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The Discriminatory Effect of Domestic Regulations on International Trade in Services: Evidence from Firm-Level Data

The Discriminatory Effect of Domestic Regulations on International Trade in Services: Evidence from Firm-Level Data

in Table (2), which is the expected effect. 30 Indeed, since regulations in a sector are likely to hamper its development, the share of professional services in GDP should be lower in countries with a higher level of regulations of service activities. Then, by using GDP as a measure of market size, one does not properly control for the impact of regulation on demand, and thus overestimates its impact on trade flows. In columns (3) to (8), we add several control variables. In a recent paper, Fillat-Castejon et al. (2008) found a positive correlation between FDI outflows and cross-border exports of services. Because restrictions on FDI in the destination country may also reduce cross-border trade while being correlated with market regulations, our econometric results might be affected by an omitted variable bias. Columns (3) and (4) include a measure of restriction on FDI. This index comes from the same OECD database as the N M R index, and ranges from 0 (no restriction) to 6 (high restrictions). Our results change very little and remain statistically significant when we include this additional control. However, we do not find evidence that restrictions on FDI hamper the exports of professional services. In columns (5) and (6), we control for the similarity in the legal system. The legal systems influence the enforcement of contracts, which are the mainstay of any international transaction, and the presence of a common legal system is known as an important factor influencing international trade flows (see for example Nunn, 2007). To
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International Specialization in Services: Insights from a New Theoretical Taxonomy

International Specialization in Services: Insights from a New Theoretical Taxonomy

 2.2. International trade in services liberalization                                                                                                   
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Directed Technical Change and International Trade

Directed Technical Change and International Trade

Heckscher-Ohlin-Vanek (HOV) trade theory predicts that a country will tend to export the services of its most abundant factors (Vanek, 1968). Accordingly, there should be a one-to- one correspondence between changes in relative factor endowments and changes in relative factor-service exports. Yet over the last decades of the twentieth century, there were two remarkable developments in the comparative advantage of the largest trading economies that do not fit this pattern. First, between 1970 and 1992, Japan's comparative advantage in machinery relative to heavy industry rose dramatically. Its export share in this human-capital-intensive sector doubled, rising from 11 to 22 percent of the OECD total, while its share in heavy industry fell (see Table 1). However, the observed changes occurred without the expected modification in factor endowments, since the ratio of human to physical capital actually declined significantly in Japan. 1 Second, the comparative advantage of both the USA and Germany rose in physical- capital-intensive heavy industry while falling in machinery. Yet in both of these countries, physical capital became scarce relative to human capital.
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Essays on international trade, capital flows and financial frictions

Essays on international trade, capital flows and financial frictions

Market access motive: According to the Horizontal FDI (Markusen (1984)) model, a MNE chooses between exporting and locating abroad in order to serve foreign markets where the key element is the proximity- concentration trade-off. It implies that FDI replaces exports when proximity gains of being close to consumers are higher than the concentration gains of having a single production plant. In this case, the main motive for FDI is to achieve a better market access when the firm faces high trade frictions. Furthermore, this type of FDI can entail intra-firm exports of intermediate products (that were not exported before) in order to replicate the final goods previously exported. Thus, initial substitution of exports can be consistent with complementarities involving intermediate goods. Note that the substitution effect always happens at the firm level and involves one individual product (the firm’s final good). It is important to bear this in mind in the empirical analysis in order to search for the right effects in the right place - aggregating the data can preclude identification of a substitution effect. Similarly, Export-Supporting FDI (Krautheim (2013)) is driven by the desire to serve foreign demand, it therefore has a market access motive. Relative to others, this type of FDI has only been studied very recently. In such cases, firms choose to maintain production at home and establish a foreign affiliate in order to reduce distribution costs abroad. However there is no substitution effect as these are meant to enhance exports from home to the host country by facilitating the distribution, sales and after-sales services. These affiliates are therefore mainly located in large target markets and essentially belong to the wholesale and retail sector. Hence, in this case, FDI should unambiguously complement the domestic country’s exports of final goods.
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The Impact of International Trade and Domestic Savings on Convergence in China

The Impact of International Trade and Domestic Savings on Convergence in China

z , , where x i , t is country i’s exports of goods and services at time t (% of GDP), I i , t is country i’s gross capital formation at time t (% of GDP). We use two stages least squares (2SLS) method instead of OLS estimation. It is shown from these results that there is convergence in each of these geographic groups; 2 of the 3 coefficients of convergence are statistically significant at 10% level. By testing the statistic-t with domestic savings, we found out that domestic savings is statistically significant at least 10% level in each of the geographic group. The coefficient of domestic savings is 1.472784 for the European countries group, and 0.8849655, 0.8692766 for the North American countries group and the Asian countries group respectively. All of these results are statistically significant, which means that domestic savings plays a significant role in the process of per-capita income convergence. This can be explained by the fact that, in a relatively open economy like Chinese economy, higher domestic savings usually means higher investments and higher growth rates.
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Trade in services: Cross-border trade vs commercial presence. Evidence of complementarity

Trade in services: Cross-border trade vs commercial presence. Evidence of complementarity

permitting cross-border “disembodied” trade in services 3 . Additionally, base on the Heckscher-Ohlin trade theory we know that the freeing up of international factor movement (labor and/or capital) and the resulting increase of international factor flows can act as a substitute for trade in final goods. Similarly, the firms theory indicates that Multi- national Corporations (MNCs) recurrently face the choice of whether to supply a foreign market by exporting into that market (cross-border trade) or by investing in it (factor movement). Accordingly, facing the new trends in cross-border trade in services and considering the theoretical models de- scribed above, it is tempting to assume that new communication technolo- gies could exempt services from the need for physical presence, generating a substitution effect from services originally provided by factor movement (Mode 3 and Mode 4) and consumer movement (Mode 2) to trade in ser- vices supplied by Mode 1. Given the recent impressive pace of cross-border trade in services we should expect that growth in factor movement has been decreasing or at least stagnating at the same time. However, the data on the Foreign Direct Investment (FDI) outward position of OECD countries by industry indicate that just in the last thirteen years, investment in the services sector has multiplied by 7, largely surpassing investment growth in the manufacturing and in the primary sectors (see Figure 2 ).
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Trade in services and trade in goods: differences and complementarities

Trade in services and trade in goods: differences and complementarities

1. Introduction The services sector is the biggest contributor to a country’s economy, its contribution increases with the level of development of countries, ranging from 47 percent of countries’ GDP in the case of low income countries to a contribution of 70 percent in the case of high income countries (See Figure 1).In addition, measured by the balance of payments (BOP), over the past two decades, growth of trade in services has surpassed growth of trade in goods. Trade in goods has multiplied by 3,5 while Total services has multiplied by around 5. (See Figure 2).The growing importance of services in domestic economies and international trade is largely due to an increase in the production of intermediate services (i.e. outsourcing). Firms increasingly delegate costly knowledge-intensive intermediate-stage processing activities to specialized suppliers in order to benefit from lower factor costs. To illustrate this phenomenon we can observe in Figure 2 that trade in “Other Commercial Services”, which consists mainly in business to business services or outsourcing services, has experienced a seven-fold increase in its export value over the last twenty years 2 . Besides the economic importance of services activity, in general, and service outsourcing, in particular, this phenomenon has received a huge amount of attention in the media and political circles 3 and the sector has increasingly been included under the framework of current multilateral negotiations (GATS) and regional agreements.
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Synergies and trade-offs between ecosystem services in Costa Rica

Synergies and trade-offs between ecosystem services in Costa Rica

Program, CIFOR (Centre for International Forestry Research), Rua do Russel, 450 sala 601, Rio de Janeiro 22210–010, Brazil Date submitted: 21 June 2012; Date accepted: 29 April 2013; First published online: 18 June 2013 SUMMARY Ecosystems services have become a key concept in understanding the way humans benefit from ecosystems. In Costa Rica, a pioneer national scheme of payment provides compensation for forest conservation that is assumed to jointly produce services related to biodiversity conservation, carbon storage, water and scenic beauty, but little is known about the spatial correlations among these services. A spatial assessment, at national scale and with fine resolution, identified the spatial congruence between these services, by considering the biophysical potential of service provision and socioeconomic demand. Services have different spatial distributions but are positively correlated. Spatial synergies exist between current policies (national parks and the payment scheme) and the conservation of ecosystem services: national parks and areas receiving payments provide more services than other areas. Biodiversity hotspots have the highest co-benefits for other services, while carbon hotspots have the lowest. This finding calls for cautiousness in relation to expectations that forest- based mitigation initiatives such as REDD (reducing emissions from deforestation and forest degradation) can automatically maximize bundled co-benefits for biodiversity and local ecosystem services.
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International trade openness and its effect on economic growth in Latin American Countries

International trade openness and its effect on economic growth in Latin American Countries

We observe in the previous paragraphs that the empirical evidence about the effect of trade on economic growth is not conclusive. In determining the relationship about trade openness and economic growth some of the potentials problems are: two-way causality between trade and economic growth due to the omission of relevant variables. On the other hand, openness indicators are not robust to the inclusion of different macroeconomic variables. For instance, the inclusion of different variables such as quality of institutions, and government expenditures makes disappear the relationship between trade and economic growth (Rodrik et al. (2004) and Levine and Renelt (1992)). Another problem is the simultaneity, which means that trade openness variables are related to the level of income (Ha Yan Lee, Luca Antonio Ricci, and Roberto Rigobon, 2004). Another issue, it is that the level of strength in the relationship between trade openness will depend on the data used cross section or panel data (Harrison (1996) and Quah and Rauch (1990)). Last but not least, another problem, it is which variable or combinations of variables are used as proxies of trade openness. Trade openness can be measure such as the share of trade in goods and services over the GDP, an annual index of trade openness based on exchange rate and commercial policies, an index based on tariffs and non-tariff Barriers, a black-market premium Harrison (1996). Which one should be used as measure of trade openness?
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The new post covid-19 international trade order

The new post covid-19 international trade order

The widely accepted overall evaluation is there is still a lot to be done. In this very preliminary outline for an ELF discussion paper, to be closely articulated with the numerous studies and policy initiatives which are already taking place on this topic, we intend to contribute to the work of Renew MEPs and ELF partners and help clarify some strategic issues.

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Bipartite networks provide new insights on international trade markets

Bipartite networks provide new insights on international trade markets

However, the evidence extracted from the weighted analysis provides a set of new findings about trade networks. First, weight distribution generate a core- periphery structure due to the existence of a group of highly-connected countries where the majority of the trade takes place. Secondly, rich countries have much more intense trade links, and are more clustered than are poor countries. This study also introduced a temporal evolution analysis of trade networks 1981 to 2000. Another previous study deals with the rewiring of trade networks. Squartini et al. [ 11 , 12 ] has two parts. Part 1 deals with binary (non-weighted) networks and it does both undirected and directed analysis of trade networks. Part 2 is quite similar in the methodological approach, but it works on weighted networks. Both studies provided a view of unipartite-type networks and their conclusions suggest that more emphasis should be put upon the topology of trade network. This topology, by itself, is fully explained by the typical indicators proposed by the paper.
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Je t'aime, moi non plus : Bilateral opinions and international trade

Je t'aime, moi non plus : Bilateral opinions and international trade

Physical distance is clearly an imperfect and incomplete measure of this overall definition of proximity. First, some elements of transaction costs are not directly related to distance (variations in bilateral protectionist measures have no a priori reason to follow distance in a systematic way for instance). Second, bilateral distance has all chances to be a poor measure of bilateral affinity. Consider the example of cultural traits. We have all reasons to believe that countries sharing similar cultural features have i) more proximate tastes, ii) lower communication and information costs and iii) more trust that individuals in the other country will not adopt an opportunistic behaviour in contractual relationships as Guiso et al. (2004) emphasize. All of those will contribute to make trade larger. Cultural proximity is likely to be correlated with physical distance, for the simple reason that a lot of cultural features travel embodied in people, and that migrations are strongly impeded by distance. It is however imperfectly captured by distance. Empirical support for this view can be found in the literature about network effects in international trade. This body of work recently surveyed in Rauch (2001) and Wagner et al. (2002) , has repeatedly found that bilateral migration is a robust trade-promoting force, even after controlling for bilateral distance. The very robust and large positive impact on trade flows of common language and colonial links that are routinely introduced in gravity equations, is a further sign that cultural aspects of proximity are important in international commerce, in addition to distance. We use here a new type of information, the bilateral opinions expressed by surveyed populations in European Union 15 (EU15) member countries about the enlargement to Eastern European countries, to capture more precisely the impact of proximity on trade patterns.
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Essays in International Trade

Essays in International Trade

hundred thousand people from Central America to the US. The main differences with respect to Parsons and Vézina [2014] are the follow- ing. First, we focus on regional differences in US imports, whereas they focus on US exports. Second, our analysis resolves reverse causality by examining the panel structure of exogenous migration within two natural experiments. As a result, the number of observations increases significantly compared to Parsons and Vezina’s cross section of 50 US states. A further benefit from working with the panel structure is that we can exploit the bilateral variation over time and control for any state and country time-varying fixed effects. The third distinction is that we include the pre-existing number of immi- grants as an additional regressor. This allows us to control for unobserved settlement preferences. Finally, we use the exogenous allocation of the US refugee resettlement program, where migrants’ only influence in the settle- ment decision is to decide whether to be close to family members already living in the United States or not. Given that we control for the number of previous immigrants, the exogenous variation in the migration decision is solely driven by the allocation of "free" application cases, i.e. those where the political refugee has no family ties and friends in the US.
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The Impact of International Trade Flows on Economic Growth in Brazilian States

The Impact of International Trade Flows on Economic Growth in Brazilian States

1 Introduction Regional inequalities have always been very large in Brazil : the per capita GDP of the Southeast region is more than three times that of the North (see Figure 3 in the Appendix). There is a growing consensus among Brazilian political parties that addressing regional inequalities is a priority for the country, as they expose the country to the risk of fragmentation. On his election in 2002, president Lula da Silva underlined that efforts to combat regional inequalities in Brazil would be one of his priorities. Brazil has undergone trade liberalization in the beginning of the 90s. A strategy of outward orientation led to reductions in tariffs and removal of other trade barriers. The aim of our paper is to determine whether there is a link between Brazil’s trade openness and the regional inequalities of the country. One hypothesis is that international trade might affect Brazil’s regional inequality through its impact on the growth of the Brazilian states. For instance, if Brazil’s trade openness benefits more the growth of richer states, then Brazil’s international trade is likely to aggravate regional inequality of the country. This paper aims to test this hypothesis.
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Impact of financial Frictions on international Trade in Brazil and emerging Countries

Impact of financial Frictions on international Trade in Brazil and emerging Countries

2.9. APPENDIX 133 in order to ensure high levels of economic development. Finally, a number of limitations can be associated to this present study. First, while the method of estimation in this paper presents a contribution to the Öeld of international trade, the use of exact values of exports would be more precise. Second, it would be interesting to have information about the ownership of exporting Örms. Multinational companies for example are found to be less credit constrained compared with domestic companies (Manova et al, 2011). It would be then interesting to control for Örm ownership when studying the e§ects of Önancial constraints at Örm-level. This question is even more important with regards to trade given the increasing role of multinational companies in determining international trade patterns. Moreover, this study has focused on the intensive margin of trade. It would be also interesting to study the e§ects of Önancial constraints on the extensive margin of trade, i.e. the decision to enter the export market. This question is particularly interesting for Brazil, since the entry rate in Brazil is particularly low (Canuto et al, 2013). This analysis will be possible through a matching exercise between exporters and non-exporters for which data are available in RAIS list. In addition, since the Önancial crisis has resulted in a worldwide credit shortage, further research is needed to disentangle the e§ects of the Önancial crisis from those related to the domestic Önancial marketís imperfections, when explaining Örmsí export performances. This idea is relevant for the Brazilian case since the Brazilian government has implemented, as in a number of emerging markets, capital controls in the aftermath of the crisis, resulting in an increase in the cost of capital (Alfaro et al, 2014). Finally, it would be also interesting to go deeper into the study the e§ects of precise export incentives on Brazilian Örmsí export performances. While the e¢ciency of BNDES loans has been treated in the literature (Ottaviano and Souza, 2007; 2014), there are no works that focus on the e§ects of BNDES loans speciÖc to the exporting activity on Brazilian Örmsí export performances. Similarly, Export Processing Zones (EPZ) are supposed to boost exports, through a range of Öscal, Önancial and currency incentives. It would be therefore interesting to evaluate their role in enhancing Brazilian export performances.
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International trade and income distribution : reconsidering the evidence

International trade and income distribution : reconsidering the evidence

The robustness of these results is assessed through additional estimates, based on estimate (3) (Tables 3 and 4). In order to check that the results are not exclusively driven by a handful of observations, estimate (4) excludes from the sample a small number of observations, signaled as outliers by standard tests. 31 The results are not substantially altered as far as the labor content of trade is concerned, although the threshold is found to be somewhat lower in this case. Since we do not want the results to stem only from the comparison of wealthiest countries to the rest of the world, estimate (5) excludes observations for which PPP GDP per capita is higher than $15,000. The interaction term between labor content of net export changes and PPP GDP per capita is still significant, and stronger in this case, consistent with the premise that some of the mechanisms described above (in particular those linked to the share of non-educated labor) are less relevant for rich countries. Interestingly, the interaction term of PPP GDP per capita with capital content of net export changes is found to be significant in this case, in contrast with the finding for the whole sample. This result is consistent with the above-mentioned interpretation that the non-significance of the capital content of trade is linked to the strong international mobility of capital. Since this mobility is lesser in developing countries, it makes sense to find a significant coefficient when the sample excludes richest countries. The estimates could also suffer from an omitted variable bias. Such a bias is likely to be far less severe than for estimates carried out on the level of income inequality, instead of the variation. However, it cannot be ignored. Since Ravallion (2003), for instance, suggested that the initial level of the Gini index might be relevant in explaining the variation of this index, estimate (6) incorporates this variable. The initial level of the Gini index does not prove to be significant, and it does not alter the results concerning the other variables. Another omission might occur if the Kuznets’s curve proves to be relevant. Although the relevance of such a hump-shaped curve has not been confirmed by recent studies, equation (7) introduces the corresponding variables, namely initial income per capita and its square value. Here again, the additional variables are not found to be significant, and the results concerning the variable of interest for us are preserved.
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Poultry products market : Food safety and international trade

Poultry products market : Food safety and international trade

European import conditions Importation of poultry products in the European Union Requirement for European official authorisation  European recognition of the third country's competent authority  Insurance of effective enforcement of all necessary health and hygiene

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Services militaires et civils, panorama français et international

Services militaires et civils, panorama français et international

Cameron D., Stannard J., Leckey C., Hale C., Di Antonio E., 2017, National Citizen Service 2015. Evaluation, Ipsos MORI [ En ligne ]. Chanet J.-P., 1999, «Le service militaire», in Rioux J.-P et al., La France d’un siècle à l’autre, 1914-2000 : Dictionnaire critique, Paris, Hachette.

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Neither imperial, nor Atlantic: A merchant perspective on international trade in the eighteenth century

Neither imperial, nor Atlantic: A merchant perspective on international trade in the eighteenth century

Choosing the right correspondent was thus essential, and even more so if one includes the second major dimension of merchant activity, that of credit. At any one time, little cash changed hands; most of the settlements took place through compensations. Green, for instance, almost never sent any cash to Lane, but "remitted" his debts by sending "bills," i. e. formal I.O.U.s, drawn on London houses. There is no indication on how these bills came into his hands, but in almost every one of his letters in 1752-1754, he apologizes for not sending Lane enough of them to balance his account. The fact that his was a paper debt, based on theoretically open credit, may mean that no interest was paid. Whatever the case in practice, the point is that Green needed Lane's forbearance. Thus a network was also a source of credit, which in turn was assuredly bound up with the personal relationships between creditor and debtor. Of course personal reputation was a decisive element, and it included non-economic ties – Lane had been the supplier of Green's father, after all. Kinship, religion, or any other potential link could become a motive for a creditor to be more tolerant of delays, or to offer better terms of payment, such as lower discounts on exotic commercial paper, for instance. The reverse was true as well, since Lane depended on payments from his customers, Green among them, to pay his suppliers on time.
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International cooperation and conflicts on trade and foreign direct investment

International cooperation and conflicts on trade and foreign direct investment

The concept of expropriation can be understood in a large sense: Stulz (2005, p.1597) defines it as “[..] actions that state rulers take to improve their welfare by reducing the return on corporate investments”. A government facing a reelection may, for instance, gain from harming foreign investors if that allows it to secure a greater number of voters. One of the main criteria discriminating investors is their nationality. Foreign investors, as informal representatives of their country, may suffer from the degradation of the diplomatic relations between their home and host countries, since their expropriation can be used as a retaliatory instrument in an interstate conflict. Boehmer et al. (2001) show how valuable interstate linkages, such as FDI, can serve as a costly signaling mechanism. They assume a rationalist explanation of war, i.e. that war is the consequence of the inability of two states to reach a negotiated arrangement due to a lack of information on the preferences of the other. From this perspective, the ex-ante destruction of mutually valuable interstate economic linkages can be seen as a mean of communication through which disagreeing parties signal their resolve by sending a credible (and costly) signal. By reducing the uncertainty about the preferences of at least one actor this signal favors the emergence of a peaceful negotiated settlement without any military fight. International security concerns can thus lead a country to expropriate foreign investors. 5 Hence, MNEs should invest less in countries where they are likely to suffer from interstate conflicts, since the risk of expropriation is high. On the contrary,
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