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on International Trade |
| By: | Massimo Del Gatto; F. di Mauro; J. Gruber; B. Mandel |
| Abstract: | We investigate the factors behind the recent decline in the U.S. share of world merchandise exports in an attempt to determine how big a role the changing productivity of U.S. firms has played. We do so against the backdrop of a measure of cost competitiveness which, insofar it is inferred from actual trade ows, we refer to as revealed marginal costs (RMC). Although, in line with our purpose, we derive such measure as an implication of a trade model with (intra-industry) firm heterogeneity, computation does not require firm level data but only aggregate bilateral trade ows, domestic trade included. Brought to the data for the manufacturing sector, such measure reveals that, notwithstanding significant heterogeneity across industries, most U.S. sectors are indeed losing momentum relative to their main competitors, as we find U.S. s RMC to grow by an average 14%, relative to the other G20 countries. The RMC structure identifies in market size, trade freeness and imports its "revealing-observable" components - while market size is found to be the main responsible of such decline on average, cost competitiveness seems to have benefited from a good combination of increasing trade freeness and decreasing imports, relative to the other G20 countries. The best performing countries in terms of RMC (China and India among others) characterize, however, for an increase in trade freeness higher than in the U.S. At the sectoral level, the "Machinery" industry is the most critical, followed by the "Chemicals" and "Equipment" industries. |
| Keywords: | Productivity; competitiveness; export shares; marginal costs; firm heterogeneity; firm selection; gravity equation; trade costs |
| JEL: | F12 R13 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:cns:cnscwp:201232&r=int |
| By: | Peter Wierts; Henk van Kerkhoff; Jakob de Haan |
| Abstract: | We investigate to what extent the destination of exports and export composition affect the export performance of euro area countries, using a dataset on exports from euro area countries to their top 20 trade partners for the period 1980-2010. Our analysis shows that European integration has not led to an increase in the share of the core and the northern periphery in the exports of the southern periphery. Our results suggest that a higher share of high tech exports in total exports leads to a higher growth of total exports. Export composition also conditions the effects of the real exchange rate and partner income growth. The effect of the real exchange rate on export growth becomes smaller the higher the share of high tech exports in total exports. The effect of partner income on export growth becomes larger the higher the share of high tech exports in total exports. |
| Keywords: | trade relations; export composition; euro area |
| JEL: | F14 F15 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:354&r=int |
| By: | Hepenstrick, Christian; Tarasov, Alexander |
| Abstract: | This paper quantitatively explores the role of the demand structure in explaining the relationship between an importer's per capita income and the extensive margin of bilateral trade. The underlying mechanism is based on the fact that agents expand the set of goods they consume with income. This in turn affects the structure of a country's import demand and therewith the extensive margin of trade. We formalize this intuition by incorporating preferences that allow for binding non-negativity constraints into an otherwise standard Ricardian multi-country model. We quantify the model using the data on US consumer expenditures and aggregate values of bilateral trade flows and find that the behavior of the model's extensive margin of bilateral trade is consistent with the data (as opposed to the standard model). Two popular counterfactual experiments - lower trade costs and the rise of China and India - demonstrate that the mechanism outlined in this paper is indeed quantitatively important. |
| Keywords: | Non-homothetic preferences; extensive margin; Ricardian trade |
| JEL: | F10 F11 F19 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:14231&r=int |
| By: | Kalina Manova; Zhihong Yu |
| Abstract: | Global supply chains allow firms in developing countries to share in the gains from trade by conducting either ordinary or processing trade. This paper examines how financial constraints affect companies’ choice of trade regime and ultimately profitability. We exploit matched customs and balance sheet data from China, where processing trade is further divided into import-and-assembly (processing firm pays for imported inputs) and pure assembly (processing firm receives imported inputs for free). We establish two main results. First, profits, profitability and value added fall as exporters orient sales from ordinary towards processing trade, and from import-and-assembly towards pure assembly. Second, less financially constrained firms perform more ordinary trade relative to processing trade, and more import-and-assembly relative to pure assembly. We rationalize these patterns with a model that incorporates credit constraints and imperfect contractibility in companies’ choice of trade regime. Our results imply that limited access to capital restricts firms to low value-added stages of the supply chain and precludes them from pursuing more profitable opportunities. Financial frictions thus affect the organization of production across firm and country boundaries, and inform optimal trade policy in the presence of trade in intermediates. |
| JEL: | F10 F13 F14 F23 F34 G32 O19 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18561&r=int |
| By: | Paul S. Segerstrom; Ignat Stepanok |
| Abstract: | In this paper, we present a standard quality ladders endogenous growth model with one significant new assumption, that it takes time for firms to learn how to export. We show that this model without Melitz-type assumptions can account for all the evidence that the Melitz (2003) model was designed to explain plus much evidence that the Melitz model can not account for. In particular, consistent with the empirical evidence we find that trade liberalization leads to a higher exit rate of firms, that exporters charge higher prices for their products as well as higher markups, and that many large firms do not export. We also find that trade iberalization promotes economic growth and that it has the opposite effect of retarding economic growth in a closely comparable growth model with Melitz-type assumptions |
| Keywords: | Trade liberalization, heterogeneous firms, quality ladders, endogenous growth |
| JEL: | F12 F13 F43 O31 O41 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1801&r=int |
| By: | Felbermayr, Gabriel; Grossmann, Volker; Kohler, Wilhelm |
| Abstract: | In this paper, we provide an overview of the relationship between international migration and international trade as well as capital movements. After taking a brief historical perspective, we first investigate migration flows between two countries in a static, neoclassical context. We allow for a disaggregated view of migration that distinguishes between different types of labor and emphasizes the distinction between migration flows and pre-existing stocks. We focus on different welfare channels, on internal income distribution, international income convergence and on whether migration and trade are substitutes or complements. Complementarity/substitutability hinges on whether countries share the same technology, and the pivotal question is whether or not technology is convex. Generally, under substitutability between trade and migration and with convex technology, globalization tends to lead to convergence. Moreover, under non-convex technology trade and migration tend to be complements. Turning to dynamic models with capital adjustment costs and capital mobility, the same is true for the relationship between migration and capital flows. Nevertheless, in neoclassical models, we may observe emigration at the same time as capital accumulates during the transition to a steady state. Moreover, we can explain reverse migration. We also touch upon the effects of migration on the accumulation of both knowledge and human capital, by invoking endogenous growth theory. Finally, we review the empirical literature exploring the link between migration and trade. The discussion is based on the so called gravity model of trade, in which trade between pairs of countries is related to measures of their respective sizes, preferences, and trade costs. We revisit the identification of the overall trade-creating effect of migration and its break-down into the trade channel and the preference channel. We clarify the role of product differentiation for the size of estimated effects, discuss the role of immigrants' education and occupation, and emphasize direct and indirect networks and their trade-enhancing potential. |
| Keywords: | migration; international trade; capital movements; capital formation; globalization |
| JEL: | F1 F2 F4 |
| Date: | 2012–11–22 |
| URL: | http://d.repec.org/n?u=RePEc:fri:fribow:fribow00436&r=int |
| By: | Paola Conconi (Université Libre de Bruxelles, ECARES and CEPR); Giovanni Facchini (University of Nottingham, Universitá degli Studi di Milano, CEPR, CES-Ifo, IZA and LdA); Max F. Steinhardt (Hamburg Institute for International Economics, LdA and CELSI); Maurizio Zanardi (Université Libre de Bruxelles and ECARES) |
| Abstract: | Over the last decades, the United States has become increasingly integrated in the world economy. Very low trade barriers and comparatively liberal migration policies have made these developments possible. What drove US congressmen to support the recent wave of globalization? While much of the literature has emphasized the differences that exist between the political economy of trade and migration, in this paper we find that important similarities should not be overlooked. In particular, our analysis of congressional voting between 1970 and 2006 suggests that economic drivers that work through the labor market play an important role in shaping representatives’ behavior on both types of policies. Representatives from more skilled-labor abundant districts are more likely to support both trade liberalization and a more open stance vis-à-vis unskilled immigration. Still, important systematic differences exist: welfare state considerations and network effects have an impact on the support for immigration liberalization, but not for trade; Democratic lawmakers are systematically more likely to support a more open migration stance than their Republican counterparts, whereas the opposite is true for trade liberalization. |
| Keywords: | Trade Reforms, Immigration Reforms. |
| JEL: | F22 J61 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:nor:wpaper:2012031&r=int |
| By: | Arjan Lejour; Hugo Rojas-Romagosa; Paul Veenendaal |
| Abstract: | The increasing importance of global supply chains has prompted the use of analytical tools based on trade in value added – instead of traditional measures in gross value. We extend this analytical framework to create indicators that identify hubs and spokes in international supply chains. Using these indicators and the GTAP databases for 2001, 2004 and 2007 we identify the importance of redirected value added trade and the hub and spoke relationships at the aggregate level and for specific highly integrated industries. |
| JEL: | F1 C67 D57 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:227&r=int |
| By: | Neubecker, Nina; Smolka, Marcel |
| Abstract: | This paper provides evidence that transnational networks, defined as networks operating across nationalities, are shaping observed patterns of international migration. In a stylized model of migration with random friendship formation, individuals from a given origin country are attracted to destinations hosting large migrant communities from countries which are culturally and geographically close to their own origin country. In addition, the attracting force of a large community of co-national migrants is the larger, the larger the community of migrants from other culturally proximate countries in the same destination. Both predictions are supported by aggregate migration data on international migration to Spain, detailed by origin country and destination province. Our findings imply that the literature estimating network effects in migration has been overly restrictive in its definition of migrant networks. -- |
| Keywords: | International migration,Co-national and transnational friendships,Network effect,Spain |
| JEL: | F22 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tuewef:46&r=int |
| By: | Brown, W. Mark<br /> Anderson, William P. |
| Abstract: | Despite the elimination of tariff barriers between Canada and the United States, the volume of trade between the two countries has been less than would be expected if there were no impediments. While considerable work has been done to gauge the degree of integration between the Canadian and U.S. economies through trade, relatively little analysis has parsed out the underlying costs for cross-border trade. The costs of crossing the border can be divided into formal tariff barriers, non-tariff barriers, and the cost of the transport system itself. This paper focuses on the latter by estimating the cost of shipping goods by truck between Canada and the U.S. during the 2004-to-2009 period. The analysis assesses the degree to which costs to ship goods by truck to and from the U.S. exceed those within Canada by measuring the additional costs on a level and an ad valorem basis. The latter provides an estimate of the tariff equivalent transportation cost that applies to cross-border trade. These costs are further broken down into fixed and variable (line-haul) costs. Higher fixed costs are consistent with border delays and border compliance costs which are passed on to the consumers of trucking services. Higher line-haul costs may result from difficulties obtaining backhauls for a portion of the trip home. Such difficulties may stem from trade imbalances and regulations that restrict the ability of Canadian-based carriers to transport goods between two points in the United States. |
| Keywords: | International trade, Transportation, Transportation by road |
| Date: | 2012–11–19 |
| URL: | http://d.repec.org/n?u=RePEc:stc:stcp5e:2012081e&r=int |
| By: | Emmanouil Tranos (VU University Amsterdam); Masood Gheasi (VU University Amsterdam); Peter Nijkamp (VU University Amsterdam) |
| Abstract: | Migration has become a prominent research theme in geography and regional science and it has been approached from various methodological angles. Nonetheless, a common missing element in most migration studies is the lack of awareness of the overall network topology, which characterizes migration flows. Although gravity models focus on spatial interaction - in this case migration - between pairs of origins and destinations, they do not provide insights into the topology of a migration network. In the present paper, we will employ network analysis to address such systemic research questions, in particular: How centralized or dispersed are migration flows and how does this structure evolve over time? And how is migration activity clustered between specific countries, and if so, do such patterns change over time? Going a step further than exploratory network analysis, this paper estimates international migration models for OECD countries based on a dual ap proach: gravity models estimated using conventional econometric approaches such as panel data regressions as well as network-based regression techniques such as MRQAP. The empirical results reveal not only the determinants of international migration among OECD countries, but also the value of blending network analysis with more conventional analytic methods. |
| Keywords: | immigration; gravity model; complex networks; community detection; MRQAP |
| JEL: | F22 O15 D85 |
| Date: | 2012–11–16 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20120123&r=int |
| By: | smruti, Smruti Ranjan Behera |
| Abstract: | This paper examines the spillover effect of foreign direct investment (FDI) and determinant of FDI across Indian manufacturing industries. The result, based on two-equation model that allows for the two-way link between labor productivity of locally owned industries and foreign presence provide evidence that foreign presence brings new channels of knowledge and technology spillover to domestic industrial firms. We find that intermediate factors like R&D intensity and technology import intensity can impact positively the productivity of domestic firms. Furthermore, we find that bigger market size and highly productive domestic sectors are likely to attract more foreign capital into Indian industries. |
| Keywords: | Foreign Direct Investment; Technology Spillover; Manufacturing; Panel Cointegration; Unit Root Tests |
| JEL: | F30 O32 C33 L60 |
| Date: | 2012–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:42178&r=int |
| By: | Julian Donaubauer; Dierk Herzer; Peter Nunnenkamp |
| Abstract: | We address the question of whether foreign aid helps attract foreign direct investment (FDI). This could be achieved if well targeted aid removed critical impediments to higher FDI inflows. In particular, test the hypothesis that aid for education is an effective means to increase FDI flows to host countries in Latin America where schooling and education appears to be inadequate from the viewpoint of foreign investors. We employ panel data techniques covering 21 Latin American countries over the period from 1984 to 2008. We find that aid for education has a statistically significant positive effect on FDI. This effect is robust to potential outliers, sample selection, alternative specifications and different estimation methods |
| Keywords: | foreign aid, foreign direct investment, aid effectiveness, human capital |
| JEL: | E24 F21 F35 O15 O19 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1806&r=int |
| By: | Marcela Eslava (Universidad de Los Andes); John Haltiwanger (University of Maryland); Adriana Kugler (Georgetown University); Maurice Kugler (United Nations Development Programme) |
| Abstract: | Technical appendix for the Review of Economic Dynamics article |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:red:append:11-69&r=int |