Multilateral Resistance Terms Research Articles

Investigating the simultaneous impact of infrastructure and geographical factors on international trade: Evidence from asian economies

Infrastructure and geography are the most important components of international trade. They provide trade-oriented amenities for the trade volume among trading partners. Thus, this study assesses the simultaneous impact of infrastructure and geographic factors on trade in Asian economies from 2004 to 2020. This work contributes to the existing literature by exploring the significance of infrastructure and geography in international trade. Furthermore, this research seeks to determine whether these factors have complementary or simultaneous effects. To examine these aspects, the augmented gravity model and cross-sectional autoregressive distributed lags are used in the current model. Then, the multilateral resistance terms are corrected. Results reveal that infrastructure has a significant and positive impact on trade. More precisely, transport infrastructure, communication infrastructure, financial infrastructure, and border-transport efficiency are productive influencers for trade over a certain period. Notably, the simultaneous impacts of infrastructure and geographic factors can lead to the deterioration of trade volume. The policy implications and future research direction of this study suggest that economies should improve infrastructure and geographic factors through gross domestic product.

The Role of Trade Agreements in Trade Creation or Trade Diversion: A Case of Pakistan

International Trade agreements are the source of trade creation or trade diversion. In the case of trade creation, it helps to rapid, sustainable economic development. This study assesses the trade creation and diversion effect for the notified trade agreements of Pakistan. This manuscript is based on an augmented gravity model with robust theoretical multilateral resistance terms. The model analyzes the impacts of trade agreements by using panel data over a period from 1962 to 2020. Making use of Poisson Pseudo maximum likelihood (PPML) family models with fixed effects, time-specific and dummy variables, it removes the issues of Jensen’s inequality E(lnXij ) ≠ lnE(Xij), heteroscedasticity, and zero-trade errors. This study's outcomes confirm that the trade agreements of Pakistan positively impact trade and exports. It can be concluded from this study that notified trade agreements of Pakistan are a source of trade creation. It further suggests that Pakistan should continue to pursue trade agreements with countries with complementary economies and focus on previously signed mutual agreements that are still not in force.

The effects of heterogeneous sanctions on exporting firms: Evidence from Denmark

AbstractSanctions encompass a wide set of policy instruments restricting cross‐border economic activities. In this paper, we study how different types of sanctions affect the export behavior of firms to the targeted countries. We combine Danish register data, including information on firm‐destination‐specific exports, with information on sanctions imposed by Denmark from the Global Sanctions Database. Our data allow us to study firms' export behavior in 62 sanctioned countries, amounting to a total of 453 country‐years with sanctions over the period 2000–2015. Methodologically, we apply a two‐stage estimation strategy to properly account for multilateral resistance terms. We find that, on average, sanctions lead to a significant reduction in firms' destination‐specific exports and a significant increase in firms' probability to exit the destination. Next, we study heterogeneity in the effects of sanctions across (i) sanction types and sanction packages, (ii) the objectives of sanctions, and (iii) countries subject to sanctions. Results confirm that the effects of sanctions on firms' export behavior vary considerably across these three dimensions.

The effect of airport efficiency on air traffic, using DEA and multilateral resistance terms gravity models

This study evaluates the bias-corrected airport efficiency by employing a slacks-based measurement-data envelopment analysis model with a bootstrapping technique. The impacts of airport efficiency on bilateral passenger traffic and freight volume are then assessed by developing a novel robust gravity model incorporating multilateral resistance (MR) terms and the Poisson pseudo maximum likelihood (PPML) method to address heteroscedasticity. We collected air route data using Incheon airport with a sample of 50 airports in 28 countries for 2006–2015. The results from all the applied models revealed a significant and positive effect of airport efficiency on passenger traffic and freight volume.

An anatomy of the impact of COVID-19 on the global and intra-Commonwealth trade in goods.

This article employs gravity modeling to examine the effect of COVID-19 on global and intra-Commonwealth trade. It uses bilateral monthly exports, number of COVID-19 cases and deaths and the stringency of measures. The main novelty is the use of price indices as proxies for multilateral resistance terms, which allow us to identify, supply, and demand effects of COVID-19 on bilateral trade. The incidence of COVID-19 impacts Commonwealth trade flows, the effect varies with the development level. High numbers of COVID-19 cases, including deaths, in low-income importers reduced Commonwealth exports unlike high-income importers that show higher exports. The incidence of COVID in an exporters' neighbouring countries impacted trade and restrictions in high-income countries increased Commonwealth trade. Short-term trends project a negative change in both exports and imports of Commonwealth countries.

Does happiness drive tourism decisions?

This research examines the role that happiness plays in affecting tourism flows. While most previous studies are country-specific, our analysis is performed with panel data on 142 countries from 2005 to 2019. This allows us to implement a structural gravity model that includes both domestic and international tourism flows, which is a novel approach in this branch of the literature. Our empirical strategy enables us to correctly identify happiness when multilateral resistance terms are included. The results show that happiness at a destination is a significant tourist attractor, although the link follows an inverted U-shaped pattern. This suggests that tourists associate happiness with the quality of life at a destination but after a threshold, it becomes less important. Moreover, when cultural distance is greater, the effect of happiness on tourism arrivals is smaller. Therefore, tourists can better interpret happiness when origin and destination cultures are similar.

The International Trade of Bangladesh: An Empirical Analysis with Gravity Model

We investigate the foreign trade pattern of Bangladesh using the gravity model of international trade. This work studies 24 years of Bangladesh’s bilateral trade with its 52 major trade partners, from 1995 to 2018. We construct a large panel dataset of 3,168 observations to capture the multilateral resistance terms by accounting for two-way trade flows from each country with the others. We use the PPML fixed effects estimator suggested by Silva and Tenreyro (2006) as the most preferred method for gravity-based analysis. We find mixed results regarding the consistency of Bangladesh’s trade pattern with the gravity model predictions. The results suggest that Bangladesh’s export is positively determined by its income and partner countries’ level of development, but it is relatively less influenced by partner countries income. However, Bangladesh’s level of development is observed to be negatively correlated with both export and import. The distance between the trading countries matters less to Bangladesh, and Bangladesh comparatively tends to trade more with distant countries. The results also suggest that tariffs imposed by partner countries do not affect Bangladesh’s export negatively as Bangladesh receives GSP benefits from its major export market. All the results of the fixed effects regression models are robust, and this paper has significant implications in terms of formulating trade policy for Bangladesh.

Trade Creation and Diversion Effects under the Free Trade Agreement between Peru and the United States: A Gravitational Analysis

This paper is oriented to quantify the trade creation and diversion effects in the Free Trade Agreement (FTA) between Peru and the United States. For that purpose, using a disaggregated database at the 10-digit level for Peruvian goods with intervals of 3-years between 2002 and 2018, this article adopts a three-dummy variable methodology that allows the identification of intra-bloc and extra-bloc effects. In addition, a theoretically-founded gravity equation is employed with the incorporation of country-time and time-invariant fixed effects in order to solve common econometric specification problems, such as lack of multilateral resistance terms in modelling, heteroscedasticity of trade data, inclusion of zero trade flows, and endogeneity of trade policy. Estimating with the PPML method for the complete sample and among types of goods (group 1: raw materials and intermediate goods, and group 2: consumer and capital goods), the main results show that the Peru-US FTA generates intra-bloc trade creation for the entire sample and two groups of goods separately. In addition, the FTA produces export trade diversion for the complete sample and group 2, while import trade creation for both groups. In overall, the Peru-USA FTA is an “intra-bloc trade creation agreement” that boosted bilateral trade flows. These effects are considered in order to formulate some policy recommendations for improving the results of this Peruvian FTA.

한국-ASEAN FTA의 산업별 무역효과에 관한 부분균형 구조적 중력모형분석

This study tried to estimate the ex-post industrial trade effects of the Korea-ASEAN FTA with the structural gravity equation. In order to effectively achieve this purpose, I used exporter-sector-time and importer-sector-time fixed effects to account for the unobservable multilateral resistance terms, employed the Poisson Pseudo Maximum Likelihood(PPML) estimator to address the issue of heteroskedasticity in trade data and to take advantage of the information contained in the zero trade flows, and used ITPD-E database on international and intra-national trade flows for consistency with the underlying gravity theory. As a result of the PPML estimation, it was found that the effects of the basic gravitational factors (distance, common language, colonial relationship, border, etc.) widely adopted are heterogeneous by industry, and the Korea-ASEAN FTA’s sectoral trade effects were the highest in the manufacturing sector.

Impact of India-ASEAN Free Trade Agreement: An Assessment from the Trade Creation and Trade Diversion Effects

This article investigates the impacts on the India–Association of Southeast Asian Nations (ASEAN) Free Trade Agreement (IAFTA) on trade creation and trade diversion. The gravity model is employed, where multilateral resistance terms are included. A panel data set of 45 countries that included India, ASEAN-10 nations and India’s top 34 trading partners in 2018 were used for the period from 1996 to 2018. The article explored that IAFTA leads to a trade creation in total bilateral trade in terms of exports and imports. The analysis further explored that the import creation effect was higher than that of the export creation effect.

General Equilibrium Effects of Trade Liberalization in ECOWAS Countries: Structural Gravity Approach

This study estimates the general equilibrium effects of the Economic Community of West African States (ECOWAS) free trade agreement, established in 1990, using the structural gravity model. Following the Anderson et al. (2015) methodology, we used country fixed effects as a proxy for multilateral resistance terms, which are considered as general equilibrium trade costs, to estimate the effects of regional trade liberalization on the ECOWAS member countries welfare. This study used data on 45 partners’ industrial trade flows from 1980 to 2006. The results indicate that trade liberalization has had positive effects on ECOWAS members welfare, via consumer or producer welfare channels. The latter channel induces an important change in real GDP relative to the former channel-countries with higher levels of producer welfare than consumer welfare experience greater changes in real GDP.

TİCARİ ÇEKİM MODELİNDE ÇOKLU DİRENÇ FAKTÖRÜ VE TÜRKİYE’NİN DIŞ TİCARET EĞİLİMİNİN DEĞERLENDİRMESİ

İlk defa Anderson ve van Wincoop (AvW, 2003) tarafından ortaya atılan Çoklu Direnç Faktörünün (Multilateral Resistance Term), çekim modeli ile yapılan tahminlemelerde değişkenlerin sapmasız ölçülebilmesi için modelde kontrol edilmesi önemlidir. Temelde, ihracat ve ithalatçıların ülke pazarlarına erişimlerinde karşılaştıkları ticaret maliyetlerini yansıtan teorik bir fiyat endeksi olarak yorumlayabileceğimiz “çoklu direnç”, dünya ülkelerinin toplam ihracat ve ithalat hacimlerinin eşit olması zorunluluğunun (pazarın temizlenme şartı) basit bir sonucudur ve en açık şekliyle, rekabetin küresel olduğunu ifade eder. Bu çalışma kapsamında gerçekleştirilen literatür taraması ve metaveri analizi sonucunda Türkiye için yapılan çekim modeli uygulamalarında, çoklu direnç faktörünün çoğunlukla yer almadığı tespit edilmiştir. Buradan hareketle çalışmada, çoklu direnç faktörünün çekim modelindeki yeri ve önemi uluslararası literatürdeki tartışmalar çerçevesinde vurgulanacak ve 1980-2018 yılları için 97 ülkenin çift yönlü ihracat hacimlerinin kullanıldığı bir ampirik çalışma yardımıyla yapısal modelin doğru tahminlenmesinde Havuzlanmış EKK, Sabit ve Rassal Panel Etkiler arasından en uygun yöntem araştırılacaktır. Ayrıca, çekim modeli yardımıyla elde edilen sabit katsayı tahminleri ile ülkelerin çoklu direnç faktörünü de içeren ihracat ve ithalat eğilimleri hesaplanacak ve aralarında bir karşılaştırma yapılacaktır. Bu karşılaştırma ile Türkiye’nin ticari yapısının temel belirleyenleri; ekonomik büyüklük, ikili ilişkiler, rekabetçi pozisyon ve çoklu direnç, ekseninde analiz edilerek hangi noktalarda güçlü veya zayıf kaldığı tanımlanacaktır.

Port efficiency and international trade in China

The relationship between port infrastructure and international trade is linked inextricably since ports remain the main gateway for international trade. All international ports thus have as their goal the effective and efficient management of ever-increasing cargo. And yet, previous research on the impact of the port efficiency on international trade remain subject to some biases in their measurement model. In order to correct them, this study developed a new port efficiency measurement model using the bootstrapping slacks-based-measurements data envelopment analysis. The study then built the linkage model with international trade by applying the gravity model using Poisson pseudo-maximum likelihood and multilateral resistance term. Based on data from 2002 to 2012 on 23 major container ports in China, our result shows a more significant and positive impact of port efficiency on international trade than in other models.

The Effects of Economic Policy Uncertainty on Export: A Gravity Model Approach

We use a gravity model that accounts for multilateral resistance terms (MRT) to examine the impact of economic policy uncertainty (EPU) on a country's export. Empirical analysis based on data from 20 countries that traded with one another (creating 380 pairs of importing-exporting countries) over the period 2002-2016 shows that the export of a country is negatively associated with the EPU of its corresponding importing country, but not with the EPU of the exporting country itself. This effect remains qualitatively unchanged regardless whether the exporting country is a developed or a developing economy and whether it focuses on commodities or non-commodities, but the effect is smaller for commodity exporters. Furthermore, the observed negative effect is more pronounced when the unemployment rate in the importing country is high, whilst GDP growth in the importing country does not influence the focal relationship. These findings advance the literature by highlighting the importance of accounting for the differential effects of policy uncertainty in importing and exporting countries and of taking into consideration country and product heterogeneity when analysing the effects of EPU on exports.

Modeling Complex Network Patterns in International Trade

When studying the formation of trade between two countries, traditional modeling has described it as being primarily dependent on individual and bilateral characteristics of the two trading partners. It is likely, however, that trade is dependent not only on the two countries involved but on the patterns by which all countries trade. Standard efforts to control for these complex network dependencies such as the inclusion of multilateral resistance terms in gravity models provide only a blunt reflection of these dependencies and overlook many of their details. This paper describes the explicit incorporation of complex network patterns in trade models. Two types of models are considered: gravity models that incorporate network covariates and exponential random graph models (ERGMs) that analyze trade from a network perspective. Estimates of both models provide evidence that network dependencies are influential in international trade. Comparisons of both models indicate that each approach outperforms the other at capturing and replicating certain types of network patterns. These results indicate that complex network patterns are an important determinant of trade, that gravity models can capture much of this dependency, and that other network models such as ERGMs can be valuable tools for capturing some types of network dependencies.

Trade balance dynamics and exchange rates: In search of the J‐curve using a structural gravity approach

AbstractThis paper uses a structural gravity approach, specifying currency movements as trade cost component to derive an empirical trade balance model, which incorporates multilateral resistance terms and accounts for the cross‐country variation in the exchange rate pass‐through into import and export prices. The model is estimated using quarterly bilateral trade flows between 47 countries over the period 2010Q1 to 2017Q2, disaggregated into 97 commodity groups. Our results support the existence of an “aggregate” J‐curve, pooled over commodity groups; at the same time they point to considerable heterogeneity in the trade balance dynamics across industries below the surface of aggregate data.

Comments on Heterogeneous Impacts of Free Trade Agreements: The Case of Japan

June 01 2019 Comments on Heterogeneous Impacts of Free Trade Agreements: The Case of Japan Author and Article Information Online Issn: 1536-0083 Print Issn: 1535-3516 © 2019 by the Asian Economic Panel and the Massachusetts Institute of Technology2019Asian Economic Panel and the Massachusetts Institute of Technology Asian Economic Papers (2019) 18 (2): 22–25. https://doi.org/10.1162/asep_a_00688 Cite Icon Cite Permissions Share Icon Share Facebook Twitter LinkedIn MailTo Views Icon Views Article contents Figures & tables Video Audio Supplementary Data Peer Review Search Site Citation Comments on Heterogeneous Impacts of Free Trade Agreements: The Case of Japan. Asian Economic Papers 2019; 18 (2): 22–25. doi: https://doi.org/10.1162/asep_a_00688 Download citation file: Ris (Zotero) Reference Manager EasyBib Bookends Mendeley Papers EndNote RefWorks BibTex toolbar search Search Dropdown Menu toolbar search search input Search input auto suggest filter your search All ContentAll JournalsAsian Economic Papers Search Advanced Search Vu Quoc Huy, Vietnam Institute of Economics, Vietnam Academy of Social Sciences: This paper represents a serious attempt to estimate trade creation effects of Japan free trade agreements (FTAs), using data from 1996–2015 and a new structural gravity model with fixed effects. The novelty in this paper is the adaptation of the structural gravity model and using directional fixed effects to deal with unobservable multilateral resistance terms. The paper provides estimation for trade creations effects for all FTAs, all Japan FTAs, and then each individual Japan FTA. It shows that on average, Japan's FTAs show no clear trade creation effects, although there seems to be a great variation in trade creation effects among different FTAs: Those with small countries and those that have been signed more recently seem to have larger effects than the others. The author then goes further to suggest that large-scale multilateral trade agreements may not be... You do not currently have access to this content.

The impact of the global financial crisis on Moroccan exports: a gravity model approach

PurposeThe purpose of this paper is to examine the impact of the global financial crisis (GFC) on Morocco’s export performance employing a gravity model framework.Design/methodology/approachThe authors investigate trade flows between Morocco and its 18 major trading partners from 2001 to 2015. The authors employ a trade gravity model using a first-order Taylor approximation of multilateral resistance terms and estimate by OLS and PPML.FindingsMorocco’s export performance was affected by theGFC. The authors find evidence that the fall in aggregate demand from Morocco’s trading partners, particularly in Europe, led to a fall in its exports. The authors also find that Morocco’s exports are positively correlated with the market size of its partner but negatively associated with distance.Originality/valueThis study contributes to the literature in two distinct ways. First, it examines variables affecting export performance in one of the emerging markets in the Middle East and North Africa region. Second, it assesses empirically whether there is a relationship between theGFCand the decline in Moroccan exports. The study also provides a number of important implications for policy makers and academics.

Bilateral Trade Performance in West Africa: A Gravity Model Estimation

AbstractThis study provides empirical insights on the functioning of regional trade agreements within the Economic Community of West African States (ECOWAS) by identifying bilateral trade barriers that affect the extent of trade flows among member countries. Also, it highlights some trade barrier indicators that are rarely covered in extant studies, such as the multilateral resistance term, the extent of trade complementarity, and the presence of economic integration agreements among ECOWAS member countries. We then provide augmented gravity model estimation on the determinants of bilateral trade in the region. We find, among other things, that trade complementarity had a positive and significant effect on bilateral trade within the sub‐region region. Other important determinants of intra‐regional trade include multilateral trade resistance and economic integration agreements — meaning that countries with some kind of agreement like the West African Economic and Monetary Union (WAEMU) tend to trade more among themselves than other member countries.

Gravity Estimations with FDI Bilateral Data: Potential FDI Effects of Deep Preferential Trade Agreements

This study employs a structural gravity approach to analyse the impact of preferential trade agreements (PTAs) on bilateral FDI. We use the UNCTAD global database on bilateral FDI stocks and flows. To control for the heterogeneous nature of PTAs we employ three different indicators of PTA depth. We find that ’deeper’ or comprehensive PTAs (e.g. including provisions on investment, public procurement and intellectual property rights provisions) have a significant positive impact on bilateral FDI between partners. For instance, we estimate that the deepest PTA (with an index of seven in the DESTA database) is expected to increase bilateral FDI stocks between signatory countries by around 54%. We also show the importance and policy-relevant information contained in the structurally estimated inward multilateral resistance terms (IMR). We find that strictly domestic policies have a significant impact on the IMR, thus explaining the variation in the national barriers to FDI. As an example, we analyse the potential impact on foreign direct investment of the economic co-operation agreement signed by the Pacific Alliance countries (Chile, Colombia, Mexico, Peru) in 2012.