The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

International Trade, Empirical Approaches to

  • Stephen J. Redding
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_2647

Abstract

This article reviews empirical research in international trade, which has undergone a resurgence since the mid-1980s. The article begins with traditional trade empirics, in which cross-country differences in opportunity costs of production (comparative advantage) are the basis for trade, before turning to new trade empirics, in which consumer love of variety and increasing returns to scale give rise to trade in similar goods between similar countries. More recent empirical research has emphasized heterogeneity across products within industries and across individual plants and firms, while other recent work has focused on the political economy of trade policy.

Keywords

Autarky Bilateral trade Campaign contributions Canada–US Free Trade Agreement Comparative advantage Constant elasticity of substitution (CES) preferences Elasticity of substitution Endowments paradox Factor content of trade Factor endowments Factor price equalization Factor price equalization theorem Factor service trade General Agreement on Tariffs and Trade (GATT) Gravity equation Heckscher–Ohlin trade theory Hecksher–Ohlin theorem International trade International trade and heterogenous firms Intra-industry trade Japan, economics in Location of production Missing trade Most Favored Nation (MFN) principle Multilateral trade liberalization Neoclassical trade theory New trade theory Non-neutral technology differences Opportunity costs of production Outsourcing Political competition Protection Reciprocity Regional and preferential trade agreements Ricardo, D. Rybczynski theorem Skill-biased technical change Stolper–Samuelson theorem Vertical specialization Wage heterogeneity World Trade Organization (WTO) 
This is a preview of subscription content, log in to check access

Bibliography

  1. Anderson, J., and E. van Wincoop. 2002. Gravity with gravitas: A solution to the border puzzle. American Economic Review 93: 170–192.CrossRefGoogle Scholar
  2. Bagwell, K., and R. Staiger. 1999. An economic theory of GATT. American Economic Review 89: 215–248.CrossRefGoogle Scholar
  3. Bagwell, K., and R. Staiger. 2001. Domestic policies, national sovereignty and international economic institutions. Quarterly Journal of Economics 116: 519–562.CrossRefGoogle Scholar
  4. Bartelsman, E., and M. Doms. 2000. Understanding productivity: Lessons from longitudinal microdata. Journal of Economic Literature 38: 569–594.CrossRefGoogle Scholar
  5. Bernard, A.B.., J. Eaton, and S.S. Kortum. 2003. Plants and productivity in international trade. American Economic Review 93: 1268–1290.CrossRefGoogle Scholar
  6. Bernard, A.B.., and J.B. Jensen. 1995. Exporters, jobs, and wages in US manufacturing: 1976–87. Brookings Papers on Economic Activity: Microeconomics 67–112.Google Scholar
  7. Bernard, A.B.., and J.B. Jensen. 1999. Exceptional exporter performance: cause, effect, or both? Journal of International Economics 47: 1–25.CrossRefGoogle Scholar
  8. Bernard, A.B.., S.J. Redding, and P.K. Schott. 2005. Factor price equality and the economies of the United States. Discussion Paper No. 5111. London: CEPR.Google Scholar
  9. Bernhofen, D., and J. Brown. 2004. A direct test of the theory of comparative advantage: The case of Japan. Journal of Political Economy 112: 48–67.CrossRefGoogle Scholar
  10. Bernhofen, D., and J. Brown. 2005. An empirical assessment of the comparative advantage gains from trade: Evidence from Japan. American Economic Review 95: 208–225.CrossRefGoogle Scholar
  11. Bowen, H., E. Leamer, and L. Sveikauskas. 1987. Multicountry, multifactor tests of the factor abundance theory. American Economic Review 77: 791–809.Google Scholar
  12. Broda, C., and D.E. Weinstein. 2006. Globalization and the gains from variety. Quarterly Journal of Economics 121: 541–586.CrossRefGoogle Scholar
  13. Clerides, S., S. Lach, and J. Tybout. 1998. Is learning by exporting important? Micro-dynamic evidence from Columbia, Mexico and Morocco. Quarterly Journal of Economics 113: 903–947.CrossRefGoogle Scholar
  14. Davis, D. 1997. Critical evidence on comparative advantage? North–north trade in a multilateral world. Journal of Political Economy 105: 1051–1060.CrossRefGoogle Scholar
  15. Davis, S., J. Haltiwanger, and S. Schuh. 1998. Job creation and destruction. Cambridge, MA: MIT Press.Google Scholar
  16. Davis, D., and D. Weinstein. 1999. Economic geography and regional production structure: An empirical investigation. European Economic Review 43: 379–407.CrossRefGoogle Scholar
  17. Davis, D., and D. Weinstein. 2001. An account of global factor trade. American Economic Review 91: 1423–1453.CrossRefGoogle Scholar
  18. Davis, D., and D. Weinstein. 2003. Market access, economic geography, and comparative advantage: An empirical assessment. Journal of International Economics 59: 1–23.CrossRefGoogle Scholar
  19. Davis, D., D. Weinstein, S. Bradford, and K. Shimpo. 1997. Using international and Japanese regional data to determine when the factor abundance theory of trade works. American Economic Review 87: 421–446.Google Scholar
  20. Deardorff, A.V. 1998. Determinants of bilateral trade: does gravity work in a neoclassical world? In The regionalization of the world economy, ed. J. Frankel. Chicago: NBER and Chicago University Press.Google Scholar
  21. Evenett, S., and W. Keller. 2002. On theories explaining the success of the gravity equation. Journal of Political Economy 110: 281–316.CrossRefGoogle Scholar
  22. Feenstra, R.C. 1994. New product varieties and the measurement of international prices. American Economic Review 84: 157–177.Google Scholar
  23. Feenstra, R. 2000. The impact of international trade on wages. Chicago: NBER and University of Chicago Press.CrossRefGoogle Scholar
  24. Feenstra, R., and G. Hanson. 1999. The impact of outsourcing and high-technology capital on wages: Estimates for the United States, 1979–80. Quarterly Journal of Economics 114: 907–940.CrossRefGoogle Scholar
  25. Feenstra, R., J. Markusen, and A. Rose. 2001. Understanding the home market effect and the gravity equation. Canadian Journal of Economics 34: 430–447.CrossRefGoogle Scholar
  26. Feenstra, R.C., J. Romalis, and P.K. Schott. 2002. U.S. imports, exports, and tariff data, 1989–2001. Working Paper No. 9387. Cambridge, MA: NBER.Google Scholar
  27. Feenstra, R.C., R.E. Lipsey, H. Deng, A.C. Ma, and H. Mo. 2005. World trade flows: 1962–2000. Working Paper No. 11040. Cambridge, MA: NBER.Google Scholar
  28. Gandal, N., G. Hanson, and M. Slaughter. 2004. Technology, trade, and adjustment to immigration in Israel. European Economic Review 48: 403–428.CrossRefGoogle Scholar
  29. Gawande, K., and P. Krishna. 2003. The political economy of trade policy: Empirical approaches. In Handbook of international trade, ed. E.K. Choi and J. Harrigan. Oxford: Basil Blackwell.Google Scholar
  30. Goldberg, P., and G. Maggi. 1999. Protection for sale: An empirical investigation. American Economic Review 89: 1135–1155.CrossRefGoogle Scholar
  31. Grossman, G.M., and E. Helpman. 1994. Protection for sale. American Economic Review 84: 833–850.Google Scholar
  32. Grossman, G.M., and E. Helpman. 1995. The politics of free trade agreements. American Economic Review 85: 667–690.Google Scholar
  33. Grubel, H., and P. Lloyd. 1975. Intra-industry trade: The theory and measurement of international trade in differentiated products. London: Macmillan.Google Scholar
  34. Hanson, G., and M. Slaughter. 2002. Labor market adjustment in open economies: Evidence from U.S. states. Journal of International Economics 57: 3–29.CrossRefGoogle Scholar
  35. Hanson, G., and C. Xiang. 2004. The home market effect and bilateral trade patterns. American Economic Review 94: 1109–1129.CrossRefGoogle Scholar
  36. Harrigan, J. 1995. Factor endowments and the international location of production: Econometric evidence for the OECD, 1970–85. Journal of International Economics 39: 123–141.CrossRefGoogle Scholar
  37. Harrigan, J. 1997. Technology, factor supplies, and international specialisation: Estimating the neoclassical model. American Economic Review 87: 475–494.Google Scholar
  38. Heckscher, E.F. 1919. The effect of foreign trade on the distribution of income. Economisk Tidsckrift. In HeckscherOhlin trade theory, ed. E.F. Heckscher, and B. Ohlin. Cambridge, MA: MIT Press, 1991.Google Scholar
  39. Helpman, E. 1987. Imperfect competition and international trade: Evidence from fourteen industrial countries. Journal of the Japanese and International Economies 1: 62–81.CrossRefGoogle Scholar
  40. Helpman, E., M. Melitz, and Y. Rubinstein. 2006. Trading partners and trading volumes. Mimeo: Harvard University.Google Scholar
  41. Hillberry, R.. and D. Hummels. 2005. Trade responses to geographic frictions: a decomposition using micro-data. Working Paper No. 11339. Cambridge, MA: NBER.Google Scholar
  42. Hummels, D., J. Ishii, and K.-M. Yi. 2001. The nature and growth of vertical specialization in world trade. Journal of International Economics 54: 75–96.CrossRefGoogle Scholar
  43. Hummels, D., and P. Klenow. 2005. The variety and quality of a nation’s exports. American Economic Review 95: 704–723.CrossRefGoogle Scholar
  44. Hummels, D., and J. Levinsohn. 1995. Monopolistic competition and international trade: Reconsidering the evidence. Quarterly Journal of Economics 110: 799–836.CrossRefGoogle Scholar
  45. Kehoe, T., and K. Ruhl. 2004. How important is the new goods margin in international trade? Working Paper, Federal Reserve Bank of Minneapolis.Google Scholar
  46. Krishna, P. 1998. Regionalism and multilateralism: A political economy approach. Quarterly Journal of Economics 113: 227–251.CrossRefGoogle Scholar
  47. Krugman, P.R. 1979. Increasing returns, monopolistic competition, and international trade. Journal of International Economics 9: 469–479.CrossRefGoogle Scholar
  48. Krugman, P.R. 1980. Scale economies, product differentiation, and the pattern of trade. American Economic Review 70: 950–959.Google Scholar
  49. Krugman, P.R. 2000. Technology, trade and factor prices. Journal of International Economics 50: 51–72.CrossRefGoogle Scholar
  50. Leamer, E. 1980. The Leontief paradox, reconsidered. Journal of Political Economy 88: 495–503.CrossRefGoogle Scholar
  51. Leamer, E. 1984. Sources of international comparative advantage. Cambridge, MA: MIT Press.Google Scholar
  52. Leamer, E. 1998. In search of Stolper–Samuelson linkages between international trade and lower wages. In Imports, exports, and the American worker, ed. S. Collins. Washington, DC: Brookings Institution Press.Google Scholar
  53. Leontief, W. 1953. Domestic production and foreign trade: The American capital position re-examined. Proceedings of the American Philosophical Society 97: 332–349.Google Scholar
  54. Limao, N. 2006. Preferential trade agreements as stumbling blocks for multilateral trade liberalization: Evidence for the United States. American Economic Review 96: 896–914.CrossRefGoogle Scholar
  55. Linder, S.B. 1961. An essay on trade and transformation. New York: Wiley.Google Scholar
  56. Linnemann, H. 1966. An econometric study of international trade flows. Amsterdam: North-Holland.Google Scholar
  57. McCallum, J. 1995. National borders matter: Canada–US regional trade patterns. American Economic Review 85: 615–623.Google Scholar
  58. MacDougall, G.D.A. 1951. British and American exports: A study suggested by the theory of comparative costs. Economic Journal 61: 697–724.CrossRefGoogle Scholar
  59. McLaren, J. 2002. A theory of insidious regionalism. Quarterly Journal of Economics 117: 571–608.CrossRefGoogle Scholar
  60. Melitz, M.J. 2003. The impact of trade on intra-industry reallocations and aggregate industry productivity. Econometrica 71: 1695–1725.CrossRefGoogle Scholar
  61. Ohlin, B. 1924. The theory of trade. In HeckscherOhlin trade theory, ed. E.F. Heckscher, and B. Ohlin. Cambridge, MA: MIT Press, 1991.Google Scholar
  62. Pavcnik, N. 2002. Trade liberalization, exit, and productivity improvement: Evidence from Chilean plants. Review of Economic Studies 69: 245–276.CrossRefGoogle Scholar
  63. Ricardo, D. 1817. The principles of political economy and taxation. London: John Murray.Google Scholar
  64. Roberts, M.J., and J. Tybout. 1997. The decision to export in Colombia: An empirical model of entry with sunk costs. American Economic Review 87: 545–564.Google Scholar
  65. Schott, P.K. 2003. One size fits all? Heckscher–Ohlin specialization in global production. American Economic Review 93: 686–708.CrossRefGoogle Scholar
  66. Schott, P.K. 2004. Across-product versus within-product specialization in international trade. Quarterly Journal of Economics 119: 647–678.CrossRefGoogle Scholar
  67. Tinbergen, J. 1962. Shaping the world economy: Suggestions for an international economic policy. New York: Twentieth Century Fund.Google Scholar
  68. Trefler, D. 1993. International factor price differences: Leontief was right! Journal of Political Economy 101: 961–987.CrossRefGoogle Scholar
  69. Trefler, D. 1995. The case of the missing trade and other mysteries. American Economic Review 85: 1029–1046.Google Scholar
  70. Trefler, D. 2004. The long and short of the Canada–U.S. Free trade agreement. American Economic Review 94: 870–895.CrossRefGoogle Scholar
  71. Yi, K. 2003. Can vertical specialization explain the growth of world trade? Journal of Political Economy 111: 52–102.CrossRefGoogle Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Stephen J. Redding
    • 1
  1. 1.