nep-int New Economics Papers
on International Trade
Issue of 2023‒09‒11
fifteen papers chosen by
Luca Salvatici, Università degli studi Roma Tre

  1. A Gravity Analysis of Inter-Provincial Trade By Beverly Lapham; Daniel Teeter
  2. Improving the system of regulation of foreign trade in agro-food products in Russia under the shocks of the global economy By Svetlov, Nikolay (Светлов, Николай); Ternovsky, Denis (Терновский, Денис); Uzun, Vasily (Узун, Василий); Shagaida, Natalia (Шагайда, Наталья); Shishkina, Ekaterina (Шишкина, Екатерина)
  3. Information frictions and the two margins of trade: Evidence from Slovenian manufacturing By Zaurino, Elena; Polanec, Sašo
  4. Exports of Fruits and Vegetables to the EU: policy recommendations By Santeramo, Fabio Gaetano; Lamonaca, Emilia
  5. When Women's Work Disappears: Marriage and Fertility Decisions in Peru By Mansour, Hani; Medina, Pamela; Velasquez, Andrea
  6. Firm-level Determinants of Cross-border Data Flows: An econometric analysis based on a variable selection technique By ITO Banri; TOMIURA Eiichi
  8. Trade Liberalization versus Protectionism: Dynamic Welfare Asymmetries By B. Ravikumar; Ana Maria Santacreu; Michael Sposi
  9. Applying the SCAN methodology to the Semiconductor Supply Chain By Bonnet, Paolo; Ciani, Andrea
  10. Trade with Search Frictions: Identifying New Gains from Trade By ARA Tomohiro
  11. The adoption and diffusion of international economic policy: The case of foreign investment screening By Michael Dorsch; Vera Eichenauer; Renaud Bourlès
  12. Impact of Final Consumption, Domestic Investment, Exports, and Imports on Economic Growth in Albania By Akermi, Najwa; Ben Yedder, Nadia; Bakari, Sayef
  13. 30 years after the fall of Communism: Lessons learned for inward FDI By Zimny, Zbigniew
  14. Trade conflicts and credit supply spillovers : Evidence from the Nobel Peace Prize trade shock By Jin Cao; Valeriya Dinger; Ragnar E. Juelsrud; Karolis Liaudinskas
  15. Logistics and the globalization of the automotive supply chain: A case study on the Parts Consolidation Centres in the Seine Valley Corridor By David Guerrero; Adolf K Y Ng; Hidekazu Itoh

  1. By: Beverly Lapham; Daniel Teeter
    Abstract: In this paper, we provide evidence of frictions associated with trade in goods and services among Canadian provinces. We examine empirical relationships between sector- and industry-level trade flows and trading frictions associated with intra-provincial trade, inter-provincial trade, and international trade. We also develop a novel method for estimating the magnitude of differences across provinces, industries, and time in relative inter-provincial trade frictions. We find that the ranking of these relative inter- provincial frictions across provinces and the degree of regional dispersion varies considerably across the sectors and industries we study. In addition, we find considerably more geographic dispersion in the frictions that provinces face as sellers of goods and services than those which they face in their roles as buyers. Finally, we evaluate quantitative associations between two Canadian inter-provincial regional trade agreements and inter-provincial trade flows for a variety of industries. We document considerable variation across sectors and manufacturing sub-industries in our estimates of the relationships between these provincial trade agreements and trade flows. For example, trade agreements signed among western provinces around 2010 are positively associated with trade flows in the mining sector, textiles, petroleum, and transportation equipment, but are negatively associated with trade flows in agricultural goods and manufactured food products.
    Keywords: Intra-regional and inter-regional trade frictions, Trade agreements, Structural gravity
    JEL: F13 F14 F15
    Date: 2023–08
  2. By: Svetlov, Nikolay (Светлов, Николай) (The Russian Presidential Academy of National Economy and Public Administration); Ternovsky, Denis (Терновский, Денис) (The Russian Presidential Academy of National Economy and Public Administration); Uzun, Vasily (Узун, Василий) (The Russian Presidential Academy of National Economy and Public Administration); Shagaida, Natalia (Шагайда, Наталья) (The Russian Presidential Academy of National Economy and Public Administration); Shishkina, Ekaterina (Шишкина, Екатерина) (The Russian Presidential Academy of National Economy and Public Administration)
    Abstract: The study proves the effectiveness of the tools used to regulate the export of wheat, sunflower seeds and sunflower oil that restrict the transfer of global prices to the domestic market, but it also evaluates the negative effects of their use and formulates proposals for their improvement. In justifying the use of floating duty mechanisms on grain exports and grain dampener, the authors also assess their positive effect on the level of consumer prices for foodstuffs made with grain. To prevent the negative effects of export restrictions, the use of a regularly updated base export price value is recommended when calculating the floating export duty on grain. The influence of tariff disparity on the restrictions on the export of sunflower seeds is substantiated, and it is shown that the use of export restrictions at a higher level of competition in the domestic market does not reduce the effect of the agricultural producers’ income growth associated with an increase in the global sunflower oil prices, with a neutral effect on the position of the processing industry. It is shown that the introduction of a floating export duty on sunflower oil in September 2021 is equivalent in its effect on the consumer market to the effect of voluntary retail price capping agreements in 2020-2021.
    Date: 2021–11–12
  3. By: Zaurino, Elena (European Commission); Polanec, Sašo (University of Ljubljana)
    Abstract: We empirically investigate whether firms lower information frictions in foreign sourcing through prior exporting. Using a panel of Slovenian manufacturing firms in the period 1996-2011, we estimate the probability of import entry in a new market when the firm is already exporting to the same country and we find a positive and significant relation. To control for the endogeneity of the export decision, we implement an instrumental variable approach exploiting the notion of sequential exporting. Moreover, we rule out productivity growth as being the only predictor of entry in a foreign market through several falsification tests. These findings suggest information frictions play an important role for firms trading in international markets.
    Keywords: Sourcing, Import entry, Information Frictions, Sunk costs
    JEL: F14 L20 D22 D83
    Date: 2023–06
  4. By: Santeramo, Fabio Gaetano; Lamonaca, Emilia
    Abstract: Growth in trade of fruit and vegetables (F&V) in the Mediterranean region, especially in Morocco, slowed down during the COVID-19 crisis. While reductions in trade of F&V are likely to be associated with shocks caused by the pandemic, the long-lasting effects of a well-established system of policy interventions in the sector should not be neglected. In other words, the effects of the COVID pandemic have only altered the volumes of F&V trade from Mediterranean countries. However, the continued occurrence of excess (low priced) imports of F&V from the Mediterranean region reinforces policy recommendations that point at the need to reform trade policy. The EU import regime should be simplified, by relaxing the controls on prices of imported F&V, and by negotiating off-season import quotas. The former would shrink running costs while the latter would lower competition among EU producers and Mediterranean traders.
    Keywords: Agriculture; Entry price; Import regime; Trade
    JEL: F13 O24 Q17 Q18
    Date: 2023
  5. By: Mansour, Hani (University of Colorado Denver); Medina, Pamela (University of Toronto); Velasquez, Andrea (University of Colorado Denver)
    Abstract: This paper studies the gendered labor market and demographic effects of trade liberalization in Peru. To identify these effects, we use variation in the exposure of local labor markets to import competition from China based on their baseline industrial composition. On average, the increase in Chinese imports during 1998-2008 led to a persistent decline in the employment share of low-educated female workers but had smaller and transitory effects on the employment of low-educated men. In contrast to the predictions of Becker's model of household specialization, we find that the increase in import competition during this period increased the share of single low-educated people and decreased their marriage rates. There is little evidence that import competition affected fertility decisions. The results highlight the role of gains from joint consumption in marriage formation.
    Keywords: import competition, marriage formation, fertility
    JEL: J16 J12 J13 J23
    Date: 2023–08
  6. By: ITO Banri; TOMIURA Eiichi
    Abstract: As digital trade involving data transfer including cross-border e-commerce is expanding, firms are actively collecting and utilizing data. This study examines the dynamics of corporate activities related to cross-border data flows based on our questionnaire surveys in 2019 and 2021 of Japanese firms regarding their data collecting activities. The firm entry and exit figures related to foreign data collection activities are quite extreme. Firms active in data collection overseas tend to be more productive. We further explore the variables that are strongly associated with the entry into data collection activities by using the least absolute shrinkage and selection operator technique for variable selection (LASSO). In addition to productivity and firm size, we found that foreign direct investment stock, skill development expenses, intangible assets, and service trade intensity are especially useful for explaining the firms’ entry into overseas data collection activities.
    Date: 2023–07
  7. By: MT Musakwa (University of South Africa)
    Abstract: This study examined the causal relationship between poverty and foreign direct investment inflows in Zimbabwe using data from 1990 to 2020. The study was motivated by the need to determine which factor influence the other between FDI and poverty. This would contribute to identifying possible solution to the challenge of low foreign direct investment and high poverty levels in Zimbabwe, despite the government open-door policy for foreign investors. The human development index and household consumption expenditure were used as poverty proxies. Using the autoregressive distributed lag to cointegration test and ECM-based causality test, the study found a unidirectional causal flow from poverty to foreign direct investment in both the short and long run, regardless of the poverty proxy used. The study confirms the importance of preconditions to foreign direct investment inflows. It is recommended that policy makers in Zimbabwe complement the open-door policy for foreign investors with policies that address preconditions such as poverty, infrastructure, education and health, to stimulate high levels of foreign direct investment.
    Date: 2023–02
  8. By: B. Ravikumar; Ana Maria Santacreu; Michael Sposi
    Abstract: We investigate whether the losses from an increase in trade costs (protectionism) are equal to the gains from a symmetric decrease in trade costs (liberalization). We incorporate dynamics through capital accumulation into a standard Armington trade model and show that the welfare changes are asymmetric: Losses from protectionism are smaller than the gains from liberalization. In contrast, standard static trade models imply that the losses equal the gains. The intuition for asymmetry in our model is that, following protectionism, the economy can coast off of previously accumulated capital stock, so higher trade costs do not imply large losses immediately. We develop an accounting device to decompose the source of welfare asymmetries into three time-varying contributions: share of income allocated to consumption, measured productivity, and capital stock. Asymmetry in capital accumulation is the largest contributing factor, and measured productivity is the smallest.
    Keywords: dynamic gains; asymmetry; capital; protectionism; liberalization
    JEL: F13 F11 E22
    Date: 2023–08–20
  9. By: Bonnet, Paolo (European Commission); Ciani, Andrea (European Commission)
    Abstract: The SCAN (“Supply Chain Alert Notification†) methodology has been developed to report signs of distress in supply chains relying on trade data. This methodology is based on a set of structural indicators to assess the ex-ante systemic risk of disruptions, and on high-frequency indicators detecting price increases and/or sizeable reductions in traded volumes. The SCAN is here applied to a basket of 74 products traded in different segments of the semiconductor supply chain, from raw materials to the final products of the chain. We find that ten products belonging to the semiconductor supply chain can be considered in medium or high risk of import disruption due to high import concentration and low substitutability in year 2021. These products belong to various segments of the value chain: raw materials, inputs for the production of wafers, equipment for the manufacture of semiconductors, and semiconductor devices. According to the SCAN methodology, EU imports of six of these products can also be considered in high distress due to observed reductions in import quantities accompanied by increases in import prices in the last available quarter (Nov. 2022 – Jan. 2023).
    Keywords: Semiconductors, Supply Chains, Trade Data
    JEL: F14 L63 F23
    Date: 2023–07
  10. By: ARA Tomohiro
    Abstract: This paper develops a dynamic industry model to study the effect of search frictions on industry structure and aggregate welfare. We consider a search-theoretic setting with two types of agents, firms and suppliers. To customize inputs, each firm needs to find a supplier but search is costly and does not always end in success. Matched firms use customized inputs obtained from matched suppliers to enhance production efficiency, while unmatched firms use generic inputs obtained from a competitive input market. In equilibrium the number of unmatched and matched firms is endogenous. We use this model to contrast the implications of two forms of economic integration: integration of final-good markets allowing firms to export varieties to another market, and integration of matching markets allowing firms to seek suppliers from another market. We show that the former form of integration can amplify the welfare gains from trade by improving firms’ matching frequency associated with resource reallocations from unmatched firms to matched firms. In contrast, the latter might cause welfare losses by hindering the resource-reallocation process of firms.
    Date: 2023–08
  11. By: Michael Dorsch (Central European University); Vera Eichenauer (ETH Zürich); Renaud Bourlès (Aix Marseille Université Économiques)
    Abstract: This presentation investigates the rise of foreign investment screening mechanisms (ISM), a new policy friction in the global economy, over the last two decades. Originally conceived as a policy to regulate the foreign control of sensitive industries for national security reasons, ISMs have proliferated across broader sectors of national economies. We formally analyze the sectoral-level choice of ISM adoption in a model that emphasizes norms within networks of international relations as the driving force behind the diffusion of ISMs. We argue that as leading economies adopt ISMs across sectors of the economy, the cost of violating norms of economic openness decreases for the other networked economies, and ISM adoption spreads. We then empirically scrutinize the role of network effects using a unique country-sector-level panel data set on ISM adoption. Examining a broad variety of network linkages—bilateral trade relations, membership in the EU, geographic and political distances, and linkages to the world's major economic powers—we conclude that network effects explain ISM adoption and that economic linkages are more important than political linkages.
    Date: 2023–08–11
  12. By: Akermi, Najwa; Ben Yedder, Nadia; Bakari, Sayef
    Abstract: The aim of this paper is to explore the impact of final consumption, domestic investment, exports and imports on economic growth in the case of Albania during the period 1996 – 2021. By using cointegration analysis, VECM model and WALD test, empirical analysis indicated that there is no causality relationship between final consumption, exports, domestic investment, imports and economic growth in the long run and in the short run. These findings present the critical economic situation of Albania, which stands in need of an entry of urgent economic reforms and strong strategies to boost economic growth.
    Keywords: Final Consumption, Domestic Investment, Exports, Imports, Economic Growth, VECM, Albania.
    JEL: E21 E22 F11 F14 F43 G11 G31 H54 O16 O47 P33 P45 R53
    Date: 2023
  13. By: Zimny, Zbigniew
    Abstract: Accomplishing a goal widely shared by emerging economies but achieved by few, East European countries attracted large amounts of FDI, especially export-oriented FDI, easing their transition from communist into market economies. This Perspective highlights key factors behind the EU11's success and draws potential lessons for other countries.
    Date: 2023
  14. By: Jin Cao; Valeriya Dinger; Ragnar E. Juelsrud; Karolis Liaudinskas
    Abstract: In this paper, we examine how a trade conflict’s impact on the real economy can be amplified by financial intermediaries. After China’s implicit ban on the imports of Norwegian salmon in response to the decision on 2010 Nobel Peace Prize, we find that banks that are highly exposed to the salmon industry cut back lending to non-salmon firms and households by 3-6 percent more than other banks. Furthermore, we find that the reduction in lending was not driven by the erosion of bank capital, but rather by the shift in expectations about the performance of loans to salmon producers, which drove highly exposed banks to increase their loan loss provisions and reduce risk-taking.
    Keywords: Trade shock, Bank lending channel, Expectation shock.
    JEL: F14 G21
    Date: 2023–06
  15. By: David Guerrero (AME-SPLOTT - Systèmes Productifs, Logistique, Organisation des Transports et Travail - Université Gustave Eiffel); Adolf K Y Ng (BNU - Beijing Normal University); Hidekazu Itoh (School of Business Administration [Kwansei Gakuin] - Kwansei Gakuin University)
    Abstract: During the past decades, the geography of the automotive industry has changed considerably. Today (2021) almost half of the production and sales take place in emerging economies compared to about 10% in 2000. Supply chains have been transformed to follow manufacturers towards the emerging economies. While most parts are sourced locally, non-negligible amounts are conveyed in containers from suppliers' plants in the advanced economies. To save transport costs and to ensure the reliability of these pipelines, car manufacturers rely on Parts Consolidation Centres (PCCs), i.e., cross-docking facilities where parts are sorted and packed in containers depending on their final destinations. Through an in-depth case study on the Seine Valley Corridor, this chapter unveils the logistics operations realized at PCCs, creating opportunities for upgrading through innovation and new technologies such as Hybrid and Electric vehicles, but simultaneously underlines the continued prevalence of low value-added logistics operations and the overall instability of demand.
    Keywords: port, globalization, automotive industry, Seine Valley Corridor, Parts Consolidation Centre
    Date: 2023

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