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on International Trade |
| By: | Joachim Wagner (Leuphana University Lueneburg, Germany) |
| Abstract: | This paper contributes to the literature by documenting for the first time the contribution of adding (and dropping) goods and destination countries to the sharp increase in exports of goods in the German economy as a whole during the Great Export Recovery in 2009/2010. The empirical investigation finds that firms that exported in both 2009 and 2010 are much more important for the export dynamics than export starters and export stoppers. Firms that increased their exports (and that were the drivers of the export boom) exported on average more goods and to more destination countries in 2009 than firms that decreased their exports, and they increased both extensive margins of exports on average while firms with decreased exports reduced both the number of goods exported and the number of countries exported to. These empirical regularities can be linked to recent theoretical models of multiproduct, multiple-destination exporters that point to a positive link between firm productivity and both extensive margins of exports. Although the data do not allow a direct test of the hypothesis, the evidence at hand justifies that we can argue that the more productive firms with higher and increasing extensive margins of exports are the drivers of The Great Export Recovery of 2009/2010 in Germany. |
| Keywords: | Extensive margins of exports, The Great Export Recovery, Germany |
| JEL: | F14 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:lue:wpaper:266&r=int |
| By: | HAYAKAWA Kazunobu; MATSUURA Toshiyuki |
| Abstract: | This paper empirically explores the reason why a recent surge of foreign direct investment (FDI) to developing countries has been mainly driven by less productive firms. To this end, we present a simple model of FDI with vertical division of labor in a heterogeneous firm framework. From a theoretical point of view, in countries with low unskilled worker wages and low trade costs, firms with high productivity invest abroad and engage in international division of labor. Moreover, if trade costs have further reduced, the productivity cut-off level becomes lower and firms within the middle range of productivity will start investing in low wage countries. Our empirical analysis using logit estimation or a multinomial logit model of Japanese firms' FDI choices reveals that a reduction in tariff rates attracts even less productive vertical foreign direct investment (VFDI) firms. This result is consistent with a different definition of VFDI. Because developing countries, particularly East Asian countries, have experienced a relatively rapid decrease in tariff rates, our results indicate that the increase in VFDI through tariff rate reduction has led to the recent relative surge of FDIs in developing countries. |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:13020&r=int |
| By: | Anders AKERMAN; Rikard FORSLID; OKUBO Toshihiro |
| Abstract: | This paper models the market entry cost of exporters as dependent on the size of the export market as well as on sector specific factors. We introduce these features in a Melitz trade model with heterogeneous firms. The predictions of our model are tested using Swedish and Japanese firm level data. We find that sector level advertising or sales promotion intensity is an important component of the market entry cost. A larger market size, if anything, lowers entry costs. |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:13015&r=int |
| By: | Persson, Maria (Lund University); Gullstrand, Joakim (Lund University) |
| Abstract: | In endeavouring to explain the empirical puzzle that the sunk costs of exporting are important, but that, at the same time, trade flows do not, on average, survive for very long, this paper explores the concepts of core and peripheral markets. First, it illustrates that if the importance of sunk costs as well as the expected future returns from exporting are different, depending on whether the export decision refers to a core or a peripheral market, it is plausible that while firms will tend to stay on the core market for a long time, they will enter and exit the peripheral market much more frequently. <p> Second, using firm-product-destination-specific export data for all firms in the Swedish food chain for the period 1997-2007, an empirical test is carried out to ascertain whether there is support for the hypothesis that trade duration will be longer for core markets. Employing two variables that capture different aspects of the core/periphery dimension, it is found that firms will indeed tend to stay longer in their core markets, while export decisions regarding peripheral markets are much less long-term. The conclusion, therefore, is that the empirical puzzle can be explained by taking into account the fact that the trade hysteresis literature builds on data on the core market decision to export or not, and that the trade survival literature also includes data on decisions to stay in or exit peripheral markets. |
| Keywords: | Sunk Costs; Trade Duration; Survival; Core v. Peripheral Markets; Sweden; Firm-Level Data; Discrete-Time Hazard Models |
| JEL: | F10 F14 |
| Date: | 2013–03–19 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0962&r=int |
| By: | Matthieu Crozet (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, IUF - Institut Universitaire de France - Ministère de l'Enseignement Supérieur et de la Recherche Scientifique, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales); Emmanuel Milet (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Daniel Mirza (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales, GERCIE - Université François Rabelais - Tours) |
| Abstract: | In order to promote international trade in services, the WTO-GATS aims at progressively eliminating discriminatory regulations, which apply to foreign suppliers, byguaranteeing equal national treatment. This paper looks instead at the trade effect of domestic regulations, which apply to all firms indifferently and do not intend to exclude foreign suppliers. We propose a theory-based empirical test to determine whether or not these domestic regulations affect foreign suppliers more than local ones. We take this test to the data by using French firm-level exports of professional services to OECD countries. Our econometric results show that domestic regulations in the importing markets matter significantly for trade in services. They reduce both the decision to export and the individual exports. These results tend to prove that domestic regulations are de facto discriminatory even if they are not de jure. |
| Keywords: | Trade in services; domestic regulations; firm heterogeneity |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00801398&r=int |
| By: | Nuno Carlos Leitão (Polytechnic Institute of Santarém and CEFGAGE, University of Èvora, Portugal) |
| Abstract: | This paper investigates the relationship between intra-industry trade (IIT) and immigration flows using a gravity model for the period 2000-2010 between Portugal and European Union’s Member States (EU-27). The present study uses the methodology of Kandogan (2003) for separating IIT into its components horizontal (HIIT) and vertical intra-industry trade (VIIT). Using a panel data approach, our study find that immigration has a positive influence on Portuguese intra-industry trade. These results indicate that the immigration can reduce transaction costs between home and host country. We also consider in econometric model, the economic dimension which appears to exercise a positive effect on IIT. Our results confirm the hypothesis that there is a negative effect of transportation costs on trade. |
| Keywords: | Gravity Model, Horizontal and Vertical Intra-industry Trade Immigration and Panel Data |
| JEL: | C20 C30 F12 L10 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2013.20&r=int |
| By: | Bjarni G. Einarsson; Gudjón Emilsson; Svava J. Haraldsdóttir; Ólafur Ö. Klemensson; Thórarinn G. Pétursson; Rósa B. Sveinsdóttir |
| Abstract: | This paper describes the production and export structure of the Icelandic economy and compares it to other developed countries. We find that the composition of gross value added and investment is very similar to other developed countries with the exception of the high share of fisheries in Iceland. The organisational structure of the corporate sector is also found to be broadly similar. Despite its small size and narrow range of domestic production, the Icelandic economy is neither found to be markedly more open to trade than the average developed economy. It is, however, relatively integrated in terms of international finance. The EU and the euro area are Iceland’s most important export markets and only a handful of countries in Europe have a higher share of exports to the EU and the euro area. Icelandic exports are however concentrated in few products and significantly diverges from the composition of exports in the average developed country with high dependence on commodities exports. Export production is also less sophisticated than in comparable countries with Icelandic export sectors less interconnected with other production sectors than in other developed countries. Despite a narrow export base, the volatility of export and terms of trade are found to be similar to that of other developed countries and the volatility of terms of trade is found to be lower than among other commodity exporters. |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:ice:wpaper:wp60&r=int |
| By: | Blyde, Juan; Molina, Danielken |
| Abstract: | Casual evidence suggests that multinational companies increasingly look for places with adequate transport and logistics infrastructure to locate affiliates that participate in cross-border production sharing. Yet, there are no systematic empirical analyses examining how logistics infrastructure interacts with the location decisions made by multinationals. Most studies on the determinants of FDI address the issue of transportation-logistics by examining the impact of distance on the relevant outcome, but distance does not capture by itself the quality of the logistics systems in place. An additional challenge is that investments in logistics infrastructure and FDI flows could be potentially endogenous. We overcome these shortcomings in the literature by embedding indicators of infrastructure into an empirical framework that examines whether countries with adequate logistics systems attract more vertical FDI in industries that are more dependent on logistics services. We find that logistics infrastructure positively impacts vertical FDI in addition to the impact typically found on distance. A change from the first quartile to the third quartile of the distribution of logistics infrastructure is associated with an average increase in the number of vertically-integrated subsidiaries equivalent to 15 percent |
| Keywords: | international production networks, vertical FDI, logistics infrastructure |
| JEL: | F10 F23 L23 |
| Date: | 2013–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:45749&r=int |
| By: | Yue Ma (Lingnan University and Hong Kong Institute for Monetary Research); Heiwai Tang (Tufts University and Hong Kong Institute for Monetary Research); Yifan Zhang (Lingnan University) |
| Abstract: | Using Chinese manufacturing firm data over the period of 1998-2007, we find that firms become less capital-intensive after exporting, compared to similar non-exporting firms. To rationalize this finding that contrasts with existing evidence for most countries, we develop a variant of the multi-product model of Bernard, Redding, and Schott (2010) to consider products with varying capital intensity. In the model, firms in a labor-abundant country specialize in their core competency by allocating more resources to produce labor-intensive products after exporting. Consistent with the model predictions, we find evidence that the ex-ante more productive firms experience a smaller decline in capital intensity after exporting, but firms that experience a sharper decline in capital intensity after exporting have a larger increase in measured total factor productivity. Using transaction-level data, we confirm that Chinese exporters add new products that are less capital-intensive than their existing product portfolios and drop those that are more capital-intensive over time. |
| Keywords: | Exporters, Productivity, Factor Intensity, Multi-product Firms |
| JEL: | F11 L16 O53 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:hkm:wpaper:252012&r=int |
| By: | Jože Damijan; Črt Kostevc; Matija Rojec |
| Abstract: | This paper empirically accounts for the importance of the 'global supply chains' concept for export restructuring and productivity growth in Central and Eastern European Countries (CEECs) in the period 1995-2007. Using industry-level data and accounting for technology intensity, we show that FDI has significantly contributed to export restructuring in the CEECs. The effects of FDI are, however, heterogenous across countries. While more advanced core CEECs succeeded in boosting exports in higher-end technology industries, non-core CEECs stuck with export specialization in lower-end technology industries. This suggests that where FDI flows have been directed is of key importance. Our results show that export restructuring and economic specialization brought about by FDI during the last two decades in the CEECs might matter a lot for their potential for long-run productivity growth. Industries of higher-end technology intensity have experienced substantially higher productivity growth and so have countries more successful in attracting FDI to these industries. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ete:vivwps:37&r=int |
| By: | Bulent Unel; Elias Dinopoulos |
| Abstract: | We propose a simple theory of personal income distribution, equilibrium unemployment, and interindustry trade, in which product markets are perfectly competitive and labor markets exhibit search related frictions. Individuals, based on their managerial talent, choose to become self-employed entrepreneurs and acquire more managerial capital, or they become workers and face the prospect of unemployment. We analyze the effects of trade on a small-open jobless economy and a two-country global economy. In the case of a small-open economy, improvements in international competitiveness raise the possibility of immiserizing recessions with higher unemployment, lower GDP, and lower aggregate welfare. Reductions in the costs of acquiring managerial capital or appropriate job-vacancy subsidies generally lead to lower unemployment rate, higher aggregate welfare, and higher income inequality. In a two-country global economy, a country exports the good with lower labor-market frictions or lower costs of managerial capital acquisition. Unilateral job-creating policies have asymmetric effects on income inequality and unemployment across countries, and ambiguous effects on welfare in each country. |
| URL: | http://d.repec.org/n?u=RePEc:lsu:lsuwpp:2013-04&r=int |
| By: | Fischer, Justina A.V. |
| Abstract: | Accounting for within-country spatial differences is a much neglected issue in many cross-country comparisons. This paper highlights this importance in this empirical analysis of the impact of a country’s degree of social and economic globalization on female employment in 33 OECD countries, using a pseudo micro panel on 110’000 persons from the World Values Survey, 1981 to 2008. A traditional cross-country analysis suggests that only the social dimension of globalization, the worldwide information exchange, increases employment probabilities of women. However, when accounting for sub-national regional differences, the social dimension of globalization appears to work at the regional level only, while economic globalization (trade) increases female employment in a cross-country fashion. |
| Keywords: | Globalization; economic integration; labor market; employment; regions; social norms; communication; discrimination; gender; World Values Survey |
| JEL: | C33 D83 F14 F16 J16 J7 R23 Z13 |
| Date: | 2013–04–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:45756&r=int |