Jørgen Ulff-Møller Nielsen

Tests of the empirical classification of horizontal and vertical intra-industry trade

Tests of the Empirical Classification of Horizontal and Vertical IntraIndustry Trade. — Using longitudinal data this paper shows the separation of international trade in (a) inter-industry trade, (b) horizontal intra-industry trade, and (c) vertical intra-industry trade used in the empirical trade literature to be non-stable at the individual product level. The high level of vertical intra-industry trade mentioned in the empirical literature probably covers up many products shifting between e.g. vertical and horizontal intra-industry trade. The paper therefore questions the work of the last decade in the measurement of intra-industry trade.

Price-quality competition in the exports of the Central and Eastern European Countries

In the decade since the fall of the Berlin Wall the number of CEEC products able to compete in export markets has steadily increased. The quality level of these products still lags substantially behind that of EU products, however. The quality level of new CEEC products coming into the market is, in fact, lower than that of older surviving products, indicating that the CEEC countries are increasingly specialising in price-sensitive sectors. The following article uses the concept of unit value to analyse the changes in the price-quality competitiveness of CEEC exports.

The EU public procurement regime— Does it work?

Has the Single Market for public procurement had the expected effects after six years in progress? The following article attempts to answer this question by first presenting alternative theoretical approaches to analysing the EU liberalisation of the public procurement market and then confronting these with the result of an empirical analysis.

The export intensity of foreign affiliates in transition economies - the importance of the organization of production

Using a unique database containing trade and industry variables of foreign-owned companies in the Polish manufacturing industry for the years 1993-2002, we investigate the relationship between the organizational structure of multinational enterprises (MNEs) in Poland and the export structure of their affiliates. We find that labour intensity and foreign control are the main explanatory variables for the export intensity of the affiliates. Given the overall rise in export intensity over the period of investigation, our findings suggest that export-platform FDI has become a more important mode of organization for multinational enterprises as Poland has evolved into a relatively stable economic environment where MNEs feel comfortable basing their regional operations. Copyright (c) 2007 The Authors Journal compilation (c) 2007 The European Bank for Reconstruction and Development .

Market Integration, Choice of Technology and Welfare

This paper develops an international trade model where firms in a duopoly may diversify their technologies for strategic reasons. The firms face the same set of technologies given by a tradeoff between marginal costs and fixed costs, but depending on trade costs firms may choose different technologies. Market integration may induce a technological restructuring where firms either diversify their technologies or switch to a homogeneous technology. In general, market integration improves welfare. However, a small decrease of trade costs which induces a switch from heterogeneous technologies to a homogeneous technology may locally reduce global welfare. The model also shows that productivity differences lead to intra-industry firm heterogeneity in size and exports similar to the “new–new” trade models with monopolistic competition.

Creative destruction and export patterns

This paper presents an international trade model based on a market structure with monopolistic competition and age dependent quality and productivity in producing each product variety. Due to innovations new product varieties of a still higher quality enter the market every period rendering old varieties obsolete. For a given technology (variety) production costs decrease after an infant period due to learning. While all firms are assumed to be symmetric in a life-cycle perspective, at a given point in time firms of different ages differ in productivity, firm size, product quality, and export behavior. The model highlights a process of creative destruction, which allows firms to produce in a finite span of periods determined by the intensity of product and process innovations. The model predicts a wide range of export behavior of the individual firm during its life cycle depending on the structure of technological progress and trade costs. These predictions are consistent with empirical evidence on firms internationalization in a dynamic perspective.

Price as an Indicator for Quality in International Trade

This paper examines the relation between price differences and quality differences in an oligopoly model with intra-industry trade, where goods are horizontally as well as vertically differentiated. The analysis demonstrates that the ratio of prices is not linked to the ratio of qualities in any simple way. The paper therefore questions empirical trade studies using unit values as an indicator for the quality of the traded goods. However, we also show that the ratio of prices is a reasonable proxy for the ratio of qualities if sunk cost is dominating in the cost structure.