Trade, conflicts and political integration : explaining the heterogeneity of regional trade agreements

This paper investigates the determinants of the shape of regional trade agreements (RTAs). Because the world is constituted by independent political entities, international trade flows take place in a system where property rights are unsecured and RTAs should be understood as regulation mechanisms. In this theoretical framework, trade and security issues interact in the formation of RTAs, so that their determinants differ according to their level of political integration, defined by their ability to promote the negotiated settlement of conflicts. Empirical results confirm that countries more subject to interstate disputes and naturally more opened to trade are more likely to create politically integrated regional agreements, such as common markets or custom unions. On the contrary, international insecurity deters less integrated agreements implying a weak institutional framework, such as preferential or free trade agreements.International conflicts, political integration, regionalism, trade, war.

Trade, Conflicts, and Political Integration: the Regional Interplays

This paper investigates the determinants of the different forms taken by regional integration in different parts of the world. This raises the issue of the relationship between economic and political integration. The theoretical model shows that, in an insecure world, the interplays between security and economic forces shape the decision to form a regional trading agreement (RTA) and its institutional design. Empirical results confirm that regionalism should be understood as a regulation mechanism: countries experiencing more interstate disputes are more likely to create a deep RTA, such as custom union or common market, whereas international insecurity deters the formation of preferential and free trade agreements.conflict, trade, regionalism, political integration

Demand learning and firm dynamics: evidence from exporters

This paper provides direct evidence that learning about demand is an important driver of firms' dynamics. We present a model of Bayesian learning in which firms are uncertain about their idiosyncratic demand in each of the markets they serve, and update their beliefs as noisy information arrives. Firms are predicted to update more their beliefs to a given demand shock, the younger they are. We test and empirically confirm this prediction, using the structure of the model together with exporter-level data to identify idiosyncratic demand shocks and the firms' beliefs about future demand. Consistent with the theory, we also find that the learning process is weaker in more uncertain environments

Global value chains during the great trade collapse: a bullwhip effect?

This paper analyzes the performance of global value chains during the trade collapse. To do so, it exploits a unique transaction-level dataset on French firms containing information on cross-border monthly transactions matched with data on worldwide intra-firm linkages as defined by property rights (multinational business groups, hierarchies of firms). This newly assembled dataset allows us to distinguish firm-level transactions among two alternative organizational modes of global value chains: internalization of activities (intra-group trade/trade among related parties) or establishment of supply contracts (arm's length trade/trade among unrelated parties). After an overall assessment of the role of global value chains during the trade collapse, we document that intra-group trade in intermediates was characterized by a faster drop followed by a faster recovery than arm's length trade. Amplified fluctuations in terms of trade elasticities by value chains have been referred to as the "bullwhip effect" and have been attributed to the adjustment of inventories within supply chains. In this paper we first confirm the existence of such an effect due to trade in intermediates, and we underline the role that different organizational modes can play in driving this adjustment. JEL Classification: F23, F15, L22.Trade collapse, multinational firms, global value chains, hierarchies of firms , vertical integration.

Exports and sectoral financial dependence: evidence on French firms during the great global crisis

The unprecedented drop in international trade during the last quarter of 2008 and the first quarter of 2009 has mainly been analysed at the macroeconomic or sectoral level. However, exporters who are heterogeneous in terms of productivity, size or external financial dependence should be heterogeneously affected by the crisis. This issue is examined in this paper by using data on monthly exports at the product and destination level for some 100,000 individual French exporters, up to 2009M4. We show that the drop in French exports is mainly due to the intensive margin of large exporters. Small and large exporters are evenly affected when sectoral and geographical specialisations are controlled for. Lastly, exporters (small and large) in sectors structurally more dependent on external finance are the most affected by the crisis. JEL Classification: F02, F10, G01financial crisis, firms’ heterogeneity, intensive and extensive margins, international trade

Global Value Chains During the Great Trade Collapse: A Bullwhip Effect?

This paper analyzes the performance of global value chains during the trade collapse. To do so, it exploits a unique transaction-level dataset on French firms containing information on cross-border monthly transactions matched with data on worldwide intra-.rm linkages as defined by property rights (multinational business groups, hierarchies of firms). This newly assembled dataset allows us to distinguish firm-level transactions among two alternative organizational modes of global value chains: internalization of activities (intra- group trade/trade among related parties) or establishment of supply contracts (arm's length trade/trade among unrelated parties). After an overall assessment of the role of global value chains during the trade collapse, we document that intra-group trade in intermediates was characterized by a faster drop followed by a faster recovery than arm's length trade. Amplified fluctuations in terms of trade elasticities by value chains have been referred to as the "bullwhip effect" and have been attributed to the adjustment of inventories within supply chains. In this paper we first con.rm the existence of such an effect due to trade in inter- mediates, and we underline the role that different organizational modes can play in driving this adjustment.trade collapse, multinational firms, global value chains, hierarchies of firms, vertical integration

Coopération et conflits internationaux sur le commerce et les investissements directs étrangers

The economic analysis of international flows of goods and capital do not consider the international political system in which they take place. The lack of enforced justice at the international level however creates risks specific to exchanges between sovereign states. In the thesis, I argue that taking into account the specificities of the international system is necessary to understand why some countries choose to create some kinds of international economic agreements and their effectiveness. The first chapter shows that the differences in the form of regional trade agreements are not related to the level of trade integration. The second chapter then proposes an explanation for the choice of different strategies of regional integration. I develop a model of endogenous formation of regional trade agreements in an insecure world in which conflicts may spill over into war. This model show that country pairs undergoing more interstate disputes and naturally more open to trade are more likely to create deep regional trade agreements, while the opposite is true concerning shallow agreements. Chapter 2 also provides empirical evidence supporting these theoretical results. Finally, Chapter 3 investigates the effect of bilateral investment treaties on foreign direct investments. It shows that, when investing abroad, foreign investors face an expropriation risk related to the interstate political relations between their home and host counties. The empirical analysis of Chapter 3 shows that a bilateral investment treaty offset these risks and increase more foreign direct investments between countries undergoing diplomatic tensionsL'analyse économique des flux internationaux de biens et de capitaux fait abstraction du contexte politique international dans lequel ils s'effectuent. L'absence de juridiction supranationale fait pourtant peser des risques spécifiques sur les échanges entre États souverains. Dans cette thèse, nous nous attachons à montrer que la prise en compte des spécificités du système politique international permet de mieux comprendre pourquoi certains pays choisissent de créer certains types d'accords économiques internationaux et leur efficacité. Dans un premier chapitre, nous montrons que les différences observées dans la forme des accords commerciaux régionaux ne reflètent pas des degrés différents d'intégration commerciale. Le second chapitre propose alors une explication du choix de différentes stratégies d'intégration régionale. Nous développons un modèle de formation endogène d'accords commerciaux régionaux dans un monde incertain, ou les conflits entre États peuvent dégénérer en guerre. Nous montrons alors que les pays connaissant le plus de conflits et naturellement les plus ouverts au commerce créent les accords les plus intègres politiquement, l'inverse étant vrai pour les accords peu intégrés. Ces résultats théoriques sont conformes empiriquement. Enfin, dans un troisième chapitre, nous nous intéressons aux traites d'investissements bilatéraux. Nous montrons que les investisseurs étrangers font face a un risque d'expropriation lie aux relations diplomatiques entre leur pays hôte et leur pays d'origine. Notre analyse montre que la signature d'un traité d'investissement bilatéral permet de s'en prémunir, et est donc plus efficace entre pays entretenant de mauvaises relations diplomatiques

Trade, Conflicts, and Political Integration: Explaining the Heterogeneity of Regional Trade Agreements ∗

This paper proposes an explanation for the heterogeneity of regional trade agreements (RTAs) regarding their form. Because the world is constituted by independent political entities, international trade flows take place in a system where property rights are insecure and where interstate disputes can harm gains from trade. In this theoretical framework, trade and security issues interact in the formation of RTAs, so that their determinants differ according to their level of political integration, defined by their ability to promote the negotiated settlement of conflicts. Empirical results confirm that countries more subject to interstate disputes and naturally more open to trade are more likely to create politically integrated regional agreements, such as common markets or custom unions. On the contrary, international insecurity deters the formation of shallow agreements implying a weak institutional framework, such as preferential or free trade agreements