Do people really support trade restrictions? Cross-country evidence

We investigate the effect of trade restrictions on the perception of well-being. Using combined cross-sectional micro data from the World Values Survey and the European Values Survey of individuals in 89 countries, we find that citizens of a country with a lower degree of trade restrictions are more satisfied with their lives. The results are also robust across different measures of well-being, different definitions of trade restrictions, different estimation methods, and different sample sizes.     

How exporting firms respond to technical barriers to trade?

This paper investigates how technical barriers to trade (TBTs) affect firm exports. The implementation of the “child‐resistance” decision (CR decision) in the EU offers an ideal quasi‐natural experiment to identify the causal effect of TBTs on firm performance. Using data on Chinese firms that exported cigarette lighters between 2004 and 2010, we show that firms exporting to the EU not only adjust their product quality to meet the requirements in the CR decision, but also upgrade their product quality in other dimensions. However, both the export value and export volume to the EU decline. At the same time, less productive exporters are forced to exit from the EU market. Lastly, heterogeneous effects of the CR decision are documented.     

Trade barriers or trade facilitators? The heterogeneous impact of food standards in international trade

Recent research shows that the effect of food standards can be heterogeneous across sectors or countries: they sometimes act as barriers to trade, but in other cases may lead to increased trade. I present empirical evidence on Norwegian seafood exports showing that foreign food standards, measured by sanitary and phytosanitary notifications to the WTO, generally have a negative impact on total exports, the number of exporters and their average exports. However, for fresh seafood, there is a positive counteracting effect. I present a theoretical explanation for this, suggesting that food standards reduce consumer uncertainty about quality and safety and therefore increase demand.     

The GDR’s foreign trade policy

Before the German Democratic Republic (GDR) achieved worldwide political recognition in 1972 and 1973 many Western observers were of the opinion that the GDR’s trade with Western industrialised countries was still not very developed. A closer look at this field of activity shows, however, a different picture.     

Do product reviews really reduce search costs?

The literature on online product reviews is based on the fundamental premise that reviews impact search costs and also affect consumers’ confidence in their purchase decisions. However, this proposition has not been proven in the literature. To this end, we conducted an experiment using an eye-tracking machine to measure the impact of online editorial and customer reviews on consumer’s information search costs and on decision confidence. Search costs in this study are defined in terms of time costs and cognitive effort costs. We find that when present, both editorial reviews and customer reviews separately reduce both search time and cognitive effort considerably, but not when present together. We also find that the presence of both types of reviews increases decision confidence considerably, but do not lower search costs. These results suggest that ecommerce firms can benefit from the presence of either or both editorial and customer reviews through either lower search costs, or higher decision confidence. We conclude with several managerial recommendations for ecommerce firms.     

Do foreign mergers and acquisitions boost firm productivity?

This paper examines the causal relationship between foreign mergers and acquisitions (M&A) and the productivity of acquired firms using micro-data from the UK over the period 1999–2007. Our results suggest a significant heterogeneity in the total factor productivity (TFP) effects of foreign M&A at the industry level. Overall, we uncover a systematic pattern of post-acquisition TFP effects that is consistent with the most recent theoretical models of firm heterogeneity and cross-border mergers and acquisitions as mode of foreign entry. Furthermore, we find positive aggregate effects on labor productivity due to capital deepening but not due to changes in TFP.     

Border tax adjustments: Do they distort trade?

A familiar proposition asserting the trade-neutrality of uniform, indirect taxes under both the origin and destination principles is re-examined in the context of a world with trade in intermediate goods. A uniform, general sales tax is shown to be trade-neutral under the destination principle, but trade-distorting under the origin principle. A ‘stage of processing’ value added tax is nondistorting under either border tax adjustment principle. The discussion is then related to a proposed change in GATT rules that would require origin principle administration of the European value added tax.     

Do types of foreign capital matter for income equality?

We investigate the link between financial integration and income inequality, suggesting that different channels of financial integration have contrasting distributional effects. Using an unbalanced panel of 65 countries from 1992 to 2015 and employing dynamic panel data methods, we find that greater financial integration through debt-creating capital increases income inequality compared to equity-type capital. Furthermore, a larger share of direct investment in financial integration is associated with lower income inequality; the converse is true for loans and credit, while the share of portfolio investment has no significant effect when considered as a whole. Evidence also shows that increased financial integration and trade is beneficial for reducing the income inequality of emerging economies.     

Do deeper regional trade agreements enhance international technology spillovers?

We examine whether regional trade agreements (RTAs) enhance international technology spillovers using a panel of patent citation data for 114 countries/regions for the period 1991–2007. We use patent citations as a proxy for technology spillovers. The focus of this study is on whether the depth of regional integration matters for technology spillovers among member countries/regions of RTAs. The depth of integration is measured by the extent to which an RTA includes legal obligations outside the current mandate of the World Trade Organization. We find that the depth of integration actually influences technology spillovers and that a deeper integration in a broad sense has a greater impact on technology spillovers than do technology‐related provisions.     

The changing structure of Pakistan’s foreign trade

A high degree of concentration on a few commodities in the export structure of Pakistan during more than a decade of economic planning reflects the typical weakness of many developing countries in generating adequate and stable external resources so badly needed to accelerate their development efforts.     

Counterfeiting and firm survival. Do international trade activities matter?

Counterfeiting is a phenomenon that threatens global competition and economic growth, and it is well-known that the presence of illicit fake products unfairly altering competition, can affect firm profitability and even, in some cases, force owners to close their businesses or declare bankruptcy. By introducing three new complementary measures of counterfeiting, this study examines the intra- and inter-industry effects of counterfeiting on Italian firm survival taking into consideration the differing degree of a firm’s involvement in international trade activities. Overall, the results of micro-econometric analysis indicate that the probability of a genuine firm exiting the market increases when the effect flows from the “fake” sector to its upstream genuine suppliers; vice versa, it decreases when the effect flows from the “fake” sector to its downstream genuine customers. However, when classifying firms as trading and no trading firms, we found that these results are confirmed only for the latter. Our evidence, which is robust to different estimation methods, provides room for policy and manager interventions.     

The dynamics of trade composition: Do trade-type interdependencies matter?

This paper explores the changes of trade composition in the Food Products, Beverages & Tobacco industry in the European Union (12 countries) from 1985 to 2007, using an empirical modeling framework based on the statistical support proposed by Márquez et al. The contribution of this study is mainly empirical. On the one hand, we investigate whether the interdependencies (complementary or substitutable) between trade types are significant and hence if they are able to affect trade composition. And on the other, we provide a ranking of the dynamic drivers of trade composition (such as market size, endowments, technology, and consumer tastes and preferences). The econometric analysis reveals evidence of significant interdependencies between some trade components. The results point to technological capital and market size as the most important drivers of Food Products, Beverages & Tobacco in European trade, and suggest some relevant economic policy recommendations to foster industries in the sector and positively influence its pattern of trade.     

Do mergers and acquisitions promote trade? Evidence from China

Many studies have shown that mergers and acquisitions (M&A) raise firms' productivity. Few researches investigate whether exporters can enhance export performance after M&A through higher levels of efficiency. Based on detailed information on M&A activities of Chinese firms, China's customs trade data and National Bureau of Statistics surveys, we investigate the causal effect of M&A on trade performance. In particular, the value and the volume of firm exports, product quality, product scope and the number of export destinations have been examined. We find positive and significant effects of M&A on all the examined indicators of export performance. These findings are generally robust to a variety of robustness checks. We further observe that state-owned firms are the least likely to benefit from M&A. We also obtain evidence that firms benefit more from M&A deals if they are targets or merge with foreign firms. Overall, this paper is to our knowledge the first study that uses micro-level data in multiple industries to examine the relationship between M&A and exports of heterogeneous firms. Our results deepen our understanding of the consequences of M&A by suggesting another potential benefit, and hence provide policy implications for merger regulation.     

China predicts $2.1 tin of foreign trade in 2007

China＇s imports and exports of goods will likely amount to US $2.1 trillion for the whole year, a growth of 20% over the year- earlier level, according to a report released by the Ministry of Commerce.     

Does trade credit play a signalling role? Some evidence from SMEs microdata

Using micro-data on small- and medium-sized enterprises, this paper empirically investigates the “signalling hypothesis” formulated on the role of trade credit (Biais and Gollier in Rev Financ Stud 10: 903–937, 1997; Burkart and Ellingsen in Am Econ Rev 94: 569–590, 2004). The research method adopted allows evaluation of the impact of suppliers’ credit on bank debt accounting for the strength (duration) of bank–firm relationships. Our main finding is that trade credit seems to have an information content for banks, especially when the latter do not dispose of adequate (soft) information on firms, which is likely the case at the beginning stages of bank–firm relationships. An implication of our results is that the availability of suppliers credit might be crucial to foster access to institutional funding for new firms entering the market. Our evidence also suggests that banks seem to consider suppliers a reliable source of information on firms’ financial conditions even after several years of lending relationships.     

The effect of domestic and foreign trade coordination on technological innovation: complements or substitutes?

Based on the theory of technology spillover in international trade, this paper discusses the technological innovation effect of trade by taking the influence of domestic trade into account. Under the constraint of the production possibility frontier, there is either complementarity or substitutability between domestic and foreign trade. It must be decided whether resources should be concentrated in one of the sectors (trade specialization) or instead allocated equally (trade equalization) between the two sectors. This paper firstly discusses how domestic trade and foreign trade work together to influence technological innovation, and how trade equalization and specialization affect different types of innovation. Using a provincial-level panel dataset from 2007 to 2015 in China, this paper constructs the indicators of domestic and foreign trade linkage and examines the impact of trade on innovation. The findings show that trade equalization mainly promotes incremental innovation, while trade specialization improves radical innovation. Thus, in the area of incremental innovation, attention should be paid to the equalized development of domestic and foreign trade, while in areas pursuing radical innovation, emphasis should be put on the specialization of the trade sector, avoiding equal allocation of resources to the two sectors.     

Do we need deeper trade agreements for GVCs or just a BIT?

The paper investigates two policies geared towards stimulating and shaping global value chains (GVCs), namely deep regional trade agreements (DRTAs) and bilateral investment treaties (BITs). In an augmented gravity model, we test the impact of both policies on a variety of trade in value added indicators. We find that both policies are likely to increase GVC trade, although their transmission channels differ. While backward linkages are stimulated through both BITs and DRTAs, forward linkages respond only to DRTAs. The estimates suggest that negotiating a DRTA with investment provisions has a higher impact on trade in value added than signing a shallow RTA and a separate BIT.     

Do small businesses create more jobs? New evidence for Europe

In this paper, we argue why, in our view, the so-called dynamic classification method should be favored when determining the contribution of small businesses towards job creation. First, it is the only method that consistently attributes job creation or loss to the size class in which it actually occurs. In addition, dynamic classification has two other advantages: (1) it is not vulnerable to the so-called regression to the mean bias, and (2) only a small number of aggregated data are required for its application. Using the dynamic classification, we analyze job creation within the different size classes for the 27 Member States of the European Union. Our main findings are as follows. For the EU as a whole, smaller firms contribute on a larger scale towards job creation than do larger firms. Net job creation rates decrease with each firm size class. This pattern occurs in most industries, however, not in all; the manufacturing industry and trade industry show different patterns. At the level of individual countries, the net job creation rate also tends to decrease with each firm size class. However, this relationship is not perfect.     

Do trade costs in goods market lead to home bias in equities?

Two of the main puzzles in international economics are the consumption and the portfolio home biases. We solve for international equity portfolios in a two-country/two-good stochastic equilibrium model with trade costs in goods markets. We show that introducing trade costs, as suggested by Obstfeld and Rogoff [Obstfeld, M., Rogoff, K., 2000a. The Six Major Puzzles in International Macroeconomics: Is There a Common Cause? NBER Macroeconomics Annual, 15], is not sufficient to explain these two puzzles simultaneously. On the contrary, we find that trade costs create a foreign bias in portfolios for reasonable parameter values. This result is robust to the addition of non-tradable goods for standard calibrations of the preferences.     

Inclusive or exclusive? Investigating how retail technology can reduce old consumers’ barriers to shopping

This paper investigates older consumers in-store shopping experiences and the barriers that they face. The aim is to understand how new retail technologies (e.g., interactive in-store displays, self-service tills, robots etc.) can help seniors access satisfying, autonomous retail experiences, helping them to achieve a sense of inclusion in physical retail settings. Drawing upon the social inclusion/exclusion theory and information overload theory, the research employs a qualitative approach based on an inductive design, including face-to-face semi structured interviews with 36 consumers aged 75+. The findings highlight (i) old consumers have scarce interactions with in-store technologies (adding knowledge to motivations literature), (ii) the need to develop new technologies to support these consumers, and (iii) the extent to which these technologies are excluding rather than including old consumers (adding knowledge to the drivers of the field of exclusion). Results provide guidelines for retailers to enhance the sense of inclusion for old consumers through a better usage of new technologies.