Productivity and trade openness in Ecuador's manufacturing industries

This study takes an empirical look at whether Ecuador's trade liberalization in the 1990s increased or decreased the productivity of Ecuadorian manufacturing establishments for the period 1997-2003. This research applies robust estimation procedures on micro-level data, controlling for a number of other economic events that may have affected productivity during the period under study. The study takes a particular look at how both exporters and import-competing sectors respond to trade openness. The results suggest evidence of a positive and significant effect of trade openness on the productivity of manufacturing industries in export-oriented industries in the years after the implementation of trade reforms, but decreasing productivity after 2000. Increased aggregate productivity might be a result of both the most productive establishments producing output, and slightly increased own-plant's productivity.     

The relationship between trade openness and economic growth: Some new insights on the openness measurement issue

Empirical results on the links between trade openness and economic growth often suggest that, in the long run, more outward‐oriented countries register better economic growth. However, a similar level of trade openness can hide different types of trade structures. The aim of this paper was to enrich the way of measuring trade openness taking into account two different dimensions of countries’ integration in world trade: export quality and export variety. Based on the estimation of an endogenous growth model on a panel of 169 countries between 1988 and 2014 using a generalised method of moments estimator, our results confirm that countries exporting higher quality products and new varieties grow more rapidly. More importantly, we find a non‐linear pattern between the export ratio and the quality of the export basket, suggesting that openness to trade may impact growth negatively for countries which are specialised in low‐quality products. A non‐linear relationship between export variety, the export ratio and growth is also found, suggesting that countries increasing their exports will grow more rapidly after reaching a certain degree of the extensive margin of exports.     

Trade openness, investment instability and terms-of-trade volatility

In the presence of economies of scale in the investment technology, trade openness may have non-conventional effects on the level of investment, its cyclical behavior, and the volatility of the terms of trade. Trade openness may lead to boom-bust cycles of investment supported by self-fulfilling expectations. The economy may oscillate between ‘optimistic’ expectations, ‘good’ terms-of-trade and investment boom to ‘pessimistic’ expectations, ‘bad’ terms-of-trade and investment bust. We also suggest that the likelihood of such oscillations is higher for developing than for developed economies, because the former may typically incur higher setup costs of investment. This phenomenon may help to explain the excessive volatility of the terms of trade of developing countries, relative to industrial countries.     

Power laws in firm size and openness to trade: Measurement and implications

Existing estimates of power laws in firm size typically ignore the impact of international trade. Using a simple theoretical framework, we show that international trade systematically affects the distribution of firm size: the power law exponent among exporting firms should be strictly lower in absolute value than the power law exponent among non-exporting firms. We use a dataset of French firms to demonstrate that this prediction is strongly supported by the data, both for the economy as a whole and at the industry level. Furthermore, the differences between power law coefficients for exporters and non-exporters are larger in sectors that are more open to trade. While estimates of power law exponents have been used to pin down parameters in theoretical and quantitative models, our analysis implies that the existing estimates are systematically lower than the true values. We propose two simple ways of estimating power law parameters that take explicit account of exporting behavior.     

Markets for risk and openness to trade: how are they related?

If protectionist trade policies aim to insure domestic industries against swings in world market prices, the development of financial markets could lead to trade liberalization. Likewise, trade liberalization could lead to the development of financial markets that help agents diversify the added risks. In this paper, we empirically address the hypothesis that there is a positive interdependence between financial development and liberal trade policies. We find a positive and economically significant relationship between the two, with causation running in both directions. The results are, however, somewhat dependent on the measure of trade policy being used.     

Education, trade and investment liberalizations

Empirical evidence suggests a two-way causality between skilled labor and inward direct investment. I construct a general equilibrium model that allows for endogenous firm and plant-location decisions and the endogenous accumulation of skilled labor. I examine the effect of an education subsidy when trade is liberalized and investment is restricted and vice versa. For an initially skilled-labor-scarce country, I show that an education subsidy under investment liberalization can jump the economy to a high-level equilibrium, and that it may be possible to remove the subsidy completely and remain at the superior equilibrium.     

Voting for pollution policy: the importance of income inequality and openness to trade

This paper analyzes how openness and the distribution of factor ownership interact to determine individual and aggregate demand for pollution policy. Analysis of voter preferences in autarky shows that an increased stake in either the dirty or the clean industry can induce an individual voter to prefer stricter environmental policy. Similarly, the paper shows that poorer voters may be the greener voters within an electorate. The model also reveals that the incidence of pollution policy depends upon a country’s trade regime, with consequences for the direction in which income inequality influences aggregate demand for pollution policy.     

Trends in protectionism: Anti-dumping and trade related investment measures

The importance of non-tariff barriers in restricting free trade has risen during recent years. Due to their selectivity non-tariff barriers may distort trade even more significantly than tariffs. Developing countries and economies in transition are often most negatively affected.     

Keiretsu and relationship-specific investment: implications for market-opening trade policy

This paper considers the implications of relationship-specific investment within keiretsu for policies aimed at opening the Japanese market for intermediate goods, such as auto-parts. Both VIEs applied to parts and VERs restricting Japanese exports of autos cause the keiretsu to import a wider range of parts, but of a relatively unimportant type, such as seat covers. Since keiretsu investment and output fall, the total value of US parts exports may actually fall. For a given value of these exports, a VIE is less costly for US consumers and Japanese producers, but a VER is preferred by US automakers.     

A new chance for trade and investment

International investment flows have increased rapidly with the growing globalization of markets and production. These flows will be of greatest benefit to the world economy as a whole if they can be based on a transparent and predictable system of generally recognized rules. What strategy should the EU adopt to help create those rules? *** DIRECT SUPPORT *** A02GP103 00002     

Financial repression and external openness in an endogenous growth model

An endogenous growth model has been developed that extends Sidrauski (1967), Roubini and Sala-i-Martin (1992,1995) and Lucas (1988) by combining financial development, human capital investment, and external openness. Financial development and trade liberalization are shown to increase the economic growth rate by increasing the marginal benefits of human capital investment. Expansionary governments are, however, provided with an incentive to increase the money supply growth rate, to repress the financial sector, to close its economy, and to impose a high proportional income tax rate.     

An information-based trade off between foreign direct investment and foreign portfolio investment

The paper develops a model of foreign direct investments (FDI) and foreign portfolio investments (FPI). FDI enables the owner to obtain refined information about the firm. This superiority, relative to FPI, comes with a cost: a firm owned by the FDI investor has a low resale price because of asymmetric information between the owner and potential buyers. The model can explain several stylized facts regarding foreign equity flows, such as the larger ratio of FDI to FPI inflows in developing countries relative to developed countries, and the greater volatility of FDI net inflows relative to FPI net inflows.     

Cuba's legal structure: How it affects foreign investment and trade

The legislative decree—Decree No. 50—allowing for foreign investment in Cuba today was ironically written back in 1982. Cuban officials have resuscitated this decree following the collapse of the Soviet system in order to obtain badly needed foreign investment. As a result, there has been a significant increase in the amount of joint ventures between foreign entities and the Cuban government. This paper gives an overview of the foreign investment laws, the application process to establish joint enterprises and the various operating aspects regarding business in Cuba, which have come about as a result of Decree No. 50. It examines the risks and rewards of doing business on the island and the impact of the United States on the efforts to liberalize the Cuban market.     

The impact of trade and financial openness on bank loan pricing: Evidence from emerging economies

In this paper, we examine the impact of trade and financial openness on bank loan pricing. Using data from 35 emerging economies, we first document that higher trade and financial openness lower interest rates on gross bank loans using country-specific measures for trade and financial openness. We then confirm our findings using firm-specific measures for trade and financial openness and individual loan spread. Exploiting the accession to World Trade Organization (WTO) as a quasi-natural experiment, we observe loan interest rates declined in countries after joining the WTO. Overall, we imply that openness is beneficial for financial development in emerging economies.     

How trade and investment agreements affect bilateral foreign direct investment: Results from a structural gravity model

We employ a structural gravity approach to analyse the impact of preferential trade agreements (PTAs), bilateral investment treaties (BITs) and other policies on bilateral foreign direct investment (FDI). We use the UNCTAD global database on bilateral FDI stocks and flows. To control for the heterogeneous nature of PTAs, we employ two different indicators of PTA depth. We find that on average signing a PTA increases bilateral FDI stocks by around 30%. Nevertheless, we also find that ‘deeper’ or comprehensive PTAs (e.g., including provisions on investment, public procurement and intellectual property rights provisions) do not have a significantly different impact than signing regular PTAs. Belonging to the EU single market, on the other hand, has a strong impact and increases bilateral FDI by around 135%, and signing a BIT has an effect that is comparable to signing a PTA.     

The simultaneous evolution of economic growth,financial development,and trade openness

This article empirically investigates the interactions among economic growth, financial development, and trade openness through simultaneous equation systems. The identification and estimation of the systems rely on the methodology of identification through heteroskedasticity. The empirical results show that each of the three variables interacts in important ways. When controlling for the reverse causation, trade promotes economic growth in high-income, low-inflation, and nonagricultural countries but has a negative impact on growth in countries with the opposite attributes. Similarly, when accounting for the feedbacks from growth, banks and stock markets have different impacts on economic growth. While banking development is detrimental to output growth, stock market development is more favorable to growth in high-income, low-inflation, and nonagricultural countries. The data also reveal coexistence of a positive effect of financial development on trade and a negative effect of trade on financial development in poorer countries. In richer countries, financial development stimulates trade openness whereas trade has an ambiguous impact on financial development.     

水汪汪的《天鹅湖》--文化消费市场规范问题思考

2000年底,广东的"文化外贸"市场十分红火,一两月之内,仅舞蹈团体就进口了四五个,密锣紧鼓你方唱罢我登场,广州能演大戏的剧场排期满满当当,迎来送往,真显繁荣。其中11月30日至12月1日,由"格鲁吉亚国家大剧院"隆重献演《天鹅湖》全剧,其"隆重"仅在广告的高调子和大规模上便可见一斑。大报章提早就作了充分的介绍:这是在国际享有一定声誉的芭蕾舞团;芭蕾之神乌兰诺娃曾指导该团主要演员获国际奖;正宗的俄罗斯学派;很得神韵的柴可夫斯基。媒体还讨论到外国大团来访,配以现场交响乐团演奏,阵容庞大,气势恢宏,而最高票价仅售180元的"地板价"。这不禁让人生疑:演出商是如何在引进优秀文化项目,普及高雅艺术的同时,又顾及合理的成本核算呢?"地板价"现象对广东的本地高雅文化市场是否具有冲击或是催熟的作用呢?仿佛在文化"进出口"经营上,也蛮有启迪意义似的。电视广告更在黄金时段连篇累牍播映。声色俱佳,美仑美奂,看起来果然不同凡响,"获国际奖章的优秀演员"们要条件有条件,要技术有技术,要表演有表演,主要演员更是光彩照人,不能不使人心驰神往,非上剧场看看不可。