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We incorporate trade in tasks a la Grossman and Rossi-Hansberg (2008) into a small open economy version of the theory of firm organization of Marin and Verdier (2012) to examine how offshoring affects the way firms organize. We show that the offshoring of production tasks leads firms to reorganize with a more decentralized management, improving the competitiveness of the offshoring firms. We show further that the offshoring of managerial tasks relaxes the constraint on managers but toughens competition, and thus has an ambiguous impact on the level of decentralized management and CEO wages of the offshoring firms. In sufficiently open economies, however, managerial offshoring unambiguously leads to more decentralized management and to larger CEO wages. We test the predictions of the model based on original firm level data we designed and collected of 660 Austrian and German multinational firms with 2200 subsidiaries in Eastern Europe. We find that offshoring firms are 33.4% more decentralized than non-offshoring firms. We find further that the average fraction of managers offshored reduces the level of decentralized management by 3.1%, but increases the level of decentralized management by 4% in industries with a level of openness above the 25th percentile of the openness distribution. Lastly, we find that one additional offshored manager lowers CEO wages relative to workers by 4.9%.

Jacks et al. (2011) offer an alternative to price gaps to quantify trade costs. Implementing a method which consists in deducing international trade costs from trade flows, they argue that the reduction in trade costs was the main driving force of trade growth during the first globalization (1870-1913), whereas economic expansion was the main driving force during the second globalization (1950-2000). We argue that this important result is driven by the use of an ad hoc aggregation method. What Jacks et al. (2011) capture is the difference in the relative starting trade of dyads experiencing faster trade growth in the first and second globalization. More generally, we cast doubts on the possibility to reach conclusions of such nature with a method that infers trade costs from trade flows, and then uses these costs to explain trade flows. We argue that it can only rephrase the information already contained in openness ratios.

This paper shows that how firms export (directly or indirectly via intermediaries) matters. We develop and estimate a dynamic discrete choice model that allows learning-by-exporting on the cost and demand side as well as sunk/fixed costs to differ by export mode. We find that demand and productivity evolve more favorably under direct exporting, though the fixed/sunk costs of this option are higher. Our results suggest that had China not liberalized its direct trading rights when it joined the WTO, its exports and export participation would have been 26 and 33% lower respectively.

A recent boom in commodities-for-manufactures trade between China and other developing countries has led to much concern about the losers from rising import competition in manufacturing, but little attention on the winners from growing Chinese demand for commodities. Using census data for Brazil, we find that local labour markets more affected by Chinese import competition experienced slower growth in manufacturing wages and in-migration rates between 2000 and 2010, and greater rises in local wage inequality. However, in locations benefiting from rising Chinese demand, we observe higher wage growth, lower takeup of cash transfers and positive effects on job quality.

Relational contracts – informal agreements sustained by the value of future relationships – are integral parts of global production processes. This paper develops a repeated-game model of global sourcing in which final good producers decide whether to engage with their suppliers in relational contracting and whether to integrate a supplier into a firm's boundaries or deal with the latter at arm's-length. The model predicts that the relative prevalence of vertical integration increases in the long-term orientation of the headquarters' and suppliers' managers. It further suggests that the share of a foreign subsidiary owned by a final good producer increases in the headquarters' long-term orientation. Combining industry-level data from the U.S. Census Bureau's Related Party Trade database with measures for long-term orientation from Hofstede et al. (2010) and the World Management Survey, I find empirical evidence supportive of the positive link between the long-term orientation of cooperation parties and the relative prevalence of vertical integration. Using information on managerial composition of firms and ownership stakes from the Bureau van Dijk's Orbis database, I find that firms led by long-term oriented managers own higher shares of their foreign subsidiaries.

This paper investigates the heterogeneous response of exporters to real exchange rate fluctuations due to product quality. We model theoretically the effects of real exchange rate changes on the optimal price and quantity responses of firms that export multiple products with heterogeneous levels of quality. The model shows that the elasticity of demand perceived by exporters decreases with a real depreciation and with quality, leading to more pricing-to-market and to a smaller response of export volumes to a real depreciation for higher quality goods. We test empirically the predictions of the model by combining a unique data set of highly disaggregated Argentinean firm-level wine export values and volumes between 2002 and 2009 with experts wine ratings as a measure of quality. In response to a real depreciation, we find that firms significantly increase more their markups and less their export volumes for higher quality products, but only when exporting to high income destination countries. These findings remain robust to different measures of quality, samples, specifications, and to the potential endogeneity of quality.

Poor domestic transportation infrastructure in developing countries is often cited as an important impediment for accessing international markets. Yet, evidence on how transportation infrastructure improvements affect the volume and composition of exports is scarce. Drawing on the large-scale public investment in expressways undertaken in Turkey during the 2000s, this paper contributes to our understanding of how internal trade costs affect regional exports and specialization. Two results emerge. First, we estimate that this road infrastructure project accounts for 15 percent of the export increase from interior regions, generating a 10-year discounted stream of additional export revenues that amount to between 9 and 14 percent of the value of the investment. Second, while the exports of all industries within a given region increase in response to improvements in connectivity to the international gateways of the country, the magnitude of this increase is larger the more time sensitive an industry is. Accordingly, we also observe an increase in the regional employment and revenue shares of such industries. Our results support the hypothesis that internal trade costs can be a determinant of international specialization and comparative advantage.

How are the dynamics of foreign and domestic sales correlated at the firm level? The question is relevant in that the sign of the correlation shapes the international transmission of shocks and the effects of policy measures. From a theoretical perspective, the correlation could be either zero, as assumed by standard international trade models, or negative if firms are capacity constrained, or positive if liquidity constraints dominate. The empirical evidence, however, is rather mixed. Using a sample of Italian manufacturing firms in the period 2001-12, we show that: i) the sign of the correlation changes over the business cycle, being negative in the first part of the past decade and positive after the 2008 crisis; ii) all the channels suggested by the literature are involved and they may explain the time-varying correlation; iii) the drop in domestic sales by Italian firms in 2012, contributed negatively to firms’ exports, and together with liquidity constraints, the fall reduced the growth rate of exports by an average of 0.6 percentage points.

Following Nocke(2012), we develop a model to explain how firms allocate their organizational capital to different products. Using the Chinese export and tax rebate data, we find that the reduction of export tax rebate causes contraction of product scope , and the less competitive products are more likely to be dropped.

We use the autoregressive distributed lag (ARDL) b ounds testing approach for cointegration with structural breaks and the ve ctor error correction model (VECM) Granger causality approach in order to investigate relationships between per capita CO 2 emissions, GDP, renewable and non-renewable energy consumption and international trade (exports or imports) for Tunisia during the period 1980-2009. We show the existence of a short-run unidirectional causality running from tra de, GDP, CO 2 emission and non-renewable energy to renewable energy. Our long-run estimates show that non-renewable energy and trade have a positive impact on CO 2 emissions, whereas renewable energy impacts weakly and negatively CO 2 emission when using the model with exports and this impact is statistically insignificant when using the model wi th imports. The inverted U-shaped environmental Kuznets curve (EKC) hypothesis is not supported graphically and analytically in the long-run. This means that Tunisia has not ye t reached the required level of per capita GDP to get an inverted U-shaped EKC. Our main policy recommendations for Tunisia are the following: (i) to radically reform the subsidies system granted b y the Tunisian government for fossil fuels consumption; (ii) to encourage the use of renewable energy and ener gy efficiency by reinforcing actual projects and regulatory frame work; (iii) to locate ports near exporting industrial zones (or vice versa) to reduce emission of pollution caused by the transport of merchandise; (iv) to elaborate a strategy for maximizing its benefit from renewable energy technology transfer occurring when importing capita l goods; (v) to encourage the creation of renewable energy projects for export to the EU with a proportion of production for national consumption.

This paper studies the main export function features of twelve top clothing exporters (China, Hong Kong, France, Germany, India, Indonesia, Italy, Netherlands, Spain, Turkey, UK and USA) in the period between 1992 and 2011. Price and income elasticities are estimated for each economy using a panel data approach, after controlling for nonstationarity, cointegration and Granger causality. Rolling regressions are also performed, and show the existence of some elasticities instability over time, fundamentally related to the profound economic and institutional changes affecting the clothing trade in the period under consideration. The analysis suggests that most advanced economies, including Hong Kong, changed their position in the global value chain towards an “organizational” role. China confirms its leadership in clothing exports although its rising price elasticity sounds a warning with regard to future prospects.

This paper builds a tractable partial equilibrium model to help explain the role of trade preferences given to developing countries, as well as the efficacy of various subsidy policies. The model allows for firm level heterogeneity in demand and productivity and lets the mass of firms that enter be endogenous. Trade preferences given by one country have positive spillovers on exports to others in this model. Preferences given by the European Union to Bangladesh in an industry raise profits, resulting in entry, and some of these firms also export to the United States. The parameters of the model are estimated using cross sectional customs data on Bangladeshi exports of apparel to the United States and European Union. Counterfactual experiments regarding the effects of reducing costs, both fixed and marginal, or of trade preferences offered by an importing country are performed. The counterfactuals show that reducing fixed costs at various levels has very different effects and suggest that such reductions are more effective in promoting exports when applied at later stages when firms are more committed to production. A subsidy of 1.5 million dollars to industry entry costs raises exports by only 0.4 dollars for every dollar spent, but when applied to fixed costs of production, it raises exports by $25 per dollar spent.

Over the last 20 years the trade literature repeatedly documented the trade-reducing effects of inter- and intra-national borders. Thereby, the puzzling size and persistence of observed border effects from the beginning raised doubts on the role of underlying political borders. However, when observed border effects are not caused by political trade barriers, why should their spatial dimension then inevitably coincide with the geography of present or past political borders? This paper identifies a "border effect" in the absence of a border. Thereby, the finding that trade between East- and West-Japan is 23.1% - 51.3% lower than trade within both country parts, is established in the absence of an obvious east-west division due to historical borders, cultural differences or past civil wars. From a rich set of explanatory variables post-war agglomeration processes, reflected by the contemporaneous structure of Japan's business and social networks, rather than cultural differences, shaped by long-lasting historical shocks, are identified as an explanation for the east-west bias in intra-Japanese trade.

We analyze how a set of traditional as well as new determinants affect trade among European countries over the period 1992–2008. The factors encompass variables from the areas of geography, culture, institutions, infrastructure, and trade direction. Trade is analyzed for three types of goods: primary goods, parts and components, and capital goods. For each type of good we also distinguish its definiti on in terms of flows, intensive margin, and extensive margin. Methodologically we first derive country-pair fixed effects over all possible pairs of export-import partners, and in the second stage we relate fixed effects with a set of influential factors. We show (i) the intuitive and varying effects of geographical, cultural, and institutional factors, (ii) the beneficial effects of soft and hard infrastructure, and (iii) the key importance of the trade between old and new EU members.

We explore the impact of FDI and imports on the upgrading of African exports. We find that South South flows impact differently from North South ones on the ability of recipients to absorb the positive spillovers. Results support the view that South South integration has a strong potential for accelerating structural transformation in the continent. South South FDI foster diversification in key low-tech industries such as agro-industry and textiles, and raise the average quality of manufacturing exports, while importing from the South increases the ability to expand the variety of manufactured exports and to introduce more advanced goods in less-diversified economies. Published version of EUI RSCAS WP 2013/75 Global Governance Programme-68

Some observers argue that increased real integration has led to greater co-movement of prices internationally. We examine the evidence for cross-border price spillovers among economies participating in the pan-Asian cross-border production networks. Starting with country-level data, we find that both producer price and consumer price inflation rates move more closely together between those Asian economies that trade more with one another, ie that share a higher degree of trade intensity. Next, using a novel data set based on the World Input-Output Database (WIOD), we examine the importance of the supply chain for cross-border price spillovers at the sectoral level. We document the increasing importance of imported intermediate inputs for economies in the Asia–Pacific region and examine the impact on domestic producer prices of changes in costs of imported intermediate inputs. Our results suggest that real integration through the supply chain matters for domestic price dynamics in the Asia–Pacific region.

This paper presents a new database of revealed comparative advantage (RCA) measures based on the recent index of RCA proposed by Costinot et al. (2012) . This new index conceptually fits the ex ante and country-sector specific nature of the Ricardian comparative advantage better than the traditional Balassa index. The Balassa index, indeed, being computed directly on observed export flows, does not distinguish between exporter, importer and sector specific factors affecting export flows. The RCA index proposed by Costinot et al. (2012) derives from a micro-foundation of the Ricardian model and, being an econometrically based measure, is able to fit the ex ante nature of Ricardian comparative advantage. Costinot et al. (2012) compute the RCA for a sample of 21 OECD countries and 13 industries (ISIC) in 1997. In this paper, we extend the RCA calculations to the period 1995–2010 up to a HS4 digit product classification for manufacturing (i.e. 1018 products). We also present some empirical distribution features of the new index in comparison with the traditional Balassa index.

We consider a model where exporting requires finding a local partner in each market. Contracts are incomplete and exporters must learn the reliability of their partners through experience. In the model, export behavior is state-dependent due to matching frictions, although there are no sunk costs. Better legal institutions alleviate contracting frictions especially in sectors with large contracting problems. Thus, measures of legal quality help reduce the risk that a match between an exporter and a local distributor splits, and they are all the more effective in sectors that are more exposed to hold-up problems. Moreover, the breaking risk declines with the age of the relationship, as unreliable partners are weeded out. We find strong evidence in favor of the model's predictions when testing them with a French dataset that includes information on firm-level exports by destination country.

Summary This work investigates the impact of importing, exporting, and two-way trading on firm labor demand in Turkish manufacturing. Adopting Multiple Propensity Score Matching techniques and Difference in Difference estimator, we support the positive internationalization impact on firm employment for an emergent country. Our evidence reveals the existence of complementarity effects between exports and imports, which is strengthened for high trade intensity firms. Furthermore, only high intensity exporting seems to promote the workforce skill upgrading in terms of an increase in the R&D worker share. The employment creation effect of firm internationalization reflects its large positive impact on firm production scale.

Over the past two decades, tourism exports have been a major driver of economic growth in many emerging and developing countries. Yet, increased tourism revenues do not automatically translate into structural transformation and broad-based economic development. Drawing on cross-sectional data, this paper gauges the extent to which tourism has contributed to economic diversification in a large sample of developing countries. An econometric model is used to assess the relative importance of a country’s natural endowments, level of development, institutional maturity, business environment, and trade regulations in explaining cross-country differences in linkages between tourism and the general economy. The central findings contain encouraging lessons for developing countries: domains that are more amenable to policy interventions in the short term, such as the business environment or trade regulations, matter most in fostering productive linkages between tourism and the general economy. In contrast, fixed factors, such as land availability, or longer-terms goals, such as advances in the level of development, have less influence.

This paper uses plant level data from Chile to show that an increase in sector-wide exports decreases the survival probability of exporters, but not that of non-exporters. We argue that this result can be explained by the fact that exporters and non-exporters use factors of production in different intensities.

This paper analyzes the role of product quality and labor efficiency in shaping the trade patterns and trade intensities within and across two groups of countries, the developed and richer North and the developing South. Taking prices as a proxy for quality, recent empirical literature identifies a positive relation between income per capita and both export and import prices, suggesting that rich countries trade goods of relatively higher quality. Instead of relying on specific demand side mechanisms such as non-homothetic preferences, we focus on the North-South differences in technology. We employ a four country North-South trade model with two dimensions of firm heterogeneity. Differences in firms’ product qualities and cost efficiencies result in a price distribution generating different consumption bundles and the observed export and import prices across rich and poor countries. Furthermore, the resulting total expenditure allocation across quality shows that the North (South) spends a larger share of its income on high (low) quality even with the same homothetic preferences across regions.

We propose a quantitative framework for the analysis of industrialization in which specialization in manufacturing or agriculture is driven by comparative advantage and non-homothetic preferences. Countries are integrated through trade but trade is not costless and geographic position matters. We use a number of analytical examples and a multi-country calibration to explain two important empirical regularities: (i) there is a strong positive cor-relation between proximity to large markets and levels of manufacturing activity; (ii) there is a positive correlation between the ratio of agricultural to manufacturing productivity and shares of manufacturing in GDP. Our calibrated model replicates these facts and also provides a better fit to cross-sectional data on manufacturing shares than frameworks which ignore the role of trade costs or non-homotheticity. We use the calibrated model to quantitatively ana-lyze the effect of increases in agricultural productivity and a further lowering of trade barriers.

The theory of the firm suggests that firms can respond to poor contract enforcement by vertically integrating their production process. The purpose of this paper is to examine whether firms' integration opportunities affect the way contract enforcement institutions determine international trade patterns. We find that the benefits of judicial quality for the exports of contract-intense goods are more muted in industries that have a greater propensity towards vertical integration arrangements with input suppliers. We show that our results are not driven by primitive industry characteristics. Our results confirm the role of judicial quality as a source of comparative advantage and suggest that this depends not only on the technological characteristics of the goods produced but also on the way firms are able to organize the production process.

This paper estimates the distribution of welfare gains due to the trade reforms in India by simultaneously considering the effect on prices of tradable goods and wages. The cost of consumption for each household is affected by the domestic price changes, while wage incomes adjust to these price changes in equilibrium. Three rounds of the Indian Employment and Consumption Surveys are used for the analysis. The price transmission mechanisms are estimated for both rural and urban areas to understand the extent to which the trade reforms are able to affect the domestic prices. In order to assess the distributional effects, a series of nonparametric local linear regressions are estimated. The findings show that households at all per capita expenditure levels had experienced gains as a result of the trade liberalization, while the average effect was generally pro-poor and varied significantly across the per capita expenditure spectrum.

We provide evidence showing that the degree of diversification of import sources of finely disaggregated commodities rises monotonically along the growth path. This result is robust to different measures of import diversification and the inclusion of a large set of additional control variables. In addition, we show the process of rising import diversification takes place as countries gradually increase their spending shares in imports originating from relatively distant exporters. Highlights ► We measure diversification of import sources using the Gini and Herfindahl index. ► Diversification of import sources rises monotonically along the growth path. ► Import diversification takes place as countries gradually shift spending towards more distant exporters.

Stricter environmental regulations may increase costs and thereby may lead to a loss of competitiveness which implies a decline in exports, increase in imports and in the long term a shift of pollution intensive industries from countries with stringent regulations towards those with less strict ones. This paper estimates a gravity model to establish whether the implementation of more stringent regulations in Romania in accordance with the environmental aquis has indeed affected its competitiveness and decreased exports towards its European trading partners. Our findings do not provide empirical support to this hypothesis, i.e. environmental stringency is not found to affect significantly either trade or its components.

We built a general equilibrium endogenous growth model in which final goods are produced either in the relatively skilled-labour intensive exports sector or in the relatively unskilled-labour intensive domestic sector. We show that, by affecting the technological-knowledge bias, subsidies explain the simultaneous rise in the exports sector, the skill wage premium and the economic growth rate. Then, to shed light upon the causal nexus between production-related subsidies and exports, we use a Portuguese longitudinal database (1996–2003) and implement a propensity score matching approach. Empirical results seem to prove the theoretical predictions: subsidies generate the rise in the wage premium of exporters and the increase in the relative size of export sector, even if no impact of subsidies is found in the capacity of transforming domestic firms into new exporters.

Lecture on the first SFB/TR 15 meeting, Gummersbach, July, 18 - 20, 2004Globalization has been identified by many experts as a new way firms organize their activities and as the emergence of talent as the new stakeholder in the firm. This paper examines the role of trade integration for the changing nature of the corporation. International trade leads to a ’war for talent’ which makes it more likely that an organizational equilibrium emerges in the integrated world economy in which control is delegated to lower levels of the firms’ hierarchy empowering human capital. Furthermore, trade integration is shown to lead to waves of outsourcing and to convergence in corporate cultures across countries.

Electricity markets vary greatly across jurisdictions, in terms of regulatory institutions, cost levels and environmental impacts. Integrating such different markets can lead to significant changes. This paper considers two jurisdictions, one with a regulated monopoly selling at average cost and one with a competitive market, and compares three different institutional regimes: autarky, a mixed-market structure with trade and a fully integrated market, where electricity is sold everywhere at marginal cost. We show that, in the second regime, the regulated monopoly always exports toward the jurisdiction pricing at marginal cost, up to inducing productive inefficiencies. By contrast, a shift from the second to the third regime, i.e. “integrated deregulation” yields a decrease in overall consumption. We identify the exact conditions under which the shift from one regime to the other results in environmental gains.

The exploitation of coltan in Central Africa can be considered a case of conflict minerals due to its nature. Many international organizations and bodies, national governments and private sector organizations seek to address this conflict, in particular via transparency, certification and accountability along the material supply chain. This paper analyses the international trade dimension of coltan and gives evidence on the dimension of illicit trade of coltan. The authors start from the hypothesis that illicit trade of coltan sooner or later will enter the market and will be reflected in the statistics. The paper is structured in the following manner: first, a short section gives a profile of coltan production and markets; second, an overview of the mining situation in the Democratic Republic of Congo (DRC) and related actors. The third section addresses mechanisms, actors and measurement issues involved in the international trade of coltan. The final part draws lessons for certification and conflict analysis and offers some guidance for future research. The paper identifies two main possible gateways to trace illegal trade in coltan: the neighboring countries, especially Rwanda, and the importing countries for downstream production, in particular China. Our estimation is that the value of such illicit trade comes close to $27 million annually (2009), roughly one-fifth of the world market volume for tantalum production. With regard to any certification the paper concludes that this will become challenging for business and policy: (a) Central Africa currently is the largest supplier of coltan on the world market, many actors profit from the current situation and possess abilities to hide responsibility; (b) China will need to accept more responsibility, a first step would be the acceptance of the OECD guidelines on due diligence; (c) better regional governance in Central Africa comprises of resource taxation, a resource fund and fiscal coordination. An international task force may provide more robust data, however more research will also be needed.

We provide a novel set of stylized facts on firms engaging in international trade in services, using unique data on firm-level exports and imports from the world's second largest services exporter, the United Kingdom (UK). We show that only a fraction of UK firms engage in international trade in services, that trade participation varies widely across industries and that services traders are different from non-traders in terms of size, productivity and other firm characteristics. We also provide detailed evidence on the trading patterns of services exporters and importers, such as the number of markets served, the value of exports and imports per market and the share of individual markets in overall sales. We interpret these facts in the light of existing theories of international trade in services and goods. Our results demonstrate that firm-level heterogeneity is a key feature of services trade. Also, we find many similarities between services and goods trade at the firm level and conclude that existing heterogeneous firm models for goods trade will be a good starting point for explaining trade in services as well.

article i nfo Do all exporters benefit the same from export promotion programs? Surprisingly, no matter how obvious this question may a priori be when thinking of the effectiveness of these programs, there is virtually no empirical evidence on how they affect export performance in different parts of the distribution of export outcomes. This paper aims at filling this gap in the literature. We assess the distributional impacts of trade promotion activities performing efficient semiparametric quantile treatment effect estimation on assistance, total sales, and highly disaggregated export data for the whole population of Chilean exporters over the 2002-2006 period. We find that these activities have indeed heterogeneous effects over the distribution of export performance, along both the extensive and intensive margins. In particular, smaller firms as measured by their total exports seem to benefit more from export promotion actions. © 2009 Elsevier B.V. All rights reserved.

This paper examines the ‘exporting job’ hypothesis that expansion of overseas opera­tions of manufacturing multinational enterprises (MNEs) reduces home employment using data for Japanese MNEs. While the existing studies are mainly based on the industry level data, this paper presents the evidence using a newly constructed firm-level panel data set over the period 1991-2002. The evidence does not support the widely-held view in Japanese policy circles that that overseas operations of MNEs expand at the cost of home employment. On the contrary, there is some evidence that overseas operations may have helped to maintain the level of home employment.

The effects of exchange rate risk have interested researchers, since the collapse of fixed exchange rates. Little consensus exists, however, regarding its effect on exports. Previous studies implicitly assume symmetry. This paper tests the hypothesis of asymmetric effects of exchange rate risk with a dynamic conditional correlation bivariate GARCH(1,1)-M model. The asymmetry means that exchange rate risk (volatility) affects exports differently during appreciations and depreciations of the exchange rate. The data include bilateral exports from eight Asian countries to the US. The empirical results show that real exchange rate risk significantly affects exports for all countries, negative or positive, in periods of depreciation or appreciation. For five of the eight countries, the effects of exchange risk are asymmetric. Thus, policy makers can consider the stability of the exchange rate in addition to its depreciation as a method of stimulating export growth.

In a world where poor countries provide weak protection for intellectual property rights (IPRs), market integration shifts technical change in favor of rich nations. Through this channel, free-trade may amplify international wage differences. At the same time, integration with countries where IPRs are weakly protected can slow down the world growth rate. An important implication of these results is that protection of intellectual property is most beneficial in open countries. This prediction, which is novel in the literature, is consistent with evidence from a panel of 53 countries observed in the years 1965–1990. The paper also provides empirical support for the mechanism linking North–South trade to the direction of technical change: an increase in import penetration from low-wage, low-IPRs countries is followed by a sharp fall in R&D investment in a panel of US manufacturing sectors.

This paper examines the hypothesis that industries engaged in international fragmentation of production experience greater skill upgrading using a panel data set of Japanese manufacturing over the period 1980–2000. The novelty of the study comes from the use of a newly constructed index using trade data on parts and components to measure intra-industry variations in the degree of international vertical specialisation (fragmentation intensity of trade). It also employs a methodology designed to embody peculiarities of Japan's fragmentation trade pattern. While the findings of existing studies are inconclusive, it is found that the expansion of fragmentation trade with developing East Asian countries has had a significant impact on the skills composition of Japanese manufacturing employment. At the same time, fragmentation trade with high income countries has had a skill downgrading effect. J. Japanese Int. Economies 22 (4) (2008) 545–565.

Export superstars are important for export growth and diversification and are typically born large. Firm-level data on manufacturing trade from 32 developing countries show that the top five exporters account for on average nearly one-third of exports, 47 percent of export growth, and a third of the growth due to export diversification over a five-year period. Within countries and industries, export growth is positively correlated with the share of exports in the top five firms. Most of the top five exporters were already large five (or eight) years ago or are new firms; it is rare for these export superstars to emerge from the bottom half of the distribution of firm sizes. For countries where detailed data exist, superstars are producers, not traders, and are primarily foreign owned.

When in 1923 Jacob Viner wrote the book, Dumping: A Problem in International Trade, he probably did not imagine that the system devised to eliminate the effects of dumping (i.e., antidumping) would itself become a problem. However, as we celebrate the 100th anniversary of the first antidumping law, the situation is quite different from that observed by Viner. Although his economic analysis on the nature and causes of dumping remains valid, the debate shifted in the early 1990s and now centers on the widespread use of antidumping. This paper documents the evolution of antidumping by examining the pattern of adoptions of antidumping laws and the statistics pertaining to the worldwide caseload. One striking result is the important role played by the new users of antidumping. Rankings based on the intensity of use magnify this conclusion, suggesting that the true dimension of the antidumping phenomenon is only partly revealed by the usual statistics on usage.

This paper analyses the export supply of Australia’s textile products. The long-run relative price elasticity indicates that a one per cent increase in relative price of exports will increase textile exports supplied by 1.83 per cent. The estimated long-run elasticity with respect to production capacity implies that a one per cent increase in the production capacity seems to decrease the textile exports supplied by 3.15 per cent. The estimated long-run elasticity with respect to effective rate of assistance shows that a one per cent decline in the effective rate of assistance will increase the textile exports supplied by 1.54 per cent. Since Australia is unable to influence the world price of textiles, further increases in the supply of textile exports seem to depend on domestic policy actions such as reducing the effective rate of assistance to textile industries and ensuring reductions of cost of production of textiles, for example by lowering of wage costs through labour market and industrial relations reforms.

This paper examines network effects on trade by comparing the trade patterns of foreign affiliates in the United States with the trade patterns of US-owned firms. The evidence strongly supports the following hypotheses: (1) foreign affiliates behave differently from US firms in their trade patterns; (2) in particular, foreign affiliates display strong home biases in their trade patterns; and (3) among the foreign affiliates, Japanese affiliates demonstrate by far the strongest home bias in their trade patterns. Controlling for income and distance effects, foreign affiliates from Canada, France, Germany, the Netherlands and Switzerland traded on average 17 times more with their respective home countries and those from the United Kingdom traded 30 times more with the United Kingdom, while Japanese affiliates traded a whopping 130 times more with Japan. J. Japanese Int. Economies 19 (2) (2005) 194–214.

This paper analyses the choices between regionalism and multilateralism, and the impact of WTO membership on the five Central Asian countries. The two main sections analyse (1) why the large number of regional trade agreements which the Central Asian countries have signed have had little economic impact, and (2) the consequences for the Central Asian countries of Chinese and Russian WTO membership and the consequences of the current Central Asian applicants’ (Kazakhstan, Tajikistan and Uzbekistan) own WTO accession. During the1990s, many regional trade agreements were signed - arrangements both among the Central Asian countries, and between Central Asian countries and their neighbours (Russia to the north, China to the east, and Iran and Turkey to the south) – but not implemented and, although the Kyrgyz Republic became a WTO member in 1998, the Central Asian countries vacillated between pursuing regional and multilateral trade policy avenues. The Central Asian countries’ relationship to the WTO became a more pressing issue after China’s long-running WTO accession negotiations were successfully concluded in December 200 and as Russian negotiations are move forward. At the same time the push towards regionalism is also affected by external events such as the European Union’s deeper integration, symbolized by the appearance of euro banknotes in 2002, and the eastward expansion of the EU in 2004.

This paper estimates the cross-price elasticity of exports with respect to investment costs for bilateral relations between 36 countries. We show that the effect of reducing foreign direct investment costs on exports depends on country characteristics and trade costs as predicted by the Markusen, 1997 , Markusen, 2002 model. When countries differ in relative factor endowments and trade costs are low, investment liberalization stimulates exports, whereas when countries are similar in terms of relative factor endowments and size, and trade costs are moderate to high, investment liberalization reduces exports.

With the availability of international value added trade data it has become evident that gross export data and value added data do not provide the same information. Although gross exports crosses national borders and is the target of trade policy, value added data tell us what fragment in the production chain is internationally competitive in a particular country. With respect to comparative advantage the differences between the two types of data are often illustrated by means of examples using a single sector. In the Ricardian theory of comparative advantage, however, the position of a commodity versus all other commodities in a country determines whether or not a sector has a comparative (dis)-advantage. This implies that distributions of comparative advantage of all sectors should be compared and not just individual sectors. In this paper we determine the distributions of Revealed Comparative Advantage (RCA) in terms of gross exports and value added for 40 countries. A Systematic comparison of these distributions shows that the distributions of RCA calculated with gross exports and value added data are indeed significantly different from each other. After establishing these significant differences we use the Great Recession as an example to determine which RCA measure has the largest information content regarding the real economy. We find that RCA calculated with value added data is the most telling.

This study empirically examines the effects of currency depreciation on the exporting firms' borrowing costs and exports. Using Korean data, first we find evidence that unanticipated currency depreciation increases the firm-level real interest rate for firms carrying foreign-currency debts, and firms in sectors importing intermediate inputs. In addition, the rise in the firm-level real interest rate is driven by long-term foreign-currency debts rather than short-term ones. Next, we show that currency depreciation has a contractionary effect of rising costs of borrowing and imported inputs, and an expansionary effect of an improvement in price competitiveness. However, the overall effect of currency depreciation on exports is ambiguous and depends on the share of foreign-currency debts in total debts and the share of imported intermediate inputs in total inputs.

This paper provides direct evidence of profit shifting to low tax jurisdictions by multinational companies through transfer prices. Using detailed firm level export and import data by origin/destination and product for France, I show that the price wedge between arm's length and related party transactions varies systematically with the differential in corporate tax rate between France and the partner country. Profit shifting through transfer prices is estimated to have reduced the French corporate tax base by 8 bn USD in 2008. Its extent is growing in France over the 2000s. The related missing tax revenues amounts to 10% of the corporate tax paid by multinational groups located in France that trade with related party.

This paper shows that the pricing behavior of exporting firms exhibits a “forward-looking” nature under sticky prices. It offers a channel by which the expectations of future exchange rates affect current prices. To seek the micro-level evidence, we adopt detailed product-level import data of the United States and firm-product-level export data of China combined with forward premiums to study the exchange rate pass-through. We find that not only current (and past) exchange rate fluctuations but also anticipated future exchange rate changes effectively pass through into current prices, suggesting a potentially important factor in help explaining incomplete exchange rate pass-through.

We make the first attempt in the literature to empirically examine the spillover effects of U.S. monetary policy on trade in other countries. In a large sector-level bilateral trade dataset of 137 countries for the years 1970-2000, we find strong and robust evidence supporting an international credit channel of U.S. monetary policy transmission. We show that: 1) financially more constrained sectors have a more negative exposure of their trade to a tight U.S. monetary policy; 2) this international credit channel works mainly during significant U.S. monetary tightening periods (e.g., a large increase in interest rates); 3) the negative impact of a tight U.S. policy is significantly stronger in financially less developed countries or countries with no monetary autonomy.

This research will analyze the effects of the similarities in economic size and institutional level on bilateral trade. It is interested whether similarities at the country size and institutional level encourage international trade between countries. Using panel data of the bilateral trade of Azerbaijan with 50 different countries from 1995 to 2012 estimating by the Poisson Pseudo-Maximum Likelihood (PPML) method, it is expecting that similarity at the income size is not necessary for increasing bilateral trade across countries, on the contrary, country has interest to trade with dissimilar economic-size countries. Institutional similarity is expecting plays pivot role in international relationships and it has positive impact on bilateral trade.

We argue that, under certain conditions, firms consider exports as a substitute for domestic demand. Our econometric model for six euro area countries suggests domestic demand and capacity constraints as additional variables for export equations. We apply the exponential and logistic variant of a smooth transition regression model and find that domestic demand developments are relevant for short-run export dynamics particularly during more extreme stages of the business cycle. A substitutive relationship between domestic and foreign sales can most clearly be found for Spain, Portugal and Italy, providing evidence of the importance of sunk costs and hysteresis in international trade.