Preferential trade agreements and their role in world trade

This paper investigates the effects of preferential trade agreements (PTAs) on bilateral trade using a comprehensive data base of PTAs in force and a detailed matrix of world trade. Total trade between PTA partners is a poor proxy for preferential trade (trade in tariff lines where preferences are likely to matter): while the former was one-third of global trade in 2000–2002, the latter was between one-sixth and one-tenth. Gravity model estimates indicate that using total trade to assess the impacts of PTAs leads to a significant downward bias in the PTA coefficient: the semi-elasticity of trade with respect to PTA membership rises from 87% for total trade to 119% for preferential trade. Product exclusions and long phase-in periods significantly limit preferential trade; the marginal impact of South-South agreements on preferential trade is much higher than North-South PTAs, while the effect of North-North agreements is insignificantly different from zero.     

The costs of non-tariff barriers to trade: Evidence from New Zealand

The Costs of Non-Tariff Barriers to Trade: Evidence from New Zealand. — Recent work on trade policy with imperfect competition indicates that the adverse effects of non-tariff barriers to trade exceed those suggested by traditional theory. With market power in foreign supply, setting a restrictive non-tariff barrier will induce foreign exporters to raise their supply prices. The authors use the experiment provided by the comprehensive New Zealand economic reforms of the mid-1980s. Using panel data on export unit values from Germany and the United States to several destinations including New Zealand, they find some evidence for decreased export prices to New Zealand as a result of the dismantling of non-tariff barriers to trade.     

Japanese foreign direct investment and regional trade

We examine the relationship between Japanese FDI outflows, domestic and foreign fixed investment, and the exchange rate. The results indicate that aggregate FDI outflows have been driven by investment in Japan and the exchange rate, while the geographic distribution of such investment has been influenced by foreign economic conditions. We also find that FDI outflows have a temporary impact on exports but a permanent effect on imports. We find no evidence that behavior with respect to East Asia differs from that with respect to North America or Europe.     

The role of R&D in high-technology trade: An empirical analysis

Conclusion This paper attempts to establish the relationship between the level of R&D activities of a country and its trade performance in high-technology products. Empirical evidence based on the limited data used in the paper shows that this relationship appears to be quite significant. An analysis of the implications of this relationship reveals that the low level of R&D in Canada is due to, among other factors, the prevalence of foreign ownership of Canadian manufacturing industries, and the resource-based characteristic of the Canadian economy. Given the nature of foreign-owned firms, the paper suggests that countries should not rely on them as a crucial instrument in the creation of an indigenous capacity to produce high-technology products which are competitive at the world level. Instead, domestic policies aimed at the development and nurturing of the countries' own scientific and technological skills are required. The views expressed in this paper are those of the author. They should not be construed as the official views of the Ministry of State for Science and Technology of the Government of Canada. Research assistance provided by Tom Wudwud and Penny Robinson is well appreciated. The author, however, is responsible for any omissions or errors that remain.     

The role of innovation and opportunity in bilateral OECD trade performance

This paper investigates the specialization pattern in terms of technology and exports and examines the role of innovation intensity and technological opportunity in determining bilateral trade at the aggregate and sectoral level. Some of the major findings are: At the aggregate level, innovation intensity and technological opportunity has positive and significant impact on bilateral trade performance especially during the 1990s. At the sectoral level, innovation intensity affects bilateral trade performance positively mainly in the high-technology sectors. There is also a positive and significant relationship between technological opportunity and bilateral trade for five of the eighteen sectors, which are the high-technology sectors. JEL no. F14, C31, O33     

The trade balance effects of U.S. foreign direct investment in Mexico

This paper examines the effect of U.S. foreign direct investment (FDI) in Mexico on U.S. exports to and imports from Mexico. The rise of intrafirm exports and imports following U.S. FDI in Mexico suggests that FDI affects trade flows. Empirical estimation proceeds with tests for stationarity and cointegration. The finding of cointegration among the variables leads to estimation of the hypothesized relationships with a vector error-correction model. Impulse response functions and variance decomposition reveal that FDI leads to increased exports and imports during the time period considered.     

Vertical intra-industry trade and foreign direct investment in East Asia

As economic integration in East Asia progresses, trade patterns within the region are displaying an ever-greater complexity: Though inter-industry trade still accounts for the majority, its share in overall trade is declining. Instead, intra-industry trade (IIT), which can be further divided into horizontal IIT (HIIT) and vertical IIT (VIIT), is growing in importance.In this paper, we set out to measure and examine vertical intra-industry trade patterns in the East Asian region and compare these with the results of previous studies focusing on the EU, to which such analyses so far have been confined. Based on the supposition that VIIT is closely related to offshore production by multinational enterprises, we then develop a model to capture the main determinants of VIIT that explicitly includes the role of FDI. The model is tested empirically using data from the electrical machinery industry. The findings support our hypothesis, showing that FDI plays a significant role in the rapid increase in VIIT in East Asia seen in recent years. J. Japanese Int. Economies 17 (4) (2003) 468–506.     

The role of foreign direct investment in Indonesia's manufacturing exports

This article examines whether foreign direct investment (FDI) has contributed to the changing structure of Indonesia's manufacturing exports. It uses industry-level data from 1990 to 2008, classified by factor intensity. Our analysis reveals that FDI promotes exports in most panel observations, especially exports from physical-capital-intensive (PCI), human-capital-intensive (HCI) and technology-intensive (TI) industries. Yet by applying a differentiated cross-section-effect model, we determine that the export-generating potential of FDI is stronger in PCI, HCI and TI industries than in natural-resource-intensive or unskilled-labour-intensive industries, in which Indonesia has a comparative advantage. We also assess the influence of other determinants of export performance – namely, private domestic capital investment, GDP growth and exchange rates. Our findings have implications for policymakers seeking to sustain Indonesia's export performance.     

国际贸易与直接投资的关系及对我国的启示

一、国际贸易与对外直接投资具有密切的联系 生产力水平的提高，国际合作在世界范围内的加强，世界各国开展对外经贸活动日益尊重国际资本流动、贸易自由化，同时，世界经济一体化和区域经济一体化的发展，国家观念日益淡漠，生产要素能在更广泛的领域实现自由流动，为国际贸易和国际资本流动的共同发展创造良好的制度环境。尤其是战后，国际直接投资与国际贸易规模日益扩大，二者相互影响、相互促进，一方面对外直接投资既可以替代也可以促进贸易；另一方面贸易政策的改变在一定宏观条件下又会成为对外直接投资的重要原因。     

Vertical specialization and intra-industry trade: The role of factor endowments

Vertical Specialization and Intra-Industry Trade: The Role of Factor Endowments. — In this paper, we use vertical differentiation models of the Falvey-Kierzkowski type to study the effects of differences in factor endowments on vertical intraindustry specialization. We focus on Spanish intra-industry trade, as Spain typically exports low-quality varieties to the northern countries of the OECD and high-quality varieties to the southern ones. In order to achieve more general results, we consider different types of productive factors: physical, human and technological capital. Our results confirm that factor endowments play a significant role in explaining vertical intra-industry specialization.     

The complementarity between U.S. foreign direct investment stock and trade

Within a gravity model framework, this paper will establish that trade and foreign direct investment (FDI) are complementary, using trade and FDI stock data on a bilateral basis between the U.S. and 51 other countries over the period 1982 to 1994. U.S. outward FDI is found to have a larger predicted impact on U.S. exports than does inward FDI. On the other hand, inward FDI is found to have a larger predicted impact on U.S. imports than does U.S. outward FDI. These results are directly linked to patterns of intrafirm trade within the multinational enterprise (MNE), a result consistent with the transactions cost theory of MNEs. In addition, a sectoral analysis indicates that U.S. outward FDI in manufacturing has a large predicted impact on both exports and imports, whereas U.S. outward FDI in services has a large predicted impact on U.S. exports but little or no predicted impact on imports. Detailed comments and suggestions were provided by Joe Daniels, Albert Berry, and seminar participants at the University of Toronto, York University, Industry Canada, and the 1999 annual Canadian Economics Association meeting. Research assistance was provided by George Georgopoulos and Anthony Yao. The authors are responsible for any remaining errors.     

论直接投资与国际贸易关系的互补性

<正> 一、环境变化与跨国公司经营战略转变 直接投资与国际贸易的互补性源于直接投资具有的能够诱发母国和东道国进出口的效应。诱发效果的产生与跨国公司国外子公司的供销行为密不可分。以出口为例,当国外生产能够诱发母国     

The role of direct foreign investment in developing east asian countries

Conclusion purpose of this paper has been to provide an overview of the role and extent of foreign investment in East Asian developing countries. We have not been concerned with the costs and benefits of DFL Rather, we have attempted to integrate the scattered and limited information on DFI into recent empirical research on the subject. Many of the issues concerning DFI can be examined only through detailed case studies, and our paper is intended to be complementary to such research. Several conclusions emerge from our study. First, DFI constitutes a substantial but still relatively minor source of the total resource inflows to the region, and a very small proportion of total domestic investment. Secondly, although there have been changes in the“packaging” of capital and technology inflows, these changes do not appear to be as great as is sometimes suggested. Thirdly, there are significant differences in the nature and extent of DFI among the investing countries. Fourthly, the importance of DFI varies markedly within the manufacturing sector, and these variations can be explained, at a general level, with reference to the theory of DFI. Fifthly, the phenomenon of intra-firm trade in manufacturing does not appear to be particularly important in the case of United States investment, but it is significant in the rapidly expanding Japanese investments abroad.     

Platforms in the Pacific: the trade effects of direct investment in Thailand

Thailand, as other ASEAN countries, experienced a dramatic surge of inward foreign direct investment in the late 1980s. These investments took place in relatively advanced, export-oriented industries. This study examines the effects of these investments on Thailand's trade, using a new methodology based on international input-output analysis. This framework accounts for the direct trade of foreign-affiliated companies as well as their indirect trade effects, including the displacement of competing imports, on one hand, and the procurement of imported intermediate inputs and capital goods, on the other. The framework is implemented with data from a Japanese Chamber of Commerce (Bangkok) survey. The results show, among other things, that Japanese-affiliated firms tend to offset their large direct trade deficits in the longer run with substantial indirect trade surpluses. These firms do, however, contribute to “triangular trade”-that is, Thai trade deficits with Japan, and surpluses with other countries.