|
on International Trade |
| By: | Brunel, Claire; Zylkin, Thomas |
| Abstract: | While we would expect that cross-border patents are used to protect a technology that is made available in another country, that technology could either be produced locally or imported. International patent filings could therefore be either complements or substitutes to international trade. This study combines data on patenting and trade for 149 countries and 249 industries between 1974 and 2006 with a "three-way" PPML panel data model that addresses several biases emphasized in the trade literature in order to provide a systematic analysis of how bilateral trade responds to cross-border patent filings. We find that cross-border patents have a positive (complementary) overall effect on the patent-filing country's exports to the patent-granting country and no effect overall on imports flowing in the opposite direction. These effects vary substantially across industries and destination markets. Patents promote significantly more bilateral export growth--and significantly less bilateral import growth--in less-differentiated industries and are found to have stronger effects on exports to more distant destinations. These findings support the interpretation that cross-border patents are mainly used to protect cost and/or quality innovations from being adopted by producers of competing products in the patent-granting country. |
| Keywords: | F10; F13; F14; O34; K33 |
| JEL: | F10 F13 F14 K33 O34 |
| Date: | 2019–03–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92514&r=all |
| By: | Kaku Attah Damoah; Giorgia Giovannetti; Enrico Marvasi |
| Abstract: | We analyze the trade patterns among the countries involved in the Belt and Road Initiative (BRI) and investigate whether and to what extent they explain the allocation of investment projects regarding their number and value. Our findings indicate that investments tend to concentrate in countries already involved in global value chains (GVC) and especially favor suppliers of intermediate goods to China with similar sectoral specialization. At the same time, more developed countries closer to destination markets tend to attract fewer but larger investments. The BRI represents an opportunity for China to upgrade its exports and for the involved countries to join GVC productions. |
| Keywords: | Belt and Road, China, global value chains, trade patterns |
| JEL: | F14 F15 F21 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:frz:wpaper:wp2019_07.rdf&r=all |
| By: | Maria Bas (Centre d'Economie de la Sorbonne Author-Workplace-Homepage: https://centredeconomiesorbonne.univ-paris1.fr); Caroline Paunov (OECD, Directorate for Science, Technology and Innovation) |
| Abstract: | This paper investigates the distributional impacts of trade liberalization across firms, consumers and workers. Using firm-product-level census data for Ecuador, we exploit exogenous tariff changes at entry to the World Trade Organization. We show that with input tariff cuts firms access higher quality and new input varieties. Consequently, firms increase their product scope and quality, while their production's skill-intensity increases and costs decrease. “Real” productivity (TFPG) increases only in the medium run, following adjustments to produce more and higher quality products. Positive immediate revenue productivity (TFPR) gains result because firms' markups increase. Consumers still gain as quality-adjusted prices decrease and varieties increase. Workers benefit differentially: skilled workers' wages rise compared to less skilled worker's wages. Input-tariff liberalization also has distributional impacts across firms. Only more productive firms with high markups increase product scope and quality and gain market shares. With output-trade liberalization the least productive firms decrease their product scope |
| Keywords: | gains from trade; input and output tariff reductions; product scope; product quality; market share; quantity and revenue total factor productivity (TFPQ, TFPR); skill premium; markups; price; foreign inputs quality and variety; firm-product-level data; Ecuador |
| JEL: | F16 O30 D22 O12 O54 L6 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:19003&r=all |
| By: | Gallegati, Mauro; Giammetti, Raffaele; Russo, Alberto |
| Abstract: | This paper presents the first detailed and holistic description of the European production network (EPN) and provides different rankings of the most 'systemically important' industries involved in Brexit. Employing techniques of complex networks analysis and Input-Output traditional tools, the study identifies those industries that are key in the complex structure of the UK-EU trade relationships. The method developed would help policy-makers to better understand which tariff would have a more distortive impact, which export sector should be pushed, which imports should be safeguarded. Such information may have foremost importance in the negotiations between the UK and EU. Our findings suggest that Brexit would be not just a problem for the UK, as it is often portrayed, but any form of Brexit could propagate affecting the global production system. Further, by inspecting industries centrality within the EPN, we find that the UK could be less exposed to trade barriers than EU countries. |
| Keywords: | Brexit, trade barriers, tariffs, key sector, centrality measures, input-output analysis, production networks, value chains. |
| JEL: | C67 F13 F14 R11 |
| Date: | 2019–03–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92559&r=all |
| By: | Mshengu, S.; Kalaba, M. |
| Abstract: | South Africa negotiated the Economic Partnership Agreement (EPA) with the EU under the Southern African Development Community (SADC) - EU EPA configuration. SADC-EU (EPA) replaced the TDCA (Trade Chapter) after the SADC-EPA was signed by both parties and came into force in 2016. The annual (2016) tariff-rate quota (TRQ) for South African wine to enter the EU duty free was 50 126 000 litres under the TDCA and increased to 110 000 000 litres that will enter the EU market duty. The aim of this paper was to assess the potential impact of wine quota under EU-SADC EPA agreement on wine trade flows between South Africa and the European Union countries by adopting the Software on Market Analysis and Restriction on Trade (SMART). The increase in duty free quota is expected to stimulate more wine production hence increasing the exports to EU market, resulting in high wine export revenues. The estimated revenue increase is $80 million. The increased trade is expected to have both direct and indirect impact on the employment in South African wine industry. In terms of the out of quota impact, the simulation results reveal that wine TRQ under the EPA would lead to a significant decrease in EU wine imports from South Africa. The results further show that trade diversion largely exceed trade creation effects and overall trade effect would be negative for out of quota trade. The findings of this study are crucial for South Africa�s wine sector because it provides strong evidence for South Africa need to pay more attention to the impact of the EU wine quota and develop appropriate strategies and policies to compete and also look into other market opportunities for diversification purposes. Key words: Tariff Rate Quota, SMART model, partial equilibrium |
| Keywords: | International Relations/Trade |
| Date: | 2018–09–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aeas18:284772&r=all |
| By: | María C. Latorre (Universidad Complutense de Madrid); Zoryana Olekseyuk (German Development Institute (Deutsches Institut für Entwicklungspolitik [DIE])); Hidemichi Yonezawa (Statistics Norway); Sherman Robinson (Peterson Institute for International Economics) |
| Abstract: | This paper examines 12 economic simulation models that estimate the impact of Brexit. We provide their range of results and explain their associated assumptions and methodologies (macroeconometric models, computable general equilibrium [CGE] models, or mixed approaches). CGE models simulate the operation of market economies, solving for changes in equilibrium prices and quantities (production, employment, demand, and international trade) for all sectors in the economy. Macroeconometric models focus on economic aggregates and macro shocks, such as interest rates, the exchange rate, inflation, risk, uncertainty, and government expenditure/revenue. Most of the studies find adverse effects for the UK and the EU-27. The UK's GDP losses from a hard Brexit (reversion to World Trade Organization rules due to a lack of UK-EU agreement) range from –1.2 to –4.5 percent in most of the models analyzed. A soft Brexit (e.g., Norway arrangement, which seems in line with the nonbinding text of the political declaration of November 14, 2018 on the future EU-UK relationship) has about half the negative impact of a hard Brexit. Only two of the models derive gains for the UK after Brexit because they are based on unrealistic assumptions. We analyze more deeply a CGE model that includes productivity and firms' selection effects within manufacturing sectors à la Melitz (2003) and the operations of foreign multinationals in services. Based on this latest model, we provide a complete overview and explanation of the likely economic impact of Brexit on a wide range of macroeconomic variables, namely GDP, wages, private consumption, capital remuneration, aggregate exports, aggregate imports, and the consumer price index. The data underlying this analysis are available at https://piie.com/system/files/documents/ wp19-5.zip. |
| Keywords: | Economic Methodology, Economic Simulation, Foreign Trade, Multinationals, Foreign Direct Investment, European Economy |
| JEL: | B41 F17 F14 C63 F23 F21 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:iie:wpaper:wp19-5&r=all |
| By: | Haichao Fan; Yao Amber Li; Sichuang Xu; Stephen R. Yeaple |
| Abstract: | Modern trade models attribute the dispersion of international prices to physical and man-made barriers to trade, to the pricing-to-market by heterogeneous producers and to differences in the quality of output offered by firms. This paper presents a general equilibrium model that incorporates all three of these mechanisms. Our model allows us to confront Chinese firm-level data on the prices charged and revenues earned across markets. We show that all three mechanisms are necessary to fit the distribution of prices and revenues across firms and markets. Accounting for endogenous quality heterogeneity across markets and firms is shown to be critical for the welfare implications of trade and for the response of prices to trade and tariff shocks |
| JEL: | F1 F10 F11 F12 F14 L11 L15 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25611&r=all |
| By: | Rodolphe Desbordes; Markus Eberhardt |
| Abstract: | A large empirical literature has estimated the effects of international agreements on trade flows, but these estimates may not be very informative for individual policymakers as they are averages of potentially very different impacts across country-pairs. We investigate this issue using quarterly data from 20 advanced economies over the past 55 years. Our empirical implementation adopts a Poisson pseudo-maximum likelihood estimation technique and estimates a reduced-form gravity relationship at the pair-level using new insights from the common factor model literature to capture multilateral resistance and globalisation effects. We find an average effect of entering regional trade agreements of just over 20%. However, we demonstrate that this average hides substantial heterogeneity across countries, with direct consequence for heterogeneity across time periods. This heterogeneity is also prevalent in the common currency effect. Beyond these findings, our empirical approach offers solutions to issues currently discussed in frontier gravity model research. |
| Keywords: | trade gravity model, panel data, heterogeneity, multilateral resistance, regional trade agreements |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:not:notgep:2019-02&r=all |
| By: | Katheryn N. Russ; Deborah L. Swenson |
| Abstract: | We study whether tariff preferences conferred on South Korean goods through the implementation of the Korea-U.S. Free Trade Agreement (KORUS) drew U.S. import demand away from other U.S. trading partners through the phenomenon known as trade diversion. In the two years following the implementation of KORUS, trade diversion was particularly strong for U.S. imports of consumption goods and for trade partners who already had free trade agreements with the U.S. Our estimates of trade diversion sum to $13.1 billion in 2013 and $13.8 billion in 2014. Notably, these estimates of trade diversion are roughly of the same magnitude as the increase in the U.S. bilateral goods trade deficit with South Korea. Thus, while increased U.S. imports from South Korea may have increased the U.S.-South Korea bilateral trade deficit, the fact that KORUS diverted U.S. import demand away from other trading partners implies new U.S. imports from Korea stimulated by the KORUS did not expand the overall U.S. trade deficit. |
| JEL: | F10 F40 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25613&r=all |
| By: | Timon Bohn; Steven Brakman; Erik Dietzenbacher |
| Abstract: | There are various ways to indicate the importance of international trade. In this paper, we use the ‘labor footprint’ concept to gain new insights into the implications of trade for employment. We focus on the US, but also provide information on 39 other, mostly developed, countries for the period 1995-2008. We show that US consumption increasingly depends on foreign workers. At the same time, US labor has benefited from new jobs generated by the world economy, especially in the services sector. Next we compare labor footprints with labor endowments to evaluate the capacity of countries to be self-sufficient in terms of labor in a hypothetical situation of autarky and perfect labor mobility. This counterfactual exercise reveals that most countries in our study are able to produce all output for consumption themselves. However, once the assumption that labor is perfectly mobile across skill levels and that all unemployed workers accept a job when offered one is relaxed, most countries can no longer be self-sufficient. That is, these countries would not be able to sustain their current consumption pattern. |
| Keywords: | factor content of trade, input-output analysis |
| JEL: | F20 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7527&r=all |
| By: | Belin, Matej; Hanousek, Jan |
| Abstract: | In this paper we use a natural experiment of reciprocal imposition of trade sanctions by Russia and the EU since 2014. Using UNCTAD/BACI bilateral flows data we take this unique opportunity to analyse both sanctions. In particular, we study the effectiveness of narrow versus broadly defined sanctions, and differences in the effectiveness of sanctions imposed on exports and imports. We show that the Russian sanctions imposed on European and American food imports resulted in about 8 times stronger decline in trade flows than those imposed by the EU and the US on exports of extraction equipment. These results do not appear to be driven by diversion of trade flows via non-sanctioning countries. Hence the difference in sanctions' effectiveness can be attributed to the broader range of sanctioned goods and potentially to a stronger position of enforcement of sanctions on imports rather than exports. |
| Keywords: | Bilateral trade flows; Differences-in-differences; International trade; Russia; sanctions; UNCTAD/BACI data |
| JEL: | C01 C23 F14 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13549&r=all |
| By: | Freddy Cepeda-Lopez (Banco de la República de Colombia); Fredy Gamboa-Estrada (Banco de la República de Colombia); Carlos León (Banco de la República de Colombia); Hernán Rincón-Castro (Banco de la República de Colombia) |
| Abstract: | The objective of this paper is to study the evolution of Colombian liberalization and integration to world trade from 1995 to 2016. We achieve our objective by measuring Colombia’s importance in the world trade network. We employ several types of network centrality metrics to measure importance (i.e. degree, strength, hub, authority), and examine their dynamics against a set of regional peers that serve as benchmark countries. Consistent with previous literature, more than two decades of dedicated trade policies and institutional changes resulted in increased exports and imports. However, when compared to regional peers such as Chile, Brazil, Mexico, and Peru, and China and the United States as trade leading countries, Colombia’s centrality in the world trade network did not improve accordingly. Absolute changes in the evolution of trade did not materialize in an enhanced integration to world markets. Colombia’s ranking in the world trade network did not improve materially, whereas that of some of her regional peers did manifestly (i.e. Peru and Chile). Results highlight the perils of analyzing a country’s trade dynamics in isolation, and emphasizes the usefulness of examining the world trade network. From the economic policy and institutional perspectives, results underscore the challenges ahead to better integrate to world markets and to achieve long-term economic growth from trade. **** RESUMEN: El objetivo del documento es estudiar la evolución de la apertura e integración de Colombia al comercio mundial entre 1995 y 2016 y evaluar su importancia en la red de comercio mundial. El documento emplea varios tipos de métricas de centralidad de red (es decir, grado, valor de los flujos de comercio, centro, autoridad), y examina su dinámica y las compara con las de pares regionales que sirven como países de referencia. De acuerdo con la literatura colombiana, más de dos décadas de políticas comerciales y cambios institucionales resultaron en un aumento de las exportaciones e importaciones. Sin embargo, en comparación con Chile, Brasil, México y Perú, y China y Estados Unidos como países líderes en el comercio mundial, la centralidad de Colombia en la red mundial no mejoró. Los cambios absolutos en los flujos de exportaciones e importaciones no se materializaron en una mayor integración a los mercados mundiales. La posición de Colombia en la red de comercio mundial no mejoró sustancialmente, mientras que la de algunos de sus pares regionales sí lo hizo (es decir, Perú y Chile). Desde una perspectiva de política económica e institucional, los resultados resaltan los desafíos futuros de Colombia para integrarse mejor en los mercados mundiales y lograr un mayor crecimiento económico de largo plazo derivado del comercio internacional. |
| Keywords: | Colombia, foreign trade, centrality, network analysis, world trade network, Colombia, comercio exterior, centralidad, análisis de redes, red de comercio mundial |
| JEL: | F14 F15 C45 C63 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:bdr:borrec:1065&r=all |
| By: | Aquilante, Tommaso (Bank of England); Vendrell-Herrero, Ferran (University of Birmingham) |
| Abstract: | This paper studies the effect of bundling products and services on the export performance of firms. Using a unique sample, we document several facts about German small and medium enterprises (SMEs). First, bundling is a relatively rare activity, which is unevenly spread across sectors. Second, SMEs that bundle products and services are more productive than those selling products and services separately. Third, these firms tend to be more internationally oriented. While most of the existing literature focuses on large firms, we contribute to the literature by uncovering a robust positive relation between product-service bundling and exporting in SMEs. Importantly, the competitiveness-enhancing effect of bundling goes beyond manufacturing, affecting non-manufacturing firms also. To mitigate endogeneity concerns, we exploit the panel structure of the data and implement several (doubly robust) propensity score matching techniques. |
| Keywords: | Bundling; innovation; export; SMEs |
| JEL: | D22 F10 F14 F23 L80 |
| Date: | 2019–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:boe:boeewp:0781&r=all |
| By: | Christian Eggenberger (University of Zurich); Simon Janssen (Institute for Employment Research IAB (Nurnberg, Germany)); Uschi Backes-Gellner (University of Zurich) |
| Abstract: | This paper examines whether and, if so, how workers’ earnings after trade shocks depends on occupational specificity. We construct a measure for occupational specificity reflecting the degree of dissimilarity between the skill bundle in an occupation and the average skill bundle in the labor market. Exploiting cross-regional variation in industry structures, we find that rising import competition from China and Eastern Europe resulted in larger earnings losses for workers with specific skill bundles than for workers with general skill bundles. However, with rising exports to these regions, workers with specific skill bundles had higher earnings than workers with general skill bundles. |
| Keywords: | import competition, trade shocks, human capital specificity |
| JEL: | F16 I20 J2 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:iso:educat:0158&r=all |
| By: | Souguir, Afef |
| Abstract: | In this study, we try to evaluate the specialization of the Tunisian international trade in relation to the European Union’s (EU-28) market during the 2004/2015 period. Trade between Tunisia and the EU has grown significantly since the signing of an EU-Tunisia Association Agreement in 1995. The examination of relative trade benefits showed that Tunisia has the highest relative trade advantage in the EU-28 in mineral fuels, lubricants and related materials (SITC 3). On the other hand, the need for modernization and restructuring of their productive production facilities stimulated the European exports of capital goods and high-tech products (chemicals and related products (SITC 5) and machinery and transport equipment (SITC 7)). The crossed trading of similar products also intensified sharply over the 2004/2015 period. |
| Keywords: | Intra-industry trade specialization; relative trade advantage index; Grubel Lloyd index. |
| JEL: | F1 |
| Date: | 2019–03–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92500&r=all |
| By: | Bonfiglioli, Alessandra; Crinò, Rosario; Gancia, Gino |
| Abstract: | We use transaction-level data to study changes in the concentration of US imports. Concentration has fallen in the typical industry, while it is stable by industry and country of origin. The fall in concentration is driven by the extensive margin: the number of exporting firm has grown, and the number of exported products has fallen more for top firms. Instead, average revenue per product of top firms has increased. At the industry level, top firms are converging, but top firms within country are diverging. These facts suggest that intensified competition in international markets coexists with growing concentration among national producers. |
| Keywords: | Concentration; Firm Heterogeneity; International trade; Superstar Firms; US Imports |
| JEL: | E23 F12 F14 L11 R12 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13566&r=all |
| By: | Bilir, Kamran; Chor, Davin; Manova, Kalina |
| Abstract: | This paper evaluates the influence of host-country financial conditions on the global operations of multinational firms. Using detailed U.S. data, we establish that financial development in a country is associated with relatively more entry by multinational affiliates, as well as with higher aggregate affiliate sales to the local market, back to the U.S. and to third destinations, with these effects being more pronounced in financially more vulnerable sectors. At the level of individual affiliates, by contrast, these forces are associated with relatively lower local sales and higher return and third-country sales. Yet at both aggregate and affiliate levels, the share of local sales in total sales is smaller, while the shares of U.S. and third-country sales are both bigger. These empirical regularities hold when using fixed effects to account for unobserved differences across country-years, sectors, and parent firms. We show theoretically that these patterns are consistent with host-country financial development affecting multinationals' incentives for horizontal, vertical and platform FDI through two channels: a financing effect that induces affiliate entry and expansion by improving their access to external finance, and a competition effect that reorients affiliate sales away from the local market due to increased entry by credit-constrained domestic firms. |
| Keywords: | credit constraints; FDI; Financial Development; Heterogeneous Firms; multinational activity |
| JEL: | F12 F23 F36 G20 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13557&r=all |
| By: | Henrekson, Magnus (Research Institute of Industrial Economics (IFN)); Öner, Özge (University of Cambridge, Department of Land Economy); Sanandaji, Tino (Institute for Economic and Business History Research) |
| Abstract: | The European Union officially proclaims to have a common refugee policy. However, the common treaties leave a great deal of discretion to the individual member countries, which allows them to regulate refugee migration while still upholding international treaties. Member countries have authority over border controls, the processing of asylum applications as well as economic benefits provided to refugees. We show that the differences in refugee flows are so extensive and systematic that the existence of a common EU refugee policy is debatable. The commitments made by the member countries are largely voluntary, and refugee policy is mainly determined at the national level. The discrepancies between the member countries strongly signal that the European Union may not be an optimal region for a common refugee policy. A refugee policy should instead be determined at the national level concordant with the regional and local level, where integration measures are implemented in practice. Meanwhile, the European Union can play an important role through refugee aid to afflicted countries, treaties with third countries, rescue actions in the Mediterranean and control of the external EU borders. |
| Keywords: | Asylum seekers; European Union; Migration policy; Refugee crisis; Schengen Agreement |
| JEL: | F22 F53 J61 |
| Date: | 2019–02–26 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1265&r=all |
| By: | Amiti, Mary; Redding, Stephen J.; Weinstein, David E. |
| Abstract: | This paper explores the impacts of the Trump administration's trade policy on prices and welfare. Over the course of 2018, the U.S. experienced substantial increases in the prices of intermediates and final goods, dramatic changes to its supply-chain network, reductions in availability of imported varieties, and complete passthrough of the tariffs into domestic prices of imported goods. Overall, using standard economic methods, we find that the full incidence of the tariff falls on domestic consumers, with a reduction in U.S. real income of $1.4 billion per month by the end of 2018. We also see similar patterns for foreign countries who have retaliated against the U.S., which indicates that the trade war also reduced real income for other countries. |
| Keywords: | International trade; tariffs; Trade War |
| JEL: | F13 F14 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13564&r=all |
| By: | Guo, Baoping |
| Abstract: | This study derived a general equilibrium for the Heckscher-Ohlin model at the context of higher dimensions. The equalized factor price at the equilibrium is the Dixit-Norman price, i.e. that the world price will remain the same when allocations of factor endowments change within the IWE box . The study explored a way to show the legacy of comparative advantages on the Heckscher-Ohlin model and demonstrated that the equalized factor price and world commodity price at the equilibrium ensured that the countries participating free trade gain from trade. The solution analytically addresses the Heckscher-Ohlin theorem with trade volume, the Factor-Price Equalization theorem with price solution, and comparative advantages with gains from trade. It shows the hided important logic in the IWE and the Heckscher-Ohlin model as that world factor endowments determine world price. |
| Keywords: | Factor Price Equalization, Integrated World Equilibrium, Heckscher-Ohlin Model, General Equilibrium, Cone of Commodity Price. |
| JEL: | F1 F10 F15 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92503&r=all |
| By: | Dhingra, Swati; Ottaviano, Gianmarco; Sampson, Thomas |
| Abstract: | Brexit will require the UK to negotiate new trade arrangements with the EU. After summarizing the main options for future UK–EU trade relations, this article reviews the purpose of trade agreements. We highlight that trade negotiations are a bargaining game between countries seeking to reap the gains from international coordination while conceding as little as possible to their negotiating partners. This leads us to propose four principles the UK should adopt to guide its trade negotiating strategy: (i) you get what you give; (ii) where negotiations start from matters; (iii) bargain from a position of power; and (iv) invest in negotiating capacity. |
| Keywords: | Brexit; trade negotiations |
| JEL: | L81 |
| Date: | 2017–03–10 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:83665&r=all |
| By: | C\'elestin Coquid\'e; Leonardo Ermann; Jos\'e Lages; D. L. Shepelyansky |
| Abstract: | Using the United Nations COMTRADE database we apply the reduced Google matrix (REGOMAX) algorithm to analyze the multiproduct world trade in years 2004-2016. Our approach allows to determine the trade balance sensitivity of a group of countries to a specific product price increase from a specific exporting country taking into account all direct and indirect trade pathways via all world countries exchanging 61 UN COMTRADE identified trade products. On the basis of this approach we present the influence of trade in petroleum and gas products from Russia, USA, Saudi Arabia and Norway determining the sensitivity of each EU country. We show that the REGOMAX approach provides a new and more detailed analysis of trade influence propagation comparing to the usual approach based on export and import flows. |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1903.01820&r=all |
| By: | Miyamoto, Wataru; Nguyen, Thuy Lan |
| Abstract: | We quantify the effects of changes in international input-output linkages on the nature of business cycles. We build a multi-sector multi-country international business cycle model that matches the input-output structure within and across countries. We find that, in our 23 countries sample with manufacturing and non-manufacturing sectors, changes in the international input-output linkages between 1970 and 2007 causes a 15% drop in output volatility in a median country, but the effects are heterogeneous across countries. Changing international linkages tend to stabilize output in most countries, while leading to a higher risk of a global recession. |
| Keywords: | International business cycles, trade linkages, volatilities, input-output |
| JEL: | E32 F31 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:hit:hitcei:2018-16&r=all |
| By: | Barbara Annicchiarico; Enrico Marvasi |
| Abstract: | We extend the protection for sale model of Grossman and Helpman (1994) by introducing a general model of monopolistic competition with variable markups and incomplete pass-through. We show that the structure of protection emerging in the political equilibrium not only depends on the weight attached by the government to consumer welfare when making its policy decision, but also on the degree of market power of firms and on the terms-of-trade variations due to the degree of pass-through. Our results highlight the importance of preferences in shaping the structure of protection and are consistent with the occurring of protectionism also in unorganized industries. |
| Keywords: | Protection for Sale; Monopolistic Competition; Incomplete Pass-Through; Endogenous Markups. |
| JEL: | F12 F13 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:frz:wpaper:wp2019_06.rdf&r=all |
| By: | Halit Yanikkaya (Department of Economics, Gebze Technical University); Mehmet Halis Saka (Department of Geomatics Engineering, Gebze Technical University); Hasan Karaboga (Department of Economics, Gebze Technical University) |
| Abstract: | This study examines the geographical determinants of bilateral trade by comparing the OLS method and ANFIS structure. Using over 150K observations for 106 countries for the years between 1995 and 2010, estimations from both methods consistently imply that the basic determinants of bilateral trade are very much similar. We compare the reliability of our estimation results from both analyses using three different criteria, namely the coefficient of determination, root mean squared error, and mean absolute error values. These comparisons clearly confirm that the geographical determinants of bilateral trade can be evaluated much more effectively by the help of the fuzzy logic framework of ANFIS than the traditional econometric methods commonly used in the literature. As a robustness check, we also generate FIS for each individual year and apply it to pooled sample, which also enables us to set up a better performing and practical tool. |
| Keywords: | Bilateral trade, Geography, Gravity model, ANFIS, OLS |
| JEL: | A12 F14 |
| Date: | 2019–02–27 |
| URL: | http://d.repec.org/n?u=RePEc:geb:wpaper:2019-01&r=all |
| By: | Keith Head; Thierry Mayer |
| Abstract: | This paper estimates the role of country-variety comparative advantage in the decision to offshore assembly of more than 2000 models of 197 car brands headquartered in 23 countries. While offshoring in the car industry has risen from 2000 to 2016, the top five offshoring brands account for half the car assembly relocated to low-wage countries. We show that the decision to offshore a particular car model depends on two types of cost (dis)advantage of the home country relative to foreign locations. The first type, the assembly costs common to all models, is estimated via a structural triadic gravity equation. The second effect, model-level comparative advantage, is an interaction between proxies for the model's skill and capital intensity and headquarter country's abundance in these factors. |
| JEL: | F1 F23 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25614&r=all |
| By: | Roberto Bonfatti; Yuan Gu; Steven Poelhekk |
| Abstract: | Africa's interior-to-coast roads are well suited to export natural resources, but not to support regional trade. Are they the optimal resourse to geography and comparative advantage, or the result of suboptimal political distortions? We investigate the political determinants of road paving in West Africa across the 1965-2012 period. Controlling for geography and the endogeneity of democratization, we show that autocracies tend to connect natural resource deposits to ports, while the networks expanded in a less interior-to-coast way in periods of democracy. This result suggests that Africa's interior-to-coast roads are at least in part the result of suboptimal political distortions. |
| Keywords: | political economy, democracy, infrastructure, natural resources, development |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:not:notgep:2019-04&r=all |
| By: | Norbäck, Pehr-Johan (Research Institute of Industrial Economics (IFN)); Persson, Lars (Research Institute of Industrial Economics (IFN)) |
| Abstract: | Entry by multinational enterprises (MNEs) into emerging markets has increased substantially over the last decades. Many of these MNE entries have taken place in concentrated markets. To capture these features, we construct a strategic interaction model of MNE cross-border acquisition and greenfield entry into an oligopolistic market. We provide an event study framework suitable to derive predictions for the stock market values of MNE entries. We show that share values of acquirers will increase when an acquisition is announced if and only if the domestic assets are not too strategically important. If there is risk associated with cross-border M&As, we show that such risks reduce the likelihood and the acquisition price of cross-border M&As. These mechanisms provide an explanation for why acquirers tend to overperform when acquiring in emerging markets but underperform when acquiring in developed markets. We also show that shareholders of targets firms in emerging markets may benefit from not selling their firms too early in the development phase. |
| Keywords: | FDI; Cross-Border Mergers and Acquisitions; Stock Market Value; Emerging Markets |
| JEL: | F23 G34 L13 |
| Date: | 2019–02–28 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1267&r=all |
| By: | Davids, T.; Meyer, F.; Westhoff, P. |
| Abstract: | Despite well-researched benefits and stated policy goals of increasing intra-regional trade, African policy makers continue to rely on export controls in an effort to keep prices at tolerable levels. Within the Southern African region, Zambia has been particularly prone to such policy action, typically in the maize sector, which has strong connotations to food security. Against the backdrop of drought-induced supply shortages of white maize in Southern Africa in 2016, this study applied a partial equilibrium model with bilateral trade flows to simulate the impact on prices and trade flow of imposing export controls in Zambia relative to an open trade scenario. The goal of reducing prices for domestic consumers was achieved at the expense of producers, who lose the market-induced price increase that would offset some revenue loss if trade was allowed to flow freely. Contrary to most previous literature on Zambian export controls, the impact of Zambian policy was also related to neighbouring markets, highlighting higher prices, reduced consumption and changes to typical trade flows. Price increases in neighbouring countries supported area expansion in subsequent years, inducing a shift in production towards these countries and highlighting the detrimental impact of trade control policies on long term production growth. Key words: Export controls, Partial equilibrium simulation, bilateral trade modelling |
| Keywords: | International Relations/Trade |
| Date: | 2018–09–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aeas18:284728&r=all |
| By: | Boly Amadou; Seydou Coulibaly (Centre d’Etudes et de Recherches sur le Développement International (CERDI), CNRS, and Université d’Auvergne (Clermont-Ferrand, France)); Eric Kéré Nazindigouba (African Development Bank) |
| Abstract: | JEL Code : C23, E62, F21, H25.Keywords: FDI, statutory corporate tax rate, panel data, spatial econometrics. |
| Date: | 2019–02–22 |
| URL: | http://d.repec.org/n?u=RePEc:adb:adbwps:2436&r=all |
| By: | Mikio Kuwayama (Research Fellow of Kobe University Research Institute for Economics and Business (RIEB) and Managing Director of the Japan Association of Latin America and the Caribbean (JALAC)) |
| Abstract: | This paper will argue that the favorable balance and world appraisal of the eight years of existence of the Pacific Alliance (PA) owes to its pragmatic, progressive, participatory, and consensual approach of regional integration based on “Open Regionalism” (OR). The OR concept of the PA has been renovated and accommodated by new challenges and opportunities that arise from the international economy, taking into consideration the specificities of Latin America. The PA’s version of OR emphasizes not only liberalization, trade facilitation, and economic and technical cooperation, as in the conventional OR concept, but also the building of regional capacity to respond to the needs of next-generation trade and investment issues. These issues include firms’ participation in GVCs (especially of SMEs), market-driven innovation policies, new forms of trade facilitation, and “quality” infrastructure, among others. The PA has been seeking integration modalities and instruments conducive to enhancing the synergy between the “market-led” and “policy-led integration. The four member states of the PA share a vision of a development model characterized by OR and a conviction that economic liberalization should be complemented by cooperation efforts on many fronts, which would result in enhanced productivity, competitiveness, and social inclusion. Therefore, these countries have sought to set themselves apart from other regional schemes that have been categorized as ideological such as UNASUR, Mercosur, and ALBA. The PA has been trying to streamline trade and investment relations with Mercosur, embarking on joint efforts aimed at creating a more unified and connected market in Latin America. |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:kob:dpaper:dp2019-02&r=all |
| By: | Hartmut Egger; Simone Habermeyer |
| Abstract: | We develop a framework for studying how differences in the level and/or dispersion of per-capita income affect trade structure and welfare in a two-country model. Thereby, we embed nonhomothetic preferences into a home-market model with two sectors of production and one input factor. We associate the outside good with a necessity and the differentiated good with a luxury, and we assume that heterogeneity of income arises due to heterogeneity of households in their effective labor supply. We then show that in line with the home-market effect countries have a trade surplus in the good for which they have relatively higher domestic demand, making the country with a higher level and/or dispersion of per-capita income a net-exporter of luxuries. The structure of trade is irrelevant for welfare in the open economy if both sectors pay the same wage. If, however, the sector producing luxuries pays a wage premium due to rent sharing, there are feedback effects of trade on the level and dispersion of per-capita income, which can lead to losses from trade in the country net-exporting necessities. In an extension of our model, we show that our results remain intact when we allow for positive assortative matching of workers featuring high effective labor supply with jobs offering high wages in the sector of luxuries. In a second extension, we show that the assumption of nonhomothetic preferences seems less important when supply-side differences are the main motive for inter-industry trade. |
| Keywords: | nonhomothetic preferences, rent sharing, trade structure, welfare effects of trade |
| JEL: | F12 F16 D11 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7522&r=all |
| By: | Diego Useche (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique); Ernest Miguelez (GREThA - Groupe de Recherche en Economie Théorique et Appliquée - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique, University of Barcelona, AQR-IREA); Francesco Lissoni (GREThA - Groupe de Recherche en Economie Théorique et Appliquée - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique, Universita Bocconi - Università Bocconi) |
| Abstract: | Based on a relational view of international business, we investigate the role of migrant inventors in cross-border mergers and acquisitions undertaken by R&D-active firms. We hypothesize that the migrant inventors' international social networks can be leveraged by their employers in order to identify and/or integrate relevant knowledge bases of acquisition targets in the inventors' home country. We nuance our hypothesis by means of several conditional logistic regressions on a large matched sample of deals and control cases. The impact of migrant inventors increases with the distance between countries and for targets located in countries with weak administrative/legal systems, as well as when targets are either innovative or belong to high-tech sectors or to the same sector as the acquirer, and for full versus partial acquisitions. |
| Keywords: | cross-border mergers and acquisitions,migration,inventors,PCT patents |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-02024499&r=all |
| By: | Kozo Kiyota (Keio Economic Observatory, Keio University); Toshiyuki Matsuura (Keio Economic Observatory, Keio University); Lionel Nesta (Université Côte d'Azur; GREDEG CNRS; OFCE Sciences Po.; SKEMA Business School) |
| Abstract: | This paper formally shows that the magnitude of the export premium, the fact that exporters are more productive than non-exporters, conveys little economic information on the underlying selection mechanism into export markets for two major reasons. First, variations in export premia may reflect differences in product and factor market imperfections. Second, under the assumption that the true productivity of firms follows a log-normal distribution, we show that a large export premium does not necessarily entail high export costs. This is due to the non-monotonic relationship between the export productivity cutoff point and the corresponding export premium. |
| Keywords: | Export premium, Productivity, Normal distribution, Firm heterogeneity |
| JEL: | D2 D3 F1 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:gre:wpaper:2019-10&r=all |
| By: | Abei, L.; Van Rooyen, J. |
| Abstract: | Since independence, the cocoa industry of Cameroon has gone through various phases suffering from deregulation of the industry, globalisation, trade liberalisation, natural disasters etc. This paper aims at analysing the competitive performance of a very tradeable global commodity and the main export crop of Cameroon from 1961 to 2013 through the application of a step-wise analytical framework adapted from ISMEA, (1999); Esterhuizen, (2006); Van Rooyen and Esterhuizen (2012) accommodating aspects of agri-value chain analysis. This conventional analysis was expanded to include value chain comparisons between various value-adding processes in the Cameroonian cocoa value chain as well as consensus vs. variations in opinions of different actors within the cocoa industry regarding the factors influencing the industry�s competitive performance from the application of the Porter Diamond model. Information from chain actors through the cocoa executive survey (CES) was used to further expand the framework and analyse the relationship between the various factors affecting the industry�s performance i.e. identify factors which are interrelated in influencing the industry and those that show a degree of independence. Such information is viewed as facilitative for strategic planning purposes. Results revealed that three Porter determinants positively influence the industry�s performance while two were constraining implying that the Cameroon cocoa industry, while performing positively, can strive to increase competitiveness considerably by applying selected industry-based strategies. Keywords: Cameroonian cocoa industry, competitive performance, relative trade advantage (RTA), cocoa executive survey (CES), Porter Diamond. |
| Keywords: | Crop Production/Industries |
| Date: | 2018–09–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aeas18:284771&r=all |
| By: | Coulter, Steve |
| Abstract: | While a reluctant European player now heading for the Exit, the UK was also an enthusiastic adopter of several key EU economic policies – namely, the skills and technology policies of Agenda 2020 and labour mobility. These initiatives worked with existing British policy, and structural biases, to exacerbate the already bifurcated structure of UK capitalism – between the high-paid technology and financial services sector on the one hand, and low-cost, low-wage sectors on the other hand. In particular, and central to the argument of this paper, immigration from Eastern and Central Europe after 2004 helped to sustain low-cost manufacturing and services industries by undermining firms’ incentives to invest in training. This combined with endemic failures in the UK’s skills system, which is heavily geared towards producing graduates with general skills but neglects the needs of mid and lower segments of the labour market. EU integration, therefore, exacerbated cleavages over skills between high- and low-productivity sectors and may have contributed to social divisions that led to Brexit |
| Keywords: | Comparative political economy; skills policy; immigration; liberal market economies; United Kingdom |
| JEL: | N0 R14 J01 |
| Date: | 2017–09–06 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:84544&r=all |
| By: | María Angélica Arbeláez; Sebastián Higuera; Roberto Steiner; Sandra Zuluaga |
| Abstract: | Como parte de una amplia agenda de reformas estructurales, a comienzos de los años noventa Colombia emprendió un importante programa de liberalización comercial, enfocado principalmente en la reducción de aranceles. En las dos últimas décadas el uso extendido de barreras no arancelarias y de otras medidas de protección han reversado parcialmente el esfuerzo de liberalización, en particular para algunos productos agrícolas considerados sensibles. Colombia también se destaca como el único país de América Latina en el que la agricultura tuvo un desempeño mediocre durante la década de precios altos de los productos básicos, con una política sectorial enfocada más en la protección que en la provisión de bienes públicos. Esto es particularmente preocupante en el contexto del Acuerdo de Paz con las FARC el cual requiere, para ser sostenible, un sector agrícola competitivo y de rápido crecimiento. Por supuesto, la política comercial no ocurre en el vacío, sino que es, más bien, el resultado de complejas interacciones políticas entre diversos grupos de interés. Para arrojar luz sobre la economía política de la protección de los productos agrícolas sensibles en Colombia, en este documento analizamos los casos de arroz y azúcar. Ambos están fuertemente protegidos, pesan mucho en las canastas de consumo de los hogares y forman parte de complejas cadenas de valor agregado. El análisis de fuentes secundarias y de más de 20 entrevistas semiestructuradas nos permite entender mejor el “por qué” de la protección comercial. Identificamos ganadores y perdedores y discutimos los canales de influencia de jugadores claves, incluyendo a los productores agrícolas y sus organizaciones, la industria procesadora de alimentos, grandes conglomerados económicos, el Congreso, los medios de comunicación y algunos ministerios altamente politizados. También discutimos los mecanismos de compensación utilizados en los pocos episodios de liberalización que se han llevado a cabo, incluyendo especialmente el TLC con EE. UU. Mostramos que los productores agrícolas están bien organizados, apoyados por grupos de presión como las “Dignidades”, y tienen más peso político que millones de consumidores dispersos y que la industria procesadora. |
| Keywords: | Colombia, Protección Comercial, Agricultura, Economía Política |
| JEL: | F14 Q1 P16 |
| Date: | 2019–02–19 |
| URL: | http://d.repec.org/n?u=RePEc:col:000124:017195&r=all |
| By: | Kangni R Kpodar; Stefania Fabrizio; Kodjovi M. Eklou |
| Abstract: | This paper investigates the impact of domestic fuel price increases on export growth in a sample of 77 developing countries over the period 2000-2014. Using a fixed-effect estimator and the local projection approach, we find that an increase in domestic gasoline or diesel price adversely affects real non-fuel export growth, but only in the short run as the impact phases out within two years after the shock. The results also suggest that the negative effect of fuel price increase on exports is mainly noticeable in countries with a high-energy dependency ratio and countries where access to an alternative source of energy, such as electricity, is constrained, thus preventing producers from altering energy consumption mix in response to fuel price changes. |
| Date: | 2019–02–04 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:19/25&r=all |
| By: | Thierry Madiès; Emmanuelle Taugourdeau (Centre de Recherche en Économie et STatistique (CREST)) |
| Abstract: | Our paper presents a model of decentralized leadership with fiscal equalization and imperfect economic integration. The degree of trade integration (reflected by trade costs) turns out to have an effect on both the state tax rates and the ex-post vertical equalization transfers. Our main results are the following: Ex post vertical transfers are welfare deteriorating for low levels of trade integration while they are welfare improving compared to tax competition when trade integration is high enough. However, when public goods are highly valued by the citizens of the federation, ex post transfers are always welfare enhancing. |
| Keywords: | Decentralized Leadership,Tax competition,Trade Integration |
| Date: | 2019–02–18 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02023908&r=all |
| By: | Syed Hasan (School of Economics and Finance, Massey University, Palmerston North); Nazmun Ratna (Faculty of Agribusiness and Commerce, Lincoln University, Canterbury, New Zealand); Shamim Shakur (School of Economics and Finance, Massey University, Palmerston North, New Zealand) |
| Abstract: | We examined the impact of the depreciation of the Australian dollar (AU$) during 2013-2015 onthe expenditure of households with foreign-born members (HFBMs) in Australia. Employing the difference-in-differences method and 2013-2015 Nielson Homescan Panel Survey data, we found that HFBMs spent around 2.4 percent more on their food expenditure in 2014 and 4.0 percentmore in 2015 compared to their native counterparts. Further investigation indicated that neither incomes nor food prices nor the expenditures on imported food items changed differently for any group in that period, while an analysis with HILDA survey data indicates a similar pattern fortotal expenditures. With reduced outward aggregate remittances from Australia over the sametime, we argue that falling AU$ induces HFBMs to substitute for consumption in the homecountry with that in the host nation. Our empirical results provide fresh insights on how changesin the exchange rate may affect immigrants differently than natives. |
| Keywords: | Australia, exchange rate, immigrant, consumption |
| JEL: | D12 D60 I30 Z13 Z18 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:mas:dpaper:1901&r=all |
| By: | MIYAKAWA Daisuke; SHIMIZU Chihiro; UESUGI Iichiro |
| Abstract: | In this paper, we examine the role of international capital flows in real estate prices by quantifying the relationship between conditions in the location of residence or registration of investors or investment firms and the prices they pay for their realty investments as well as the spillover effect of such capital flows on property prices in the host countries of their investments. Using a unique dataset accounting for about 30,000 realty investment transactions in Australia, Canada, France, Hong Kong, Japan, the Netherlands, the United Kingdom, and the United States, we find the following. First, foreign investors pay significantly higher prices than domestic investors, even after taking a wide variety of controls into account. Second, the larger the buyers' experience with realty investments in the host countries, the smaller the over-payment tendency. These results indicate that foreign investors are overcharged when they are less informed about the property market and that the extent to which they are overcharged decreases with the more investment experience they have. Third, we did not find any significant spillover effects from overpaying by foreign investors to real estate prices in host countries. This finding is consistent with a group of extant studies employing aggregate-level data to examine the link between international capital flows and real estate prices. |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:19011&r=all |