TRADE COSTS AND TRADE COMPOSITION

In this paper, we investigate whether countries' trade costs act like other national endowments by affecting the composition of countries' exports. Using an econometric approach that controls for endogeneity by accounting for potentially relevant omitted variables, we find strong evidence for a sample of 37 industrialized and transition countries that national trade costs systematically affect the composition of trade and can be viewed therefore as a source of comparative advantage. Industries located in countries with low trade costs capture significantly higher shares of world exports, where this effect is stronger in trade cost intensive industries. (JEL F11, F14)     

TRADE OVERLAP AND INTRA-INDUSTRY TRADE

Theorizing about and empirically measuring "intraindustry trade" is pointless if "factor proportions" vary more within than among "industries." Available data show this to be the case.     

TRADE ADJUSTMENT,POLITICAL PRESSURE,AND TRADE PROTECTION PATTERNS

This paper introduces trade adjustment considerations as active determinants of trade policy. Using novel U.S. data sets, I show that, despite their small monetary value, trade‐induced unemployment and trade‐adjustment costs can incite an incumbent politician to grant protection to an unorganized industry, even in the presence of political pressure by organized sectors. This finding complements the theoretical predictions from Grossman and Helpman (American Economic Review, 84, 1994, 833–50) who argue that the government should protect organized industries but should subsidize imports in unorganized sectors. (JEL D73, F13, F14, F16, J68)     

RACIAL DIFFERENCES IN ACCESS TO HIERARCHICAL AUTHORITY

Using national data from the General Social Surveys, I examined race differences in the magnitude of the black-white gap among men in the odds of gaining access to positions of hierarchical authority at work and possible changes in this gap over the period 1972–1994. A test of William Julius Wilson's (1978) thesis of "the declining significance of race'and human capital/structural explanations for racial differences in access to hierarchical authority show that (1) blacks are less likely to be in the highest levels of job authority net of human capital, occupational location, family status, and region of residence, but there are fewer racial differences in access to lower positions of authority, and (2) blacks receive a lower authority return to their levels of education compared to whites. However, separate analyses based on subsamples of men living and working in large and small cities suggest that the racial gap in access to high authority and in the amount of authority returns to education is present more so among men living in large cities than small cities; but the racial gap in men's access to positions of high authority in small cities increased over the twenty-two-year period covered by the data. I discuss the implications of these findings for the persistent role of race in determining the life chances of black and white men.     

FOREIGN INVESTMENT AND TRADE DEPENDENCE

This article explores the relationship between foreign capital investment and trade dependence in less developed economies. Dependency and world system theorists have argued that foreign investment from the advanced capitalist states promotes export and import dependent forms of development. Using cross-national data for 65 less developed nations between 1960 and 1977, the analysis supports this general claim. Total direct foreign investment has a significant positive impact on the measures of export, import and total trade dependence. However, when the total foreign investment measure is disaggregated by sectoral destination (agriculture, manufacturing, petroleum/extraction) only investment in petroleum/extraction has the expected effect on trade dependence. This finding suggests that a large part of the effect of foreign investment may be due to the structuring influence of investment in mineral/extractive forms of production.     

THE THEORY OF INTERSTELLAR TRADE

This article extends interplanetary trade theory to an interstellar setting. It is chiefly concerned with the following question: how should interest charges on goods in transit be computed when the goods travel at close to the speed of light? This is a problem because the time taken in transit will appear less to an observer traveling with the goods than to a stationary observer. A solution is derived from economic theory, and two useless but true theorems are proved. (JEL F10, F30)     

FOREIGN TRADE AND DOMESTIC COMPETITION

This paper contains estimates of the determinants of the commodity composition of U. S. trade flows and of price-cost margins in U. S. domestic manufacturing in a simultaneous context. Above-competitive profits in U. S. manufacturing appear to provide a powerful incentive to import competition. These imports, in turn, provide a check on the ability of domestic firms to earn monopoly rents. The estimates indicate that failure to account for imports leads to a substantial underestimation of the impact of market structure on price-cost margins. The linkages between exports and domestic market conditions appear to be of second-order importance.     

THE WELFARE IMPACT OF TRADE LIBERALIZATION

This paper analyzes the distributional welfare impact of trade liberalization reforms on heterogeneous households. We develop a static applied general equilibrium model, and using a Social Accounting Matrix and Household Expenditure Survey, we calibrate it to match Slovenian data. We simulate the case of Slovenia joining the EU and quantify its welfare impact on households that differ in terms of age, income, and education. Additionally, we compare this benchmark case with two alternative scenarios: (1) a free trade agreement between Slovenia and the EU and (2) a custom union arrangement where tariff revenues are rebated proportionally to the households. We find that while trade liberalization leads to falling consumer prices, increased production in the export sectors, and aggregate welfare gains, the differentiated welfare impacts across heterogeneous households vary in their degrees. (JEL D58, F14, F15)     

COTTON IN A FREE TRADE WORLD

Trade liberalizing reform in the world cotton market would increase world cotton traded an average 2.69% over 5 yr and increase world cotton prices to an average 10.5%. A partial equilibrium model was used to estimate the effects of removing global domestic subsidies and border tariffs for cotton. Trade flows in international markets would be affected as U.S. market share of world cotton exports decline, net cotton-importing countries with minimum domestic and trade distortions import less because of higher cotton prices, and net cotton-importing countries that subsidize domestic production and/or impose border tariffs significantly increase their imports. ( JEL F17, F42, F47, O2)     

TRADE LIBERALIZATION AND CORPORATE INCOME TAX AVOIDANCE

We identify the effect of trade liberalization on corporate income tax avoidance in a sample of Chinese manufacturing firms, taking advantage of China's entry into the World Trade Organization (WTO). We find that firms engage in more tax avoidance in industries with larger tariff reductions. Further analysis shows that firms with a lack of cash or a high demand for cash before WTO entry tend to engage in more tax avoidance after WTO entry. Our study also provides evidence that manipulating costs is one way that firms avoid corporate income tax. (JEL D22, F61, F63, H26)