Productivity and Firms’ Sales Destination: Chinese Characteristics

In the trade literature, it is often assumed that there is little or no trade cost within a country's borders, but large trade costs across a country's borders. Thus, productive firms self‐select into exporters and the less productive firms can only serve domestic consumers. This paper presents a similar but different case in China, whose domestic markets are segmented by provincial borders mainly owing to the various (hidden) protective measures favoring local firms. These discriminative measures are de facto trade barriers. It applies the heterogeneous trade theory to examine the effects of firms’ productivity on their sales choices in both the international and domestic markets, in the presence of intra‐national and international trade costs. We find that productive firms not only self‐select into exporters, but also into sales in other provincial markets. This pattern is sensitive to firms’ locations and ownerships. For foreign direct investment (FDI)‐controlled firms, increases in productivity are associated with a higher probability of selling into other provincial markets, rather than into international ones. Productivity increases for firms operating in the inland area exhibit different patterns than those in the Eastern area.     

Tear down this wall: on the persistence of borders in trade

Abstract Why do borders still matter for economic activity? The reunification of Germany in 1990 provides a unique natural experiment for examining the effect of political borders on trade. With the fall of the Berlin Wall and the rapid formation of a political and economic union, strong and strictly enforced administrative barriers to trade between East Germany and West Germany were eliminated completely within a very short period of time. Remarkable persistence in intra‐German trade patterns along the former East‐West border suggests that border effects are neither statistical artefacts nor driven by administrative barriers to trade, but arise from economic fundamentals.     

Product Market Integration and Union Collusion

This paper investigates the effects of product market integration on the incentives and scope for union collusion across borders. In the absence of binding agreements, the impact of this process on the unions’ willingness to collude depends both on the degree of product market integration and on the degree of substitutability among traded goods. Where trade barriers across countries are relatively low, implicit cross‐border collusion among unions is more difficult the more integrated are product markets and the less substitutable are traded goods.     

“快速通关”贸易促进效应的实证分析

在低关税的时代,快速通关很可能是打破贸易壁垒,推动国际贸易发展的重要手段。文章从四个方面总结了快速通关对国际贸易的影响机制,并基于2008-2010年113个国家相互之间的出口数据,使用 Heckman两步选择模型进行了实证研究。结果显示,快速通关对贸易参与和贸易规模都有着显著的促进作用,从多个角度进行稳健性检验后,该结论依然成立。快速通关可以通过需求偏好效应、成本效应与全球化生产网络效应和遏制日益强化的非关税贸易壁垒的负面效应,使得多边谈判所形成的关税降低的效应得以真正发挥。此外,文章还发现,自由贸易协定的建立,提升了通关效率与边境管理的透明度,进而提高了国家间的贸易量。文章的研究结论对于理解目前中国建立自由贸易区以及实施在贸易谈判中主导快速通关的措施或建立条款,打破技术贸易壁垒具有重要的意义。     

An Incumbent Country View on Eastern Enlargement of the EU Part I: A General Treatment

An eastern enlargement of the EU, from an incumbent country point of view,involves a fiscal burden from extending Union agricultural and cohesion policiesto new members, coupled with potential gains as well as adjustment problemsderiving from an extended customs union and a larger single market. Enlargementis controversial, because the net effect is unclear, a priori, and will certainly vary across individual countries. Our two-part contribution tries to do shed light on this controversy. In this first part, we present a general treatment of the likely effects on different incumbent countries, while a subsequent companion paper will take a closer look at the specific case of Austria. The general view of part I, in turn, first focuses on various empirical measures highlighting crucial differences between incumbents, pertaining to the fiscal burden on the one hand, and integration gains on the other. We then argue that a proper evaluation must rely on an explicit welfare criterion, and we use a general model of economic integration in order to identify the principalchannels through which aggregate welfare of an incumbent country is affected by an enlargement of the EU. We address traditional effects of trade creation and trade diversion, as well as growth effects arising from an abolition of trade barriers. In addition, we ask how enlargement affects foreign direct investmentand labor migration, and what this implies in welfare terms for an incumbent western European country. Taken together, these effects generate a certain presumption of integration gains, which need to be set against the fiscal burden. However, a final judgement requires a case-by-case approach, based on empirical implementations of enriched and parameterized models for specific countries. The companion paper, therefore, uses a suitably specified, calibrated dynamic equilibrium model, in order to take a closer look at the Austrian case.     

Kosovo – EU trade relations: a dynamic panel poisson approach

To inform policymaking following trade liberalization between Kosovo and the EU within the framework of the Stabilisation and Association Agreement (SAA), we specify a gravity model to investigate Kosovo’s trade in goods with 28 EU countries over the period 2005–2013. We reconcile competing methodological requirements by using a dynamic Poisson approach to estimation. Together, persistent trade patterns and an unfavourable combination of demand and supply elasticities suggest that trade liberalization in isolation is not sufficient to promote exports but may need to be incorporated within a wider policy and institutional framework. In addition, our findings suggest that trade costs should be a particular focus for policy: distance has a big negative influence on Kosovo’s exports to EU countries; while diaspora communities promote Kosovo’s exports to EU markets, most likely because they offset trade costs.     

Implicit trade Costs and European single market enlargement

This paper investigates the deeper integration of the new EU accession states into the Single Market. Building on the assumption that observed trade patterns can be taken to reveal trading costs between members and non-members of a bloc, I develop a model-consistent Dixit-Stiglitz general equilibrium-based calibration technique. Using this, I investigate numerically the effects of the recent EU enlargement, suggesting that deeper integration, which removed the border costs implied by 1990s trade patterns, could raise trade by 50–100% and incomes in the accession states by 10–20%.     

Resiliency or Change? The Contemporary Canada—US Border

The developed states of North America have not experienced transnational integration to the same degree as those of the European Union. Indeed, some scholars have argued that North American States and the border functions which define their territorial limits, are essentially unchanged in the face of globalisation, hardening rather than softening, and remaining unabashedly archaic and state-centred. This article suggests that although there has been considerable change in the border functions and geopolitical discourses which mediate transnationalism among the highly developed North American states – namely Canada and the United States – the nature and structure of transnational integration has remained more limited than that of the EU. It argues that the reasons for this more limited international integration agenda lie in the specific geopolitical discourses which sustain cross-border institutions and national identity before and after 11 September 2001 (‘9/11’). The Canadian state, for example, has demonstrated considerable resistance to greater levels of integration with the United States, at the same time that it has became increasingly open to cross-border trade under NAFTA. This resistance is based upon a national-identity discourse that relies upon distancing the Canadian state from its larger neighbours to the south. At the same time, however, the national security discourse which has emerged in the Canada and the United States following from 9/11, has failed to close borders to increasing levels of economic integration, and must accommodate the need for a degree of openness to the heightened levels of cross-border trade under NAFTA. As a result, there has been considerable reorganisation and reorientation of borders within North America. It is simply inaccurate to view the continent as a place where borders have remained unyielding to the broader forces of globalisation. If the role of borders in maintaining security while facilitating trade has resulted in an increased awareness of, and concern with the Canada-US border, the latter is not simply a continuation of ‘old-fashioned state-centred geopolitical concerns’ but is instead a newly-fashionedpost-9/11 response to the ramifications of globalised trade and terrorism.     

Brussels is Speaking: The Adverse Speech Geo-Politics of the European Union Towards its Neighbours

The European Neighbourhood Policy (ENP) was presented as the EU's strategic response in order to deal with the new situation following the enlargement of the European Union in 2004. According to the EU, these changing circumstances have led to new rationales: 1) coping with its new external borders and neighbours and 2), finding a solution for a further enlargement problem. Both rationales are drawn out of strategic interest avoiding potentially damaging consequences on stability and development. Moreover, new inducements for multilevel cooperation were seen as necessary in order to ‘include’ the neighbouring states and create a prosperous and stable ‘Ring of friends’. The ENP has the objective to contribute to internal transformation and to further the process of ‘Europeanisation’. Europeanisation is explained by the EU as a normative process of sharing European values made concrete through policies of conditionality and socialisation of neighbouring states. This process of expanding ‘Europeanisation’ beyond the EU borders is inspired by an ambiguous and conflicting geopolitics that the EU applies as a strategic instrument. Most notably, this is emphasised by the fact that the ENP on the one hand creates an image of an inferior neighbour that urgently needs to move towards European standards and on the other hand produces a speech politics of mutuality and dialogue.

Through the study of EU speeches, communications and documents, we will argue that the rationales behind the ENP suggest a closure of the European Union and allow for neo-colonial interpretations by which pre-defined policies are to be accepted and pre-defined European values are seen as superior to neighbouring local values. This development is both undesirable and harmful. Europe is increasingly re-created as a bounded political entity institutionalised through hierarchical treaties and acts with friends, special friends, and reluctant, unwilling neighbours. In doing so, the EU faces a significant chance of alienating its neighbours and damaging cultures and societies by asymmetrical imperial power-policies based on self-created values. Paradoxically then, ENP that was set up to create good neighbours, risks producing what it wishes to protect from, angry neighbours.     

东盟区域经济一体化 ——基于边境效应的实证分析

本文通过计算边境效应来测定自由贸易区与其他国家（地区）的贸易程度。通过2000-2009年这10年的面板数据，在理论上验证了以下结论：东盟区域内部各国之间的贸易壁垒和边境效应普遍降低；东盟作为一个整体对于世界其他主要贸易国家的边境效应却在不断提升，这反映出东盟的一体化进程在不断提高。此外，在本文的研究中还发现另外一个值得关注的情况：与其他自由贸易区的国家同质化结构不同，东盟区域内既有发展程度较高的国家，也有依然被联合国定义为贫穷、欠发达的国家，这样的国家结构必然会造成贸易层面上的分化，折射出东盟在内部融合的过程中出现的一些不协调和分化     

Trade Effects of European Union Enlargement: an ex post model of trade between Spain and Latin America

Past research on European Union (EU) Enlargement has tended to neglect the effects on trade with non-preferred trading partners. This paper examines the consequences of EU enlargement on trade between Spain and the Latin American countries with which it has traditional economic and cultural ties. An import demand functions model was estimated for the period 1964–93. The country-level results showed that Spanish accession to the EU only had large adverse effects on its imports from Argentina. The results for non-agricultural products indicated a general absence of negative effects on Spanish imports. The aggregate results from the ex post model provide support for some, but not all, of the ex ante predictions of previous studies.     

On Nations’ Size and Transportation Costs*

This paper develops a noncooperative Nash model in which a closed border is opened to trade between countries that differ in size and transportation costs. the paper suggests an explanation as to why economists have not convinced policymakers to lift all barriers to free trade. the questions we pose are: Who will gain as a result of opening the borders? Is free trade beneficial to the two parties involved? Do they both share equally in the fruits of free trade? Which country, large or small, benefits most? It is shown that free trade is not beneficial to both countries.     

Fiscal devaluation and economic activity in the EU

In the aftermath of the global financial crisis, a fiscal devaluation (hereafter, FD), understood as a shift in taxation from labour to consumption, has been debated as a possible tool for restoring competitiveness, particularly in peripheral countries of the Eurozone. We contribute to this debate. Based on a set of panel and spatial panel models for the EU 27 over the period 1995–2014, we find that FD works, especially where economic activity is heavily subdued and in sectors more exposed on external competition. FD increases value added in exports, improves net exports, accelerates GDP and employment growth, and decelerates growth in labour costs. These effects are nonlinear; they are stronger in the members of the Eurozone and weaker in countries with either more coordinated or more centralised wage bargaining processes or more generous unemployment benefits. The magnitude of these effects is dampened by strict regulatory barriers: they are weaker in countries with higher barriers to entrepreneurship, trade and investment. Most importantly, FD is not a beggar thy neighbour policy, at least in the EU. In our sample, the aggregate demand (‘cooperative’) effect of unilateral FD, which is beneficial for neighbouring countries, outweighs by far the expenditure switching (‘competitive’) effect, which comes at the expense of other countries’ competitiveness. FD implemented in one country can benefit other countries, provided that they are strongly integrated in global value chains. These findings are robust to changes in the estimation methods, the sample composition, the set of explanatory variables and the selection of a spatial weight matrix.     

Foreign firm entry in an open economy: the case of Portugal

The purpose of this paper is to analyse the entry process of foreign direct investment (FDI) in Portuguese industrial sectors. Portugal presents an interesting case where firms enter to take advantage of export opportunities. The results suggest that foreign firms possess the ability to overcome existing entry barriers that affect domestic firms. Apparently, foreign firms have different expectations about profitability than domestic firms, possibly due to foreign firms’ export-orientation to the rest of the European Union (EU). They appear to desire industries where other foreign firms have clustered. Above all, it appears that these foreign firms enter industries to exploit Portugal's chief location advantage in Western Europe: low wages. Portugal's FDI experience is relevant to other countries that have opened their economies to greater trade and investment and attracted export-oriented firms.     

Which commercial partners are important for the most recently admitted EU countries?

This paper describes the degree of trade integration inside the European Union (EU) after the fifth enlargement in 2004. To achieve this goal, we build a database of information on trade flows between the new EU countries (EU‐10) and 180 commercial partners in six different sectors from 1999 to 2011. Using the standard gravity model and estimating a difference‐in‐differences specification, we analyze how joining the EU affected the intensity and direction of the EU‐10's trade flows. Our results show that though trade exchanges between the EU‐10 and EU‐15 intensified after 2004, the impact of integration was much more significant to the EU‐10 group.     

Estimating the trade and welfare effects of Brexit: A panel data structural gravity model

This paper proposes a new panel data structural gravity approach for estimating the trade and welfare effects of Brexit. Assuming different counterfactual post‐Brexit scenarios, our main findings suggest that the UK's exports of goods to the EU are likely to decline within a range between 7.2% and 45.7% six years after Brexit has taken place. For the UK, the negative trade effects are only partially offset by an increase in domestic trade and trade with third countries, inducing a decline in the UK's real income of between 0.3% and 5.7%. The estimated welfare effects for the EU are not different from zero, but some members like Ireland are expected to also experience welfare losses.     

EU-Russian Border Crossing: The Dialogical Perspective

Mainstream post-positivist approaches to Border Studies typically represent national borders as losing their importance or blurring. This insight usually fails to grasp the perspective of those who have to cross ‘hard’ borders, for whom these borders are primarily ‘hard facts’ quite precisely restricting territorial limits of their movement. Aiming to take this perspective and practical problems experienced by such border crossers into account, the author proposes an approach focusing on communication between those who cross ‘hard’ borders and those who protect these borders. The case of the EU-Russian border shows that border crossers have an increasing range of options to make themselves heard by their own country's officials, though it is much more difficult for them to reach gatekeepers and public on the other side of the border without resorting to intermediaries (such as their states or business actors). The author suggests that border crossers could be heard better if cross-border cooperation initiatives would prioritise this purpose thus making the EU's external borders not only ‘friendly’ or ‘blurred’ but also ‘dialogic’.     

The contribution of start-ups and young firms to industry-level efficiency growth

This article examines the impact of start-ups (active for 1 up to 5 years) and young firms (active for 6 up to 10 years) on industry-level efficiency growth in six EU countries, covering the period 2002–2009. Using semi-parametric estimates of meta-frontier efficiency, it is found that surviving entrants gradually raise their efficiency level in all countries considered. Firm-level efficiency growth decreases with firm age, whereas reallocation towards efficient firms contributes more to industry-level growth as firms mature. The relative contribution of start-ups appears to have been important as they actually contributed positively to overall efficiency growth which, over the period under consideration, was negative in most countries, even before the ‘Great Recession’. There are indications of ‘cleansing’, due to the exit of less efficient firms, during the ‘Great Recession’.     

Costs of a missing FTA: the case of Turkey and Algeria

Turkey has been deeply integrated with the EU, its largest trading partner, particularly following the Customs Union agreement in 1996. However, the free trade agreements (FTAs) signed by the EU with third party countries may create some unfair competitive pressures, market share and welfare losses for Turkey. This study investigates the impact of the FTA signed by Algeria and the EU in 2005 on Turkey’s trade flows. Covering 181 countries, a difference-in-differences analysis embedded in an extended gravity framework is employed to quantify the trade effects of the EU-Algeria FTA for the period of 1996–2013. Our findings suggest that bilateral trade between Turkey and Algeria is affected adversely due to the FTA. The counterfactual analysis shows that Turkish exports and imports to/from Algeria could have been 12 and 17% higher, respectively, had there been no FTA between the EU and Algeria.     

Home country bias in international emissions trading: Evidence from the EU ETS

We examine the pattern of allowance trades in the European Union Emissions Trading System (EU ETS) using highly disaggregated trading data and identify a significant and robust home market bias. Our results point to informational transactions costs that increase when trading across national borders. The existing trade pattern in goods and services explains two thirds of the home bias, with the remainder due to other causes. Our finding suggests that firms make use of existing trade networks to overcome search costs in bilateral allowance trade. Since the home bias differs across firms, it follows that marginal abatement costs are not equalized across market participants of the EU ETS.