Author Archives: jdingel

Pierce & Schott: A Concordance Between HTS & SIC/NAICS

This paper looks like it may be helpful to applied empirical researchers:

This paper provides and describes concordances between the ten-digit Harmonized System (HS) categories used to classify products in U.S. international trade and the four-digit SIC and six-digit NAICS industries that cover the years 1989 to 2006. We also provide concordances between ten-digit HS codes and the five-digit SIC and seven-digit NAICS product classes used to classify U.S. manufacturing production. Finally, we briefly describe how these concordances might be applied in current empirical international trade research.

This week’s WTO ministerial

The WTO’s Seventh Ministerial Conference starts on Monday. Demonstrations, arson, and arrests started Saturday.

In his report to the General Council on 17 November 2009, Pascal Lamy said that while the upcoming WTO Ministerial Conference would not be a negotiating session, it would be “a platform for ministers to review the functioning of this house”, including the Doha Round, and an occasion “to send a number of strong signals to the world with respect to the entire WTO waterfront of issues — from monitoring and surveillance to disputes, accessions, Aid for Trade, technical assistance and international governance”. [WTO]

Police fired tear gas and rubber bullets Saturday to separate violent demonstrators from a protest of a meeting of top world trade officials, but the hooded “black bloc” activists were able to cause damage before 14 were arrested, spokesmen said. The protesters set fire to at least four cars, broke shop windows and committed other acts of violence Saturday, police spokesman Patrick Puhl said. [AP]

Bhagwati and Blinder: Offshoring of American Jobs

Jagdish Bhagwati and Alan Blinder discussed “Offshoring of American Jobs: What Response from U.S. Economic Policy?” at a Harvard symposium in 2007, with comments from Richard B. Freeman, Doug Irwin, Lori Kletzer and Robert Z. Lawrence. Those papers now appears as a book edited by Benjamin Friedman. Bhagwati and Blinder discussed offshoring last week on Bloomberg Radio (mp3).

Richard Cooper summarizes:

This stimulating collection, like the Harvard symposium that led to it, is built around Blinder’s strong and much-debated thesis that within two decades, 30-40 million U.S. jobs, mainly those in the services industries that require no direct contact between the provider and the customer, could be sent offshore — especially to India, where wages are low and English-speaking university graduates are plenty. Blinder argues that the United States should adapt its educational and labor policies to prepare for this possibility. Bhagwati, for his part, points out that offshoring is just one more dimension of an open trading system, which will produce higher living standards for Americans — and Indians. The contributors observe that this possibility will be similar in proportion to the adjustments that the U.S. economy has already made in past decades, particularly to the decline in manufacturing employment; that for a variety of reasons, not nearly so many jobs will move offshore; and that other countries will offshore some of their jobs to the United States.

The latter comment echoes Richard Baldwin’s argument that offshoring is more likely to be a two-way, intraindustry exchange than a one-way departure of jobs.

Whither single undertaking trade negotiations?

UCL’s WTO Scholars Forum raises an interesting question: Is the single undertaking model dead?

GATT and WTO negotiations for trade liberalisation have always aimed at comprehensive packages containing something for everyone. But in 1994 the Uruguay Round had to leave several topics over to be settled later. It took 9/11 and the financial slump to launch the already watered-down Doha Round which was further starved of substance and ambition in 2004 (and later). Despite this lack of ambition, the current Doha Agenda negotiations have still fractured, and bilateral and regional trade deals are proliferating.  Does this mean that all-encompassing global trade negotiations have become impossible? And what could emerge in their place?

The event is the evening of December 8 if you’re in London.

Giovanni Peri: “The Effect of Immigration on Productivity: Evidence from US States”

NBER WP 15507:

Using the large variation in the inflow of immigrants across US states we analyze the impact of immigration on state employment, average hours worked, physical capital accumulation and, most importantly, total factor productivity and its skill bias. We use the location of a state relative to the Mexican border and to the main ports of entry, as well as the existence of communities of immigrants before 1960, as instruments. We find no evidence that immigrants crowded-out employment and hours worked by natives. At the same time we find robust evidence that they increased total factor productivity, on the one hand, while they decreased capital intensity and the skill-bias of production technologies, on the other. These results are robust to controlling for several other determinants of productivity that may vary with geography such as R&D spending, computer adoption, international competition in the form of exports and sector composition. Our results suggest that immigrants promoted efficient task specialization, thus increasing TFP and, at the same time, promoted the adoption of unskilled-biased technology as the theory of directed technologial change would predict. Combining these effects, an increase in employment in a US state of 1% due to immigrants produced an increase in income per worker of 0.5% in that state

Amiti & Khandelwal: “Competition and Quality Upgrading”

NBER WP 15503:

How does competition affect innovation? We address this question by using a novel approach to measure quality — an important component of innovation — using highly disaggregated product data for a large set of countries.  Constructing an internationally comparable measure of quality enables us to separate the effect of reducing import tariffs, our measure of competition, on quality upgrading from other country level differences in competitive environments, and product demand shocks.  We base our analysis on recent theoretical frameworks that predict that the effect of competition on innovation depends on firms’ proximity to the world technological frontier.  As predicted by theory, we find that lower tariffs are associated with quality upgrading for products close to the world frontier; whereas lower tariffs discourage quality upgrading for varieties distant from the frontier.

Measuring distance

Neat:

The CEPII has built and made available two datasets providing useful data for empirical economic research including geographical elements and variables. A common use of these files is the estimation by trade economists of gravity equations describing bilateral patterns of trade flows…

Distance calculation requires information on geographical coordinates of at least one city in each of the country. The simplest measure of geodesic distance considers only the main city of the country, reported here with the English and French names, latitude and longitude. In most cases, the main city is the capital of the country. However, for 13 out of the 225 countries, we considered that the capital was not populated enough to represent the “economic center” of the country. For these countries, we propose the distances data calculated for both the capital city and the economic center…

There are two kinds of distance measures: simple distances, for which only one city is necessary to calculate international distances; and weighted distances, for which we need data on the principal cities in each country. The simple distances are calculated following the great circle formula, which uses latitudes and longitudes of the most important city (in terms of population) or of its official capital. These two variables incorporate internal distances based on areas provided in the geo_cepii.xls file. The two weighted distance measures use city-level data to assess the geographic distribution of population inside each nation. The idea is to calculate distance between two countries based on bilateral distances between the largest cities of those two countries, those inter-city distances being weighted by the share of the city in the overall country’s population.