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     

International Trade, OECD Membership, and Religion

Transaction costs in trade gravity equation are proxied by the distance that separates two trading partners, under the assumption that the distance elasticity is the same across all trading partners. We show that distance elasticity, however, critically depends on whether trading partners are industrial countries (i.e., members of the OECD) or share same religion. These heterogeneities are both statistically and economically significant. For instance, expected trade flows are the largest when an OECD member trades with a non-member and both are non-religious. Expected trade flows fall as much as by 62.9% between two non-religious, non-OECD members. Expected bilateral trade drops by 48.1% when both countries in the pair are OECD members while one is Christian and the other is Islamic. Both religion and OECD membership significantly affect the typical transaction costs implied by the gravity equation. JEL Classification Number: F13     

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     

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     

河北省对外贸易与经济增长关系的实证分析

运用计量经济模型分析河北省对外贸易与经济增长之间的关系,结果表明:对外贸易对河北经济增长有很强的拉动作用,其中出口对经济增长的贡献要高于进口,而净出口对经济增长的作用不明显.     

China''''s Economic Prospects and Sino-US Economic Relations

I. Introduction The rapid rise of the economic weight of China in the world economy has increasingly caught the attention of many analysts as well as policy-makers, eliciting various opinions on the global implications. Although China’s economic performance in the past 2 decades46 Pingfan Hong / 45 – 55, Vol. 14, No. 2, 2006 or so is indeed miraculous, the rest of the world should become less surprised or bewildered if they see China’s recent performance from a long-run historical perspe…     

Capital Account Liberalisation by China and the Effects on Global FDI and Trade

We model the partial liberalisation of the capital account by China using a dynamic computable general equilibrium model of the world economy. Our results indicate that a reduced capital controls on foreign direct investment (FDI) would lead to a significant increase in FDI capital in China and a significant reduction in the cost of capital in China relative to the rest of the world. Furthermore, we observe an increase in capital stocks in most regions, which benefits most regions in terms of GDP and GNP. The Chinese economy grows by 3.3% driven by a significant fall in the rental price of capital that, in turn, lowers domestic costs, causes a real depreciation of the exchange rate and thus increased exports relative to other regions. We also observe an across-the-board increase in the saving rate driven by the rise in the price of consumption relative to investment (saving) in all regions.     

Access to Finance,Financial Development and Firm Ability to Export: Experience from Asia–Pacific Countries

With particular reference to Asia–Pacific countries, the present study examines how access to finance and financial development affects firms’ ability to enter export markets. Using firm‐level data from the World Bank Enterprises Survey, we found that access to finance plays a significant role in improving firms’ ability to export. In addition, development of the financial sector fosters export market entry. Among the financial development indicators, reach of the banking sector variable is most prominent. The present study suggests that improvements in access to finance and financial development (increases in the reach of the banking sector) enable firms operating away from capital or major cities to enter export markets easily. The present study supports policy intervention to strengthen access to the financial sector, which would encourage firms to export, and to facilitate export market entry for remotely located firms.     

China's Free Trade Ports: Effective Action Against the Threat of De‐globalization

With sluggish external demand and increasing trade protectionism by the USA and the European Union, China is facing severe challenges in implementing its deeper, ongoing reforms. To respond actively to such challenges, the Communist Party of China's 19th National Congress proposed to “promote a new pattern of all‐round opening up.” In particular, the establishment of free trade ports is considered an important means to realize deeper integration with the world economy. This paper discusses the background, the motivation, the possible challenges as well as a feasible path for the successful implementation of free trade ports in China. Based on the international experience, the construction of free trade ports in China requires freer trade in goods, high mobility of talent and free capital flow.     

Mercantilism: a materialist approach

ABSTRACT

Historians and economists have shown renewed interest in mercantilism over the last couple of years. From this interest, a dispute has arisen about whether mercantilism should be seen as an incoherent economic thought or if it is possible to ‘reconstruct’ its basic principles. In line with this latter attempt, this paper is intended to provide a materialist explanation for varying degrees of belief in shared mercantilist assumptions. My hypothesis is that belief in mercantilist assumptions is significantly dependent upon how economic and security issues materially interact in a given time and space, with uncertainty and insecurity profoundly favouring mercantilist dispositions in economic thought. To analyse this hypothesis, the paper sets the first steps for relating the credibility of mercantilism with changes in British economic and military history from the sixteenth to the nineteenth century. Section 3 presents ideas to further investigate this hypothesis. Section 4 concludes the paper.