Trade and growth: A gravity approach

The impact of international trade, or “openness,” on economic growth is difficult to quantify because of reverse causality. In this article, I use recent advances in gravity equation estimation to generate a geography‐based instrument for openness à la Frankel and Romer (1999). In contrast with the benchmark, the new instrument is constructed using consistent and unbiased estimates of the impact of geography on bilateral trade. As a result, the instrument provides stronger identification of the impact of trade on income and increases the efficiency of the two‐stage least square estimation. An important advantage of the corrected procedure over the benchmark is that the estimated effect of trade on income remains large, positive, and statistically significant even after controlling for regional indicators and endogenous institutional quality.     

Openness,Regional Trade Agreements and Growth: Evidence from Asia*

This paper assesses the relationship between regional trade agreements, trade integration and economic growth in 21 South and South‐East Asian countries over the period from 1980 to 2004. We aim to answer the following questions. First, how does the trade policy of a given country (and countries within the same region) affect a nation's domestic growth? Second, should developing economies in South and South‐East Asia engage in regional trade agreements (RTA) or move towards broad liberalization? Our results show that openness of either a single country or of its neighbors does not affect a nation's growth and that the impacts of RTA are unclear (if not detrimental to growth in some cases, once endogeneity is accounted for). Panel Granger‐causality tests running from openness to growth yield mixed results and some conclusions depend on the particular subsample under scrutiny.     

Trade Agreements,Trade Liberalization and Economic Growth: A Selective Survey

Since 1950 there has been a massive liberalization of world trade taking various forms including the formation of free trade areas, customs unions, unilateral reductions in tariff barriers, and reductions in non‐tariff barriers to trade. To what extent has this liberalization contributed to the growth performance of countries, and what are the mechanisms through which faster export growth may impact favourably on economic growth? The paper first surveys the empirical literature which seems to show that countries that participate in regional trading agreements (RTAs) fare worse than countries which reduce tariffs unilaterally, and secondly comments on the theoretical literature relating to the mechanisms through which exports affect growth. It is argued that the orthodox neoclassical supply‐side argument is only half the story, and much more emphasis needs to be placed on the effect of export performance in relaxing a balance of payments constraint on demand. Depuis 1950, le commerce mondial a connu une libéralisation considérable qui a pris diverses formes: formation de zones de libre‐échange, d’unions douanières, abaissement unilatéral des barrières tarifaires et réduction des barrières non tarifaires. Dans quelle mesure cette libéralisation a‐t‐elle contribuéà la croissance des pays et par quels mécanismes une expansion plus rapide des exportations peut‐elle influencer positivement la croissance économique? Le document passe d’abord en revue le littérature empirique qui semble démontrer que les pays qui participent à des accords commerciaux régionaux (ACR) sont en pire posture que ceux qui abaissent unilatéralement les barrières tarifaires. Le document formule ensuite des observations sur la littérature théorique concernant les mécanismes par lesquels les exportations influent sur la croissance. Il soutient que l’argument néoclassique orthodoxe axé sur l’offre n’explique pas tout, et qu’un accent plus appuyé doit à tre mis sur l’effet que les résultats à l’exportation, en tant que facteur d’atténuation des problèmes de la balance des paiements, peuvent avoir sur la demande.     

China's Anti‐dumping Problems and Mitigation through Regional Trade Agreements

The present paper explores the opportunities for China's regional trade agreement (RTA) initiatives to mitigate its anti‐dumping problems. The paper highlights the severity and discriminatory nature of China's anti‐dumping problems. The high concentration of the share of anti‐dumping actions taken by the top 4 and top 8 anti‐dumping initiators is noted. Our finding of a weak effect of existing RTAs on mitigating China's anti‐dumping problems supports the argument that China could become more active in mitigating anti‐dumping problems through RTA negotiations. An RTA can include a higher level of openness in exchange for an improvement in regional anti‐dumping provisions. Case studies on RTAs involving the EU, the USA and India offer some precedents for offering inducements and modifying regional anti‐dumping provisions. The approaches for China may lie in obtaining market economy status from intensive anti‐dumping initiators at RTA levels and also altering regional anti‐dumping provisions that could be put in place in exchange for some potential concessions.     

Economic Value of Country Image: Evidence from International Trade and Implications for China

This paper examines the economic value of country image from the perspective of export prices through matching the CEPII export price data with the British Broadcasting Company country image data from 2006 to 2013. The estimation results show that positive country image has an “elevating” effect and negative country image has a “depressing” effect on export prices. The results also indicate that the lower the level of economic development of an export or import country, the stronger the export price effect of country image. As distances between export countries and trading partners increase, the elevating effect of positive country image on export prices becomes weaker. However, the depressing effect of negative country image does not become weaker over greater distances. We find that export prices are depressed by negative country image to a greater degree for China than for other countries. Therefore, it is necessary for China to prevent the occurrence of incidents detrimental to country image.     

APEC成员间建立FTA的影响因素研究

本文使用Probit模型对APEC成员间建立FTA的影响因素进行了经验分析。一个国家在决定是否与其他国家结成FTA时,从长期来看主要考虑其是否会带来本国经济福利的改善。纯经济因素准确预测了APEC成员间59个已经形成的FTA中的51个和151个尚未结成的FTA中的146个。与以往的研究不同,本文额外考察了生产者服务在长期内对于FTA形成的影响,以及社会和政治因素在短期内对于FTA形成的影响。     

Free Trade Agreements and Foreign Direct Investment: The Role of Endogeneity and Dynamics

This article studies the impact of Free Trade Agreements (FTA) on outbound foreign direct investment (FDI). From one perspective, FTA may promote FDI since FTA aim to promote economic activity between countries. However, lower trade barriers may lower the incentive of firms to conduct FDI. Therefore, the net impact is an empirical question. Using a panel of countries for the years 1990–2006, this article effectively controls for participation in an FTA when analyzing the impact on outbound FDI. The lengthy time series also allows us to examine effectively the dynamic nature of the relationship. Failing to account for endogeneity and dynamics would likely generate inaccurate conclusions regarding the impact of FTA on outbound FDI. Our analysis finds that outbound FDI is either unrelated to participation in an FTA or is negatively affected.     

Measuring Multi‐Membership in Economic Integration and Its Trade Impact: A Comparative Study of ECOWAS and SADC

One of the intriguing aspects of African regional trade agreements (RTAs) is the extent of multi‐membership, where many African countries are members of more than one RTA. Using a gravity model for 25 countries and the years 1980‐2006, we measure the extent of multi‐membership and compare its impact in two major African regional blocs, Economic Community of West Africa States (ECOWAS) and Southern Africa Development Community (SADC). We find that the impact of multi‐membership critically depends on the characteristics of the multi‐membership of regional integration initiatives. We find a positive impact if an additional membership complements the integration process of the original regional integration initiative: overlapping memberships had a much stronger and significant positive effect on bilateral trade within ECOWAS compare with an insignificant impact within the SADC.     

Multinationals,Institutions and Economic Growth in China

This study examines the effects of multinationals and economic institutions on the economic growth of cities in China. Consistent with previous findings, the empirical results suggest that property rights institutions are significantly more important than contracting institutions in promoting economic growth. The direct effect of multinationals on economic growth is generally insignificant statistically. However, a statistically significant and robust interaction effect exists between property rights institutions and multinationals on economic growth, whereas no such effect is observed between contracting institutions and multinationals. The results are attributable to the fact that multinationals can rely on reputation or personal connections to enforce contracts when contracting institutions are weak. However, it is difficult for multinationals to operate when the state expropriates their profits (i.e. property rights institutions are weak).     

Trade Liberalization,Economic Restructuring and Urban Poverty: The Case of China*

Increased trade openness and rapid market-oriented transformation have largely altered the patterns of wealth accumulation and wealth distribution in post-reform China. In the present paper, with the help of Chinese provincial level data over the period of 1986 to 2000, simultaneous equations estimation and generalized method of moment techniques are applied to investigate the relationship between trade and poverty in urban China. Empirical results suggest that China's trade liberalization helps to reduce urban poverty both directly and indirectly through its favorable impacts on economic growth.     

Trade regimes and spillover effects of FDI: Evidence from Uruguay

Trade Regimes and Spillover Effects of FDI: Evidence from Uruguay. — This paper examines differences in the character and impact of FDI entering Uruguay during import substitution, pursued until 1973, and the subsequent more outwardoriented trade regime. Regression analysis shows that the labor productivity of local firms is positively related to the presence of older import-substituting MNCs in their industry. The presence of foreign affiliates established after 1973 has no apparent impact on local productivity, but seems to raise the likelihood that local firms engage in exporting. This may be a sign of export spillovers, indicating that local firms may pick up some exportrelated skills from the operations of outward-oriented foreign MNCs.     

服务贸易结构与经济增长

服务贸易可以分为生产者服务贸易和消费者服务贸易,二者对各国经济增长有着不同的影响。本文分别采用静态和动态面板模型对它们的影响进行分析发现,生产者服务贸易能提升经济增长率,而消费者服务贸易则对经济增长率有抑制作用,且这一趋势随着国家收入水平的提高愈加明显。因此,我国在进行服务贸易的时候应该优先发展生产者服务贸易。     

Trade Union and Global Economic Growth

Abstract

This paper develops a simple framework for examining the role of unions in a global economy. It builds on the model of different institutions by comparing America with a flexible wage and Europe with a rigid wage (the existence of union), where the two areas are integrated via perfect capital mobility. We find the necessary condition that the degree of wage orientation of the union is larger than the firm's bargaining power and determines the positive direction on global economic growth. In addition, the effect of union's bargaining power on global economic growth is ambiguous. If the sum of the elasticity of substitution between capital and labour and the output elasticity of labour is smaller than one, or the firms are characterized by a Leontief production function (Harrod–Domar growth model) or an extremely low substituting elasticity (much empirical literature is supported), the union's bargaining power will lead to an increase in the growth of the global economy. In the general Cobb–Douglas production function (Solow–Swan neoclassical growth model), the union's bargaining power will result in a decline in the growth of the global economy.     

Trade,efficiency, and growth in a cross section of countries

Trade, Efficiency and Growth in a Cross Section of Countries. —Some cross-country studies of the determinants of growth suggest only a modest role for trade policy. This study, measuring trade openness by the rate of growth of the share of exports in GDP, argues that once the possibility of outliers for trade share growth is considered, a close relationship between exports and growth emerges that works mainly through improved efficiency. This relationship proves to be robust to the inclusion of a set of commonly used right-side variables as well as the corresponding import variable.     

Does Technology Foster Trade? Empirical Evidence for Developed and Developing Countries

This paper aims to investigate the effects of technology on international trade flows. In order to do so, the authors use a composite index designed to capture the performance of countries concerning technology and human knowledge as a new explanatory variable in an augmented gravity equation estimated for a sample of 62 developed and developing countries. Results show that geographical factors are always relevant, however geographical distance, being landlocked, technological and social factors seem to be more important for the poorest than for the richest countries. Transport infrastructure and technology can be considered as barriers to trade for those countries with lower endowment levels, therefore investing in these variables will increase the participation of the poorest countries in the world economy.The authors would like to thank the participants at the 2004 International Atlantic Economic Conference held in Lisbon and at the VII Encuentro de Economía Aplicada held in Vigo for their useful comments and suggestions. Moreover, the authors acknowledge the support and collaboration of the Instituto Valenciano de Investigaciones Económicas.     

The Evolution and Reshaping of Globalization: A Perspective Based on the Development of Regional Trade Agreements

With the weakening role of the World Trade Organization multilateral trading system, the globalization pattern is moving toward regional economic integration. As a result, the number of regional trade agreements (RTAs) has rapidly increased. New trends in international economics and trade, such as the withdrawal of the US from the Trans‐Pacific Partnership and the trade disputes between the US and China, have revealed the intention of the developed countries represented by the US to reshape the direction of globalization. This paper combines the relevant research conclusions and current stylized facts to examine the evolution and reshaping of globalization. We find that: (i) countries have different attitudes toward the recent round of globalization, which are related to changes in the patterns of income distribution within countries caused by the last round of globalization; and (ii) regional economic development is an effective way to reshape globalization. The self‐strengthening effect of the hub country in the trade network has promoted global RTA expansion.