International Trade in a Competitive World: Empirical Evidence from the UK

This thesis aims to provide helpful insights into trade in goods and services. The first two chapters focus on the micro-level determinants of international trade in services in the UK: The aim of the first chapter is to investigate the determinants of trade in services in a gravity framework, considering both country- and firm-level factors. The second chapter investigates how the determinants of service trade vary along the distribution of trade value and how the firm-level characteristics influence the impact of typical gravity variables. The third chapter focuses on the UK's imports of goods from China and investigates the impact of increasing Chinese import competition on local labour market outcomes in the UK. The results from the first chapter show that the gravity equation succeeds in explaining the determinants of service exports and imports. When the disaggregated level data is taken into account, the coefficients of the trade determinants change considerably, suggesting that the policies adopted according to the results of the country-level analyses do not fit all of the trading firms. The second chapter provides evidence for the parameter heterogeneity in firm-level service exports and imports in a gravity context. According to the findings, the impact of typical gravity variables is influenced by the firm characteristics and differs along the distribution of trade value. The findings from the third chapter show that exposure to Chinese imports does not have any significant impact on workers in the UK. The results are sustained when the different demographic groups, such as age, gender and education level are considered, except in the case of graduate employment. Accordingly, exposure to Chinese imports is associated with a decline in graduate employment only. The analysis regarding the firm characteristics suggests that exposure to Chinese imports within these local labour markets decreases the average firm size, whereas the average labour productivity remains unaffected.