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on International Trade |
| By: | Borchert, Ingo (University of Sussex Business School); Larch, Mario (University of Bayreuth); Shikher, Serge (United States International Trade Commission); Yotov, Yoto (Yoto V. Yotov, Drexel University, yotov@drexel.edu) |
| Abstract: | We introduce the International Trade and Production Database for Simulation (ITPD-S) and use it, in combination with the International Trade and Production Database for Estimation (ITPD-E), to quantify the impact of globalization on bilateral trade, real income, and inequality in the world at the industry level in 1990-2019. To perform the analysis, we rely on a new quantitative trade model, which enables us to estimate the magnitude of globalization and then perform a counterfactual analysis of the impact of globalization on real output within the same framework. Our estimates reveal that, on average, bilateral globalization forces have led to a remarkable increase in international trade of about 570%, between 1990 and 2019, with very wide but intuitive variation across industries. Our counterfactual analysis reveals that globalization has benefited most countries but relatively more so smaller and more open economies, which are typically developing countries. As a result, this ‘catch-up’ implies less cross-country income inequality. |
| Keywords: | Trade dataset; Domestic trade; Globalization; Inequality; Disaggregated simulation analysis; Gravity |
| JEL: | F10 F14 F63 O11 O19 |
| Date: | 2024–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:ris:drxlwp:2024_006&r=int |
| By: | Baldwin, Richard; Freeman, Rebecca; Theodorakopoulos, Angelos |
| Abstract: | This article contests the idea that the world has entered a post-globalization era. It argues that rapid globalization has evolved rather than ended. Even though the global goods trade-to-GDP ratio reached its zenith 15 years ago, the rapid rise of services trade has persisted and now accounts for one-fifth of international commerce. The paper makes a statistical and logical case that the future of trade lies in services trade—especially trade in intermediate services. |
| Keywords: | deglobalization; intermediate services; intermediate trade; service-led development; services trade |
| JEL: | F10 F13 F15 |
| Date: | 2024–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:122847&r=int |
| By: | Elena Vidal; Alberto González Pandiella |
| Abstract: | Mexico is well integrated into global value chains (GVCs). Its exports as a share of GDP have tripled since 1988. Mexico’s participation in GVCs is mainly driven by backward linkages, i.e. the share of foreign value added in Mexico’s total exports is large, which reflects Mexico’s importance in assembling processes in some manufacturing sectors. Conversely, forward participation, i.e. to what extent trading partners exports incorporate Mexico’s value added, remains low. Ongoing nearshoring trends provide opportunities to strengthen and improve Mexico’s participation in GVCs, and to move up in the value chain and develop stronger forward linkages, which are associated to higher productivity growth. This paper zooms into the most recent developments to assess whether Mexico is already benefiting from these trends. The empirical analysis suggests that Mexico’s wide trade agreements and low tariffs, will help, but improving the business environment and the rule of law, a better educated workforce, or increasing female labour participation would also facilitate deepening forward GVCs linkages. |
| Keywords: | Global value chains, Gravity models, Nearshoring, Trade |
| JEL: | F14 F43 F62 O54 |
| Date: | 2024–05–07 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1802-en&r=int |
| By: | Marcos A. L. de Campos; Jose Luis Oreiro; Kalinka Martins da Silva |
| Abstract: | This article aims to analyse the impact of exchange rate levels and trade liberalization that occurred in the 1980s and 1990s on the exports, imports, and trade balances of Latin American countries over the last five decades. The basic idea is to update the study conducted by A. Santos-Paulino and A. P. Thirlwall in 2004, which aimed to test the hypothesis that trade liberalizations in developing countries lead to a deterioration of the trade balance by boosting imports more than exports. Additionally, this analysis introduces the effect of the exchange rate on the trade balance through the currency undervaluation index created by Rodrik (2008). Data from seven Latin American countries between 1970 and 2019 were selected to estimate econometric models for exports, imports, and the trade balance. Although the inherent uniqueness of each Latin American economy makes it challenging to make general conclusions, the results show that currency undervaluation has a strong effect on export performance, and they also support the idea that trade liberalisation reforms generate imbalances in the trade balance in the long run. This negative effect of trade liberalization, however, can be offset by a proper exchange rate policy that aims to set an undervalued exchange rate. If trade liberalization is combined with a competitive exchange rate, then an increase in exports growth and in the trade balance as a ratio to GDP will be consequence of this smart combination of trade and exchange rate policies. |
| Keywords: | Trade Liberalization, Real Exchange Rate and Trade Balance |
| JEL: | F10 F15 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:pke:wpaper:pkwp2408&r=int |
| By: | Gero Dasbach (University of Lille, France) |
| Abstract: | Gains from trade liberalization are accompanied by environmental externalities of increased greenhouse gas emissions. The EU is currently active on both trade and climate policy frontiers. By means of a new quantitative trade model, this study uncovers counterfactual changes in trade, CO2 emissions, and welfare of an EU-India FTA, first as a standalone policy, and then, in conjunction with the Carbon Border Adjustment Mechanism (CBAM). Trade data from the OECD Inter-Country Input-Output (ICIO) tables and CO2 emission data from the OECD Trade in Embodied CO2 (TECO2) database are used. While the CBAM decreases trade volumes and CO2 emissions, a hypothetical EU-India FTA results in significant increases in both trade and CO2 emissions. When considering the Armington assumption of national product differentiation and no intermediate goods, the welfare effects of the EU-India FTA alone are found to be negative for India. |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:bai:egeiwp:egei_wp-3_2024&r=int |
| By: | Erik Frohm |
| Abstract: | Switzerland has shown remarkable strength during past economic downturns. A comprehensive risk planning and monitoring system, as well as essential-goods stockpiles has effectively bridged temporary supply disruptions. Yet, rising geopolitical tensions and a global shift towards protectionism pose significant challenges for the Swiss economy. To raise its resilience and productivity, Switzerland should refrain from relying on distortive industrial policies or trade restrictions, and rather continue to commit to international trade and cooperation, strengthen ties with key trading partners and enhance domestic competition. Resuming negotiations with the EU is key to safeguard access to the single market and deepen the economic partnership. Reducing trade barriers and lowering the administrative burden could reduce trade costs, which would allow companies to diversify supply chains while raising productivity. |
| Keywords: | Competition, Economic Resilience, Global Value Chains, Industrial Policy, Trade |
| JEL: | E32 F15 F41 F62 L17 |
| Date: | 2024–05–07 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1798-en&r=int |
| By: | Kaz Miyagiwa (Department of Economics, Florida International University); Yoshiyasu Ono (Institute of Social and Economic Research, Osaka University) |
| Abstract: | We examine the effect of international immigration on the host-country economy in the dynamic model capable of generating full employment as well as secular unemployment in equilibrium. It is shown that the effect of immigration depends on the host country's employment conditions and immigration magnitudes. If full employment prevails initially, a small inflow of immigrants boosts aggregate demand and improves welfare for host-country residents; a massive influx of immigrants leads to secular stagnation. If unemployment prevails initially, immigration always decreases aggregate demand and worsens unemployment. Furthermore, remittances by immigrants are always harmful to the host country under full employment but can beneficial under stagnation. |
| Keywords: | immigration, secular stagnation, unemployment, aggregate demand, remittances |
| JEL: | F16 F22 J61 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:fiu:wpaper:2403&r=int |
| By: | Chong, Terence Tai Leung; Lo, Vincent Pok Ho |
| Abstract: | This paper studies the Hong Kong economy from a trade intermediary’s perspective. Using a structural vector autoregression (SVAR) framework, we discover that trade-related external shocks mainly affect the economy through re-exports channel over the offshore trade channel. We observe that re-exports shock does not transmit to the real economy through employment channel. A puzzling phenomenon is that trade-related employment has been in decline since 2008. Moreover, we notice that although the Sino-U.S. trade war exerted much downward pressure on economic growth between 2018 and 2019, the trade intermediary sector swiftly recovered in 2020, reflecting the versatility of the external trade sector in Hong Kong. |
| Keywords: | Hong Kong; Entrepôt; Re-Export; Sino-U.S. Trade War. |
| JEL: | F13 F14 F16 |
| Date: | 2024–12–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120642&r=int |
| By: | Nora Strecker; Georg U. Thunecke; Benedikt Zoller-Rydzek |
| Abstract: | Rising globalization has exerted a downward pressure on global tariffs, thereby eroding tariff revenues in developing nations. We analyse how gains from lowering import tariffs are distributed within the firm and the corresponding tax (base) implications. First, we study the effect of tariff changes on imports. Second, we estimate the firm-level semi-elasticities of profits, sales, capital, and wages with respect to import tariffs. |
| Keywords: | Globalization, Taxation, Tariffs, Inequality, Tax revenue |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp-2024-23&r=int |
| By: | Jan David Bakker; Alvaro Garcia Marin; Andrei V. Potlogea; Nico Voigtländer; Yang Yang |
| Abstract: | Does international trade affect the growth of cities, and vice versa? Assembling disaggregate data for four countries, we document a novel stylized fact: Export activity is disproportionately concentrated in larger cities – even more so than overall economic activity. We rationalize this fact by marrying a standard quantitative spatial economics model with a heterogeneous firm model that features selection into the domestic and the export market. Our model delivers novel predictions for the bi-directional interactions between trade and urban dynamics: On the one hand, trade liberalization shifts employment towards larger cities, and on the other hand, liberalizing land use raises exports. We structurally estimate the model using data for the universe of Chinese manufacturing and French firms. We find that trade policies have quantitatively meaningful impacts on urban outcomes and vice versa, and that the aggregate effects of trade and urban policies differ from more standard models that do not account for the interaction between trade and cities. In addition, a distinguishing prediction of our model – which we confirm in the data – is that local trade elasticities vary systematically with city size, so that a country's aggregate trade elasticity depends on the spatial distribution of production within its borders. |
| JEL: | F1 R1 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32377&r=int |
| By: | Joana Garcia; João Amador |
| Abstract: | We analyze how firms choose the currency in which they price their transactions in services trade and explore to what extent the U.S. dollar has a dominant role in those transactions, as documented by earlier literature for goods trade. Using a new granular dataset detailing the currency used by Portuguese firms in extra and intra-EU trade, we show that currency choices in services trade are active firm-level decisions. Services exporters that are larger and that rely more on inputs priced in foreign currencies are less likely to use the domestic currency in their services exports. Moreover, we document that the U.S. dollar has a dominant role as a vehicle currency in services trade, but it is less prevalent than in goods trade. Our results are consistent with this difference arising from a lower openness of services markets and from a stronger reliance of services in domestic inputs. |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ptu:wpaper:w202316&r=int |
| By: | Stefan Ambec (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Federico Esposito (Tufts University [Medford]); Antonia Pacelli (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, University of Naples Federico II = Università degli studi di Napoli Federico II) |
| Abstract: | In a trade model with endogenous emissions abatement, we investigate the impact of three policy instruments aimed at mitigating carbon leakage: free emission allowances, a Carbon Border Adjustment Mechanism (CBAM), and a CBAM with export rebates. We show that providing free allowances does not alter the incentives to abate carbon emissions, but, instead fosters the entry of more carbon intensive producers. This "levels the playing field" both domestically and internationally, and may even reverse carbon leakage. In contrast, a CBAM only levels the playing field domestically, and may lead to an autarky equilibrium. To reverse carbon leakage, a CBAM must be complemented with export rebates. We further show that a CBAM and export rebates improve welfare for any carbon price, and we identify the optimal share of free allowances with or without a CBAM. Finally, we perform a calibration exercise on cement and steel sectors to simulate the effects of the CBAM recently adopted by the European Union. Our model predicts a scenario with reverse carbon leakage and significant welfare gains for both sectors. |
| Keywords: | Carbon pricing, Trade, Carbon leakage, CBAM, Free allowances, Export rebates |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04550380&r=int |
| By: | Jacques De Jongh (School of Economic Sciences, North-West University); Precious Mncayi (School of Economic Sciences, North-West University) |
| Abstract: | An interconnected and globalised world has arguably been one of the most prominent features of the 21st century. Globalisation, as a process, has altered many socio-economic features, and the gendered aspects of society have been among the most prominent. Ongoing debates suggest that the modern wave of neoliberal and technologically inclined integration has seen a more significant improvement in the socioeconomic position of females. Though from the developing world, concerns have been raised on the skill-biased nature of the process, its creation of a gendered division of labour, and trade liberalisation practices that have mainly benefited male-dominated sectors. Therefore, the study's main objective was to determine the impact of economic globalisation on gender inequality in Southern African Customs Union (SACU) countries. This study utilised a novel panel econometric approach, accounting for structural breaks, cross-sectional dependence and heterogenous slopes by employing the dynamic common correlated effects estimator. Causal links were identified using a Dumitrescu-Hurlin causality test. The main findings indicate that economic globalisation improves gender inequality in SACU countries. There is also evidence of a bidirectional causal relationship between the variables, suggesting that the way these countries integrate into the global economy is both a cause and effect of gender income distributions. It is therefore recommended that policies aimed at reducing gender inequality within the customs union consider the broader economic and social context in which economic globalisation is embedded. Strategies must promote gender-sensitive trade practices and improve women's education and training in preparation for employment in export-oriented sectors. Moreover, policymakers should prioritise attracting investments that enable the cohort and their communities while improving women-owned businesses' participation in global value chains. |
| Keywords: | Globalisation; Economic globalisation; Inequality; Gender inequality; SACU; Southern Africa |
| JEL: | F00 F63 F15 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iefpro:14115872&r=int |
| By: | Francesca Guadagno (The Vienna Institute for International Economic Studies, wiiw); Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | The energy-renewables ecosystem (ERES) plays a particularly important role in the green transition. This paper analyses its relevance in EU member states and the competitiveness for the EU27 as a whole vis-à-vis other global players and identifies structural dependencies and vulnerabilities. It does so by drawing on the Joint Research Centre’s FIGARO dataset and detailed trade data, and by developing a novel approach that adapts input-output indicators to the analysis of industrial ecosystems. A number of key findings emerge from our analysis. First, the ERES is particularly relevant in new member states, Austria and Germany. At the global level, the EU27 is the second most important exporter after China. Second, in 2020 the EU ecosystem was dependent on imports of coal and lignite from Russia, as well as on a variety of other products from China (including medium- and high-tech electronic products). Third, analysis on the basis of detailed trade data indicates that a few products in the ERES supply chain are delivered by only a handful of countries, which could indicate some vulnerability. Most of the partner countries supply some products that may be characterised as ‘risky’, but China is a main source of such products. |
| Keywords: | green transition; energy-renewables ecosystem; linkages; dependencies; open strategic autonomy |
| JEL: | F10 F14 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:wii:rpaper:rr:473&r=int |
| By: | Sampson, Thomas |
| Abstract: | Global value chains create opportunities for North-South technology diffusion. This paper studies technology transfer in value chains when contracts are incomplete and input production technologies are imperfectly excludable. It introduces a new taxonomy of value chains based on whether 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. But 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. |
| JEL: | G30 O10 |
| Date: | 2024–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:119640&r=int |
| By: | Jacobus Johannes de Jongh (School of Economic Sciences, North-West University) |
| Abstract: | Industrialisation and globalisation are two critical factors that have shaped the economic development of many countries around the world. South Africa has been no exception, as the country has witnessed significant changes in its economy, particularly since the move to a more liberal and democratic orientation. While integration has afforded the country many benefits in this regard, so too have concerns been raised on the causal effects of re-primarisation, rising inequality and even the onset of premature deindustrialisation. The main aim of this study was therefore to explore the moderating role of globalisation on the relationship between industrialisation and economic development in the country. It made use of a quantitative research approach using secondary time-series data from 1980 to 2021. The analysis included the use of the combined cointegration test of Bayer and Hanck, and three different estimation techniques, namely the fully modified ordinary least squares, dynamic ordinary least squares and canonical cointegrating regressions. Moreover, it employed the Toda-Yamamoto Granger causality test to determine the causal links between the variables. The results of the study show that industrialisation has had a significant positive effect on the country?s development process. However, it seems that globalisation moderates this relationship, with a negative interaction effect. This suggests that the positive effect of industrialisation on economic development is deterred by the way the country has integrated into the global economy, pointing to adverse consequences concerning its peripheral GVC participation, lack of economic diversification and formation of trade relationships. Based on this, it is recommended that policymakers prioritise the development of IWOSS industries, facilitate broader and deeper regional partnership formation as well as improve the diversification of its export base with adequate support directed towards developing the private sector. |
| Keywords: | Globalisation, Industrialisation, Economic development, South Africa |
| JEL: | F15 F63 O14 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iefpro:14115863&r=int |
| By: | Fays, Valentine (University of Mons); Mahy, Benoît (University of Mons); Rycx, François (Free University of Brussels) |
| Abstract: | This article is the first to examine how 1st-generation migrants affect the employment of workers born in the host country according to their origin, distinguishing between natives and 2nd-generation migrants. To do so, we take advantage of access to a unique linked employer-employee dataset for the Belgian economy enabling us to test these relationships at a quite precise level of the labour market, i.e. the firm level. Fixed effect estimates, including a large number of covariates, suggest complementarity between the employment of 1st-generation migrants and workers born in Belgium (both natives and 2nd-generation migrants, respectively). Several sensitivity tests, considering different levels of aggregation, workers' levels of education, migrants' region of origin, workers' occupations, and sectors corroborate this conclusion. |
| Keywords: | 1st- and 2nd-generation migrants, substitutability, complementarity, moderating factors |
| JEL: | J15 J24 J62 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16887&r=int |
| By: | Roberto Coronado |
| Abstract: | Dallas Fed Senior Vice President Roberto Coronado delivered these remarks at the Western Hemispheric Trade Center Annual Conference at Texas A&M International University in Laredo. |
| Keywords: | economic conditions; Mexico; Texas; trade; United States |
| Date: | 2024–04–12 |
| URL: | http://d.repec.org/n?u=RePEc:fip:feddsp:98192&r=int |
| By: | Reda Cherif; Fuad Hasanov |
| Abstract: | Industrial policies pursued in many developing countries in the 1950s-1970s largely failed while the industrial policies of the Asian Miracles succeeded. We argue that a key factor of success is industrial policy with export orientation in contrast to import substitution. Exporting encouraged competition, economies of scale, innovation, and local integration and provided market signals to policymakers. Even in a large market such as India, import substitution policies in the automotive industry failed because of micromanagement and misaligned incentives. We also analyze the risk tradeoffs involved in various industrial policy strategies and their implications on the 21st century industrial policies. While state interventions may be needed to develop some new capabilities and industries, trade protectionism is neither a necessary nor a sufficient tool and will most likely be counterproductive. |
| Keywords: | Industrial policy; export orientation; import substitution; growth; diversification; innovation; technology |
| Date: | 2024–04–26 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2024/086&r=int |
| By: | Subhayu Bandyopadhyay; Todd Sandler |
| Abstract: | The paper offers a game-theoretical model that includes three participants – the terrorist organization, its foreign fighters, and the adversarial host government. In stage 1, the terrorist group induces foreign fighters to emigrate through wage incentives, while the host government deters these fighters through proactive border security. Foreign fighters decide whether to emigrate from their source country (extensive margin) in stage 2, after which these fighters determine their level of attacks (intensive margin) in stage 3. Comparative statics to the Nash equilibrium are tied to changes in the employment or opportunity cost in the source country, as well as to changes in radicalization. Our basic model provides a theoretical foundation to recent empirical results. An extension involves a four-stage game with the host government assuming a leadership role prior to the terrorist group choosing its wage incentive. |
| Keywords: | foreign fighters; extensive and intensive margins; three-stage game; selective incentives; proactive border security |
| JEL: | D74 H56 C72 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:98197&r=int |
| By: | Alessandro Caiumi; Giovanni Peri |
| Abstract: | In this article we revive, extend and improve the approach used in a series of influential papers written in the 2000s to estimate how changes in the supply of immigrant workers affected natives' wages in the US. We begin by extending the analysis to include the more recent years 2000-2022. Additionally, we introduce three important improvements. First, we introduce an IV that uses a new skill-based shift-share for immigrants and the demographic evolution for natives, which we show passes validity tests and has reasonably strong power. Second, we provide estimates of the impact of immigration on the employment-population ratio of natives to test for crowding out at the national level. Third, we analyze occupational upgrading of natives in response to immigrants. Using these estimates, we calculate that immigration, thanks to native-immigrant complementarity and college skill content of immigrants, had a positive and significant effect between +1.7 to +2.6\% on wages of less educated native workers, over the period 2000-2019 and no significant wage effect on college educated natives. We also calculate a positive employment rate effect for most native workers. Even simulations for the most recent 2019-2022 period suggest small positive effects on wages of non-college natives and no significant crowding out effects on employment. |
| JEL: | F22 J21 J69 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32389&r=int |
| By: | Rodolfo G. Campos; Iliana Reggio; Jacopo Timini |
| Abstract: | We describe an algorithm for computing counterfactual trade flows, prices, output, and welfare in a large class of general equilibrium trade models. We introduce a command called ge_gravity2 that allows users to perform these computations in Stata. This command extends the existing ge_gravity command by allowing users to compute the general equilibrium effects of changes in trade policy in positive supply elasticity models. It can be used to solve any model that falls into the class of universal gravity models as defined by Allen, Arkolakis, and Takahashi [Universal Gravity, Journal of Political Economy, 128(2), 2020, 393-433]. |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2404.09180&r=int |
| By: | Maurice Obstfeld (Peterson Institute for International Economics) |
| Abstract: | The global economic institutions that grew from the Bretton Woods conference of 1944 aimed to create a cooperative policy environment conducive to recovery, development, continuing prosperity, social stability, and democracy. Prominent in the minds of the architects were the macroeconomic and trade policy coordination failures of the 1930s, which accompanied a world depression and the march toward the Second World War. The assumption of "embedded" liberalism' underlying Bretton Woods gave way to a much more market-oriented system by the early 1990s, fueling strong growth in several large emerging markets and a period of hyperglobalization--but also social tensions in advanced economies. The result has been a changed geopolitical balance in the world as well as a backlash against aspects of globalization in many richer countries, notably the main sponsor of postwar international cooperation, the United States. At the same time, global cooperation is threatened despite the emergence of a broader range of shared global threats requiring joint action. The rich industrial countries that dominate the existing multilateral institutions should recognize them as being instrumental for channeling superpower competition into positive-sum outcomes that can also attract broad-based international support. However, leveraging those institutions will require buy-in from middle- and low-income countries, as well as from domestic political constituencies in advanced economies. The future of multilateralism depends on reconciling these potentially conflicting imperatives. |
| Keywords: | multilateralism, Bretton Woods, globalization, geopolitics |
| JEL: | F13 F52 F6 N40 P16 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:iie:wpaper:wp24-9&r=int |
| By: | Pedro Dias Moreira; João Monteiro |
| Abstract: | How do exporting firms react to changes in the cost of credit? To answer this question, we exploit an exogenous variation in banking regulation which increases the cost of financing forexports in the European Union. Using a unique dataset which combines customs, firm-level, and credit registry data on Portuguese firms we find that in response to an increase in the costof credit, exports fall by 10 percent through the intensive margin. In the extensive margin, we also show that there is a sharp drop in entry as well as an increase in firm exit. Within a firm, we document that firms reduce their dependence on bank credit by adjusting their product mix, as firms shift towards products with a low dependence on working capital and bank credit. We also provide direct evidence of the mechanism through which the change in banking regulation operates. We find that loan rates for exporting firms increase and that loan amounts fall by 7 percent. We then turn to aggregate trade data for all E.U. countries. We find that there is an overall decline in exports, but that this decline is driven by countries with undercapitalized banks or where bank equity is scarce. This finding suggests that the health of the banking system is an important determinant of how exports react to an increase in the cost of credit. Using a multi-sector Ricardian model, we show that welfare in E.U. countries declines due to a depreciation in terms of trade. Welfare in countries which import goods from the E.U. also declines. |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ptu:wpaper:w202320&r=int |
| By: | Alberto González Pandiella; Alessandro Maravalle |
| Abstract: | Mexico has large potential to boost its productivity and attract investment from companies looking to relocate their operations to North America. It also has an historic opportunity to spread the benefits of trade throughout the country, integrate SMEs more forcefully into value chains and to create more and better value chain linkages. Nearshoring is also an opportunity to step up efforts to address and mitigate climate change. Fully realising these opportunities will require addressing long standing challenges related to transport and digital connectivity, regulations, the rule of law, renewable energy and water scarcity. |
| Keywords: | Competition, Digitalization, Logistics, Nearshoring, Productivity, renewables, Rule of Law, Trade, Water |
| JEL: | B27 K42 L41 L96 Q4 Q25 |
| Date: | 2024–05–07 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1799-en&r=int |
| By: | Schilirò, Daniele |
| Abstract: | This essay primarily examines the significant economic, political, religious, and demographic disparities among Mediterranean-bordering countries, with a central focus on the migrant issue in the region. It delves into the array of international agreements formed by both the Italian government and the European Union to mitigate the influx of migrants. Additionally, it scrutinizes the strategies devised by the government of our country to address the underlying causes of irregular migration while concurrently promoting forms of regulated and monitored migration. Furthermore, it addresses crucial economic matters pertaining to energy supply from select countries in the "Enlarged Mediterranean" which produce gas and oil, as well as technological transfer initiatives aimed at aiding less developed nations in their developmental pursuits. The central theme of the Dublin Treaty, which still underpins the reception system for migrants arriving in the European Union, and the discussion of the New Pact for Migration and Asylum, approved by the European Parliament in April 2024 to address certain shortcomings of the Dublin Treaty, are the two focal points of this essay. Finally, the essay outlines the principles that should guide policies to address the issue of migration. These are: legality, transparency, and cooperation. |
| Keywords: | Migrations; Mediterranean Sea; European Union; Treatise of Dublin |
| JEL: | F50 J0 |
| Date: | 2024–04–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120790&r=int |
| By: | Paolo Falco; Eleanor Wiseman |
| Abstract: | Cross-border traders face a choice between official and unofficial border crossings. The latter allow them to evade taxes, but expose them to other risks, such as bribes, fines, and arrest. We investigate the perceptions of cross-border traders about the risks of trading officially vs unofficially at the border between Kenya and Uganda. We find that traders overestimate the risks of trading officially relative to the same risks when trading unofficially. In reality, the measured risks of trading through the official border are lower. |
| Keywords: | Trade, Formality, Informality, Subjective beliefs, Corruption, Tax evasion, Risk attitudes |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp-2024-19&r=int |
| By: | Pedro Teles; João Brogueira de Sousa |
| Abstract: | We study preferential tax schemes for high-skill immigrants such as those adopted in Europe in the past two decades. The overall assessment is negative. While they induce a very large immigration surplus tilted towards the low-skill, they may also give rise to an emigration deficit that more than offsets the surplus. The unilateral adoption is ambiguous in its welfare effects for both high- and low-skill workers, but the multilateral adoption is unambiguous in redistributing from low-skill to high-skill workers. |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ptu:wpaper:w202321&r=int |
| By: | Ken Chan (ESCP Business School, Paris) |
| Abstract: | Companies undertake corporate political activity (CPA) to secure favorable policies and regulatory environments using internal capabilities and external resources, such as trade associations. This study examines how companies can effectively use trade associations for CPA by conducting qualitative interviews with 35 company executives. According to the interviews, companies expect trade associations to prioritize advocacy and public policy as their core businesses. The study identifies the following five ways in which trade associations provide value to companies: (1) be the critical voice for the industry, (2) represent collective interest, (3) provide policy and research support, (4) facilitate sector-wide collaboration, and (5) act as a sounding board for policymakers. This study also finds that companies benefit from active participation in trade associations. Through board and committee involvement, they can influence the organization?s strategic agendas. |
| Keywords: | Corporate Political Activity, Government Relations, Lobbying, Nonmarket Strategy, Trade Associations |
| JEL: | D71 D72 F23 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iefpro:14115871&r=int |
| By: | Jenny Vinueza (Universidad de las Fuerzas Armadas - ESPE); Marcela Viteri (Universidad de las Fuerzas Armadas - ESPE) |
| Abstract: | In the present investigation, the issue of fair trade is addressed with a focus on sustainability and highlights its importance in promoting equity in global trade. The problem addressed in the research is the lack of links between fair trade organizations and universities, and how this affects the study and development of this type of trade. The methodology used is non-experimental and intentional sampling is used. The units analyzed are fair trade organizations, state services, non-governmental organizations, and universities; semi-structured interviews and secondary information sources produced by the participants are applied to stakeholders on their web pages. Among the main conclusions, it is identified that fair trade organizations perceive a lack of interest and knowledge about fair trade in universities, which makes collaboration between both parties difficult. In addition, it is pointed out that universities are not familiar with the concept of fair trade and lack trained personnel in this field. Organizations demand more research topics and propose collaborations through talks, workshops, and fairs at universities. It is observed that public institutions also face difficulties in approaching academia and fair trade organizations due to bureaucracy and lack of funds. On the other hand, it is highlighted that universities do not have macro projects on fair trade, although they show openness to broaden knowledge in this area. Likewise, it is revealed that most of the career directors are unaware of fair trade issues, but they recognize its importance as a development alternative |
| Keywords: | Fairtrade, Sustainability, Universities, Fair trade |
| JEL: | D21 I21 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iefpro:14116030&r=int |
| By: | Li, Shuping; Meng, Jing; Hubacek, Klaus; Eskander, Shaikh M. S. U.; Li, Yuan; Chen, Peipei; Guan, Dabo |
| Abstract: | Many economies set climate mitigation targets for 2020 at the 2009 15th Conference of the Parties conference of the United Nations Framework Convention on Climate Change in Copenhagen. Yet no retrospective review of the implementation and actual mitigation associated with these targets has materialized. Here we track the national CO2 emissions from both territory and consumption (trade adjusted) perspectives to assess socioeconomic factors affecting changes in emissions. Among the 34 countries analysed, 12 failed to meet their targets (among them Portugal, Spain and Japan) and 7 achieved the target for territorial emissions, albeit with carbon leakage through international trade to meet domestic demand while increasing emissions in other countries. Key factors in meeting targets were intensity reduction of energy and the improvement of the energy mix. However, many countries efforts fell short of their latest nationally determined contributions. Timely tracking and review of mitigation efforts are critical for meeting the Paris Agreement targets. |
| Keywords: | 72373081; 72250710169; 72140001; 101137905 (PANTHEON) |
| JEL: | N0 |
| Date: | 2024–04–16 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:122815&r=int |
| By: | Michael A. Clemens (Peterson Institute for International Economics) |
| Abstract: | Legal and illegal markets often coexist. In theory, marginal legalization can either substitute for the remaining parallel market, or complement it via scale effects. I study migrants crossing without prior authorization at the US southwest border, where large-scale unlawful crossing coexists with substantial, varying, and policy-constrained lawful crossing. I test whether lawful and unlawful crossing are gross substitutes or complements, using lag-augmented local projections to analyze a monthly time-series on the full universe of 10, 658, 497 inadmissible migrants encountered from October 2011 through July 2023. Expanded lawful crossings cause reduced unlawful crossings, an effect that grows over time and reaches elasticity -0.3 after approximately 10 months. That is, in this case, expanded activity on the lawful market substitutes for the parallel market, even net of scale effects. This deterrent effect explains approximately 9 percent of the overall variance in unlawful crossings. In an ancillary finding, I fail to reject a null effect of depenalizing unlawful crossings on future attempted unlawful crossings. |
| Keywords: | Labor Mobility, Immigrant Workers, International Migration, Illegal Behavior, Enforcement of Law |
| JEL: | F22 J61 K42 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:iie:wpaper:wp24-10&r=int |
| By: | Inaki Veruete Villegas (Charles University, Institute of Economic Studies at Faculty of Social Sciences & The Environment Center, Czech Republic & BETA, CNRS, University of Strasbourg); Milan Scasny (Charles University, Institute of Economic Studies at Faculty of Social Sciences and The Environment Center, Czech Republic.) |
| Abstract: | The current geopolitical landscape, exemplified by the Russian invasion of Ukraine, has heightened concerns about energy security. This study delves into the nexus of energy security and natural gas utilization in the Czech Republic, offering a thorough analysis amid these turbulent times. Despite the fact that the environment/energy-extended input-output models have been significantly improved, they still fail to fully capture a sector’s role in an economic system characterized as a network of sectors as they primarily analyze sectors as both ends of the supply chain, ignoring a significant role of transmission sectors. We overcome this gap by applying a multidimensional approach to scrutinize the energy supply chain in order to assess the repercussions of heightened natural gas prices post-Russian invasion. Specifically, we combine domestic energy input-output demand and price models to assess the economic impacts under constrained alternative energy scenarios, particularly relevant given the challenges of replacing Russian gas. Additionally, leveraging network analysis techniques —node and edge betweenness centrality—and the hypothetical extraction method are used to identify critically important structural elements within the country’s natural gas consumption chain. While the former pinpoints vital transmission sectors based on gas flow, the latter gauges sectoral significance by simulating complete disconnections, without being influenced by the number of times the sector appears in the supply chain path. Last, we develop a complete map of the embodied energy flows. Structural Path Analysis traces intermediate product flows, enabling the quantification of embodied energy across the supply chain and its representation as a tree-like structure. Our findings reveal significant implications of natural gas price fluctuations on key manufacturing industries, notably those engaged in international trade which are vulnerable to energy supply and price disruptions. We emphasize the critical role of sectors providing essential household goods and services, like energy, food, and transportation. Strategic interventions may be necessary to safeguard domestic demand and the competitive edge of vital sectors like automotive. As energy security remains a dynamic and evolving challenge, our research contributes significantly to the ongoing discourse on energy resilience, particularly for countries dependent on energy imports. Despite the fact our study is applied to the energy field, this framework is useful to analyze the footprint of any inputs, including usage of critical materials, environmental inputs, or emissions, which face similar complexities. |
| Keywords: | Energy-Extended Input-Output Aanalysis; Energy Supply Chain; Natural Gas Footprint; Embodied Energy; Betwenness Centrality; Hypothetical Extraction; Structural Path Analysis; Input-Output Price Model |
| JEL: | C67 Q43 H56 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2024_19&r=int |
| By: | Lee, Kyung Min; Kim, Mee Jung; Brown, J. David; Earle, John S.; Liu, Zhen |
| Abstract: | We evaluate the contributions of immigrant entrepreneurs to innovation in the U.S. using linked survey-administrative data on 199, 000 firms with a rich set of innovation measures and other firm and owner characteristics. We find that not only are immigrants more likely than natives to own businesses, but on average their firms display more innovation activities and outcomes. Immigrant-owned firms are particularly more likely to create completely new products, improve previous products, use new processes, and engage in both basic and applied R&D, and their efforts are reflected in substantially higher levels of patents and productivity. Immigrant owners are slightly less likely than natives to imitate products of others and to hire more employees. Delving into potential explanations of the immigrant-native differences, we study other characteristics of entrepreneurs, access to finance, choice of industry, immigrant self-selection, and effects of diversity. We find that the immigrant innovation advantage is robust to controlling for detailed characteristics of firms and owners, it holds in both high-tech and non-high-tech industries and, with the exception of productivity, it tends to be even stronger in firms owned by diverse immigrant-native teams and by diverse immigrants from different countries. The evidence from nearly all measures that immigrants tend to operate more innovative and productive firms, together with the higher share of business ownership by immigrants, implies large contributions to U.S. innovation and growth. |
| Date: | 2024–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:3kycm&r=int |
| By: | Sundarvalli Narayanaswami; Anumeha Saxena |
| Abstract: | Policy initiatives to manage gold imports in India have historically relied on the use of customs duty. However, the presence of a multi-duty structure essentially offers gold traders a legal channel to re-route imports with little risk of punitive action. In this paper, we present multiple instances from FY 2023-24 where importers have significantly exploited these loopholes to import at lower rates. We also observe that exhaustive identification of alternative routes that traders can potentially exploit is infeasible. Reactive interventions to curb the traders taking advantage of the loopholes or gaps in policies are also not helpful in the long run. Traders are quick enough to snoop out the best possible channels to maximize their outcomes, which systemically leads to uneven playing fields for different types of traders. Subsequently, we show that the use of multiple taxation structures as a tool to contain Current Account Deficit (CAD) and to facilitate a level-playing market for importers of various sizes, in-fact is counter-effective. Traders are able to quickly discover more loopholes and are able to legally increase their import volumes at lesser imports duty. The current multi-duty structures to manage gold imports and in turn, India’s current account deficit, continue to be weak. To curb such unintended discounts and imports arbitrage in the domestic gold market, it is recommended that a single import duty is levied on all variants of the precious metal. |
| Date: | 2024–05–08 |
| URL: | http://d.repec.org/n?u=RePEc:iim:iimawp:14711&r=int |
| By: | Victor Vasnetsov (Caribbean Environmental Development Institute); Catherine Vasnetsov (Caribbean Environmental Development Institute) |
| Abstract: | This paper investigates trends in cross-border Mergers and Acquisitions (M&A) in the European Union (EU), both pre-COVID and during the COVID epidemic, in its correlations with several major macroeconomic and financial factors. We established that EU cross-border M&A transaction volume during the 2000-2023 period was positively correlated to European stock market performance, exchange rate (Euro/US dollar), and EU economic uncertainty, and inversely correlated to stock market valuations and cost of debt capital. All these correlations were found to be highly statistically significant. COVID?s overall impact could be split into two different phases: first, the initial massive ?shock? (March ? June 2020) with its highly disruptive effect to all types of economic activities (including cross-border M&A). In the later, longer phase (July 2020 ? April 2022), COVID itself had no statistically significant impact on a strong rebound in the economy and M&A activity despite two larger waves of COVID epidemic (winters of 2020-21 and 2021-22). The latter could be explained by the rapid adjustment of economies and societies to effective remote work and by the massive monetary and fiscal interventions by EU governments. This unprecedented government stimulus had a rapid, positive, and sustainable effect on the economies and the stock market more than just offsetting the initial negative impact of COVID, and temporarily distorted historical relationships of M&A activity with macroeconomic factors. |
| Keywords: | EU mergers and acquisitions (M&A), Cross-border M&A, COVID-19 |
| JEL: | G34 I15 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iefpro:14115993&r=int |
| By: | Jos\'e M. Gaspar |
| Abstract: | We study the impact of economic integration on spatial development in a model where all consumers are inter-regionally mobile and have heterogeneous preferences regarding their residential location choices. This heterogeneity is the unique dispersion force in the model. We show that, under reasonable values for the elasticity of substitution among varieties of consumption goods, a higher trade integration always promotes more symmetric patterns, irrespective of the functional form of the dispersion force. We also show that an increase in the degree of heterogeneity in preferences for location leads to less spatial inequality. |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2404.09796&r=int |
| By: | Ryba, Ren |
| Abstract: | In the context of the Russian invasion of Ukraine and increasing global destabilisation, policy makers within the European Union have expressed the need to reduce the bloc's dependence on imported agricultural products such as livestock feed. One industry that has been promoted as an advantageous source of livestock feed is the insect farming industry. However, the insect industry's growth has not kept pace with optimistic expectations, and high labour and electricity costs in Europe appear to be driving major insect companies to expand production offshore. Solutions may include supporting the automation of insect farming, though automation may have harmful social consequences, or bringing additional land under cultivation to expand domestic production of maize and soy. |
| Date: | 2024–04–15 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:6wq4f&r=int |