Job Market Paper
Preferential trade agreements (PTAs) have proliferated with the ongoing rise in globalization. Beyond their traditional purview of liberalizing trade and encouraging market access between agreement members, the provisions included in newer PTAs encompass areas not explicitly related to trade in goods: areas such as intellectual property rights (IPRs), the focus of this paper. And while the main effects of the market access provisions of PTAs are felt foremost by the members of the agreements, IPR provisions have the potential to generate spillover effects on member countries' economic relations with non-members. This paper assesses the existence of these IPR policy spillover effects on members' third-country trade (trade with countries outside of the PTA) in industries that differ in the extent to which they rely on IPRs. Countries that enter into PTAs with the United States, the European Union, or the European Free Trade Association—economies that include the most substantive IPRs provisions in the PTAs that they negotiate—exhibit a significant restructuring of their patterns of trade relative to otherwise similar countries that do not. Most of these effects are concentrated in exports, but import effects are also evident, with the results being sensitive to PTA members' levels of development and the sectoral composition of trade. These findings suggest that IPRs provisions shape the effects of PTA formation in ways that have heretofore been unexplored.
with Kun Jiang, Wolfgang Keller, and Larry D. Qiu
This paper studies international joint ventures, where foreign direct investment is performed by a foreign and a domestic firm that together set up a new firm, the joint venture. Employing administrative data on all international joint ventures in China from 1998 to 2007—roughly a quarter of all international joint ventures in the world—we find, first, that Chinese firms chosen to be partners of foreign investors tend to be larger, more productive, and more likely subsidized than other Chinese firms. Second, there is substantial international technology transfer not only to the joint venture itself but also to the Chinese joint venture partner firm. Third, with technology spillovers typically outweighing negative competition effects, joint ventures generate net positive externalities to other Chinese firms in the same industry. Joint venture externalities are large, perhaps twice the size of wholly-owned FDI spillovers, and it is R&D-intensive firms, including the joint ventures themselves, that benefit most from these externalities. Furthermore, the positive external joint venture effect is larger if the foreign firm is from the U.S. rather than from Japan or Hong Kong, Macau, and Taiwan, while this effect is virtually absent in broad sectors that include economic activities for which China’s FDI policy has prohibited joint ventures.
with Stephen Devadoss and Jeff Luckstead
Argentina plays an important role in the global soy market as one of the world’s leading exporters of soy products. In an effort to shift its agricultural sector’s focus to value-added exports and to raise revenue, Argentina’s government has maintained a regime of differential export taxes on soy products. In addition to soy products, Argentina is a major producer, consumer, and exporter of beef. However, over the last decade it has relinquished much of its world market share as its beef exports have fallen because the government has periodically imposed a ban on exports of beef along with maintaining an export tax. As the soy and livestock sectors are inextricably linked, owing to both industries' intensive land use and the utilization of soymeal as a feed supplement for cattle, trade policies in one sector have pronounced cross-sectoral impacts. This study develops a theoretical model of these different sectors and trade policies, incorporating the dynamic decisions of cattle stock management. The model is calibrated to real world data on the Argentinean economy and the impacts of trade liberalization are quantified. Key results show, modeling the various intersectoral linkages and the dynamic implications of cattle stock is essential for obtaining accurate estimates.
with Keith Maskus
This paper investigates the role of preferential trade agreements (PTAs) with complex chapters covering intellectual property rights (IPRs) in determining the magnitude and composition of countries’ trade. Changes in the global IPRs environment have increasingly been negotiated within the terms of PTAs. Despite the proliferation of PTAs with strong IPRs standards, little attention has been paid to their effects on the trade of member countries. Using a carefully designed empirical framework to measure the effects of agreement membership on aggregate imports and exports, we find that trade agreements with IPRs chapters have significant impacts on members’ aggregate trade. The results are further broken down by income groups and the composition of sectoral trade. The findings accord with predicted relationships from previous research on IPRs and trade and suggest that regulatory aspects of trade agreements have important cross-border impacts. This possibility has been little studied to date.