nep-int New Economics Papers
on International Trade
Issue of 2016‒06‒09
47 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Global Value Chains: New Evidence for North Africa By Davide Del Prete; Giorgia Giovannetti; Enrico Marvasi
  2. Exports diversification and knowledge sharing from south-south and south-north economic cooperation: evidence from the Central and West Africa By Ndambendia, Houdou
  3. Measuring Non-Tariff Barriers by Combining Cointegration Tests and Simulation Models with an Application to Russian Chicken Imports By Soon, Byung Min; Thompson, Wyatt
  4. Estimating Import Demand Functions in Major Beef Importing Countries by Bayesian Hierarchical Linear Model By Soon, Byung Min; Thompson, Wyatt
  5. A Transatlantic Trade and Investment Partnership Agreement: Implications for Swiss Agriculture By Daniel Rais
  6. Trade and Jobs: Can We Trust the Models? By Dean Baker; David Rosnick
  7. Government Corruption and Foreign Direct Investment Under the Threat of Expropriation By Christopher Hajzler; Jonathan Rosborough
  8. The structural behavior of China–US trade flows By Cheung, Yin-Wong; Chinn, Menzie D.; Qian, XingWang
  9. The impact of trade shocks on collective wage bargaining agreements By Carluccio, Juan; Fougère, Denis; Gautier, Erwan
  10. Food Safety Standards and Quality Upgrading through Import Competition By Eum, Jihyun
  11. Analyzing Collective Trade Policy Actions in Response to Cyclical Risk in Agricultural Production: The Case of International Wheat By Lee, Youngjae; Kennedy, Lynn
  12. Exchange Rate Volatility and Agricultural Commodity Trade By Steinbach, Sandro
  13. What Do We (and Others) Mean by "The Terms of Trade"? By Alan V. Deardorff
  14. The Impact of Trade Liberalization on Industrial Pollution: Empirical Evidence from Vietnam By Pham Thai Hung; Bui Anh Tuan; Nguyen The Chinh
  15. A System Approach for Three-Dimensional Panel Data to Estimate Poultry Trade Impacts due to Animal Disease Outbreaks By Thompson, Jada M.; Pendell, Dustin L.
  16. Does tariff reduction have a positive effect on the world’s grain self-sufficiency? By Byeong-il, Ahn; Younghyeon, Jeon
  17. Trade Shocks, Taxes, and Inequality By Douglas L. Campbell; Lester Lusher
  18. National and global price- and trade-distorting policies By Kym Anderson
  19. The Fickle Fringe and the Stable Core: Exporters' Product Mix Across Markets By Lionel Fontagné; Angelo Secchi; Chiara Tomasi
  20. China’s emerging dairy markets and potential impacts on U.S. alfalfa and dairy product exports By Wang, Qingbin; Hansen, James; Xu, Fang
  21. National treatment under the TBT Agreement By Daniel Rais
  22. Africa trade and investment with BRIC nations in a changing economic landscape: the role of China By Ndambendia, Houdou
  23. Exports and job training By Bastos; Silva,Joana C. G.; Proenca,Rafael Prado
  24. Pacific Trade: Dynamics in a High-Cost Region By Asian Development Bank (ADB); Asian Development Bank (ADB); Asian Development Bank (ADB); Asian Development Bank (ADB)
  25. Learning, Prices, and firm dynamics By Bastos,Paulo S. R.; Dias,Daniel; Timoshenko,Olga A.
  26. Corruption and Agricultural Trade By Biswas, Trina; Kennedy, P. Lynn
  27. Industrial Location and North-South Trade in Vertically-linked Industries By Kurata, Hiroshi; Nomura, Ryoichi; Suga, Nobuhito
  28. Back to the Future: International Trade Costs and the Two Globalizations By Michel Fouquin; Jules Hugot
  29. Relativity Meets Gravity: A Better Measurement of Market Size to Explain Agricultural Trade By Xiong, Bo
  30. Protected Geographic Indicators in Trade Agreements By Mitchell, Lorraine S.
  31. The Impact of HACCP Implementation on U.S. Imports By Chen, Rui; Wilson, Norbert L.; Hartarska, Valentina
  32. The power law of agricultural trade: Measurement and decomposition of agricultural import diversification across trading partners By Xiong, Bo
  33. Exporters, engineers, and blue-collar workers By Brambilla,Irene; Lederman,Daniel; Porto,Guido
  34. Trade Policies and Institutions under the African Growth and Opportunity Act By Wamisho, Kassu
  35. Regionalism without Regions: Evaluating the Economic Impacts of Cross-Regional Trade Agreements By Grant, Jason; Marchant, Mary
  36. Australia-India relations: trends and the prospects for a comprehensive economic relationship By Ashok Sharma
  37. China’s Agricultural Exports and their Effects on other Exporters By Nguyen, Huong
  38. The Impact of Slave Trade on Current Civil Conflict in Sub-Saharan Africa By Zhang, Yu; Kibriya, Shahriar
  39. The Jurisprudence of the World Trade Organization in 2013 By Daniel Rais
  40. Industrial policy, Structural Change and Global Value Chains Participation: Case study of Morocco, Tunisia and Egypt By Abdelaaziz Ait Ali; Yassine Msadfa
  41. Multiplication of Environmental Labelling and Information Schemes (ELIS): Implications for Environment and Trade By Andrew Prag; Thomas Lyon; Aimée Russillo
  42. Why Do Economies Enter into Preferential Agreements on Trade in Services? Assessing the Potential for Negotiated Regulatory Convergence in Asian Services Markets By Daniel Rais
  43. FDI in Central Asia: Uzbekistan By Kechagia, Polyxeni; Metaxas, Theodore
  44. The U.S. Role in the Price Determination of Major Agricultural Commodities By Nigatu, Getachew; Adjemian, Michael
  46. FDI and Ownership in Czech Firms: Pre- and Post-crisis Efficiency By Jan Hanousek; Evzen Kocenda
  47. What drives China’s outward FDI? A regional analysis By You, Kefei

  1. By: Davide Del Prete; Giorgia Giovannetti (Dipartimento di Scienze per l'Economia e l'Impresa); Enrico Marvasi
    Abstract: This paper analyzes the participation and the position of North African countries into global value chains (GVCs). Exploiting the recently released multiregional Input-Output tables from UNCTAD-Eora, we describe regional and country GVC involvement. North African countries have not been able so far to fully integrate into international production networks. However, large part of their (low) trade is due to value added related activities, mainly in the upstream phases, and the importance of foreign linkages has been increasing over time signalling the existence of unexploited opportunities. We complement the Input-Output analysis with evidence from bilateral trade flows and case studies from specific sectors. This anecdotal evidence is in line with previous findings. Overall, our results suggest that enhancing GVC participation of North African countries is likely to substantially benefit local industries, countries and the whole area. However, the ability to retain such benefits relies on specific characteristics, such as the level of human capital, the trade logistics and the presence of trade barriers, thus leaving room for policy intervention.
    Keywords: international production networks, global value chains, Multi-Regional Input-Output tables, North Africa.
    JEL: F14 F15 L23 O11 O55
    Date: 2015
  2. By: Ndambendia, Houdou
    Abstract: In this paper, we address the issue of knowledge sharing from FDI inflows and imports from the north and south on exports diversification of selected African economies. Applying Generalized Method of Moments (GMM) and Random-Effects Probit with control of endogeneity, we find that FDI inflows and imports from the north and the south affect differently horizontal and vertical exports diversification. Indeed, FDI inflows have the strongest effect on vertical diversification whereas imports impact strongly horizontal export diversification. Moreover, imports from the south have the strongest impact on horizontal exports diversification whereas only FDI from the north significantly affect exports diversification irrespective of its nature. In addition, we find no evidence of knowledge sharing through education, meaning that lack of education significantly reduces the marginal effects of FDI inflows and imports on exports diversification. However, taking knowledge separately, we find that higher education is required to vertically diversify an economy. As policy recommendation, further human capital investment and set up of incentive mechanisms to attract FDI are needed to truly diversify economies of selected countries.
    Keywords: exports diversification, knowledge, FDI, imports, endogeneity
    JEL: C23 C26 F14 I25 O55
    Date: 2014
  3. By: Soon, Byung Min; Thompson, Wyatt
    Abstract: Non-tariff barriers (NTBs) to agricultural trade are believed to have increased as tariffs fell. Hence, measuring NTBs has become important and several alternative methods to do so are used. We develop a method that combines cointegration tests and an equilibrium model. We use these two seemingly disparate methods not only to estimate the size of NTBs, but also to assess its economic impact. We apply our method to the Russian chicken import ban and find larger impacts as compared to a common method based on price gaps. Trade policy analysts can use our method to convert the implicit economic assumptions of cointegration test results into explicit measures of NTBs or other factors that can explain the observed pattern in time series price data and estimate their impacts.
    Keywords: Cointegration test, Non-tariff barriers, Partial equilibrium model, Agricultural and Food Policy, Demand and Price Analysis, International Relations/Trade, Research Methods/ Statistical Methods, F13, F14, Q17,
    Date: 2016–08–02
  4. By: Soon, Byung Min; Thompson, Wyatt
    Abstract: Trade elasticities are critical for price or structural change analysis. The Armington demand model is used to estimate trade elasticities, the country-of-origin bias, and the impact of the U.S. BSE outbreak on preferences. OLS estimation generates theoretically wrong signs, including a positive impact of U.S. BSE on other countries’ demand for imported beef. Results of a Bayesian hierarchical model show that import demand of countries that tend to import more beef from the U.S., such as Japan, Canada, Korea, and Russia, are affected more by the U.S. BSE outbreak than countries, such as the EU that tend not to import from the U.S.
    Keywords: Armington demand model, Bayesian hierarchical model, BSE, Country-of-origin bias., Agricultural and Food Policy, Demand and Price Analysis, International Relations/Trade, Livestock Production/Industries, Research Methods/ Statistical Methods, F13, F14,
    Date: 2016–08–02
  5. By: Daniel Rais
    Abstract: Abstract To say that regionalism is gaining momentum is an understatement. To mourn the lack of progress in multilateral trade rule-making is a commonplace in the discourse of politicians regretting the WTO negotiation standstill, and of “know-it-all†academics. The real problem is the uneven playing field resulting from increasing differences of rules and obligations. The Transatlantic Trade and Investment Partnership Agreement (TTIP) is a very ambitious project. WTI studies in 2014 have shown that the implications for Switzerland could be enormous. But even the combined market power of the two TTIP participants – the EU and the USA – will not level the playing field impairing the regulatory framework, and the market access barriers for trade in agriculture. Such differences will remain in three areas which, incidentally, are also vital for a global response to the food security challenge to feed 9 billion people before the year 2050: market access, non-tariff barriers, and trade-distorting domestic support programmes. This means that without multilateral progress the TTIP and other so-called mega-regionals, if successfully concluded, will exacerbate rather than lessen trade distortions. While this makes farmers in rich countries safer from competition, competitive production in all countries will be hampered. Consequently, and notwithstanding the many affirmations to the contrary, farm policies worldwide will continue to only address farmer security without increasing global food security. What are the implications of the TTIP for Swiss agriculture? This article, commissioned by Waseda University in Tokyo, finds that the failure to achieve further reforms – including a number of areas where earlier reforms have been reversed – presents Switzerland and Swiss agriculture with a terrible dilemma in the eventuality of a successful conclusion of the TTIP. If Swiss farm production is to survive for more than another generation, continuous reform efforts are required, and over-reliance on the traditional instruments of border protection and product support must be avoided. Without a substantial TTIP obliging Switzerland to follow suit, autonomous reforms will remain extremely fragile.
    Date: 2015–04–15
  6. By: Dean Baker; David Rosnick
    Abstract: This paper notes the poor track record of CGE models like the ones used by the Peterson Institute and the International Trade Commission in projecting the changes in patterns of trade following recent trade deals. These models failed to project the large rise in the U.S. trade deficit with Mexico following the implementation of NAFTA or with South Korea following the implementation of KORUS. Past research has shown that these models also failed to correctly identify the winning and losing industries in trade with Mexico following NAFTA. This analysis shows that the ITC model similarly failed to identify winning and losing industries following the implementation of the KORUS.
    JEL: F F1 F4 F10
    Date: 2016–04
  7. By: Christopher Hajzler; Jonathan Rosborough
    Abstract: Foreign investment is often constrained by two forms of political risk: expropriation and corruption. We examine the role of government corruption in foreign direct investment (FDI) when contracts are not fully transparent and investors face the threat of expropriation. Using a novel dataset on worldwide expropriations of FDI over the 1990–2014 period, we find a positive relationship between the extent of foreign investor protections and the likelihood of expropriation when a country’s government is perceived to be highly corrupt, but not otherwise. We then develop a theory of dynamic FDI contracts under imperfect enforcement and contract opacity in which expropriation is a result of illicit deals made with previous governments. In the model, a host-country government manages the FDI contract on behalf of the public, which does not directly observe government type (honest or corrupt). A corrupt type is able to extract rents by encouraging hidden investments in return for bribes. Opportunities for corrupt deals arise from the distortions in the optimal contract when the threat of expropriation is binding. Moreover, a higher likelihood of the government being corrupt increases the public’s temptation to expropriate FDI, magnifying investor risk. The model predicts that expropriation is more likely to occur when the share of government take is low and following allegations of bribes to public officials, and it suggests an alternative channel through which corruption reduces optimal foreign capital flows.
    Keywords: Development economics, Economic models, International topics
    JEL: F23 F21 F34
    Date: 2016
  8. By: Cheung, Yin-Wong; Chinn, Menzie D.; Qian, XingWang
    Abstract: We examine Chinese-US trade flows over the 1994-2012 period, and find that, in line with the conventional wisdom, the value of China’s exports to the US responds negatively to real renminbi (RMB) appreciation, while import responds positively. Further, the combined empirical price effects on exports and imports imply an increase in the real value of the RMB will reduce China’s trade balance. The use of alternative exchange rate measures and data on different trade classifications yields additional insights. Firms more subject to market forces exhibit greater price sensitivity. The price elasticity is larger for ordinary exports than for processing exports. Finally, accounting for endogeneity and measurement error matters. Hence, the purging the real exchange rate of the portion responding to policy, or using the deviation of the real exchange rate from the equilibrium level yields a stronger measured effect than when using the unadjusted bilateral exchange rate. Publication keywords: import, export, elasticity, real exchange rate, processing trade
    JEL: F12 F41
    Date: 2014–12–05
  9. By: Carluccio, Juan; Fougère, Denis; Gautier, Erwan
    Abstract: We study the impact of international trade on firm-level wage bargaining using a unique administrative firm-level dataset for French manufacturing. Exports have a positive effect on the probability of signing firm-level wage agreements, while offshoring has no significant effect. Results are consistent with the predictions of rent-sharing models of the export wage-premium.
    Keywords: collective bargaining; exports; offshoring
    JEL: F16 J52
    Date: 2016–05
  10. By: Eum, Jihyun
    Abstract: This paper investigates the effect of tariffs and non-tariff measures on efforts to upgrade product quality. Following conventional approaches to quality measurement, we examine disaggregated data covering the European Union's food imports from 159 trading partners from 1995 to 2003 across 28 food industries. Food product import tariffs and non-tariff measures are found to affect the rate of quality upgrading. Furthermore, we find the effect of import standard enforcement on quality upgrading to be non-monotonic, in that the products close to the world technology frontier are more likely to upgrade, while those distant from the frontier are less likely to upgrade.
    Keywords: Import competition, quality upgrading, food quality, distance to frontier., Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety, International Relations/Trade, F13, F14, O13,
    Date: 2016
  11. By: Lee, Youngjae; Kennedy, Lynn
    Abstract: This study shows how cyclical risk and collective trade policy actions can cumulatively worsen international food price spikes. By using spatial Computable General Equilibrium (CGE) and Eaton and Kortum’s trade model, this study offers the following conclusions. At first, the cyclical shock in agricultural production might cause agricultural and food price spikes in the international agricultural and food markets. Second, export restrictions and import responses can worsen food price spikes and disrupt trade flows in international agricultural and food markets. Finally, the effect of these collective trade policy actions and resulting food price spikes in international agricultural and food markets do not dissipate even after agricultural production has recovered.
    Keywords: collective trade policy actions, cyclical risk, export restriction., Agribusiness, Agricultural and Food Policy, Demand and Price Analysis, International Relations/Trade, Productivity Analysis, F10, F13, F14, F18, O19, Q17, Q54.,
    Date: 2016–07–31
  12. By: Steinbach, Sandro
    Abstract: This paper is concerned with the relationship between exchange rate volatility and agricultural commodity trade. Since the Bretton Woods system had been established in 1973, many countries have moved from a fixed exchange rate system to a floating system. The increase in volatility has provoked considerable interest both in the theoretical and empirical trade literature. I contribute to the ongoing debate on the relationship between exchange rate volatility and commodity trade by testing for a causal effect at the commodity level. My empirical results provide evidence for a significant effect of exchange rate volatility on agricultural commodity trade. I find that the higher the exchange rate volatility between two countries is, the less these countries trade with each other. The magnitude of this effect varies widely, but is strongest for differentiated commodities. Lastly, I find that the use of the end-month volatility measure masks the true effect of exchange rate volatility as the measure provides significantly lower effect estimates.
    Keywords: Exchange rate volatility, agricultural commodity trade, sectoral gravity model, International Relations/Trade, F14, Q17,
    Date: 2016–05
  13. By: Alan V. Deardorff (University of Michigan)
    Abstract: I explore how the concept of Òthe terms of tradeÓ has been used since it was coined by Marshall. Early writers (Taussig, Viner, Dorrance) constructed variations on the relative price of traded goods that Marshall was concerned with, but most of these variations have been left behind in modern uses of the term, which today almost always refer to a relative price of exports and imports. However, when authors have wanted to identify the terms of trade with a particular country and to represent it either symbolically in an economic model or empirically, they have had to choose between defining the terms of trade as the relative price of exports or the relative price of imports. The first to do this was Taussig, who chose the second option, but he was followed by Viner who chose the first, and was followed in this choice by almost all writers for the next several decades. Then, around 1980, TaussigÕs choice came back into fashion among scholars of international finance. I document this contrast in definitions between international trade and international finance, then add slightly to VinerÕs argument for preferring that the terms of trade of a country be defined as the relative price of its exports.
    Keywords: Terms of trade
    JEL: F1
    Date: 2016–05–23
  14. 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
  15. By: Thompson, Jada M.; Pendell, Dustin L.
    Abstract: Disruptions in international trade can cause negative and costly impacts to both exporting and importing countries. These disruptions affect commodity groups differently based on level of processing and type of product. Disaggregating data into sub-commodity groups allows for a better understanding of the impact highly pathogenic diseases can have on trade quantities. In this analysis, a systems approach Hausman-Taylor estimations (HT-SUR) will be applied to estimate the factors affecting bilateral trade of disaggregated poultry commodities during an outbreak of a highly pathogenic avian influenza (HPAI) and exotic Newcastle disease (ND). The ending results will be a granular impact analysis of disease outbreaks on exporting countries by commodity.
    Keywords: Hausman-Taylor, Avian Influenza, Seemingly Unrelated Regression, International Relations/Trade, Research Methods/ Statistical Methods, Q17, C13,
    Date: 2016
  16. By: Byeong-il, Ahn; Younghyeon, Jeon
    Abstract: This paper investigates the effect of a tariff reduction on the world's grain self-sufficiency which is a main component in defining the food security. We develop a theoretical model in which trade, tariff and supply-demand equations are explicitly included, with the classification of food-importing and exporting countries. Empirical equations are estimated using the system generalized method-of-moments (GMM) approach to control endogeneity problem. Estimation results based on panel data for 150 countries over 17 years show that world grain price and world's self-sufficiency rate(SSR) are positively correlated, but the country level GDP per capita, population, agricultural input price, and prices of substitutes for grain have negative effects on world's SSR. The effects of domestic tariff of food-importing countries on the world’s grain SSR are estimated to be positive. Using the estimated coefficients on the empirical equations, we derived the elasticities of grain SSR with respect to the tariff level of food-importing countries. Those are in the ranges of 0.221-0.387. These results support the argument that tariff reduction has a negative effect on the importer’s food SSR.
    Keywords: trade liberalization, tariff reduction, self-sufficiency, system generalized method of moments, Agricultural and Food Policy, International Relations/Trade,
    Date: 2016–08–02
  17. By: Douglas L. Campbell (New Economic School (NES)); Lester Lusher (UC Davis)
    Abstract: We study the impact of trade shocks on inequality using newly constructed micro and macro data. First, we use the Current Population Survey’s (CPS) Merged Outgoing Rotation Group (MORG) from 1979 to 2010 combined with new annual measures of imported inputs, a proxy for offshoring. We find that in periods when US relative prices are high, and imports surge relative to exports, workers in sectors with greater initial exposure to international trade were more likely to be unemployed a year later, but did not experience significant declines in wages conditional on being employed. Contrary to the usual narrative, we find negative wage effects for higher-wage, but not lower-wage workers, particularly for those who are less-educated. Second, sectors most exposed to trade shocks do not experience relative increases in inequality. Third, using aggregate international data for 31 countries, we find that various trade shocks, such as increases in trade with China, are not generally correlated with changes in the income distribution. Instead, using new historical data, we confirm a close connection between top marginal tax rates and top income shares, and find that the level of top marginal tax rates impacts changes in the top 1% share of income, implying that top income shares are a function of historical marginal tax rates.
    Keywords: Inequality, Globalization, Skill-Biased Technological Change, American Manufacturings
    JEL: F10 F16 F41 N60 L60
    Date: 2016–05
  18. By: Kym Anderson
    Abstract: This paper surveys significant contributions made by Australian and New Zealand agricultural and trade economists to our understanding of the extent to which price- and trade-distorting policies affect domestic and international prices and markets for agricultural products and economic welfare. It begins with the theory of policy impacts on producer and consumer prices and value added by farmers. It then surveys efforts to measure the extent of distortions due to such policies, first in Australia and New Zealand and then in other regions of the world. ANZ economists’ efforts to use models to estimate the market and welfare effects of policies nationally and globally are then assessed, before attention turns to their ex ante estimates of the effects of trade agreements. The paper’s online supporting material includes a brief survey of attempts to understand the political economy forces behind those various policies and their recent reforms.
    Keywords: Distortions to agricultural and food markets, nominal and relative rates of assistance, economywide modelling of trade-related policies
    Date: 2016
  19. By: Lionel Fontagné (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics); Angelo Secchi (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); Chiara Tomasi (Università di Trento - Dipartimento di Economia e Management)
    Abstract: Multi-product exporters choose their product mix focusing on their best-performing products. Although their product mix varies across countries (the fickle fringe), the interdependence in demand or production technology making vectors of products systematically co-exported leads to commonalities in this mix across destinations (the stable core). In order to uncover the determinants of the fickle and stable parts of firm export product mix, we use a cross section of firm-product-destination level French and Italian data, taking explicitly into account the choice of not exporting a product to a destination. Using dissimilarity measures instead of rank correlations, we observe a great deal of variability among the product-mixes a firm exports to different destinations. We show that market size, but also the market positioning of a firm and market structure explain part of this observed variability. At the same time, together with this fickle part, we highlight the existence of a stable component among the diverse product-mixes exported. The probability of exporting this core set of products increases with the size of the destination market and with the ability to match demand, but is inversely related to market concentration.
    Keywords: multi-product, multi-country firms, product vectors, demand and concentration
    Date: 2016–05–04
  20. By: Wang, Qingbin; Hansen, James; Xu, Fang
    Abstract: China has rapidly emerged as a large milk producer and dairy product importer and there is a growing need for information on China’s dairy market and trade behavior. This study uses the most recently available data to examine the trends of China’s dairy production, demand, and imports and to assess the potential impacts on U.S. exports of alfalfa and dairy products. While the empirical results suggest that China is very likely to remain as a large importer of alfalfa, powder milk, whey, cheese, and many other dairy products for meeting its growing domestic demand, China’s emerging demand for these imports is expected to bring more opportunities for the U.S. dairy industry. On the other hand, the United States is facing more competitions from other alfalfa and dairy product exporters and more studies are needed for developing effective programs to enhance U.S. competitiveness in the Chinese markets.
    Keywords: China’s dairy market, U.S. dairy exports, alfalfa, powder milk, whey, projection, Livestock Production/Industries, Marketing,
    Date: 2016
  21. By: Daniel Rais
    Abstract: The principle of national treatment, or the non-discrimination clause, applies across many fields of international economic law. This book provides a unique horizontal examination of the principle as it applies within international trade law, international investment law and intellectual property law, whilst also offering challenging and perceptive views on commercial practices, trade law and policy. Combining perspectives from practitioners, academics and members of the judiciary, the book is the first to cover the national treatment principle across the whole field of international economic law – including not only in the domain of WTO law, but also in treaty and contractual settings involving investment and in intellectual propertylaw. It also provides practical insights regarding the application of the principle relevant to inter-state relations, state-investor relations and in the context of intellectual property protection. With its comprehensive interdisciplinary coverage, this book will be of special interest to academics, students and practitioners interested in international economic law and trade, international investment law, and intellectual property law and policy.
    Date: 2014–10–28
  22. By: Ndambendia, Houdou
    Abstract: This paper addresses the trade and investment cooperation between African states and BRIC countries in a dynamic economic environment. No doubt that given it size and open up strategy, China is playing an outstanding role in this cooperation. It appears as the top trading and investor partner among BRIC countries with Africa. Trade is mainly dominated by raw materials coming from Africa to BRIC and manufactured products going to Africa from BRIC. China has the most geographically diversified investment in Africa than other BRIC countries. However, Primary and tertiary sectors are the most targeted sectors for FDI to the continent, leaving behind sector with more labor content. Some policy recommendations are proposed in order for this cooperation to achieve the long term development goal of Africa.
    Keywords: trade, investment, FDI, Africa, BRIC
    JEL: F41 F63 O55
    Date: 2015
  23. By: Bastos; Silva,Joana C. G.; Proenca,Rafael Prado
    Abstract: This paper examines whether export participation matters for job training. The paper draws on longitudinal worker-firm data for Brazilian manufacturing, linked with detailed records on training activity from the main provider. The analysis uses industry-specific exchange rate movements to generate exogenous variation in export status at the firm-level. The findings indicate that export participation tends to increase the share of workers who receive technical upgrading. The results also reveal that technical upgrading has positive returns to trainees within exporting firms. These findings support the hypothesis that exporting requires skill upgrading, and suggest that this is partially achieved by training firms'existing workforce.
    Keywords: Education For All,Labor Markets,Labor Standards,Tertiary Education,Primary Education
    Date: 2016–05–16
  24. By: Asian Development Bank (ADB); Asian Development Bank (ADB) (Economic Research and Regional Cooperation Department, ADB); Asian Development Bank (ADB) (Economic Research and Regional Cooperation Department, ADB); Asian Development Bank (ADB)
    Abstract: Aid for Trade (AfT) to the Pacific is an important enabler of the private sector. Trade costs in the Pacific have been falling but remain high, and continue to constrain SME growth. The development of niche product exports and the use of e-commerce (especially for women-led firms) have allowed for Pacific economy exporters to overcome these difficulties and increase trade primarily with Asia.
    Keywords: aid for trade, aft, trade and industry, alisa di caprio, asia, pacific, pacific trade, e-commerce, trade costs, export, niche exports, niche marketing, digital economy, smes, ict, economic infrastructure, regional connectivity, internet connectivity, mobile connectivity, women-led firms
    Date: 2015–10
  25. By: Bastos,Paulo S. R.; Dias,Daniel; Timoshenko,Olga A.
    Abstract: This paper documents new facts about the joint evolution of firm performance and prices in international markets and proposes a theory of firm dynamics emphasizing the interaction between learning about demand and quality choice to explain the observed patterns. Using data from the Portuguese manufacturing sector, the paper documents that: (1) within narrow product categories, firms with longer spells of activity in export destinations tend to ship larger quantities at similar prices, thus obtaining larger export revenue; (2) older exporters tend to import more expensive inputs; and (3) revenue growth within destinations (conditional on initial size) tends to decline with market experience. The authors develop a model of endogenous input and output quality choices in a learning environment that is able to quantitatively account for these patterns. Counterfactual simulations reveal that minimum quality standards on exports reduce welfare by lowering entry in export markets and reallocating resources from old and large toward young and small firms.
    Keywords: E-Business,Access to Markets,Economic Theory&Research,Airports and Air Services,Markets and Market Access
    Date: 2016–05–10
  26. By: Biswas, Trina; Kennedy, P. Lynn
    Abstract: Using a gravity model framework this paper examines the effect of corruption on bi- lateral agricultural trade. This is the first cross-country study in the trade literature to examine the relationship between corruption and agricultural trade. The article uses five-year panel data from 2006 to 2010 and corrects for sample-selection bias. It also uses an instrumental variable approach for addressing endogeneity concerns. The study provides evidence that corruption can be trade-taxing when the protection level is low, but with the degree of protection higher than a threshold level, it becomes trade-enhancing. The results are robust for different measures of corruption.
    Keywords: Corruption, Agricultural Exports, Gravity Model, International Relations/Trade, Political Economy, Public Economics, F10, F13, F14,
    Date: 2016–05–17
  27. By: Kurata, Hiroshi; Nomura, Ryoichi; Suga, Nobuhito
    Abstract: This study clarifies how a reduction in trade costs affects location and economic welfare in an economy with a vertically-linked industry. We focus on location in upstream and downstream sectors and economic welfare for a reduction in trade costs for intermediate goods. We show that the reduction in trade costs makes upstream and downstream production in the North move to the South, and further liberalization makes some of the upstream productions remove back to the North. We also demonstrate that such reduction in trade costs improves world welfare but does not necessarily benefit for each country.
    Keywords: Industrial location, Vertically-linked industries, North-South trade,
    Date: 2015–09
  28. By: Michel Fouquin; Jules Hugot
    Abstract: This article provides an assessment of the nineteenth century trade globalization based on a systematic collection of bilateral trade statistics. Drawing on a new data set of more than 1.9 million bilateral trade observations for the 1827-2014 period, we show that international trade costs fell more rapidly than intra-national trade costs from the 1840s until the eve of World War I. This finding questions the role played by late nineteenth century improvements in transportation and liberal trade policies in sparking this First Globalization. We use a theory-grounded measure to assess bilateral relative trade costs. Those trade costs are then aggregated to obtain world indices as well as indices along various trade routes, which show that the fall of trade costs began in Europe before extending to the rest of the world. We further explore the geographical heterogeneity of trade cost dynamics by estimating a border effect and a distance effect. We find a dramatic rise in the distance effect for both the nineteenth century and the post-World War II era. This result shows that both modern waves of globalization have been primarily fueled by a regionalization of world trade.
    Keywords: Globalization;Trade Costs;Border Effect;Distance Effect
    JEL: F14 F15 N70
    Date: 2016–05
  29. By: Xiong, Bo
    Keywords: International Relations/Trade,
    Date: 2016–05–24
  30. By: Mitchell, Lorraine S.
    Keywords: international trade, agriculture, geographic indicators, Agricultural and Food Policy, International Relations/Trade, F1, F13, Q17,
  31. By: Chen, Rui; Wilson, Norbert L.; Hartarska, Valentina
    Abstract: This paper explores the impact of HACCP implementation on U.S. fishery imports in 1997 and U.S. meat imports in 2000. To achieve this goal, we build a panel database of information on fishery and meat imports between U.S. and 248 partner countries from 1988-2006. Using AvW gravity model and estimating a difference-in-difference (DID) specification, we study how HACCP implementation in U.S impact the intensity and extensity of the USA fishery imports by truncated OLS, Heckman selection model with fixed effects methods. Results show that the HACCP implement increases the extensive margin effect of US fishery imports; the outcome equation demonstrates the enforcement of HACCP increases in U.S. fishery imports by 35.3% and 13.8%, but no effect in U.S. meat imports no matter what we use as a control.
    Keywords: HACCP, difference-in-difference, fishery import, meat imports, Agricultural and Food Policy, International Relations/Trade,
    Date: 2016
  32. By: Xiong, Bo
    Keywords: International Relations/Trade,
    Date: 2016–05–24
  33. By: Brambilla,Irene; Lederman,Daniel; Porto,Guido
    Abstract: This paper investigates differences in the composition of employment between exporting and non-exporting firms. In particular, it asks whether exporting firms hire more engineers relative to blue-collar workers than non-exporting firms. In a stylized partial-equilibrium model, firms produce goods of varying quality and exporters tend to produce higher quality goods, which are intensive in engineers relative to blue-collar workers. Firms are heterogeneous and more productive firms become exporters and have a higher demand for engineers. The paper provides causal evidence in support of these theories using the Chilean Encuesta Nacional Industrial Anual, an annual census of manufacturing firms. The results from an instrumental variable estimator suggest that Chilean exporters indeed utilize a higher share of engineers over blue-collar workers.
    Keywords: Debt Markets,Economic Theory&Research,Labor Policies,Markets and Market Access,Labor Markets
    Date: 2016–05–31
  34. By: Wamisho, Kassu
    Keywords: International Development, International Relations/Trade,
    Date: 2016–07–31
  35. By: Grant, Jason; Marchant, Mary
    Keywords: International Relations/Trade,
    Date: 2016–05–25
  36. By: Ashok Sharma
    Abstract: Today India is the fastest growing major economy in the world and offers immense opportunities for business and economic partnership. Many countries are reformulating their economic and foreign policies to engage India. Australia too has been taking steps to establish a comprehensive strategic partnership with India. One of the most standout components of this emerging Australia-India strategic partnership is the economic relationship which is noticeable mainly by the Australian resources and energy-driven export to India. However, the synergies and complementarities in other sectors provide huge opportunities for expansion and have yet to form a considerable chunk of Australia-India economic relationship. Given the political will shown at the top level from both the governments for a Comprehensive Economic Co-operation Agreement (CECA), it is imperative to study the trends and prospects for the investment and economic relationship between Australia and India.BETWEEN Australia-INDIA with India. This paper examines the sectors which need to be synergised for a comprehensive Australia-India economic relationship, namely the resources and energy, agriculture and food, education and tourism, health and medical, manufacturing and infrastructure sectors.
    Keywords: Australia-India, economic relation, energy, strategic partnership, Indo-Pacific region, free trade agreement
    JEL: F23 F5
    Date: 2016
  37. By: Nguyen, Huong
    Abstract: This paper critically investigates the impact of China’s agricultural exports on its competitors in third markets in a global context for the 1993-2012 period. We estimate a gravity equation using 6-digit HS classification data of China and 25 major exporters to the top 50 markets. Using instruments for China’s bilateral exports we find that China’s agricultural exports have both complementary and displacement effects on different exporter groups in different third markets. All exporters are negatively affected by China’s exports in Latin American markets while most exporters are positively affected in Asian markets on both intensive and extensive margin. The greatest losers are African and Latin American exporters while the winner is US exporters in most markets. China’s exports have complementary effects on almost exporters in African market on the intensive margin but OECD and Asian market on the extensive margin. Asian exporters are promoted by China’s exports in Asian market on both intensive and extensive margin. OECD exporters are also much more adversely affected in Latin American and even OECD markets on the intensive margin; and in African, Latin American markets on the extensive margin.
    Keywords: China, agricultural exports, gravity model, effects, intensive margin, extensive margin, third markets, International Development, International Relations/Trade,
    Date: 2016–05–25
  38. By: Zhang, Yu; Kibriya, Shahriar
    Abstract: Slave trade affects regional economic development, degree of trust among individuals, community cohesion, and ethnic identity, which in turn have a bearing on the spatial distribution of civil conflict in Africa. Hence, ethnic homelands that have more slaves exported are expected to be more prone to conflict. By using a subnational dataset in Sub Sahara Africa (SSA) between 1997 and 2014, we find that slave trade in the colonial period significantly causes higher risks of civil conflict in the present. In order to reduce the concern of endogeneity, we employ the historical slave trade distances as instruments, which do not affect conflict except through their influence on slave trade.
    Keywords: civil conflict, slave trade, sub Saharan Africa, Institutional and Behavioral Economics, International Development,
    Date: 2016–08–02
  39. By: Daniel Rais
    Abstract: Abstract The year 2013 was less busy than previous years for WTO dispute settlement.WTO Members filed 20 notifications of “requests for consultations†, the DisputeSettlement Body (DSB) established twelve new dispute settlement panels,adopted three panel reports and one Appellate Body report. While few in number, the cases adjudicated in 2013 are of considerable importance. For the first time, a panel and the Appellate Body in Canada – Feed-In Tariff Program ventured into the uncharted waters of trade in energy, in particular the legal status of renewable energy and measures of support to enhance its contribution to the energy mix. Secondly, the panel in EC – Seal Products recognized that public morals of an importing country relating to processing products in the country of origin is a legitimate concern, which may restrict imports. It will be interesting to see how the Appellate Body rules on the point in 2014. It will be crucial in assessing so-called production and process methods (PPMs), which are also essential for environmental and human rights protection. It is noteworthy in the context of this report that both panels were chaired by Swiss nationals. Thirdly, the 2013 case law on anti-dumping, in the panel reports China – X-Ray Equipment and China – Broiler Products, had its focus on China, strengthening the rule of law in Chinese anti-dumping determinations and procedures.
    Date: 2014–10–15
  40. By: Abdelaaziz Ait Ali; Yassine Msadfa
    Abstract: Morocco, Tunisia and Egypt (such as many other developing countries) have always considered pro-active industrial policies as an important means to upgrading their manufacturing sector. In an era of premature deindustrialization, the manufacturing sector is expected to promote structural change and economic convergence allowing job creation. On this basis, this paper thus analyzes the pace of structural transformation for the three North African countries in the last decade using two approaches. First, this study analyzes labor reallocation between five sectors of the economy and assess to what extent this movement contributes to the overall productivity growth. The second approach applied in this study is related to the construction of new measures for exports performance, quality and variety dimensions. Results show that for the case of Morocco and Tunisia, performances are comparable with a reallocation effect that was positive and contributed to 18% and 21% respectively to overall productivity growth, driven mainly by services that were able to create more and more employment in parallel with an increase in their efficiency as measured by productivity gains. However, Morocco has witnessed a productivity growth around 3.7% per year in average while in Tunisia the performance is well below, rounding up to 1.7%. For Egypt, the period 1999-2008 experienced a negative contribution of the reallocation effect to overall productivity growth, meaning that the labor factor was moving from high productivity sectors to low productivity sectors. Horizontal policies related to exchange rate management and monetary policy could be the factors to blame for this growth-reducing structural change. In addition, the increased reliance on natural resources could have compromised the reallocation of labor between low to high productivity sectors. For the quality index, it seems that not much improvement has been noted in the 2000s for the three countries, even for industries targeted by the policy makers in each country. For the variety index, the overall performance of the three countries has improved steadily in the last decade, but driven mainly by classic sectors such as textile or food and tobacco. The manufacturing sector in general in these countries has known a shrinking contribution to wealth and employment creation. The deindustrialization process could be overcome through increased integration in global value chains (GVC). Taking full advantage of the changing landscape of the production systems and networks may allow North African countries to accelerate their structural change and enhance their manufacturing sector. These countries are increasing in fact their participation in the GVCs. The challenge for each economy in this case is the capacity to upgrade and climb up the GVC ladder from low value added to high value added activities. At a starting point, it could be enough for a country to integrate the GVC in low value added activities, which is apparently the case for these countries, but beyond a certain level, these economies must aim to climb the GVCs ladder and move away from low value added activities. Describing the right ingredients for any industrial policy is, in the authors’ point of view, the best way to deceive, but economists agree on the importance of upgrading the logistics and infrastructure framework, which are relevant to keep the economy competitive and highly anchored to international markets. In addition, a success in climbing the GVC ladder is contingent on capacity to ensure the supply of skilled labor to leverage the challenge and move the economy to high value added activities. Active interventions in selective sectors is not enough to build a strong manufacturing sector and a competitive economy. A “policy mix” between vertical and horizontal policies is to be kept in mind. Maintaining a sound macroeconomic framework is also crucial, especially regarding monetary policy decisions, exchange rate movements and the fiscal policy stance.
    Date: 2016–04
  41. By: Andrew Prag; Thomas Lyon; Aimée Russillo
    Abstract: This report explores potential effects of the recent rapid growth in Environmental Labelling Information Schemes (ELIS) around the world, with a focus on the implications of ELIS multiplication for environmental effectiveness and international trade. As empirical work on the environmental effects of ELIS multiplication is just beginning to appear, insights from the theoretical literature on label competition are presented. Modelling suggests that competition between labels may reduce environmental performance relative to a single label with strict environmental goals, though stylised modelling may not accurately reflect the complex real-world interactions of schemes. The analysis is complemented with an overview of empirical studies on environmental effects, including evidence that label competition has led to market-driven convergence of standards in some sectors, such as forest certification. However, it is important that convergence leads to more holistic and streamlined ELIS rather than acting as a weakening influence on the stringency and quality of standards or how schemes are implemented, to maximise environmental effectiveness. Multiplication of ELIS could have implications for the ways that labelling schemes interact with international trade, particularly in terms of market access and international competitiveness. Although difficult to demonstrate empirically, the conditions that could lead to such effects are described conceptually in the report, noting particularities of certain types of schemes such as quantitative footprints. The report also documents a range of ways that government and non-government bodies have responded to ELIS multiplication, such as mutual recognition of schemes and creation of “focal” schemes or standards that can lead to market convergence. Such responses could also alter trade effects of ELIS under certain conditions, for example if a particular voluntary scheme becomes sufficiently dominant in a country to be perceived as a “de facto” market entry requirement by suppliers in other countries. L’objet du présent document est d’étudier les retombées potentielles de la multiplication des dispositifs d’éco-étiquetage et d’information environnementale (DEIE) observée depuis peu dans le monde, en particulier du point de vue de l’efficacité environnementale et du commerce international. Comme il y a peu d’études empiriques sur la multiplication des DEIE, les résultats des travaux de modélisation théoriques concernant la mise en concurrence des dispositifs sont présentés. D’après les exercices de modélisation théorique, la concurrence entre labels peut réduire la performance environnementale par rapport à un label unique visant des objectifs strictement environnementaux. Cependant, le caractère simplifié des modèles employés et la complexité du paysage dans lequel évoluent les DEIE limitent certainement l’intérêt de la modélisation pour la définition de l’action à mener. L’analyse est complétée par une revue d’études empiriques sur l’efficacité environnementale des DEIE. La concurrence entre labels semble entraîner sur la durée une uniformisation et une convergence des normes tirée par le marché, par exemple, dans le secteur de la certification forestière. Pour que les bienfaits écologiques soient optimaux, il importe que la convergence ne mène pas à l’abaissement du niveau d’exigence et de la qualité des normes utilisées. La multiplication des DEIE pourrait influer sur leur lien avec le commerce international, en particulier en ce qui concerne l’accès au marché et la compétitivité internationale. Bien que ces effets soient difficiles à démontrer à partir de données empiriques, le rapport décrit les conditions en principe susceptibles de conduire à ces effets. Les particularités de certains types de dispositif dans ce regard sont notés, comme par exemple les labels « enceintes ». Le rapport s’intéresse également aux actions prise par les acteurs gouvernementaux et non gouvernementaux pour rendre le marché des DEIE cohérent et prévisible. Ces actions comprennent, par exemple, des accords de reconnaissance mutuelle ou la création de normes ou labels de « référence ». Ces actions peuvent également mener une influence sur le commerce international, par exemple si un dispositif d’application facultative gagne un part de marché qui semble constituer un critère de facto d’entrée sur le marché.
    Keywords: trade and environment, information policy approaches, product environmental footprints, Ecolabels, environmental reporting, Eco-labels, rapports environnementaux, politique d’approches informationnelles, empreintes environnementales des produits
    JEL: F18 L15 Q56 Q58
    Date: 2016–04–25
  42. By: Daniel Rais
    Abstract: Asian Development Review Volume 33, Issue 1 - March 2016:  More than one-third of the World Trade Organization-notified services trade agreements that were in effect between January 2008 and August 2015 involved at least one South or Southeast Asian trading partner. Drawing on Baier and Bergstrand’s (2004) determinants of preferential trade agreements and using the World Bank’s database on the restrictiveness of domestic services regimes (Borchert, Gootiiz, and Mattoo 2012), we examine the potential for negotiated regulatory convergence in Asian services markets. Our results suggest that Asian economies with high levels of preexisting bilateral merchandise trade and wide differences in services regulatory frameworks are more likely candidates for services trade agreement formation. Such results lend support to the hypothesis that the heightened “servicification†of production generates demand for the lowered services input costs resulting from negotiated market openings. Â
    Date: 2016–03–01
  43. By: Kechagia, Polyxeni; Metaxas, Theodore
    Abstract: FDI inflows are a significant form of capital flows mostly towards the developing countries and they decisively affect the host country’s economic growth, the macroeconomic stability, the infrastructure and the governmental policy. The present paper focuses on the FDI inflows absorbed by the Central Asian countries, studying the case of Uzbekistan that attracts limited amount of FDI contrary to other countries of the region. It is argued that Uzbekistan attracts FDI mostly because of its market size and its adequacy on natural resources; however, the transformations performed failed to further increase the country’s attractiveness to foreign investors.
    Keywords: FDI, developing countries, Uzbekistan, Central Asia, capital inflows
    JEL: F21 O16 O18 R11
    Date: 2016
  44. By: Nigatu, Getachew; Adjemian, Michael
    Abstract: The United States historically played a dominant role in global agricultural commodity trading, and therefore price formation, for major food, feed and fiber commodities. But the share of U.S. agricultural commodity export has recently declined, and international supply and demand fundamentals likely play a larger role in setting commodity prices. Using wavelet coherence methods, this paper examines the price discovery process between the U.S. and international prices for corn, soybean, and cotton. The wavelet analyses reveal that short-run (around 20 trading days) relationship between the U.S. and international prices is, in many cases, not stable. The two major agricultural commodity exporters, the US and Brazil, experience long-run relationships in corn and soybean prices. Unlike Japan, Chinese commodity prices share little or no relationship with the U.S. prices even though China is one of the biggest export market for the US.
    Keywords: agricultural commodity price, cointegration, price discovery, wavelet coherence analysis, Demand and Price Analysis, International Relations/Trade,
    Date: 2016
    Date: 2016
  46. By: Jan Hanousek (CERGE-EI, Charles University); Evzen Kocenda (Institute of Economic Studies, Charles University)
    Abstract: We analyze how efficiency of firms in the Czech Republic is affected by their size, age, competition, capital structure, ownership types, and global financial crisis. We employ the stochastic frontier approach, use a large and detailed dataset, and cover time span 2001-2012. We show that larger firms cannot be associated with better efficiency in general. Effect of their age has only negligible impact. Impact of the capital structure is shown to be strong in large and more leveraged firms. Higher competition is not contributive to efficiency neither on individual nor aggregate levels. While effects of firm characteristics are small, the effects of ownership are economically substantial. We show that majority owners are most contributive with respect to firm’s efficiency when compared to other categories we analyze. Minority owners with legally grounded power are able to impose significant efficiency improvement. The effect of the foreign ownership is strongest when foreign owners control firms with less than majority of voting power. Minority owners sharing the control do not seem to contribute to efficiency. The impact of crisis is not balanced but can be regarded as negative in general. The firms’ characteristics change only a little. In contrast, worsening impact of the crisis is evidenced for controlling ownership categories. Minority owners exhibit a limited disciplining effect to improve efficiency after the crisis.
    Keywords: efficiency; ownership structure; firms; panel data; stochastic frontier; Europe
    JEL: C33 D24 G32 L60 L80 M21
    Date: 2016–05
  47. By: You, Kefei
    Abstract: Our study examines home drivers of China’s regional outward FDI. We propose a theoretical framework that incorporates an extended Investment Development Path (IDP) theory, home locational constraints, policy incentives and geographic factors. Empirically, we employ the Bayesian Averaging Maximum Likelihood Estimates method to address model uncertainty. All proposed theories (except for geographic aspects) are found to provide important perspectives explaining China’s regional outward FDI. Our results highlight the importance of government policies but do not support the original IDP hypothesis that outward investment is automatically generated as income grows. Our findings have implications for both regional and central-government policy.
    Keywords: China, regional outward FDI, home determinants, extended IDP theory, home locational constraints, government policies, Bayesian
    JEL: F21 R11 C11 C23
    Date: 2015–05–05

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