nep-cna New Economics Papers
on China
Issue of 2022‒05‒02
23 papers chosen by
Zheng Fang
Ohio State University

  1. Does India Use Development Finance to Compete With China? A Subnational Analysis By Gerda Asmus; Vera Eichenauer; Andreas Fuchs; Bradley C. Parks
  2. Import liberalization as export destruction? Evidence from the United States By Breinlich, Holger; Leromain, Elsa; Novy, Dennis; Sampson, Thomas
  3. Opposing firm-level responses to the China shock: horizontal competition versus vertical relationships By Aghion, Philippe; Bergeaud, Antonin; Lequien, Matthieu; Melitz, Marc J.; Zuber, Thomas
  4. Worker and firm responses to trade shocks: the UK-China case By De Lyon, Joshua; Pessoa, João Paulo
  5. Mapping evolving population geography in China By Lei Dong; Rui Du; Yu Liu
  6. AI-tocracy By Beraja, Martin; Kao, Andrew; Yang, David Y.; Yuchtman, Noam
  7. Out of the window? Green monetary policy in China: window guidance and the promotion of sustainable lending and investment By Dikau, Simon; Volz, Ulrich
  8. Migration, Agglomeration and Attractiveness of Cities in China By Xubei Luo; Nong Zhu
  9. Omnia Juncta in Uno: Foreign Powers and Trademark Protection in Shanghai's Concession Era By Laura Alfaro; Cathy Bao; Maggie X. Chen; Junjie Hong
  10. Minimum wages and the China syndrome: causal evidence from US local labor markets By Heath Milsom, Luke; Roland, Isabelle
  11. Chinese investment in Turkey: the Belt and Road Initiative, rising expectations and ground realities By Gürel, Burak; Kozluca, Mina
  12. Can Aid Buy Foreign Public Support? Evidence from Chinese Development Finance By Lukas Wellner; Axel Dreher; Andreas Fuchs; Bradley C. Parks; Austin M. Strange
  13. The Incidence of the U.S.-China Solar Trade War By Sébastien Houde; Wenjun Wang
  14. Fintech, Cryptocurrencies, and CBDC: Financial Structural Transformation in China” By Franklin Allen; Xian Gu; Julapa Jagtiani
  15. Impacts of COVID-19 on Households in CAREC Countries By Azhgaliyeva, Dina; Mishra, Ranjeeta; Long, Trinh; Morgan, Peter
  16. Estimating Treatment Effects of Monetary Policies and Macro-prudential Policies: From the Perspectives of Macro-economic Policy Evaluation By Zeqin Liu; Zongwu Cai; Ying Fang
  17. The short-term effect of COVID-19 pandemic on China's crude oil futures market: A study based on multifractal analysis By Shao Ying-Hui; Liu Ying-Lin; Yang Yan-Hong
  18. Global distributions of capital and labor incomes: capitalization of the global middle class By Ranaldi, Marco
  19. Dynamics and Developments of Chinese M&A Transactions in the wake of the BRI: A comparison of Germany and CEEC By Kintzinger, Paulina; Horky, Florian
  20. Trade protection along supply chains By Bown, Chad P.; Conconi, Paola; Erbahar, Aksel; Trimarchi, Lorenzo
  21. The impact of non-tariff barriers on trade and welfare By Dhingra, Swati; Freeman, Rebecca; Huang, Hanwei
  22. AI Watch Index 2021 By Riccardo Righi; Camila Pineda Leon; Melisande Cardona; Josep Soler Garrido; Michail Papazoglou; Sofia Samoili; Miguel Vazquez-Prada Baillet
  23. Multilevel financing of sustainable infrastructure in China— policy options for inclusive, resilient and green growth By Ahmad, Ehtisham

  1. By: Gerda Asmus (Heidelberg University - Alfred Weber Institute for Economics); Vera Eichenauer (ETH Zurich, Switzerland); Andreas Fuchs (University of Goettingen, Department of Economics and Centre for Modern East Asian Studies); Bradley C. Parks (AidData, Global Research Institute, William and Mary, Center for Global Development)
    Abstract: China and India increasingly provide aid and credit to developing countries. This paper explores whether India uses these financial instruments to compete for geopolitical and commercial influence with China (and vice versa). To do so, we build a new geocoded dataset of Indian government-financed projects in the Global South between 2007 and 2014 and combine it with data on Chinese government-financed projects. Our regression results for 2,333 provinces within 123 countries demonstrate that India’s Exim Bank is significantly more likely to locate a project in a given jurisdiction if China provided government financing there in the previous year. Since this effect is more pronounced in countries where India is more popular relative to China and where both lenders have a similar export structure, we interpret this as evidence of India competing with China. By contrast, we do not find evidence that China uses official aid or credit to compete with India through co-located projects.
    Keywords: development finance, foreign aid, official development assistance, official credits, South-South Cooperation, China, India, geostrategic competition, geospatial analysis
    JEL: F34 F35 F59 H77 H81 O19 O22 P33 R58
    Date: 2022–01
  2. By: Breinlich, Holger; Leromain, Elsa; Novy, Dennis; Sampson, Thomas
    Abstract: How does import protection affect export performance? In trade models with scale economies, import liberalization can reduce an industry's exports by cutting domestic production. We find this export destruction mechanism reduced US export growth following the normalization of trade relations with China (PNTR). But there was also an offsetting boost to exports from lower input costs. We use our empirical results to calibrate the strength of scale economies in a quantitative trade model. Counterfactual analysis implies that while PNTR increased aggregate US exports relative to GDP, exports declined in the most exposed industries because of the export destruction effect. On aggregate, the US and China both gain from PNTR, but the gains are larger for China.
    Keywords: trade policy; import liberalization; comparative advantage; scale economies; China shock
    JEL: F12 F13 F15
    Date: 2021–06–30
  3. By: Aghion, Philippe; Bergeaud, Antonin; Lequien, Matthieu; Melitz, Marc J.; Zuber, Thomas
    Abstract: We decompose the "China shock" into two components that induce different adjustments for firms exposed to Chinese exports: a horizontal shock affecting firms selling goods that compete with similar imported Chinese goods, and a vertical shock affecting firms using inputs similar to the imported Chinese goods. Combining French accounting, customs, and patent information at the firm-level, we show that the horizontal shock is detrimental to firms' sales, employment and innovation. Moreover, this negative impact is concentrated on low-productivity firms. By contrast, we find a positive effect - although often not significant - of the vertical shock on firms' sales, employment and innovation.
    Keywords: competition shock; patent; firms; import
    JEL: F14 O19 O31 O33 O34
    Date: 2021–08–09
  4. By: De Lyon, Joshua; Pessoa, João Paulo
    Abstract: We exploit the recent surge in Chinese export growth to study the effects of a trade shock on workers and firms in a foreign market, the UK, in the period 2000-2007. We find that individuals initially employed in sectors highly exposed to growth in imports from China experienced lower income growth and remained out of employment longer than workers in sectors that were less exposed to import competition. The effects are heterogeneous, with initially lower-paid workers suffering more in terms of employment and earnings than those initially better-paid, and female workers experiencing a greater relative fall in total earnings than males, mostly through reduced years of employment. Plants in industries more exposed to Chinese products displayed lower employment growth and higher probability of going out of business than plants in sectors more insulated from competition with China, with stronger effects for larger plants.
    Keywords: globalisation; employment; wages; UK economy
    JEL: F14 F16 J30 J60
    Date: 2021–01–08
  5. By: Lei Dong; Rui Du; Yu Liu
    Abstract: China's demographic changes have important global economic and geopolitical implications. Yet, our understanding of such transitions at the micro-spatial scale remains limited due to spatial inconsistency of the census data caused by administrative boundary adjustments. To fill this gap, we manually collected and built a population census panel from 2010 to 2020 at both the county and prefectural-city levels. We show that the massive internal migration drives China's increasing population concentration and regional disparity, resulting in severe population aging in shrinking cities and increasing gender imbalance in growing cities.
    Date: 2022–03
  6. By: Beraja, Martin; Kao, Andrew; Yang, David Y.; Yuchtman, Noam
    Abstract: Can frontier innovation be sustained under autocracy? We argue that innovation and autocracy can be mutually reinforcing when: (i) the new technology bolsters the autocrat's power; and (ii) the autocrat's demand for the technology stimulates further innovation in applications beyond those benefiting it directly. We test for such a mutually reinforcing relationship in the context of facial recognition AI in China. To do so, we gather comprehensive data on AI firms and government procurement contracts, as well as on social unrest across China during the last decade. We first show that autocrats benefit from AI: local unrest leads to greater government procurement of facial recognition AI, and increased AI procurement suppresses subsequent unrest. We then show that AI innovation benefits from autocrats' suppression of unrest: the contracted AI firms innovate more both for the government and commercial markets. Taken together, these results suggest the possibility of sustained AI innovation under the Chinese regime: AI innovation entrenches the regime, and the regime's investment in AI for political control stimulates further frontier innovation.
    Keywords: artificial intelligence; autocracy; innovation; data; China; surveillance; political unrest; Global Professorships program
    JEL: O30 P00 E00 L50 L63 O40
    Date: 2021–11–02
  7. By: Dikau, Simon; Volz, Ulrich
    Abstract: Chinese monetary and financial authorities have been among the pioneers in promoting green finance. This article investigates the use of one specific monetary policy tool, namely window guidance, by the Peoples’ Bank of China (PBC) and the China Banking Regulatory Commission (CBRC) to encourage financial institutions to expand credit to sustainable activities and curb lending to heavy-polluting industries. ‘Window guidance’ is a relatively informal policy instrument that uses benevolent compulsion to ‘guide’ financial institutions to extend credit and allocate lending in line with official (government) targets. We investigate window guidance targets for the period 2001–2020 and find that ‘green’ targets were included by the CBRC from at least 2006 and by the PBC from 2007 to discourage lending to carbon-intensive and polluting industries and/or to increase support to sustainable activities. In 2014, both authorities stopped discouraging lending to carbon-intensive/polluting industries through window guidance. Sustainable objectives were subsequently also removed from the PBC's list of window guidance priority sectors at the start of 2019, ending the practice of green window guidance in China. Sustainability-enhancing window guidance targets were replaced and formalized through new ‘Guidelines for Establishing the Green Financial System’, reflecting efforts to move away from controls-based towards market-based policy instruments. Based on this analysis, the article draws four lessons for the design of green finance policies for other countries that seek to enhance sustainable finance and mitigate climate change and related risks.
    Keywords: sustainable finance; central banking and financial supervision; China; ES/R009708/1; ES/P005241/1; 71661137002; T&F deal
    JEL: G20
    Date: 2021–12–08
  8. By: Xubei Luo (The World Bank - The World Bank - The World Bank); Nong Zhu (INRS - Institut National de la Recherche Scientifique [Québec])
    Abstract: This study aims to identify drivers of spatial migration in the context of regional structural transformation towards clean and connected cities. Using two surveys of floating population covering all cities, conducted by China Family Planning Commission in 2010 and 2014, we examine the effect of city characteristics and local policies on the mobility of migrants. Our analyses show that city size, wage level, sectoral composition, ownership structure of enterprises, and healthcare service provision are important factors that condition migratory inflow; their effect varies across migrants with different characteristics. While most of migrants moved to the regional hubs, migration to cities other than hubs has increased in the 2010s and many medium and small cities have become more attractive.
    Keywords: Migration,Agglomeration,City,Structural Transformation,China
    Date: 2022–03–11
  9. By: Laura Alfaro; Cathy Bao; Maggie X. Chen; Junjie Hong
    Abstract: We investigate how firms adapt to trademark protection, an extensively used but underexamined form of IP protection, by exploring a historical precedent: China’s trademark law of 1923—an unanticipated and disapproved response to end foreign privileges in China. By exploiting a unique, newly digitized firm-employee-level dataset from Shanghai in 1872-1941, we show that the trademark law shaped firm dynamics on all sides of trademark conflicts. The law spurred growth and brand investment among Western firms with greater dependence on trademark protection. In contrast, Japanese businesses, which had frequently been accused of counterfeiting, experienced contractions while attempting to build their own brands after the law. The trademark law also led to new linkages with domestic agents, both within and outside the boundaries of Western firms, and the growth of Chinese intermediaries. At the aggregate level, trademark-intensive industries witnessed a net growth in employment and the number of product categories. A comparison with previous attempts by foreign powers—such as extraterritorial rights, bilateral treaties, and an unenforced trademark code—shows that those alternative institutions were ultimately unsuccessful.
    Keywords: trademark, firm dynamics, intermediaries, intellectual property institutions
    JEL: F20 D20 O10 O30 N40
    Date: 2022
  10. By: Heath Milsom, Luke; Roland, Isabelle
    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
    JEL: E24 F14 F16 J23 L60 R12
    Date: 2021–10–28
  11. By: Gürel, Burak; Kozluca, Mina
    Abstract: Turkey's inclusion in the Belt and Road Initiative in 2015 has raised the expectations of Turkish businesses and government concerning growth-generating investment from China. Existing studies on Chinese investments in Turkey lack sufficient data on the volume of investment, types of firms, and sectoral composition. Based on a novel dataset of Chinese investments in Turkey, this article contributes to filling this gap. We show that although Chinese investment in Turkey has increased considerably in recent years, it remains quite modest compared with investments from the West. Moreover, despite the expanding activities of Chinese technology companies, more than half of Chinese investment in Turkey consists of low value-added manufacturing, extraction of raw materials, and marketing of Chinese products. Overall, the developmental potential of Chinese investment in Turkey has not been radically different from other countries' investments.
    JEL: N0
    Date: 2022–01–28
  12. By: Lukas Wellner; Axel Dreher; Andreas Fuchs; Bradley C. Parks; Austin M. Strange
    Abstract: Bilateral donors use foreign aid to pursue soft power. We test the effectiveness of aid in reaching this goal by leveraging a new dataset on the precise commitment, implementation, and completion dates of Chinese development projects. We use data from the Gallup World Poll for 126 countries over the 2006–2017 period and identify causal effects with (i) an event-study model that includes high-dimensional fixed effects, and (ii) instrumental-variables regressions that rely on exogenous variation in the supply of Chinese government financing over time. Our results are nuanced and depend on whether we focus on subnational jurisdictions, countries, or groupings of countries. On average, we estimate that the completion of one additional development project in a recipient country increases public support for the Chinese government by more than 3 percentage points in the short run and 0.2 percentage points in the longer run.
    Keywords: development finance, foreign aid, aid events, public opinion, government approval, soft power, China, Gallup World Poll
    JEL: F35 F59 H73 H77 O19 P33
    Date: 2022
  13. By: Sébastien Houde (Grenoble Ecole de Management, 38000 Grenoble, France. Research affiliate at CEPE, ETH Zurich and Research Fellow at E4S); Wenjun Wang (Agricultural Bank of China)
    Abstract: This paper investigates the distributional welfare effects of the recent trade war in the solar manufacturing sector resulting from the U.S. government-initiated trade tariffs against Chinese solar manufacturers. Our structural econometric model incorporates the vertical structure between upstream solar manufacturers and downstream solar installers. Counter-factual simulations show the tariffs had a small positive impact on U.S. manufacturers but a large negative impact on U.S. consumers and installers. Chinese manufacturers were also negatively economically affected. Overall, our results suggest the solar trade war led to large welfare losses in both countries and substantially slowed the adoption of solar photovoltaic technology.
    Keywords: Trade War; Solar Industry; Structural Econometric Model; Pass-Through
    JEL: F14 L10 Q50
    Date: 2022–04
  14. By: Franklin Allen; Xian Gu; Julapa Jagtiani
    Abstract: Fintech and decentralized finance have penetrated all areas of the financial system and have improved financial inclusion in the last decade. In this paper, we review the recent literature on fintech, cryptocurrencies, stablecoins, and central bank digital currencies (CBDCs). There are important implications from the rise of fintech and the introduction of stablecoins and CBDCs in recent years. We provide an overview of China’s experience in fintech, focusing on payments, digital banking, fintech lending, and the recent progress on its CBDC pilots (e-CNY). We also discuss important considerations in designing effective cryptocurrency regulations. Cryptocurrency regulations could promote growth of innovations through enhanced public confidence in this market. The e-CNY could become mainstream in the global market through effective regulations, which provide incentives and protection to market participants. A key factor to success for digital currencies has been their widespread adoption. If the Chinese e-CNY were to become a mainstream currency, the introduction of CBDC could potentially offer solutions to existing problems inherent in traditional financial systems.
    Keywords: fintech; cryptocurrency regulations; stablecoins; CBDCs; e-CNY; China
    JEL: G21 G28 G18 L21
    Date: 2022–04–11
  15. By: Azhgaliyeva, Dina (Asian Development Bank Institute); Mishra, Ranjeeta (Asian Development Bank Institute); Long, Trinh (Asian Development Bank Institute); Morgan, Peter (Asian Development Bank Institute)
    Abstract: The impacts of the COVID-19 outbreak have heavily affected CAREC member countries, which include Afghanistan, Azerbaijan, Georgia, Kazakhstan, the Kyrgyz Republic, Mongolia, Pakistan, the People’s Republic of China (PRC), Tajikistan, Turkmenistan, and Uzbekistan. The COVID-19 crisis and the resulting falls in demand and supply due both to uncertainty and policy measures such as lockdowns, “social distancing,” and travel restrictions are having a severe impact on CAREC member countries. In order to better understand these impacts, computer-assisted telephone (CATI) interviews of households were conducted in 10 countries from the CAREC region (excluding the PRC). We estimate the impact of COVID-19 on income declines, expenditure changes, and financial difficulty in December 2020 compared with June 2020.
    Keywords: COVID-19; CAREC; Central Asia; household survey; household income; employment
    JEL: D14 G51 H12 H84 I10 I24 J60
    Date: 2022–01
  16. By: Zeqin Liu (School of Statistics, Shanxi University of Finance and Economics, Taiyuan, Shanxi 030006, China); Zongwu Cai (Department of Economics, The University of Kansas, Lawrence, KS 66045, USA); Ying Fang (The Wang Yanan Institute for Studies in Economics, Xiamen University, Xiamen, Fujian 361005, China and Department of Statistics & Data Science, School of Economics, Xiamen University, Xiamen, Fujian 361005, China)
    Abstract: Since the global financial crisis in 2008, an increasing number of economists, central banks and regulators across the world has realized the occurrence of fundamental changes in the dynamics of the economy. The breakout of the global financial crisis highlights the importance of financial shocks. Aiming to maintaining financial stability, Bank for International Settlements (BIS) initialized macro-prudential policies in the early of 2009. China, as one of important countries pioneering the practice of macro-prudential policies, adopted a so called two-pillar regulatory framework of monetary policies and macro-prudential policies to safeguard the macroeconomic and financial stability. However, due to the coincidence of policy targets and the interdependence in transmission mechanisms between monetary policies and macro-prudential policies, the practice of the two-pillar regulatory framework raises some important coordination issues (Beau et al. 2012). The aim of this paper is to discuss theoretically the coordination mechanisms between monetary policies and macro-prudential policies, and then evaluate empirically the effects of the practice of the two-pillar regulatory framework on policy targets, such as economic growth, inflation, and financial stability in China. One of main contributions of this paper is to estimate the causal effects of China’s two-pillar regulatory framework from 2007 to 2017 by adopting new macroeconomic policy evaluation methods proposed by Angrist and Kuersteiner (2011) and Angrist et al. (2018). Compared to mainstream methods such as dynamic stochastic general equilibrium (DSGE) models, the macroeconomic policy evaluation methods based on Rubin’s causal model alleviate the risk of model misspecification by avoiding to specify how an economy works and how outcome variables are determined. Moreover, the concept of dynamic treatment effect developed in the framework of macroeconomic policy evaluation coincides with the nonlinear impulse function induced by structural models. In other words, the new method can complement the DSGE models by providing parallel estimates insensitive with structural model setup. Another major contribution of this paper is to extend the existing macroeconomic policy evaluation methods by adopting statistical learning methods to estimating policy propensity score functions using macroeconomic big data and proposing a new test statistic for testing the conditional unconfoundedness assumption. It is well known that a major challenge in empirical macroeconomic research is how to capture exogenous policy shocks to identify causal effects. We address this issue in two aspects. First, in order to fully use all information available at the current period, we propose to model policy-making process based on macroeconomic big data and adopt statistical learning methods to solve the high dimensional problem. Moreover, we propose a new statistic to test the exogeneity of the residuals estimated from the policy propensity scores using macroeconomic big data, which is a conditional unconfoundedness in the context of time series data. The latter actually provides a testable method of evaluating the validity of the use of the macroeconomic policy evaluation method. Finally, our empirical findings can be summarized as follows. First, when macro-prudential policies remaining neutral, monetary policies can effectively manage the aggregate demand and fulfill the output target by adjusting money supply and credit growth,while the transmission channel through interest rates does not work effectively. Second, when monetary policies remaining neutral, macro-prudential policies can maintain financial stability as expected, and at the same time, there are little effects on real economy targets. Last, when monetary policies and macro-prudential policies are jointly implemented, a same direction policy combination can further strengthen the effect on the output target and accelerate the process towards the target. However, the same direction combination has no significant exaggerating impact on financial stability variables. In addition, we find that the same direction combination may cause counteracting effects on some target outcome variables, such as the growth rate of capital adequacy ratio and the risk-weighted asset ratio. We ascribe the counteracting effect to the argument that the same direction policy combination weakens the negative correlations between monetary policies and banks’ risk-taking level.
    Keywords: Monetary Policy; Macro-prudential Policy; Two-pillar Regulatory Framework; Macro-economic Policy Evaluation
    JEL: E60 E50 G28
    Date: 2022–04
  17. By: Shao Ying-Hui; Liu Ying-Lin; Yang Yan-Hong
    Abstract: The ongoing COVID-19 shocked financial markets globally, including China's crude oil future market, which is the third most traded crude oil futures after WTI and Brent. As China's first crude oil futures accessible to foreign investors, the Shanghai crude oil futures (SC) have attracted significant interest since launch at the Shanghai International Energy Exchange. The impact of COVID-19 on the new crude oil futures is an important issue for investors and policy makers. Therefore this paper studies the short-term influence of COVID-19 pandemic on SC via multifractal analysis. We compare market efficiency of SC before and during the pandemic with the multifractal detrended fluctuation analysis and other commonly-used random walk tests. Then we generate shuffled and surrogate data to investigate the components of multifractal nature in SC. And we examine cross-correlations between SC returns and other financial assets returns as well as SC trading volume changes by the multifractal detrended cross-correlation analysis. The results show that market efficiency of SC and its cross-correlations with other assets increase significantly after the outbreak of COVID-19. Besides that, the sources of its multifractal nature have changed since the pandemic. The findings provide evidence for the short-term impacts of COVID-19 on SC. The results may have important implications for assets allocation, investment strategies and risk monitoring.
    Date: 2022–04
  18. By: Ranaldi, Marco
    Abstract: This article studies the global distributions of capital and labor incomes among individuals in 2000 and 2016. By constructing a novel database covering approximately the 80% of the global output and the 60% of the world population, two major findings stand out. First, the world underwent an important process of capitalization. The share of world individuals with positive capital income rose from 20% to 32%. Second, the global middle class benefited the most, in relative terms, from such capitalization process, and China is the main responsible of this global trend. The findings of this paper are robust to changes in the income definition, and top-income adjustments. The global composition of capital and labor incomes is, therefore, more equal today than it was twenty years ago.
    Keywords: global inequality; capital ad labor; compositional inequality
    JEL: D31
    Date: 2022–02
  19. By: Kintzinger, Paulina; Horky, Florian
    Abstract: China's "Belt-and-Road" initiative is one of the largest economic policy projects in history to date. It comes hand in hand with investments in almost all areas of life in 164 countries. In this article, dynamics of Chinese M&A activities in Europe related to the BRI are investigated. Germany as Europe's largest economy is compared to the countries of the former 17+1 Forum by using a modern sequential explanatory mixed-methods research design. The investigation examines four main fields: the general scope, dynamics over time, sectoral focus and short-term financial development of target companies. Hereby, we find crucial differences but also similarities of the regions studied. Based on the quantitative results as well as the in-depth expert insights, implications for politics and business are finally derived.
    Keywords: M&A Transactions, CEEC, Germany, BRI, Economic Policy
    JEL: E61 F5 G34
    Date: 2022–04–04
  20. By: Bown, Chad P.; Conconi, Paola; Erbahar, Aksel; Trimarchi, Lorenzo
    Abstract: During the last decades, the United States has applied increasingly high trade protection against China. We combine detailed information on US antidumping (AD) duties— the most widely used trade barrier — with US input-output data to study the effects of trade protection along supply chains. To deal with endogeneity concerns, we propose a new instrument for AD protection, which combines exogenous variation in the political importance of industries with their historical experience in AD proceedings. We find that tariffs have large negative effects on downstream industries, decreasing employment, wages, sales, and investment. Our baseline estimates for 1988-2016 indicate that, due to AD protection against China, around 1.8 million US jobs were lost in downstream industries, with no significant job gains in protected sectors. When we extend the analysis to measures introduced under President Trump, we find that around 500,000 jobs were lost during the first two years of his term. We also provide evidence of the mechanisms behind the negative effects of protection along supply chains: AD duties decrease imports and raise production costs for downstream industries.
    Keywords: trade protection; supply chains; input-output linkages; employment
    JEL: F13 D57
    Date: 2021–01–06
  21. By: Dhingra, Swati; Freeman, Rebecca; Huang, Hanwei
    Abstract: Deep trade agreements are widespread and have taken the world beyond tariff liberalization in goods trade. As the importance of global supply chains and the services sector increased across the world, shallow tariff reductions gave way to deeper commitments that address non-tariff barriers and behind the border barriers to trade. This paper shows that deep trade agreement commitments increase trade by 25% for trade in goods and by even more for trade in services. Taking reduced form estimates to a quantitative model enables general equilibrium analysis of the trade and welfare impacts of deep trade agreements. We find that China, India, and the Eastern European bloc have benefited the most from trade agreements since the Uruguay Round. While a large share of the gains to Eastern Europe come from deep commitments during its accession to the EU, gains for China and India come largely from tariff reductions. Applying the framework to ex-ante analysis of the UK’s departure from the deepest trade agreement in the world suggests that the potential benefits the UK may gain, post-Brexit, from future deep agreements with the EU and selected nonEU trade partners would not offset its losses from leaving the EU. Overall, deep trade agreements have contributed over 40% to the welfare gains from trade globally and even more so for advanced economies.
    Keywords: trade agreements; deep agreements; economic integration; provisions; non-tariff barriers
    JEL: F14 F10 F15
    Date: 2021–01–12
  22. By: Riccardo Righi (European Commission - JRC); Camila Pineda Leon (European Commission - JRC); Melisande Cardona (European Commission - JRC); Josep Soler Garrido (European Commission - JRC); Michail Papazoglou (European Commission - JRC); Sofia Samoili (European Commission - JRC); Miguel Vazquez-Prada Baillet (European Commission - JRC)
    Abstract: This report provides the analysis of multiple indicators related to the development of artificial intelligence from several perspectives. Although the geographical focus is on the EU27, when possible we provide a comparison with major worldwide AI powerhouses, i.e., the US and China, among others. Also, when available, an indicator is provided for the 27 EU Member States. The analysis is structured in five dimensions: (i) global view on the AI landscape, (ii) industry, (iii) research and development (R&D), (iv) technology, and (v) societal aspects. The results show, as expected, that AI is in a phase of technological evolution and improvement. The US is in a leading position in the worldwide landscape in economic terms. China follows, notably due to a very prominent patenting activity in the field. The EU is third, but several elements support the thesis that the distance with the two leading countries is less than often suggested. The analysis reveals that the EU performs remarkably well in R&D - beyond the consideration of EC-funded projects -. Also, the EU demonstrates specialisation in AI Services and in Autonomous Robotics. Also, the EU shows very positive dynamics in trade in industrial robotics and in new robotics start-ups. Regarding investments in AI, we observe a positive signal for the potential development of the domain in the Union, as the level of private and public investments has increased in all of the 27 EU Member States in the last year.
    Keywords: artificial intelligence, index, statistics, global landscape, industry, technology, research and development, societal aspects
    Date: 2022–03
  23. By: Ahmad, Ehtisham
    Abstract: COVID-19 has amplified existing imbalances, institutional and financing constraints associated with a development strategy that did not take sufficient account of challenges with emissions, environmental damage and health risks associated with climate change in a number of countries, including China. The recovery from the pandemic can be combined with appropriately designed investments that take into account human, social, natural and physical capital, as well as distributional objectives, that can also address commitments under the Paris agreement. An important criterion for sustainable development is that the tax regimes at the national and sub-national levels should reflect the same criteria as the investment strategy. Own-source revenues, are essential to be able to access private financing, including local government bonds and PPPs in a sustainable manner. Governance criteria are also important including information on the buildup of liabilities at all levels of government, to ensure transparent governance. Despite differences in political systems, the Chinese experiences are relevant in a wide range of emerging market countries as the measures utilize institutions and policies reflecting international best practices, including modern tax administrations for the VAT, and income taxes, and benefit-linked property taxes, as well as utilization of balance sheets information consistent with the IMF’s Government Financial Statistics Manual, 2014. The options have significant implications for policy advice and development cooperation for meeting global climate change goals while ensuring sustainable employment generation with transparency and accountability.
    Keywords: environmental policy; human capital; intergovernmental fiscal relations; investment; taxation and subsidies
    JEL: R14 J01 F3 G3
    Date: 2021–05–06

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