nep-int New Economics Papers
on International Trade
Issue of 2016‒03‒29
thirty papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Trade Policy Uncertainty and Exports: Evidence from China’s WTO Accession By Ling Feng; Zhiyuan Li; Deborah L. Swenson
  2. Micro to Macro: Optimal Trade Policy with Firm Heterogeneity By Arnaud Costinot; Andrés Rodríguez-Clare; Iván Werning
  3. The Micro Origins of International Business Cycle Comovement By Julian di Giovanni; Andrei A. Levchenko; Isabelle Mejean
  4. How does multinational production affect the measurement of competitiveness? By Stefano Federico
  5. Value Chains and the Great Recession: Evidence from Italian and German Firms By Antonio Accetturo; Anna Giunta
  6. Trade (dis)Integration and Imbalances in the EMU By Esposito, Piero
  7. The Long Italian Stagnation and the Welfare Effects of Outsourcing By Jacopo Zotti
  8. Emerging multinational corporations: Theoretical and conceptual framework By Mustafa Sakr and Andre Jordaan
  9. Risk Sharing in a World Economy with Uncertainty Shocks By Robert Kollmann
  10. Understanding the Cross-country Productivity Gap of Exporters By KIYOTA Kozo; MATSUURA Toshiyuki; Lionel NESTA
  11. The Effects of Trade Policy By Pinelopi K. Goldberg; Nina Pavcnik
  12. On the Existence and Characterization of Unequal Exchange in the Free Trade Equilibrium By Yoshihara, Naoki; Kaneko, Soh
  13. Slave trade and Human Trafficking By Oasis Kodila-Tedika; Martin Mulunda Kabange
  14. COMESA’s Revealed Comparative Advantage in Common Agricultural Commodities By Sukati, Mphumuzi
  15. International Competition and Labor Market Adjustment By Joao Paulo Pessoa
  16. How Exporters Grow By Doireann Fitzgerald; Stefanie Haller; Yaniv Yedid-Levi
  17. Globalization and Political Structure By Gino Gancia; Giacomo A.M. Ponzetto; Jaume Ventura
  18. Immigration, amnesties and the shadow economy By Emanuele Bracco; Luisanna Onnis
  19. The Law of one Price in Global Natural Gas Markets - A Threshold Cointegration Analysis By Nick, Sebastian; Tischler, Benjamin
  20. Winners and Losers in International Trade: The Effects on U.S. Presidential Voting By J. Bradford Jensen; Dennis P. Quinn; Stephen Weymouth
  21. Least Developed Countries and Trade: Challenges of Implementing the Bali Package By Mia Mikic; Debapriya Bhattacharya
  22. A Drought-Induced African Slave Trade? By Boxell, Levi
  23. Learning or leaning : persistent and transitory growth spillovers from FDI By Davies,Ronald B.; Lamla,Michael Josef; Schiffbauer,Marc Tobias
  24. What drives cross-border bank expansion? Answers from Kenya By Odongo Kodongo
  25. Migrants, Ancestors, and Investments By Konrad B. Burchardi; Thomas Chaney; Tarek A. Hassan
  26. Why do some countries fear immigration more than others? Evidence from Europe By Matija Kovacic; Cristina Orso
  27. Long-Term Effect of International Trade on the Gender Wage and Educational Gaps By Eiji Yamamura
  28. Immigration to the U.S.: A problem for the Republicans or the Democrats? By Anna Maria Mayda; Giovanni Peri; Walter Steingress
  29. Innovation and Immigration – Insights from a Placement Policy By Jahn, Vera; Steinhardt, Max Friedrich
  30. Global Value Chain Upgrading By Ylömäki, Tobias

  1. By: Ling Feng; Zhiyuan Li; Deborah L. Swenson
    Abstract: This paper studies how reduction in trade policy uncertainty affects firm export decisions. Using a firm-product level dataset on Chinese exports to the United States and the European Union in the years surrounding China’s WTO accession, we provide strong evidence that reduction in trade policy uncertainty simultaneously induced firm entries to and firm exits from export activity within fine product-level markets. In addition, we uncover accompanying changes in export product prices and quality that coincided with this reallocation: firms that provided higher quality products at lower prices entered the export market, while firms that had higher prices and provided lower quality products prior to the changes, exited. To explain the simultaneous export entries and exits, as well as the change in product export prices and quality induced by trade policy uncertainty changes, we provide a model of heterogeneous firms which incorporates trade policy uncertainty, tracing the effects of the changes in policy uncertainty on firm-level payoffs and the resulting selection effects which apply to new entrants and incumbents.
    JEL: F13 F14 F23
    Date: 2016–02
  2. By: Arnaud Costinot; Andrés Rodríguez-Clare; Iván Werning
    Abstract: The empirical observation that “large firms tend to export, whereas small firms do not” has transformed the way economists think about the determinants of international trade. Yet, it has had surprisingly little impact about how economists think about trade policy. In this paper, we characterize optimal trade policy in a generalized version of the trade model with monopolistic competition and firm-level heterogeneity developed by Melitz (2003). At the micro-level, we find that optimal import taxes discriminate against the most profitable foreign exporters, while optimal export taxes are uniform across domestic exporters. At the macro-level, we demonstrate that the selection of heterogeneous firms into exporting tends to create aggregate nonconvexities that dampen the incentives for terms-of-trade manipulation, and in turn, the overall level of trade protection.
    JEL: F10
    Date: 2016–02
  3. By: Julian di Giovanni; Andrei A. Levchenko; Isabelle Mejean
    Abstract: This paper investigates the role of individual firms in international business cycle comovement using data covering the universe of French firm-level value added, bilateral imports and exports, and cross-border ownership over the period 1993-2007. At the micro level, controlling for firm and country effects, trade in goods with a particular foreign country is associated with a significantly higher correlation between a firm and that foreign country. In addition, foreign multinational affiliates operating in France are significantly more correlated with the source economy. The impact of direct trade and multinational linkages on comovement at the micro level has significant macro implications. Because internationally connected firms are systematically larger than non- internationally connected firms, the firms directly linked to foreign countries represent only 8% of all firms, but 56% of all value added, and account for 75% of the observed aggregate comovement. Without those linkages the correlation between France and foreign countries would fall by about 0.091, or one-third of the observed average business cycle correlation of 0.29 in our sample of partner countries. These results are evidence of transmission of business cycle shocks through direct trade and multinational ownership linkages at the firm level.
    JEL: F44
    Date: 2016–01
  4. By: Stefano Federico (Banca d'Italia)
    Abstract: This work assembles a unique bilateral dataset on multinational production in the manufacturing sector, in which value added and factor incomes are broken down by location country and by ultimate owner country. Using this dataset, which covers 44 countries over the years 2004-11, we compute measures of production capabilities in which value added is allocated across countries not according to the location of the activity but according to the nationality of the firm or of the factors involved in production (Baldwin and Kimura 1998). These indicators based on the ownership of production are then compared with standard geography-based indicators. This framework is also applied to the analysis of the two modes of supply of foreign markets (exports and FDI) using a common metric based on value added (domestic value added in exports versus value added of foreign affiliates). Overall, the evidence suggests that there are significant differences between geography-based and ownership-based measures, proving that, in an increasingly integrated global economy, ownership matters for the measurement of competitiveness.
    Keywords: multinational companies, foreign direct investment, ownership-based competitiveness, global value chains
    JEL: F21 F23 F14 L60
    Date: 2016–01
  5. By: Antonio Accetturo (Banca d'Italia); Anna Giunta (Università Roma Tre)
    Abstract: Global Value Chains (GVCs) have been one of the main transmission mechanisms of 2009 the Great Trade Collapse. Our paper provides a description of the effects of the crisis from a perspective that is both country-comparative (Germany and Italy) and on firm level. Two are the main conclusions: i) intermediate firms were hit by the crisis more than final firms; ii) firms’ position in GVCs and their strategies explain part of the performance gap between Italian and German firms.
    Keywords: Global Value Chains, Germany, Italy, Industrial Firms, Firm Organization, World Trade
    JEL: D23 L22 F14 F23
    Date: 2016–01
  6. By: Esposito, Piero (LUISS School of European Political Economy)
    Abstract: The aim of this paper is to assess the role of competitiveness and financial integration on trade flows for countries belonging to the European Monetary Union (EMU). We argue that these two factors contributed both to the dynamics of trade imbalances and to the reduction of intra-EMU share in total trade. The latter effect adds to the physiological reduction of intra-EMU trade due to lower than average growth and competitiveness losses. We use a gravity-type bilateral trade model in order to estimate the impact on both imports and exports, providing a more detailed explanation for the developments of total and net trade. The results indicate that both competitiveness and financial opening significantly increased trade imbalances, particularly within the EMU. In addition, financial opening also played a strong role in the reduction of the intra-area trade share.
    Keywords: Imbalances; euro area; Competitiveness; Financial flows; Panel data
    JEL: C23 F15 F32 F36 O52
    Date: 2015–07–13
  7. By: Jacopo Zotti (Fondazione Eni Enrico Mattei and University of Trieste, Department of Political and Social Sciences)
    Abstract: The stagnation of the Italian economy over the last two decades is widely documented. During this period, the world economy has become highly integrated, and foreign outsourcing has become a standard practice for firms. While trade theory predicts benefits from the internationalization of production, Italy seems to have gained negligibly from it, or, rather to have lost. In a simple model, we show that this may be the case when markets are overregulated and competition policies are weak. We study a small open economy with one oligopolistic and one competitive sector, which outsources part of its production process abroad. Advances in globalization entail lower tariff rates of outsourcing. Contrary to the common wisdom, we show that national welfare is an inverted U-shaped function of tariffs. There exists a tariff threshold, below which the economy loses from globalization because the competitive sector overproduces and the oligopolistic underproduces (the oligopolistic good has a higher marginal effect on welfare). Competition policies that target the competitive sector lower the threshold and allow the economy to benefit from increased openness.
    Keywords: Italy’s Economic Decline, General Equilibrium, Cournot Oligopoly, Outsourcing
    JEL: D43 D51 F12 L13
    Date: 2015–10
  8. By: Mustafa Sakr and Andre Jordaan
    Abstract: Given the looming significance of emerging multinational corporations, this article outlines the primary theoretical aspects pertaining to this growing phenomenon. The following four main aspects are covered: The concept of emerging multinational corporations, theories explaining their evolution, market penetration modes, and finally the types of such firms. Based on the motive of multinationality, it is proposed to classify the different theories into three groups, namely: Firm advantages (asset exploiting), host country advantages (asset seeking), and both firm and host country advantages. This article distinguishes between 10 different types of emerging multinational corporations, based on the timing and the motives for initiating the multinationality process, the relation between the headquarters and affiliates, and the geographical dispersion of foreign activities. Entry modes adopted by emerging multinational corporations vary significantly according to ownership, the nature of overseas' operations, the control of parent firms over these activities, and the extent of externalising and internalising.
    Keywords: emerging multinational corporations, foreign market entry modes, theories of emerging multinational corporations, and types of emerging multinational corporations
    JEL: P45 F21
    Date: 2016
  9. By: Robert Kollmann
    Abstract: This paper analyzes the effects of output volatility shocks and of risk appetite shocks on the dynamics of consumption, trade flows and the real exchange rate, in a two-country world with recursive preferences and complete financial markets. When the risk aversion coefficient exceeds the inverse of the intertemporal substitution elasticity, then an exogenous rise in a country’s output volatility triggers a wealth transfer to that country, in equilibrium; this raises its consumption, lowers its trade balance and appreciates its real exchange rate. The effects of risk appetite shocks resemble those of volatility shocks. In a recursive preferences-complete markets framework, volatility and risk appetite shocks account for a noticeable share of the fluctuations of net exports, net foreign assets and the real exchange rate. These shocks help to explain the high empirical volatility of the real exchange rate and the disconnect between relative consumption growth and the real exchange rate.
    Keywords: external balance; exchange rate; volatility; risk appetite; consumption-real exchange rate anmaly
    JEL: F31 F32 F36 F41 F43
    Date: 2015–11
  10. By: KIYOTA Kozo; MATSUURA Toshiyuki; Lionel NESTA
    Abstract: This paper develops a framework that decomposes the international productivity gap of exporters into a selection effect and a competitiveness effect. This framework implies that the international productivity gap of exporters between two countries can be explained by three variables: the average productivity gap, the export participation rates, and the export premia within each country. The empirical analysis reveals that the exporters' productivity gap does not exclusively reflect the competitiveness of the industry, mainly because of the selection effect. These results imply that both the competitiveness and selection effects matter for explaining the cross-country productivity gap of exporters.
    Date: 2016–03
  11. By: Pinelopi K. Goldberg; Nina Pavcnik
    Abstract: The last two decades have witnessed a shift in the focus of international trade research from trade policy to other forms of trade frictions (e.g., transportation, information and communication costs). Implicit in this development is the widespread view that trade policy no longer matters. We confront this view by critically examining a large body of evidence on the effects of trade policy on economically important outcomes. We focus on actual as opposed to hypothetical policy changes. We begin with a discussion of the methodological challenges one faces in the measurement of trade policy and identification of its causal effects. We then discuss the evidence on the effects of trade policy on a series of outcomes that include: (1) aggregate outcomes, such as trade volumes (and their price and quantity subcomponents), the extensive margin of trade, and static, aggregate gains from trade; (2) firm and industry performance, i.e., productivity, costs, and markups; (3) labor markets, i.e., wages, employment, and wage inequality; (4) long-run aggregate growth and poverty, secondary distortions and misallocation, uncertainty. We conclude that the perception that trade policy is no longer relevant arises to a large extent from the inability to precisely measure the various forms of non-tariff barriers that have replaced tariffs as the primary tools of trade policy. Better measurement is thus an essential prerequisite of policy-relevant research in the future. Despite measurement challenges and scant evidence on the impact of actual policy changes, existing evidence when properly interpreted points to large effects of trade policy on economically relevant outcomes, especially when trade policy interacts with other developments, e.g., technological change. We point to areas and opportunities for further research and draw lessons from the past to apply to future studies.
    JEL: F10 F13 F14 L11
    Date: 2016–02
  12. By: Yoshihara, Naoki; Kaneko, Soh
    Abstract: As in Roemer (1982, chapter 1), this paper considers a simple international trade model and examines the existence and characterization of free trade equilibria involving the unequal exchange of labor (UE). The paper provides an almost complete characterization of the domain of economies in which free trade equilibria with incomplete specialization exist. Moreover, the necessary and sufficient conditions for free trade equilibrium to involve UE is identified. It suggests that the emergence of free trade equilibria with UE cannot be entailed by the competitive mechanism of markets and unequal distribution of wealth alone, but might be understood as an outcome of equilibrium selection on the basis of Nash bargaining between rich and poor nations.
    Keywords: Unequal exchange of labor, International division of labor, Subsistence international economies
    JEL: D63 D51
    Date: 2016–02
  13. By: Oasis Kodila-Tedika (Université de Kinshasa Département d’Eco); Martin Mulunda Kabange (University of KwaZulu-Natal)
    Abstract: The literature has not sufficiently engaged in the emergence and expansion of the phenomenon of slave trade. This article estimates whether or not slave trade affects human trafficking using an Ordinary Least Squares (OLS) with standard errors that are consistent with heteroscedasticity. The paper also checks for the robustness of the OLS model. The findings of the paper reveal that the effect of slave trade on human trafficking is positive and statistically significant.The more one is exposed to the phenomenon of slave trade, the more human trafficking is important. The paper also deduces that developed countries that experienced slave trade record low level of human trafficking nowadays, while developing countries continue to record high level of human trafficking. Additionally, institutions werefound to be statistically very significant, and essential to be politically and socioeconomically consolidated and promoted, mainly in developing countries in order to alleviate the level of human trafficking.
    Keywords: Human Trafficking; Slavery
    JEL: I20 I29 N30
    Date: 2016–02
  14. By: Sukati, Mphumuzi
    Abstract: The paper undertakes an analysis of Revealed Comparative Advantage (RCA) for common agricultural commodities in the COMESA Region. The aim of the analysis is firstly, to determine the level of agro-processing in the region; and secondly, in support of the COMESA industrial policy and strategy, to identify commodities countries could focus on in setting up agro-food industries. To address these two issues, RCA is determined for selected agricultural commodities, which are divided into raw/semi processed and highly processed food stuff. Results reveal that many COMESA Member States show strong RCA in raw or semi-processed agricultural commodities with little or no corresponding RCA in highly processed derivatives of those commodities. In general, very few countries in the COMESA region show strong RCA in highly processed and diversified food commodities. This means that there is still a large scope for agro-processing, especially using the abundant traded raw materials. Countries can focus on agro-industries where they show strong RCA in the corresponding raw material base or precursor. Agro-industrialization can help reverse the negative trade balance in processed food commodities that the region is currently experiencing.
    Keywords: RCA, Agro-processing, Agro-industries, COMESA
    JEL: F15 O11 O13
    Date: 2016–03–11
  15. By: Joao Paulo Pessoa
    Abstract: How does welfare change in the short- and long-run in high wage countries when integrating with low wage economies like China? Even if consumers benefit from lower prices, there can be significant welfare losses from increases in unemployment and lower wages. I construct a dynamic multi-sector-country Ricardian trade model that incorporates both search frictions and labor mobility frictions. I then structurally estimate this model using cross-country sector-level data and quantify both the potential losses to workers and benefits to consumers arising from China's integration into the global economy. I find that overall welfare increases in northern economies, both in the transition period and in the new steady state equilibrium. In import competing sectors, however, workers bear a costly transition, experiencing lower wages and a rise in unemployment. I validate the micro implications of the model using employer-employee panel data.
    Keywords: trade, unemployment, earnings, China
    JEL: F16 J62 J64
    Date: 2016–03
  16. By: Doireann Fitzgerald; Stefanie Haller; Yaniv Yedid-Levi
    Abstract: We show that after firms enter new export markets, there are striking dynamics of quantities, but no dynamics of prices, controlling for both costs and selection. This points to an important role for demand in the growth of successful exporters, and to a nonprice mechanism through which quantity demanded grows. A model where firms engage in costly investment in customer base through marketing and advertising, and learn about their idiosyncratic demand, can qualitatively match these facts, along with a declining exit hazard. We structurally estimate the model and find that costs of adjusting customer base are key to explaining how exporters grow.
    JEL: E2 F1 L1
    Date: 2016–01
  17. By: Gino Gancia; Giacomo A.M. Ponzetto; Jaume Ventura
    Abstract: The first wave of globalization (1830-1914) was accompanied by a decline in the number of countries from 125 to 54. The second wave of globalization (1950-present) has led instead to an increase in the number of countries to a record high of more than 190. This paper develops a theoretical framework to study the interaction between globalization and political structure. We show that political structure adapts to expanding trade opportunities in a non-monotonic way. Borders hamper trade. In its early stages, the political response to globalization consists of removing borders by increasing country size. In its later stages, however, the political response to globalization is to remove borders by creating economic unions, and this leads to a reduction in country size.
    JEL: D71 F15 F55 H77 O57
    Date: 2016–02
  18. By: Emanuele Bracco; Luisanna Onnis
    Abstract: This paper investigates the effects of immigration and immigration amnesties on the shadow economy. We find a robust and positive relationship between the presence of immigrants and the unobserved economic activity at the local level, but the implementation of a large immigration amnesty substantially weakens this link. Our analysis exploits newly compiled datasets of Italian immigration and shadow economy estimates for the years 1995-2006, comprising a panel of local-level aggregate statistical information, and a micro-level survey of representative households. We exploit the discontinuity created by the 2002 immigration amnesty, which increased the stock of migrants by almost 50%.
    Keywords: Shadow Economy, immigration, Immigration policies, Amnesties
    JEL: H26 J61
    Date: 2016
  19. By: Nick, Sebastian (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI)); Tischler, Benjamin (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI))
    Abstract: The US and UK markets for natural gas are connected by arbitrage activity in the form of shifting trade volumes of liquefied natural gas (LNG). We empirically investigate the degree of integration between the US and the UK gas markets by using a threshold cointegration approach that is in accordance with the law of one price and explicitly accounts for transaction costs. Our empirical results reveal a high degree of market integration for the period 2000-2008. Although US and UK gas prices seemed to have decoupled between 2009 and 2012, we still find a certain degree of integration pointing towards significant regional price arbitrage. However, high threshold estimates in the latter period indicate impediments to arbitrage that are by far surpassing the LNG transport costs difference between the US and UK gas market.
    Keywords: natural gas market; liquified natural gas; law of one price; arbitrage; nonlinear models; threshold error correction;
    JEL: C51 G14 Q40 Q41
    Date: 2014–11–14
  20. By: J. Bradford Jensen; Dennis P. Quinn; Stephen Weymouth
    Abstract: This paper studies how international trade influences U.S. presidential elections. We expect the positive employment effects of expanding exports to increase support for the incumbent’s party, and job insecurity from import competition to diminish such support. Our national-level models show for the first time that increasing imports are associated with decreasing incumbent vote shares, and increasing exports correlate with increasing vote shares for incumbents. These effects are large and politically consequential. We also construct U.S. county-level measures of employment in high- and low-skill tradable activities. We find increases in incumbent vote shares in counties with concentrations of employment in high-skilled tradable goods and services, and decreases in counties with concentrations of employment in low-skilled manufactured goods. Incumbent parties are particularly vulnerable to losing votes in swing states with high concentrations of low-skilled manufacturing workers with increasing trade exposure. Thus there is an Electoral College incentive to protect this sector.
    JEL: F0 F5
    Date: 2016–01
  21. By: Mia Mikic (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)); Debapriya Bhattacharya (Centre for Policy Dialogue (CPD))
    Abstract: This monograph explores the challenges faced in implementing the Bali package by LDCs in WTO. It provides an analysis of the key decisions, and identifies opportunities and, in certain cases, outlines strategies for assessing the impacts. The important aspects of this publication relate to policy advisory with regard to the preparedness of LDCs as a group for successful negotiations at WTO. At the same time, given the high trade costs facing the LDCs, the study rightly suggests that they must capitalize on the successful implementation of the Trade Facilitation Agreement. Moreover, the study identifies the gaps in LDC capacities, and articulates the needs in terms of national and regional policies as well as capacity-building programmes for helping them to implement the Ministerial decisions in favour of the LDCs. The study also draws attention to what should be done towards achieving the finalization of the Doha Development Agenda Work Programme and the ongoing WTO negotiations.
    Keywords: Lease developed countries, LDCs, Bali package, Doha, WTO
    JEL: F0
    Date: 2015–11
  22. By: Boxell, Levi
    Abstract: Historians have frequently suggested that droughts helped facilitate the African slave trade. By introducing a previously unused dataset on historical rainfall levels in Africa, I provide the first empirical answer to this hypothesis. I demonstrate how negative rainfall shocks and long-run shifts in the mean level of rainfall increased the number of slaves exported from a given region and can have persistent effects on the level of development today. Using a simple economic model of an individual's decision to participate in the slave trade, along with observed empirical heterogeneity and historical anecdotes, I argue that consumption smoothing and labor allocation adjustments are the primary causal mechanisms for the negative relationship between droughts and slave exports. These findings contribute to our understanding of the process of selection into the African slave trade and have policy implications for contemporary human trafficking and slavery.
    Keywords: slave trade; climate; droughts; consumption smoothing; human trafficking
    JEL: N37 N57 O15 Q54
    Date: 2016–03–03
  23. By: Davies,Ronald B.; Lamla,Michael Josef; Schiffbauer,Marc Tobias
    Abstract: Using firm-level data for Jordan, the paper estimates the extent to which growth spillovers from foreign direct investment (FDI) to local firms stem from persistent learning externalities (i.e., they endure even after foreign investment leaves as knowledge has been transferred to local firms) or from transitory effects (e.g., demand increases that evaporate following disinvestment). The paper find that spillovers have a significant transitory nature, with employment and capital growth declining when FDI falls, particularly in downstream industries supplied by locals. This suggests that if FDI-attracting policies are intended to promote sustainable growth, it may be more effective to attract and retain FDI via long-term structural policies, for instance, through low corporate tax rates rather than temporary tax holidays or through policies that strengthen the domestic absorptive capacity and linkages between foreign and local firms.
    Keywords: Economic Theory&Research,Labor Policies,Emerging Markets,Foreign Direct Investment,Investment and Investment Climate
    Date: 2016–03–02
  24. By: Odongo Kodongo
    Abstract: This paper investigates the drivers of bank foreign expansion in East Africa. Our results support the view that institutional quality is vital at the planning phase of banks’ going-abroad decision but its importance is muted once the decision has been taken. Second, relatively competitive markets and weak market power at home seem to “push†banks abroad. Third, banks seek to exploit the benefits of their relative efficiency through regional expansion. Fourth, relatively higher foreign country inflation is a deterrent to banks expansion abroad. Finally, desire for greater earnings, economic integration, and follow-the-client hypothesis do not explain banks’ foreign expansion decisions.
    Keywords: East Africa, Foreign bank expansion, Internationalization theories, Poisson regression
    JEL: F23 G15 G21
    Date: 2016
  25. By: Konrad B. Burchardi; Thomas Chaney; Tarek A. Hassan
    Abstract: We use 130 years of data on historical migrations to the United States to show a causal effect of the ancestry composition of US counties on foreign direct investment (FDI) sent and received by local firms. To isolate the causal effect of ancestry on FDI, we build a simple reduced-form model of migrations: migrations from a foreign country to a US county at a given time depend on (i) a push factor, causing emigration from that foreign country to the entire United States, and (ii) a pull factor, causing immigration from all origins into that US county. The interaction between time-series variation in country-specific push factors and county-specific pull factors generates quasi-random variation in the allocation of migrants across US counties. We find that a doubling of the number of residents with ancestry from a given foreign country relative to the mean increases by 4.2 percentage points the probability that at least one local firm invests in that country, and increases by 31% the number of employees at domestic recipients of FDI from that country. The size of these effects increases with the ethnic diversity of the local population, the geographic distance to the origin country, and the ethno-linguistic fractionalization of the origin country.
    JEL: F21 G15 J61 L14 N3 O11
    Date: 2016–01
  26. By: Matija Kovacic (Department of Economics, University Of Venice Cà Foscari); Cristina Orso (Department of Economics, University Of Venice Cà Foscari)
    Abstract: In this paper we show that the individuals' perception of immigration is shake by their cultural and social characteristics. In order to account for cultural differences in a broader sense, we rely on linguistic relativity theory according to which linguistic differences in grammatical structure may induce speakers of different languages to conceptualize and experience the world differently (Sapir (1921), Whorf and Carroll (1964)). Linguistic variation is measured by means of a specific linguistic marker developed in Kovacic et al. (2015) based on the number of grammatical categories (moods)concerned with the expression of uncertainty. We show that more intensive users of these specific grammatical forms are signficantly more intolerant toward immigration with respect to other identical individuals speaking a different language/s. In line with Kovacic et al. (2015), this result can be interpreted as a direct consequence of individual unobserved general attitude towards uncertainty reflected by the specific linguistic marker used to measure the degree of linguistic variation. The results are robust to the inclusion of additional set of explanatory and control variables, country and year fixed effects, and alternative estimation methods.
    Keywords: Immigration, Tolerance, Uncertainty, Integration, Culture, Language
    JEL: D80 Z13 J15 D83
    Date: 2016
  27. By: Eiji Yamamura
    Abstract: This paper uses cross-country data to examine the long-term effect of trade openness on the gender gaps in wages, education, political empowerment and health. Key findings are: trade openness since 1970 reduced the gender gaps in wages and educational attainment as of 2011 but did not influence the gaps in political attainment and health status. The effect of trade openness on the gender wage gap remained observable in later years (1980, 1990 and 2000), although it decreased in degree over time. On the other hand, the effect of trade openness on the gender gap in educational attainment disappeared in 2000. Similar results were obtained even after controlling for endogenous bias.
    Date: 2016–03
  28. By: Anna Maria Mayda; Giovanni Peri; Walter Steingress
    Abstract: We empirically analyze the impact of immigration to the U.S. on the share of votes to the Republicans and Democrats between 1994 and 2012. Our analysis is based on variation across states and years – using data from the Current Population Survey merged with election data – and addresses the endogeneity of immigrant flows using a novel set of instruments. On average across election types, immigration to the U.S. has a significant and negative impact on the Republican vote share, consistent with the typical view of political analysts in the U.S. This average effect – which is driven by elections in the House – works through two main channels. The impact of immigration on Republican votes in the House is negative when the share of naturalized migrants in the voting population increases. Yet, it can be positive when the share of non-citizen migrants out of the population goes up and the size of migration makes it a salient policy issue in voters' minds. These results are consistent with naturalized migrants being less likely to vote for the Republican party than native voters and with native voters' political preferences moving towards the Republican party because of high immigration of non-citizens. This second effect, however, is significant only for very high levels of immigrant presence.
    JEL: F22
    Date: 2016–01
  29. By: Jahn, Vera (Helmut Schmidt University, Hamburg); Steinhardt, Max Friedrich (Helmut Schmidt University, Hamburg)
    Abstract: The paper examines the impact of immigration on innovation. We exploit an immigrant placement policy which took place during the early nineties in Germany when large numbers of so called ethnic Germans entered the country. This allows us to overcome the potential bias of endogenous location decisions and to estimate how regional inflows of ethnic Germans affected patent applications over time. Although the majority of ethnic German inflows was unskilled, we do not find any evidence of a negative impact on innovations. Instead, our panel estimates suggest that immigration had no or even a positive impact on innovations.
    Keywords: Innovation; Immigration; Ethnic Germans; Quasi-experimental setting
    JEL: F22 O32 R11
    Date: 2016–02–29
  30. By: Ylömäki, Tobias
    Abstract: Global value chain (GVC) upgrading is a key factor in country-level economic performance. Therefore it is important to study its fundamental, firm-level origins. What are the main attributes that drive firms toward GVC upgrading? How do upgrading trajectories differ? The previous literature has largely concentrated on developing countries and firms producing low value-added goods and services. Are there any fundamental differences between these and firms in a highly developed country that mainly operate in sectors other than pure manufacturing? I answer these questions by analyzing a 2015 survey that consists of thousands of Finnish firms from a variety of industries and size cohorts. From the survey, it is possible to determine firms’ ex ante propensity for GVC upgrading. I found that innovativeness, the young age of the firm and outsourcing positively affect upgrading. I also found that firms do not plan their upgrading via any specific trajectory.
    Keywords: Global value chain upgrading, firm-level survey analysis, innovativeness, outsourcing
    Date: 2016–03–11

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