99 publications classées par:
type de publication
: Revue avec comité de lecture
Articles Cadot O., Disdier A.-C. & Fontagné L. (in press). North-South Standards Harmonization and International Trade. World Bank Economic Review. [doi] [web of science]
Cadot O. & Gourdon J. (in press). Assessing the price-raising effect of non-tariff measures in Africa. Journal of African Economies. [doi] [web of science]
Cadot O., Jaud M. & Suwa-Eisenmann A. (in press). Do Food Scares Explain Supplier Concentration? An Analysis of EU Agri-Food Imports. European Review of Agricultural Economics. [doi]
Cadot O., Carrère C. & Strauss-Kahn V. (2014). OECD imports: Diversification of suppliers and quality search. Review of World Economics / Weltwirtschaftliches Archiv, 150(1), 1-24. [doi] [web of science] [abstract]
We posit that OECD buyers are in a continuous search for best quality suppliers from developing countries. We build a simple model of adverse selection and quality screening which captures this feature. The model predicts that diversification happens by "bouts", or temporary episodes, during which OECD buyers search for high-quality suppliers. Each diversification episode is followed by a phase of re-concentration on the best performers, until those fail (which happens stochastically), triggering new search phases. The model also shows that concentration across origin is highly volatile, especially for goods with high-quality heterogeneity. Finally, as the set of suppliers expands and buyers continue sampling, the overall trend is an increased diversification across time. We empirical explore these conjectures using OECD imports over time (1963-2006) and measuring their concentration across 250 origin countries at the product level (1,300 products). We provide strong empirical evidence corroborating the model predictions.
Cadot O., Fernandes A., Gourdon J., Mattoo A. & de Melo J. (2014). Evaluating Aid for Trade: A survey of recent studies. The World Economy, 37(4), 516-529. [doi] [web of science] [abstract]
The demand for accountability in 'Aid-for-Trade' (AFT) is increasing but monitoring has focused on case studies and impressionistic narratives. The paper reviews recent evidence from a wide range of studies, recognising that a multiplicity of approaches is needed to learn what works and what does not. The review concludes that there is some support for the emphasis on reducing trade costs through investments in hard infrastructure (like ports and roads) and soft infrastructure (like customs). But failure to implement complementary reform - especially the introduction of competition in transport services - may erode the benefits of these investments. Direct support to exporters does seem to lead to diversification across products and destinations, but it is not yet clear that these benefits are durable. In general, it is difficult to rely on cross-country studies to direct AFT. More rigorous impact evaluation is an under-utilised alternative, but situations of 'clinical interventions' in trade are rare and adverse incentives (due to agency problems) and costs (due to the small size of project) are a hurdle in implementation.
Augier P., Cadot O. & Dovis M. (2013). Imports and TFP at the firm level: The role of asorptive capacity. Canadian Journal of Economics / Revue Canadienne d'Économique, 46(3), 956-981. [doi] [web of science] [abstract]
This paper estimates the effect of the decision to import intermediate goods and capital equipment on Total Factor Productivity (TFP) at the firm level on a panel of Spanish firms (1991-2002). We use two alternative approaches. In the first, we estimate TFP and apply a diff-in-diff estimator with a control group constructed by propensityscore matching. In the second, direct method, we estimate TFP with imported inputs as a state variable in one stage. Both approaches show that the effect of a firm's decision to source intermediates and capital equipment abroad on its TFP depends critically on its capacity to absorb technology, measured by the proportion of skilled labour.
Cadot O., Carrère C. & Strauss-Kahn V. (2013). Trade diversification, income, and growth: What do we know?. Journal of Economic Surveys, 27(4), 790-812. [doi] [url] [abstract]
This paper surveys the empirical literature on export and import diversification and its linkages with growth. We review widely used measures of diversification and the evidence about their evolution focusing on how export diversification relates to trade liberalization and economic development. We also discuss the linkages between trade diversification and productivity at the firm and industry level, highlighting new advances on the linkages between import diversification and productivity.
Cadot O., Iacovone L., Pierola M. D. & Rauch F. (2013). Success and failure of African exporters. Journal of Development Economics, 101, 284-296. [doi] [url] [web of science] [abstract]
Using a new dataset with transaction-level export data from four African countries (Malawi, Mali, Senegal and Tanzania), this paper explores the determinants of success upon entry into export markets, defined as survival beyond the first year at the firm-product-destination level. We find that the probability of success rises with the number of same-country firms exporting the same product to the same destination, suggesting the existence of cross-firm externalities. We explore several conjectures on the determinants of these externalities and provide evidence suggestive of information spillovers, possibly mediated through the banking system.
Jaud M. & Cadot O. (2012). A second look at the Pesticides Initiative Program: Evidence from Senegal. World Trade Review, 11(3), 490-506. [doi] [web of science] [abstract]
This paper investigates whether the Pesticides Initiative Program has significantly affected the export performance of Senegal's horticulture industry. We apply two main microeconometric techniques, difference-in-differences and matching difference-in-differences, to identify the effect of the Pesticides Initiative Program on exports of fresh fruits and vegetables. We use a unique firm-level dataset containing data on sales, employment, and exports by product and destination markets, as well as firm enrolment year, over 2000-2008. The results suggest that while the program had no significant effect on exports pooled over all products and destinations, it had a positive effect when considering fresh fruits and vegetables exports to the European Union.
Cadot O., Carrère C. & Strauss-Kahn V. (2011). Export Diversification: What's behind the Hump?. Review of Economics and Statistics, 93(2), 590-605. [doi] [web of science] [abstract]
The paper explores the evolution of export diversification patterns along the economic development path. Using a large database with 156 countries over 19 years at the HS6 level of disaggregation (4,991 product lines), we look for action at the intensive and extensive margins. We find a hump-shaped pattern of export diversification similar to what Imbs and Wacziarg (2003) found for production. Diversification and subsequent reconcentration take place mostly along the extensive margin. This hump-shaped pattern is consistent with the conjecture that countries travel across diversification cones, as discussed in Schott (2003, 2004) and Xiang (2007).
Cadot O. & Shakurova Y. (2010). Endowments, specialization, and policy. Review of International Economics, 18(5), 913-923. [doi] [web of science] [abstract]
The paper explores the relationship between industry shares in production and their determinants including factor endowments, technology, and government policies, in a GDP-function framework. We use a new international panel dataset on production and trade compiled by the World Bank. As an intermediate step we calculate Hicks-neutral productivity indices that vary across industries, time, and countries. We find that own-TFP is robustly associated with industry shares across time and countries and that, after correcting for these productivity differences, output shares are related to factor endowments (Rybczynski effects) in a plausible way. Once Rybczynski effects are controlled for, we find little evidence of demand-side policies (import tariffs) affecting the allocation of resources; we find, however, more role for supply-side policies as the relative size of capital-intensive industries is positively associated with infrastructure-capital endowments.
Cadot O., Dutoit L. & de Melo J. (2009). The elimination of Madagascar's vanilla marketing board, 10 years on. Journal of African Economies, 18(3), 388-430. [doi] [web of science] [abstract]
This paper explores how the elimination of Madagascar's Vanilla Marketing Board (VMB) in 1993 affected prices paid to farmers, incentives and indicators of poverty and inequality using household survey data and simulation analysis. Following the reforms, margins between FOB and farmgate prices have narrowed down, and the analysis of changes in poverty and inequality based on household surveys suggests a reduction in poverty and a muted supply response. A counterfactual analysis based on the observed reduction in intermediation margins shows that, however limited, increase in competition among intermediaries has contributed to raise purchase prices and the cash income of vanilla farmers. After taking into account the reduction in Madagascar's monopoly power on the world vanilla market implied by the elimination of the VMB, the induced rise in producer prices is estimated to have lifted about 20,000 individuals out of poverty.
Cadot O., Djiofack C. & de Melo J. (2008). Préférences commerciales et règles d'origine: perspectives des Accords de Partenariat Économique pour l'Afrique de l'Ouest et centrale. Revue d'Economie du Développement, 3(22), 5-48. [abstract]
The present paper analyses how the design of EU preferences, in particular of their rules of origin, impacts the integration of West Africa into world trade. We show that West Africa?s trade has not yet undergone the structural change typical of countries having successfully established themselves as manufacturing assembly platforms. Complex, restrictive, and discriminatory, EU rules of origin (RoOs) have so far not proved conducive to the integration of African producers in world trade. However, the reform of the EU?s RoOs currently contemplated by the Commission which would consist of replacing the ?single list? of RoOs by a unique instrument could be a step forward in this regard, provided the unique instrument is set at a level of restrictiveness that does not hamper the ability of firms to fragment manufacturing processes and set up complex cross-border value chains.
Cadot O. & de Melo J. (2007). Why OECD countries should reform their rules of origin. World Bank Research Observer, 23(1), 77-105. [doi] [abstract]
With preferential trade agreements on the rise worldwide rules of origin-which are necessary to prevent trade deflection-are attracting increasing attention. At the same time, preference erosion for Generalized System of Preferences (GSP) recipients is increasing resistance to further multilateral negotiations. Drawing on different approaches, this article shows that the current system of rules of origin that is used by the European Union and the United States in preferential trade agreements (including the GSP) and that is similar to systems used by other Organisation for Economic Co-operation and Development countries should be drastically simplified if developed economies really want to help developing economies integrate into the world trading system. In addition to diverting resources for administrative tasks, current rules of origin carry significant compliance costs. More fundamentally, it is becoming increasingly clear that they are often been designed to force developing economies to buy inefficient intermediate products from developed economies to "pay for" preferential access for the final product. The evidence also suggests that a significant share of the rents associated with market access (net of rules of origin compliance costs) is captured by developed economies. Finally, the restrictiveness of rules of origin is found to be beyond the levels that would be justified to prevent trade deflection, suggesting a capture by special interest groups. The article outlines some alternative paths to reforms.
Cadot O., de Melo J. & Portugal-Pérez A. (2007). Rules of origin for preferential trading arrangements: Implications for the ASEAN Free Trade Area of EU and US experience. Journal of Economic Integration, 22(2), 288-319. [doi] [abstract]
With free trade areas (FTAs) under negotiation between Japan and the ASEAN Free Trade Area (AFTA) members and between the Republic of Korea and AFTA members, preferential market access will become more important in Asian regionalism. Protectionist pressures will likely increase through rules of origin, the natural outlet for these pressures. Based on the experience of the European Union and the United States with rules of origin, this paper argues that, should these FTAs follow in the footsteps of the EU and the US and adopt similar RoO, trading partners in the region would incur unnecessary costs. Using EU trade with GSP and ACP partners, the paper estimates how the utilization of preferences would likely change if AFTA were to veer away from its current uniform RoO requiring a 40% local content rate. Depending on the sample used, a 10 percentage point reduction in the local value content requirement is estimated to increase the utilization rate of preferences by between 2.5 and 8.2 percentage points.
Cadot O., Anson J. & Olarreaga M. (2006). Tariff Evasion and Customs Corruption: Does PSI Help?. Contributions to Economic Analysis and Policy, 15. [url] [abstract]
This paper provides a new approach to the evaluation of pre-shipment inspection (PSI) programs as ways of improving tariff-revenue collection and reducing fraud when customs administrations are corrupt. We build a model highlighting the contribution of surveillance firms to the generation of information and describing how incentives for fraud and collusive behaviour between importers and customs are affected by the introduction of PSI. It is shown theoretically that the introduction of PSI has an ambiguous effect on the level of customs fraud. Empirically, our econometric results suggest that PSI reduced fraud in the Philippines; it increased it in Argentina and had no significant impact in Indonesia.
Cadot O., Röller L.-H. & Stephan A. (2006). Contribution to Productivity or Pork Barrel? The Two Faces of Infrastructure Investment. Journal of Public Economics, 90(6-7), 1133-1153. [abstract]
This paper proposes a simultaneous-equation approach to the estimation of the contribution of transport infrastructure accumulation to regional growth. We model explicitly the political-economy process driving infrastructure investments; in doing so, we eliminate a potential source of bias in production-function estimates and generate testable hypotheses on the forces that shape infrastructure policy. Our empirical findings on a panel of France's regions over 1985-92 suggest that electoral concerns and influence activities were, indeed, significant determinants of the cross-regional allocation of transportation infrastructure investments. By contrast, we find little evidence of concern for the maximization of economic returns to infrastructure spending, even after controlling for pork-barrel.
Carrère C., Cadot O., de Melo J. & Tumurchudur B. (2006). Product-Specific Rules of Origin in EU and US Preferential Trading Arrangements: An Assessment. World Trade Review, 5(2), 199-225. [url] [abstract]
Building on earlier work by Estevadeordal, we construct a synthetic index (R-index) intending to capture the restrictiveness of rules of origin (PSRO) in preferential trading agreements. The R-index is applied to NAFTA and the Single List of the EU's PANEURO system covering all of the EU's preferential trade agreements. The R-index highlights how a common set of rules of origin can affect countries, differently depending on their export structures, and how their complexity varies across sectors. Having controlled for the extent of tariff preference at the tariff-line level, the R-index contributes to explain differences in the rate at which preferences are used. Finally, we compute estimates of the compliance costs associated with rules of origin under NAFTA and the Single List and find them to be between 6.8% of good value (NAFTA) and 8% (PANEURO).
Cadot O., Anson J., Estevadeordal A., de Melo J., Suwa-Eisenmann A. & Tumurchudur B. (2005). Rules of Origin in North-South Preferential Trading Arrangements with an Application to NAFTA. Review of International Economics, 13(3), 501-517. [url] [abstract]
All preferential trading agreements (PTAs) short of a customs union use rules of origin (ROO) to prevent trade deflection. ROO raise production costs and create administrative costs. This paper argues that in the case of the recent wave of North-South PTAs, the presence of ROO virtually limits the market access that these PTAs confer to the Southern partners. In the case of NAFTA, we find average compliance costs around 6% in ad valorem equivalent, undoing the tariff preference (4% on average) for a large number of tariff lines. Administrative costs amount to 47% of the preference margin. These findings are coherent with the view that North-South PTAs could well be viewed like a principal-agent problem in which the Southern partners are just about left on their participation constraint. Copyright Blackwell Publishing Ltd 2005.
Cadot O., Carrère C., de Melo J. & Portugal A. (2005). Market access and welfare under free trade agreements: Textiles under nafta. World Bank Economic Review, 19(3), 379-406. [doi] [url] [web of science] [abstract]
The effective market access granted to textiles and apparel under the North American Free Trade Agreement (nafta) is estimated, taking into account the presence of rules of origin. First, estimates are provided of the effect of tariff preferences combined with rules of origin on the border prices of Mexican final goods exported to the United States and of U.S. intermediate goods exported to Mexico, based on eight-digit Harmonized System tariff-line data. A third of the estimated rise in the border price of Mexican apparel products is found to compensate for the cost of complying with nafta's rules of origin, and nafta is found to have raised the price of U.S. intermediate goods exported to Mexico by around 12 percent, with downstream rules of origin accounting for a third of that increase. Second, simulations are used to estimate welfare gains for Mexican exporters from preferential market access under nafta. The presence of rules of origin is found to approximately halve these gains.
Cadot O., Carrère C., De Melo J. & Portugal-Pérez A. (2005). Market Access and Welfare under Free Trade Agreements: Textiles under NAFTA. World Bank Economic Review, 19(3), 379-406. [url] [abstract]
This paper estimates the effective market access granted under NAFTA in textiles and apparel by combining two approaches. First, we estimate the effect of tariff preferences and rules of origin on the border prices of Mexican final goods exported to the US and of US intermediates exported to Mexico. We find that one third of the estimated rise in the border price of Mexican apparel products compensates for the cost of complying with NAFTA's rules of origin. We also find that the price of US intermediates exported to Mexico is raised significantly by the presence of rules of origin downstream. Second, simulations from a structural model inspired by our econometric estimates, suggest little market access improvement for Mexican exporters.
Cadot O. & Anson J. (2004). Par-delà le "Röstigraben": L'électorat Suisse partagé face à l'UE. Swiss Journal of Economics and Statistics, 140(2), 171-206.
Cadot O., De Melo J. & Olarreaga M. (2004). Lobbying, Counterlobbying, and the Structure of Tariff Protection in Rich and Poor Countries. World Bank Economic Review, 18(3), 345-366. [url] [abstract]
A political economy model of protection is used to determine endogenously the intersectoral patterns of protection. Three propositions are derived that are consistent with the stylized patterns of tariff protection in rich and poor countries: Nominal protection rates escalate with the degree of processing, protection is higher on average in poor countries, and rich countries protect agriculture relatively more than they protect manufacturing, whereas poor countries do the reverse. Numerical simulations for archetypal rich and poor economies confirm that the endogenously determined structure of protection is broadly consistent with observed patterns of protection. Copyright 2004, Oxford University Press.
Cadot O., de Melo J. & Olarreaga M. (2003). The Protectionist Bias of Duty Drawbacks and the New Regionalism. Journal of International Economics, 59(1), 161-182. [abstract]
In a political-economy setting where tariffs and duty drawbacks are endogenously chosen through industry lobbying, it is shown that full duty-drawbacks are granted to exporters who use imported intermediates in their production. This in turn decreases their incentives to counter-lobby against high tariffs on their inputs. In equilibrium, higher tariffs will be observed on these goods. The creation of a regional block will change the political equilibrium. Duty-drawbacks will be eliminated on intra-regional exports, which in turn will lead to lower tariffs for goods used as inputs by intra-regional exporters. Evidence from Mercosur suggests that the elimination of duty-drawbacks for intra-regional exports led to increased counter-lobbying by users of intermediate products. In its absence the common external tariff would have been on average 3.5 percentage points (25 percent) higher.
Cadot O., Suwa-Eisenmann A. & Traça D. (2003). OGM et relations commerciales transatlantiques. Cahiers d'Economie et de Sociologie Rurale, 68-69, 104-148. [abstract]
L'article analyse le différend transatlantique à propos de la réglementation européenne sur les organismes génétiquement modifiés (OGM) et ses implications commerciales. Après avoir brièvement passé en revue les arguments en faveur d'une interprétation protectionniste de l'approche réglementaire européenne, l'article présente une analyse factuelle des échanges agricoles entre les Etats-Unis et l'Union européenne (UE), en particulier en ce qui concerne les produits potentiellement affectés par la réglementation européenne. Une analyse empirique de l'impact du moratoire européen sur l'approbation de produits génétiquement modifiés sur l'accès au marché européen des produits agricoles américains suggère que les effets de prix dominent les effets contemporains à l'apparition d'OGM comme déterminants des tonnages d'exportations américaines vers l'UE dans deux des quatre lignes tarifaires potentiellement affectées. L'article propose alors une interprétation du différend fondée essentiellement sur des considérations internes plutôt qu'industrielles ou commerciales et sur une lecture politique de l'évolution des approches réglementaires de part et d'autre de l'Atlantique.
Cadot O., de Melo J. & Olarreaga M. (2002). External Quota Harmonization in FTAs: A Step Backward ?. Economics and Politics, 14, 259-282. [abstract]
This paper explores how political-economy forces shape quantitative barriers against the rest of the world in an FTA. We show that whereas the dilution of lobbying power in an FTA typically leads to a relaxation of external quotas, this result is likely to be overturned as integration deepens. In particular, we show that cooperation among member countries on the level of their external quotas, cross-border lobbying by import-competing interests in the free-trade area, and the consolidation of national external quotas into a single one, all lead to stffer restrictions against imports from the rest of the world. We also show that unlike tariffs, endogenous quotas are not crucially a ected by the presence of rules of origin.
Cadot O. & Webber D. (2002). Banana Splits: Policy Process, Particularistic Interests, Political Capture and Money in Transatlantic Trade Politics. Business and Politics, 4(1), 5-39. [doi] [abstract]
The most intractable and protracted transatlantic trade conflict of the last decade was over bananas, which grow neither on the European nor on the North American continent. Our explanation of the conflict emphasizes the determining role of the domestic politics of the EU and the United States. It was driven not only by the extreme divergence of preferences of Brussels' and Washington's domestic constituencies, rooted in the competitive position of competing banana industries, but also, and critically, by the institutional configuration of (agricultural) trade policymaking on either side of the Atlantic. The EU agricultural trade policy process is characterized by a division of labor that favors agricultural over wider trading interests, sectoral segmentation, and sector-specific issue-linkage. The U.S. trade policy process is characterized by the Congress's growing reassertion of its trade policy prerogatives, the growing institutionalization of firms' access to the trade policy bureaucracy, and the growing volume and role of corporate campaign donations. The combined effect of these different policy process traits has been to facilitate the capture of banana trade policy by highly organized, particularistic, and predominantly trading interests. Although neither the WTO nor the transatlantic trading relationship ultimately "slipped" over bananas, the conflict provides scant reason for optimism concerning the future of this relationship or indeed of the multilateral international trading system, at least in as far as the latter depends on good EU-U.S. relations.
Cadot O., De Melo J. & Olarreaga M. (2001). Can Bilateralism Ease the Pains of Multilateral Trade Liberalization?. European Economic Review, 45(1), 27-44. [abstract]
Using the influence-driven approach to endogenous trade-policy determination, we show how a free-trade agreement (fta) with rules of origin can work as a device to compensate losers from trade liberalization. The fta constructed in this paper is characterized by external tariff structures that are negatively correlated across member countries, ensuring e±ciency gains and, through reduced average protection, compatibility with the multilateral trading system's requirements. It is also politically viable, and we demonstrate that, in the countries concerned, governments are willing to include its formation in the political agenda in spite of the fact that, in equilibrium, political contributions from producer lobbies decline after the agreement.
Cadot O. & Sinclair-Desgagné B. (2001). Career Concerns and the Acquisition of Firm-Specific Skills. Journal of the Japanese and International Economy, 14(3), 204-217. [abstract]
This paper studies incentive schemes that can motivate a worker to acquire nonverifiable firm-specific skills, when the acquisition process is also one of learning about managerial talent. At the beginning of the employment relationship, the worker encounters opportunities to enhance his or her specific human capital. Greater skills may increase the chances of being promoted, but as more opportunities are taken, more is learned about the worker's intrinsic talent, and someone displaying low talent is sure not to be promoted. In this context we show that first-best firm-specific skills collection can be implemented with a scheme that combines discretionary promotions, an appropriate wage schedule and subsidies of training at the margin.
Cadot O., de Melo J. & Grether J.-M. (2000). Trade and Competition Policy: Where do we stand ?. Journal of World Trade, 13, 1-24.
Cadot O., de Melo J. & Olarreaga M. (2000). Régionalisme asymétrique en Afrique sub-saharienne: où en sommes-nous ?. Revue d'Economie du Développement, 1-2, 247-261.
Cadot O., de Melo J. & Olarreaga M. (1999). Regional Integration and Lobbying for Tariffs Against Non Members. International Economic Review, 39, 635-658. [url] [abstract]
Using an extension of the influence-driven lobbying approach developed by Grossman and Helpman, we study the impact of regional integration arrangements (RIAs) on trade policy towards non-members in a three-good, three-country model. We explore under what conditions the formation of an RIA between countries A and B leads, through lobbying pressure, to a higher or lower tariff against country C. Comparing free trade areas (FTAs) with and without rules of origin and customs unions (CUs) with varying degrees of economic and political integration, we show how increasingly deep integration, both within an FTA and a CU, can lead to rising protection against non-member imports. These results, which abstract from two differences between FTAs and CUs, namely the extent of free-riding in CUs and the component of a CU?s tariffs designed to improve the members? terms of trade, need to be qualified accordingly. As it stands, the results nevertheless suggest that FTAs are likely to welfare-dominate CUs.
Cadot O. & Desruelles D. (1998). R&D: Who Does the R, Who Does the D?. Journal of International Economics, 46, 87-104. [url] [abstract]
This paper examines the determinants of the allocation of national R&D resources between research and development activities. We derive conditions under which a firm being outdistanced by a foreign rival in a two-stage international patent race would drop out, and relate those conditions to home-market size and to the race's cost and risk characteristics. Because of this ''discouragement effect'', firms located in smaller markets appear as if they were, on average, less successful in transforming research expertise into commercial product development. We also show that in a two-sector model (R and D), the proportion of R&D resources going into product development as opposed to research increases with country size. Moreover, starting from a symmetric game and increasing the size of one country induces the opposite effect on other countries (a shift of R&D resources from development to research) through strategic interaction among research teams.
Cadot O. & Banerjee S. (1996). Syndicated Lending under Asymmetric Creditor Information. Journal of Development Economics, 49, 289-306. [url] [abstract]
This paper explores how asymmetric information about borrower quality among syndicated lenders alters the incentive to refinance illiquid borrowers. The authors use a model in which lenders enter the market sequentially in two rounds of lending. Between the two rounds, a shock separates borrowers into good ones and bad ones, and early entrants acquire information about individual borrower type, while late entrants know only the distribution of borrower types. The asymmetric information structure gives rise to both signalling and screening issues. It is shown that self-selecting contracts do not exist and that there is always pooling Perfect Bayesian Equilibrium in which late entrants lend to both good and bad types, without borrower type being exposed before final clearing at the terminal time. Based on this framework, the authors argue that prior to the 1982 international debt crisis, it was possible for banks with heavy exposure to troubled debtors to attract rational newcomers in syndicated loans which were, with positive probability, bailout loans.
Cadot O. & Desgagné B. (1996). On the Computation of Randomized Markov Equilibria. Games and Economic Behaviour, 17(1), 129-134. [url] [abstract]
This note extends the usual method for finding totally mixed strategy equilibria in 2×2 matrix games to the computation of randomized Markov equilibria in infinite-horizon discrete-time stochastic games. It is shown that the method can be applied in the class of separable sequential games with binary action sets when continuation payoffs are monotone in each player's own-mixing probabilities.
Cadot O. & Desgagné B. (1995). Environmental Standards and Industrial Policy. Journal of Environmental Economics and Management, 29(2), 228-237. [url] [abstract]
The paper analyzes a regulatory problem where the government can commit to adopting stricter environmental standards but not to a date of regulatory change. The issue is to find a path toward more stringent environmental requirements which avoids putting domestic firms at a competitive disadvantage. We show how the government can use the threat of an immediate tightening of environmental standards to induce domestic firms to develop a technology capable of coping with those standards.
Cadot O., Faini R. & de Melo J. (1995). Early Trade Patterns under the Europe Agreements: France, Germany and Italy. European Economic Review, 39(3), 601-610. [url] [abstract]
In the sphere of trade preferences, The EAs have largely amounted to a ratification of the status quo reached between the EU and the CEECs following prior trade liberalization by both sets of partners. It is widely accepted that this cautious approach reflected fears of large adjustment costs among EU members. The paper examines the CEEC-EU trade pattern over 1990-93, finding no evidence in support of these fears. Detailed regional-level calculations of likely job displacements for France corroborate the findings from aggregate trade flows.
Cadot O. & Desgagné B. (1992). Prudence and Success in Politics. Economics and Politics, 4, 171-190.
Cadot O. (1987). Corruption as a Gamble. Journal of Public Economics, 33(2), 223 - 244. [url] [abstract]
In the following model of corruption, a simple game is set up whose players are a government official granting a permit, conditional on a test, and a candidate requesting the permit. The game is solved under different assumptions as to the information sets of the players: perfect information, asymmetric information and imperfect information on both sides. In the latter case, after characterizing the solution and presenting some important comparative-statics results, the paper moves on to show the emergence of multiple equilibria in corruption, illustrating the interaction of corruption at different hierarchical levels of an administration.
Etudes de cas Cadot O., Casanova L. & Traça D. (2002). Chile: In Search of a Second Wind. INSEAD Case Studies.
Cadot O., Ladis Gabel H. & Traça D. (2001). Monsanto and Genetically Modified Organisms. INSEAD Case Studies.
Cadot O. & Traça D. (1999). Soccer Balls: Made For Children By Children? Child Labor in Pakistan. INSEAD Case Studies.
Cadot O. (1998). Chad's Billion-Barrel Oil Field: From Rags to Riches?. INSEAD Case Studies.
Cadot O. (1998). Confronting EU Antidumping: the Grey Cotton Case Seen from Turkey. INSEAD Case Studies.
Cadot O., Landis Gabel H. & Traça D. (1998). Reinventing Airbus. INSEAD Case Studies.
Cadot O. & Fatas A. (1996). From Franc Faible to Franc Fort: 12 years of French Economic Policy. INSEAD Case Studies.
Cadot O. & Landis Gabel H. (1996). David vs Goliath in European Power Battle. INSEAD Case Studies.
Cadot O. & Webber D. (1996). Banana Split in Europe. INSEAD Case Studies.
Lettre Cadot O. & Vogel D. (2001). France's role in the transatlantic dispute over biotechnology: Public convern or protectionist conspiracy?. Brookings Briefings, Brookings Institution.
Livres O. Cadot & J. de Melo (Eds.). (2014). Aid for Trade: What have we learnt? Which way ahead?. London : CEPR Press and FERDI. [url] [abstract]
The Aid for Trade (AFT) initiative has been successful in mobilising funding to aid developing countries - in particular, the least developed - cope with the cost of implementing Uruguay Round commitments. However, whether the aid has really made a difference in their ability to take part in world trade growth remains unclear. Reasons for the lack of clear-cut evidence include the lack of a counterfactual, as the initiative's broad definition meant that it includes areas of traditional donor assistance like infrastructure, the lack of a binding monitoring and evaluation framework, and the inherent difficulty of assessing causation between interventions on the ground and 'distant' outcomes such as export growth.¦With increasing pressure on donor budgets, the achievements of the AFT initiative are at risk unless a convincing case can be made that there is value for money. The time has come to focus and put in place an evaluation framework that can deliver robust evidence on the initiative's impact on the ground. This book suggests ways to make progress in that direction. In particular, the WTO's Trade Facilitation Agreement, signed in December 2013 in Bali, is an opportunity to refocus AFT on a narrower set of issues revolving around border management efficiency and streamlining non-tariff measures, where outcomes can be more directly related to interventions. The book shows how the wealth of available methods helps to confront the conceptual and measurement difficulties in identifying causal relationships from interventions to outcomes.
Cadot O. & Malouche M. (Eds.). (2012). Non-tariff measures: A fresh look at trade policy's new frontier. London/Washington, DC: CEPR/The World Bank. [url] [abstract]
In a world where many forms of protection - including tariffs - are constrained by WTO disciplines, non-tariff measures (NTMs) are the new frontier of trade policy. NTMs that are poorly designed or captured by special interests can hurt competitiveness and fragment markets; whereas well-designed ones can effectively overcome informational and other market failures. Assisting governments in the design of NTMs is a critical challenge for donors and development agencies. However, many issues relating, for example, to regional harmonisation and the interaction of NTMs with market structure are still imperfectly understood. This CEPR/World Bank volume brings together recent work by young scholars that draws on original data to shed light on some of the key analytical and policy issues.
Bacchetta M., Beverelli C., Cadot O., Fugazza M., Grether J.-M., Helble M. et al. (2012). A practical guide to trade policy analysis. Geneva, CH: World Trade Organization. [url] [abstract]
Overview¦- Trade flows and trade policies need to be properly quantified to describe, compare or follow the evolution of policies between sectors or countries or over time. This is essential to ensure that policy choices are made with an appropriate knowledge of the real conditions.¦- This practical guide introduces the main techniques of trade and trade policy data analysis. It shows how to develop the main indices used to analyse trade flows, tariff structures and non-tariff measures. It presents the databases needed to construct these indices as well as the challenges faced in collecting and processing these data, such as measurement errors or aggregation bias.¦- Gravity models are a means to understanding the determinants and patterns of trade and assessing the trade effects of certain trade policies, such as WTO accession or the signing of preferential trade agreements. The appropriate specification of the model and estimation method is crucial for reliable results. This practical guide guides you in making the right choice.¦- Trade policies generally have diverse effects across economic sectors and ultimately individuals. The welfare impact of trade policies is therefore an important concern for policy-makers.¦- This practical guide provides an overview of how applied partial and general equilibrium models can be used to assess the impact of policy reforms such as tariff reductions. The aim is to provide the reader with an understanding of how these models work, what they can and cannot do, and what is required to make them operational.¦- In particular, the practical guide offers a hands-on introduction on how to use the most common partial equilibrium models and how to estimate the distributional effects of trade policies on welfare, in particular on inequality and poverty.
Brenton P., Cadot O. & Pierola M. D. (2012). Pathways to African export sustainability. Washington, USA: The World Bank. [doi] [url] [abstract]
African exporters suffer from low survival rates on international markets. They fail more often than others, incurring time and again the setup costs involved in starting new relationships. This high churning is a source of waste, uncertainty, and discouragement. However, this trend is not inevitable. The high ?infant mortality? of African exports is largely explained by Africa?s low-income business environment and, once properly benchmarked, Africa?s performance in terms of exporter failure is no outlier. Moreover, African exporters show vigorous entrepreneurship, with high entry rates into new products and markets despite formidable hurdles created by poor infrastructure, landlocked boundaries for some, and limited access to major sea routes for others. African exporters experiment a lot, and they frequently pay the price of failure. What matters for policy is how to ensure that viable ventures survive. Research carried out for this book demonstrates that governments can and should help to reduce the rate of failure of African export ventures through a mixture of improvements in the business environment, as well as well-targeted proactive interventions. The business environment can be made more conducive to sustainable export entrepreneurship through traditional policy prescriptions such as reducing transportation costs, facilitating trade through better technology and workflow in border management, improving the effectiveness of banking regulations to ensure the availability of trade finance, and striving for regulatory simplicity and coherence. In addition, governments can help leverage synergies between exporters. Original research featured in this book shows that African exporters improve each other's chances of survival when a critical mass of them penetrates a given market together. They also benefit from diaspora presence in destination markets. With adequate donor support and private-sector engagement, export-promotion agencies and technical-assistance programs can help leverage those synergies.
Cadot O., Fernandes A., Gourdon J. & Mattoo A. (Eds.). (2011). Where to spend the next million ? Applying impact evaluation to trade assistance. Washington/London: World Bank/CEPR. [url] [abstract]
Description: The focus of trade policy has shifted from economy-wide reductions in import tariffs and other border restrictions towards targeted interventions designed to facilitate trade and promote exports. Most of these interventions are based on the new mantra of "aid-for-trade" rather than on any hard evidence regarding what does and does not work. Rigorous impact-evaluation is needed to justify these interventions and to improve their design. At the same time rigorous impact-evaluation is feasible because unlike traditional trade policy, these interventions tend to be targeted and so it is possible to construct treatment and control groups. Even in the case of non-targeted interventions, such as customs reforms, meaningful evaluation may still be possible even though randomized control trials may not be feasible. The book presents a rich set of examples of impact evaluations of trade-related assistance using a range of methods - including experimental, quasi-experimental, and "natural experiments" - highlighting the particular issues and caveats arising in a trade context, and the valuable lessons that are already being learnt. Systematically building impact evaluation into trade projects could lead to better policy design and a more credible case for "aid-for-trade".
Cadot O., Malouche M. & Saez S. (2011). Streamlining non-tariff measures: A toolkit for policy makers. Washington, USA: The World Bank. [doi] [url] [abstract]
Overview¦This volume aims to assist policy makers in reviewing and improving "non-tariff measures" (NTMs), that is, policies other than tariffs that affect international trade. Traditionally, NTMs have been perceived and defined solely as non-tariff barriers (NTBs) that governments needed to remove in order to facilitate trade. This toolkit provides a new, practical approach to designing NTMs that carefully balances the reduction of trade costs against the preservation of public objectives. It is also intended to encourage governments to address the NTM agenda from domestic competitiveness and poverty perspectives, rather than from a mercantilist standpoint of concessions to trading partners. The basic question to be addressed is neatly summarized by the World Trade Organization (WTO), with regard to sanitary and phytosanitary (SPS) measures:¦How do you ensure that your country's consumers are being supplied with food that is safe to eat-"safe" by the standards you consider appropriate? And at the same time, how can you ensure that strict health and safety regulations are not being used as an excuse for protecting domestic producers? (WTO 2012).
Grether J. M., Cadot O. & de Melo J. (2008). Applied trade policy analysis: A handbook. UNCTAD Virtual Institute. [url]
Cadot O., Estevadeordal A., Suwa-Eisenmann A. & Verdier T. (Eds.). (2006). The origin of goods: Rules of origin in regional trade agreements. Oxford, UK: Oxford University Press. [doi]
Cadot O., Gabel L., Story J. & Webber D. (1996). European Casebook in Trade And Industrial Policy. Prentice Hall.
Parties de livre Cadot O., Estevadeordal A. & Suwa-Eisenmann A. (2006). Rules of Origin as Export Subsidies. In Cadot et al. (Ed.), The Origin of Goods: Rules of Origin in Regional Trade Agreements (pp. 149-172). Oxford University Press, CEPR.
Cadot O. & de Melo J. (1996). The Europe Agreements and EC-LDC Relations. In Herderschee H., van der Windt N. & Kuyvenhoven A. (Eds.), Transition in Central and Eastern Europe: Implications for EU-LDC Relations. Kluwer, Boston. [url]
Cadot O. & Desgagné B. (1996). Innovation Under the Threat of Stricter Environmental Standards. In Carraro C., Katsoulacos Y. & Xepapadeas A. (Eds.), Environmental Policy and Market Structure. Kluwer, Boston. [abstract]
This paper considers the threat of stricter regulation as a policy instrument to enhance innovation into cleaner technology. It is argued that in some contexts the government would find it optimal to regulate with positive probability but not with certainty. In those contexts the optimal policy is indeed made of regulatory threats; furthermore, we show that it is time-consistent, credible, involving little information, and immune to ex post renegotiation.
Cadot O. & de Melo J. (1995). France and the CEECs: Adjusting to Another Enlargement. In Faini R. & Portes R. (Eds.), European Union Trade with Eastern Europe: Adjustment and Opportunities. CEPR, London.
Cadot O. & Landis Gabel H. (1993). European Steel in Crisis. In Cadot et al. INSEAD (Ed.), European Casebook on Trade and Industrial Policy. Prentice Hall.
Cadot O. & Landis Gabel H. (1993). High Definition TV in Europe. In Cadot et al. INSEAD (Ed.), European Casebook on Trade and Industrial Policy. Prentice Hall.
Chapitre Andriamananjara S., Cadot O. & Grether J.-M. (2013). Tools for applied goods trade analysis: An introduction. In A. Lukauskas, R. Stern & G. Zanini (Eds.), Handbook of Trade Policy for Development. Oxford, UK: Oxford University Press. [doi] [abstract]
Soamiely Andriamananjara, Olivier Cadot, and Jean-Marie Grether discuss the data and statistical instruments available for applied trade policy analysis. A variety of analytical and statistical tools now permit trade analysts to create a rigorous but accessible portrait of the policy-relevant features of a country's trade patterns and the consequences of its policy choices. The authors examine the practical data and implementation issues for the most widely used tools to enable the reader to understand how these models are constructed and what can and cannot be gleaned from them. Among the topics covered are methods for presenting a picture of a country's trade performance and standard measures of its trade policy stance, the econometric techniques that can be used to assess ex post the effects of trade policies on trade flows and key features of the domestic economy, and the principle attributes of the tools used in the ex-ante assessment of trade policy.
Augier P., Cadot O., Gourdon J. & Malouche M. (2013). Non-tariff measures: Regional cooperation and competitiveness through regulatory governance. In M. Gasiorek (Ed.), The Arab Spring: Implications for economic Iitegration. London, UK: CEPR/FEMISE.
Cadot O., Carrère C. & Strauss-Kahn V. (2011). Trade diversification: Drivers and impacts. In M. Jansen, R. Peters & J. M. Salazar-Xirinachs (Eds.), ILO-EC publication, Trade and employment: From myths to facts (pp. 253-307). Geneva, CH: ILO-EC International Labour Office - European Commission. [url]
Cadot O., de Melo J. & Portugal-Pérez A. (2011). Understanding the barriers to entry effects of rules of origin in preferential trading arrangements with an application to Asian FTAs. In M. N. Jovanović (Ed.), International Handbook on the Economics of Integration (Vol. 1, pp. 187-203). Chentelham, UK: Edward Elgar. [web of science]
Cadot O., Dutoit L. & Olarreaga M. (2010). Sunk costs in agriculture. In B. Hoekman & G. Porto (Eds.), Trade Adjustment Costs In Developing Countries: Impacts, Determinants And Policy Responses (pp. 89-102). Washington, USA: The World Bank. [url]
Cadot O., Maliszewska M. & Saez S. (2010). Non-tariff measures: Impact, regulation, and trade facilitation. In G. McLinden, E. Fanta, D. Widdowson & T. Doyle (Eds.), Modernizing Border Management (pp. 215-230). Washington, USA: The World Bank.
Cadot O., Olarreaga M. & Tschopp J. (2008). Does Regionalism Reduce Trade-Policy Volatility?. In K. Anderson, E. Valenzuela & D. Sandri (Eds.), Fifty years of distortions to the world's agricultural prices. The World Bank, Washington.
Actes de conférence (partie) Cadot O., Estevadeordal A., de Melo J., Suwa A. & Tumurchudur B. (2002). Assessing the Effects of NAFTA's Rules of Origin. Policy Options for Latin America workshop, Washington (The World Bank).
Cadot O. (1994). Beyond the current gloom: is France losing competitiveness?. Proceedings of the IXth EBIC Conference, Paris.
Rapports Cadot O., Regolo J. & Yoshino Y. (2012). Firm-level patterns of export expansion: Evidence from Tanzania. The World Bank.
Cadot O. (2009). Stratégie de Développement Commercial : Rapport de Cadrage. Gouvernement du Mali.
Cadot O. (2008). Le secteur du Transit à Madagascar. The World Bank.
Cadot O., Fonseca E. & Yaye Sakho S. (2008). Sunset over the ATPDEA: Implications for Bolivian Real Incomes. The World Bank.
Cadot O., Molina A.-C. & Yaye Sakho S. (2008). Trade and Employment: Bolivia, 1992-2004. The World Bank.
Cadot O. (2007). Préférences et règles d'origine dans le commerce de textile entre la Suisse et les pays Euro-Med. Institut Créa.
Cadot O., Djiofack C. & de Melo J. (2007). Préférences et règles d'origine: Perspectives des APE pour l'Afrique de l'Ouest et Centrale. Agence Française de Développement.
Cadot O. (2006). Landlockedness, Infrastructure and Trade in Central Asia. The World Bank.
Cadot O., de Melo J. & Pondard E. (2006). GSP Rules of Origin: A Proposal for Reform. European Commission.
Cadot O. (2005). An Effective Strategy for Zambia's Regional Trade Agreements. The World Bank.
Cadot O., de Melo J. & Tumurchudur B. (2005). The Rules of Origin facing ESA Trade: Analysis and Proposals for EPA Negotiations. The World Bank.
Cadot O. (2004). Diagnostic Trade Integration Study: Chad. The World Bank.
Cadot O., Messerlin P. & François J. (2004). Tariffication of the EU's TRQ regime for bananas: evaluation of scenarios. Government of Ecuador.
Cadot O. & Blime P. (1996). Can Industrial Europe be Saved ?. Center for European Reform, London.
Cahiers de recherche Cadot O., Dutoit L. & Olarreaga M. (2005). How Costly is it for Poor Farmers to Lift Themselves out of Subsistence? (05.09). Université de Lausanne - HEC - DEEP. [pdf] [url] [abstract]
The main objective of this paper is to provide estimates of the cost of moving out of subsistence for Madagascar's farmers. The analysis is based on a simple asset-return model of occupational choice. Estimates suggest that the entry (sunk) cost associated with moving out of subsistence can be quite large|somewhere between 124 and 153 percent of a subsistence farmer's annual production. Our results make it possible to identify farm characteristics likely to generatee large gains if moved out of subsistence, yielding useful information for the targeting of trade-adjustment assistance programs.
Cadot O., Grether J.-M. & Olarreaga M. (2002). India's Trade Policy for Sale: Who Buys? How Much? (4168). CEPR.
Cadot O. & Nasir J. (2001). Incentives and Obstacles to Growth: Lessons from Manufacturing Case Studies in Madagascar (117, November, 117). The World Bank.
Cadot O., de Melo J. & Olarreaga M. (1999). Asymmetric Regionalism in Sub-Saharan Africa: Where do we stand ? (2299). CEPR. [abstract]
The paper reviews the likely economic effects of the Regional Economic Partnership Agreements (REPAs) proposed by the EU to the ACP countries to succeed to the Lom IV agreements. We argue that, in spite of some likely positive effects because of reciprocity and because of the North-South partnership, the pronounced asymmetries among the Southern partners will lead to strong redistributive and marginalization effects that will require compensations that are likely to be costly to implement. It is also pointed out that efforts at regional cooperation agreements would avoid some of the shortcomings associated with the proposed discriminatory trade preferences that would accompany the proposed REPAs. And if the REPAs are negotiated, they should be accompanied by compensatory transfers from the EU for tax revenues losses attributable to the agreements.
Thèses Fidalgo A., Cadot, O. (Dir.) (2013). Global economic development since 1700 : new data, new techniques, new results. Université de Lausanne, Faculté des hautes études commerciales.
Shakurova Y., Cadot O. (Dir.) (2011). Three essays in applied international trade. Université de Lausanne, Faculté des hautes études commerciales.
Tschopp J., Brûlhart M. & Cadot O. (Dir.) (2011). Three essays in international trade and economic adjustment. Université de Lausanne, Faculté des hautes études commerciales.
Kukenova M., Cadot O. (Dir.) (2010). Financial Markets and Real Ecinomy: Four Essays in International Trade. Université de Lausanne, Faculté des hautes études commerciales. [abstract]
Financial markets play an important role in an economy performing various functions like mobilizing and pooling savings, producing information about investment opportunities, screening and monitoring investments, implementation of corporate governance, diversification and management of risk. These functions influence saving rates, investment decisions, technological innovation and, therefore, have important implications for welfare. In my PhD dissertation I examine the interplay of financial and product markets by looking at different channels through which financial markets may influence an economy.My dissertation consists of four chapters. The first chapter is a co-authored work with Martin Strieborny, a PhD student from the University of Lausanne. The second chapter is a co-authored work with Melise Jaud, a PhD student from the Paris School of Economics. The third chapter is co-authored with both Melise Jaud and Martin Strieborny. The last chapter of my PhD dissertation is a single author paper.Chapter 1 of my PhD thesis analyzes the effect of financial development on growth of contract intensive industries. These industries intensively use intermediate inputs that neither can be sold on organized exchange, nor are reference-priced (Levchenko, 2007; Nunn, 2007). A typical example of a contract intensive industry would be an industry where an upstream supplier has to make investments in order to customize a product for needs of a downstream buyer. After the investment is made and the product is adjusted, the buyer may refuse to meet a commitment and trigger ex post renegotiation. Since the product is customized to the buyer's needs, the supplier cannot sell the product to a different buyer at the original price. This is referred in the literature as the holdup problem. As a consequence, the individually rational suppliers will underinvest into relationship-specific assets, hurting the downstream firms with negative consequences for aggregate growth. The standard way to mitigate the hold up problem is to write a binding contract and to rely on the legal enforcement by the state. However, even the most effective contract enforcement might fail to protect the supplier in tough times when the buyer lacks a reliable source of external financing. This suggests the potential role of financial intermediaries, banks in particular, in mitigating the incomplete contract problem. First, financial products like letters of credit and letters of guarantee can substantially decrease a risk and transaction costs of parties. Second, a bank loan can serve as a signal about a buyer's true financial situation, an upstream firm will be more willing undertake relationship-specific investment knowing that the business partner is creditworthy and will abstain from myopic behavior (Fama, 1985; von Thadden, 1995). Therefore, a well-developed financial (especially banking) system should disproportionately benefit contract intensive industries.The empirical test confirms this hypothesis. Indeed, contract intensive industries seem to grow faster in countries with a well developed financial system. Furthermore, this effect comes from a more developed banking sector rather than from a deeper stock market. These results are reaffirmed examining the effect of US bank deregulation on the growth of contract intensive industries in different states. Beyond an overall pro-growth effect, the bank deregulation seems to disproportionately benefit the industries requiring relationship-specific investments from their suppliers.Chapter 2 of my PhD focuses on the role of the financial sector in promoting exports of developing countries. In particular, it investigates how credit constraints affect the ability of firms operating in agri-food sectors of developing countries to keep exporting to foreign markets.Trade in high-value agri-food products from developing countries has expanded enormously over the last two decades offering opportunities for development. However, trade in agri-food is governed by a growing array of standards. Sanitary and Phytosanitary standards (SPS) and technical regulations impose additional sunk, fixed and operating costs along the firms' export life. Such costs may be detrimental to firms' survival, "pricing out" producers that cannot comply. The existence of these costs suggests a potential role of credit constraints in shaping the duration of trade relationships on foreign markets. A well-developed financial system provides the funds to exporters necessary to adjust production processes in order to meet quality and quantity requirements in foreign markets and to maintain long-standing trade relationships. The products with higher needs for financing should benefit the most from a well functioning financial system. This differential effect calls for a difference-in-difference approach initially proposed by Rajan and Zingales (1998). As a proxy for demand for financing of agri-food products, the sanitary risk index developed by Jaud et al. (2009) is used. The empirical literature on standards and norms show high costs of compliance, both variable and fixed, for high-value food products (Garcia-Martinez and Poole, 2004; Maskus et al., 2005). The sanitary risk index reflects the propensity of products to fail health and safety controls on the European Union (EU) market. Given the high costs of compliance, the sanitary risk index captures the demand for external financing to comply with such regulations.The prediction is empirically tested examining the export survival of different agri-food products from firms operating in Ghana, Mali, Malawi, Senegal and Tanzania. The results suggest that agri-food products that require more financing to keep up with food safety regulation of the destination market, indeed sustain longer in foreign market, when they are exported from countries with better developed financial markets.Chapter 3 analyzes the link between financial markets and efficiency of resource allocation in an economy. Producing and exporting products inconsistent with a country's factor endowments constitutes a serious misallocation of funds, which undermines competitiveness of the economy and inhibits its long term growth. In this chapter, inefficient exporting patterns are analyzed through the lens of the agency theories from the corporate finance literature. Managers may pursue projects with negative net present values because their perquisites or even their job might depend on them. Exporting activities are particularly prone to this problem. Business related to foreign markets involves both high levels of additional spending and strong incentives for managers to overinvest. Rational managers might have incentives to push for exports that use country's scarce factors which is suboptimal from a social point of view. Export subsidies might further skew the incentives towards inefficient exporting. Management can divert the export subsidies into investments promoting inefficient exporting.Corporate finance literature stresses the disciplining role of outside debt in counteracting the internal pressures to divert such "free cash flow" into unprofitable investments. Managers can lose both their reputation and the control of "their" firm if the unpaid external debt triggers a bankruptcy procedure. The threat of possible failure to satisfy debt service payments pushes the managers toward an efficient use of available resources (Jensen, 1986; Stulz, 1990; Hart and Moore, 1995). The main sources of debt financing in the most countries are banks. The disciplining role of banks might be especially important in the countries suffering from insufficient judicial quality. Banks, in pursuing their rights, rely on comparatively simple legal interventions that can be implemented even by mediocre courts. In addition to their disciplining role, banks can promote efficient exporting patterns in a more direct way by relaxing credit constraints of producers, through screening, identifying and investing in the most profitable investment projects. Therefore, a well-developed domestic financial system, and particular banking system, would help to push a country's exports towards products congruent with its comparative advantage.This prediction is tested looking at the survival of different product categories exported to US market. Products are identified according to the Euclidian distance between their revealed factor intensity and the country's factor endowments. The results suggest that products suffering from a comparative disadvantage (labour-intensive products from capital-abundant countries) survive less on the competitive US market. This pattern is stronger if the exporting country has a well-developed banking system. Thus, a strong banking sector promotes exports consistent with a country comparative advantage.Chapter 4 of my PhD thesis further examines the role of financial markets in fostering efficient resource allocation in an economy. In particular, the allocative efficiency hypothesis is investigated in the context of equity market liberalization.Many empirical studies document a positive and significant effect of financial liberalization on growth (Levchenko et al. 2009; Quinn and Toyoda 2009; Bekaert et al., 2005). However, the decrease in the cost of capital and the associated growth in investment appears rather modest in comparison to the large GDP growth effect (Bekaert and Harvey, 2005; Henry, 2000, 2003). Therefore, financial liberalization may have a positive impact on growth through its effect on the allocation of funds across firms and sectors.Free access to international capital markets allows the largest and most profitable domestic firms to borrow funds in foreign markets (Rajan and Zingales, 2003). As domestic banks loose some of their best clients, they reoptimize their lending practices seeking new clients among small and younger industrial firms. These firms are likely to be more risky than large and established companies. Screening of customers becomes prevalent as the return to screening rises. Banks, ceteris paribus, tend to focus on firms operating in comparative-advantage sectors because they are better risks. Firms in comparative-disadvantage sectors finding it harder to finance their entry into or survival in export markets either exit or refrain from entering export markets. On aggregate, one should therefore expect to see less entry, more exit, and shorter survival on export markets in those sectors after financial liberalization.The paper investigates the effect of financial liberalization on a country's export pattern by comparing the dynamics of entry and exit of different products in a country export portfolio before and after financial liberalization.The results suggest that products that lie far from the country's comparative advantage set tend to disappear relatively faster from the country's export portfolio following the liberalization of financial markets. In other words, financial liberalization tends to rebalance the composition of a country's export portfolio towards the products that intensively use the economy's abundant factors.
Dutoit L., Cadot O. (Dir.) (2008). An analysis of agricultural development and the market and an econometric survey. Université de Lausanne, Faculté des hautes études commerciales.
Tumurchudur B., Cadot O. (Dir.) (2007). Rules of origin : from analysis to reform. Université de Lausanne, Faculté des hautes études commerciales. [abstract]
General Introduction¦This thesis can be divided into two main parts :the first one, corresponding to the first three chapters, studies Rules of Origin (RoOs) in Preferential Trade Agreements (PTAs); the second part -the fourth chapter- is concerned with Anti-Dumping (AD) measures.¦Despite wide-ranging preferential access granted to developing countries by industrial ones under North-South Trade Agreements -whether reciprocal, like the Europe Agreements (EAs) or NAFTA, or not, such as the GSP, AGOA, or EBA-, it has been claimed that the benefits from improved market access keep falling short of the full potential benefits. RoOs are largely regarded as a primary cause of the under-utilization of improved market access of PTAs.¦RoOs are the rules that determine the eligibility of goods to preferential treatment. Their economic justification is to prevent trade deflection, i.e. to prevent non-preferred exporters from using the tariff preferences. However, they are complex, cost raising and cumbersome, and can be manipulated by organised special interest groups. As a result, RoOs can restrain trade beyond what it is needed to prevent trade deflection and hence restrict market access in a statistically significant and quantitatively large proportion.¦Part l¦In order to further our understanding of the effects of RoOs in PTAs, the first chapter, written with Pr. Olivier Cadot, Celine Carrère and Pr. Jaime de Melo, describes and evaluates the RoOs governing EU and US PTAs. It draws on utilization-rate data for Mexican exports to the US in 2001 and on similar data for ACP exports to the EU in 2002. The paper makes two contributions. First, we construct an R-index of restrictiveness of RoOs along the lines first proposed by Estevadeordal (2000) for NAFTA, modifying it and extending it for the EU's single-list (SL). This synthetic R-index is then used to compare Roos under NAFTA and PANEURO.¦The two main findings of the chapter are as follows. First, it shows, in the case of PANEURO, that the R-index is useful to summarize how countries are differently affected by the same set of RoOs because of their different export baskets to the EU. Second, it is shown that the Rindex is a relatively reliable statistic in the sense that, subject to caveats, after controlling for the extent of tariff preference at the tariff-line level, it accounts for differences in utilization rates at the tariff line level. Finally, together with utilization rates, the index can be used to estimate total compliance costs of RoOs.¦The second chapter proposes a reform of preferential Roos with the aim of making them more transparent and less discriminatory. Such a reform would make preferential blocs more "cross-compatible" and would therefore facilitate cumulation. It would also contribute to move regionalism toward more openness and hence to make it more compatible with the multilateral trading system.¦It focuses on NAFTA, one of the most restrictive FTAs (see Estevadeordal and Suominen 2006), and proposes a way forward that is close in spirit to what the EU Commission is considering for the PANEURO system. In a nutshell, the idea is to replace the current array of RoOs by a single instrument- Maximum Foreign Content (MFC). An MFC is a conceptually clear and transparent instrument, like a tariff. Therefore changing all instruments into an MFC would bring improved transparency pretty much like the "tariffication" of NTBs.¦The methodology for this exercise is as follows: In step 1, I estimate the relationship between utilization rates, tariff preferences and RoOs. In step 2, I retrieve the estimates and invert the relationship to get a simulated MFC that gives, line by line, the same utilization rate as the old array of Roos. In step 3, I calculate the trade-weighted average of the simulated MFC across all lines to get an overall equivalent of the current system and explore the possibility of setting this unique instrument at a uniform rate across lines. This would have two advantages. First, like a uniform tariff, a uniform MFC would make it difficult for lobbies to manipulate the instrument at the margin. This argument is standard in the political-economy literature and has been used time and again in support of reductions in the variance of tariffs (together with standard welfare considerations). Second, uniformity across lines is the only way to eliminate the indirect source of discrimination alluded to earlier. Only if two countries face uniform RoOs and tariff preference will they face uniform incentives irrespective of their initial export structure.¦The result of this exercise is striking: the average simulated MFC is 25% of good value, a very low (i.e. restrictive) level, confirming Estevadeordal and Suominen's critical assessment of NAFTA's RoOs. Adopting a uniform MFC would imply a relaxation from the benchmark level for sectors like chemicals or textiles & apparel, and a stiffening for wood products, papers and base metals. Overall, however, the changes are not drastic, suggesting perhaps only moderate resistance to change from special interests.¦The third chapter of the thesis considers whether Europe Agreements of the EU, with the current sets of RoOs, could be the potential model for future EU-centered PTAs. First, I have studied and coded at the six-digit level of the Harmonised System (HS) .both the old RoOs -used before 1997- and the "Single list" Roos -used since 1997. Second, using a Constant Elasticity Transformation function where CEEC exporters smoothly mix sales between the EU and the rest of the world by comparing producer prices on each market, I have estimated the trade effects of the EU RoOs. The estimates suggest that much of the market access conferred by the EAs -outside sensitive sectors- was undone by the cost-raising effects of RoOs. The chapter also contains an analysis of the evolution of the CEECs' trade with the EU from post-communism to accession.¦Part II¦The last chapter of the thesis is concerned with anti-dumping, another trade-policy instrument having the effect of reducing market access. In 1995, the Uruguay Round introduced in the Anti-Dumping Agreement (ADA) a mandatory "sunset-review" clause (Article 11.3 ADA) under which anti-dumping measures should be reviewed no later than five years from their imposition and terminated unless there was a serious risk of resumption of injurious dumping.¦The last chapter, written with Pr. Olivier Cadot and Pr. Jaime de Melo, uses a new database on Anti-Dumping (AD) measures worldwide to assess whether the sunset-review agreement had any effect. The question we address is whether the WTO Agreement succeeded in imposing the discipline of a five-year cycle on AD measures and, ultimately, in curbing their length.¦Two methods are used; count data analysis and survival analysis. First, using Poisson and Negative Binomial regressions, the count of AD measures' revocations is regressed on (inter alia) the count of "initiations" lagged five years. The analysis yields a coefficient on measures' initiations lagged five years that is larger and more precisely estimated after the agreement than before, suggesting some effect. However the coefficient estimate is nowhere near the value that would give a one-for-one relationship between initiations and revocations after five years. We also find that (i) if the agreement affected EU AD practices, the effect went the wrong way, the five-year cycle being quantitatively weaker after the agreement than before; (ii) the agreement had no visible effect on the United States except for aone-time peak in 2000, suggesting a mopping-up of old cases. Second, the survival analysis of AD measures around the world suggests a shortening of their expected lifetime after the agreement, and this shortening effect (a downward shift in the survival function postagreement) was larger and more significant for measures targeted at WTO members than for those targeted at non-members (for which WTO disciplines do not bind), suggesting that compliance was de jure. A difference-in-differences Cox regression confirms this diagnosis: controlling for the countries imposing the measures, for the investigated countries and for the products' sector, we find a larger increase in the hazard rate of AD measures covered by the Agreement than for other measures.
Anson J., Cadot O. (Dir.) (2006). Economics of public governance with strategic production of information: four essays. Université de Lausanne, Faculté des hautes études commerciales. [abstract]
SUMMARY¦This paper analyses the outcomes of the EEA and bilateral agreements vote at the level of the 3025 communities of the Swiss Confederation by simultaneously modelling the vote and the participation decisions. Regressions include economic and political factors. The economic variables are the aggregated shares of people employed in the losing, Winning and neutral sectors, according to BRUNETTI, JAGGI and WEDER (1998) classiﬁcation, Which follows a Ricardo-Viner logic, and the average education levels, which follows a Heckscher-Ohlin approach. The political factors are those used in the recent literature. The results are extremely precise and consistent. Most of the variables have the predicted sign and are significant at the l % level. More than 80 % of the communities' vote variance is explained by the model, substantially reducing the residuals when compared to former studies. The political variables do have the expected signs and are significant as Well. Our results underline the importance of the interaction between electoral choice and participation decisions as well as the importance of simultaneously dealing with those issues. Eventually they reveal the electorate's high level of information and rationality.¦ZUSAMMENFASSUNG¦Unser Beitrag analysiert in einem Model, welches gleichzeitig die Stimm- ("ja" oder "nein") und Partizipationsentscheidung einbezieht, den Ausgang der Abstimmungen über den Beitritt zum EWR und über die bilateralen Verträge für die 3025 Gemeinden der Schweiz. Die Regressionsgleichungen beinhalten ökonomische und politische Variabeln. Die ökonomischen Variabeln beinhalten die Anteile an sektoriellen Arbeitsplatzen, die, wie in BRUNETTI, JAGGIl.1I1d WEDER (1998), in Gewinner, Verlierer und Neutrale aufgeteilt Wurden, gemäß dem Model von Ricardo-Viner, und das durchschnittliche Ausbildungsniveau, gemäß dem Model von Heckscher-Ohlin. Die politischen Variabeln sind die in der gegenwärtigen Literatur üblichen. Unsere Resultate sind bemerkenswert präzise und kohärent. Die meisten Variabeln haben das von der Theorie vorausgesagte Vorzeichen und sind hoch signifikant (l%). Mehr als 80% der Varianz der Stimmabgabe in den Gemeinden wird durch das Modell erklärt, was, im Vergleich mit früheren Arbeiten, die unerklärten Residuen Wesentlich verkleinert. Die politischen Variabeln haben auch die erwarteten Vorzeichen und sind signifikant. Unsere Resultate unterstreichen die Bedeutung der Interaktion zwischen der Stimm- und der Partizipationsentscheidung, und die Bedeutung diese gleichzeitig zu behandeln. Letztendlich, belegen sie den hohen lnformationsgrad und die hohe Rationalität der Stimmbürger.¦RESUME¦Le présent article analyse les résultats des votations sur l'EEE et sur les accords bilatéraux au niveau des 3025 communes de la Confédération en modélisant simultanément les décisions de vote ("oui" ou "non") et de participation. Les régressions incluent des déterminants économiques et politiques. Les déterminants économiques sont les parts d'emploi sectoriels agrégées en perdants, gagnants et neutres selon la classification de BRUNETTI, JAGGI ET WEDER (1998), suivant la logique du modèle Ricardo-Viner, et les niveaux de diplômes moyens, suivant celle du modèle Heckscher-Ohlin. Les déterminants politiques suivent de près ceux utilisés dans la littérature récente. Les résultats sont remarquablement précis et cohérents. La plupart des variables ont les signes prédits par les modèles et sont significatives a 1%. Plus de 80% de la variance du vote par commune sont expliqués par le modèle, faisant substantiellement reculer la part résiduelle par rapport aux travaux précédents. Les variables politiques ont aussi les signes attendus et sont aussi significatives. Nos résultats soulignent l'importance de l'interaction entre choix électoraux et décisions de participation et l'importance de les traiter simultanément. Enfin, ils mettent en lumière les niveaux élevés d'information et de rationalité de l'électorat.
Autres Cadot O. & De Candia F. (2001). Biotechnologie: Quelle place dans la société de demain ? Published in "Bulletin HEC" No 63.