Inma Martinez-Zarzoso

The price of modern maritime piracy

Inmaculada Martinez-Zarzoso et al. — Thu, 22 Sep 2011 06:52:02 PDT

A growing body of literature has recently focused on the economic origins and consequences of modern maritime piracy and on the perception that the international community has failed to control it. This paper aims to investigate maritime transport costs as one of the channels through which modern maritime piracy could have a major impact on the global economy. A transport-cost equation is estimated using a newly released dataset on maritime transport cost from the OECD together with data on maritime piracy from the IMB. Our results show that maritime piracy significantly increases trade cost between Europe and Asia.

Trade in intermediate goods and regional production networks. An application for Latin America

Marcelo Florensa et al. — Fri, 12 Aug 2011 06:13:02 PDT

This paper quantifies the effects of two regional integration agreements in Latin America (LA), namely the Latin American Integration Association and the Southern Common Market, on the development of production networks in the region. Two main hypotheses are tested using disaggregated data for trade in goods between eleven LAIA members over the period 1991-2008. First, with integration LA countries have become more integrated into regional production networks and second, the implementation of LA agreements has production relocation consequences. The main results indicate some evidence of production networks mainly in the 1990s and for Mercosur members, but no evidence is found after 2000.

How Costly is Modern Maritime Piracy to the International Community?

Inmaculada Martinez-Zarzoso et al. — Thu, 11 Aug 2011 00:51:10 PDT

This paper focuses on the impact of maritime piracy on international trade. Piracy increases the cost of international maritime transport through an increase in insecurity regarding goods deliveries. Bilateral trade flows between the main European and Asian countries over the 1999 to 2008 period are used to estimate an augmented gravity model that includes various measures of piracy acts. We found robust evidence indicating that maritime piracy reduces the volume of trade; the effect of ten additional vessels hijacked being associated to an 11% decrease in exports. Consequently, the current cost of piracy in terms of international trade destruction is estimated at 24.5 billion dollars.

Bilateral Trade Flows and Income-Distribution Similarity

Inma Martinez-Zarzoso et al. — Thu, 02 Sep 2010 04:29:05 PDT

This paper accounts for non-homothetic preferences by specifically investigating the role of income per capita and income-distribution differences in the context of the gravity model of trade. A theoretically justified gravity model is estimated for disaggregated trade data using a sample of 104 exporters and 108 importers for 1980-2003 to achieve two main goals. First we are able to empirically test some of the theoretical predictions of Markusen (2010), namely that there is a positive dependence of trade on per capita income and that higher inequality increase trade of more sophisticated goods. Second, and in line with the Linder hypothesis, we hypothesized that a higher demands’ overlap implies a more similar demand structure and therefore more trade. We test this hypothesis with new measures of income-distribution similarity. National income distributions are used to calculate income similarity indices that measure how much each country pair overlaps in terms of income distribution and population. We find that per capita income is positively related to bilateral trade and that on average, a 10 percent increase in income-distribution similarities increases exports by almost 4 percent being this effect stronger for more sophisticated goods in comparison with more homogenous ones.

Economic integration and the two margins of trade: An application to the Euro-Mediterranean agreements

Sami Bensassi et al. — Fri, 13 Aug 2010 05:34:56 PDT

According to trade theory preferential trade agreements increase international trade through a reduction in artificial trade barriers. In recently developed models with imperfect competition and heterogeneous firms, lower trade costs increase bilateral trade through an increase in the number of exporting firms (the extensive margin of trade) and a rise in the mean value of individual shipments (the intensive margin of trade). In this paper, a decomposition of a structural gravity equation derived from Chaney’s (2008) model is presented. Using highly disaggregated export data for six countries (Algeria, Egypt, Jordan, Lebanon, Morocco and Tunisia) between 1995 and 2008, we estimate the impact of the recently signed trade agreements with the EU on both trade margins and we provide empirical evidence of the validity of the theoretical predictions.

CEECs Integration into Regional and Global Production Networks

Inma Martinez-Zarzoso et al. — Fri, 13 Aug 2010 05:14:18 PDT

We estimate a gravity model that incorporates the extensive margin of trade and accounts for firm heterogeneity to evaluate the effect of the EU-accession on CEECs trade in intermediates and final goods for the period 1999-2009. The importance of production networks is captured by including imports of intermediates as a determinant of a country’s exports of final goods. We find a positive and significant effect of the EU-accession on CEECs trade in intermediate and final goods. Hence, the elimination of “behind the border” trade barriers has a positive impact on increasing not only trade volumes but also trade varieties.

Competitiveness: A Comparison of China and Mexico

Felicitas Nowak-Lehman D. et al. — Thu, 18 Feb 2010 01:11:00 PST

Maritime Networks, Services Structure and Maritime Trade

Inma Martinez-Zarzoso et al. — Wed, 17 Feb 2010 04:26:48 PST

This paper aims at investigating the relationship between maritime trade and maritime transport costs at sectoral level. The costs and its effect on international trade will be estimated using highly disaggregated data of shipments from five Spanish ports to seventeen destinations. The paper focuses on the effect of maritime networks, services structure and port infrastructure variables on maritime transport costs. The relationship between transport costs and trade is then analysed by applying a gravity model for sectoral imports. We investigate the endogeneity of the trade and transport cost variables by estimating both equations by using instrumental variables methods. The main findings of this study should contribute significantly to explain the variability of maritime transport costs and to quantify the impact of maritime transport costs in maritime trade.

Aid and Trade – A Donor’s Perspective

Inma Martinez-Zarzoso et al. — Fri, 11 Dec 2009 06:21:42 PST

One reason donors provide foreign aid is to support their exports to aid-recipient countries. Time series data for Germany suggests an average return of between US$1.04–$1.50 for each US dollar of aid spent by Germany. Although this is well below previous estimates, the value is robust to different specifications and econometric approaches. Interestingly, we find strong evidence of crowding out between bilateral donors in the sense that bilateral aid from other EU members significantly reduces exports from Germany to the recipients. The evidence suggests that, in the long run, aid causes exports and not vice versa. We discuss the implications these findings might have for aid volumes and allocation.

Determinants of maritime transport costs - a panel data analysis

Inma Martinez-Zarzoso et al. — Fri, 11 Dec 2009 04:38:28 PST

This paper analyses the determinants of maritime transport costs for intra-Latin American trade over a period of 6 years (1999-2004). The data refer to yearly disaggregated (five-digit level Standard International Classification) containerised maritime trade flows on 277 trade routes. With this data-set, a transport costs equation is estimated using linear regression analysis in a panel data framework. The first contribution to the literature is to exploit the greater variability present in the data and to control for unobservable heterogeneous effects. The second is to investigate the role of distance as a determinant of international maritime transport costs in comparison to the location within the liner services network and the potential impact of being peripheral in the liner shipping network. Finally, the work analyses influence of open registries on the variability of maritime transport costs. To the authors’ knowledge, this has not been done previously. Three groups of explanatory variables are considered. Firstly, time variant variables: use of open registries and trade imbalance. Secondly, variables related to liner shipping network structures: number of liner services; shipping opportunities; deployed ships and deployed TEUs. Finally, product-related variables such as volume of shipment, value of product and special characteristics of the cargo (i.e. refrigerated cargo). The results allow the quantification of the effects of explanatory variables on international maritime transport costs and to compare the obtained elasticities with previous cross-section analyses. In particular, estimating the impact of the use of open registries on maritime transport cost is a new contribution in this field that could provide policy-makers with valuable information to be used in the implementation of economic policies.

Unit Values, Productivity, and Trade - Determinants of Spanish Export Strength

Inma Martinez-Zarzoso et al. — Thu, 20 Aug 2009 02:03:53 PDT

In this paper we assess the current relevance of different sources of international competitiveness. Relative prices, labor costs, and productivity are evaluated as determinants of a country’s international competitiveness at the industry level. Working with detailed data on unit values and with industry data on productivity, we empirically implement a MacDougall-type model for Spanish and French trade to Brazil, China, Japan, and the U.S.. The period under study is 1980 to 2001 and we distinguish in our analysis between homogenous, reference-priced, and differentiated goods. Our results indicate that cost competitiveness factors are only valid for explaining trade with developing countries while other factors are of importance for developed economies. Overall price competitiveness is of importance, but for differentiated goods, factors distinct from prices seem to determine export success.

EU-ACP ECONOMIC PARTNERSHIP AGREEMENTS

Inma Martinez-Zarzoso et al. — Thu, 20 Aug 2009 01:54:38 PDT

We estimate the welfare effects of the Economic Partnership Agreements between the EU and nine African countries. Our analysis is based on highly disaggregated data for trade and tariffs. We extend the literature in two principal ways: First, we estimate bilateral elasticities of import demand from the disaggregated data. Second, in place of simulating rather general scenarios we apply the recently negotiated tariff reduction rates to estimate the agreement’s welfare effects. Results indicate that Botswana, Cameroon, Mozambique, and Namibia will profit from the interim agreements, while the effects for Côte d’Ivoire, Ghana, Kenya, Tanzania, and Uganda are close to zero.

Trade as Aid: The Role of the EBA-Trade Preferences Regime in the Development Strategy

Inma Martinez-Zarzoso et al. — Thu, 20 Aug 2009 01:14:31 PDT

This study focuses primarily on trade preferences offered by the European Union (EU) and in particular on the Everything But Arms (EBA) trade preferences regime, which is targeted exclusively on least developed countries (LDCs). Using the gravity model, an estimation of the influence of the EBA preferences on exports from the ACP LDCs to the EU-15 is presented. The model is applied to the time period 1995 to 2005 for the ACP countries’ exports to the EU-15 and estimated with the help of different econometric techniques. The core questions of the investigation are two: First, to examine the influence of the EBA preferences on the ACP LDCs’ export performance and second to compare the impact of the EBA scheme with the one of official development assistance. In addition to their separate effects the combined impact of EBA and aid flows is also analysed. The main results show a very poor performance of the EBA regime. However, the combined effect of the EBA and aid on exports is positive, indicating that the development strategy of the developed countries, in this case of the EU, needs to include both sorts of assistance, aid and trade preferences.

Determinants of the dynamics of the European Union integration process: An ordered logit approach

Inma Martinez-Zarzoso et al. — Thu, 30 Jul 2009 03:51:34 PDT

This research has three main aims: firstly, to empirically analyse the determinants of different levels of integration by re-examining the evidence presented by Baier and Bergstrand (2004) in the JIE 64 (1); secondly, to analyse the importance of additional factors, in particular socio-political factors. Finally, to analyse the dynamics of the European Union integration process. The results show that although economic and geographical factors are the most important explanatory factors for the probability of regional integration agreement formation or enhancement, socio-political variables also contribute to explain the formation of regional integration agreements. Democracies and countries with a higher level of economic freedom are more likely to form or enhance RIAs.

Are Regional Trading Agreements Beneficial? Static and Dynamic Panel Gravity Models

Inma Martinez-Zarzoso et al. — Sun, 02 Nov 2008 23:44:33 PST

This paper evaluates the effects of preferential agreements on trade between trade group members and nonmembers using a static model and a dynamic gravity model. The gravity model is estimated using recent panel data techniques which account for the endogeneity of the integration effects and the existence of dynamic effects. We incorporate into the static model the time-varying, multilateral resistance terms to obtain unbiased estimates. In addition, we estimate a dynamic version of the gravity model using a number of GMM estimators. The results show that dynamics are significant and robust and that the new wave of regionalism in the 1990s has had larger positive effects on intra and extra-bloc trade on developed countries (EU and NAFTA) than on developing countries.

Does German Development Aid Promote German Exports?

Inma Martinez-Zarzoso et al. — Mon, 13 Oct 2008 00:20:23 PDT

This paper uses a static and dynamic gravity model of trade to investigate the link between German development aid and exports from Germany to the recipient countries. The findings indicate that in the long run German aid is associated with an increase in exports of goods that is larger than the aid flow, with a point estimate of 140 percent of the aid given. In addition, the evolution of the estimated coefficients over time shows an effect that is consistently positive but which oscillates over time. Interestingly, after a decrease in the nineties, the estimated coefficients of the effect of aid on trade show a steady increase in the period between 2001 and 2005. The paper distinguishes among recipient countries and finds that the return on aid measured by German exports is higher for aid to countries considered “strategic aid recipients” by the German government. We also find some evidence that aid given by other EU members reduces German exports.

The Effect of Trade Facilitation on Sectoral Trade

Inma Martinez-Zarzoso et al. — Mon, 29 Sep 2008 23:43:10 PDT

This paper aims to analyse the effect of trade facilitation on sectoral trade flows. We use data from the World Bank's Doing Business Database on the fees associated with completing the procedures to export or import goods in a country, on the number of documents needed and on the required time to complete all the administrative procedures to import and export. An augmented gravity equation is estimated for 13 exporters and 167 importers using a number of estimation techniques, namely OLS, PPML and the Harvey model. A common result is that trade flows increase by lowering transport costs and the number of days required to trade. The outcome supports multilateral initiatives, as that in the WTO, which encourages countries to assess their trade facilitation needs and priorities and to improve them. The measures adopted will not only benefit the country that improves trade facilitation, but also it's trading partners.

The Impact of Urbanization on CO2 Emissions: Evidence from Developing Countries

Inma Martinez-Zarzoso — Mon, 29 Sep 2008 23:43:07 PDT

This paper analyzes the impact of urbanization on CO2 emissions in developing countries. In this study we treat population as a predictor in the model, instead of assuming a unitary elasticity of emissions with respect to population growth. We contribute to the existing literature by examining the effect of urbanization, taking into account the presence of heterogeneity in the sample of countries and testing for the stability of the estimated elasticities over time. The sample covers the period from 1975 through 2005 for different groups of countries, classified according to their income levels. Our results show that, whereas the impact of population growth on emissions is above unity and only slightly different for upper, middle, and low-income countries, additional demographic variables, namely, urbanization, demonstrate a very different impact on emissions for low and lower-middle-income countries and upper-middle income countries. For the first set of countries, the elasticity, emission-urbanization, is higher than unity, whereas in the second group, the elasticity is 0.72, which is in accordance with the higher environmental impact observed in less developed regions. However, in upper-middle income countries and highly developed countries, the elasticity, emission-urbanization, is negative. The heterogeneous impact of urbanization on CO2 emissions should therefore be taken into account in future discussions of climate change policies.

IS DISTANCE A GOOD PROXY FOR TRANSPORT COSTS?: THE CASE OF COMPETING TRANSPORT MODES

Inma Martinez-Zarzoso et al. — Tue, 15 Jan 2008 04:56:35 PST

In this paper, we analyze separately the determinants of maritime transport and road transport costs for Spanish exports to Poland and Turkey (markets for which maritime and road transport are competing modes) and investigate the different effects of these costs on international trade. First, we investigate the extent to which maritime and road transport costs depend on different factors such as unit values, distances, transport conditions, service structures, and service quality. Second, we analyze the relative importance of road and maritime transport costs in comparison with distance measures as determinants of trade flows. The main results of this investigation indicate that real distance is not a good proxy for transportation costs and identify the central variables influencing road and maritime transportation costs: for both modes, transport conditions are strong determinants, whereas efficiency and service quality are more important for maritime transport costs, and geographical distance is more important for road transport. Road and maritime transport costs are central explanatory factors of exports and they seem to deter trade to a greater extent than road or maritime transit time when endogeneity is considered.

DO TRANSPORT COSTS HAVE A DIFFERENTIAL EFFECT ON TRADE AT THE SECTORAL LEVEL?

Inma Martinez-Zarzoso et al. — Fri, 30 Nov 2007 05:11:04 PST

This paper aims to analyse the determinants of transport costs and to investigate their influence in international trade with a sample of disaggregate trade data. First, we estimate a transport cost function using cross-section data on maritime and overland transport for four sectors: agro-industry, ceramic tiles, motor vehicle parts and accessories, and electrical and mechanical household appliances, obtained from interviews held with Spanish exporters and logistics operators in 2001. Second, we study the relationship between transport costs and trade and estimate the elasticity of trade with respect to transport costs for each sector. Important differences for high and low value-added sectors are observed. The trade equation estimation shows that higher transport costs significantly deter trade, especially in high value-added sectors.