|
on International Trade |
| By: | Ndubuisi, Gideon (UNU-MERIT, Maastricht University); Foster-McGregor, Neil (UNU-MERIT, Maastricht University) |
| Abstract: | How trade related is Intellectual property right (IPRs) protection? Extant studies examining the relationship between domestic Intellectual Property Rights (IPRs) protection and trade focus predominately on imports whilst neglecting exports. This paper focuses on the latter, further examining the effect of domestic IPRs on the margins of exports. Results from the study reveal that IPRs are trade-related and that it can be a tool for stimulating exports in both developed and developing countries. We also find that the level of IPRs in the exporting country matters more to the exporter than the level of IPRs in the importing country. Examining the different export margins, we obtain robust evidence suggesting that stronger IPRs in the exporter country works largely along the extensive margin, with coefficients on the intensive margin tending to be insignificant. We discuss the welfare and growth implications of these findings in the conclusion. |
| Keywords: | Intellectual Property Rights (IPRs); Exports, Intensive margin, Extensive margin |
| JEL: | O34 F13 F14 |
| Date: | 2018–09–26 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2018035&r=int |
| By: | Ana M. Fernandes; Peter J. Klenow; Sergii Meleshchuk; Denisse Pierola; Andrés Rodríguez-Clare |
| Abstract: | The Melitz model highlights the importance of the extensive margin (the number of firms exporting) for trade flows. Using the World Bank's Exporter Dynamics Database (EDD) featuring firm-level exports from 50 countries, we find that around 50% of variation in exports is along the extensive margin --- a quantitative victory for the Melitz framework. The remaining 50% on the intensive margin (exports per exporting firm) contradicts a special case of Melitz with Pareto-distributed firm productivity, which has become a tractable benchmark. This benchmark model predicts that, conditional on the fixed costs of exporting, all variation in exports across trading partners should occur on the extensive margin. We find that moving from a Pareto to a lognormal distribution allows the Melitz model to match the role of the intensive margin in the EDD. We use likelihood methods and the EDD to estimate a generalized Melitz model with a joint lognormal distribution for firm-level productivity, fixed costs and demand shifters, and use "exact hat algebra" to quantify the effects of a decline in trade costs on trade flows and welfare in the estimated model. The welfare effects turn out to be quite close to those in the standard Melitz-Pareto model when we choose the Pareto shape parameter to fit the average trade elasticity implied by our estimated Melitz-lognormal model, although there are significant differences regarding the effects on trade flows. |
| JEL: | F00 F14 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25195&r=int |
| By: | Emanuel Ornelas; Marcos Ritel |
| Abstract: | We use an empirical gravity equation approach to study how nonreciprocal trade preferences (NRTPs), enacted mainly through the Generalized System of Preferences, affect the exports of the beneficiary nations. In line with existing studies, the average trade effect stemming from nonreciprocal preferences is highly unstable across specifications. However, once we allow for heterogeneous effects, results become robust and economically important. Specifically, NRTPs have a strong effect on the exports of beneficiaries when they are members of the World Trade Organization and are very poor. Not-so-poor beneficiaries also expand foreign sales, but only if they are not WTO members. For all others, the average export effects of NRTPs are mute. |
| Keywords: | Trade preferences; gravity equation; trade policy; nonreciprocity; GSP. |
| JEL: | F13 F14 F15 F55 O19 O24 |
| Date: | 2018–11–08 |
| URL: | http://d.repec.org/n?u=RePEc:col:000518:016937&r=int |
| By: | Faraji Dizaji, Sajjad; Jariani, Farzaneh; Najarzadeh, Reza |
| Abstract: | This paper uses Generalized Method of Moments (GMM) estimation, gravity model, and dynamic panel data to evaluate the effect of the imposed sanctions against Iran on the value of the bilateral trade of agricultural products between Iran and its trading partners among the MENA and the EU countries during 2000 to 2014. The results show that the sanctions have had no effects on the trade flows between Iran and the MENA countries. However, they have meaningful impact on the Iran’s agricultural export to the EU countries, albeit they have caused a decrease in Iran’s agricultural import from this area. The annual precipitation in Iran, as a control variable, using in this paper has positive effects on the Iran’s agricultural export to the EU countries, nonetheless has negative effects on the Iran’s import from the mentioned countries. The overall country size of two trading partners’ variable has meaningful and direct effects on the mutual trade between Iran and the EU countries. According to the above outcomes, the imposed sanctions should be considered as an opportunity to the Iranian agricultural development and diversification of exports from the agriculture sector to the EU region as a wide range of non-oil products to compensate some of the costs on the Iranian economy caused by sanctions. |
| Keywords: | Bilateral Trade of Agricultural Products, Gravity Model, Generalized Method of Moments, Dynamic Panel Data, Index of Economic Freedom |
| JEL: | O13 O44 |
| Date: | 2018–07–31 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:89438&r=int |
| By: | Bernhard Michel; Caroline Hambÿe; Bart Hertveldt |
| Abstract: | For a finer analysis of global value chain integration and competitiveness, we develop and apply a method for a micro-data based breakdown of manufacturing industries in the 2010 Belgian supply-and-use tables into export-oriented and domestic market firms. The former are defined as those firms that export at least 25% of their turnover. We then derive export-heterogeneous national input-output tables which we integrate into a global table. Our analyses reveal that: a) export-oriented manufacturers have lower value-added in output shares and import proportionally more of the intermediates they use; b) exports of export-oriented manufacturers generate substantial value added in other Belgian firms, in particular providers of services; c) Belgium’s backward participation in global value chains is mainly due to export-oriented manufacturers and its forward participation is due to other firms, d) export-oriented manufacturers participate in value chains that comprise, on average, a greater number of upstream and downstream production stages and of which a greater share is located abroad. |
| JEL: | C67 D22 D57 F14 F15 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25155&r=int |
| By: | Campolmi, Alessia; Fadinger, Harald; Forlati, Chiara |
| Abstract: | We consider unilateral and strategic trade and domestic policies in single and multi-sector versions of models with CES preferences and monopolistic competition featuring homogeneous (Krugman, 1980) or heterogeneous firms (Melitz, 2003). We first solve the world-planner problem to identify the efficiency wedges between the planner and the market allocation. We then derive a common welfare decomposition in terms of macro variables that incorporates all general-equilibrium effects of trade and domestic policies and decomposes them into consumption and production-efficiency wedges and terms-of-trade effects. We show that the Nash equilibrium when both domestic and trade policies are available is characterized by first-best-level labor subsidies that achieve production efficiency, and inefficient import subsidies and export taxes that aim at improving domestic terms of trade. Since the terms-of-trade externality is the only beggar-thy-neighbor motive, it remains the only reason for signing trade agreements in this general class of models. Finally, we show that when trade agreements only limit the strategic use of trade taxes but do not require coordination of domestic policies, the latter are set inefficiently in the Nash equilibrium in order to manipulate the terms of trade. |
| Keywords: | Domestic Policy; efficiency; Heterogeneous Firms; Tariffs and Subsidies; terms of trade; Trade agreements; trade policy |
| JEL: | F12 F13 F42 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13219&r=int |
| By: | Boddin, Dominik |
| Abstract: | By crawling online data, I create a new long-term patenting panel dataset for Germany to identify the causal effect of trade integration with Eastern Europe and China on patenting in the period 1993-2012. I exploit the cross-regional variation in the German industry structure and use trade flows to other advanced economies as instruments for regional import and export exposure. I find that an increase in the net trade exposure (defined as import- minus export exposure) causes an increase in regional patenting. This effect is purely driven by a positive link between import exposure and innovation, whereas export exposure does not influence innovation. Interestingly, the effects are heterogeneous across exposure origin. The positive link between import exposure and innovation is fully explained by trade integration with Eastern Europe. Increasing integration with China has no effects on innovation. |
| JEL: | F14 O30 R11 R12 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc18:181640&r=int |
| By: | Sasahara, Akira |
| Abstract: | This paper estimates and decomposes the impact of export opportunities on countries’ employment by using a global input-output analysis, focusing on the U.S., China, and Japan. The greater they export, the greater employment in the exporting countries. However, we first document that the number of jobs created per exports varies substantially across destination countries. We find that exports from sectors with higher domestic value-added contents such as natural resource, textile, and service sectors lead to a greater employment effect. As a result, cross-country differences in sectoral compositions of exports explain a large part of the variations in the employment effects across destination countries. Time series changes in the employment effect of exports come from changes in (1) the labor-to-output ratio, (2) input-output linkages, and (3) sectoral compositions in exports. Results suggest that the first channel worked to reduce the employment effect in all of the three countries we focused but the directions of the last two channels are different across the countries. |
| Keywords: | Exports, Employment, Global Input-Output Table, Value-Added Content of Trade |
| JEL: | F14 F16 |
| Date: | 2018–10–24 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:89731&r=int |
| By: | Dani Rodrik |
| Abstract: | Many of the exports of developing countries are channeled through global value chains (GVCs), which also act as conduits for new technologies. However, new capabilities and productive employment remain limited so far to a tiny sliver of globally integrated firms. GVCs and new technologies exhibit features that limit the upside and may even undermine developing countries’ economic performance. In particular, new technologies present a double whammy to low-income countries. First, they are generally biased towards skills and other capabilities. This bias reduces the comparative advantage of developing countries in traditionally labor-intensive manufacturing (and other) activities, and decreases their gains from trade. Second, GVCs make it harder for low-income countries to use their labor cost advantage to offset their technological disadvantage, by reducing their ability to substitute unskilled labor for other production inputs. These are two independent shocks that compound each other. The evidence to date, on the employment and trade fronts, is that the disadvantages may have more than offset the advantages. |
| JEL: | O30 O40 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25164&r=int |
| By: | Bickwit, Grant; Ornelas, Emanuel; Turner, John |
| Abstract: | We study how a preferential trade agreement (PTA) affects international sourcing decisions, aggregate productivity and welfare under incomplete contracting and endogenous matching. Contract incompleteness implies underinvestment. That inefficiency is mitigated by a PTA, because the agreement allows the parties in a vertical chain to internalize a larger return from the investment. This raises aggregate productivity. On the other hand, the agreement yields sourcing diversion. More efficient suppliers tilt the tradeoff toward the (potentially) beneficial relationship-strengthening effect; a high external tariff tips it toward harmful sourcing diversion. A PTA also affects the structure of vertical chains in the economy. As tariff preferences attract too many matches to the bloc, the average productivity of the industry tends to fall. When the agreement incorporates "deep integration" provisions, it boosts trade flows, but not necessarily welfare. Rather, "deep integration" improves upon "shallow integration" if and only if the original investment inefficiencies are serious enough. On the whole, we offer a new framework to study the benefits and costs from preferential liberalization in the context of global sourcing. |
| Keywords: | Hold-up Problem; Incomplete Contracts; Matching; regionalism; sourcing; trade diversion |
| JEL: | D23 D83 F13 F15 L22 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13264&r=int |
| By: | ABDELMOUNAIM LAHRECH (BRITISH UNIVERSITY IN DUBAI) |
| Abstract: | The aim of this paper is to investigate the relationship between trade and economic growth in Morocco with emphasis on both the role of exports and imports using yearly multivariate time series data covering the period from 1975 to 2015. Causality is tested within a vector autoregressive (VAR) framework, first using the augmented VAR model proposed by Toda and Yamamoto (1995) for cointegrated series to perform causality testing as described by Granger (1969), then by using the Vector Error Correction Model (VECM) proposed by Engle and Granger (1987) and analyzing the cointegration, Impulse Response Functions (IRF) and the Factor Error Variance Decomposition (FEVD) of the system. We found a one-way causality between exports and imports, and between Economic growth and Exports. These results re-veal that Morocco Imports are driven by the Exports that create a demand for technology, raw materials and consumable goods. In addition, the results show that Economic growth drives the country?s export, and therefore support the growth-led-exports hypothesis in the case of Morocco. |
| Keywords: | Trade, Economic Growth, Cointegration, Causality, VECM |
| JEL: | F43 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:8209757&r=int |
| By: | Douch, Mustapha (Aston University, Lloyds Banking Centre); Edwards, T.Huw (Loughborough University); Soegaard, Christian (University of Warwick) |
| Abstract: | We analyse the impact of the Brexit announcement shock on UK exports of commercial services, using a synthetic control method (SCM) to create a counter-factual based upon other countries' exports. Our analysis shows that UK export performance in this critical sector has been below the counterfactual since the referendum by over 7 per cent. This indicates that policy uncertainty is a ecting exports even in sectors which are not normally subject to tariffs by the EU. |
| Keywords: | Anticipation ; policy uncertainty ; Brexit ; synthetic control method |
| JEL: | F02 F13 F15 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:1182&r=int |
| By: | Nitsch, Volker |
| Abstract: | A country's visa policies are widely assumed to have economic consequences. In this short paper, I examine the effect of the ease with which a country's citizens can enter foreign countries on international trade. Using a specification of the gravity model that avoids the endogeneity problems that typically arise when analyzing the association between ease of travel and the extent of bilateral interactions, I find that countries which issue powerful passports experience more international trade. |
| Keywords: | visa,document,mobility,border,barrier |
| JEL: | F14 F29 F59 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:darddp:234&r=int |
| By: | Lema, Rasmus (Aalborg University); Pietrobelli, Carlo (UNU-MERIT, and University Roma Tre); Rabellotti, Roberta (University of Pavia, and Aalborg University) |
| Abstract: | Developing countries are faced with significant challenges related to building and deepening their innovation capabilities. In this chapter, we focus on innovation in global value chains and on the role that such chains play in building and deepening capability. We also focus on the trajectories along which firms, once inserted into global value chains and located in developing countries, acquire or lose innovation capability. To do so, we bring together the global value chains and innovation systems approaches. Our key arguments are that global value chains interact with innovation systems in multiple ways and that these interactions have important implications for the speed, depth, and overall quality of capability building in developing-country firms. We outline five innovation capability trajectories and show how capability building at the firm level interrelates with the various ways in which global value chains and innovation systems co-evolve. |
| Keywords: | global value chains, innovation systems, technological capabilities, innovation policy, co-evolution |
| JEL: | F23 D23 L22 L25 O10 O32 O38 |
| Date: | 2018–10–24 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2018038&r=int |
| By: | Fernandes, Ana; Winters, L. Alan |
| Abstract: | This paper exploits the abrupt and sharp depreciation of the British Pound after the Brexit referendum as a quasi-natural experiment to investigate the effect of exchange rate shocks on export quantity, price, entry and exit. We use transaction-level export data for the universe of exporters in Portugal. Using monthly observations on export quantity and price for the same firm exporting the same product to buyers in the UK and in other countries, allows us to cleanly identify the differential response to the shock for the UK market, relative to other markets. We find that exporters reduced their mark-up in the UK market after the referendum shock. Our estimates imply a large pricing-to-market coefficient and exchange rate pass-through. Exporters that are more productive adjust their mark-ups by more after the exchange rate shock, and have lower pass-through. There is more pricing-to-market for consumer goods than for intermediate inputs. Within the same firm-product, export quantity to the UK also decreased after the shock. The referendum shock reduced the rate of export entry to the UK market by Portuguese firms and the probability of their continuing to export in the UK. |
| Keywords: | Brexit vote; exchange rate pass-through; exchange rate shocks; exports; extensive margin of trade; intensive margin of trade; pricing-to-market |
| JEL: | F14 F31 F32 F41 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13253&r=int |
| By: | Njangang, Henri; Nembot Ndeffo, Luc; Noubissi Domguia, Edmond; Fosto Koyeu, Prevost |
| Abstract: | This paper investigates the long-run and short-run effects of foreign direct investment (FDI), foreign aid and migrant remittances on economic growth in 36 African countries over the period 1980–2016. Empirical evidence is based on Pooled Mean Group (PMG) approach. The following findings are established. First, while there is a positive and significant long-run relationship between foreign direct investment and economic growth in Africa as a whole, the effect of remittances and foreign aid is insignificant. Second, in the short-run there is no evidence of any significant impact of FDI, remittances and foreign aid on economic growth. Third, results are still robust in the short-run when the panel is divided in three subsamples. However, in the long-run the effects of FDI, remittances and foreign aid on economic growth depend on the income level. |
| Keywords: | FDI; Remittances; Foreign Aid; economic growth; PMG |
| JEL: | F23 F24 F35 F43 O55 |
| Date: | 2018–10–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:89747&r=int |
| By: | P.B. Dixon; M.T. Rimmer |
| Abstract: | Since the 1970s the Armington approach has been the workhorse specification of trade in CGE models. Under Armington, agents substitute between products from different countries. Conceptually, Melitz provides a more attractive approach in which substitution is between products from different firms, rather than countries. Other attractive features of Melitz are allowance for: monopolistic competition; and economies of scale from fixed establishment costs for firms and fixed set-up costs on trade links. In this paper we show how an Armington model can be converted to Melitz by adding a few equations and introducing closure swaps, with little change to existing code. We apply our Armington-to-Melitz method to the Armington-based GTAP model to derive GTAP-A2M. Then we show how results from a CGE model with Melitz industries can be interpreted and justified via back-of-the-envelope calculations. Finally, we review the strengths and weaknesses of GTAP-HET, an alternative Melitz-based version of GTAP. |
| Keywords: | heterogeneous firms Armington to Melitz GTAP-A2M GTAP-HET result interpretation |
| JEL: | C68 D58 F12 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:cop:wpaper:g-284&r=int |
| By: | Florian A. Alburo (School of Economics, University of the Philippines Diliman) |
| Abstract: | The paper examines recent technology enablers as these affect the services sector and are seen to be analogous to developments taking place as Industry 4.0. After briefly summarizing these, we argue that there are important implications to services, particularly their international trade, in terms of challenges to investment, regulation, policy, regional cooperation, and regional agreements, among others. Some of the possible adjustments arising out of these developments are outlined - in the manufacturing sector and in the services (and their trade). |
| Keywords: | trade and investment |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:phs:dpaper:201805&r=int |
| By: | Christina Platz (Royal Melbourne Institute of Technology/ RMIT University) |
| Abstract: | Copyright law is continuously in a crisis, however, on 8 March 2018, a new initiative, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP) emerged at the international level in order to aid trade related challenges such as copyright law. The CPTPP agreement was the result of an extensive renegotiation of the Trans-Pacific Partnership Agreement (TPP) that since the US departure in January 2017 had been considered dead in the water. This article considers the reasoning for the renegotiation of the TPP from the perspective of Australian society with focus on copyright law. It utilises the theoretical underpinning of cooperation theory as well as case studies of the Australia-United States Free Trade Agreement (AUSFTA) and the TPP to examine why it was necessary to renegotiate the TPP and significantly cut back on the IP chapter. This article concludes that it was necessary to renegotiate the TPP because it represented the US copyright agenda and failed to satisfy the Australian interests in copyright law and promote the copyright balance. |
| Keywords: | Copyright law, trade agreement, technology, intellectual property |
| JEL: | O30 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:8209052&r=int |
| By: | Lechowski, Grzegorz |
| Abstract: | The present study investigates the relatively successful development of the homegrown IT industry in Poland since the early 1990s. The case is theoretically interesting because it runs counter to the dominant perspective on the economic systems in postcommunist Central Europe, which emphasizes the region's dependency on foreign direct investment (FDI) for industrial development. The empirical analysis focuses on the industry's two key players, Asseco and Comarch, which are among Europe's largest enterprise IT (EIT) vendors. It uses rich historical data to reconstruct the firms' strategies regarding sales market operations, corporate finance, and productive organization. The study's main theoretical interest is to explore how the firms' successful development has been shaped by the interplay between home-country institutions and the governance structure of the transnational EIT industry. The analysis indicates, first, that the firms have benefited from a well-functioning local capital market, the domestic supply of high-skilled labor, and some characteristics of the home country sales market. Second, the study reveals that the firms' development has been conditioned by the ongoing modularization processes in the EIT sector. In their initially home market oriented operations, the analyzed firms focused on the downstream segments of the EIT value chain while sourcing the more high-tech components (e.g. databases) from collaborations with foreign suppliers. In general, the findings contribute to the discussions on catching-up processes in emerging countries, first, by demonstrating the developmental potential related to modularization processes in high-tech industries, and second, by drawing attention to how the globally fragmented production regimes intersect with country-specific institutional frameworks. |
| Keywords: | varieties of capitalism,sectoral systems of innovation,IT industry,postcommunist Europe,Poland,Spielarten des Kapitalismus,sektorale Innovationssysteme,IT-Industrie,post-kommunistisches Europa,Polen |
| JEL: | P12 P16 L86 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbgwp:spiii2018302&r=int |
| By: | Fariha Kamal |
| Abstract: | This paper evaluates the U.S. Census Bureau’s most recent data collection efforts to classify business entities that engage in an extreme form of production fragmentation called “factoryless” goods production. “Factoryless” goods-producing entities outsource physical transformation activities while retaining ownership of the intellectual property and control of sales to customers. Responses to a special inquiry on the incidence of purchases of contract manufacturing services in combination with data on production inputs and outputs, intellectual property, and international trade is used to identify and document characteristics of “factoryless” firms in the U.S. economy. |
| Keywords: | contract manufacturing services, “factoryless” production, imports, multinationals, intellectual property |
| JEL: | F1 F14 F23 L23 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:18-43&r=int |
| By: | Andre G Ross (Department of Economics University of Strathclyde); Grant Allan (Department of Economics University of Strathclyde); Gioele Figus (Department of Economics University of Strathclyde); Peter McGregor (Department of Economics University of Strathclyde); J Kim Swales (Department of Economics University of Strathclyde); Karen Turner (Centre for Energy Policy, University of Strathclyde) |
| Abstract: | The wider impacts of energy policy on the macro-economy are increasingly recognised in the academic and policy-oriented literatures. Additionally, the interdependence of energy and economy implies that a (policy) change in the non-energy system impacts on the energy system. However, such spillovers on the energy system have not been extensively researched. We begin by analysing the impacts of export promotion policies - a key element of the UK’s Industrial Strategy - on the energy system and energy policy goals. As the impacts of such policies are, in large part, transmitted via their effects on the economy, we adopt a computable general equilibrium model - UK-ENVI - that fully captures such interdependence. Our results suggest that an across-the-board stimulus to exports increases total energy use significantly. This does not come directly through energy exports, but indirectly through the energy sectors’ linkages to other sectors. Export led growth therefore impacts on energy use - and significantly so. This in turn is likely to have an adverse impact on emission targets. Policy makers should be aware of the fact that a successful implementation of the Industrial Strategy may create significant tensions with the UK’s Clean Growth Strategy, for example, and with the goals of energy policy more generally. The importance of this effect will in practice depend upon: the mix of goods and services that are exported (an issue that we shall address once the export strategy is published); the success of low-carbon policies. Ultimately, a knowledge of the nature and scale of these spillover effects of economic policies on the energy system creates the potential for more effective and efficient policy making. |
| Keywords: | energy policy, industrial strategy, trade policy |
| JEL: | C68 D58 Q43 Q48 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:str:wpaper:1810&r=int |
| By: | Campo, Francesco (University of Milan Bicocca); Forte, Giuseppe (King's College London); Portes, Jonathan (King's College London) |
| Abstract: | We investigate the relationship between migration and productivity in the UK, using an instrumental variable along the lines suggested by Bianchi, Buonanno and Pinotti (2012). Our results suggest that immigration has a positive and significant impact (in both the statistical sense and more broadly) on productivity, as measured at a geographical level; this appears to be driven by higher-skilled workers. The results for training are less clear, but suggest that higher-skilled immigration may have a positive impact on the training of native workers. We discuss the implications for post-Brexit immigration policy. |
| Keywords: | immigration, productivity, training, Great Britain |
| JEL: | E24 J24 J61 M53 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11833&r=int |
| By: | Doris Hanzl-Weiss (The Vienna Institute for International Economic Studies, wiiw); Philipp Heimberger (The Vienna Institute for International Economic Studies, wiiw); Mario Holzner (The Vienna Institute for International Economic Studies, wiiw); Olga Pindyuk (The Vienna Institute for International Economic Studies, wiiw); Roman Stöllinger (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | In this paper we do a detailed analysis of Austrian gross export data at the industry level in order to detect potential trade specialisation lock-in effects vis-à-vis the countries from Central, East and Southeast Europe (CESEE). In addition we analyse Austrian global value added export development, Austrian trade in services as well as the link between industry-specific specialisation lock-in effects and foundational competitiveness of Austria. The main findings are the Austrian global gross export market share has declined since 2004 (the year of the EU eastern enlargement) in all industries, except for pharmaceuticals and chemicals; however, Austria managed to increase its global export market share in terms of value added, primarily through an increase in price competitiveness; Austria’s CESEE potential lock-in effects have stagnated since the outbreak of the global financial crisis, with some negative effects only in the medium-high-tech industries (i.e. to a large extent the automotive sector) on Austria’s competitiveness. |
| Keywords: | Austria, CESEE, competitiveness, international trade, manufacturing exports, services trade |
| JEL: | F14 L60 L80 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:wii:rpaper:rr:433&r=int |
| By: | Hélène Latzer (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, CEREC - Université Saint-Louis - Bruxelles); Florian Mayneris (UQAM - Université du Québec à Montréal) |
| Abstract: | This paper analyses the relationship between a country's income distribution and its exports' unit values. Using bilateral export flows, we not only confirm the positive relationship between a country's average income and the quality of its exports, but further identify a heterogeneous impact of income inequality: we find a greater income spread to be beneficial for an exporter's unit values in the case of poor countries only. These results are robust to the inclusion of controls for other determinants of export unit values, as well as to the use of alternative measures of income inequality and of the quality index. We finally show that this heterogeneous impact of income inequality along the average income dimension is consistent with models emphasizing the role of the composition of local demand in determining the comparative advantage of countries in terms of quality. |
| Keywords: | Income distribution,Export Unit Values,Product quality,Trade,Home market effect |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-01901256&r=int |
| By: | Kohl, Miriam |
| Abstract: | This paper examines the distributional effects of international trade in a general equilibrium model with heterogeneous agents and a welfare state redistributing income. The redistribution scheme is financed by a progressive income tax and gives the same absolute transfer to all individuals. Ceteris paribus, international trade leads to an increase in income per capita but also to higher income inequality on two fronts. Inter-group inequality between managers and workers increases, and intra-group inequality within the group of managers goes up as well. We show that for a given tax rate, there is an endogenous increase in the size of the welfare state that works against the increase in inequality, yet cannot offset it. The paper also sheds light on the conditions under which trade can actually lead to a Pareto improvement. |
| Keywords: | International trade,Income inequality,Redistribution,Heterogeneous firms |
| JEL: | F12 F16 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc18:181538&r=int |
| By: | Pitsoulis, Athanassios; Schwuchow, Soeren |
| Abstract: | On June 19, 2017 the European Union and the British government officially commenced negotiations on the terms of the British exit from the union. The dominant view among most economic policy analysts and commentators seems to be that the cards are clearly stacked against Britain and that the high-handed behaviour of the British representatives is, at best, either a bluff or, at worst, a sign of a loss of reality. In this paper we develop a formal model to show how this uncertainty regarding the preferences and strategy of the British side may affect the dynamic of the negotiations and may lead to unanticipated outcomes. |
| Keywords: | Brexit,game theory,madman strategy,trembling-hand perfection |
| JEL: | D78 E65 H12 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc18:181635&r=int |
| By: | Njangang, Henri; Chameni Nembua, Célestin; Nembot Ndeffo, Luc |
| Abstract: | This paper investigates the relationship between Chinese foreign direct investment and industrialization for 41 African countries over the period 2003-2015. Based on System Generalized Method of Moments (GMM), empirical findings show that Chinese foreign direct investment did not significantly influence the industrialization process in African countries. |
| Keywords: | Chinese FDI, Industrialization, System GMM, Africa |
| JEL: | F21 L60 O55 |
| Date: | 2018–10–26 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:89726&r=int |
| By: | Konrad B Buchardi (Stockholm University); Thomas Chaney (Département d'économie); Tarek A Hassan (Boston University (Boston, Massachusetts) (BU)) |
| Abstract: | We use 130 years of data on historical migrations to the United States to show a causal effect of the ancestry composition of US counties on foreign direct investment (FDI) sent and received by local firms. To isolate the causal effect of ancestry on FDI, we build a simple reduced-form model of migrations: Migrations from a foreign country to a US county at a given time depend on (i) a push factor, causing emigration from that foreign country to the entire United States, and (ii) a pull factor, causing immigration from all origins into that US county. The interaction between time-series variation in origin-specific push factors and destination-specific pull factors generates quasi-random variation in the allocation of migrants across US counties. We find that doubling the number of residents with ancestry from a given foreign country relative to the mean increases the probability that at least one local firm engages in FDI with that country by 4 percentage points. We present evidence that this effect is primarily driven by a reduction in information frictions, and not by better contract enforcement, taste similarities, or a convergence in factor endowments. |
| Keywords: | Migrations; Foreign direct investments; International trade; Networks; Social ties |
| JEL: | O11 J61 L14 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/4j5snkuat19kma9diah5p0g5eq&r=int |
| By: | Holzmann, Carolin; Büttner, Thiess |
| Abstract: | The paper explores the effects of the switch to territorial taxation on outbound FDI. Rather than employing standard FDI statistics, the paper uses data which reports the location of the ultimate owner. We use a quasi-experimental approach that exploits the timing of reforms. In order to provide a counterfactual we employ synthetic-control methods. Our results document a substantial increase of Japanese FDI in Germany after the switch from worldwide to territorial taxation in Japan in 2009. In contrast, the switch in the UK in the same year is not found to exert any significant effects on investment of UK multinationals in Germany. These findings support the view that only the switch in relatively high-tax countries exerts FDI effects. |
| Keywords: | FDI,Dividend Exemption,Tax Competition,Synthetic Control Method |
| JEL: | H25 F23 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc18:181555&r=int |
| By: | Ali, R. |
| Abstract: | While much evidence shows self-sufficiency is not an efficient policy strategy to address food security concerns as well as poverty alleviation, Malaysia is following a self-sufficiency strategy in its primary staple, rice. This study evaluates and analyzes the impact of two alternative approaches to achieve food security, namely, pursuing rice self-sufficiency, and allowing free trade in rice. The results indicate that even though Malaysia could achieve self-sufficiency in rice, consumers are worse off, since consumer rice prices increase sharply. On the other hand, rice producers are better off due to higher producer prices and domestic production. The government welfare worsens from the self-sufficiency policy due to massive requirements on additional subsidies and the loss of import tariff revenues. Free trade results in lower consumer prices and greater rice consumption, thus favoring consumer welfare. Producer welfare worsens due to higher import competition and lower producer prices. Pursuing self-sufficiency would effectively punish consumers, and even the government loses from the policy. Otherwise, self-sufficiency could also be a political strategy in political economic environment to become an independent region without relying on external food sources. This study provides economic measures on self-sufficiency and free trade of non-distortionary policy options of Malaysian rice sector. Acknowledgement : First and foremost, I am very grateful to the Malaysian Agricultural Research and Development Institute (MARDI) and the Department of Agricultural Economics and Agribusiness, University of Arkansas for providing financial and technical supports to conduct this research. I would like to extend my gratitude to Dr. Eric Wailes and Dr. Alvaro Durand-Morat for their tireless assistance, outstanding knowledge, expertise in methodologies, and insightful comments to improve research and writing. Special thanks go to Ms. Hannah Allen, Mr. Lucas Palmer, and Mr John Mahany for their assistance in reviewing and correcting this writing. |
| Keywords: | Food Security and Poverty |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:277036&r=int |
| By: | Sei-Wan Kim (Department of Economics, Ewha Womans University); Moon Jung Choi (Economic Research Institute, The Bank of Korea) |
| Abstract: | In this work we examine whether the relationships of Korean exports to global GDP and to the exchange rate change depending on whether exports are in their expansionary or their contractionary regimes. To this empirical end we incorporate the two distinct dynamic features of regime change and co-integration into a multi-variable smooth transition autoregressive vector error correction model (STAR-VECM). Our estimation results reveal asymmetries in the short-run relationships of Korea¡¯s exports to global GDP and to the exchange rate, between the contractionary and the expansionary export regimes, although their long-run relationships remain stable. Specifically, the positive effect of real global GDP on Korea¡¯s real exports is inelastic during contractionary regimes but changes to become elastic in expansionary regimes. The effect of the real effective exchange rate on Korea¡¯s real exports is positive and inelastic under contractionary regimes, but becomes negative and elastic under expansionary regimes. Our results suggest that the asymmetric properties of the relationship of Korea¡¯s exports to global GDP and the exchange rates across the different regimes should be taken into account in order to better understand the behavior of Korea¡¯s exports. |
| Keywords: | Exports, Global GDP, Exchange rate, Regime change, Smooth Transition Autoregressive Model |
| JEL: | F14 C40 C51 |
| Date: | 2018–10–05 |
| URL: | http://d.repec.org/n?u=RePEc:bok:wpaper:1830&r=int |
| By: | Schiff, Maurice |
| Abstract: | Based on a welfare-maximization model of skilled migration where education generates a positive externality, this paper examines whether the early view regarding brain drain’s (BD) negative impact on source countries – and the Bhagwati tax (𝐵𝑇) associated with it – is compatible with the recent more optimistic BD-induced brain gain view. I derive BD’s impact on education, welfare, the optimal education subsidy (𝑠), and a combination of 𝑠 and (the optimal) 𝐵𝑇, when residents’ (emigrants’) weight in the government’s objective function is 1 (1−𝛽), with 𝛽 𝜖 [0,1]. I find that: i) education, welfare and 𝑠 levels are higher (lower) under an open than under a closed economy for 1−𝛽>( |
| Keywords: | Brain drain,brain gain,Bhagwati tax,education subsidy,welfare |
| JEL: | F20 F22 I25 O15 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:262&r=int |
| By: | Luca Alfieri |
| Abstract: | The paper aims to assess the influence of the heterogeneity of financial institutions in the relationship between bilateral trade and the monetary integration process in East Asia. I used a structural gravity model with similarity of currency regimes and I introduced a heterogeneity of financial institutions variable derived from the World Bank Financial Development and Structure Dataset. The hypothesis is that the more heterogeneous financial institutions are, the less bilateral trade there is. The results show a negative relationship between trade and the heterogeneity of the financial institutions. The similarity of currency regimes has a negative effect on bilateral trade, and that effect increases with the presence of the financial institutions variable. I made a second estimation concerning 184 countries and territories and I replaced the similarity of currency regimes with a standard currency dummy. The results confirmed the negative and significant relationship between the heterogeneity of the financial institutions and trade. The recent reform plans of ASEAN countries should also consider these aspects, which are not limited to financial integration problems. |
| Keywords: | Trade, Institutions, Monetary Integration, Trade Finance |
| JEL: | F14 F33 N25 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:mtk:febawb:112&r=int |
| By: | Narula, Rajneesh (UNU-MERIT, and Henley Business School, University of Reading); Pineli, André (Henley Business School, University of Reading, and IPEA, Brazil) |
| Abstract: | We summarise the key empirical evidence on the nexus between MNEs and development, focusing on issues that are relevant for the formulation, implementation and assessment of policies by host developing countries. We also delve into what we do not know, as well as topics for which the evidence is still quite blurred. We discuss the reasons for the absence of clear evidence, and potential avenues for future research to improve policies. Although most countries rely on MNEs/FDI as a central plank of their development strategy, the collective weight of academic research has not led to a fine-tuning of policy implementation. Countries still rely on policies for which evidence is sparse, or no longer valid in an era of globalisation. Much of the literature has focused on externalities and spillovers, and has deemphasised the other ‘effects’ of MNE activity, implicitly assuming that MNEs are almost always beneficial for development. Few rents are costless when the opportunity costs of scarce resources are considered, especially in the longer term. Despite the abundance of empirical studies (of increasing sophistication), most ignore the significance of structural change. Growth and the interaction with MNE activity is not linear or monotonic over time, because the economy itself is in a constant state of flux. |
| Keywords: | multinational enterprises, economic development, developing countries, GDP growth, spillovers, public policy |
| JEL: | D62 F23 O14 O19 O24 |
| Date: | 2018–10–22 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2018036&r=int |
| By: | Christopher F. Baum (Boston College; DIW Berlin; CESIS, KTH Royal Institute of Technology); Hans Lööf (CESIS, KTH Royal Institute of Technology); Andreas Stephan (Jönköping International Business School; DIW Berlin) |
| Abstract: | STEM-focused industries are critical to the innovation-driven economy. As many firms are running short of STEM workers, international immigrants are increasingly recognized as a potential for high-tech job recruitment. This paper studies STEM occupations in Sweden 2011–2015 and tests hypotheses on new recruitment and the economic impact of foreign STEM workers. The empirical analysis shows that the probability that a new employee is a STEM immigrant increases with the share of STEM immigrants already employed, while the marginal effect on average firm wages is positively associated with the share of immigrant STEM workers. We also document heterogeneity in the results, suggesting that European migrants are more attractive for new recruitment, but non-EU migrants have the largest impact on wage determination. |
| Keywords: | STEM; migration; employment; wages; correlated random effects |
| JEL: | C23 J24 J61 O14 O15 |
| Date: | 2018–10–04 |
| URL: | http://d.repec.org/n?u=RePEc:boc:bocoec:962&r=int |
| By: | Viktoras Kulionis |
| Abstract: | Most of today's products and services are made in global supply chains. As a result, a consumption of goods and services in one country is associated with various environmental pressures all over the world due to international trade. Advances in global multi-region input-output models have allowed researchers to draw detailed, international supply-chain connections between production and consumptions activities and associated environmental impacts. Due to a limited data availability there is little evidence about the more recent trends in global energy footprint. In order to expand the analytical potential of the existing WIOD 2016 dataset to a wider range of research themes, this paper develops energy accounts and presents the global energy footprint trends for the period 2000-2014. |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1810.07112&r=int |
| By: | P.B. Dixon; M.T. Rimmer |
| Abstract: | This paper documents a project carried out under contract with the U.S. Department of Commerce. As stated in the contract, the aim was to: "provide the means to conduct analyses of the impacts of trade on employment by industry and occupation in regional labor markets via the creation of a labor market module add-on to the dynamic version of USAGE-TERM. The resultant labor-market enhanced dynamic USAGE-TERM model will give users the capability to identify structural adjustment problems arising from difficulties that workers displaced by trade may have in transferring their skills to alternative employment possibilities in other industries and/or regions." In the paper we provide technical documentation on how the labor-market module was created and illustrate its application by simulating the effects on regional labor markets of a hypothetical reduction in U.S. exports of Machinery and equipment. |
| Keywords: | regional labor markets multi-regional CGE dynamic CGE labor mobility |
| JEL: | C68 J62 R13 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:cop:wpaper:g-283&r=int |
| By: | Marwil J. Dávila-Fernández; Serena Sordi |
| Abstract: | In a recent article, we extended Goodwin's (1967) model to study the interaction between distributive cycles and international trade for economies in which growth is balance-of-payments constrained (BoPC). Building on that set up, we investigate the implications of allowing exports to be a function of the capital stock. Using the existence part of the Hopf bifurcation theorem, we show that the resulting 3-dimensional system admits a limit cycle solution. We rely on numerical simulations to verify if fluctuations are persistent and bounded. Applying panel cointegration techniques, we also provide empirical evidence for a sample of 19 OECD countries between 1950-2014 that gives support to the formulation adopted for the exports function. Our main contribution lies in providing a simple base-line model to study distributive dynamics in open economies in line with recent developments in the BoPC growth literature. |
| Keywords: | Growth cycle, Path dependence, Thirlwall?s law, Distributive cycles, Hopf bifurcation, Cointegration. |
| JEL: | E12 E32 O40 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:785&r=int |
| By: | Thi-Ngoc Anh NGUYEN; SATO Kiyotaka |
| Abstract: | This paper employs the nonlinear autoregressive distributed lag (NARDL) model to investigate possible short- and long-run asymmetry in the pricing-to-market (PTM) behavior of Japanese exporters. In contrast to the conventional threshold specification, this study uses firms' predicted exchange rates, collected from a large-scale firm-level survey by the Bank of Japan, to distinguish between yen appreciation and depreciation periods. Using Japanese export price data at an industry level, we demonstrate that (1) the short-run PTM is almost complete and symmetric in all industries over the entire sample period from 1997 to 2015 and (2) during the latter sub-sample period from 2007 to 2015, Japanese exporters tend to engage in asymmetric PTM behavior in the long run. In the yen appreciation period, most industries choose incomplete but relatively strong long-run PTM. However, in the yen depreciation period, competitive industries tend to conduct complete PTM in the long run, while less-competitive industries tend to raise the degree of exchange rate pass-through (ERPT) in the long run. These empirical findings have important policy implications for the recent unresponsiveness of Japanese real exports to the substantial depreciation of the yen from the end of 2012. |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:18071&r=int |
| By: | Mitze, Timo; Breidenbach, Philipp |
| Abstract: | We use the case of EU enlargement in 2004 to investigate the impact of economic integration on regional income growth. Being particularly interested in studying the effects 'at the margin', we track the relative performance of regions adjacent to both sides of the integration border vis-à-vis non-border regions. We use a space-time incremental difference-in-difference (IDiD) analysis to account for spatial spillovers, early anticipation and adjustment dynamics over time. Our findings indicate that EU-15 regions up to a distance of 100 km from the integration border experience positive integration effects, but we do not observe additional income growth effects for NMS-10 border regions compared to non-border regions. The results are found to be robust for alternative regression specifications including doubly robust estimation, varying sample settings and placebo tests. Country-specific estimates for the EU-15 finally indicate that in particular East German regions have benefited from EU enlargement potentially reflecting their proximity to Poland as largest NMS market, their favorable investment conditions, i.e. modern infrastructure, and preferential historical ties to the NMS-10. |
| Keywords: | economic integration,regional income growth,EU enlargement,spatial spillovers,space-time incremental difference-in-difference estimation |
| JEL: | C23 F15 O47 R11 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:775&r=int |
| By: | Nikolka, Till |
| Abstract: | This paper investigates the role of family ties for international return migration decisions. The presence of children in the household affects return propensities of couples in different ways. Results suggest that schooling considerations as well as factors related to cultural identity play a role for family return migration. Moreover, the paper studies self-selection into return migration with respect to the partners’ incomes. Couples returning from Denmark to the non-Nordic countries are positively selected with respect to primary earner income. Positive selection holds for male and female primary earners; it is weaker among dual earner couples and among couples with children. |
| Keywords: | International migration,Family migration,Return migration,Education |
| JEL: | F22 J13 J61 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc18:181641&r=int |
| By: | Jacques Melitz (CREST; ENSAE; CEPII); Farid Toubal (CREST; ENS de Paris-Saclay; CEPII) |
| Abstract: | Somatic distance; or differences in physical appearance; proves to be extremely important in the gravity model of bilateral trade in conformity with results in other areas of economics and outside in the social sciences. This is also true independently of survey evidence about bilateral trust. These findings are obtained in a sample of the 15 members of the European Economic Association in 1996. Robustness tests also show that somatic distance; as well as co-ancestry; has a more reliable influence on bilateral trade than the other cultural variables. The article finally discusses the interpretation and breadth of application of these results. |
| Keywords: | Somatic distance, Cultural interactions, Co-ancestry, Trust, Language, Bilateral Trade. |
| JEL: | F10 F40 Z10 |
| Date: | 2018–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:crs:wpaper:2018-11&r=int |
| By: | Vivarelli, Marco (Università Cattolica del Sacro Cuore) |
| Abstract: | This paper aims to provide a critical overview of the drivers that the relevant theoretical and empirical literature suggests being crucial in dealing with the challenges an emerging country may encounter in its attempts to further catch-up a higher income status, with a particular focus devoted to the implications for the domestic labor market. In the first part of the paper, attention will be focused on structural change, capability building and technological progress, trying to map - using different taxonomies put forward by the innovation literature - the concrete ways through which an emerging country can engage a successful catching-up, having in mind that developing countries are deeply involved into globalized markets where domestic innovation has to be complemented by the role played by international technology transfer. In the second part of the paper, the focus will be moved to the possible consequences of this road to catching-up in terms of employment and skills. In particular, the prescriptions by the conventional trade theory will be contrasted with a view taking into account technology transfer, labor-saving technological progress and skill-enhancing trade. |
| Keywords: | catching-up, structural change, globalization, capabilities, technological transfer |
| JEL: | O14 O33 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11849&r=int |
| By: | Hines, Annie Laurie (University of California, Davis); Simpson, Nicole B. (Colgate University) |
| Abstract: | This paper investigates the relationship between international migration, remittances and human capital investment in Kenya. We use household level data from the 2009 Kenya Migration Household Survey (produced by the Africa Migration Project) to test our hypothesis and uncover a positive and significant relationship between the amount of international remittances a household receives and the amount of expenditures allocated to education (for all levels of education). We consider various robustness checks and find that our results hold up to various specifications, including an instrumental variable approach. |
| Keywords: | migration, remittances, human capital |
| JEL: | F24 I25 J61 O12 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11835&r=int |
| By: | Jean Pisani-Ferry |
| Abstract: | This paper, which partially draws on the author's Tommaso Padoa-Schioppa inaugural lecture at the EUI, is an updated and augmented version of a contribution to the Hertie School’s Governance Report 2018, published under the title ‘Is global governance passé?’. The high point of global governance was reached in the mid-1990s around the creation of the World Trade Organisation. It was hoped that globalisation would be buttressed by a system of global rules and a network of specialised global institutions. Two decades later these hopes have been dashed by a series of global governance setbacks, the rise of economic nationalism and the dramatic change of attitude of the United States administration. From trade to the environment, a retreat from multilateralism is observable. The 2008 elevation of the G20 to leaders’ level was an exception to this trend. But the G20 is no more than a political steering body. The reasons for this retreat partially arise from political developments in individual countries. But such factors hide a series specific roadblocks to global governance - the growing number and diversity of countries involved; the mounting rivalry between the US and China; doubts about globalisation and the distribution of the associated benefits; the obsolescence of global rules and institutions; imbalances within the global governance regime; and increased complexity. What, then, should be the way forward? The demand for global governance has not diminished, but support for binding multilateral arrangements has. There is a need for alternative governance technologies that better accommodate the diversity of players, provide for more flexibility and rely less on compulsion. From competition to financial regulation, such arrangements have been developed in a series of fields already. They are often hailed as providing a solution to the governance conundrum. But their effectiveness should be assessed critically. Can they overcome the free-rider curse and enforcement problems? Usual game theory suggests not. Not all games are similar, however, and some collective action problems can be tackled without recourse to coercion. Against this background, multilateralists hesitate over the choice of a strategy. One option would be to seek to preserve the existing order to the greatest extent possible. Its downside is that it does not address the underlying problems. An alternative option is to try to redesign international arrangements, putting the emphasis on flexibility and voluntary participation. Its downside is that it risks overlooking the intrinsic problems of international or global collective action. A potentially more promising approach would be to define the minimum conditions that the multilateral framework must fulfil to provide a strong-enough basis for flexible, variable-geometry and possibly informal arrangements. In the end, we should neither cultivate the nostalgia of yesterday’s order nor invest our hopes in ineffective international cooperation. The narrow path ahead is to establish a sufficient, critical multilateral base for flexible arrangements and to equip policymakers with a precise toolkit for determining, on a field-by-field basis, the minimum requirements for effective collective action. |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:bre:polcon:27917&r=int |