nep-int New Economics Papers
on International Trade
Issue of 2016‒06‒18
forty papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Do Free Trade Agreements Increase The New Goods Margin? Evidence from Korea By Sang-Wook (Stanley) Cho
  2. Foreign Direct Investment and Trade in the U.S. Food Processing Industry: Complements or Substitutes? By Ajaero, Victor; Van der Sluis, Evert
  3. Chinese outward foreign direct investment: Is ASEAN a new destination? By Nguyen, Thi Tuong Anh; Doan, Quang Hung
  4. TTIP and Agricultural Trade: The Case of Tariff Elimination and Pesticide Policy Cooperation By Bo Xiong; John C. Beghin
  5. Does trade liberalization trigger tax competition? Theory and evidence from OECD countries By Nelly Exbrayat
  6. Some Twins Are Not Alike: FDI Premia in the Former Soviet States By Valeria, Gattai; Rajssa, Mechelli; Piergiovanna, Natale;
  7. Africa’s rising commodity export dependency on China By Carlos Casanova; Alicia Garcia-Herrero
  8. Trade and Innovation: Matched Worker-Firm-Level Evidence By Tuhkuri, Joonas
  9. Export characteristics and output volatility: comparative firm-level evidence for CEE countries By Urška Èede; Bogdan Chiriacescu; Péter Harasztosi; Péter Harasztosi; Tibor Lalinsky; Jaanika Meriküll
  10. TBT and Trade Facilitation Agreements: Leveraging linkages to reduce trade costs By Ayral, Serra
  11. Energy efficiency gains from trade in intermediate inputs: Firm-level evidence from Indonesia By Michele Imbruno; Tobias D Ketterer
  12. Income Effects and Vertical Differentiation in International Trade By Pierre M. Picard; Alessandro Tampieri
  13. Credit, Inequality and Trade By Sugata Marjit; Suryaprakash Mishra
  14. Foreign Aid and Foreign Direct Investment in Sub-Saharan Africa: A Panel Data Analysis By Kafayat Amusa; Nara Monkam; Nicola Viegi
  15. Firm Dynamics and Residual Inequality in Open Economies By Gabriel Felbermayr; Giammario Impullitti; Julien Prat
  16. Forecasting the Great Trade Collapse By Hakan Yilmazkuday
  17. Measuring and Understanding Trade in Service Tasks By Chiquiar Daniel; Tobal Martín; Yslas Renato
  18. Investment Policies Related to National Security: A Survey of Country Practices By Frédéric Wehrlé; Joachim Pohl
  19. Capital flight and foreign direct investment in Africa An investigation of the role of natural resource endowment By Léonce Ndikumana; Mare Sarr
  20. Estimating General Equilibrium Trade Policy Effects: GE PPML By Anderson, James; Larch, Mario; Yotov, Yoto
  21. International Trade and Job Polarization: Evidence at the Worker-Level By Wolfgang Keller; Hâle Utar
  22. Foreign aid and Foreign direct investment in Sub-Saharan Africa: A panel data analysis By Kafayat Amusa, Nara Monkam, Nicola Viegi
  23. Tourism and Economic Development: Evidence from Mexico's Coastline By Benjamin Faber; Cecile Gaubert
  24. Capacity to Grow: Transport Infrastructure Needs for Future Trade Growth By OECD
  25. Agricultural Trade and Regional Economic Integration: Opportunities and Challenges for Indonesia By Oktaviani, Rina
  26. Does tax competition make mobile firms more footloose? By Ferrett, Ben; Hoefele, Andreas; Wooton, Ian
  27. Agriculture and Trade Agreements By Thorn, Craig
  28. China shock: the impact on trade and incomes By Joao Paulo Pessoa
  29. Trade Policy of South-East Asia By Volovik, Nadezhda
  30. The heterogeneous response of domestic sales and exports to bank credit shocks By Ines Buono; Sara Formai
  31. On domestic demand and export performance in the euro area countries: does export concentration matter? By Soares Esteves, Paulo; Prades, Elvira
  32. The panorama for Vietnam’s Timber Industry with Vietnam-EU Free Trade Agreement (EVFTA): Opportunities and challenges By Daniel Rais
  33. Is the European Union attractive for potential migrants?: An investigation of migration intentions across the world By Flore Gubert; Jean-Noël Senne
  34. Disentangling the Wage Impacts of Offshoring on a Developing Country: Theory and Policy By Bandyopadhyay, Subhayu; Basu, Arnab K.; Chau, Nancy; Mitra, Devashish
  35. Slump despite Global Upturn By Gabor Hunya; Monika Schwarzhappel
  36. The Impact of Foreign Direct Investments on Economic Growth: The Case of MENA Region By Gulcin Guresci Pehlivan; Yagmur Saglam
  37. Importing and firm performance New evidence from South Africa By Lawrence Edwards; Marco Sanfilippo; Asha Sundaram
  38. Is Fair Trade Fair for Consumers? A Hedonic Analysis of U.S. Retail Fair Trade Coffee Prices By Wang, Xiaojin
  39. Tariff-induced (de)industrialization in transition economies: A comparative analysis By Branimir Jovanović; Marjan Petreski; Igor Velickovski
  40. US-China trade: Who is telling the truth? By Shaar, Karam; Zubaidi, Ahmad

  1. By: Sang-Wook (Stanley) Cho (School of Economics, UNSW Business School, UNSW)
    Abstract: This paper analyzes the role of the new goods margin, or the extensive margin, in the growth of trade between Korea and countries with which it has signed free trade agreements (FTAs). Using a methodology developed by Kehoe and Ruhl (2013), I look at the set of least-tradedgoods (or “new” goods) that constitutes the bottom decile of total trade value in 1995, and calculate its share of trade in 2013, when most of the bilateral trade agreements have come into full effect. On average, these new goods account for 26 percent of Korea’s exports and 31 percent of its imports post-FTA. When compared to a control group of main trade partners with no FTAs, I find that FTAs have more impact on the growth of new goods in imports rather than in exports. This difference may be due to the fact that Korea’s tariff barriers were relatively higher than those of its FTA partner countries. Despite rapid growth at the extensive margin, the main avenue of growth in trade came from growth along the intensive margin.
    Keywords: Free trade agreement, Extensive margin, Intensive margin, Korea
    JEL: F13 F14
    Date: 2016–05
  2. By: Ajaero, Victor; Van der Sluis, Evert
    Abstract: A multinational enterprise (MNE) seeking to maximize its profits must decide whether to emphasize production within its home country-based facilities or at its affiliates abroad. We examine what determines the choice between exporting and FDI by the U.S. food processing industry. We also analyze whether trade and FDI are complements or substitutes, i.e., whether foreign affiliate sales have positive or negative impacts on exports. Results indicate that U.S. exports and affiliate sales (due to outward FDI) have both been increasing but sales by foreign affiliates far exceed exports. Also, results show that U.S. exports and FDI are complements, in the sense that exports have a positive effect on FDI and vice versa, FDI has a positive effect on exports. Furthermore, a nation’s GNP per capita was found to be an important factor in determining sales by foreign affiliates. Finally, the results suggest that owners of capital in the processed food industry stand to gain more than the workforce because the former disproportionately benefit from their returns on investment in the long run.
    Keywords: Foreign direct investment, trade, food industry, multinational enterprise, Agribusiness, Food Consumption/Nutrition/Food Safety, International Relations/Trade, Q17,
    Date: 2016–06–07
  3. By: Nguyen, Thi Tuong Anh; Doan, Quang Hung
    Abstract: The paper re-investigates the determinants of China’s outward foreign direct investment (ODI) employing panel data analysis collecting between 2003 and 2014. The results highlight that the market-seeking variables as GDP, GDP Per Capita, and openness to trade have a positive impact on China’s ODI. In addition, Chinese investors are likely to be not associated with economic growth of host countries. Importantly, the previous studies confirmed that only the rich natural resources and the weak institutions countries attracted China’s ODI. However, we found out that, in recent years, not only weak institutions but also good institutions with rich natural resources countries attracted China’s ODI. Moreover, China – ASEAN FTA and cultural proximity between the host country and China both have a significant positive effect of China’s ODI.
    Keywords: Chinese Outward FDI; ASEAN
    JEL: F1 F23
    Date: 2016–05
  4. By: Bo Xiong; John C. Beghin (Center for Agricultural and Rural Development (CARD))
    Abstract: A possible Trans-Atlantic Trade and Investment Partnership (TTIP) agreement will further integrate agricultural markets between the United States and the European Union. The elimination of tariffs and cooperation on sanitary and phytosanitary measures will promote cross-Atlantic trade. We empirically estimate the impacts of tariffs and Maximum Residue Limits (MRLs) on trade in plant products between the two partners. Furthermore, we simulate trade expansions under plausible negotiation outcomes. We find that a TTIP agreement promotes cross-Atlantic trade in plant products, in both directions, by over 60% if tariffs are removed and MRLs are mutually recognized or harmonized to Codex levels.
    Keywords: Trans-Atlantic Trade and Investment Partnership, TTIP, maximum residue limit, MRL, sanitary and phytosanitary measures, tariff, trade agreement, NTM JEL: Q17, F15
    Date: 2016–06
  5. By: Nelly Exbrayat (Université de Lyon, Lyon F- 69007, France; CNRS, GATE L-SE, Ecully, F- 69130, France; Université J. Monnet, Saint-Etienne, F- 42000, France)
    Abstract: This article aims at assessing the empirical relevance of New Economic Geography models of tax competition. We rely on a simple model to specify tax reactions functions, which we estimate with a panel covering (up to) 26 OECD countries over the period 1982 to 2006. We provide striking support for the two main predictions regarding the slope and the constant of the reaction function: national governments seem to adjust their corporate tax rate towards the level chosen in countries that are more populated, and they tend to set higher corporate tax rates when their country enjoys a high real market potential. Through the latter effect, trade integration exerts a positive influence on the level of corporate taxation. However, using a theoretically grounded index of bilateral trade integration, we also show that trade liberalization gives rise to significant tax interactions in the setting of effective average tax rates in the case of European countries, thus exerting a downward pressure on corporate tax rates.
    Keywords: Tax competition, new economic geography, panel data, trade integration, market potential
    JEL: H2 H3 C23 F12
    Date: 2016
  6. By: Valeria, Gattai; Rajssa, Mechelli; Piergiovanna, Natale;
    Abstract: groups of former Soviet states, designated CIS, Developed and Developing. Using Orbis data, we provide within-group and between-group results on the effects of outward FDI (OFDI) and inward FDI (IFDI) on firm-level innovation. As the most notable finding, OFDI firms innovate more than IFDI firms, which in turn innovate more than non-FDI firms. The innovation effect of OFDI is the largest for firms from the Developing economies, followed by the Developed and CIS countries. The innovation effect of IFDI is the largest for firms from the Developing economies, followed by the CIS and Developed countries. FDI to and from Europe have the largest impact on innovation; this holds across country groups.
    Keywords: FDI, Premia, Patents, Former Soviet States, Russia, CIS
    JEL: F23 L25 O57
    Date: 2016–06–10
  7. By: Carlos Casanova; Alicia Garcia-Herrero
    Abstract: In this paper, we look at China-Africa trade links in more detail and evaluate some of the implications of Africa’s growing commodity export dependency on China going forward, particularly in the context of a slowdown in China.
    Keywords: Asia , Economic Analysis , Emerging Economies , Regional Analysis , Working Paper
    JEL: D51 F02 F14
    Date: 2016–05
  8. By: Tuhkuri, Joonas
    Abstract: This paper examines the relationship between globalization and innovation. To do so, it draws from data that match the full population of workers and private-sector firms in Finland tracking them from 1995 to 2009. To correct for endogeneity the paper considers variation in trade exposure from China during its entry to the world market using a fixed effects model. While the literature on trade and innovation has emphasized the role of firms in driving onshore innovation, the main conclusion of this research is that globalization increases the share of innovators within firms.
    Keywords: Trade, Innovation, China, Employment
    JEL: F14 F16 J24 L60 L24
    Date: 2016–06–03
  9. By: Urška Èede (Banka Slovenije); Bogdan Chiriacescu (Banca Nationala a României); Péter Harasztosi (Magyar Nemzeti Bank); Péter Harasztosi (Magyar Nemzeti Bank); Tibor Lalinsky (National Bank of Slovakia, Research Department); Jaanika Meriküll (Eesti Pank)
    Abstract: The literature shows that openness to trade improves long-term growth but also that it may increase exposure to high output volatility. In this vein, our paper investigates whether exporting and export diversification at the firm-level have an effect on the output volatility of firms. We use large representative firm-level databases from Estonia, Hungary, Romania, Slovakia and Slovenia over the last boom-bust cycle in 2004-2012. The results confirm that exporting is related to higher volatility at the firm level. There is also evidence that this effect increased during the Great Recession due to the large negative shocks in export markets. In contrast to the literature and empirical findings for large or advanced countries we do not find a statistically significant and consistent mitigating effect from export diversification in the Central and Eastern European countries. In addition, exporting more products or serving more markets does not necessarily result in higher stability of firm sales.
    Keywords: export diversification, export share, volatility of sales, business cycle, Central and Eastern Europe, CEE
    JEL: F14 F43 O57
    Date: 2016–05
  10. By: Ayral, Serra
    Abstract: The average international trade transaction is subject to numerous procedural and documentation requirements, which add to the costs of doing business as an importer or exporter and also use up scarce government resources. While these requirements can be necessary to fulfil policy objectives, questions are often raised about why and how they are implemented. The Trade Facilitation Agreement (TFA), adopted by WTO Members in 2014, seeks to expedite the movement, release and clearance of goods across borders and reduce these trade transaction costs - by an average of 14.3 per cent as estimated by the 2015 World Trade Report. At the same time, many WTO Agreements already contain provisions aimed at facilitating trade procedures and avoiding unnecessary costs. The Agreement on Technical Barriers to Trade (the TBT Agreement) is one of these: its provisions on transparency and conformity assessment procedures, some of which are applied at the border, are of particular relevance in this context. The TFA and TBT Agreements are in fact complementary, with the TFA introducing some new requirements/recommendations, which are likely to apply to certain TBT measures. This paper maps out the linkages between these two Agreements. It does so with a view to informing TBT officials of the requirements and best practices emerging in the trade facilitation area as well as raising awareness amongst trade/customs officials of existing rules and evolving practices in the TBT area. The 2015 World Trade Report refers to "border agency cooperation" as the main TFA implementation challenge identified by developing countries and also points to the importance of cooperation and coordination between ministries as one of the main success factors. Considering that a significant share of import/export procedures and controls arise from the implementation of TBT measures, a better understanding of the linkages between the TFA and the TBT Agreement (as well as other relevant WTO Agreements such as the SPS Agreement) will be crucial for effective implementation. It will also contribute to more streamlined technical assistance activities and raise awareness among TBT officials of the opportunities generated by trade facilitation projects. The procedures and practices of the WTO TBT Committee, especially with regards to transparency and specific trade concerns, could also be of interest to the future TFA Committee, as it embarks on its task of furthering the implementation of the TFA. All these in turn will help reap the expected benefits of the new Trade Facilitation Agreement.
    Keywords: trade facilitation,technical barriers to trade,non-tariff barriers,WTO
    JEL: F13 F53 K33
    Date: 2016
  11. By: Michele Imbruno; Tobias D Ketterer
    Abstract: This paper investigates whether importing intermediate goods improves firm-level environmental performance in a developing country, using data from the Indonesian manufacturing sector. We build a simple theoretical model showing that trade integration of input markets entails energy efficiency improvements within importers relative to nonimporters. To empirically isolate the impact of firm participation in foreign intermediate input markets we use ‘nearest neighbour’ propensity score matching and difference-indifference techniques. Covering the period 1991-2005, we find evidence that becoming an importer of foreign intermediates boosts energy efficiency, implying beneficial effects for the environment.
    Keywords: Trade, Intermediate Inputs, Energy Efficiency, Environment, Indonesia.
    Date: 2016
  12. By: Pierre M. Picard (CREA, Université du Luxembourg); Alessandro Tampieri (CREA, Université du Luxembourg)
    Abstract: We analyse a trade model with non-homothetic preferences and different quality ver- sions of each product. Income effects drive the quality composition of consumption, pro- duction and trade flows. We show that a rise in local population fosters local asymmetric specialization in high-quality production and exports while it harms low income groups. By contrast, an increase in local productivity may generate specialization in high quality production, which in turn may trigger an immiserizing growth process. Weaker compa- rative advantages induce firm to move and make a local productivity improvement more likely to increase production of higher quality goods everywhere.
    Keywords: Heterogeneous firms, vertical differentiation, horizontal differentiation, trade, income heterogeneity
    JEL: F12 F16 L11 L15
    Date: 2016
  13. By: Sugata Marjit (University of Calcutta, India); Suryaprakash Mishra (NLSAR, Hyderabad, India)
    Abstract: Conventional wisdom suggests that in a credit constrained economy with uneven asset distribution underinvestment and income inequality is a general possibility as poor agents are barred from accessing loans from banks. This has implications for skill formation, entrepreneurship, trade and poverty. General assertion is that more even asset distribution is desirable to promote investment and efficiency. Contrary to the conventional wisdom, this paper argues that more egalitarian asset distribution is likely to reduce output of the credit intensive sector when credit limit is determined by the level of asset ownership, firms face binding credit constraints for all levels of asset holding and firms are price takers. Therefore, it is not the inequality of asset distribution but imperfect product market that adversely affects the efficiency outcome. Trade does not worsen inequality within groups of entrepreneurs and non-entrepreneurs, but inequality increases across groups. However, the country with more egalitarian distribution of assets, in contrast to usual outcome, may import credit intensive good and export capital to the rest of the world.
    Keywords: Credit, Inequality, Egalitarian Distribution, Trade
    JEL: F12
    Date: 2016–05–17
  14. By: Kafayat Amusa (Department of Economics, University of Pretoria and University of South Africa); Nara Monkam (African Tax Administration Forum); Nicola Viegi (Department of Economics, University of Pretoria)
    Abstract: Funding constraints experienced by Sub-Saharan African (SSA) countries has led to reliance on foreign direct investment (FDI) and foreign aid as alternative sources of finance. Despite the importance of FDI for growth, SSA has failed to attract an increasing share of global FDI and at the same time faces volatile aid flows. This study examines the role of foreign aid in enhancing FDI inflows to 31 SSA countries for the period 1995 to 2012. Using panel data estimation techniques, the results suggest that productive infrastructure aid is complementary to FDI inflows and socio-economic infrastructure aid has no significant impact on FDI inflows. When resource (oil) motive of FDI is considered, the results indicate that productive and socio-economic infrastructure aid to oil-producing SSA countries results in less FDI inflows compared to non-oil producing SSA countries. Finally, the significance of sectoral aid analysis is highlighted by the finding of a complementary role of energy infrastructure aid to FDI inflows and an insignificant impact of transport infrastructure aid.
    Keywords: Foreign aid, foreign direct investment, Sub-Saharan Africa
    JEL: F35 F21
    Date: 2016–06
  15. By: Gabriel Felbermayr; Giammario Impullitti; Julien Prat
    Abstract: Wage inequality between similar workers has been on the rise in many rich countries. Recent empirical research suggests that heterogeneity in firm characteristics is crucial to understand wage dispersion. Lower trade costs as well as labor and product market reforms are considered critical drivers of inequality dynamics. We ask how these factors affect wage dispersion and how much of their effect on inequality is attributable to changes in wage dispersion between and within firms. To tackle these questions, we incorporate directed job search into a dynamic model of international trade where wage inequality results from the interplay of convex adjustment costs with firms' different hiring needs along their life cycles. Fitting the model to German linked employer-employee data for the years 1996-2009, we find that firm heterogeneity explains about half of the surge in inequality. The most important mechanism is tougher product market competition driven by domestic product market deregulation and, indirectly, by international trade.
    Keywords: Wage Inequality, International Trade, Directed Search, Firm Dynamics, Product and Labor Market Regulation.
    Date: 2016
  16. By: Hakan Yilmazkuday (Department of Economics, Florida International University)
    Abstract: This paper introduces a simple methodology to forecast international trade. The main innovation is to calculate non-unitary expenditure elasticities of import demand implied by non-homothetic preferences in the previous year to be further combined with the current change in expenditure to forecast the current imports. Using U.S. data on aggregate expenditure and good-level imports, we test the performance of the methodology in forecasting international imports. The methodology is successful in forecasting not only the Great Trade Collapse and the corresponding recovery period but also the other periods in the sample.
    Keywords: Great Trade Collapse, Non-Homothetic Preferences, Forecasting
    JEL: F14 F17
    Date: 2016–06
  17. By: Chiquiar Daniel; Tobal Martín; Yslas Renato
    Abstract: Improvements in Information and Communication Technologies (ICT) have had differential impacts on the costs of offshoring service tasks. As a result, services with stronger tradability characteristics are at a higher risk of being offshored. This has increased the need for coming up with proper measures of service tradability and to better understand the labor market implications of service offshoring. Indeed, recent literature suggests that both skill-intensity and tradability are key determinants of wage and employment effects. Nonetheless, the lack of widely accepted definitions of tradability, the absence of high quality data on service trade flows and the difficulty of measuring import competition at higher disaggregation levels pose difficulties to attain further empirical progress. Moreover, the theoretical literature must produce a new generation of models that could rationalize the stylized facts.
    Keywords: Service Offshoring; ICT Revolution; Trade-in-Tasks.
    JEL: F11 F16
    Date: 2016–05
  18. By: Frédéric Wehrlé; Joachim Pohl
    Abstract: While many countries have become ever more open and welcoming for foreign investment, the awareness of risks for national security stemming from or related to international investment has increased. Many governments have thus introduced policies that seek to protect their national security with the smallest possible impact on investment flows. Guidelines for recipient country investment policies relating to national security adopted at the OECD in 2009 provide recommendations for the design and implementation of such policies. This paper reviews commonalities and differences of policies implemented in 54 countries with a special focus on arrangements in 17 economies that have explicit policies in this area. It offers a comparative analysis of countries’ investment policy approaches to address national security concerns stemming from foreign investment; classifies the different forms of restrictions to address these concerns; identifies differences between restrictions on ownership and acquisitions; and presents how countries define the scope of application of their policies. The study also assesses how countries have implemented some of the key principles set out in the 2009 Guidelines in actual policy in order to meet their need to safeguard national security while reducing the impact of these policies on international investment.
    Keywords: international investment, national security, CFIUS
    JEL: F52 F53
    Date: 2016–06–14
  19. By: Léonce Ndikumana; Mare Sarr
    Abstract: This paper aims to provide theoretical and empirical insights into the puzzling simultaneous rise in foreign direct investment (FDI) inflows in Africa and capital flight from the continent over the past decades. It specifically explores two questions: Is FDI a potential driver of capital flight? And, is natural resource endowment a possible channel for the capital flight.FDI link? The econometric analysis is based on 32 African countries over the period 1970.2"013 using dynamic panel data estimation methods.Three important findings emerge from the analysis. First, while there is no robust evidence that capital flight is fuelled by annual FDI inflows (there is no equivalent to debt-fuelled capital flight), there is a positive relationship between the stock of FDI and capital flight. Second, natural resource endowment is directly related positively to capital flight and resource endowment is associated with a stronger FDI flight link, especially in the case of oil. Third, high-quality institutions somehow weaken the link between FDI and capital flight, although they do not completely eliminate the relationship. The results point to potential gains from improvements in institutional quality in African countries through minimizing the contribution of FDI and natural resources to capital flight.
    Keywords: Capital, Investments, Foreign, Natural resources
    Date: 2016
  20. By: Anderson, James (Department of Economics Boston College); Larch, Mario (University of Bayreuth); Yotov, Yoto (School of Economics Drexel University)
    Abstract: We develop a simple estimation procedure for general equilibrium (GE) comparative static analysis of gravity models. Non-linear solvers of estimated models are replaced by (constrained) regressions. Applied economists can more readily generate results, with more intuition about the working of the model. We illustrate with a worldwide border removal application using the Poisson Pseudo-Maximum-Likelihood (PPML) estimator in STATA, iterated to deliver conditional and full general equilibrium responses. The method works by fully exploiting the combined properties of structural gravity and PPML. Our procedures readily extend to a wide class of general equilibrium production models.
    Keywords: Structural Gravity; General Equilibrium Effects; Counterfactuals; Estimation
    JEL: F10 F14 F16
    Date: 2015–11–09
  21. By: Wolfgang Keller; Hâle Utar
    Abstract: This paper examines the role of international trade for job polarization, the phenomenon in which employment for high- and low-wage occupations increases but mid-wage occupations decline. With employer-employee matched data on virtually all workers and firms in Denmark between 1999 and 2009, we use instrumental-variables techniques and a quasi-natural experiment to show that import competition is a major cause of job polarization. Import competition with China accounts for about 17% of the aggregate decline in mid-wage employment. Many mid-skill workers are pushed into low-wage service jobs while others move into high-wage jobs. The direction of movement, up or down, turns on the skill focus of workers’ education. Workers with vocational training for a service occupation can avoid moving into low-wage service jobs, and among them workers with information-technology education are far more likely to move into high-wage jobs than other workers.
    JEL: F16 I24 J21
    Date: 2016–06
  22. By: Kafayat Amusa, Nara Monkam, Nicola Viegi
    Abstract: Funding constraints experienced by Sub-Saharan African (SSA) countries has led to reliance on foreign direct investment (FDI) and foreign aid as alternative sources of finance. Despite the importance of FDI for growth, SSA has failed to attract an increasing share of global FDI and at the same time faces volatile aid flows. This study examines the role of foreign aid in enhancing FDI inflows to 31 SSA countries for the period 1995 to 2012. Using panel data estimation techniques, the results suggest that productive infrastructure aid is complementary to FDI inflows and socio-economic infrastructure aid has no significant impact on FDI inflows. When resource (oil) motive of FDI is considered, the results indicate that productive and socio-economic infrastructure aid to oil-producing SSA countries results in less FDI inflows compared to non-oil producing SSA countries. Finally, the significance of sectoral aid analysis is highlighted by the finding of a complementary role of energy infrastructure aid to FDI inflows and an insignificant impact of transport infrastructure aid.
    Keywords: Foreign aid, Foreign Direct Investment, Sub-Saharan Africa
    JEL: F35 F
    Date: 2016
  23. By: Benjamin Faber; Cecile Gaubert
    Abstract: Tourism is one of the most visible and fastest growing facets of globalization in developing countries. This paper combines a rich collection of Mexican microdata with a quantitative spatial equilibrium model and a new empirical strategy to learn about the long-run economic consequences of tourism. We begin by estimating a number of reduced-form effects on local economic outcomes in today's cross-section of Mexican municipalities. To base these estimates on plausibly exogenous variation in long-term tourism exposure, we exploit geological and oceanographic variation in beach quality along the Mexican coastline to construct instrumental variables. To guide the estimation of the aggregate implications of tourism, we then write down a spatial equilibrium model of trade in goods and tourism services, and use the reduced-form moments to inform its calibration for counterfactual analysis. We find that tourism causes large and significant local economic gains relative to less touristic regions, and that these gains are in part driven by significant positive spillovers on manufacturing production. In the aggregate, however, we find that these local spillovers are largely offset by reductions in agglomeration economies among less touristic regions, so that the national gains from tourism are mainly driven by a classical market integration effect.
    JEL: F15 F63 O24
    Date: 2016–06
  24. By: OECD
    Abstract: This report examines the consequences of increased global trade on the world’s transport infrastructure. More complex international freight flows as a result of diversified global trade patterns will change capacity requirements and increasingly reshape global transport networks over the coming decades. Policy makers need to understand now how these forces are likely to play out in order to ensure adequate and timely investment into transport infrastructure that will continue to provide the backbone of global trade and economic development.
    Date: 2016–05–01
  25. By: Oktaviani, Rina
    Keywords: Agricultural and Food Policy, International Relations/Trade,
    Date: 2016–02
  26. By: Ferrett, Ben; Hoefele, Andreas; Wooton, Ian
    Abstract: Existing analyses of fiscal competition for foreign direct investment (FDI) often assume a one-shot interaction between governments and the firm within a static environment where the firm makes a permanent location choice. We examine a two-period regional model where economic geography evolves, giving the firm an incentive to relocate between periods. Government competition for FDI leads the firm to make efficient location choices, with relocation "more likely" in the presence of international tax competition, because the winning country's bid absorbs some of the firm's relocation costs. With more time periods, tax competition induces firm relocation sooner than in its absence.
    Keywords: dynamic fiscal competition; efficiency; FDI; geographical change
    JEL: F23 H25 R38
    Date: 2016–06
  27. By: Thorn, Craig
    Keywords: International Relations/Trade,
    Date: 2016–02–25
  28. By: Joao Paulo Pessoa
    Abstract: Is US presidential candidate Donald Trump right when he claims that the Chinese are causing serious damage to American workers? Research by João Paulo Pessoa analyses the impact of the recent massive increase in China's participation in world trade on jobs and incomes in developed economies. He finds that the effects of the 'China shock' on wages and unemployment vary substantially across sectors within countries. Greater trade benefits workers in services and harms workers in low-tech manufacturing. This indicates that even when developed economies face a fierce competitor like China, they also receive many benefits.
    Keywords: china, trade, Donald Trump, unemployment, wages
    Date: 2016–06
  29. By: Volovik, Nadezhda (Russian Presidential Academy of National Economy and Public Administration (RANEPA), Gaidar Institute for Economic Policy)
    Abstract: For Russia, the development of relations with the Association of Southeast Asian Nations (ASEAN) has a special political and economic importance. They are designed to help create favorable conditions for the security of Russia and its most important communications, and for the modernization of the whole region of Eastern Siberia and the Far East. One of the issues of further development of relations of the Russian Federation with the ASEAN countries is that in the business of Russia and the Association of the communities do not have sufficient information about each other, thus allowing the participants of foreign economic activity of relevant information in order to promote Russian exports and investment projects. This paper presents an overview of the foreign trade and trade policy in South-East Asia.
    Keywords: ASEAN, Russia, Eastern Siberia, Far East, trade policy
    Date: 2016–04–14
  30. By: Ines Buono (Bank of Italy); Sara Formai (Bank of Italy)
    Abstract: This paper analyzes the role of bank credit in firms' export performance. We use Italian bank-firm matched data and contribute to the existing literature by focusing on the link between bank-credit and exports in ‘normal times’ (1997-2008) and measuring access to credit with hard data on the credit actually extended to firms by the banking system. We also establish the causal link that goes from bank credit to exports, exploiting bank mergers and acquisitions as a source of bank credit supply shocks. We find that short-run shocks to the supply of bank credit induce exporters to decrease their export flows, without affecting their domestic sales. On the other hand, non-exporters react by reducing their domestic sales.
    Keywords: export, bank lending channel, credit shocks, mergers and acquisitions
    JEL: F14 G21 G34
    Date: 2016–06
  31. By: Soares Esteves, Paulo; Prades, Elvira
    Abstract: During economic downturns, weak domestic demand developments seem to be an additional driver of exports, as firms increase their efforts to serve markets abroad to compensate the fall in domestic sales. This may constitute an additional mechanism adjustment for the euro area countries where real exchange rate variations are limited by the common currency itself and the present low inflation environment. However, this substitution effect between domestic and foreign sales could be different across euro area members. This paper uses panel data techniques to assess the role of the export structure in explaining these differences. Building a novel indicator for product concentration, the results suggest that domestic demand developments are more relevant to explain exports in countries with a lower product concentration index (that is, more diversified exports). This contributes to explain why euro area countries under stress registered different economic performance during the most recent years. JEL Classification: C22, E03, F10
    Keywords: domestic demand pressures, external adjustment
    Date: 2016–05
  32. By: Daniel Rais
    Abstract: SECO Working Paper 5/2016
    Date: 2016–05–31
  33. By: Flore Gubert; Jean-Noël Senne
    Abstract: This paper is part of the joint project between the Directorate General for Migration and Home Affairs of the European Commission and the OECD’s Directorate for Employment, Labour and Social Affairs on “Review of Labour Migration Policy in Europe”. This document has been produced with the financial assistance of the European Union. The views expressed herein can in no way be taken to reflect the official opinion of the European Union. Grant: HOME/2013/EIFX/CA/002 / 30-CE-0615920/00-38 (DI130895) A previous version of this paper was presented and discussed at the OECD Working Party on Migration in June 2015. The paper investigates the main likely drivers of migration towards the EU. It encompasses a literature review on the determinants of potential and actual migration, followed by an illustrative empirical investigation of worldwide migration intentions – focused on intentions to move permanently in a restricted time span, based on the Gallup surveys on the opinions and aspirations of people around the globe. The paper then continues with a descriptive analysis of migration intentions using both aggregated figures and figures disaggregated by region or country of destination and region or country of origin. It then investigates if individuals intending to move to European countries differ from those intending to move elsewhere using basic individual characteristics such as sex, age, education, and marital and employment status. When feasible, it compares the findings with the profile of recent migrants residing in OECD countries derived from the Database on Immigrants in OECD and non-OECD Countries.
    JEL: F22 O15
    Date: 2016–06–10
  34. By: Bandyopadhyay, Subhayu (Federal Reserve Bank of St. Louis); Basu, Arnab K. (Cornell University); Chau, Nancy (Cornell University); Mitra, Devashish (Syracuse University)
    Abstract: The various channels through which a reduction in the cost of offshoring can improve wages in a developed country are by now well understood. But does a similar reduction in the offshoring cost also benefit workers in the world's factories in developing countries? Using a parsimonious two-country model of offshoring we find very nuanced results. These include cases where wages monotonically improve or worsen as well as those where wages exhibit an inverted U-shaped relationship in response to parametric reductions in the cost of offshoring. We identify qualitative conditions under which wages and welfare increase or decrease in the developing world as a result of a reduction in offshoring costs. Since global welfare always rises with an improvement in offshoring technology, we find that there is a role for a wage tax or a minimum wage in the developing country. We derive the optimal levels of such policies.
    Keywords: wages, international offshoring, wage tax, minimum wage
    JEL: F11 F13 F16 F66 O19 O24
    Date: 2016–05
  35. By: Gabor Hunya (The Vienna Institute for International Economic Studies, wiiw); Monika Schwarzhappel (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Content and General Description (PDF) In 2015, the FDI inflow to the Central, East and Southeast European (CESEE) countries fell to its lowest level since 2008, while global FDI recovered. The decline was especially severe in the EU Member States of Central and Eastern Europe, as well as in Russia, while expansions were recorded in the Western Balkans and Turkey. The first part of this report provides an analysis of the 2015 FDI trends in 23 countries, highlighting uneven developments. New features of FDI have appeared recently in the Central European countries, which are deeply integrated into multinational production networks. FDI inflows fluctuate more wildly than before and have lost their close connection with economic growth or changes in the business environment. Capital relations between subsidiaries and parent companies have become more complex capital reserves, losses and profits are shifted around within multinational conglomerates in various forms of FDI and income. Moreover, tax optimisation by multinational enterprises has become one of the main factors determining the economic sector or the immediate host country chosen by investors when they reorganise their assets into holdings. Round-tripping domestic capital distorts the FDI statistics, of Russia in particular. Special sections of this report analyse the Russian FDI collapse, the Chinese expansion, and the position of Austria as investor and investment destination of CESEE countries. A further section presents new features of greenfield investments in 2015 a declining number of projects and lower capital investments that increasingly focus on the manufacturing sector. Forecasts for FDI in 2016 point downwards again, because the international environment may not support capacity expansions, and also economic growth in most of the CESEE will be less robust than last year. The second part of this report contains two sets of tables Tables I cover FDI flow and stock data, FDI flows by components and related income; Tables II provide detailed FDI data by economic activity and by country. The main sources of data are the central banks of the individual Central, East and Southeast European countries. Methodological explanations highlight important recent changes in reporting standards and their application in the wiiw FDI Database and wiiw FDI Report. The wiiw FDI Database is available online This online access with a modern query tool supports easy search and download of data. The wiiw FDI Database contains the full set of FDI data with time series starting form 1990 as far as available. Access to wiiw FDI Database
    Keywords: foreign direct investment, balance of payments, FDI by form, income repatriation, statistics, new EU Member States, Central Europe, Southeast Europe, Western Balkans, China, Turkey, CIS, Russia, Ukraine
    JEL: C82 F21 O57 P23
    Date: 2016–06
  36. By: Gulcin Guresci Pehlivan (Department of Economics, Dokuz Eylul University); Yagmur Saglam (Department of Economics, Dokuz Eylul University)
    Abstract: The main purpose of this paper is to investigate relationship between foreign direct investment and economic growth for MENA countries from 1990 to 2014. We firstly tested heterogeneity and cross sectional dependence and found that all series have homogeneity and cross sectional dependence. For that reason, Hadri Kruzomi and Pesaran et al. Multifactor Error Structure panel unit root tests were used. For obtaining long-run relationship, we used Weterlund’s panel and group cointegration tests. The results supported the long-run relationship, therefore, we used Common Correlated Effect Model, thanks to this method, and coefficients for each cross-section unit could be calculated individually.
    Keywords: Foreign direct investment, economic growth, MENA, panel cointegration
    JEL: F21 O47 C23
    Date: 2016–06
  37. By: Lawrence Edwards; Marco Sanfilippo; Asha Sundaram
    Abstract: This paper uses firm-level data from company tax declarations to analyse the complementary relationship between direct access to imported intermediate inputs and manufacturing firm performance in South Africa.There are three main findings. The first is on firm heterogeneity, showing that importers consistently demonstrate premiums in terms of productivity, employment, wages, and capital intensity in production compared to firms that do not trade. The second supports the hypothesis of firm learning by importing. Finally, we show that importing also has implications for exporting, especially if inputs are sourced from advanced economies.
    Keywords: Business, Delivery of goods, International trade
    Date: 2016
  38. By: Wang, Xiaojin
    Abstract: This study aims to investigate the impact of the fair trade label on the market for coffee in the United States, a country with high public awareness regarding environmental and social matters. A revealed preference approach is adopted, using monthly Nielsen scanner sales panel data. The pricing of labelled ground and whole bean coffee is studied over the 2011-2013 period. Hedonic estimates are obtained for what consumers pay for different product characteristics. Results would provide information on the existing price differences between labelled and conventional coffee, and add to the ongoing analysis and debate over fair trade coffee.
    Keywords: fair trade, coffee, hedonic price, social premium, Nielsen scanner data, Agricultural and Food Policy, Consumer/Household Economics, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, International Development, International Relations/Trade, Marketing, C13, D44, O31, Q13,
    Date: 2016
  39. By: Branimir Jovanović; Marjan Petreski; Igor Velickovski
    Abstract: Abstract In this paper we investigate if tariffs affect manufacturing value added in 25 countries from Central and Southeast Europe, the Commonwealth of Independent States and Middle East and North Africa over the period1990-2010. We use an instrumental variable approach, with the World Trade Organization bound tariff and the lagged tariff as instruments. Results suggest that, in general, lower tariffs seem to lead to higher value added, through the higher imports of inputs in the production process which were either inexistent or more expensive on the domestic market previously. The effect is not driven by the World Trade Organization membership, but by individual countries’ decision to lower their tariffs. However, there are notable differences in the effects between different groups of countries and industries tariffs are not found to affect industrialization in Southeast Europe and Middle East and North Africa, which implies that their decision to liberalize trade was likely premature. This is supported by the finding that lower tariffs have positive effects on industry value added only in industries with higher value added (i.e. more mature industries).
    Keywords: industrialization, trade liberalization, tariffs
    JEL: F13 F42
    Date: 2015–10
  40. By: Shaar, Karam; Zubaidi, Ahmad
    Abstract: Econometric studies investigating the US-China trade have largely retrieved data from one side only, mainly the US. There is a considerable difference between what each partner claims to have actually traded with the other. In 2013, the US-reported trade deficit with China was $346.3 billion, while the figure stood at $215.7 billion according to China’s reports, which accumulates merely 62% of the former’s claim. To answer the question of which data source is more reliable for research purposes, we assess the dynamic magnitude of the discrepancy for the period 1984-2013 and review the causes behind it. Through grouping the causes into two categories based on the causative factors, this study concludes there is no enough evidence to trust the data of one side more than the other. We highly encourage more in-depth studies to reconcile the data. Researchers who still prefer to utilize unreconciled data are recommended to express more caution.
    Keywords: Trade Data Discrepancy, US-China Trade, Econometric analysis,
    Date: 2016

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