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on International Trade |
| By: | Holger Breinlich; Swati Dhingra; Gianmarco Ottaviano |
| Abstract: | Over the past two decades, the European Commission has negotiated a number of Free Trade Agreements (FTAs) which contain both traditional elements of bilateral tariff reductions, as well as additional liberalisation measures like non-tariff barriers. According to economic theory, FTAs lower trade barriers on imported goods, leading to consumer welfare gains from increase in product variety, better quality products and lower prices for existing products. We estimate the variety, quality and price effects of EU FTAs, drawing on recent developments in the quality literature and using detailed import price and expenditure data. On average, trade agreements the EU has entered into over the past two decades increased the quality of UK imports from its FTA partners by 26 per cent and lowered the quality-adjusted price of imports by 19 per cent. We find that consumer prices fell by 0.5 per cent for UK consumers as a result of FTAs with trade partners that are not members of the European Community. Price reductions for UK consumers are greater than those for EU12 consumers, whose prices fell by 0.3 per cent from non-EC FTAs. Using the set of non-EC FTA estimates to predict the effects of future FTAs, we find a projected decline in consumer prices for UK consumers of 0.4 per cent from an FTA with the United States (TTIP) and 0.2 per cent an FTA with Japan (EPA). For EU12 consumers, the TTIP and EPA are predicted to reduce consumer prices by 0.3 per cent and 0.1 per cent. |
| Keywords: | trade agreements, EU, consumers |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1417&r=int |
| By: | Elif Arbatli; Gee Hee Hong |
| Abstract: | Singapore is one of the world’s most open economies, with the size of its trade reaching about 350 percent of its GDP. With the rise of highly diversified cross-border production networks, Singapore has come to play an integral role in the global supply chain with heavy reliance on foreign contents in its exports and production. It has also successfully moved up the value chain, exporting goods with high sophistication and economic complexity. Against this backdrop, in this paper, using disaggregate industry/product level trade data, we revisit Singapore’s export elasticities and find that growing participation in global production chains and rising export complexity are important determinants. |
| Keywords: | Asia and Pacific;Singapore;Foreign exchange;Trade elasticities, trade structure, global supply chain, economic complexity, trade, value, exports, price, share, Input-Output Analysis, General, Country and Industry Studies of Trade, |
| Date: | 2016–03–07 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:16/52&r=int |
| By: | Bahar, Dany (Inter-American Development Bank); Rapoport, Hillel (Paris School of Economics) |
| Abstract: | Do migrants shape the dynamic comparative advantage of their sending and receiving countries? To answer this question we study the drivers of knowledge diffusion by looking at the dynamics of the export basket of countries, with particular focus on migration. The fact that knowledge diffusion requires direct human interaction implies that the international diffusion of knowledge should follow the pattern of international migration. This is what this paper documents. Our main finding is that migration, and particularly skilled immigration, is a strong and robust driver of productive knowledge diffusion as measured by the appearance and growth of tradable goods in the migrants' receiving and sending countries. We find that a 10% increase in the stock of immigrants from countries exporters of a given product is associated with a 2% increase in the likelihood that the host country will start exporting that good "from scratch" in the following 10-year period. In terms of ability to expand the export basket of countries, a migrant with college education or above is about ten times more "effective" than an unskilled migrant. The results are robust to accounting for shifts in product-specific global demand, to excluding bilateral trade possibly generated by network effects, as well as to instrumenting for migration using a gravity model. |
| Keywords: | migration, knowledge diffusion, comparative advantage, exports |
| JEL: | F14 F22 O33 D83 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9788&r=int |
| By: | Tadashi Ito (Institute of Developing Economies); Toshiyuki Matsuura (Keio Economic Observatory, Keio University); Takeshi Mizuta (Hitotsubashi University) |
| Abstract: | This paper reviews trade liberalization of Japan's agricultural sector in the past 50 years and compute welfare impact of such liberalization. Using detailed data of Japan's agricultural sector, we compute elasticities of substitution for each agricultural product group based on the methodologies of Broda and Weinstein (2006) and Soderbery (2015). Using these estimated elasticities of substitutions, we compute welfare improvement by the trade liberalization following the recently developed methodologies for the computation of welfare improvement by Arkolakis et al (2012) and Ossa (2012). We find 5 to 15 percent welfare improvement vis-a-vis autarky situation. |
| Keywords: | Japan, Agriculture, Trade Liberalization, Welfare |
| JEL: | F14 |
| Date: | 2016–02–25 |
| URL: | http://d.repec.org/n?u=RePEc:keo:dpaper:2016-003&r=int |
| By: | Lucas Bretschger (ETH Zürich, Switzerland); Simone Valente (University of East Anglia, United Kingdom) |
| Abstract: | We build a two-country model of endogenous growth to study the welfare effects of taxes on tradable primary inputs when countries engage in asymmetric trade. We obtain explicit links between persistent gaps in productivity growth and the incentives of resource exporting (importing) countries to subsidize (tax) domestic resource use. The exporters' incentive to subsidize hinges on slower productivity growth and is disconnected from the importers' incentive to tax resource inflows i.e., rent extraction. Moreover, faster productivity growth exacerbates the im- porters' incentive to tax, beyond the rent-extraction motive. In a strategic tax game, the only equilibrium is of Stackelberg type and features, for a wide range of parameter values, positive exporters' subsidies and importers' taxes at the same time. The model predictions concerning the impact of resource taxes on relative income shares are supported by empirical evidence. |
| Keywords: | Productivity Gaps, Endogenous Growth, International Trade, Tax Policy |
| JEL: | O40 F43 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:eth:wpswif:16-239&r=int |
| By: | Kyle Bagwell; Robert W. Staiger |
| Abstract: | What does economics have to say about the design of international trade agreements? We review a literature on this question, providing detailed coverage on three key design features of the GATT/WTO: reciprocity, nondiscrimination as embodied in the MFN principle, and tariff bindings and binding "overhang." Each of these features is central to the design of the GATT/WTO, and we argue that an economic perspective can go a long way toward revealing a consistent logic to the inclusion of these design features in trade agreements. |
| JEL: | F02 F13 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22087&r=int |
| By: | Hanna Krings (University of Aachen) |
| Abstract: | This paper analyzes the consequences of innovations in the electronic goods sector for global energy consumption and identities a global rebound effect with respect to trade in second-hand electronic consumption goods. With the help of 2SLS-regressions, the positive influence of trade in second-hand electronics on the respective penetration rates in developing countries and the consequences for worldwide energy consumption are estimated. |
| Keywords: | Second-hand trade, global rebound effect, energy consumption |
| JEL: | F14 Q49 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:201538&r=int |
| By: | Marta Solaz Alamá (Universitat de València) |
| Abstract: | Following Koopman, Wang and Wei (2014) and using the data and indicators derived from the international input-output tables of the World Input-Output Database (WIOD), this paper addresses the participation of the Spanish economy and its sectors in GVCs during the period 1995-2011 and its implications for the value-added content of trade. The analysis reveals the increasing integration of the country in GVCs and the heterogeneity between manufacturing and services in their degree of international fragmentation and its contribution to value-added. The importance of sectors heavily dependent on foreign inputs and the relatively low share of exports in GDP limit the capacity of the external sector to stimulate a sustained recovery. Siguiendo la metodología propuesta por Koopman, Wang y Wei (2014) y a partir del banco de datos generado en base a las tablas input-output internacionales de la World Input-Output Database (WIOD), el trabajo analiza la integración de la economía española y sus distintos sectores en las cadenas globales de valor (CGV) a lo largo del periodo 1995-2011, así como las implicaciones de su especialización en la generación de valor añadido. El análisis refleja el avance de su integración en las CGV y la existencia de diferencias notables entre manufacturas y servicios en su grado de fragmentación internacional y aportación al valor añadido. La importancia de sectores muy dependientes de los insumos extranjeros en su estructura productiva, junto con el reducido peso de las exportaciones brutas sobre el PIB, limitan la capacidad del sector exterior de estimular la recuperación de manera sostenida. |
| Keywords: | exportaciones; valor añadido; fragmentación; globalización; modelo input-output multi-regional (MRIO) exports; value added; fragmentation; multi-regional input-output model (MRIO) |
| JEL: | F14 F15 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:ivi:wpasec:2016-01&r=int |
| By: | Sandra Hanslin; Rolf Scheufele |
| Abstract: | Foreign economic activity is a major determinant of export development. This paper presents an indicator for now- and forecasting exports, which is based on survey data that captures foreign economic perspectives. We construct an indicator by weighting foreign PMIs of main trading partners with their respective export shares. For two very trade exposed countries (Germany and Switzerland) the paper shows that the indicator based on foreign PMIs is strongly correlated with exports (total as well as goods exports). In an out-of-sample forecast comparison we employ MIDAS models to forecast the two different definitions of exports. We document that our export indicator performs very well relative to univariate benchmarks and relative to other major leading indicators using hard and soft data. |
| Keywords: | Business tendency surveys, mixed frequencies, nowcasting, forecasting, MIDAS, exports |
| JEL: | F14 F17 C53 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:snb:snbwpa:2016-01&r=int |
| By: | Mustafa Sakr (Department of Economics, University of Pretoria); Andre Jordaan (Department of Economics, University of Pretoria) |
| Abstract: | As emerging market multinational corporations (EMNCs) tend to remarkably expand their global presence, it is of the utmost importance to explore the salient attributes of such unfolding phenomenon. One of the key findings is that top EMNCs are displaying a leapfrogging internationalisation process. Moreover, natural resources related sectors, in particular energy, have been proven to dominate the non-financial industry structure of EMNCs. In addition, various interesting findings have been concluded by this article. Regarding the preferred destination for their outward foreign direct investment (OFDI), EMNCs currently tend to invest more in developing markets. However, the relevance of developed markets is growing over time. Available statistics furthermore exhibit that greenfield is often preferred above mergers and acquisitions (M&As) as an entry mode into developing markets. The opposite is true in developed markets. EMNCs are domiciled predominantly in BRICS countries which account collectively for most of the OFDI getting from EMs. Emerging African MNCs are dramatically losing ground in the EMNC landscape. Regarding internationalisation, ownership, industry and geographical structure and preferred entry modes, remarkable differences are easily seen in the salient features of EMNCs compared to those based in developed markets. |
| Keywords: | Emerging MNCs, BRICS MNCs, African MNCs, emerging markets’ OFDI, differences between EMNCs and DMNCs |
| JEL: | P45 F21 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:201623&r=int |
| By: | Jayjit Roy |
| Abstract: | Analyzing the impact of domestic labor regulations on international trade is relevant, in part, because (i) trade negotiations may increasingly constrain countries’ ability to implement trade policies and (ii) concerns over international competition driving countries towards a ‘race to the bottom’ in labor standards are rampant. However, identification of this causal e§ect is challenging due to the potential endogeneity of regulations attributable to crucial unobservables and measurement error. In this light, we use data from more than 30 countries across 21 manufacturing sectors over the period 2001-2009 and examine the impact of employment protection legislation (EPL) on industry-level trade. While a di§erence-in-di§erences type approach controls for several potential confounders, we also employ an instrumental variables (IV) strategy. Across all specifications, EPL is found to significantly encourage imports in relatively labor-intensive industries. Further, the IV estimates uncover a more pronounced e§ect and find concerns over endogeneity to be relevant. Key Words: Employment Protection Legislation, International Trade |
| JEL: | C36 F16 J80 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:apl:wpaper:16-06&r=int |
| By: | Robert-Nicoud, Frédéric; Carrere, Céline; Grujovic, Anja |
| Abstract: | We develop a multi-country, multi-sector trade model with labor market frictions and equilibrium unemployment. Trade opening leads to a reduction in unemployment if it raises real wages and reallocates labor towards sectors with lower-than-average labor market frictions. We estimate sector-specific labor market frictions and trade elasticities using employment data from 25 OECD countries and worldwide trade data. We then quantify the potential unemployment and real wage effects of implementing the Transatlantic Trade and Investment Partnership (TTIP) or the Trans-Pacific Partnership (TPP), and of eliminating trade imbalances worldwide. The unemployment and real wage effects work in conflicting directions for some countries under some trade regimes, such as the US under TTIP. We introduce a welfare criterion that accounts for both effects and splits such ties. Accordingly, US welfare is predicted to decrease under TTIP and increase under TPP. |
| JEL: | F15 F16 F17 J64 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:gnv:wpgsem:unige:77631&r=int |
| By: | Kyu-Min Lee; Kwang-Il Goh |
| Abstract: | Many real-world complex systems across natural, social, and economical domains consist of manifold layers to form multiplex networks. The multiple network layers give rise to nonlinear effect for the emergent dynamics of systems. Especially, weak layers that can potentially play significant role in amplifying the vulnerability of multiplex networks might be shadowed in the aggregated single-layer network framework which indiscriminately accumulates all layers. Here we present a simple model of cascading failure on multiplex networks of weight-heterogeneous layers. By simulating the model on the multiplex network of international trades, we found that the multiplex model produces more catastrophic cascading failures which are the result of emergent collective effect of coupling layers, rather than the simple sum thereof. Therefore risks can be systematically underestimated in single-layer network analyses because the impact of weak layers can be overlooked. We anticipate that our simple theoretical study can contribute to further investigation and design of optimal risk-averse real-world complex systems. |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1603.05181&r=int |
| By: | Nagayasu, Jun |
| Abstract: | In order to differentiate between commonality and heterogeneity in real effective exchange rates, which are considered a measure of external competitiveness, we decompose their movements into global and country-specific factors using the Bayesian factor model. First, we show a complex but often positive relationship between real exchange rates and net trade volume using panel data of developed and developing countries. Then we report a particular global trend in real exchange rates, but a substantial proportion of their variation is found to be country-specific. In line with this finding, we conclude that structural shifts, when they do exist, are considered country-specific factors. Furthermore, consistent with economic theory, this global factor is closely related to a trend in the global interest rate, while country-specific factors are closely related to idiosyncratic movements in the countries' own interest rates. Such a decomposition results in better model performance in terms of coefficient signs, and therefore our results suggest that external competitiveness is heterogeneous among countries and that economic policy can influence countries’ competitiveness. |
| Keywords: | Real effective exchange rates; factor model; variance decomposition; external competitiveness |
| JEL: | F3 |
| Date: | 2016–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:70078&r=int |
| By: | Ralph Ossa |
| Abstract: | What tariffs would countries impose if they did not have to fear any retaliation? What would occur if there was a complete breakdown of trade policy cooperation? What would be the outcome if countries engaged in fully efficient trade negotiations? And what would happen to trade policy cooperation if the world trading system had a different institutional design? While such questions feature prominently in the theoretical trade policy literature, they have proven difficult to address empirically, because they refer to what-if scenarios for which direct empirical counterparts are hard to find. In this chapter, I introduce research which suggests overcoming this difficulty by applying quantitative models of commercial policy. |
| JEL: | F12 F13 O19 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22062&r=int |
| By: | Uddin, Md Akther; Baddou, Mehdi; Gulzar Mohd, Rosana |
| Abstract: | The stability and level of strength or weakness in exchange rates are prime considerations of monetary authorities and businesses, both domestic and international. This paper thus analyses the RMB’s appreciation and depreciation against its major trading partners’ currencies namely the USD, EUR, JPY, AUD and MYR. It also includes a review of their volatilities and most importantly, the economic implications of the RMB rates on exports and foreign investment flows. The Renminbi has come a long way since its pegged days of 1994 to 2005. Most recently, head of the International Monetary Fund (IMF), Christine Lagarde herself, has endorsed its inclusion into an elite basket of the fund’s reserve currencies. The Renminbi is now on a managed floating system and allegations of manipulation remain, especially with notable pauses in the currency’s rises during the global financial crisis and in the second quarter of 2015. But the upward trend is undeniable, given that the Chinese economy is now the world’s number two in size and the Renminbi is now the world’s second most-used currency for trade finance. Its volatility has similarly picked up with the end of the peg and its increasing use worldwide. Ironically, an appreciating currency, albeit a managed one, bodes well for China’s economy now as it is engineering a shift away from being led by exports to being driven by domestic consumption. A strong Renminbi will encourage more import consumption, something that the government would like to see. But challenges remain. China’s still largely closed markets and questions about the country’s political, legal and economic institutions may constrain the international use of its currency. And while the Renminbi has shot up in use, international sales in the currency still account for less than 3% of global transactions. The greenback continues to dominate as the currency for trade settlements. Thus while the wind is definitely beneath the Renminbi’s sails, officials will likely need to skilfully navigate through potential turbulences ahead. |
| Keywords: | currency volatility, exchange rate, devaluation, RMB, USD, EUR, AUD and MYR |
| JEL: | A1 A3 F3 F31 |
| Date: | 2015–11–18 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:70144&r=int |
| By: | Britz, Wolfgang; Drud, Arne; van der Mensbrugghe, Dominique |
| Abstract: | We discuss how to avoid aggregation bias in large-scale global Computable General Equilibrium (CGE) models by reducing the need of pre-model aggregation, based on the combination of algorithmic improvements and a filtering approach which removes small transactions. Using large-scale sensitivity analysis, we show the impact of pre-aggregation and filtering on model size, model solution time and simulated welfare impacts, using a multi-lateral partial trade liberalization simulated with the standard GTAP model as the test case. We conclude that pre-model aggregation should be avoided as far as possible, and that our filtering approach and algorithmic improvements allow global CGE analysis even with highly disaggregated data sets at moderate solution times. |
| Keywords: | Computable General Equilibrium analysis, aggregation bias, International Relations/Trade, Research Methods/ Statistical Methods, C68, C63, |
| Date: | 2015–12–10 |
| URL: | http://d.repec.org/n?u=RePEc:ags:ubfred:232876&r=int |
| By: | Karen Bosman (Independent Researcher) |
| Abstract: | The overall trend since 1994 of growing foreign direct investment into South Africa has been a reflection of the country’s openness to investment as well as significant international trust in its institutions. Recent policy and legislative developments, including the termination of South Africa’s bilateral investment treaties with EU trading partners and the introduction of the Protection of Investment Act, are however raising concern among international investors and bringing into question the attractiveness and reliability of South Africa as a destination for foreign investment. These concerns have been compounded by increasing regulatory restrictions upon foreign investors, including stricter visa requirements, and the introduction of various other pieces of legislation that have implications upon the level of protection of property rights in South Africa. A policy shift, reflected in legislation such as the Protection of Investment Act, the Private Security Industry Regulation Amendment Bill and the Expropriation Bill, indicates an enhanced focus on the public interest aspect of the constitutional right to property in accordance with the government’s constitutionally mandated transformative agenda. A balance needs to be found between the government’s sovereign right to implement domestic policies in order to achieve its socio-economic goals, its duty to protect foreign investments, and its overall objective of promoting sustainable economic growth. |
| Keywords: | South Africa, foreign investment protection, expropriation, policy space, bilateral investment treaties, Protection of Investment Act, Constitution |
| JEL: | K10 K11 K33 F21 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:sza:wpaper:wpapers259&r=int |
| By: | Itoh, Ryo; Nakajima, Kentaro |
| Abstract: | This study investigates how the structure of a supply chain network influences the FDI decisions of firms embedded in the network. We theoretically describe firms' FDI decisions through a coordination game of a fixed network with incomplete information. We show that the network effect in the equilibrium can be represented by Katz-Bonacich centrality. Firms with a larger Katz-Bonacich centrality than other firms are more likely to engage in FDI. We empirically test this prediction with disaggregated inter-firm transaction network data of 115,111 Japanese firms and confirm that the Katz-Bonacich centrality has a significantly positive, robust effect on firms' FDI engagements. |
| Keywords: | FDI, network game, supply chain, Katz-Bonacich centrality |
| JEL: | D20 D85 F23 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:hit:remfce:49&r=int |
| By: | Kollmann, Robert |
| Abstract: | This paper analyzes the effects of output volatility shocks on the dynamics of consumption, trade flows and the real exchange rate, in a two-country, two-good world with consumption home bias, 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, to compensate for the greater riskiness of the country’s output stream. This risk sharing transfer raises the country’s consumption, lowers its trade balance and appreciates its real exchange rate. In the recursive preferences framework here, volatility shocks account for a non-negligible 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 and the real exchange rate. |
| Keywords: | uncertainty shocks, international business cycles, international risk sharing, external balance, exchange rate, consumption-real exchange rate anomaly |
| JEL: | E3 F3 F4 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:70183&r=int |
| By: | Clemens, Michael A. (Center for Global Development); Montenegro, Claudio (University of Chile); Pritchett, Lant (Harvard Kennedy School) |
| Abstract: | Large international differences in the price of labor can be sustained by differences between workers, or by natural and policy barriers to worker mobility. We use migrant selection theory and evidence to place lower bounds on the ad valorem equivalent of labor mobility barriers to the United States, with unique nationally-representative microdata on both U.S. immigrant workers and workers in their 42 home countries. The average price equivalent of migration barriers in this setting, for low-skill males, is greater than $13,700 per worker per year. Natural and policy barriers may each create annual global losses of trillions of dollars. |
| Keywords: | migration, growth, impact, GDP, tariff, quota, deadweight, cost, visa, barrier, price, wedge |
| JEL: | F22 J61 J71 O15 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9789&r=int |
| By: | Omojolaibi, Joseph; Mesagan, Ekundayo; Olaifa, Adeyemi |
| Abstract: | The study explores the relationship between non-oil export and domestic investment in Nigeria. Relevant data were collected from the Central Bank of Nigeria statistical bulletin between 1980 and 2011. The error correction model was estimated in determining how non-oil export impacts domestic investment and the granger causality test was conducted to determine the causal relationship among the variables. The findings revealed that the impact of non-oil export on domestic investment was positive but insignificant. The insignificance is as a result of the mono-cultural nature of production skewed towards the oil sector, although the positive coefficient shows that a lot of prospects still exist in the sector. Also, the findings show that while domestic investment granger causes non-oil export, nonoil export did not granger cause domestic investment. Hence, the study the recommended that effort must be made at formulating explicit export promotion policies that will encourage the growth of the non-oil sector in order to make them more viable at generating export earnings for the country and also boost their contribution the level of domestic investments in the country. |
| Keywords: | Non-oil Export, Domestic Investment, Export Promotion, Causality, Nigeria. |
| JEL: | C32 C33 F43 |
| Date: | 2015–09–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:70201&r=int |
| By: | Shima'a Hanafy (University of Marburg) |
| Abstract: | This paper investigates the effect of sectoral foreign direct investment (FDI) on economic growth in Egypt, using a novel panel dataset of 26 Egyptian governorates for the period 1992–2007. The growth literature is robust with the benefits of using a within-country dataset for such a research question (Ford et al., 2008). Despite the large number of theoretical models on the channels through which FDI can enhance economic growth, empirical findings are still inconclusive. We argue that one possible reason for the ambiguous effect is the use of aggregate FDI data across different sectors. Our results show no significant effect of aggregate FDI stock on economic growth in Egyptian governorates, which can be partly explained by the contradictory growth effects of FDI at the sectoral level. We find a positive effect of manufacturing FDI, a negative effect of agricultural FDI and no significant effect of services FDI on economic growth. |
| Keywords: | Foreign direct investment; sectoral FDI; economic growth; Egypt |
| JEL: | B59 C61 D21 D69 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:201537&r=int |
| By: | Miyakawa, Daisuke; Hosono, Kaoru; Uchino, Taisuke; Ono, Arito; Uchida, Hirofumi; Uesugi, Iichiro |
| Abstract: | This paper investigates the effect of financial shocks on firms' exports. To circumvent endogeneity problems, we utilize the natural experiment provided by Japan's Great Hanshin-Awaji earthquake in 1995. Using a unique firm-level dataset, we single out the effect of exogenous financial shocks on firms' exports by focusing on exports of those firms that were not directly damaged by the earthquake but had main bank relationships with damaged banks. Our main findings are twofold. First, as for the extensive margins of exports, the probabilities of starting exports or of expanding export destination areas were smaller for undamaged firms transacted with a damaged main bank than for those transacted with an undamaged main bank. Second, as for the intensive margins of exports, undamaged firms transacted with a damaged main bank had a lower export-to-sales ratio than those transacted with an undamaged main bank. These findings lend support to the existence of the financial constraint on firm exports. |
| Keywords: | Bank Lending, Firm Exports, Extensive and Intensive Margins |
| JEL: | F14 G21 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:hit:remfce:50&r=int |
| By: | Alexei Kireyev; Andrei Leonidov |
| Abstract: | The paper models international spillovers from a hypothetical drop of China’s imports as a result of China’s rebalancing of its growth model. A network-based model used in the paper allows capturing higher round network effects of the shock, which are largely unaccounted for in the existing literature. Such effects include direct spillovers from China on its trading partners, subsequent spillins among them, and spillbacks on China itself. The paper finds that the network effects most likely will be substantial, may amplify initial shock, and change the direction of its propagation. The impact on Asia and Pacific will be the strongest followed by the Middle East and Central Asia. The impact on sub-Saharan Africa would be noticeable only for some countries. Spillovers on Europe, including the Euro area, will be moderate, and spillovers on the Western Hemisphere, including the United States, would be very marginal. Metal and non-fuel commodity exporters may experience the largest negative impact. |
| Keywords: | Asia and Pacific;China, People's Republic of;Trade;shocks, spillover, spillin, spillback, network, gdp, revenue, demand, Neural Networks and Related Topics, Country and Industry Studies of Trade, Open Economy Macroeconomics, International Policy Coordination and Transmission, Forecasting and Simulation, and spillback, network., |
| Date: | 2016–03–07 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:16/51&r=int |
| By: | Michel Beine (CREA, Université du Luxembourg); Bénédicte Souy (CREA, Université du Luxembourg) |
| Abstract: | This article presents and discusses the evolution of immigration policy of Luxembourg concerning the entry of economic, family related and humanitarian migrants. To that aim, we rely on some of the data of the IMPALA project that codes from immigration laws the entry conditions in a set of immigration countries. We focus on some entry tracks specific to skilled and unskilled migrants and compare some of the conditions prevailing in Luxembourg with those observed in France, the US and Australia. We also propose a narrative analysis of the changes in the Luxembourgish regulation since the end of the 19th Century. We show that Luxembourg has improved its immigration system over time and follows mainly reforms introduced in the other European countries and at the European level. |
| Keywords: | IMPALA project, Immigration policy, Asylum policy, Luxembourgish regulation |
| JEL: | K F22 J08 J61 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:luc:wpaper:16-02&r=int |
| By: | Liu, Yanping |
| Abstract: | Theoretical and empirical work on export dynamics has generally assumed constant marginal production cost and therefore ignored domestic product market conditions. However, recent studies have documented a negative correlation between firms' do- mestic and export sales growth, suggesting that firms can be capacity constrained in the short run and face increasing marginal production cost. This paper develops and estimates a dynamic model of export behavior incorporating short-term capacity con- straints and endogenous capital investment. Consistent with the empirical evidence, the model features firms' sales substitutions across markets in the short term, and generates time-varying transition paths of firm responses through firms' capital adjust- ments over time. The model is fit to a panel of plant-level data for Colombian manufacturing indus- tries and used to simulate how firm responses transition following an exchange-rate devaluation. The results indicate that incorporating capital adjustment costs is quan- titatively important, as shown by the length of the transition period, and the difference between the short-run and long-run exchange rate elasticity of exports. Firms' expeca- tion on the permanence of the policy changes also matters. |
| Keywords: | International trade; heterogeneous firms; capacity constraints; capital adjustment costs; firm dynamics; firm panel data |
| JEL: | F12 L11 F14 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:26600&r=int |
| By: | Paulo Bastos (World Bank); Natália P. Monteiro (Department of Economics/NIPE, University of Minho); Odd Rune Straume (Department of Economics/NIPE, School of Economics and Management, University of Minho) |
| Abstract: | We study the effect of foreign takeovers on firm organization. Using a comprehensive data set of Portuguese firms and workers spanning two decades, we find that foreign acquisitions lead to: (1) an expansion in the scale of operations; (2) a higher number of hierarchical layers; (3) increased span of control among top managers; and (4) increased wage inequality across layers. These results accord with a theory of knowledge-based hierarchies in which foreign takeovers improve management practices and reduce communication costs within the acquired firms. Evidence from auxiliary survey data provides support to this mechanism by suggesting that acquired firms are more likely to use information technologies that reduce internal communication costs. |
| Keywords: | Foreign direct investment, internal organization, wage inequality, information technologies. |
| JEL: | D24 E23 F23 M10 M16 O30 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:nip:nipewp:5/2016&r=int |
| By: | Voeten, Jaap (Tilburg University, School of Economics and Management); Vannoorenberghe, Gonzague (Tilburg University, School of Economics and Management) |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiutis:ffc4c870-f6e9-4795-badd-47ec320943a8&r=int |
| By: | Mary Amiti (Federal Reserve Bank of New York, 33 Liberty Street, New York, NY 10045); Oleg Itskhoki (Princeton University, Department of Economics, Princeton, NJ 08544); Jozef Konings (Katholieke Universiteit Leuven, Department of Economics, Naamsestraat 69, 3000 Leuven, Belgium, National Bank of Belgium) |
| Abstract: | How strong are strategic complementarities in price setting across firms? In this paper, we provide a direct empirical estimate of firm price responses to changes in prices of their competitors. We develop a general framework and an empirical identification strategy to estimate the elasticities of a firm’s price response to both its own cost shocks and to the price changes of its competitors. Our approach takes advantage of a new micro-level dataset for the Belgian manufacturing sector, which contains detailed information on firm domestic prices, marginal costs, and competitor prices. The rare features of these data enable us to construct instrumental variables to address the simultaneity of price setting by competing firms. We find strong evidence of strategic complementarities, with a typical firm adjusting its price with an elasticity of 35% in response to the price changes of its competitors and with an elasticity of 65% in response to its own cost shocks. Furthermore, we find substantial heterogeneity in these elasticities across firms, with small firms showing no strategic complementarities and a complete cost pass-through, while large firms responding to their cost shocks and competitor price changes with roughly equal elasticities of around 50%. We show, using a tightly calibrated quantitative model, that these findings have important implications for shaping the response of domestic prices to international shocks. |
| Keywords: | Pass-through, markups,strategic complementarities, firm heterogeneity |
| JEL: | F1 F3 F4 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbb:reswpp:201603-295&r=int |