Growing Exports by Signaling Product Quality

Citation:

Xun, C., Aseem, P., (2010). Growing exports by signaling product quality: Trade competition and the cross-national diffusion of ISO 9000 quality standards. Journal of Policy Analysis and Management, 30(1), 111-135. doi:10.1002/pam.2054

Abstract:

• Trade policy is an important topic in global public policy. It is recognized that trade is hampered when buyers have incomplete information about the offered products, a problem accentuated in the international markets by the physical and cultural distances between buyers and sellers. Buyers look for proxies to assess product quality, and exporters that can provide assurance about quality gain a competitive advantage. Our paper focuses on voluntary or private regulatory programs that have emerged as important instruments to correct policy failures. We examine how trade competition motivates firms to signal quality by joining ISO 9000, the most widely adopted voluntary quality certification program in the world. Methodologically, our study is novel because we observe trade competition at the bilateral and the sectoral levels. Structural equivalence, the measure of competition we introduce in this paper, captures competitive threats posed by actors that export similar products to the same overseas markets. We study ISO 9000 adoption levels from 1993 to 2002 for 134 countries, and separately for non-OECD countries and non-EU countries. Across a variety of specifications, we find that trade competition drives ISO adoption: The uptake of ISO 9000 is encouraged by ISO 9000 adoption by firms located in countries that are “structurally equivalent” trade competitors. Given that information problems about product quality are likely to be more salient for developing country exporters, we find that trade competition offers a stronger motivation for ISO 9000 adoption in non-OECD countries in relation to developed countries. © 2010 by the Association for Public Policy Analysis and Management.

Ecological Unequal Exchange: International Trade and Uneven Utilization of Environmental Space in the World System

Citation:

James, R., (2007). Ecological unequal exchange: International trade and uneven utilization of environmental space in the world system. Social Forces, 85(3), 1369-1392.

Abstract:

• We evaluate the argument that international trade influences disproportionate cross-national utilization of global renewable natural resources. Such uneven dynamics are relevant to the consideration of inequitable appropriation of environmental space in particular and processes of ecological unequal exchange more generally. Using OLS regression with slope dummy interaction terms, we analyze the effects of trade upon environmental consumption, as measured by per capita ecological footprint demand for 2002, delineated by country income level. Based on data for 137 countries, analyses reveal low- and lower middle-income countries characterized by a greater proportion of exports to the core industrialized countries exhibit lower environmental consumption. The results contradict neoclassical economic thought. We find trade shapes uneven utilization of global environmental space by constraining consumption in low and lower middle-income countries.

Processing Trade, Normal Trade and the Transmission Channels of Foreign Demand Shock

Citation:

Lang, J., & Shi, J. (2013). Processing trade, normal trade and the transmission channels of foreign demand shock. Zhejiang Daxue Xuebao (Renwen Shehui Kexue Ban)Journal of Zhejiang University (Humanities and Social Sciences Edition), 43(1), 179-190. doi:http:dx.doi.org10.3785/j.issn.1008-942X.2012.06.261

Abstract:

• In the new millennium, two features have developed in China's macro-economy: The first is the close association of macroeconomic fluctuations with foreign demand shocks; the second is the addition of processing trade to the foreign demand structure and its eventual precedence over normal trade in gross value. Owing to the development of these two features, the classic International Real Business Cycles Theory has failed to explain China's macroeconomic fluctuation and meanwhile there has been little research on such a typical foreign demand structure. To fill the gap between theory and reality, this paper further categorizes the trade sector in the International Real Business Cycles Theory into processing trade and normal trade. Under such a categorization, two key assumptions are put forward: (1) the home elasticity of substitution for intermediate goods is relatively small in the processing trade sector; (2)the home value added for intermediate goods is relatively small in the processing trade sector…

Trade policy and human development: a cross-country perspective

Citation:

Peneva, D., & Ram, R. (2013). Trade policy and human development: A cross-country perspective. International Journal of Social Economics, 40(1), 51-67. doi:10.1108/03068291311283436

Abstract:

• The purpose of this research is to study the relation between "restrictiveness" of a country's trade policy and its socio-economic well-being as reflected in the indicators of human development. Design/methodology/approach—A recently-developed trade-restrictiveness-index (TRI), which seems superior to almost all existing indexes of trade policy or "outward orientation", is related with infant-mortality, child-mortality, maternal-mortality, access to safe water, access to basic sanitation, and secondary-school enrollment, which are well-known and important measures of a country's human development and are closely related to several Millennium Development Goals. In addition to a consideration of the covariation between TRI and the six human-development measures, estimates from parsimonious regression models are studied. Sensitivity checks are conducted by considering covariations and regression estimates for another trade-policy index and different country groups…

Trade and Foreign Policy Attitudes

Citation:

Kleinberg, K. B., & Fordham, B. O. (2010). Trade and foreign policy attitudes. Journal of Conflict Resolution, 54(5), 687-714. doi:10.1177/0022002710364128

Abstract:

• Does trade influence whether individuals view other states as friendly or threatening? Liberal theory implies that it should, but the individual-level implications of the liberal argument are rarely tested. Trade should influence individual attitudes more strongly where trade is more economically important. International trade also creates both winners and losers within the trading states, and the foreign policy attitudes of these winners and losers should differ. The authors test hypotheses drawn from this line of argument using a forty-seven-country survey conducted by the Pew Global Attitudes project. They find some evidence that exports but not imports reduce hostile foreign policy attitudes. They find little support for the claim that the trade interests indicated by factor ownership influence attitudes toward trading partners in this broad cross-national sample. On the other hand, attitudes toward trade and foreign direct investment are correlated with broader foreign policy attitudes in the way liberal theory suggests. The authors conclude that there is reason to believe that trade influences individual foreign policy attitudes but that factor ownership does not provide an adequate account of individual interests in international trade in most cases.

Does International Trade Cause Economic Growth? A Survey

Citation:

Singh, T. (2010). Does international trade cause economic growth? A survey. The World Economy, 33(11), 1517-1564. doi:10.1111/j.1467-9701.2010.01243.x

Abstract:

• This study surveys the literature on the relationship between international trade and economic growth, and succinctly reviews the role of GATT/WTO in fostering free trade. Most studies support the gains of trade and recognise the substantive contributions of GATT/WTO in fostering free trade; the evidence is, however, not ubiquitously unambiguous. The macroeconomic evidence provides a dominant support for the positive and significant effects of trade on output and growth, while the microeconomic evidence lends larger support to the exogenous effects of productivity on trade, as compared to the effects of trade on productivity. The GATT/WTO remains surrounded by barriers to trade and avowed preferences for preferential trade agreements. The strength of the argument for the gains of trade needs to be evaluated in juxtaposition with several methodological and measurement issues that surround the trade-growth empirics. Most studies focus on partial equilibrium analysis of trade policy and ignore the general equilibrium aspects of macroeconomic policy. It is difficult to disentangle the effects of trade policies from those of other macroeconomic policies and unequivocally interpret the observed correlations between trade policies and economic growth. Trade is one of the several catalysts of productivity and growth and hence its contribution is contingent on its weight in economic activity. Adapted from the source document.

Tariff Liberalisation and the Growth of World Trade: A Comparative Historical Analysis of the Multilateral Trading System

Citation:

Nenci, S. (2011). Tariff liberalisation and the growth of world trade: A comparative historical analysis of the multilateral trading system. The World Economy, 34(10), 1809-1835. doi:10.1111/j.1467-9701.2011.01401.x

Abstract:

• The aims of this study are to assess the relationship between tariff barriers and world trade growth from a comparative and historical perspective, and to derive some useful indications for evaluating the effectiveness of the current multilateral trading system for promoting world trade. The novelty of this work is the complex reconstruction of a historical tariffs and trade series for the period 1870-2000, for 23 countries; this constitutes a good proxy for world trade (accounting for over 60 per cent) in this period. The effect of tariff liberalisation on trade growth is analysed empirically using panel data and time series. The results, while confirming the existence of a world level long-term relationship between tariff reductions and trade growth, demonstrate how this substantial and significant relationship pre-World War II gradually diminished in importance and significance after 1950. This result does not conflict with the key role of the General Agreement on Tariffs and Trade/World Trade Organization system in trade liberalisation; however, it underlines the importance of a formalised multilateral trading system, not so much for tariff liberalisation, but for building a virtuous process of international coordination of trade policies and ensuring fuller participation in world trade. Adapted from the source document.

International Trade Agreements and International Migration

Citation:

Poot, J., & Strutt, A. (2010). International trade agreements and international migration. The World Economy, 33(12), 1923-1954. doi:10.1111/j.1467-9701.2010.01299.x

Abstract:

• Despite large potential economic gains, bilateral and multilateral negotiations focusing on liberalisation of migration have not shared the high profile of international trade negotiations and agreements. Migration and trade have been traditionally viewed rather separately and the relevance of the many, and complex, interdependencies has been given remarkably little attention in the literature to date. In this article, we focus on the two-way interaction between international migration and agreements designed to enhance cross-border trade and investment. Liberalisation of international trade in services and in the movement of people potentially offers much greater economic gains than liberalisation of remaining barriers to goods trade. However, progress within multilateral frameworks is fraught with difficulty. The World Trade Organization's General Agreement on Trade in Services (GATS) has yielded little real progress so far and negotiations within more flexible unilateral and bilateral frameworks are likely to be more successful in liberalising the movement of labour…