Market Access Asymmetry in Food Trade

Using a bilateral trade equation derived from a monopolistic competition model, we investigate market access reciprocity in food trade among the United States, Canada, the European Union and Japan. We explore country- and industry-specific market access asymmetry through a border effect approach. Our findings reveal marked asymmetries in reciprocal border effects, both across countries and industries. Trade policy measures, particularly non-tariff barriers (NTBs), the degree of product differentiation and a ‘home bias’ in preferences, are important factors in explaining levels in border effects. Asymmetries in border effects are mainly explained by trade policies. JEL no.  F13, F14, Q17     

Economic Integration and Manufacturing Concentration Patterns: Evidence from MERCOSUR

Over the past two decades, Argentina, Brazil, Paraguay, and Uruguay have implemented unilateral trade liberalization programs and formed MERCOSUR. The effects of these reforms on production structures in these countries have not received a great deal of attention. This paper analyses patterns of relative manufacturing concentration in Argentina, Brazil, and Uruguay over the period 1985–1998. Our results indicate that localisation of demand and comparative advantages are the main driving forces of these patterns. The establishment of MERCOSUR has fostered the relative importance of factor endowments and production linkages in shaping the spatial distribution of manufacturing in the above three countries. JEL Classification Numbers: F14, F15, L60, C23     

Regional Economic Integration and the Location of Multinational Firms

A theoretical model of international location is applied to a process of regional economic integration in which a set of countries mutually removes barriers to trade and investment, thus overcoming the traditional ‘hub and spoke’ setup of regional agreements. The theoretical results are matched with actual trade and foreign investment data from a sample of some 4,200 multinational firms who have invested in Central and Eastern Europe over the 1990–1999 period. Controlling for the effects of the reduction in trade barriers through a proper specification of a gravity model, it is found that the conventional outcome of an agglomeration of economic activities in the centre of the integrating area does not necessarily hold. Multilateral regional integration agreements can act as an important dispersion force significantly driving the location of multinational firms. A panel probit econometric exercise confirms the findings. JEL no. F12, F15, F21     

What Determines China's Grain Imports and Self‐sufficiency? The Role of Rising Domestic Costs and Varying World Market Prices

China's grain sectors have faced unprecedented challenges in recent years as the ever‐increasing and historically high level of grain output has failed to reduce grain imports. On the contrary, high grain imports and high domestic stock have accompanied historically high domestic output, a situation dubbed the “triple high” phenomenon in current policy discussion. This paper explores the role of widening domestic–world market price gaps in determining the triple high phenomenon. Unlike earlier studies that relied on production capacities, this paper argues that domestic production and demand (hence imports) are functions of domestic and world market prices and proposes an analytical framework to explicitly capture such price gaps under restricted trade linkages in general equilibrium. Following this approach, a set of price scenarios for the 2011–2020 period are constructed and simulated in a computable general equilibrium model. Results from the core scenarios, in which recent domestic and world market price trends are assumed to continue, suggest that further widening price gaps would substantially increase grain imports and reduce domestic output (by 60 million tons) and self‐sufficiency ratios from base levels. In the alternative scenarios with larger (smaller) price gaps, we find higher (lower) imports and larger (smaller) decreases in domestic output and self‐sufficiency ratios. Such results provide important policy implications as China's agricultural policy undergoes significant adjustment.     

The effect of trade on earnings--evidence from Swedish micro data

Using a large longitudinal data set, we study the effects ofincreased trade on earnings in the Swedish labor market. Earningsrespond significantly to changes in industry sales, whethergenerated by domestic market forces or international trade:Swedish exports (imports) raise (lower) annual earnings, butchanges in trade affect earnings just as any other shift inmarket conditions. We also examine whether the effects of tradevary by skill. We do not find systematic differences in theeffects of trade across the skill distribution.     

Is Exporting a Source of Productivity Spillovers?

This paper investigates whether exporting generates positive productivity spillover effects on other plants in the same industry and on plants in vertically related industries. Using data for Chilean manufacturing plants from 1990 to 1999, we find strong evidence that domestic as well as foreign-owned exporting plants improve productivity of local suppliers. We also find some evidence of horizontal spillovers from exporting but these are mainly generated by plants with foreign ownership. These results suggest that positive productivity spillovers are not only generated by the presence of foreign-owned exporting plants but also by exporting activity of domestic firms. The results are robust to controls for agglomeration of economic activity, the importance of non-exporting foreign-owned plants, and plant unobserved heterogeneity. JEL no.  F10, F23, O3, O54     

An open economy general equilibrium model with heterogeneous producers, a homothetic utility function and endogenous elasticity

Recent monopolistic competition models have identified three main sources of the gains from trade: (1) the introduction of new varieties for consumers, (2) an improvement in efficiency through the exit of low-productivity firms, and (3) a reduction in firms’ markups through import competition. In this paper, we extend Feenstra (Economics Letters, 78(1):79–86, 2003) to develop a model with producers heterogeneous in productivity to capture these gains. Here, firm markups are decreasing with market share, and trade introduces new varieties to consumers and reduces the market share of domestic firms. This reduces markups and profits and forces low-productivity firms to exit. This pro-competitive effect on the distribution of productivity contrasts with the conventional export-driven mechanism in a constant elasticity setup. We can usefully extend this model for further study because of the homotheticity of the utility function and the tractability of the model.     

Friendly Fire? The Impact of US Antidumping Enforcement on US Exporters

While there has been considerable interest in recent years in the role of macroeconomic determinants of antidumping actions by the United States and other traditional users, on the one hand, and the determinants of the growing global usage of this trade policy instrument, on the other, there has to date been no systematic exploration of the motivations for the significant number of foreign antidumping cases filed against US exporters. Several observers have remarked that the growing number of foreign users of antidumping might threaten US exporters, but the determinants of these actions have not been examined. That is the purpose of this study. We find that these actions are in part explained by macroeconomic forces and as a response to US export superiority in particular sectors, however a significant role (and larger than found for global antidumping more generally) is played by retaliation for US trade policy actions. JEL no.  F13     

The Disciplinary Effect of the Single Market on Swedish Firms

In the 1980s it became increasingly clear that the European Community market was still segmented by national borders because of non-tariff barriers to trade. A major objective of the Single Market Program in 1992 was to remove these barriers, thereby enforcing intra-union competition. In this paper, a panel of Swedish firm-level data is used to evaluate whether domestic market power has been curtailed as a consequence of the SMP and of the Swedish membership in the European Union in 1995. Evidence of increased competition emerges, as price-cost margins have declined in industries with high non-tariff barriers prior to 1992. JEL Classification Numbers: F15, L11, C33     

Exports of manufactures by developing countries: emerging patterns of trade and location

Developing countries are rapidly increasing their shares ofmanufactured trade, not just in labour-intensive products, butalso in capital- and skill-intensive ones; their shares arerising particularly rapidly in the high-technology area. However,manufactured exports remain highly concentrated in the developingworld, with a few countries dominating all forms of export.Within the successful exporting countries, there are significantdifferences in the 'technology content' of exports. These trendsare difficult to explain with received trade theory, even takinghuman capital into account, or with reference to broad economicpolicies: it is useful to bring in 'learning', along with scaleeconomies, increasing returns, and agglomeration as determinantsof comparative advantage. These factors imply market failures,and so a role for policy in developing genuine comparative advantages.This article suggests that emerging trade and location patternsin the developing work are explained by market imperfectionsand government policies to overcome them.     

论中国外贸发展的战略选择

伴随着经济全球化的推进,国际贸易在经济发展中的作用不可同日而语,国际市场竞争变得愈加激烈,其形式、内容也发生了深刻的变化。长期指导我国外贸战略的比较优势贸易理论已不再适应国际、国内经济形势的变化,并制约着经济的快速发展。因此,我国应逐步淡出比较优势战略,而选择以竞争优势为主导的贸易发展战略。     

US Safeguards on Steel and the Markups of European Producers

This paper is among the first to explore the microeconomic impacts of a trade policy on foreign firms. We empirically investigate the effects of the US safeguard protection of steel imports in 2002 on the markups of EU steel firms. Using a large panel of affected EU steel firms between 1995 and 2005, we find that the protection they faced abroad significantly reduced their markups. Our results indicate smaller adverse effects on multi-product EU firms. Our study has wider implications as it quantifies the cost that trade protection imposes on trading partners, an externality currently not considered in any trade regulation. The US safeguard protection also resulted in some diversion of EU steel especially towards China, aggravating the situation on the Chinese steel market and ultimately resulting in the Chinese trade protection of steel imports. JEL no.  F13, L13, L61     

经济全球化背景下中国与德国的贸易发展研究——基于贸易竞争性和互补性的实证分析

本文运用出口相似度指数测算了1999～2008年间中国与德国在欧盟15国市场和在世界市场细分商品上的竞争性,结果表明:虽然从变化趋势来看,中国与德国在欧盟15国市场上的贸易竞争性在逐渐下降,但是从绝对值来看中国与德国的贸易竞争性仍然比较激烈。在世界市场上,中国和德国在燃料、机器和运输设备以及其他制成品三类商品上都是竞争程度上升。运用显性比较优势指数测算了中国和德国的总体以及细分商品的比较优势,结果表明:中国从90年代中期以来出口产品结构中劳动密集型产品和资源密集型产品的地位已经趋于稳定,资本和技术密集型产品的地位开始上升,德国则在资本技术密集型产品上具有明显的比较优势。本文还运用贸易互补指数测算了中国和德国的贸易互补性,结果表明,中国和德国的贸易潜力是巨大的。文章最后根据分析提出发展中国与德国贸易的政策建议。     

What Happened to European Unemployment?

Summary  Many academic papers were still being written on mass unemployment in Europe. While, unemployment in the EU15 was falling dramatically. Not only academics, but also European workers at large did not seem to appreciate these labour market developments. I offer two explanations for this puzzling deterioration of workers perceptions of the labour market in spite of disappearing unemployment: (i) labour market risk increased, and (ii) employment growth occurred at the cost of stagnating labour productivity. This means that the new labour market offers a worse risk-return combination. Strategies to address these issues are discussed in the final section of the paper. This paper provides an extended version of the first Willem F. Duisenberg Lecture, held at the University of Amsterdam on February 28, 2008. I am particularly grateful to NIAS for this opportunity and to Petry Kievit for having greatly improved my English.     

Explaining liberalization commitments in financial services trade

The paper examines the determinants of market access commitments in international financial services trade in the General Agreement on Trade in Services (GATS). Based on a theoretical model, it empirically investigates the role of domestic political economy forces, international bargaining considerations, and the state of complementary policy. The empirical results confirm the relevance of the model in explaining banking and (to a somewhat lesser degree) securities services liberalization commitments. The findings imply that those who seek greater access to developing country markets for financial services must do more to counter protectionism at home in areas of export interest for developing countries. JEL no. D78, F13, G20     

Agglomeration and location of foreign direct investment: The case of China

This paper investigates the effect of agglomeration on foreign direct investment (FDI) location in China. We use different measures of agglomeration, and test both within and across region agglomeration effect. The results suggest that urbanization, foreign-specific agglomeration and industry diversity have positive impact on FDI location. Urbanization, foreign-specific agglomeration and industry specialization, also significantly promote industrial FDI. The results also suggest there exist both within and across region agglomeration effects. Other factors including market size, wage, education, road density, government policy and trade cost also have significant impacts on FDI location.     

Can Import Tariffs Deter Outward FDI?

In this paper we analyze a country's optimal trade policy when its labor market is unionized and firms are footloose. We show that an important objective for governments to use import protection is to prevent their domestic multinationals to go to a non-unionized location abroad and to serve their country from a distance. A domestic government will set a positive tariff to dissuade its multinational from engaging in outward FDI when the additional profits it repatriates, do not compensate for the loss of domestic union rent. To put it differently, we show that when the domestic labor market is unionized, trade liberalisation between countries with similar wage levels is likely to result in domestic welfare losses as a result of outward FDI. Only when wage differences between countries are large enough, can outward FDI improve domestic welfare and optimal tariffs will be zero. JEL Classification Numbers: L13, F23     

Trade Specialization in Latin America: The Impact of China and India

This paper examines the extent to which the growth of China and India in world markets is affecting the patterns of trade specialization in Latin American (LA) economies. We construct a measure of Revealed Comparative Advantage (RCA) by 3-digit ISIC sector, country, and year. This RCA accounts for both imports and exports. The empirical analyses explore the correlation between the RCAs of LA and the two Asian economies. Econometric estimates suggest that the specialization pattern of LA—with the exception of Mexico—has been moving in opposite direction to the trade specialization pattern of China and India. Labor-intensive sectors (both unskilled and skilled) probably have been negatively affected by the growing presence of China and India in world markets, while natural resource and scientific knowledge intensive sectors have probably benefited from China and India’s growth since 1990. JEL no.  F10, F14     

“Weak” Trade,European States in the International Arms 1920–1937: The impact of external threats,market forces,and domestic constraints

Abstract

This article analyses the small- and medium-size arms trade behaviour of nine “weak” (that is, limited political and economic influence) European states in the interwar period: Belgium, Czechoslovakia, Finland, the Netherlands, Norway, Portugal, Spain, Sweden, and Switzerland. In particular, the significance of external threats, market forces and domestic constraints is assessed for these states' military trade. Firstly, the hypothesis that there might be fewer domestic constraints on the military trade behaviour of these states was not supported by the analysis. The increased military spending of the 1930s seemed to benefit the domestic producers. Secondly, most of these countries were dependent on their aggregate military trade, especially military exports. Thirdly, the hypothesis that the differences between these states might be explained by geographical, strategic or economic factors was found too simplistic. Only proximate groupings could be developed based on various types of categories. Fourthly, “weak” states were found to benefit from the intense international political and economic competition of the 1930s, enabling the pursuit of new military export markets amidst increasing threats.