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on International Trade |
| By: | Edson Paulo Domingues; Mauro Borges Lemos |
| Abstract: | There is a great interest in free trade areas (FTA) in Brazil, predominantly in the context of a proposed Free Trade Area of the Americas (FTAA). In addition, a free trade area between MERCOSUR (the customs union involving Brazil, Argentina, Uruguay, and Paraguay) and the European Union has also been considered. In this paper, an interregional computable general equilibrium (CGE) model is used to analyze the long-run regional effects of alternative trade liberalization strategies on Brazil. The model provides a description of the Brazilian inter-regional economic system, divided into two regions - Sao Paulo and Other Regions in Brazil. One of its innovations is a full specification of foreign trade in both regions, capturing the complete structure of trade flows and import tariffs, linking the two Brazilian regions and a set of foreign markets. In this way, adequate simulations of tariff liberalization can be implemented for several possibilities of trade agreements. |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa04p311&r=int |
| By: | Nathan Nunn (University of British Columbia) |
| Abstract: | Recent studies have found evidence linking Africa’s current underdevelopment to colonial rule and the slave trade. Given that these events ended long ago, why do they continue to matter today? I develop a model, exhibiting path dependence, that explains how these past events could have lasting impacts. The model has multiple equilibria: one equilibrium with secure property rights and a high level of production and others with insecure property rights and low levels of production. I show that external extraction, when severe enough, causes a society initially in the high production equilibrium to move to a low production equilibrium. Because of the stability of low production equilibria, the society remains trapped in this suboptimal equilibrium even after the period of external extraction ends. The model provides one explanation why Africa’s past events continue to matter today. |
| JEL: | O P |
| Date: | 2005–08–22 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpdc:0508008&r=int |
| By: | Isidro Frías; A. David Carballas |
| Abstract: | In this paper we focus on the major determinants of exports and imports in the member states of EU-15, giving a special emphasis on those belonging to the Economic and Monetary Union. For this reason we drive a general picture on the evolution of exports and imports. We analyse also the evolution of export and import prices, as well as the average labour productivity. Finally we estimate foreign trade equations both for imports and exports using the Johansen methodology. Among the major findings we can mention that we can reject the no cointegration among the import and export variables in the EU countries. |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa04p398&r=int |
| By: | Fernando Perobelli; Eduardo Haddad |
| Abstract: | The relationship between trade and growth has been a familiar topic of discussion in the development literature. More often, the question posed concerns the effects of international trade on economic growth, and thus focuses on trade as an active “agent” of growth. This active role played by international trade can be found in many different models. Todaro (1994) concludes that trade can be an important stimulus to rapid economic growth, although it might not be a desirable strategy for economic and social development. The contribution to development depends on the nature of the export sector, the distribution of its benefits, and the sector’s linkages with the rest of the economy. It seems that, to the extent we are only interested in the effects of international trade on pure economic growth, there is a consensus that trade can provide an important stimulus to growth. At the sub-national level, the export base theory provides the foundations to different models of regional development. Recently, however, given the focus on globalization issues and the implicit assumption that a region’s economic future is inextricably tied with its ability to compete in the international export market, international trade has attracted the attention of regional analysts as well. In this paper we address some of these issues. An interstate CGE model is implemented to simulate the likely implications of state export growth on the structure of the Brazilian economic interregional system. Key-words: regional development, computable general equilibrium, trade. |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa04p464&r=int |
| By: | Sjoerd Beugelsdijk; Henri De Groot; Gert-Jan Linders; Arjen Slangen |
| Abstract: | There is large variation in trade patterns across the world. Despite the popular discussion on the ‘death of distance’, distance is still the most important variable explaining this variation. In explaining trade patterns across the worls, it is important to acknowledge the multiple dimensions of distance. In this paper, we empirically investigate the relevance of several of these dimensions. Apart from physical distance, we also consider the effects of cultural distance and institutional distance. Our results reveal the importance of all three dimensions. JEL classification: F14 Keywords: bilateral trade, gravity models, cultural distance, institutional distance |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa04p265&r=int |
| By: | Yoshifumi Ishikawa; Toshihiko Miyagi |
| Abstract: | In Japan, We can use many input-output tables for regional economic analysis. However, Most of them are not inter-regional input-output tables but intra-regional input-output tables. Therefore, these do not enable analysis in consideration of interregional interdependence except for a famous nine regions covering the whole of Japan by MITI etc. In this study, we attempted to estimate a 47 region-interregional input-output table at the prefecture level covering the whole of Japan. The hybrid approach of constructing regional input-output tables was adopted in this 47 region-interregional input-output study. First of all, all intra-regional input-output tables at prefecture level were prepared. We can use intra-regional input-output tables of all prefectures in Japan from 1990. The second step is the estimation of interregional trade coefficients. When inter-regional input-output tables are constructed, Estimation of interregional trade coefficients is very important. In this study, we propose a method for estimation of interregional trade using a distribution census and some data. And the interregional trade coefficients were adjusted by using a new iterative method so that the sum total of the total output of 47 regions might suit the amount of total output of Japan. Finally, a 47 interregional input-output table was compiled using tables of 47 all prefectures and the interregional trade coefficients. And also, this paper presents some regional economic analysis using a 47 region-interregional input-output table. We can observe the relation between transportation network and inter-regional economic linkage at prefecture level. |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa04p432&r=int |
| By: | Mark Thissen; Frank Van Oort |
| Abstract: | This paper addresses consequences of increased labour migration in Europe due to productivity effects in a core-periphery model. Traditional trade and growth models predict an overall beneficial impact of the accession of the current candidate states to the European Union. However, models incorporating imperfect competition warn that peripheral countries may realise only a small portion of this beneficial impact of the accession. In this chapter we go a step further: On the domestic level the countries accession may have negative effects while on the nationals level the effect will be positive. An empirical indication that benefits of accession may be low is the marginal benefits during the early phases of EU membership for Greece and Ireland and the Neue Länder of Germany. The following main questions are addressed in this chapter. What is the consequence of increased migration within the European Union due to deregulation in the context of the creation of a common market, and what will be the consequence of the extension of the European union with central and eastern European countries? |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa04p449&r=int |
| By: | Roberto Basile; Luca De Benedictis |
| Abstract: | The existence and persistence of large spatial disparities in un-employment within national economies is a central issue in regional economics. Previous empirical analyses have largely disregarded the role of fundamentals. On the contrary in this paper we explore the link between labour productivity, international trade and regional un-employment differentials. We base our empirical analysis on the predictions of a simple General Oligopolistic Equilibrium effciency-wage trade model. Using semi parametric regression methods, controlling for industry-mix and labour force participation, we give evidence of a non linear negative relationship between labour productivity and regional unemployment, in the cases of European regions. Instead, no significant relationships between these variables have been found for the United States. Keywords: Productivity, Regional Unemployment, Oligopoly, Non parametrics. JEL Classification: C14, D50, F12, F16, J41, L13, R10. |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa04p38&r=int |
| By: | Eduardo Haddad; Geoffrey Hewings |
| Abstract: | The purpose of this paper was threefold. First, we presented a flexible analytical framework, based on sound and consistent economic theory and data, in order to assess the likely state/sectoral/income effects of policy changes in Brazil. This is the first fully operational interstate CGE model implemented for the Brazilian economy, based on previous work by the author and associates. Among the features embedded in this framework, modeling of scale economies and transportation costs provides an innovative way of dealing explicitly with theoretical issues related to integrated regional systems. Results seemed to reinforce the need to better specifying spatial interactions in interregional CGE models. Second, in order to illustrate the analytical capability of the CGE module, we presented a simulation, which evaluated the regional impacts of a decrease in transportation costs, in accordance with recent policy developments in Brazil. Rather than providing a critical evaluation of this debate, we intended to emphasize the likely structural impacts of such policies. Third, previous diagnostics suggested the need to make a more in-depth analysis of trade flows between the Brazilian states, potentially leading to generalizations regarding the type of trade involved, changes in its composition through time as the Brazilian economy develops, and the implications of these structural differences in the coordination and implementation of development policies. In order to address this issue we gave interregional trade its proper place by taking into account a fully specified interstate system of accounts specially developed for the purpose of calibrating the CGE model. |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa04p461&r=int |
| By: | Raquel Díaz |
| Abstract: | Since the middle 1980's, as consequence of the worldwide process of liberalization, there has been an important rise in international capital flows, especially Foreign Direct Investment (FDI). In particular, during the second half of 1990’s, worldwide FDI inflows grew four times faster than domestic output, twice as fast as domestic investment and three times as fast as exports. However, the geographical distribution of these flows of international capital was highly uneven. The main receivers of these FDI inflows were the most-developed countries. The developing countries only received approximately 30% of the worldwide FDI inflows. At the same time, there has been a decrease in the speed of economic convergence among countries and regions. Between 1950 and 1990 the rate of convergence has been around 2% annually, but from the mid 1980’s, this rate decreased to the 0.2%-0.5% level on an annual basis. Immediately, a question arises: could the very high share of international capital directed to the most-developed countries, be one reason for the slowdown in the rate of economic convergence?. Most studies on the effects of the internationalization of production processes in economic growth have identified the liberalization process with international trade, excluding the effects of FDI and its consequences on regional convergence. However, the liberalization process has increased not only trade, but also international capital flows. In this paper we address this last point. The main objective is to analyze the possible relationship among FDI and economic convergence. In particular, we present arguments which support the hypothesis that FDI inflows could be one of the elements helping to slowdown the speed of convergence in recent years. We show, on one hand, that FDI is an "engine of growth", the same as international trade. The main reason is that FDI is not merely a transfer of capital. FDI contributes to strengthening the economic structure on the host country, modernizes and internationalises it as well. FDI is usually accompanied by specific intangible assets of the transnational corporation, changes in production systems and/or technological innovations, among others. There is not doubt that all these factors generate positive growth effects in the target destination. On the other hand, we show that the main receivers of this FDI are not the developing countries. The developed countries, with more than two-thirds of the worldwide FDI inflows dominate the global picture. So, if these facts are analysed together, it is possible to show that the positive effects of FDI on economic growth are concentrated mainly in the most developed countries. From this point, the negative effect of FDI on economic convergence is an obvious result. |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa04p374&r=int |
| By: | Gert-Jan Linders |
| Abstract: | Barriers to international trade are more sizeable than can be accounted for on the basis of formal trade barriers and transport costs alone. Search costs in the international marketplace and insecurity of property and contract enforcement have recently been stressed to explain this observation. This paper proposes that both elements can be combined to explain observed trade patterns. Distinguishing between homogeneous and differentiated product groups, we estimate gravity equations to investigate how patterns of bilateral trade are affected by variation in the quality of institutions across countries. JEL codes: F14, F15 Keywords: institutions, bilateral trade, gravity model, sectoral analysis, markets |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa04p357&r=int |
| By: | Dražen Derado |
| Abstract: | Economic integration in Europe will have significant effects not only on participating countries, but also on countries remaining outside of the EU-structures. Starting from the theory of custom union and the trade creation and trade diversion effects, this paper tries to apply the theoretical inferences relating to the countries participating in economic integration to those countries which do not take part in it. The ex ante-analysis focuses mainly on long-term dynamic effects which follow from increasing export possibilities and advantages from economies of scale. Taking into account the foreseen dynamics of trade barriers elimination as well as the effects of trade liberalization so far, the paper estimates the expected effects of further trade liberalization and the adjustment costs arising from increased competition and changing pattern of specialization. In doing so, it makes use of the export similarity index and the methodology of intra-industry trade measurement. Key words: customs union, economies of scale, intra-industry trade, EU, Croatia |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa04p236&r=int |
| By: | José Pedro Pontes |
| Abstract: | Although empirical evidence shows that the relationship between foreign direct investment (FDI) and trade is complex, theories of international investment (both vertical and horizontal) present simple patterns of relation. By allowing for different locations of vertically-related stages of production and distinguishing between trade in finished goods and trade in intermediate goods, this paper introduces a non monotonic relationship between multinational firms and trade costs, which must be neither too high nor too low for FDI to arise. Exports and FDI be have as complements for high levels of trade costs and as substitutes otherwise. J.E.L. Classification: F23, F12, C72. Keywords: Foreign Direct Investment, Multinationals, Trade, Intermediate Goods, Non cooperative Games. |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa04p47&r=int |
| By: | Jayanthakumaran, Kankesu (University of Wollongong); Sanidas, Elias (University of Wollongong) |
| Abstract: | This paper is differentiated from most previous studies in that it uses intra-ASEAN's (of the 5 founding counties) historical data and it assesses both exports and the export-GDP nexus by isolating the following three different historical policy interventions: the introduction of Preferential Trade Agreement (PTA) in 1977, the unilateral liberalisation following the severe recession of the mid-1980s and the ASEAN Free Trade Area (AFTA) formation in 1992. Our findings indicate that the ASEAN-5 countries' economies are moving together through time and emerged as a powerful integrated area as a consequence of all of the above three interventions. Unilateral liberalisation and ASEAN regionalism are complementary with each other. The ASEAN's story is unique and relies on both outward orientation and positive aspects of regionalism. |
| Keywords: | EASEAN-5, Exports, Export-GDP nexus, Trade Liberalisation, Intervention Time Series, Integration |
| JEL: | F15 F13 C4 O4 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:uow:depec1:wp05-14&r=int |
| By: | Jens Suedekum; Michael Pflueger |
| Abstract: | This paper studies the social desirability of agglomeration and the efficiency arguments for regional policy in a simple, analytically solvable ‘new economic geography’ model with two trade integrating regions. The location pattern emerging as market equilibrium is ?-shaped, featuring dispersion of firms both at high and low trade costs and stable equilibria with partial agglomeration of firms in addition to core periphery equilibria for intermediate levels of trade costs. Our central finding is that the market equilibrium is characterised by over-agglomeration for high trade costs and under-agglomeration for low trade costs. For an intermediate level of trade costs, the market equilibrium yields the socially optimal degree of agglomeration. An important implication of this result is that, on efficiency grounds, regional policy should foster the dispersion of firms for a range of high trade costs only, but agglomeration for a range of low trade costs. Hence, regional policies, such as those pursued by the European Union (which are aimed at fostering dispersion in general), is counterproductive when trade integration is deep enough JEL-Classification: F12, F15, F22, R12, R50 Keywords: economic geography, regional policy, optimal agglomeration, welfare |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa04p341&r=int |
| By: | Pablo Sanguinetti; Iulia Traistaru; Christian Volpe Martincus |
| Abstract: | Economic integration leads to a reallocation of resources across sectors and space. Location patterns resulting from North-North and North-South regional trade initiatives have been documented in several studies. However, empirical evidence on South-South agreements is rather limited. In this respect, MERCOSUR provides an interesting case study. This paper aims at answering the following questions: What are the main driving factors explaining location patterns in the Southern Cone? To what extent has the establishment of MERCOSUR affected location of economic activities? Using data for the period 1985-1998, we identify the determinants of manufacturing location patterns and assess their changes in the context of increased economic integration. We find that preferential trade liberalization has fostered the influence of factors underlined by the recent trade theories, such as economies of scale and input-output linkages, relative to comparative advantage considerations. Keywords: Economic Integration, Location of Industrial Activities, MERCOSUR JEL-Classification: F14, F15, L60 |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa04p609&r=int |
| By: | Pedro N. Ramos; Pedro G. Carvalho; Ana Lúcia Sargento |
| Abstract: | This paper estimates the trade balance for a small region located in inland Portugal – Beira Estrela – geographically defined as the merge of 3 official NUT III regions – Beira Interior Norte, Serra da Estrela and Cova da Beira. This estimate disaggregates by 31 commodities and includes four essential parts: first, the international trade of goods and services; second, the interregional trade of the same commodities; third, the net balance between in-region consumption by foreigner non-residents and the international consumption by residents and finally the equivalent net balance for Portuguese tourists visiting Beira-Estrela and the consumption of out Beira-Estrela Portuguese residents. Interregional trade (not available in official statistics) is the residual between supply and demand of the different groups of commodities corresponding to the columns and rows of a regional Make and Use table we derive for Beira-Estrela. This regional matrix is the outcome of the application of a simplified non-survey method to the Portuguese (National Accounts provided) Make and Use table decomposition. Moreover we set a survey on lodging and restaurant users that allowed the detachment of the interregional tourist consumption flows from the remaining interregional trade. The aim of this estimate is to assess the relative importance of tourism in the Beira-Estrela regional trade balance. Furthermore, we argue in the paper that, unlike countries, regions do not benefit from trade surpluses and these surpluses are just the counterpart of the income drainage or capital outflows, which weaken the economic region basis. |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa04p303&r=int |
| By: | Andres Rodriguez-Pose; Nicholas Gill |
| Abstract: | As part of the ongoing globalisation of the world economy, the past twenty-five years have witnessed a steep rise in the amount of trade between nations, as well as changes in the composition of trade. This has been linked to economic growth, with most literature on the subject highlighting the benefits of greater openness. Concurrently, however, regional spatial inequalities within nations have also tended to increase steadily. In this paper we explore to what extent there is a link between the phenomena of increased trade flows and regional inequalities. We present a preliminary empirical evaluation based on eight major world economies, and ground these results in the theoretical literature. It emerges that the link between trade and regional inequalities is evidenced most strongly when sectoral shifts in the composition of trade are accounted for. Specifically, we find that as trade in primary sector goods loses importance in the composition of total trade, regional inequalities are likely to increase. Such an impact of changes in the composition of trade on regional inequalities is likely to have a greater negative impact on developing than on developed countries for two reasons. First, because the dimension of intra-national disparities tends to be greater in the developing than in the developed world. Second, because the share of agricultural trade in developing countries has traditionally been higher and has been declining at a much faster rate in recent decades. |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa04p478&r=int |
| By: | Izet Ibreljic; Salih Kulenovic |
| Abstract: | Territorial borders of the future European Union imply an integration of the South-East Europe into the EU political and economic structures. Such “map of the European Union” should represent the “European perspective” to the countries of the South-East Europe. At the present time, no-one can foresee when exactly shall countries of the South-East Europe join the EU, however the conditions that must be met are more-less well known and harmonized within the European Commission. Given the political and economic structure of the South-East Europe area, it is primarily “attractive market” for many European producers, as well as for future European investors. To achieve that, it is necessary to create the pre-conditions in the countries of the South-East Europe. Thus, it is necessary to intensify the regional cooperation between the countries in this region, wither by establishing the “classic free-trade zone” or by liberalization of trade through the network of bilateral contracts on free trade. The cross-border cooperation programs should link up all assistance that would be, for this purpose, coming from the EU. The primary goal of this paper is to research the possibilities and priority-areas of the economic-regional and cross-border cooperation in the South-East Europe in the context of its faster integration in the EU, as well as from the perspective of the optimal synchronization of this cooperation with political and economic strategy fo the EU toward these countries. As it is well known, re-unification of the continent is the joint goal of all citizens of the Europe. Key words: cooperation, South East Europe, European Union |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa04p224&r=int |
| By: | Andrea Gebauer; Chang Woon Nam; Rüdiger Parsche |
| Abstract: | At the end of June 1999 the intra-EU duty free shopping was abolished among the fifteen member nations. The opponents of this resolution argued that such a tax-free sales sector created jobs EU-wide and hardly reduced the value added and excise tax revenue of individual countries. In their opinion, duty free trade not only contributed to the reduction of travel fare within the EU but could also be characterised as a supplement to the normal retail trade for some products. Such ‘old’ ideas are increasingly popular in some Eastern European EU candidates where they are preparing for the introduction of the Single Market and EU membership in the near future. This study primarily shows that the arguments mentioned above were neither significant enough nor conclusive to maintain the intra-EU duty free shopping. Furthermore, the abolition of such tax free sales was approved in the EU in order to ensure the allocation efficiency of the VAT and excise tax system within a single market. Several arguments against the intra-EU tax free shop-ping examined in the study provide some helpful policy orientations for EU membership candidates. |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa04p204&r=int |
| By: | Jose Carlos Melendez-Hidalgo; Piet Rietveld; Erik Verhoef |
| Abstract: | Large-scale investments in transport infrastructure have been traditionally evaluated assuming the equivalence between direct and indirect economic effects (Jara-Diaz,1986), which is only correct under -generally non-guaranteed- perfect competition assumptions. Despite this common practice there is still no consensus amongst economists as to how the benefits and costs of large infrastructure projects should be determined. The discussions regarding the desirability, for instance, of the Betuwe railway line, the fifth runway at Schiphol Airport, the North-South underground railway in Amsterdam etc. are illustrative of this. The focus has been, in particular, on the magnitude of ‘indirect’ and ‘strategic’ effects, that is effects on parties other than the direct users of the infrastructure (indirect effects) and those factors that have a favorable effect on the long-term development of the (regional) economy, such as effects relating to firm location and demographics (strategic effects). Focusing on general equilibrium, increasing returns and imperfect competition modeling approach this paper aims to throw light on this subject matter by examining how the social benefits in terms of efficiency resulting from improvements to the infrastructure can be determined in an imperfect regional economy. |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa04p426&r=int |
| By: | Hiroyuki Kasahara (University of Western Ontario); Joel Rodrigue (Queen's University) |
| Abstract: | This paper examines whether importing intermediate goods improves plant performance. While addressing the issue of simultaneity of a productivity shock and the decision to import intermediates, we estimate the impact of the use of foreign intermediates on plants' productivity using plant-level Chilean manufacturing panel data. We found that switching from being a non- importer to being an importer of foreign intermediates can improve productivity by 2.3 to 22.0 percent. We also investigate the plant dynamic decisions to import, invest, and exit. The results show that having imported last year substantially increases the probability of importing this year, providing the evidence for sunk start-up costs of importing. We also found that importers accumulate more capital and are less likely to exit than non-importers, which indicates that importing intermediates may play an important role in reallocating resources across heterogeneous plants. |
| Keywords: | productivity; imported intermediates; plant-level |
| JEL: | F10 D21 D24 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:uwo:epuwoc:20057&r=int |