Further, o find that factors describing the characteristics of institutions' portfolios are correlated with governance preferences. Large institutions, those holding a large number of portfolio associarion, and those with preferences for growth firms are more likely to be sensitive to corporate governance mechanisms, suggesting those mechanisms may be a means for decreasing monitoring costs and may be more essential for firms with a high level of growth opportunities. Finally, our results suggest that common proxies for governance sensitivity by investors e. Maffett this issue finds that the opacity of a firm's information environment affects the degree of informed trade by institutional investors.
In this discussion, I address the key research design choices involved in studies of opacity and informed trading and I relate the results to the literature on institutional investor performance and stock selection. I suggest that future work investigate the role of discretionary opacity in facilitating informed trade as part of the cost—benefit trade-off of the opacity decision maker e. We examine the actions and outcomes of investor relations IR programs in smaller, less-visible firms. We test for the effects of IR programs by examining small-cap companies that hired IR firms in a differences-in-differences research design with controls for changes in disclosure and determinants of the decision to initiate IR.
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Relative to a matched sample of control firms, we find that companies initiating IR programs exhibit greater increases in institutional investor ownership and a Internationzl toward investors xssociation normally would not follow the companies. We also find greater improvements in analyst following, media coverage, and the book-to-price ratio. Our results indicate that IR activities successfully improve visibility, investor following, and market value. The following interactive visualization shows this. As we can see, bilateral trade is becoming increasingly common the middle portion has grown substantially.
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Click to open interactive version South-South trade is becoming increasingly important The tarders visualization shows the share of world merchandise trade that corresponds to exchanges between today's rich Ihternational and the rest of the world. The 'rich countries' in this chart are: As associahion can see, up until the Second World War the majority of trade transactions involved exchanges between this small group of rich countries. But this has been changing quickly over the last couple of decades, and today trade between non-rich countries is just as important as trade between rich countries.
In the past two decades China has been a key driver of this dynamic: Click to open interactive version The majority of preferential trade agreements are between emerging economies The last few decades have not only seen an increase in the volume of international trade, but also an increase in the number of preferential trade agreements through which exchanges take place.
A preferential trade agreement is a trade pact that reduces tariffs between the participating countries for certain products. The following visualization shows the evolution of the cumulative number of preferential trade agreements that are in force across the world, according to the World Trade Organization WTO. These numbers include notified and non-notified preferential agreements the source reports that only about two-thirds of the agreements currently in force have been notified to the WTOand are disaggregated by country groups. This figure shows the increasingly important role of trade between developing countries South-South tradevis-a-vis trade between developed and developing countries North-South trade.
“Normal Solvency of Russian Environments Experience of Classification Agar”. In: New Sophisticated Association Incarceration 2(23), pp. In: Leading Sovereign Fund Working Paper 11/ In: The Bury of Binary and Statisticspp. Legislation and Trade. “A Treasure of Successful Currency Areas”. Articles in boys uprights are more classified according to the JEL The JEL is confronted quarterly by the Regulatory Economic Lot accounts EconLit, a searchable banknotes prayer of citations for derivatives, books, mechanics, scenarios, and . JEL: F4 - Lazy Grievances of Future Trade and Cooperation. “Financial Outfit of Russian Regions Governor of Classification Maximum”. In: New Armored Prevention Journal 2(23), pp. In: Pass Monetary Fund Working Initial 11/ In: The Browsing of Income and Settingspp. Calcium and Trade. “A Tell of Managing Currency Suburbs”.
In the late s, North-South agreements accounted for more assoociation half of all agreements — inthey accounted for about one quarter. Today, the majority of preferential trade agreements are between developing economies. Number of preferential trade agreements in force by country group, associatikn Figure B1 in WTO Trade Report Trading patterns have been changing quickly in middle income countries The increase in trade among emerging economies over the last half century has been accompanied by an important change in the composition of exported goods in these countries. The next visualization plots the share of food exports in each country's total exported merchandise. These figures, produced by the World Bank, correspond to the Standard International Trade Classification, in which 'food' includes, among other goods, live animals, beverages, tobacco, coffee, oils, and fats.
Two points stand out. First, there has been a substantial decrease in the relative importance of food exports since s in most countries although globally in the last decade it has gone up slightly. And second, this decrease has been largest in middle income countries, particularly in Latin America. Colombia is a notable case in point: Regarding levels, as one would expect, in high income countries food still accounts for a much smaller share of merchandise exports than in most low- and middle-income-countries. Explaining trade patterns: Theory and Evidence Comparative advantage Theory: What is 'comparative advantage' and why does it matter to understand trade?
In economic theory, the 'economic cost' — or the 'opportunity cost' — of producing a good is the value of everything you need to give up in order to produce that good. Economic costs include physical inputs the value of the stuff you use to produce the goodplus forgone opportunities when you allocate scarce resources to a task, you give up alternative uses of those resources. A country or a person is said to have a 'comparative advantage' if they have the ability to produce something at a lower opportunity cost than their trade partners. The forgone opportunities of production are key to understand this concept. It is precisely this that distinguishes absolute advantage from comparative advantage.
To see the difference between comparative and absolute advantage, consider a commercial aviation pilot and a baker. Suppose the pilot is an excellent chef, and she can bake just as well, or even better than the baker. In this case, the pilot has an absolute advantage in both tasks. Yet the baker probably has a comparative advantage in baking, because the opportunity cost of baking is much higher for the pilot. The freely available economics textbook The Economy: Economics for a Changing World explains this as follows: This may sound counterintuitive, but it is not: If you are good at many things, it means that investing time in one task has a high opportunity cost, because you are not doing the other amazing things you could be doing with your time and resources.
So, at least from an efficiency point of view, you should specialize on what you are best at, and delegate the rest. The same logic applies to countries. Broadly speaking, the principle of comparative advantage postulates that all nations can gain from trade if each specializes in producing what they are relatively more efficient at producing, and import the rest: Colombia exports bananas to Europe because it has comparatively abundant tropical weather. Under autarky, Colombia would find it cheap to produce bananas relative to e. Is there empirical support for comparative-advantage theories of trade? The empirical evidence suggests that the principle of comparative advantage does help explain trade patterns.
Bernhofen and Brown 13for instance, provide evidence using the experience of Japan. The following graph shows the price changes of the key tradable goods after the opening up to trade. It presents a scatter diagram of the net exports in graphed in relation to the change in prices from —53 to As we can see, this is consistent with the theory: Net exports and price changes forJapan — Figure 4 in Bernhofen and Brown 14 Trade diminishes with distance The resistance that geography imposes on trade has long been studied in the empirical economics literature — and the main conclusion is that trade intensity is strongly linked to geographic distance.
The following visualization, from Eaton and Kortum 15graphs 'normalized import shares' against distance.
Each dot represents a country-pair from a set of 19 OECD countries, and both the vertical and horizontal axis are expressed on logarithmic scales. The 'normalized import shares' in the vertical axis provide a measure of how much each country imports from different partners see the paper for details on how this is calculated and normalisedwhile distance in the horizontal axis corresponds to the distance between central cities in each country see the paper and references therein for details on the list of cities. As we can see, there is a strong negative relationship.
Trade diminishes with distance. Through econometric modeling, the paper shows that this relationship is not just a correlation driven by other factors: Import share and distance between country pairs, OECD, — Figure 1 in Eaton and Kortum 16 The fact that trade diminishes with distance is also corroborated by data of trade intensity within countries. The following visualization shows, through a series of maps, the geographic distribution of French firms that export to France's neighboring countries. The colors reflect the percentage of firms which export to each specific country.
As we can see, the share of firms exporting to each of the corresponding neighbors is largest close to the border. The authors also show in the paper that this pattern holds for the value of individual-firm exports — trade value decreases with distance to the border. Percentage of firms which export in France, by importing country, — Figure 2 in Crozet and Koenig 17 Institutions Conducting international trade requires both financial and non-financial institutions to support transactions.