nep-int New Economics Papers
on International Trade
Issue of 2019‒10‒21
28 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Exporters in Africa: What Role for Trade Costs? By Afonso, Helena; Vergara, Sebastian
  2. Fostering Argentina’s integration into the world economy By Robert Grundke; Jens Arnold
  3. The Composition of New Zealand Exports 1989-2018 By Ralph G. Lattimore
  4. The Growth Dynamics of New Export Entrants in Kenya: a Survival Analysis By Peter W. Chacha; Lawrence Edwards
  5. Tech on the ROC: A New Way of Looking at Exporting Firms By Stefano Costa; Federico Sallusti; Claudio Vicarelli; Davide Zurlo
  6. APEC’s exports of environmental goods: an exploratory analysis of performance By Huong Thi Thu Tran; Kaliappa Kalirajan
  7. Before the Invention of the “New World” Argentinean and Chilean Wines in Sweden before 1950 By Paulina Rytkönen
  8. Does inward foreign direct investment influence macroeconomic performance? A case of Slovakia By Aneta Bobeni? Hinto?ová
  9. Reopening Pandora's Box in Search of a WTO-Compatible Industrial Policy? The Brazil -Taxation Dispute By Ornelas, Emanuel; Puccio, Laura
  10. Welfare State vs. Market Forces in a Globalization Era By Razin, Assaf; Sadka, Efraim; Schwemmer, Alexander
  11. A non-parametric re-assessment of the trade effects of the euro using value added data By Pierluigi Montalbano; Silvia Nenci; Laura Dell'Agostino
  12. Global E-Commerce Talks Stumble on Data Issues, Privacy, and More By Gary Clyde Hufbauer; Zhiyao (Lucy) Lu
  13. The Determinants and Macroeconomic Impacts of Foreign Direct Investment in Transition Economies By Iwasaki, Ichiro; Tokunaga, Masahiro
  14. Imported inputs, Government Support and Performance of manufacturing exporters By Peter Chacha; Lawrence Edwards
  15. Is environmental goods trade beneficial for the environmental performance of the concerned countries? Vol: By Huong Thi Thu Tran; Kaliappa Kalirajan
  16. Exchange Rate Regimes and Foreign Direct Investment Flow in West African Monetary Zone (WAMZ) By Perekunah B. Eregha
  17. Weight Gains from Trade in Foods: Evidence from Mexico By Giuntella, Osea; Rieger, Matthias; Rotunno, Lorenzo
  18. Demographics and the Evolution of Trade Imbalances By Michael Sposi
  19. Industry 4.0, towards a de-globalization of value chains? Expected effects of advanced industrial robotics and additive manufacturing on the coordination system By Vincent FRIGANT
  20. Assessing the migration and social instability nexus in sub-saharan Africa : A spatial analysis By fofana, moustapha; Lawson, Laté; ballo, zié
  21. Immigration, Diversity and Growth By Gradstein, Mark; Justman, Moshe
  22. The Impact of Food Prices on Conflict Revisited By Jasmien De Winne; Gert Peersman
  23. A link between innovation performance and inward foreign direct investments: A case of Slovakia By Aneta Bobeni? Hinto?ová; Michaela Bruothová
  24. Foreign Competition and Domestic Innovation: Evidence from U.S. Patents By Autor, David; Dorn, David; Hanson, Gordon H.; Pisano, Gary; Shu, Pian
  25. Forecasting Swiss Exports Using Bayesian Forecast Reconciliation By Florian Eckert; Rob J Hyndman; Anastasios Panagiotelis
  26. Export Prices, Markups, and Currency Choice after a Large Appreciation By Daniel Kaufmann; Tobias Renkin
  27. Buyer-Driven Upgrading in GVCs: The Sustainable Quality Program in Colombia By Macchiavello, Rocco; Miquel-Florensa, Josepa
  28. Price Discrimination within and across EMU Markets: Evidence from French Exporters By Fontaine, Francois; Martin, Julien; Mejean, Isabelle

  1. By: Afonso, Helena; Vergara, Sebastian
    Abstract: This paper investigates the role of trade costs in exporter dynamics in Africa. In comparison to exporters from other regions, African exporting firms are fewer, smaller and relatively less diversified. African countries also display the highest rates of entry, exit and turnover of exporting firms, exporting products and export destinations. This suggests that Africa’s export environment is volatile, with exporters having difficulties in maintaining trade relationships. The analysis also confirms that trade costs are a crucial factor in explaining exporter performance in Africa vis-à-vis other regions, but also among African countries. Trade costs play a disproportionate role in affecting the size of new exporters and the survival of exporters in Africa in comparison to other regions. Also, trade costs differences across African countries are a relevant factor in explaining the lower market diversification of exporters from landlocked countries. A key implication is that the African Continental Free Trade Agreement can entail large benefits in the medium-term, especially in terms of export flows and destination markets. Yet, the diversification of export products will likely remain limited without strengthening productive capacities.
    Keywords: Trade Costs, Exporter dynamics, Africa
    JEL: F14
    Date: 2019–09–27
  2. By: Robert Grundke; Jens Arnold
    Abstract: Ever since the early 20th century, Argentina has failed to fully reap the benefits that integrating into the world economy can offer. With exports and imports only accounting for less than 30% of GDP, Argentina is significantly less integrated into the world economy than other emerging market economies. This reflects several decades of inward oriented policies including a strategy of industrialisation through import substitution. Trading little, Argentina has also remained on the side-lines of global value chains, all of which represents significant lost opportunities for growth and well-being. This paper, based on a chapter in the 2019 Economic Survey of Argentina, analyses the potential benefits and distributional effects of a stronger integration into the global economy. It also discusses policy options for opening up and for accompanying policies to ease the transition towards a more open economy. This Working Paper relates to the 2019 OECD Economic Survey of Argentina onomic-snapshot/
    Keywords: adjustment costs, Argentina, domestic distortions, empirical trade analysis, factor reallocation, International trade, trade openess
    JEL: F13 F14 F16
    Date: 2019–10–16
  3. By: Ralph G. Lattimore
    Abstract: It has been over 30 years since New Zealand initiated a trade liberalisation strategy as part of its radical economic reforms. Specifically, trade policies were changed in the early 1980’s and this liberalisation was brought to a halt around 2002. This paper uses revealed comparative advantage indices of 4-digit export categories to explore the changing composition of exports from 1989 to 2018.
    Keywords: trade liberalisation; New Zealand exports; revealed comparative advantage
    JEL: D22 E61 E65 F13 F14
    Date: 2019–09–30
  4. By: Peter W. Chacha; Lawrence Edwards
    Abstract: Promotion of exports remain a core objective of trade policy in many countries. Information on how long or how short the duration of a trade relationship is for an average exporter may be important from a policy point of view. Policy makers from almost all countries aim to encourage exports and entry of new exporters, because exports are a major driver of economic growth and jobs. This is usually accompanied by fiscal incentives geared toward promotion of exports and raising the number of new exporters as a performance metric. However, knowledge on how many of these new exporters will be able to survive in international markets remains extremely scarce for countries in the Sub-Saharan Africa, and certainly for Kenya. This is surprising given that the length of survival can be considered one of the most comprehensive measures of exporter performance. This paper seeks to add to a growing literature examining this issue for SSA countries.
    Date: 2018–06
  5. By: Stefano Costa (ISTAT); Federico Sallusti (ISTAT); Claudio Vicarelli (ISTAT); Davide Zurlo (ISTAT)
    Abstract: Policies aimed at increasing firm participation in international markets have been playing an increasing role. Using a new approach to estimate export threshold for manufacturing firms, and considering the technology adoption, this paper analyses the potential mismatch between the conditions required for a firm to become exporter and the pattern of technology in the industry. The export threshold – which is estimated on the basis of the ROC methodology – is the minimum combination of productivity and “economic size” (a broad measure of firm size composed of employment, age, turnover and capital intensity) that firms need to achieve in order to access international markets. In turn, the technology prevailing in each industry is expressed in terms of the relative weights of productivity and size corresponding to a (firm-level) technology level higher than the average within the industry. The interaction between this “technology line” and the export threshold allows for deriving a new firm-based taxonomy that can be useful to study exporting and non-exporting firms in the light of their position with respect to the technology prevailing in the given industry, allowing to have a more efficient selection of policy targets (e.g. intensive or extensive margins).
    Keywords: ROC analysis, export threshold, technology adoption, extensive margin of exports
    JEL: F14 L60 L11 O14
    Date: 2019
  6. By: Huong Thi Thu Tran (Crawford School of Economics & Government, Australian National University, Canberra, ACT, Australia); Kaliappa Kalirajan
    Abstract: Understanding the determinants of Environmental goods (EGs) trade is imperative for trade promotion and environmental protection. As the impacts of the determinants differ among EGs subgroups and countries, examining these determinants for each subgroup is necessary for policy recommendations. Export performances measured in terms of export efficiency using the stochastic frontier gravity model and data from APEC from 2007 to 2014 suggest that, albeit, the efforts in tariff reduction of APEC, do not appear to have reduced the constraints to increasing export efficiency of EGs trade over the period of analysis. Through the APEC regional cooperation, there is an urgent need to transfer technology in EGs to those countries with poor export efficiency from those countries enjoying the high level of realization of export efficiency including Japan, USA, China, and Canada.
    JEL: F14 F15 Q56 R11
    Date: 2018–07
  7. By: Paulina Rytkönen
    Abstract: Before the new world became a concept related to the upswing of wines from Australia, Latin Amer- ica, New Zealand, South Africa and the United States, occasionally, wines from these countries could be sold in countries like Sweden. One such point in time was during WWII, when importing wines from Europe became impossible and a very short window of trade opened-up between Argentina, Chile and Sweden. This paper partially describes this story, based on the scarce sources found at the archive of the former Museum of Wines and Spirits in Stockholm. The purpose of the paper is to shed light on the amount of wine imports from Argentina and Chile during the trade window between Swe- den, Argentina and Chile caused by WWII. Some sources analyzed are sales statistics of the Swedish wholesale and import monopoly Aktiebolaget Vin & Spritcentralen, price lists of the regional alcohol monopoly in Stockholm (Stockholmssystemet) and by analyzing the labels of the wines found in the archive. Some of the questions to be answered are: How much wine from Argentina and Chile was sold during the studied period? Who were the exporters? Why was this trade window opened and closed?
    Keywords: Agribusiness, Agricultural and Food Policy, Marketing
    Date: 2019
  8. By: Aneta Bobeni? Hinto?ová (Faculty of Business Economics in Ko?ice, University of Economics in Bratislava)
    Abstract: Foreign direct investments (FDI) are generally considered as key drivers of economic development of the country. However, studies confirming significant effects of inward FDI on macroeconomic performance especially in conditions of the Central European countries are rather scare. The present paper investigates effects of different types of inward FDI, namely cross-border mergers and acquisitions and greenfield investment projects on the macroeconomic performance measured by GDP per capita in conditions of Slovakia. The results of regression analysis for the period of 2003-2018 show rather negative impact of greenfield investments allocated in Slovakia as well as cross border sales of local companies on the level of GDP per capita of the host country.
    Keywords: foreign direct investment, macroeconomic performance, mergers and acquisitions, greenfield projects
    JEL: F21 F23 F43
    Date: 2019–10
  9. By: Ornelas, Emanuel; Puccio, Laura
    Abstract: The Brazil-Taxation dispute concerns the complaints taken to the World Trade Organisation by the European Union and Japan against seven different Brazilian industrial subsidy programmes. One concerned the automotive sector and represents a clear case of policies dictated by strong domestic political-economy forces, with little attention to impacts on consumers or imports. The ensuing WTO dispute raises important issues concerning the WTO-compatibility of subsidy measures. In particular, the Appellate Body (AB) reversed the panel findings with respect to two issues: the extent to which subsidy measures can be exempted from complying with National Treatment rules under the General Agreement on Tariffs and Trade, and the identification of local content requirements (LCRs), which are prohibited under the Agreement on Subsidies and Countervailing Measures (SCM). In particular, the AB considered that subsidies, if not based on discriminatory taxation, could be justified under the GATT and could have some discriminatory elements without violating the National Treatment disciplines. Furthermore, it concluded that legitimate eligibility criteria under a subsidy programme should not be construed as prohibited LCRs under the SCM. However, the test devised by the AB to distinguish legitimate eligibility criteria from prohibited LCRs could facilitate circumvention of the LCRs prohibition under the SCM.
    Keywords: Dispute Settlement; industry subsidies; international trade rules; local content requirements; National Treatment; trade policy
    JEL: F13 F51 F53
    Date: 2019–10
  10. By: Razin, Assaf; Sadka, Efraim; Schwemmer, Alexander
    Abstract: Globalization radically changes income distribution and triggers intense international tax competition. Therefore, globalization entails an extensive restructuring of the welfare state. We analyze a parsimonious model of an open economy, in its trade and finance transactions with the rest of the world, governed by voter-majority-controlled welfare state. We analyze the interactions between taxation, provision of social benefits, and globalization. We demonstrate how these interactions are grounded on trade-related and macro-related fundamentals, familiar from a standard open-economy model: (i) Degree of trade border frictions, (ii) Degree of international finance frictions, (iii) Relative factor abundance that determines the capital intensity of the country's exports; and, (iv) Domestic savings and productivity of domestic investment, which determines whether the country is a financial capital exporter or importer. We address the issues of whether the welfare state enhances (or inhibits) the trade and financial openness driven by diminished border effects; whether globalization chips away at the generosity of the welfare state; and, whether the welfare state efficiently spreads out the gains from globalization from winners to losers.
    Date: 2019–08
  11. By: Pierluigi Montalbano (Department of Social Sciences and Economics, Sapienza University of Rome (IT); Department of Economics, Sussex University (UK).); Silvia Nenci (Department of Economics, Rome Tre University (IT).); Laura Dell'Agostino (Department of Management, Economics and Industrial Engineering, Politecnico di Milano (IT).)
    Abstract: This work presents an original contribution to the debate on the trade effects of the euro, recently revamped by Glick and Rose (2016). It provides a re-assessment of the effects of the euro by focusing on trade in value added and applying non-parametric matching techniques that control for non-linearity-with-self-selection. In line with Persson (2001), we show a less positive post-assessment of the euro effect on intra-EMU trade flows. However, we detect a robust positive impact of the euro on trade shares in selected value added components net to the single market effect. These results are robust to a large set of sensitivity checks.
    Keywords: trade in value added, monetary union, global value chains, production fragmentation, euro, non-parametric estimates.
    JEL: F10 F12 F15
    Date: 2019–10
  12. By: Gary Clyde Hufbauer (Peterson Institute for International Economics); Zhiyao (Lucy) Lu (Peterson Institute for International Economics)
    Abstract: In early 2019, several important members of the World Trade Organization (WTO) submitted noteworthy proposals in a realm of international commerce that has evolved faster than rules to govern it: e-commerce or digital trade. While countries agree on less controversial subjects like banning unsolicited commercial electronic messages, the three leading WTO members—China, the European Union, and the United States—have big differences in their approaches to more challenging issues: data flows, data localization, privacy invasions by data collectors, transfer of source code, imposition of customs duties and internet taxes, and internet censorship. Their differing viewpoints lead Hufbauer and Lu to conclude that the prospect of reaching a high-level WTO e-commerce agreement is not promising. To reach an agreement, either most of the contentious issues must be dropped or the number of participating countries must be sharply reduced. A WTO accord, even of low ambition, would have value if only to establish basic digital norms on matters such as banning unsolicited commercial messages and protecting online consumers from fraudulent practices. A more ambitious accord covering the controversial issues should be negotiated in bilateral and/or plurilateral/regional pacts rather than in the WTO.
    Date: 2019–10
  13. By: Iwasaki, Ichiro; Tokunaga, Masahiro
    Abstract: In this paper, we perform a meta-analysis of foreign direct investment in transition economies. The first part examines how transition-specific factors affect FDI in CEE and FSU countries. The latter part explores how large is the impact of FDI on macroeconomic growth in the region. The results of meta-analysis revealed that empirical results reported in previous studies present the close relationship between the progress in transition to a market economy and FDI and a positive effect of FDI on macroeconomic growth in the literature as a whole; this suggests that, in transition economies, the success of transformation towards a marketoriented system and foreign capital flow has created a kind of virtuous cycle.
    Keywords: transition economies, foreign direct investment (FDI), determinants of FDI, macroeconomic impacts of FDI, meta-analysis, publication selection bias
    JEL: E22 F21 F23 F43 P33
    Date: 2019–09
  14. By: Peter Chacha; Lawrence Edwards
    Abstract: Access to imported intermediate inputs has been hailed as crucial in enhancing firm productivity and performance in exports. Indeed, this is perhaps the greatest gain by countries through globalization. A cut in global tariffs has promoted access to a larger variety of higher quality and cheaper inputs, enabling firms to lower their marginal costs and overcome the fixed costs of serving foreign markets. In addition, most countries go a step further and grant duty relief and tax exemptions to exporters to encourage them to use more imported intermediate inputs in their production processes.
    Date: 2018–09
  15. By: Huong Thi Thu Tran (Crawford School of Economics & Government, Australian National University, Canberra, ACT, Australia); Kaliappa Kalirajan
    Abstract: This paper examines the impacts of environmental goods (EGs) trade on environmental performance of the concerned countries. The EGs have been disaggregated into renewable energy, environmental monitoring analysis and assessment equipment, and environmental protection and environmental preferable products. Environmental performance has been classified into environmental health and ecosystem vitality. The empirical analysis is carried out using data from the Asia Pacific Economic Cooperation (APEC) member countries covering the period of 2007-2014. The empirical results suggest positive impacts of EGs exports and imports on environmental performance. While exports of environmental goods have significant beneficial impacts on environmental health measure, the impact on ecosystem vitality measure is not impressive. These results support the reduction in barriers on EGs trade, which has policy implications towards increasing the technology, awareness, and environmental-regulation effects, and minimizing the scale effect of EGs exports.
    JEL: Q56 F14 F15
    Date: 2018–07
  16. By: Perekunah B. Eregha (Pan-Atlantic University, Lekki-Lagos, Nigeria)
    Abstract: This study examines the effect of exchange rate regimes on Foreign Direct Investment (FDI) flow for WAMZ. The Arellano Panel Correction for Serial Correlation and Heteroskedaticity option of the Within Estimator for fixed effect panel data model as well as the Dynamic Panel Data Instrumental Variable Approach by Anderson and Hsiao (1981) for the countries selected based on data availability for the period 1980-2016 were used. The fixed exchange rate regime was found to hamper FDI flow in the zone while intermediate policy had a significantly positive effect in facilitating FDI flow during periods of declining foreign reserves and narrowing current account balance in WAMZ. This implies that the transmission of the effect of exchange rate regimes on FDI inflows depends on the positions of the foreign reserves and current account balance in the zone. Consequently, the fixed regime is not a good policy in periods of narrowing current account balance and depleting foreign exchange reserves. The study therefore recommends the need for monetary authorities to be cautious in managing their exchange rates especially in periods of depleting foreign reserves and narrowing current account so as not to deter the much needed FDI inflow.
    Keywords: Exchange Rate Regimes; Inflationary Expectation; Exchange rate uncertainty; Foreign Direct Investment Flow; Panel Data Analysis
    JEL: E31 F21 F31
    Date: 2019–01
  17. By: Giuntella, Osea (University of Pittsburgh); Rieger, Matthias (ISS, Erasmus University Rotterdam); Rotunno, Lorenzo (Aix-Marseille University)
    Abstract: In this paper, we investigate the effects of trade in foods on obesity in Mexico. To do so, we match data on Mexican food imports from the U.S. with anthropometric and food expenditure data. Our findings suggest that exposure to food imports from the U.S. can explain up to twenty percent of the rise in obesity prevalence among Mexican women between 1988 and 2012. Pro-obesity effects are driven by areas more exposed to unhealthy food imports. We also find evidence in favour of a price mechanism. By linking trade flows to obesity, the paper sheds light on an important channel through which globalisation may affect health.
    Keywords: trade, obesity, nutrition transition, Mexico
    JEL: I10 I12
    Date: 2019–10
  18. By: Michael Sposi (Southern Methodist University)
    Abstract: The age distribution evolves asymmetrically across countries, inuflencing relative saving rates and labor supply. Using a dynamic, multicountry trade model I quantify how demographic changes affected trade imbalances across 28 countries since 1970. Counterfactually holding demographics constant reduces net exports in emerging economies that experienced rising working age shares, and boosts them in advanced economies that experienced flatter, or declining, working age shares. This helps alleviate the allocation puzzle. On average, a one percentage point increase in a country's working age share, relative to the world, increased its ratio of net exports to GDP by one-third of a percentage point.
    Keywords: Demographics, Trade imbalances, Dynamics, Labor supply.
    JEL: F11 F21 J11
    Date: 2019–10
  19. By: Vincent FRIGANT
    Abstract: The aim of this paper is to provide a framework for understanding how advanced industrial robotics and additive manufacturing technologies lead to restructuring the geography of value chains. Build on an analytical framework in terms of “coordination system”, we explain how these two technological bricks reinforce the centrifugal and centripetal forces determining the degree of globalization of the value chains. The analysis of the empirical literature suggests that rapidly developing advanced industrial robotics has an ambiguous (but likely) potential for tightening value chains, while the most difficult to deploy additive manufacturing has a high de-globalisation potential. The conclusion calls for quantitative work to better guide public policy in favor of Industry 4.0.
    Keywords: Industry 4.0; Advanced industrial robotics; Additive manufacturing; Global value chain; Relocation; De-globalization
    JEL: L23 O33 F23
    Date: 2019
  20. By: fofana, moustapha; Lawson, Laté; ballo, zié
    Abstract: The reverse effects of migration in enhancing small-scale social unrest seem less regarded in the existing studies on social conflicts in Africa. Thus, this paper proposes to reversely assess the migration and social instability nexus in Africa, exploiting data on “riots and protests” and “violence against civilians”. In addition to geographical spillovers in social instability, our results indicate that increasing migrants stock enhances small-scale internal conflicts in African countries. On the contrary, good economic performances and openness to trade are found to be reducing social conflicts. Globally, our results impel political actors and regional unions to further implement specific policies for the inclusive integration of regional migrants.
    Keywords: Small-scale conflicts; migration, spatial spillovers; development; Sub-Saharan Africa
    JEL: C23 O15 Q34
    Date: 2019–07–30
  21. By: Gradstein, Mark; Justman, Moshe
    Abstract: International migration offers the potential for mutual economic gain-for migrants and their host countries-through an efficient reallocation of human resources and a fruitful meeting of cultures, even as cultural frictions may threaten their shared social fabric. Immigrants and natives have a common interest in prospering through cooperation but may have opposing views on how quickly immigrants should assimilate. Confrontation between the two populations can lead to immigrants culturally disengaging from the mainstream, and retard their economic integration. This paper analyzes these reciprocal cultural and economic effects, indicating the scope for growth-promoting and welfare enhancing assimilation policies.
    Date: 2019–09
  22. By: Jasmien De Winne; Gert Peersman
    Abstract: Studies that examine the impact of food prices on conflict usually assume that (all) changes in international food prices are exogenous shocks for individual countries or local areas. By isolating strictly exogenous shifts in global food commodity prices, we show that this assumption could seriously distort estimations of the impact on conflict in African regions. Specifically, we show that increases in food prices that are caused by harvest shocks outside Africa raise conflict significantly, whereas a “naive” regression of conflict on international food prices uncovers an inverse relationship. We also find that higher food prices lead to more conflict in regions with more agricultural production. Again, we document that failing to account for exogenous price changes exhibits a considerable bias in the impact. In addition, we show that the conventional approach to evaluate such effects; that is, estimations that include time fixed effects, ignores an important positive baseline effect that is common for all regions.
    Keywords: conflict, food prices, instrumental variables
    JEL: C23 D74 F44 Q11 Q34
    Date: 2019
  23. By: Aneta Bobeni? Hinto?ová (Faculty of Business Economics in Ko?ice, University of Economics in Bratislava); Michaela Bruothová (Faculty of Business Economics in Ko?ice, University of Economics in Bratislava)
    Abstract: There are plenty of studies analysing foreign direct investment flows in connection with other factors, however not so many of them take into consideration also effects on innovation performance of a particular country. The present study investigates a link between macro-level innovation performance and inward foreign direct investments in conditions of Slovakia. The results of regression analysis covering the period between 2003-2017 showed that innovation performance measured by gross expenditures on research and development is negatively influenced by foreign direct investment inflows, especially by greenfield investment projects allocated in Slovakia. This negative effect is even more significant on lagged level, namely one year after the investment allocation.
    Keywords: innovation performance, inward foreign direct investment, greenfield investment, mergers and acquisitions
    JEL: F21 F41 O30
    Date: 2019–10
  24. By: Autor, David (MIT); Dorn, David (University of Zurich); Hanson, Gordon H. (University of California, San Diego); Pisano, Gary (Harvard University); Shu, Pian (Georgia Institute of Technology)
    Abstract: Manufacturing accounts for more than three-quarters of U.S. corporate patents. The competitive shock to this sector emanating from China's economic ascent could in theory either augment or stifle U.S. innovation. Using three decades of U.S. patents matched to corporate owners, we quantify how foreign competition affects domestic innovation. Rising import exposure intensifies competitive pressure, reducing sales, profitability, and R&D expenditure at U.S. firms. Accounting for confounding sectoral patenting trends, we find that U.S. patent production declines in sectors facing greater import competition. This adverse effect is larger among initially less profitable and less capital-intensive firms.
    Keywords: innovation, patents, trade
    JEL: F14 O30
    Date: 2019–09
  25. By: Florian Eckert; Rob J Hyndman; Anastasios Panagiotelis
    Abstract: This paper conducts an extensive forecasting study on 13,118 time series measuring Swiss goods exports, grouped hierarchically by export destination and product category. We apply existing state of the art methods in forecast reconciliation and introduce a novel Bayesian reconciliation framework. This approach allows for explicit estimation of reconciliation biases, leading to several innovations: Prior judgment can be used to assign weights to specific forecasts and the occurrence of negative reconciled forecasts can be ruled out. Overall we find strong evidence that in addition to producing coherent forecasts, reconciliation also leads to improvements in forecast accuracy.
    Keywords: hierarchical forecasting, Bayesian forecast reconciliation, Swiss exports, optimal forecast combination
    JEL: C32 C53 E17
    Date: 2019
  26. By: Daniel Kaufmann; Tobias Renkin
    Abstract: We analyze export price adjustment of Swiss manufacturing firms using a novel data set of matched export, import, and domestic prices. After a large, unexpected, and permanent appreciation of the Swiss franc, export prices set in domestic currency fell less than export prices set in foreign currency. This difference prevails if we control for variation in firms' marginal cost. Through the lens of a structural model, this difference can be traced back to strategic complementarity in price setting for firms pricing in foreign currency. Meanwhile, firms setting prices in domestic currency exhibit no strategic complementarity and follow a constant markup-pricing rule.
    Keywords: Nominal exchange rate, border prices, currency choice, variable markups, pricing-to-market, price rigidity, exchange rate pass through, exchange rate sensitive factor costs.
    JEL: E3 E5 F3 F4
    Date: 2019–10
  27. By: Macchiavello, Rocco; Miquel-Florensa, Josepa
    Abstract: This paper studies the Sustainable Quality Program in Colombia - a quality upgrading program implemented on behalf of a multinational coffee buyer. The Program is a bundle of contractual arrangements involving farmers, intermediaries, exporters and the multinational buyer. We tackle three questions. First, we investigate the impact of the Program on the supply of quality coffee. Eligible farmers upgraded their plantations, expanded land under coffee cultivation, increased quality and received higher farm gate prices. Second, we quantify how the Program gains are shared between farmers and intermediaries along the chain. In regions in which the Program was rolled out surplus along the chain increased by 30%. Eligible farmers kept at least half of the gains and their welfare increased by 20%. Finally, we examine how the Program works conducting counterfactual exercises and comparing the Program price premia along the chain against two prominent non-buyer driven certifications. The Program achieved a better transmission of the export gate price premium for quality to the farm gate and curbed market failures that stifled quality upgrading. Contractual arrangements at the export gate significantly contributed to higher farmers welfare in rural areas.
    Keywords: BuyerDriven Supply Chain; Contracts; market structure; Quality upgrading; voluntary standards
    JEL: L23 O12 Q12 Q13
    Date: 2019–08
  28. By: Fontaine, Francois; Martin, Julien; Mejean, Isabelle
    Abstract: We study the cross-sectional dispersion of prices paid by EMU importers for French products. We document a significant level of price dispersion both within product categories across exporters, and within exporters across buyers. This latter source of price discrepancies, sellers' price discrimination across buyers, is indicative of deviations from the law-of-one price. Price discrimination (i) is substantial within the EU, within the euro area, and within EMU countries; (ii) has not decreased over the last two decades; (iii) is more prevalent among the largest firms and for more differentiated products; (iv) is lower among retailers and wholesalers; (v) is also observed within almost perfectly homogenous product categories, which suggests that a non-negligible share of price discrimination is triggered by heterogeneous markups rather than quality or composition effects. We then estimate a rich statistical decomposition of the variance of prices to shed light on exporters' pricing strategies.
    Date: 2019–08

This nep-int issue is ©2019 by Luca Salvatici. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.