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Economic Incentives and International Trade

Listed author(s):
  • Dalia Marin
  • Monika Schnitzer

This paper studies the importance of incentives as a determinant of international trade flows. We argue that barter, countertrade and foreign direct investment can be seen as efficient institutions that mitigate contractual hazards which arise in technology trade, marketing and imperfect capital markets. Paying an import with export goods rather than cash (barter) helps to overcome incentive problems that arise in debt repayment of highly indebted countries. Payment in export goods removes the anonymity of the medium of exchange and thus allows to create a collateral for the creditor. Furthermore, tying an import with an export (countertrade) helps to solve the incentive problems related to the technology transfer to developing countries. The export flow serves as a "hostage" that deters cheating on the quality of the imported technology good. The predictions of the two models are consistent with the pattern of trade of actual barter and countertrade contracts. ZUSAMMENFASSUNG - (Ökonomische Anreize und internationaler Handel) ´ Diese Studie untersucht die Bedeutung von ökonomischen Anreizen als Bestimmungsgröße internationaler Handelsflüsse. Wir argumentieren, daß ausländische Direktinvestitionen, Joint Ventures, der Barterhandel und Kompensationsgeschäfte als effiziente Institutionen angesehen werden können, die Anreizprobleme vermeiden helfen, die bei dem Technologiehandel, bei der Vermarktung neuer Produkte und auf unvollkommenen Kapitalmärkten auftreten. Die Bezahlung eines Imports mit Exportgütern, statt mit Geld (Barter), hilft, Anreizprobleme zu überwinden, die in hochverschuldeten Ländern bei der Schuldentilgung auftreten. Die Zahlung mit Gütern hebt die Anonymität des Tauschmediums auf und erlaubt somit dem Gläubiger eine Sicherheit für seinen Kredit zu schaffen. Die Verknüpfung eines Imports mit einem Export (Countertrade) hilft die Anreizprobleme zu überwinden, die mit dem Technologietransfer in Entwicklungsländer verbunden sind. Das Exportgeschäft dient als "Geisel" im Sinne von O. Williamson, die dazu dient, Betrugsanreize im Importgeschäft bei der Lieferung der Technologie abzuschrecken. Dadurch kann Countertrade als ein erst-bestes Substitut für eine ausländische Direktinvestition angesehen werden, bei der die Anreizprobleme bei der Technologielieferung durch eine firmeninterne Organisation gelöst werden. Die Voraussagen beider Modelle sind konsistent mit den Spezialisierungsmuster des Barter- und Countertrade- Handels.

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Paper provided by Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG) in its series CIG Working Papers with number FS IV 97-24.

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Length: 16 pages
Date of creation: Oct 1997
Publication status: Published in: R. Mirus/B. Yeung (eds.): The Economics of Barter and Countertrade . Cheltenham, U.K.: Elgar, 2001, pp. 113-144.
Handle: RePEc:wzb:wzebiv:fsiv97-24
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  1. Dalia Marin & Monika Schnitzer, 2002. "The Economic Institution Of International Barter," Economic Journal, Royal Economic Society, vol. 112(479), pages 293-316, April.
  2. Dalia Marin, 1990. "Tying in International Trade: Evidence on Countertrade," NBER Chapters,in: New Issues in the Uruguay Round, pages 445-462 National Bureau of Economic Research, Inc.
  3. Bulow, Jeremy & Rogoff, Kenneth, 1989. "A Constant Recontracting Model of Sovereign Debt," Journal of Political Economy, University of Chicago Press, vol. 97(1), pages 155-178, February.
  4. Marin, Dalia, 1990. "Tying in International Trade," Munich Reprints in Economics 3114, University of Munich, Department of Economics.
  5. Greif, Avner, 1992. "Institutions and International Trade: Lessons from the Commercial Revolution," American Economic Review, American Economic Association, vol. 82(2), pages 128-133, May.
  6. Hans-Peter Lankes & A. J. Venables, 1996. "Foreign direct investment in economic transition: the changing pattern of investments," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 4(2), pages 331-347, October.
  7. Chan, Raissa & Hoy, Michael, 1991. "East--West joint ventures and buyback contracts," Journal of International Economics, Elsevier, vol. 30(3-4), pages 331-343, May.
  8. Williamson, Oliver E, 1983. "Credible Commitments: Using Hostages to Support Exchange," American Economic Review, American Economic Association, vol. 73(4), pages 519-540, September.
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