do trade missions increase trade in an effort to stimulate trade canada has conducted regular trade missions starting in 1994 often led by the prime minister according to the canadian government these missions generated tens of billions of dollars in new business deals this paper uses bilateral trade data to assess this claim we find that canada exports and imports above normal amounts to the countries to which it sent trade missions however the missions do not seem to have caused an increase in trade in the preferred specification incorporating country pair fixed effects trade missions have small negative and mainly insignificant effects dans un effort pour stimuler le commerce international le canada a mene des missions commerciales depuis 1994 souvent sous la direction du premier ministre selon le gouvernement canadien ces missions ont engendre des dizaines de millions de dollars en relations d affaires ce texte utilise des donnees sur le commerce bilateral pour evaluer cette proposition on decouvre que le canada exporte et importe des quantites au dessus de la normale vers et en provenance des pays ou il a mene des missions commerciales cependant les missions ne semblent pas avoir cause un accroissement du commerce dans la specification preferee incorporant les effets fixes des paires de pays les missions commerciales ont des effets faibles negatifs et en gros insignifiants

dark costs missing data shedding some light on services trade a structural gravity model is used to estimate barriers to services trade across many sectors countries and time since the disaggregated output data needed to infer border barriers flexibly are often missing for services this paper derives a novel methodology for projecting output data the empirical implementation sheds light on the role of institutions geography size and digital infrastructure as determinants of border barriers the paper finds that border barriers have generally fallen over time but there are differences across sectors and countries notably border effects for the smallest economies have remained stable giving rise to a divergent pattern across countries

intra national home bias new evidence from the united states commodity flow survey abstract this paper estimates the us intra national home bias in trade using poisson pseudo maximum likelihood methodology to complement and extend wolf s 2000 work we use wolf s data from the 1993 commodity flow survey cfs and add the 1997 2002 2007 and 2012 waves we claim that wolf s home bias magnitude is overestimated due to the log linearization of the gravity equation and the control for distance used in the cross sectional study our results with panel data and latest econometric estimators show that the levels of us states home bias are in between 50 and 60 lower than in wolf s however since 2002 the home bias has experienced substantial growth which suggests that the us market is less commercially integrated in 2012 than in 1993

immigration and trade creation econometric evidence from canada immigrants may expand trade with their country of origin owing to superior knowledge of or preferential access to market opportunities the authors test this proposition using canadian trade data with 136 partners from 1980 to 1992 in an augmented gravity equation they find that a 10 percent increase in immigrants is associated with a 1 percent increase in canadian exports to the immigrant s home country and a 3 percent increase in imports they also find that among the primary categories of immigrants independents have the greater influence on trade immigration via the entrepreneur class appears to have less impact on trade than all other classes except refugees

do migrants improve governance at home evidence from a voting experiment can international migration promote better institutions at home by raising the demand for political accountability a behavioral measure of the population s desire for better governance was designed to examine this question a postcard was distributed to households promising that if enough postcards were mailed back results from a survey module on perceived corruption would be published in the national media data from a tailored household survey were used to examine the determinants of this behavioral measure of demand for political accountability undertaking the costly action of mailing the postcard and to isolate the positive effect of international emigration using locality level variation the estimated effects are robust to the use of instrumental variables including past migration and macro shocks in the destination countries the estimated effects can be attributed mainly to migrants who immigrated to countries with better governance especially migrants who return home

pragmatism and the gradual shift from dependency to neoliberalism the world bank african leaders and development policy in africa abstract the long standing disagreement between the international community and african leaders over an appropriate development strategy has been settled by the world bank s comprehensive development framework cdf and african leaders new partnership for africa s development nepad both documents support neoliberalism and see increased global integration as the key to africa s development this paper traces africa s journey from the dependency neoliberalism debate in the early 1980s to the current endorsement of neoliberalism it is argued that the overwhelming global attention and support enjoyed by nepad derives from its embrace of western development ideas as well as changes in the global political economy that have made reformist ideas more acceptable nepad s success will however depend on how african leaders and the international community respond to the initiative

bridging trade theory and labour econometrics the effects of international migration this paper surveys current theoretical and empirical research on international migration with a particular emphasis on the links between trade theory and labour empirics

immigrant links to the home country empirical implications for u s bilateral trade flows immigrants ties to their home countries can play a key role in fostering bilateral trade linkages immigrant ties include knowledge of home country markets language preferences and business contacts that have the potential to decrease trading transaction costs empirical results for the united states suggest that immigrant links have historically been important in increasing bilateral trade flows with immigrants home countries copyright 1994 by mit press

a generalized design for bilateral trade flow models abstract this paper suggests a full interaction effects design to analyze bilateral trade flows this is illustrated with an unbalanced panel of bilateral trade between the triad eu15 usa and japan economies and their 57 most important trading partners over the period 1986 1997 our full interaction model finds empirical support for the new trade theory and linder s hypothesis we show that the omission of one or more interaction effects can result in biased estimates and misleading inference

networks and the disappearance of the intranational home bias abstract previous studies have shown that not only countries but also regions have a preference to trade within their administrative borders using unique trade flows data we also find a large home bias in spanish intranational trade however we show that this home bias tends to disappear once we take into account the higher density of social and business networks within regions than between regions we also find that the home bias does not disappear if intranational trade flows are measured in quantity rather than value this fact might explain why previous studies on other european countries still find an intranational home bias even when network effects are taken into account

national borders and international trade evidence from the european union in this paper the impact of national borders on international trade within the european union is considered using a gravity model i find that averaged over all eu countries intranational trade is about ten times as high as international trade with an eu partner country of similar size and distance this relatively strong home bias suggests that even within the european union national borders still have a decisive impact on trade patterns jel classification f02 f14 f15 o52 ce memoire examine l impact des frontieres nationales sur le commerce international a l interieur de l union europeenne on montre que en moyenne pour tous les pays de l union europeenne le commerce intranational est a peu pres dix fois plus important que le commerce international avec un pays partenaire de l union europeenne de meme taille et a meme distance ce degre relativement important de preference nationale suggere que meme dans le cadre de l union europeenne les frontieres nationales ont encore un impact determinant sur les patterns de commerce

migrants ancestors and foreign investments we use 130 years of data on historical migrations to the u s to show a causal effect of the ancestry composition of u s counties on foreign direct investment fdi sent and received by local firms to isolate the causal effect of ancestry on fdi we build a simple reduced form model of migrations migrations from a foreign country to a u s county at a given time depend on 1 a push factor causing emigration from that foreign country to the entire u s and 2 a pull factor causing immigration from all origins into that u s county the interaction between time series variation in origin specific push factors and destination specific pull factors generates quasi random variation in the allocation of migrants across u s counties we find that doubling the number of residents with ancestry from a given foreign country relative to the mean increases the probability that at least one local firm engages in fdi with that country by 4 percentage points we present evidence that this effect is primarily driven by a reduction in information frictions and not by better contract enforcement taste similarities or a convergence in factor endowments

the positive effects of the schengen agreement on european trade enacted in 1985 the schengen agreement is widely heralded as both a symbol and major institutional advancement of the european project by eliminating passport requirements for workers the compact ostensibly produces gains from travel ease of market access and economies of scale yet despite these optimistic predictions scholars know little about the actual effects of schengen on trade we fill this void by identifying why labour mobility should expand the cross country exchange of goods and services and then test our theory with data from europe spanning the period 1980 to 2011 we argue that labour mobility resulting from schengen yields positive effects on trade by increasing demand for foreign goods improving awareness of low cost producers abroad and lowering the risks associated with buying and selling outside the country using the gravity model of trade we show empirically that schengen membership makes european states more robust trading partners

international labor and capital flows complements or substitutes in a global context foreign direct investment fdi and migration substitute one another in the matching process between workers and firms yet migrants provide information about future investment opportunities in their country of origin evidence from u s data is consistent with contemporaneous substitutability and dynamic complementarity between migration and fdi

the export effect of immigration into the usa much has been written on the connection between migration and international trade human history provides important examples of migrations leading to increased trade activity with perhaps the most well known example of the overseas chinese this study investigates the trade related importance of chinese and other immigrants into the usa previous studies may have underestimated or overestimated the relationship between trade and migration with nations treated as featureless plains rather than as varied landscapes this study contends that an understanding of the immigration trade relationship can be improved upon by examining the specific pattern and destination of immigration into specific us states using state level export data to 28 immigrant source countries in 1993 a strong immigration trade link is found reinforcing conclusions made by previous research using country level data the compelling connection between immigration and trade found in this study and others suggests that future change

international migration the brain drain and poverty a cross country analysis the aim of the paper is threefold first it empirically investigates the effect of international migration on poverty in origin countries using data from a cross country analysis second it explores the specific part of the income distribution from which migrants are drawn by comparing the effect of international migration on different income quintiles of the population finally given that the selection of migrants depends not only on the income level of their households but also on the skill levels of movers the paper casts some light on the implications of the emigration of skilled workers on poverty this article shows that the stock of international migrants have a positive effect on the income of the poor while it does not have a significant impact on the income of the middle and top quintiles of the population in particular a 10 per cent increase in the per capita stock of migrants resident in oecd nations augments the income of the poor by 1 per cent on average and ceteris paribus finally the poverty reducing effect of migration holds even when the emigration process selects the best and the brightest

the impact of common native language and immigration on imports this paper sheds light on the impact of common native language and immigration both jointly and separately on imports common native language and immigrant networks stimulate bilateral trade relationships by reducing transaction costs through both market creation and the removal of information asymmetries whereas evidence on the importance of weak links for trade provides support for the first channel the need for additional immigrants does not decline if the second mechanism proves to be a driver of trade relationships for estimation of a causal and nonlinear effect of the two common native language and immigration on imports we employ a flexible identification strategy which allows common native language and migration to be endogenous the results suggest that both common native language and immigration raise imports but the impact of common native language is ever increasing with its level whereas that of immigration is of declining importance as its level increases

price dispersion and the border effect abstract cross country price differences could reflect regional market segmentation within countries or national segmentation at the border in a search based model of price setting identifying national versus regional segmentation requires data on regional trade flows a calibration to u s and canadian data implies predominantly regional frictions u s producers are three times more likely to sell in their home region than another u s region and canadian producers are seven times more likely to sell in their home region than another canadian region frictions vis a vis foreign regions are only slightly higher models that ignore regional segmentation can misstate the severity of frictions at the border

social ties and international entrepreneurship opportunities and constraints affecting firm internationalization international entrepreneurship involves the identification and exploitation of opportunities for international exchange yet little is known about the entrepreneurial methods used for opportunity recognition while previous work emphasizes effects operating at the level of the business network i propose that the recognition of exchange opportunities is a highly subjective process shaped by entrepreneurs existing ties with others based on interview data collected from 41 managers i develop a comprehensive measure for classifying different methods of opportunity recognition i then use this measure to classify 665 international exchange ventures set up by entrepreneurs in four chinese cities in contrast with past research i find virtually no role for blind luck although the majority of exchange opportunities were discovered rather than sought these discoveries were intentional rather than accidental i also find that entrepreneurs idiosyncratic connections with others both promote and inhibit international exchange tie based opportunities lead to higher quality and more valuable exchanges that are constrained in terms of geographic psychic and linguistic distance from this i conclude that entrepreneurial networks have distinct opportunity horizons that limit the reach of tie based exchanges and potentially lead to sub optimal internationalization trajectories

migration and trade theoretical and empirical research in economics suggests that bilateral migration triggers bilateral trade through a number of channels this paper assesses the functional form of the impact of migration on trade flows in a quasi experimental setting we provide evidence that the relationship is not log linear in particular at small levels of immigration stocks the elasticity of trade to migration is quite high and it declines to zero at about 4 000 immigrants if immigration stocks exceed such a level the evidence suggests that trade will not increase anymore this suggests that for cross country network and other effects flowing from immigration to materialise at a significant level for trade a high enough level of immigrant stocks is necessary but there appears to be satiation as immigrant numbers increase

within u s trade and the long shadow of the american secession using data from the us commodity flow surveys we show that the historical union confederacy border lowers contemporaneous trade between us states by about 16 percentrelative to trade flows within the former alliances amongst one million placebos there is no other constellation of state grouping that would yield a larger border effect the finding is robust over different econometric models treatment of the rest of the world available survey waves or levels of aggregation including contemporaneous controls such as network institutional or demographic variables and heckscher ohlin or linderterms lowers the estimate only slightly historical variables such as the incidence of slavery do not explain the effect away adding us states unaffected by the civil war we argue that the friction is not merely reflecting unmeasured north south differences finally the estimated border effect is larger for differentiated than for homogeneous goods stressing the potential role for cultural factors and trust

industrial groupings and foreign direct investment we explore worldwide foreign direct investment location decisions by japanese manufacturing firms from 1985 through 1991 our conditional logit estimates provide evidence that firms location decisions are affected by membership in either vertical or horizontal keiretsu consistent with previous studies that stress agglomeration effects on firms location decisions we find that the stock of investment in a region by a firm s vertical keiretsu partners increases the probability of location further we find that the recent flow of investment into a region by a firm s horizontal keiretsu partners increases the probability of investment to the region providing evidence of networking effects

three new empirical tests of the pollution haven hypothesis when environmental regulation is endogenous the validity of existing empirical tests of the pollution haven hypothesis phh is constantly under scrutiny due to two shortcomings first the issues of unobserved heterogeneity and measurement error in environmental regulation are typically ignored due to the lack of a credible traditional instrumental variable second while the recent literature has emphasized the importance of geographic spillovers in determining the location choice of foreign investment such spatial effects have yet to be adequately incorporated into empirical tests of the phh as a result the impact of environmental regulations on trade patterns and the location decisions of multinational enterprises remains unclear in this paper we circumvent the lack of a traditional instrument within a model incorporating geographic spillovers utilizing three novel identification strategies using state level panel data on inbound u s fdi relative abatement costs and other determinants of fdi we consistently find i evidence of environmental regulation being endogenous ii a negative impact of own environmental regulation on inbound fdi in pollution intensive sectors particularly when measured by employment and iii larger effects of environmental regulation once endogeneity is addressed neighboring environmental regulation is not found to be an important determinant of fdi

intra national trade costs assaying regional frictions abstract the effects of intra regional inter regional and international frictions on the trade flows of canada s provinces are disentangled by gravity model techniques unexplained trade barriers utbs are the difference between inter provincial trade barriers inferred from pair fixed effects and from bilateral distance and contiguity the estimates reveal large intra national trade costs and utbs that vary significantly across canada s provinces decomposition of utbs into relative border effects and a systematic residual utb is based on a novel cobb douglas aggregator of intra provincial and pure inter provincial trade costs variation of both components across provinces is big

native language spoken language translation and trade we construct new series for common native language and common spoken language for 195 countries which we use together with series for common official language and linguistic proximity in order to draw inferences about 1 the aggregate impact of all linguistic factors on bilateral trade 2 the separate role of ease of communication as distinct from ethnicity and trust and 3 the contribution of translation and interpreters to ease of communication the results show that the impact of linguistic factors all together is at least twice as great as the usual dummy variable for common language resting on official language would say in addition ease of communication plays a distinct role apart from ethnicity and trust and so far as ease of communication enters translation and interpreters are significant finally emigrants have much to do with the role of ethnicity and trust in linguistic influence

brain drain in globalization a general equilibrium analysis from the sending countries perspective according to the economic literature high skilled emigration may either harm or bene t developing economies recent research highlighted several positive and negative channels through which the brain drain operates this paper aims at evaluating the relative magnitudes of various brain drain channels and quantifying their global impact on migrants sending countries for this purpose we develop a 10 region general equilibrium model of the world economy characterized by overlapping generations dynamics our ndings suggest that the short run impact of brain drain on resident human capital is extremely crucial as it affects not only the number of high skilled workers available to domestic production but also the sending economy s capacity to innovate adopt modern technologies this latter effect is particularly important in globalization where capital investments are made in places with high production ef ciencies hence despite positive feedback effects those countries facing prevalent high skilled emigration are the most candid victims to brain drain

convergence and migration among provinces have regional disparities in canada changed over the past thirty years this paper assesses the robustness of earlier findings of convergence in the levels and growth rates of provincial per capita gdp and then estimates the extent to which interprovincial and international migration is being influenced by regional differences in incomes and employment excerpt

anonymous market and group ties in international trade abstract history provides many examples of cohesive groups dispersed over several countries who exploit the ties between their members to gain entry into foreign markets the phenomenon is well established empirically and noteworthy because it suggests the importance of informational barriers in international transactions we present a simple model where output is produced through a joint venture and agents have complete information domestically but are unable to judge the quality of their match abroad a minority of individuals otherwise identical to all others can exploit complete information in international matches between group members if they so choose group ties increase aggregate trade and income but hurt the anonymous market because they deprive it disproportionately of the group s more productive members

do farmers value the environment evidence from a conservation reserve program auction the paper uses data from one conservation reserve program crp auction to elicit farmers attitudes toward the environment by analyzing their bids the crp pays farmers to remove chosen plots of land from agricultural production and put them to a conservation use an interesting aspect of this auction is that winners are determined by a combination of low bids and environmental scores of individual plots using decision theoretic approach to model this auction we show that farmers condition their bids on the strength of their environmental scores and that they value environmental benefits especially those that increase future soil productivity of their land

too burdensome to bid transaction costs and pay for performance conservation in a world free of transaction costs reverse auctions can cost effectively allocate payment for environmental service contracts by targeting projects that provide the most benefit per dollar spent however auctions only succeed if enough farmers choose to bid so that the auctioneer can evaluate numerous projects for targeted funding a 2014 conservation auction to allocate payments for phosphorus reduction practices in nw ohio experienced very thin bidding according to a follow up survey auction participation was deterred by the complexity of the bidding process and the need to negotiate with renters due to low participation the actual conservation auction made payments for phosphorus reduction that were surprisingly costly at the margin applying a farmer behavioral model to the western lake erie basin we simulate participation choice and cost effectiveness of environmental outcomes in reverse auctions and uniform payment conservation programs results reveal that when perceived transaction costs of bid preparation are high reverse auctions are less cost effective than spatially targeted uniform payment programs that attract higher participation keywords reverse auctions transaction costs cost effective conservation programs endogenous participation

assessing adjustment in africa abstract in 1994 the world bank issued a report on structural adjustment adjustment in africa in which it was argued that orthodox macroeconomic management represented the road to economic recovery for the sub saharan countries this article demonstrates that with its heavy emphasis upon macroeconomic policy bank policy shifts from structural adjustment to stabilization second the statistical evidence presented by the bank is analyzed and shown to be neither convincing nor internally consistent finally an alternative approach to adjustment stabilization is proposed and subjected to statistical testing

globalization and the dynamics of cultural identity this paper presents a simple model where micro founded dynamics of cultural identity are endogenous and interact with an international trade equilibrium this process generates a strong home bias under autarky we then show that goods market integration causes a phenomenon of cultural divergence whereby the distributions of cultures become more dissimilar across countries and one of the cultures that existed under autarky ultimately disappears by way of contrast we show that social integration causes cultural convergence and can counterbalance the effects of goods market integration

do foreign workers reduce trade barriers microeconomic evidence this paper provides evidence that foreign workers reduce firms trade costs and thus increase the probability that firms export this informs both the literature on trade costs and the microeconomic literature on firms export behaviour we identify the nationality of each worker in a large sample of german establishments and relate this to the exporting behaviour of these establishments we allow for the possible endogeneity of an establishment s workforce by instrumenting the share of foreign workers with the regional distribution of foreign workers in the wider labour market we find a significant effect of worker nationality on exporting which is not driven by the industrial occupational or locational concentration of migrants the effect is much stronger for senior occupations who are more likely to have a role in exporting decisions by the establishment the relationship is also stronger when we consider exports to particular regions and workers from these regions consistent with a gravity model in which trade flows from country i to j are a function of migrants from j in i

reverse importing and asymmetric trade and fdi a networks explanation abstract this paper considers the impact of business and social networks on international trade and fdi i propose that differences in the strength of network effects across countries can produce asymmetric trade and investment flows that may lead to trade friction a firm from a country with strong network effects has a cost advantage in selling to buyers from its own country this advantage results in lower inward fdi lower total imports but larger volumes of reverse imports into the country with strong network effects the model s predictions match observed asymmetric trade and investment flows that sometimes lead to us japan trade friction

dialect transaction cost and intra national trade evidence from china growing evidence emphasizes the important role of network effects on bilateral trade this paper proposes a new factor dialect difference which decreases social network across regions may incre

immigrant specificity and the relationship between trade and immigration theory and evidence studies routinely document that immigrant employment concentrates in non traded goods sectors and that many immigrants have low inter sectoral mobility we consider these observed characteristics of immigrant employment with regard to the question of how immigration affects a nation s pattern of production and trade we model an economy producing three goods one is non traded domestic labor and capital are domestically mobile but internationally immobile allowing that some new immigrants will become specific to the non traded goods sector the model indicates that the effects of immigration on output and trade depend importantly on the sectoral pattern of employment of both new and existing immigrants empirical investigation in a panel data set of oecd countries supports the model s prediction that immigration raises the output of non traded goods consistent with the model we also find that immigration and trade are complements given its empirical support the model s implications for immigration policy are then discussed

do state borders matter for u s intranational trade the role of history and internal migration empirical evidence of the impact of borders on international trade flows using the gravity equation approach abounds this paper examines the empirical relevance of state borders in u s interstate trade for various specifications of the gravity equation we find a large and economically significant subnational border effect for some specifications however two model specifications drastically reduce if not eliminate the border effect i dynamic panel specifications controlling for past levels of trade and ii models conditioning on internal migration les resultats empiriques de l analyse des impacts des frontieres sur les flux de commerce international en utilisant les modeles de gravite sont devenus monnaie courante ce texte examine l impact des frontieres entre etats a l aide de cette technique il s avere que les effets de frontieres infranationales sont grands et significatifs pour certaines specifications du modele cependant deux specifications du modele reduisent dramatiquement s ils n eliminent pas l effet de frontiere i des specifications qui prennent en compte les niveaux anterieurs de commerce et ii des specifications qui dependent de la migration interne

thick and thin borders in the european union how deep internal integration is within countries and how shallow between them the existence of large border effects is one of the main puzzles of international macroeconomics the seminal paper by mccallum found that trade between any two canadian provinces was on average 22 times greater than trade between any canadian province and any united state us although various authors have estimated internal and external border effects for the whole european union and some specific european countries none has done so in the manner that mccallum s seminal paper stymied by lack of data on region to region international trade flows this study uses a novel data set that captures intra and international truck shipments between spanish regions and regions in seven european countries during the period 2004 11 it computes internal and external border effects offering novel results for aggregate flows and the importing countries and estimates several specifications of the gravity equation so as to tackle such issues as the multilateral resistance term heteroskedasticity and zero flows and non linear relation between trade and distance the paper also adds a detailed analysis on the external border effect for each spanish exporting region and each of the seven european countries considered by means of this analysis we shed new light on the relative integration between regions of these seven countries and spanish exporting regions finally we conduct an extrapolation exercise computing the trade potentials that would be expected in a fully integrated europe and estimating how long full integration would take to achieve between each spanish exporting region and each european importing country to this regard two alternative scenarios are considered one using the growth rates of the spanish exports before the crisis 2001 08 and other considering the postcrisis growth rates 2011 13

border effects and the availability of domestic products abroad trade between countries could fall short of trade within a country because 1 the volume of international trade is less than the volume of domestic trade for a given product the intensive margin or 2 some goods that are sold domestically are simply not exported the extensive margin my theoretical model illustrates that either of these two factors could explain a given aggregate border effect i examine the empirical relevance of this distinction by isolating the fraction of total domestic production attributable only to exporters finding that around one half of the border effect may be attributed to each explanation jel classification f1 les effets de frontieres et la disponibilite de produits domestiques a l etranger le commerce entre pays peut etre moindre que le commerce a l interieur d un pays parce que 1 le volume de commerce international est moindre que le volume du commerce interieur pour un produit donne la marge intensive ou 2 certains biens qui sont vendus a l interieur d un pays ne sont tout simplement pas exportes la marge extensive un modele theorique montre que l un et l autre de ces facteurs pourraient expliquer un certain effet de frontiere au niveau agrege on montre l importance empirique de cette distinction en isolant la fraction de la production interieure totale attribuable strictement aux exportateurs et il s avere qu a peu pres la moitie de l effet de frontiere est attribuable a chacune des deux explications

out of sight not out of mind education networks and international trade summary university students typically develop between them long lasting ties of friendship and trust as well as an attachment to their university if they are foreign students they also form a bond to their country of study this paper investigates the impact of university ties on the uk s trade with 167 countries during 1999 2009 i find robust evidence that education network ties boost the uk s bilateral trade flows specifically the impact of networks is stronger on trade between the united kingdom and countries with dissimilar institutions and culture and particularly with post communist economies results are robust to different econometric specifications and regressors

subnational home market bias in vietnam evidence from enterprise level data this paper contributes to the home market bias literature where administrative or political borders limit trade across borders home bias is well documented at the national and subnational level to sort out macro e g location characteristics and micro e g enterprise characteristics factors behind home bias we use small and medium sized enterprise sme data from vietnam using the fractional multinomial logit model we find that the proportion of sme sales outside of their home markets is positively associated with enterprise size age number of business association memberships and the distance of smes most important supplier in contrast the proportion of sme sales to neighbouring provinces is negatively associated with the share of sme production for final consumption besides enterprise level frictions market characteristics matter too the proportion of sme sales to customers in their home markets is negatively associated with home or neighbouring provinces governance quality while the proportion of sales to customers in neighbouring provinces is positively associated with these areas governance quality these suggest that good governance frees sme resources for use in selling to less familiar markets

immigration and the diffusion of technology the huguenot diaspora in prussia abstract this paper analyzes long term effects of skilled worker immigration on productivity for the huguenot migration to prussia in 1685 religiously persecuted french huguenots settled in brandenburg prussia and compensated for population losses due to plagues during the thirty years war we combine huguenot immigration lists from 1700 with prussian firm level data on the value of inputs and outputs in 1802 in a unique database to analyze the effects of skilled immigration to places with underused economic potential exploiting this settlement pattern in an instrumental variable approach we find substantial long term effects of huguenot settlement on the productivity of textile manufactories jel j24 j61 l67 n33 n63 o33 o47

assessing cost effectiveness of the conservation reserve program crp and interactions between the crp and crop insurance we examine the u s conservation reserve program crp enrollment design while accounting for the crp s interactions with the federal crop insurance program we find that the current crp is not cost effective despite its intent to balance benefits and costs based on crp contract level data we show that adopting a cost effective enrollment design and incorporating crop insurance subsidies into the crp s environmental benefits index would significantly increase the crp acreage environmental benefits and savings on crop insurance subsidies while leaving government outlay unchanged large geographical redistributions of crp acreage would also occur we further investigate the cost effective design s robustness to crp benefit misspecifications

linguistic distance as a determinant of bilateral trade we introduce a measure of language difficulty called linguistic distance into a modified gravity model to determine whether a language being further away from english affects the level of trade our sample of 36 non english speaking countries includes japan and south korea which we argue are special cases because of world war ii the korean war and subsequent close political and economic ties with the united states presence of a stock of immigrants in the home country has been shown to enhance trade with the country of origin controlling for immigrant network and information attributes the special relationship with japan and korea and the standard gravity model variables we find that trade will be less between the united states and a country the further that country s language is from english these results hold for aggregate exports and imports and for exports and imports of consumer and producer manufactures

does the chinese diaspora speed up growth in host countries summary we compiled a new enhanced data set on the population share of overseas chinese covering 147 countries over the period 1970 2010 linking the migration and economic growth literature this article attempts to estimate the impact of the chinese diaspora on economic growth in host countries regression results from both barro type and dynamic panel data models suggest that a country s initial relative endowment with overseas chinese is positively related to subsequent growth results are robust to a number of sensitivity tests the effect is transmitted via increased trade openness enhanced investment and general tfp effects

aggregation bias compositional change and the border effect borders affect the composition not only the level of interregional trade in disaggregated u s commodity flow data border effects vary substantially across commodities substantial border induced compositional change suggests the possibility that standard estimates suffer from aggregation bias arising from endogenous industry location patterns and the presence of zero observations in commodity level trade adjusting for these effects reduces the estimate of the aggregate border effect from 20 9 to 5 7 jel classification f14 f15 biais d agregation changement de composition et effet de frontieres les frontieres affectent la composition et pas seulement le volume de commerce inter regional une analyse des donnees desagregees des flux de commerce de biens des etats unis montre que l effet de frontieres varie substantiellement selon les biens le changement de composition du commerce engendre par les frontieres suggere la possibilite que les estimations usuelles souffrent d un biais d agregation resultant des patterns de localisation industrielle endogenes et de la presence d observations nulles dans le commerce de certains biens un ajustement pour tenir compte de ces effets suggere que les effets de frontieres passent de 20 9 a 5 7

aid policies and growth the authors of this paper use a new database on foreign aid to examine the relationships among foreign aid economic policies and growth of per capita gdp in panel growth regressions for 56 developing countries and 6 four year periods 1970 93 they find that the policies that have a great effect on growth are those related to fiscal surplus inflation and trade openness they construct an index for those three policies and have that index interact with foreign aid they have instruments for both aid and aid interacting with policies they find that aid has a positive impact on growth in developing countries with good fiscal monetary and trade policies in the presence of poor policies aid has no positive effect on growth this result is robust in a variety of specifications which include or exclude middle income countries include or exclude outliers and treat policies as exogenous or endogenous they examine the determinants of policy and find no evidence that aid has systematically affected policies either for good or for ill they estimate an aid allocation equation and show that any tendency for aid to reward good policies has been overwhelmed by donors pursuit of their own strategic interests in a counterfactual they reallocate aid reduce the role of donor interests and increasing the importance of policy such a reallocation would have a large positive effect on developing countries growth rates

immigration and firms integration in international production networks abstract this paper uses panel data on cross border migration and transaction level trade for swiss municipalities to identify the effect of migration networks on specific margins of the integration of firms in global value chains we find that the stability of an international supplier buyer relationship is strongly associated with a priori knowledge about the supplier s origin as measured by the migrant network with the same country of origin present in the buyer s immediate environment here a municipality not only do firms engage in more stable input trading relationships and intensify relationships in terms of input trading volume but they reduce the total number of suppliers in a given country in response to an increase of immigration from there these results are in line with a theoretical framework where firms sourcing strategies are subject to incomplete information firms diversify their foreign supplier network in order to be less susceptible to potential bad shocks once informational barriers are lifted firms contract fewer suppliers but purchase a larger volume from each of them

the trade creating effects of business and social networks evidence from france using theory grounded estimations of trade flow equations this paper investigates the role that business and social networks play in shaping trade between french regions the bilateral intensity of networks is quantified using the financial structure and location of french firms and bilateral stocks of migrants compared to a situation without networks migrants are shown to double bilateral trade flows while networks of firms multiply trade flows by as much as four in some specifications finally taking network effects into account divides the estimation of the impact of transport costs and of the effect of administrative borders by around three

does trade creation by social and business networks hold in services recent literature on the border effect has shown that the intensity of trade in goods is positively correlated with the migration stocks between any pair of countries regions the number of references for business networks is more limited but they are also related with a reduction on information costs in this article we investigate whether such a relation holds also for spanish domestic trade flows in consumer services to this end we use a gravity model rooted in the dixit stiglitz krugman theoretical framework and a unique data set on interregional trade flows for some of the main tourism service sectors namely accommodations and restaurants our industry specific analysis finds a large positive effect for restaurants but a more limited effect for accommodations forces driving the demand in each sector explain this result and suggest the idea that although social networks can act as a substitute of firms in some sectors at the same time they can enhance trade flows in other sectors we perform the

factor movements and commodity trade as complements abstract several models are presented in which factor mobility leads to an increase in the volume of world trade the models share the common characteristic that the basis for trade is something other than differences in relative factor endowments these alternative bases for trade include returns to scale imperfect competition production and factor taxes and differences in production technology taken together the models suggest a more general idea the widely held notion that trade in goods and factors are substitutes is in fact a rather special result which is a general characteristic only of factor proportions models

the pecking order of cross border investment abstract is there a pecking order of cross border investment in that countries become financially integrated through some types of investment rather than others using a novel database of bilateral capital stocks for all types of investment fdi portfolio equity securities debt securities as well as loans for a broad set of 77 countries we show that such a pecking order indeed exists the paper focuses on two key determinants of this pecking order information frictions and the quality of host country institutions overall we find that in particular fdi and to some extent also loans are substantially more sensitive to information frictions than investment in portfolio equity and debt securities we also show that the share as well as the size of fdi that a country receive are largely insensitive to institutional factors in host countries while portfolio investment is by far the most sensitive to the quality of institutions this provides new evidence in favor of some hypotheses but contradicts others put forward in the literature on trade in financial assets

efficiency gains from liberalizing labor mobility in this paper we quantify the effect of a complete liberalization of cross border migration on the world gdp and its distribution across regions we build a general equilibrium model endogenizing bilateral migration and income disparities between and within countries our calibration strategy uses data on effective and potential migration to identify total migration costs and visa costs by education level data on potential migration reveal that the number of people in the world who have a desire to migrate is around 400 million this number is much smaller than that predicted in previous studies and reflects the existence of high incompressible migration costs in our benchmark framework liberalizing migration increases the world gdp by 11 5 12 5 percent in the medium term our robustness analysis reveals that the gains are always limited in the range of 7 0 percent with schooling externalities to 17 9 percent if network effects are accounted for

the environmental consequences of trade evidence from subnational trade flows abstract the debate over the environmental consequences of free trade is not only quite heated but also entails significant policy ramifications recently cross sectional analysis at the country level has made use of exogenous determinants of trade to identify the causal effect of trade on the environment finding moderate evidence of a beneficial impact of expanded trade on environmental quality given the stakes involved we revisit this finding using subnational data on trade flows across us states and several measures of pollution not only does the analysis shed further light on the debate at the international level but also addresses a heretofore unexamined question does greater inter regional commerce at the subnational level harm the environment our findings are striking providing further evidence against a negative environmental impact of trade for the majority of measures analyzed however several sources of heterogeneity arise that are noteworthy

decentralized international exchange traditional models of international trade take place within trading environments in which trade is coordinated by a walrasian auctioneer who instantly matches buyers and sellers in world markets this assertion seems inconsistent with evidence suggesting that trading arrangements seem to economize on transactions costs associated with international trade recognizing these insights we depart from standard models of international trade by incorporating the difficulties in the coordination of exchange within a two country random matching model of international trade we capture a motivation for trade through comparative advantage and interpret trade across economies to be associated with an agent s endogenous choice to participate in foreign markets although an individual may decide to search abroad to obtain additional gains from trade resulting from comparative advantage she is less likely to meet trading partners abroad as search frictions are higher in the foreign country than in the domestic market using this framework we show that international trade is associated with convergence in relative prices across countries we also show that the extent of market frictions in the foreign country affects relative prices the volume of international trade and welfare levels due to market participation externalities associated with international trade we show that a movement from autarky to free trade may actually lower welfare levels we conclude by examining the possible inefficiencies associated with international trade due to the decentralized nature of exchange and the policy implications of our model

social ties and foreign market entry the social dynamics which precede international exchange are considered in light of data collected on 133 foreign market entries from a sample of highly internationalized manufacturing firms consistent with research done in the social network field the findings support the hypothesis that knowledge of foreign market opportunities is commonly acquired via existing inter personal links rather than collected systematically via market research this study thus contributes towards an understanding of those antecedent conditions that lead to the formation of export exchange relationships

the impact of mandated employment verification systems on state level employment by foreign affiliates faced with diminishing prospects for a comprehensive immigration reform at the federal level states have started to take immigration matters into their own hands for example many states have been mandating the use of employment verification e verify systems to confirm work eligibility some of the consequences of these e verify mandates remain unclear in this article we focus on the effect of anti illegal immigrant laws on foreign investment specifically we exploit the state level and time variation in the enactment and implementation of e verify mandates to explore if punitive measures against the firm impact states ability to attract foreign direct investment fdi we quantify fdi through the employment by u s affiliates owned by foreign firms our results suggest that e verify mandates adversely affect employment among these majority owned u s affiliates and therefore work against states trying to attract fdi

are international trade and factor mobility substitutes abstract this paper analyzes whether factor flows and commodity trade are substitutes or complements i e whether increasing the level of one impacts adversely or favorably on the volume of the other it derives with the aid of a new general equilibrium framework of the world which allows possible differences in factor endowments tastes and technologies across the two trading countries the necessary and sufficient condition for substitutability and complementarity the results are then further examined in two special cases a survey of different concepts of substitutability and complementarity which have appeared in the literature is also given

intra national home bias some explanations wolf demonstrates that trade within the united states appears substantially impeded by state borders we revisit this finding with improved data we show that much intranational home bias can be explained by wholesaling activity shipments by wholesalers are much more localized within states than shipments from manufacturing establishments controlling for relative prices and the use of actual rather than imputed shipment distances also reduces home bias estimates

reconciling the pattern of trade with the pattern of migration aspects of the brain drain are considered in a theoretical context the emphasis is on the migration of those with managerial skills between countries with abundant skilled labor and those with abundant unskilled labor the results indicate that countries with abundant skilled labor therefore export managers e g through multinational subsidiaries and skilled labor intensive goods yet import skilled employees the brain drain excerpt

explaining the border effect the role of exchange rate variability shipping costs and geography this paper exploits a three dimensional panel data set of prices on 27 traded goods over 88 quarters across 96 cities in the us and japan we show that a simple average of good level real exchange rates tracks the nominal exchange rate well suggesting strong evidence of sticky prices focusing on dispersion in prices between city pairs we find that crossing the us japan border is equivalent to adding as much as 43 000 trillion miles to the cross country volatility of relative prices we turn next to economic explanations for this so called border effect and to its dynamics distance unit shipping costs and exchange rate variability collectively explain a substantial portion of the observed international market segmentation relative wage variability on the other hand has little independent impact on segmentation 2001 elsevier science b v all rights reserved

the state and economic stagnation in tropical africa abstract politics while only one strand in the explanation of africa s massive economic problems is nonetheless a significant factor a central conundrum facing postcolonial political leaders is how to govern and hold together unintegrated peasant societies in the absence of legitimacy personal rule a particular mode of patrimonial governance provides an answer permitting regime survival and the advancement of political insiders but personal rule has an economically destructive tendency that only shrewd political leadership and propitious world economic conditions can check if uncontrolled certain political practices corrode bureaucratic and legal rationality and promote the misallocation of scarce public resources the result can be a downward spiral of interrelated political and economic decline that is increasingly difficult to reverse

canadian provinces in world trade engagement and detachment the authors test whether the findings of john mccallum 1995 and john f helliwell 1996 that the canada u s border substantially decreases trade are evident in canada s trade with the rest of the world they also test whether there are differences across provinces and between each province s exports and imports in this border effect the authors find canada s border with the united states is neither larger nor smaller than the border with the rest of the world and that the border s size varies dramatically across provinces provinces exhibit distinct borders for exports and imports suggesting british columbia is an export platform while ontario and quebec are import platforms

international trade agreements and international migration despite large potential economic gains bilateral and multilateral negotiations focusing on liberalisation of migration have not shared the high profile of international trade negotiations and agreements migration and trade have been traditionally viewed rather separately and the relevance of the many and complex interdependencies has been given remarkably little attention in the literature to date in this article we focus on the two way interaction between international migration and agreements designed to enhance cross border trade and investment liberalisation of international trade in services and in the movement of people potentially offers much greater economic gains than liberalisation of remaining barriers to goods trade however progress within multilateral frameworks is fraught with difficulty the world trade organization s general agreement on trade in services gats has yielded little real progress so far and negotiations within more flexible unilateral and bilateral frameworks are likely to be more successful in liberalising the movement of labour we discuss a range of specific examples focusing particularly on the interesting case of new zealand we find that trade agreements are increasingly including agreements on migration though typically favouring temporary migration and involving numerically modest quotas we conclude that migration regulatory frameworks are likely to be further and more strongly linked to trade and investment agreements in the future particularly given changing economic and demographic forces the primary focus of migration policies may nonetheless remain different from that of trade policies while further migration liberalisation is likely to be through bilateral and regional agreements it will be important to try to lock in the gains of such agreements while simultaneously working to consolidating these in a way that will help to facilitate future multilateral agreement

the conservation reserve program as a least cost land retirement mechanism mechanism design theory is used to characterize the properties of a least cost crp if marginal land rents decrease with acres farmed then a least cost crp is a set of nonlinear price schedules if marginal land rents are independent of acres farmed then an offer system constitutes a least cost crp the least cost offer system gives a useful estimate of the upper bound of a least cost crp empirical results suggest that a 34 million acre crp should have cost no more than 1 billion per year

product complexity quality of institutions and the protrade effect of immigrants the paper assesses the trade creating impact of foreign born residents on the international imports and exports of the french regions where they are settled the protrade effect of immigrants is investigated along two intertwined dimensions the complexity of traded goods and the quality of institutions in partner countries the trade enhancing impact of immigrants is on average more salient when they come from a country with weak institutions however this positive impact is especially large on the imports of simple products when we turn to complex goods for which the information channel conveyed by immigrants is the most valuable immigration enhances imports regardless of the quality of institutions in the partner country regarding exports immigrants substitute for weak institutions on both simple and complex goods

foreign direct investment the human dimension this paper argues that fdi is plagued by information asymmetries and moral hazard problems which can be ameliorated by face to face interaction an equilibrium model of fdi indicates that better ability to discriminate among alternative projects in a foreign country through personal contact will increase foreign investment into that country and spur more investment back from that country we examine the relationship between fdi and three proxies for personal interaction distance language and travel we find strong evidence supporting the importance of the human dimension in fdi particularly that associated with travel the direction of influence appears to be of travel on fdi rather than fdi on travel

brain drain and ldcs growth winners and losers we present an empirical evaluation of the growth e ects of the brain drain for the source countries of migrants using recent us data on migration rates by education levels carrington and detragiache 1998 we nd empirical support for the bene cial brain drain hypothesis in a sample of 50 developing countries at the country level we distinguish between winners and losers among source countries while the number of winners is smaller these include nearly 80 of the total population of developing countries jel classi cation f22 j24 o15

getting the properties right to secure property rights dixit s lawlessness and economics this is a review article of lawlessness and economics alternative modes of governance princeton university press 2004 by avinash k dixit

measuring internal trade distances a new method applied to estimate provincial border effects in canada in this paper we suggest an improved methodology for comparing the intensity of trade across and within national and provincial boundaries earlier efforts to assess border effects for provinces or for countries without internal trade statistics made fairly arbitrary assumptions about average distances for internal trade flows we improve on earlier efforts by taking more complete account of the distribution of population within each province or country internal distance is estimated as a population weighted average of intra city and intercity distances as well as distances to and within rural areas we find higher estimates of internal distances and hence border effects than found in previous studies

the trade facilitation impact of the chinese diaspora using an enhanced data set on the population share of overseas chinese in 1970 and 1990 this paper analyses the impact of the chinese diaspora on facilitating china s bilateral trade during the period 1973 2013 our findings suggest substantial trade creation effects resulting from the presence of ethnic chinese in the trade partner population diaspora impacts on chinese bilateral imports are in general higher than those found for exports coethnic networks play a larger role as long as the partner country does not have an rta with china in place among export sectors effects found were strongest for food as well as for machinery and transport equipment in regard to imports coethnic networks matter mostly for raw materials machinery and transport equipment and chemicals

the effect of conservation priority areas on bidding behavior in the conservation reserve program we explore how a landowner s bid to enroll in the conservation reserve program crp is influenced by his parcel s designation as a conservation priority area cpa a theoretical model of a landowner s optimal bid is presented and we demonstrate the ambiguity in a landowner s optimal bid response to cpa designations the bid choice is analyzed using a data set of accepted and unaccepted offers during three crp sign up periods we focus empirically on a subset of offers from the prairie pothole cpa to identify whether bid responses to exogenous location factors differ across landowners with varying opportunity costs to enrollment jel q15 q18

search and deliberation in international exchange microfoundations to some macro patterns in this era of globalization how do we explain the home bias unexpectedly large distance effects and lagged adjustment patterns visible in international exchange in this paper i argue that in the real world the identity and reliability of potential exchange partners are seldom the data that most economists take them to be in fact firms confront formidable problems of search and deliberation in these circumstances firms social networks can provide a key recourse yet for historical reasons most firms social networks still tend to be local or national and absent institutional solutions even in the face of apparent cross border economic opportunities firms responses appear overly sticky and lagged i explore these arguments in an empirical study that contrasts multinational and domestic firms trade responses to changes in real exchange rates

familiarity breeds investment diaspora networks and international investment what explains cross national patterns of international portfolio and foreign direct investment fdi while existing explanations focus on the credibility of a policy maker s commitment we emphasize the role of diaspora networks we hypothesize that diaspora networks connections between migrants residing in investing countries and their home country influence global investment by reducing transaction and information costs this hypothesis is tested using dyadic cross sectional data for both portfolio and fdi the findings indicate that even after controlling for a multitude of factors disapora networks have both a substantively significant effect and a statistically significant effect on cross border investment

informal barriers and agricultural trade does monetary integration matter eu enlargement and the recent sovereign debt crisis of euro zone countries have revived the debate around the european monetary union emu in this article we ask how informal barriers to agricultural and food trade have changed since the introduction of the common european currency and whether this evolution can be attributed to monetary integration we focus on the foreign trade of the 11 emu founder countries over a nine year period covering the creation of the emu and find a diminishing marginal trade impact of both information and institutional barriers we find a lower level of trade barriers but cannot attribute this outcome to the introduction to the euro

the economics of a public fund for environmental amenities a study of crp contracts the problem of targeting crp purchases to buy environmental amenities under productivity and environmental heterogeneity is considered gini coefficients and lorenz curves are used to measure the effectiveness of spending under alternative targeting criteria the environmental benefits considered are water erosion wind erosion surface water quality and wildlife habitat the three alternative targeting criteria examined include purchasing land according to i the benefit to cost ratio ii the level of benefits and iii the level of cost results indicate that the degree of variability and correlation determine the extent to which suboptimal targeting achieves a significant portion of available environmental benefits

modeling biomass procurement tradeoffs within a cellulosic biofuel cost model abstract we develop a long run cellulosic biofuel cost model that minimizes feedstock procurement and processing costs per gallon the distinguishing feature of the model is that it accounts for the procurement tradeoff between the intensive margin biomass producers participation rate and extensive margin biomass capture region to investigate the extent to which this procurement tradeoff affects processors cost minimizing decisions we apply the model to switchgrass ethanol production in u s crop reporting districts results suggest that location characteristics will determine the extent to which processors can reduce their total procurement costs by offering a higher biomass price to increase participation near the plant and reduce transportation costs

immigrant remittances and the venture investment environment of developing countries despite the increasing importance of financial and social remittances to developing countries their impact on home country venture investing environments has been largely overlooked i develop a framework grounded in transaction costs economics and social knowledge theories to investigate relationships between remittances and home country 1 capital availability 2 new business creation and 3 economic internationalization my framework also accounts for individual and collective immigrant attributes that may moderate the impact of remittances on these alternative indicators of the venture investment environment analyses of immigrant remittances to 61 developing countries from 2002 2007 indicate that they increase general and more narrowly defined venture capital availability as well as broader openness to international trade remittances also increase new business start up rates when the developing country s public sector is sufficiently small positive venture funding effects of remittances are magnified when coming from immigrants living in highly concentrated communities but are diminished when coming from highly educated immigrants overall results suggest that developing country immigrants of varying backgrounds play an important role in venture funding founding and integration with the world economy