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on International Trade |
| By: | Behar, Alberto; Criville, Laia Cirera i |
| Abstract: | Free trade agreements lead to a rise in bilateral trade regardless of whether the signatories are developed or developing countries. Furthermore, the percentage increase in bilateral trade is higher for South-South agreements than for North-South agreements. In this paper, the results are robust across a number of gravity model specifications in which the analysis controls for the endogeneity of free trade agreements (with bilateral fixed effects) and also takes account of multilateral resistance in both estimation (with country-time fixed effects) and comparative statics (analytically). The analytical model shows that multilateral resistance dampens the impact of free trade agreements on trade by less in South-South agreements than in North-South agreements, which accentuates the difference implied by the gravity model coefficients, and that this difference gets larger as the number of signatories rises. For example, allowing for lags and multilateral resistance, a four-country North-South agreement raises bilateral trade by 53 percent while the analogous South-South impact is 107 percent. |
| Keywords: | Free Trade,Trade Law,Trade Policy,Economic Theory&Research,Emerging Markets |
| Date: | 2011–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5626&r=int |
| By: | Martin, Philippe; Mayer, Thierry; Thoenig, Mathias |
| Abstract: | We analyze the interaction of economic and political determinants of free trade agreements (FTA). In addition to standard trade gains, FTAs can promote peaceful relations by offering a political forum and by increasing the opportunity cost of conflicts that disrupt trade. If policy makers believe in such pacifying effects of FTAs, country pairs with large trade gains from FTAs and a high probability of conflict are more likely to sign a FTA. Using data on the 1950-2000 period, we show that this complementarity between economic and political gains is at work in the geography of FTAs. Country pairs characterized by a high frequency of old wars - which we use as a proxy of the latent probability of conflict - are shown to be more likely to sign FTAs, the more so the higher the trade gains from a FTA. These trade gains are estimated by a theory-driven empirical strategy to disentangle them from the political factors. We also show that, contrary to old wars, recent wars make it more difficult to negotiate a FTA. This suggests the existence of windows of opportunity to lock in FTAs and peace. Finally, multilateral trade openness, because it reduces the opportunity cost of bilateral conflict, increases the political incentive to sign FTAs. |
| Keywords: | Free Trading Arrangements; Trade; War |
| JEL: | F12 F15 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpm:docweb:1019&r=int |
| By: | De Sousa, José; Mirza, Daniel; Verdier, Thierry |
| Abstract: | We study the impact of transnational terrorism diffusion on security and trade. We set a simple theoretical model predicting that the closer a country to a source of terrorism, the higher the negative spillovers on its trade. The idea is that security measures, which impede trade, are directed both against the source country of terror and its neighbor countries where terrorism may diffuse. In contrast, we demonstrate that countries located far from terror could benefit from an increase in security by trading more. Taken to the test, we empirically document these predictions. We find (1) a direct negative impact of transnational terrorism on trade; (2) an indirect negative impact emanating from terrorism of neighbor countries; and (3) that trade is increasing with remoteness to terror. These results are robust to various definitions of the neighboring relationships among countries. |
| Keywords: | Terrorism; Trade; Security |
| JEL: | F12 F13 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpm:docweb:1017&r=int |
| By: | Denise Konan (University of Hawaii); Keith E. Maskus (Department of Economics, University of Hawaii at Manoa) |
| Abstract: | We consider analytically and numerically the welfare tradeoffs inherent in a preferential trade area (PTA) with products differentiated by region of origin. For a small open economy in such a setting, welfare gains are associated with higher trade volumes within the PTA. However, welfare losses are induced by declining tariff revenues on trade with nonmember countries. We show that both effects are concave, while one is a non-monotonic and the other a potentially non-monotonic function of pre-PTA partner trade shares. Therefore, the relationship between initial partner import shares and direct static welfare impacts of a PTA are theoretically ambiguous. This finding contrasts with conventional results in the homogeneous-goods case, whereby the smaller is the pre-agreement trade volume with a potential partner the more beneficial is a PTA. |
| Keywords: | preferential trade agreements, differentiated products |
| JEL: | F13 F15 |
| Date: | 2011–02–14 |
| URL: | http://d.repec.org/n?u=RePEc:hai:wpaper:201101&r=int |
| By: | Behar, Alberto; Edwards, Lawrence |
| Abstract: | Do Southern African Development Community countries trade enough with each other and with the rest of the world? Although its share of world trade has fallen, appropriate benchmarking shows that, controlling for gross domestic product and other characteristics, Southern African Development Community countries have experienced an increase in openness that is comparable to other developing countries. Once market size and geography are taken into account, trade between Southern African Development Community countries is actually high. Southern African Development Community countries also trade more products with each other than they do with the rest of the world. In this sense, and contrary to stylized fears, the Southern African Development Community region is quite integrated. Although the Southern African Development Community has reduced its tariffs, the structure remains complex and could be lowered on intermediates. Other impediments make it costly and difficult to move goods, but are at levels that are comparable with countries at similar levels of development. Although this may be surprising, there is still scope for improvement and the disadvantageous geography of the Southern African Development Community makes it important for other trade impediments to be reduced. |
| Keywords: | Free Trade,Environmental Economics&Policies,Economic Theory&Research,Trade Policy,Trade Law |
| Date: | 2011–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5625&r=int |
| By: | Susanto, Dwi; Rosson, C. Parr |
| Abstract: | This study empirically investigates the possible link between financial development and international agricultural trade using binomial models of the gravity equations. Financial development is measured by a constructed financial reforms index. The results provide some evidence on the positive impacts of financial reform on agricultural exports. The results further indicate that countries with a greater degree of financial development as exhibited by advanced countries tend to have larger impacts on agricultural exports. Bilateral trade involving advanced countries has a larger magnitude of impacts of financial reforms on agricultural trade than those involving developing countries |
| Keywords: | agricultural trade, binomial model, financial reform, gravity model, International Development, International Relations/Trade, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ags:saea11:98479&r=int |
| By: | Crozet, Matthieu; Trionfetti, Federico |
| Abstract: | Guided by empirical evidence we consider firms heterogeneity in terms of factor intensity. We show that Heckscher-Ohlin comparative advantage and firm-level relative factor-intensity interact to jointly explain the observed differences in relative sales. Firms whose rela- tive factor-intensity matches up with the comparative advantage of the country have lower relative marginal costs and larger relative sales than firms who do not. Our empirical analysis, conducted us- ing data for a large panel of European firms, supports these predic- tions. Our findings also provide an original firm-level verification of the Heckscher-Ohlin model based on the effect of comparative advantage on firms relative sales. |
| Keywords: | Factor intensity; Firms heterogeneity; Test of trade theories. |
| JEL: | F1 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpm:docweb:1101&r=int |
| By: | Estevadeordal, Antoni (Asian Development Bank Institute); Shearer, Matthew (Asian Development Bank Institute); Suominen, Kati (Asian Development Bank Institute) |
| Abstract: | The Americas have been a key driver of regional trade agreements (RTAs) since the 1990s. This study considers the effect of these agreements on trade liberalization, and the lessons that this offers for other parts of the world, notably Asia. It finds broad geographical coverage of RTAs in the Americas, and evidence that these agreements have broadened and deepened liberalization. It stresses the importance of looking beyond tariffs on goods, to consider liberalization of services and removal of non-tariff barriers, both for academics assessing the true extent of liberalization, and for policymakers looking to ensure well-functioning RTAs. It suggests that RTAs can encourage broader liberalization in Asia, but some sectors will be resistant to liberalization. Moreover, efforts must be made to harmonize the provisions of RTAs, to avoid costly multiplication of rules and to ensure a web of bilateral deals does not undermine multilateral trade. |
| Keywords: | regional trade agreements; trade liberalization; liberalization of services; non-tariff barriers; multilateral trade agreements; bilateral trade agreements |
| JEL: | F13 F15 F36 F42 J44 |
| Date: | 2011–04–08 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0277&r=int |
| By: | Dermot Leahy; Catia Montagna |
| Abstract: | We study the make-or-buy decision of oligopolistic firms in an industry in which final good production requires specialised inputs. Firms’ mode of operation decision depends on both the incentive to economize on costs and on strategic considerations. We explore the strategic incentives to outsource and show that asymmetric equilibria emerge, with firms choosing different modes of operation, even when they are ex-ante identical. With ex-ante asymmetries, higher cost firms are more likely to outsource. We apply our model to a number of different international trading setups. |
| Keywords: | Outsourcing, Vertical Integration, Trade Liberalisation, Oligopoly |
| JEL: | F12 L13 L14 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:dun:dpaper:251&r=int |
| By: | Jiangyong, Lu; Yi, Lu; Zhigang, Tao |
| Abstract: | This paper provides the first evidence about pure exporters (i.e., firms exporting all of their output to the foreign market) -- a phenomenon overlooked and cannot be explained in the existing literature. It then offers a generalized model of Melitz (2003) for examining the existence and behavior of pure exporters. In particular, pure exporters arise when the export market is sufficiently large -- a situation more likely to hold in developing countries as opposed to large developed countries; and their productivity levels are above those of non-exporters, but below those of firms having both domestic sales and export. These theoretical predictions are borne out in a data of Chinese manufacturing firms for the period of 1998-2005. |
| Keywords: | Pure Exporter; Firm Heterogeneity; Exporting Behavior |
| JEL: | F23 F12 D24 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:29966&r=int |
| By: | Robert C. Feenstra; Zhiyuan Li; Miaojie Yu |
| Abstract: | This paper examines why credit constraints for domestic and exporting firms arise in a setting where banks do not observe firms' productivities. To maintain incentive-compatibility, banks lend below the amount needed for first-best production. The longer time needed for export shipments induces a tighter credit constraint on exporters than on purely domestic firms, even in the exporters' home market. Greater risk faced by exporters also affects the credit extended by banks. Extra fixed costs reduce exports on the extensive margin, but can be offset by collateral held by exporting firms. The empirical application to Chinese firms strongly supports these theoretical results, and we find a sizable impact of the financial crisis in reducing exports. |
| JEL: | D8 F1 G2 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:16940&r=int |
| By: | Cadot, Olivier; Carrere, Celine; Strauss-Kahn, Vanessa |
| Abstract: | This paper explores the evolution of OECD imports over time, measuring their concentration across origin countries at the product level. The authors find evidence of diversification followed, in the very last years of the sample period (post-2000), by a slight re-concentration. This re-concentration is entirely explained by the growing importance of Chinese products in OECD imports. They also find evidence of relatively more volatile concentration levels for goods with high quality heterogeneity, with temporary phases of re-concentration on goods with higher unit values. Both findings are consistent with a simple model of adverse selection and quality screening by OECD buyers predicting that diversification happens by"bouts"rather than continuously, with temporary re-concentration on higher-quality suppliers. |
| Keywords: | Markets and Market Access,Microfinance,Labor Policies,E-Business,Agribusiness&Markets |
| Date: | 2011–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5627&r=int |
| By: | Joseph W. Gruber; Filippo di Mauro; Bernd Schnatz; Nico Zorell |
| Abstract: | Global and U.S. trade declined dramatically in the wake of the global financial crisis in late 2008 and early 2009. The subsequent recovery in trade, while vigorous at first, gradually lost momentum in 2010. Against this backdrop, this paper explores the prospects for global and U.S. trade in the medium term. We develop a unified empirical framework – an error correction model – that exploits the cointegrating relationship between trade and economic activity. The model allows us to juxtapose several scenarios with different assumptions about the strength of GDP growth going forward and the relationship between trade and economic activity. Our analysis suggests that during the crisis both world trade and U.S. exports declined significantly more than would have been expected on the basis of historical relationships with economic activity. Moreover, this gap between actual and equilibrium trade is closing only slowly and could persist for some time to come. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgif:1017&r=int |
| By: | Ortega, Francesc (Universitat Pompeu Fabra); Peri, Giovanni (University of California, Davis) |
| Abstract: | Two large but separate bodies of literature analyze the economic effects of international trade and immigration. Given that several factors are important determinants of both trade and migration flows, the previous studies are vulnerable to a potentially serious omitted-variables bias, questioning the validity of existing estimates of the effects of trade and immigration on income. This paper provides estimates of the effects of trade and immigration on income in a unified framework. We also provide a useful decomposition of the channels at work in terms of the employment rate, the capital intensity, and total factor productivity of the receiving economy. We assemble panel data on immigration flows, output, employment and capital stocks for thirty OECD countries over the period 1980-2007. In order to identify the causal effects of trade and immigration on economic outcomes we adopt and extend the gravity-based approach in Frankel and Romer (1999). Our predictors for trade and immigration flows are based on geography and the demographic trends of each country’s trade and migration partners. We find that immigration has a large, positive effect on the employment rate of the receiving country. However, it leaves income per capita unaffected because of an offsetting negative effect on TFP. In contrast, trade flows appear to increase income per capita, mainly through TFP growth, and have no impact on the employment rate. The positive employment effect of immigration is the most robust of all the effects identified in this paper. |
| Keywords: | trade, international migration, income, geography |
| JEL: | F22 E25 J61 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5604&r=int |
| By: | Arnaud Costinot; Jonathan Vogel; Su Wang |
| Abstract: | This paper develops an elementary theory of global supply chains. We consider a world economy with an arbitrary number of countries, one factor of production, a continuum of intermediate goods, and one final good. Production of the final good is sequential and subject to mistakes. In the unique free trade equilibrium, countries with lower probabilities of making mistakes at all stages specialize in later stages of production. Because of the sequential nature of production, absolute productivity differences are a source of comparative advantage among nations. Using this simple theoretical framework, we offer a first look at how vertical specialization shapes the interdependence of nations. |
| JEL: | F1 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:16936&r=int |
| By: | Lucas Bretschger (ETH Zurich, Switzerland); Simone Valente (ETH Zurich, Switzerland) |
| Abstract: | The theory of welfare accounting shows that comprehensive measures of net investment can be used to test whether an economy is following unsustainable paths of consumption. However, the notion of net investment used in most applied studies rules out technological progress and terms-of-trade gains from international trade. This paper considers an augmented expression of net investment derived from a dynamic growth model featuring international trade in different types of resource inputs, exogenous productivity growth in final sectors, and cost-reducing progress in resource extraction. Calculating augmented net investment for the world's top twenty oil producers, we show that the difference with standard non-augmented measures can be large and may even revert some established con- clusions regarding sustainability: prospects are more favorable than previously thought in oil-exporting countries endowed with large reserves like Angola, Azerbaijan, Kuwait, Saudi Arabia and Venezuela. In oil-importing economies, future consumption possibilities are limited by the lack of expected rental incomes from future resource exports. |
| Keywords: | International Trade, Natural Resources, Net Investment, Sustainability, Technological Progress |
| JEL: | E22 F11 O11 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:eth:wpswif:11-144&r=int |
| By: | Remco H. Oostendorp (VU University Amsterdam, the Netherlands); Doan Hong Quang (World Bank Country Office, and Centre for Analysis and Forecasting (CAF), Vietnam) |
| Abstract: | Several studies have identified the impact of trade liberalization in developing countries on the return to education within a Mincerian framework through a difference-in-difference estimator or with industry-level measures of trade openness. These studies have typically estimated the return to education in terms of changes in wages rather than employment, effectively ignoring the fact that trade liberalization affects not only wages but also employment opportunities. In this paper we use four large-scale representative household surveys from Vietnam for the period 1998-2006 to estimate the impact of trade liberalization on the return to education taking into account both changes in wages and employment. The results show that the impact was large in Vietnam but is severely underestimated if changes in employment opportunities are ignored. |
| Keywords: | trade liberalization; return to education; employment; Vietnam |
| JEL: | F16 J21 J31 O1 |
| Date: | 2011–03–28 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20110060&r=int |
| By: | Chia-Hui Lu (City University of Hong Kong); Shin-Kun Peng (Institute of Economics, Academia Sinica, Taipei, Taiwan; National Taiwan University); Ping Wang (Department of Economics, Washington University in St. Louis) |
| Abstract: | We construct a uni ed framework to study under what conditions one of the three frequently observed organizational structures of international middle-product production may arise in equilibrium: (i) separation of upstream and downstream firms with middle-product trade, (ii) vertical integration of upstream and downstream firms, and (iii) global sourcing with upstream fi rms internalizing design and marketing tasks while only outsourcing the final good production to subcontractors. We examine how conventional comparative advantage (search, communication, trade and labor diversi cation costs) and the concern of the product-defect risk arising from outsourcing jointly determine the organization of production and trade. We show that the potential availability of one organizational structure can change the trade-off of the other two structures, thereby making simple pairwise comparison invalid. Moreover, we fi nd that an equilibrium organizational structure may be suboptimal, as a result of conflicting effects on firm's payoffs and the consumer's surplus. Furthermore, we calibrate various economies and illustrate why different organizational structures may be more frequently observed in different economic environments. |
| Keywords: | Middle-Product Trade, Vertical Mergers, Global Sourcing |
| JEL: | F20 F21 F23 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:sin:wpaper:11-a003&r=int |
| By: | Cissokho, Lassana |
| Abstract: | In this paper, I use a dynamic recursive computable general equilibrium to evaluate, for the economy of Senegal, the dynamic effects of an economic Partnership Agreement between West African countries and the European Union. In the simulation, the liberalization scheme is designed in a way similar to the interim agreement signed by Cote dâIvoire and Ghana. The effects described are the shifts from the baseline numbers. I found that the production of agricultural goods will decrease, affecting employment negatively, particularly in unskilled labor, since this sector is very labor intensive. In fact, employment drops at around 0.2 percent a year, during the simulation period (2012-2030). GDP grows on average by 1.9 percent a year. The effects of the economic partnership agreement closely mirror the results of a free trade agreement between Senegal and the European Union, implying that a customs union between West African countries is not necessary to reap of the benefit of the former. |
| Keywords: | Economic Partnership Agreement, Free Trade Area, Dynamic Computable General Economic, Crop Production/Industries, International Relations/Trade, |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:ags:saea11:97622&r=int |
| By: | Babool, Md. Ashfaqul Islam; Saghaian, Sayed |
| Abstract: | This study investigates the effects of the current recession on foreign direct investment (FDI) in the food sectors of developing countries. The study tests the hypothesis that the economic recession adversely affects FDI flows in the food sector. The specific objectives are: to identify determinants that influence FDI inflows; to develop an econometric model to estimate changes in FDI inflows as influenced by factor determinants, including the present recession; and to compare the impact of the recession on FDI in the food system in different developed and developing economies. |
| Keywords: | Recession, FDI, Developing countries, Agricultural and Food Policy, International Development, International Relations/Trade, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ags:saea11:98786&r=int |
| By: | Li, Xiaofei; Gunter, Lewell F.; Epperson, James E. |
| Abstract: | In recent years, the United States has taken the lionâs share of the Chinese broiler meat import market, ranging from 53.0% to 84.9%. Under the threat of rising poultry imports from the United States Chinese producers asked for an investigation into chicken prices, accusing American poultry firms of dumping. The investigation led to antidumping duties on U.S. chicken imports as of February 13, 2010, ranging from 43.1% to 105.4%. This study is designed to evaluate U.S.-China poultry bilateral trade relations under the new tariff using an excess-supply-excess-demand model. The structural model is estimated using GMM with HAC (heteroskedasticity-autocorrelation) robust standard errors to obtain structural coefficients. The analysis focuses on chicken wings, legs, and feet. Monthly data for 2005 to 2009 are used in the analysis and reflect recent events. |
| Keywords: | poultry, excess demand, excess supply, antidumping tariff, International Relations/Trade, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ags:saea11:98848&r=int |
| By: | Muhammad, Andrew; Fonsah, Greg E.; Zahniser, Steven |
| Abstract: | U.S. banana demand differentiated by country of origin is estimated using the generalized dynamic Rotterdam model. Results indicate that dynamic factors play a significant role in determining the allocation of U.S. banana expenditures across exporting sources. Of particular interest is Guatemalaâs increased share and Costa Ricaâs decreased share of U.S. banana supply. A number of factors explained why Guatemala replaced Costa Rica as the leading U.S. supplier in 2007. (1) Guatemala is the least expensive source on average. (2) Habit persistence, adjustment costs, and other dynamic factors favor Guatemalaâs exports. (3) Given increases in the relative price of Costa Ricaâs bananas, the price competition between Costa Rica and Guatemala is highly significant. (4) Bananas from Costa Rica are highly responsive to own-price while imports from Guatemala are more price-inelastic. (5) Heavy rains and fluctuating temperatures in Costa Rica have decreased banana production and exports. |
| Keywords: | bananas, imports, demand, Latin America, United States, Demand and Price Analysis, International Relations/Trade, F14, Q11, Q13, Q17, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ags:saea11:98365&r=int |
| By: | Duch-Carvallo, Teresa; Malaga, Jaime E. |
| Abstract: | The impacts of maintaining increasing rates of Mexican chicken meat imports from the United States on United States grain sorghum price and Mexican GS imports from the United States were modeled using a non-spatial, partial equilibrium, econometric, and simulation international trade model. Twenty five equations were simultaneously estimated and validated as a system using three stages least squares. A 9-year baseline was estimated under existing projections and the impacts of the increasing rates of Mexican chicken meat imports from the United States were simulated and compared with the baseline. |
| Keywords: | Supply, Demand, NAFTA, International trade, Grain sorghum, Chicken meat exports, International Relations/Trade, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ags:saea11:98828&r=int |
| By: | Craig Burnside; Martin S. Eichenbaum; Sergio Rebelo |
| Abstract: | We examine the empirical properties of the payoffs to two popular currency speculation strategies: the carry trade and momentum. We review three possible explanations for the apparent profitability of these strategies. The first is that speculators are being compensated for bearing risk. The second is that these strategies are vulnerable to rare disasters or peso problems. The third is that there is price pressure in currency markets. |
| JEL: | F31 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:16942&r=int |
| By: | Mekonnen, Dawit Kelemework; Fonsah, Esendugue Greg |
| Abstract: | Although this paper focuses on apple juice, a restricted version of source differentiated Almost Ideal Demand System (RSDAIDS) was used to examine U.S. import demand for fresh apple, apple juice and other processed apple. Apple imports were differentiated by type and source of origin and the RSDAIDS model was estimated after imposing the general demand restrictions of adding-up, homogeneity and slutsky symmetry. Seasonality and trend variables were also included on the model. The estimation results showed that U.S. demand for apple juice from China was price inelastic with relatively high expenditure elasticity. We believe the result partially explains why China managed to have a 60 percent import market share in the sub-market despite U.S. imposition of high duties on Chinese apple juice. |
| Keywords: | Import demand estimation, apple juice, RSDAIDS, Demand and Price Analysis, International Relations/Trade, |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:saea11:98789&r=int |
| By: | Frédéric DOCQUIER (FNRS and UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)); Hillel RAPOPORT (Department of Economics, Bar-Ilan University, EQUIPPE, Universités de Lille, and Center for International Development, Harvard University) |
| Abstract: | This paper reviews four decades of economics research on the brain drain, with a focus on recent contributions and on development issues. We first assess the magnitude, intensity and determinants of the brain drain, showing that brain drain (or high-skill) migration is becoming the dominant pattern of international migration and a major aspect of globalization. We then use a stylized growth model to analyze the various channels through which a brain drain affects the sending countries and review the evidence on these channels. The recent empirical literature shows that high-skill emigration need not deplete a country's human capital stock and can generate positive network externalities. Three case studies are also considered: the African medical brain drain, the recent exodus of European scientists to the United States, and the role of the Indian diaspora in the development of India's IT sector. We conclude with a discussion of the implications of the analysis for education, immigration, and international taxation policies in a global context.∗ |
| Date: | 2011–02–28 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvir:2011009&r=int |
| By: | Caruso, Raul |
| Abstract: | This paper presents first a theoretical model of conflict between two agents characterized by a two-sector economy. In a contested sector two agents struggle to appropriate the maximum possible fraction of a contestable output. In an uncontested sector, they hold secure property rights over the production of some goods. Agents split their resource endowment between ‘butter’, ‘guns’ and ‘ice-cream’. Eventually, tradable goods made of butter and ice-cream produced by conflicting parties are both sold to the Rest of the world. Therefore, the opportunity cost of conflict depends also on relative profitability of contested and uncontested production. In particular, productivity of uncontested production and profitability of contested sectors are countervailing forces. The empirical section focused on a panel of Sub-Saharan African countries for the period 1995-2006. Results are not fully conclusive. However, there is robust evidence that prices of manufactures (interpreted as the uncontested ice-cream) are negatively associated with the likelihood of a civil war. Eventually, international price of manufactures is also associated with a higher GDP per capita growth rate. The concluding remark seems to be that an increase in world prices of manufactures would make civil wars less likely. |
| Keywords: | Theoretical model of conflict; Civil war; resource curse; butter guns and ice-cream; structure of the economy; commodity prices; MUV; panel probit analysis |
| JEL: | D74 O19 C33 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:29761&r=int |