Intra-Industry specialization: A cross-country analysis

This paper tests various hypotheses as to the determinants of intra-industry trade in thirty-eight developed and developing countries exporting manufactured goods. The econometric estimates for the entire group of countries show that the extent of intra-industry trade increases with the level of economic development (GNP per head), the size of domestic markets (GNP), and the openness of national economies. The existence of trading partners with common borders and geographical proximity further contributes to intra-industry trade.These hypotheses have also been confirmed for the developing country group. And while similarities in regard to trade orientation and the existence of border trade, as well as intercorrelation between the gross national product and per capita GNP, have reduced the statistical significance of the regression coefficients for these variables for the developed country group, this equation also has a high explanatory power.     

Indra-Industry Trade,Endogenous Technical Change,Wage Inequality and Welfare

By using alternative intra-industry trade models (1. New goods cannot be introduced into the economy; 2. The possibility for a set of capital goods available in the economy to vary; the models consider the existence of intersectoral linkages), I show by means of Applied General Equilibrium (AGE) analysis that trade rises wage inequality between skilled and unskilled workers; but the impact on wage inequality is far larger, when countries are assumed to exchange differentiated capital goods. The latter result has been obtained by using an imperfect competitive model, which embodies a sector bias technological change that arises from trade. In addition, the gains from trade, insignificant under the standard trade hypotheses, are extraordinarily large when endogenous technological change is taken into account. The main policy conclusion is that if policy makers of flexible wage economies introduce trade barriers to reduce wage inequality, these protective measures, by affecting the diffusion of technology, would cause a large welfare loss. [D58, f12, F43, J3, O3]     

Trade implications of the Euro in EMU countries: a panel gravity analysis

In this paper, we study the intra-EMU and intra-Eurozone trade effects of the euro adoption on 29 European Economic and Monetary Union countries (including 17 Eurozone economies and Iceland) from the period 1994 through 2011. We employ a generalized gravity model that controls for an extended set of trade theory and policy variables. The gravity model is estimated using the robust panel data techniques that includes times effects, besides country-specific effects. The various econometric specifications of the gravity equation, on the whole dataset of 29 economies, yield positive and significant impact (to be around 14 %) of the euro currency adoption on bilateral trade flows. Next, euro effect on bilateral trade and exports on a smaller dataset is estimated. The estimated results suggest that bilateral trade and exports increase by 20.81 and 18.57 %, respectively, when both the countries belong to the Eurozone. This effect is larger than the one obtained when only one of the two trading partners uses the euro as its currency. In addition, the validity of the assumptions of Heckscher–Ohlin (H–O) theory are checked for the countries under study. The estimated results reject the H–O theory in favor of Modern Trade theories. However, the low value of the coefficient on respective variable suggests that, over the period, the type of trade among these countries has transited from inter-industry trade to horizontal intra-industry trade. This suggests that these developed European economies are on the path of economic convergence via intra-industry trade.     

新贸易理论:证据再反思

产业内贸易常被作为支持"新贸易理论"的一个关键因素.然而该文从理论和实证两个方面对这一观察提出了若干质疑.建立在68个国家数据基础上的静态和动态计量模型结果显示,经济规模、消费者偏好、地理位置、贸易不均衡以及贸易环境(国家的经济开放程度)等因素,在短期和长期都对产业内贸易产生影响.这些发现促使"新贸易理论"重新去审视支持它的"证据".     

The pattern of specialization and economic growth: The resource curse hypothesis revisited

This paper explores the relation between countries’ pattern of trade specialization and long-term economic growth. It shows that countries specializing in the export of natural resource based products only fail to grow if they do not succeed in diversifying their economies and export structure. This conclusion follows from an empirical investigation that has three innovative features. First, it uses a dynamic panel data analysis. Secondly, it employs disaggregated trade data sets to elaborate different measures of trade specialization that distinguish between unprocessed and manufactured natural resource products and are informative about the countries’ trade diversification experience, their link to world demand trends and involvement in intra-industry trade. The final innovative aspect of the paper relates to our empirical findings: it is only specialization in unprocessed natural resource products that slows down economic growth, as it impedes the emergence of more dynamic patterns of trade specialization.     

Intra-tourism trade,income distribution and tourism endowment: an econometric investigation

Empirical investigation (Nowak et al., 2012) points out that vertical intra-industry trade (VIIT) in Europe is the dominant type of intra-industry trade (IIT) in the tourism sector. This article is the first in tourism literature to test separately the determinants of vertically and horizontally differentiated services, using the most recent models in the theory of IIT. We examine bilateral trade among all trading partners of the sample of European countries, covering the period from 2000 to 2008. We show that differences in gross domestic product per capita and the income-distribution overlap, as well as cultural proximity, are the most significant driving forces behind VIIT for European countries. Geographic distance has a negative effect, whereas specific tourism endowments and relative size of the economies are less conclusive. These results confirm theory predictions and most of the empirical findings related to the pattern of VIIT for the manufacturing sector. As expected, we find that determinants of VIIT cannot explain horizontal intra-industry trade in tourism. We suggest two alternative methods of estimation: generalized least squares logistic function and the fractional logit estimator. We conclude that there are common factors explaining IIT in the manufacturing and tourism trades.     

Extra-union exports of industrial goods from customs unions among developing countries

Formation of a customs union by developing countries is likely to affect extra-union exports of industrial goods. Two competing hypotheses as to the likely direction of such effects are presented, related to the more conventional concepts of trade creation and trade diversion, and tested. On one hand, increased competition and intra-industry specialization may lead to the emergence of larger, more specialized firms which will be more able to export to the rest of the world. On the other hand, expansion of the protected ‘domestic’ marke may induce firms to sell domestically products that they would otherwise have exported. Evidence from the Central American Common Market (CACM) is consistent with each of the two hypotheses for different goods. In aggregate, CACM extra-union exports of industrial goods did not keep pace with the increase in extra-union imports during 1962–1968.     

新贸易理论:证据再反思

产业内贸易常被作为支持“新贸易理论”的一个关键因素。然而本文从理论和实证两个方面对这一观察提出了若干质疑。建立在68个国家数据基础上的静态和动态计量模型结果显示,经济规模、消费者偏好、地理位置、贸易不均衡以及贸易环境(国家的经济开放程度)等因素,在短期和长期都对产业内贸易产生影响。这些发现促使“新贸易理论”重新去审视支持它的“证据”。     

Heckscher-Ohlin Theory or the Modern Trade Theory: How the Overall Trade Characterizes at the Global Level?

This paper has two objectives: to locate the global trade pattern and to compute the export potential of world economies. Considering the maximum number of countries and maintaining a good representative sample of the overall international trade, an empirical examination is conducted by utilizing the trade complementary index and the per-capita income variable in the standard gravity model. The main aim is to determine which of the two theoretical frameworks―either the Heckscher-Ohlin theory, which is based on factor endowments or the Modern Trade theory of Krugman-Helpman and Linder, based on the intra-industry trade―is explaining the overall global trade flows. The estimated results support the factor endowments trade theory. In other words, the observed trade patterns conform to the Heckscher-Ohlin theory of trade over intra-industry Modern trade theories. The inference drawn is based on the significantly positive coefficient of the trade complementarity index and the absolute differenced PCI variable. Furthermore, as far as export potential is concerned, there exists a vast scope for the export potential across economies. These countries can exploit the existing export potential through trade cooperation and integration at the regional and the bilateral level.

     

Tariff Revenue, Government Expenditure and Growth in a Small Open Economy

I develop a small open endogenous growth model with domestic and foreign intermediate goods. The Marshallian external economies in the domestic intermediate goods sector work as the engine of sustained growth. The model offers two arguments. First, imposing a trade distortion is growth- and welfare-improving if the government uses the tariff revenue for correcting the domestic distortion. Second, comparing the tariff with a lump-sum tax as a financing device, the former is certainly worse than the latter with respect to both growth and welfare if the two intermediate goods are substitutes.
JEL Classification Numbers: F43, H20.     

Book Review

This paper analyses determinants of intra-industry trade in food processing for a 30-country sample over the period 1964–85. Previous studies have tested the hypothesis that imperfect competition is a major determinant of intra-industry trade (IIT) in the durable goods manufacturing sectors. This study is distinguised from the earlier studies of IIT by; the examination of the processed food sector (SIC=20), the use of a panel data set for 22 years and 30 countries available at the four-digit SIC level, the use of purchasing power parity measures of GDP, and the use of a weighted tobit model with fixed effects to account for the censored cross-section time-series nature of the date. The results indicate that ITI in food processing is a positive function of a country's GDP per capita and equality if GDP per capita between countries. In addition, it is also found that such trade is strongly influenced by distance between trading partners, membership in customs unions and free trade blocs, and also exchange rate volatility.     

中国农产品产业内贸易影响因素的实证研究

本文首先运用Grubel-Lloyd计量法和GHM分解法对1997—2008年中国农产品产业内贸易以及垂直型和水平型农产品产业内贸易水平分别加以测度,然后运用面板数据从国家层面对中国农产品产业内贸易影响因素进行了实证研究。结果表明:人均收入差距、外商直接投资、农产品贸易不平衡、贸易伙伴的贸易开放度是影响中国农产品产业内贸易的主要国家层面因素;区域优惠贸易安排、地理距离、市场规模因素对中国农产品产业内贸易发展也有不容忽视的影响。     

Intra-Industry Trade in the Pacific Basin

The purpose of this paper is to investigate the degree of intra-industry trade in the Pacific Basin which includes developing countries as well as advanced countries. The Aquino index, with slight rearrangement for aggregation over countries and correction for trade imbalance, is chosen as the measurement. The findings are that the major hypotheses about the intra-industry trade which are believed to be applicable mainly to advanced countries could also be applicable to developing countries. Industries with high capital intensity, high degree of product differentiation, and large economics of scale, show high degree of intra-industry trade in the Pacific Basin. [420]     

产业内贸易对我国制造业自主创新能力影响的实证研究

从产业内贸易的形成机理出发,利用1997—2010年我国29个制造业的相关数据,利用面板数据变截距模型分析了我国制造业整体的产业内贸易对其自主创新能力的影响,利用面板数据变系数模型分析了29个制造业行业的产业内贸易对其自主创新产出的间接影响效应和直接影响效应。实证结果表明:不同的制造业行业的产业内贸易对其自主创新能力的影响有所差异;在自主创新能力高的制造业行业中,产业内贸易对其自主创新的影响比较显著;在自主创新能力中等的制造业行业中,除了医药制造业、黑色金属冶炼及压延加工业的产业内贸易对其自主创新能力有显著影响外,其他制造业行业的该影响均不显著。     

Trade liberalization and Firms’ export performance in China: Theory and evidence

The focus of the literature surrounding trade liberalization has recently shifted from trade liberalization in imported final goods to studying the effects of trade liberalization in imported intermediate inputs. This emphasis fits very well the trade liberalization experience of China following its accession to the WTO in 2001. In this paper, we build a multi-sector heterogenous-firm model with trade in both intermediate goods and final goods, and we ask: How do final-goods producers respond to trade liberalization in imported inputs? Do they respond differently across sectors? How do firms respond differently to trade liberalization in imported-outputs instead? We separate the total effect of trade liberalization into those caused by inter-sectoral resource allocation (IRA) and by within-sector selection of firms according to productivity (which we call Melitz selection effect). It is the IRA effect that gives rise to differential impacts of trade liberalization in different sectors. These impacts include changes in the probability of entry into the export market, the fraction of firms that export and the share of export revenue. To test our hypotheses, we carry out both quantitative analysis and empirical analysis by using Chinese firm-level data. The results are consistent with our theoretical predictions.     

INCREASING COSTS IN PRODUCT DIVERSIFICATION AND GAINS FROM TRADE*

The purpose of this paper is to extend a monopolistically competitive trade model with symmetric costs to one with asymmetric costs in product diversification. Both the trade pattern and the effects of the opening of trade on welfare are examined. It is shown that: (1)the larger country will be a net importer of differentiated products, which contradicts the result of Krugman (1980); (2)the greater the size of the country, the smaller is the share of the intra-industry trade, and (3)the larger the trading partner of a country, the larger are the gains from trade of the country. Some of these results duplicate those from recent studies. However, our results are based on asymmetric costs. In particular, (3) suggests that the presence of increasing-returns-to-scale technology does not always imply that the large country gains from its large market.     

海峡两岸产业内贸易动态变化特征分析

选用Aquino指数,定量地分析了海峡两岸产业内贸易在二者贸易份额中的比重。在此基础上,进一步将产业内贸易细分为垂直型和水平型两种形式,选取2001—2008年的相关数据,运用GMH法对两岸的产业内贸易结构特征进行全面的实证分析。结果发现:两岸贸易产业内贸易水平还比较低,但产业内贸易增长迅速,尤其在中高技术层面产品上产业内贸易逐步增强;两岸产业内贸易以垂直型为主,但最近几年,水平型所占比重增长较快,有垂直型向水平型发展的趋势;两岸产业内贸易在区域结构上也呈现出动态演进的特征。     

Export demand elasticities and productivity as determinants of growth: estimates for Mauritius

In this article, we combine the export led and import led growth hypotheses in a growth model in which the importation of foreign capital goods and the demand elasticities of own export products explain the growth opportunities and the technical progress of developing countries. This model, based on imported capital goods, uses Mauritius’ data on capital investment, employment, export partners’ growth and terms of trade to estimate price and income elasticities of export demand, total factor productivity growth and economies of scale. These elasticities are then used to assess how the growth in export partners’ income is converted into domestic growth. The implications of the presence of low or high export demand elasticities are discussed by relating them to various strands of trade and growth literature. Based on the results of this estimation, we also calculate steady state growth rates, engine and handmaiden effects of growth as well as the dynamic steady state gains from trade for this latecomer export economy. The implications of steady state results are also discussed in the light of the Mauritian employment and growth perspectives.     

Pushing Economies (and Students) Outside the Factor Price Equalization Zone

Despite overwhelming empirical evidence of the failure of factor price equalization, most teaching of international trade theory (even at the graduate level) assumes that economies are incompletely specialized and that factor price equalization holds. The behavior of trading economies in the absence of factor price equalization is not well understood, and some major textbook treatments err. The authors map regions of specialization and diversification for standard competitive economies and show how outputs, goods, and factor prices change as economies move within and across different regions of diversification and specialization. Two examples of how the analysis can enrich graduate-level trade teaching are given: the substitutability of goods trade and factor movements, and debates over the trade and inequality.     

Growing Trade in Intermediate Goods: Outsourcing,Global Sourcing,or Increasing Importance of MNE Networks?

Growth in trade is often seen to have played a dominant role in integrating national economies. Analyses of this role have, however, almost exclusively been based on trade in final goods. This paper attempts to address this problem by analyzing recent growth in intermediate goods. Three possible causes are posited for this growth: outsourcing, global sourcing, and the increasing importance of MNE networks. These are examined in two analytical frameworks: one using OECD input–output table data and one using German time‐series data. Results from both frameworks give strong support to the hypothesis that international production plays a great role in explaining the strong increase in intermediate inputs imports of developed countries. The evidence for the hypothesis that the increasing importance of the MNE network causes the growing trade in intermediate goods is especially strong. The outsourcing hypothesis receives also some support.