Bilateral Goods Trade Research Articles

A panel data-based analysis of factors influencing market demand for Chinese outbound tourism

ABSTRACTThis paper presents data on the top 50 outbound destinations for Chinese tourists from 2002 to 2013. The total number of Chinese tourists traveling to these 50 destinations accounts for 95.38% of outbound travelers from China. We built a dynamic panel data model to measure factors that influence market demand for Chinese outbound tourism. The results show that economic variables such as income, tourism prices, and exchange rates have a significant influence on outbound tourism volume. The effect of bilateral goods trade and leisure time significantly differ between the full sample and the two subsamples, whereas political stability of the destinations and special incidents in China have no significant impact on demand for outbound tourism. Based on these findings, this study proposes strategies to strengthen the management of China’s outbound tourism market.

(Investigation of the Relationship Between the Intensity of International Trade and the Volatility of Paired Exchange Rates of the Russian Federation and its Trading Partners)

Russian Abstract: В работе анализируется взаимное влияние интенсивности двусторонней торговли товарами и волатильности парных валютных курсов РФ и её торговых партнеров. В то время, как в большей части экономической литературы рассматриваются только односторонняя причинно-следственная связь от волатильности валютного курса к торговле товарами и ущерб, наносимый нестабильным валютным курсом нормальному ходу экспортно-импортных операций, в рамках настоящего исследования также рассматривается одновременно и обратная взаимосвязь между указанными показателями на российском опыте. Работа синтезирует широкий круг макро- и микроэкономических данных, включая обобщение данных по таможенным декларациям. В работе проводится изучение воздействия дифференциала в краткосрочных процентных ставках и темпах роста фондового рынка на волатильность реального эффективного валютного курса для пар Россия-страна-торговый партнёр. Не подтверждается гипотеза о влиянии волатильности реального валютного курса на интенсивность торговых связей; вместе с тем обратное воздействие имеет статистически значимый характер. Из всех каналов воздействия на волатильность реального валютного курса в изучаемой выборке наиболее существенными являются кредитный, макроторговый и микроструктурный, рассчитанный на базе данных по таможенным декларациям. English Abstract: This study analyzes the interaction of intensity of bilateral trade in goods and volatility of pairwise exchange rates between Russia and its major trade partners. While the bulk of existing economic literature considers mainly the one-side causal link from exchange rate volatility to trade in goods, and the negative impact of exchange rate fluctuations on the normal course of export and import transactions, this paper estimates simultaneously (for the first time for Russian trade data) the inverse relationship. This paper synthesizes a wide range of macro- and microeconomic data, including variables drawn from customs declarations. It also explores the effect on real effective exchange rate (REER) volatility of differences in short-term interest rates and stock markets' rates of growth in dyadic relationships between Russia and its trade partners. The study does not find support in statistical data for the hypothesis of impact of REER volatility on bilateral trade intensity, while the inverse hypothesis is shown to be statistically significant. Credit rate, macroeconomic trade intensity, and microstructural (based on customs declarations' data) channels have major impact on REER volatility in the sample dataset.

The Impact of Information and Communication Technology on Bilateral Trade in Goods

The Impact of Information and Communication Technology on Bilateral Trade in Goods

Business Cycle Synchronization in the EnlargedEU: The Role of Bilateral Trade andFDI

AbstractThe aim of this paper is to investigate the determinants of business cycle (BC) synchronization across 21 (old and new) countries of the enlargedEuropeanUnion (EU). It utilizes international data to evaluate the linkages among bilateral trade in goods, bilateral foreign direct investment (FDI) flows andBCco‐movements. The paper contributes to the current literature by examining the relationship using the latest available data (sample range: 1998–2011), and thus taking into account the European sovereign debt crisis period. It also examines the role ofFDI, which though increasingly important in the flows of international production factors, is currently neglected by the literature. Preliminary results show thatFDIhas no direct effect onBCsynchronization while international trade helps to synchronizeBCs but only before the recent financial crisis (pre‐2008) and only for the traditionalEUcountries.

Surge in bilateral economic relationship: India-Malaysia trade

India-Malaysia trade relations have expanded significantly since 1991 so much so, that currently, India is Malaysia's largest trading partner in Association of South East Asian Nations (ASEAN). Malaysia is the fourth country after Singapore, South Korea and Japan with which India has a bilateral Comprehensive Economic Cooperation Agreement. India and Malaysia will operationalise a Comprehensive Economic Cooperation Agreement, aiming to boost bilateral trade to $15 billion by 2015 from nearly $10 billion last year. The paper studies the trends and changes in the composition of exports and imports of Indian trade with Malaysia during the study period 1991 to 2009. The study dwells upon analysing the present status of bilateral trade in goods and services, investment and other areas of economic cooperation. It also assesses the feasibility, potential and nature of cooperation in these areas under the CECA.

The Magnitude and Distance Decay of Trade in Goods and Services: New Evidence for European Countries

Using a newly assembled, consistent and disaggregated dataset (12 goods and 7 services) on internal and bilateral trade for 25 European countries, we analyse the difference between trade in goods and services. The measurement of both trade in goods and trade in services is improved over earlier research, allowing us to compare trade in goods and services in a coherent and systematic way. First, our dataset is made consistent with the domestic demand and production and the total exports and imports at the sector and product levels. Second, we explicitly control for re-exports. We find that, although goods are more often bilaterally traded than services, the volume of bilateral trade in services does not attenuate less with distance than the volume of bilateral trade in goods.

Effects of the Endogenous Scope of Preferentialism on International Goods Trade

Abstract Previous empirical research has assumed that goods trade responds to goods trade preferentialism only, while other forms of preferentialism — such as services trade or investment preferentialism — are irrelevant for goods trade. This article provides novel evidence for the gains from a broader scope of preferentialism (in terms of the number of dimensions covered: goods, services, and investment) at the intensive and extensive country margins of bilateral goods trade.

Multiple faces of preferential market access: their causes and consequences

This paper suggests an integrated approach to study selection into and consequences of five modes of preferential economic integration agreements (PEIAs): goods trade agreements (GTAs), services trade agreements (STAs), double taxation treaties (DTTs), bilateral investment treaties (BITs), and currency unions as well as currency pegs (CUAs). A detailed descriptive analysis reveals typical integration patterns, with DTTs and BITs often being first steps towards deeper integration. We consider the effects of PEIAs on bilateral goods trade, services trade, and FDI and provide conclusive evidence that single and combined PEIAs are associated with positive effects not only on single outcome but typically on all outcomes. Investment liberalization through DTTs and BITs seems to be particularly beneficial since concluding them alone or in any combination with other agreements encourages goods trade even more than the liberalization of goods trade per se — Peter Egger and Georg Wamser

The Heckscher–Ohlin model and the network structure of international trade

This paper estimates for 28 product groups a characteristic parameter that reflects the topological structure of its trading network. Using these estimates, it describes how the structure of international trade has evolved during the 1980–2000 period. Thereafter, it demonstrates the importance of networks in international trade by explicitly accounting for their scaling properties when testing the prediction of the “Heckscher–Ohlin” model that factor endowment differentials determine bilateral trade flows. The results suggest that factor endowment differentials increase bilateral trade in goods that are traded in “dispersed” networks. For goods traded in “concentrated” networks, factor endowment differentials are less important.

Complementarity among international asset holdings

By utilizing a unique dataset and employing a variant of gravity models, we find strong evidence for the presence of complementarities among bank loans, short- and long-term debts, and portfolio equity holdings. The complementarities can be partially explained by common factors of standard gravity models such as economy size, state of economic development, and information cost proxies (such as distance), as well as bilateral trade in goods. However, we find an additional direct channel of complementarities among financial asset holdings that cannot be explained by these gravity factors. The complementarities are also robust to the consideration of unobserved fixed effects of both source and destination countries. We find evidence that the sequential reinforcing impact of bank lending on portfolio asset holdings is greater than the impact of portfolio asset holdings on bank lending. We also find that bank loans lead to subsequent portfolio asset holdings by partially alleviating information frictions. However, the role of portfolio investment seems to be independent from the information channel. The mutual reinforcement effect among cross-border asset holdings is stronger in destination countries with better quality of institutions. Overall our findings suggest that, while there may exist pecking order of cross-border investment due to differing sensitivity of capital flows to various costs and frictions, once a country receives a form of cross-border investment, this tends to induce other forms of investment and thus a deeper and more balanced financial integration. J. Japanese Int. Economies 23 (1) (2009) 37–55.

International Investment Patterns

We provide a systematic analysis of the bilateral factors driving portfolio equity holdings across countries. We find that bilateral equity holdings are strongly correlated with bilateral trade in goods and services. Larger bilateral positions are also associated with proxies for informational proximity.

The International Equity Holdings of Euro Area Investors

We provide a systematic analysis of bilateral, source and host factors driving portfolio equity investment by countries, using newly-released data on international equity holdings at the end of 2001. We find that bilateral equity holdings are strongly linked to bilateral trade in goods and services and are also associated with proxies for informational proximity. We further document that there exists a significant euro-area bias, with countries investing in other countries over and above the amount predicted by underlying fundamentals.

Does Gravity Matter in a Service Economy?

This paper estimates gravity equations for bilateral services trade in a sample of 28 countries. It finds that the standard gravity variables of economic size and geographic proximity are significant factors in services trade. It also reveals positive effects of linguistic ties on services trade. There is evidence of a positive link between regional trade arrangements and services trade. Much of that effect appears to reflect the impact of bilateral goods trade on services trade. This implies that efforts to enhance goods trade—bilateral or multilateral—should lead to more services trade as well.

The geography of trade in goods and asset holdings

Gravity models have been widely used to describe bilateral trade in goods. Portes and Rey [Portes, R., Rey, H., 2005. The Determinants of Cross-Border Equity Flows. Journal of International Economics, 65(2), 269–296.] applied this framework to cross-border equity flows and found that distance, which proxies information asymmetries, is a surprisingly very large barrier to cross-border asset trade. We adopt a different point of view and explore the complementarity between bilateral trade in goods and bilateral asset holdings in a simultaneous gravity equations framework. Providing different instruments for both endogenous variables, we show that a 10% increase in bilateral trade raises bilateral asset holdings by 6% to 7%. The reverse causality is also significant, albeit smaller. Controlling for trade, the impact of distance on asset holdings is drastically reduced.

The Gravity Equation in International Trade in Services

The main purpose of this paper is to assess the impact of various factors on bilateral services trade, relative to that on bilateral goods trade. To accomplish this purpose, using the standard gravity model, we ran regressions on bilateral services trade and goods trade between 10 OECD member countries and other economies (including OECD member and nonmember countries) for the years 1999 and 2000. One main and interesting result is that services trade is better predicted by gravity equations than goods trade. Another interesting result is that there is a complementary relationship between goods exports and services imports.

International Investment Patterns

We provide a systematic analysis of bilateral, source and host factors driving portfolio equity investment across countries, using newly released data on international equity holdings at the end of 2001. We develop a model that links bilateral equity holdings to bilateral trade in goods and services and find that the data strongly support such a correlation. Larger bilateral positions are also associated with proxies for informational proximity. We further document that the scale of aggregate foreign equity asset and liability holdings is larger for richer countries and countries with more developed stock markets.

What is So Special about Trade in Services?

This article argues that trade in services has a specific feature that does not apply to trade in goods. As the traded service is partly produced where it is consumed (i.e. in the importing country), we propose that it must use interactively inputs from both the exporting and importing countries. The modelling of the specificity of traded services is inspired from the O-ring production function presented in Kremer (1993). We then test our analytical framework using a new OECD dataset on bilateral trade in services. We find that policy and non-policy factors affecting the use of inputs in the exporting or importing country indeed have a similar impact on the same flow of traded service between those countries. This finding may contribute to explain why bilateral commerce in tradable-services is typically weaker than bilateral trade in goods.

International Investment Patterns

We provide a systematic analysis of bilateral, source and host factors driving portfolio equity investment across countries, using newly released data on international equity holdings at the end of 2001. We develop a model that links bilateral equity holdings to bilateral trade in goods and services and find that the data strongly support such a correlation. Larger bilateral positions are also associated with proxies for informational proximity. We further document that the scale of aggregate foreign equity asset and liability holdings is larger for richer countries and countries with more developed stock markets.

International Investment Patterns

The paper provides a systematic analysis of bilateral, source and host factors driving portfolio equity investment across countries, using newly-released data on international equity holdings at the end of 2001. It develops a model that links bilateral equity holdings to bilateral trade in goods and services and finds that the data strongly support such a correlation. Larger bilateral positions are also associated with proxies for informational proximity. It further documents that the scale of aggregate foreign equity asset and liability holdings is larger for richer countries and countries with more developed stock markets.