Essays on Complexity and trade barriers at the sub-national level

Resumen

The work presented in this Doctoral Thesis constitutes unpublished research on intra-national and international trade from a regional point of view. Specifically, on different aspects related to the generation and accumulation of knowledge, the concept of economic complexity, and other diverse aspects related to the role of administrative borders (inside and outside a country), the quality of infrastructures, social and business links (networks) or the presence of regulatory barriers at different territorial levels. All the analyses carried out are made with a great geographical and sectorial disaggregation, focusing on these effects on the Spanish provinces. The first objective of this Thesis is to contribute to the literature of economic complexity and regional science by generating the first complexity database at a subnational level with intra-national and international trade data for Spain. Following and the different incursions have been made with this same objective (Balland and Rigby, 2017; Reynolds et al., 2017; Gao and Zhou, 2018). However, none of these examples use a trade database equivalent to that used to calculate the original complexity indicators developed by Hausmann and Hidalgo (2009; 2011; 2014). For this, a trade database will be used that does include not only international trade in each region but also intra-national trade (distinguishing intra-regional and inter-regional trade). The inclusion of intra-national trade flows lies precisely in the intention of getting as close as possible to the productive capacity of each of the regions. The hypothesis that arises in this research is the need to include this type of intra-national data when estimating complexity at a broader level of territorial disaggregation. The thesis describes the proposed methodology for the estimation of this novel database, providing a profound descriptive analysis that helps to categorize the situation and evolution of all the Spanish provinces over a long period. Likewise, we develop an econometric analysis similar to that carried out in the reference articles that link the levels of complexity with growth and development (wealth) at the country level. Also, we explore in-depth the contribution of our new global trade indicators (intra-national and international), as well as providing new specifications and sensitivity analysis. The second objective of the thesis is the study of complexity from the point of view of the products and the destinations they reach according to their complexity. The basic hypothesis of the study will be to contrast that indeed complex products are those that travel greater distances and are capable of crossing administrative borders (mainly international) more easily. We perform two complementary analyses. First, the relationship between complexity, distance, and trade borders will be analysed, focusing on the intensity of exports (their monetary value). We used gravity trade models, focusing on the relationship between complexity and distance to check the first relation. The second analysis focus on the probability of entering (or not) in more international markets, analysing the number of different international destinations that a product of a specific regional origin is capable of reaching according to its complexity. The final objective of the thesis is to identify the determinants of trade, focusing our attention precisely on the least known and most substantial part of the trade: intra-national flows. We follow a novel methodology proposed in Agnosteva et al. (2019) to quantify the so-called “unexplained trade barriers” for the case of trade flows in Canada. Our objective is to use this methodology to quantify the non-tariff barriers of the Spanish regions. Once calculated, we will focus on identifying the potential factors that determine why regions trade more with each other, after discounting the higher trade costs associated with greater distances. Finally, the methodology of "unexplained trade barriers" will be used to calculate them not only from a regional point of view but also from a sectoral point of view. The main objective of this calculation is to identify if divergences of “unexplained barriers” are due to specific conditionals in some or all sectors.