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Author: Wendkouni Jean-Baptiste Zongo Publisher: ISBN: Category : Languages : en Pages : 105
Book Description
In standard trade models with constant average cost, the firm's sales in any given market is related to other markets only through price indices which are treated as exogenous in the firm's optimization. With cost convexity, the firm's decision in any given market is directly tied to sales in other markets through an index aggregating the trade cost-adjusted market size of the destinations supplied by the firm. The difference made by increasing costs is that the firm is cognizant that by changing its sales in a given destination it changes its unit cost for all destinations. This in turn triggers extensive and intensive margins adjustments. In the first essay, we develop a theoretical framework to address the incidence of increasing marginal costs and capacity constraints on trade at the extensive and the intensive margins and on export duration. Under convex costs, an increase in productivity may not increase the number of destinations supplied by a firm, making "ins and outs", not just new entries. We generated empirical evidence in support of the aforementioned trade adjustments by assessing the incidence of lagged foregone exports on exports to "fallback markets" and on export survival. Exports to the fallback markets systematically increase in response to foregone sales from terminated trade flows. Similarly, the sum of foregone sales from terminated trade flows make existing trade flows more resilient, less prone to an export failure. A distinguishing feature of our survival models is that they test and correct for the endogeneity of tariffs. Previous studies reported peculiar results about the incidence of tariff on export survival. We too find wrong signs when tariff is treated as an exogenous variable, but we find that higher tariffs increase the likelihood of export failures when tariff endogeneity is addressed. The second essay investigates the dynamic impacts of animal disease outbreak on cattle and beef trade accounting for vertical linkage between cattle and beef. The empirical framework features a multi-sample selection model (MSSM) to investigate how animal-specific diseases affect aggregate trade flows at the extensive and intensive margins of trade in livestock and meat products over time, accounting for constraints imposed by the technological linkages between livestock and meat productions. The spontaneous emergence of foot and mouth disease adversely impacts the extensive and intensive margins of trade in cattle and beef for seven years. Our results show that the extensive margin effects of the disease outbreak are larger than its corresponding intensive margin effects. Regarding cross-species effects, the avian flu and swine fever reduce the probability and the level of trade in cattle and beef. The third essay studies a counterfactual experiment about the elimination of bovine spongiform encephalopathy (BSE) and the foot and mouth diseases (FMD) on beef trade flows. Disease outbreak alerts typically prompt importing countries to impose trade bans. The bans vary a lot across importing countries in terms of product coverage and duration. We rely on a unique balanced panel dataset that covers 4-digit disaggregated beef product over the 1996-2013 period. Previous gravity studies reported only partial trade flow effects. However, a large shock like the complete elimination of BSE and FMD diseases must affect the inward and outward multilateral resistance indices (i.e., the importing countries' barriers on beef imports from all sources and the trade barriers faced by exporting countries in all destinations), factory-gate prices, consumer expenditures and the value of beef production in exporting countries. Our results confirm that the indirect channels through which BSE and FMD impact trade are important when it comes to measuring welfare gains. Interestingly, our counterfactual experiment suggests that Canada would be one of the countries gaining the most from BSE and FMD eradication.
Author: Wendkouni Jean-Baptiste Zongo Publisher: ISBN: Category : Languages : en Pages : 105
Book Description
In standard trade models with constant average cost, the firm's sales in any given market is related to other markets only through price indices which are treated as exogenous in the firm's optimization. With cost convexity, the firm's decision in any given market is directly tied to sales in other markets through an index aggregating the trade cost-adjusted market size of the destinations supplied by the firm. The difference made by increasing costs is that the firm is cognizant that by changing its sales in a given destination it changes its unit cost for all destinations. This in turn triggers extensive and intensive margins adjustments. In the first essay, we develop a theoretical framework to address the incidence of increasing marginal costs and capacity constraints on trade at the extensive and the intensive margins and on export duration. Under convex costs, an increase in productivity may not increase the number of destinations supplied by a firm, making "ins and outs", not just new entries. We generated empirical evidence in support of the aforementioned trade adjustments by assessing the incidence of lagged foregone exports on exports to "fallback markets" and on export survival. Exports to the fallback markets systematically increase in response to foregone sales from terminated trade flows. Similarly, the sum of foregone sales from terminated trade flows make existing trade flows more resilient, less prone to an export failure. A distinguishing feature of our survival models is that they test and correct for the endogeneity of tariffs. Previous studies reported peculiar results about the incidence of tariff on export survival. We too find wrong signs when tariff is treated as an exogenous variable, but we find that higher tariffs increase the likelihood of export failures when tariff endogeneity is addressed. The second essay investigates the dynamic impacts of animal disease outbreak on cattle and beef trade accounting for vertical linkage between cattle and beef. The empirical framework features a multi-sample selection model (MSSM) to investigate how animal-specific diseases affect aggregate trade flows at the extensive and intensive margins of trade in livestock and meat products over time, accounting for constraints imposed by the technological linkages between livestock and meat productions. The spontaneous emergence of foot and mouth disease adversely impacts the extensive and intensive margins of trade in cattle and beef for seven years. Our results show that the extensive margin effects of the disease outbreak are larger than its corresponding intensive margin effects. Regarding cross-species effects, the avian flu and swine fever reduce the probability and the level of trade in cattle and beef. The third essay studies a counterfactual experiment about the elimination of bovine spongiform encephalopathy (BSE) and the foot and mouth diseases (FMD) on beef trade flows. Disease outbreak alerts typically prompt importing countries to impose trade bans. The bans vary a lot across importing countries in terms of product coverage and duration. We rely on a unique balanced panel dataset that covers 4-digit disaggregated beef product over the 1996-2013 period. Previous gravity studies reported only partial trade flow effects. However, a large shock like the complete elimination of BSE and FMD diseases must affect the inward and outward multilateral resistance indices (i.e., the importing countries' barriers on beef imports from all sources and the trade barriers faced by exporting countries in all destinations), factory-gate prices, consumer expenditures and the value of beef production in exporting countries. Our results confirm that the indirect channels through which BSE and FMD impact trade are important when it comes to measuring welfare gains. Interestingly, our counterfactual experiment suggests that Canada would be one of the countries gaining the most from BSE and FMD eradication.
Author: Kai Xu Publisher: ISBN: Category : Languages : en Pages : 314
Book Description
This thesis consists of three essays on the economic effects of agricultural and non-agricultural trade. The first essay asks whether the observed low trade intensity of agricultural goods is caused by high trade costs or small gains from agricultural trade. By empirically estimating structural equations from a trade model, I find that it is largely due to high trade costs. I also find large variation in relative efficiency of producing agricultural goods, which suggests that lower agricultural trade costs could lead to large gains from trade. The second essay asks how large are the gains from lower trade costs in the presence of the "Food Problem". I extend the Eaton-Kortum trade model to include a tradeable agriculture sector, minimum consumption and home production of agricultural goods. The calibrated model implies much larger gains from trade for poor countries than prior studies. The main reason for these gains is that intra-sectoral trade leads poor countries to specialize in a set of agricultural goods with high efficiency and inter-sectoral trade enables them to reallocate labor to manufacturing, which often is their comparative advantage sector. The third essay quantitatively evaluates the potential impact of removing China's Hukou system, which restricts rural-urban migration in China, on the world economy. I find that removing Hukou could increase China's income by 4.7%, and would substantially impact some of China's small neighboring economies. This is because removing Hukou increases the relative price of agricultural goods, which benefits net agricultural exporters such as Thailand and hurts net agricultural importers such as Sri Lanka and Bangladesh.
Author: Jeheung Ryu Publisher: ISBN: Category : Agriculture Languages : en Pages : 0
Book Description
"In the first essay of my dissertation, I examine how agricultural support affects the design of preferential trade agreements (PTAs). I hypothesize that democratic institutions that over-represent rural interests create incentives for leaders to negotiate flexible trade agreements to respond to the concerns of their agricultural constituents. To validate this argument, I construct a measure of flexibility using a Bayesian item response theory that treats flexibility as a latent characteristic of trade agreements. With this index and panel data covering 648 PTAs signed from 1948-2017, I find that political leaders are more likely to introduce flexibility provisions when entering into trade agreements as they confer more agricultural subsidies to farmers. Instrumental variables regression indicates that most of the effect of agricultural subsidies on flexibility provisions is attributable to rural malapportionment. In the second essay, I study which firm-level factors influence government's decisions to protect firms from increased import in the United States. After opening up domestic markets for more competition by making PTAs, the government seeks to protect "losers of trade" by providing financial assistance or imposing tariffs against competitors. Using a novel firm-level data I gathered, I find that firms' corporate political activity plays an important role in receiving government assistance and tariff protection. In addition, focusing on firms' geographic location, I find that firms located in US counties in which incumbent politicians lose the vote share in the last presidential election are more likely to receive the supports from government. The results imply that firm lobbying and geopolitical location influence government's trade protection policy. In the final essay, I consider the role of third parties in the WTO dispute settlement process and investigate how they contribute to the legalization of the WTO. Using an original dataset, covering all WTO disputes from 1995 to 2012, I find that third parties have heterogeneous motivations for participation and have different effects on dispute settlement and compliance. In particular, third parties that claim to have "systemic interests" help to accelerate dispute resolution and make respondents more likely to comply with rulings"--Pages viii-ix.
Author: Lei Lei Publisher: ISBN: Category : Languages : en Pages : 306
Book Description
This dissertation provides a thorough analysis of the impact of international trade policy on agricultural input markets. International agricultural trade are often affected by policies in importing and exporting countries. These policies can be directly or indirectly imposed on the production inputs. It is important to understand the markets’ responses in both importing and exporting countries to the policies changes through vertical linkages between the input and output markets. This dissertation provides three essays to study this topic from the prospective of importer, exporter, input market, output market, and trade negotiation mechanism. Essay 1 studies a European Union trade policy induced technological innovation, specifically on its impact on the U.S. apple markets. I adopt the Ex Ante approach to simulate the market reaction to both the European Union policy change and the technological innovation. The research finds that the policy induced technological innovation benefits the outputs that are intensive in the policy affected input. The methodology and conclusion contribute to research on markets with highly differentiated products. Essay 2 is motivated by the decade-long cotton dispute between Brazil and the United States. The dispute was arbitrated based on several domestic policies of the United States. This chapter analyzes the impact of a U.S. domestic policy on 1) land re-allocation with a difference-in difference model; 2) international cotton trade between the United States and the rest of world including Brazil with a partial equilibrium simulation model. Based on the analysis, I find limited policy impact of removing this particularly U.S. domestic policy on international cotton trade. The result is consistent to the World Trade Organization arbitration of the dispute. Essay 3 summarizes three most common methods of quantifying the trade impact of non-tariff trade measures in the literature. I carefully compare the advantages and disadvantages between each method. A guidance of how to choose an appropriate method based on the characteristic of a non-tariff trade measure is summarized. To illustrate the guidance, I show a real example of apple trade with non-tariff trade measure imposed by the European Union.
Author: Yelena Sheveleva Publisher: ISBN: Category : Languages : en Pages :
Book Description
This dissertation consists of three essays spanning the fields of international trade and economic development. In the first essay, we ask why developing countries fail to specialize in products in which they (at least potentially) have a comparative advantage? For example, farmers in land-poor developing countries overwhelmingly produce staples rather than exotic fruits that command high prices. We propose a simple model of trade and intermediation that shows how holdup resulting from poor contracting environment can produce such an outcome. We use the model to examine which polices can help ameliorate the problem, even when its cause cannot be eliminated.In the second and the third essays, we study how exporters introduce new products into the export market. In the second essay, using information on the universe of Chinese exporters to the US, we document a number of empirircal facts that discipline economists' undrstanding of dynamic aspects of multiproduct exporters. In the third essay, we estimate a structural dynamic model of multiproduct exporting.In Chapter 1, "Wheat or Strawberries? Intermediated Trade with Limited Contracting," we develop the model that provides a new explanation as to why developing countries have agricultural productivity orders of magnitude smaller than in the developing countries. We propose that due to contracting frictions agricultural producers often specialize in staples in which they have a comparative disadvantage, instead of specializing in fruits and vegetables which they can grow efficiently and which command higher prices in the export markets. While farmers can subsits on staples, farmers require services of the intermediaries to deliver cash crops to the export market. When markets are thin intermediaries hold the bulk of the bargaining power and offer a small price to the farmer for his produce. Foreseeing the hold up farmers choose to specialize in the staples.In the model, farmers can produce two types of goods: wheat and strawberries. Wheat is suitable for subsistence but farmers are inefficient in producing it. Farmers are efficient in making strawberries, but cannot subsist on it, and have to sell them to an intermediary who makes profits by selling it at the world price. In a frictionless world farmers would specialize in strawberries. Central to the model is the inability of farmers and traders to contract ex-ante on a price. The absence of enforceable contracts sets the stage for the classic hold up problem and precludes negotiating the terms of trade prior to entry into production. We use a two period model with a continuum of traders and farmers. In the first period, farmers decide whether to produce wheat or strawberries and intermediaries decide whether to enter the business of intermediation. In the second period, farmers and traders meet randomly and trade. Since meetings are random and traders do not know the number of local competitors but do know how thick the market is, they can infer the distribution of potential rivals and offer a price based on this information. In other words, traders compete for the output of farmers in the first price auction. As a result, some farmers fetch a high price for their strawberries; others fetch a low price, or even fail to meet an intermediary. Farmers make the production decision based on the expected price.We solve the model and characterize all the possible equilibria as a function of the primitive parameters. Of particular interest is the region in the parameter space that yields multiple equilibria. In the good equilibrium, specialization occurs according to comparative advantage and there is intermediation, while in the bad equilibrium, there is no intermediation and the staple is produced. Our work suggests that there may be some simple measures to ensure intermediation and specialization according to comparative advantage even if the government is not able to resolve the core issue, the underlying lack of enforceable contracts. A temporary production subsidy or a marketing board that ensures a sufficiently high minimum price to the farmer can help an economy remove the bad equilibrium without intermediation. This paper is closely related to the work of Antras and Costinot (2011). In their paper they focus on the implications of intermediation for globalization in a model that assumes that contracts between traders and producers are enforceable. In contrast we study the implications of contractual failure on production choices in a model of trade with intermediation. In Chapter 2, "Multiproduct Exporters: Empirical Regularities," we use information on Chinese exporters to the US to document a number of empirical regularities regarding dynamic multiproduct exporter behaviour. First, we confirm that scope and firm scale are positively associated. This suggests that more productive firms select to produce more products. Furthermore we find empirical regularities that are consistent with firms facing uncertainty in the export market. We explore the conjecture that firms learn about their potential in new export products trough exporting similar products. We find only tentative support for this conjecture.In chapter 3, "Multiproduct Exporters: Learning versus Knowing," we develop and estimate a structural model of multiproduct exporters based on three empirical regularities documented using data on Chinese exporters. These regularities are as follows: (1) multi-product exporters introduce their best-selling products early; (2) more than 40% of the new products introduced by incumbent exporters are dropped due to low sales within the first year; (3) for a firm, the probability of introducing a new product is positively related to the survival and success of the earlier products.The first regularity is consistent with unobserved firm-product specific heterogeneity. The second suggests that both incumbents and new exporters face uncertainty when they introduce new products. The third is consistent with firms learning about their potential in an export market, i.e., their brand effect, as they introduce new products. We develop a model which incorporates all of these features, and we estimate it structurally using data on Chinese exporters to the U.S. in the plastics industry.First, we find that known demand shocks play an important role in whether producers enter the exporting market or not. Second, we find that it is important to account for large attrition among new exporters including uncertainty about the brand effect. When we let firms know their brand effect precisely, only those with sufficiently high brand effects enter, and then the model cannot replicate disproportionately large attrition of new products among new exporters. Third, we find that while firms act consistently with learning about their brand effect, the uncertainty that firms face in conjunction with introducing new products looms large, and limits the extent to which learning affects incentives of firms to add new products. Our counterfactuals show that the distribution of products among the high brand effect firms only marginally first order stochastically dominates the distribution for low brand effect firms.Using our model we revisit the question of trade policy in the multiproduct firm setting. We simulate a decrease in the cost of introducing new products for firms. Our simulations suggest that in the presence of economies of scope and even moderate learning effects, decreasing costs of introducing subsequent products can make a significant contribution to increasing trade flows.
Author: Rafael Costa Publisher: ISBN: Category : Languages : en Pages :
Book Description
There are many factors that affect international agricultural trade. One of them is international transportation costs. Another important factor is non-tariff barriers such as sanitary and phytosanitary regulations caused by animal disease outbreaks. The main purpose of this dissertation was to analyze how these factors interfere in the international agricultural trade by examining three cases. In Chapter II, a spatial price equilibrium model of the international cotton sector was utilized to evaluate the effects of the Panama Canal expansion (PCE) on the world cotton industry. Three scenarios were evaluated by reducing ocean freight rates from U.S. Gulf and Atlantic ports to Asian destinations. All scenarios suggested that cotton exports from U.S. Gulf and Atlantic ports would considerably increase. On the other hand, the West Coast ports decreased its participation in total U.S. cotton exports. Overall, total U.S. cotton exports were expected to increase due to the PCE. By using the same model which was used in Chapter II, the third chapter analyzes port improvements in Brazil. By March of 2012, the port of Salvador is expected to have undergone relevant improvements. As a result, the port of Salvador is expected to attract ocean shipping companies which are willing to export directly to Asian importing markets. Scenarios with different reductions in cotton export cost for this port were examined. In general, results indicated a shift in Brazil cotton export flows from the port of Santos to the port of Salvador as well as an increase in exports and producer revenues for the country. Finally, in Chapter IV, the impacts of the 2005 FMD outbreak on the Brazilian meat market was examined. The imposition of an import ban by Russia on Brazilian meat exports was also investigated. By using time series methods, it was found that the outbreak along with the import ban caused a temporary negative price shock to the Brazilian meat market. Export pork and export chicken prices were found to not fully recover after the removal of the import ban by Russia. On the other hand, the export beef price was indicated to undergo a complete recovery.
Author: David Blandford Publisher: World Scientific ISBN: 1786349779 Category : Business & Economics Languages : en Pages : 233
Book Description
Current Issues in Global Agricultural and Trade Policy presents an authoritative perspective on matters that will contribute to the future shape of global markets for agricultural products. Written by a rare grouping of eminent and globally leading agricultural economists from a wide variety of backgrounds, the book provides an analytical overview of the academic and professional work of the late Timothy E Josling, an outstanding intellectual innovator.Areas covered in the book include farm policies of the EU and the USA, analysis of farm support and its effects, US trade policy for agricultural products, analysis of food security, implications of sanitary and phytosanitary measures, and relevance of geographical indications in international trade. The implications of the COVID-19 pandemic for agricultural trade policy are discussed in an endnote. This book throws light on some of the most impressive achievements of the agricultural economics profession.
Author: Chun Kwon Yoo Publisher: ISBN: Category : Agriculture, Cooperative Languages : en Pages : 122
Book Description
Since the Uruguay Round Agreement on Agriculture (URAA) in 1994, global competition in Korean agricultural markets has significantly increased. The objective of this dissertation is to identify the effects of trade liberalization on productivity and pricing in the Korean rice market (Essay 1 and 2) and on the entire agricultural sector (Essay 3). Rice is the major agricultural commodity in Korean agriculture with Rice Processing Complexes (RPC), i.e. agricultural cooperatives, playing a major role in the rice processing industry. Essays 1 and 2 examine RPCs adjustment to the increasingly competitive market environment. The first essay draws on the emerging heterogeneous-firms trade model to test the hypothesis that trade liberalization forces least productivity firms to exit (extensive margin) and encourages reallocation of resources and market share to high productivity firms (intensive margin) within an industry. The above churning results in an increase in the average productivity of the industry. Results from using plant-level RPC data from 2002-2008 to test the above hypothesis show that international competition via increases in rice import (Minimum Market Access) has the largest effect on RPCs' productivity. In particular, greater competition shifts the left tail of the productivity distribution to the right, increasing the median productivity of the Korean rice processing industry. Thus, the above findings suggest that RPCs, often considered to be quasi-public firms shielded from competition, face significant adjustment following trade liberalization. Economic theory suggests that a key input, i.e. raw product that farmer-members deliver, is treated as given in marketing cooperatives' optimization, unlike in the case of profit maximizing firms. Thus, only if cooperatives minimize the cost of conventional inputs (labor and capital) cost and additionally, set the price of the raw product optimally, their production is efficient. Essay 2 examines RPCs' pricing efficiency, based on the above theory, by incorporating farmers' supply function of raw product (rice) into hypothesized RPCs' optimization framework. Results show that only large RPCs' pricing and thus, production is efficient. For small and medium RPCs, processing size, i.e. realizing economies of scale, is important for their efficiency. The latter finding suggests merger of neighboring small and medium RPCs to both expand supply of raw rice and lower processing costs. In fact, results show that post-merger RPCs have attained pricing efficiency similar to large RPCs. Since 2002, about 20 percent of Korean RPCs have merged adjusting to the competitive market and improving pricing efficiency and overall productivity. In the third essay, the effects of agricultural openness on aggregate agricultural productivity and farmers' welfare in Korea are examined. Results indicate that the openness significantly improves agricultural productivity, with a marked increase following URAA. However, in real terms, farm products' price and net farm business income have declined after trade liberalization. The findings show that agricultural trade liberalization has greatly benefitted Korean consumers, but the net impact on farmers' welfare from productivity growth, real price decline and transfer payments is less clear. The three essays show that Korean agriculture has been adjusting to the increasingly competitive environment in primary and processing sectors, contributing to overall gains for the Korean economy. Encouraging resource reallocation towards more competitive segments of Korean agriculture along with targeted transfer payments to revitalize losers from trade are needed to continue to realize and share gains from trade.
Author: Wendkouni Jean-Baptiste Zongo
Author: Wendkouni Jean-Baptiste Zongo
Author: Abebe Adugna
Author: Kai Xu
Author: Jeheung Ryu
Author: Lei Lei
Author: Tereso S. Tullao
Author: Yelena Sheveleva
Author: Rafael Costa
Author: David Blandford
Author: Chun Kwon Yoo