Three Essays on International Trade

Abstract

This dissertation is composed of three essays. The first essay assesses the impact of agricultural support policies on refined sugar exports. A theoretically consistent gravity model is extended to include the spatial dependence across trade flows. The proposed methodology takes into account spatial effects since it is based on the concept of location. The study provides evidence of the distorting effects of market price support on exports of refined sugar. The second essay uses balance panel data for 156 countries from 2006 to 2008 to investigate how trade facilitation, defined as reducing time delays at borders affects trade. I estimate a Heckman sample selection model, and find that a 10% reduction in relative delays is associated with an increase of 8% in the volume of trade. Additionally, the simulations results show that improved trade facilitation would be beneficial for all countries but especially for developing countries. The third essay develops a spatial panel simultaneous equation model to first investigate the relationship between foreign direct investment and trade, and second to assess the presence of complex foreign direct investment of multinational firms using 24 OECD countries from 1999-2009. The empirical results indicate a complementary relationship between foreign direct investment and trade, as well as the presence of complex foreign direct investment with agglomeration economies.