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on International Trade |
| By: | Rebecca Freeman; Kalina Manova; Thomas Prayer; Thomas Sampson |
| Abstract: | This paper studies the impact of Brexit on the UK's trade with the EU relative to its trade with the rest of the world. We find no evidence that uncertainty and anticipation effects led to a significant decline in relative UK trade with the EU during the period after the UK voted for Brexit in 2016 and before the change in policy was implemented under the new Trade and Cooperation Agreement (TCA) in 2021. However, the UK's departure from the EU's single market and customs union at the start of 2021 caused a major shock to UK-EU trade. We estimate that the new TCA trade relationship led to a sudden and persistent 25% fall in relative UK imports from the EU. In contrast, we find a smaller and only temporary decline in relative UK exports to the EU, but nevertheless a large and sustained drop in the extensive margin of exports, driven by the exit of low-value relationships. The timing and asymmetry of Brexit effects on UK imports and exports is puzzling and provides evidence of important differences in adjustment to integration and disintegration shocks. |
| Keywords: | Brexit, EU, exports, trade policy, globalisation, imports, uncertainty |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1847&r= |
| By: | Kannan, Elumalai; Kumar, Anjani |
| Abstract: | This paper analyses relative contribution of intensive and extensive margins to growth in India’s agricultural exports for the period 2001 to 2020. Two alternative approaches are employed to estimating export margins: the traditional approach of using export volume across product lines, and a robust method proposed by Hummels and Klenow (2005). The paper also examines the determinants of export margins through a standard gravity model. Traditional method of decomposing export growth shown that intensification of the export of existing products to existing destinations dominated export growth. The contribution of export diversification to export growth has remained subdued in the last two decades. Within the extensive margin, contribution of product diversification to export growth was more important than the contribution of geographic diversification. According to the Hummels and Klenow approach, during the 2001 to 2020 period, the extensive margin grew at 1.24 percent per annum, while the intensive margin increased at 0.23 percent. The contribution of growth at the extensive margin increased from 58.8 percent in 2001 to 70.2 percent in 2020. Gravity model results revealed that, among other variables, a positive and significant effect of free trade agreement on export margins. Broadly the study results point out that India’s exports along the extensive margin has not been fully exploited and that export diversification holds the key to higher export growth in agricultural products. There is wide scope for expansion of India’s agricultural exports through development of new product varieties and new markets. |
| Keywords: | INDIA; SOUTH ASIA; ASIA; agricultural trade; trade; agriculture; exports; models; diversification; export margins; export decomposition; gravity model; export growth; agricultural trade specialization; trade openness; revealed comparative advantage; mobility of comparative advantage |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:2119&r= |
| By: | Nguyen, Nguyen Trinh Thanh |
| Abstract: | This paper explains the EU's Aid for Trade (AfT) and trade relations with Vietnam, and examines how EU AfT influences Vietnam's trade policy reform. It provides an analysis of EU AfT as a contested trade policy intervention by using the results of the EU-MUTRAP project in Vietnam. The finding is that EU AfT can interfere as an “external impacts” on Vietnam's trade policy reform. Based on the priorities of EU trade policies towards Vietnam, the EU uses AfT projects to support and change the Vietnamese trade environment. The paper partially proves the contribution of the EU-MUTRAP on the EU-Vietnam Free Trade Agreement negotiations and implementation. |
| Date: | 2022–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:4xa2h&r= |
| By: | Auboina, Marc; Borino, Floriana |
| Abstract: | In this paper, we estimated the standard (macro-economic) import equation over the period 1995-2021Q2, using an import intensity-adjusted measure of aggregate demand (IAD) calculated from input-output tables at country level, and compared the results with regressions using GDP. Initially introduced by Bussière (2013), this "synthetic" concept of IAD was perfected, inter alia, by the IMF (2016) and by us (2017), with a view to explaining the "missing" trade flows unpredicted by GDP-based import models during the trade collapse of 2009 and subsequent recovery from it. At the time, it appeared that the integration of IAD helped predict over three-quarters of the changes in global imports, a better performance than if using GDP (two-thirds) or any other measure of aggregate demand. We had found much value to this method, as a complement to existing analytical tools, enabling to measure the relative importance of each component of demand in the variations of country/global imports, over entire economy cycles (a phase of trade expansion, a sudden collapse and a recovery). Moreover, by weighting each aggregate demand component by its direct and indirect traded inputs, import-adjusted integrated a supply-side dimension to such macro-economic modelling. By extending our estimates to cover global trade during the (on-going) Covid-19 pandemic (1995-2021 Q2), we found the IAD-based model to continue performing well, predicting 79% of changes in global imports during the period 1995-2021Q2 (10 percentage points more than when using GDP). We also found that, on average, 97% of the difference in global import growth between the pre-pandemic (2012-2019) and the pandemic period (2020), was attributable to IAD. Most of the variations in imports can be explained by changes in the growth of investment and exports, the two-most trade-intensive elements of demand, by 29% and 45%. The variations of consumption also accounted for a significant share of global import variations during this period (25%). |
| Keywords: | investment,global outlook, trade policy,trade forecasting,business cycles |
| JEL: | E22 F01 F13 F17 F44 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wtowps:ersd20228&r= |
| By: | Alan Wm. Wolff (Peterson Institute for International Economics) |
| Abstract: | The negotiation of multilateral agreements has stalled at the World Trade Organization (WTO). The action is among groups of like-minded WTO Members, either regionally or in open plurilateral agreements (OPAs) in Geneva at the WTO. There is currently no consensus among WTO Members to include plurilateral agreements officially in the set of WTO agreements. Many additional challenges require multilateral--that is, global--agreements: the pandemic, food security, and climate change, among them. A breakthrough is needed to get WTO negotiations back on track. |
| Keywords: | international trade, WTO, trade negotiations, multilateral trading system, trade agreements |
| JEL: | F13 F51 F53 F55 K33 K41 N40 |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:iie:wpaper:wp22-7&r= |
| By: | Simola, Heli |
| Abstract: | The EU, US and several other countries have responded with a wide range of new economic sanctions on Russia in response to the military attack on Ukraine. These sanctions include various restrictive measures on trade with Russia. In this brief, we examine the potential short-term effects of trade sanctions on Russian production with an input-output framework. We find that the trade sanctions can have substantial negative effects on Russian production when Russia is unable to find alternative markets for imports and exports. |
| Keywords: | Russia,trade,sanctions,input-output |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bofitb:42022&r= |
| By: | Alan Wm. Wolff (Peterson Institute for International Economics) |
| Abstract: | The World Trade Organization (WTO) as an institution accords much less of a role to its chief officer and her staff, namely the WTO Director-General and the Secretariat, than do any of its sister international organizations--the World Bank, the International Monetary Fund, the Organization for Economic Cooperation and Development--to their chief officers and staff. The WTO Secretariat is much smaller than its peer international organizations and underfunded. In considering WTO reform, this deficiency needs to be rectified if the WTO's performance is to live up to its Members' needs. |
| Keywords: | international trade, international trade agreements, dispute settlement, enforcement of agreements, US trade policy, World Trade Organization |
| JEL: | F13 F51 F53 F55 K33 K41 N40 |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:iie:wpaper:wp22-8&r= |
| By: | Assi Okara (CERDI - Centre d'Études et de Recherches sur le Développement International - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne) |
| Abstract: | This paper investigates the potential of Foreign Direct Investment (FDI) to counter socio-political instability, one of the most pressing challenges faced by developing countries. Socio-political (in)stability is approached from an institutional perspective and linked to one particular type of FDI, greenfield FDI, for its more direct socio-economic externalities and their influences on greed and grievance. The issue of causality is primarily addressed using a gravity-based instrumental variable for FDI, taking advantage of bilateral greenfield projects data. The empirical results using data over the period 2003-2017 for a large sample of developing countries show that FDI favors institutional development not only in terms of overall socio-political stability but also human rights compliant socio-political stability. The results are robust to a range of specifications and alternative identification strategies, as well as to a series of sensitivity tests. Overall, this study highlights the promotion of political stability as another channel through which FDI can contribute to development. |
| Keywords: | Greenfield FDI,institutions,political stability,developing countries |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03617085&r= |
| By: | Thammachote, Pasakorn; Trochim, Jirapa Inthisang |
| Abstract: | The spread of COVID-19 has caused uncertainty in Thailand agricultural trade flows. This study makes a preliminary analysis to explore the impact of COVID-19 on Thailand’s agri-food export flows. • Over the past few decades, Thailand’s exports have been shifting away from agricultural to manufacturing products. However, the agricultural and food product exports remain vital to Thailand’s economy, and Thailand continues to be a net exporter of agri-food products. • Approximately 40 percent of Thailand’s agri-food products were exported to the country’s major trading partners including China, Japan, and the United States of America. Agri-food exports to intra-Association of Southeast Asian Nation (ASEAN) countries’ have also grown rapidly, while agricultural exports to other developed countries have been relatively stagnant in recent years. • The composition of Thailand’s top ten agri-food exports has barely changed in the past two decades. Most of the top ten agri-food products exported in the period of 1998-2008 are also among top ten products between 2009-2018. While Thailand increasingly exports many high-value processed agri-food products, natural rubber and rice continue to play a dominant role, and account for one-third of total agri-food exports in value. • COVID-19 caused a disruption of the supply chain in the rubber industry in 2020. The lockdown measures in many countries led to a decline in world demand for natural rubber and both the value and volume of natural rubber exports from Thailand fell. Exports started to recover by the end of 2020 partly due to a surge in demand for medical gloves and relaxation of lockdown measures. • COVID-19 temporarily boosted the world demand for Thai rice exports in the early stages of the outbreak, as Thailand briefly benefited from the temporally export restrictions imposed by other exporting countries. However, overall, Thai rice exports declined in 2020 mainly due to a strong Baht and high production costs that weakened Thailand’s competitiveness in the world market. • A drought in 2020 lowered sugar yields causing production to fall significantly while COVID-19 reduced demand because of the lockdown measures. Combined the supply and demand shocks led to the decline in Thailand sugar exports, from a modest growth of 2 percent in 2019 to the decline of 19 percent in 2020. • The spread of COVID-19 caused a surge in demand for canned tuna, providing increased export opportunities for Thailand, which is an important exporter. However, this surge in the world market was caused by panic buying and it did not last long. • Thailand is also an important exporter of processed chicken. Exports of processed chicken were negatively affected by COVID-19 due to the disruption of transport and logistic systems resulting in higher cost for trade. • The contraction of crustaceans’ exports can be attributed both to the lockdown and strong competition in world markets. In 2020, processed crustacean exports performed better than exports of fresh and frozen crustacean due to consumer preferences. However, crustacean iv industries were badly affected overall due to the detection of a COVID-19 cluster in the fish market which led to strict regulation and closure of the market and distribution centers. • Overall, processed fruit and vegetables export values increased in 2020 but export volume dropped with all major trading partners. People bought large quantities of shelf stable products such as rice and canned fish but reduced the purchase of processed fruit and vegetables. • In conclusion, the impacts of COVID-19 on most important Thai agri-food export flows seem to be temporary as many factors leading to the surge or fall are short-lived. However, there is the possibility of increases in COVID-19-related non-tariff barriers (NTB) that originated because of food safety concerns and production standards. Small and medium exporters are likely to be most affected due to limited resources. Food safety concerns and production standards also affect upstream suppliers, small farmers, and fishers. Such NTBs can have longer term impacts on the prospects of post-COVID Thailand agri-food exports. • The changing world demand for agri-food products and potential new TBs could possibly have profound impact on Thai agri-food export flows in the future. Exporters, governments, and international organization need to work together to keep a balance between public health concerns and business operation efficiency. Promoting trade facilitation while ensuring food safety measures to safeguard public health would help Thailand gain more from exports. |
| Keywords: | Agricultural and Food Policy |
| Date: | 2021–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:ags:miprrp:320709&r= |
| By: | Dutta, Sourish |
| Abstract: | This paper deals with the problem of measuring intra-industry trade. In section 2, it presents two existing approaches (Balboni, 2007) to measuring intra-industry trade: the so-called “recovery of trade”, developed by Balassa (1966); Grubel and Lloyd (1975) & the “type of trade” one initiated by Abd-el Rahman (1986b); Vona (1991). Then this paper presents indicators and empirical methods inspired by these two approaches. Notions of trade recovery & trade type come from two different definitions of the empirical phenomena they aim to measure. This paper also discusses these definitions and the theoretical foundations in the section 3. |
| Keywords: | Intra-industry Trade; Inter-Industry Trade; Horizontal Differentiation; Vertical Differentiation |
| JEL: | F10 F11 F12 F14 |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:113195&r= |
| By: | Nicholas M. Odhiambo |
| Abstract: | In this paper, the casual relationship between foreign direct investment (FDI) and economic growth in Kenya during the period 1980-2018 is examined. In an attempt to address the omission-of-variable bias, which has been detected in some previous studies, two variables, namely money supply and trade, are used as intermittent variables, thereby leading to a system of multivariate Granger-causality equations. Using the ARDL bounds testing approach, the results show that there is a unidirectional causal flow from economic growth to FDI in Kenya. These results apply, irrespective of whether the causality is conducted in the short run or in the long run. Based on these results, it can be concluded that the current burgeoning FDI inflows that Kenya has attracted in recent years are largely driven by the strong economic growth and prudent macroeconomic policies that the country has been pursuing in recent decades. To our knowledge, this may be the first study of its kind to examine in detail the causal relationship between FDI and economic growth in Kenya in recent years. Policy implications are discussed. |
| URL: | http://d.repec.org/n?u=RePEc:afa:wpaper:aesriwp04&r= |
| By: | Dutta, Sourish |
| Abstract: | From a historical perspective, the development of research studies concerning the emergence of intra-industry trade is fruitful interaction between theoretical explanations and empirical methods to measure this phenomenon. The foundation of indicators to measure the intensity of intra-industry trading caused the rise of theoretical models explaining the determinants of these trade flows. It also contributed to the debate on the need to distinguish, in empirical analyses, intra-industry trade in horizontal differentiation from that in vertical differentiation. |
| Keywords: | Intra-Industry Trade; Horizontal Differentiation; Vertical Differentiation |
| JEL: | F10 F11 F12 F14 |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:113194&r= |
| By: | Jevan M. Cherniwchan; M. Scott Taylor |
| Abstract: | Considerable progress has been made in our understanding of the relationship between international trade and the environment since Gene Grossman and Alan Krueger published their now seminal working paper examining the potential environmental effects of the North American Free Trade Agreement in 1991. This review uses their original paper as a guide to highlight key developments along three main branches of research that all stem from their analysis: (i) the interaction between international trade, economic growth, and environmental outcomes, (ii) the role of environmental regulation in determining trade and investment flows, and (iii) estimating the relative magnitudes of the scale, composition, and technique effects induced by trade. It discusses key developments along each branch, with a particular focus on the empirical challenges that have impeded progress. It also highlights an area along each branch that is ripe for further study. These areas are termed the Three Remaining Challenges. |
| JEL: | F18 Q0 |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30020&r= |
| By: | Javier López González; Francesca Casalini; Juan Porras |
| Abstract: | This paper maps the evolving data localisation landscape. It shows that the number of data localisation measures is on the rise and that the measures themselves are becoming more restrictive. The paper highlights the need to better understand and monitor the evolving regulatory environment with a view to enabling empirical analysis of the economic and societal implications of data localisation. This is an issue which is particularly important in the context of ongoing discussions on data localisation, be they in preferential trade agreements (PTAs) or in the context of the WTO Joint Statement Initiative on e-commerce. |
| Keywords: | Data flows, Digital economy, Digital trade, Digitalisation, Trade policy |
| JEL: | F14 O33 F13 |
| Date: | 2022–06–13 |
| URL: | http://d.repec.org/n?u=RePEc:oec:traaab:262-en&r= |
| By: | Italo Colantone; Gianmarco I. P. Ottaviano; Piero Stanig |
| Abstract: | We review the literature on the globalization backlash, seen as the political shift of voters and parties in a protectionist and isolationist direction, with substantive implications on governments' leaning and enacted policies. Using newly assembled data for 23 advanced democracies, we document a protectionist and isolationist shift in electorates, legislatures, and executives from the mid-1990s onwards. This is associated with a noticeable protectionist shift in trade policy - although with some notable nuances - especially since the financial crisis of 2008. We discuss the economics of the backlash. From a theoretical perspective, we highlight how the backlash may arise within standard trade models when taking into ac-count the 'social footprint' of globalization. Then, we review the empirical literature on the drivers of the backlash. Two main messages emerge from our analysis: (1) globalization is a significant driver of the backlash, by means of the distributional consequences entailed by rising trade exposure; yet (2) the backlash is only partly determined by trade. Technological change, crisis-driven fiscal austerity, immigration, and cultural concerns are found to play an important role in creating politically consequential cleavages. Looking ahead, we discuss possible future developments, with specific focus on the issue of social mobility. |
| Keywords: | Globalisation, protectionist and isolationist direction |
| Date: | 2021–09–13 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1800&r= |
| By: | Michael W. L. Elsby; Jennifer C. Smith; Jonathan Wadsworth |
| Abstract: | This paper examines the role of population flows on labour market dynamics across immigrant and native-born populations in the United Kingdom. Population flows are large, and cyclical, driven first by the maturation of baby boom cohorts in the 1980s, and latterly by immigration in the 2000s. New measures of labour market flows by migrant status uncover both the flow origins of disparities in the levels and cyclicalities of immigrant and native labour market outcomes, as well as their more recent convergence. A novel dynamic accounting framework reveals that population flows have played a nontrivial role in the volatility of labour markets among both the UK-born and, especially, immigrants. |
| Keywords: | immigration, worker flows, labour market dynamics |
| Date: | 2021–11–10 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1814&r= |
| By: | Appelbaum, Elie |
| Abstract: | Using a simple duopolistic trade model with demand uncertainty and an identical traded product, we show that we can view trade in goods as implicit exports/imports of risk and risk aversion. Specifically, we show that a relatively "risk-aversion abundant" country is more likely to be a net importer of the product - hence an importer of low risk-aversion. Similarly, a "relatively high-risk abundant" country is more likely to be a net exporter of the product - hence importer of low risk. We also show that risk and risk aversion differences, and the presence of market correlation, are sources of implicit risk-sharing and diversification gains from trade. Consequently, the relatively high-risk or high-risk-aversion country always gains from trade, whereas the other country will most likely gain unless markets are highly, positively correlated. Furthermore, we show that world gains from trade are always strictly positive, and in general, are likely to decrease with risk and correlation. Comparing gains from trade with and without uncertainty, we find that, sometimes, both world and country gains may be higher with uncertainty than without it. Finally, to get a sense of the importance of risk, risk aversion and correlation, we calculate local measures of world gains from trade elasticities. We find that world gains from trade are most responsive to changes in market correlation, highlighting the importance of diversification. |
| Keywords: | Patterns of Trade, Gains from Trade, Risk, Risk Aversion, Exports. |
| JEL: | D81 F11 F12 F13 G11 |
| Date: | 2021–07–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:113000&r= |
| By: | Assi Okara (CERDI - Centre d'Études et de Recherches sur le Développement International - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne) |
| Abstract: | Foreign Direct Investment flows to developing economies have increased significantly over the last decades, bringing about important changes in the developing world. This paper is interested in the institutional aspect of these changes, a dimension weakly investigated in the development literature. More precisely, it explores how the quality of economic institutions in developing countries responds to changes in FDI inflows. The results, based on extensive data on FDI for a large sample of developing countries over the period 1990-2009, show that economic institutions improve in countries with larger FDI flows. On average, a 10-point increase in FDI inflows as a percent of GDP is associated with a 0.9-point increase in the quality of economic institutions. The results also show that this effect is driven by FDI flows from developed economies while no significant link is detected for FDI from developing economies. Furthermore, they indicate that the positive institutional impact of total FDI is likely to be mitigated in countries where the natural resources sector represents a major driver of FDI. The findings suggest that the quality of the institutions in FDI origin countries matters in the FDI/economic institutions relationship in the developing world. Overall, the results are robust to a series of sensitivity tests including the introduction of additional control variables, the exclusion of outliers, the test of income group and regional effects, and heterogeneity analysis based on the level of institutional development of the origin countries. |
| Keywords: | economic institutions,property rights,FDI,developing countries |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03617915&r= |
| By: | Carl Gaigne (SMART-LERECO - Structures et Marché Agricoles, Ressources et Territoires - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - INSTITUT AGRO Agrocampus Ouest - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement); Anne-Célia Disdier (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Cristina Herghelegiu (European Commission [Brussels]) |
| Abstract: | We examine whether standards raise the quality of traded products by correcting market failures associated with information asymmetry on product attributes. Matching a panel of French firmproduct-destination export data with a dataset on sanitary and phytosanitary (SPS) measures and technical barriers to trade (TBTs), we find that such quality standards enforced on products by destination countries: (i) favor the export probability of high-quality firms provided that their productivity is high enough; (ii) raise the export sales of high-productivity high-quality firms at the expense of low-productivity and low-quality firms; (iii) improve the average quality of consumption goods exported by France. We then develop a simple new trade model under uncertainty about product quality, in which heterogeneous firms can strategically invest in quality signaling, to rationalize these empirical results on quality and selection effects. |
| Abstract: | Nous examinons si les normes améliorent la qualité des produits échangés en corrigeant les défaillances du marché associées à l'asymétrie d'information sur les attributs des produits. A partir de données sur les exportations françaises au niveau entreprise-produitdestination et sur les mesures sanitaires et phytosanitaires (SPS) et les obstacles techniques au commerce (OTC) appliquées par les pays étrangers, nous constatons que ces normes de qualité a (i) favorisent la probabilité d'exportation des entreprises françaises offrant des produits de haute qualité, à condition que leur productivité soit suffisamment élevée, (ii) augmentent les ventes à l'exportation des entreprises à forte productivité au détriment des entreprises à faible productivité, et (iii) améliorent la qualité moyenne des biens de consommation exportés par la France. Afin de rationaliser ces résultats empiriques sur les effets de qualité et de sélection, nous développons ensuite un nouveau modèle de commerce internationale avec incertitude sur la qualité des produits et des entreprises hétérogènes pouvant investir stratégiquement dans le signalement de la qualité. |
| Keywords: | Firm exports,Quality standards,Information asymmetry,Product quality,Heterogeneity,Exportation,Normes de qualité,Asymétrie d’information,Qualité des produits,Hétérogénéité |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03623098&r= |
| By: | Holger Breinlich; Dennis Novy; J.M.C. Santos Silva |
| Abstract: | Gravity regressions are a common tool in the empirical international trade literature and serve an important function for many policy purposes. We study to what extent micro-level parameters can be recovered from gravity regressions estimated with aggregate data. We show that estimation of gravity equations in their original multiplicative form via Poisson pseudo maximum likelihood (PPML) is more robust to aggregation than estimation of log-linearized gravity equations via ordinary least squares (OLS). In the leading case where regressors do not vary at the micro level, PPML estimates obtained with aggregate data have a clear interpretation as trade-weighted averages of micro-level parameters that is not shared by OLS estimates. However, when regressors vary at the micro level, using disaggregated data is essential because in this case not even PPML can recover parameters of interest. We illustrate our results with an application to Baier and Bergstrand's (2007) influential study of the effects of trade agreements on trade flows. We examine how their findings change when estimation is performed at different levels of aggregation, and explore the consequences of aggregation for predicting the effects of trade agreements. |
| Keywords: | free trade agreements, gravity equation, OLS, PPML, trade costs |
| Date: | 2021–09–22 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1802&r= |
| By: | Odhiambo, Nicholas M |
| Abstract: | Purpose ? This study examines the causal relationship between exports and economic growth in sub-Saharan African (SSA) countries during the period 1980 to 2017. The study also examines whether the causality between these two macroeconomic variables depends on the countries? stage of development as proxied by their per capita income.Design/methodology/approach ? The study uses a panel cointegration test and panel Granger-causality model to examine the link between exports and growth. The study also incorporates external debt as an intermittent variable in a bivariate setting between exports and economic growth, thereby creating a dynamic multivariate panel Granger-causality model.Findings ? Although the study found the existence of a long-run relationship between exports and economic growth, the study failed to find any export-led growth response in both low-income and middle-income countries. Instead, the study found evidence of a bidirectional causality and a neutrality response in middle-income and low-income countries, respectively. The study, therefore, concludes that the benefits of an export-led growth hypothesis may have been oversold, and that the strategy may not be desirable to some low-income developing countries.Practical implications ? These findings have important policy implications as they indicate that the causality between exports and economic growth in SSA countries varies with the countries? stage of development. Consistent with the contemporary literature, the study cautions low-income SSA countries against over-relying on an export-led growth strategy to achieve a sustained growth path as no causality between exports and economic growth has been found to exist in those countries. Instead, such countries should consider pursuing new growth strategies by building the domestic demand side of their economies alongside their export promotion strategies in order to expand the real sector of their economies. For middle-income countries, the study recommends that both export promotion strategies and pro-growth policies should be intensified as economic growth and exports have been found to reinforce each other in those countries.Originality/value ? Unlike the previous studies, the current study disaggregated the full sample of SSA countries into two subsets ? one comprising of low-income countries and the other consisting of middle-income countries. In addition, the study uses a multivariate Granger-causality model in order to address the emission-of-variable bias. To our knowledge, this may be the first study of its kind in recent years to examine in detail the causal relationship between exports and economic growth in SSA countries using an ECM-based multivariate panel Granger-causality model. |
| Keywords: | Granger causality, Economic growth, Exports, Sub-Saharan Africa |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:uza:wpaper:28864&r= |
| By: | Pedro Molina Ogeda; Emanuel Ornelas; Rodrigo R. Soares |
| Abstract: | We show that the Brazilian trade liberalization in the early 1990s led to a permanent relative decline in the vote share of left-wing presidential candidates in the regions more affected by the tariff cuts. This happened even though the shock, implemented by a right-wing party, induced a contraction in manufacturing and formal employment in the more affected regions, and despite the left's identification with protectionist policies. To rationalize this response, we consider a new institutional channel for the political effects of trade shocks: the weakening of labor unions. We provide support for this mechanism in two steps. First, we show that union presence-proxied by the number of workers directly employed by unions, by union density, and by the number of union establishments-declined in regions that became more exposed to foreign competition. Second, we show that the negative effect of tariff reductions on the votes for the left was driven exclusively by political parties with historical links to unions. Furthermore, the impact of the trade liberalization on the vote share of these parties was significant only in regions that had unions operating before the reform. These findings are consistent with the hypothesis that tariff cuts reduced the vote share of the left partly through the weakening of labor unions. This institutional channel is fundamentally different from the individual-level responses, motivated by economic or identity concerns, that have been considered in the literature. |
| Keywords: | trade shocks, elections, unions, Brazil |
| Date: | 2021–11–17 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1816&r= |
| By: | Thomas Sampson |
| Abstract: | Firm-to-firm relationships in global value chains create opportunities for North-South technology diffusion. This paper studies technology transfer in value chains when contracts are incomplete and in-put production technologies are imperfectly excludable. The paper introduces a new taxonomy of value chains based on whether or not the headquarters firm benefits from imitation of its supplier's technology. In inclusive value chains, where imitation is beneficial, the headquarters firm promotes technology diffusion. By contrast, in exclusive value chains headquarters seeks to limit supplier imitation. The paper analyzes how this distinction affects the returns to offshoring, the welfare effects of technical change and the social efficiency of knowledge sharing. Weaker intellectual property rights over input production technologies raise welfare when value chains are inclusive, but have the opposite effect under exclusive value chains. |
| Keywords: | technology transfer, global value chains, incomplete contracts, intellectual property rights, imitation |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1826&r= |
| By: | Luke Milsom; Isabelle Roland |
| Abstract: | Exposure to Chinese import competition led to significant manufacturing job losses in the United States. Local labor markets, however, differ significantly in how they fared with respect to manufacturing employment. An important question is whether labor market institutions have an impact on the dynamic response of manufacturing employment to rising import penetration. We contribute to this debate by showing that minimum wages amplified the negative effect of Chinese import penetration on manufacturing employment in US local labor markets between 2000 and 2007. We develop a rigorous double-edged identification strategy. First, we construct shift-share instrumental variables to address the endogeneity of import penetration. Second, we use a border identification strategy to distinguish the effects of minimum wage policies from the effects of other local labor market characteristics that are unrelated to policy. Specifically, we rely on comparing commuting zones that are contiguous to each other but located in different states with different minimum wage policies. The approach essentially considers what happens to the response of manufacturing employment to import penetration when one crosses a policy border. |
| Keywords: | import penetration, labor market institutions, minimum wages, manufacturing employment |
| Date: | 2021–10–28 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1807&r= |
| By: | Nobuhiro Hosoe (National Graduate Institute for Policy Studies, Tokyo, Japan) |
| Abstract: | We use a computable general equilibrium model of world trade to quantify the possible impact of economic sanctions imposed by the Western and other countries in response to Russia’s invasion of Ukraine. If senders chose 100% import tariffs and export taxes on trade with Russia, Russia’s GDP would decline by 3–7% due to a significant reduction in exports. By contrast, the GDP loss for those countries would be the largest for Europe but only about 0.2%, and 0.05% for Japan. The effect of China’s participation in the sanctions is more significant than that of India. There are concerns about food and energy crises due to economic sanctions against Russia, but food supplies would not be a serious problem for either senders or third parties. The impact on energy supplies would affect all senders to some extent, for example with a reduction of energy consumption by 3% in and a rise in electricity and town gas prices by 3–4% in Japan. |
| Keywords: | Russian invasion; Ukraine; economic sanctions; energy security; food security; simulation |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:ngi:dpaper:22-06&r= |
| By: | Suh, Jin Kyo (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)) |
| Abstract: | Korean Abstract: 2010년 이후 미국과 EU의 무역왜곡보조가 정체 내지 증가추세를 보이고 있다. 무역왜곡보조 정체 또는 증가추세를 보이는 품목은 주로 넓은 토지에서 재배되고 있는 밀, 면화, 옥수수, 대두 등이다. 이러한 품목의 공통점은 해당 지역사회의 유지 및 지속가능 발전, 또는 해당 지역의 전통과 밀접한 연계가 있다는 점이다. 이에 무역왜곡보조를 무조건적으로 ‘감축보조’로 보기보다 농촌지역사회 유지 등 지역사회의 가치창출과 관련된 경우 특정 제약조건하에서 부분적으로 허용해 주는 방안을 국제적으로 검토할 필요가 있다. English Abstract: The Uruguay Round’s Agreement on Agriculture (AoA) categorized “domestic support” according to its presumed effect on trade. Subsidies that were deemed to be “trade distorting” were subject to limits specified in member schedules. Domestic agricultural policies have been radically reformed in a number of countries, including the U.S. and the EU (European Union). This reform has been in the direction of reducing reliance on price supports in favor of direct payments. Both the U.S. and the EU have found ways to adjust policy instruments to appear to show trade-distorting support reduction even when incentives to producers are maintained. In fact, both countries had significantly reduced their trade-distorting supports (TDS) from the initial stage of agricultural subsidies reduction. For example, the TDS of EU decreased to 10.4 billion Euro in 2012 from 73.4 billion Euro in 1995, which is almost 86 percent reduction. Similarly, the TDS of the U.S. shows the continuous declining trend during the period of 1999~2008, $ 24.3 billion in 1999 to $8.5 billion in 2007. However, there was a sharp reversal in this decreasing trends of the trade-distorting agricultural subsidies during the period of 2010~2019. Both economies started to increase, at least maintain their TDS level from around 2008~2010. As a result, EU’s TDS increased in recent years from 11.0 billion Euro in 2010 to 11.8 billion Euro in 2018. Particularly, the TDS of the U.S. significantly was increased by 2.2 times, from $ 15.6 billion 2008 to $ 34.6 billion in 2019. What happened in both economies during the last decade? (the rest omitted) |
| Keywords: | Trade–Distorting Subsidies; U.S; EU |
| Date: | 2021–12–30 |
| URL: | http://d.repec.org/n?u=RePEc:ris:kiepre:2021_008&r= |
| By: | Monica Langella; Alan Manning |
| Abstract: | We analyse the role of household and country-level personal income in explaining both the desire to emigrate and the desired destination country. We use data from the Gallup World Poll and applications to the US Diversity Visa Program. We find that higher GDP per capita at destination is strongly associated with a higher desire to move to that country. We do not find strong support for the selection hypothesis that people want to move to countries with a higher return to their level of education. On emigration, we find that both personal income and aggregate income matter. In poorer countries richer people are more likely to want to emigrate, while the opposite is true in richer countries. In looking at the impact of origin country income on the desire to emigrate, we find little evidence for the upward part of Zelinsky's 'hump-shape' migration transition hypothesis. |
| Keywords: | international migration, migration intentions, development |
| Date: | 2021–09–06 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1794&r= |
| By: | Mai, Nhat Chi |
| Abstract: | Since 1986, Vietnam has continued to transform from a centrally-planned to market-oriented economy. Over the past 30 years, Vietnam has enjoyed one of the world’s best performances in terms of both economic growth and poverty reduction. Living standards have improved significantly – remarkable achievements based on the country’s socioeconomics. These results stem from the efforts of hundreds of thousands of small and medium sized enterprises (SMEs), and micro enterprises nationwide. They are considered the ‘backbone’ of the economy, and their development is a key driver of sustainable economic development. In 2007, Vietnam officially became a member of the World Trade Organization (WTO); integration that has delivered substantial benefits, as evidenced by the recent rapid growth in exports, income and employment to develop the economy. In this process, SMEs continue to play an important role in the distribution of income, employment levels, export growth and poverty reduction. |
| Date: | 2022–05–07 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:dv68m&r= |
| By: | Kaus, Wolfhard; Zimmermann, Markus |
| Abstract: | This paper analyses the effect of offshoring (i.e., the relocation of activities previously performed in-house to foreign countries) on various firm outcomes (domestic employment, production, and productivity). It uses data from the International Sourcing Survey (ISS) 2017 for Germany, linked to other firm level data such as business register and ITGS data. First, we find that offshoring is a rare event: In the sample of firms with 50 or more persons employed, only about 3% of manufacturing firms and 1% of business service firms have performed offshoring in the period 2014-2016. Second, difference-in-differences propensity score matching estimates reveal a negative effect of offshoring on domestic employment and production. Most of this negative effect is not because the offshoring firms shrink, but rather because they don't grow as fast as the non-offshoring firms. We further decompose the underlying employment dynamics by using direct survey evidence on how many jobs the firms destroyed/created due to offshoring. Moreover, we do not find an effect on labour productivity, since the negative effect on domestic employment and production are more or less of the same size. Third, the German data confirm previous findings for Denmark that offshoring is associated with an increase in the share of 'produced goods imports', i.e. offshoring firms increase their imports for the same goods they continue to produce domestically. In contrast, it is not the case that offshoring firms increase the share of intermediate goods imports (a commonly used proxy for offshoring), as defined by the BEC Rev. 5 classification. |
| Keywords: | international sourcing,offshoring,productivity |
| JEL: | D24 L60 O30 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwhdps:142022&r= |
| By: | TAKAYAMA Haruka; TOMIURA Eiichi |
| Abstract: | Quantitative data, including Big Data, are increasingly used in economic analyses. In the international trade field, the application of AIS data will be informative, as it records traffic for all vessels around the globe for all ships above the threshold size. In this paper, we review the existing literature using the AIS data and conduct a preliminary first-step study on vessel speed changes for container ships and oil tankers. We also discuss issues and prospects for research with AIS data in international trade. |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rpdpjp:22011&r= |
| By: | Kohnert, Dirk |
| Abstract: | Boris Johnson’s populist policy against immigrants and asylum seekers, dumped in detention camps in Rwanda, may not succeed because of legal constraints. Yet, his political agenda will probably work nevertheless, given the growing xenophobia among his electorate. Against expert advice, Home Secretary Priti Patel promised the autocratic ruler in Kigali, Paul Kagame, responsible among others for retribution killings of his army (RPF), to transfer an initial £120m to deter the migrants and to make them 'settle and thrive' in Rwanda. However, London would have to pay much more in the proposed 'economic transformation and integration fund' for the current cost. It is highly unlikely that Rwanda will be able to cope with additional immigrants as it is already struggling to accommodate its own more than 130,000 refugees. Moreover, in the past, also Denmark and Israel had tried in vain to execute similar policies to get rid of undesirable migrants and settle them in Rwanda and Uganda. Johnson's scheme reminded Britain's foremost historian of Nazi Germany, Sir Richard Evans, of Hitler's ploy to deport Jews to Madagascar. Thus, policies purported to aim at 'migration control' may not control migration, but reconfigure potential host societies along ethnic, racial, linguistic, and xenophobe lines. The burden of colonial heritage persists in attempts to reject 'strangers' through populist politics, culture and public discourse. This policy was revived and adjusted in the post-Brexit era, as exemplified by the preferential treatment given to Ukrainian migrants. Racism works best when it's overtly selective. Treating some migrants as “worthy” and others as “undeserving” avoids accusations of racism. It allows racist voters to be fooled into believing that they are personally virtuous while secretly or unconsciously indulging their basest instincts. |
| Keywords: | United Kingdom, Rwanda, immigration, refugees, African migration to UK, post-colonialism, peace-building, identity politics, nationalism, xenophobia, discrimination, African poverty, famine, Sub-Saharan Africa, human rights, Boris Johnson, Paul Kagame |
| JEL: | E24 E26 E61 F22 F24 F35 F52 F54 F66 J46 J61 J71 K37 N17 N37 N47 N97 P16 Z13 |
| Date: | 2022–05–14 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:113099&r= |
| By: | Andre Groeger; Gianmarco León-Ciliotta; Steven Stillman |
| Abstract: | Venezuela is currently experiencing the biggest crisis in its recent history. This has led more than 5.6 million Venezuelans to emigrate, one million of those to Peru, which amounted to an increase of over 2 percent in the Peruvian population. Venezuelan immigrants in Peru are relatively similar in cultural terms, but, on average, more skilled than Peruvians. In this paper, we first examine Venezuelans'perceptions about being discriminated against in Peru. Using an instrumental variable strategy, we document a causal relationship between the level of employment in the informal sector - where most immigrants are employed - and reports of discrimination. We then study the impact of Venezuelan migration on local's labor market outcomes, reported crime rates and attitudes using a variety of data sources. We find that inflows of Venezuelans to particular locations led to increased employment and income among locals, decreased reported crime, and improved reported community quality. We conduct a heterogeneity analysis to identify the mechanisms behind these labor market effects and discuss the implications for Peruvian immigration policy. |
| Keywords: | immigration, forced migration, discrimination, labor markets, Peru, Venezuela |
| JEL: | F22 J15 O15 R23 |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1840&r= |
| By: | Ziesemer, Thomas (UNU-MERIT, Maastricht University) |
| Abstract: | In an empirical, dynamic simultaneous equation model (DSEM) for Brazil with 22 equations and variables, we show that foreign income is a driver of economic growth besides semi-endogenous technical change. With a balance-of-payments constraint and endogenous terms of trade, the major mechanism is (i) world GDP driving exports, (ii) exports paying for imported capital goods, which (iii) enter a production function increasing output and the foreign-debt/GDP ratio and (iv) increase the endogenous labour force, and (v) slightly reduce human capital growth. Permanent increases of human capital increase the R&D/GDP ratio, labour-augmenting productivity, and GDP. A policy to increase the R&D/GDP ratio leads to more human capital, labour productivity and GDP levels. Both knowledge policies reduce the debt/GDP ratio. A lasting shock on the terms of trade reveals that there is no Harberger-Laursen-Metzler effect. The results hold in the presence of endogenous terms of trade, foreign debt, net foreign income, and net current transfers from abroad, and non-Walrasian (dis-)equilibrium variables: inflation and changing inventories for the goods market, and unemployment in the labour market. Policy should strengthen the weak link from R&D to technical change and make education more attractive. |
| Keywords: | dynamic simultaneous equation model, balance-of-payments, constrained growth, imported capital goods, foreign debt, human capital, R&D |
| JEL: | F43 O11 O41 O47 O54 |
| Date: | 2022–04–12 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2022013&r= |
| By: | Scheresky, Gwen; Wilson, William W.; Bullock, David W. |
| Keywords: | Demand and Price Analysis, International Relations/Trade |
| Date: | 2021–11–30 |
| URL: | http://d.repec.org/n?u=RePEc:ags:nddaes:320807&r= |
| By: | Adina Ardelean; Miguel Leon-Ledesma; Laura Puzzello |
| Abstract: | We analyze how trade affects aggregate volatility using a multi-country, multi-industry, and multi-destination framework. We decompose aggregate output growth risk into destination risk, origin risk, and idiosyncratic risk (and their covariances). We then use this framework to run counterfactuals changing the degree of destination market diversification (including home) and industry specialization. Using data on 19 industrial sectors, 34 countries, and 85 destination markets for the 1980¨C2011 period, we find that destination risk dominates, followed by idiosyncratic risk. From the counterfactuals, we find that the effect of increased destination market diversifi- cation is quantitatively important in reducing aggregate volatility for high volatility countries. On the other hand, reducing specialization increases volatility. |
| Keywords: | Output Volatility; Destination Shocks; Origin Shocks; Trade Diversification; Specialization |
| JEL: | F15 F44 F61 |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:ukc:ukcedp:2202&r= |
| By: | Javier L\'opez Prol; Karl W. Steininger; Keith Williges; Wolf D. Grossmann; Iris Grossmann |
| Abstract: | Electrification of all economic sectors and solar photovoltaics (PV) becoming the lowest-cost electricity generation technology in ever more regions give rise to new potential gains of trade. We develop a stylized analytical model to minimize unit energy cost in autarky, open it to different trade configurations, and evaluate it empirically. We identify large potential gains from interhemispheric and global electricity trade by combining complementary seasonal and diurnal cycles. The corresponding high willingness to pay for large-scale transmission suggests far-reaching political economy and regulatory implications. |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2205.01436&r= |
| By: | Luca Buzzanca; Caterina Conigliani; Valeria Costantini |
| Abstract: | The literature identifies three main drivers for forced migration, namely conflict, food nsecurity, and natural and man-made disasters, although finds no empirical consensus on the association between climate change and migrations. Aim of this study is to identify the different push and pull factors of forced migration in different regions of the world by means of gravity-type models. Particular attention is devoted to determining the effects of climatic factors and conflicts, while controlling for the economic, political and social relationship between the origin and the destination countries. We model both total forced migration, that includes refugees, asylum seekers, internal displacements, and returnees, and cross-border forced migrations. Finally, we consider a full panel data analysis and estimate both fixed effects and random effects model specifications. The former offers interesting insights when looking at the most significant country pair fixed effects, that after controlling for all the different drivers, represents the migration routes whose intrinsic characteristics are most relevant for explaining forced migrations. The latter, on the other hand, allows estimating also the effect of time-constant bilateral predictors such as the distance between countries or the fact that they share a common language or have a colonial relation. |
| Keywords: | Forced migration; IDPs; Conflicts; Natural disasters; Climate change; Gravity models |
| JEL: | C23 D74 F22 K37 K38 O15 Q54 |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:rtr:wpaper:0268&r= |
| By: | Abay, Kibrom A.; Breisinger, Clemens; Glauber, Joseph W.; Kurdi, Sikandra; Laborde Debucquet, David; Siddig, Khalid |
| Abstract: | This paper analyzes the implications of the Russian-Ukraine crisis on global and regional food security. We start with a global vulnerability analysis to identify most vulnerable regions and countries. The Middle East and North Africa (MENA) region is particularly vulnerable to trade shocks because of its high food import dependence. Thus, we provide descriptive evidence characterizing how food systems and policies impact vulnerability to the price shock in selected MENA countries: Egypt, Sudan, and Yemen. Within these countries, we show that the crisis will differentially impact poor and non-poor households as well as rural and urban households. Although the absolute level of food insecurity may still be higher in rural areas where larger numbers of poor households are located, urban poor are likely to suffer most because of the Russia-Ukraine crisis and associated hikes in food prices, especially in those countries where social protection and food subsidies are missing. On the policy side, we review lessons from previous food crises and identify actions needed to take (and to avoid) to protect most vulnerable countries and households in the short-term while also highlighting long-term policy options to diversify food, fertilizer and energy production and trade. |
| Keywords: | MIDDLE EAST, NORTH AFRICA, AFRICA, RUSSIAN FEDERATION, EASTERN EUROPE, UKRAINE, EUROPE, food security, food crises, food prices, conflicts, fertilizers, farm inputs, poverty, economic shocks |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:menawp:39&r= |
| By: | Samuel Standaert; Glenn Rayp (-) |
| Abstract: | Many research analyses monitoring the patterns and evolution of international migration would benefit from high-frequency data on a global scale. However, the presently existing databases force a choice between the frequency of the data and the geographical scale. Yearly data exist but only for a small subset of countries, while most others are only covered every 5 to 10 years. To fill in the gaps in the coverage, the vast majority of databases use some imputation method. Gaps in the stock of migrants are often filled by combining information on migrants based on their country of birth with data based on nationality or using ‘model’ countries and propensity methods. Gaps in the data on the flow of migrants, on the other hand, are often filled by taking the difference in the stock, which the ’demographic accounting’ methods then adjust for demographic evolutions. This paper proposes a novel approach to estimating the most likely values of missing migration stocks and flows. Specifically, we use a Bayesian state-space model to combine the information from multiple datasets on both stocks and flows into a single estimate. Like the demographic accounting technique, the state-space model is built on the demographic relationship between migrant stocks, flows, births and deaths. The most crucial difference is that the state-space model combines the information from multiple databases, including those covering migrant stocks, net flows, and gross flows. The result of this analysis is a global, yearly, bilateral database on the stock of migrants according to their country of birth. This database contains close to 2.9 million observations on over 56,000 country pairs from 1960 to 2020, a ten-fold increase relative to the second-largest database. In addition, it also produces an estimate of the net flow of migrants. For a subset of countries –over 8,000 country pairs and half a million observations– we also have lower-bound estimates of the gross in- and outflow. |
| Keywords: | Bilateral migration data, Stock, Imputation, State-Space model |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:rug:rugwps:22/1045&r= |
| By: | Christos Genakos; Mario Pagliero |
| Abstract: | A fundamental issue in economics is how firms deal with unexpected cost increases, perhaps arising from taxes, exchange rate fluctuations or rising input prices: what drives the extent to which they pass the costs through to the prices they charge? To explore the relationship between 'pass-through' and competition within a sector, Christos Genakos and Mario Pagliero take us to the Greek islands. |
| Keywords: | trade, competition |
| Date: | 2021–06–15 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepcnp:605&r= |
| By: | Giuseppe Berlingieri; Frank Pisch |
| Abstract: | Exporting involves sunk and fixed costs in the form of service inputs, and whether such services are 'made' in-house or 'bought' from external agencies is a key organizational margin: it is not a core-competence of manufacturing companies and has far-reaching implications for the costs of exporting. We study such outsourcing decisions both conceptually and empirically. For guidance, we propose a theoretical framework in which firms trade off managerial strain (internal provision) and ex-post adaptation costs (external provision). Using confidential firm-level data from France and a novel instrumental variables strategy, we document the precise service inputs needed to access foreign markets and provide empirical evidence that these are typically outsourced. In line with the model, this pattern is strong for services with high costs of adaptation, and when firms have little managerial capability available. Finally, we discuss the implications of our findings for servitization and inequality. |
| Keywords: | adaptation, complexity, core competencies, firm boundaries, firm capabilities, sunk and fixed export costs, professional and business services, structural transformation. |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1843&r= |
| By: | Mai, Nhat Chi |
| Abstract: | The purpose of this study is to analyze the diplomatic strategies of Japan in engagement with two Southeast Asian nations in response to China’s Foreign Policy on the Belt and Road Initiative. In particular, this paper examines how Vietnam and Myanmar, which are transition countries, utilize Chinese aid and Japan’s Official Development Assistance, focusing on changes in domestic politics. We thus explore questions as to whether Vietnam and Myanmar are intensively investing in sectors directly linked to economic growth, or distributing foreign aid to the political sector necessary to build democratic institutions. We will track these developments across a timescale divided into before and after the respective transitions of economy and/or politics in both countries. This is diachronic approach enables us track differentiation in where and the ways in which foreign aid is used. As a result, Vietnam has been utilizing foreign aid toward objectives economic growth without introducing any change to the political system. Both Myanmar and Vietnam, moreover, are actively embracing foreign policy competition between China and Japan to their own respective advantage. |
| Date: | 2022–05–07 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:xkvwt&r= |
| By: | Yuxian Chen; Yannis M. Ioannides; Ferdinand Rauch |
| Abstract: | Asymmetric transport costs arise when shipping times from point i to point j differ from shipping from point j to i. We show that such asymmetric transport costs predict distinct patterns of location in a class of models using Dixit-Stiglitz preferences. We then study factors affecting the location of cities in ancient Hellas. Prevailing winds create an environment of asymmetric trade costs in ancient Greece. We show that predictions of these models are consistent with the location of ancient cities. |
| Date: | 2022–04–07 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:969&r= |
| By: | Stanzel, Angela |
| Abstract: | Chinese foreign policy is at the crossroads of regional interests and global power rivalry in the Middle East, especially in Iran. China's interests in the Middle East increasingly collide with those of the US, which has brought about a significant re-orientation of Chinese foreign policy on this region. Beijing is increasingly concerned with balancing US influence in the region. Relations with Iran offer China various possibilities for balancing US influence. A decisive factor for China's Iran policy are its regulatory ideas aiming to establish equality of influence between the major global powers in a given region, in this case the Middle East. Chinese discourse underpins the shifts in Chinese foreign policy in which hard or soft balancing is increasingly becoming a feature of a "geo-politicised" regional policy. This geostrategic regional policy with regard to Iran shows that China is gaining influence there at the expense of the United States. German and European actors need a deeper understanding of China's balancing policy. This would enable Germany and the EU to correctly assess and also question the rhetoric of the Chinese leadership. On this basis, Germany and the EU should adjust their engagement in Iran, especially with regard to the Iranian nuclear weapons issue. Moreover, the new German government should ensure that foreign policy actions in third countries are comprehensive and coordinated with the EU so as to meet the challenges posed by China. Such coordination must also be pursued within the transatlantic framework. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:swprps:52022&r= |
| By: | Clayton, Christopher (Yale School of Management); Dos Santos, Amanda (Columbia Business School;); Maggiori, Matteo (Stanford University Graduate School of Business, NBER, and CEPR;); Schreger, Jesse (Columbia Business School, NBER, and CEPR;) |
| JEL: | E01 E44 F21 F23 F32 G11 G15 G32 |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:4019&r= |
| By: | Akkoyunlu Åžule (Åžule Akkoyunlu); Gil Epstein (Gil S. Epstein); Ira Gang (Ira N. Gang) |
| Abstract: | Distinguishing between short-run and long-run outcomes we provide new insight into the relationship between education and migration. We examine the specific link between the acquisition of high levels of human capital in the form of university education in Turkey and migration to Germany. We implement bounds testing procedures to ascertain the long-run relationships with the variables of interest in a migration model. Although the bounds testing procedure has advantages compared to other methods, it has not been widely implemented in the migration literature. We find a negative and decreasing non-linear long-run and short-run relationship between home country university education and Turkish migration to Germany over 1970-2015. Over the long run, increased higher education reduces emigration flows. |
| Keywords: | Education; Migration; Turkey; Germany |
| JEL: | C22 F22 F63 I25 I26 O15 |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:2211&r= |
| By: | Ozge Akinci; Ṣebnem Kalemli-Özcan; Albert Queralto |
| Abstract: | Foreign investors’ changing appetite for risk-taking have been shown to be a key determinant of the global financial cycle. Such fluctuations in risk sentiment also correlate with the dynamics of UIP premia, capital flows, and exchange rates. To understand how these risk sentiment changes transmit across borders, we propose a two-country macroeconomic framework. Our model features cross-border holdings of risky assets by U.S. financial intermediaries who operate under financial frictions, and who act as global intermediaries in that they take on foreign asset risk. In this setup, an exogenous increase in U.S.-specific uncertainty, modeled as higher volatility in U.S. assets, leads to higher risk premia in both countries. This occurs because higher uncertainty leads to deleveraging pressure on U.S. intermediaries, triggering higher global risk premia and lower global asset values. Moreover, when U.S. uncertainty rises, the exchange rate in the foreign country vis-à-vis the dollar depreciates, capital flows out of the foreign country, and the UIP premium increases in the foreign country and decreases in the U.S., as in the data. |
| JEL: | F3 F31 F32 F4 F41 F44 |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30026&r= |
| By: | Ding Ding; Yannick Timmer |
| Abstract: | We estimate exchange rate elasticities of international tourism. We show that, in addition to the bilateral exchange rate, the exchange rate between the tourism origin country vis-à-vis the U.S. dollar is an important driver of tourism flows, indicating a strong role of U.S. dollar pricing. The U.S. dollar exchange rate is more important for tourism destination countries with higher U.S. dollar borrowing, pointing toward a complementarity between U.S. dollar pricing and financing. Country-specific dominant currencies (CSDCs) play only a minor role for the average country but are important for tourism-dependent countries and those with a high concentration of tourists. The importance of the U.S. dollar exchange rate represents a strong piece of evidence of dominant currency pricing (DCP) in the international trade of services and suggests that the benefits of exchange rate flexibility for tourism-dependent countries may be weaker than previously thought. |
| Keywords: | exchange rates, trade, tourism, dominant currency pricing |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9743&r= |
| By: | Matti Sarvimäki (Aalto University School of Business, VATT and Helsinki GSE); Hanna Pesola (VATT Institute for Economic Research and Helsinki GSE) |
| Abstract: | This paper shows that an integration policy aimed at unemployed adult immigrants generated positive spillovers for their children. Our research design builds on a discontinuity in the phase-in-rule of Finland’s 1999 reform that introduced integration plans—a new approach for allocating unemployed immigrants to active labor market policies. We find that parents’ integration plans substantially improved their children’s grades and educational attainment and reduced their time out of employment, education, or training. Our examination of potential mechanisms suggests that integration plans increased parents’ earnings, employment and exposure to native colleagues and pushed their children to better schools. |
| Keywords: | Immigrants, integration policy, intergenerational effects |
| JEL: | J61 J68 J13 H53 |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:2212&r= |
| By: | Matti Viren (University of Turku, Finland.) |
| Abstract: | In this paper we examine how Finnish municipalitiesâ expenditures depend on the share of citizens with foreign background out of the total population. Empirical analyses make use of Finnish panel data from 295 municipalities and 202 migrant nationalities for the period 1987-2018. It turns out that the share of foreign population tends to increase per capita expenditures up to the point where the respective semi-elasticity is about one. The result seems robust in terms of different control variables, subsamples of the data and estimation techniques. Sizeable differences between different nationalities could, however, be detected. Thus, we cannot assume that the use of public services is neutral in terms of demographic changes and that should be considered when making assessments on overall fiscal effects of migration. |
| Keywords: | government expenditures, migration, local government |
| JEL: | H24 H31 H42 H71 J15 J61 |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:tkk:dpaper:dp151&r= |
| By: | Arianna Garofalo (Universitat de Barcelona) |
| Abstract: | Over the past three decades, the drop in fertility rates has been accompanied by high rates of migration in several developing countries. We argue that migration affects fertility negatively in the countries of origin. To analyze the effect of migration we build a fertility choice model, based on De La Croix (2014), with endogenous migration decisions. In this framework, when a member of the household migrates abroad, income increases due to remittances but at the same time, individuals left at home face a much higher opportunity cost time. This means that household members have less time to devote to taking care of the children and the consequence is a decrease in fertility. We calibrate the model to match the migration rates and to quantify the effect of migration on the fertility rate in those countries. To this end, we first show that the model can replicate the high rate of migrations in several developing countries. Then we perform two counterfactual exercises to address the effect of our mechanism. In the first exercise, we keep the migration constant as in the benchmark model while we give a higher value to the time cost of migration. The result is an increase in fertility. In the second exercise, we quantify how the differences in the time cost of migration affect the differences in fertility. We found that the time cost of migration accounts for 53% of the fall in the fertility of the developing countries in our sample between 1990 and 2017. |
| Keywords: | Fertility, migration, remittances. |
| JEL: | O11 J11 F22 F24 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ewp:wpaper:421web&r= |
| By: | Iftikhar Ahmad (Pakistan Institute of Development Economics); Usman Qadir (Pakistan Institute of Development Economics) |
| Abstract: | Is Pakistan an attractive destination for foreign investment in the region? To put it bluntly, the answer is, No. The reason why is simple: Pakistan has had volatile and episodic growth since the 1950s, and we: have low rates of local investment, lag in innovation and suffer from low productivity. We need strong efforts to come out of this vicious circle of low investment, low innovation and low productivity. |
| Keywords: | Inviting FDI, Pakistan, Attractive, Destination |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:pid:kbrief:2021:34&r= |
| By: | Tröster, Bernhard; Gunter, Ulrich |
| Abstract: | The prices of cash crops are crucial to the livelihood of millions of households in developing countries. While the influence of financial investors on the determination of global commodity prices on derivative exchanges is extensively discussed, the role of physical actors in the global value chains (GVCs) is largely disregarded in the 'financialization of commodities' debate. This excludes, however, the interlinked activities of GCV lead firms in financial and physical commodity markets, by which prices are transmitted to producer countries. We, therefore, relate the buying and pricing strategies of lead firms in the coffee, cocoa and cotton GVCs with their activities as hedgers on commodity derivatives markets. Based on Open Interest (OI) data in the Commitments of Traders (COT) database, a measure of buying and selling pressure by trader categories is applied in a GARCH model. Our findings show that liquidity provision by hedgers allows speculators' position takings to drive returns of global benchmark prices. We identify elaborated financial hedging and physical price-setting strategies as a determinant of hedgers' activities on derivative markets, which contributes to price transmission through GVCs and thereby expose smallholder and other actors in cash crops in producer countries to price risks. |
| Keywords: | Financialization,Cash crops,Price transmission,Global Value Chains,Hedging,GARCH Models |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:oefsew:68&r= |
| By: | Hafsa Hina (Pakistan Institute of Development Economics) |
| Abstract: | Devaluation[2] is necessitated only when policy weakness leads to a loss of reserves. It takes on a harsher form when central banks refuse to recognize the will of the market and spends reserves to preserve an artificial value of the exchange rate. Ill-informed popular debate appears to hold to the notion that the purpose of a devaluation is to devalue to improve the trade balance and as they say “improve competitiveness.” |
| Keywords: | Real Exchange Rate, Trade Balance, Elasticities |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:pid:kbrief:2021:30&r= |
| By: | Priyaranjan Jha; David Neumark; Antonio Rodriguez-Lopez |
| Abstract: | Dube, Lester, and Reich (2010) argue that state-level minimum wage variation can be correlated with economic shocks, generating spurious evidence that higher minimum wages reduce employment. Using minimum wage variation within contiguous county pairs that share a state border, they find no relationship between minimum wages and employment in the U.S. restaurant industry. We show that this finding hinges critically on using cross-border counties to define local economic areas with which to control for economic shocks that are potentially correlated with minimum wage changes. We use, instead, multi-state commuting zones, which provide superior definitions of local economic areas. Using the same within-local area research design−but within cross-border commuting zones−we find a robust negative relationship between minimum wages and employment. |
| Keywords: | minimum wage, employment, commuting zones |
| JEL: | J23 J38 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9746&r= |
| By: | Dieterle, Carolin |
| Abstract: | Throughout the last decade, the international donor community has developed a plethora of regulatory initiatives for responsible agricultural investments. It remains unclear how such guidelines are invoked in practice in investment cases, and whether their use can prevent conflict and protect local land rights, as promoted. Uncovering how international guidelines work necessitates an understanding of the formal-legal setting and underlying land tenure regimes that shape investment projects. In Uganda, these contexts vary from region to region and investments take place on land held under various tenure regimes, including private, state-owned, and customary land. Based on 8 months of fieldwork in Uganda, I compare three cases of large-scale land investments in different settings and argue that variation in the underlying land tenure systems determines the variation, uneven applicability and effectiveness of global governance mechanisms. |
| Keywords: | Uganda; global governance; land rights; land tenure; large-scale land investment; Taylor & Francis deal |
| JEL: | R14 J01 |
| Date: | 2022–03–04 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:111962&r= |
| By: | Bouët, Antoine; Laborde Debucquet, David; Traoré, Fousseini |
| Abstract: | MIRAGRODEP-AEZ is a recursive dynamic multi-region, multi-sector Computable General Equilibrium (CGE) model based on MIRAGRODEP which in turn is based on MIRAGE (Modelling International Relations Under Applied General Equilibrium) with Agro-ecological zones (regions). It constitutes an extension of the MIRAGRODEP model that allows the user to perform analysis at the subnational level using spatial disaggregated data. The model is particularly suitable for agricultural policy analysis that require working at different levels of disaggregation to consider differences in agro-ecological conditions. |
| Keywords: | WORLD; models; modelling; production; demand; supply; markets; economics |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:agrotn:tn-24&r= |