Trade Theory Research Articles

Research on the impact of trade barriers on the binary marginal of enterprise exports: India's anti-dumping of China

ABSTRACT This paper derives a theoretical model of the impact of anti-dumping barriers on enterprise exports under the framework of heterogeneous firm trade theory and evaluates the trade-damaging effect of India's anti-dumping against China. The results show that the export volume and the number of export enterprises involved in anti-dumping cases show a downward trend after the anti-dumping is imposed. After controlling for heterogeneity, anti-dumping does not reduce the exports of incumbent enterprises. Anti-dumping mainly affects the exports of Chinese enterprises through the expansion margin, and has a small impact on the intensification margin. This research provides references for improving international trade development.

Effect of Integrated Customs Management Systems (ICMS) on Customs Duty Performance in Nairobi County, Kenya

Purpose: Tax is an important stream of revenue for government’s development projects and therefore all efforts must be made by governments to ensure that it is accurately and efficiently collected to facilitate the government’s operations. This study sought to determine the of integrated customs management system on factors affecting customs duty performance Nairobi County, Kenya. The theories supporting the study is comparative theory of international trade. Methodology: The study employed explanatory research design. The target population of this study was 438 respondents comprising customs heads of departments, customs officers and customs agents at Embakasi Inland Depot, Nairobi. with a sample size of 209, out of which 173 respondents correctly filled the questionnaires and submitted them accordingly. The data collected was analyzed through descriptive and inferential statistics. A linear regression model was used. Results: The coefficient study showed that a unit change in ICMS increases customs duty performance significantly β =0.205 p-value =0.000<0.05. Conclusion: The study recommends that the KRA and the government of Kenya prioritize the continuous improvement of the Integrated Customs Management System (ICMS). Customs management should ensure full utilization of the ICMS by training customs officials and stakeholders, given its positive impact on duty performance. Future research may be carried out on the effects of tax incentives on Customs duty performance

Assessing the internationalization dynamics of emerging markets: a comprehensive analysis utilizing SWARA-WASPAS techniques

Purpose This paper aims to evaluate the internationalization of countries represented in the MSCI Emerging Markets Index. The evaluation considers high-technology product imports, foreign direct investments, research and development expenditures, patent and industrial design applications, exports and gross domestic product (GDP) data, representing production. Design/methodology/approach This paper uses the Step-Wise Weight Assessment Ratio Analysis (SWARA) method to assess and rank the criteria for evaluating emerging markets. Four academics who are authorities in the field of foreign trade were consulted to weigh the criteria. The Weighted Aggregated Sum Product Assessment (WASPAS) method, considered one of the most reliable and robust MCDM techniques, was then used to evaluate and rank the countries. Findings The findings obtained during the research process reveal the internationalization dynamics of these countries based on the indicators they possess. As a result, it is observed which countries achieve higher performance in the internationalization process based on relevant criteria. Originality/value This study is theoretically unique and valuable as it simultaneously offers the potential for development to macro-level international trade theories, such as the technologic deficit hypothesis, and meso-level internationalization theories, such as the Uppsala model. Additionally, integrated multiple criteria decision-making (MCDM) methods, which are not frequently used in cross-country studies, have been used, and the performance of emerging markets has been ranked. The findings obtained from this application distinguish the research from the existing literature by transforming it into a performance ranking rather than focusing on the antecedents or consequences of internationalization and their interactions.

A behavioural theory of trade

ABSTRACT Inspired by the psychology of creativity, we explore a new cause of trade with a behavioural trade model which predicts several trade patterns supported by new empirical evidence. The model examines the effects of human creative orientation on production, consumption, and trade patterns, thus shedding new light on the gains and losses from trade. It predicts that countries with higher levels of household creative orientation are more inclined to export creative goods. This prediction is supported by empirical evidence using a gravity model with data from the European Social Survey.

Firm Heterogeneity and India’s Manufacturing Exports: Lessons on Protection and Trade Theory

ABSTRACT Empirical examinations of heterogeneity among Indian manufacturing firms provide helpful lessons for trade theories and policies. Using descriptive statistics of cross-section data for 2011, 2015, and 2019, the asymptotic Wilcoxon-Mann-Whitney test, and regression analysis, the study reveals that firms are heterogeneous within each 4-digit National Industrial Classification (NIC) category, exporting firms are more productive than non-exporters, and exporter premia decline with trading activities. The study concludes that recent protectionist policies reduced extensive trade margins, firm heterogeneity, and productivity in the Indian manufacturing sector.

ANALYZING THE IMPACT OF FREIGHT TRANSPORT, GDP, AND PESO – BAHT EXCHANGE RATE ON PHILIPPINE TRADE IN DESICCATED COCONUT USING THE GRAVITY MODEL OF INTERNATIONAL TRADE

Objective: The objective of this study is to investigate the impact of freight transport, Gross Domestic Product (GDP), and the Peso-Baht exchange rate on the trade of desiccated coconut between the Philippines and Thailand, utilizing the Gravity Model of International Trade. The primary aim is to understand the significant factors influencing the trade flow and to identify areas for improvement in international competitiveness. Theoretical Framework: The research is grounded in international trade theories, focusing on the Gravity Model, which emphasizes the roles of economic mass and geographical distance in determining trade flows. Method: This study made use of the ADF - Unit Root Test, Durbin – Watson Test, Jarque – Bera Test, Variance Inflationary Factor (VIF), Chow Breakpoint Test, Ramsey’s RESET, and Johansen Cointegration, to test the relationship between variables. Results and Discussion: The results of this study highlights the positive, yet insignificant effect of Thailand, and Philippines’ GDP on the trade in desiccated coconut. The exchange rate, and freight transport negatively impacts the trade, however, it is notable that only freight transport having a significant effect. Research Implications: The study provides insights into the logistical and economic challenges in the desiccated coconut trade, suggesting that addressing transportation inefficiencies and stabilizing exchange rates could enhance trade performance. Originality/Value: This study contributes to the literature by applying an innovative approach to desiccated coconut, revealing how logistical inefficiencies and economic variables affect trade flows and influence policy decisions. This research aids in enhancing trade efficiency between agricultural-exporting nations like the Philippines and Thailand.

Использование сценарных условий международного взаимодействия национальных хозяйств в антикризисном управлении

One of the main questions that economic science seeks to answer in the field of international economic relations is the question of the impact of free trade on economic development. The article analyzes the main approaches and theories of international trade, and also examines the characteristics of economic systems involved in trade from the point of view of information theory and cybernetics, and the influence of these parameters on the management of economic development as national economies, and the world economy as a whole. In some cases, successful specialization in the international division of labor is actually achieved through measures of liberalization of trade, financial markets and capital rules. But these measures do not always produce the expected effects. Information and cybernetic interpretation of the processes of interaction of national economic systems opens up opportunities for the development of a new scientific approach to describing phenomena in the field of international trade.

Spillover effects of structure-adjustment pollution reduction measures in China's iron and steel industry

The iron and steel industry (ISI) is a significant source of sulfur dioxide and particulate matter pollution in China. Existing research on regional environmental regulation or ISI emission reduction strategies tends to overlook spillover effects and the enterprise perspective. During the heating season, production limitations in ISI are potential policy measures for achieving structural emission reductions in heavily polluted cities in China's Jing-Jin-Ji and surrounding regions. We adopt a bottom-up modeling approach, incorporating effective production time to describe enterprise behavior and establishing a quantitative trade model based on trade theory. By modeling three types of production restriction policies outlined in policy documents, we evaluate the emission reduction effects of structure-adjustment measures using the example of reduced effective production time for steel-producing enterprises in the air pollution transmission channel in the Beijing-Tianjin-Hebei area. The results indicate the following: (1) Reducing the effective production time of ISI enterprises can help decrease domestic production value and total factor productivity in pollution-intensive industries, including but not limited to ISI. It also leads to reduced emissions of various pollutants in the implementation regions. (2) Due to interprovincial trade and input-output linkages, structural reduction measures in certain regions have implications for almost all other provinces' industrial structures. Differences in initial industrial structures, factor endowments, and geographical locations contribute to varying directions and magnitudes of industrial structural changes. Pollution-intensive industries' share tends to increase higher in less developed regions. (3) Our estimated pollution reduction is smaller compared to the literature evaluating clean air policies in similar regions using top-down strategies. This discrepancy arises because we analyze a single policy tool rather than modeling industry-wide emission fluctuations from the top down. Additionally, our modeling approach allows us to examine dynamic changes in comparative advantages. The increase in production scale for certain industries in policy-affected regions partially offsets the decline in pollution emissions. These findings enhance our understanding of structure-adjustment reduction measures' role and highlight their potential advantages and limitations.

Did the International Trade in Crops Lead to Global Cropland Saving or Wasting in the Period 2000-2022?

The international food trade is beneficial for enhancing global food security but also raises issues such as global cropland redistribution, land use efficiency, and environmental problems. While current studies have examined the impacts of the international food trade on these issues, its long-term effects on global cropland use efficiency remain unclear, especially when considering different crops and countries. Utilizing the international trade theory and the principle of virtual cropland, this study explores the relationship between international food trade and global cropland use efficiency from 2000 to 2022. The results illustrate that the global crop trade surged by 142%, outpacing the 102% increase in virtual cropland trade, which was attributed to crop yield enhancements. By 2022, the global virtual cropland trade encompassed 10.7% of the total croplands, with China emerging as the foremost importer, particularly due to soybean imports. Notably, the global crop trade led to substantial cropland savings and higher cropland use efficiency, totaling 1244.9 million hectares (Mha) between 2000 and 2020. These gains were largely attributed to the superior yields of major crop-exporting countries. Despite these gains, socio-economically vulnerable countries face significant challenges, potentially compromising their food security amidst the complexities of the global trade dynamics.

New trade theory converges to the old trade theory—An elementary theoretical perspective

AbstractWe introduce factor specificity to reflect the cost of adjustment of reallocating factors between technologies that determine fixed costs and variable costs in a typical Dixit–Stiglitz–Krugman (DSK) model of trade, retaining all other standard specifications of such a framework. We show that such an apparently benign change fundamentally alters the results of the DSK model. The number of varieties and output per variety depends entirely on full employment conditions. Thus, DSK and Heckscher–Ohlin–Samuelson (HOS) models, which represent the major workhorses of old trade theory, converge in the sense that now the number of varieties and outputs per variety are completely determined by factor endowments.

News or noise? ESG disclosure and stock price synchronicity

Environmental, social, and governance (ESG), as an important mechanism to promote the sustainable development of the capital market, is bound to have a significant impact on its stock price synchronicity. This paper examines the impact and mechanism of corporate ESG disclosure on stock price synchronicity using data from Chinese A-share listed companies from 2013 to 2022. It analyzes the dual perspectives of information efficiency and noise trading. The findings support the noise trading perspective, as ESG disclosure significantly reduces the impact of noise on stock prices and enhances firms' stock price synchronicity, and the conclusions still hold after a series of endogeneity and robustness tests. It is also found that the positive impact of ESG disclosure on stock price synchronicity is mainly realized through the paths of reducing accrual earnings management and increasing analyst attention. Moreover, the positive impact of ESG disclosure on stock price synchronicity is more significant in the group of non-state-owned enterprises, higher quality of internal control, non-polluting industries, and less market-oriented enterprises. The study in this paper not only enriches the related literature in the field of ESG disclosure and stock price synchronicity but also reaffirms the noise trading theory of the irrational school.

Indonesia’s Potential Trade Flow to EAEU Countries: The Gravity Model Approach

This research aims to examine the Indonesia’s potential trade flow to EAEU countries using Augmented Gravity Model with Pseudo Poisson Maximum Likelihood (PPML) estimator, revealed comparative advantage (RCA) index, and constant market share analysis (CMSA) index on trade flows data for the period 2002-2022. The results indicates that trade relation between Indonesia and EAEU countries align with Heckscher-Ohlin Theory of trade, which states that dissimilar countries tend to trade more. Furthermore, the finding emphasizes the importance of Indonesia-EAEU preferential trade agreement to reduce or eliminate tariffs which otherwise will increase trade between both parties.

Trade, Power, and Welfare: An International Economic Political Analysis of Great Power Competition

Traditional international trade theories seldom consider the pursuit of power as maintaining and enlarging a country’s relative strength in the process of interstate competition. However, in the context of great power competition, the importance of power in the trade between advanced and latecomer countries has become more pronounced. Given this situation, we can establish a tractable and generalized international economic political framework for analyzing great power competition by introducing the power factor into classic two-country trade theory, treating the absolute welfare and relative welfare emphasized by economics and political science respectively as actors’ dual objectives, and making use of game theory methods. It can be found that in a two-country game composed of an advanced and a latecomer country, the latter will prefer a strategy of “enhancing its own strength and rectifying its own weak points,” while the former will favor a strategy that “worsens the other’s weak points and enhances the other’s strengths.” Once the technological gap that determines comparative advantage narrows, the advanced country will tend to totally suppress the latecomer and even “decouple” from it.

Matching comparative advantages to special economic zones for sustainable industrialization

African countries are consistently trying to leverage industrialization to advance their economic development. Despite possessing favorable factors such as abundant natural resources, a surplus of low-cost labor, and an increasing number of established Special Economic Zones (SEZs), African countries are yet to fully maximize their potential and achieve sustainable and inclusive industrialization. This study explores the comparative advantages of African countries to determine the types of SEZs that can effectively accelerate industrialization. By leveraging the unique strengths and resources of each country, customized strategies for SEZs can be developed to attract investments, promote technological advancements, and foster sustainable economic growth. The research utilizes the Revealed Comparative Advantage (RCA) matrix, which is grounded in Ricardian trade theory, examining trade data spanning from 2011 to 2021 to evaluate the competitive export capabilities of various countries. The findings consistently reveal that the selected countries (Ghana, Ethiopia, and South Africa) possess a significant and consistent comparative advantage in natural and agricultural resources compared to other sectors. Establishing SEZs that focus on these sectors can generate substantial socio-economic impacts, including attracting investments, creating employment opportunities, enhancing export capacities, stimulating economic growth, fostering linkages, facilitating skills and technology transfer, promoting spillover effects, encouraging specialization, developing infrastructure, and supporting value addition in agribusinesses. The result of this study will contribute to policy discussions and aid decision-making processes for policymakers, investors, and development practitioners in their efforts to advance industrial development across Africa.

The Economic Role of Technology in International Trade: Theory and Practice in the Trade War

Scientific purpose. The aim of the article is to analyze the impact of technological changes and restrictions on the freedom of technology transfer in the contemporary world economy on international trade in the context of the trade conflict between the United States and China. Research process and methods. Interrelationships between the role of technological changes and trade, the issue of monopoly rent resulting from the technological advantage of some countries, were examined on the basis of the theory of international trade (Ricardian model, Heckscher-Ohlin) and subsequent theories, in particular the approach of Posner, Krugman, Melitz. To analyze the problem of technology transfer limitations in the modern world economy, mainly due to China's trade practices, a quantitative and qualitative method was used as well as a review of statistics of international trade in high-tech goods. Foreign direct investment in China was conditioned by the transfer of knowledge and advanced technologies from the United States. Scientific analysis results. Technological changes and the spread of technology as a result of the intensification of international trade are associated with a specific impact on the benefits and losses for the state with a technological advantage as a result of the phenomenon of "learning by doing". To examine the economic effects of the growing importance of technology in international trade, the theoretical and empirical approach to analyzing the demand in selected countries, including the United States, European Union countries, Japan and China, for the level of employment and wages of highly qualified labor force was used. Conclusions, innovations, recommendations. Further research should cover issues related to the influence of states on supporting the development of advanced technologies, which is associated with specific dilemmas regarding the shaping of international trade flows and the impact on the level of wages in the economy.

Electronic Cargo Tracking and Trade Facilitation Among Clearing and Forwarding Companies at Inland Container Deport Nairobi, Kenya

The increasing forces of globalization around the world require that goods and services are moved from one part of the country to the other hence the need for customs. It is the responsibility of KRA to ensure that all taxes have been collected on behalf of the government of Kenya. However, several challenges have been evident in the operations of KRA as far as the realization of its objectives of customs system automation on trade facilitation is concerned. The purpose of this study was to establish the effect of electronic cargo tracking on trade facilitation among clearing and forwarding companies at inland containers deport Nairobi, Kenya. The study was grounded by the New Trade Theory. The explanatory research design was used. The target population of this study was the 369 clearing and forwarding agents and KRA staff and transporters, and a sample size of 191 respondents. Primary data was collected through a close-ended questionnaire. The data was analyzed using descriptive and inferential statistics. The study found that electronic cargo tracking has a positive and significant effect on trade facilitation (β = 0.323; p = 0.000). The study emphasized the direct contribution of electronic cargo tracking to the enhancement of trade facilitation processes. KRA is recommended to support research initiatives that focus on the continuous improvement of customs systems and trade facilitation technologies. The study recommends that KRA establish robust monitoring and evaluation mechanisms to assess the implementation and impact of electronic cargo tracking. The study recommends that the treasury establishes and implement policies that encourage the seamless integration of advanced technological solutions within the customs and trade facilitation processes.

Trading with Frenemies: How Economic Diplomacy Affects Exports

Abstracts Trade is inherently risky, involving a commitment problem for both importers and exporters. The former must deal with ex ante uncertainty about whether exporters will deliver the goods or services as promised, while the latter has to identify an importer willing to trade a product. How, then, do firms establish trading relationships, especially in new markets? While both classical and newer trade theories tend to downplay the role of government in trade, we argue that government institutions play a crucial role in resolving this uncertainty. Specifically, export promotion agencies and embassies in foreign countries vet potential trade contacts and head off potential disputes before they get too serious, thus insuring against the basic risks of trade. We expect that this institutional backing will have stronger export-promoting effects on great powers’ trade with economically developing and politically dissimilar countries. Using a large collection of U.S. State Department cables from the 1970s that concern export promotion, we find strong evidence that promotion efforts had the largest effect when economic trade barriers were high and in countries that were politically dissimilar to the U.S. Rather than passively participating in trade, government bureaucrats play a large role in helping firms establish trading relationships.

ANALYSIS OF UKRAINE’S COMPETITIVENESS: PROBLEMS AND PROSPECTS OF EUROPEAN INTEGRATION

The article analyzes the competitiveness of Ukraine, identifies problems and outlines the prospects and consequences of the country’s European integration aspirations. A retrospective review of the development of the country’s economic model was conducted in order to evaluate the effectiveness of the implementation of reforms and identify errors that affected the place and role of the domestic economy in the world markets of goods and capital. This made it possible to single out certain comparative characteristics with the main theories of international trade and international investment. It was noted that unsuccessful attempts to quickly transform from a command-administrative economy to a mixed market system led to a loss of industrial potential and, accordingly, negatively affected the structure of foreign trade relations and the investment climate, which in turn led to a drop in the level of competitiveness of Ukraine. Along with this, the analysis of the key indicators of socio-economic development indicates certain positive changes in the period 2002-2012, which was reflected in the dynamics of GDP growth, an increase in incoming investment flows, stabilization of inflation at the targeted level and overall improved welfare of society. However, the uncertainty and constant change of the vector of economic integration together with the change of power led to the deterioration of the state’s economic condition and made sustainable economic growth impossible. The period of revival of business and investment activity in the post-Covid 2021 year was replaced by a deep crisis with the beginning of the war. At the same time, the aspiration of our state to join the European community nevertheless gave a powerful impetus to the implementation and implementation of innovative reforms, which made it possible to achieve certain success in the direction of digitalization, infrastructure development, and further implementation of educational, medical, and social reforms even during the conduct of military operations. Currently, on the way to European integration, Ukraine is overcoming the difficult path of transforming its economic system to the requirements and values of the EU. Our country, together with the European Union, needs to solve the issues of labor migration and refugees, the introduction of a duty-free regime for domestic goods, the creation of a safe investment climate, etc. And there is not always unity in the choice of tools for solving these issues in the EU countries. Ukraine needs to use its advantages in logistics, geographical location, labor and natural resources, develop an industrial direction, introduce modern technologies, improve its energy independence and take an active part in integration processes. Finding compromises and political will allow Ukraine to successfully reform the socio-economic model and become a full member of the EU.

George Grote’s manuscript essay on “Foreign trade”

This paper explains the origin, content and importance of a manuscript essay on “Foreign trade” which George Grote, the historian of Greece, submitted to David Ricardo in March 1819. By relating it to the contributions to foreign trade theory of Ricardo and of James and John Stuart Mill it is shown that Grote anticipated important elements of the “Sraffa-Yukizawa-Parrinello interpretation” of Ricardo’s cloth-and-wine example. By suggesting that comparative advantage-based trade is incompatible with the labour theory of value Grote also pointed to an apparent incongruity in Ricardo’s chapter “On Foreign Trade.” A transcription of Grote’s manuscript essay is provided in the appendix.

Can the expansion of market size increase firm markup? Evidence from China

ABSTRACT Traditional international trade theory suggests that a larger market size leads to more intense competition, thereby reducing firm markup. However, this conclusion does not hold in our research. Based on the theoretical model constructed by Melitz, this paper makes the following extensions: First, introducing the cost-saving effect outside of the competitive effect discussed in traditional international trade theory. Second, introducing a specific marginal cost function, which deepens the analysis of the operating mechanism. What’s more, earlier models focused solely on the market size of the industry itself (the target industry), whereas our analysis also takes into account the impact of the market size of its upstream and downstream industries. Our model indicates that the impact of market size on firm markup depends on the relative magnitude of the competitive effect and the cost-saving effect. With firm cost following a Pareto distribution, the expansion of market size leads to an increase in firm markup. In addition, this paper presents a spatial econometric model using industrial firms’ data from China. The results indicate that the promoting effect of market size on firm markup is more prominent among top-tier firms, state-owned firms, low export intensity firms, and firms in technology intensive industries.