Review of World Economics

Nochmals zum Faktorgehalt des Nord-Süd-Handels mit Industrieprodukten. — In den konventionellen Berechnungen des Faktorgehalts der international gehandelten Güter werden die Wirkungen, die der Nord-Süd-Handel mit Industriegütern auf die Struktur der Nachfrage nach heimischen Produktionsfaktoren ausübt, erheblich unterschÄtzt. In diesem Artikel wird eine modifizierte Methode entwickelt, die mehr als sonst üblich nicht-konkurrierende Importe einbezieht. Danach ist die positive Ansto\wirkung des Handels auf die relative Nachfrage nach ungelernten ArbeitskrÄften im Süden ungefÄhr sechsmal, die negative Ansto\wirkung im Norden ungefÄhr zehnmal grö\er, als konventionelle Berechnungen ergeben. Dieser Befund könnte bedeutende Folgerungen für andere ökonomische Forschungsgebiete und für die Wirtschaftspolitik haben. Le facteur-contenu du commerce Nord-Sud des produits industriels — une reconsidération. — Les calculations conventionnelles du facteur-contenu du commerce international sous-estiment largement les effets du commerce Nord-Sud des produits industriels sur la demande de facteurs intérieurs de la production. Pour le facteur-contenu, on a développé une méthode modifiée qui se concentre aux importations non-compétitives. Cette méthode propose que l'effet sur la demande relative de main-d'∄uvre non-qualifiée est au Sud environ six fois, au Nord environ dix fois plus grand que les calculations conventionnelles indiquent. De ce résultat on peut tirer des conclusions importantes pour d'autres recherches économiques et pour la politique. Una reconsideration del contenido de factores del comercio en manufacturas Norte-Sur. — Las calculaciones convencionales del contenido de factores del comercio subestiman bastante los efectos del comercio Norte-Sur en manufacturas sobre la composición de la demanda de factores de producción domésticos. Se desarrolla un método modificado que se concentra en las importaciones no competitivas. Este método sugiere que el impacto sobre la demanda relativa de la mano de obra no calificada es seis veces más grande en el Sur que lo que las calculaciones convencionales indican y alrededor de diez veces más grande en el Norte. Este resultado podria tener importantes implicaciones para otros campos de la ciencia económica y para la política.

This paper investigates the effect of quality on foreign entry using data on international movie exports and direct and revealed measures of movie quality. Strict quality sorting is predicted by a model of firm heterogeneity. An alternative model is random entry, in which entry decisions are independent of the movie’s quality. I develop a discrete choice model that allows for both of these extremes as special cases, and use graphical techniques and simulations to compare their predictions to the data. I then use regression analysis to estimate the effect of quality on the propensity to enter foreign markets. A one-standard-deviation increase in quality increases the probability of entry by 25–50 %. Systematic differences in taste for different genre types are used to estimate a measure of cultural distance between countries. Movies in “culturally dependent” genres are less likely to enter foreign markets and their probability of entry is less sensitive to quality. The cultural distance measure enters a gravity equation of US bilateral trade significantly.

This paper studies how exchange rate movements affect the export market entry and intensity decision of firms and the export behaviour of multinationals in the UK. Using data on British manufacturing firms we find that exchange rate movements have little effect on firm export participation but have a significant impact on export shares. Multinationals have at their disposal a greater array of instruments to deal with exchange rates changes, although their use may vary according to the motives behind FDI. We also find important differences according to the country of origin of multinational firms. Multinationals firms originating from outside of the EU are less affected by changes in the exchange rate compared to those inside, who appear similarly affected as domestic firms.

Has the Canada-US Trade Agreement Fostered Price Integration? — This paper assesses the Canada-US Trade Agreement (CUSTA) from the perspective of market integration. Using monthly data on producer price indices and the exchange rate of both countries for the 1974:1–1996:1 period, a Johansen procedure is used to test for a long-run equilibrium or cointegrated price system among the price series. In addition, to determine whether product markets are converging after the implementation of CUSTA, a Kaiman filter or time-varying parameter analysis is used. Empirical evidence supports the conclusion that CUSTA did not cause price integration or convergence, rather for the two markets convergence and integration were well established prior to CUSTA. The success of CUSTA appears to be in maintaining Canadian access to the US market in the face of rising US protectionism.

Tax Policy on Foreign Direct Investment in the Presence of Cross-Hauling. — The authors develop a partial equilibrium model of foreign direct investment (FDI) in which identical foreign firms locate themselves in a host country to compete with internationally mobile domestic firms in non-tradeable oligopolistic markets for two differentiated commodities. The host country, which is small in the market for FDI, uses lumpsum subsidy (tax) to encourage (discourage) FDI. There is unemployment in the host country. Under this framework, the authors analyse the effect of discriminatory and uniform subsidies on the inflow/outflow of domestic and foreign firms and on employment. They also derive some properties of optimal subsidies.