Inter‐communal institutions in medieval trade

This article examines the institutional structure of medieval overseas trade to explain why trade thrived even in the absence of the state. The literature has dealt mainly with intra‐coalition or intra‐community relations. However, the literature does not answer the question of how institutions could be created that could support interaction between a large number of distant communities and between merchants who did not necessarily know one another. This article presents such an institution that prevailed in the Baltic Sea region in the late middle ages, referred to here as the inter‐communal conciliation mechanism. In case of a dispute, conciliation took place between town councils, rather than the merchants involved in the dispute, thus combining individual liability and communal enforcement. Exploration of the documents reveals a task‐specific regularity of behaviour, which was the general practice among merchants to turn to the council of their own community when they had problems in a foreign town, instead of being obliged to solve disputes by themselves. This institution provided a permanent, centralized, and relatively impartial enforcement mechanism to respond to breaches. It was therefore well adapted to large, at least partially anonymous markets, such as the Baltic Sea region, with dozens of towns and thousands of merchants.     

Trade, Institutions, and Credit

Within economics there has been a mounting interest in institutions. Virtually all the work to date on institutions has examined a single institution. The problem is that in many settings the performance of the institution under examination is affected by other, unexamined institutions. This paper examines the relationship between two types of private-order institutions that facilitated trade in a specific setting—Mexican California during the 1830s and 1840s. The surviving evidence suggests that a multilateral institution enabled merchants to extend credit to their retail customers, and a similar multilateral institution enabled the merchants to extend credit to one another. The relationship between these institutions makes them of particular interest. This relationship arose because local communities imposed costs on merchants that affected their trade with one another. The barriers to entry and exit posed by these costs, in turn, facilitated the operation and persistence of the institution that supported intermerchant trade. They also precluded other organizational forms such as the vertical integration of wholesalers.     

‘Eating the bread out of their mouth’: Antwerp's export trade and generalized institutions, 1544–5

This article studies the distribution of exports from mid‐sixteenth‐century Antwerp at the individual and group level (grouped by merchant origin). Recently, scholars have argued that sixteenth‐century Antwerp, and in its wake a series of other cities, hosted an open‐access market as a result of an evolution towards open‐access institutions. However, the direct effect of this institutional change on merchant enterprise is hard to measure. Relying on detailed tax records, preferences at the individual merchant level for particular destinations and commodities are documented, to evaluate whether exporters had equal chances in Antwerp's export market. A few exporters had large export shares next to a multitude of smaller merchants. The exports of these smaller merchants to distant destinations and their participation in the export of important products demonstrate a fairly level commercial playing field with regard to their larger‐scale colleagues. Foreign traders had access to trade in Low Countries products, while local merchants were active in the export of major transit products. The activities of the latter group are particularly important; contrary to previous literature, Low Countries traders did not differ in their preference for home‐grown products.     

South Carolina indigo,European textiles,and the British Atlantic economy in the eighteenth century

Europe's indigo imports grew rapidly from the 1720s, but the mid‐century wars (1739–48, 1756–63) had a devastating effect on the European textile industries and hence on the indigo trade. Britain's indigo market, however, boomed in wartime on the bases of prize indigo captured from France and Spain and of indigo imported from South Carolina. The rise of South Carolina's trade from the mid‐1740s was not caused, as the historiography claims, by its monopoly of the British market—such a monopoly never existed—but because the depression in South Carolina's major staple, rice, compelled a remodelling of the South Carolina plantation system, which produced an elastic supply of indigo. Carolina indigo was blighted by a poor reputation, not, as is usually argued, because British merchants maligned unfairly its quality, but because Carolina planters failed to achieve consistent production standards. Carolina indigo nevertheless succeeded in displacing French and Spanish indigo in the British and in some continental markets, reflecting the demand for cheap dyestuffs from manufacturers of low‐cost textiles, the fastest‐growing sectors of the European textile industries at the onset of industrialization.     

How Rome enabled impersonal markets

Impersonal exchange increases trade and specialization opportunities, encouraging economic growth. However, it requires the support of sophisticated public institutions. This paper explains how Classical Rome provided such support in the main areas of economic activity by relying on public possession as a titling device, enacting rules to protect innocent acquirers in agency contexts, enabling the extended family to act as a contractual entity, and diluting the enforcement of personal obligations which might collide with impersonal exchange. Focusing on the institutions of impersonal exchange, it reaches a clear positive conclusion on the market-facilitating role of the Roman state because such institutions have unambiguously positive effects on markets. Moreover, being impersonal, these beneficial effects are also widely distributed across society instead of accruing disproportionately to better-connected individuals.     

Institutional choice in the governance of the early Atlantic sugar trade: diasporas,markets, and courts

The expanding sugar trade linking Portugal, Brazil, and the Netherlands in the sixteenth and seventeenth centuries required enforcement mechanisms to guarantee that overseas agents would act honestly and diligently. While the recent literature emphasizes that multiple mechanisms were substitutes in addressing this problem, this article highlights that merchants chose different mechanisms to govern distinct types of transactions and explains why. A reputational mechanism relying on social and economic constraints within an ethnic diaspora governed more complex and higher‐value arrangements. A different mechanism linking economic incentives to professional reputations across the diasporas plying this trade route predominated in simpler and smaller transactions. Finally, long‐distance and transnational judicial enforcement supplemented these two reputational mechanisms. Capable of matching the value and complexity of transactions with the attributes of governing mechanisms, merchants were able to diversify their transactions, expand the market for agents, better allocate agents to tasks, and stimulate competition among them. The resulting decrease in agency costs was critical in such a significantly competitive market as the sugar trade. Evolving institutional choice thus reinforced the expansion of trade. These hypotheses are corroborated by data from a prosopography of merchants of Jewish origin, derived from notarial records from Oporto and Amsterdam, and from Inquisition files.     

Alien finance and the development of the English economy, 1285–13111

The contribution of alien, particularly Italian, investment to the development of the medieval English economy has provoked opposing views which hitherto have had to rely chiefly on customs records and evidence of Italian loans to the state for statistical evidence. These, though, vary in their coverage and do not record the inland trade. This article uses the Statute Merchant certificates of debt from 1285 to analyse changing levels of commercial investment by alien and denizen merchants throughout all areas of the kingdom. It shows that Italian investment was declining from the 1280s in line with falling imports of foreign silver. It discusses the causes of this decline, and the effect on alien and denizen credit of imports of counterfeit sterling coins produced by European mints. It relates these financial developments in England, France, and Flanders to the sequence of events which led to English merchants increasing their numbers and mercantile capital at the beginning of the fourteenth century when they were first able to establish their domination of the country's export trade in wool.     

International Trade and R&D Investment: Evidence from Chinese Manufacturing Firms

A current concern for China's long‐term growth prospect is whether China can become an innovative economy and achieve industrial upgrading to compensate for the gradually declining competitiveness resulting from low‐cost labor. The present study examines this issue by exploring how trade participation impacts on the R&D investment of manufacturing firms through various channels. Merging China's Annual Manufacturing Survey Dataset and the Chinese Customs Dataset allows us to study such a relationship at the individual firm level. The empirical results suggest that channels such as geographical diversification of export markets, share of imports from high‐income countries, average unit value of imports, number of intermediate goods and capital goods imports, and the trade regime are significant factors that influence firm‐level R&D investment. The study discusses the policy implications of the empirical findings in relation to industrial and trade policies that may be potentially beneficial for China's transition towards an innovative economy.     

Dealing with drainage: state regulation of drainage projects in the Dutch Republic,France, and England during the sixteenth and seventeenth centuries

In the early modern period the viability of large‐scale drainage projects implemented by courtiers, officials, or merchants could be endangered by litigation or violent conflicts with landlords, commoners, cities, or water boards whose interests were harmed by the implementation of such projects. A comparison between the Dutch Republic, England, and France shows that the Dutch had developed institutions to deal with this efficiently. State patents for drainage granted compensation to all parties involved and precluded long drawn‐out lawsuits. When large‐scale drainage began in England and France from c. 1600 onwards, these states had no experience with drainage regulation. They had to find their way by trial and error. In England this led to lawsuits and riots by commoners that ruined several drainage schemes. The decentralized nature of the Dutch state turned out to be an advantage. Dutch politicians and entrepreneurs were used to compromises, and solutions could be adapted to local circumstances. In more centralized England and France this was more difficult to achieve. The Dutch also profited from the fact that territorial lords had already abolished common rights of usage in the coastal provinces in the late middle ages, thus removing an important source of conflict.     

A review of trade trends: South Africa and the Indian Ocean Rim

Since 1990, intense diplomatic efforts have taken place to secure and negotiate trade treaties with South Africa's traditional trading partners (the European Union, in particular) and those countries in close geographic proximity. This article examines South Africa's trade links with some of its ‘non‐traditional’ trading partners, in particular the countries of the Indian Ocean Rim (IOR), in an attempt to ascertain the nature of the trade and its importance vis‐a‐vis the rest of the world. An examination of trade data for the years 1992‐5 indicates that trade with the IOR consists mainly of the mutual exchange of natural resource products and that this trade is growing much faster than South Africa ‘s trade in general. Given this trade dynamism, South Africa should pay increasing attention to international relations with these countries. South African trade with the Rim was also found to differ from trade with the rest of the world in that it comprises the mutual exchange of natural resource‐based products. This research shows that our imports and exports are positively related to the gross domestic product of our trading partners, and negatively related to their population size and distance from South Africa. Also, more open economies have absorbed more exports from South Africa. There is some ambiguity as to the role that distance plays in determining the level of imports into this country. The intensity indices computed in this article have to be viewed in the light of this research.     

China＇s Import-exchange Rate Linkage： Evidence from the China-bound Exports of Japan and Korea

This paper examines how the China-bound exports of Japan and Korea are related to exchange rates, motivated by the fact that processing trade makes up a large proportion of China＇s trade, and that Japan and Korea are the leading source countries for processing imports. Because processing imports are inputs for exports, the link between such imports and China＇s exchange rates are ambiguous. We estimate export functions that include China＇s RMB real effective exchauge rates （REER） along with bilateral real exchange rates （B RER） using Johausen ＇s cointegration method aud find that the RMB REER significantly affects Japanese and Korean exports to China, even more so than BRER in most cases examined. These two exchange rates appear in the export equations with opposite signs. Subsequently, we use the estimated model to illustrate the importance of accounting for a concurrent change in B RER when analyzing the effects of a hypothetical RMB revaluation on China＇s trade balances despite the apparently weak imports-B RER linkage.     

Impact of China-ASEAN Free Trade Area on China＇s International Agricultural Trade and Its Regional Development

This study aims to examine the impact of the China‐ASEAN Free Trade Area (CAFTA) on China's international agricultural trade and its regional agricultural development, using the Global Trade Analysis Project model and the China Agricultural Decision Support System. Our analysis showed that: (i) CAFTA will improve resource allocation efficiencies for both China and ASEAN and will promote bilateral agricultural trade and, hence, will have positive effects on the economic development of both sides; (ii) CAFTA will accelerate China's export of the agricultural commodities in which it has comparative advantages, such as vegetables, wheat and horticultural products, but at the same time bring about a large increase in imports of commodities such as vegetable oil and sugar; and (iii) CAFTA will have significantly varying impacts on China's regional agricultural development because of large differences in the agricultural production structure in each region. Our results indicate that agriculture in the northern, northeastern and eastern regions of China will benefit from CAFTA, whereas agriculture development in southern China will suffer. Those regional specific impacts are quite different from the effects brought by multilateral free trade treaties, such as those of the WTO, which usually have positive effects on south China but negative impacts on the northern and western parts of China.     

Entrepreneurs,formalization of social ties,and trustbuilding in Europe (fourteenth to twentieth centuries)1

The establishment of trust is a key component of economic activity and social ties can make business dealings work better. However, we do not know much about how economic actors created new social ties deliberately in order to pursue their objectives. This article analyses the way in which merchants and entrepreneurs used specific rituals to establish formal social ties, with the intent of protecting their business relationships. It focuses on relational instruments that until now had been neglected, particularly godparenthood and marriage witnessing. It shows that formalization, ritualization, and publicity of ties were used by entrepreneurs to establish trust with their business associates, for example when information was asymmetric or when institutions were perceived as inefficient in guaranteeing mutual good behaviour. The analysis covers a long period, from the late middle ages to today. It pays particular attention to the consequences of the Reformation in the sixteenth and seventeenth centuries and of the industrial revolution in the nineteenth. Contrary to the received wisdom, it suggests that formal social ties such as godparenthood continued to play an important role in economic activity during and after the industrial revolution. New databases on early modern Italy and nineteenth‐century France are used.     

Blue Box Policy Reform in the Doha Round Negotiations： Effects and China＇s Position

This paper uses an agricultural trade policy simulation model to quantitatively evaluate the effects of Blue Box policy reform on agricultural production and trade, and further provides specific proposals regarding China ＇ s reform position. The results indicate that, if the reform could achieve a reduction in distorting supports in more developed countries, China＇ s total agricultural production would increase, accompanied by a decrease in agricultural imports and a slight increase in exports. In terms of social welfare, producers would gain significantly, consumers would lose and government would not suffer greatly, which is in accordance with current agricultural policies in China. As a core member of G20, China should approve a subsidy level as low as possible required by Blue Box to achieve ＂substantial reductions in trade-distorting domestic supports＂.     

Free Trade Agreements and the SADC Economies

Countries in southern Africa have engaged in a variety of tradeliberalisation initiatives such as the European Union (EU)–SouthAfrica Free Trade Agreement (FTA), the EU's ‘Everythingbut Arms’ (EBA) initiative to eliminate trade barriersagainst imports from the least developed countries and a potentialFTA among Southern African Development Community (SADC) countries.In this paper we use a multi-country computable general equilibrium(CGE) model to analyse the impact of trade liberalisation inthe region. First, we analyse the FTA between South Africa andthe EU. Then, we consider how the rest of southern Africa mightrespond: (i) by enforcing an SADC FTA; (ii) by exploiting theadvantages of unilateral access to the EU in addition to anSADC FTA; and (iii) by entering an FTA with the EU and otherSADC countries. The scenarios are ordered such that the SADCcountries pursue increased trade liberalisation. We find thatunder all FTA arrangements the increased total imports fromFTA partners exceeds the reduction in imports from non-FTA partners— the FTAs examined are all net trade creating. Some SADCeconomies are slightly hurt by the FTA between the EU and SouthAfrica, while others gain slightly. Overall, the agreement isnot a beggar-thy-neighbour policy. We also find that unilateralaccess to the EU is more beneficial for SADC countries thanan SADC FTA because the SADC countries trade more with the EUthan with each other. However, reciprocal reforms under an EU–SADCFTA dominate unilateral access to the EU because they requiremore structural adjustment in the SADC countries. Finally, wefind that South Africa is not large enough to serve as a growthpole for the region. Access to EU markets provides substantiallybigger gains for the other SADC countries than access to SouthAfrica.     

Trade Destruction and Trade Diversion: Evidence from China

Over the past three decades, we have seen a dramatic increase in the incidence of temporary trade barriers such as antidumping duties and countervailing duties. China has been at the receiving end of a large number of such measures. In this paper, we study how China's exports to its major trade partners have been affected when its major trade partners have used these measures either against China or against other countries. We find that Chinese exports to the country that imposed an antidumping duty decreased by approximately 35 percent. At the same time, an antidumping duty used by the importing country that was directed towards other countries but not against China led to an approximate 30‐percent increase in China's exports to the policy‐imposing country. These results remain robust across various specifications. Our findings have important policy implications. In particular, the magnitude of these effects highlights why it is important to curb the recent widespread use of these barriers.     

东道国基础设施质量对中国进出口贸易的影响——基于“一带一路”沿线51个国家的实证分析

基础设施建设是经济社会发展的重要支撑,对国家经贸关系进一步发展具有桥梁作用。基于“一带一路”沿线51个国家2011—2019年面板数据,构建拓展引力模型实证分析东道国基础设施质量分别对中国进口与出口的影响。研究发现：东道国基础设施质量会显著促进中国的进口与出口贸易,但对中国进口贸易促进作用强于出口,且东道国GDP增长促进了中国进口与出口贸易增加,其对中国进口贸易促进作用大于出口;而东道国与中国的地理距离对中国进口贸易限制作用大于出口,东道国与中国为邻国、与中国具有共同语言及签订自由贸易协定会推动中国对其进出口贸易增长。在此基础上,提出促进中国与沿线国家进出口贸易的对策建议。     

On the (nonlinear) relationship between exchange rate uncertainty and trade — An investigation of US trade figures in the group of seven

In this paper bilateral models formalizing monthly growth of US imports and exports are employed to investigate the potential of nonlinear relationships linking exchange rate uncertainty and trade growth. Parametric linear and nonlinear as well as semiparametric time series models are evaluated in terms of fitting and ex ante forecasting. The overall impact of exchange rate variations on trade growth is found to be weak. In periods of large exchange rate variations, trade growth forecasts gain from conditioning on volatility. Empirical results support the view that the relationship of interest might be non-linear and, moreover, lacks homogeneity across countries and imports vs. exports. JEL no. C14, C22, F31, F41     

Trade,Investment and Economic Interdependence between South Korea and China*

The Korean economy has been significantly affected by the emergence of China. It is now the largest market for Korean exports and a major supplier of its low‐cost imports but has at the same time become a serious challenger to Korea in the world markets for manufacturing exports. This paper investigates changes in China's export structure and its effect on Korea, and bilateral trade between the two. It also examines the motives for Korean investment in China and its effect on bilateral trade and cross‐border production networks.     

Trade Policy Versus Competition Policy: Substitutes or Complements?

This paper deals with the difference between trade policy and competition policy for domestic prices, wages, and employment when product and labour markets are imperfectly competitive. We show that in the presence of country-specific institutions like trade unions, trade policy and competition policy are no longer substitutes in disciplining product and labour market distortions. While both domestic entry and foreign imports affect domestic price-cost margins, they differ in their effectiveness and their impact on the domestic labour market. The results in this paper suggest that enforcement of competition policy without a sufficient degree of openness to imports is typically not a first-best outcome. While domestic entry increases union welfare, foreign imports reduce it. Competition policy in the presence of labour unions is insufficient to reduce labour market distortions, while international competition reduces both labour and product distortions.