nep-int New Economics Papers
on International Trade
Issue of 2017‒06‒04
thirty-six papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Impacts of export-platform FDI on backward linkages - Do third country size, trade agreements and heterogeneity of firms matter? Evidence from the Vietnamese supporting industries By Nguyen-Huu, Thanh Tam; Nguyen-Khac, Minh
  2. Economic integration and export complexity: the case of Slovakia By Piotr Gabrielczak; Tomasz Serwach
  3. How Deep is Your Love? A Quantitative Spatial Analysis of the Transatlantic Trade Partnership By Oliver Krebs; Michael Pflüger
  4. On the Geography of Global Value Chains By Pol Antràs; Alonso de Gortari
  5. On the Geography of Global Value Chains By Antràs, Pol; de Gortari, Alonso
  6. The Lerner Symmetry Theorem: Generalizations and Qualifications By Arnaud Costinot; Iván Werning
  7. ChinaÕs Nonmarket Economy Treatment and U.S. Trade Remedy Actions By Jieun Lee
  8. USA trade policy agenda perspectives in international trade By Marcel Kordos
  9. Lithuanian Agri-Food Industry Responses to Russian Import Ban on Agricultural Products By Vlada Vitunskiene; Evaldas Serva
  10. Trade, Education, Governance and Distance: Impact on Technology Diffusion and Productivity Growth in Asia and LAC By Schiff, Maurice; Wang, Yanling
  11. The Role of Transfer Prices in Profit-Shifting by U.S. Multinational Firms : Evidence from the 2004 Homeland Investment Act By Aaron Flaaen
  12. Foreign Direct Investment and Export Growth: empirical evidence from Macedonian economy By Jovanka Damoska Sekuloska
  13. Comparative Advantage in Innovation and Production By Mariano A. Somale
  14. The effect of investing abroad on investment at home: On the role of technology, tax savings, and internal capital markets By Goldbach, Stefan; Nagengast, Arne J.; Steinmüller, Elias; Wamser, Georg
  15. Determinants of Net Exports in Polish and Czech Manufacturing: A Sectoral Approach with Error Correction Model By Magdalena Olczyk; Aleksandra Kordalska
  16. Climate change and trade policy interactions: Implications of regionalism By Harro van Asselt
  17. Short Run Gravity By James E. Anderson; Yoto V. Yotov
  18. Barriers to Public Procurement: A Review and Recent Patterns in the EU By Chiara Carboni; Elisabetta Iossa; Gianpiero Mattera
  19. Taxing and Subsidizing Foreign Investors By Sharma, Rishi
  20. Goods-Market Frictions and International Trade By Pawel Krolikowski; Andrew H. McCallum
  21. The Economic Commission for Latin America (ECLA) was right: scale-free complex networks and core-periphery patterns in world trade By Gala, Paulo; Camargo, Jhean Steffan Martines de; Freitas, Elton
  22. Upstart Industrialization and Exports, Japan 1880-1910 By Christopher M. Meissner; John P. Tang
  23. Overseas Production Expansion and Domestic Transaction Networks By HAYAKAWA Kazunobu; MATSUURA Toshiyuki
  24. Economic Consequences of Immigration to Austria By Sergej Vojtovic; M?gdaléna Tupá
  25. The Effect of Migration on Terror - Made at Home or Imported from Abroad? By Dreher, Axel; Gassebner, Martin; Schaudt, Paul
  26. Bilateral FDI from South Africa and Income Convergence in SADC By J. Paul Dunne; Nicholas Masiyandima
  27. The Role of SMEs in International Trade: Selected Aspects By Joanna Malecka
  28. Casual relationship between FDI and poverty reduction in South Africa By Magombeyi, Mercy T; Odhiambo, Nicholas M
  29. The Nexus between Industrial Exports and Economic Growth in Tunisia: Empirical Analysis By elmakki, asma; Bakari, Sayef; MABROUKI, Mohamed
  30. Making trade work for all By OECD
  31. Evaluation of the Factors that Have the Most Significant Influence on Lithuanian Export By Rita Remeikiene; Ligita Gaspareniene; Alius Sadeckas
  32. Quality Upgrading and the Stages of Diversification By Papageorgiou, Chris; Perez-Sebastian, Fidel; Spatafora, Nikola
  33. The Cross-Border Spillover Effects of Recreational Marijuana Legalization By Zhuang Hao; Benjamin Cowan
  34. The Double-Edged Sword of Global Integration: Robustness, Fragility & Contagion in the International Firm Network By Grant, Everett; Yung, Julieta
  35. Russia-EU28 and Russia-China trade interdependence vs. the competitiveness of the Russian economy By Krzysztof Falkowski
  36. Changes in perception of European integration after Brexit By Andzelika Kuznar; Jerzy Menkes

  1. By: Nguyen-Huu, Thanh Tam; Nguyen-Khac, Minh
    Abstract: The paper investigates the impacts of export-platform foreign direct investment (FDI) on backward linkages. First, in a three-country model, these impacts are explained through the competition effect and the demand effect. Whenever the former is stronger than the latter, the investment has a negative impact on the level of backward linkages and conversely. Otherwise, the level of backward linkages is also affected by third country size, local content requirement, and the power of trade agreements between the host and the third countries. Second, in the case of the Vietnamese supporting industries between 2000 and 2012, export-platform FDI generates a negative effect. Moreover, local content requirement, and trade agreements between Vietnam and third countries (bilateral trade agreement with the U.S. and entry of Vietnam into the WTO) positively impact the level of backward linkages whereas third country size has an ambiguous impact.
    Keywords: export-platform FDI,backward linkages,local content requirement,third country size,power of trade agreements,Vietnam
    JEL: F15 F23 O1
    Date: 2017
  2. By: Piotr Gabrielczak (Department of Macroeconomics, Institute of Economics, University of Lodz); Tomasz Serwach (Department of International Trade, Institute of Economics, University of Lodz)
    Abstract: The goal of the article is to evaluate the impact of the European Union (EU) accession on the complexity of goods in Slovak exports. The traditional theories or trade (Ricardian and Heckscher-Ohlin models) show that such an engagement in economic integration may lead to specialization in the production of either more or less sophisticated goods, depending on the country’s technological advancement and factor endowment. At the same time, increased FDI flows may stimulate the engagement of a country in international production chains with ambiguous effects on export complexity. Because it is impossible to a priori predict the effect economic integration may have on the complexity, it is reasonable to verify it empirically. The authors used the Synthetic Control Method (SCM) to compare the observed post-accession levels of exports complexity in Slovakia with the counterfactual values of that country remaining outside of the EU. The obtained results show that the accession led to an increase in complexity of exported goods.
    Keywords: economic integration, European Union, international trade, complexity, treatment effect, Synthetic Control Method
    JEL: C21 F14 F15
    Date: 2017–02
  3. By: Oliver Krebs; Michael Pflüger
    Abstract: This paper explores the effects of trade liberalization envisioned in a Transatlantic Trade and Investment Partnership (TTIP) between the United States and the European Union. We use a new quantitative spatial trade model with consumptive and productive uses of land and inputoutput linkages. Our calibration draws mainly on the World Input Output Database (WIOD). The eventual outcome of the negotiations is uncertain. Tariffs in EU-US-trade are already very low, however, so that an agreement will have a major impact only by eliminating non-tariff barriers. These are extremely hard to quantify. We address these uncertainties by considering a corridor of trade liberalization paths and by providing numerous robustness checks. We find that even with ambitious liberalization, real income gains within a TTIP are in the range of up to 0.46% for most countries. The effect on outside countries is often negative, and even smaller. Taking land into account scales down the welfare effects quite strongly. Interestingly, we find that all German counties derive unambiguous welfare gains even though the model allows for negative terms-of-trade effects, in principle. Our analysis also implies that in order to arrive at the same welfare gains as under a TTIP, a multilateral liberalization would have to be much more ambitious for the US than for the EU.
    Keywords: international trade and trade policy, factor mobility, intermediate inputs, sectoral interrelations, transatlantic trade, TTIP
    JEL: F11 F16 R12 R13
    Date: 2016–12
  4. By: Pol Antràs; Alonso de Gortari
    Abstract: This paper develops a multi-stage general-equilibrium model of global value chains (GVCs) and studies the specialization of countries within GVCs in a world with barriers to international trade. With costly trade, the optimal location of production of a given stage in a GVC is not only a function of the marginal cost at which that stage can be produced in a given country, but is also shaped by the proximity of that location to the precedent and the subsequent desired locations of production. We show that, other things equal, it is optimal to locate relatively downstream stages of production in relatively central locations. We also develop and estimate a tractable, quantifiable version of our model that illustrates how changes in trade costs affect the extent to which various countries participate in domestic, regional or global value chains, and traces the real income consequences of these changes.
    JEL: C67 D21 D57 D58 F11 F14 F60
    Date: 2017–05
  5. By: Antràs, Pol; de Gortari, Alonso
    Abstract: This paper develops a multi-stage general-equilibrium model of global value chains (GVCs) and studies the specialization of countries within GVCs in a world with barriers to international trade. With costly trade, the optimal location of production of a given stage in a GVC is not only a function of the marginal cost at which that stage can be produced in a given country, but is also shaped by the proximity of that location to the precedent and the subsequent desired locations of production. We show that, other things equal, it is optimal to locate relatively downstream stages of production in relatively central locations. We also develop and estimate a tractable, quantifiable version of our model that illustrates how changes in trade costs affect the extent to which various countries participate in domestic, regional or global value chains, and traces the real income consequences of these changes.
    Keywords: Gains from trade; global value chains; sequential production; specialization; Trade Costs
    JEL: C67 D21 D22 D58 F11 F14 F60
    Date: 2017–05
  6. By: Arnaud Costinot; Iván Werning
    Abstract: The Lerner Symmetry Theorem (Lerner, 1936) establishes the equivalence between import tariffs and export taxes in a simple neoclassical economy with two countries, two final goods, and no trade costs. In this paper we provide a number of generalizations and qualifications of this well-known result. Among other things, we show that the absence of trade deficits is neither necessary nor sufficient for Lerner Symmetry to hold. We conclude by discussing its implications for border tax adjustments.
    JEL: F1 F10 F11 F12 F13 F23
    Date: 2017–05
  7. By: Jieun Lee (University of Michigan)
    Abstract: The price comparability provision of ChinaÕs accession protocol recognizes that WTO members may face special difficulty in determining subsidies and dumping from China, due to its governmentÕs pervasive intervention in the economy. The provision permits importing members to disregard domestic prices or costs in China and to use alternative benchmarks in determining the normal value of Chinese exports. Consequently, this so-called nonmarket economy methodology tends to inflate antidumping and countervailing duty rates. Certain paragraphs of the provision determining dumping expire on 11 December 2016, and yet the heated debate on ChinaÕs economic status post-December 2016 remains ongoing. This paper studies the history of U.S. trade remedy actions against nonmarket economies and traces recent developments and findings at the WTO dispute settlement body. Congressional history shows that antidumping regulations in the U.S. have been constantly amended to catch up with agency practices that discriminate against nonmarket economies. Meanwhile, the Department of Commerce recently started to apply countervailing duties on Chinese imports and has finally codified such practices into law. The paper offers many reasons to believe that the U.S. is equipped with various trade remedy measures to continue Ôspecial treatmentÕ against China, even if the country graduates from a nonmarket economy status.
    Keywords: non-market economy status, anti-dumping
    JEL: F13
    Date: 2016–10–15
  8. By: Marcel Kordos (Alexander Dubcek University in Trencin, Slovak Republic)
    Abstract: International trade means the exchange of goods or services along international borders. This type of trade allows for a greater competition and more competitive pricing in the market. Probably the most important single insight in all of international economics is that there are gains from trade - that is, when countries sell goods and services to each other, this exchange is almost always to their mutual benefit. Importing and exporting of goods is big business in today's global economy thus international trade is supposed to be beneficial for a particular economy even for the USA. The question is arising if Americans shouldn’t buy American goods whenever possible, to help create jobs in the United States. Paper deals with issues such as the U.S. international trade characteristics in terms of territorial and commodity structure, the U.S. export trade promotion strategy, the impact of trade on the US economy and international trade development as well as President’s Obama strategy regarding the U.S. international trade strategy. This study is analyzing the US trade policy agenda and discussing the impact of foreign trade on the U.S. economy and its current status in international economic relations. To accomplish this goal, methods such as analysis, comparison, synthesis and logical deduction are to be used; facts from scientific and professional publications, periodical and non-periodical press. International trade of the United States is one of the world's most significant economic markets. The country is among the top three global importers and exporters. USA has trade relations with many other countries. Through efficiency, competition, and relationships the international trade can increase economic growth and allow for all countries to benefit from it.
    Keywords: competitiveness enhancement, export promotion strategy, international economics, jobs creation
    JEL: F19 F59 F63
    Date: 2017–05
  9. By: Vlada Vitunskiene (Aleksandras Stulginskis University, Lithuania); Evaldas Serva (Aleksandras Stulginskis University, Lithuania)
    Abstract: For a long time before the Russian import ban, Russia was the second most important destination for Lithuania's agricultural exports (after the EU common market), especially for processed dairy and meat products, and edible vegetables. Russia imposed a ban on most agricultural products from the EU in August 2014. Moreover, a year earlier, Russia closed its market for Lithuanian dairy products citing safety concerns. Among the EU countries, the economic impact of the Russian import ban of agricultural products may be most acute in Lithuania. Purpose of the article is to examine the Russian import ban consequences for Lithuanian agricultural products export and the agri-food industry responses to the Russian import restrictions. The examination has been based on trade and production performance indicators. Time series and spatial analysis of agricultural export flows by HS and the food production. Due to the Russian embargo Lithuania’s agricultural production export worth sharply declined in 2014-2015. In volume terms, Lithuania’s export of cheese, cream, yogurt and other fermented milk products was significantly lower in 2016 than in 2013, although, butter export has increased, whereas a higher share of raw milk was processed into butter. The production profile of the dairy processing industry has been changing since 2014. Processors have increased output of products like butter and skimmed milk powder which can be sold or stored within the EU intervention programs or exported to alternative markets within the EU or beyond. In 2015-2016, the export of banned agricultural products has been reoriented towards new markets. The profitability of dairy processors decreased in 2014. However, in 2015, main dairy processors increased the profitability again due to the greatly reduced farm-gate milk prices. Despite the drop of farm-gate milk prices, majority of farmers are continuing milk production. Some of the farms completely switched to local food markets
    Keywords: agri-food products export, processing industry, Russian import ban, profitability
    JEL: F14 Q17 Q18
    Date: 2017–05
  10. By: Schiff, Maurice; Wang, Yanling
    Abstract: This paper examines the impact of North-South trade, education, governance and North-South distance, on technology diffusion and total factor productivity (TFP) growth in the South, focusing on LAC and East Asia over the 32 years before the Great Recession (1976-2007). Findings are: i) TFP rises with education, trade, governance (ETG) and imports’ R&D content, and falls with distance to the North; ii) an increase of LAC’s ETG to East Asia’s levels raises TFP by 165%, fully accounting for its TFP gap with East Asia; iii) the impact of the education gap equals the sum of the governance and openness gaps; and iv) South America’s loss of TFP relative to Mexico associated with its greater distance to US-Canada (both Europe and Japan) is 9.3 (0) percent.
    Keywords: Trade,Governance,Education,Distance,Technology Diffusion,Productivity growth
    JEL: F22 J61
    Date: 2017
  11. By: Aaron Flaaen
    Abstract: Using unique transaction-level microdata, this paper documents profit-shifting behavior by U.S. multinational firms via the strategic transfer pricing of intra-firm trade. A simple model reveals how differences in tax rates, both the corporate tax rates across countries and the dividend repatriation tax rate over time, affect the worldwide profit-maximizing transfer-prices set by firms for intra-firm exports and imports. I test the predictions of the model in the context of the 2004 Homeland Investment Act (HIA), a one-time tax repatriation holiday which generated a discreet change in the incentives for U.S. firms to shift profits to low-tax jurisdictions. Matching individual trade transactions by firm, product, country, mode-of-transport, and month across arms-length and related-party transactions (following Bernard, Jensen, and Schott (2006) ) yields a measure of the transfer-price wedge at a point in time. A difference-in-difference strategy reveals that this wedge responds as predicted by the model: In the period following passage of the HIA, the export transfer price wedge increased in low-tax relative to high-tax countries, while the import transfer price wedge exhibited the opposite behavior. Consistent with the form of tax avoidance known as "round-tripping, the results imply $6 billion USD of under-reported U.S. exports, nearly $7 billion USD of over-reported U.S. imports, and roughly $2 billion USD in foregone U.S. corporate tax receipts.
    Keywords: Corporate Taxes ; Intra-firm Trade ; Multinational firms ; Profit-Shifting ; Transfer Prices
    JEL: F23 H26 F14 H25 H32
    Date: 2017–05
  12. By: Jovanka Damoska Sekuloska (University of Information Science and Technology “St. Paul the Apostle”)
    Abstract: Research background: Foreign direct investment is perceived as a valuable tool for economic growth. The growth could be realized less and more as a set of benefits depending on the FDIs features. In the period from 2009 to 2014 it is noticed a remarkable increase in the share of FDIs inflow in automotive sector in Macedonian economy, from 2.8% to 11.2%. Thus, the issue of FDIs inflow in automotive sector is a strong reason and an incentive to be examined from different aspects of influence on the economic growth. Purpose of the article: The aim of the paper is to analyze the influence of the increased FDIs inflow in automotive industry as a reason behind the remarkable export growth. The research interest of the study is to recognize the importance of the FDIs inflow structure as a determinant of the export structure. Methodology/methods:Within the paper it is developed a model that identifies the FDIs as a factor of growth of the export performances. A regression analysis is used to examine the correlation between the FDIs inflow and export. Since the correlation doesn’t explain the causality, within the paper the Granger causality test is applied to examine causality between the FDIs inflow and increased export. Findings:The results suggest that FDIs create a good base for qualitative shift in the export structure of Macedonian economy. The paper associates growth of sectoral export with the growth of FDIs in that sector. Due to the increased FDI inflow in automotive industry this sector significantly has increased its share in total Macedonian export. The paperindicates that FDIs can be considered as a way of engagement in the global supplying chains which additionally influences positively to the competitiveness and export potentials of the host suppliers.
    Keywords: FDI; automotive industry; export; competitiveness
    JEL: F14 F21 F23
    Date: 2017–05
  13. By: Mariano A. Somale
    Abstract: This paper develops a multi-country, general equilibrium, semi endogenous growth model of innovation and trade in which specialization in innovation and production are jointly determined. The distinctive element of the model is the ability of the agents to direct their research efforts to specific goods, in a context of heterogeneous innovation capabilities across countries and contemporaneous decreasing returns to R&D. The model features a two-way relationship between trade and technology absent in standard quantitative Ricardian trade models. I calibrate the model using a sample of 29 countries and 18 manufacturing industries and quantify the importance of endogenous adjustments in technology. I find that endogenous adjustments in technology due to directed research can account for up to 52.8% of the observed variance in comparative advantage in production. In addition, the model suggests that standard Ricardian models overestimate the reductions in real income from increases in trade costs and underestimate the increment in real income due to trade liberalizations.
    Keywords: Trade ; Innovation ; Directed research ; Quantitative models
    JEL: F10 F11 O30
    Date: 2017–05
  14. By: Goldbach, Stefan; Nagengast, Arne J.; Steinmüller, Elias; Wamser, Georg
    Abstract: This paper examines the relationship between foreign and domestic investment activity of multinational enterprises. The empirical analysis is based on micro data of German firms and their operations at home and abroad, including information on investment in fixed assets. The empirical approach, which rests upon extensive and intensive margin variation, is shown to produce very robust results. These suggest a positive relationship between foreign and home investment in real capital. This positive effect seems to be mainly related to additional opportunities for tax planning and better access to financing capital. In contrast, we do not find evidence that improved production processes and technology upgrading cause the positive effect on investment at home. Our empirical approach allows us to distinguish between an extensive and intensive margin effect: setting up a new foreign affiliate leads to an immediate positive effect of about EUR 450,000 additional investment; the investment elasticity at the intensive margin is estimated to be approximately 0.13.
    Keywords: Outward FDI,Multinational Firms,Domestic Investment,Corporate Taxes,Internal Capital Markets,Technology
    JEL: F23 F61 H25 L23
    Date: 2017
  15. By: Magdalena Olczyk (Politechnika Gdanska, Poland); Aleksandra Kordalska (Politechnika Gdanska, Poland)
    Abstract: Growth model in CEE countries has based on a massive inflow of direct foreign investments, especially in manufacturing, from the onset of the transformation. This resulted in a substantial share of manufacturing goods in total exports and a high ranking position of some CEE countries among the most industrialized economies in the world. The main objective of this paper is to compare the determinants of the international competitiveness, measured by the net exports of the manufacturing sectors in the Czech and Polish economies, by using the database of 13 manufacturing sub-sectors in 1995-2011. The authors research the question of how much foreign and domestic demand, the level of labour costs, the level of sector innovation intensity, the level of sector openness to foreign markets as well as sectoral labour productivity influence the changes in trade balance. Our approach is based on employing an error correction model and SURE model to disaggregated sectoral manufacturing data. The results of the analysis conducted show substantial differences in the roles particular variables play in explaining the net exports in individual sectors. For the majority of Polish and Czech manufacturing sub-sectors, generation of positive trade balance is determined by relative demand growth. An increasing labour productivity influences heavily a positive trade balance of Polish goods in majority of sub-sectors, however, a key factor in Czech sub-sectors is decreasing unit labour costs. The results of the analysis indicate mostly a greater impact of the researched factors on net exports in long rather than short term and the better capacity of the Czech economy to correct deviations from the equilibrium.
    Keywords: CEE economies, net exports, international competitiveness, manufacturing, error correction mode
    JEL: F40 C23 F14 O14 L60
    Date: 2017–05
  16. By: Harro van Asselt (Stockholm Environment Institute)
    Abstract: This report investigates the implications of regionalism for the interaction between trade and climate policy. It examines the implications of regional climate governance for international trade and conversely the implications of regional trade governance for climate change action. Regional approaches to climate change governance are discussed with a specific focus on the rise of “climate clubs” and their implications for international trade. Moreover, regional trade agreements and their current environmental provisions related to climate change are also examined. Building on these analyses, this report explores the various ways in which regional trade agreements could address climate change objectives, and draws lessons from recent developments in regional trade governance for the further evolution of such agreements.
    Keywords: climate clubs, climate coalitions, free trade agreements, regional trade agreements, Trade and environment
    JEL: F13 F18 Q54 Q56 R11
    Date: 2017–05–31
  17. By: James E. Anderson; Yoto V. Yotov
    Abstract: Short run gravity is a geometric weighted average of long run gravity and bilateral capacity. The model features (i) joint trade costs endogenous to bilateral volumes, (ii) long run gravity as a limiting case of efficient investment in bilateral capacities, (iii) a structural ratio of short run to long run trade elasticities equal to a micro-founded buyers' incidence elasticity, and (iv) tractable short and long run models of the extensive margin. Application to manufacturing trade of 52 countries during the globalization period 1988-2006 strongly supports the model. Results solve several time invariance and trade elasticity puzzles in the literature.
    JEL: F10 F14 F15
    Date: 2017–05
  18. By: Chiara Carboni; Elisabetta Iossa; Gianpiero Mattera
    Abstract: The international dimension of public procurement has gained in importance in the last decade and has attracted the attention of economist and policy makers. A number of trade agreements were signed with the intention to remove barriers to procurement markets and favour entry of foreign firms and products. However, empirical evidence shows that, despite the existence of trade agreements, discrimination towards foreign firms still applies in a number of countries around the world. In this paper, we discuss the methodologies used in the economic literature for the identification of overt and covert barriers to public tenders and some empirical evidence from the EU, TED database. We stress the importance of collecting high quality data for meliorating the ability of international traders to detect procurement barriers.
    Keywords: Discrimination in procurement, international trade; procurement barriers.
    JEL: F13 H57
    Date: 2017
  19. By: Sharma, Rishi (Department of Economics, Colgate University)
    Abstract: Many countries impose taxes on foreign investors while also having in place targeted subsidies and tax incentives that are designed to attract them. This paper shows that such a policy can be optimal from the standpoint of a host country. The government has an incentive to tax inframarginal firms because they are relatively immobile. It also has an incentive to subsidize marginal firms because the economic activity generated by such a subsidy can increase domestic wages in excess of the fiscal cost of the subsidy. These tax and subsidy policies improve host country welfare at the expense of foreigners. This analysis is thus able to provide an explanation for why tax coordination efforts can simultaneously entail reduced taxes and subsidies on foreign firms.
    Keywords: international taxation, foreign direct investment, firm heterogeneity, tax competition
    JEL: H87 H25 F23
    Date: 2016–01–01
  20. By: Pawel Krolikowski; Andrew H. McCallum
    Abstract: We present a tractable framework that embeds goods-market frictions in a general equilibrium dynamic model with heterogeneous exporters and identical importers. These frictions arise because it is time consuming and expensive for exporters and importers to meet. We show that search frictions lead to an endogenous fraction of unmatched exporters, alter the gains from trade, endogenize entry costs, and imply that the competitive equilibrium does not generally result in the socially optimal number of searching firms. Finally, ignoring search frictions results in biased estimates of the effect of tariffs on trade flows.
    Keywords: Search ; Trade ; Goods ; Frictions ; Information
    JEL: D83 F12
    Date: 2017–05–23
  21. By: Gala, Paulo; Camargo, Jhean Steffan Martines de; Freitas, Elton
    Abstract: The main purpose of this paper is to apply big-data and scale-free complex network techniques to the study of world trade, with a specific focus on the investigation of ECLA and structuralist ideas. A secondary objective is to illustrate the potentialities of the use of the new science of complex networks in economics, in what has been recently referred to as an econophysics research agenda. We work with a trade network of 101 countries and 762 products (SITC-4) which generated 1,756,224 trade links in 2013. The empirical results based on network analysis and computational methods reported here point in the direction of what ECLA economists used to argue; countries with higher income per capita concentrate in producing and exporting manufactured and complex goods at the center of the trade network; countries with lower income per capita specialize in producing and exporting non-complex commodities at the network’s periphery.
    Date: 2017–03–13
  22. By: Christopher M. Meissner; John P. Tang
    Abstract: Japanese exports between 1880 and 1910 increased massively in volume, changed composition, and shifted away from leading industrialized countries toward poorer Asian neighbors. The product mix also varied with the level of development of the destination, with new products and specializations more likely to ship to less developed regional economies. Using a new disaggregated data set of the bilateral-product level exports for the universe of Japanese trade partners, we find that changes in various extensive margins (new markets, new goods) account for over 30 percent of export growth over this period. Determinants of initial entry include trade costs and market size. Products started in a small number of markets and accumulated additional destinations building on earlier successes. Subsequent entry was also influenced by product-level characteristics interacting with destination-specific characteristics. We confirm that export growth for “new” products was stronger in LDCs than in advanced economies, but the latter still claimed a larger share of overall trade growth. There is little evidence that Japan exported low quality manufactured goods to new, low-income destinations. Instead, reductions in trade costs helped Japan augment market share. Exit is relatively rare but appears to be determined by market-specific demand-side effects and product-specific factors.
    Keywords: market entry, extensive margin, intensive margin, first wave of globalization, export diversification
    Date: 2017–05
  23. By: HAYAKAWA Kazunobu; MATSUURA Toshiyuki
    Abstract: In this study, we empirically examine the effects of customers' foreign direct investment (FDI) on their domestic transaction ties and the performance of their suppliers. In particular, we examine the difference in such effects between the first- (direct) and second-tier (indirect) suppliers. To this end, we utilize a unique firm-level survey in Japan that contains information on inter-firm transaction networks matched with FDI data. Our findings can be summarized as follows. There is no evidence that customers' FDI is more likely to suspend their domestic transactions. Rather, direct suppliers' transaction ties with multinational enterprises (MNEs) are more persistent than those with other firms. Although such an effect becomes weak for transactions between direct and indirect suppliers, we did not find a negative effect. Furthermore, customers' FDI has a significantly positive impact on employment growth for both their direct and indirect suppliers.
    Date: 2017–05
  24. By: Sergej Vojtovic (University of Alexander Dubchek in Trencin, Slovakia); M?gdaléna Tupá (University of Alexander Dubchek in Trencin, Slovakia)
    Abstract: Austria and low unemployment rate, higher salaries, more vacancies in comparison to the Slovak Republic together with the system of state benefits and geographical proximity have caused increased interest of Slovaks in work in the given country. The open asylum politics of Austria and Germany is attractive to immigrants from the third-world countries. Based on the analyses of development of work force emigration from the Slovak Republic and immigration to Austria, the study identifies migration trends in both countries. Calculations of migration benefits from the arrival of work force from the Central and East European countries and calculations of losses and benefits from the migration from the third-world countries aim at explaining the development of economical, social and demographic parameters in the country. Mathematic calculations of losses and benefits from migrations for a country and society are also introduced. These are based on the statistical data available from Eurostat, WTO, Statistical Office of the Slovak Republic, Statistic Austria, Ministry of Labour, Social Affairs and Family, World Bank, International Monetary Fund and data acquired from empirical surveys published in scientific publications. The study uses general scientific methods of induction, deduction, scientific abstraction and comparison, analysis and synthesis of selected facts, phenomena and processes. To calculate the data acquired, statistical and mathematical methods and calculations were implemented. The result of the experiment is to create a model approach to the evaluation of economic benefits and losses from work force migration from the Central and East European countries and, at the same time, immigration from the third-world countries. It may be stated that work force migration from Central and East Europe is beneficial for Austria. The study also shows expenses on immigrants while asylum procedures are taking place followed by expenses on their integration into the labor market and society.
    Keywords: migration, migration management, labour migration, work force, target country, source country
    JEL: F22
    Date: 2017–05
  25. By: Dreher, Axel; Gassebner, Martin; Schaudt, Paul
    Abstract: We investigate whether the stock of foreigners residing in a country leads to a larger number of terrorist attacks on that country. Our instrument for the stock of foreigners relies on the interaction of two sets of variables. Variation across host-origin-dyads results from structural characteristics between the country of origin and the host, while variation over time makes use of changes in push and pull factors between host and origin countries resulting from natural disasters. Controlling for the levels of these variables themselves and fixed effects for dyads and years, the interaction provides a powerful and excludable instrument. Using data for 20 OECD host countries and 187 countries of origin over the 1980-2010 period we show that the probability of a terrorist attack increases with a larger number of foreigners living in a country. However, this scale effect is not larger than the effect domestic populations have on domestic terror. We find some evidence that terror is systematically imported from countries with large Muslim populations. A larger number of attacks against foreigners in the host country increases the risk of terror from foreigners there. We find that host country policies relating to integration and the rights of foreigners are key to fight terror- stricter policies that exclude foreigners already living in a country increase the risk of terror. High-skilled migrants are associated with a significantly lower risk of terror compared to low-skilled ones, while there is no significant difference between male and female migrants.
    Keywords: migration; migration policy; Terrorism
    JEL: D74 F22 F52 P48
    Date: 2017–05
  26. By: J. Paul Dunne (School of Economics, University of Cape Town); Nicholas Masiyandima (School of Economics, University of Cape Town)
    Abstract: This study investigates whether bilateral foreign direct investment between a technology leader country and follower countries has technology and productivity externalities that speed up income convergence among the countries. The study is based the SADC region, in which South Africa is identified as both the technology leader and a major source of FDI for the other 14 developing countries in the region. Using countries’ per capita incomes time series over a period spanning from 1980 to 2011, the results of the study show that bilateral FDI between South Africa and countries in the region fosters income convergence in the region. Countries that have higher FDI stocks from South Africa exhibit higher rates of convergence towards both the regional average per capita income and South Africa’s per capita income, than those that host less FDI stocks.
    Date: 2017
  27. By: Joanna Malecka (Poznan University of Technology Faculty of Engineering Management Strzelecka 11, 60-965 Poznan, Poland)
    Abstract: Research background: International trade is an important stimulant for economic development that simultaneously ensures free access to raw materials, goods, services and technologies. It essentially involves trade in goods, yet what is also significant is the invisible trading sphere (tourism, transport, financing sources). Being a vital factor in macro-economic policies pursued by contemporary national economies, SMEs build the single market, which integrates the European economy, through trade development that directly fosters economic growth. Purpose of the article: The article strives to answer the question whether EU-based SMEs enjoy benefits and greater stability as well as state support when operating in foreign markets. The article presents the contribution of SMEs to international trade conducted by selected EU countries and Poland. The results of the author’s own research relate to the share of SMEs in the sectoral and geographical structure. Methodology/methods: The research findings are based on source data from annual reports and publications that have been produced and made available by financial market institutions and on the author’s own research concerning Polish entrepreneurs. The volume and structure of SME imports and exports in the various markets are outlined by means of analyses, figures and comparisons. Findings: The author’s own research shows that Polish entrepreneurs operating in international markets are primarily driven by: (1) profitability of transactions, (2) prospects for establishing long-term cooperation, and (3) high demand for products originating in their country in foreign markets. The ongoing standardisation and unification with respect to internationalisation should be supported by the state along with forms of financial security and contract insurance. What SMEs expect most is support as regards co-financing investments that are a necessary and costly element of the international activity development process.
    Keywords: export; import; SME; international trade; internationalisation
    JEL: F02 F43 F63 L11 L26
    Date: 2017–05
  28. By: Magombeyi, Mercy T; Odhiambo, Nicholas M
    Abstract: This study investigates the causal relationship between poverty reduction and foreign direct investment (FDI) inflows in South Africa using time-series data from 1980 to 2014. A trivariate framework is used in this analysis, with the addition of real gross domestic product (GDP) as an intermittent variable. Employing the autoregressive distributed lag (ARDL)-bounds testing approach to cointegration and ECM-based causality tests, the results from this study found a distinct unidirectional causality from poverty reduction to FDI in both the short run and the long run when poverty reduction is measured by life expectancy and infant mortality rate. However, the results failed to find any causality, irrespective of the time considered, when poverty reduction is measured by household consumption expenditure. Based on the results from this study, it can be concluded that the causal relationship between FDI and poverty reduction is sensitive to the proxy used to measure the level of poverty reduction.
    Keywords: South Africa; Household consumption expenditure; Life expectancy; infant mortality
    Date: 2017–05
  29. By: elmakki, asma; Bakari, Sayef; MABROUKI, Mohamed
    Abstract: This paper investigates the relationship between industrial exports and economic growth in Tunisia. In order to achieve this purpose, annual data for the periods between 1969 and 2015 were tested using the Johansen co-integration analysis of VECM and the Granger-Causality tests. According to the result of the analysis, it was determined that there is a negative relationship between industrial exports and economic growth in the long run term. Otherwise, and on the basis of the results of the Granger causality test, we noted the absence of a causal relationship between industrial exports and economic growth in the short term. These results provide evidence that industrial exports, thus, are not seen as the source of economic growth in Tunisia and suffer a lot of problems and poor economic strategy.
    Keywords: Industrial Export, Economic Growth, Tunisia, Cointegration, VECM and Causality.
    JEL: F1 F14
    Date: 2017–05–10
  30. By: OECD
    Abstract: Against the background of rising anti-globalisation sentiment, this report argues that, while there are good reasons for some people to be angry, trade is not the root of many problems, nor can it solve them on its own. What is needed is an integrated approach to make the whole system work better for more people. This means three things. First, creating the environments where benefits from trade can materialise through domestic policies that encourage opportunity, innovation and competition by cutting unnecessary trade costs and investing in people and digital and physical infrastructure. Second, doing more to bring everyone along, including in lagging regions where trade shocks can be concentrated. Third, making the international system work better, harnessing the full range of international economic co-operation tools to level the international playing field, addressing the gaps in the rules and doing more to ensure that everyone, from companies to countries, plays by the rules.
    Keywords: cooperation, Globalisation, labour, rules
    JEL: F13 F16 F18 F6
    Date: 2017–05–25
  31. By: Rita Remeikiene (Lithuanian Institute of Agrarian Economics, V. Kudirkos 18-2, 03105, Vilnius, Lithuania); Ligita Gaspareniene (Lithuanian Institute of Agrarian Economics, V. Kudirkos 18-2, 03105, Vilnius, Lithuania); Alius Sadeckas (Mykolas Romeris University, Economics Institute, Ateities str. 20, 08303, Vilnius, Lithuania)
    Abstract: Export is an important part of economics not only in a country’s, but also in international level. Over the last two decades, development of export has been one of the fastest and most acceptable strategies of economic progress. Export is also one of the ways to improve a country’s balance of payments, reduce trade deficits, and raise the general life standards. Scientific literature does not contain any unambiguous models developed for evaluation of the impact of the influential factors on the volumes of exports in the countries with similar economic conditions. Hence, the scientific problem for this research is formulated as follows: which factors have the most significant impact on export and how does this impact manifest? is to conduct evaluation of the influential factors affecting Lithuanian export leaning on the theoretical aspects of export determinants. The methods of the research include comparative and systematic analysis of the scientific literature, correlation and regression analysis. Mathematical estimations have revealed that GDP per capita and general state’s revenue from taxes and social contributions can explain the trends of Lithuanian export by 99.1 percent over the period 2007 – 2015. Crediting of private sector also showed a very strong correlation with Lithuanian export; the negative medium-strong correlation was estimated between the export and general tax level, while the positive medium-strong correlation was captured between the export and minimum wages.
    Keywords: export, factors, evaluation, Lithuania
    JEL: J11 O15
    Date: 2017–05
  32. By: Papageorgiou, Chris; Perez-Sebastian, Fidel; Spatafora, Nikola
    Abstract: This paper explores the contribution of product quality upgrading in the process of export diversification. To do this, the paper builds a multisector model following Eaton and Kortum (2002) in which product quality is incorporated as a key feature. The model is then calibrated to generate predictions about the degree of export diversification in a number of East Asian countries. It is shown that quality upgrading is a key factor to understand the changes in the degree of export diversification in the majority of countries in our sample.
    Keywords: export diversification, product quality, international trade, structural transformation.
    JEL: F10 O14 O40
    Date: 2016–12–16
  33. By: Zhuang Hao; Benjamin Cowan
    Abstract: We examine the spillover effects of recreational marijuana legalization (RML) in Colorado and Washington on neighboring states. We find that RML causes a sharp increase in marijuana possession arrests in border counties of neighboring states relative to non-border counties in these states. RML has no impact on juvenile marijuana possession arrests but is rather fully concentrated among adults. We do not find evidence that marijuana sale/manufacture arrests, DUI arrests, or opium/cocaine possession arrests in border counties are affected by RML.
    JEL: I12 I18 K14
    Date: 2017–05
  34. By: Grant, Everett (Federal Reserve Bank of Dallas); Yung, Julieta (Federal Reserve Bank of Dallas)
    Abstract: We estimate global inter-firm networks across all major industries from 1981 through 2016 and provide the first empirical tests for both robust (beneficial) and fragile (harmful) network behavior, relating firms' health with global integration. More connected firms are less likely to be in distress and have higher profit growth and equity returns, but are also more exposed to direct contagion from distressed neighboring firms and network level crises. Our analysis reveals the centrality of finance in the international firm network and increased globalization, with greater potential for crises to spread globally when they do occur.
    JEL: C3 F36 F61 G15
    Date: 2017–05–01
  35. By: Krzysztof Falkowski (World Economy Research Institute, Warsaw School of Economics)
    Abstract: Research background: The actual position of a country in the international division of labour is determined by the competitiveness of its trade, the structure of which may both reveal and perpetuate the comparative advantages possessed. This is particularly true for Dutch disease economies such as Russia. Recently, economic literature has seen a growing interest in the topic of Russia’s economic relations with the European Union and China. This article is meant to be the author’s contribution to this discussion. Purposes of the article: (1) to discuss the existing trade interdependence between Russia and EU28, and Russia and China; (2) to try to assess the extent to which the current structure of Russian trade with these two partners corresponds with the competitiveness of the Russian economy. Methodology/methods: An in-depth analysis of Russia-EU28 and Russia-China trade interdependencies in 2007-2015 has been conducted, with emphasis on the categories of goods within the spectrum from low-tech to high-tech, according to the OECD classification. Furthermore, in order to analyse Russia’s competitive profile with regard to the same categories of goods, Balassa’s methodology of revealed comparative advantages has been applied. Findings & Value added: In the recent years, a growing importance of China in Russian trade can be observed, being the effect of dynamic growth of Chinese economy, cooling political relations between Moscow and Brussels and the drop in petroleum prices in international markets. Sadly, the existing structure of Russian trade with EU28 and China seems likely to preserve its traditional competitive advantages in the medium-low-tech goods and petroleum, which, in turn, will only further exacerbate the negative effects of the so-called Dutch disease affecting the Russian economy.
    Keywords: trade interdependence; competitiveness; competitive advantages; Russia; European Union; China
    JEL: F14 F40 P45
    Date: 2017–05
  36. By: Andzelika Kuznar (Warsaw School of Economics (SGH), Al. Niepodleglosci 162, 02-554 Warszawa); Jerzy Menkes (Warsaw School of Economics (SGH), Al. Niepodleglosci 162, 02-554 Warszawa)
    Abstract: Research background: UK rejects the paradigm of the role and rank of the security community and the perception of European integration as a road of no return. Economic and legal study allows to assess the reasoning of Brexit and future regime of EU-UK relations. Purpose of the article: To assess changes in perception of European integration due to Brexit and to determine its geopolitical and geo-economic consequences. The reasons of such purpose: the evolving structure of the UK, persistent trends of separatism in the UK, geographical differences in attitudes of UK citizens to Brexit. Methods: The research is an interdisciplinary economic and law study. The authors use: economic and legal methods applicable to the research. Conclusions are formulated on the basis of the synthesis of the results and approximations. Findings: Brexit changes the perception and attractiveness of European integration. Weakening of Britain’s ties with EU Members will have a significant impact on the strength of European identity. Brexit will weaken the European pillar of Atlantic Alliance. Brexit will be a factor of permanent disintegration of UK.
    Keywords: Brexit; European integration; transatlantic relations
    JEL: F14 F15 F53 K33
    Date: 2017–05

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