Intermediate goods trade and international wage convergence in Central Europe

The recent literature on international outsourcing points out that cross-border fragmentation of production processes may foster the convergence of international factor prices. This paper makes a first attempt to analyze this hypothesis empirically using a small panel of NACE 2-digit wage data of three Central and Eastern European economies.     

International trade agreements, environmental policy, and relocation of production

This paper studies the influence of free trade agreements on national environmental policies and location strategies of polluting firms. It is shown that banning export subsidies makes relocation of production more attractive for firms. When export subsidies are banned relocation is profitable because: (1) the rival firm reduces output due to more stringent emission regulation in the host country of the investment and (2) relocation leads to lower emission tax rate in the original home country of the investing firm. When export subsidies are used, the first effect is absent because the host government is able to use the export subsidy to compensate the negative effect of more stringent emission taxation on domestic shareholders.     

Competing-destinations gravity model applied to trade in intermediate goods

The competing-destinations formulation of the gravity model ensues from the fact that unlike the classic version, this approach explicitly acknowledges the interdependence of the flows between a set of alternative countries. This article applies the competing-destinations gravity model to the analysis of trade in intermediate goods. The results of the model were then tested empirically with an international input–output data set and using the Poisson pseudo-maximum-likelihood estimator. The empirical results suggest that the analytical model can explain trade in intermediate goods. Indeed, as predicted, import of intermediate goods is increasing in the importing country’s demand for inputs, in the competitiveness of the exporting country, and decreasing in distance and competition posed by alternative countries.     

Optimal Environmental Tax and Level of Privatization in an International Duopoly

This paper explores the optimal environmental tax and level of privatization in an international duopolistic market. We show that when the government is able to control the environmental tax and the extent of privatization, the optimal environmental tax is lower than the standard Pigouvian level. We also show that the optimal level of privatization of state-owned enterprises is partial privatization. Further, the optimal level of privatization is inversely dependent on the cleanup cost of past environmental contamination.     

Trade liberalization and trade performance of environmental goods: evidence from Asia-Pacific economic cooperation members

In this article, we study the impact of trade liberalization, including reductions in both tariff and nontariff trade barriers, on environmental goods (EGs) exports. Using bilateral trade data from 20 Asia-Pacific Economic Cooperation members, we find that tariff reduction in an exporting country has a larger positive impact on its exports of EGs than tariff reduction in an importing country. Our results also show that a lower nontariff barrier in an importing country increases its imports of EGs. A considerable amount of heterogeneity also exists in subsample results based on countries’ income levels.     

Looking for evidence of the middle-income trap. The case of Polish trade in high-tech goods with Germany

Research on the transition of post-communist economies has long been aimed at the identification of obstacles to growth. The idea behind this article relates to the paradigm of the middle-income trap and its characteristics. We adopt this conceptual framework because the economic position of Poland is determined by the nature of global value chains, its geographical proximity to Germany and the inflow of foreign direct investments which sustain cost and efficiency advantages and foster technological dependence. We embark on an analysis of trade in high-tech goods with a particular emphasis placed on Polish–German relations in the most significant sectors: machinery, electrical and electronic equipment. The results show tendencies typical for the middle-income trap, which has particular implications for the development of the semi-peripheral Polish economy.     

The new goods margin in new markets

We analyze the role of the new goods margin in the Baltic countries’ exports and imports growth during the 1995–2008 period. Using the methodology developed in Kehoe and Ruhl (2013), we define the set of least-traded goods as those that account for the lowest 10% of total exports and imports in 1995, and then trace its growth in several markets including the Baltics’ main trade partners, the European Union and Russia. We find that, on average, by 2008 least-traded goods accounted for nearly 50% of total Baltic exports to their main trade partners. Moreover, we find that increases in the share of least-traded exports coincided with the timing of the trade liberalization reforms implemented by the Baltic countries. Least-traded imports also grew at robust rates, but their growth was lower than that of exports, accounting for slightly less than a quarter of total imports, that is, about half of the exports value. Moreover, we find that the shares of least-traded imports from the EU 15 and from Russia started diverging around the time the Baltic countries joined the EU, with the EU 15 share increasing and the Russian one declining. We also find that the Baltics’ share of least-traded exports outpaced that of other economies in Central and Eastern Europe. Finally, exports of new goods from the Baltic countries suffered noticeably during the Global Financial Crisis. After the crisis ended, the restart in new goods exports growth displayed mixed patterns.     

Eco-Dumping, Capital Mobility, and International Trade

A small open economy’s optimal environmental policy is studied in a model with international capital mobility and local pollution. The country produces traded as well as non-traded goods. Is it in the country’s interest to engage in ecological dumping by choosing generous pollution allowances for the traded-good sector? The answer depends decisively on the policy regime in use. Dumping is not optimal if the country ensures that the implicit rent on pollution is completely appropriated within the country. However, if the implicit factor reward on pollution leaves the country because it accrues to (foreign) owners of mobile capital, the local welfare maximizing government tends to discriminate against the traded-good sector, the opposite of ecological dumping.     

Economic growth, international trade and air pollution: A decomposition analysis

This study analyzes the impact of economic growth and international trade on the level of air pollution. This is done by the estimation of the Structural Equation Model with two factors describing the structure of economic activity and air pollution intensity. It is further assumed that there is causal link between these two factors and that they are influenced by per capita income, international trade intensity and the Freedom House Index.The estimation results suggest that in the developing countries analyzed both international trade and per capita income lead to changes in the structure of economic activity and - as a consequence - to the increase in air pollution. In addition, the estimation results suggest that the impact of economic growth on air pollution intensity varies between the developing and developed countries. In the developing countries, this impact occurs through the change of the structure of economic activity, while in the developed countries, this impact is mainly direct and occurs through the sum of the scale effect and income effect. The positive sign of this impact suggests the dominance of the scale effect over the income effect.     

International differences in emissions intensity and emissions content of global trade

Understanding international differences in the emissions intensity of trade and production is essential to understanding the effects of greenhouse gas limitation policies. We develop data on emissions from 41 industrial sectors in 39 countries and estimate the CO₂ emissions intensity of production and trade. We find no evidence that developing countries specialize in emissions-intensive sectors; instead, our evidence suggests that emissions intensities differ systematically across countries because of differences in production techniques. Our results confirm that international differences in emissions intensity are substantial, but suggest that they do not play a significant factor in determining patterns of trade.     

Financial development and the share of imported capital goods in developing countries: firm-level evidence

Firm-level estimations across a sample of seven developing countries suggest that a higher firm’s leverage – a proxy for credit constraints – reduces the share of imported capital goods in total capital expenditures. This result holds across different models such as a two-limit tobit and a fractional logit model. It is also confirmed after controlling for unobserved firm heterogeneity, state dependence or when using the share of property in total assets as an alternative credit constraint indicator. The results also indicate that the importance of credit constraints is significantly reduced in financially more developed countries.     

Impact of FDI and trade on environmental quality in the CAFTA-DR region

This study investigates the relationship between foreign direct investment (FDI), trade and industrial emissions in member countries of the Central American Free Trade Agreement–Dominican Republic (CAFTA-DR) between 1979 and 2010. Our model is based on extant literature about the Environmental Kuznets’ Curve framework. In this study, we consider sulphur dioxide (SO₂), nitrogen oxides (NO_x) and carbon dioxide (CO₂) as our dependent variables. Our key independent variables are FDI and trade. Our study finds evidence that foreign investment and trade have had a negative impact on our selected emissions. However, our models also estimate turning points which are below the current GDP per capita values for all CAFTA-DR member countries. This is an encouraging trend in terms of the potential reduction in emissions in the region.     

A study of environmental impact on manufacturing products trade in Shandong,China

Based on the situation that the trade of manufactured goods takes the main position in Shandong Province,this paper identifies Shandong industrial pollutant discharge by three indices,which are industrial effluent discharge,industrial SO2 emission,and solid waste disposal.Furthermore,it conducts an empirical analysis of the trade terms of pollution content transfer on nine identified industrial sectors.The conclusion is that the increase in industrial effluent discharge,industrial SO2 emission,and solid waste disposal has paralleled the growth of the GDP in Shandong.The rapid economic growth brings obvious negative impact on the environment.Compared with that in 1998,the increase in the pollution content of exports in 2007 indicated that more environmental costs were generated with the economic development in Shandong.There is a need for optimization of foreign trade structure in Shandong,especially the need for increasing import of the pollution intensive products and decreasing the export of the pollution intensive products.The research on the relationship between manufactured goods trade and the environmental impact will make a contribution to the adjustment of foreign trade and environmental policies.     

Redistribution,trade and corruption: an empirical assessment

ABSTRACT

This article explores the role of institutional quality in the trade and inequality nexus. Does corruption shape the relationship between trade and inequality through its impact on redistribution? Our answer to this question builds on the hypothesis that trade raises inequality and that governments may want to intervene through appropriate redistribution schemes that aim at taxing the gains from trade in a way that offsets the negative effects of trade on inequality. Moreover, we argue that this mechanism may be distorted by corruption and bad institutions in general. Quite to the contrary to common wisdom, we find that trade reduces inequality in countries with high institutional standards by means of a low level of corruption but increases inequality in countries with low levels of institutional quality.     

Wake up and smell the ginseng: International trade and the rise of incremental innovation in low-wage countries

Increasingly, a small number of low-wage countries such as China and India are involved in incremental innovation. That is, they are responsible for resolving production-line bugs and suggesting product improvements. We provide evidence of this new phenomenon and develop a model in which there is a transition from old-style product-cycle trade to trade involving incremental innovation in low-wage countries. The model explains why levels of involvement in incremental innovation vary across low-wage countries and across firms within each low-wage country. We draw out implications for sectoral earnings, living standards, the capital account and, foremost, international trade in goods.     

Export and import composition as determinants of bilateral trade in goods: evidence from Russia

Conventional theory and several empirical studies state that incomes and exchange rates are the key determinants of the trade balance. Here, we argue that export and import composition are also key explanatory variables because some goods are inelastic and/or with a high added value, directly and indirectly affecting income and price elasticities and trade balance. Thus, if exports and/or imports significantly consist of price inelastic products, then, a positive and a negative effect, respectively, should be expected on the trade balance. Using bilateral trade data and dynamic panel models, we found that the ratio of exports of crude petroleum and natural gas (price inelastic goods) to total exports is significantly and positively associated with the Russian trade balance in goods. For its part, Russian imports of high-tech goods (income elastic and price inelastic with a high added value) show a negative association. The goods balance of Russia also responded to changes in relative income, but there is only weak evidence of reactions to changes in the exchange rate. These findings partially explain the persistent surplus in the Russian trade balance and current account.     

我国对外贸易与环境协调发展的思考

从2008年开始,我国已成为世界第一大贸易强国。在对外贸易发展迅速的同时,环境污染十分严重。环境污染是经济快速增长的产物,而对外贸易则是我国经济增长的强劲动力。对外贸易发展对环境造成了不良影响,而环境问题又阻碍了对外贸易的进一步发展。因此,为了使我国的对外贸易与环境走向良性循环,必须协调好两者的关系。     

Corruption and assortative matching of partners in international trade

Although the effects of corruption on bilateral trade are well-documented, its impact on the composition of trading partners remains unexplored. In this paper, we argue that corruption in a country imposes asymmetric costs on its trading partners depending on their characteristics. Consequently, as the level of corruption in a country changes, its trade flows from some of its trading partners change more than others, depending on their characteristics, changing the composition of its trading partners. We focus on two characteristics of trading partners: (1) the level of corruption and (2) membership in the Organization for Economic Cooperation and Development Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (OECD Convention). Using the gravity model, we find evidence of a negative assortative matching in international trade with respect to corruption. We find that corruption in a country is negatively associated with trade flows from high-corrupt countries and is positively associated with trade volume from signatories of the OECD convention. Our results suggest that future studies on this topic should consider controlling for institutional dissimilarities between the trading partners as it has implications for bilateral trade costs.     

An empirical investigation of the balance of embodied emission in trade: Industry structure and emission abatement

By constructing the world panel dataset for the pollution emission embedded in international trade of 132 countries for the period between 1988 and 2008, we investigate whether the balance of embodied emission in trade (BEET) is consistent with the implication of pollution haven hypothesis (PHH). By using two differently constructed datasets, we are able to distinguish between the composition (i.e., changes in industry structure of international trade) effect and the technique (i.e., improvement in emission abatement) effect. We find that the composition effect is neither related with the income level nor the democracy level of countries. However, the empirical evidence, with consideration for the technique effect, provides a partial support that income level is negatively related with the BEET. Therefore, the BEET in fact has worsened for developing countries, but not by the composition effect assumed in the PHH.     

Global environment and dynamic games of environmental policy in an international duopoly

This paper examines a differential game model of international pollution control in which polluting oligopolists compete in a third country market. Two alternative policy instruments (emission taxes and command-and-control regulations) are considered. A tougher emission policy in the home country enhances the foreign firm’s competitiveness because of the static “rent-shifting” effect. The foreign country also enjoys a future improvement of the global environmental quality by “free riding” on the home country’s emission reduction effort. Because of these strategic effects, the levels of environmental policy determined in the noncooperative policy game are distorted away from the socially optimal level. Moreover, the emission tax game produces a more distortionary outcome than that in the command-and-control game; it generates more pollution and lower welfare.