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Total factor productivity spillovers from trade reforms in India

Marijke J. D. Bos and Gonzague Vannoorenberghe.

Canadian Journal of Economics, 51(2). 2018.

It is often argued that the positive effects of policies or institutional reforms on the productivity of firms are amplified by positive spillovers to other firms. In this paper, we use a comprehensive dataset of Indian manufacturing firms and employ spatial econometric techniques to estimate the strength of inter‐firm total factor productivity (TFP) spillovers within India following trade reforms.

We use externally imposed tariff reductions as an exogenous source of variation in TFP (following Topalova and Khandelwal 2011) and test for spillovers arising from observation, labour mobility and intermediate input use. We find no evidence of TFP spillovers between Indian manufacturing firms after trade liberalization on average. However, initially productive firms seem to benefit from TFP increases in other highly productive firms located in their vicinity.

URL: https://onlinelibrary.wiley.com/toc/15405982/2018/51/2

Courtesy: Wiley online library

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Domestic patent rights, access to technologies and the structure of exports

Recent years have seen major reforms in patent laws around the world. We study the effects of variations over time and across countries in the strength of domestic patent rights (PRs) on exports in high‐R&D goods. Adopting a generalized factor‐proportions framework, we interact industry research intensity with national PRs. Countries with stronger PRs have significantly greater exports in research‐intensive sectors. These effects are positive in emerging and developing economies but smaller than in developed economies. The sensitivity of high‐R&D exports to PRs rises with inward flows of patent applications, FDI employment and intra‐firm trade with multinational firms.

URL: https://onlinelibrary.wiley.com/doi/abs/10.1111/caje.12328

Courtesy: Wiley online library

Reciprocity in trade negotiations and welfare

Pascalis Raimondos and Alan Woodland

Journal of International EconomicsVolume 111March 2018

We propose a reciprocity rule for use in multilateral trade policy negotiations that is guaranteed to raise welfare of all participating countries under minimal assumptions. Our reciprocity rule requires all countries to raise the quantities of their net imports by the same proportion. We show that, starting from a Nash tariff equilibrium, a tariff reform that delivers proportional increases in all countries’ net imports will unambiguously raise welfare in each country. The structure imposed by the quantity-based reciprocity rule delivers this strong welfare result for a household welfare maximizing government without concern for general equilibrium price impacts. However, it does not generalize to the wide range of political economy welfare functions handled by Bagwell and Staiger.

URL: https://www.sciencedirect.com/journal/journal-of-international-economics/vol/111/suppl/C

Courtesy: Sciencedirect

Trade, Financial Flows and Stock Market Interdependence: Evidence from Asian Markets

Sowmya Dhanaraj, Arun Kumar Gopalaswamy and M. Suresh Babu

MSE WORKING PAPER 158/2017

Liberalization and globalization of Newly Industrialized Economies have contributed to increased integration of capital markets. This study tests whether convergence of macroeconomic variables and enhanced bilateral trade and financial flows causes greater interdependence of markets.Daily closing indices and quarterly differentials in interest, inflation,
growth rates, exchange rates, trade of goods and services, direct and portfolio investment were used. Results revealed that markets of Asia arenot immune to shocks originating in US although co-movements of macroeconomic variables do not help in explaining level of interdependence. Portfolio flows were found to be important than tradeflows in explaining market interdependence.

URL: http://www.mse.ac.in/wp-content/uploads/2017/03/Working-Paper-158-.pdf

Courtesy: MSE

Interplay between Patents and Standards in the Information and Communication Technology (ICT) Sector and its Relevance to the Implementation of the WTO Agreements

Xiaoping Wu

ERSD-2017-08, April 2017

While standard setting organizations (SSOs), industry bodies, as well as judicial and administrative authorities have made great efforts to solve the issue of patent holdup and holdout, there is still an ongoing struggle among divergent stakeholders. Patent holdup and holdout directly impacts the innovation and dissemination of patented technology, the harmonization and implementation of standards, and international trade, which are promoted by the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) and the Agreement on Technical Barriers to Trade (TBT Agreement). This working paper provides an overview of the current debate on patent holdup and holdout in the ICT sector, analyses existing policy measures and their limitations, and then highlights the relevance of the WTO to this debate.

URL: https://www.wto.org/english/res_e/reser_e/ersd201708_e.htm

Courtesy: WTO

Fair Trade Certification and Livelihoods: A Panel Data Analysis of Coffee-growing Households in India

Income inequality and export prices across countries

Lisandra Flach and Eckhard Janeba

Canadian Journal of Economics, Volume 50Issue 1, February  2017

This paper provides theory and evidence on the links between income inequality within a destination country and the patterns of trade and export prices. The theoretical framework relates income inequality to product quality and prices using a simple demand composition effect. The model predicts that a more unequal income distribution in a destination country leads to higher average prices, though the effect is nonlinear and disappears for rich enough countries. The predictions are tested using detailed firm-level data. Controlling for income per capita, prices are systematically higher in more unequal destinations, and the strength of this effect depends on income per capita. Results are particularly important for middle-income countries and hold only for differentiated goods, and in particular for products with a high degree of vertical differentiation.

URL: http://onlinelibrary.wiley.com/doi/10.1111/caje.12254/abstract

Courtesy: Wiley online library