Matthias Helble

Heterogeneous quality firms and trade costs

There is increasing empirical evidence that vertical product differentiation is an important determinant of international trade. However, the economic literature so far has solely focused on the case in which quality trade stems from differences between countries. No studies investigate the role of quality trade between similar economies. This paper first develops a simple theoretical trade model that includes vertical product differentiation in a heterogeneous-firm framework. The model yields three main predictions for trade between similar economies. First, exported goods are of higher quality than goods sold on the domestic market. Second, larger economies have on average higher export qualities compared with smaller economies. Third, with increasing trade costs higher quality goods are exchanged. For all three effects, strong empirical support is found using detailed export trade data of the United States and 15 European Union countries.

Transparency, trade costs, and regional integration in the Asia Pacific

The authors show in this paper that increasing the transparency of the trading environment can be an important complement to traditional liberalization of tariff and non-tariff barriers. Our definition of transparency is grounded in a transaction cost analysis. The authors focus on two dimensions of transparency: predictability (reducing the cost of uncertainty) and simplification (reducing information costs). Using the Asia Pacific Economic Cooperation (APEC) member economies as a case study, the authors construct indices of importer and exporter transparency for the region from a wide range of sources. Our results from a gravity model suggest that improving trade-related transparency in APEC could hold significant benefits by raising intra-APEC trade by proximately USD 148 billion or 7.5 pecent of baseline trade in the region.

International Trade and Determinants of Price Differentials of Insulin Medicine

Empirical studies on pharmaceutical pricing across countries have found evidence that prices vary according to per capita income. These studies are typically based on survey data from a subset of countries and cover only one year. In this paper, we study the international trade and price of insulin by using detailed trade data for 186 importing countries from 1995 to 2013. With almost 12,000 observations, our study constitutes the largest comparative study on pharmaceutical pricing conducted so far. The large dataset allows us to uncover new determinants of price differentials. Our analysis shows that the international trade of insulin increased substantially over this time period, clearly outpacing the increasing prevalence of diabetes. Using the unit values of imports, we also study the determinants of price differentials between countries. Running various panel regressions, we find that the differences in prices across countries can be explained by the following factors: First, corroborating earlier studies, we find that per capita GDP is positively correlated with the unit price of insulin. Second, the price of insulin drugs originating from Organisation for Economic Co-operation and Development countries tends to be substantially higher than for those imported from developing countries. Third, more intense competition among suppliers leads to lower insulin prices. Fourth, higher out-of-pocket payments for health care are associated with higher prices. Finally, higher volumes and tariffs seem to result in lower unit prices.

From Global Factory to Global Mall:East Asia’s Changing Trade Composition

This paper studies how East Asia’s trade composition and orientation have changed over the past decade and analyzes the implications for the region and beyond. Over the last 2 decades we have witnessed the emergence of regional and global supply chains, in which production is divided into production stages or tasks across the most competitive locations. East Asia has been the most successful region in the world in building up or joining regional and global supply chains and has been described as “Factory Asia” (Baldwin 2008). Introducing a new and simple analytical tool, we show that over the past decade East Asia has successfully consolidated its role as the “Global Factory.” Furthermore, studying East Asia’s recent trade patterns in primary, intermediate, capital, and consumption goods, our results indicate that East Asia is on track to becoming one of the biggest “malls” in the world. Whereas in 1999–2000 around half of all consumption goods exported by East Asia went to the United States and the European Union-27, in 2011–2012 half stayed in the region or were traded with the rest of the world.

Socioeconomic inequality in excessive body weight in Indonesia

HighlightsThis study addresses the socioeconomic inequality in obesity in Indonesia.Socioeconomic inequality in obesity has been decreasing over the last two decades.Lower income groups have begun to become overweight and obese.Excessive weight is not affecting only the wealthier segments of the population.A large part of the inequity can be explained by wealth and sanitary conditions. ABSTRACT Exploiting the Indonesian Family Life Survey (IFLS), this paper studies the transition of socioeconomic‐related excess weight disparity, including overweight and obesity, from 1993 to 2014. First, we show that the proportions of overweight and obese people in Indonesia increased rapidly during the time period covered and that poorer groups exhibited a larger annual excess weight growth rate than richer groups (7.49 percent vs. 3.01 percent). Second, by calculating the concentration index, we confirm that the prevalence of obesity affected increasingly poorer segments of Indonesian society. Consequently, the concentration index decreased during the study period, from 0.287 to 0.093. Finally, decomposing the change in the concentration index of excess weight from 2000 to 2014, we show that a large part of the change can be explained by a decrease in the elasticity of wealth and improved sanitary conditions in poorer households. Overall, obesity in Indonesia no longer affects purely the wealthier segments of the population but the entire socioeconomic spectrum.

Socioeconomic Inequity in Excessive Weight in Indonesia

Exploiting the Indonesian Family Life Survey, this paper studies the transition of socioeconomic related disparity of excess weight, including overweight and obesity, from 1993 to 2014. First, we show that the proportions of overweight and obese people in Indonesia increased rapidly during the time period and that poorer income groups exhibited the strongest growth of excess weight. Using the concentration index we find that prevalence of overweight and obesity affected increasingly poorer segments of Indonesian society. Third, decomposing the concentration index of excess weight in 2000 and 2014 for both sexes, our results suggest that most parts of the concentration index can be explained by the unequal distribution of living standards, sanitary conditions, the possession of vehicles, and home appliances. Finally, decomposing the change in the concentration index of excess weight from 2000 to 2014, we show that a large part of the change can be explained by the decrease in inequality in living standards, and improved sanitary conditions and better availability of home appliances in poorer households.

Trade in Health Products: Reducing Trade Barriers for Better Health

Trade in health products has been flourishing in recent years as the demand for better health has been growing throughout the world. At the same time, trade in health products is hampered by substantive trade barriers. In this paper, we present evidence that countries around the world still apply tariffs and nontariff measures that increase prices and limit the availability of health-related products such as pharmaceuticals, vaccines, and medical equipment. The case for liberalizing trade in these products is therefore strong. In addition, we show that improving trade facilitation performance, using the World Trade Organization’s Trade Facilitation Agreement as a starting point, can be linked to improved handling of health-related products such as vaccines which, in turn, would boost usage. In the last part of the paper, we study the price differences for insulin across countries. We observe that the price of insulin has various determinants, one of them being open trade: the higher the level of competition between manufacturers, the lower the price of insulin. In summary, lowering trade barriers on health products can make a substantive contribution to building up health systems and lowering out-of-pocket payments of patients.

Regulatory Instruments and the Diffusion of Low-Carbon Technologies in the European Union

This chapter studies the policies designed and implemented in the European Union (EU) to promote low-carbon technologies (LCTs). The focus of this chapter is on nonmarket instruments, i.e. instruments that do not use financial incentives but rather regulatory measures. In particular, we study measures that were decided at the regional level by the European Commission and need to be implemented at the national level. We analyse four recent directives aimed at promoting LCTs for reducing greenhouse gas (GHG) emissions. We find that the four directives helped reduce energy consumption in the EU and increased international trade in low-carbon products.

Exchange rate policy in the pacific: an evaluation of currency basket regimes

The Pacific island countries have opted for exchange rate regimes with varying degrees of flexibility. Whereas several microstates have adopted an external currency as their legal tender, others have decided to use a basket currency, and yet others have chosen a managed float. The choice of exchange rate regime can have far reaching economic consequences. In the paper, we study the basket currency arrangements by Fiji, Samoa, the Solomon Islands, and Tonga. We first build a new four-country exchange rate model that illustrates how monetary authorities should best determine the weights of the basket currencies given certain macroeconomic objective functions. In this model, we explicitly include tourism flows. In the second part of the paper, we estimate the de facto weights of foreign currencies in the currency basket of the four countries. We show how the composition has changed amid the global financial crisis. Finally, we demonstrate that the current weights are not optimal compared with the predictions of our model.

Urbanization and Inequality in Hypertension Diagnosis and Medication in Indonesia

Urbanization has been progressing quickly in Indonesia and the consequences on health and health inequities are still not well understood. In this paper, we present new empirical evidence on the differences in the utilization of health care services between rural and urban areas as well as for the respective health inequities. Exploiting the rich dataset of the Indonesian Family Life Survey, this paper measures the socioeconomic inequality of health care utilization for the case of the diagnosis of hypertension and its medication. In the Indonesian Family Life Survey, about 45% of all respondents over the age of 39 were found to suffer from hypertension (average systolic blood pressure higher than 140). However, more than half of the people with hypertension have never been diagnosed by a health care professional, and only a small fraction of the people suffering from hypertension are taking medicine for it. Our analysis further shows that diagnosis and medication rates are significantly higher in urban areas than in rural areas, implying that urban areas offer better access to health care services and medicines. Calculating concentration indices, we find that underdiagnosis of hypertension is more prevalent among the poor and this health inequality is more pronounced in rural areas. For the case of medication, we are unable to detect strong evidence of inequality either in rural or urban areas, as most Indonesians with hypertension do not take medicine irrespective of their socioeconomic status. Finally, decomposition analysis shows that the inequality in education, living standards, sanitary conditions, and the possession of vehicle and home appliances can explain a large fraction of the inequality of diagnosis and medication.