Trade Diversion

An interesting line of ongoing research pairs transaction-level trade data across countries to provide detailed descriptions of importers, exporters, and their transactional relations. Eaton, Eslava, Krizan, Kugler, and Tybout (in a project titled “A Search and Learning Model of Export Dynamics”, there are various versions, here’s May 2010) have combined 13 years of Colombian export data with US import data, generating many new interesting findings about buyer-seller matches (e.g. “Roughly 80 percent of matches are monogamous in the sense that the buyer deals with only one Colombian exporter and the exporter ships to only one buyer in the United States”). Blum, Claro, and Horstmann have used the other side of the Colombian trade data, studying Chilean-exporter-Colombian-importer pairs. There are also theoretical predictions about international transactional matching that could be tested using such paired data.

In short, this is an exciting new avenue in trade empirics.

Bastos & Silva: Firms’ free-on-board unit values increase with the distance to and income of export destinations. They use Portuguese customs data.

The paper is now available at the Journal of International Economics in its near-published form.

“In 2004 Nokia’s share of Finnish GDP was 3.5 per cent and in 2003 it accounted for almost a quarter of Finland’s exports” (Neary, 2010).

The latest from Bernard, Jensen, Redding, and Schott: “Intra-firm trade is high for products with low levels of contractibility sourced from countries with weak governance, for skill-intensive products from skill-scarce countries, and for capital-intensive products from capital-abundant countries.” [Intra-Firm Trade and Product Contractibility]

The latest issue of World Economy is a special symposium featuring firm-level evidence on exporting, importing, and offshoring.

This abstract caught my eye:

Learning by exporting refers to the mechanism whereby firms improve their performance (productivity) after entering export markets. Although this mech- anism is often mentioned in policy documents, a significant share of econometric studies has not found evidence for this hypothesis. This has lead to a view that the correlation between firm-level export status and productivity is a result of a self-selection process of more productive firms becoming exporters. This paper shows that the methods used to come to the latter conclusion suffer from a large internal inconsistency: they rely on an exogenous evolving productivity process. I show how recent proxy estimators can easily be accommodated to incorporate the endogenous process of learning by exporting and can detect sig- nificant productivity gains upon export entry. I apply my empirical model to plant-level data and find substantial additional productivity gains (upon export entry) ranging from 4 to 27 percent.