Bedassa Tadesse

Social capital and self-rated health: Results from the US 2006 social capital survey of one community

Using data from the 2006 Social Capital Community Survey in Duluth, Minnesota, and Superior, Wisconsin, USA, we investigate associations between individual social capital measures (attitudes on trust, formal group involvement, informal socializing, organized group interaction, social support and volunteer activity) and self-rated health after controlling for individual and economic characteristics. In particular, we address issues of social capital as an endogenous determinant of self-reported health using instrumental variables probit estimation. After accounting for the endogeneity of these various measures of individual social capital, we find that individual social capital is a significant predictor of self-rated health.

Cultural distance as a determinant of bilateral trade flows: Do immigrants counter the effect of cultural differences?

We introduce ‘cultural distance’ as a measure of the degree to which shared norms and values in one country differ from those in another country, and employ a modified gravity specification to examine whether such cultural differences affect the volume of trade flows. Employing data for US state-level exports to the 75 trading partners for which measures of cultural distance can be constructed, we find that greater cultural differences between the United States and a trading partner reduces state-level exports to that country. This result holds for aggregate exports, cultural and noncultural products exports as well, but with significantly different magnitudes. Immigrants are found to exert a pro-export effect that partially offsets the trade-inhibiting effects of cultural distance.

Immigration Policy, Cultural Pluralism and Trade: Evidence from the White Australia Policy

Abstract. Examining data for Australia and 101 trading partners that span the years 1989–2000, we find immigrants from nations afforded preference under the White Australia policy exert greater proportional influences on Australian imports from their home countries compared to immigrants from nations not privy to such preference. Immigrants from this latter group of countries influence Australian exports to their home countries proportionally more than do immigrants from the former group. We also find immigrant‐trade links vary across disaggregated measures of trade. The results suggest that cultural diversity, affected here by immigration policy, is relevant to a nations trade patterns.

Cultural Distance and the US Immigrant-Trade Link

Using data from the World and the European Values Surveys, we calculate cultural distances between the US and 54 immigrant home countries and examine the influences of cultural distance and immigrant populations on US imports from and exports to immigrants home countries during the years 1997-2004. Our study indicates that, for both US imports and exports, the trade-enhancing effect of immigrants partially offsets the trade-inhibiting effect of cultural distance. Further, decomposing our measure of cultural distance into two component dimensions and revisiting the immigranttrade relationship, we find significant variation in the extent to which immigrants counter the trade-inhibiting influences of the underlying dimensions of culture for both US imports and exports. Our findings have the implication that by countering the trade-inhibiting influences of cultural differences between their home and host countries, immigrants exert pro-development effects.

Research Note: Tourism and Economic Growth in Latin American Countries – Further Empirical Evidence:

Using panel data that span from 1990 to 2005, the authors investigate the impact of tourism on the economic growth of 18 heterogeneous Latin American countries within the framework of the conventional neoclassical growth model. Results from the empirical models show that revenues from the tourism industry contribute positively to both the current level and the growth rate of the per capita GDP of the countries in the region, as do investments in physical and human capital. The findings imply that Latin American economies may enhance their economic growth in the short run by strengthening their tourism industries strategically, while not neglecting the traditional sources of economic growth.

Host market characteristics, FDI, and the FDI – trade relationship

This paper empirically examines how a host nations market characteristics, particularly its market maturity and role as an export platform, affect the amount of inward FDI it receives and its FDI – bilateral trade relationship with the FDI source. For the period 1989 – 1999, using Japanese outward FDI into 85 geographically and developmentally diverse countries, we find a positive and significant relationship between FDI inflows and the hosts market maturity levels. However, the FDI – trade interaction between the host and the FDI source appears to vary inversely with the host countrys market maturity level. In addition, after controlling for the hosts market maturity, we find that the nature of the hosts ‘export platform’ status also significantly impacts both inward FDI flows and the FDI – trade relationship.

The impact of foreign direct investment on horizontal export diversification: empirical evidence

Using data on stocks of Foreign Direct Investment (FDI) from 131 countries spanning the years 1984 to 2004 and the number of products exported by each country, we examine the effect of FDI on horizontal export diversification. To quantify the effects, we utilize parametric (quantile) and semi-parametric econometric methods. Results from both approaches indicate that, in general, an increase in the stock of FDI enhances the horizontal diversification of exports. The actual magnitude of the effect however, varies greatly across countries depending on the existing stock of FDI and stage of diversification, giving rise to an almost inverted U-shaped relationship. A further look at our results provides useful insights on the circumstances under which FDI may aid or inhibit the horizontal expansion of exports.

The effects of refugee and non-refugee immigrants on US trade with their home countries

Employing data on US immigrants and trade with 59 home countries for the years 1996–2001, we compare the extent to which refugee and non-refugee immigrants affect US trade with their home countries and provide the first evidence of variation in the US immigrant–trade relationship across immigrant types. We also consider the abilities of refugee and non-refugee immigrants to offset the trade-inhibiting influence of cultural distance. Our results show that while immigrants, in general, exert positive influences on US imports from – and exports to – their home countries, the influence of refugee immigrants is quite minimal when compared with that of non-refugee immigrants. For both immigrant types, however, evidence supporting the notion that immigrants act to offset cultural distance is observed. To conceptualize the economic meaning of our results, we provide estimates of the extent to which each type of immigrants offset transport costs.

Do African Immigrants Enhance Their Home Nations' Trade With Their Hosts?

Employing data on the immigrant stocks of 43 African home countries who reside in 110 host countries and on trade flows between these countries during the year 2005, we examine whether African immigrants exert positive effects on their home countries’ trade with the typical host country. Estimates from Tobit regression models indicate a one percent increase in the number of African immigrants in a given host country increases that country’s exports to and imports from the typical home country by 0.132 percent and 0.259 percent, respectively. Further evaluation of these effects from the perspective of each African home country reveals that, in several instances, immigrants do not exert positive and significant influences on trade flows. The considerable variation in the presence of pro-trade influences and the dissimilarity of estimated significant effects suggests that highly divergent immigration and trade structures among African countries may affect whether African immigrants exert pro-trade influences.

Volatility in Exchange Rate Components and the Volume of International Trade

By decomposing the changes in the real exchange rate series into fundamental and transitory components (market microstructure and stochastic element) and modeling the volatility in each via a GARCH process, this paper examines how volatility in exchange rate affects the volume of aggregate and disaggregate US trade with Canada, Germany, and Hong Kong during the 1989–2002 period. The results indicate significantly different impacts of volatility due to the fundamental and transitory components of the exchange rate series on US bilateral trade. While the findings suggest heterogeneous responses of traders to volatilities arising from different components of the real exchange rate, the impact of the volatility due to the fundamental component is also found to vary across commodities, implying disparities in the inter- and intra-trading arrangements made by traders of different goods in counteracting foreign exchange risk arising from changes in the economic fundamentals.