Annex to the Study Guide

Transcription

1 Annex to the Study Guide World Trade Organization Under-Secretary-General responsible for World Trade Organization Yunus Can Aybaş

2 Annex I. Gravity Model

3 In this extend to satisfy, both empirical and mathematical analysis, the gravity model has been used by various institutions, to examine such. Model is to obtain, a time-specific result, which measures the effect of multilateral and regional agreements to international trade. With the data, Model estimates the impact of multilateral and regional and associates the trade flow with the distance and income of the parties. 1 Equation 1 2 both partners inside GATT/ + both partners inside same In the abovementioned equation, i denote importing countries, j denotes exporting country and t denotes the time. The vector X of ijt represented the all other control variables in the model. is the intercept, represent country pair specific, is the dummy variable of time. The variable both partners inside GATT/WTO is also a dummy variable, which is one if both participate WTO in time t. Basically with the, it yields 53 dummy elements which for the 53 year. This is the same for both partners inside same RTA. 1 Potential Effects of the Proposed Transatlantic Trade and Investment Partnership on Selected Developing Countries. (2014). 1st ed. [ebook] University of Sussex. Available at: c%20trade%20and%20investment%20partnership%20on%20selected%20developing%20c ountries_dfid_final%20report_july2013.pdf [Accessed 21 Jan. 2015]. 2 Ibid.

4 Furthermore are the estimated coefficients for time specific trade liberalization effect of GATT/WTO and RTAs. Where polity, represent the political regime based on democracy index, +10(for strongly democratic) and -10 (strongly autocratic). 3 3 Based on: Herz, B. and Wagner, M. (2010). Multilateralism versus Regionalism!?. 1st ed. [ebook] Munchen: Universitat Bayreuth Rechts- und Wirtschaftswissenschaftliche Fakultat, pp Available at: [Accessed 19 Jan. 2015].

5 Annex II. Findings of Gravity Model 4 4 Based on: Herz, B. and Wagner, M. (2010). Multilateralism versus Regionalism!?. 1st ed. [ebook] Munchen: Universitat Bayreuth Rechts- und Wirtschaftswissenschaftliche Fakultat,

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7 Annex III. FDI MODEL

8 Following is the implication of the regional integration and multinational firms activities. FDI equation, in this model, estimated as the consideration of regionalism anf of course the conventional knowledge or human capital model. 5 Equation 2 6 Equation above has been based on the dependent variable of FDI. Such measurement was based on the US outward FDI scale, j index denotes host country, k denoted industry and t denotes time in year. Host is a vector of host country which is as following: Equation 3 7 Host vector includes, market size, production cost, corporate tax and trade cost, of course between the host and multinational companies. Host country with comparatively bigger market will either have greater income or larger population. Therefore hosted with greater amount of FDI, yet only that, by more firms as well, thereby it raises the total FDI amount pro rata.( > 1). In contrary, higher level of the cost of production accompanied with lower level of FDI ( < 0) Hence the actual production cost is not actually observed hence the relative human capital is creates it with its proxy and comparative advantage. In other words, 5 Potential Effects of the Proposed Transatlantic Trade and Investment Partnership on Selected Developing Countries. (2014). 1st ed. [ebook] University of Sussex. Available at: c%20trade%20and%20investment%20partnership%20on%20selected%20developing%20c ountries_dfid_final%20report_july2013.pdf [Accessed 21 Jan. 2015]. 6 Ibid. 7 Ibid.

9 comparatively, countries lacking skilled labour ratio should focus on what he lacks basically become the production location of high skilled labour industries production location and vice versa. The corporate tax rate, in fact, effects the operation cost and therefore is negatively associated therefore ( < 0). Lastly the multinational are decrease with the outward FDI reaches to high figures and level trade cost, tariff and shipping to host country is present and also further labelled as market access and trade cost maximum motive therefore ( < 0). Equation 4 8 Furthermore in the second variable Industry includes skilled-labour intensity and further plant scale. Skilled labour has a negative coefficient ( < 0) which derived basically from the multinational firms tendency to keen to relocate the less skilled labour for intense production overseas. Moreover it is expected that FDI level in a country is decreasing with pro rata to a production plant ( < 0) that rejects basically to operate additional production. Equation 5 9 Lastly for regionalism, lover the tariffs are to firms located inside the RTA or PTA, more that FDU allows such state to improve intraregional market access( > 0). 8 Potential Effects of the Proposed Transatlantic Trade and Investment Partnership on Selected Developing Countries. (2014). 1st ed. [ebook] University of Sussex. Available at: c%20trade%20and%20investment%20partnership%20on%20selected%20developing%20c ountries_dfid_final%20report_july2013.pdf [Accessed 21 Jan. 2015]. 9 Ibid.

10 Equation Potential Effects of the Proposed Transatlantic Trade and Investment Partnership on Selected Developing Countries. (2014). 1st ed. [ebook] University of Sussex. Available at: c%20trade%20and%20investment%20partnership%20on%20selected%20developing%20c ountries_dfid_final%20report_july2013.pdf [Accessed 21 Jan. 2015].

11 Table 2: Varied effects of RTAs Potential Effects of the Proposed Transatlantic Trade and Investment Partnership on Selected Developing Countries. (2014). 1st ed. [ebook] University of Sussex. Available at: c%20trade%20and%20investment%20partnership%20on%20selected%20developing%20c ountries_dfid_final%20report_july2013.pdf [Accessed 21 Jan. 2015].

12 Annex IV. Dynamic Equilibrium Analysis

13 A. Revealed Comparative Advantage Revealed Comparative Advantage(RCA) stands as a measure to calculate how much the export of such country is relative to its total trade, comparatively to the share of the good in the world trade. Country will achieve comparative advantage if RCA is bigger than one, or in other words its share is bigger pro rate to world. Calculation is made via the following formula Equation 7 i12 denotes the exports of sector k, by the country i to the world and denotes the total exports from the country I to the World and the capital letter denotes total flow of the goods. Normalized RCA, is calculated via following. Normalized RCA =(RCA-1) (RCA+1) Potential Effects of the Proposed Transatlantic Trade and Investment Partnership on Selected Developing Countries. (2014). 1st ed. [ebook] University of Sussex. Available at: c%20trade%20and%20investment%20partnership%20on%20selected%20developing%20c ountries_dfid_final%20report_july2013.pdf [Accessed 21 Jan. 2015]. 13 Ibid.

14 B. Bilateral RCA Bilateral RCA computed via the comparison of world trade hares and their shares. Basically j denotes a comparator country and BRCA1 denotes whether which country is comparatively advantageous over other. Equation 8 14 Basically it is the same formula with RCA hence where trafe with the world is compare to j country. Also following formula holds for BRCA as well. Normalized BRCA= (BRCA-1) (BRCA+1) 15 C. Interpretation of RCA RCA is the identifying method of identifying which sectors countries are competitive either vis-à-vis the world or another country in comparison. The index of such can be used for the identification of such industries. RCA s in fact a comparison method to achieve a better dynamic equilibrium analysis. RCA calculation carried out separately for each sector, per se. 14 Potential Effects of the Proposed Transatlantic Trade and Investment Partnership on Selected Developing Countries. (2014). 1st ed. [ebook] University of Sussex. Available at: c%20trade%20and%20investment%20partnership%20on%20selected%20developing%20c ountries_dfid_final%20report_july2013.pdf [Accessed 21 Jan. 2015]. 15 Ibid.

15 D. Finger-Kreinin Index Finger-Kreinin Index (FK) is the method of measurement of the similarity of two sets of numbers. In this context, it is the methods used in the dynamic equilibrium analysis to compare the similarity of the patterns in either the structure of a country imports and exports with two partner countries. Trade Sift analysis based on the applications of FK index that is to be computed with respect to the trade either to a destination or from a source. To summarize, FK index is a measure of aggregates information from and across the range of sectors. By Common Destination: The version of FK index is a comparison of export patterns of two countries into a specific market. In other words it is a method of comparison of how similar the exports are to a specific country. Equation 9 16 = By Common Source: 16 Potential Effects of the Proposed Transatlantic Trade and Investment Partnership on Selected Developing Countries. (2014). 1st ed. [ebook] University of Sussex. Available at: c%20trade%20and%20investment%20partnership%20on%20selected%20developing%20c ountries_dfid_final%20report_july2013.pdf [Accessed 21 Jan. 2015].

16 Similarly to the FK index of common destination, it is their imports from the same country of origin. Equation = E. Revealed Market Access A countries Revealed Market Access (RMA) is a comparison method of the level of market access with respect to another countries export. The value of exports into a specific market will, especially in terms of goofs depends on the market size. There to methods of Revealed Market Access is normalised with two methods as follows. Following is the RMA normalised with GDP, where i is the origin country, j denotes destination country. Equation ) ( Following is the RMA normalized with GDP, where the ide of exports to a given market is pro rata to of economic value by the proxy of imports. 17 Ibid. 18 Ibid.

17 Equation ) ( Annex V. Results of the Analysis Ibid. 20 Potential Effects of the Proposed Transatlantic Trade and Investment Partnership on Selected Developing Countries. (2014). 1st ed. [ebook] University of Sussex. Available at: c%20trade%20and%20investment%20partnership%20on%20selected%20developing%20c ountries_dfid_final%20report_july2013.pdf [Accessed 21 Jan. 2015].

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20 Annex VI. EU Guidelines Ibid.

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22 Annex VII. Findings of Tapes Model Analysis of TradeSift 22 22

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25 Annex VIII. EU Core Indicators Ibid.

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