|
on International Trade |
| By: | Philip Wales; Russell Black; Ted Dolby; Gaganan Awano |
| Abstract: | Despite a large international literature on the relationship between firm-level trading behaviour and productivity, evidence on this link for the UK has been hampered by long-standing data issues. This paper addresses this data gap, introducing a new dataset which combines information from the ONS’ Annual Business Survey (ABS) and HM Revenue & Customs’ (HMRC) trade in goods declarations. We apply this new dataset to examine the prevalence of trading behaviour among businesses of different sizes, ownership types and in different industries; and to analyse the link between productivity and trader status for British businesses in the non-financial business economy. The results of this analysis show that large businesses and those which are foreign-owned are most likely to declare international trade in goods. Among businesses with more than 10 employees, only around one-in-five firms report trade in goods to HMRC, but businesses which declare trade in goods accounted for around 40% of all employment in 2016. Most direct trade in goods is undertaken by the Manufacturing and Wholesale & Retail industries. Our analysis also suggests that trade in goods is strikingly concentrated: 38% of the value of UK goods exports was accounted for by the top 50 exporters in 2016, while the top 50 importers accounted for 34% of the value of imports over the same period. Our productivity analysis suggests that the productivity of British businesses which declare international trade in goods was around 70% higher on average than for businesses which did not in 2016. After controlling for their size, industry and foreign ownership status, businesses which declare goods exports or imports have labour productivity premia relative to non-traders of around 21% and 20% respectively. These premia are notably lower for trade with the EU: consistent with lower barriers to EU goods trade enabling relatively less productive businesses to access these markets. Analysis of the link between labour productivity and the intensive margin of trade suggests businesses which source a large proportion of their inputs abroad, which export more products (particularly to non-EU nations), or which export to more countries (particularly within the EU) tend to be more productive than businesses which have less internationalised supply chains, which import a wider variety of products and which have a more limited geographical reach within the EU. Although these results are not necessarily causal, they provide a detailed overview of the link between productivity and trade in goods in the UK context. |
| Keywords: | Productivity, trade in goods, administrative data |
| JEL: | F1 J2 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:nsr:escoed:escoe-dp-2018-09&r=all |
| By: | Giammetti, Raffaele |
| Abstract: | This paper challenges and complements existing studies on the economic impact of Brexit providing a discussion of the UK's decision to leave the EU and how it will affect international trade networks and value-added. Using the World Input-Output Database, we develop a multi-sector inter-country model that allows us to identify the channels through which the economic effects of Brexit would propagate. The inclusion of global value chains and indirect Brexit effects in the model leads to estimates that diverge with the results of the main literature. Indeed our findings, suggest that Brexit could be risky and costly not only for the UK but also for many EU countries. Furthermore, building on the Dietzenbacher and Lahr (2013) method of hypothetical expansion, we develop a second model and present the first empirical analysis on the consequences of domestic import substitution and trade diversion policies in Input-Output schemes. We found that allowing sectors and countries to partly substitute foreign products, leads to significantly lower losses for both macro-regions. In the second model, the UK and EU27 would lose, at worst, the 0.05 and 0.5 percent of value-added, respectively. |
| Keywords: | Brexit, trade barriers, tariffs, input-output analysis, value chains, import substitution, production networks. |
| JEL: | C67 F13 F14 O21 R15 |
| Date: | 2019–03–18 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:93229&r=all |
| By: | Giordano Mion |
| Abstract: | This technical paper outlines a methodology for constructing estimates of the valueadded from exports by 4-digit SIC sub-industries within the UK car manufacturing industry while further extending the analysis to all 4-digit SIC sub-industries belonging to the manufacturing sector. More specifically, our estimates provide a measure of the direct domestic value-added component of exports, i.e., the difference between the value of exports and the expenditure on intermediates used to produce the exported goods. Currently, published estimates on the value-added of UK trade are only available for the car industry as a whole. Our estimates are available at a yearly frequency from 2012-2015. This methodology has been developed through collaboration between the Economic Statistics Centre of Excellence (ESCoE), the ONS and HMRC. The ESCoE aggregate estimates are constructed using individual business data held by HMRC. These methods enable the value-added and exporting profile of each firm to be considered and so better estimates to be constructed than would have been the case if only aggregated data was used. ESCoE estimates suggest that at least that £3.93bn of UK car industry exports was value-added generated directly by the firms immediately prior before exporting. The 4 sub-industries comprising the UK car industry we analyse differ substantially in terms of their import and export intensities and our study provides a detailed picture of direct domestic value-added and direct domestic value-added content of exports from such subindustries. Furthermore, we also provides a way of measuring direct imports and exports, both within and outside the EU28, for subindustries belonging to the car industry thus allowing to gain better insights into the importance of global value chains for specific subindustries. Finally, we extend the above methodology and analysis to all 4-digit SIC sub-industries belonging to manufacturing sector while providing detailed results. These estimates form part of a wider project conducted by ESCoE, whose aim is to construct more highly disaggregated measures of value-added from trade for key sectors. |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:nsr:escoet:escoe-tr-02&r=all |
| By: | Mary E. Burfisher; Frederic Lambert; Troy D Matheson |
| Abstract: | The United States – Mexico – Canada Agreement (USMCA) was signed on November 30, 2018 and aims to replace and modernize the North-American Free Trade Agreement (NAFTA). This paper uses a global, multisector, computable-general-equilibrium model to provide an analytical assessment of five key provisions in the new agreement, including tighter rules of origin in the automotive, textiles and apparel sectors, more liberalized agricultural trade, and other trade facilitation measures. The results show that together these provisions would adversely affect trade in the automotive, textiles and apparel sectors, while generating modest aggregate gains in terms of welfare, mostly driven by improved goods market access, with a negligible effect on real GDP. The welfare benefits from USMCA would be greatly enhanced with the elimination of U.S. tariffs on steel and aluminum imports from Canada and Mexico and the elimination of the Canadian and Mexican import surtaxes imposed after the U.S. tariffs were put in place. |
| Date: | 2019–03–26 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:19/73&r=all |
| By: | Vanzetti, David; Do, Lien Huong |
| Abstract: | In July 2018 the Trump Administration initiated a tariff war by imposing additional duties of 25 percentage points on selected imports from China. As promised, China responded with bilateral tariffs of its own. As a result, both countries are worse off. Not so obvious is the impact on third countries, including exporters competing with the USA, such as Australia or Brazil, or exporters competing with China to supply the US market, such as Korea and Japan. Analysis using a global computable general equilibrium model suggests that a bilateral tariff war does not make every country worse off. Indeed, if the effects are confined to tariff cuts, as opposed to investment flows, most countries gain. This is because most imports between the USA and China have substitutes, albeit imperfect. This means that most imports can be obtained elsewhere. Conversely, both the USA and China can export to alternative markets. Trade and welfare effects are presented. |
| Keywords: | Agricultural and Food Policy, International Relations/Trade |
| Date: | 2019–02–13 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aare19:287203&r=all |
| By: | Paulo Soares Esteves (Banco de Portugal); Miguel Portela (NIPE/Universidade do Minho and IZA Bonn); António Rua (Banco de Portugal & NOVA School of Business and Economics) |
| Abstract: | The existence of a link between exports and domestic demand challenges the standard theoretical assumption in international trade models and carries out important policy implications. Being a small open economy and one of the hardest hit economies during the latest economic and financial crisis, Portugal is a natural case study for assessing the role of this channel, in particular given the large export market share gains that mitigated the negative effects on economic activity. A key difference of our empirical approach vis-`a-vis previous literature is that the estimated relationship between exports and domestic sales results directly from a monopolistic model of a firm selling to both domestic and external markets. Drawing on an appropriate estimation strategy, it is found a noteworthy negative relationship between domestic demand and firms’ exports covering the manufacturing sector over the period 2009–2016. This result holds for almost all industries although with a heterogeneous magnitude. Aditionally, there is also evidence that this effect is stronger for larger firms. |
| Keywords: | international trade, firms, exports, domestic demand, foreign demand,panel data. |
| JEL: | C33 C36 D21 D22 F14 F41 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:nip:nipewp:18/2018&r=all |
| By: | Jayasooriya, Sujith |
| Abstract: | Impact of globalization in terms of environmental degradation over trade liberalization is renowned strong theoretical underpinning in the literature. Nevertheless, testing Environmental Kuznets model of trade liberalization is not adequately estimated to provide pragmatic evidences for optimal environmental policy designs. Besides identifying the Environmental Kuznets Hypothesis (EKH); testing for (i) CO2 emission and economic growth (ii) CO2 emission and trade openness, (iii) changes of emissions over simulated trade openness under the experiential Environmental Kuznets Curve (EKC) was estimated using dynamic panel data estimation with Instrumental Variable-Generalized Methods of Moments. The paper used innovative approach to measure the scale effect after performing series of approximations of EKH relationships, a non-linear relationship between percentage changes of CO2 emission with respect to the simulated trade openness, are predicted using Monte Carlo simulation experiments. Data from WDI of World Bank was used to model the EKC relationships. The results provides evidences that the impacts are considered as the magnifier effect, as this experimentation shows that the increase of trade openness, under these economic situations need to increase 400% to reach the maximum % of CO2 emissions to decrease gradually. The South Asian Association for Regional Corporation (SAARC) countries cannot increase the trade openness for eight times from current level of trade openness to minimize the emissions, thus high emission rates with increase of trade openness can’t be avoided without incorporation of environmental policy instruments. This study also verified that when trade liberalization eliminates subsidies, inducing less environmental friendly effects in the production processes, both trade flows and quality of the environment improves. Finally, the study produced evidences for policymakers to consider the regulatory effect of the trade liberalization in the SAARC region. The paper recommends movements towards the free trade intimidate the optimal environmental standards. Thus, optimal trade openness is essential for amending the SAARC regional trade agreement for environmental effects with regulations for minimizing the environmental impacts and sharing the common benefits among partners for designing the open economic policies. |
| Keywords: | EKC, IV-GMM, Emissions, Trade Openness, SAARC |
| JEL: | F1 F14 F18 Q5 |
| Date: | 2019–04–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:93203&r=all |
| By: | idris, rafiq |
| Abstract: | In an effort to explore new economic window, there was a suggestion to further integrate the economies in Borneo island by improving connectivity. Road connectivity with Kalimantan has been proposed as having the potential to further stimulate Sabah’s economic growth. One of the suggestions was to have road from Serudong to Simanggaris from Malaysia’s side of Sabah. In the context of Sabah, several questions arise: how does this benefit the state? Should there be additional efforts to connect Sabah and Kalimantan via road? Should Sabah spend money to improve logistical connectivity with Kalimantan? This chapter discusses briefly the latest proposal in recent years to establish a road connectivity with North Kalimantan, by estimating the effect of common border when having good road on export. Generally, there are limited studies assesses the impact of Sabah-Kalimantan Road Connectivity from Sabah’s perspective. The study uses gravity model. The regression results indicate that common border is positively linked to trade of Malaysia for the period under investigation. Similarly, it is expected that the road connectivity with Kalimantan is projected to increase Malaysia's and Sabah's export. This study shall give an overview and fill in the literature gap by providing an estimation of the common border effect through road connectivity in the context of Sabah-Kalimantan further economic integration. |
| Keywords: | Sabah, Kalimantan, Common Border, Effect, Export |
| JEL: | F10 F14 R4 |
| Date: | 2018–12–31 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92991&r=all |
| By: | Beata K. Bierut; Piot Dybka |
| Abstract: | Although the impact of institutions has been broadly studied in the literature on economic growth, their impact on international trade is less well-established. We aim to fill this gap by creating an extended database that, apart from price and non-price factors traditionally analyzed as determinants of exports, also includes measures of institutional development. Next, we introduce the Bayesian Model Averaging to establish which factors play the most important role for the export performance. Our results show that institutions have two types of effects on exports: a direct positive effect on the overall export performance (e.g. regulation) as well as a transformational impact on the export structure (from less to more technologically advanced exports, e.g. freedom to trade internationally). Our results also confirm that technological factors (e.g. patents) have a much greater impact on export performance than price factors. Moreover, some technological factors only have a significant transformational impact on the export structure (e.g. R&D expenditure). Human capital also seems to have only a transformational, rather than direct, impact on exports. |
| Keywords: | Trade, price competitiveness, technological competitiveness, institutional environment, Bayesian Model Averaging |
| JEL: | C11 C33 F14 F15 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:sgh:kaewps:2019043&r=all |
| By: | Ural Marchand, Beyza (University of Alberta) |
| Abstract: | This paper studies the pro-poor bias of contemporary trade policy in India by estimating the household welfare effects of eliminating the current protection structure. The elimination of a pro-poor trade policy is expected to have lower welfare gains or higher welfare loss at the low end of the per capita expenditure distribution. The paper first constructs trade restrictiveness indices for household consumption items and industry affiliations using both tariffs and the ad-valorem equivalent of non-tariff barriers. The welfare effects are estimated through its impacts on household expenditure and earnings. The results indicate that Indian trade policy is regressive through the expenditure channel as it disproportionately raises the cost of consumption for poorer households, while it is progressive through the earnings channel in urban areas and neutral in rural areas. The net distributional effect through these two channels is estimated to be regressive, and elimination of current trade protection structure is expected to reduce inequality. These results indicate that a trade protection structure that designed as a progressive trade policy through the earnings channel may induce price effects that are regressive through the expenditure channel. |
| Keywords: | trade protection, consumption inequality, poverty |
| JEL: | D31 F14 I30 O12 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12199&r=all |
| By: | Alessia Matano (AQR-IREA Research Group, University of Barcelona. Department of Econometrics, Statistics and Applied Economics. Av. Diagonal 690, 08034 Barcelona, Spain.); Paolo Naticchioni (University of Roma Tre, INPS-DCSR, IZA.); Francesco Vona (OFCE Sciences-Po and Université Côte d’Azur, SKEMA.) |
| Abstract: | A growing body of research has contributed to understanding the labor market and political effects of globalization. This paper explores an overlooked aspect of trade-induced adjustments in the labor market: the institutional aspect. We take advantage of the two-tier collective bargaining structure of the Italian labor market, whereby the first tier entails setting minimum wages at the contract level. Using an instrumental variable strategy and exploiting variations in contract-level exposure to trade, we find for the 1995-2003 period that on average, the surge in imports decreased contractual minimum wages by 1.5%. This impact increased with the increase in the share of unskilled workers employed under this contract. This negative institutional effect contrasts with a nonsignificant effect of trade on total wages, with the latter becoming positive and large only for highly skilled workers. |
| Keywords: | bargained minimum wages; import competition; labor market institutions; skills. JEL classification: J50, F16, J31, J24. |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:ira:wpaper:201905&r=all |
| By: | Tsuyoshi Toshimitsu (School of Economics, Kwansei Gakuin University) |
| Abstract: | Focusing on the role of an intermediary, we consider the choice of export mode (i.e., direct vs. indirect exports) by a manufacturer. We also examine the effect of “learning-by-exporting,” which implies that a manufacturer using an intermediary in a previous period is likely to export directly in a subsequent period. |
| Keywords: | export mode, trade costs, intermediary firms, Nash bargaining, self-selection hypothesis, learning-by-exporting hypothesis |
| JEL: | D21 F1 L81 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:kgu:wpaper:190&r=all |
| By: | Sylvain Weber; Reyer Gerlagh; Nicole A. Mathys; Daniel Moran |
| Abstract: | The amount of CO2 embedded in trade has substantially increased over the last decades. We study the trends and some drivers of the carbon content of trade over the period 1995-2009. Our main findings are the following. First, the mix of traded goods tends to have higher emission intensity than the average mix of final demand. Second, dirty countries tend to specialize in emission-intensive sectors. This finding suggests that trade liberalization may increase global emissions. Third, the share of goods produced in emission-intensive countries is rising, consequently increasing global emissions. Finally, we find that coal abundance is an important driver of net CO2 exports, and abundance increases exports. These findings highlight the importance of considering trade when designing CO2 reduction strategies. They also suggest that, if left unattended, continued growth in global trade will increase – not decrease – global CO2 emissions. |
| Keywords: | international trade, embodied emissions, carbon leakage, multi-region input-output analysis, fossil fuels, Kyoto Protocol |
| JEL: | F18 Q43 Q54 C67 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7562&r=all |
| By: | Arnaud Mehl (European Central Bank); Martin Schmitz (European Central Bank); Cédric Tille (IHEID, Graduate Institute of International and Development Studies, Geneva) |
| Abstract: | Does distance matter for the volatility of international real and financial transactions? We show that it does, in addition to its well-established relevance for the level of trade. A simple model of trade with endogenous markups shows that demand shocks have a larger impact on trade between more distant countries. We test this implication in two steps, relying on a broad range of real and financial transactions measures, as well as several different metrics of distance (physical, linguistic, and internet). We first show that during the Great Trade Collapse of 2007-09 international transactions fell more between countries that are more distant along the various metrics, and find that the different distance measures magnify each other’s respective impacts. We then focus on a longer panel analysis of trade in goods and show that trade is more volatile between more distant countries, with again a magnification pattern across metrics of distance. |
| Keywords: | distance, gravity, volatility, international trade, international finance, Great Trade Collapse |
| JEL: | F10 F30 |
| Date: | 2019–03–27 |
| URL: | http://d.repec.org/n?u=RePEc:gii:giihei:heidwp05-2019&r=all |
| By: | Chort, Isabelle (Université de Pau et des pays de l’Adour); de la Rupelle, Maëlys (Paris School of Economics) |
| Abstract: | This paper uses state-level data on migration flows between Mexico and the U.S. from 1999 to 2011 to investigate the migration response to climate shocks and the mitigating impact of an agricultural cash-transfer program (PROCAMPO) and a disaster fund (Fonden). While lower than average precipitations increase undocumented migration, especially from the most agricultural states, Fonden amounts decrease the undocumented migration response to abnormally low precipitations during the dry season. Changes equalizing the distribution of PROCAMPO and favoring vulnerable producers in the non irrigated ejido sector mitigate the impact of droughts on migration, especially for a high initial level of inequality. |
| Keywords: | international migration, climate, public policies, weather variability, natural disasters, Mexico-U.S. migration, inequality |
| JEL: | F22 Q54 Q18 Q18 J61 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12227&r=all |
| By: | Yangyuyu, Luo; Scrimgeour, Frank; Bano, Sayeeda |
| Abstract: | This paper explores the patterns of duration and survival of fresh fruit and vegetables import in New Zealand and identifies determinants of survival. Using a discrete-time survival model, we evaluate the impacts of partner-specific characteristics and New Zealand Import Health Standards (IHS) regulations on the survival of trade relationships with 87 economies from 1994 to 2017. Our findings indicate that while more than half of these trade relationships had only survived one year, approximately one-quarter had attempted to enter the market multiple times. Interestingly, the results reveal no evidence that IHS regulations have persistent effects on import survival |
| Keywords: | Agricultural and Food Policy |
| Date: | 2018–08–31 |
| URL: | http://d.repec.org/n?u=RePEc:ags:nzar18:287206&r=all |
| By: | Catherine Mathieu (Observatoire français des conjonctures économiques); Henri Sterdyniak (Observatoire français des conjonctures économiques) |
| Abstract: | Le 23 juin 2016, les Britanniques avaient choisi de quitter l’Union européenne (UE). Le vote pour sortir avait recueilli 51,9% des voix contre 48,1% pour rester dans l’UE. Près de trois ans après le référendum, la sortie ne s’est toujours pas faite ; ses modalités restent controversées au Royaume-Uni ; les remainers militent encore pour un second referendum, qui annulerait le premier. Le Royaume-Uni a choisi de respecter l’article 50 du Traité sur l’Union européenne, qui prévoit une sortie négociée de l’UE dans un délai de deux ans après l’activation de l’article, faite par le gouvernement britannique à la fin mars 2017. La négociation s’annonçait forcément difficile car les instances européennes voulaient éviter un accord avantageux pour le Royaume-Uni. Ainsi, le Conseil européen à 27 (article 50) du 27 avril 2017 [1] écrivait : « Un pays non membre de l’Union, qui n’a pas à respecter les mêmes obligations qu’un État membre, ne peut avoir les mêmes droits et bénéficier des mêmes avantages qu’un État membre ». Pour l’UE27, il s’agissait avant tout de préserver la construction européenne et les intérêts des États membres[2] afin que d’autres pays de l’UE ne soient tentés de suivre le chemin des Britanniques. La négociation avait abouti en novembre 2018 à un accord de retrait et à une déclaration politique commune sur les relations futures entre le Royaume-Uni et l’UE 27 (voir « Brexit : l’accord du 25 novembre »). La déclaration politique prévoit que de nouvelles négociations s’engageront immédiatement après la sortie pour préciser ces relations futures et que celles-ci mettront en place un « partenariat étroit, spécifique et équilibré ». Par ailleurs, compte-tenu de la nécessité reconnue par les deux parties de ne pas mettre en place de frontière physique entre l’Irlande du Nord et la République d’Irlande, il a été acté qu’un filet de sécurité (le backstop) sera mis en place : le Royaume-Uni restera dans l’Union douanière et le Marché unique tant que n’aura pas été imaginé un dispositif permettant de concilier l’intégrité du Marché unique et l’absence de frontière. Cet accord n’a pas, jusqu’à présent, été ratifié par le Parlement britannique. Depuis cet accord, les Britanniques sont partagés entre quatre grandes positions, dont la première peut elle-même se diviser en deux sous-groupes : les remainers, qui veulent rester dans l’UE, certains dans une UE libérale, d’autres dans une UE plus sociale ; les hard brexiters, partisans d’une sortie sans accord ; les partisans d’un Brexit négocié, qui acceptent l’accord de novembre 2018 et enfin ceux qui veulent renégocier l’accord. Aucune de ces positions n’a la majorité au Parlement britannique et chacune a une majorité contre elle. La situation est bloquée. Theresa May, qui avait appelé à voter pour rester dans l’UE en juin 2016, essaie de respecter la démocratie, à la fois le résultat du référendum de juin 2016, mais aussi le programme sur lequel le parti conservateur s’est présenté aux élections législatives de juin 2017 : « Brexit means Brexit », la sortie du Royaume-Uni du Marché unique et de l’Union douanière ; le « Take back control », c’est-à-dire la reprise du contrôle des frontières et des lois, que le Royaume-Uni n’ait plus à obéir à des règles définies par les instances européennes et la Cour de justice de l’Union européenne (CJUE), qu’il puisse en particulier contrôler son immigration. Mais que peut faire Theresa May entre sa volonté de respecter le vote des Britanniques, la position ferme de l’UE (ainsi Michel Barnier écrivait en décembre 2016 [3]: « Le Marché unique, les quatre libertés forment un tout, le « cherry picking » n’est pas une option », ce qui impliquait que la mise en cause de la liberté d’installation des travailleurs impliquait la sortie du Marché unique) et un parlement britannique divisé |
| Keywords: | Union européenne; Royaume Uni; Brexit |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/8g8us4rp9cjb4d1ef6uq7iv4&r=all |
| By: | Joe Pilkington; Jeremy Rowe |
| Abstract: | This technical paper outlines a methodology for constructing estimates of the value-added from exports of Monetary Financial Institutions (MFIs) in the UK. We present new and initial estimates giving a lower bound for the value-added component of MFIs exports generated directly by the domestic MFI (ISIC 64.10) subsector, called the direct domestic value-added component of exports. We also present a disaggregation of MFIs exports into EU and nonEU exports for the first time. Currently, published estimates on the value-added of UK trade are only available for aggregate financial services or even higher levels of industrial aggregation, and only with a lag and at an annual frequency. Our estimates are available at a quarterly frequency from 2014-2017 Q1. This methodology has been developed through collaboration between the Economic Statistics Centre of Excellence (ESCoE) and the Bank of England. Our estimates for MFIs are constructed using individual institution data held and aggregated by the Bank of England and the destination of exports is allocated using disaggregated product level data. These methods enable the value-added and exporting profile of each MFI to be considered and so better estimates are constructed than would have been the case if only aggregated data was used. Our initial estimates suggest that at least £14.6bn of the £38.2bn of MFI exports in 2016 was direct domestic value-added, of which £5.0bn is exported to the EU. We compare these new estimates with currently published data at a higher industry level. These estimates form part of a wider project conducted by ESCoE, the aim of which is to construct more highly disaggregated measures of value-added from trade for key sectors. |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:nsr:escoet:escoe-tr-01&r=all |
| By: | Daniele Verdini (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)) |
| Abstract: | Does production size play any role in industrial productivity? And how important is its contribution to the evolution of comparative advantage over time? In this paper, I develop a multi-country multi-sector general equilibrium model of trade characterized by the presence of inter-temporal sector-level externalities. The model makes explicit the mechanism linking size and productivity and delivers at the equilibrium a dynamic gravity model of trade that can be empirically tested. I structurally estimate the dynamic scale parameter by exploiting exogenous demand shocks uncorrelated to any supply-side component of production. Results show that industrial production scale can be a potential source of comparative advantage, with an estimated average dynamic scale parameter of 0.18. However, potential gains are heterogeneous, with values ranging between 0.12 and 0.20 across different industries. |
| Keywords: | International Trade, Dynamic Comparative Advantage, Sector-level Externality, Demand Shocks |
| JEL: | D62 F11 |
| Date: | 2019–03–24 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvir:2019007&r=all |
| By: | Lin, Jingyi (Lund University); Plechero, Monica (University of Florence) |
| Abstract: | Literature investigating highly skilled Chinese migrants has so far focused on their role as drivers of new entrepreneurship as well as innovation in firms and regions, although their role in supporting small and medium enterprises (SMEs) engagement in global innovation networks (GINs) is still underexplored. The participation in GINs is key for high tech SMEs, which rely on sophisticated knowledge but may not have the same absorptive capacity of large firms and multinational corporations. Based on primary data from a case study on 19 SMEs in the IT and new media industry in Beijing, this paper investigates the role of returnees and highly skilled migrants in supporting the engagement of Chinese high-tech SMEs in GINs. The results reveal the important role of those individuals in bringing SMEs in former international knowledge networks and establishing new linkages for sourcing key knowledge. |
| Keywords: | lobal innovation networks; GIN; knowledge sourcing; small and medium enterprises; SMEs; Beijing; China; highly skilled migrants; returnees; IT and new media industry |
| JEL: | F20 O30 |
| Date: | 2019–04–04 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lucirc:2019_005&r=all |
| By: | Brahim Gaies (LED); Khaled Guesmi (LED); St\'ephane Goutte (LED) |
| Abstract: | This study suggests a new decomposition of the effect of Foreign Direct Investment (FDI) on long-term growth in developing countries. It reveals that FDI not only have a positive direct effect on growth, but also increase the latter by reducing the recessionary effect resulting from a banking crisis. Even more, they reduce its occurrence. JEL: F65, F36, G01, G15 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1904.04911&r=all |
| By: | Ivlevs, Artjoms (University of the West of England, Bristol); King, Roswitha M. (Østfold University College) |
| Abstract: | For decades, countries aspiring to join the European Union (EU) have been linked to it through migration. Yet little is known about how migration affects individual support for joining the EU in prospective member states. We explore the relationship between migration and support for EU accession in the Western Balkans. Using data from the Gallup Balkan Monitor survey, we find that prospective and return migrants, as well as people with relatives abroad, are more likely to vote favourably in a hypothetical EU referendum. At the same time, only people with relatives abroad are more likely to consider EU membership a good thing. Our results suggest that migration affects attitudes toward joining the EU principally through instrumental/utilitarian motives, with channels related to information and cosmopolitanism playing only a minor role. Overall, our study suggests that migration fosters support for joining a supranational organization in the migrants' countries of origin, which, in turn, is likely to affect political and institutional development of these countries. |
| Keywords: | migration, return migration, European Union, european integration, Western Balkans |
| JEL: | F22 F24 J61 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12254&r=all |
| By: | Karin Gourdon; Joaquim Guilhoto |
| Abstract: | This study quantifies the significant economic gains that are expected to be revealed through the abolition or relaxation of local content based policies. The work analyses two specific local content policies affecting directly or indirectly the shipbuilding industry in two countries: Brazil’s local content requirement as part of national concession contracts in the oil and gas sector, and the long-standing US Jones Act obliging intra-US seaborne trade to be conducted on US built and US flagged vessels. The paper’s static simulation exploits OECD’s latest Trade-in-Value-Added (TiVA) data – a rich database on Inter-Country Input-Output relationships. The database has been disaggregated to the level of the shipbuilding industry, enabling an assessment of the effect of the two selected policies on inter-industry trade. The simulation results suggest large economic benefits for both countries in the long-term despite initial losses in the target industry. |
| Keywords: | input-output models, international trade, Local content requirements, shipbuilding, trade restrictions |
| JEL: | F10 C67 R15 |
| Date: | 2019–04–12 |
| URL: | http://d.repec.org/n?u=RePEc:oec:stiaac:69-en&r=all |
| By: | Husmann, Christine; Kubik, Zaneta |
| Abstract: | In this paper, we seek to answer three research questions: (1) What is the pattern of foreign direct investment (FDI) in the African food and agriculture sector in the last 15 years? (2) What are the drivers of FDI in the African food and agriculture sector? (3) What is the evidence on the impacts of private-sector investments in the African food and agriculture sector on the product and labor markets, with particular focus on income effects? Our analysis shows that a total of $48.737 billion was invested in the African food and agriculture sector by foreign private-sector investors between 2003 and 2017, with a noticeable peak in FDI inflows observed after the 2008/09 agricultural commodities shocks suggesting that international investors want to capitalize on high food prices. The initiatives such as the New Alliance for Food Security and Nutrition and Grow Africa, which aim to create a conducive environment for investment, might have also contributed to the growth of FDI volumes reported over the last years. Our econometric analysis reveals that market potential is one of the main drivers of FDI in food and agriculture sector in Africa. More specifically, population size consistently has a significant impact on sectoral FDI inflows in Africa, irrespective of the model specification. Among the supply-side factors, the size of agricultural land turns out to be an important predictor of FDI inflows. Agglomeration effects are also observed, with a lagged volume of FDI inflows having a very strong impact on the level of current FDI. Finally, infrastructure or institutional quality play an essential role in attracting investment. These findings give support to various strands of literature that we drew upon in the theoretical framework. Uncovering the impacts that private-sector investment has on the population proved not to be straightforward. Even though the literature is relatively abundant, it is flawed with multiple methodological issues that limit its internal and external validity. Despite these caveats, most of the studies reviewed in our paper seem to suggest positive impacts on farm and labor income. The effects on equality and poverty are not clear, as some investment schemes may be biased towards the better-off households. However, wage-employment opportunities generated by private-sector investment seem to benefit the poorest, especially when they target unskilled labor or women. Finally, there is evidence that private-sector investment might act as a driver of technical innovation. However, many research gaps remain. |
| Keywords: | Agricultural and Food Policy, International Development, Labor and Human Capital |
| Date: | 2019–04–12 |
| URL: | http://d.repec.org/n?u=RePEc:ags:ubzefd:287431&r=all |
| By: | Nicholas Oulton |
| Abstract: | What effect, if any, do changes in the terms of trade have on the level of output (GDP) or welfare? I examine this issue through two versions of a textbook, Hecksher-Ohlin-Samuelson (HOS), two-good model of a small, open economy. In the first version both goods are for final consumption. In the second, one good is an imported intermediate input into the other. In both versions, economic theory suggests that an improvement in the terms of trade raises welfare (consumption) but leaves aggregate output (GDP) unchanged. This follows from a continuous-time analysis using Divisia index numbers. I then show that a national income accountant applying the principles of the 2008 System of National Accounts (SNA) would reach the same conclusions. |
| Keywords: | GDP, welfare, SNA, Hecksher-Ohlin-Samuelson, terms of trade, Divisia |
| JEL: | E01 F11 C43 D60 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:nsr:escoed:escoe-dp-2019-06&r=all |
| By: | Ge, Ying (School of International Trade and Economics, Beijing); Fang, Tony (Memorial University of Newfoundland); Jiang, Yeheng (Chinese Academy of Forestry) |
| Abstract: | We use Chinese firm-level data from the World Bank Investment Climate Survey to examine the link between importing intermediates and intra-firm wage inequality. Our results show that intermediate input importers not only have a significant wage premium but also have a greater intra-firm wage dispersion than non-importing firms. This pattern is robust when we control for productivity and use trade costs as the instruments. We further investigate the mechanism of how importing intermediates might contribute to both inter-firm and intra-firm wage inequality. Our evidence is consistent with three important channels. First, imported intermediate inputs complement skilled labour. Second, intermediates importers are more likely to use performance pay. Third, imported inputs complement innovation and employee training. |
| Keywords: | global production sharing, wage inequality, world bank investment climate survey |
| JEL: | F16 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12246&r=all |
| By: | Brunello, Giorgio (University of Padova); Lodigiani, Elisabetta (University of Padova); Rocco, Lorenzo (University of Padova) |
| Abstract: | We estimate the (causal) effects of low skill immigration on the performance of Italian manufacturing firms. We find that an increase of the local supply of low skilled immigrants by one thousand units – which corresponds to 8.5 percent of the mean value - raises profits on average by somewhat less than half a percentage point, reduces average labour costs by about 0.1 percent and has no effect on TFP. The positive effects on profits are larger for small firms operating in low tech sectors and for firms located in areas specializing in low skill productions. Our evidence suggests that the recent waves of low skilled immigration in Italy may have hampered the transition to an economic structure characterized by high productivity and wage growth. |
| Keywords: | low skilled immigration, profits, Italy |
| JEL: | J61 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12226&r=all |
| By: | Sultan Mehmood (University of Paris - IX); Avner Seror (Chapman University) |
| Abstract: | In this paper, we demonstrate that even when foreign aid is used to fund patronage, it may still have a positive - and significant - effect on economic growth in developing countries. First, we present a theory that formalizes the effect of aid on economic growth and patronage. Next, we provide evidence from Pakistan consistent with the predictions of the model that foreign aid increases economic growth, despite being used for patronage. The identification strategy we propose allows us to provide causal evidence for the predictions of the model. |
| Keywords: | Foreign aid, Economic growth, Political Economy, Patronage |
| JEL: | F35 D72 O1 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:19-10&r=all |
| By: | Frederico Oliveira Torres |
| Abstract: | For Melitz (2003), the driving force behind a firm’s decision to export is productivity. If firms pass the productivity cut-off, they all export. Nonetheless, empirical studies show that a substantial share of high-productive firms do not export. Using a dataset that covers Portuguese non-financial firms, between 2010 and 2016, we assess which factors determine the export decision, besides productivity. According to our results, firm’s characteristics, such as size, turnover, import as well as export status, age, worker skills and knowledge agglomeration, are crucial in the process of internationalisation of firms. |
| Keywords: | Exports, firm heterogeneity, firm-level data |
| JEL: | D22 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:mde:wpaper:0118&r=all |
| By: | Dinda, Soumyananda |
| Abstract: | This study focuses on India’s climate change mitigation strategy through trade and how India gradually moves forward towards the goal of sustainable development path. The paper highlights trade performances of climate friendly goods and technology (CFGT) in India during 2002-20017 and suggests possible solution through trade channels that might mitigate climate change through disseminating and exchanging the low carbon and clean technologies, which improve energy efficiency and minimizes environmental impacts. The products associated with clean technologies which have relatively less adverse impact on the environment. This paper attempts to realize India’s CFGT export and import, and quantify trade opportunities of CFGT in India. With these it also identifies constrains and helps to widen capacity and strengthen its capability in the advancement of capturing new opportunities in production and trade in CFGT. India should adopt few policies to improve and raise CFGT production while trade ensures availability of technologies |
| Keywords: | Climate Change, Climate Mitigation, Energy Efficiency, India, CFGT, Trade, Climate Friendly Goods and Technology, Export and Import |
| JEL: | C21 C51 C54 O3 O53 Q27 Q37 Q5 Q52 Q56 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:93031&r=all |
| By: | Raifu, Isiaka Akande; Aminu, Alarudeen; Adeniyi, Oluwatosin Ademola |
| Abstract: | The role of exchange rate movements in determining the trading position of a country and the ultimate welfare of its people vis-à-vis its trading partners is enormous. Consequently, this study is conducted to examine the nature of the trading relationship between Nigeria and its trading partners in three continents-North America, Europe and Asia. The study specifically focuses on how the fluctuation of naira vis-à-vis the pound sterling, dollar and Yuan affects Nigeria's trading position in relation to UK, US and Hong Kong (China). Quarterly data that span the period from 1981 to 2015 were used and linear and Non-linear ARDL estimation techniques were deployed to prove the existence of linear and nonlinear J-Curve. The findings, based on linear ARDL, show no proof of J-Curve in all the models, however, cointegration exists between the trade balance and the exchange rate dynamics. In non-linear ARDL, the existence of J-Curve is only observed in Nigeria-Hong Kong model. However, the findings show that there is both the existence of cointegration and the short-run and the long-run asymmetric nexus between exchange rate dynamics and trade balance in all the models. The overarching implication of the finding is that devaluation of Naira will not improve Nigeria’s trading position vis-à-vis trading partners considered. |
| Keywords: | Exchange Rate Dynamics, Trade Balance, J-Curve, ARDL, NARDL |
| JEL: | F31 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92976&r=all |
| By: | Purnendra Jain |
| Abstract: | This paper analyses Japan’s motivation for supporting the high-speed rail (HSR or bullet train) project in India, its largest ever single-country Official Development Assistance (ODA) yen loan project. The paper explores the strategic underlay for Tokyo’s new thinking about ODA projects, centered on ‘quality’ infrastructure, and argues that by nature, scale, and location, the HSR project is an outstanding example of Japan’s contemporary strategic aid. Concerned with ‘comprehensive national security,’ this aid is mindful of Japan’s economic interests as well as its national security and defence. India’s rising economic potential as a huge future market has great appeal for Japan, but foremost it is India’s current strategic importance in the context of power shifts at Asian regional and global levels that steers Japan’s rising interest. The HSR project’s multiple strategic dimensions are also shaped powerfully by the moves of China, Japan’s key economic and strategic competitor. Since these circumstances heighten the strategic stakes for guiding the region’s infrastructure development, Japan’s HSR ODA project for ‘quality infrastructure’ in India provides new insights into not only the country’s current relationship with India, but also Tokyo’s broader thinking about strategic aid, especially through the ‘quality’ lens in its contemporary aid narrative. |
| Keywords: | Japan, ODA, Japan?India Relations, Quality Infrastructure, Bullet Train, Aid Politics, Strategic Aid. |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:jic:wpaper:184&r=all |