Gianluca Orefice

Deep Integration and Production Networks: An Empirical Analysis

In this paper, the two way relationship between deep integration and production networks trade is investigated. Deep integration is captured by a set of indices constructed in terms of policy areas covered in preferential trade agreements. An augmented gravity equation is estimated to investigate the impact of deep integration on production networks. The results show that on average, signing deeper agreements increases production networks trade between member countries by almost 35 percentage points. In addition, the impact of deep integration is higher for trade in automobile parts and information and technology products compared with textiles products. To analyse whether higher levels of network trade increase the likelihood of signing deeper agreements the literature on the determinants of preferential trade agreements is followed. The estimation results show that, after taking into account other PTAs determinants, a ten per cent increase in the share of production network trade over total trade increases the depth of an agreement by approximately 6 percentage points. In addition, the probability of signing deeper agreements is higher for country pairs involved in North-South production sharing and for countries belonging to the Asia region.

Product Standards and Margins of Trade: Firm Level Evidence

This paper analyses the trade effects of restrictive product standards on the margins of trade for a large panel of French firms. To focus on restrictive product standards only, we use a new database compiling the list of measures that have been raised as concerns in dedicated committees of the WTO. We restrict our analysis to the subset of Sanitary and Phyto-Sanitary (SPS) regulatory measures and analyse the effects of product standards on three variables: (i) probability to export and to exit the export market (firm-product extensive margins), (ii) value exported (firm-product intensive margin) and (iii) export prices. In particular we study whether firms size, market shares and export orientation modify the effect of SPS measures. We find that SPS measures discourage exports. We also find a negative effect of SPS imposition on the intensive margins of trade. Finally, the negative effects of SPS measures on the extensive and intensive margins of trade are attenuated for big firms.

Non-Tariff Measures, Specific Trade Concerns and Tariff Reduction

This paper studies the determinants of the recent proliferation of Specific Trade Concerns raised at the WTO on non‐tariff trade measures (NTMs), with a focus on sanitary and phytosanitary (SPS) and technical barriers to trade (TBTs). Even though NTMs are imposed de jure to protect consumers from unhealthy products, they increase trade costs de facto. So, when tariff protection lowers, NTMs become effective barriers to trade and the exporting countries can complain at the dedicated committee at the WTO (STCs). Therefore, we study whether STCs are raised by exporting countries as a consequence of tariff reductions in importing countries, that is when non‐tariff measures become barriers to trade. Using a recent database on STCs over the period 1996–2010, we find empirical evidence that SPS and TBT concerns are raised by exporting country as a consequence of importers tariff cut.

Offshoring, migrants and native workers: The optimal choice under asymmetric information

This paper presents a theoretical model of the optimal choice for firms between offshoring and hiring immigrant workers, in conditions of asymmetric information about their ability and effort in production (symmetric information is assumed for home born workers). When a domestic firm hires an immigrant it has no knowledge of the workers ability; when the firm goes abroad it uses local agents to obtain additional information about workers, allowing enforceable contracts. I show that it is optimal for firms to produce low quality products by offshoring production abroad and that high quality products will be produced using native workers, while intermediate quality level products are more likely to be produced at home using foreign born workers.

Exporting Creative and Cultural Products: Birthplace Diversity Matters!

This paper analyses the effect of birthplace diversity on exports of creative and cultural goods, for 19 OECD countries, over the period 1990–2010. By matching UNESCOs creative and cultural exports classification to trade and migration data, we find a strong positive effect of birthplace diversity on the export of creative products. In particular, a 10% increase in the birthplace diversity index implies a 4% increase in creative goods exports. These results are robust across several specifications and shed light on a potential new channel through which migrants can contribute to the host countrys export performance. It is interesting to note that only diversity of secondary and tertiary educated immigrants contributes to an increase in exports of creative and cultural goods. An instrumental variables approach addresses the potential endogeneity problems and confirms our results.