We use the HOSV model of trade to find out a link between corruption and the pattern of trade, not just its effect on the volume of trade. We prove that greater corruption in labor-abundant countries will restrict the volume of world trade while corrupt capital-abundant countries promote trade. This is caused by intermediaries who are engaged in mitigating the transaction cost of corruption. Re...

T his study investigates the short-run and long-run impact of real exchange rate misalignment and volatility on Indonesian export to the US by exploiting the disaggregated data of export volume. The proxy of real exchange rate misalignment was obtained by estimating the fundamental equilibrium exchange rate (FEER) model, and the exchange rate volatility measured by employing the GARC...

A new presentation of the specific factors model shows how labor fares under international trade by considering how the price elasticity of the nominal wage rate responds to the terms of trade as well as factor endowments. Gains to labor are decomposed into measurable terms of trade effects and production bias effects. If trade is caused by differences in technology, trade can harm the interest...

According to the “smooth adjustment hypothesis”, the labour-market adjustment costs entailed by trade liberalisation are lower if trade expansion is intra-industry rather than interindustry in nature. In this paper, we study the link between trade and labour market changes in UK manufacturing industries during the 1980s. We use industry-level measures of unemployment duration and wage variabili...

This paper examines how the patterns of India’s food consumption have been changing in recent times as a consequence of her faster economic growth and generally rising affluence levels. The study, also, presents evidence on the nutritional implications of these changes to reinforce some of the findings on the observed changes in the food consumption patterns. The exercise estimates the Quadrati...

This paper examines the role of high-technology trade, IPRs and FDI in determining a country’s rate of innovation and economic growth. The empirical analysis is conducted using a unique panel data set of 47 developed and developing countries from 1970 to 1990. The results suggest that: (1) high-technology imports are relevant in explaining domestic innovation both in developed and developing co...

How Outsourcing Affects Bilateral Political Relations One issue the literature neglects is how outsourcing stimulates trade (imports, exports and foreign direct investment), thereby affecting political relations. However, at least as far back as 1750, economic philosophers such as Baron de Montesquieu in his L’Esprit des Lois, argued, “peace is the natural effect of trade.” This paper first rev...

This paper investigates long-run consequences of international trade between two economies inhabited by two distinct races using different languages. If wages are not equal in autarky, free trade encourages the workers of the low-wage country to learn the language of the high-wage country. As the bilingual population increases in the low-wage country, products are increasingly produced in the d...

JEL classification: F1 F12 We show theoretically and confirm empirically that domestic productivity has a significant impact on the demand for foreign varieties under the assumption that domestic and foreign varieties are imperfect substitutes. In particular, the demand for imported varieties ismore elastic for countries with comparative advantage. For an average good facing a median trade barr...

Using industry-level data disaggregated by states, this paper finds a positive impact of trade liberalization on labor-demand elasticities in the Indian manufacturing sector. These elasticities turn out to be negatively related to protection levels that vary across industries and over time. Furthermore, we find that these elasticities are not only higher for Indian states with more flexible lab...