Who Gains and Who Loses from China's Growth?

Emerging countries have been winning large market shares since the early 1990s. Among these, China stands out with the most remarkable performance: it almost tripled its world market share since 1994 reaching 16.1% in 2007. The present paper attempts to identify the countries that have profited the most from this increase in the size of the Chinese market. I use an econometric shift-share methodology, that permits to identify for each trade flow the share of growth arising from the capacity to target the products and markets with the highest increase in demand, and the share due exclusively to exporter’s performance.China, Export Performance, Shift-Share, International Relations/Trade, F12, F15,

Border Effects and East-West Integration

A new method for measuring trade potential from border effects is developed and applied to manufactured trade between the old fifteen European Union (EU) members and twelve Central and East European (CEE) economies. Border effects are estimated with three theoretically compatible trade specifications, and much larger trade potentials are obtained than predicted by usual trade potential models. Even after a decade of regional trade liberalization, the integration of CEE and EU economies is two to three times weaker than intra-EU integration, revealing a large potential for East-West European trade.Trade potential, regional integration, border effects

Do multinational retailers affect the export competitiveness of host countries?

The accelerated overseas expansion of multinational retailers (MRs) over the last decade transformed these companies into major regional and global actors. In this paper we question how MRs arriving in foreign markets affect the export performance of local firms. We develop a theoretical framework that explains the mechanisms by which multinational retailers establishing outlets abroad impact the export performance of local firms and test its predictions empirically for the agri-food sector. The adopted approach draws on recent empirical evidence of the effects of foreign direct investment (FDI) in the retail sector and recent developments in the literature on international trade with heterogeneous firms and on trade and intermediaries. First, incoming multinational retailers may increase the overall export capacity of local firms to any foreign market via an increase in their productivity. The growing competitive pressure in the upstream sector, induced by global retail chains, drives least productive firms out of the market and the average productivity of the sector increases. In addition, retail sector FDI generates productivity gains at the firm level: local suppliers of multinational retailers benefit from the retailers' financial and technological support and become more productive in time. Thus, although the productivity threshold for exporting remains unchanged, some firms reach this threshold and start exporting, while firms above this threshold that experience productivity gains increase their volume of exports ..

Applying the gravity approach to sector trade: Who bears the trade costs?

Thanks to its empirical success, the gravity approach is widely used to explain trade patterns between countries. In this article we question the simple application of this approach to product/sector-level trade on two grounds. First, we demonstrate that the traditional Armington version of gravity must be altered to properly account for the fact that sector expenditures are not strictly equal to sector productions because some trade costs are incurred outside the sector of interest. Secondly, we test empirically the mis-measurement of the expenditures with both Armington (1969) and Helpman and Krugman (1985) approaches. We estimate trade flows and prices simultaneously with non linear techniques. Underestimated expenditure levels yield biased values of model parameters.gravity, trade, econometric simulation

Border Effects and European Integration

A new method for measuring trade potential from border effects is developed and applied to manufactured trade between the old fifteen European Union (EU) members and twelve Central and East European (CEE) economies. Border effects are estimated with three theoretically compatible trade specifications, and much larger trade potentials are obtained than usually predicted by standard trade potential models. Even after a decade of regional trade liberalization, the integration of CEE and EU economies is two to three times weaker than intra-EU integration, revealing a large potential for East-West European trade

Do exporting firms benefit from retail internationalization? Evidence from France

We explore the link between globalization of the retail sector and the export activity of firms from their origin country. In a previous paper (Cheptea et al., 2015), we showed that exporting firms from countries with internationalized retail companies benefit more from this process than firms from other countries. Two mechanisms can explain this effect: a trade cost advantage for retailers' domestic suppliers, or a shift in foreign demand from which benefit all origin country firms. In this paper we question which of the two mechanisms dominates. For that, we test whether retailers' supplying firms benefit more from the overseas expansion of retailers than other origin country firms. We employ French firm-level data to evaluate the effect for the two types of firms. We identify retailers' suppliers as firms that sell their products under French retailers' brands or labels, i.e. French firms certified with the IFS standard. Our empirical objective is to estimate whether firms with IFS certification have better export performance on markets where French retailers operate. We find that certified French firms are more likely to export, and export larger volumes, than non-certified firms to markets where French retailers established outlets. We also show that when French retailers close down their activities in a market, IFS firms face a drop in exports to this market in the subsequent years. The results are robust to the use of different sets of firm- and country-specific fixed effects, are unaffected by possible selection and endogeneity biases, and the presence in export markets of other retailers. This difference in behavior for certified and non-certified exporting firms confirms the trade cost advantage of retailers' suppliers, which is lost when French retailers exit from the destination country

Border Effects and European Integration

A new method for measuring trade potential from border effects is developed and applied to manufactured trade between the old fifteen European Union (EU) members and twelve Central and East European (CEE) economies. Border effects are estimated with three theoretically compatible trade specifications, and much larger trade potentials are obtained than usually predicted by standard trade potential models. Even after a decade of regional trade liberalization, the integration of CEE and EU economies is two to three times weaker than intra-EU integration, revealing a large potential for East-West European trade

Sectoral and geographical positioning of the EU in the international division of labour

Today’s international trade in goods is driven mainly by the growth of exports and imports of the South. Emerging countries naturally gain global market shares in manufactured goods from old industrialised countries, including Europe. This trend has became even more pronounced during the last years. We use a detailed and exhaustive database on world trade from 1995 to 2003 to study the way in which the EU as a whole, and each of its 25 members individually faced these recent evolutions of the world market, compared to their main economic partners. For simplicity reasons, and because most European countries sell more and better on the domestic (EU) market, we disregard intra-EU trade flows. Our analysis draws on a number economic indicators, including the evolution of market shares, adaptation effects, and the revealed comparative advantage, and on a shift-share decomposition of market share growth. First, we examine the overall evolution of countries’ market shares, their geographical and sectoral specialisation, export performance, and capacity to adapt to changes in the global demand. Secondly, detailed results on the positioning and the performance of exports on different segments of the world market are produced. In both cases trade unit-values data is employed to separate the evolution of exports in monetary (value), and physical (volume) terms. This differentiation is necessary to distinguish between the impact of pure demand, and price-related factors on countries’ exports performance. Unit values are used as well to segment markets according to the quality of traded products according to the principle that high-quality products (up-market) are also the more expensive ones. Nevertheless, besides intrinsic quality this taxonomy reflects additional aspects, such as trade-mark effects or the capacity of countries to sell their products at high prices. EU’s position on the global market has eroded during the last years, because of the poor performance of its largest members (except Germany), and despite the favourable sectoral breakdown of its exports. Still, its losses in market share were considerably smaller than those of its American and Japanese competitors, due mainly to the ability of European firms to sell expensive products to foreign consumers. The EU reinforced or acquired leadership in up-market products in a large number of industries, ranging from leather and clothing to machinery and automobiles. At the same time, European countries suffered important market share losses in the high-technology sector. Moreover, the revealed comparative advantage indicator shows that the EU, contrary to other developed countries, does not exhibit a specialisation in high-technology products. This result is explained by the large and deepening disadvantage of EU countries in down-market high-tech products, such as computer devices. Nevertheless, the EU has maintained and even reinforced its comparative advantage in up-market (high-price/high-quality) high-technology products

Sectoral and geographical positioning of the EU in the international division of labour

Today’s international trade in goods is driven mainly by the growth of exports and imports of the South. Emerging countries naturally gain global market shares in manufactured goods from old industrialised countries, including Europe. This trend has became even more pronounced during the last years. We use a detailed and exhaustive database on world trade from 1995 to 2003 to study the way in which the EU as a whole, and each of its 25 members individually faced these recent evolutions of the world market, compared to their main economic partners. For simplicity reasons, and because most European countries sell more and better on the domestic (EU) market, we disregard intra-EU trade flows. Our analysis draws on a number economic indicators, including the evolution of market shares, adaptation effects, and the revealed comparative advantage, and on a shift-share decomposition of market share growth. First, we examine the overall evolution of countries’ market shares, their geographical and sectoral specialisation, export performance, and capacity to adapt to changes in the global demand. Secondly, detailed results on the positioning and the performance of exports on different segments of the world market are produced. In both cases trade unit-values data is employed to separate the evolution of exports in monetary (value), and physical (volume) terms. This differentiation is necessary to distinguish between the impact of pure demand, and price-related factors on countries’ exports performance. Unit values are used as well to segment markets according to the quality of traded products according to the principle that high-quality products (up-market) are also the more expensive ones. Nevertheless, besides intrinsic quality this taxonomy reflects additional aspects, such as trade-mark effects or the capacity of countries to sell their products at high prices. EU’s position on the global market has eroded during the last years, because of the poor performance of its largest members (except Germany), and despite the favourable sectoral breakdown of its exports. Still, its losses in market share were considerably smaller than those of its American and Japanese competitors, due mainly to the ability of European firms to sell expensive products to foreign consumers. The EU reinforced or acquired leadership in up-market products in a large number of industries, ranging from leather and clothing to machinery and automobiles. At the same time, European countries suffered important market share losses in the high-technology sector. Moreover, the revealed comparative advantage indicator shows that the EU, contrary to other developed countries, does not exhibit a specialisation in high-technology products. This result is explained by the large and deepening disadvantage of EU countries in down-market high-tech products, such as computer devices. Nevertheless, the EU has maintained and even reinforced its comparative advantage in up-market (high-price/high-quality) high-technology products