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on International Trade |
| By: | David Kohn; Fernando Leibovici; Michal Skup |
| Abstract: | This paper studies the role of nancial frictions as a barrier to international trade. We study new exporter dynamics to identify how these frictions aect export decisions. We introduce a borrowing constraint and working capital requirements into a standard model of international trade, with exports more working-capital-intensive than domestic sales. Our model can quantitatively account for new exporter dynamics, in contrast to a model with sunk export entry costs. We provide additional evidence in support of our mechanism. We nd that nancial frictions reduce the impact of trade liberalization, suggesting that they constitute an important trade barrier. |
| Keywords: | international trade, firm dynamics, new exporter, plant-level data, financial frictions, borrowing constraints, working capital, trade credit, liberalization |
| JEL: | F1 F14 F4 G32 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:udt:wpecon:2014_4&r=int |
| By: | de Sá Porto,Paulo C.; Canuto,Otaviano; Morini,Cristiano |
| Abstract: | This paper analyzes the impacts of selected trade facilitation measures on international trade flows. A gravity model is used to estimate four equations: a pooled cross-section model; a fixed-effects model; a random effects model; and a Poisson maximum likelihood estimator. The contribution of the paper is twofold. First, the analysis uses a recent data set, a panel that includes trade data from 2011 and 2012 for 72 countries. Second, to measure the impacts of trade facilitation measures, the analysis includes dummy variables for the presence of an authorized economic operator program, the existence of a single-window program in the countries in the sample, and the existence of a mutual recognition arrangement between pairs of countries in the sample. The results show that the presence of an authorized economic operator program and the existence of a single-window program will improve countries? trade performance. By contrast, the existence of a mutual recognition arrangement will not necessarily improve countries? trade performance. These results suggest that, in general, trade facilitation measures as a whole will help countries improve their trade performance. |
| Keywords: | Free Trade,Economic Theory&Research,Trade Policy,Trade Law,Common Carriers Industry |
| Date: | 2015–07–14 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:7367&r=int |
| By: | Costas Arkolakis; Arnaud Costinot; Dave Donaldson; Andrés Rodríguez-Clare |
| Abstract: | We study the gains from trade liberalization in models with monopolistic competition, firm-level heterogeneity, and variable markups. For a large class of demand functions used in the international macro and trade literature, we derive a parsimonious generalization of the welfare formula in Arkolakis, Costinot, and Rodríguez-Clare (2012). We then use micro-level trade data to quantify the implications of this new formula. Our main finding is that gains from trade liberalization predicted by models with variable markups are slightly lower than those predicted by models with constant markups. In this sense, pro-competitive effects of trade are elusive. |
| JEL: | F1 F12 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21370&r=int |
| By: | World Bank |
| Keywords: | Law and Development - Trade Law International Economics and Trade - Free Trade Private Sector Development - Emerging Markets International Economics and Trade - Trade Policy |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wboper:22045&r=int |
| By: | World Bank |
| Keywords: | International Economics and Trade - Free Trade International Economics and Trade - Trade Policy Private Sector Development - Emerging Markets Environment - Environmental Economics & Policies |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wboper:22091&r=int |
| By: | David Kohn; Fernando Leibovici; Michal Skup |
| Abstract: | We study the role of financial frictions and balance-sheet effects in accounting for the dynamics of aggregate exports in large devaluations. In standard models of international trade, exports increase immediately following a large devaluation; in contrast, aggregate exports respond sluggishly in the data. We investigate a small open economy with heterogeneous firms and idiosyncratic productivity shocks, where firms face financing constraints and debt can be denominated in domestic or foreign units. In our model, a real depreciation affects firms through two channels. On the one hand, it increases the returns to selling internationally, making exporting more profitable. On the other hand, it tightens the borrowing constraint by increasing the value of foreign debt relative to firms’ net worth. We calibrate the model to match key features from plant-level data and use it to quantify the importance of these channels. We find that financial frictions slow down the response of aggregate exports, and foreign-denominated debt amplifies this effect by decreasing firms’ net worth on impact. When accounting for the observed heterogeneity in export intensity across exporters, these channels explain a large share of the gap between the data and the frictionless model. |
| Keywords: | international trade, financial frictions, borrowing constraints, large devaluations, export elasticity, export dynamics, quantitative |
| JEL: | F1 F4 G32 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:udt:wpecon:2015_2&r=int |
| By: | Magasházi, Anikó |
| Abstract: | The paper investigates the role of regionalization and regional identity in the endeavours of emerging economies to connect successfully to the global world economy. It addresses the question of whether the Association of Southeast Asian Nations (ASEAN), with its loose institutional integration framework, has contributed to the global integration of its very heterogenous members in the first decade of the 21st century – and, if so, what are the drivers behind this. The paper summarizes connecting theories, using a multidisciplinary approach, and uses descriptive statistical analysis to identify the achievements of the ASEAN-6 countries within global trade and foreign direct invesment (FDI) flows in the given time period. We suggest that ASEAN countries, with their efforts to initiate interconnecting regional organizations in Asia, most specifically the ASEAN+3 (APT) construction, did contribute to greater integratedness of member countries; and they have created a regional image with a common market and production base. Such achievements, however, can be in great part attributed to the micro-level activities of international and regional firms wishing to establish cross-border production networks in these countries. |
| Keywords: | ASEAN, regional integration, FDI, production networks |
| JEL: | F13 F15 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:cvh:coecwp:2015/13&r=int |
| By: | Taguchi, Hiroyuki; Lar, Ni |
| Abstract: | Asian economies have been and will be a growth center in the world. One of the driving forces for Asian economic growth seems to be their economic integration through forming global value chains (hereafter GVCs) especially in manufacturing sectors. This chapter aims to investigate the dynamic economic impacts of GVCs participation in Asian developing economies from the following two analytical angles. Since the creation of GVCs usually involves the prevailing foreign direct investment (hereafter FDI) undertaken by transnational corporations, we first examined the impacts of FDI on the growth of GDP and exports focusing on ASEAN economies including latecomers and forerunners in their economic developments, by conducting causality tests in the vector auto-regression model. The analytical outcomes represented the clear causality from FDI to GDP and exports as well as the opposite causality from GDP and exports to FDI for a group of ASEAN economies, although individual economies has different causality relations. It implied that FDI has been a driving force for economic growth through capital accumulation and technological transfers, while FDI inflows have been attracted to the growing economies and markets. It should also be noted that the significant causality from FDI to exports might imply that the inward FDI has facilitated the GVCs participation in Asian economies. We second examined the economic impacts of GVCs participation by analyzing the value-added-trade data in Asian developing economies. We observed that the GVCs participation in manufacturing sectors has allowed the absolute domestic value added for their exports to contribute to their GDP growth. We also found that the development paths of domestic value added contributions to exports in the GVCs participating economies have followed “smile curve” with its turning point being 5,651 U.S. dollars in per capita GDP. It implied the dynamic impacts of GVCs participation, where at the initial stage of GVCs participation the domestic value added contributions to exports have reduced, but have recovered at the later stage of GVCs involvement with upgrading domestic productive capacities. It should also be noted that the turning points of “smile curves” differed according to manufacturing sectors: the sectors of food, textile, and wood products reached the turning point at lower per capita GDP and at higher ratio of domestic value added contributions to exports than those of machinery, electrical, and transport equipment. |
| Keywords: | Global value chains, industrial upgrading, Asian developing economies |
| JEL: | F23 O53 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:65708&r=int |
| By: | Alicia Garcia-Herrero |
| Abstract: | The rapid rise of trade in part of components –in the context of an increasingly important global production chain – is a key future of Asia’s economic miracle. This paper aims at analyzing empirically what are key determinants of trade in parts and components. |
| Keywords: | Asia, China, Economic Analysis, Latin America, Mexico, Research, Working Paper |
| JEL: | F10 F12 F15 F16 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:bbv:wpaper:1524&r=int |
| By: | Dalia Marin; Jan Schymik; Jan Tscheke |
| Abstract: | What explains Germanyâ??s superb export performance? Is Germanyâ??s export behaviour very distinct compared to other European countries? The authors explore the organisational responses to competition of 14,000 exporting firms in seven European countries. The paper examines the export business model of the median exporter and of the top one percent exporters in each country, accounting for 20 percent to 55 percent of total exports. What do these firms do to become superstars? The authors find, first, that the export market share of the median exporter in each of the countries to the world more than tripled (in some cases the export market share increases tenfold) for firms that combine decentralised management with offshoring of production to low-wage countries. Exporters which abstain from any organisational adjustment do very badly. Decentralised management provides incentives for workers for product improvements allowing exporters to compete on quality. Offshoring production to low-wage countries reduces costs allowing exporters to compete on price. Second, we find that Germany is the leading quality exporter in Europe followed by Austria and Spain. Among the top 10 percent of exporters there is no single firm with low quality in Germany and Austria, which suggest that decentralised management has provided incentives for quality in these countries. Third, Germanyâ??s exports are less vulnerable to price increases, while exports from France and Italy respond strongly to price changes, and thus costs reductions via offshoring benefits these countries most. |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:bre:wpaper:889&r=int |
| By: | Paola Conconi (European Center for Advanced Research in Economics and Statistics (ECARES) Université Libre de Bruxelles and Centre for Economic Policy Research (CEPR)); David R. DeRemer (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences); Georg Kirchsteiger (European Center for Advanced Research in Economics and Statistics (ECARES) Université Libre de Bruxelles also CEPR, CESifo and VCEE); Lorenzo Trimarchi (European Center for Advanced Research in Economics and Statistics (ECARES) Université Libre de Bruxelles); Maurizio Zanardi (Lancaster University Management School) |
| Abstract: | This paper shows that electoral incentives affect the occurrence of trade disputes. Focusing on WTO disputes filed by the United States during the 1995-2012 period, we show that U.S. presidents are more likely to initiate a dispute in the year preceding their re-election date. Moreover, disputes filed by the U.S. tend to target industries that are important to swing states in the presidential election. To explain these regularities, we develop a theoretical model in which an incumbent can file a trade dispute to appeal to voters motivated by reciprocity. The incumbent's ability to initiate a dispute during the re-election campaign provides an advantage over the challenger, who cannot commit to file the dispute if elected. If voters' ideological preferences are not too strong in favor of either candidate, the incumbent will file a trade dispute to increase his re-election chances. |
| Keywords: | trade disputes, elections, reciprocity |
| JEL: | F13 D72 D78 D63 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:has:discpr:1521&r=int |
| By: | Bouoiyour, Jamal; Selmi, Refk |
| Abstract: | The main focus of this paper is to survey the literature that investigates the effects of exchange rate uncertainty on international trade. Specifically, we carry out meta-regression analysis to 42 studies with 810 estimates. We show that the empirical studies on the focal link exhibit a substantial publication selection and a significant genuine exchange rate volatility effect on trade flows after correction of publication bias. Moreover, we find that most of the variables that may help explain the heterogeneity of results (such as the country sample, the choice of modeling strategies and potential political measures, etc) are significant. These results appear robust among the different methods used and the dummies for the type of research outlet and the publication year included in our estimates. |
| Keywords: | Exchange rate uncertainty; trade; meta-regression analysis. |
| JEL: | F14 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:65737&r=int |
| By: | James E. Anderson; Mario Larch; Yoto V. Yotov |
| Abstract: | We build and estimate a structural dynamic general equilibrium model of growth and trade. Trade affects growth through changes in consumer and producer prices that in turn stimulate or impede physical capital accumulation. At the same time, growth affects trade, directly through changes in country size and indirectly through altering the incidence of trade costs. The model combines structural gravity with a capital accumulation specification of the transition between steady states. Theory translates into an intuitive econometric system that identifies the causal impact of trade on income and growth, and also delivers estimates of the key structural parameters in our model. Counterfactual experiments based on the estimated model give evidence for strong dynamic relationships between growth and trade, resulting in doubling of the static gains from trade liberalization. |
| JEL: | F10 F43 O40 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21377&r=int |
| By: | Vorobyev, Mihail (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Gubenko, Roman (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Klueva, Alla (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Reshetova, O. (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Salamatov, V. (Russian Presidential Academy of National Economy and Public Administration (RANEPA)) |
| Abstract: | All experts engaged today in the issues of the WTO recognize that the emphasis in the use of trade measures, as well as trade policy, moving away from tariff measures in the sphere of non-tariff measures. If we analyze the practice of the World Trade Organization, namely the number of disputes that had taken place on the date of the formation of the WTO in 1995, to the present time, it is clear that 52% of these disputes affect the subject of application of trade defense measures, ie anti-dumping, countervailing, safeguard non-tariff measures. Therefore, sector analysis industry needs to develop a clear understanding of which sectors, for some goods may be introduced in the first place trade defense measures, and what those measures might be. |
| Keywords: | WTO, CU, sectoral analysis, industry |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:rnp:ppaper:mn48&r=int |
| By: | Tobias Erhardt; Rolf Weder (University of Basel) |
| Abstract: | This paper examines the unprecedented decimation of sharks. We develop a Ricardian Gordon-Schaefer model with a continuum of heterogeneous species which are subject to combined harvesting and perfect substitutability in consumption. The model implies that slow-growing species, surviving in autarky, will be driven to extinction in an open trade regime. In the empirical analysis, we show that the model is in line with observations of shark biology and the international shark market. In particular, the likelihood of extinction turns out to be significantly greater for shark species which are part of trade in shark fins and exhibit low intrinsic growth. |
| Keywords: | Sharks, Trade and Renewable Resources, Biodiversity |
| JEL: | F14 F18 Q27 Q57 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:bsl:wpaper:2015/07&r=int |
| By: | Alexander Beames (Treasury, Government of Australia); Michael Kouparitsas (Treasury, Government of Australia) |
| Abstract: | This paper adds to the relatively scant Australian literature on modelling the demand and supply of Australian imports. We build on earlier demand modelling by deriving conditional import demand relationships via representative household/firm-level utility-maximisation/cost-minimisation problems, which explicitly assume households/firms have both a taste for variety and rival sources of supply. Our estimates of disaggregated price elasticities are consistent with earlier studies in finding relatively low substitutability between imported and domestically produced varieties. Our derivation of the long-run supply framework also adds to the existing literature by explaining why it is necessary for researchers to employ trade-weighted foreign prices in place of individual country prices and providing conditions under which this approach is consistent with the underlying theory. We find that the extent of the foreign cost pass-through to import prices depends critically on the choice of foreign cost variable. |
| Keywords: | Import prices, price elasticity of imports, income elasticity of imports |
| JEL: | F14 F17 C22 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:tsy:wpaper:wpaper_tsy_wp_2015_2&r=int |
| By: | Massimiliano Calì; Wissam Harake; Fadi Hassan; Clemens Struck |
| Keywords: | International Economics and Trade - Trade Policy International Economics and Trade - Free Trade Economic Theory Research Finance and Financial Sector Development - Currencies and Exchange Rates Transport Economics Policy Planning Transport Macroeconomics and Economic Growth |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wboper:21914&r=int |
| By: | Cirera,Xavier; Lederman,Daniel; Máñez,J.A.; Rochina,M.E.; Sanchis,J.A. |
| Abstract: | This paper explores the link between exports and total factor productivity in Brazilian manufacturing firms over the period 2000?08. The Brazilian experience is instructive, as it is a case of an economy that expanded aggregate exports significantly, but with stagnant aggregate growth in total factor productivity. The paper first estimates firm-level total factor productivity under alternative assumptions (exogenous and endogenous law of motion for productivity) following a GMM procedure. In turn, the analysis uses stochastic dominance techniques to assess whether the ex ante most productive firms are those that start exporting (self-selection hypothesis). Finally, the paper tests whether exporting boosts firms? total factor productivity growth (learning-by-exporting hypothesis) using matching techniques to control for the possibility that selection into exports may not be a random process. The results confirm the self-selection hypothesis and show that starting to export yields additional growth in total factor productivity that emerges since the firm?s first year of exporting but lasts only one year. Further, this extra total factor productivity growth is much higher under the assumption of an endogenous law of motion for productivity, which reinforces the importance of accounting for firm export status to study the evolution of productivity. |
| Keywords: | E-Business,Economic Theory&Research,Labor Policies,Industrial Management,Knowledge for Development |
| Date: | 2015–07–13 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:7365&r=int |
| By: | Natalia Ramondo (UCSD) |
| Abstract: | The decline in the costs of multinational production (MP) has led some countries to specialize in innovation and others to specialize in production. To study the aggregate and distributional implications of this phenomenon, we develop a quantifiable general equilibrium model of trade andMP. Specialization is endogenously determined as a result of comparative advantage and home market effects (HME) that arise from the interaction between increasing returns to innovation and geographical frictions. The model yields simple structural expressions for bilateral trade and MP that we use to calibrate it across a set of OECD countries. Comparative statics exercises reveal that the reduction in the cost of MP or the integration of China into the world economy may hurt countries that are driven to specialize in production due to HMEs, although these losses tend to be very small. Contrary to popular fears, we find that production workers gain even in countries that further specialize in innovation. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed015:183&r=int |
| By: | Soumyajit Mazumder |
| Abstract: | Where does precedent in international law come from? Because the efficacy of international courts depends on the efficiency with which they can deal with disputes, they must be able to deter future disputes. Deterrence rests on the availability of precedent (a public good), but because it is costly to generate precedent, powerful states must take on the cost of leadership. In this paper, I investigate the relationship between power and precedent by analyzing dispute settlement at the World Trade Organization (WTO). Borrowing insights from hegemonic stability theory, I argue that it is precisely the strategic nature of WTO dispute settlement that makes powerful states--namely, the United States (US)--willing to supply precedent. This theory accounts for three empirical insights regarding WTO dispute settlement: (1) the US, counterintuitively, tends to file low-stakes cases, (2) cases filed by the US yield a greater precedential value for the broader WTO membership than their counterparts, and (3) the US tends to shape the precedent that it does create in its favor. Statistical analysis using Bayesian estimation provides evidence in favor of the hypotheses. My results suggest that power undergirds the politics of WTO law. |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:qsh:wpaper:269356&r=int |
| By: | Volovik, Nadezhda (Russian Presidential Academy of National Economy and Public Administration (RANEPA)) |
| Abstract: | CIS countries are our neighbors and have traditionally been the most important trade partners of the Russian Federation in the course of political and economic reforms in the CIS countries there are new developments and trends in the development of trade relations of these countries, the problems and difficulties of traditional restoration and finding new forms of trade relations. The changes require constant study of the events in order to determine the prospects of trade and economic cooperation, development of recommendations for improvement, find solutions to problems. All this determines the relevance of the study. |
| Keywords: | CIS, Russia, trade |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:rnp:ppaper:mn51&r=int |