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on International Trade |
| By: | Edward J. Balistreri (Division of Economics and Business, Colorado School of Mines); Maryla Maliszewska (The World Bank); Israel Osorio-Rodarte; David G. Tarr; Hidemichi Yonezawa (ETH-Zurich) |
| Abstract: | Evidence indicates that trade costs are a much more substantial barrier to trade than tariffs, especially in sub-Saharan Africa. We decompose trade costs into: (i) trade facilitation; (ii) non-tariff barriers; and (iii) the costs of business services. Our paper is the first CGE-microsimulation model to assess the poverty and shared prosperity impacts of the reduction of trade costs. We examine policies to reduce trade costs in: (i) the "Tripartite" FTA among COMESA, SADC and the East African Customs Union (EACU); (ii) within the EACU alone; and (iii) unilaterally by the EACU. Our CGE model contains imperfect competition and foreign direct investment, which allows us to assess the poverty effects of services liberalization. We find that there are significant reductions in the poverty headcount, the percentage of the population living in poverty and increases in the incomes of the bottom forty percent of the population for all six of our African regions from deep integration in the Tripartite FTA or comparable unilateral reforms by the EACU. Despite the uniform increases in income for the poorest 40 percent, we find that trade facilitation tends to increase the share of income captured by the poorest 40 percent of the population, while services reform decreases the share. We find that the estimated gains vary considerably across countries and reforms. Thus, countries would have an interest in negotiating for different reforms in different agreements. |
| Keywords: | poverty head count, shared prosperity, microsimulation, CGE, trade facilitation, trade costs, services liberalization, non-tariff barriers, regional integration, Tripartite Free Trade, foreign direct investment |
| JEL: | F14 F15 F17 O55 F55 |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:mns:wpaper:wp201607&r=int |
| By: | Gordeev, Dmitriy (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Idrisova, Vittoria (Gaidar Institute for Economic Policy); Kaukin, Andrei (Gaidar Institute for Economic Policy); Ponomarev, Yuriy (Russian Presidential Academy of National Economy and Public Administration (RANEPA); Gaidar Institute for Economic Policy); Filicheva, Evgeniya (Russian Presidential Academy of National Economy and Public Administration (RANEPA)) |
| Abstract: | Reducing the costs of international trade as a result of technological progress and trade liberalization around the world has led to increased fragmentation and internationalization of production, an increase in the intensity of trade in intermediate goods. Under these conditions, is becoming increasingly important tracking global trade chains, the study of factors export and import value-added embodied in goods and services of a country. The aim of this work is to develop theoretical and empirical evaluation of the model value-added trade, as well as the development of recommendations for management of industrial and trade policy with Russia, taking into account the results obtained. In this study, an analysis of the current structure of trade flows, provides an overview of key theoretical and empirical approaches to the evaluation of international trade flows. As part of this study to determine the theoretical form and specified empirical trade model specifications added value. The evaluation of empirical specifications models of international trade added value of the basic principles of functioning of global trade and production chains, identified key factors that determine the intensity of the flow of added value embodied in goods and services. The results of this study allow a new point of view to determine the main directions of economic policy, contributing to the expansion of the volume of exports of high degree of redistribution and improvement of the production structure of the Russian economy. The paper described a promising tool of industrial and trade policy of the Russian Federation, and the relationship between these instruments, fleshed out the key principles for the integration of Russian producers in international value chains. |
| Keywords: | international trade, global supply chains |
| Date: | 2016–06–07 |
| URL: | http://d.repec.org/n?u=RePEc:rnp:wpaper:765&r=int |
| By: | Swarnali Ahmed Hannan |
| Abstract: | The Trans-Pacific Partnership (TPP) has reinvigorated research on the ex-ante impact of trade agreements. The results from these ex-ante models are subject to considerable uncertainties, and needs to be complimented by ex-post studies. The paper fills this gap in recent literature by employing synthetic control methods (SCM) – currently extremely popular in micro and macro studies – to understand the impact of trade agreements in the period 1983–1995 for 104 country pairs. The key advantage of using SCM to address selection bias – one of the persisting issues in trade literature – is that it allows the effect of unobserved confounder to vary with time, as opposed to traditional econometric methods that can deal with time-invariant unobserved country characteristics. Using SCM approach, the paper finds that trade agreements can generate substantial gains, on average an increase of exports by 80 percentage points over ten years. The export gains are higher when emerging markets have trade agreements with advanced markets. The paper shows that all the countries in NAFTA have substantially gained due to NAFTA. Finally, there is some evidence that trade agreements can potentially lead to slight import diversion, but not export diversion. |
| Keywords: | International trade agreements;Bilateral trade;Trade preferences;Exports;Time series;Econometric models;Trade agreements, international trade flows, synthetic control method. |
| Date: | 2016–06–10 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:16/117&r=int |
| By: | ye, ming |
| Abstract: | The rising of Global Value Chains (GVCs) during the last two decades has changed the nature of international trade and investment significantly with many new implications including the generation of value-added. To well understand the international trade in the GVCs context, it is crucial to have a completely decomposition of value-added in the most explicit way. We propose an improved accounting framework based on Koopman, Wang and Wei (2014)’s method by incorporating the Ghosh insight in the value-added demonstration. The new mathematical framework can easily decompose the exports in the form of final demand (including both the intermediate and final good exports). It contributes to the current value-added decomposition GVCs literature because the new method could successfully 1) trace the exports goods propagation route to all the way to the ultimate destination country; 2) trace the value-added terms to include both domestic and foreign double counting terms; 3) show where the value-added double counting terms come from and give explicit expression of domestic and foreign double counting terms. The new framework can also be used for bilateral exports (the most common trade pattern) decomposition directly. At last, we present the dis-aggregated decomposition results for sectoral and bilateral sectoral level trade between China and Brazil based on the WIOD database. |
| Keywords: | Input-Output table, Value-added decomposition, Global value chains |
| JEL: | F12 |
| Date: | 2016–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:73476&r=int |
| By: | Jamal Ibrahim Haidar; Seyed Hossein Mirjalili |
| Abstract: | After matching a rich micro-level Iranian customs dataset with a macro-level cross-country database on Iranian diaspora stocks, we establish that diaspora matters for dynamics of Iranian exporters. We document the extent to which Iranian emigrants foster exports through both intensive and extensive margins at the micro-level. We show that destinations with more emigrants from Iran attract more Iranian exporters and allow them to survive longer and grow faster. One plausible explanation is that the diaspora channel reduces the fixed cost of exporting that Iranian exporters incur to enter a destination, those related to creating distribution channels, and those associated with learning about market demand. Our results add firm-level insight to the burgeoning literature on the channels through which emigration could impact economic integration. As Iran is now trying to integrate more with the global economy, these results suggest that Iranian embassies across the world have a role to play in bridging the gap between Iranian diaspora and exporters through trade promotion exhibitions and workshops to encourage greater trade between Iran and the rest of the world. |
| URL: | http://d.repec.org/n?u=RePEc:qsh:wpaper:449876&r=int |
| By: | Zoltán Elekes; Balázs Lengyel |
| Abstract: | How does international trade of foreign-owned companies contribute to regional economic growth in less developed regions? Are there knowledge externalities at play between co-located trade activities of foreign and domestic firms? We address the above questions by analysing the impact of technological relatedness of regional import and export activities in manufacturing, performed by foreign and domestic companies on regional employment growth in Hungary between 2000 and 2012. Results suggest that the related variety of export activities and the relatedness between import and export products benefits regional employment growth in general, while the host economy benefits more from the technological relatedness of domestic firms’ trade activities, rather than relatedness to or between foreign firms’ activities. Employment of domestic firms benefits from the trade activity of co-located foreign firms only if it is in the same product class. |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1620&r=int |
| By: | Engler, Philipp; Tervala, Juha |
| Abstract: | Several studies have analyzed the trade and output effects of the Transatlantic Trade and Investment Partnership (TTIP) between the United States and the European Union, but our paper is the first attempt to study its welfare effects. We measure the welfare effect of TTIP as the percentage of initial consumption that households would be willing to pay for TTIP in order to remain as well off with TTIP as without it. The discounted present value of the welfare gain of TTIP, which leads to the elimination of tariffs and cuts in non-tariff measures by 25%, is in the range of 1% to 4% of initial consumption, depending on the parameterization. The welfare gain increases in the elasticity of substitution between domestic and foreign goods. The bulk of the welfare gain is caused by cuts in non-tariff measures. |
| Keywords: | tariffs,TTIP,trade agreement,trade liberalization |
| JEL: | F13 F41 E60 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fubsbe:201617&r=int |
| By: | Kazunobu Hayakawa (Inter-disciplinary Studies Center, Institute of Developing Economies, Japan); Nuttawut Laksanapanyakul (Science and Technology Development Program, Thailand Development Research Institute, Thailand); Hiroshi Mukunoki (Faculty of Economics, Gakushuin University, Japan); Shujiro Urata (Economic Research Institute for ASEAN and East Asia, Graduate School of Asia-Pacific Studies, Waseda University, Japan) |
| Abstract: | We examine the impact of free trade agreement (FTA) utilisation on import prices. For this analysis, we employ establishment-level import data with information on tariff schemes, that is, the FTA and most-favoured-nation schemes used for importing. Unlike previous studies in this literature, we estimate the effects of FTA utilisation on prices by controlling for the differences in importing firms' characteristics. Our main findings are as follows. First, the effect of FTA use is overestimated when not controlling for the importing firm-related fixed effects. Second, the average effect of the tariff reduction induced by FTA utilisation is a 3.6-6.7 percent rise in import prices. Third, in general, we do not find a price rise resulting from the costs of compliance with the rules of origin. Fourth, we also find several other factors that affect import prices in the case of FTA utilisation. |
| Keywords: | FTA, Prices, Thailand |
| JEL: | F15 F53 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:era:wpaper:dp-2016-24&r=int |
| By: | BAHMANI-OSKOOEE, Mohsen; HALICIOGLU, Ferda; GHODSI, Seyed Hesam |
| Abstract: | This research presents first empirical time series evidence of the asymmetric impact of exchange rate changes on Britain’s trade balances with her 8 trading partners. Recent advances in time series and cointegration analysis have allowed for the estimation of the nonlinear effects of currency depreciations on countries’ trade balances. To this extent, we employ the nonlinear version of the Autoregressive Distributed Lag (ARDL) approach to cointegration and error correction methodologies to examine whether pound appreciations affect trade differently than do pound depreciations. We use monthly trade data which runs from 1998M1 to 2015M11 to capture more robustly the asymmetric impacts of exchange rate changes on trade balances. Econometric results from the non-ARDL procedures reveal that there exist long-run relationships in the case of UK-Canada, UK-Germany, UK-Italy, UK-Japan, UK-Korea, and UK-US trade balance models. Nevertheless, we did not find any long-run relationship in the case of UK-Spain and UK-Norway trade balance models. We also present empirical evidence for the existence of long-run asymmetries of exchange rates in the case of UK-Germany, UK-Italy, UK-Korea, and UK-Japan trade balance models. This paper also discusses policy implications of the empirical results as well as offering policy recommendations. |
| Keywords: | International trade, Exchange rates, Asymmetry, Nonlinear Cointegration |
| JEL: | C2 C22 F4 F41 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:73477&r=int |
| By: | Ronald B Davies; Iulia Siedschlag; Zuzanna Studnicka |
| Abstract: | The design of optimal tax policy, especially with respect to attracting FDI, hinges on whether taxes affect multinational firms at the extensive or the intensive margins. Nevertheless, the literature has not yet explored the simultaneous impact of taxation on FDI on these two margins. Using firm-level cross-border investments into Europe during 2004-2013, we do so with a Heckman two-step estimator, an approach which also allows us to endogenize the number of investments and include home country and parent firm characteristics. We find that taxes affect both margins, particularly for firms that invest only once, with 92 percent of tax-induced changes in aggregate inbound FDI driven by movements at the extensive margin. In addition, we find significant effects of both home country and parent firm characteristics, pointing towards the granularity of investment decisions. |
| Keywords: | Foreign direct investment; Taxation; Extensive margin; Intensive margin |
| JEL: | F23 F14 H25 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:ucn:wpaper:201608&r=int |
| By: | JaeBin Ahn; Moon Jung Choi |
| Abstract: | Using the Korean manufacturing firm-level data, this paper confirms that three stylized facts on importing hold in Korea: the ratio of imported inputs in total inputs tends to be procyclical; the use of imported inputs increases productivity; and larger firms are more likely to use imported inputs. As a result, we find that firm-level import decisions explain a non-trivial fraction of aggregate productivity fluctuations in Korea over the period between 2006 and 2012. Main findings of this paper suggest a possible link between the recent global productivity slowdown and the global trade slowdown. |
| Keywords: | Imports;Korea, Republic of;Total factor productivity;Manufacturing sector;Econometric models;Time series;Firm-level imports, Productivity pro-cyclicality, Aggregate TFP growth |
| Date: | 2016–08–05 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:16/162&r=int |
| By: | Claudiu Tiberiu Albulescu (UPT); Daniel Goyeau (CRIEF) |
| Abstract: | Inside the EU, the commercial integration of the CEE countries has gained remarkable momentum before the crisis appearance, but it has slightly slowed down afterwards. Consequently, the interest in identifying the factors supporting the commercial integration process is high. Recent findings in the new trade theory suggest that FDI influence the trade intensity but the studies approaching this relationship for the CEE countries present mixed evidence, and investigate the commercial integration of CEE countries with the old EU members. Against this background, the purpose of this paper is to assess the CEE countries' intra-integration, focusing on the Czech Republic, Hungary, Poland and the Slovak Republic. For each country we employ a panel gravitational model for the bilateral trade and FDI, considering its interactions with the other three countries in the sample on the one hand, and with the three EU main commercial partners on the other hand. We investigate different facets of the trade -- FDI nexus, resorting to a fixed effects model, a random effects model, as well as to an instrumental variable estimator, over the period 2000-2013. Our results suggest that outward FDI sustains the CEE countries' commercial integration, while inward FDI has no significant effect. In all the cases a complementarity effect between trade and FDI is documented, which is stronger for the CEE countries' historical trade partners. Consequently, these findings show that CEE countries' policymakers are interested in encouraging the outward FDI toward their neighbour countries in order to increase the commercial integration. |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1609.02334&r=int |
| By: | Markus Brueckner; Kien Trung Nguyen |
| Abstract: | The Vietnamese economy is characterized by a high degree of international trade openness and a relatively low GDP share of net-exports. This paper examines the effect of growth in the terms of trade, and more specifically, in international commodity prices, on Vietnam's GDP per capita growth. The paper finds that, during 2000-2014, growth in the terms of trade contributed positively to Vietnam’s GDP per capita growth but the effect is not large: less than one-tenth of Vietnam’s GDP per capita growth was due to growth in its terms of trade. The paper argues that the relatively small effect of growth in the terms of trade on GDP per capita growth is due to a low GDP share of net-exports. Econometric model estimates show that transitional convergence accounted for about half of Vietnam's GDP per capita growth during 2000-2014. |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:acb:cbeeco:2016-643&r=int |
| By: | Markus Brueckner; Kien Trung Nguyen |
| Abstract: | The Vietnamese economy is characterized by a high degree of international trade openness and a relatively low GDP share of net-exports. This paper examines the effect of growth in the terms of trade, and more specifically, in international commodity prices, on Vietnam's GDP per capita growth. The paper finds that, during 2000-2014, growth in the terms of trade contributed positively to Vietnam's GDP per capita growth but the effect is not large: less than one-tenth of Vietnam’s GDP per capita growth was due to growth in its terms of trade. The paper argues that the relatively small effect of growth in the terms of trade on GDP per capita growth is due to a low GDP share of net-exports. Econometric model estimates show that transitional convergence accounted for about half of Vietnam's GDP per capita growth during 2000-2014. |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:een:camaaa:2016-54&r=int |
| By: | Yuichi Ikeda (Graduate School of Advanced Integrated Studies in Human Survivability, Kyoto University); Tsutomu Watanabe (Graduate School of Economics, The University of Tokyo) |
| Abstract: | We developed a model to reconstruct the international trade network by considering both commodities and industry sectors in order to study the effects of reduced trade costs. First, we estimated trade costs to reproduce WIOD and NBER-UN data. Using these costs, we estimated the trade costs of sector specific trade by types of commodities. We successfully reconstructed sector-specific trade for each types of commodities by maximizing the configuration entropy with the estimated costs. In WIOD, trade is actively conducted between the same industry sectors. On the other hand, in NBER-UN, trade is actively conducted between neighboring countries. This seems like a contradiction. We conducted community analysis for the reconstructed sector-specific trade network by type of commodities. The community analysis showed that products are actively traded among same industry sectors in neighboring countries. Therefore the observed features of the community structure for WIOD and NBER-UN are complementary. |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:upd:utppwp:071&r=int |
| By: | Sandile Hlatshwayo; Magnus Saxegaard |
| Abstract: | In recent years, the link between the real effective exchange rate (REER) and exports in South Africa has weakened. While exports still rise in response to REER depreciations, the REER-export elasticity is below historical estimates. The literature has put forward a number of possible explanations, from multi-national supply-chains to muted exchange rate pass-through. This research explores the role of policy uncertainty in reducing the responsiveness of exports to relative price changes. We construct a novel “news chatter†measure of policy uncertainty and examine how it, paired with other supply-side constraints, can improve our understanding of export performance. We find that increased policy uncertainty diminishes the responsiveness of exports to the REER and has short and long-run level effects on export performance. Finally, we show that a measure of competitiveness that adjusts for uncertainty and supply-side constraints greatly outperforms the REER in tracking exports performance. |
| Keywords: | Real effective exchange rates;South Africa;Exchange rate depreciation;Exports;Price elasticity;Export performance;Economic policy;Competitiveness, Exports, Policy Uncertainty, Real Effective Exchange Rate |
| Date: | 2016–06–09 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:16/113&r=int |
| By: | Thomas J. Hannigan (Strategic Management Department, Fox School of Business, Temple University); Alessandra Perri (Dept. of Management, Università Ca' Foscari Venice); Vittoria Giada Scalera (Amsterdam Business School, University of Amsterdam) |
| Abstract: | The multinational enterprise (MNE) is the superior form of organization to play arbitrageur of country differences, particularly with respect to high knowledge activities. To this end, extant IB literature has devoted significant efforts to the transfer of knowledge across countries via local embeddedness. However, in a modern business environment characterized by dispersed value chain activities and falling spatial transaction costs, collaborative innovation relationships may be far more complex. In this paper, we argue that the connectedness of inventor networks Ð rather than knowledge spillovers - may transcend requirements of local embeddedness and serve as a crucial source of new ideas and exploration into new technologies. Further, we posit that these collaborations stem out of locations at the subnational level, such as cities, and fall along the somewhat orthogonal dimensions of foreign and domestic connections. Finally, we argue that the operational footprint of the firm serves as a positive moderator on the impact of connectedness on technological exploration. |
| Keywords: | Innovation, Economic Geography, Regional Innovation, Connectedness, Clusters, Multinational Enterprises (MNEs) |
| JEL: | M16 O32 |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:vnm:wpdman:122&r=int |
| By: | Sanjay Kalra |
| Abstract: | Global merchandise trade expanded rapidly over the last 6½ decades and its relationship with global income has seen ebbs and flows. This paper examines the shifts in this relationship using time series data over 1950-2014 and situates it in the current and longer term context. The conjunctural context comes from, among other things, the “great trade collapse†(GTC) and the global financial crisis (GFC) in 2009, and developments since then. The longer term context comes from the relative role of “globalization†and “technology†shocks in accounting for the short and long run variance of global exports and income. The paper estimates trade and income elasticities using ADL models taking account of structural breaks, and impulse response functions from structural VARs. The estimated SVAR model provides a lens to ask whether global trade and income are in a “new normal’ or only “back to (an old) normal†after the GTC and GFC. |
| Keywords: | International trade;Exports;Income;Economic growth;Structural vector autoregression;Econometric models;Global Trade and Income, Elasticities, SVAR, Globalization, Technology shocks, Structural breaks |
| Date: | 2016–07–12 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:16/139&r=int |
| By: | Gee Hee Hong; Jaewoo Lee; Wei Liao; Dulani Seneviratne |
| Abstract: | Asia and China made disproportionate contributions to the slowdown of global trade growth in 2015. China’s import growth slowed starkly, driven by both external and domestic factors, including a rebalancing of demand. Econometric results point to weak investment and rebalancing as the main causes of the import slowdown. Spillover effects from China’s rebalancing are estimated for some 60 countries using value-added trade data, and are found to be more negative on Asia and commodity exporters than others. |
| Keywords: | International trade;China;Asia;Imports;Goods;Demand;Consumption;External shocks;Spillovers;Trade integration;trade linkages, trade elasticities, spillovers Author’s E-Mail Address: ghong@imf.org, jlee3@imf.org, wliao@imf.org, dseneviratne@imf.org |
| Date: | 2016–05–26 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:16/105&r=int |
| By: | Jan Gottschalk; Carl Miller; Lanieta Rauqeuqe; Isoa Wainiqolo; Yongzheng Yang |
| Abstract: | This paper provides an assessment of real exchange rate measures and their impact on trade performance with special reference to two Pacific island countries, Fiji and Samoa. The analysis shows that the commonly used CPI-based real effective exchange rate (REER) measure provides a useful starting point of assessment, but alternative measures based on other price and cost indices should be used to check the robustness of the results, particularly given the large impact of global commodity prices on small open economies. The paper also offers some illustrations of how to quantify the impact of exchange rate movements on trade, especially in the face of data constraints in small open economies. |
| Keywords: | Real exchange rates;Fiji;Samoa;Tourism;Demand;Real effective exchange rates;Balance of trade;Exports;Consumer price indexes;Exchange rate, trade, Pacific, Fiji, Samoa |
| Date: | 2016–08–08 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:16/168&r=int |
| By: | Ruben V Atoyan; Lone Engbo Christiansen; Allan Dizioli; Christian H Ebeke; Nadeem Ilahi; Anna Ilyina; Gil Mehrez; Haonan Qu; Faezeh Raei; Alaina P Rhee; Daria V Zakharova |
| Abstract: | This paper analyses the impact of large and persistent emigration from Eastern European countries over the past 25 years on these countries’ growth and income convergence to advanced Europe. While emigration has likely benefited migrants themselves, the receiving countries and the EU as a whole, its impact on sending countries’ economies has been largely negative. The analysis suggests that labor outflows, particularly of skilled workers, lowered productivity growth, pushed up wages, and slowed growth and income convergence. At the same time, while remittance inflows supported financial deepening, consumption and investment in some countries, they also reduced incentives to work and led to exchange rate appreciations, eroding competiveness. The departure of the young also added to the fiscal pressures of already aging populations in Eastern Europe. The paper concludes with policy recommendations for sending countries to mitigate the negative impact of emigration on their economies, and the EU-wide initiatives that could support these efforts. |
| Keywords: | Emigration and immigration;Central and Eastern Europe;Private sector;Global competitiveness;Skilled labor;Remittances;Income;Economic growth;Gross domestic product;Emigration, remittances, growth, convergence, Eastern Europe |
| Date: | 2016–07–20 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfsdn:16/7&r=int |
| By: | Lorenzo Rotunno (Nuffield College and Blavatnik School of Government, University of Oxford); Adrian Wood (Dept of International Development, University of Oxford) |
| Abstract: | This paper explores empirically the relationship between relative wages and relative endowments of skilled and unskilled workers in open economies across the world. It reconciles different views about the role of national labour markets in wage determination when countries trade. The observed sensitivity of relative wages to variation in endowments in open economies, across countries and over time, is hard to reconcile with the standard HOS model. By contrast, this sensitivity is intrinsic to a more general (so labeled GHO) model in which, as shown by our results, the wage-endowment elasticity depends on the height of barriers to trade and on the share of wages in goods prices. In GHO, openness to trade reduces - rather than eliminates - the sensitivity of wages to variation in endowments. |
| Keywords: | Heckscher-Ohlin, trade and wages, trade liberalisation |
| JEL: | F11 F16 |
| Date: | 2015–10–05 |
| URL: | http://d.repec.org/n?u=RePEc:nuf:econwp:1511&r=int |
| By: | Gordeev, Dmitriy (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Idrisov, Georgiy (Gaidar Institute for Economic Policy); Idrisova, Vittoria (Gaidar Institute for Economic Policy); Kaukin, Andrei (Gaidar Institute for Economic Policy) |
| Abstract: | To date, one of the most used tools for the analysis of international trade is a gravity model of trade. A significant simplification of the model is the replacement cost of trade between the two countries on the distance between them, acting as a proxy variable. Thus, under the costs of foreign trade refers to not only transportation costs, but also the cost of doing this kind of activity as a whole. Administrative, informational, tax, adjustment costs, etc. However, in the academic literature is virtually no research on the analysis of trade flows, taking into account the calculated transportation costs on specific routes. Conducting such a study will fill a gap in the theory of gravitational models of trade, as well as provide an opportunity for more detailed empirical analysis of trade flows on selected routes. The aim is a theoretical modification empirical calibration of the spatial gravity model of trade based on the actual transport cost value of goods on certain routes, recommendations on updating the predictive model of Russia's foreign trade, the development of economic and trade policies, including those aimed at reducing the negative effects of external sanctions and downturn in the economy. To achieve this objective the work objectives: the analysis and systematization of the existing theoretical and empirical approaches to the analysis of foreign trade of goods transportation costs; analysis and systematization of the existing theoretical and empirical approaches to the analysis of the volume and routing trade flows, taking into account the transportation costs for the individual supply chains; modification of the spatial gravity model of trade of Russia to work with detailed trade flows and the cost of transportation of goods in the existing supply chain; empirical assessment of the modified model to the data of the Russian foreign trade in the years 2011-2014, to determine the degree by the amount of the cost of the transport component of the impact of trade flows and routing varying degrees of aggregation. |
| Keywords: | spatial distribution, foreign trade, spatial gravity model of trade, Russia |
| Date: | 2016–06–07 |
| URL: | http://d.repec.org/n?u=RePEc:rnp:wpaper:764&r=int |
| By: | Lanre Kassim |
| Abstract: | Despite the advent of trade liberalisation, trade taxes still remain a huge source of tax revenues in Sub-Saharan Africa. Further trade reforms in the form of the Economic Partnership Agreements (EPAs) could, however, hinder output growth in the region if these reforms lead to a decline in total tax revenues. Motivated by this conundrum, our paper adopts panel data estimators to investigate the impact of trade liberalisation on total tax revenue across 28 Sub-Saharan African countries from 1981 to 2010. We also analysed the impact of freer trade policies on trade and domestic tax revenues. The results indicate that trade liberalisation is associated with an increase in total tax revenues. Also, the reduction of trade tariffs significantly increases and decreases domestic and trade tax revenues, respectively. In addition, greater urbanisation is associated with an increase in total tax revenues while a higher inflation rate decreases tax revenues. |
| Keywords: | Trade liberalisation; Generalised method of moments; Fixed effects; Tax revenue; Sub-Saharan Africa |
| JEL: | C23 F13 F14 H20 O55 |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:ukc:ukcedp:1605&r=int |
| By: | Gino Gancia; Paolo Epifani |
| Abstract: | We study the welfare e¤ects of trade imbalances in a two-sector model of monopolistic competition. As in perfect competition, a trade surplus involves an income transfer to the deficit country and possibly a terms-of-trade deterioration. Unlike the conventional wisdom, however, trade imbalances do not impose any double burden on surplus countries. This is because of a production-delocation effect, which leads to a reduction in the local price index. In the presence of intermediate goods, new results arise: A trade surplus may lead to an appreciation of the exchange rate, to a terms-of-trade improvement and even to a welfare increase. Numerical simulations show that, under realistic assumptions about preferences and technology, the beneficial price-index effect can significantly reduce the direct cost of the transfer. |
| Keywords: | trade imbalances, trade costs, monopolistic competition, intermediate goods |
| JEL: | F1 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:864&r=int |