The changes in globalization and in the world of international business make it necessary to rethink the basic model of the economics of international business. For most of the 2nd half of the 20th centuryinternational business was about how large companies in the developed countries increase their valuevia international business activities. Not surprisingly the research in the economics of international business from Caves, Kindleberger, and Hymer to Buckley and Casson, Dunning, and many others was based on models of industrial organization. The world has changed and international business has become a two-way street where firms and governments from emerging markets and small countries are as active as the developed countries MNEs and their governments. In this paper the basic international trade model is used to gain insights of the new world of international business. In particular, a dynamic model of changing factor intensity and of creating local specific competitive and comparative advantages for firms and governments from emerging markets is presented and discussed.
{"title":"Market Globalization by Firms from Emerging Markets and Small Countries: An Application of the Neoclassical Trade Model","authors":"T. Agmon","doi":"10.2139/ssrn.1489623","DOIUrl":"https://doi.org/10.2139/ssrn.1489623","url":null,"abstract":"The changes in globalization and in the world of international business make it necessary to rethink the basic model of the economics of international business. For most of the 2nd half of the 20th centuryinternational business was about how large companies in the developed countries increase their valuevia international business activities. Not surprisingly the research in the economics of international business from Caves, Kindleberger, and Hymer to Buckley and Casson, Dunning, and many others was based on models of industrial organization. The world has changed and international business has become a two-way street where firms and governments from emerging markets and small countries are as active as the developed countries MNEs and their governments. In this paper the basic international trade model is used to gain insights of the new world of international business. In particular, a dynamic model of changing factor intensity and of creating local specific competitive and comparative advantages for firms and governments from emerging markets is presented and discussed.","PeriodicalId":14396,"journal":{"name":"International Trade","volume":"18 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2009-07-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85196687","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The mobility of skilled labor across firms has been identified as an important source of regional advantage. Scholars have shown how cultural, economic, and legal conditions (such as the nonenforceability of covenants not to compete) affect the development of high tech sectors that are geographically concentrated. This paper explores to what extent these theories are applicable to the movement of skilled labor across national borders. This inquiry is relevant because the United States enacted the Economic Espionage Act in 1996, and this Act has been used to prosecute non-US skilled workers for theft of trade secret. The Act has application to mobility within the United States as well. To what extent are justifications for the Economic Espionage Act of 1996 mitigated by its effects on labor mobility and the accompanying transfer of knowledge and technology? This paper addresses this question through a theoretical discussion of international trade and mobility of labor and knowledge across borders and an assessment of the case law under the Economic Espionage Act. The author criticizes the Act because of its effect on the transfer of knowledge and makes the case for open borders to promote the mobility of knowledge. Several policy implications are drawn for limits on the Economic Espionage Act, including extraterritorial application of state trade secret law and federal patent law.
{"title":"Open Borders, Intellectual Property Policy, and Federal Criminal Trade Secret Law","authors":"Shubha Ghosh","doi":"10.2139/SSRN.1434135","DOIUrl":"https://doi.org/10.2139/SSRN.1434135","url":null,"abstract":"The mobility of skilled labor across firms has been identified as an important source of regional advantage. Scholars have shown how cultural, economic, and legal conditions (such as the nonenforceability of covenants not to compete) affect the development of high tech sectors that are geographically concentrated. This paper explores to what extent these theories are applicable to the movement of skilled labor across national borders. This inquiry is relevant because the United States enacted the Economic Espionage Act in 1996, and this Act has been used to prosecute non-US skilled workers for theft of trade secret. The Act has application to mobility within the United States as well. To what extent are justifications for the Economic Espionage Act of 1996 mitigated by its effects on labor mobility and the accompanying transfer of knowledge and technology? This paper addresses this question through a theoretical discussion of international trade and mobility of labor and knowledge across borders and an assessment of the case law under the Economic Espionage Act. The author criticizes the Act because of its effect on the transfer of knowledge and makes the case for open borders to promote the mobility of knowledge. Several policy implications are drawn for limits on the Economic Espionage Act, including extraterritorial application of state trade secret law and federal patent law.","PeriodicalId":14396,"journal":{"name":"International Trade","volume":"65 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2009-07-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"79742984","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The economic analysis of trade-secret protection has traditionally focused on the interests of companies to conceal information from competitors in order to gain a competitive advantage through trade-secret law. This has neglected cases in which the interest is not in concealing information from competitors, but from trading partners. We investigate the social efficiency effects of trade-secret protection in such cases. Many results from economic theory state that asymmetric information (and therefore also its legal protection) is socially undesirable since it leads to inefficient trade. At the same time, protecting private information might create incentives for socially desirable investments. We model this trade-off in a simple buyer-seller model and find that, indeed, trade-secret protection has ambiguous welfare effects. However, a simple, informationally undemanding rule, conditioning the applicability of legal protection on a minimum investment by the informed party to conceal the information, helps to apply trade-secret protection only when it increases welfare. This rationalizes important features of current legal practice.
{"title":"An Economic Analysis of Trade-Secret Protection in Buyer-Seller Relationships","authors":"S. Bechtold, Felix Höffler","doi":"10.1093/JLEO/EWP020","DOIUrl":"https://doi.org/10.1093/JLEO/EWP020","url":null,"abstract":"The economic analysis of trade-secret protection has traditionally focused on the interests of companies to conceal information from competitors in order to gain a competitive advantage through trade-secret law. This has neglected cases in which the interest is not in concealing information from competitors, but from trading partners. We investigate the social efficiency effects of trade-secret protection in such cases. Many results from economic theory state that asymmetric information (and therefore also its legal protection) is socially undesirable since it leads to inefficient trade. At the same time, protecting private information might create incentives for socially desirable investments. We model this trade-off in a simple buyer-seller model and find that, indeed, trade-secret protection has ambiguous welfare effects. However, a simple, informationally undemanding rule, conditioning the applicability of legal protection on a minimum investment by the informed party to conceal the information, helps to apply trade-secret protection only when it increases welfare. This rationalizes important features of current legal practice.","PeriodicalId":14396,"journal":{"name":"International Trade","volume":"16 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2009-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73974852","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Provided in this report is information summarizing the global competitive dynamics and pressures on the PM part manufacturing industry in north central Pennsylvania. Information is provided about the geographic/economic region in which the industry operates. A brief description of PM manufacturing materials and processes is presented. Then, an analysis is reported of the economic and workforce structure of PM part manufacturing industry in north central Pennsylvania. Last, evidence of competitive forces affecting the industry is drawn from structured face-to-face and telephone meetings, gleaned during plant tours and over informal lunches, linked by following trends and themes in documents, and captured in confidences revealed in unstructured personal conversations. These competitive forces are summarized around five themes: the threat of entry of new competitors; bargaining power of customers; bargaining power of suppliers; the threat (and opportunity) posed by substitute products; and the nature of competitive rivalry within the PM part manufacturing industry. The kernel of competition in the PM part manufacturing industry is summarized in the following simple statements:• The north central region of Pennsylvania is an economic region that is the locus of PM part manufacturing industry activity in the United States. It generates much economic good in the region for individuals and institutions. The industry is both a jewel and a bellwether for the Pennsylvania economy. The competitiveness of the PM part industry is a lynchpin economic driver in Pennsylvania, in general, and the north central region, in particular.• The PM part manufacturing industry brings unique and specialized manufacturing know–how from Pennsylvania to the world through its economic and technological contribution and potential.• New competitors can enter the industry at the low end with modest capital and knowledge of PM parts manufacturing. However, to play at the high end, new market entrants require deeper pockets. • Foreign involvement and ownership are diffusing around the world the specialized knowledge and human capital that formerly was localized to north central Pennsylvania. Competition is not local any more. It is global.• PM part manufacturers compete aggressively and almost solely on the basis of price.• Poor understanding and inaccurate perceptions held by customers about the materials, processes, and end-products of PM part manufacturing affect the competitive position of the industry.• The PM industry deals with a small number of large suppliers and customers who have the power to dictate the ability of PM part manufacturing firms to cover their costs and make a profit. • The PM part manufacturing industry is small relative to the entire manufacturing sector and, in particular, within the fabricated metal product manufacturing subsector. Just on these scale factors alone, opportunities probably are large for capturing metal fabrication opportunities from othe
{"title":"Global Competitiveness of Powder Metallurgy Part Manufacturing in North Central Pennsylvania","authors":"R. Baker, D. Passmore","doi":"10.2139/ssrn.1426266","DOIUrl":"https://doi.org/10.2139/ssrn.1426266","url":null,"abstract":"Provided in this report is information summarizing the global competitive dynamics and pressures on the PM part manufacturing industry in north central Pennsylvania. Information is provided about the geographic/economic region in which the industry operates. A brief description of PM manufacturing materials and processes is presented. Then, an analysis is reported of the economic and workforce structure of PM part manufacturing industry in north central Pennsylvania. Last, evidence of competitive forces affecting the industry is drawn from structured face-to-face and telephone meetings, gleaned during plant tours and over informal lunches, linked by following trends and themes in documents, and captured in confidences revealed in unstructured personal conversations. These competitive forces are summarized around five themes: the threat of entry of new competitors; bargaining power of customers; bargaining power of suppliers; the threat (and opportunity) posed by substitute products; and the nature of competitive rivalry within the PM part manufacturing industry. The kernel of competition in the PM part manufacturing industry is summarized in the following simple statements:• The north central region of Pennsylvania is an economic region that is the locus of PM part manufacturing industry activity in the United States. It generates much economic good in the region for individuals and institutions. The industry is both a jewel and a bellwether for the Pennsylvania economy. The competitiveness of the PM part industry is a lynchpin economic driver in Pennsylvania, in general, and the north central region, in particular.• The PM part manufacturing industry brings unique and specialized manufacturing know–how from Pennsylvania to the world through its economic and technological contribution and potential.• New competitors can enter the industry at the low end with modest capital and knowledge of PM parts manufacturing. However, to play at the high end, new market entrants require deeper pockets. • Foreign involvement and ownership are diffusing around the world the specialized knowledge and human capital that formerly was localized to north central Pennsylvania. Competition is not local any more. It is global.• PM part manufacturers compete aggressively and almost solely on the basis of price.• Poor understanding and inaccurate perceptions held by customers about the materials, processes, and end-products of PM part manufacturing affect the competitive position of the industry.• The PM industry deals with a small number of large suppliers and customers who have the power to dictate the ability of PM part manufacturing firms to cover their costs and make a profit. • The PM part manufacturing industry is small relative to the entire manufacturing sector and, in particular, within the fabricated metal product manufacturing subsector. Just on these scale factors alone, opportunities probably are large for capturing metal fabrication opportunities from othe","PeriodicalId":14396,"journal":{"name":"International Trade","volume":"61 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2009-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90860536","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Last month I was in Singapore to join an international seminar on 'Pan Asian Integration' but before that we must be integrated in South Asia to facilitate integration with East Asia. The South Asian Association for Regional Cooperation (SAARC) is mandated for poverty alleviation through trade and economic cooperation in the region. It did not gain momentum up to the desired level. Intra-SAARC trade remained lower than 5% even after 23 years of SAARC's inception. The foreign direct investment (FDI) among the SAARC region is very negligible. Intra-regional investment depends on the capability to pursue deep integration and economic connectivity. Our previous efforts to boost intra-regional trade through South Asian Preferential Trade Arrangement (SAPTA) did not meet with success because of some factors like intercountry barriers to trade, rampant informal trade, high tariff, non-tariff barriers, absence of harmonisation of standards, non-simplification of customs clearance procedures, non-simplification of banking procedures, barriers to intra-SAARC investment and inadequate transport infrastructure. Effective trade facilitation measures should be implemented as an obligation to ensure enabling trade policy and governance for smooth and speedy movement of goods across the borders.
{"title":"Initiatives Should Be Taken to Facilitate South Asian Economic Integration","authors":"M. Abdin","doi":"10.2139/ssrn.1426442","DOIUrl":"https://doi.org/10.2139/ssrn.1426442","url":null,"abstract":"Last month I was in Singapore to join an international seminar on 'Pan Asian Integration' but before that we must be integrated in South Asia to facilitate integration with East Asia. The South Asian Association for Regional Cooperation (SAARC) is mandated for poverty alleviation through trade and economic cooperation in the region. It did not gain momentum up to the desired level. Intra-SAARC trade remained lower than 5% even after 23 years of SAARC's inception. The foreign direct investment (FDI) among the SAARC region is very negligible. Intra-regional investment depends on the capability to pursue deep integration and economic connectivity. Our previous efforts to boost intra-regional trade through South Asian Preferential Trade Arrangement (SAPTA) did not meet with success because of some factors like intercountry barriers to trade, rampant informal trade, high tariff, non-tariff barriers, absence of harmonisation of standards, non-simplification of customs clearance procedures, non-simplification of banking procedures, barriers to intra-SAARC investment and inadequate transport infrastructure. Effective trade facilitation measures should be implemented as an obligation to ensure enabling trade policy and governance for smooth and speedy movement of goods across the borders.","PeriodicalId":14396,"journal":{"name":"International Trade","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2009-06-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89571928","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The vector space model facilitates a very useful representation of the strategic interaction in trade because it is possible to incorporate both symmetric and asymmetric features of the players. This paper characterizes the Nash solution of the non-cooperative international trade game in the orthogonal vector space. We have used the standard properties of the Nash solution to determine if the non-cooperative action-reaction trade policy space should be written in terms of 'import-import' or 'import-export' quotas as strongest punishment. The trade policy space defined by import-export' quotas is not a Nash solution of the non-cooperative game but an improvement in the disagreement set. We show the positive correlation between import and export quotas using data on trade relations between EU-15, Romania, Hungary and Bulgaria for wine sector during 1995-2005. In our model the outcome of the non-cooperative trade is autarky. Retaliation is played when countries restrict their imports to one third of the national optimum.
{"title":"Retaliatory Disagreement Point with Asymmetric Countries: Evidence from European Wine Sector During Enlargement","authors":"Genoveva Elena Perju","doi":"10.2139/ssrn.1435993","DOIUrl":"https://doi.org/10.2139/ssrn.1435993","url":null,"abstract":"The vector space model facilitates a very useful representation of the strategic interaction in trade because it is possible to incorporate both symmetric and asymmetric features of the players. This paper characterizes the Nash solution of the non-cooperative international trade game in the orthogonal vector space. We have used the standard properties of the Nash solution to determine if the non-cooperative action-reaction trade policy space should be written in terms of 'import-import' or 'import-export' quotas as strongest punishment. The trade policy space defined by import-export' quotas is not a Nash solution of the non-cooperative game but an improvement in the disagreement set. We show the positive correlation between import and export quotas using data on trade relations between EU-15, Romania, Hungary and Bulgaria for wine sector during 1995-2005. In our model the outcome of the non-cooperative trade is autarky. Retaliation is played when countries restrict their imports to one third of the national optimum.","PeriodicalId":14396,"journal":{"name":"International Trade","volume":"2 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2009-06-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"87165018","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Using detailed data on trade and tariffs from 1992-2007, the authors examine how the ASEAN Free Trade Agreement has affected trade with nonmembers and external tariffs facing nonmembers. First, the paper examines the effect of preferential and external tariff reduction on import growth from ASEAN insiders and outsiders across HS 6-digit industries. The analysis finds no evidence that preferential liberalization has led to lower import growth from nonmembers. Second, it examines the relationship between preferential tariff reduction and MFN tariff reduction. The analysis finds that preferential liberalization tends to precede external tariff liberalization. To examine whether this tariff complementarity is a result of simultaneous decision making, the authors use the scheduled future preferential tariff reductions (agreed to in 1992) as instruments for actual preferential tariff changes after the Asia crisis. The results remain unchanged, suggesting that there is a causal relationship between preferential and MFN tariff reduction. The findings also indicate that external liberalization was relatively sharper in the products where preferences are likely to be most damaging, proving further support for a causal effect. Overall, the results imply that the ASEAN agreement has been a force for broader liberalization.
{"title":"The ASEAN Free Trade Agreement: Impact on Trade Flows and External Trade Barriers","authors":"Hector F. Calvo Pardo, C. Freund, E. Ornelas","doi":"10.2139/ssrn.2483814","DOIUrl":"https://doi.org/10.2139/ssrn.2483814","url":null,"abstract":"Using detailed data on trade and tariffs from 1992-2007, the authors examine how the ASEAN Free Trade Agreement has affected trade with nonmembers and external tariffs facing nonmembers. First, the paper examines the effect of preferential and external tariff reduction on import growth from ASEAN insiders and outsiders across HS 6-digit industries. The analysis finds no evidence that preferential liberalization has led to lower import growth from nonmembers. Second, it examines the relationship between preferential tariff reduction and MFN tariff reduction. The analysis finds that preferential liberalization tends to precede external tariff liberalization. To examine whether this tariff complementarity is a result of simultaneous decision making, the authors use the scheduled future preferential tariff reductions (agreed to in 1992) as instruments for actual preferential tariff changes after the Asia crisis. The results remain unchanged, suggesting that there is a causal relationship between preferential and MFN tariff reduction. The findings also indicate that external liberalization was relatively sharper in the products where preferences are likely to be most damaging, proving further support for a causal effect. Overall, the results imply that the ASEAN agreement has been a force for broader liberalization.","PeriodicalId":14396,"journal":{"name":"International Trade","volume":"81 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2009-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"74507506","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper estimates the trade potential for India using the augmented gravity model and then attempts to determine the importance of trade remedies. Based on panel data, this gravity model is the first-ever attempt to estimate India’s trade potential in the pre- and post- global economic and financial crisis period. The estimates of India’s global trade potential reveal that the magnitude of India’s trade potential is at its maximum in the Asia-Pacific region, followed by Africa and Latin America. Potential for expansion of trade in the post-crisis period is highest for countries such as China. However, in a large part of the world, India’s trade has remained unrealized, which provides further opportunities to expand despite the slowdown in global demand. There is a strong complementary role, as the findings of this paper indicate; i.e., tariff liberalization and trade facilitation, which taken together can help build export momentum in the crisis period.
{"title":"Global Economic and Financial Crisis: India's Trade Potential and Future Prospects","authors":"P. De","doi":"10.2139/ssrn.1412592","DOIUrl":"https://doi.org/10.2139/ssrn.1412592","url":null,"abstract":"This paper estimates the trade potential for India using the augmented gravity model and then attempts to determine the importance of trade remedies. Based on panel data, this gravity model is the first-ever attempt to estimate India’s trade potential in the pre- and post- global economic and financial crisis period. The estimates of India’s global trade potential reveal that the magnitude of India’s trade potential is at its maximum in the Asia-Pacific region, followed by Africa and Latin America. Potential for expansion of trade in the post-crisis period is highest for countries such as China. However, in a large part of the world, India’s trade has remained unrealized, which provides further opportunities to expand despite the slowdown in global demand. There is a strong complementary role, as the findings of this paper indicate; i.e., tariff liberalization and trade facilitation, which taken together can help build export momentum in the crisis period.","PeriodicalId":14396,"journal":{"name":"International Trade","volume":"88 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2009-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73395190","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2009-06-01DOI: 10.1080/17421770902834327
M. Burger, F. V. van Oort, G. Linders
Conventional studies of bilateral trade patterns specify a log-normal gravity equation for empirical estimation. However, the log-normal gravity equation suffers from three problems: the bias created by the logarithmic transformation, the failure of the homoscedasticity assumption, and the way zero values are treated. These problems normally result in biased and inefficient estimates. Recently, the Poisson specification of the trade gravity model has received attention as an alternative to the log-normality assumption (Santos Silva and Tenreyro, 2006). However, the standard Poisson model is vulnerable for problems of overdispersion and excess zero flows. To overcome these problems, this paper considers modified Poisson fixed-effects estimations (negative binomial, zero-inflated). Extending the empirical model put forward by Santos Silva and Tenreyro (2006), we show how these techniques may provide viable alternatives to both the log-normal and standard Poisson specification of the gravity model of trade.
{"title":"On the Specification of the Gravity Model of Trade: Zeros, Excess Zeros and Zero-Inflated Estimation","authors":"M. Burger, F. V. van Oort, G. Linders","doi":"10.1080/17421770902834327","DOIUrl":"https://doi.org/10.1080/17421770902834327","url":null,"abstract":"Conventional studies of bilateral trade patterns specify a log-normal gravity equation for empirical estimation. However, the log-normal gravity equation suffers from three problems: the bias created by the logarithmic transformation, the failure of the homoscedasticity assumption, and the way zero values are treated. These problems normally result in biased and inefficient estimates. Recently, the Poisson specification of the trade gravity model has received attention as an alternative to the log-normality assumption (Santos Silva and Tenreyro, 2006). However, the standard Poisson model is vulnerable for problems of overdispersion and excess zero flows. To overcome these problems, this paper considers modified Poisson fixed-effects estimations (negative binomial, zero-inflated). Extending the empirical model put forward by Santos Silva and Tenreyro (2006), we show how these techniques may provide viable alternatives to both the log-normal and standard Poisson specification of the gravity model of trade.","PeriodicalId":14396,"journal":{"name":"International Trade","volume":"92 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2009-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83748911","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2009-06-01DOI: 10.4067/S0718-88702009000100002
E. M. Ekayanake, Bala Veeramacheneni, Carlos Moslares
The main objectives of this paper are to (a) explain the extent of vertical and horizontal intra-industry trade in the United State’s foreign trade with the North American Free Trade Area (NAFTA), and (b) identify the industry-specific determinants of vertical and horizontal intra-industry trade. One of the main findings is that the observed increase in intra-industry trade between the United States and NAFTA is almost entirely due to two-way trade in vertical differentiation. Another important finding is that the share of horizontal intra-industry trade has increased significantly during this period, although vertical intra-industry trade continued to be dominant in the U.S.-NAFTA IIT Trade. Among the industry-specific variables, product differentiation, vertical product differentiation, and product quality differences are found to have a positive effect on all three types of IIT shares. Industry concentration and industry size are found to have a negative and statistically significant effect on all three types of IIT share.
{"title":"Vertical and Horizontal Intra-Industry Trade Between the U.S. And NAFTA Partners","authors":"E. M. Ekayanake, Bala Veeramacheneni, Carlos Moslares","doi":"10.4067/S0718-88702009000100002","DOIUrl":"https://doi.org/10.4067/S0718-88702009000100002","url":null,"abstract":"The main objectives of this paper are to (a) explain the extent of vertical and horizontal intra-industry trade in the United State’s foreign trade with the North American Free Trade Area (NAFTA), and (b) identify the industry-specific determinants of vertical and horizontal intra-industry trade. One of the main findings is that the observed increase in intra-industry trade between the United States and NAFTA is almost entirely due to two-way trade in vertical differentiation. Another important finding is that the share of horizontal intra-industry trade has increased significantly during this period, although vertical intra-industry trade continued to be dominant in the U.S.-NAFTA IIT Trade. Among the industry-specific variables, product differentiation, vertical product differentiation, and product quality differences are found to have a positive effect on all three types of IIT shares. Industry concentration and industry size are found to have a negative and statistically significant effect on all three types of IIT share.","PeriodicalId":14396,"journal":{"name":"International Trade","volume":"78 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2009-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81270616","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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