Regional Trade Agreements and the Pattern of Trade: A Networks Approach

This paper uses a complex network approach for the analysis trade effects from regional trade agreements on world trade flows. We use bilateral trade data to compute the network community structure for every year between 1970 and 2000. We compare this to null community structures that emerge from various models based on regional and geographical classifications, the implementation of RTA's and gravity models of trade. Our results show that RTA formation appears to have a cyclical pattern on the world trade network community structure. We document periods where bilateral trade flows and the structure of the world trade network are consistent with those predicted by formation of RTAs. These cycles occur in 1980–86 and 1990–96. At the same time, we document periods in which the pattern in the world trade network is not explained by RTA formation. Two periods, 1986–90 and 1997–2000, show a pattern of bilateral trade flows that moves away from the prediction that results from assuming RTA formation as the driving force in the determination of the world trade network structure. Factors contributing to the latter parts of the cycle during our sample period include formation of regional trade networks in East Asia that account for a significant portion of world trade but are not formalised by RTAs in force.     

中国服务贸易潜力——基于引力模型的测算

国外使用引力模型研究服务贸易始于2002年,国内研究则起步稍晚,至2009年方有学者致力于此类研究。从使用数据和实证模型两方面看,现有研究都有可进一步拓展的潜力。本文基于引力模型对服务贸易的决定因素进行识别与测算。本文在实证部分采用了基本引力模型,使用4种计量方法。结果显示:贸易双方经济规模、经济发展水平、物理距离和自由贸易区对总服务贸易额和分部门贸易额的影响表现出不同的显著性。     

General equilibrium trade modelling with Canada–US transportation costs

Transportation costs are an important topic in international trade, but seldom have researchers paid attention to general equilibrium trade modelling with transportation costs and explored their relevant effects. This paper uses numerical general equilibrium trade model structures to simulate the impacts of transportation costs on welfare and trade for a Canada–US country pair case. We compare two groups of model structures: Armington assumption models and homogeneous goods models. Within these two groups of models, we also compare balanced trade structures to trade imbalance structures and production function transportation costs to iceberg transportation costs. Armington goods models generate more absolute welfare gains from transportation cost elimination than homogeneous goods models. Welfare gains under balanced trade structures are larger in production function transportation cost scenarios than in iceberg transportation cost scenarios, but under trade imbalance structures, welfare gains are greater under iceberg transportation cost scenarios. Canada's welfare gains in the iceberg transportation cost scenario are significantly larger than gains in the production function transportation cost scenario. On trade effects, homogeneous goods models generate more export and import gains, balanced trade structures have more trade variations, and iceberg transportation costs generate more trade effects.     

U.S.-Canadian trade liberalization and adjustment mechanisms: A survey

The prospect of bilateral trade liberalization requires an understanding of contemporary work on the adjustment process. This survey of recent models by principally Canadian economists examines the methodological foundations of this research. It is found that the new trade adjustment models are just beginning to incorporate key elements of industrial organization effects such as intra-firm trade and non-tariff barriers to trade. More progress in these areas is required.     

A causal relationship between trade efficiency and economic efficiency: Evidence from dynamic simultaneous equations models

The objective of this study is to examine the causal relationship between economic efficiency and trade efficiency using dynamic panel data in simultaneous equations models for global panel of 50 countries over the period 2000–2014. The study also implements this interrelationship for two groups of countries based on their level of development. Two models applying different factors reflecting countries’ economic and trade policies are proposed to measure the targeted efficiencies using data envelopment analysis method. Evidence from the simultaneous equations models to identify a relationship between economic efficiency and trade efficiency supports the bidirectional causality between them in all three categories of countries. It has been also found that both economic and institutional factors have a significant positive influence on trade and growth performance, with the effect of political factors being especially pronounced for developing countries that suffer from weak institutional capacity. These empirical findings are of particular interest to policy-makers as they help to build sound policies in order to maximize trade performance as well as economic efficiency.     

Trade Costs in Bilateral Trade Flows: Heterogeneity and Zeroes in Structural Gravity Models

This paper contributes to the explanation of international trade flows with structural gravity models taking heterogeneity and excess zeroes into account. We introduce a more general hypothesis on the structure of trade costs in Helpman et al. (The Quarterly Journal of Economics, 2008; 123 , 2, 441) theoretical model that is capable of explaining over‐dispersion in trade data. Zero‐inflated negative binomial models are considered to analyse the impact of trade costs, measured in terms of geographical distance and contiguity effects. An analysis related to a sample of 37 countries' trade flows, with heterogeneous effects across sectors and trade‐integrated areas, such as APEC and EU, is presented. The size of exporting and destination economies and cultural and institutional factors are considered as influencing both the extensive and the intensive margin of trade.     

Unemployment and Trade Liberalisation

In contrast to the focus of the public debate over trade liberalisation on job losses there is a widespread view among economists that unemployment and trade issues should be considered separately. This view cannot be justified theoretically, and ignores the growing number of general equilibrium trade models with unemployment. In a simple model with an exogenous wage floor, trade liberalisation can lead to either gains or losses depending on the production technology, severity of the factor market distortion, factor intensities of the industries and conditions in trading partners. Definite results can be derived about gains from liberalising trade with lower wage floors, about relative abundance of the unemployed factor dampening losses when trade is liberalised, and about gains when the good which uses the unemployed factor is exported. The theoretical models are then linked to the policy modelling literature, using the example of recent Australian controversies over liberalisation of trade in automobiles and textiles. It is argued that trade liberalisation would be better advanced by including endogenous employment in trade policy simulation exercises and by discussing employment effects rather than brushing them aside as temporary adjustment problems or regional difficulties.     

Trade Policy and Environmental Regulation in the Asia–Pacific: A Simulation

The Asia–Pacific Economic Cooperation (APEC) has the potential to become the world's largest free trade area, encompassing both developed and developing countries. At the same time environmental standards vary substantially in the region. A multilateral computable general equilibrium (CGE) model combined with environmental sub–models simulates the environmental effects of trade and environmental policy changes. The simulations show: (i) Even drastic reductions in trade barriers have only a small effect on pollution; (ii) Low environmental standards relative to trade partners do not necessarily result in increased pollution when trade is liberalised; (iii) Unilaterally raising environmental standards does not crowd out pollution to countries with laxer standards.     

Trade in tourism services: Explaining tourism trade and the impact of the general agreement on trade in services on the gains from trade

The article addresses two questions related with tourism as a service trade. Can tourism be explained as other export activities? Does service liberalisation have a positive or negative impact on tourism receipts in destination countries? Previous research has either focused on the demand side factors (i.e. factors of demand in the origin countries) or on tourism as a long-run factor of economic growth. The research shows that a complementary perspective such as that offered by trade in a supply side perspective can render additional insights towards understanding tourism. This approach can explain why countries have absolute and comparative advantage. Another finding is that tourism as an export can be explained by some of the same destination factors that explain other service exports. Using different panel estimators the importance of supply side factors that are to some extent exclusive to tourism are demonstrated: the general price competitiveness of the destination, tourism infrastructure and the provision of safety. The econometric models also confirm the relevance of other conventional explanatory factors of trade in services such as GDP per capita and internet usage. The last part of the article analyses the welfare gains from trade under the general agreement on trade in services (GATS). The revenue (tourism receipt) effect is decomposed into a volume (arrival) and price effect. Results suggest that liberalisers under the GATS gained especially from a volume effect with average higher growth rates in the number of arrivals. There is also found to be a positive effect on the average income earned per tourist from being a liberaliser.     

中美航运贸易边境效应的实证研究

基于较为成熟的贸易引力模型,构建适用于航运贸易的边境效应引力模型,采用中美2005-2009年的港口航运贸易数据比较模型,度量中国的航运贸易边境效应。结果表明,调整后的边境效应引力模型——差异截距模型是一个较优模型,中美航运贸易边境效应显著存在。     

我国劳动密集型产品出口企业低价竞销的博弈分析

我国劳动密集型产品出口企业的低价竞销行为是导致我国出口贸易条件恶化、出口企业利润率下滑和贸易摩擦增加的重要因素。文章运用不同博弈模型分析了同种产品同质和不同质两种情况下劳动密集型产品出口企业低价竞销行为的原因和形成机制,并在此基础上给出了我国出口企业长期健康发展的启示。     

通用贸易定律及其在中国对外贸易中的验证

在贸易理论中能够定量应用于两个经济之间贸易额计算的,目前只有引力模型。但引力模型在实践中的应用效果并不令人满意。注意到贸易的本质就是交换,贸易额与产出之间应该存在着某种特定的数量关系,本文认为引力模型的基本形式应该能够普遍适用于国内贸易和国际贸易,并称之为“贸易定律”。模型中的距离应该理解为“经济距离”,代表运输成本。据此思路以中国对外贸易数据进行验证,贸易定律是有效的。     

构建中韩双边自由贸易区的前景探讨——基于货物贸易的视角

随着双边自由贸易区的迅猛发展,各国经济相互合作和融合的程度大大增强.与此同时,东亚地区尤其是中韩两国的经济贸易关系日益密切,加快建立双边自由贸易区的呼声不断涌现.文章以中韩两国的货物贸易为研究基础,运用相关模型和指标分别就中韩两国建立双边自由贸易区后可能产生的贸易效应以及对产业内贸易的影响进行了系统的实证分析.研究表明,构建中韩自由贸易区对于增加两国福利、优化两国产业结构以及平衡两国国际收支等方面都有积极影响,中韩两国具有广阔的经贸合作前景.     

The core and periphery of the world economy

This paper reviews three models of foreign trade, including the Heckscher-Ohlin model, the new trade theory based on increasing returns to scale, and the model of economic geography and trade with agglomeration effects. It demonstrates that gravity models perform relatively well for differentiated and non-differentiated products. This result supports Hummels' and Levinsohn's () critique of the new theory foundation of the gravity equation. Furthermore, the bilateral trade relations of peripheral countries are often identified as outliers. This pattern of outliers is consistent with the model of geography and trade.     

From the Editor

The primary rationale for international trade models has been Adam Smith's analogy of a tailor and a shoemaker. Most free trade models relate to it in some way. Unfortunately when generalized to apply to nations, the model has serious defects.

This article develops a network flow model of international trade, simple enough for general comprehension, yet capable of dealing with the many complexities of international trade. Some of the current methods of trade management are also reviewed.

A variable compensatory tax is proposed to replace many of the current, inadequate trade management techniques. It is relatively simple to implement, fair to trading partners, precludes retaliation, and is based on measured performance in international trade.     

Regional Integration and Trade: Controlling for Varying Degrees of Heterogeneity in the Gravity Model

The proliferation of regional trade agreements (RTAs) in the 1990s prompted a renewal of interest in studying the effect of regional integration on trade. Using a panel dataset of bilateral export flows from 12 EU countries to 20 OECD trading partners over the period 1992–2003, the trade effect of European regional integration, denoted by an EU dummy, is examined across a number of fixed effects (FE) specifications, each of which has been claimed as the correct econometric specification of the gravity model. Typically parsimonious in (time‐varying) economic variables and abundant in fixed effects, the FE specifications allow for varying degrees of heterogeneity in the gravity model. Two gravity models are estimated: a gravity model of traditional trade determinants and a gravity model of new trade theory (NTT) determinants. Both gravity models provide reasonable coefficient estimates, although they vary somewhat across the FE specifications for the traditional gravity model. Both gravity models are congruent in suggesting that the coefficient of the EU dummy declines in magnitude and becomes insignificant as an increasing degree of heterogeneity is admitted into the model. This suggests the fundamental importance of the econometric specification when evaluating trade policy effects within a gravity framework.     

The structure of factor content predictions

The last decade witnessed an explosion of research into the impact of international technology differences on the factor content of trade. Yet the literature has failed to confront two pivotal issues. First, with international technology differences and traded intermediate inputs, there is no existing definition of the factor content of trade that is compatible with Vanek's factor content prediction. We fill this gap. Second, as Helpman and Krugman (1985) showed, many models beyond Heckscher-Ohlin imply the Vanek prediction. Thus, absent a complete list of these models, we do not fully know what models are being tested when the Vanek prediction is tested. We completely characterize the class of models being tested by providing a familiar consumption similarity condition that is necessary and sufficient for a robust Vanek prediction. Finally, we reassess the performance of the prediction using the correct factor content definition and input-output tables for 41 countries. We find that the prediction performs well except for the presence of missing trade. Further, missing trade is not pervasive: it is associated entirely with ‘home bias’ in the consumption of agricultural goods, government services and construction.     

On Some Effects of International Fragmentation of Production on Comparative Advantages,Trade Flows and the Income of Countries

In traditional trade models, whether based on technological differences or on relative factor endowments, merchandise composition and directions of trade are derived from closed‐economy conditions. But nowadays one of the basic assumptions of traditional trade models, i.e. that production processes are integrated within just one country, is being increasingly violated as previously integrated productive activities are segmented and spread over an international network of production sites: as a result, an increasingly large share of trade flows is made up of intermediate and unfinished goods being transferred from one country to another in order to be processed. In this paper we submit that such new configuration of production processes has important effects on at least three dimensions of economic research. First, we show that international disintegration of production processes leads to a lessening of the power of comparative advantages when it comes to explaining both merchandise composition and directions of trade, while it is the concept of absolute advantage to become increasingly relevant; second, we show that empirical measures of revealed comparative advantages are inherently misleading if they do not account for differences in the stage‐of‐processing of traded goods; third, we estimate a simple model of aggregate demand accounting for international trade in intermediates: results of estimation lend support to our prior that participation of a country in the process of international fragmentation of production plays a specific and significant role in determining its year‐over‐year change in GDP.     

Trade, wages, and the political economy of trade protection: evidence from the Colombian trade reforms

Worker industry affiliation plays a crucial role in how trade policy affects wages in many trade models. Yet, most research has focused on how trade policy affects wages by altering the economy-wide returns to a specific worker characteristic (i.e., skill or education) rather than through worker industry affiliation. This paper exploits drastic trade liberalizations in Colombia in the 1980s and 1990s to investigate the relationship between protection and industry wage premiums. We relate wage premiums to trade policy in an empirical framework that accounts for the political economy of trade protection. Accounting for time-invariant political economy factors is critical. When we do not control for unobserved time-invariant industry characteristics, we find that workers in protected sectors earn less than workers with similar observable characteristics in unprotected sectors. Allowing for industry fixed effects reverses the result: trade protection increases relative wages. This positive relationship persists when we instrument for tariff changes. Our results are in line with short- and medium-run models of trade where labor is immobile across sectors or, alternatively, with the existence of industry rents that are reduced by trade liberalization. In the context of the current debate on the rising income inequality in developing countries, our findings point to a source of disparity beyond the well-documented rise in the economy-wide skill premium: because tariff reductions were proportionately larger in sectors employing a high fraction of less-skilled workers, the decrease in the wage premiums in these sectors affected such workers disproportionately.     

Global production sharing and trade in the services of factors

This article develops an approach to measuring the factor content of trade when intermediate inputs are traded, and techniques differ for reasons such as factor price differences. An empirical section documents the importance of intermediates and shows that they mitigate cross-country differences in the factor content of finished goods. The performance of recent models of factor service trade is also evaluated. Existing approaches impute the factor content of imported intermediates with domestic techniques and tend to overstate how well those models perform. The framework developed here can help reconcile general-equilibrium trade models with actual patterns of trade.