Does regionalism lead to more global trade integration in East Asia?

Since early 1999, global trade liberalization has been sidelined as regional trade agreements (RTA) have become the preferred choice in East Asia. Does this shift suggest that global trade and welfare levels will be raised? In contrast to unilateral trade liberalization, RTAs may well cause both ‘trade creation’ and ‘trade diversion,’ so that their net effect on global trade and welfare becomes ambiguous. It is conjectured that RTAs among “natural trading partners” are more likely to be trade-creating, and less likely to divert trade from non-member countries, in which case welfare will improve. We find that if an RTA involves geographically proximate countries (measured either by distance or border), trade significantly increases among them. At the same time, geographical proximity also contributes to increasing trade between members and the rest of the world. We examine how existing or proposed East Asian trading blocs affect intra-bloc and extra-bloc trade and thereby global trade. We find that the East Asian RTAs are likely to create more trade among members without diverting trade from non-members.     

Estimating models of complex FDI: Are there third-country effects?

The recent general equilibrium theory of trade and multinationals emphasizes the importance of third countries and the complex integration strategies of multinationals. Little has been done to test this theory empirically. This paper attempts to rectify this situation by considering not only bilateral determinants, but also spatially weighted third-country determinants of foreign direct investment (FDI). Since the dependency among host markets is particularly related to multinationals’ trade between them, we use trade costs (distances) as spatial weights. Using panel data on U.S. industries and host countries observed over the 1989–1999 period, we estimate a “complex FDI” version of the knowledge-capital model of U.S. outward FDI by various recently developed spatial panel data generalized moments (GM) estimators. We find that third-country effects are significant, lending support to the existence of various modes of complex FDI.     

城市产业战略的若干理论及应用--以上海市嘉定区产业定位为例

城市产业的战略定位关系着城市发展的成败,现有产业定位在理论上主要依据比较优势理论(绝对优势论、比较优势论、机会成本说)或比较优势理论的延伸(区域分工理论).事实上,随着全球化进程的推进,跨国公司可以在全球范围内组织资源,原有的基于特殊生产要素的比较优势逐渐衰退,而内涵更广的竞争优势越来越成为决定一个城市发展成功与否的关键.而且现有产业定位研究在对象层面上以区域为主,随着全球化城市网络体系的形成,区域之间的竞争越来越体现为城市之间的竞争,因此对城市产业定位的研究更显重要.文章将对产业定位的已有若干理论进行回顾总结,并引入竞争优势理论、新贸易理论和城市化阶段理论,提出城市产业定位的区域视角、竞争视角、城市化视角等的一般方法.并以上海嘉定的产业定位为例,阐述上述理论的具体实践.     

Regional integration and dynamic adjustments: Evidence from gross national product functions for Canada and the United States

We estimate a translog Gross National Product function and test for endogenously determined structural change allowing for anticipated and lagged responses to regional trade agreements. We found that Canada embarked on a long transition path prior to the implementation of the Canada-U.S. Trade Agreement, a result reminiscent of Magee's (2008) results concerning RTAs’ trade creation effects. In contrast, the United States experienced an abrupt structural change a year after the North American Free Trade Agreement took effect. This reflects that smaller economies benefitting from larger changes in terms of trade are confronted to more complex adjustment processes than larger economies.     

Trade Liberalization and Industrial Restructuring: The Role of Cross-Border Mergers and Acquisitions

This paper analyzes industry adjustments to trade liberalization. It introduces cross-border mergers and acquisitions (M&A) as an alternative mode of industrial restructuring to firms' exit. In a two-country Cournot model, we examine the responses of domestic and foreign firms endowed with different technologies for different stages of trade openness. It is found that the less efficient firm loses market shares in its home market at the beginning of trade liberalization. Only for a more advanced level of liberalization, does it take advantage of a larger access to foreign demand. Trade liberalization may therefore harm its profits too strongly, forcing it to leave the market. However, although its incentives decrease with trade liberalization, the high-technology firm may be willing to take it over for low organizational and technological costs of firms' integration. In addition, it may buy it out even if the less efficient firm manages to stay. Then, trade liberalization affects M&A incentives depending on the technological gap. For low and high (medium) gap, there is an inverted U- (W-) shaped relation between trade costs and incentives to merge. Moreover, although technology transfer is assumed to be complete, M&A may lead to a reduction in consumers' welfare. Firms may capture some pro-competitive gains from economic openness. Lastly, an empirical analysis based on a data set of OECD members' multinationals gives some support to these theoretical predictions.     

The conflict mitigating effects of trade in the India-Pakistan case

We examine whether greater inter-state trade, democracy and reduced military spending lower belligerence between India and Pakistan, beginning with a theoretical model covering the opportunity costs of conflict in terms of trade losses and security spending, as well as the costs of making concessions to rivals. Conflict between the two nations is best understood in a multivariate framework where variables such as economic performance, integration with rest of the world, bilateral trade, military expenditure, democracy orientation and population are simultaneously considered. Our empirical investigation based on time series econometrics from 1950 to 2005 suggests that reduced bilateral trade, greater military expenditure, less development expenditure, lower levels of democracy, lower growth rates and less general trade openness are all conflict enhancing. Globalization, or a greater openness to international trade with the rest of the world, is the most significant driver of a liberal peace, rather than a common democratic orientation.     

World trade recovering but still reasons for caution

• ? World trade has picked up in recent months, expanding at the fastest pace in six years in the first quarter, with the rise fairly evenly split between advanced and emerging markets. Stronger activity in China and a broader upturn in global investment have been key factors. But there are still reasons for caution. Although the ‘cyclical’ element in world trade is improving, the ‘trend’ element is not thanks to changes in supply chains and a lack of trade liberalisation.
• ? World trade growth looks set to reach about a 4% annual rate in Q1 2017, the fastest pace since 2011. Alternative freight‐based indicators confirm the upturn. This suggests some modest near‐term upside risk to our world growth forecasts.
• ? Recent growth has been evenly split between advanced countries and emerging markets (EM). In EM, the end of deep recessions in Russia and Brazil and an upturn in China have been key factors. China directly added 0.5 percentage points to annual world trade growth over recent months and firmer growth there has also pushed up commodity prices and the spending power and imports of commodity exporters.
• ? Another important positive factor is an improvement in investment, which is a trade‐intensive element of world GDP. Rising capital goods imports across a range of countries suggest the drag on world trade from weak investment is fading.
• ? The decline in the ratio of world trade growth to world GDP growth over recent years has both cyclical and structural elements. But while the cyclical component now seems to be improving, there is little evidence that the structural part – responsible for between a half and two‐thirds of the recent decline – is doing likewise.
• ? Key factors behind the structural decline in world trade growth are changes in supply chains and a lack of trade liberalisation/protectionism. Both are likely to remain a drag over the coming years. Meanwhile, a levelling‐off of growth in China and drop back in commodity prices could curb the recent cyclical uptick.

     

Volatile multinationals? Evidence from the labor demand of German firms

Does more FDI make the world a riskier place for workers? We analyze whether an increase in multinational firms' activities is associated with an increase in firm-level employment volatility. We use a firm-level dataset for Germany which allows us to distinguish between purely domestic firms, exporters, domestic multinationals and foreign multinationals. Employment in multinationals could be more volatile than employment in domestic firms if multinationals were facing more volatile demand or if they react more to aggregate developments. We therefore decompose the labor demand of firms into their reaction and their exposure to aggregate developments. We find no above-average wage and output elasticities for multinational firms.     

Regional trade agreements and the WTO

The rapid growth in the number of regional trade agreements (RTAs) has led to concern about the weakening of the multilateral trading system. This paper looks at the spread of such agreements and the extent to which they pose a threat to the system.     

“Third World” Multinationals Revisited

Abstract

The notion of “Third World Multinationals” has always been, at least, slightly misleading, and has now also become obsolete, taking into account the dismantlement of most of the ideological divides between different political and economic blocks since the early 1990s, and the new rules of the games imposed by globalization. Furthermore, new multinationals emerging from China, and also from the former Soviet republics, are demanding a new and more flexible taxonomy. The present paper re-defines “Multinationals from Developing Countries” (MEDCs) and it reviews first, the current literature on multinationals, looking at the key factors which may explain the internationalization process of enterprises coming from outside the traditional, developed, and industrialised world, and also whether they may enjoy specific sources of comparative advantages, different from those ascribed to the old, established multinationals. A statistical appendix provides a brief but comprehensive survey of the current status of MEDCs, pointing out that, at the end of the day, there are roughly only four such enterprises in the usual rankings of the first one hundred multinational corporations, worldwide, and that the prospects of a forthcoming, and enhanced upgrading in the global corporate structure are heavily geared towards Asia. The data would also seem to support the argument that sheer “scale”, as such, of the enterprises does not explain a greater or lower degree of “transnationalization,” a conclusion which, added to that of the greater flexibility provided by the new information technologies, could be goods news for small-and medium-sized enterprises coming from the developing world.     

Managing the Post-acquisition Integration Process: How the Human Iintegration and Task Integration Processes Interact to Foster Value Creation

The paper reports a study of the post-acquisition integration process in three foreign acquisitions made by Swedish multinationals. Detailed interview data and questionnaire responses in both acquiring and acquired firms are presented. The sub-processes of task integration and human integration are separated out and it is shown that effective integration in these cases was achieved through a two-phase process. In phase one, task integration led to a satisficing solution that limited the interaction between acquired and acquiring units, while human integration proceeded smoothly and led to cultural convergence and mutual respect. In phase two, there was renewed task integration built on the success of the human integration that had been achieved, which led to much greater interdependencies between acquired and acquiring units.     

金融危机下的贸易保护主义及应对策略分析

为了应对经济危机,很多国家和地区纷纷出台贸易保护主义措施,这不仅不会刺激世界经济恢复增长,反而会阻碍世界经济复苏。在世界经济高度一体化的今天,世界各国只有加强合作与对话,减少贸易障碍,才能逐步从危机中走出来,促进世界经济的复苏。本文从当前贸易保护主义的表现特点出发,分析了贸易保护主义对我国的影响及应对策略。     

我国对外贸易结构现状、问题与对策建议

自改革开放以来,对外贸易已经成为我国经济增长中极为重要的因素。随着经济全球化的加快,区域竞争与合作也日益激烈,要保持和扩大我国对外贸易对经济增长的促进作用,贸易结构和政策就要不断调整和完善。对我国现阶段的贸易结构研究,能有效分析我国当前外贸易结构的现状以及存在的问题,据此方能提出和制定相应的对策建议,对中国从贸易大国转变成贸易强国有一定的启示意义。     

Who's most exposed to the world trade slowdown?

• ? A new indicator of exposure to the world trade slowdown points to Asian economies like Taiwan and Korea being most exposed, but also to significant vulnerability in Germany. Better insulated from the slowdown are the less open economies, such as the US, Brazil and India.
• ? Asian economies’ exposure is greater due to their generally high export orientations and strong trade integration with China – especially significant given the escalation of US‐China trade tensions. Likewise, Germany is highly export‐oriented but is also specialised in capital goods exports, which tend to weaken most in trade downturns.
• ? The indicator used is based on factors including trade openness, export specialisation in weakening sectors and exposure to spillovers from US‐China tariffs. It explains around 40% of the pattern of economic slowdown from 2017–2019 across a sample of key economies.

     

US Multinationals: changing the framework of Irish industrial relations?

Traditionally it has been argued that the practices of multinationals conform to the industrial relations practices of the host country. Recent arguments claim that a new orthodoxy prevails which originates in the multi-national's country of origin. The authors find little evidence for a new orthodoxy in Irish industrial relations     

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.     

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.     

Multinational corporations: Trade and investment across the East-West divide

East-West trade and investment remains a preserve of the multinational corporations due to their resources in finance, manpower and production which enables them to absorb the attendant costs of lengthy negotiations; to meet the occasional high-volume order placed by a state foreign trade enterprise purchasing on behalf of an entire sector of industry; to aid the state foreign trade enterprise by sourcing from a world-wide network so as to alleviate currency or distribution problems; and to help with the provision of finance or to agree to part payment by means of the resultant product produced under licence. Size is an important factor, and many of the joint ventures concluded over the last ten years have been for massive investment projects. These joint ventures are of a contractual type and referred to as industrial cooperation agreements' which involve repurchase of the goods produced under licence, often to a value which repays over a specified time the capital borrowed plus interest charges. These counter-trade agreements have become more popular in the Eastern bloc because of their ‘self-financing’ principle but are beginning to face mounting criticism in the West, currently facing a trade recession and the echoing pleas for trade protectionism to curb the threat of cheap Eastern imports upon Western job security. Industrial cooperation has been diverted towards the more export intensive branches of the socialist economies and has led to the increasing size and importance of certain of their production enterprises. This has created Western fears of the advent of the ‘socialist multinationals’ or Socialist Common Enterprises. However, industrial cooperation is a recent phenomenon, and if only by default, a strategy will emerge in future years as to the pattern and behaviour of East-West multinational arrangements.     

Trade integration in the European Union: Openness,interconnectedness, and distance

This article presents a set of indicators to measure regional trade integration, focusing on the case of the European Union. We propose measures of openness, connectedness and integration which are tuned to evaluate not only how these components contribute to the advance of international integration, but also to control for the potential threat posed by the proliferation of regional trade agreements to trade globalization. Although this and related questions have been examined from several perspectives, the present article explicitly attempts to quantify how regional trade agreements either intensify or thwart trade globalization. Results show that the process of trade integration has intensified among European Union members, whereas integration with non-members is advancing slowly. Our indicators provide a more complete view of the differing speeds of integration, which depend on whether the component of integration considered is openness or connectedness.     

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.