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This article talks about international trade in the period between 1862-1879, or the greenback period. F.W. Taussig, a professor, concluded in 1917 that with the U.S., which was using inconvertible paper money as monetary standard, borrowing heavily and continuously from Great Britain, which was using gold as basis, there will be increased sterling supply in New York and lowered cost, in U.S. paper, of imported commodities. The author noted that when both countries are on a gold basis, there will be an influx of gold from Great Britain in the U.S. and general prices will rise, while they fall in Great Britain. He concluded that the large borrowing operations of the U.S. in the 1860s was an important factor in the disturbance of the normal course of trade.

The author focuses on international trade for countries with paper money. He says that foreign exchanges and international trade has an assumption that gold is the basis of the exchange medium in trading countries. He points out that this would not be applicable to trading countries whose monetary systems do not use the same basis. He adds that these kind of transactions would be more affected by inflation and that gold shipments do not influence these exchanges. He argues that international values are not given adequate attention.

The article discusses the mechanisms and processes of international trade under inconvertible paper as the basis of the monetary system. The article examines the mechanisms of international trade as well as the nature of relationships prevailing between international trade and other domestic phenomena such as domestic prices and foreign exchange rate. The international trade between an inconvertible paper and gold standard country is also tackled. There is also a discussion that centers around the purchasing-power parity doctrine.

Comments on an article about the effect of international trade between a borrowing country on an inconvertible paper basis and a lending country on a specie basis. Definition of borrowing and lending; Analysis of international trade; Discussion on the disproportion of borrowing transactions; Effect of loan transaction on prices.

The article presents the comments of college teacher Knut Wicksell about an article by F.W. Taussig about international trade under depreciated paper currency, published in the May 1917 issue of the "Quarterly Journal of Economics." Taussig's response to the comments is also presented. Wicksell says that Taussig discusses the trade between England and the U.S. as an example which is a complex issue. Taussig says that he does not agree with Wicksell's comments.

This paper provides quantitative modelling of the effect of three longer-term global transitions: the global demographic transition involving a marked reduction in population growth; a long-term slowdown in productivity growth which may continue, or may conceivably be reversed; and the disruption in the global economy due to increasing climate shocks and the implementation of climate policies that will be needed to reach net-zero emissions by 2050. We study the global investment needs to which these transitions will lead. We demonstrate that these investment needs will be both asymmetric across countries and over time. This asymmetry will lead to potentially large changes in trade flows and significant financial capital flows across national borders, and also to substantial real exchange changes and interest rate movements. The resulting large movements in international capital flows will have significant implications for the global financial system, which we demonstrate at the country and regional level. [ABSTRACT FROM AUTHOR]

This article points out the error in economist David Ricardo's exposition of his theory of Rent which based on relative land productivity. Ricardo supported the classical theory of international trade, emphasizing national specialization and freedom of competition. His labor theory of value, which influence economist Karl Marx, states that wages are determined by the price of food, which is determined by the cost of production, itself determined by the amount of labor required to produce the food; in other words labor determines value. He feared increasing population would lead to a shortage of productive land.

The papers published in this issue of Economic Policy were presented at the April 2007 Panel meeting, hosted in Frankfurt by the Bundesbank. In this introduction we highlight, and relate to each other and to wider issues, their novel insights into highly topical international trade patterns and productivity dynamics. The type of competition that industrialized countries face from new trading partners has important implications for the income distribution of globalization. Analysis of imports from China and other countries brings a mix of worrisome and reassuring news in this regard. [ABSTRACT FROM PUBLISHER]

This article comments on the decline in productivity in industrialized countries. The rates of growth in productivity relate to the main industrialized countries and are measured from peak to peak. For the world as a whole there has been no obvious decline in the growth of industrial productivity. But, of course, that includes the emerging industrial countries. It was suggested that the years 1973-1975 were so exceptional that they are better omitted in examining medium-term changes in productivity trends. The cartel set its demands simultaneously before all industrialised countries. It thus increased the international synchronisation of economic fiuctuations, and hence also their amplitude. The direct dislocation to production-patterns, caused by the transfer of purchasing-power from industrialised to oil-producing countries, was then compounded by indirect effects resulting from falls in foreign trade. Obviously, the plans of industrialists and their expectations were severely upset by those events. And productivity-growth was lost in those years. Problems in the adjustment for quality-variations, and for the introduction of new varieties, arise even the production of goods was considered and the faster the rate of product-innovation the greater the uncertainty. The U.S. statistics on productivity-growth are equally subject to revision, and it is worth looking at the alternative figures for private manufacturing calculated by the U.S. Bureau of Labour Statistics.

How do trade costs affect international trade? This paper offers a new approach. We rely on a flexible gravity equation that predicts variable trade cost elasticities, both across and within country pairs. We apply this framework to popular trade cost variables such as currency unions, trade agreements and World Trade Organization membership. While we estimate that these variables are associated with increased bilateral trade on average, we find substantial heterogeneity. Consistent with the predictions of our framework, trade cost effects are strong for 'thin' bilateral relationships characterised by small import shares, and weak or even zero for 'thick' relationships. [ABSTRACT FROM AUTHOR]

This paper analyses frameworks for the design of the rules for international trading, assuming that it is possible to have some rule of law. In the Arrow–Debreu benchmark, where there is no economic power and political power is seemingly irrelevant, there is no need for trade agreements—free trade is the optimal policy for each country. But under even minimal deviations from that benchmark, trade agreements matter. We focus on environments in which there are market failures, technology is endogenous, and there is political power. Power dynamics play, for instance, a critical role in the design, implementation, and enforcement of agreements, with the latter being a critical difference between international agreements and domestic contracts and a key determinant of the feasibility and consequences of agreements. With endogenous technology, trade rules proscribing industrial policies may lead to lower growth and greater cross-country inequalities. Finally, we develop a normative framework which may be useful in the design and implementation of trade rules. [ABSTRACT FROM AUTHOR]

As part of its Green Deal, the European Union has advanced a 'Carbon Border Adjustment Mechanism' (CBAM). Reflective of a trend towards greater use of coercive trade measures to advance environmental and other policy objectives, the CBAM would extend carbon pricing to imported goods with the aim of limiting carbon leakage. Theoretical enquiry into this type of policy approach—known as border carbon adjustments (BCAs)—suggests economic and environmental benefits, but typically discounts the role of legal and practical constraints on BCA design and implementation. In this paper, we show why the BCA design commonly featured in past research—basing the adjustment level on default carbon intensities—runs counter to the economic logic of carbon pricing by distorting the incentives for emissions abatement. Requiring producers to demonstrate their actual carbon intensity captures additional economic benefits of carbon pricing and improves the overall legal prospects of a BCA, but adds to its administrative complexity and creates risk of avoidance practices such as 'resource shuffling'. What emerges is a more nuanced understanding of BCAs that highlights the challenges when transitioning from theory to practice. [ABSTRACT FROM AUTHOR]

Ninety percent of the world's fishers are directly involved in small-scale fisheries (SSFs), and many food safety and quality issues along the food value chains may be both irreversible and cumulative. Ensuring safe, high-quality aquatic products are key to sustaining life, promoting good health, and avoiding adverse health effects. Objective This paper aimed to highlight factors preventing the implementation of safety and quality assurance systems in SSFs by analysing the results from surveys on the implementation of Article 11 of the Food and Agriculture Organization of the United Nations (FAO) Code of Conduct for Responsible Fisheries (2017, 2019, and 2022). Materials and methods The analysis considered responses to 15 closed-ended questions on food safety and quality obtained from 143 FAO Members and the European Union, and 87 open-ended replies addressing challenges in SSFs. Results The major factors preventing the implementation of the Code's food safety and quality provisions were lack of sanitation and monitoring programmes, lack of infrastructure (particularly refrigeration facilities) lack of technical capacities and limited management of food safety risks along the value chains. Safety and quality assurance efforts were focused on international markets, resulting in less attention being paid to domestic markets where a high degree of informality was reported. Conclusions Improved implementation of safety and quality assurance systems will lead to safer food with higher nutritional quality, extended shelf-life and reduced post-harvest loss. Increased awareness of food safety issues in SSFs is a prerequisite for achieving several of the UN Sustainable Development Goals. [ABSTRACT FROM AUTHOR]

An introduction to the journal is presented in which the editor discusses various reports in the issue on the topics including the geography of production and international trade, migration of production to lower-cost countries and self-driving tractors operating through satellite control systems.

Terrorist events typically vary along many dimensions, making it difficult to identify their economic effects. This paper analyses the impact of terrorism on international trade by examining a series of three large-scale terrorist incidents in France over the period from January 2015 to July 2016. Using firm-level data at monthly frequency, we document an immediate and lasting decline in cross-border trade after a mass terrorist attack. According to our estimates, France's trade in goods, which accounts for about 70% of the country's trade in goods and services, is reduced by more than 6 billion euros in the first 6 months after an attack. The reduction in trade mainly takes place along the intensive margin, with particularly strong effects for partner countries with low border barriers to France, for firms with less frequent trade activities and for homogeneous products. A possible explanation for these patterns is an increase in trade costs due to stricter security measures. [ABSTRACT FROM AUTHOR]

Written on the occasion of marking the 30th anniversary of the reform and opening-up process starting in 1978 which ushered in a new historical phase of both China's own development and China's interrelation with the world, the paper asserts that international law has played a unique role in this process through facilitating an increasingly broader and deeper mutual engagement and interaction between China and the world. The paper reviews both the benefits China has gained from its engaging with and using international law and the contribution made by China to international law in a wide range of areas covering international commerce and trade, environment protection, climate change, combating transnational crimes, human rights, disarmament, etc. In view of the ongoing significant changes both China and the world order are experiencing, the paper foresees a more important and conducive role for international law in China's future development and presents recommendations for China's better interaction with international law. [ABSTRACT FROM PUBLISHER]

After a lengthy incubation period, electronic bills of lading (eBLs) are at last taking their first tentative steps in the shipping world. Systems currently in operation, however, are closed; only traders, carriers and banks who are members can participate. These closed schemes are not, therefore, true replacements for traditional paper bills of lading (pBLs), which can be used by anyone. Open eBL implementations are very difficult, which is no doubt why practical schemes so far have been closed. While blockchains and smart contracts make no difference to what is possible, they do to what is practicable. In particular, they may render feasible eBL implementations more open than those that have existed until now. They can obviate the need for distrusted central registries, and resolve the digital islands problem which can plague closed schemes. This article considers how an open eBL implementation might work. The schemes suggested here are rendered practicable by the new technology, should the industry choose to go down the eBL route. It may not so choose, at any rate in the short term, but if it does take this route, the article examines the legal obstacles that would need to be overcome. It assumes no change in the existing law, but concludes with a discussion of what lawmakers should consider, were they minded to assist. [ABSTRACT FROM AUTHOR]

The Scarce Currency Clause (SCC) in the IMF's Articles of Agreement (Article VII) was originally designed to establish an effective, automatic mechanism to stimulate the surplus countries to adopt adjustment policies and to correct chronic imbalances. The clause formally authorises countries with a chronic deficit to apply trade discrimination against a surplus country, by imposing tariffs and other restrictions on its exports. But the SCC has never been applied, and its permanence in the IMF's Articles of Agreement appears today as a relic of the past, an example of post-war international cooperation. This paper presents an analytical survey of the debate on the SCC in the first decade of the IMF, exploring the contemporary opinions on the possibility that this instrument could be effectively used to correct the chronic imbalances in the post-war world and to resolve the problem of dollar shortage. More recently, the persistence of current global trade imbalances has stimulated a renewed reflection on the automatic instrument for encouraging or compelling countries to undertake necessary adjustments. The paper is focusing on recent proposals for correcting imbalances against surplus countries. [ABSTRACT FROM AUTHOR]

Capacity mechanisms have been implemented in an uncoordinated way by many countries in Europe in recent years to ensure security of supply. The European Commission has defined, via the state aid guidelines, principles to minimize their impact on trade and competition in European electricity markets. The paper identifies the different drivers of these national reforms, maps the key issues associated with the coordination of capacity mechanisms across countries, and explores alternative approaches to allow for explicit cross-border participation in capacity mechanisms. [ABSTRACT FROM AUTHOR]

Utilizing language measures from a paper by Melitz and Toubal, we estimate a gravity model to examine how various aspects of language may influence bilateral FDI. Our paper shows that while common language can help to foster bilateral FDI between countries, some aspects of language are more important than others. We find that bilateral FDI tends to be higher between countries that share a common official language, have common native languages, or languages that are linguistically proximate. However, it does not appear to be influenced merely by countries speaking a common language. We also observe that common native language, which indicates ethnic ties and trust, is the strongest predictor of FDI. This association is driven mainly by countries sharing English as the native language, but not by countries sharing the same non-English European native languages. [ABSTRACT FROM AUTHOR]

This paper offers a novel perspective on manufacturing home-sourcing. We present evidence that home-sourcing occurs in the context of a new competitive environment where the relative importance of scale economies versus variety is altered, and a recoupling of innovation and production within industrial ecosystems becomes desirable. We look at the determinants of manufacturing home-sourcing. We find that R&D-intensive businesses with core non-standardized products are more likely to switch sourcing of components to the home economy from abroad. Our findings provide evidence in favour of increasing trends towards closer value chains for knowledge-intensive production, suggesting that the possibilities for (and potential impact of) home-sourcing have not been fully recognised as pathways to industrial and economic renewal in mature economies. The implications for industrial policy are to focus on the resilience of existing national industrial ecosystems and their attractiveness and ability to integrate incoming business opportunities. [ABSTRACT FROM AUTHOR]

This paper models the global financial crisis as a combination of shocks to global housing markets and sharp increases in risk premia of firms, households, and international investors in an intertemporal (dynamic stochastic general equilibrium or DSGE) global model. The model has six sectors of production and trade in 15 major economies and regions. The paper shows that a ‘switching’ of expectations about risk premia shocks in financial markets can easily generate the severe economic contraction in global trade and production currently being experienced in 2009 and subsequent events. The results show that the future of the global economy depends critically on whether the shocks to risk are expected to be permanent or temporary. The best representation of the crisis may be one where initial long-lasting pessimism about risk is unexpectedly revised to a more moderate scenario. This suggests a rapid recovery in countries not experiencing a balance sheet adjustment problem. [ABSTRACT FROM PUBLISHER]

To predict the value of trade between countries, a differential gravity model of bilateral trade flowswas formulated and estimated with panel data from 2005 to 2014 for each of the commodity groups HS44 (wood and articles of wood), HS47 (pulp of wood, fibrous cellulosic material) and HS48 (paper and paperboard). The parameters were estimated with a large database by ordinary least squares, fixed-effects and random-effects methods. For the three commodity groups, the results were stable across methods. For HS44, exports were inelastic (0.33±0.19) with respect to the gross domestic product (GDP) of exporters and elastic (1.95±0.15) with the GDP of importers. For HS47, exports were elastic with respect to the exporters GDP (1.67±0.55) and importers GDP (1.10±0.36). Exports of HS48 were inelastic with the exporters GDP (0.81±0.21) and elastic with respect to the importers (1.00±0.14). For all three products, there were marked decreases in exports in 2009 and 2012 independent of GDP. The estimated elasticities were used to predict the growth rate of trade flows from 2015 to 2020 based on exogenous GDP projections of the International Monetary Fund. Another application investigated the effects of the Trans-Pacific Partnership agreement on the trade of forest products between the 12 member countries. [ABSTRACT FROM AUTHOR]

The main purpose of this paper is to apply big-data and scale-free complex network techniques to the study of world trade, with a specific focus on the investigation of ECLAC and structuralist ideas. A secondary objective is to illustrate the potentialities of the use of the new science of complex networks in economics, in what has been recently referred to as an econophysics research agenda. We work with a trade network of 101 countries and 762 products (SITC-4) which generated 1,756,224 trade links in 2013. The empirical results based on network analysis and computational methods reported here point in the direction of what ECLAC economists used to argue; countries with higher income per capita concentrate in producing and exporting manufactured and complex goods at the center of the trade network; countries with lower income per capita specialize in producing and exporting noncomplex commodities at the network's periphery. [ABSTRACT FROM AUTHOR]

This paper discusses the Marshallian Industrial District as it was rediscovered and further developed by Italian economists before tracing the main changes in the market and institutional context in the wake of globalization. It then focuses on some of the main transformations that have taken place in the Italian districts since the 1990s. After highlighting the important role still played by the districts in the Italian economy, the paper develops a framework for the evolutionary processes of the Marshallian Industrial District that would allow reproduction of the district in a manner suited to the era of globalisation. [ABSTRACT FROM AUTHOR]

The paper examines the effects on Italian manufacturing firms of trade cost reduction due to the introduction of the euro over the period 1996-2004. Using the gravity approach and a difference-in-differences (DID) empirical strategy, the results reveal the importance of properly controlling for heterogeneity. The euro's effect on the performance of exporting firms is estimated not to be statistically significant when considering eurozone destination markets as a whole. Nevertheless, an increase of flows to 'peripheral' eurozone countries is channelled through the intensive margin. When heterogeneity in terms of firm-level labour-productivity is controlled for, a competition effect emerges in core markets, with a reduction of the intensive margin for less productive firms and an increase for the more productive ones. Finally, more financial contrained firms decreased the extensive margin in core markets, regardless of their productivity level. [ABSTRACT FROM AUTHOR]

THE purpose of this paper is to present a short-run analysis of the impact and stability of interest rate policies at home and abroad in an open economy model which features explicit expectations and a trade balance which does not instantaneously adjust to changes in its arguments. In this, the paper is different in aim from that of the large number of articles which have appeared since the early sixties dealing with the relative efficiency of fiscal and monetary policy under alternative exchange rate regimes.[2] Instead of contrasting monetary and fiscal policies, a dichotomy which has been shown to be of doubtful value both in a comparative statics and a dynamic sense,[3] we look at in some detail, and attempt to devise a diagrammatic analysis for, only one type of policy, namely interest rate policy.
Throughout the paper, therefore, it will be assumed that government policy other than interest rate policy is constant. The government, when wishing to alter the rate of interest in pursuance of some objective will bring about and maintain a discrete change in the rate of interest using the money supply as the control variable by operations in the money and bond markets. On the other hand, it will never intervene in the foreign exchange markets nor vary any quantitative import controls nor rates of tax or duty on incomes or imports or home-produced goods: nor will it adjust either the level or composition of government expenditure even when unemployment alters. In such a system, in which total tax receipts will depend on incomes which will in turn be affected by changes in interest rates, any change of interest rates by the government will indirectly affect total tax-receipts and the budget surplus (or deficit), since, by assumption, government expenditure stays the same. (If, instead, we had assumed that total tax receipts and the budget surplus (or deficit) remained the same, then tax rates or government expenditure would have had to be adjusted when... [ABSTRACT FROM AUTHOR]

This article attempts to verify writer Gottfried Haberler's assertion in his book "The Theory of International Trade," that economist David Ricardo had considered income effects in the theory of the transfer mechanism. The main aspect of Ricardian theory, which Mason then uses to show that no income effect reasoning has been involved, is the long-run static nature of Ricardo's analysis. This approach to an interpretation of Ricardo's writings on the subject has the added advantage of making many of Ricardo's seemingly inconsistent statements mutually consistent. The main problems discussed in this great debate had to do with the effects on the exchanges of England's paper currency and credit creation, harvest failures, and the payment of foreign subsidies. For the purposes of exposition the analysis at first proceeds on the assumption that a universal gold standard exists. Later on the effects of credit creation under an inconvertible paper standard are examined. An increase of money by 50 per cent would cause wages and prices to rise in an equal proportion. As a consequence imports would increase and exports would decline until the resultant gold-flows would reestablish equal levels of money in all countries and the balance of trade would return to equilibrium.

One of the most fundamental, and most difficult problems in most branches of economic theory is the now familiar one of the" measurement of capital." Most branches of theory, however, ignore the attempts actually being made to measure "capital "--in some instances even the entire problem itself is ignored. Our concern in this short paper is with one such branch of theory,[1] namely, international trade theory, and in that theory with an essential aspect of the so-called factor-proportions theory of the forces that determine the structure of international trade. In this paper we briefly consider the effects on the assessment of relative factor-endowments in two countries when we use alternative methods for measuring the quantity of the factor of production capital that either country possesses. These methods have recently been suggested by capital theorists.[3] 4. There are three main ways in which we can measure overall capital supply, namely:[4] (1) by adding-up the physical units of" capital," as we have already noted; I have dealt with another branch in a forthcoming paper, "Measures of Capital and Definitions of Neutral Technical Progress." 2 See, for example, my recent book, The Ohlin-Heckscher Theory or my paper in the September 1963 issue of the ECONOMIC JOURNAL. 3 Especially, of course, by Mrs. J. Robinson, in her Accumulation of Capital. 4 Robinson, ibid., p. 118. (2) in terms of commodities; and (3) in terms of labour time. [ABSTRACT FROM AUTHOR]

We argue that the recent increases in market concentration and markups are partly due to an 'innovation feedback effect' of globalisation. Lower trade costs increase innovation incentives for global firms. As the winners of the ensuing innovation race increase their technological advantage, concentration and markups rise. We develop an endogenous growth model capturing this effect and calibrate it to US manufacturing data. We find that the increase in trade between 1989 and 2007 raised the aggregate markup by 3.5 percentage points. This is entirely due to innovation: without the innovation response, markups would have fallen by 4 percentage points. [ABSTRACT FROM AUTHOR]

The goal of this paper is to assess the impact of the euro on the relationship between firm size and exports. We employ previous new-new trade theory models to derive some hypotheses that are tested using a representative sample of Spanish manufacturing firms. The results indicate that the introduction of the euro has remarkably weakened the role of firm size in the decision to export to the Eurozone. What is more, the change in the proportion of exports to the Eurozone is negatively related to firm size. Our results suggest that the euro has reduced the threshold size in order to export to Eurozone countries. [ABSTRACT FROM AUTHOR]

This paper develops a model of North-South trade and economic development. The model is consistent with two empirical facts: (1) the growth rate of income per capita differs across countries; and (2) the relationship between the growth of population and that of income per capita differs for developed and developing countries. We assume that the North and the South are characterized by increasing-returns-to-scale and decreasing-returns-to-scale technologies, respectively. Real national income grows at the same rate in both countries along the balanced growth path owing to a terms of trade effect. However, real income per capita grows at different rates because of population growth differentials. In developed countries, the correlation between population growth and income per capita growth can be positive or negative while in developing countries, the correlation is negative. [ABSTRACT FROM AUTHOR]

We extend the theoretical framework in Cuñat and Melitz (2007) to a many-country setup where countries exhibit different degrees of labor market flexibility. We rely on the insights from a recent paper by Costinot (2009) to obtain precise predictions about comparative advantage in this setting: countries with more flexible labor markets specialize in more volatile industries. [ABSTRACT FROM AUTHOR]

This paper analyzes the determinants of protectionism in a small open economy with search frictions. In this environment, jobs generate rents whose access depends on the level of trade protection. By raising the domestic price of a good, a government may attract more firms in a particular industry. This raises the probability that workers will find jobs in this sector, and in turn, will benefit from the associated rents. Though simple, this channel may help explain a variety of stylized facts on the structure of trade protection and individual trade-policy preferences. [ABSTRACT FROM AUTHOR]

The aim of this paper is to analyse the consequences of some structural reforms on the institutional coherence of OECD countries. particularly in Continental Europe, and on their economic performance, particularly as regards employment. Because institutions in developed political economies are interrelated through a complex network of complementarities, institutional change has consequences beyond the area concerned in a reform. This also implies that there are complementarity effects in reforms themselves. A challenge of reform programmes is therefore to achieve a new type of complementarity between reformed institutions. The paper presents empirical evidence questioning the compatibility of the ongoing structural reforms in product and labour markets with the existing institutional structures in some OECD countries. The coherence of the flexicurity strategy, i.e. a combination of labour-market flexibility and a generous welfare state, is also questiones, from the point of view of both economic efficiency and political economy. [ABSTRACT FROM AUTHOR]

This paper assesses the effect of import competition on the labour market and health outcomes of US workers. We first show that import shocks affect employment and income, but only in areas where jobs are more intense in routine tasks. Exploiting over 40 million individual observations on health and mortality, we find that import had a detrimental effect on physical and mental health that is concentrated in those areas and exhibits strong persistence. It decreased healthcare utilisation and increased hospitalisation for a large set of conditions, more difficult to treat. The mortality hazard of workers in manufacturing increased by up to 6% per billion-dollar import increase. [ABSTRACT FROM AUTHOR]

We study the effects of real exchange rate (RER) changes on trade flows considering the skill content and origin/destination of products in a North–South framework. The empirical analysis is based on bilateral trade flows in five product categories of technology-and-skill intensities between 172 countries during 1962–2012. Consistent with the development channel, we find that both the composition and direction of trade affect how exports respond to RER changes. We find that high-skill manufactures and primary goods are the least affected from RER depreciation and volatility. The strongest effects are found for medium-skill, low-skill and resource-intensive manufactures. We also show that these effects depend on the direction of trade. Southern exports are more sensitive to RER than Northern exports in all product categories except for primary goods. Regarding volatility, South–North exports are hurt the most while North–South the least. Also, South–South exports appear to be less sensitive to volatility in all product groups than South–North. Overall, this paper provides a synthesis of the recent neoclassical international trade literature with the heterodox development literature. [ABSTRACT FROM AUTHOR]

This paper tests propositions advanced in previous theoretical literature about the impact of international economic integration via trade and investment on environmental protection with a case study of China. We hypothesize that instead of leading to additional environmental degradation, increased openness to trade and foreign investment results in an overall improvement in environmental quality by acting as a transmission belt for superior regulatory standards and environmental technology from China’s key export markets. Additionally, pressure for enhanced environmental regulation and product standards from principal developed-world importers of Chinese goods may induce Chinese firms to self-regulate rather than attempting to reduce the cost of their exports by lowering environmental standards. Statistical analysis of the variation in environmental performance across China’s regions from 1996 to 2004 lends support to this hypothesis, indicating that rather than leading regions to engage in a “race to the bottom” with the lowering of environmental standards, increased trade and investment encourages more stringent policy enforcement and compliance. [ABSTRACT FROM AUTHOR]

This paper derives a balance-of-payments equilibrium growth rate analogous to Thirlwall's Law from a Pasinettian multi-sector macrodynamic framework. The resulting formula, which we call the Multi-Sectoral Thirlwall's Law, asserts that a country's growth rate of per capita income is directly proportional to the growth rate of its exports, with such a proportionality being inversely (directly) related to sectoral income elasticities of demand for imports (exports). These income elasticities are weighted by coefficients that measure the share of each sector in total imports and exports, respectively. It is shown that several theoretical, empirical and policy implications can be drawn from such a structural economic dynamics approach to balance-of-payments-constrained growth. [ABSTRACT FROM AUTHOR]

Institutions—quality of contract enforcement, property rights, shareholder protection, and the like—have received a great deal of attention in recent years. Yet trade theory has not considered the implications of institutional differences, beyond treating them simply as different technologies or taxes. The purpose of this paper is twofold. First, we propose a simple model of international trade in which institutional differences are modelled within the framework of incomplete contracts. We show that doing so reverses many of the conclusions obtained by equating institutions with productivity. Institutional differences as a source of comparative advantage imply, among other things, that the less developed country may not gain from trade and factor prices may actually diverge as a result of trade. Second, we test empirically whether institutions act as a source of trade, using data on U.S. imports disaggregated by country and industry. The empirical results provide evidence of “institutional content of trade”: institutional differences are an important determinant of trade flows. [ABSTRACT FROM AUTHOR]

This paper constructs a framework for analysing the welfare effects of free trade areas. We provide an alternative verification of the Panagariya-Krishna proposition on free trade areas, shortening the proof, covering a broader set of circumstances, and showing the necessary income flows to guarantee welfare gains to all members. The paper provides a theoretical parallel to the important Kemp and Wan custom union theory. [ABSTRACT FROM AUTHOR]

This paper re-examines the determinants of trade policy. It modifies the Grossman- Helpman model of trade policy to take account of factors besides lobby contributions that may lead politicians to value rents differently across industries. The idea is motivated by the puzzling results of the recent empirical work on the Grossman-Helpman model. The empirical work in the paper based on US data confirms that lobby contributions do not play obvious roles in trade policy. Rather, trade policies seem to be placing higher weights on the earnings of industries where lower skill workers and smaller, less capital intensive firms are more prevalent. It is argued that this can be explained by the credit and insurance constraints that such agents tend to face. The weakness of lobby contributions in predicting protectionism across industries may be due to the variety of alternative goals that lobbies pursue and the diversity of interests within each industry. Also, the industries with well-organized and well-funded lobbies may have easier access to more efficient fiscal and financial transfers. The approach adopted in this paper paves the way for examining a variety of determinants of trade policy in a broader framework. The regularities observed here have far-reaching implications for the pattern and evolution of trade policies. [ABSTRACT FROM AUTHOR]

This paper defines de-industrialisation as a secular decline in the share of manufacturing in national employment. De-industrialisation, in this sense, has been a widespread feature of economic growth in advanced economies in recent decades. The paper considers briefly what explains this development and quantifies some of the factors responsible. It then examines the experience of Britain and America, which are two countries that have combined rapid de-industrialisation with a strong overall economic performance. The paper considers both the domestic situation of manufacturing industry in these countries and its foreign trade performance. It concludes by examining in detail the British balance of payments, and documenting how improvements in the non-manufacturing sphere have helped offset a worsening performance in manufacturing trade. [ABSTRACT FROM AUTHOR]

This paper applies the principles of the neo-Ricardian (or Sraffian) theory of international trade to certain joint production systems. It is shown that, in contrast with single-product systems, (1) there is not always a pattern of international specialisation, which would entail the increase of the real wage rate in both economies, and (ii) the 'law of comparative advantage' has no general validity. Furthermore, not only the existence of such a pattern of specialisation but also the validity of this law depend on the values of the variables of distribution of income. The analysis is wholly based on two of the numerical examples formulated by Bidard in 1997, and neither generalised in an elementary way only when this is considered necessary. [ABSTRACT FROM AUTHOR]

This paper examines the evidence about the extent of globalisation by focusing on some aspects of international trade flows. A reinterpretation of the existing evidence based on the analysis of tables and a range of indicators is provided in the first pan of the paper. The focus is on whether the increase in trade flows has been predominantly a global or regional phenomenon. The analysis points to the tentative conclusion that the dominant tendency is the increase in trade within regional blocs (North America, the EU and the Asia-Japan blocs) rather than across them. To address the same question, a more formal analysis is undertaken in the second pan of the paper, by focusing on the relative speed of the convergence in openness within and across regions of the world. Our results indicate that the degree of openness converges faster across the countries of a given region rather than at the global level, reinforcing the conclusions from the first part of the paper. The results are consistent with the view that trade integration is more of a `regional' phenomenon than a `global' one. [ABSTRACT FROM AUTHOR]

This paper develops a model to analyse how skill premia differ over time and across countries, and uses this model to study the impact of international trade on wage inequality. Skill premia are determined by technology, the relative supply of skills, and trade. Technology is itself endogenous, and responds to profit incentives. An increase in the relative supply of skills, holding technology constant, reduces the skill premium. But an increase in the supply of skills over time also induces a change in technology, increasing the demand for skills. The most important result of the paper is that increased international trade induces skill-biased technical change. As a result, trade opening can cause a rise in inequality both in the U.S. and the less developed countries, and thanks to the induced skill-biased technical change, this can happen without a rise in the relative prices of skill-intensive goods in the U.S., which is the usual intervening mechanism in the standard trade models. [ABSTRACT FROM AUTHOR]

In his seminal work on tariff retaliation, Johnson (Review of Economic Studies, 21, 1953–1954) showed that a country will “win” a bilateral “tariff war” if its relative monopoly/monopsony power in world trade is sufficiently large. However, it is unclear from Johnson’s analysis and from subsequent research on the subject how this power is determined in general economic environments. An important goal of this paper is to address this issue. With the help of a neoclassical trade model in which country size is at centre stage, it is shown that a sufficient condition for a country to prefer a non–cooperative Nash tariff equilibrium (retaliation) over free trade is that its relative size be sufficiently large. The paper also refines the structure of the general trade model and generates additional characterization results on the importance of country size for best–response tariff functions, retaliatory tariffs, and welfare. [ABSTRACT FROM AUTHOR]

This paper explains how and why entrepreneurship has emerged as a key component of economic policy to enhance the economic growth performance. Understanding the linkages between entrepreneurship and economic growth requires drawing upon four disparate literatures: international trade and growth, innovation, entrepreneurship, and economic geography. Integrating the key insights from these literatures provides a framework highlighting the important role played by entrepreneurship in economic policy knowledge to enhance the economic growth performance, particularly at the local and regional levels. [ABSTRACT FROM AUTHOR]

The article comments on the paper "Classical Theory: Graham's Theory and Linear Programming in International Trade,'" by T.M. Whitin published in the November 1953 issue of "The Quarterly Journal of Economics." In his illuminating paper T. M. Whitin has portrayed Graham's theory of international trade in two versions. Firstly, as a geometrical approach representing a two-commodity, three-country model and secondly, as an algebraically formulated model for commodities and countries. The paper also try to formulate within's geometrical approach to Graham's theory in more appropriate terms of algebra, thus revealing that immediate relations between Graham's theory and linear programming as pointed out by Whitin on the basis of his algebraic model, do not exist. The article informs that Whitin's geometrical representation of Graham's theory differs from his algebraic model. In the formulation of Whitin's geometrical representation of Graham's theory there is no problem of maximizing the value of world trade.