The Magnitude and Distance Decay of Trade in Goods and Services: New Evidence for European Countries

Abstract

Using a newly assembled, consistent and disaggregated dataset (12 goods and 7 services) on internal and bilateral trade for 25 European countries, we analyse the difference between trade in goods and services. The measurement of both trade in goods and trade in services is improved over earlier research, allowing us to compare trade in goods and services in a coherent and systematic way. First, our dataset is made consistent with the domestic demand and production and the total exports and imports at the sector and product levels. Second, we explicitly control for re-exports. We find that, although goods are more often bilaterally traded than services, the volume of bilateral trade in services does not attenuate less with distance than the volume of bilateral trade in goods.     

Outsourcing and trade in a spatial world

This paper provides an analysis of outsourcing and trade in a spatial model à la Hotelling. In this setting, we discuss the trade-off between transport-cost-related disadvantages and outsourcing-related production cost advantages of a large economy and we investigate how the existence of national transport costs influences both the structure of industrial production and the pattern of final goods trade. In addition, the model gives a rich picture of the possible welfare effects of trade liberalization. In particular, we show that a final goods exporting country definitely gains from economic integration, while a final goods importing country may lose. Finally, when lowering domestic outsourcing activities, trade liberalization may reduce world welfare, even if pro-competitive effects lead to a decline in consumer prices.     

The political economy of international trade and factor mobility

Abstract. Free trade in goods and factors is efficient. When we move away from economic theory and consider the policies actually followed by governments, we observe distortions being implemented both on goods and factors trades. It is natural then to question the relative merits of the two types of intervention, and the normative literature has provided only partial answers. We ask then why is the international flow of goods and factors not free, and the political economy literature has looked at the two issues only separately. In studying the determination of trade policy, a theoretical paradigm has emerged, focusing on the role of influence driven contributions. This approach has also found strong empirical support. The literature on the political economy of factor mobility, on the other hand, is fragmented. Distortions in labor and capital flows are typically the subject of different studies, and only recently a unified framework has been proposed. More work has to be done in this area as well as in integrating the political economy of trade and factor movements.     

How does history matter? Hysteresis in Canadian trade

Should trade economists account for hysteresis when estimating gravity models, as [Eichengreen, B., & Irwin, D. A. (1998). The role of history in bilateral trade flows. In J. A. Frankel (Ed.), Regionalization of the world economy. Chicago: University of Chicago/NBER] recommend? Are the effects on trade of key variables, such as a national border, mismeasured when hysteresis is not accounted for? Using a unique panel data set on Canada's international trade over 1988–1996, and building on recent advances in fixed effects approaches to gravity estimation, we find strong evidence that history does matter in determining trade. But exporter and importer fixed effects, as opposed to lagged dependent variables, appear adequate to capture history. Omitting lagged dependent variables matters little to measured parameters like the border effect. After accounting for history we find Canada's overall border effect to be large with little evidence of diminishment in this period.     

REGIONAL DEVELOPMENT IN CHINA: INTERREGIONAL TRANSPORTATION INFRASTRUCTURE AND REGIONAL COMPARATIVE ADVANTAGE

Significant economic disparities among China's Eastern, Central, and Western regions pose unequivocal challenges to social equality and political stability in the country. A major impediment to economic development, especially in the poor, remote Western region, is the shortage of a transportation infrastructure. The Chinese government has committed to substantial investment for improving the accessibility of this vast, land-locked region as a mechanism for promoting its development. The paper examines the impacts of the intended transportation infrastructure build-up on the Western region's comparative advantage and its interregional trade. The World Trade Model is extended to represent this investment and applied to determine interregional trade in China based on region-specific technologies, factor endowments and prices, and consumption patterns as well as the capacities and costs of carrying goods among regions using the interregional transportation infrastructure in place in the base year of 1997 and that planned for 2010 and 2020. The model is implemented for three regions, 27 sectors, and seven factors. The results indicate that the planned infrastructure build-up will be cost-effective, will increase benefits especially for the Western region, and that it can conserve energy overall at given levels of demand but substitute oil for coal. Based on these and other model results, some recommendations are offered about strategies for regional development in China.     

Does Turkey have a special trade relation with the EU?: A gravity model approach

We apply the gravity model to Turkey's trade flows over 1967–2001. First, we check whether this model fits Turkey's geographical pattern of trade in goods. Second, provided that the model works, we assess whether Turkey already has a “special” trade relation with the EU, namely whether merchandise exchanges between the two parties exceed what the gravity approach predicts. The main findings are: (i) the gravity model provides a good fit of Turkey's trade patterns, and (ii) despite the 1963 Association agreement and the customs union launched in 1996, there is no evidence of additional trade between Turkey and the EU.     

A world trade model with bilateral trade based on comparative advantage

This paper describes an extension of Duchin's world trade model to include the explicit representation of transportation costs, permitting the endogenous determination of bilateral trade flows and region-specific prices. The original model is a linear program that, based on comparative advantage and the minimization of factor use, determines regional production and trade flows as well as world prices and scarcity rents for m regions, n good, and k factors. The new world trade model with bilateral trade achieves its objectives by introducing transportation services and geographically dependent transportation requirements for each traded good and each pair of potential trade partners. The formulation of this model and its major properties are presented, and results from a preliminary analysis with 11 regions, eight goods, four transportation sectors, and six factors of production are reported and compared with corresponding results from the world trade model. On the basis of this comparison, we conclude that transportation costs have little impact on a region's total imports or exports of a given commodity.     

Horizontal vs. Vertical Interdependence in Multinational Activity*

This paper sheds light on interdependencies in multinational activity that are brought about by (horizontal) trade in final goods and (vertical) trade in intermediate goods (within and between host countries). We use a panel data set of US foreign affiliate sales to 16 developed countries in seven industries over the period 1983–2000, distinguish between horizontal and vertical interdependence in multinational enterprise activity and allow for both market size (demand)‐related as well as remainder linkage effects. Evidence suggests that vertical interdependence is somewhat more important than horizontal interdependence and, hence, vertical motives of multinational activity tend to dominate horizontal ones.

相似文献   

FROM THE CLASSICAL ECONOMISTS TO EMPIRICISTS: A REVIEW OF THE TERMS OF TRADE CONTROVERSY

Contrary to the classical position, the works of Prebisch and Singer in the middle of the last century launched the controversial hypothesis of a long-term decline in the terms of trade of primary products vis-á-vis manufactured goods and a corresponding decline in the terms of trade of developing countries vis-á-vis advanced ones. The present study traces the origin and evolution of the hypothesis and reviews the related statistical debate. It also reviews the theoretical support for the Prebisch–Singer hypothesis. It is an exercise in the history of economic thought to trace how the controversies surrounding the terms of trade have evolved over time, specifically noting that, with the development of the field of econometrics, the central thesis of the argument got lost somewhere in the realm of hi-tech statistical debates.     

Bilateral trade between India and Bangladesh: A general equilibrium approach

India and Bangladesh have pursued policies of trade liberalization since the early 1990s. However, owing to the differential speeds of opening up, Bangladesh's bilateral trade deficit with India widened substantially over the years. This aggravated the economic and the political tensions between the economies. It has been held that promotion of free trade between the two economies may enhance the trade and hence economic cooperation between them. Against this backdrop the present paper proposes a theoretical framework that provides a general equilibrium determination of the commodity pattern of trade and hence locates the comparative advantages of the economies. The empirical implementation of the model considers trade in 25 sectors comparable in the input–output tables of the economies. The study isolates the gains from free trade accruing to either economy. The paper also explores the pattern of bilateral trade when each economy produces goods by utilizing their own as well as the other country's technology. The gains from this trading arrangement are also isolated.     

中国服务贸易竞争力影响因素的数理分析

服务贸易对一国经济增长有重要影响,一定程度上决定了一国国际贸易在国际市场上的竞争能力。文章分析了影响服务贸易竞争力的四个因素:外商直接投资、服务贸易开放度、货物贸易发展水平、劳动力素质,对这些影响因素与服务贸易的关系进行了实证检验,提出了促进我国服务贸易发展的七项对策建议。     

Trade costs,regional inequality,and the Home-Market Effect

ABSTRACT

This paper develops an economic geography framework with positive trade costs in both manufacturing and traditional sectors, mobile skilled workers, and unequal shares of unskilled labour in regions. It shows that partial agglomeration always features the Home-Market Effect (HME) regardless of whether regions trade only the manufacturing good or both. Moreover, spatial factor mobility is significant for the HME to arise, while intersectoral mobility does not play a crucial role. Furthermore, a decrease in the traditional sector trade costs makes the HME weaker and increases the likelihood of full agglomeration in the larger region. Finally, the paper shows that a small departure from Cobb–Douglas upper-tier utility towards gross substitutability of manufacturing and traditional goods reinforces the HME, while the opposite holds for gross complementarity of goods.     

中部地区承接加工贸易转移的影响因素分析——以武汉城市圈为例

东部沿海地区的加工贸易正面临着巨大的向外转移的压力,找出影响加工贸易发展的相关因素对于中部地区吸收加工贸易转移具有重要的意义。通过实证检验,可以找出影响武汉城市圈承接加工贸易转移的因素,发展物流业、扩大外商投资、完善基础设施和打造特色产业成为今后努力的方向。     

The Impact of Multilateral Trade Liberalisation on Economic Development: Some Empirical Evidence

This article examines the impact of multilateral trade policy liberalisation on countries' levels of economic development, proxied by their real per capita income. The study is particularly relevant in the current context of growing rhetoric against international trade, which could fuel domestic protectionism and would likely undermine multilateral trade liberalisation. The analysis has been conducted on a panel data set of 155 countries, over non‐overlapping four‐yearly sub‐periods during 1995–2014. The empirical results suggest strong support for the view that multilateral trade liberalisation promotes economic development. Hence, the rise in unilateral protectionist trade measures around the world would likely endanger the prospects of further multilateral trade liberalisation and ultimately undermine countries' prospects of economic development.     

Japan

Monthly indicators suggest that the momentum in exports and industrial production improved in Q1. And we expect a weaker currency and a gradually improving outlook for global trade – led by Chinese demand – to continue to help exports. Business investment is also set to improve, as corporate profits recover, albeit growth is likely to be bumpy given ongoing uncertainty surrounding President Trump's policies. Fiscal and monetary policy will remain supportive. With little evidence that elusive demand‐pull pressures will boost inflation, we expect BoJ to maintain its current monetary policy stance over 2017–18, while government infrastructure spending is set to rise.     

The evolution of free trade networks

This paper considers the evolutionary dynamics of a free trade agreement (FTA) network formation game among N countries. We first explore the static model introduced by Goyal and Joshi (2006) and precisely characterize the set of pairwise stable FTA networks. Then, we develop a dynamic model under random perturbations and identify long-run outcomes to remove prediction uncertainty inherited from static analysis. The results show that both partial free trade and global free trade will result when there are only three countries. However, when more countries are involved, only the complete FTA network emerges.     

中荷之间的任务贸易

在经济全球化时代,随着交易成本的降低和世界性专业化分工,国际贸易特征发生变化。任务贸易理论将替代李嘉图的比较优势理论。文章试图利用任务贸易理论来解释中荷之间的贸易。荷兰是通往欧洲腹地的通道,而中国负责为荷兰进行产品的生产和组装。这些都是典型的服务外包任务。     

贸易方式的转变对中美贸易失衡的影响分析

在经济全球化的背景下,世界各国的贸易关系越来越多,中国和美国作为世界上两个经济大国,两国之间的经济贸易关系非常引人注目。在中美贸易的产业转移中,出口加工贸易,转口贸易,跨国公司内部贸易等新型贸易方式逐渐的取代了传统的国际贸易方式。三种新型贸易方式的出现,改变了产品的价值增值链,并使得中美之间贸易利益分配格局被打破。本文就中美贸易方式的转变对贸易失衡的影响进行了全面分析,一个国家出口的商品有很大的可能性并不是本国的企业生产的,而是由外国或者进口国的跨国公司的子公司自己生产的,也就是这种国际贸易交换的不是单个国家自行生产的产品,而是多国生产的跨国产品。按照目前的情况,显然难以准确计量国与国之间的资源和商品的流动状况。证明转口贸易,加工贸易以及公司的内部贸易这三种贸易方式,扭曲了中美两国之间贸易的最真实的经济关系,掩盖了两国贸易利益分配的真实格局。     

Accounting for growth in retail trade: an international productivity comparison

In this paper we argue that the standard approach for measuring output and productivity in the trade sector has become obsolete. The key problem is that changes in prices of goods purchased for resale are not accounted for. We outline a consistent accounting framework for measuring trade productivity and provide new estimates, taking into account purchase prices of goods sold in a double deflation procedure. We find strong productivity improvements in the UK and US compared to France, Germany and The Netherlands since the mid-1990s. This finding is robust for various productivity measurement models.

Factors driving embodied carbon in international trade: a multiregional input–output gravity model

ABSTRACT

Concerns about the effects and consequences of climate change have notably increased in recent decades. Despite large advances in the understanding of this phenomenon, further research into the determinants of gas emissions is necessary, to shed light on the responsibilities of producers and consumers, and their potential contribution to mitigation strategies. This paper studies the trajectories and determinants of carbon embodied in world trade during a period of 15 years. Our methodology relies on a multiregional input–output model, environmentally extended. Drawing on data from the World Input–Output Database, we estimate embodied emissions in bilateral flows. Then, we assess the determinants of CO₂ emissions embodied in trade, combining input–output modelling with trade gravity panel data analysis. This paper offers a methodological approach that explains and quantifies the underlying factors of carbon trade, integrating the production and consumption perspectives and considering the geographical, structural and institutional context of countries.