Handbook of international trade Vol 1

446 Pages·2003·1.763 MB·English

by  Eun Kwan Choi, James Harrigan

Handbook of
International
Trade
Edited by
E. Kwan Choi and
James Harrigan
© 2003 by Blackwell Publishing Ltd
except for editorial material and organization © 2003 by E.Kwan Choi and
James Harrigan
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The right of E.Kwan Choi and James Harrigan to be identified as the Authors of the
Editorial Material in this Work has been asserted in accordance with the UK Copyright,
Designs,and Patents Act 1988.
All rights reserved.No part of this publication may be reproduced,stored in a retrieval
system,or transmitted,in any form or by any means,electronic,mechanical,photocopying,
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Act 1988,without the prior permission of the publisher.
First published 2003 by Blackwell Publishing Ltd
Library of Congress Cataloging-in-Publication Data
Handbook of international trade / edited by E.Kwan Choi and
James Harrigan.
p. cm.– (Blackwell handbooks in economics)
Includes bibliographical references and index.
ISBN 0-631-21161-6 (hardcover :alk.paper)
1. International trade. I. Choi,Eun Kwan,1946–
II. Harrigan,James. III. Series.
HF1379.H364 2003
382–dc21 2002155271
A catalogue record for this title is available from the British Library.
Set in 10/12 Times
by SNP Best-set Typesetter Ltd.,Hong Kong
Printed and bound in the United Kingdom
by MPG Books,Bodmin,Cornwall
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Contents
Figures vii
Tables ix
Contributors xi
Introduction 1
James Harrigan
Part I: Factor Proportions Theory
1 Trade Theory and Factor Intensities:An Interpretative Essay 5
Ronald W.Jones
2 Implications of Many Industries in the Heckscher–Ohlin Model 32
E.Kwan Choi
3 Robustness of the Stolper–Samuelson Intensity Price Link 60
Henry Thompson
4 Specialization and the Volume of Trade:Do the Data Obey the Laws? 85
James Harrigan
5 The Factor Content of Trade 119
Donald R.Davis and David E.Weinstein
6 Global Production Sharing and Rising Inequality:A Survey of Trade
and Wages 146
Robert C.Feenstra and Gordon H.Hanson
7 External Economies in the International Trade Theory:A Survey 186
Jai-Young Choi and Eden S.H.Yu
vi Contents
Part II: Trade Policy
8 The Political Economy of Trade Policy:Empirical Approaches 213
Kishore Gawande and Pravin Krishna
9 Antidumping 251
Bruce A.Blonigen and Thomas J.Prusa
Part III: Investment
10 Foreign Direct Investment and the Operations of Multinational Firms:
Concepts,History,and Data 287
Robert E.Lipsey
11 General-Equilibrium Approaches to the Multinational Enterprise:
A Review of Theory and Evidence 320
James R.Markusen and Keith E.Maskus
Part IV: New Trade Theory
12 The Economic Geography of Trade,Production,and Income:
A Survey of Empirics 353
Henry G.Overman,Stephen Redding,and Anthony J.Venables
13 Plant- and Firm-Level Evidence on “New”Trade Theories 388
James R.Tybout
Index 416
Figures
Figure 1.1 Endowments and outputs 9
Figure 1.2 Factor-intensity reversal 10
Figure 1.3 Biased technical progress 12
Figure 1.4 Joint production 13
Figure 1.5 Hicksian composite unit value isoquant 16
Figure 1.6 Technical change and factor prices 17
Figure 2.1 Price adjustment of the middle good 44
Figure 2.2 Adjustments of other prices 45
Figure 2.3 A change in the price of the middle good 46
Figure 2.4 Why a Leontief paradox may occur 53
Figure 2.5 Indirect factor trade 55
Figure 2.6 Factor content of trade without FPE 56
Figure 3.1 Stolper–Samuelson adjustment 62
Figure 3.2 Monopoly output restriction 70
Figure 3.3 Homothetic and nonhomothetic production 73
Figure 3.4 Convex PPF without factor price effects 74
Figure 3.5 Stolper–Samuelson result with convex PPF 76
Figure 4.1 The relative distance effect 106
Figure 6.1 Relative wage of nonproduction/production workers,
US manufacturing 148
Figure 6.2 Relative employment of nonproduction/production workers,
US manufacturing 148
Figure 6.3 Production of industry output y 156
m
Figure 6.4 Change in wages due to fall in p 159
Figure 6.5 Change in wages due to rise in r 160
Figure 11.1 Volume of affiliate production,KK model 326
Figure 11.2 Volume of affiliate production,HOR model 327
Figure 11.3 Volume of affiliate production,VER model 327
Figure 11.4 Change in the volume of affiliate production:trade costs
reduce from 20% to 1% 331
viii Figures
Figure 11.5 Change in the volume of trade following investment
liberalization,high trade costs (20%) 332
Figure 11.6 Change in the volume of trade following investment
liberalization,low trade costs (1%) 333
Tables
Table 3.1 An example of mean weighted factor intensity 78
Table 4.1 Gravity equation estimates for different types of goods 111
Table 4.2 The volume of trade relative to output within the
OECD,1985 112
Table 6.1 Percentage share of imported to total intermediate inputs 151
Table 6.2 Employment weighted percentage changes in domestic
and import prices 152
Table 6.3 Employment and wages of nonproduction workers,
1973–1979 and 1979–1987 153
Table 6.4 Dependent variable – change in nonproduction wage share,
1979–1990 164
Table 6.5 Dependent variable – log change in industry price,1979–1990 169
Table 8.1 Cross-sectional studies of the determinants of trade
protection 218
Table 8.2 Comparisons of political economy models 220
Table 8.3 Grossman and Helpman (1994) model estimation results 227
Table 10.1 Percentage share of direct investment in total world capital
outflow,1970–1999 299
Table 10.2 Percentage share of FDI in US private investment and
inward FDI stock as percentage of outward,1976–1999 302
Table 10.A1 World investment outflows,1990–1999 309
Table 10.A2 Sources of direct investment outflows 310
Table 10.A3 Destinations of direct investment inflows 310
Table 10.A4 Net inflows of direct investment 311
Table 10.A5 US private investment abroad,1976–1999 311
Table 10.A6 Foreign non-official assets in the United States,1976–1999 312
Table 10.A7 The relation of US affiliate activity to US outward FDI
stock across countries 313
Table 10.A8 The relation of US affiliate activity to the US outward
FDI stock 313
x Tables
Table 10.A9 The relation of changes in US affiliate activity to changes
in US outward FDI stock 314
Table 10.A10 The relation of changes in US affiliate activity to changes in
US outward FDI stock:52 countries and 12 industry groups 315
Table 12.1 World market access,supplier access,and GDP per capita 364
Table 12.2 Market potential and wages across US counties 366
Table 12.3 Comparative advantage and geography:Dependent
variable ln(rk) 374
i
Contributors
Bruce A. Blonigen is the Knight Professor of Social Science in the Economics
Department at the University of Oregon. He is also an Associate Editor for the
Journal of International Economics and a Research Associate with the National
Bureau of Economic Research.
E. Kwan Choi has been a Professor of Economics at Iowa State University since
1985.He is currently the editor of the Review of International Economicsand Review
of Development Economics. He has published articles in Quarterly Journal of
Economics and Journal of Political Economy, and edited Economic Growth and
International Tradeand Globalization and the Labor Markets(Blackwell Publishing).
Jai-Young Choiis Professor of Economics at Lamar University (Beaumont,Texas).
His primary research interests are in the analyses of international economic prob-
lems and policies.His articles have appeared in such journals as Economica,Oxford
Economic Papers, Canadian Journal of Economics, Southern Economic Journal,
International Economic Journal,and Journal of Economics.
Donald R.Davisis Professor of Economics at Columbia University and a Research
Associate of the National Bureau of Economic Research. Previously he was an
Assistant and Associate Professor of Economics at Harvard University.His research
interests include the theory and empirics of international trade,economic geogra-
phy,and the impact of trade on inequality in the global economy.
Robert C.Feenstrais Professor of Economics at the University of California,Davis.
He is a former editor of the Journal of International Economics,and currently an
associate editor of that journal,along with the American Economic Review and the
Review of Economics and Statistics.Feenstra alsoheads the International Trade and
Investment research program at the National Bureau of Economic Research.Most
recently,Feenstra is author of the graduate textbook Advanced International Trade:
Theory and Evidence (forthcoming).
xii Contributors
Kishore Gawande is Associate Professor of Economics at the University of New
Mexico.His research interests include empirical political economy,empirical trade
policy, and trade and environment. He has published numerous articles in such
journals as Review of International Economics, Southern Economic Review, and
Canadian Journal of Economics.
Gordon H.Hanson is Professor of Economics in the Graduate School of Interna-
tional Relations and Pacific Studies at the University of California,San Diego.He
is currently a Research Associate in the National Bureau of Economic Research
and on the Board of Editors for the American Economic Review and the Journal
of International Economics.
James Harrigan is a Senior Economist in the International Research Department
of the Federal Reserve Bank of New York. He has also taught at the University
of Pittsburgh and Columbia University,and is a member of the National Bureau of
Economic Research. He is a former co-editor of the Journal of International
Economics.
Ronald W.Jones is Professor and Department Chair of Economics at the Univer-
sity of Rochester.He has spent most of his career doing international trade theory
at the university. He has thoroughly investigated multiple aspects of simple com-
petitive general equilibrium models of trade,including the specific-factors model.
Pravin Krishna is Professor of Economics at Brown University.A recent Visiting
Professor of Economics at Princeton University,he is also a Faculty Research Fellow
with the National Bureau of Economic Research.He is a co-author of Trade Blocs:
Alternate Analyses of Preferential Trade Arrangements (with Jagdish Bhagwati and
Arvind Panagariya,1999).
Robert E.Lipsey is a Research Associate and Director of the New York Office of
the National Bureau of Economic Research and Professor Emeritus of Economics
at Queens College and the Graduate Center of the City University of New York.
At various times in the past he was Director of International and Financial Studies
and Vice President of the NBER, and a Lecturer in Economics at Columbia
University.
James R. Markusen is Professor of Economics at the University of Colorado,
Boulder,specializing in the theory of international trade,and direct foreign invest-
ment.He is associate editor of the Journal of International Economicsand is widely
published in the top economic journals.
Keith E.Maskusis Professor of Economics at the University of Colorado,Boulder,
and is also a Research Fellow at the Institute for International Economics. In
2001–2002 he was a Lead Economist in the Development Research Group at the
World Bank.He was associate editor of Review of International Economics and is
now the editor of The World Economy:the Americas.