nep-int New Economics Papers
on International Trade
Issue of 2014‒12‒03
27 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Trade liberalization in the presence of domestic regulations: Impacts of the proposed EU-U.S. free trade agreement on wine markets By Rickard, Brad; Gergaud, Olivier; Hu, Wenjing
  2. Crisis-proof services: Why trade in services did not suffer during the 2008-2009 collapse By Ariu, Andrea
  3. The ASEAN Free Trade Agreement: How Effective? By Vaishnavi Venkatesh; Ranajoy Bhattacharyya
  4. A Note on Shifts in Turkey's International Trade Pattern By Deger, Cagacan
  5. Markket Integration and Energy Trade Efficiency: An Application of Malmqvist Index to Analyse Multi-Product Trade By Yu SHENG; Yanrui WU; Xunpeng SHI; Dandan ZHANG
  6. Export dynamics and sales at home By Berman, Nicolas; Berthou, Antoine; Héricourt, Jérôme
  7. The T - Rex in the Room: Using Network Analysis to Get a Better Grasp of Small Arms Issues By Einar Engvig
  8. Global value chains: surveying drivers and measures By Amador, João; Cabral, Sónia
  9. Demand for Luxury Goods in a World of Income Disparities By Anna Ray; Antoine Vatan
  10. Export price adjustments under financial constraints By Angelo Secchi; Federico Tamagni; Chiara Tomasi
  11. Are Free Trade Agreements Making Swiss Cheese of Australia's Foreign Investment Regime? By Shiro Armstrong; Sam Reinhardt; Tom Westland
  12. Environmental Regulation and Competitiveness: Evidence from Trade and Production in the Manufacturing Sector By Yang, Tsung Yu
  13. Efficiency Gains from Removing Trade Barriers: Evidence from Asian Banking Industries By Kai Du
  14. Innovation, Diffusion, and Trade: Theory and Measurement By Santacreu, Ana Maria
  15. The Trans-Atlantic Trade and Investment Partnership: European Disintegration, Unemployment and Instability By Jeronim Capaldo
  16. Beyond Ricardo: Assignment Models in International Trade By Arnaud Costinot; Jonathan Vogel
  17. [WTO Case Review Series No. 9] <i>United States—Certain Country of Origin Labelling Requirements</i> (DS384, 386): The impacts of country of origin labelling on international trade (Japanese) By NAIKI Yoshiko
  18. New trade models, elusive welfare gains By Kristian Behrens; Yoshitsugu Kanemoto; Yasusada Murata
  19. Aggregravity: Estimating Gravity Models from Aggregate Data By Harald Badinger; Jesus Crespo Cuaresma
  21. Regional and Global Trade Strategies for Liberia By Jaime de MELO; Armela MANCELLARI
  22. Analysing global value chains using input-output economics: Proceed with care By Nomaler Ö.; Verspagen B.
  23. Global competition for attracting talents and the world economy By Frédéric DOCQUIER; Joël MACHADO
  24. Cross-border M&As and innovative activity of acquiring and target firms By Stiebale, Joel
  25. Agriculture in the Trans-Pacific Partnership By Wainio, John; Dyck, John; Meade, Birgit; Mitchell, Lorrarine; Zahniser, Steven; Arita, Shawn; Beckman, Jayson; Burfisher, Mary
  26. Intermediate inputs, external rebalancing and relative price adjustment By Bems, Rudolfs
  27. Assessing the impact of ASEAN economic integration on labour markets By Plummer, Michael G; Petri, Peter A; Zhai, Fan

  1. By: Rickard, Brad; Gergaud, Olivier; Hu, Wenjing
    Abstract: Revised version posted November 11, 2014.
    Keywords: Domestic regulations, EU-U.S. Free Trade Agreement, Non-tariff barriers, Simulation model, Trade policy, Wine., Agricultural and Food Policy, International Relations/Trade, Q13, Q17,
    Date: 2014–05–28
  2. By: Ariu, Andrea
    Abstract: During the 2008-2009 crisis trade in goods experienced the deepest decline ever recorded. Surprisingly, trade in services came through the crisis unscathed and some service categories carelessly stuck to their growth paths. Using firm-product-destination exports for Belgium, we show that the particular resilience of services is explained by a significantly lower elasticity to demand in export markets. More specifically, services exports tend to decline on average 5% less than exports of goods following a 1% decrease in GDP growth in destination countries. Most of this effect is accounted for by business services, it is more pronounced with respect to durables than to consumable products and it is stronger for OECD exports than for non-OECD. In terms of economic magnitude, if goods had the same elasticity to GDP growth of services, they would have decreased of about half. Conversely, if services had the same elasticity of goods, their fall would have been more than thrice as much. JEL Classification: F10, F14, L80
    Keywords: service resilience, services and goods trade, trade collapse
    Date: 2014–07
  3. By: Vaishnavi Venkatesh (School of Public Policy,George Mason University,3351 N Fairfax Dr, Arlington, VA 22201, United States. phone-+1 703-993-2280); Ranajoy Bhattacharyya (Indian Institute of Foreign Trade, Kolkata, India)
    Abstract: A careful assessment of intra-regional and extra-regional ASEAN trade volumes from 1970 to 2010 reveals that there has been no significant change during the pre- and post-AFTA era. However, researchers working on the effectiveness of the ASEAN Free Trade Agreement have consistently reported positive trade creationary effects of AFTA. By reassessing the impact of AFTA through the Balassa method of estimating trade creation and diversion, and applying it to traditional gravity estimates, we find that (a) while ASEAN countries have spent more money per dollar earned on foreign goods in the post-AFTA period, this is generally true for all countries in the world, and (b) being a small region with significant historic trade ties, ASEAN, as a whole has always traded more amongst themselves, when compared to the world average, and this fact has been misrepresented as the trade creationary effects of AFTA. By comparing the coefficients of the regionalism dummies of ASEAN, within the scope of the gravity model, we find that there has been no significant change in these coefficients, when the sample is divided into the pre-and post-AFTA years. We thus conclude that the free trade agreement in question has had no significant impact on intra-ASEAN trade.
    Keywords: ASEAN, Free trade agreement, Trade creation, trade diversion, Regional trade.
    JEL: F12
    Date: 2014–08
  4. By: Deger, Cagacan
    Abstract: It is frequently stated that Turkey's trade orientation has shifted in the last decade away from Europe and more towards the East, specifically Arab countries and Middle East. However, comprehensive presentation of the situation is lacking, causing concern over the validity of the statement. This paper examines the foreign trade of Turkey for years 1995 to 2012. The analysis focuses on a number of country groups and product categories. The analysis confirms the shift away from EU and towards not only Arab countries but Asia as a whole, primarily due to gas imports from Russia. It is observed that Turkey's exports are becoming more focused towards manufactured goods and increasing in technological complexity. An interesting observation is the increase in the share of “commodities and transactions not elsewhere classified”, especially with the Arab countries.
    Keywords: international trade; Turkey; trade patterns
    JEL: F10 F14
    Date: 2014–07–01
  5. By: Yu SHENG (Australian National University); Yanrui WU (University of Western Australia); Xunpeng SHI (National University of Singapore); Dandan ZHANG (Peking University)
    Abstract: As This paper uses the data envelope analysis method to investigate the Malmquist index-based gravity relationship between bilateral energy trade flows and their determinants throughout the world. Using a balance panel data of 40 countries between 1995 and 2008, this paper shows that market integration will increase energy trade by improving trade efficiency between trade partners, though allowing for a flexible substitution between different energy products tends to weaken these effects. This result highlights cross-product substitution and its implications for the aggregate energy trade pattern, providing insights on the importance of prioritising product-specific trade facilitating policies.
    Keywords: energy trade efficiency, energy market integration, Malmquist index; energy trade efficiency, energy market integration, Malmquist index
    JEL: Q27 Q47 O47
    Date: 2014
  6. By: Berman, Nicolas; Berthou, Antoine; Héricourt, Jérôme
    Abstract: Using a French firm-level database that combines balance-sheet and product-destination-specific export information over the period 1995-2001, we study the interconnections between exports and domestic sales. We identify exogenous shocks that affect the firms' demand on foreign markets to instrument yearly variations in exports. We use alternatively as instruments product-destination specific imports or tariffs changes, and large foreign shocks such as financial crises or civil wars. Our results show that exogenous variations in foreign sales are positively associated with domestic sales, even after controlling for changes in domestic demand. A 10% exogenous increase in exports generates a 1 to 3% increase in domestic sales in the short-term. This result is robust to various estimation techniques, instruments, controls, and sub-samples. We provide empirical evidence suggesting that this positive effect of exogenous changes in exports on domestic sales is related to a relaxation of short-run liquidity constraints. JEL Classification: F10, F44, L20
    Keywords: demand shocks, domestic sales, export dynamics, liquidity, markets
    Date: 2014–08
  7. By: Einar Engvig
    Abstract: The international small arms and light weapons (SALW) trade is a pervasive, lucrative, poorly regulated and poorly understood network of global business with subtle yet far - reaching consequences on the state of world affairs. While much has been written on the topic of the legal and illegal international SALW trade and its consequences, little has been done to try to understand the extremely complex and nuanced network of the trade as a whole. This report, aimed at addressing this issue, will (1) provide a literature review on SALW nonproliferation and social network analysis for context, (2) posit the case for the usefulness of social network analysis as an innovative descriptive and inferential tool in analyzing international SALW networks and nonprolifer ation efforts, (3) present a description of the data to be utilized in the study, (4) report the findings of the study, (5) provide a contextual analysis of the findings , and (6) conclude. The study finds ( a ) a group of seven significant nations beyond simply measuring for sheer bulk of export and import; ( b ) a K - Core defined subgroup network of 49 most significant global traders ; ( c ) a group of three nations significant by sheer import and export, but not in being n etworked in the K - Core subgroup; ( d ) a considerable overlap between the K - Core subgroup network and participating states of the Wassenaar Arrangement ; ( e ) a minority of 14 K - Core subgroup nations that are not participating states of the Wassenaar A rrangement . It finds that adherence to international treaties for specific international SALW regulation is correlated to an increased net value of legal SALW trade and that membership in an multilateral export control regime is correlated to a decreased n et value of legal SALW trade.
    Keywords: social network analysis, small arms and light weapons, nonproliferation, arms trade
    JEL: D85 F14 F53
    Date: 2014–11
  8. By: Amador, João; Cabral, Sónia
    Abstract: The production of most goods and services is nowadays vertically fragmented across different countries, as global value chains (GVCs) emerged as the current paradigm for the international organisation of production. This paper surveys part of the growing empirical literature on GVCs, starting by discussing the main driving forces of GVCs in recent decades. Next, it surveys the indicators used to map and measure this phenomenon, accounting for their different scopes and required datasets. JEL Classification: F60
    Keywords: global value chains, globalisation, international trade, offshoring, survey
    Date: 2014–10
  9. By: Anna Ray (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Antoine Vatan (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, LMA - Laboratoire de macroéconomie - Centre de Recherche en Économie et STatistique (CREST))
    Abstract: This paper approaches international trade in luxury goods from demand side. It associates demand for luxury goods with within-country income disparities, via a social interactions component, the so-called Veblen effect (Veblen 1899). In the theoretical part, we propose a simple model of vertical differentiation with preferences displaying a Veblen effect. The model predicts that demand for luxury goods increases with the income gap between the two socio-economic groups (wealthy and non-wealthy agents). Furthermore, wealthy individuals in societies with higher income disparities have higher incentives to purchase luxury goods and hence they are willing to pay more for these. Next, we provide an empirical validation of these predictions on a sample of French high-end exporters (as defined by Martin and Mayneris, 2013) from French 8-digit CN custom data for 2006 at firm-product-destination level. Both demand for and average firm-product unit values of luxury goods are increasing with the income gap in importer country. The relationship is robust to inclusion of control variables as well as to use of alternative measures of income dispersion.
    Keywords: International Trade ; Luxury Goods ; Veblen Effects
    Date: 2013–10
  10. By: Angelo Secchi (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Federico Tamagni (Scuola Superiore Sant'Anna - Institute of Economics); Chiara Tomasi (Università di Trento - Dipartimento di Economia e Management)
    Abstract: Exploiting data on product-destination level transactions of a large panel of Italian firms, we provide new evidence on the effect of financial constraints on price variation across exporters. Controlling for firm characteristics and endogeneity, constrained exporters charge higher prices than unconstrained firms exporting in the same product-destination market. The positive price difference increases with horizontal differentiation of products, while it reduces in vertically differentiated products, where there is more scope for quality adjustments. The results are consistent with constrained firms exploiting demand rigidities to keep prices up in the attempt to sustain revenues and escape the constraints.
    Keywords: Financial constraints; export prices; horizontal and vertical differentiation; quality adjustment
    Date: 2013–07
  11. By: Shiro Armstrong (East Asia Bureau of Economic Research); Sam Reinhardt; Tom Westland
    Abstract: Australia’s foreign investment regime plays an important role in Australia maintaining an open investment environment while providing the Australian community confidence that new investment projects are in the interest of the community. Until 2005, the foreign investment regime treated all investment sources on a non-discriminatory basis but since then some important preferential exemptions to screening have been introduced. Bilateral deals with the United States and New Zealand more than quadrupled the threshold to A$1.078 billion for investments that must be screened by the Foreign Investment Review Board (FIRB), and deals with South Korea and Japan promise the same treatment. There is expectation that a free trade agreement with China will also lift the threshold for Chinese investment. This represents a major liberalisation towards investment from those countries, given that a vast majority of investment is below the A$1 billion threshold. Some new rules regarding investment have also been introduced in those bilateral agreements which only apply to the signatories of those bilateral deals, however, the differential treatment is not at this stage too different or complex and there is scope for them to be unified and made consistent to all sources of investment. The piecemeal changes to the foreign investment regime through bilateral trade and economic agreements have occurred without a clear strategy set forth and further piecemeal changes threaten to impact the operation and function of the regime with implications for confidence in Australia maintaining an open investment environment.
    Keywords: investment
    JEL: F21 F23
    Date: 2014–11
  12. By: Yang, Tsung Yu
    Abstract: Previous empirical studies of the pollution haven hypothesis (PHH) have not reached a consistent conclusion. The existing literature is primarily based on anecdotes and scattered case studies. This study analyzes the trade flows and composition change of the most polluting industries in manufacturing sectors among countries in order to offer a more general conclusion. This study finds that stricter environmental regulation stringency decreases the net export and production share of the most polluting production, which provides the evidence for pollution haven effect (PHE). However, we find no evidence to support PHH. Contrary, we find stricter environmental regulation stringency corresponds to larger net export and polluting production as trade openness increases. We also find that the ability to innovate in environmental-related technology creates a comparative advantage in polluting production. This finding implies that governments do not have to constrain their policies on the tradeoff between pollution control and international competitiveness since the innovative ability may both obtain the goals of pollution control and strengthening international competitiveness.
    Keywords: Environmental Economics and Policy, International Relations/Trade,
    Date: 2014–07
  13. By: Kai Du (School of Economics, University of Adelaide)
    Abstract: This paper employs two stage data envelopment analysis (DEA) to investigate the efficiency effects of removing trade barriers on banking performance for a sample of Asian developing economies over the period 1997-2006. First, the DEA is employed to estimate the efficiency scores of banks. After that, the estimated DEA scores are analysed by density analysis and regressed on indices of trade barriers (Dinh 2008) that represent how restrictive the national trade policies are in the selected banking industries. The empirical evidence shows that deregulation policies that reduce restrictions on foreign banks have enhanced bank efficiency, while the deregulation of domestic banks has not resulted in significant efficiency gains.
    Keywords: Data envelopment analysis, financial deregulation, banking services
    JEL: D21 D24 G21
    Date: 2014–06
  14. By: Santacreu, Ana Maria (Federal Reserve Bank of St. Louis)
    Abstract: I develop a multicountry-model in which economic growth is driven mainly by domestic innovation and the adoption of foreign technologies embodied in traded intermediate goods. Fitting the model to data on innovation, output per capita, and trade in varieties for the period 1996-2007, I estimate the costs of both domestic innovation and adopting foreign innovations, and then decompose the sources of economic growth around the world. I find that the adoption channel has been especially important in developing countries, and accounts for about 65% of their “embodied” growth. Developed countries grow mainly through the domestic innovation channel, which explains 85% of their “embodied” growth. A counterfactual exercise shows that if all countries reached the same research productivity, then (i) the world’s steady-state growth rate would double, and (ii) developing countries would close the gap in terms of both growth rate and income per capita.
    Keywords: innovation; technology adoption; extensive margin of trade; growth.
    JEL: F11 F43 O33
    Date: 2014–05–01
  15. By: Jeronim Capaldo
    Abstract: According to its proponents, the Trans-Atlantic Trade and Investment Partnership will stimulate growth in Europe and in the US. Projections endorsed by the European Commission point to positive, although negligible, gains in terms of GDP and personal incomes. In a paradox, these projections also show that any gains in Trans-Atlantic trade would happen at the expense of intra-EU trade reversing the process of European economic integration. Furthermore, recent literature has pointed out several problems in the most influential assessment of the TTIP’s effects. Projections by different institutions have been shown to rely on the same Computable General Equilibrium model that has proven inadequate as a tool for trade policy analysis. In this paper we assess the effects of TTIP using the United Nations Global Policy Model, which incorporates more sensible assumptions on macroeconomic adjustment, employment dynamics, and global trade. We project that TTIP will lead to a contraction of GDP, personal incomes and employment. We also project an increase in financial instability and a continuing downward trend in the labor share of GDP. Evaluated with the United Nations model, TTIP appears to favor economic dis-integration, rather than integration, in Europe. At a minimum, this shows that official studies do not offer a solid basis for an informed decision on TTIP.
    Date: 2014–10
  16. By: Arnaud Costinot; Jonathan Vogel
    Abstract: International trade has experienced a Ricardian revival. In this article, we offer a user guide to assignment models, which we will refer to as Ricardo-Roy (R-R) models, that have contributed to this revival.
    JEL: F1
    Date: 2014–10
  17. By: NAIKI Yoshiko
    Abstract: This paper examines <i>US-COOL</i>, which is the third, landmark Appellate Body's ruling under the Word Trade Organization (WTO)'s Agreement on Technical Barriers to Trade (hereinafter "TBT Agreement") and came out in 2012.The case addressed two key obligations of the TBT Agreement (i.e., Articles 2.1 and 2.2). Its findings mainly followed the legal framework established by the previous two cases under the TBT Agreement: <i>US-Clove Cigarettes and US-Tuna II</i>. Thus, the Appellate Body's ruling on <i>US-COOL</i> does not add the legal approach under Articles 2.1 (the non-discrimination principle) and 2.2 (the necessity requirement), but it provides us an opportunity to consider the relation between Articles 2.1 and 2.2 under the TBT Agreement. While it is generally admitted that it is legitimate to provide origin information to consumers, labelling requirements can be designed to restrict trade unnecessarily. This paper discusses the implications and insights that this decision provides for labelling requirements on origin information to consumers.
    Date: 2014–09
  18. By: Kristian Behrens (Department of Economics, Université du Québec à Montréal); Yoshitsugu Kanemoto (National Graduate Institute for Policy Studies); Yasusada Murata (Nihon University)
    Abstract: We generalize the formulae for welfare changes by Arkolakis, Costinot, and Rodríguez-Clare (2012) and Melitz and Redding (2014a) to allow for various cardinalizations of the subutility functions for varieties. Despite the same macro restrictions and the same equilibrium allocations, our new formula coincides with the original ones if and only if the number of varieties is invariant to foreign shocks. When product diversity responds to foreign shocks, different cardinalizations generate different welfare changes, thus revealing a fundamental difficulty in quantifying welfare gains implied by new trade models.
    Date: 2014–11
  19. By: Harald Badinger (Department of Economics, Vienna University of Economics and Business); Jesus Crespo Cuaresma (Department of Economics, Vienna University of Economics and Business)
    Abstract: This paper considers alternative methods to estimate econometric models based on bilateral data when only aggregate information on the dependent variable is available. Such methods can be used to obtain an indication of the sign and magnitude of bilateral model parameters and, more importantly, to decompose aggregate into bilateral data, which can then be used as proxy variables in further empirical analysis. We perform a Monte Carlo study and carry out a simple real world application using intra-EU trade and capital flows, showing that the methods considered work reasonably well and are worthwhile being considered in the absence of bilateral data.
    Keywords: Aggregation, gravity equations
    JEL: C13 F14 F17
    Date: 2014–09
  20. By: Lee, Yu Na; Chau, Nancy; Just, David
    Abstract: The Trade Adjustment Assistance (TAA) program for farmers was established in 2002 to assist farmers adversely affected by import surges. Since its introduction, the program has been mostly underused by farmers, and the American Recovery and Reinvestment Act (ARRA) in 2009 eased the program rules to drive more participation of farmers. Based on the decision-making model and the uniquely constructed panel data set, we find that farmers’ incentive to make up for the losses in other types of direct government payments as well as eligibility criteria explain farmers’ participation in the TAA program. Less time and efforts needed for participation, proxied by previously approved cases of the same or similar commodities, also seems to drive farmers’ participation. Results also confirm that the ARRA of 2009 was effective in increasing farmers’ participation.
    Keywords: trade, program participation, trade adjustment assistance, TAA, American Recovery and Reinvestment Act, ARRA, incentive, Agricultural and Food Policy, Farm Management, International Relations/Trade, Risk and Uncertainty,
    Date: 2014–05–28
  21. By: Jaime de MELO (Ferdi); Armela MANCELLARI (FERDI)
    Abstract: Liberia intends to deepen its participation in Economic Community of West African States (ECOWAS) by adopting the common external tariff (CET) of the Customs Union (CU). This implies that Liberia will have to modify its tariff structure to be much closer to the (yet unknown because of upcoming demands for exceptions to the schedule and demands for reclassification of goods) CET of the CU. This implies that Liberia will have to modify its tariff structure to be much closer to the (yet unknown because of upcoming demands for exceptions to the schedule and demands for reclassification of goods) CET of the CU. This report is in response to the Government of Liberia’s request to the International Growth Centre to estimate the likely effects of this change, particularly on households’ well-being and on government revenue. This paper was prepared by the IGC at the request of the Government of Liberia. A full version with annexes is available at: The authors thank Mounir Siaplay, IGC Liberia in-country Economist, and John Spray, ODI Fellow at the Ministry of Commerce and Industry (MOCI) of Liberia for support. We also thank Ibrahim Stevens, Eric Werker, participants at the WTO Technical Workgroup meeting on October 10th 2013, as well Hon. Minister Axel Addy, MOCI, Deputy Minister Steve Marvie, MOCI, and Deputy Minister Candance Eastman, MOCI for their valuable comments and insights.
    Date: 2014–05
  22. By: Nomaler Ö.; Verspagen B. (UNU-MERIT)
    Abstract: Input-output economics has become a popular tool to analyse the international fragmentation of value chains, especially now that several multi-regional tables that cover large parts of the global economy have become available. It has been argued that these tables, when analysed with the help of the input-output economics toolbox, can provide better insights about global value chains than can be obtained by case studies of individual value chains. We argue that there are several problems related to the aggregated nature of the input-output table that may lead to large distortions and biases in the aggregate picture about global value chains that is obtained by input-output analysis. There are three main sources behind the distortion obtained in static decompositions of value chains the average nature of value added to output ratios in the tables, the emergence of production cycles in the process of aggregating several value chains into a single table, and the characteristic of the so-called inverse Leontief matrix to even out the value added distribution. We provide an overview of how these distortions work, and argue that under a wide range of circumstances, input-output methods tend to overstate the contribution of the final sector to the value chain. We also show that this bias does not vanish when we compare input-output decompositions at two different points in time.
    Keywords: Input-Output Models; Globalization: Macroeconomic Impacts;
    JEL: C67
    Date: 2014
  23. By: Frédéric DOCQUIER (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and FNRS); Joël MACHADO (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: This paper studies the effect of liberalizing the international mobility of college-educated workers on the world economy. First, we combine data on effective and desired migration to identify the net pool of foreign talents (NPFT) of selected high-income countries. So far, the EU15 has poorly benefited from its NPFT while the US has mobilized a large portion of it. Second, we use a micro-founded model to simulate the effects of skill-selective liberalization shocks. In our benchmark model, a worldwide liberalization induces larger long-run income gains for the EU15 (+8.8 percent) than for the US (+5.9 percent). However, less attractive EU countries such as Austria, Belgium, Germany, Greece, Luxembourg and the Netherlands benefit less than the US. In addition, liberalizing high-skilled migration decreases income per worker by 2.5 percent in developing countries. Overall, it increases efficiency (+6.2 percent in the worldwide average level of income per capita) and inequality (+1.2 percentage points in the Theil inequality index). Much greater effects can be obtained if total factor productivity varies with human capital.
    Keywords: brain drain, human capital, migration, growth,inequality
    JEL: O15 F22 I24
    Date: 2014–11–07
  24. By: Stiebale, Joel
    Abstract: This paper analyzes the effects of cross-border mergers and acquisitions (M&As) on the innovation of European firms. The results indicate a considerable increase in post-acquisition innovation in the merged entity. This is mainly driven by inventors based in the acquirer's country, while innovation in the target's country tends to decline. The asymmetry of effects between acquiring and target firms increases with pre-acquisition differences in knowledge stocks, indicating a relocation of innovative activities towards more efficient usage within multinational firms. Instrumental variable techniques as well as a propensity-score matching approach indicate that the effect of cross-border M&As on innovation is causal.
    Keywords: Multinational Enterprises,Mergers and Acquisitions,Innovation
    JEL: F23 D22 G34 O31
    Date: 2014
  25. By: Wainio, John; Dyck, John; Meade, Birgit; Mitchell, Lorrarine; Zahniser, Steven; Arita, Shawn; Beckman, Jayson; Burfisher, Mary
    Keywords: International Development, International Relations/Trade, Production Economics,
    Date: 2014–10
  26. By: Bems, Rudolfs
    Abstract: This paper proposes a methodology for tracing out the effect of intermediate inputs, including ‘processing trade’, on the link between external rebalancing and relative price adjustment. We find that neglect of inputs distorts parameterization of the traditional multi-sector macro model. Distortions affect the link between external rebalancing and relative price through several opposing channels. (1) Mismeasured imported inputs exaggerate economic openness and understate the price response to rebalancing. (2) Mismeasured domestic inputs increase cross- sectoral asymmetry in openness, leading to an overstated price response. (3) Mismeasured price elasticities tend to overstate the price response. (4) Distortions in model parameters interact to generate a sizable further understatement of the price response. Quantitative results show that the identified channels can each be significant in economic terms. JEL Classification: F32, F41
    Keywords: external sector adjustment, intermediate inputs, real exchange rate, transfer problem
    Date: 2014–07
  27. By: Plummer, Michael G; Petri, Peter A; Zhai, Fan
    Abstract: Enhancing regional economic integration has become an important priority for the Association of Southeast Asian Nations (ASEAN). Building on the ASEAN Free Trade Area, ASEAN has been implementing the ASEAN Economic Community (AEC) since 2007, scheduled for completion in 2015. The AEC is in many ways the most ambitious economic cooperation programme in the developing world, with its goal being the creation of an economic space in which there will be a free flow of goods, services, foreign direct investment and skilled labour. In addition, ASEAN has cemented free trade areas with six regional partners (Japan, Republic of Korea, People’s Republic of China, Australia, New Zealand and India) and, together with these economies, launched the Regional Economic Comprehensive Partnership (RCEP) in November 2012, also with the goal of completion in 2015. This study estimates the implications of the regional integration initiatives on ASEAN Member States using a cutting-edge computable general equilibrium model. In addition to gauging the effects on welfare, trade and economic structure, it considers the ramifications for labour markets. Using detailed data from the labour force surveys available for six ASEAN markets, the paper captures the effects of these initiatives on seven categories of labour at the occupational level. It also includes estimates of the distributional effects of these initiatives for labour relative to other factors (capital and land) and on gender.
    Keywords: labour market, employment, decent work, productivity, wages, economic integration, regional cooperation, ASEAN countries, marché du travail, emploi, travail décent, productivité, salaire, intégration économique, coopération régionale, pays de l'ANASE, mercado de trabajo, empleo, trabajo decente, productividad, salario, integración económica, cooperación regional, países del ASEAN
    Date: 2014

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