Export sophistication and the terms of trade of the developing and emerging countries

The question of the terms of trade has not yet been studied by the new empirical literature on the export sophistication, which focuses only on its effect on economic growth. The contribution of this paper is to investigate whether the increase in the export sophistication is terms of trade worsening or improving for the developing and emerging economies. Importantly, we find that the increase in the sophistication of the developing countries’ exports is accompanied by a deterioration of their terms of trade.     

Aid for trade and international transactions in goods and services

The empirical literature on aid for trade (AfT) mainly considers its effects on merchandise trade and investment. In this paper, we provide an in‐depth analysis of the relationship between AfT and trade in services using both aggregate and bilateral data. We find a statistically weak effect of AfT on both goods and services trade in our aggregate analysis once we account for endogeneity in the AfT–trade relationship. In contrast, the bilateral analysis suggests that AfT, in particular that allocated to services activities, especially economic infrastructure, has a positive effect on recipients’ merchandise exports to donor countries. This novel finding is robust across different lag structures and provides evidence of complementarities between services AfT and goods trade.     

An approach to the construction of indexes of technological change and of technological sophistication : The case of agricultural tractors

Two indicators of the output of technological innovation have been developed for the case of agricultural tractors. The tractor is a multicharacteristic product, and a fundamental problem in measuring its technological sophistication or technological change is to determine the relative weights of different characteristics. These relative weights have been approximated by the coefficients of a regression of tractor price with respect to tractor technical characteristics. The indicators developed allow one to measure technical change over time or the relative technical sophistication of different tractor models or tractor firms at a given moment. These indicators can be applied only to multicharacteristic products with easily quantifiable characteristics. However, products that satisfy these requirements account for a very large share of the market for industrial goods. These indicators can be useful in assessing the efficiency of R&D, in analyzing the influence of technological innovation on patterns of trade, and in determining the contribution of changes in the quality of capital goods employed to increases in industrial productivity.     

Export sophistication and economic growth: Evidence from China

We consider the effect of export sophistication on economic performance by appealing to regional variation within one single country (China) over the 1997-2009 period. We find evidence in support of Hausmann, Hwang and Rodrik (2007), in that regions specializing in more sophisticated goods subsequently grow faster. We find substantial variation in export sophistication at the province and prefecture level, controlling for the level of development, and that this sophistication in turn drives growth. Our results suggest that these gains are limited to the ordinary export activities undertaken by domestic firms: no direct gains result from either processing trade activities or foreign firms, even though these are the main contributors to the global upgrading of China's exports. As such, the extent of assembly trade and foreign entities should be distinguished in order to measure the true movement in a country's technology and the contribution of exports to economic growth.     

Sanitary and phytosanitary measures in Chinese agricultural exports: the role of trade intermediaries

We study the effect of sanitary and phytosanitary (SPS) measures on Chinese agricultural exports and the role of trade intermediaries in this process following China’s accession to the World Trade Organization. While both agricultural exports and SPS regulations have grown, the use of trade intermediaries has declined sharply. We develop a model of heterogeneous producer-level decisions about choice of export mode that is consistent with this trend. In our econometric analysis, we analyse the effects of SPS measures and trade intermediaries on Chinese fruit and vegetable exports using transaction-level customs data. In contrast to much of the literature, we find some evidence of positive relationships among SPS measures, trade intermediaries and exports.     

Trade Sophistication Indicators: Balancing Diversity and Specialization

Motivated by the important role of trade in driving and reflecting economic transformation, we focus on the export structure of two small export-oriented economies, Ireland and Finland 2000–2009, from the perspective of the sophistication of both economies’ exports, i.e., the extent to which high-value products characterise each country’s export profile. The Product Space method is used as the basis of our comparison of the economies in terms of their sectors, activities, and structural transformation of the economies. The method focuses attention on the estimated density of the product space as evident in patterns of revealed comparative advantage (RCA) in goods exports. The Information and Communication Technology (ICT) sector, as a significant export sector for both economies, is examined specifically to investigate its further export potential.     

Demand shocks and firm-financed R&D expenditures

Business cycles might affect firms'?ability and incentive to perform R&;D. Firms finance most R&;D activities out of cash flow so when cash flow decreases the funds available for R&;D also decreases. This limits the ability of firms to perform R&;D, potentially leading to reduced R&;D expenditures during recessions. However, business cycles also influence the incentive to perform R&;D. The opportunity cost of funds devoted to R&;D falls during recessions since the return on production will likely be lower than during an expansion. During recessions, this provides firms with an incentive to redistribute an existing pool of funds away from production and towards R&;D projects. This paper tests whether the business cycle influences the incentive and ability of firms to engage in R&;D activities, in particular examining whether the response is symmetric across the business cycle.     

Sources of Comparative Advantages in Brazil

Based on the Heckscher-Ohlin-Vanek model, the authors investigate relative factor abundance in Brazil, as revealed by its international trade. They study two different time periods: one characterized by high trade barriers (1980–85) and the trade liberalization period (1990–95). Two alternative methodologies are used: the estimation of factor intensity regressions on net exports and the direct computation of factor content in net exports. In the factor intensity regression, the authors incorporate technological changes that might have occurred over time, and these turn out to be significant. Both methods yield the same results: the Brazilian international trade reveals relative abundance in capital, land, and unskilled labor, and scarcity in skilled labor, with qualitatively equivalent results for the two time periods studied.     

贸易对我国二氧化硫污染的影响 ——基于投入产出的分析

本文利用1997年、2002年和2007年的投入产出表和二氧化硫排放的统计数据,分析了贸易对中国二氧化硫污染的影响,得到以下结论：第一,研究期内进口和出口含硫量都在迅速增长,出口含硫量始终大于进口含硫量。第二,结构分解显示规模效应始终占主导地位。第三,出口产品并没有比内需产品包含更多的污染,是我国巨额的贸易顺差导致了污染出口的顺差。本文认为,在短期内要改变“奖出限入”的贸易政策,调整进出口结构;在长期内则要调整产业结构,同时发展绿色能源,提高能源利用效率。     

Product innovation,process innovation and export propensity: persistence,complementarities and feedback effects in Spanish firms

Drawing on a longitudinal data of Spanish manufacturing firms, this study explores the persistence of technological innovation and exports, their potential complementary relations and feedback effects. Empirical results suggest the presence of both true and spurious state dependence in all three activities. True state dependence in technical innovation and exports implies intertemporal spillovers relevant to the evaluation of innovation and export policy measures. However, given that results also suggest spurious state dependence, firm-specific characteristics should be taken into account in promoting technological innovations and exports. In addition, we find a strong complementarity between product and process innovation both through a contemporaneous effect and via unobserved firm characteristics. However, concerning complementarity between innovation and exports, results suggests complementarity only through contemporaneous effects. Finally, we find no support for the causal link from past product and process innovations to current export activities.     

Technological Change, Market Rivalry, and the Evolution of the Capitalist Engine of Growth

In the early stages of Western industrialization, innovation was the domain of individuals who devoted their entrepreneurial talents to the development of a new product or process, typically setting up a new firm in order to take the innovation to the market. Today, commercial R&;D is almost exclusively carried out by corporate laboratories affiliated with manufacturing firms. The corporate R&;D lab, however, did not exist in its modern form until the late nineteenth century. The history of Western industrialization, thus, suggests that a fundamental change in the structure of incentives, and consequently in the nature and the organization of the R&;D process, occurred around the turn of the century. Three questions arise. What is the nature of this change? What economic forces caused it? What are its implications? To answer these questions, I construct a model where this change is endogenous to the evolution of the economy toward industrial maturity. The change in the locus of innovation—from R&;D undertaken by intventor-entrepreneurs, to R&;D undertaken within established firms in close proximity to the production line—results from the interaction of market structure and technological change. This interaction captures the essence of the evolution of the capitalist engine of growth and provides an economic explanation of a “stylized fact” that has received no attention in the theoretical literature. The endogenous market structure generates dynamic feedbacks that shape the growth path of the economy and determine the structural change it undergoes, including the endogenous formation of corporate R&;D labs. The evolution of market rivalry explains when and how established firms become the major locus of R&;D activity.     

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。     

Technology spillover effects within Spanish communities

The article uses panel data for the period 1990–2010 to estimate technology spillover effects on 17 Spanish communities. Accounting for nonstationarity and cointegration, we use the dynamic OLS estimator to estimate the impact of domestic and non-domestic R&;D capital stock on labour productivity of Spanish communities, taking into account trade-, migration- and foreign direct investment (FDI)-related technology diffusion channels. We find significant trade-related spillover effects within Spanish communities and from EU countries. On average, an increase in the non-domestic R&;D stock of 1% increases their labour productivity between 0.02% and 0.12% if related to bilateral trade pattern. Moreover, migration within Spanish communities has a negative impact ranging between ?0.07% and ?0.16% on labour productivity as the impact of inward migration is dominated by outward migration. There is no robust impact from FDI inflows of OECD countries in general or EU countries in particular. Finally, the domestic R&;D stock, physical capital and human capital are shown to be significant drivers for labour productivity in Spain no matter if non-domestic (local or foreign) spillover effects are trade-, migration- or FDI-related.     

International Business Cycles and Exchange Rates

Models of international real business cycles are not able to account for the high volatility of exports, imports, the trade balance, and the terms of trade. By introducing exogenous exchange rate movements in addition to standard technological shocks, the model presented here comes much closer to replicating the relatively high volatility observed in the data while also improving other moments.     

Mismeasurement of Distance Effects: The Role of Internal Location of Production

The estimated effects of distance in empirical international trade regressions are unrealistically high. Using state‐and‐sector level US exports data, this paper shows analytically and proves empirically that ignoring the internal location of production (of international exports), which leads to the overestimation of distance effects by about twofold, is a possible explanation. This overestimation is mostly attributed to the mismeasurement of the distance elasticity of trade costs when internal locations of production are ignored. A corrective distance index is proposed to avoid such mismeasurements and is shown to work well for the median sector. The results are robust to the consideration of alternative estimation methodologies and data sets.     

India’s Green Revolution: Economic Gains and Political Costs

Research and development (R&;D) promotion policies are critical for economic development in the sense that they contribute to technical progress. Although it is true that policy space is restricted under the World Trade Organization (WTO) system, there are still some R&;D promotion policy measures made available to developing countries. It is thus necessary for developing countries to utilize such available measures. In addition to explaining the R&;D promotion measures available under the current WTO regulations, I provide suggestions for modifying the Uruguay Round Subsidies Code with respect to the R&;D promotion policies of developing countries from the viewpoint of “distributional fairness” in international trade relations.     

Impact of regional interactions on China’s trade performance: evidence from a spatial econometric approach

ABSTRACT

In this paper, we examine the impact of regional interactions on China’s trade performance as supported by infrastructure development, using exports and imports of Chinese-owned and foreign-owned firms disaggregated for 28 provinces. Taking into account the disparities in the regional economic activities, we use five spatial weight matrices in a spatial panel lag and spatial panel error frameworks in the period 1996–2016. The spherical distance and the gasoline usage weight matrices measure the impact of ground connections on China’s trade flows. The nautical miles and the river distance weight matrices measure the impact of maritime and river connections on trade flows for provinces along the sea coast, in the Yangtze valley, and along Zhu river, respectively. We find significant cross border effects on provincial trade flows. The effects vary between areas and firms. Overall, our findings show positive influence of regional interactions on China’s international trade performance.     

Does a strong patent regime discourage innovation?

Does a strengthening of the patent regime impact R&;D expenditure? For the US semiconductor industry, a strengthening of the patent regime in the 1980s was followed by a sharp increase in patenting but had almost no impact on R&;D expenditure. This paper attempts to understand this patent paradox by taking some of the industry features into account. We present a model of invention and product development in complex industries where product development involves putting together a large number of inventions and where licensing of patentable inventions is common. While a stronger patent regime leads to higher patenting in both in presence and absence of licensing, the positive relationship between patenting and R&;D is weakened in presence of licensing since licensing provides an alternative way of accessing inventions. A stronger patent regime, therefore, may only create weak incentives to increase R&;D, while strongly increasing patenting activities in such an industry.     

Competition policy in open economies

Abstract

This paper examines aspects of R&;D spillovers across countries, in particular, the role of international trade and human capital as the catalysts for international diffusion of technology. We present a new way of measuring foreign R&;D stocks embodied in foreign intermediate goods and capital equipment, which we argue is free from the criticism of previous measures. With the pooled panel data spanning 1970 through 1995 for 103 countries, we find that the effects of foreign R&;D on total factor productivity growth of both industrial countries and developing countries are substantial and that human capital is the most influential channel for absorbing foreign R&;D spillovers.     

Economic development and inflation: a theoretical and empirical analysis

This paper studies the relation between inflation and economic development. The literature is largely silent regarding both the theoretical and empirical perspectives that undeveloped countries endure higher average inflation than developed economies. We present a simple theoretical model linking the inflation phenomenon to the tradition of development economics. Empirical evidence is garnered to test the hypothesis that economic development engenders a downward bias to inflation rates. Through the feasible-GLS estimator in a panel of 65 countries from 2001 to 2011, we aim at listing a number of variables most commonly used to explain differences in the stage of economic development across countries and identifying the most statistically relevant ones to account for differences in inflationary patterns. While our results show that inflation is inversely correlated with the level of the technological content of the economy (measured by share of high-tech exports), human capital and cyclical unemployment, it is directly related to the degree of inflation persistence and terms of trade growth. However, our findings still present an inverse and low correlation between inflation persistence and economic development, implying that development-sensitive variables allowed into the model can only partially account for the differences in inflation at different levels of economic development.