Consequently, it is shown that under this assumption, the FPET does not hold, even when there is no reversal of capital intensity. This paper also demonstrates that the recent studies on the dynamic HOS trade theory generally ignore the difficulties posed by the capital controversies and are thereby able to conclude that the FPET holds even when capital is modelled as a reproducible factor. Our analysis suggests that there is a need for a basic theory of international trade that does not rely on factor price equalisation and a model that formulates capital as a bundle of reproducible commodities.
    Keywords: factor price equalisation, capital as the bundle of reproducible commodities, reswitching of techniques, capital reversing
    JEL: B51 D33 F11
    Date: 2016–04
  24. By: Pham Thai Hung (National Economics University, 207 Giai Phong, Hai Ba Trung Dist, Hanoi, Vietnam); Bui Anh Tuan (National Economics University, 207 Giai Phong, Hai Ba Trung Dist, Hanoi, Vietnam); Nguyen The Chinh (National Economics University, 207 Giai Phong, Hai Ba Trung Dist, Hanoi, Vietnam)
    Abstract: This study assesses the impact of trade liberalization on the environment in Vietnam. In particular it looks at the link between the amount of pollution produced by the country’s manufacturing industries and the degree to which this is affected by trade liberalization policies. The study was carried out by Pham Thai Hung, Bui Anh Tuan and Nguyen The Chinh, from Vietnam’s National Economics University. It finds that trade liberalization in the country exacerbates industrial pollution at both the firm and industry level. This trade-off is worrying as Vietnam has recently become a WTO member and further trade liberalization commitments are now in the pipeline. In light of their findings, the researchers recommend that the environmental impact of any future trade reforms should be carefully considered and that steps should be taken to mitigate any potential negative effects such reforms might have.They suggest that polluting industries should be given priority in any clean-up programme. They highlight key steps which can be taken to help reduce pollution, including the strict enforcement of environmental regulations support to promoting information technology application and technology advancement in the manufacturing sector.
    Keywords: Trade, impact, vietnam, pollution
    Date: 2016–04
  25. By: Halicioglu, Ferda; Ketenci, Natalya
    Abstract: This research presents first empirical time series evidence of the impact of international trade on environmental quality in the case of transition countries. The linkages between international trade and environmental quality are well established both theoretically and empirically in the literature. However, the empirical evidence relating to transition countries is non-existent as far as this study is concerned. Thus, our research aims at filling this gap. To this extent, fifteen transition countries are selected in order to test the impact of international trade on environmental quality. An econometric model between carbon emissions, energy use, income and trade openness is formed. The econometric model was estimated via ARDL approach to cointegration and GMM procedures. The econometric results from both econometric techniques support the existence of the EKC hypothesis only in three transition countries: Estonia, Turkmenistan and Uzbekistan. As for the impact of trade on environmental quality, the econometric results from both techniques vary in different transition countries. To this extent, the displacement hypothesis is validated in the case of Armenia, Estonia, Latvia, Kyrgyzstan, and Russia. The paper also discusses policy implications of the empirical results as well as offering policy recommendations.
    Keywords: International trade, Environmental quality, Cointegration, Transition countries
    JEL: C22 F1 F18
    Date: 2015
  26. By: Hayakawa, Kazunobu; Laksanapanyakul, Nuttawut; Yoshimi, Taiyo
    Abstract: This study examines how the importing process time affects export patterns at an establishment level. We first theoretically discuss the effects of import time on not only exports but also export shipment frequency and exports per shipment. Then, we derive some propositions regarding those effects. Next, by employing highly detailed customs data for Thailand from 2007 to 2011, we empirically investigate those propositions. In this study, the time to import is measured at an establishment level using the difference between the dates on which import shipments arrived in ports and then were released from the container yard. Our main finding is that a longer time reduces total exports, particularly through decreasing export frequency. Significantly negative effects on exports per shipment appear in some specific cases. A longer time to import also reduces total imports, particularly through decreasing import frequency.
    Keywords: Thailand, International trade, Econometric model, Customs, Time
    JEL: F15 F53
    Date: 2016–03
  27. By: Johnson, Michael; Dorosh, Paul
    Abstract: This paper assesses the difficulties inherent with raising the rice import tariff in Nigeria given the problem of smuggling, and under such conditions, whether there is an optimal tariff rate that the Nigerian government can consider, especially when the effects are likely to vary by location. Using a spatial multi-market model for rice, results show that an optimal tariff rate of 37 percent does exist if smuggling cannot be controlled. The effects of higher tariffs can have different effects on price changes, trade flows, and ultimately, household welfare in different parts of the country. Most notably but not surprising, consumers in the south could face much higher welfare losses, especially in urban areas as prices increase more when imports flow in from the north. On the other hand, smuggled imports in the north actually help dampen the effect of the tariff on prices in this region and in the central region.
    Keywords: Optimal tariff, smuggling, spatial market equilibrium model, rice, Nigeria, Agricultural and Food Policy, International Relations/Trade,
    Date: 2015
  28. By: May, Daniel; McCorriston, Steve
    Abstract: Global trade agreements in agriculture have been unsuccessful. Current explanations argue that this outcome reflects the fact that governments have motivations other than maximising social welfare. At the current state of the knowledge, there is not a suitable framework that can be used either to assess the veracity of these explanations or determine how these biases influence the international trade structure. The objective of this article is to fill this gap by proposing a formal international trade network adapted to study the issue of global agreements in agriculture. The network approach outlined here accounts for the bias of government policies towards farmers or consumers; but we also allow for intermediaries in agricultural markets that have the potential to exercise market power are largely ignored in current approaches to modelling agricultural trade. We show that accommodating these features of agricultural markets offers important insights in understanding why promoting free trade in agricultural markets has proved to be so elusive.
    Keywords: Agricultural and Food Policy, International Relations/Trade, Marketing,
    Date: 2015
  29. By: Mohammed, Rezgar; Zheng, Yuqing
    Abstract: We examined the cross-national adoption of six major private food safety standards, focusing on the role of certifiers and international trade. Results based on a negative binomial model show that the number of domestic certification bodies, total food exports, and the proportion of food exports to North America had a positive effect on a country’s adoption of food safety standards. We also found that distance creates product differentiation for standards and therefore disadvantages developing countries in Africa and Asia for adopting standards. Providing these countries with better access to certifiers can alleviate this geographic disadvantage.
    Keywords: adoption, certification bodies, food exports, food safety standard, third-party certification, Food Consumption/Nutrition/Food Safety, Q13, Q17, Q18,
    Date: 2015
  30. By: Lanfranco, Bruno A.; Ferraro, Bruno; Rostan, Francisco
    Abstract: This aim of this paper was to provide empirical evidence of market integration in the beef cattle industry of the MERCOSUR economic bloc. This region possesses the largest commerical bovine herd in the world and explains one quarter of the international trade for beef. The study included size relevant cattle markets located in the four original members of the bloc. The analysis was conducted using a fractional cointegration approach proposed Marinucci and Robinson (2001). The fractional integration parameters and the error term of the cointegration equations were computer using a semi-parametric approach developed by Geweke and Porter-Hudak (1983). The null hypothesis of 'separate markets' could not be rejected even when the general bahavior of the series under analysis encouraged the idea of some market integration. Despite the common trends, their response to specific shocks was dissimilar and, most importantly, the reversion of the disturbed series to equilibrium was always slow.
    Keywords: cattle prices, law of one price, market integration, fractional cointegration, Crop Production/Industries, Livestock Production/Industries, C5, F15, Q11,
    Date: 2015
  31. By: Kimhi, Ayal
    Abstract: After Israel became self-sufficient in food in the late 1960s, farmers started migrating out of agriculture while production continued to increase towards export markets. This process intensified considerably when foreign labor became available. Traditional production theory predicts that foreign workers replace local workers, but the number of Israeli hired farm workers has actually increased since the arrival of foreign labor. This paper develops a modified theoretical model in which farm labor is heterogeneous, so that changes in the number of foreign and local hired workers are not necessarily opposite in sign. The results of the model are consistent with the observation that the availability of foreign labor has led to an increase in the production and export of labor-intensive horticultural products. Farms became larget and more specialized, and this has led to labor specialization, with foreign workers doing manual tasks and Israeli hired employees doing mostly managerial and professional tasks.
    Keywords: Farm Management, Labor and Human Capital,
    Date: 2015
  32. By: Klovland, Jan Tore (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: New monthly freight rate indices for 13 coal trade routes from Britain 1919-1939 are presented. The new indices form the basis of a review of the interwar freight markets and their relationship to the timing and severity of general business cycles. New time series of laid-up tonnage provide the background for this discussion. The Great Depression starting in the autumn of 1929 created a shipping cycle of unusual length and severity. Real freight rate indices used as a cross-check on productivity gains in shipping raise some doubt on previous estimates of productivity growth in British shipping in the interwar years.
    Keywords: Freight markets; business cycles.
    JEL: D24 N14 N74
    Date: 2016–03–30
  33. By: Chen, Bo; Saghaian, Sayed H.
    Keywords: Rice, market integration, asymmetric price transmission, Agribusiness, Demand and Price Analysis, International Relations/Trade,
    Date: 2016
  34. By: Rutsaert, Pieter; Demont, Matty
    Abstract: Although Vietnam is one of the biggest rice exporters today, there is an urgent need to restructure the sector. To guide the transition from a quantity focused producer to a credible supplier of high quality rice, this study explores the diversity in value chains and the sector’s opportunities for sustainable value chain upgrading. During a participatory multi-stakeholder workshop participants from the public as well as the private sector were guided through several collective tasks to uncover the strengths and weaknesses of the Vietnamese rice sector, and the opportunities and threats (SWOT) the sector faces to become more sustainable. Subsequently, a Strategic Orientation Round (SOR) was used to evaluate the relative importance of the SWOT components. Results show that the stakeholders perceive the sector’s capability to grasp opportunities (including growing export and domestic markets) to be higher than its resilience to potential threats (including more stringent food safety regulations and global warming). Three different strategies are discussed for making rice value chains more sustainable: embodying, disembodying and internalizing sustainability.
    Keywords: Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety,
    Date: 2015
  35. By: Keita, Moussa
    Abstract: This study attempts to bring new perspectives on the death of distance hypothesis by examining to what extent the intensification of ICT has contributed to attenuate the effect of distance on international trade issues. Our analysis is based on an extended gravity model constituted of 2827 country pairs observed from 2002 to 2012. The model is estimated by using the Hausman-Taylor instrumental variable approach to deal with specificities of the panel gravity models that cannot be treated in classical fixed-effect or random-effect models. The estimations confirm significant beneficial effects of ICT regarding trade costs reduction. We found that bilateral trade costs are significantly low between countries that have a more densified communication network. And this effect appears to be strongly heterogeneous regarding the distance. In particular, we found that the impact of ICT on trade costs is greater when the distance between the trading partners is more important. We also found that the elasticity of trade costs to distance decreases as the level of ICT increases. These results appear robust to various sensitivity and robustness checks and are consistent with other studies. Finally, the results obtained in this study suggest the existence of strong distance-neutralizing effect of ICT.
    Keywords: ICT, Distance, Trade, Trade costs, infrastructure, Gravity model.
    JEL: F14 O33
    Date: 2016–04
  36. By: Hills, Robert (Bank of England); Reinhardt, Dennis (Bank of England); Sowerbutts, Rhiannon (Bank of England); Wieladek, Tomasz (Barclays Capital)
    Abstract: This paper forms the United Kingdom’s contribution to the International Banking Research Network’s project examining the cross-border spillovers of prudential policy actions, where each participant in the network uses proprietary bank-level data available to central banks. We examine whether UK-owned banks’ domestic lending is affected by prudential actions in other countries where they have exposures. We also examine the impact of a change in prudential policy in a foreign-owned UK-resident bank’s home jurisdiction on its lending to the United Kingdom. Our results suggest that prudential actions taken abroad do not have significant spillover effects on bank lending in the UK economy as a whole. But there are more granular effects: for instance, when a foreign authority tightens loan-to-value standards, UK affiliates of banks owned from that country expand their lending to UK households and corporates.
    Keywords: Macroprudential policies; bank lending; spillovers; capital flows
    JEL: F32 F34 G21
    Date: 2016–04–22
  37. By: Laroche-Dupraz, Cathie; Huchet-Bourdon, Marilyne
    Abstract: Our hypothesis is that the Bonilla Index can be used as a consistent indicator of food security vulnerability to trade at national level. In this article, we test the assumption that, with the aim of stabilizing national food availability and accessibility, developing countries use policy instruments for stabilizing their Bonilla Index. After analysing the role of the national rate of assistance and of the exchange rate vulnerability of food security to trade, we first present the Bonilla Index evolution paths of 39 developing countries from 2005 to 2010. Second, we measure the impact of their national policy responses to 2008 price surge, by using the national rate of assistance on importable food products. Finally we test, statistically, the extent to which our qualitative hypotheses and relationships are actually confirmed by the data over the period 2005-2010. Our results suggest that most developing countries have used their possibility to play with the nominal rate of assistance level to compensate the effects of the 2008 food price surge, and that exchange rate variations actually have few impact on food accessibility for consumers in a context of volatility of food prices.
    Keywords: national rate of assistance, food security, exchange rate, food trade, Agricultural and Food Policy, Food Security and Poverty, International Relations/Trade, Q17, Q18,
    Date: 2016
  38. By: Assaf Razin; Efraim Sadka
    Abstract: Motivated by the unique experience of Israel of a supply-side shock of skilled migration, and the concurrent rise in disposable income inequality, this paper develops a model which can explain the mechanism through which a supply-side shock of skilled migration can reshape the political-economy balance and the redistributive policies. First, it depresses the incentives for unskilled migrants to flow in, though they are still free to do so. Second, tax-transfer system becomes less progressive. Nonetheless, the unskilled native-born may well become better-off, even though they lose their political clout.
    JEL: F22 H0 J0
    Date: 2016–04
  39. By: Iakov T. Kuga (National Research University Higher School of Economics)
    Abstract: According to the Treaty of Frankfurt (1871) France lost Alsace and Lorraine. In the paper I estimate how the new border affected a growth of nearby towns. Applying difference-in-differences methodology to census data for 1831-1911, I obtain paradoxical result. The new border boosted the growth of nearby towns. Extra urban growth in a 70 km border region reached 4.23 per cent p.a. in 1872-6, and was smaller, but still significantly positive, later. Point estimate of the total border effect in 1872-1911 is 134 per cent. This effect survives in more homogeneous subsamples and is robust to a number of specification changes. Both immigration of Alsatians, garrison growth and fort construction have sizable and significant positive effect on urban growth; however, the border effect remains significantly positive after accounting for these factors
    Keywords: market potential, population, France, Alsace, Lorraine, difference-in-differences.
    JEL: F15 N93
    Date: 2016
  40. By: Kazuki Tomioka; Rod Tyers
    Abstract: This paper examines the contributions of foreign growth (particularly in China), on Japan's domestic economic performance and inequality. While the standard approach to external sources of inequality has emphasized transmission through trade and labor markets, here the emphasis is on financial flows. We begin by exploring this link using a three factor, three sector, two-region dynamic computable general equilibrium model (CGE), in which the regions are interlinked by both trade and financial flows. To provide an empirical perspective, a lag-augmented vector autoregression (LA-VAR) and a sign restricted vector autoregression (Sign restricted VAR) are estimated. We find convincing evidence through numerical simulations that strong growth in a near neighbor not only retards domestic performance but also raises home inequality. Empirical results suggest that growth in China has a significant delayed effect in aggravating Japanese inequality and its importance in explaining Japanese inequality increases in magnitude over time.
    Keywords: Japanese inequality, Foreign growth, Stagnation, Financial linkages, CGE, Lag augmented, Sign restriction, VAR.
    JEL: C32 C68 E25 F21 F41 F60
    Date: 2016–05

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