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on International Trade |
| By: | Horst Raff; Joachim Wagner |
| Abstract: | We examine how foreign ownership of a firm affects the variety of goods that the firm exports and the number of countries it trades with. We construct a simple theoretical model of how foreign ownership may affect these extensive margins of exports and take this model to data from Germany, one of the leading actors on the world market for goods. In line with theoretical predictions we find that foreign-owned firms do export more goods to more countries after controlling for firm size, productivity and industry affiliation. These differences between foreign-owned firms and domestically controlled firms are highly statistically significant, and they are large from an economic point of view, with foreign-owned firms exporting up to 39% more goods to up to 31% more countries |
| Keywords: | international trade, foreign ownership, multinational enterprise, foreign direct investment, extensive margins of exports, Germany |
| JEL: | F14 F23 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1845&r=int |
| By: | Temouri, Yama (Aston University); Wagner, Joachim (Leuphana University) |
| Abstract: | A stylized fact from the literature on the Micro-econometrics of International Trade and a central implication of the heterogeneous firm models from the New New Trade Theory is that exporters are more productive than non-exporters. It is argued that this exporter productivity premium is due to extra costs of exporting that can be covered only by more productive firms. However, in recent papers that control for extreme observations and unobserved firm heterogeneity by applying a highly robust fixed-effects estimator, no such exporter productivity premium is found for firms from manufacturing and services industries in Germany. This paper uses enterprise level panel data for France, Germany and the United Kingdom from 2003 to 2008 to systematically investigate the role of outliers and unobserved firm heterogeneity for estimates of the exporter productivity premium. We report that outliers do have an influence on the estimated exporter productivity premium. We argue that the vanishing exporter premium in robust fixed effects estimations that is reported for all three countries is caused by characteristics of firms that start or stop to export over the period under investigation, and that are not representative for the bulk of firms that either export or not. |
| Keywords: | Export; productivity premium; outlier; unobserved heterogeneity; robust estimation |
| JEL: | F14 |
| Date: | 2013–06–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0320&r=int |
| By: | Horst Raff; Natalia Trofimenko |
| Abstract: | This paper uses micro-data from the World Bank Investment Climate Surveys 2002-2006 to investigate how foreign ownership and access to external finance affect the likelihood of manufacturers in emerging markets to export and/or import. Applying propensity score matching to control for differences across firms in terms of labor productivity, size, etc., we find that foreign ownership and access to external finance are statistically significant determinants of the likelihood that a firm will export or import. Foreign ownership has a large positive impact on the likelihood to engage in direct trade but a negative effect on the likelihood to trade through intermediaries; the effects vary across upper and lower middle income countries. Access to external finance has a modest but positive effect on the likelihood to engage in any of the modes of connecting with foreign customers or suppliers |
| Keywords: | international trade, foreign ownership, financing, developing countries, intermediation, multinational enterprise |
| JEL: | F12 F14 F23 O19 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1848&r=int |
| By: | Jose Luis Groizard (Department of Economics, Universitat de les Illes Balears); Priya Ranjan (Department of Economics, University of California-Irvine); Jose Antonio Rodriguez-Lopez (Department of Economics, University of California-Irvine) |
| Abstract: | We construct a heterogeneous-firm model with a continuum of inputs to study the impact of offshoring on job flows at both the intensive and extensive margins. We identify three channels through which a reduction in the cost of offshoring affects firm-level employment: a job-relocation effect, a productivity effect, and a competition effect. Whether there is net job creation or job destruction crucially depends on the elasticity of substitution between inputs: the greater the elasticity, the more likely it is that offshoring causes overall job destruction. When firms are allowed to export, a reduction in the cost of offshoring makes offshoring firms more productive in the export market, which leads to further job creation. This offshoring-induced job creation due to exporting possibilities increases the likelihood that the overall effect of offshoring on industry employment is positive. |
| Keywords: | Heterogeneous firms; Employment; Offshoring costs |
| JEL: | F12 F16 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:irv:wpaper:121312&r=int |
| By: | MUKONOKI Hiroshi |
| Abstract: | This paper investigates the welfare effect of forming free trade agreements (FTAs) in an international oligopoly model with cost heterogeneity. To receive tariff-free treatment, firms must comply with the rules of origin (ROO) that require them to use a certain fraction of the parts and intermediates produced within the FTA. Firms producing outside of the FTA could undertake either market-oriented or export-platform foreign direct investment (FDIs). The presence of ROO has the following potential effects: (i) making an initially infeasible FTA become feasible by deterring outside firms from undertaking FDI, (ii) inducing an export-platform FDI of a less efficient firm to replace a market-oriented FDI of an efficient firm, or (iii) discharging FDIs made before the FTA was formed and deterring all possible FDIs. These potential effects complicate the welfare effect of FTAs and could decrease consumer surplus in member countries. |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:13053&r=int |
| By: | Francisco Rebelo; Ester Gomes da Silva |
| Abstract: | Although the analysis of the relationship between international trade and economic growth has an important tradition in the economic literature, the specific focus on a related matter, the link between export variety and economic growth, remains a relatively unexplored field of research. Recently, a few studies have approached this issue, adopting a neo-Schumpeterian framework. In line with this general frame of analysis, in this paper we investigate the impact of export variety on economic growth, cross-relating the variety dimension with technological upgrading. Cointegration econometric results based on the Portuguese experience over the past four decades (1967-2010) show that increased related variety has led to a significant growth bonus, but only in the case of technology advanced sectors. The impact of export variety on economic performance seems, therefore, to be conditioned by the technological intensity of the products involved. |
| Keywords: | Trade, variety, economic growth, technical change, Portugal |
| JEL: | F10 O11 O30 O52 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1310&r=int |
| By: | Vincent Bodart (University of Maastricht); Bertrand Candelon (IRES, Université catholique de Louvain); Jean-François Carpantier (CREA, University of Luxembourg) |
| Abstract: | This paper provides new empirical evidence about the relationship that may exist between real exchange rates and commodity prices in developing countries that are specialized in the export of a main primary commodity. It investigates how structural factors like the exchange rate regime, the degree of financial and trade openness, the degree of export concentration and the type of the commodity exports affect the strength of the commod- ity price-real exchange rate dependence. |
| Keywords: | Real exchange rates; commodity prices; exchange rate regime; financial openness; dynamic panel analysis; |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:luc:wpaper:13-09&r=int |
| By: | Naohisa Hirakata (Director and Senior Economist, Institute for Monetary and Economic Studies (currently, Financial System and Bank Examination Department), Bank of Japan (E-mail: naohisa.hirakata@boj.or.jp)); Mitsuru Katagiri (Associate Director and Economist, Institute for Monetary and Economic Studies (currently, Monetary Affairs Department), Bank of Japan (E-mail: mitsuru.katagiri@boj.or.jp)) |
| Abstract: | In this paper, we investigate the dynamics of foreign direct investment (FDI) and examine the effects of FDI on the macroeconomic dynamics following a decline in labor endowment. In so doing, we introduce capital accumulation into Helpman, Melitz and Yeaple (2004)'s model and extend their model to a dynamic setting following Ghironi and Melitz (2005). Our main findings are as follows. First, we find that FDI stocks do not monotonically decrease toward the new steady state but rather initially increase and move away from the new steady state before reversing course and converging to it, reflecting the fact that a part of foreign assets is accumulated in the form of FDI. Second, we find that foreign portfolio investment (FPI) helps the funding of foreign multinational firms and encourages inward FDI by them. While the increase in inward FDI decreases the number of domestic firms by discouraging their entry, it increases the equilibrium relative wages, thus making the relationship between relative wages and the number of firms different from the conventional "home market effect.'' |
| Keywords: | Foreign Direct Investment (FDI), Capital Flows, Home Market Effect |
| JEL: | F12 F23 F32 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:ime:imedps:13-e-05&r=int |
| By: | Warda, Peter (Jönköping International Business School (JIBS), Center of Excellence for Science and Innovation Studies (CESIS) KTH, Sweden) |
| Abstract: | Structural changes due to global integration certainly affect the employment, productivity and profitability of firms. An interesting case reflects how firms use imports to replace certain stages in production of physical goods. The relevant question here is: if imports make up a substantial part of firms’ sales value, then can the import quality affect firms’ labor composition? The purpose of this paper is to analyze how high and low quality imports affect the labor composition in importing firms in Swedish manufacturing. Inter-firm variation shows that an increase in high (low) quality imports, on average, decreases the share of high-educated (low-educated) labor wages in total wages. Hence, a substitution effect. However, when intra-firm variation is considered the results are instead in favor of a complementary effect. |
| Keywords: | Labor decomposition; labor composition; imports; quality of imports; manufacturing |
| JEL: | F14 J21 J23 O33 |
| Date: | 2013–06–24 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0322&r=int |
| By: | Mori, Romio; Nabeshima, Kaoru; Yamada, Nanae |
| Abstract: | This paper analyzes factors associated with the rejection of products at ports of importer countries and remedial actions taken by producers in China. As an example, it uses one of the most competitive agro-food products of China: live and processed eels. This paper provides an overview of eel production and trade trends in China. In addition, it identifies the causes of port rejection of Chinese eel products as veterinary drug residues by examining the detailed case studies of export firms and the countermeasures taken by the government and firms. |
| Keywords: | China, Aquaculture, International trade, Exports, Quality control, Eels, Agro-food trade, Food safety, Port rejection |
| JEL: | F23 L66 Q13 Q17 Q18 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper418&r=int |
| By: | K, S Chalapati Rao; Dhar, Biswajit |
| Abstract: | After a long and winding process, India opened the retail trade to foreign direct investment (RFDI) albeit with some caveats. The process, however, suggests that the case of RFDI provides a classic example of large global corporations succeeding in influencing public policy of developing countries and putting the regulatory system to stupor with the backing of powerful home governments. Starting from the mid-2000s when it started seeking to expand its global operations, there have been repeated attempts by Walmart to meet important relevant functionaries in India. Once the policy makers were convinced either on their own or due to the intense and sustained lobbying from abroad, the process has been unidirectional. The process also suggests that the protection offered by the safeguards could be illusory. |
| Keywords: | FDI, India, Retail Trade, Walmart |
| JEL: | F21 F23 |
| Date: | 2013–02–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:47795&r=int |
| By: | Bruno, Randolph Luca (University College London); Campos, Nauro F (Brunel University) |
| Abstract: | The prevailing consensus is that foreign direct investment (FDI) effects are conditional. At the macro level, they depend upon minimum levels of human capital or financial development, while at the micro level, they depend on type of linkage (forwards, backwards, or horizontal). This paper presents new evidence showing that these effects are substantially less "conditional". We use a meta-analysis on two data sets covering 549 micro and 553 macro estimates of the effects of FDI on performance. We find these effects tend to be larger in macro than in micro studies, and greater in low- than in high-income countries. |
| Keywords: | foreign direct investment, economic growth, firm performance, meta-regression-analysis |
| JEL: | C83 F23 O12 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7458&r=int |