Trade in Parts and Components and the Industrial Geography of Central and Eastern European Countries

Growing inflows of FDI and the increasing integration of domestic firms into International Production Networks (IPNs) set up by EU-15 partners have yielded a rise in trade in parts and components for Central and Eastern European Countries (CEECs). As a consequence, new patterns of localization of industrial activities have been observed in the region since the mid-1990s. In this paper, I propose a comprehensive model of trade and production which tries to explain cross-country variations of sectoral output by comparative advantages (Ricardo, Heckscher–Ohlin) and agglomeration forces (home market effect, market potential), with a focus on the role played by trade in middle products. The empirical implementation reveals that the higher is the involvement in IPNs the larger is the domestic share of regional output. Comparative advantages are a crucial determinant of localization as opposed to agglomeration forces. I argue that these results can be interpreted as an assessment of the predictive power of two alternative trade theories. JEL no.  F10, F12, F14, F15     

US Safeguards on Steel and the Markups of European Producers

This paper is among the first to explore the microeconomic impacts of a trade policy on foreign firms. We empirically investigate the effects of the US safeguard protection of steel imports in 2002 on the markups of EU steel firms. Using a large panel of affected EU steel firms between 1995 and 2005, we find that the protection they faced abroad significantly reduced their markups. Our results indicate smaller adverse effects on multi-product EU firms. Our study has wider implications as it quantifies the cost that trade protection imposes on trading partners, an externality currently not considered in any trade regulation. The US safeguard protection also resulted in some diversion of EU steel especially towards China, aggravating the situation on the Chinese steel market and ultimately resulting in the Chinese trade protection of steel imports. JEL no.  F13, L13, L61     

Market structure and the link between migration and trade

Many recent studies have looked at the impact of international migration on trade and found a significant effect. They posit that migration fosters trade by lowering costs or by means of a preference bias. However, to my knowledge, market structure has not as yet been considered. Using data from Switzerland, this paper empirically assesses the extent to which migration affects trade, taking goods differentiation into account. A monopolistic model with a multisector economy (Chaney in Am Econ Rev 98(41):1707–1721, 2008) is then empirically estimated. The findings show that market structure explains the different channels through which migration affects trade.

Liberalization of EU telecommunications and trade: theory, gravity equation analysis and policy implications

The liberalization of telecommunications has contributed to considerable price reductions in international telephony and to rising volumes of telecommunications. This raises the issue of the economic impact of international telephony. Falling international information and transaction costs should stimulate competition and enlarge the market radius for producers in the tradables sector—this lets us to expect trade creation effects of international telecommunications; this in turn should raise output provided that more intensive international telecommunications stimulates international diffusion of knowledge or brings about trade-related specialization gains. Based on a modified gravity equation which is taking into account the role of international telecommunication volumes—based on new ITU data—we show that international telephony has a significant positive impact on trade volume: A rise of the international telecommunications volume by 10% raises trade by 2% in Europe. At the same time the coefficients of the traditional variables, GDP in the exporting and the importing country, are smaller than in traditional approaches. Thus from a policy perspective the modernization and growth of the international telecommunications network—within a system of enhanced competition—is crucial for Europe: economic integration will be reinforced. From this perspective the Lisbon Agenda is right to emphasize the importance of creating a digitally networked knowledge society.

Regional Economic Integration and the Location of Multinational Firms

A theoretical model of international location is applied to a process of regional economic integration in which a set of countries mutually removes barriers to trade and investment, thus overcoming the traditional ‘hub and spoke’ setup of regional agreements. The theoretical results are matched with actual trade and foreign investment data from a sample of some 4,200 multinational firms who have invested in Central and Eastern Europe over the 1990–1999 period. Controlling for the effects of the reduction in trade barriers through a proper specification of a gravity model, it is found that the conventional outcome of an agglomeration of economic activities in the centre of the integrating area does not necessarily hold. Multilateral regional integration agreements can act as an important dispersion force significantly driving the location of multinational firms. A panel probit econometric exercise confirms the findings. JEL no. F12, F15, F21     

Intra-Industry Trade Expansion and Employment Reallocation between Sectors and Occupations

This paper re-examines the relationship between trade and labour market adjustment costs by explicitly considering the effects of occupational mobility. We investigate the hypothesis that intra-industry trade expansion entails lower adjustment costs than inter-industry trade expansion—the so-called Smooth Adjustment Hypothesis (SAH). This paper makes two new contributions. First, the introduction of a new adjustment variable that considers reallocation between sectors and occupations. Second, a test of the SAH using panel data with relevant trade and non-trade control variables, which overcomes some of the methodological limitations of former studies. The results suggest a confirmation of the SAH and stress the importance of considering the effects of worker moves between occupations in the study of trade-induced adjustment. JEL no. F12, F16, J62     

Trade Costs,Trade Balances and Current Accounts: An Application of Gravity to Multilateral Trade

In this paper we test the well-known hypothesis of Obstfeld and Rogoff (NBER Macroeconomics Annual 7777:339–390, 2000) that trade costs are the key to explaining the so-called Feldstein–Horioka puzzle. Our approach has a number of novel features. First, we focus on the interrelationship between trade costs, the trade account and the Feldstein–Horioka puzzle. Second, we use the gravity model to estimate the effect of trade costs on bilateral trade and, third, we show how bilateral trade can be used to draw inferences about desired trade balances and desired intertemporal trade. Our econometric results provide strong support for the Obstfeld and Rogoff hypothesis and we are also able to reconcile our results with the so-called home bias puzzle.

The Barcelona initiative and the importance of NTBs: a dynamic CGE-analysis for Syria

The Barcelona Initiative is the central element of the EU’s Mediterranean policy. We study the implementation of this policy with respect to Syria using a dynamic general equilibrium model with credit constraints and capital market imperfections. Dismantling formal tariffs has only limited effects on the Syrian economy, while reducing non-tariff barriers produces by far larger results. EU association promises broadly positive effects for factor incomes and sectoral outputs, with some temporarily negative effects in agricultural sectors. Nevertheless, we find evidence of severe trade distorting effects making preferential trade policy clearly welfare inferior to multilateral trade liberalization within the WTO framework.

Trade Specialization in Latin America: The Impact of China and India

This paper examines the extent to which the growth of China and India in world markets is affecting the patterns of trade specialization in Latin American (LA) economies. We construct a measure of Revealed Comparative Advantage (RCA) by 3-digit ISIC sector, country, and year. This RCA accounts for both imports and exports. The empirical analyses explore the correlation between the RCAs of LA and the two Asian economies. Econometric estimates suggest that the specialization pattern of LA—with the exception of Mexico—has been moving in opposite direction to the trade specialization pattern of China and India. Labor-intensive sectors (both unskilled and skilled) probably have been negatively affected by the growing presence of China and India in world markets, while natural resource and scientific knowledge intensive sectors have probably benefited from China and India’s growth since 1990. JEL no.  F10, F14     

Self-Selection and Post-Entry Effects of Exports: Evidence from Italian Manufacturing Firms

Our paper adds empirical evidence on the causal effects of exporting on firms’ performances. Using a rich database on Italian manufacturing firms, we test the self-selection and the post-entry effects hypotheses with respect to various firms’ characteristics. Our analysis supports the idea that the superior performance of the exporters is due not only to a market selection mechanism, but also to efficiency improvements following the export activity. We find heterogeneous post-entry effects with respect to characteristics as geographical location, size and sector. To test the post-entry hypothesis we implement the propensity score matching and differences-in-differences techniques. JEL no.  D24, F14, O31     

Overall trade specialization and economic development: countries diversify

This paper provides evidence for an aspect of trade often disregarded in international trade research: countries’ sectoral export diversification. The results of our semiparametric empirical analysis show that, on average, countries do not specialize; on the contrary, they diversify. Our results are robust for different statistical indices used to measure trade specialization, for the level of sectoral aggregation, and for the level of smoothing in the nonparametric term associated with per capita income. Using a generalized additive model (GAM) with country-specific fixed effects it can be shown that, controlling for countries’ heterogeneity, sectoral export diversification increases with income.

印度农产品市场准入:分析及借鉴

印度在利用《农业协定》规则特别是农产品市场准入来规避风险方面,有着丰富的经验。本文着重从印度农产品市场准入的承诺、实际执行情况以及政策效果评价等角度进行分析,以期为我国在WTO新一轮多边贸易谈判中吸取教训,并提供可以借鉴的经验。     

Do Global Trade Distortions Still Harm Developing Country Farmers?

We estimate the impact of global merchandise trade distortions and services regulations on agricultural value added in various countries. Using the latest versions of the GTAP database and the GTAP-AGR model of the global economy, our results suggest real net farm incomes would rise in developing countries with a move to free trade, thereby alleviating rural poverty—despite a terms of trade deterioration for some developing countries that are net food importers or are enjoying preferential access to agricultural markets of high-income countries. We also show, for several large developing countries, the contribution of their own versus other countries’ trade policies. JEL no. C68, D58, F17, Q17     

Does Gravity Matter in a Service Economy?

This paper estimates gravity equations for bilateral services trade in a sample of 28 countries. It finds that the standard gravity variables of economic size and geographic proximity are significant factors in services trade. It also reveals positive effects of linguistic ties on services trade. There is evidence of a positive link between regional trade arrangements and services trade. Much of that effect appears to reflect the impact of bilateral goods trade on services trade. This implies that efforts to enhance goods trade—bilateral or multilateral—should lead to more services trade as well. JEL no. F13, F15, L80     

Evaluating China’s Integration in World Trade with a Gravity Model Based Benchmark

This paper assesses China’s “natural” place in the world economy with a new set of trade integration indicators, which are used as a benchmark in order to examine whether China’s share in international trade is consistent with fundamentals such as economic size, location and other relevant factors. They constitute a better measure of trade integration that incorporates many more factors than traditional openness ratios. The model tracks international trade well and confirms that China is already well integrated in world markets, particularly with North America, several Latin American and East Asian emerging markets and most euro area countries.

Migration Flows and Intra-Industry Trade Adjustments

In this paper we analyse the link between trade and migration. Focusing on the experience of Spain, we relate a marginal index of intra-industry trade to the stock of foreign workers—classified according to their country of origin and their situation in the Spanish labour market. We focus on the possibility that existing networks of foreign workers and their connections with their countries of origin could stimulate trade with the host country. Our results show a significant impact of the number of immigrants with work permits on intra-industry trade adjustment. However, this impact being positive or negative depends on whether foreign workers are employees or self-employed, the duration of the work permits and the type of job they occupy. JEL no. F10, F14, F15, F22     

Regional Business Cycles and National Economic Borders: What Are the Effects of Trade in Developing Countries?

Using regional gross product data for Argentina and Brazil over the period 1961–2000, we find that business cycle synchronization within countries is substantially larger than across them. Factors such as monetary policy and large country-specific shocks play a significant role in explaining this observed border effect. Furthermore, our GMM single and multiple equation estimates based on Brazilian states and Argentinean national data provide indicative evidence that the higher level of trade among regions within a country is an important factor that accounts for differences in output correlations across countries. JEL no. F15, F42, E32, R11     

Measuring Restrictiveness of Bilateral Trade Policies: A Comparison between Developed and Developing Countries

This paper compares the degree of openness to trade of three developed countries markets—the European Union, Japan, the United States—with that of three middle-income countries, namely Brazil, India, and China. A theoretically consistent protection measure—the Mercantilistic Trade Restrictiveness Index (MTRI)—is employed to average tariffs at different levels of aggregation. The computation relies on a comparative static applied general equilibrium model (Global Trade Analysis Project—GTAP) featuring imperfect competition as well as on the bilateral applied tariffs included in the most recent version of the GTAP database. Results provide a different picture from what could have been expected given the widely publicized diffusion of preferential schemes supposedly favoring developing countries exports. JEL no.  F17, C68, Q17     

Exploring the Intensive and Extensive Margins of World Trade

World trade evolves at two margins. Where a bilateral trading relationship already exists it may increase through time (intensive margin). But trade may also increase if a trading bilateral relationship is newly established between countries that have not traded with each other in the past (extensive margin). We provide an empirical dissection of post–World War II growth in manufacturing world trade along these two margins. We propose a “corner-solutions version” of the gravity model to explain movements on both margins. A Tobit estimation of this model resolves the so-called “distance puzzle”. It also finds more convincing evidence than recent literature that WTO-membership enhances trade. JEL no. F12, F15