|
on International Trade |
| By: | Michael Blanga-Gubbay; Paola Conconi; Mathieu Parenti |
| Abstract: | We study the role of firms in the political economy of trade agreements. Using detailed information from lobbying reports filed under the Lobbying Disclosure Act, we find that virtually all firms that lobby on free trade agreements (FTAs) support their ratification. Moreover, relative to non-lobbying firms, lobbying firms are larger, and more likely to be engaged in international trade and to operate in comparative advantage sectors. To rationalize these findings, we develop a model in which heterogeneous firms decide whether to lobby and how much to spend in favor or against a proposed FTA. We show that the distributional effects are asymmetric: the winners from the FTA have higher stakes in the agreement than the losers, which explains why only pro-FTA firms select into lobbying. The model also delivers predictions on the intensive margin of lobbying. In line with these predictions, we find that firms spend more supporting agreements that generate larger potential gains - in terms of the extent of the reduction of tariffs on their final goods and intermediate inputs, the depth of the agreement, and the export and sourcing potential of the FTA partners - and when politicians are less likely to be in favor of ratification. |
| Keywords: | trade agreements, endogeneous lobbying, heterogeneous firms |
| JEL: | F13 F53 F61 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8239&r=all |
| By: | Amat Adarov (The Vienna Institute for International Economic Studies, wiiw); Mahdi Ghodsi (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | The preferential trade agreement between the Eurasian Economic Union (EAEU) and Iran on mutual trade entered into force in October 2019. In this report we estimate its expected impact at aggregate and sectoral levels using the gravity model of trade based on the global sample of bilateral trade flows at the HS 6-digit level. The analysis suggests that the implementation of the agreement will boost mutual trade for both trading partners, with relatively greater gains expected for the EAEU’s exports to Iran. On aggregate, the total gains in mutual trade are estimated to reach almost USD 46 million, with exports from the EAEU to Iran expected to increase by 9.7%, compared with a rise in exports from Iran to the EAEU of up to 4%. The difference in the impact will also be significant across the five EAEU countries as well as across sectors, with the major export gains expected to accrue in the chemicals and agri-food sectors, especially trade in miscellaneous fruits and vegetables, as well as in the textile, polymer production and metals sectors. |
| Keywords: | Eurasian integration, EAEU, Iran, trade agreement, gravity model, PPML |
| JEL: | F13 F14 F15 F17 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:wii:wpaper:179&r=all |
| By: | Kazunobu Hayakawa (Institute of Developing Economies (IDE-JETRO)); Jota Ishikawa (Faculty of Economics, Hitotsubashi University and the Research Institute of Economy, Trade and Industry (RIETI)); Nori Tarui (Department of Economics, University of Hawaii at Manoa and the University of Hawaii Economic Research Organization (UHERO)) |
| Abstract: | In international trade, transportation requires a round trip for which a transport firm has to commit to shipping capacity that is sufficient to meet the maximum shipping volume. This may cause the “backhaul problem.” Trade theory suggests that, facing the problem, transport firms with market power adjust their freight rates strategically when import tariffs change. As a consequence, a country reducing its import tariffs may experience an increase in exports as well as imports. Using worldwide data covering 1995-2007, we find evidence that supports these predictions: a 1% reduction in an importer’s tariffs increases the import freight rates by around 0.8%; decreases the export freight rates by around 1.1%; and increases the export quantity by 0.6% to 1%. These findings indicate a new mechanism through which import-tariff reductions lead to export expansions. |
| Keywords: | Transport firm, freight rates, tariffs, backhaul problem |
| JEL: | F12 F13 R40 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:hai:wpaper:202009&r=all |
| By: | Ciani, Andrea; Mau, Karsten (RS: GSBE other - not theme-related research, General Economics 2 (Macro)) |
| Abstract: | This paper presents evidence in support of a novel source of comparative advantage that arises from geographic proximity between trading partners and differential importance of timely delivery across industries (i.e. time-sensitivity). To test this channel, we investigate adjustments to Chinese export competition by a group of Eastern and Southeastern European (ESE) countries within EU15 destination-product markets. We rely on instrumental variables to extract exogenous variation in the expansion of Chinese export supply capacity across products and destinations. While finding sizable displacements effects materializing in terms of both export revenues and quantities, they appear to be about 50 percent smaller for time-sensitive exports. We further show that distance between trade partners determines this differential effect. Results based on firm-level customs data for a single ESE country support these findings. Overall, we observe that geographic proximity can shield firms from external competition in specific industries. |
| JEL: | F14 F15 F61 L25 |
| Date: | 2020–03–03 |
| URL: | http://d.repec.org/n?u=RePEc:unm:umagsb:2020007&r=all |
| By: | Muhammad, Andrew; Smith, S. Aaron |
| Abstract: | On January 15, 2020, the U.S. and China signed a “Phase One” trade deal to address desired structural reforms and other changes to the Chinese economy affecting international trade and foreign investment. The U.S.-China Phase One Agreement, which is the first agreement in what is expected to be a series of agreements, focuses on reforms in the Chinese economy in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange. The agreement also includes commitments by China to purchase additional U.S. goods and services over the next two years, including significant purchases of U.S. agricultural, food and fishery products (Office of the U.S. Trade Representative [USTR], 2020a). Although the U.S. has agreed not to impose additional tariffs on imports from China, and China has agreed to reduce or eliminate certain tariffs imposed in direct retaliation to U.S. tariffs, the Phase One Agreement does not specifically address the escalating tariffs between the two countries due to the ongoing trade dispute that started in 2018. However, the agreement signifies a decrease in tensions between the U.S. and China and a possible path to future tariff reductions and eliminations. These potential reductions are particularly important for U.S. agriculture, which has suffered considerable export losses in 2018 and 2019 from Chinese retaliatory tariffs. (See Muhammad and Smith, 2018; and Muhammad, Smith, and MacDonald, 2019, for a discussion of the trade dispute’s impact on Tennessee and U.S. soybeans and cotton.) In this report, we provide both an overview and context for the U.S.-China Phase One Agreement and outlook for U.S. agricultural exports. We also discuss the potential price implications for major agricultural commodities. We close the report with a brief summary and discuss implications for U.S. and Tennessee agriculture. |
| Keywords: | Agricultural and Food Policy, International Relations/Trade |
| Date: | 2020–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:ags:utaeer:303038&r=all |
| By: | Amat Adarov (The Vienna Institute for International Economic Studies, wiiw); Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | The paper studies the drivers of productivity at country and sectoral levels over the period 2000-2017 with the focus on the impact of capital accumulation and structure. The analysis confirms an especially important role of ICT and intangible digital capital for productivity growth, particularly in the manufacturing sectors. While backward global value chain participation and EU integration are also found to be instrumental for accelerating productivity growth, the impact of inward foreign direct investment is not robustly detected when the data is purged from the effects of special purpose entities and outlier countries. |
| Keywords: | Productivity, digitalisation, ICT, intangible capital, FDI, capital accumulation, global value chains |
| JEL: | F14 F15 F21 E22 O47 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:wii:wpaper:178&r=all |
| By: | Adeola F. Adenikinju; Louis N. Chete (Department of Economics University of Ibadan Ibadan, Nigeria) |
| Abstract: | This study investigates the relationship between trade liberalization and the marketstructure and productivity performance of the Nigerian manufacturing sector. The study uses firm-level panel data for the three years from 1988 to 1990, a period of considerableliberalization in the country. The data cover 382 manufacturing firms. The study shows that in general, the productivity level of Nigerian manufacturing is very low. Thisreflects in part an outcome of years of industrialization strategy that stressed factor accumulation rather than the efficiency with which factors are utilized. The findingsfrom the study show that sectors with a high component of local raw materials generally performed better than those depending on imported inputs. The study also shows that foreign ownership has an important bearing on firm performance and foreign-owned firms generate positive spillover effects on the otherfirms in the industry. Moreover, the findings support the current trade liberalization effort of the government as we found that the policy of trade liberalization and the loweringof average tariff rates open up the economy to foreign investment, the promotion of manufactured exports impinges positively on total factor productivity in the Nigerian manufacturing sector. However, the government needs to exercise some caution withthe pace of import liberalization, as import growth rate was found to have a negative impact on productivity. While this may be a short-run phenomenon, the implication thatthe pace of import liberalization proceeded too fast for domestic firms to cope with |
| URL: | http://d.repec.org/n?u=RePEc:aer:wpaper:126&r=all |
| By: | Hu, Weinian |
| Abstract: | China is the EU’s second biggest agri-food exports market. It is also the second destination for the export of EU products protected by geographical indications (GI), accounting for 9% of its value, including wines, agri-food and spirits. The EU-China Agreement on the Protection of Geographical Indications, concluded in November 2019, is expected to realise higher potential for exporting EU GIs to the country since market access is now guaranteed. But the US-China Economic and Trade Agreement, signed in January 2020, has set down a couple of precautionary measures, including a consultation mechanism with China before new GIs can be recognised for protection in the Chinese market because of international trade agreements. As a result, EU GIs could be brought under tighter US scrutiny before being recognised for protection in China. Analysis reveals, however, that only a handful of EU GIs may be affected by the latter Agreement, if at all. |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:eps:cepswp:26988&r=all |
| By: | Girum Abebe (EDRI, Ethiopia); Margaret McMillan (Tufts; NBER; IFPRI); Michel Serafinelli (University of Essex; IZA; CReAM; Rimini Centre for Economic Analysis) |
| Abstract: | We use a plant level survey to identify interactions between domestic plants and foreign direct investment (FDI) in Ethiopia's manufacturing sector. One third of Ethiopian plants are linked to FDI through labor sharing, supply chains and competition. Technology upgrading most commonly occurs as a result of competition in output markets and observation and imitation of FDI in the same line of business. Other benefits include enhanced managerial practices and knowledge about exporting. Spillovers from FDI are identified by comparing changes in total factor productivity (TFP) among domestic plants in districts where a large greenfield foreign plant produces and districts where FDI in the same industry and around the same time was licensed but not yet operational. Over the four years starting with the year of the FDI opening, the TFP of domestic plants is 11 percent higher in treated districts, employment in domestic plants increases and more domestic plants open. |
| Keywords: | Foreign Direct Investment, productivity, localized knowledge spillovers, plant-to-plant labor mobility |
| JEL: | F21 R10 D24 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:20-14&r=all |
| By: | Ariel Dvoskin; Guido Ianni |
| Abstract: | Literature on international trade agrees that comparative advantages (CA) regulate the pattern of trade across countries. What is not usually stressed is that, for this to be possible, CA must be identified ex-ante by some ranking of international competitiveness. Otherwise, they become a tautology: countries are said to possess CA in those sectors that have managed to become internationally competitive. In this work, we show that when there is production of capital goods, in particular of imported means of production, and even under a zero profit rate: (a) the ranking of industries on the basis of autarky comparative costs may not be a good predictor of CA; (b) no ranking of industries exists, in general. The overall conclusion of the article is that CA cannot explain the pattern of trade and, therefore, an alternative explanation must be searched for. |
| Keywords: | Comparative Advantage– Comparative Costs- Imported Capital Goods – Pattern of Specialization |
| JEL: | B51 F10 F16 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:825&r=all |
| By: | Hayafuji, Masahiro |
| Abstract: | This paper reviews the main developments of trade and related policies and measures in the Asia and Pacific region during the 30 years since establishment, in 1989, of the Trade Policy Review Mechanism (TPRM). The objectives of the TPRM include facilitating the smooth functioning of the multilateral trading system by enhancing the transparency of WTO Members' trade policies. Reviews take place in the General Council, operating as the Trade Policy Review Body as peer-group assessments. This paper aims to identify the main trade liberalization/reform measures adopted over the 30 years and, to the extent possible, their developments, including adoption and abolition. The main source of information is the documentation used for the WTO trade policy reviews (TPRs) of 30 Members within the Asia-Pacific region, in particular, the reports by the Secretariat. Between 1989 and August 2019, 132 reviews for these Members were conducted; all documents used for the TPRs are available in the public domain. |
| Keywords: | trade policy review,trade policies,trade restrictions,trade facilitation |
| JEL: | F13 F14 F61 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wtowps:ersd202005&r=all |
| By: | Eliasson, Kent (Swedish Agency for Growth Policy Analysis); Hansson, Pär (Örebro University School of Business); Lindvert, Markus (Swedish Agency for Growth Policy Analysis) |
| Abstract: | The purpose of this paper is to analyze the effects of foreign acquisitions on the productivity of acquired Swedish firms. However, because an acquisition is an opportunity to restructure a business and because such changes, in turn, can result in increased productivity, the effects may be observed in other outcome variables. Therefore, we also study the effects after an acquisition on employment, share of skilled labor, and export and import intensities in Swedish firms taken over by foreign multinationals (MNEs). As we examine the effects on both acquired manufacturing and service firms, we also analyze the effects in small firms, e.g., those with one or more employees. To control for the possible endogeneity of foreign direct investment decisions, propensity score matching is combined with a difference-in-difference approach. The positive effects on productivity, the share of skilled labor, employment and the export and import intensities of foreign acquisitions are most pronounced among small service firms. We also find positive productivity effects of foreign acquisitions in large manufacturing firms. A contributing factor is the investment in human capital, i.e., increasing the share of skilled labor. Foreign acquisitions appear to involve expansion in the acquired firms, particularly with respect to employment increases in small firms. Thus, being acquired by a foreign MNE appears to be a conceivable alternative for small firms with strong future growth potential, especially when dealing with the growth barriers that such firms usually encounter. |
| Keywords: | foreign acquisition; restructuring; cherry-picking; labor productivity; skilled labor; export and import intensities |
| JEL: | D22 F21 F23 J24 |
| Date: | 2020–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:oruesi:2020_004&r=all |
| By: | Nguyen, V.C. |
| Abstract: | On November 12th 2018, the Vietnamese National Assembly ratified joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which has 11 members. Regarding investment attraction, commitments in CPTPP are expected to have positive effects in improving investment environment, attracting foreign investment and expanding domestic investment. The article analyzes some results of FDI attaction in Viet Nam during the past time as well as the spillover effects of FDI capital, raises several measures to increase FDI efficiency in the context of CPTPP implementation. |
| Date: | 2020–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:u5xkh&r=all |
| By: | Hsu, Wen-Tai (School of Economics, Singapore Management University); Lu, Yi (Tsinghua University); Luo, Xuan (INSEAD); Zhu, Lianming (Osaka University) |
| Abstract: | This paper studies the effect of foreign direct investment (FDI) on industrial ag-glomeration. Using the differential effects of FDI deregulation in 2002 in China on different industries, we find that FDI actually affects industrial agglomeration neg-atively. As FDI brings technological spillovers and various agglomeration benefits, other forces must be at work to drive our empirical finding. We propose a simple theory that FDI may discourage industrial agglomeration due to fiercer competition pressure. We find various evidence on this competition mechanism. We also examine an alternative theory based on spatial political competition, but find no evidence sup-porting it. On industrial growth, we find that FDI deregulation is conducive, but the dispersion induced by FDI deregulation reduces the positive effect of FDI on growth rate by 16 to 19%. |
| Keywords: | FDI; deregulation; industrial agglomeration; competition; industrial growth; WTO; China |
| Date: | 2020–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:smuesw:2020_011&r=all |
| By: | Francois de Soyres; Erik Frohm; Vanessa Gunnella |
| Abstract: | This note summarizes the main results of the de Soyres et al. (2018) paper, drawing out the most policy-relevant implications. |
| Date: | 2020–02–03 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfn:2020-02-03&r=all |
| By: | Wang, Hao; Fidrmuc, Jan; Luo, Qi |
| Abstract: | When investigating the relationship between inward FDI and rural-urban inequality, previous studies overlook the inter-regional interactions. Building on the literature that highlights the significant role of rural-urban migration in inequality, this article investigates spatial spillover effect of inward FDI on the rural-urban wage inequality by utilizing the Spatial Durbin Model (SDM) both in the short run and long run. In particular, we carefully consider the heterogeneity of inward FDI and categorize it with respect to entry modes and sectoral distribution. On the basis of a panel dataset covering 30 provinces in China from 2000 to 2016, our results show that overall the inward FDI should not be blamed for the exacerbation of rural-urban wage inequality. We do not find significant relationship between inward FDI in secondary and tertiary sector while the FDI in primary sector has a slight negative effect. When we separate the FDI according to entry modes, we find that WFE is shown to have a negative effect on the rural-urban wage inequality and this effect is more pronounced in the long run when we conduct a period average estimation. This change also similarly applies to the equity joint ventures. |
| Keywords: | Spatial spillovers,foreign direct investment,rural-urban wage inequality,SDM |
| JEL: | C21 F21 O19 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:522&r=all |
| By: | Dünhaupt, Petra; Herr, Hansjörg; Mehl, Fabian; Teipen, Christina |
| Abstract: | In traditional trade theory, it is generally assumed that the development of export-oriented industries in the Global South can create the conditions for technological spillover effects, productivity increases and social welfare gains. However, based on the results of comparative case studies in four sectors (apparel, automotive, electronics and IT services) and six emerging and developing countries (Bangladesh, Brazil, China, India, South Africa, Vietnam), successful economic integration into global value chains is not necessarily associated with better working conditions, nor with positive employment and welfare effects. It also becomes clear that the country-specific context of a particular industry plays a greater role in determining these effects than is often assumed. Here the decisive factors are in particular the national system of industrial relations and the power of trade unions. At the same time, it can be asserted from this study that without coherent industrial policy strategies it is not possible to realize the opportunities for development that arise as a product of deeper integration into the global economy. |
| Keywords: | Trade Theory,Economic Development,Global Value Chains,EconomicUpgrading,Social Upgrading |
| JEL: | F10 F63 O57 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ipewps:1402020&r=all |
| By: | Lim, Aik Hoe; Mathur, Sajal; Suk, Gowoon |
| Abstract: | In order to ensure transparency and to keep abreast of trade policies in support of sustainability, the WTO Committee on Trade and Environment (CTE) mandated the WTO Secretariat to compile and collate all environment-related measures notified to WTO. The database also includes environment-related entries found in Trade Policy Reviews (TPRs). This information, which is updated annually, is contained in the WTO Environmental Database (www.wto.org/edb). It has nearly 11,500 measures drawn from WTO notifications and over 7,800 trade policy review entries. By analysing the trade policy review entries over time, we can better understand how the relationship between trade and environment is evolving in Members' trade policies, the relevant sectors involved, and the types of instruments which are most frequently used to pursue environmental objectives. |
| Keywords: | Agriculture,Circular Economy,Climate,Energy,Environment,Environment and Trade,Fisheries,Forestry,International Trade,Policy Making,Trade,Trade Policy,Services,Waste,Wildlife,WTO |
| JEL: | F13 F18 F42 F64 F68 Q56 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wtowps:ersd202006&r=all |
| By: | Aksoy, Cevat Giray; Ajzenman, Nicolás; Guriev, Sergei |
| Abstract: | Does exposure to mass migration affect economic behavior, attitudes and beliefs of natives in transit countries? In order to answer this question, we use a unique locality-level panel from the 2010 and 2016 rounds of the Life in Transition Survey and data on the main land routes taken by migrants in 18 European countries during the refugee crisis in 2015. To capture the exogenous variation in natives’ exposure to transit migration, we construct an instrument that is based on the distance of each locality to the optimal routes that minimize travelling time between the main origin and destination cities. We first show that the entrepreneurial activity of natives falls considerably in localities that are more exposed to mass transit migration, compared to those located further away. We then explore the mechanisms and find that our results are likely to be explained by a decrease in the willingness to take risks as well as in the confidence in institutions. We also document an increase in the anti-migrant sentiment while attitudes towards other minorities remained unchanged. We rule out the possibility of out-migration of natives or of trade-related shocks (potentially confounded with the mass-transit migration) affecting our results. Using locality-level luminosity data, we also rule out any effect driven by changes in economic activity. Finally, we find no statistically significant effects on other labor market outcomes, such as unemployment or labor force participation. |
| Date: | 2020–04–21 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:pj2cd&r=all |
| By: | Louis N. Chete; Adeola F. Adenikinju (Economic Development Department Nigerian Institute of Social & Economic Research (NISER) Ibadan, Nigeria) |
| Abstract: | While the centrality of productivity enhancement to growth acceleration is one issue around which broad consensus exists in theory and empiricism, the role of trade policyin fostering productivity growth has received only modest attention. Recently, however, a considerable body of knowledge has accumulated on the importance of trade policy to the productivity process. To be sure, there are two divergent perspectives. One view posits that trade liberalization will stifle industrial productivity by opening up the economy to superior foreign products, compelling infant industries to close up. The other, and more pervasive, holds that outward-oriented trade policy will engender overall industrial efficiency in the economy by exposing local firms to competition and thereby improve the allocation of resources across sectors. This paper computes total factor productivity growth (TFPG) for the aggregate manufacturing sector of Nigeria and across the various subsectors and correlates these with specific indexes of trade policy. The results generally corroborate the mainstream view of a positive correspondence between trade liberalization and productivity growth |
| URL: | http://d.repec.org/n?u=RePEc:aer:wpaper:127&r=all |
| By: | Aaron Flaaen; Justin R. Pierce |
| Abstract: | Since the beginning of 2018, the United States has undertaken unprecedented tariff increases, with one goal of these actions being to boost the manufacturing sector. In this paper, we estimate the effect of the tariffs---including retaliatory tariffs by U.S. trading partners---on manufacturing employment, output, and producer prices. A key feature of our analysis is accounting for the multiple ways that tariffs might affect the manufacturing sector, including providing protection for domestic industries, raising costs for imported inputs, and harming competitiveness in overseas markets due to retaliatory tariffs. We find that U.S. manufacturing industries more exposed to tariff increases experience relative reductions in employment as a positive effect from import protection is offset by larger negative effects from rising input costs and retaliatory tariffs. Higher tariffs are also associated with relative increases in producer prices via rising input costs. |
| Keywords: | Manufacturing; Industry; Tariffs |
| JEL: | F13 F14 F15 |
| Date: | 2019–12–26 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2019-86&r=all |
| By: | Esposito, Federico; Bianconi, Marcelo; Sammon, Marco |
| Abstract: | We examine how trade policy uncertainty is reflected in stock returns. Our identification strategy exploits quasi-experimental variation in exposure to trade policy uncertainty arising from Congressional votes to revoke China's preferential tariff treatment between 1990 and 2001. More exposed industries commanded a risk premium of 6% per year. The risk premium was larger in sectors less protected from globalization, and more reliant on inputs from China. More exposed industries also had a larger drop in stock prices when the uncertainty began, and more volatile returns around key policy dates. Moreover, the effects of policy uncertainty on expected cash-flows, investors' forecast errors, and import competition from China cannot explain our results. |
| Keywords: | Trade policy; uncertainty; risk premium; China shock |
| JEL: | F1 F60 G10 |
| Date: | 2020–04–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:99874&r=all |
| By: | Esposito, Federico |
| Abstract: | I develop a theory of risk diversification through geography, where risk-averse entrepreneurs exploit the spatial correlation of demand across countries to lower the variance of sales. Both the probability of entry and trade flows to a market are increasing in the “Diversification Index”, which depends on the multilateral covariance of a country's demand with all other markets. The firms’ risk diversification behavior may imply higher welfare gains from trade than in standard trade models. Risk-augmented gravity regressions show that demand risk significantly affects trade patterns. The risk diversification channel increases welfare gains from trade by 16% relative to models with risk neutrality. The quantitative application highlights the role of demand uncertainty in shaping the economic consequences of the recent Chinese boom. |
| Keywords: | Demand risk; gravity; risk diversification; welfare gains from trade; China shock |
| JEL: | F1 F10 F12 F6 F60 |
| Date: | 2019–12–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:99875&r=all |
| By: | Vincenzo Bove (Department of Politics and International Studies and CAGE (Competitive Advantage in the Global Economy), University of Warwick,); Georgios Efthyvoulou (Department of Economics, University of Sheffield, UK); Harry Pickard (Department of Economics, University of Sheffield, UK) |
| Abstract: | We provide the first empirical evidence that differences in government ideology play an important role in the choice of cross-border migration destinations. In absence of first-hand experience, immigrants rely on information about the political landscape of the origin and host countries to form expectations about the context of reception in the host society. We use data on bilateral migration and government ideology for 36 OECD countries between 1990 and 2016. Our analysis shows that bilateral migration flows are higher when the government at the destination is more left-wing than the government at the origin, especially when we consider proximate countries. |
| Keywords: | international migration; migration choice; government ideology; OECD countries |
| JEL: | J15 D72 F22 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:shf:wpaper:2020004&r=all |
| By: | Pisch, Frank |
| Abstract: | This paper examines the structure of international Just-in-Time (JIT) supply chains. Using information about JIT supply chain management for a large panel of French manufacturers I first document that JIT is widespread across all industries and accounts for roughly two thirds of aggregate employment and trade. Next, I establish two novel stylized facts about the structure of JIT supply chains: They are more concentrated in space (1) and more vertically integrated both domestically and internationally (2), than their `traditional' counterparts. I rationalize these patterns in a framework of sequential production where failure to coordinate adaptation decisions in the presence of upstream and demand shocks leads to inventory holding. In JIT supply chains, information about downstream demand conditions is shared throughout the supply chain, which facilitates coordination. The associated inventory saving effect is stronger when firms are close to each other, so that the supply chain reacts quickly to changes in demand; and when they are part of the same company, so that incentives for adaptation are aligned. Guided by further predictions of the model, I present empirical evidence that these organizational complementarities depend on inventory holding costs, demand persistence, and the ability to push inventories upstream via contractual penalties. Finally, I discuss long term implications of Brexit and COVID-19 for the structure of international supply chains based on my findings. |
| Keywords: | Price setting behavior of firms, exchange rate, distance to border |
| JEL: | F10 F14 F23 D23 L23 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:usg:econwp:2020:08&r=all |
| By: | Gern, Klaus-Jürgen; Mösle, Saskia |
| Abstract: | In cooperation with the World Free Zones Organization, the IfW Kiel has conducted a survey among special economic zones on the impairment of their economic activities by COVID-19. The survey reveals that the vast majority of the Free Zones have already been noticeably affected and that the impact of the pandemic is expected to increase in the coming months. The authors show that COVID-19 is affecting Free Zones through various channels, in particular through its own measures to slow the epidemic, through the global decline in demand, through disruptions in value chains, and through a deterioration in financial conditions. From a regionally disaggregated view the weight of the individual channels is described. |
| Keywords: | Corona crisis,world trade,Special Economic Zones,Free Zones,business survey,Coronakrise,Welthandel,Sonderwirtschaftszonen,Konjunkturumfrage |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwkpb:139&r=all |
| By: | Nour, Samia (University of Khartoum, and UNU-MERIT, Maastricht University) |
| Abstract: | This paper uses both the descriptive and comparative approaches to provide an overview of migration of higher education students from North Africa to the United Kingdom (UK). We fill the gap in the African literature and present a more comprehensive and recent analysis of migration of higher education students from the North Africa region to the UK using UNESCO recent secondary data on international students mobility in tertiary education. We provide an interesting comparative analysis of migration of higher education students from the North Africa region to the UK. A novel element in our analysis is that we examine migration of higher education students from the North Africa region to the UK from both national and regional perspectives; mainly we discuss migration of higher education students for each individual country in the North Africa region (Algeria, Egypt, Libya, Morocco, Sudan and Tunisia) and then discuss the total for the entire North Africa region. Therefore, we provide an extremely valuable contribution to the increasing debate in the international literature concerning the increasing interaction between migration and increasing internationalisation of higher education. Our findings support the first hypothesis that from a national perspective, the pattern and size of migration of higher education students from the North Africa region to the UK increased substantially over the period (2000-2017/2018) but the distribution showed considerable variation across North African countries. Our results corroborate the second hypothesis that the increasing trend of migration of higher education students from the North Africa region to the UK is caused by several push-pull factors (e.g. economic, social, political, cultural and educational). Our results support the third hypothesis that migrations of higher education students from North Africa to the UK lead to mixed positive and negative impacts (e.g. transfer of knowledge, brain gain and skill acquisition for returned migrant students, but weak capacity to retain talents and brain drain for non-returned migrant students). Our findings corroborate the fourth hypothesis that skills of migrant higher education students from the North Africa region can be better mobilised in their countries of origin by addressing the push-pull factors that determine migration of skills from the North Africa region. |
| Keywords: | Migration, higher education students, International student mobility, Internationalisation of higher education, Africa, North African region, the United Kingdom |
| JEL: | J60 J61 I23 I25 |
| Date: | 2020–04–21 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2020016&r=all |
| By: | Cernat, Lucian; Kutlina-Dimitrova, Zornitsa |
| Abstract: | A recent report on public procurement published by the United States Government Accounting Office (GAO) attempted to provide a range of estimates for the EU and the US, among others, and argued that the EU awarded a low share of public procurement contracts to US firms ($300 million) compared to a much higher value of US public procurement ($3 billion) awarded to EU firms (GAO 2019). However, the methodological approach used by GAO was partial and misrepresented the level of EU openness, as it only looked only at the ‘tip of the procurement iceberg’ and missed out other main avenues for international government procurement. Once these other two main procurement modes are taken into account, EU openness in procurement is much higher, vis-a-vis both for US and third countries. Overall, the EU has awarded over €50 billion worth of public contracts to foreign firms, out of which €11 billion to US firms. Comparable data across all modalities do not yet exist for the US, but we do have clear evidence that, since 2009, the US has introduced the largest number of protectionist procurement measures severely affecting international procurement. Against this background, this Policy Brief makes four basic points: i. Public procurement is a key area of trade negotiations, and the EU remains committed to promoting further non-discriminatory access to procurement markets both at home and abroad. ii. The existing levels of openness in procurement markets need to be assessed across all three procurement modalities and not only on direct cross-border procurement, which is not the main procurement avenue. According to a comprehensive approach, such as the one used in this brief, the EU market already has a high foreign penetration rate, including by US companies. iii. Unfortunately, similar procurement data (at both federal and sub-federal level) does not exist for the US market. But there is growing evidence of discriminatory measures introduced in recent years, which impede the ability of EU and other foreign firms to compete on a level-playing field in US procurement markets. iv. The importance of procurement as a key negotiating area requires better data and a greater analytical engagement internationally. |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:eps:cepswp:26698&r=all |
| By: | Kolié, Michael |
| Abstract: | Agriculture is highly important to the sustainable performance of economies in Sub-Saharan Africa (SSA), and a sound sanitary and phytosanitary (SPS) system plays a key role in this respect. SPS measures are one of the many trade topics covered by TPR reports on WTO Members. Therefore, we found it interesting to explore the extent to which the WTO Trade Policy Review Mechanism (TPRM) has contributed to providing a comprehensive picture of SPS systems in SSA countries, and venues for a more in-depth analytical framework. The main purpose of the paper is to present the coverage of SPS systems in SSA countries by TPR reports, and their main findings. It also opens the discussion as to whether the SPS analytical framework in TPR reports has been sufficiently comprehensive and beneficial in guiding technical assistance (TPR follow-up) activities in SSA. At the outset, we briefly present the strategic importance of agriculture in SSA countries, with a description of the link between an effective SPS regulatory system and the performance of agriculture. This paper is neither a comparative study on the work done by the WTO Secretariat and other organisations whose mandate is exclusively SPS related, nor a research paper to analyse SPS issues in SSA. For this work, the main source of our information consists of the series of TPR reports on SSA countries, particularly sections on SPS; standards, including inspections and conformity assessment; customs procedures; and agriculture policies. |
| Keywords: | WTO,Trade Policies Review Mechanism,agriculture,exports,Africa |
| JEL: | F13 N57 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wtowps:ersd202007&r=all |
| By: | Ganguly, Shrimoyee; Acharyya, Rajat |
| Abstract: | This paper investigates how devaluation by a small open economy affects its export quality when higher quality requires more of skilled labour and capital; and the ramifications of such quality changes on employment of unskilled labour and real income. In a competitive general equilibrium structure with cost of export quality determined endogenously, changes in export quality is shown to be contingent upon whether higher quality is more skill intensive or more capital intensive; but, aggregate employment of unskilled labour rises unambiguously under homothetic taste, and under reasonable conditions under non-homothetic tastes. These results qualify several robustness checks. |
| Keywords: | Export Quality; Devaluation; RER; Employment |
| JEL: | F11 F16 |
| Date: | 2020–03–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:99851&r=all |
| By: | Nguyen, V.C. |
| Abstract: | Vietnam has officially joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP); the agreement is expected to have positive effects on attracting FDI and increasing investment in the agriculture, forestry and seafood and rural economic development, where has nearly 40% workforce in Vietnam. |
| Date: | 2020–04–19 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:xtkjg&r=all |
| By: | Shapiro, Joseph S. |
| Abstract: | This paper documents a new fact, then analyzes its causes and consequences: in most countries, import tariffs and non-tariff barriers are substantially lower on dirty than on clean industries, where an industry’s “dirtiness” is defined as its carbon dioxide (CO2) emissions per dollar of output. This difference in trade policy creates a global implicit subsidy to CO2 emissions in internationally traded goods and so contributes to climate change. This global implicit subsidy to CO2 emissions totals several hundred billion dollars annually. The greater protection of downstream industries, which are relatively clean, substantially accounts for this pattern. The downstream pattern can be explained by theories where industries lobby for low tariffs on their inputs but final consumers are poorly organized. A quantitative general equilibrium model suggests that if countries applied similar trade policies to clean and dirty goods, global CO2 emissions would decrease and global real income would change little |
| Keywords: | Social and Behavioral Sciences, climate change, trade policy, trade and the environment |
| Date: | 2020–05–02 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:agrebk:qt7jh2s7d6&r=all |
| By: | Francois de Soyres; Alexandre Gaillard |
| Abstract: | In this note, based on de Soyres and Gaillard (2019a, 2019b), we argue that the propagation of shocks across countries through trade linkages is large and propose the first model that accounts for such propagation with a magnitude in line with the data. |
| Date: | 2019–12–13 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfn:2019-12-13-3&r=all |
| By: | Nguyen, V.C. |
| Abstract: | After 32 years since “Doi moi” in 1986, Vietnam has become a good destination, attracting many foreign direct investments (FDIs) in Southeast Asia. End of 2018, the country has more than 27.353 valid projects with a total registered capital of USD 340 bn while accumulated disbursement of FDIs is estimated at USD 191.4 bn, which is an important contribution to the economy and economic restructuring. |
| Date: | 2020–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:k5eqb&r=all |
| By: | Mishra, Mukesh Kumar |
| Abstract: | Our current economic models needs to allow us to achieve the multiple goals the international community has set, Nearly twenty seven years after Rio, we have come to realize that a more sophisticated development model who linking economy and environment and a more evolved economic model are needed if we are collectively to enjoy the fruits of globalization effects. Environment and development, global trends in relation to environment and socio-economic development, the challenges society faces today and provides signposts towards sustainable development... Major causes of environmental problems are population growth, wasteful and unsustainable resource use, poverty, exclusion of environmental costs of resource use from the market prices of goods and services, and attempts to manage nature with insufficient knowledge. The beginning, the phenomenon of globalization has captured world attention in various ways in development. The tremendous change in the countries caused erosion of environmental quality to a large extent. Hence the concept of sustainable development has gained importance since Rio Declaration. The ultimate goal is an environmentally sustainable society—one that meets the current and future basic resource needs of its people in a just and equitable manner without compromising the ability of future generations to meet their basic needs. This paper focuses on how Sustainable Development linking economy and environment in the era of Globalization, and the need for sustainable environment with the economic growth. |
| Keywords: | Sustainable Development,Economic Development |
| JEL: | O11 O44 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:215793&r=all |
| By: | Zimmermann, Klaus F.; Karabulut, Gokhan; Bilgin, Mehmet Huseyin; Doker, Asli Cansin |
| Abstract: | Originating in China, the Coronavirus has reached the world at different speeds and levels of strength. This paper provides some initial understanding of some driving factors and their consequences. Since transmission requires people, the human factor behind globalization is essential. Globalization, a major force behind global wellbeing and equality, is highly associated with this factor. The analysis investigates the impact globalization has on the speed of initial transmission to a country and on the size of initial infections in the context of other driving factors. Our cross-country analysis finds that measures of globalization are positively related to the spread of the virus, both in speed and size. However, the study also finds that globalized countries are better equipped to keep fatality rates low. The conclusion is not to reduce globalization to avoid pandemics, but to better monitor the human factor at the outbreak and to mobilize collaboration forces to curtail diseases. |
| Keywords: | Globalization,Coronavirus,COVID-19,Pandemic,Inter-country Distancing |
| JEL: | C30 F69 I19 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:508&r=all |
| By: | David Escamilla-Guerrero; Moramay Lopez-Alonso |
| Abstract: | Abstract We evaluate the responsiveness of migrant self-selection to short-run changes in theWe evaluate the responsiveness of migrant self-selection to short-run changes in theeconomic environment. Using novel historical micro data, we estimate the initialselectivity of Mexican migration (1906-08) and focus on labor institutions as short-runadjustment channels of self-selection. We find that the first Mexican migrants werepositively self-selected on the basis of height—a proxy for physical productivity oflabor. Additionally, the US financial crisis of 1907 significantly modified self-selection.Shifts in migrant self-selection during and after the crisis were influenced by theenganche, an institution that reduced migration costs, but only for the “best†Mexicansduring “good†economic times. |
| Keywords: | labor migration, migrant self-selection, Panic of 1907, Mexico |
| JEL: | F22 J61 N36 O15 |
| Date: | 2020–04–27 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:esohwp:_179&r=all |
| By: | Wolfgang Britz (University of Bonn); Yaghoob Jafari (University of Bonn); Alexandr Nekhay (Loyola Andalusia University, Seville); Roberto Roson (Department of Economics, University Of Venice Cà Foscari; Loyola Andalusia University, Seville; GREEN Bocconi University, Milan) |
| Abstract: | This paper presents an empirical exercise, aimed at investigating the implications on poverty and income distribution of a reference scenario (SSP2) of economic development. It does so by coupling a dynamic general equilibrium model of the global economy, specifically designed to capture structural change dynamics in the medium and long run, with detailed micro data on household income in six countries: Albania, Bolivia, Ethiopia, Malawi, Nicaragua and Vietnam. We also consider an alternative scenario of accelerated international trade integration, with a higher degree of trade openness. We found that long run structural change widens income inequality in all six developing countries. Accelerated trade integration amplifies the effect further, but most of it is already generated in the baseline scenario. A decrease in the relative value of land property and an increase in the relative value of capital ownership appear as key determinants. We decompose income differentials in three dimensions. Structural change worsens the income gap between male and female headed households, but the additional impact of trade is minimal. The effect of structural change is not uniform across countries when income of rural households is contrasted with the one of urban households, yet more trade reduces the relative rural income. Relative poverty increases in both the baseline and the larger trade volume case. However, we found that absolute poverty would be eradicated in almost all countries by the year 2050. |
| Keywords: | Shared socioeconomic pathways, dynamic computable general equilibrium models, structural change, development scenarios, Albania, Bolivia, Ethiopia, Malawi, Nicaragua, Vietnam, income inequality, microsimulation, poverty |
| JEL: | C68 E17 F17 I32 O11 O15 O41 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ven:wpaper:2020:03&r=all |
| By: | Rodriguez Castelan, Carlos (World Bank); López-Calva, Luis-Felipe (World Bank); Barriga Cabanillas, Oscar (University of California, Davis) |
| Abstract: | Although market concentration is one of the main impediments to productivity growth globally, data constraints have limited its analysis to developed countries or cross-country studies based on definitions of market concentration across nations and industries. This paper takes advantage of a database that is unusual by developing-country standards by means of leveraging the richness of five rounds of the Mexican Manufacturing Census between 1994 and 2014. The data allow estimation of the effects of local industry concentration on productivity. The main results show that a decline by 10 points in the Herfindahl-Hirschman index (on a 0-100 scale), a measure of market concentration, explains an increase by 1 percent in the total factor productivity of revenue. Local industry concentration also has heterogeneous effects on productivity across industries, while its impact on productivity varies by level of exposure to international markets. Results show that the effect of greater exposure to trade offsets and, in most cases, reverses the negative effects of local concentration on productivity. These results are robust to specifications based on the estimation of firm productivity using the panels of establishment data from the 2009 and 2014 rounds of the economic census, to controlling for a proxy of markups, and to using alternative indicators of local industry concentration. |
| Keywords: | productivity, market concentration, instrumental variables |
| JEL: | C26 D24 D4 F12 L1 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13147&r=all |
| By: | Christoph E. Boehm; Andrei A. Levchenko; Nitya Pandalai-Nayar |
| Abstract: | We propose a novel approach to estimate the trade elasticity at various horizons. When large countries change Most Favored Nation (MFN) tariffs, small trading partners that are not in a preferential trade agreement experience plausibly exogenous tariff changes. The differential growth rates of imports from these countries relative to a control group — countries not subject to the MFN tariff scheme — can be used to identify the trade elasticity. We build a panel dataset combining information on product-level tariffs and trade flows covering 1995-2017, and estimate the trade elasticity at short and long horizons using local projections (Jordà, 2005). Our main findings are that the elasticity of tariff-exclusive trade flows in the year following the exogenous tariff change is about –0.7, and the long-run elasticity ranges from –1.5 to –2. The welfare-relevant long-run trade elasticity is about –0.6. Our long-run estimates are smaller than typical in the literature, and it takes 7-10 years to converge to the long run, implying that (i) the welfare gains from trade are high and (ii) there are substantial market penetration costs to accessing new customers. |
| JEL: | F0 F1 F14 F4 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27064&r=all |
| By: | Sari Pekkala Kerr; William R. Kerr |
| Abstract: | Immigrants account for about a quarter of US invention and entrepreneurship despite a policy environment that is not well suited for these purposes. This chapter reviews the US immigration policy environment that governs how skilled migrants move to America for employment-based purposes. We discuss points of strain in the current system and potential policy reforms that would likely increase the rate of innovation and the number of startups due to immigrants in the country. Key areas include adjustments to the allocation of permanent residency visas, adjustments to the H-1B visa program, and the creation of an immigrant startup visa. |
| JEL: | F22 F23 J15 J44 J61 L26 M13 O31 O32 O33 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27040&r=all |