Exchange rate and foreign GDP elasticities of Swiss exports across sectors and destination countries

This article uses a detailed breakdown of Swiss trade flows to identify how the impact of the two main determinants of Switzerland’s exports – foreign demand and the real exchange rate – varies across sectors and export destinations. Our main findings are that (i) both foreign demand and exchange rate elasticities vary substantially across both export sectors and export destinations. (ii) Foreign demand trends are more important for structural considerations than the exchange rate. This is due to the fact that exports of the two largest export sectors are relatively sensitive to long-run foreign demand developments while they are relatively insensitive to changes in the exchange rate. (iii) The sectoral structure of Switzerland’s exports has shifted towards goods that have a lower short-run demand elasticity and a higher long-run demand elasticity. Goods exports are thus less influenced by business cycle fluctuations while they benefit more from long-term growth trends. (iv) The export share of sectors with a relatively low exchange rate elasticity has increased. However, this result is mainly driven by the strong rise in exports of chemicals and pharmaceuticals as well as precision instruments and watches, which are also the two important sectors responsible for the Swiss trade surplus.     

Foreign-exchange distribution in Yugoslavia's new planning system: An input-output approach

Under the new planning system in Yugoslavia, the foreign-exchange earnings of the final exporter should be shared by all the producing units that contributed to the production of the exported goods or services. A method of calculating the contributions of the various producing sectors to a country's exports is developed. This method makes use of the value-added/gross-output ratios of individual sectors and the Leontief inverse matrix. The analysis is extended to an examination of the balance-of-trade effects of exports.     

Exchange rate disconnect and financial constraints —evidence from Chinese firms

One puzzling observation in international economics is the lack of response of exports to exchange rate fluctuations. Employing the most comprehensive export data from China for the 2000–2007 period, we provide sector- and firm-level evidence that the response of exports to exchange rate movements depends crucially on the level of financial constraints. For sectors with large financial constraints, the response is small, whereas, for less financially constrained sectors, the response can be much larger, with the estimated elasticity decreasing with the sector's degree of financial constraints. At the firm-level, financial constraints affect the firm's response to exchange rate shocks at both the intensive and the extensive margins. At the intensive margin, financial constraints dampen the effect of exchange rate on exports by restricting the firm's export value to the existing destination market; at the extensive margin, financial constraints restrict the number of firms participating in exporting, the number of firm-product pairs being exported, and the probability of entering a new destination market.     

Estimating domestic content in exports when processing trade is pervasive

For many questions, it is crucial to know the extent of domestic value added (DVA) in a country's exports, but the computation is more complicated when processing trade is pervasive. We propose a method for computing domestic and foreign contents that allows for processing trade. By applying our framework to Chinese data, we estimate that the share of domestic content in its manufactured exports was about 50% before China's WTO membership, and has risen to nearly 60% since then. There are also interesting variations across sectors. Those sectors that are likely labeled as relatively sophisticated such as electronic devices have particularly low domestic content (about 30% or less).     

产业关联视角下的碳关税征收对我国产业经济的影响

最终需求的生产诱发系数和依存度系数揭示,我国高耗能产业部门生产对出口依赖程度较高;碳关税征收在减少高耗能产品出口的同时,由于其产业影响力较大,会对其它产业部门的生产产生较大的波及。高耗能产业部门的感应度系数表明,当各个部门的最终需求变化时,其生产将受到较大的影响。碳关税对高耗能产品的征收最终会通过产业间的关联波及各个产业部门,进而全面影响我国产业经济的发展。     

HOW THE GLOBALIZATION OF R&D COMPETITION AFFECTS TRADE AND GROWTH

The implications of international R&D competition on trade and growth are investigated. The model is one in which a separate R&D sector competes with the manufacturing sector to secure human capital, and technology is licensed to manufacturers by the winner of a pre-emptive R&D competition. The results show that globalization of R&D competition leads to trade between countries (even identical countries), because the result of competition leads to a reallocation of human capital between sectors. The winning country exports technology and traditional goods, while the loser exports manufactured goods. Globalization with indiscriminate technology licensing increases the world's economic growth rate.     

The European Single Currency and MENA's Exports to Europe

The paper investigates future exchange rate policy of the Middle East and North African (MENA) countries vis‐à‐vis the euro aimed at fostering their manufactured exports towards Euroland. The exchange rate policy is captured through three different indicators: the real effective exchange rate changes, volatility, and misalignment. The investigation is conducted for 11 sectors over the period 1970–1997. The sample includes four North African countries (Algeria, Morocco, Tunisia, Egypt) and Turkey. The results show that exchange rate management plays a crucial role in providing incentives for manufactured exports toward Euroland. The food sector is weakly responsive to real exchange rate changes while the textile sector is highly responsive. Four growing sectors (electronic, electrical, mechanical, and vehicles) were also found to be highly sensitive to exchange rate changes. The results suggest that policymakers should be more concerned with misalignment than with volatility.     

The economic and trade effects of the UK–Korea free trade agreement on the United Kingdom,Korea, Japan,China, and the European Union

We explored a comparative static computable general equilibrium model with six regions and 12 sectors to estimate the impacts of the recent UK–Korea free trade agreement (FTA) along with the European Union (EU)–Korea FTA. The empirical results provide quantitative evidence of the impact on national GDP, national exports and imports by sector, and the changes in exports or imports among the United Kingdom, Korea, Japan, China, and the EU. The UK–Korea FTA, along with the EU–Korea FTA, increases GDP and welfare for the United Kingdom and Korea; moreover, there is a large increase in automobiles, transport equipment, and machinery exports between Korea and the United Kingdom. The GDP and welfare level of non-member countries such as Japan and China will slightly decline. Exports from the United Kingdom and Korea to non-member countries are also expected to decrease in most manufacturing sectors. The UK–Korea FTA will lead to increases in imports between the United Kingdom and Korea due to mutual trade creation effects and trade diversion effects. However, non-member countries such as Japan's exports are expected to experience a large decline in automobiles to the United Kingdom and in most manufacturing products to Korea due to the negative impact of the UK–Korea FTA.     

External income shocks and Turkish exports: A sectoral analysis

This study assesses how the growth rates of Turkish trading partners affected Turkish exports in various sectors for the period 1996:01 to 2009:12. To determine this, we modeled the destination countries and the export demand for each sector separately. Each model is estimated as a system of equations, where each equation represents a country using a seemingly unrelated regression method. The empirical evidence suggests that Motor Vehicles, Basic Metals, and Radio–Television are the sectors with the highest income elasticities for most of the analyzed countries, whereas the Food Products and Beverages sector has the lowest income elasticity. We also performed simulations for the effect of a 1% increase in the growth rate of each country on Turkish exports.     

IDENTIFYING AND ESTIMATING SOURCES OF TECHNICAL INEFFICIENCY IN KOREAN MANUFACTURING INDUSTRIES

This study estimated translog stochastic frontier production functions using an unbalanced panel of Korean manufacturing firms in the food, textile, paper, chemical, basic-metal, and fabrication sectors. The sectors were estimated individually to investigate whether technical efficiency is systematically related to firm size, dependency on external funds, research and development investments, and exports. The empirical results suggest that firm size has a positive and significant effect in every sector. The effects of the other factors are less systematic and vary across sectors.     

The Impact of Exchange Rate Volatility on UK Exports to EU Countries

This paper investigates the impact of exchange rate volatility on UK exports to European Union (EU) countries by means of a newly developed ARDL bounds testing procedure to cointegration. Using monthly data disaggregated by market of destination and sectors for the period 1993ml to 2001m6, our results indicate that UK exports to the EU14, at both aggregate and sectoral level, are generally income elastic, relative price inelastic and largely unaffected by short‐term exchange rate volatility. Re‐estimation of the model using a long‐term measure of volatility, however, provides evidence supporting the hypothesis that exchange rate uncertainty has a negative and significant influence on UK exports to EU countries.     

China’s Outward FDI: An Industry-Level Analysis of Host-Country Determinants

We use disaggregated data by country and industry to empirically analyze the host country determinants of Chinese outward foreign direct investment (FDI) for the years 2003 to 2011. Our results suggest that the host-country determinants of Chinese FDI differ between high- and low-income countries. While all Chinese FDI is invariably market seeking, other motivations stand out for differing sectors in specific country groups. The resource seeking motivation is relevant for manufacturing FDI to high-income countries with relatively high fuel abundance, and to low-income countries with primary resource abundance (other than fuels). Differently, the strategic-asset seeking motivation, measured by the level of R&D spending on GDP, only positively and significantly affects Chinese manufacturing and service FDI to OECD countries, while higher education levels are an attraction factor for all investing firms. Natural resource is an important attraction factor for Chinese FDI, not only in resource-related sectors, but also in manufacturing and service sectors. Finally, Chinese FDI tends to follow exports (rather than foster them), especially in service sectors.     

LONG‐RUN DETERMINANTS OF JAPANESE EXPORTS TO CHINA AND THE UNITED STATES: A SECTORAL ANALYSIS

During the period 1971–2007, Japanese sectoral exports to China and the United States depended on real exchange rate fluctuations and external demand (GDP of the country of destination). This result holds for both geographical destinations and for all six sectors under investigation in this study: foods, textiles, metal products, chemicals, non‐metal products, and machinery and equipment. For both China and the United States and for almost all sectors, the real exchange rate fluctuations and GDP have had the expected effects. Real appreciation of the yen and greater uncertainty derived from increased exchange rate volatility have reduced Japanese exports.     

The convergence in domestic value-added of exports in the EU

Difficulties in measuring domestic value-added in exports (DVA) have led to the development of alternative measures of trade in value-added terms. These new measures have enabled more accurate estimates that reveal that the EU countries from Central and Eastern Europe (CEE10) exhibit an approximately five percentage points lower DVA share of exports compared with other EU countries (EU15). The lag is on average the highest in knowledge-intensive manufacturing sectors (eight percentage points) and the lowest in knowledge-intensive services (0.3 percentage points). However, this article argues that the CEE10 economies have acquired new knowledge by participating in GVCs and thus have gradually started increasing their level of DVA. Based on EU trade data, this article presents evidence of convergence of DVA in manufacturing and especially in the services sector. It is also shown that a negative relationship exists between participation in GVCs and DVA in the CEE10 economies that is declining over time in both manufacturing and services exports.     

Measuring Vertical Specialization: The Case of China

The explosive growth of Chinese trade may be due to international production fragmentation, but few have assessed these phenomena together, in part, because it is difficult to measure the vertical specialization (VS) of China's trade. Unique features of China's processing trade cause both identification of imported inputs and their allocation across sectors to vary by trade regime. This paper estimates the VS of Chinese merchandise exports, addressing these two challenges. A new method to identify Chinese imported inputs is developed, and used to calculate VS by sector and destination. VS estimates based on the official Chinese input–output table are contrasted with those based on a split table, capturing processing and normal exports separately. Last, the paper tests whether Chinese “export sophistication” can be explained by VS.     

Exports and left‐behind children: Empirical evidence from the China Migrants Dynamic Survey

The opportunity for jobs and high wages induced by exports have attracted rural laborers in China to work in the cities temporarily, and some parents must leave behind their children in rural areas, called left‐behind children (LBC). Notably, the cause of LBC has not been investigated carefully. In this study, we combine the 2010 to 2015 Chinese trade data with the data from the 2010 to 2015 China Migrants Dynamic Survey(CMDS) to identify LBC based on the young children of migrants not living with their parents in the cities, and empirically test the effects of exports on LBC. The results show that under the same income level and other circumstances, the increase in export dependency significantly increases the probability of the migrants’ young children becoming LBC. We construct an instrumental variable to manage the potential endogeneity problems and conduct many other robustness checks, and all the results are consistent. We also examine the heterogeneous effects of exports on LBC and observe that migrants with low income, low education, rural hukou (area of origin) status, and in manufacturing sectors are more vulnerable to exports.Key Words: Exports; Internal Migration; Left‐behind children     

The Great Collapse in Value Added Trade

This paper studies the great collapse in value added trade using a structural decomposition analysis. We show that changes in vertical specialization accounted for more than 40% of the great trade collapse. Second, we find that the drop in the overall level of demand accounted for roughly a quarter of the decline in value added exports while just under one third was due to compositional changes in final demand. Finally, we demonstrate that the dichotomy between services and manufacturing sectors observed in gross exports during the great trade collapse is not apparent in value added trade data.     

Exchange rate bands of inaction and play-hysteresis in Greek exports to the Euro Area,the US and Turkey: sectoral evidence

In this paper a non-linear model is applied, where suddenly strong spurts of exports occur when changes of the exchange rate go beyond a zone of inaction, which we call “play” area—analogous to mechanical play. We implement an algorithm describing path-dependent play-hysteresis into a regression framework. The hysteretic impact of real exchange rates on Greek exports is estimated based on the period from 1995Q1 to 2014Q4. Looking at some of the main export partners of Greece, the euro area, Turkey and the US, and some of its most important tradeable sectors we identify significant hysteretic effects for a part of the Greek exports. We find that Greek export activity is characterized by “bands of inaction” with respect to changes in the real exchange rate and calculate the further real depreciation needed to trigger a spurt in Greek exports. To check for robustness we (a) estimate Greek export equations for a limited sample excluding the recent financial crisis, (b) use export weight instead of deflated nominal exports as the dependent variable, (c) employ a political uncertainty variable as a determinant of the width of the area of weak reaction. Overall, we find that those specifications which take uncertainty into account display the best goodness of fit. In other words: the option value of waiting dominates the real exchange rate effect on Greek exports.     

The impact of environmental policy on international competitiveness in manufacturing

The aim of this study is to test the hypothesis that environmental stringency adversely affects the international competitiveness (net exports) in manufacturing sectors. The model follows the standard factor endowment approach to explain the effects of environmental regulatory policy on net exports in different product-based industries. An econometric model is constructed, which includes factor endowments and environmental regulations to examine how strict environmental policies impact export competitiveness. A panel dataset of 10 Organisation for Economic Co-operation and Development (OECD) countries, over 17 years, 1987–2003, was constructed for the modelling effort. The study finds that environmental regulations can be a way to combat the flight of manufacturing out of developed countries if the output from these industries can be identified as environmentally friendly. A positive relationship between net exports and environmental regulations was found for paper products, wood products and textile products. However, most manufacturing industries are harmed by increased environmental regulations.     

中美贸易的反比较优势之谜

通过统计分析,本文发现中美贸易间存在"反比较优势之谜"。即美国在其具有技术上比较优势的行业,对中国出口相对较少,且在其比较优势越大的行业,对中国出口量相比世界其他地区越少;相比之下,中国对美国的出口则符合比较优势原理。为进一步检验该现象,本文将Eaton-Kortum模型扩展到多部门,并将其应用于中美贸易结构影响因素的经验分析。结果显示:在控制了行业生产规模和贸易成本等因素后,比较优势在中美双边贸易中的不对称作用依然存在,且结果稳健。