INVESTMENT LIBERALIZATION, CREDIT CONSTRAINTS, AND INTERNATIONAL TRADE

2021 ◽  
pp. 2150004
Author(s):  
TINGTING XIONG ◽  
HAO SUN
Keyword(s):  
International Trade ◽  
Credit Constraints ◽  
Developed Countries ◽  
Extensive Margin ◽  
Bilateral Investment Treaties ◽  
Intensive Margin ◽  
External Finance ◽  
Investment Liberalization ◽  
Manufacturing Sectors ◽  
Robust Evidence

This paper investigates the effect of bilateral investment treaties (BITs) on the extensive and intensive product margins of exports in sectors with different credit constraints. The model in this paper demonstrates that such investment liberalization increases the extensive product margin by lowering the variable costs of selling abroad, while it decreases the intensive product margin by lowering both the fixed investment costs and the variable costs. Moreover, the effects of investment liberalization are stronger in financially more vulnerable sectors. Using a detailed dataset of 190 countries and 27 manufacturing sectors from 1988 to 2006, this paper furnishes robust evidence that BITs increase the extensive margin of exports from developed countries and decrease the intensive margin of exports. It further shows that BITs decrease the intensive margin of exports from developed countries more in the sectors that are more dependent on external finance. Similarly, the intensive margin of exports from developed countries in low tangibility sectors falls by 11.81% because of BITs, while the intensive margin in high tangibility sectors is quite stable with BITs.

Financial Development & Commercial Advantage

2017 ◽  
Vol 17 (1) ◽  
pp. 20160027
Author(s):  
Rafael Cezar
Keyword(s):  
Financial Development ◽  
Heterogeneous Firms ◽  
Developed Countries ◽  
Extensive Margin ◽  
Exporting Firms ◽  
External Finance ◽  
Cost Structures ◽  
Manufacturing Sectors ◽  
The Relationship ◽  
Different Levels

Abstract: The article seeks to clarify the relationship between financial development and the marginal variation in the proportion of exporting firms (extensive margin) and the volume exported by each economic sector (intensive margin). We develop a theoretical model with two countries facing different levels of financial restrictions and input costs, several sectors differentiated by their dependence on external finance and heterogeneous firms producing with a combination of inputs. The model shows that financially developed countries experience a commercial advantage in financially dependent sectors and countries with more competitive cost structures experience an advantage and specialize in low financially dependent sectors. This relationship is true even within the manufacturing sectors. The model also indicates that financial development only affects trade in financially constrained sectors.

WHAT MATTERS FOR THE EXTENSIVE AND INTENSIVE MARGINS OF INTERNATIONAL TRADE? EVIDENCE FROM KOREAN EXPORTS

2012 ◽  
Vol 57 (03) ◽  
pp. 1250018 ◽  
Author(s):  
KICHUN KANG
Keyword(s):  
International Trade ◽  
Price Index ◽  
External Environment ◽  
Export Promotion ◽  
Extensive Margin ◽  
Suggested Model ◽  
Intensive Margin ◽  
Quantity Index ◽  
Extensive And Intensive Margins ◽  
What Matters

Recently, there has been increased interest in the distinction between the extensive margin (EM) and the intensive margin (IM) of international trade. Between 1988 and 2006, the growth of the EMs and IMs of Korean exports has been diverse across its destinations. This paper links each component of the trade value (EM, IM, price index and quantity index) to factors that have been identified as trade determinants in the suggested model. This paper finds that the destination GDP, distance, tariffs, language, existence of an export promotion agency (EPA), local infrastructure and import procedures have an effect on the EMs and IMs of Korea's exports, and the effect works largely through the IM. This paper examines the external environment that shapes the contributions of each of these margins of a country's exports.

scholarly journals Distorted Gravity: The Intensive and Extensive Margins of International Trade

2008 ◽  
Vol 98 (4) ◽  
pp. 1707-1721 ◽  
Author(s):  
Thomas Chaney
Keyword(s):  
International Trade ◽  
Simple Model ◽  
Firm Heterogeneity ◽  
Trade Flows ◽  
Elasticity Of Substitution ◽  
Extensive Margin ◽  
Trade Barriers ◽  
Intensive Margin ◽  
The Impact

By considering a model with identical firms, Krugman (1980) predicts that a higher elasticity of substitution between goods magnifies the impact of trade barriers on trade flows. In this paper, I introduce firm heterogeneity in a simple model of international trade. I prove that the extensive margin and the intensive margin are affected by the elasticity of substitution in exact opposite directions. When the distribution of productivity across firms is Pareto, the predictions of the Krugman model with representative firms are overturned: the impact of trade barriers on trade flows is dampened by the elasticity of substitution, and not magnified. (JEL F12, F13)

HARMONISING PUBLIC PROCUREMENT IN THE SADC

2014 ◽  
Vol 1 (1) ◽  
pp. 90-109
Author(s):  
Stephen De la Harpe
Keyword(s):  
International Trade ◽  
Free Trade ◽  
Public Procurement ◽  
Developed Countries ◽  
Government Procurement ◽  
Substantial Part ◽  
Private Industry ◽  
Regional Competition ◽  
Model Law ◽  
Opening Up

The promotion of international trade is seen as one of the important instruments to ensure development in developing nations and regions. The history of the World Trade Organisation (WTO) and the drafting of many regional and similar international trade agreements are evidence of this. The Southern African Development Community (SADC) is no exception.1 It is therefore strange that many states that are members of the WTO and actively encourage the opening up of international borders to free trade do not include public procurement2 in such free trade arrangements. This is particularly evident in developing states. If the WTO Government Procurement Agreement (GPA), which is a plurilateral agreement, is considered it is clear that many states do not wish to open their internal markets to competition in the public procurement sphere. It is therefore not surprising that public procurement has been described as the last rampart of state protectionism (Ky, 2012). Public procurement is an important segment of trade in any country (Arrowsmith & Davies, 1998). It is estimated that public procurement represents between 10% and 15% of the gross domestic product (GDP) of developed countries and up to 25% of GDP in developing states (Wittig, 1999). Unfortunately, governments often expect private industry to open up national markets for international competition but do not lead the way. Except for the limited use of pooled procurement,3 no specific provision is at present made for the harmonisation and integration of public procurement in the SADC. In view of the proximity of the member states, the interdependency of their economies and the benefits that can be derived from opening up their boundaries to regional competition in public procurement, the possibility of harmonisation and deeper integration in this sphere needs to be given more attention. The importance of public procurement in international trade and regional integration is twofold: first, it forms a substantial part of trade with the related economic and developmental implications; secondly, it is used by governments as an instrument to address socio-economic issues. Public procurement spending is also important because of its potential influence on human rights, including aspects such as the alleviation of poverty, the achievement of acceptable labour standards and environmental goals, and similar issues (McCrudden, 1999). In this article the need to harmonise public procurement in the SADC in order to open up public procurement to regional competition, some of the obstacles preventing this, and possible solutions are discussed. Reference is made to international instruments such as the United Nations Commission on International Trade Law (UNCITRAL), the Model Law on Public Procurement and the GPA. In particular, the progress made in the Common Market for Eastern and Southern Africa (COMESA) with regard to the harmonisation of public procurement, which was based on the Model Law, will be used to suggest possible solutions to the problem of harmonising public procurement in the SADC.

The Diffusion of Product Innovations

2018 ◽  
Author(s):  
Paul Stoneman ◽  
Eleonora Bartoloni ◽  
Maurizio Baussola
Keyword(s):  
Extensive Margin ◽  
Intensive Margin ◽  
Industry Sector ◽  
Product Innovations ◽  
Market Product ◽  
Principal Finding ◽  
Considerable Period

This chapter explores the patterns of adoption and use of original and new-to-market product innovations. Three levels of diffusion are identified: (i) the spreading of first use across countries (the extensive margin); (ii) the spreading of first use across users within countries (the intensive margin); and (iii) increasing intensity of use by adopters (firms or households). The principal finding is that diffusion often takes a considerable period of time, both across and within countries. Movement on the intensive margin continues for many years after diffusion on the extensive margin is completed. Intra-firm or household diffusion is also time-intensive, differs by industry sector, country, and technology, and continues even after inter-firm or household diffusion is complete. In addition, the diffusion of the production of product innovations may eventually mean that countries that were early producers are eventually replaced by countries that were late producers.

China's International Investment Strategy

2019 ◽  
Keyword(s):  
Development Strategy ◽  
Foreign Investment ◽  
Developed Countries ◽  
Investment Strategy ◽  
International Investment ◽  
Bilateral Investment Treaties ◽  
Open Door Policy ◽  
Outward Fdi ◽  
Investment Law ◽  
Investment Treaties

The phenomenal story of China’s ‘unprecedented disposition to engage the international legal order’ has been primarily told and examined by political scientists and economists. Since China adopted its ‘open door’ policy in 1978, which altered its development strategy from self-sufficiency to active participation in the world market and aimed at attracting foreign investment to fuel its economic development, the underlying policy for mobilizing inward foreign direct investment (IFDI) remains unchanged to date. With the 1997 launch of the ‘Going Global’ policy, an outward focus regarding foreign investment has been added, to circumvent trade barriers and improve the competitiveness of Chinese firms, typically its state-owned enterprises (SOEs). In order to accommodate inward and outward FDI, China’s participation in the international investment regime has underpinned its efforts to join multi-lateral investment-related legal instruments and conclude international investment agreements (IIAs). China began by selectively concluding bilateral investment treaties (BITs) with developed countries (major capital exporting states to China at that time), signing its first BIT with Sweden in 1982. Despite being a latecomer, over time China’s experience and practice with the international investment regime have allowed it to evolve towards liberalizing its IIAs regime and balancing the duties and benefits associated with IIAs. The book spans a broad spectrum of China’s contemporary international investment law and policy: domestic foreign investment law and reforms, tax policy, bilateral investment treaties, free trade agreements, G20 initiatives, the ‘One Belt One Road’ initiative, international dispute resolution, and inter-regime coordination.

scholarly journals Scale free is not rare in international trade networks

2021 ◽  
Vol 11 (1) ◽  
Author(s):  
Linqing Liu ◽  
Mengyun Shen ◽  
Chang Tan
Keyword(s):  
International Trade ◽  
Preferential Attachment ◽  
Developed Countries ◽  
Total Trade ◽  
Trade Networks ◽  
Scale Free ◽  
Weighted Networks ◽  
Free Exploration ◽  
Technology Products ◽  
Attachment Mechanism

AbstractFailing to consider the strong correlations between weights and topological properties in capacity-weighted networks renders test results on the scale-free property unreliable. According to the preferential attachment mechanism, existing high-degree nodes normally attract new nodes. However, in capacity-weighted networks, the weights of existing edges increase as the network grows. We propose an optimized simplification method and apply it to international trade networks. Our study covers more than 1200 product categories annually from 1995 to 2018. We find that, on average, 38%, 38% and 69% of product networks in export, import and total trade are scale-free. Furthermore, the scale-free characteristics differ depending on the technology. Counter to expectations, the exports of high-technology products are distributed worldwide rather than concentrated in a few developed countries. Our research extends the scale-free exploration of capacity-weighted networks and demonstrates that choosing appropriate filtering methods can clarify the properties of complex networks.

International Governance on Carbon Tariff and Its Vacuum in International Regime

2013 ◽  
Vol 01 (01) ◽  
pp. 1350008 ◽  
Author(s):  
Mou WANG
Keyword(s):  
Climate Change ◽  
Developing Countries ◽  
International Trade ◽  
Global Climate ◽  
Developed Countries ◽  
International Governance ◽  
International Consensus ◽  
Climate Governance ◽  
Emission Quota ◽  
Carbon Tariff

Drawing on the idea that countries are eligible to implement differentiated emission reduction policies based on their respective capabilities, some parties of UNFCCC attempt to weaken the principle of “Common but differentiated responsibilities(CBDR)” and impose carbon tariff on international trade. This initiative is in fact another camouflage to burden developing countries with emission cut obligation, which has no doubt undermined the development rights of developing countries. This paper defines Carbon Tariff as border measures that target import goods with embodied carbon emission. It can be import tariffs or other domestic tax measures that adjust border tax, which includes plain import tariffs and export rebates, border tax adjustment, emission quota and permit etc. For some developed countries, carbon tariffs mean to sever trade protectionism and to build trade barriers. Its theoretical arguments like “loss of comparative advantage”, “carbon leakage decreases environmental effectiveness” and “theoretical model bases” are pseudo-propositions without international consensus. Carbon tariff has become an intensively debated issue due to its duality of climate change and trade, but neither UNFCCC nor WTO has clarified this issue or has indicated a clear statement in this regard. As a result, it allows some parties to take advantage of this loophole and escape its international climate change obligation. Carbon tariff is an issue arising from global climate governance. To promote the cooperation of global climate governance and safeguard the social and economic development of developing countries, a fair and justified climate change regime and international trade institution should be established, and the settlement of the carbon tariff issue should be addressed within these frameworks. This paper argues that the international governance of carbon tariff should in cooperation with other international agreements; however, principles and guidelines regarding this issue should be developed under the UNFCCC. Based on these principles and guidelines, WTO can develop related technical operation provisions.

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