Author: Yesheng Guo
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Services has long been the largest sector of the global economy. In 2011, it produced over 70% of the worlds GDP and employed nearly 50% of the worlds labor force. In the United States, those shares were around 80%. Meanwhile, total imports of services reached 6% of the worlds GDP, almost 1/3 of total goods imports, and it has been steadily growing at 2.63% per annum since 1995, 54% faster than goods trade. Despite its solid presence, services trade is still missing in most existing trade studies. It is often taken as a closed outside sector whose main purpose is to complete the equilibrium. The goal of this thesis is to demonstrate the importance of services trade to our understanding of comparative advantage and welfare implications of trade. In particular, I will introduce services trade and related data sources, provide benchmark quantifications of the gains from services trade, investigate the evolution of comparative advantage of services industries over time, and discuss how trade in services can interact with market entry and technology to generate interesting labor reallocation across sectors.The main results can be summarized as follows. First, standard gravity models fit services trade well. This allows us to apply the widely popular Eaton and Kortum model to services and estimate services productivities. Second, in a series of counterfactual experiments, the same amount of technological progress or friction reduction in services will lead to 3 to 4 times higher gains from trade than in manufacturing. Next, by estimating productivities for 35 industries, 17 in services, from 1995 to 2000, we found that while comparative advantage was weakened in all sectors, relative convergence among services industries was 75% faster than manufacturing industries on average. Such convergence eliminated 3.9% potential gains from trade from the median country, and reduced total trade volume by 25%. In addition, we estimated the speed of technological diffusion across industries within each country to be 3.6% and that across countries for every industry to be 6.0%. Last but not least, inspired by the negative correlation between trade intensity and employment share found in the swift labor reallocation from manufacturing to services in the U.S. since 2000, we discussed how interactions between entry choice, skill-biased technology, and trade may give rise to interesting patterns of structural transformation.This thesis offers basic quantifications of the macro impact of services trade on welfare and structural transformation. From these basic quantifications, we can infer that promoting services trade will unlock considerable amount of potential gains, much higher than the gains from goods trade. At the same time, strengthening services comparative advantage could further hurt employment in other sectors, particularly manufacturing. Fortunately, the manufacturing comparative advantage of the non-OECD countries has diminished in recent decades, reducing the relative cost of re-industrialization that US and other OECD countries are pursuing. Finally, as more granular services trade data becomes available, better economics and econometrics tools can be applied to improve our quantification and deepen our understanding of services trade for policy considerations.
Author: Zhimin Li
Publisher:
ISBN:
Category :
Languages : en
Pages : 116
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Book Description
This dissertation consists of three chapters regarding international trade and economic development. In the first two chapters I explore how China’s economic rise to the global stage affects resource allocations inside and outside the country, and in the third chapter I present a new method to infer risk sharing regimes pertinent to studying consumption behavior in developing countries. The first chapter studies how the "China shock"--the remarkable growth in China's productivity and trade activities since its accession to the World Trade Organization (WTO)--affects China's labor market and real exchange rate dynamics. I apply a dynamic trade and spatial equilibrium model to jointly explain two distinctive features of China's economic growth: the structural transformation, as characterized by the reallocation of labor from agriculture to manufacturing and services, and the sluggish appreciation of the real exchange rate, a puzzle from the perspective of a standard international economics model. The model highlights the role of the subsistence sector in shaping the patterns of the structural transformation and real exchange rate dynamics. Using inter-regional trade and migration data, I calibrate the model to decompose the ``China shock" into productivity shocks and trade shocks and show that the two features above arise naturally from the interaction between the labor market and observed shocks to productivity and trade costs. I find that while productivity growth is the primary source of the structural transformation, the accession to the WTO explains about 35% of the rise in the employment share and 20% of the increase in the real wage in the manufacturing sector. Welfare gains from the "WTO entry" are 27% on average and would be larger if complemented by relaxing labor restrictions further. By accounting for trade costs, the subsistence sector, and labor market frictions, the model generates dynamics for China's real exchange rate consistent with the data. The second chapter studies the effects of real estate investments by foreign Chinese on local economies in the United States. This chapter is co-authored with Leslie S. Shen and Calving Zhang. We document an unprecedented surge in housing purchases by foreign Chinese in the US over the past decade and analyzes their effects on US local economies. Using transaction-level data on housing purchases, we find that the share of purchases by foreign Chinese in the California real estate market increased more than tenfold during the period of 2007-2013 relative to earlier years. In particular, these purchases have been concentrated in zip codes that are historically populated by ethnic Chinese, making up for more than 10\% of the total real estate transactions in these neighborhoods in 2013. We exploit the cross-sectional variation in the concentration of Chinese population settlement across zip codes during the pre-sample period to instrument for the volume of housing purchases by foreign Chinese. Our results show that housing purchases by foreign Chinese significantly increased local housing prices as well as local employment. Our evidence highlights the role of foreign investments in local employment, especially in times of economic downturns. The third chapter proposes a novel approach to test alternative theories of risk sharing--full insurance, self-insurance, and private information--in a unified framework. Given the prevalence of informal insurance in developing countries to share consumption risks, studying risk sharing regimes is important. A distinguishing feature of the framework presented in this chapter is that it accounts for aggregate shocks and does not require data on interest rates, an important advantage for studying rural economies. Applying the approach to a longitudinal dataset from Tanzania, I reject models of full insurance and private information and find evidence of self-insurance. An incorrect inference on the insurance regime could underestimate the welfare loss from risk by as much as ten times.
Author: Fabian Guenter Werner Trottner
Publisher:
ISBN:
Category : Economic development
Languages : en
Pages : 220
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Book Description
I study how international trade affects labor market outcomes and economic growth. In the first chapter, I study how international trade affects wage inequality within and between firms. Using matched employer-employee data from Germany, I document that the firm-size wage premium is higher for skilled compared to less-skilled workers and that larger firms disproportionately employ more skilled workers. I show, using a new quantitative framework, that non-homothetic production and monopsonistic competition in labor markets can rationalize these reduced-form findings. To estimate the model, I propose a new econometric method to identify non-homotheticity in the presence of upward-sloping labor supply curves separately. Counterfactual exercises quantitatively show that the mechanism implies sizeable distributional effects of trade. The second chapter, co-authored with Yann Koby, combines reduced-form evidence with a new model of a dynamic multi-country and multi-sector economy to study the link between trade and structural transformation. The model accounts for major drivers of structural change—including sector-biased technological change and income effects, as well as technological and factor-driven motives for trade. We provide a characterization of the existence and uniqueness of the equilibrium. We quantify the model to the years 1995 to 2011 and then use it to discuss the decline in U.S. manufacturing and the role of service trade in influencing employment in the manufacturing sector. The third chapter, co-authored with Bastian Krieger, studies the effect of trade in services on firms' innovation activities. We combine unique micro-data from Germany with a simple theory of international trade and innovation to provide causal evidence that trade in innovation services increases innovative activities in firms, accounting for market size and competition effects of trade integration.
Author: Guillermo Gallacher
Publisher:
ISBN:
Category :
Languages : en
Pages : 108
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Book Description
In this dissertation I explore the relationship between structural change and globalization. In particular, I focus on the impact of international trade on sectoral labor markets. In Chapter 1, by using a growth accounting framework I provide quantitative estimates of the impact of international trade on sectoral employment shares, in the presence of structural change. I find that in the USA between 1995 and 2014, international trade accounts for 16 percent of the decline in the goods sector employment share. Across countries, the impact of trade on the goods sector employment share is heterogeneous in sign and magnitudes, and is correlated with comparative advantage in the goods sector. I then introduce a Ricardian model of trade with structural change, to shed light on the comparative advantage mechanism. In the data and in the model, international trade mitigates structural change forces in countries with a comparative advantage in the goods sector, while it magnifies structural change forces in countries with a comparative advantage in the service sector. The framework and results I present suggest that trade policy has a limited role in "bringing the manufacturing jobs back". In Chapter 2 I first document that changes in sectoral relative wages have been heterogeneous across countries and then show that these changes in sectoral relative wages matter for understanding employment reallocation. I then ask: why do sectoral relative wages evolve over time? I argue that a likely explanation is the existence of idiosyncratic sectoral labor demand shocks in the context of employment reallocation frictions. I argue that aggregate trade integration con generate such shifts. The intuition is simple: trade liberalization tends to increase labor demand in sectors in which the country has a comparative advantage, and to decrease labor demand in sectors in the rest of sectors. If labor cannot fully reallocate after such shocks, wages tend to adjust: relative wages tend to increase in sectors in which the country has a comparative advantage and tend to shrink in the rest of the economy. Trade integration thus impacts sectoral relative wages and that this impact varies across countries. I introduce a model of international trade with labor market frictions and show that countries with a comparative advantage in the goods (service) sectors tend to experience increasing relative wages in the goods (service) sector. Using the Revealed Comparative Advantage Index, I confirm this relationship in the data. Employment reallocation frictions thus shed light on the empirical relevance of the Ricardian model of international trade.
Author: Dee Philippa
Publisher: World Scientific
ISBN: 9814508756
Category : Business & Economics
Languages : en
Pages : 469
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Book Description
The book shows policy makers how to approach the economics and politics of services trade reform domestically, consistent with relevant special features of services trade. It shows analysts the full policy implications of those special features, including what they mean and how services reform should be treated in the future in national and international forums.
Author: Till Ferdinand Hollstein
Publisher:
ISBN:
Category :
Languages : en
Pages : 103
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Book Description
The purpose of the thesis is to investigate the impact of patterns of trade on the structural composition of an economy. We show that trade affects an economy's productivity by shifting labor across broad sectors and reallocating resources across firms within sectors. In the first chapter, we examine how the introduction of a labor subsidy in the manufacturing sector affects manufacturing employment in a Ricardian trade model. Furthermore, the trade-off between subsidy distortions, dynamic productivity gains in the manufacturing sector and gains from trade are examined. We derive a critical labor subsidy. If a labor subsidy is larger than this critical subsidy, TFP growth in the manufacturing sector is higher than in the agricultural sector and the economy industrializes. Accelerated TFP growth can outweigh the welfare reducing distortions of labor subsidies in the long run. In the second chapter, we investigate the role of quality of traded goods. We analyze a U.S. import data set and show that firms within a sector may find it profitable to export different quality levels and the quality of exported goods is bimodally distributed within these sectors. We address these results by extending the standard heterogeneous firms trade model with endogenous intermediate input quality choice and assuming that there exists quality complementarity between a firm's capability and their choice of intermediate input quality. In the third chapter, we examine the interrelationship between patterns of trade and premature deindustrialization. We develop a multi-sector two-economy model that allows for inter- and intra- industry trade and find an additional channel through which a developing economy may deindustrialize. Manufacturing production requires intermediate inputs that must be imported from high-income economies. The foreign technology embodied in those inputs reduces the relative price of manufactured goods over services. This effect is independent of trade openness in the manufacturing sector. Summarizing, the thesis emphasizes the role of international trade on economic growth, structural composition, and firm selection and studies the consequences of their interdependence.
Author: Rodney de C. Grey
Publisher: IRPP
ISBN: 9780886450953
Category : Political Science
Languages : en
Pages : 232
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Book Description
This study examines the proposal of the United States, and supported by Canada and the EC, that the trading nations should negotiate new international, multilateral rules to control restrictions on trade in services, including services provided by establishments, such as branches or subsidiaries of foreign controlled firms, as well as services sold across frontiers, such as computer services.
Author: Services World Forum (Association)
Publisher: Pergamon
ISBN:
Category : Business & Economics
Languages : en
Pages : 320
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Book Description
Service sector, trade, economic role in economic development - service worker employment, information technology, outer space, tourism, insurance, data collecting, measurement, research methods, etc. Bibliography, diagrams.
Author: Bernard Hoekman
Publisher:
ISBN:
Category :
Languages : en
Pages : 38
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Book Description
The competitiveness of firms in open economies is increasingly determined by access to low-cost and high-quality producer services - telecommunications, transport and distribution services, financial intermediation, etc. This paper discusses the role of services in economic growth, focusing in particular on channels through which openness to trade in services may increase productivity at the level of the economy as a whole, industries and the firm. The authors explore what recent empirical work suggests could be done to enhance comparative advantage in the production and export of services and how to design policy reforms to open services markets to greater foreign participation in a way that ensures not just greater efficiency but also greater equity in terms of access to services.
Author: United Nations Publications
Publisher: UN
ISBN: 9789211206739
Category : Political Science
Languages : en
Pages : 0
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Book Description
This volume comprises four selected research essays on different aspects of trade and industry issues that are of significance and interest to researchers and policy analysts alongside policy makers in the Asian region: 1) Structural transformation and trade policy: Case of Nepal, 2) Logistics performance and trade: An analysis of India's trade in intermediates with Bangladesh and Thailand, 3) An analysis of export performance of manufacturing and service sector enterprises in Sri Lanka, and 4) Evaluation of business association membership on small and medium enterprises' growth performance: Evidence from enterprise survey of Cambodia. These essays are written by researchers in Asian countries, brought together by the Asia-Pacific Research and Training Network on Trade (ARTNeT) which from April 2011 until September 2013 has implemented its Phase III under the topic of 'Drivers of Competitiveness and Strategies for Economic Diversification for Developing Countries - Building Policy Making Capacity in Asia and the Pacific.'
