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Browsing by Subject "Welthandel"

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Comparative advantage of Vietnam's rice sector under different liberalisation scenarios: a policy analysis matrix (PAM) study
(2004) Nguyen, Manh Hai; Heidhues, Franz
The rapidly changing global economic environment and domestic economic reforms in Viet-nam have brought the issue of comparative advantage of the rice sector to the forefront. In recent years, Vietnam has had to compete in an increasingly competitive rice export market. This paper examines the fluctuations in the comparative advantage of Vietnamese rice production based on different scenarios of trade liberalisation and economic reform in Viet-nam. To do this, a Policy Analysis Matrix (PAM) was used in conjunction with an econo-metric model. The study involved simulation of a large number of scenarios of trade liberalisation and macroeconomic reform, using variations in a single factor and in a group of factors such as product price and input costs, i.e., the price of imported fertilisers, land, water and labour costs, etc. The empirical results show that in 1998 (the baseline scenario), the comparative advantage in rice was relatively high and that the use of domestic resources ? i.e., land, labour and water ? was efficient in economic terms. The estimated DRC elasticities in respect of the world rice price and the shadow exchange rate in 1998 showed a considerably improved com-parative advantage. The estimated DRC elasticities for land rent, the social costs of labour, the import price of fertilisers and irrigation water charges were small in absolute values indi-cating small and negative impacts on comparative advantage with a rise in these prices. The results of sensitivity analyses revealed that the comparative advantage of rice is very sensitive to changes in its export price. In addition, the exchange rate and land rent are also important determinants of the rice sector?s comparative advantage in Vietnam. Other empirical results show that Vietnam is still likely to retain its comparative advantage in rice production in the next decade; however, its comparative advantage might be seriously affected or even dis-appear entirely if Vietnam is exposed to a number of unfavourable economic conditions simultaneously. The major recommendation of this paper is that production should be diversified, with appropriate agricultural policy support, within a broader framework of macroeconomic transformation and trade liberalisation.
Ethnic networks, information, and international trade : revisiting the evidence
(2009) Felbermayr, Gabriel; Jung, Benjamin; Toubal, Farid
Influential empirical work by Rauch and Trindade (REStat, 2002) finds that Chinese ethnic networks of the magnitude observed in Southeast Asia increase bilateral trade by at least 60%. We argue that this estimate is upward biased due to omitted variable bias. Moreover, it is partly related to a preference effect rather than to enforcement and/or the availability of information. Applying a theory-based gravity model to ethnicity data for 1980 and 1990, and focusing on pure network effects, we find that the Chinese network leads to a more modest amount of trade creation of about 15%. Using new data on bilateral stocks of migrants from the World Bank for the year of 2000, we extend the analysis to all potential ethnic networks. We find, i.a., evidence for a Polish, a Turkish, a Mexican, or an Indian network. While confirming the existence of a Chinese network, its trade creating potential is dwarfed by other ethnic networks.
Input-output linkages and monopolistic competition : input distortion and optimal policies
(2021) Kohler, Wilhelm; Jung, Benjamin
In this paper, we provide a detailed analysis of a mechanism that distorts production towards too much use of primary factors like labor and too little use of intermediate inputs. The distortion results from two ingredients that are cornerstones of modern quantitative trade theory: monopolistic competition and input-output linkages. The distortion as such is unrelated to trade, but has important consequences for trade policy, including a positive first-order welfare effect from an import subsidy. For a crystal-clear view on the distortion, we first look at it in a single-sector, closed economy where the monopolistic competition equilibrium would be efficient without the presence of input-output linkages. We compare the social-planner-solution with the decentralized market equilibrium, and we identify first-best policies to correct the distortion. To analyze the trade policy implications we then extend our analysis to a setting with trade between two symmetric countries. We identify first-best cooperative policies, featuring nondiscriminatory subsidies of intermediate input use, aswell as non-cooperative trade policies where countries use tariffs to weigh terms of trade effects against benefits from correcting the input distortion.
The effect of culture on trade over time : new evidence from the GLOBE data set
(2018) Frank, Jonas
In this essay I use the GLOBE research study by House et al. (2013) as a proxy for measuring cultural distance. Unlike other studies, GLOBE introduces nine cultural dimensions and focuses exclusively on managers, allowing for a distinct glimpse into the values of people actually making trade decisions. I make use of a state-of-the-art PPML approach using data on international trade flows together with intra-national trade flows (Yotov, 2012) and a comprehensive set of fixed effects to consistently es- timate a gravity equation using a panel from 1995 to 2004. I distinguish between different industries by following the goods classiffcation introduced by Rauch (1999). The results show that cultural differences indeed affect trade values differently over time, but their size and impact depends on the chosen measure of cultural distance and on the industry classification.
The effects of economic sanctions on trade : new evidence from apanel PPML gravity approach
(2018) Frank, Jonas
Economic sanctions are a popular diplomatic tool for countries to enforce political demands abroad or to punish non-complying countries. There is an ongoing debate in the literature about whether this tool is effective in reaching these goals. This paper looks at the consequences of sanctions for bilateral trade values between 1987 and 2005. In order to quantify the direct effects of sanctions on the trade flows between countries I use PPML as well as several other econometric specifications to estimate the gravity equation with country pair, sender-time, and target-time fixed effects. Following Heid et al. (2015) I include intra-national as well as international trade flows, to reduce the endogeneity bias of trade policy instruments. The estimates reveal that there is a signifucant decrease in the value of trade after the introduction of sanctions, which turns out to be driven by moderate sanctions. I also check whether countries that are affected by sanctions switch to other trade partners, but here is no robust evidence for behavior like this.
The pro-trade effect of the brain drain : sorting out confounding factors
(2008) Jung, Benjamin; Felbermayr, Gabriel J.
We sort out confounding factors in the empirical link between bilateral migration and trade. Using newly available panel data on developing countries? diaspora to rich OECD nations in a theory-grounded gravity model, we uncover a robust, causal pro-trade effect. Moreover, we do not find evidence in favor of strong differences across education groups.
Trade and unemployment : what do the data say?
(2009) Felbermayr, Gabriel; Prat, Julien; Schmerer, Hans-Jörg
This paper documents a robust empirical regularity: in the long-run, higher trade openness is causally associated to a lower structural rate of unemployment. We establish this fact using: (i) panel data from 20 OECD countries, (ii) cross-sectional data on a larger set of countries. The time structure of the panel data allows to deal with endogeneity concerns, whereas cross-sectional data make it possible to instrument openness by its geographical component. In both setups, we carefully purge the data from business cycle effects, include a host of institutional and geographical variables, and control for within-country trade. Our main finding is robust to various definitions of unemployment rates and openness measures. The preferred specification suggests that a 10 percent increase in total trade openness reduces unemployment by about one percentage point. Moreover, we show that openness affects unemployment mainly through its effect on TFP and that labor market institutions do not appear to condition the effect of openness.
Trade intermediation and the organization of exporters
(2009) Felbermayr, Gabriel; Jung, Benjamin
The business literature shows that exporting rms typically require the help of foreign trade intermediaries or need to set up own foreign wholesale affiliates. In contrast, conventional trade theory models assume that producers can directly access foreign consumers. This paper models the endogenous emergence of intermediaries in an international trade model where producers differ with respect to productivity as well as regarding their varieties' perceived quality and tradability. We assume that trade intermediation is prone to frictions due to the absence of enorceable cross-country contracts while own wholesale subsidiaries require capital investment. We derive the sorting pattern of rms according to their degree of competitive advantage and show how the relative prevalence of intermediation depends on the degree of heterogeneity among producers, on the importance of market-specificity of goods, or on expropriation risk. We use US export data for 50 sectors and 133 destination countries to check the empirical validity of this predictions and find robust empirical support.
Unemployment in an interdependent world
(2009) Felbermayr, Gabriel; Larch, Mario; Lechthaler, Wolfgang
We introduce search and matching unemployment into a model of trade with differentiated goods and heterogeneous firms. Countries may differ with respect to size, geographical location, and labor market institutions. Contrary to the literature, our single-sector perspective pays special attention to the role of income effects and shows that bad institutions in one country worsen labor market outcomes not only in that country but also in its trading partners. This spill-over effect is conditioned by trade costs and country size: smaller and/or more centrally located nations suffer less from inefficient policies at home and are more heavily affected from spill-overs abroad than larger and/or peripheral ones. We offer empirical evidence for a panel of 20 rich OECD countries. Carefully controlling for institutional features and for business cycle comovements between countries, we confirm our qualitative theoretical predictions. However, the magnitude of spill-over effects is larger in the data than in the theoretical model. We show that introducing real wage rigidity can remedy this problem.
WTO membership and the extensive margin of world trade : new evidence
(2009) Felbermayr, Gabriel; Kohler, Wilhelm
Recent literature has argued that, contrary to the results of a seminal paper by Rose (2004), WTO membership does promote bilateral trade, at least for developed economies and if membership includes non-formal compliance. We review the literature in order to identify open issues. We then develop the simplest possible \corner-solutions" version of the gravity model which serves as a framework to readdress these issues. We focus on the extensive margin of trade that separates positive-trade from zero-trade country pairs. We argue that the model can be consistently estimated using Poisson pseudo-maximum-likelihood methods with exporter and importer fixed effects. We account for coding issues and the potential heterogeneity of the WTO membership which recent contributions have stressed. While we find that WTO membership increases the likelihood that a given country pair trades, we do not find that the extensive margin has a strong and systematic effect on the average trade-creating potential of the WTO.

Browsing by Subject "Welthandel"

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