The Impact of Foreign Direct Investment on International Trade: An Empirical Study of China

This paper investigates the impact of inward FDI (Foreign Direct Investment) on international trade of China empirically on the country level by using panel data from 1984 to 2007. Two separate transformed models which are based on the gravity equation and refer to the econometric models of some previous studies, are used in this paper to estimate the effect of FDI inflows on exports and imports respectively. The estimation results confirmed the complementary relationship between FDI inflows and trade of China both on exports and imports, which has also been supported by previous empirical studies.

Euroland - The effect of Euro on international trade : Are there winners and losers in this ''Euro-game''?

This paper examines whether European Monetary Union (EMU) countries share fairly the effect of their membership in Eurozone (EZ) or whether are winners and losers in this ''Euro-game''. By using panel data of 27 European Union (EU) Member States for the period 2001-2012 in the context of a gravity model, we focus on estimating the Euro’s effect on bilateral trade and we detect whether this effect differs across the Member States of EZ. Two estimation methods are applied: Pooled OLS estimator and Fixed Effects estimator. The empirical results come to the conclusion that the individual country effects differ and are statistically significant, indicating that EMU’s effect on trade differs across the Member States of EZ. The overall effect of the Euro is statistically insignificant, regardless the estimation method, demonstrating that the common European currency may have no effect on bilateral trade.

Firm relocation and firm profits : Evidence from the Swedish wholesale trade sector

This study analyses the effects of firm relocation on firm profits, using longitudinal data on Swedish limtied liability firms and employing a difference-in-differnce propensity score method in the empirical analysis. Using propensity score matching, the pre-relocalization differneces between relocating and non-relocating firms are balanced. In addition to that, a difference-in-difference estimator is employed in order to control for all time-invariant unobserved heterogeneity among firms. For matching, nearest neighbour matching, using the one-, two- and three nearest neighbours is employed. The balanacing results indicate that matching achieves a good balance, and that similar relocating and non-relocating firms are being compared. The estimated average treatment on the treatment effects indicate thats relocations has a significant effect on the profits of the relocating firms. In other words, firms taht relocate increase their profits significantly, in comparison to what the profits would be had the firms not relocated. This effect is estimated to vary between 3 to 11 percentage points, depending on the lenght of the analysed period after relocation. 

Entry, re-location and growth in the Swedish wholesale trade industry

Wholesale trade has an intermediate position between manufacturing and retail in the distributional channel. In modern economies, consumers buy few, if any, products directly from manufacture or producer. Instead, it is a wholesaler, who is in direct contact with producers, buying goods in larger quantities and selling them in smaller quantities to retailers. Traditionally, the main function of a wholesaler has been to push goods along the distributional channel from producer to retailer, or other nonend user. However, the function of wholesalers usually goes beyond the process of the physical distribution of goods. Wholesalers also arrange storage, perform market analyses, promote trade or provide technical support to consumers (Riemers 1998). The existence of wholesalers (and other intermediaries) in the distributional channel is based on the effective and efficient performance of distribution services, that are needed by producers and other members of the supply chain. Producers usually do not enjoy the economies of scale that they have in production, when it comes to providing distributional services (Rosenbloom 2007) and this creates a space for wholesalers or other intermediaries. Even though recent developments in the distributional channel indicate that traditional wholesaling activities now also compete with other supply chain organizations, wholesaling still remains an important activity in many economies (Quinn and Sparks, 2007). In 2010, the Swedish wholesale trade sector consisted of approximately 46.000 firms and generated an annual turnover of 1 300 billion SEK (Företagsstatistiken, Statistics Sweden). In terms of turnover, wholesaling accounts for 20% of the gross domestic product and is thereby the third largest industry. This is behind manufacturing and a composite group of firms in other sectors of the service industry but ahead of retailing. This indicates that the wholesale trade sector is an important part of the Swedish economy. The position of wholesaling is further reinforced when measuring productivity growth. Measured in terms of value added per employee, wholesaling experienced the largest productivity growth of all industries in the Swedish economy during the years 2000 through 2010. The fact that wholesale trade is one of the important parts of a modern economy, and the positive development of the Swedish wholesale trade sector in recent decades, leads to several questions related to industry dynamics. The three topics that will be examined in this thesis are firm entry, firm relocation and firm growth. The main question to be answered by this thesis is what factors influence new firm formation, firm relocation and firm growth in the Swedish wholesale trade sector?

Essays on firm dynamics in the Swedish wholesale trade sector

This thesis consists of a summary and five self-contained papers addressing dynamics of firms in the Swedish wholesale trade sector. Paper [1] focuses upon determinants of new firm formation in the Swedish wholesale trade sector, using two definitions of firms’ relevant markets, markets defined as administrative areas, and markets based on a cost minimizing behavior of retailers. The paper shows that new entering firms tend to avoid regions with already high concentration of other firms in the same branch of wholesaling, while right-of-the-center local government and quality of the infrastructure have positive impacts upon entry of new firms. The signs of the estimated coefficients remain the same regardless which definition of relevant market is used, while the size of the coefficients is generally higher once relevant markets delineated on the cost-minimizing assumption of retailers are used. Paper [2] analyses determinant of firm relocation, distinguishing between the role of the factors in in-migration municipalities and out-migration municipalities. The results of the analysis indicate that firm-specific factors, such as profits, age and size of the firm are negatively related to the firm’s decision to relocate. Furthermore, firms seems to be avoiding municipalities with already high concentration of firms operating in the same industrial branch of wholesaling and also to be more reluctant to leave municipalities governed by right-of-the- center parties. Lastly, firms seem to avoid moving to municipalities characterized with high population density. Paper [3] addresses determinants of firm growth, adopting OLS and a quantile regression technique. The results of this paper indicate that very little of the firm growth can be explained by the firm-, industry- and region-specific factors, controlled for in the estimated models. Instead, the firm growth seems to be driven by internal characteristics of firms, factors difficult to capture in conventional statistics. This result supports Penrose’s (1959) suggestion that internal resources such as firm culture, brand loyalty, entrepreneurial skills, and so on, are important determinants of firm growth rates. Paper [4] formulates a forecasting model for firm entry into local markets and tests this model using data from the Swedish wholesale industry. The empirical analysis is based on directly estimating the profit function of wholesale firms and identification of low- and high-return local markets. The results indicate that 19 of 30 estimated models have more net entry in high-return municipalities, but the estimated parameters is only statistically significant at conventional level in one of our estimated models, and then with unexpected negative sign. Paper [5] studies effects of firm relocation on firm profits of relocating firms, employing a difference-in-difference propensity score matching. Using propensity score matching, the pre-relocalization differences between relocating and non-relocating firms are balanced, while the difference-in-difference estimator controls for all time-invariant unobserved heterogeneity among firms. The results suggest that firms that relocate increase their profits significantly, in comparison to what the profits would be had the firms not relocated. This effect is estimated to vary between 3 to 11 percentage points, depending on the length of the analyzed period. 

CO2 Emissions, GDP and trade : a panel cointegration approach

This paper examines the relationships among per capita CO2 emissions, per capita GDP and international trade based on panel data sets spanning the period 1960-2008: one for 150 countries and the others for sub-samples comprising OECD and Non-OECD economies. We apply panel unit root and cointegration tests, and estimate a panel error correction model. The results from the error correction model suggest that there are long-term relationships between the variables for the whole sample and for Non-OECD countries. Finally, Granger causality tests show that there is bi-directional short-term causality between per capita GDP and international trade for the whole sample and between per capita GDP and CO2 emissions for OECD countries

The effects of Ikea and external shopping centers on regional trade and retail growth : A comparative analysis of Ikea’s establishment in Kalmar and Karlstad

This paper examines the effects of Ikea store establishment in Kalmar and Karlstad on the trade and retail inside the two cities, and as well on the trade and retail in the close neighboring municipalities and in further peripheral municipalities in both regions. After the establishment of Ikea store, Kalmar and Karlstad have experienced significant growth in trade and retail. The question, however, is how big this growth is in both cities? And how different locations on different distances from Ikea have been affected? What impact there was on different segments of the retail? How different business branches have been affected? How large the catchment area for the emerging new large-scale retail locations is? These questions, in addition to few others, are investigated in this paper. The thesis starts with an introduction chapter containing a background of the topic, problem description, the investigated questions, the purpose, and the outline of the paper. The next chapter includes the frame of reference which consists of literature review and theoretical framework about the external shopping centers and their impact on retail and regional trade development. It includes also information gathered from previous studies technical reports and other available sources about the subject. The third chapter includes description for the methods used to collect the primary and secondary data needed for the purpose of this study. Then the empirical framework which demonstrates the results of the conducted research followed by analysis and concluded in discussion and conclusion. Mixed methods are used as research strategy in this thesis, and the method to conduct the research is based on telephone interviews for the primary (qualitative) data, and documents and desk research for the secondary (quantitative) data. The gathered data is analyzed and designed in a way that allows the usage of comparative analysis technique to present the findings and draw conclusions. The results showed that new established Ikea retail store outside the city boundaries results with many effects on the city center and on the neighboring municipalities as well. The city center seems not to be affected negatively, but on the contrary positive effects were witnessed in both regions, these positive effects are linked to the increase inflow of customers from the external retail area which is known as spillover effect. III On the other hand, the neighboring towns and municipalities are more negatively affected especially with the trade of con-convenience goods as the consumers in these towns and municipalities start to go to the area of Ikea and the large external retail center to do their purchasing, the substitution effect is then said to be occurred. Moreover, the further far municipalities do not seem to be significantly affected by the establishment of Ikea. These effects whether positive or negative could be monitored by looking to few trade parameters such as the turnover, the sales index, and the consumers’ expenditure, these parameters can be very useful to measure the developments and changes in the trade and retail in a given place. 

Optimization of cable cycles : a trade-off between reliability and cost

This paper elaborates the routing of cable cycle through available routes in a building in order to link a set of devices, in a most reasonable way. Despite of the similarities to other NP-hard routing problems, the only goal is not only to minimize the cost (length of the cycle) but also to increase the reliability of the path (in case of a cable cut) which is assessed by a risk factor. Since there is often a trade-off between the risk and length factors, a criterion for ranking candidates and deciding the most reasonable solution is defined. A set of techniques is proposed to perform an efficient and exact search among candidates. A novel graph is introduced to reduce the search-space, and navigate the search toward feasible and desirable solutions. Moreover, admissible heuristic length estimation helps to early detection of partial cycles which lead to unreasonable solutions. The results show that the method provides solutions which are both technically and financially reasonable. Furthermore, it is proved that the proposed techniques are very efficient in reducing the computational time of the search to a reasonable amount.

Migration, unemployment and trade

Migration, Unemployment and Trade focuses on the issues of migration, welfare and unemployment in a trade and development framework. Several chapters of the book analyze the implications of internal labor mobility in a model designed to highlight its implications for regional welfare, urban unemployment, rural-urban dichotomy and structural adjustment. An important innovation in this work is the disaggregation of the economy and the use of separate utility functions to highlight non-homogeneity of preferences. The book also deals with international mobility of factors in different frameworks. In particular it concentrates on the highly emotive issue of legal and illegal migration. Thus this work incorporates interesting and important features of labor economics and factor mobility into trade and distortion theory.

Globalisation, the environment and recent trends in international trade

The process of globalization has had far-reaching social as well as economic effects. The term "globalization" is generally taken to mean an increase in international transactions in markets for goods, services and factors of production and a growth in institutions .that straddle international borders. This development has also meant that the corporate-governance mechanisms have to be reinforced to ensure fairness and transparency as well as social responsibility. Finally, international infrastructure and institutions have to evolve to facilitate and ameliorate the effects of the growth in this world trade on the environment, sustainable development and bio-diversity. This paper provides an overview of the current developments in all these areas.

Settlement of Disputes Within the World Trade Organisation: A Guide to the Jurisprudence

The Urugauy Round of Multilateral Trade Negotiations led to the development of a revised set of procedures on dispute settlement. These procedures dealt with a number of significant problems that had arisen under GATT dispute settlement experience. In spite of these important reforms, there are numerous, complex and contentious questions of legal adjudication that any formal dispute settlement system must face. The article outlines the aims and organs of dispute settlement under the WTO. It addresses some of the key questions as to standing, interpetation, evidence and adjudicatory practices and processes. While ongoing moitoring and reform is necessary, an important thesis is that the inherent nature of legal adjudication forces uncertain determinations that can too easily give rise to unwarranted criticism of the system as a whole.

Globalization, international trade and welfare

The term globalization is generally used to describe an increase in international transactions in markets for goods and services and factors of production, plus the growth and expanded scope of mar.y institutions that straddle international borders. Globalization has also led to a more liberal economic environment where issues such as labour standards, human rights, the environment, intellectual property rights, investment codes and competition policy are now considered legitimate topics in the trade debate. Free global markets cannot guarantee that air, water or energy resources are accurately priced for sustainable development since there is no mechanism to internalize environmental costs. Economic growth, although a powerful tool for increasing a country's wealth, cannot guarantee that such wealth will be equally distributed. What is needed is environmental and social policy to redistribute the benefits.
Recent empirical studies show that there are clear signs of income convergence among countries that integrate more fully with the world economy but a divergence between these active participants and those who elect to remain insulated from global markets. The inequality within nations (distribution of income) has increased during the period of globalization over the last fifty years.