We use a sample of 14 OECD countries and 15 manufacturing industries to test for the effect of trade on productivity. Endogeneity concerns are accounted for using the geographical component of trade as instrument as suggested by Frankel and Romer (1999). Our results are in line with previous studies: Trade increases productivity. What is puzzling, however, is the size of the effect: An increase in the export ratio by one percentage point increases productivity in manufacturing by 0.6 percent on average. This is less than half of the effect obtained in previous studies. We discuss likely explanations for this discrepancy. / Series: EI Working Papers / Europainstitut

EU's 2007 enlargement by Bulgaria and Romania is evaluated by applying a simple macroeconomic integration model able to encompass as many of the theoretically predicted integration effects possible. The direct integration effects of Bulgaria and Romania spill-over to EU15, including Austria and the 10 new member states of the 2004 EU enlargement. The pattern of the integration effects is qualitatively similar to those of EU's 2004 enlargement by 10 new member states. Bulgaria and Romania gain much more from EU accession than the incumbents in the proportion of 20:1. In the medium-run up to 2020, Bulgaria and Romania can expect a sizable overall integration gain, amounting to additional ½ percentage point real GDP growth per annum. Within the incumbent EU member states Austria will gain somewhat more (+0.05%) than the average of EU15 (+0.02%) and the 10 new EU member states (+0.01%), which joined the EU in 2004. (author's abstract) / Series: EI Working Papers / Europainstitut

This paper analyses the South African trade data from1992 until 2006 by means of a Grubel-Lloyd index, a measurement of marginal intra-industry trade and a revealed comparative advantage (RCA) indicator. During this period a lot happened that influenced the South African trade policy, e.g. the political transition in 1994, the formation of the World Trade Organisation in 1995, the rise of China as trading power, etc. The purpose is not only to analyse the current structure of South African trade, but also to examine its structural change over time. As a result this paper shows that South Africa is principally a supplier of natural resources to both industrialised and emerging economies. With respect to its African neighbours South Africa has a more advantageous trading position. More general this paper shows that an indicator reaches significant different values, if different trading partners or industries are analysed.(author´s abstract) / Series: Department of Economics Working Paper Series

In an open economy economic agents distribute their spending between domestic and various import goods and they may reconsider their choice whenever relative international prices change. Armington elasticities quantify these reallocations in demand for goods produced in different countries. Recent analytical frameworks allow to further differentiate between a macro elasticity of substitution between domestic and import goods and a micro elasticity between different import sources. Despite the relevance of Armington elasticities for evaluating trade policy there has been no systematic study on whether micro and macro elasticities significantly differ for highly integrated economies within a free trade area and whether there is a common pattern. Using highly disaggregated data, this paper estimates Armington elasticities for a panel of 15 EMU Member States. Empirical results indicate a significant difference between micro and macro elasticities for up to one half of the consistent product groups considered, implying preferences across EMU countries are not perfectly aligned with non-discriminatory tariffs. I conclude that both the absolute and relative macro elasticities are informative and that heterogeneous preference patterns link to current trade imbalances. (author's abstract) / Series: Department of Economics Working Paper Series