nep-int New Economics Papers
on International Trade
Issue of 2016‒07‒16
forty papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Breaking down world trade elasticities: a panel ECM approach By Jaime Martínez-Martín
  2. Global Value Chains and Trade in Value-Added: An Initial Assessment of the Impact on Jobs and Productivity By OECD
  3. Understanding the Flow of Electronic Parts and Components in East Asia By Willem THORBECKE
  4. ASEAN-plus-one Free Trade Agreements and their trade effects By Taguchi, Hiroyuki; Lee, Hak-Loh
  5. Quality and the Great Trade Collapse By Natalie Chen; Luciana Juvenal
  6. Expediting trade : impact evaluation of an in-house clearance program By Fernandes,Ana Margarida; Hillberry,Russell Henry; Berg,Claudia N.
  7. Protecting Health or Protecting Imports? Evidence from EU Non-Tariff Barriers By Kareem, Fatima Olanike; Martinez-Zarzoso, Inmaculada; Brümmer, Bernhard
  8. North African Countries and Firms in International Production Networks By Davide Del Prete; Giorgia Giovannetti; Enrico Marvasi
  9. Worker-Level Consequences of Import Shocks By Nilsson Hakkala, Katariina; Huttunen, Kristiina
  10. Reassessing the link between firm size and exports By Hernández Martínez, Pedro Jesús
  11. Pakistan's Potential Trade and 'Behind the Border' Constraints By Adil Khan Miankhel
  12. Bilateral Trade Elasticity: B&H versus its seven trade partners By Kurtovic, Safet; Halili, Blerim; Maxhuni, Nehat
  13. Gains from Convergence in US and EU Auto Regulations under the Transatlantic Trade and Investment Partnership By Caroline Freund; Sarah Oliver
  14. Services Trade Restrictiveness and Manufacturing Productivity: The Role of Institutions By Cosimo Beverelli; Matteo Fiorini; Bernard Hoekman
  15. Enhancing Export Opportunities for Small and Medium-Sized Enterprises By Caroline Freund; Gary Clyde Hufbauer; Euijin Jung
  16. Economic Growth in China and Its Potential Impact on Australia-China Bilateral Trade By Yu Sheng
  17. The March of the Techies: Technology, Trade, and Job Polarization in France, 1994-2007 By James Harrigan; Ariell Reshef; Farid Toubal
  18. Aging, trade, and migration By Chisik,Richard Asher; Onder,Harun; Qirjo,Dhimitri
  19. Waste haven effect: unwrapping the impact of environmental regulation By Thais Nuñez-Rocha
  20. Trade in Environmental Goods: A Review of the WTO Appellate Body’s Ruling in US — Countervailing Measures (China) By Rachel Brewster; Claire Brunel; Anna Maria Mayda
  21. European Cities and Foreign Investment Networks By Riccardo Crescenzi; Kerwin Datu; Simona Iammarino
  22. The Elasticity of the Migrant Labor Supply: Evidence from Temporary Filipino Migrants By Bertoli, Simone; Fernández-Huertas Moraga, Jesús; Keita, Sekou
  23. Channelizing Afghanistan to Pakistan Informal Trade into Formal Channels By Adil Khan Miankhel
  24. Chinese Returnees and High-tech Sector Outward FDI: The Case of Changzhou By Chen, Zhao; Fang, Tony
  25. Made in the world? By Sébastien Miroudot; Håkan Nordström
  26. Exploring Outward FDI and the Choice of Destination: Evidence from Swedish Firm-Level Data By El-Sahli, Zouheir; Gullstrand, Joakim; Olofsdotter, Karin
  27. Private Standards and the WTO: Reclusive No More By Petros C. Mavroidis; Robert Wolfe
  28. How Do Countries Respond to Antidumping Filings? Dispute Settlement and Retaliatory Antidumping By Robert M. Feinberg; Kara M. Reynolds
  29. Revisiting Procedure and Precedent in the WTO: An Analysis of US – Countervailing and Anti-Dumping Measures (China) By Mostafa Beshkar; Adam S. Chilton
  30. Firm Employment Growth, R&D Expenditures and Exports By Marco Di Cintio, Marco Di Cintio; Sucharita Ghosh, Sucharita Ghosh; Emanuele Grassi, Emanuele Grassi
  31. Protectionism in a liquidity trap By Lechthaler, Wolfgang
  32. Vietnam-EU Free Trade Agreement: Impact and Policy Implications for Vietnam By Daniel Rais
  33. Foreign direct investment and economic growth: ADRL and causality analysis for South Africa By Sunde, Tafirenyika
  34. The roots of regional trade in the Americas 1870 to 1950 By Restrepo-Estrada, Maria Isabel; Tena Junguito, Antonio
  35. Globalization and Governance: A Critical Contribution to the Empirics By Simplice Asongu; Uchenna Efobi; Vanessa S. Tchamyou
  36. The impact of migration on tourism demand: evidence from Japan By Etzo, Ivan
  37. How open are public procurement markets? By Patrick Messerlin
  38. Thinking about the performance of the World Trade Organization: A discussion across disciplines By Manfred Elsig; Bernard M. Hoekman; Joost Pauwelyn
  39. Disabling Labeling: The WTO Consistency of the Indonesian Mandatory Halal Labeling Law By Daniel Rais
  40. It’s baaaack— zeroing, the US Department of Commerce, and US — Shrimp II (Viet Nam) By James C. Hartigan

  1. By: Jaime Martínez-Martín (Banco de España)
    Abstract: This paper exhaustively analyses the recent decline of international trade elasticities to output growth. We extend an empirical model of import demand functions to account not only for transitory factors, such as relative prices and import intensity-adjusted measures of demand (I-O Tables), but also for habitually neglected permanent factors such as protectionism, vertical integration (i.e. Global Value Chains) and foreign direct investment (FDI). Dealing with a non-stationary heteregenous panel of 27 countries, we estimate a panel Error Correction Model from 1960 to 2015 in order to break down world trade elasticities. Our main fi ndings evidence: i) the presence of panel (cointegrating) structural changes in the trade-to-GDP relationship in 2000 and 2009, private consumption being a source of disruption; ii) although investment and exports are the most sensitive, import-intensive components of demand, this is far from being transitory, which is clearly weighing on the current slowdown; iii) the relevant contribution of GVCs shows a procyclical pattern, questioning the permanent nature of the current levelling-off of vertical integration processes. The lack of progress in reducing import tariffs and the usual discarded, complementary relationship between FDI and imports have a residual role. All in all, our results have substantial policy implications, as they reinforce the idea of a historical break towards a new ‘normal’ trading phase.
    Keywords: global trade, income elasticities, panel error correction models, panel cointegration structural breaks
    JEL: F14 F40 C23
    Date: 2016–07
  2. By: OECD
    Abstract: This paper contributes to a better understanding of the impact of global value chains (GVCs) on jobs and productivity by providing new evidence on employment embodied in value-added trade flows. Linking jobs data to the Trade in Value-Added (TiVA) indicators first highlights that a large share of employment in OECD and key partner countries relies on consumption taking place abroad and for most countries this share has increased between 1995 and 2011. There are differences across industries in the share of jobs embodied in exports but in all industries a majority of these jobs originates in the service sector. In almost all countries, the jobs embodied in exports are shifting towards high-skill and medium-skill occupations. Within GVCs, there is also a shift from employment in core manufacturing activities to employment in service support functions such as R&D, distribution, logistics, marketing, sales and customer services. The impact of GVCs on the number of people engaged in each industry is the combination of several factors but related to specialisation patterns and the evolution of productivity. In this assessment, it is important to look at the whole value chain and not to focus only on industries where GVCs are prevalent. Job creation in sectors less exposed to GVCs is the consequence of productivity gains in sectors the most integrated in GVCs.
    Keywords: productivity, trade, employment, trade in tasks, global value chains, occupations
    JEL: F16 F23 J24
    Date: 2016–07–07
  3. By: Willem THORBECKE
    Abstract: This paper investigates East Asia's exploding trade in electronic parts and components (ep&c). The results indicate that foreign direct investment (FDI) increases the level of ep&c exports. Thus, FDI has promoted the slicing up of the value chain in the region. Higher capital intensity increases the share of a country's ep&c exports relative to its Asian trading partners. Thus, one reason why South Korea and Taiwan have gained market share is because they have invested heavily in plant, equipment, and technology. Exchange rate depreciations significantly increase both the level and the share of a country's ep&c exports. This implies that regional exchange rate stability may reduce beggar-thy-neighbor policies and promote intra-regional trade.
    Date: 2016–06
  4. By: Taguchi, Hiroyuki; Lee, Hak-Loh
    Abstract: This article reviewed ASEAN-plus-one free trade agreements (FTAs) by describing the backgrounds and issues in their formations, and by examining their trade effects through an empirical analysis. The empirics examined the trade creation and diversion effects of ASEAN-plus-one FTAs by estimating the gravity trade model for the recent two decades between 1993 and 2013. The estimation outcomes showed that the trade creation effect in ASEAN-China FTA (ACFTA) was much larger than those in ASEAN-Korea FTA (AKFTA) and ASEAN-Japan FTA (AJFTA), and that the trade diversion effects were commonly negative in ACFTA, AKFTA and AJFTA as expected. The larger trade creation effect in ACFTA might come from the wider gap between the general tariff rate and the preferential tariff rate for ASEAN in China.
    Keywords: trade creation and diversion effects, ASEAN-plus-one, free trade agreement
    JEL: F13 F14
    Date: 2016–07
  5. By: Natalie Chen (University of Warwick, CAGE, CESifo and CEPR); Luciana Juvenal (International Monetary Fund)
    Abstract: We explore the heterogeneous effects of the global financial crisis on international trade flows differentiated by quality. Combining a dataset of Argentinean firm-level destination-specific wine exports with experts quality ratings, we show that higher quality exports collapsed more dramatically during the recession. This flight from quality was triggered by a fall in aggregate demand, and was stronger for smaller firms’ exports and in the countries where households could substitute imports by domestic alternatives. Quantitatively, our results suggest that the quality composition of exports can explain up to nine percentage points difference in trade performance.
    Keywords: Exports, financial crisis, heterogeneity, multi-product firms, quality, wine.
    JEL: F10 F14 F41
    Date: 2016–05–09
  6. By: Fernandes,Ana Margarida; Hillberry,Russell Henry; Berg,Claudia N.
    Abstract: Despite the importance of trade facilitation as an area of trade and development policy, there have been very few impact evaluations of specific trade facilitation reforms. This paper offers an evaluation of in-house clearance, a reform that allows qualified firms in Serbia to clear customs from within their own warehouse rather than at the customs office. The pooled synthetic control method applied here offers a novel solution to many of the empirical challenges that frustrate efforts to evaluate trade facilitation reforms. The method is used to estimate causal impacts on trade outcomes for 21 firms that adopted in-house clearance for import shipments. The program compressed the distribution of clearance times for adopting firms, but the estimated effects on median clearance times, inspection rates, and import value were not statistically significant. Tests for heterogeneous program impact do not indicate that the program affected adopting firms differently. Overall, the results suggest that the most evident benefit of the program for participating firms is reduced uncertainty about clearance times.
    Keywords: Economic Theory&Research,Science Education,Trade Policy,Microfinance,Scientific Research&Science Parks
    Date: 2016–06–20
  7. By: Kareem, Fatima Olanike; Martinez-Zarzoso, Inmaculada; Brümmer, Bernhard
    Abstract: Non-tariff measures such as food safety standards are used to achieve the non-trade objective of protecting consumers’ health and safety. However, they can also be used as a trade protection tool to drive a price wedge between domestic and foreign producers. This study investigates the protectionist intent of EU food safety standards using a sample of EU food imported from African countries with a specific focus on tomatoes and citrus fruits. We formalize what protectionism is by comparing EU standards to the internationally scientific referenced benchmarks regulated jointly by both the Food and Agricultural Organization and the World Health Organization. Our results show that the EU tomato sector is less dependent on imports and is overprotected by more stringent standards relative to the international benchmarks. Conversely, we find that the EU orange and lime and lemon sectors are heavily import dependent and are under-protected relative to the international standards. These results largely support the hypothesis that heavily import dependent sectors are less protected.
    Keywords: Trade Protectionism, Non-tariff barriers, Food Safety Standards, Food exports, Agricultural and Food Policy, Health Economics and Policy, International Development, International Relations/Trade, Political Economy, F13, F14, L15, P16, Q17, Q18,
    Date: 2016–07
  8. By: Davide Del Prete; Giorgia Giovannetti; Enrico Marvasi
    Abstract: This paper analyzes the participation of North African countries into international production networks and examines if/to what extent being part of a global value chain affects firms’ performance. Using largely unexploited Input-Output data from UNCTAD-Eora, we describe regional and country GVC involvement. Results show that North African countries have not been able so far to fully integrate into international production networks. However, large part of their (low) trade is due to value added related activities, mainly in the upstream phases, and the importance of global linkages has been increasing over time. To better understand the impact of international fragmentation of production on competitiveness, we complement the above assessment with a firm-level analysis. We show that the performance of firms, measured by several indicators, is positively associated with both internationalization modes and GVC participation. These results con.rm those of our sectoral analyses and are in line with existing anecdotical evidence. Enhancing GVC participation of North African countries is likely to substantially benefit firms, countries and the whole area. However, the ability to retain such benefits relies on specific characteristics, such as the level of human capital, trade logistics and the presence of trade barriers, thus leaving room for policy intervention.
    Keywords: global value chains, fi rm heterogeneity, North Africa, competitiveness
    JEL: F14 F15 L23 L25
    Date: 2016–04
  9. By: Nilsson Hakkala, Katariina (Aalto University); Huttunen, Kristiina (Aalto University)
    Abstract: We analyse the effects of imports on employment and earnings by distinguishing between import competition in final products and firms' use of imports in production (offshoring). We use Finnish worker-firm data merged with product-level trade data. We focus on Chinese imports and instrument them by changes in China's share of world exports to other EU countries. Both types of importing increase the job loss risk for all workers and, in particular, for workers in production occupations. An increase in import competition has larger negative effects than an increase in offshoring. Production workers suffer the largest earnings losses, while for high- skilled workers the wage-effect is positive.
    Keywords: offshoring, import competition, employment, earnings
    JEL: F16 J23 J31 J63 L23
    Date: 2016–07
  10. By: Hernández Martínez, Pedro Jesús
    Abstract: The small average size of Spanish firms has been put forward as the main impediment to their international competitiveness. This paper re-examines the link between firm size and exports. The new theories of international trade emphasize firm heterogeneity as the theoretical basis of export behavior. In the context of this heterogeneity, the paper uses the quantile regression methodology to analyze the effect of firm size on firm export propensity (percentage of exported sales). The paper confirms the existence of a positive relationship between firm size and export intensity but finds that the conventional estimates of the elasticity of export propensity with respect to firm size on the average of the export propensities distribution underestimate the effect at the bottom of the distribution and overestimate the effect on most of it. Consequently, policies aimed at increasing exports should concentrate their efforts on increasing the size of those firms with lower export propensity.
    Keywords: exports,firm size,quantile regression,firm heterogeneity
    JEL: F14 L25
    Date: 2016
  11. By: Adil Khan Miankhel (Embassy of Pakistan)
    Abstract: Institutions are source of comparative advantage or disadvantage in international trade. Socio-economic and political constraints also matter for creating comparative advantage and affect the trade pattern of a country. These diverse ‘beyond the border’ and ‘behind the border’ constraints are often not fully captured in the literature on international trade and institutions. The existence of such institutional, socio-economic, and political constraints to Pakistani exports is empirically investigated in this paper through a cross-sectional analysis employing a trade Stochastic Frontier Gravity Model. Aggregate data for 2006-08 and 2009-11 show lower exports in the latter period. This is attributed to demand-suppressing effects emanating from the 2008 global financial crisis and supply-suppressing effects emanating from energy shortfalls and input constraints, due to floods, in Pakistan. The model estimation then demonstrates that behind the border constraints in Pakistan are statistically significant in explaining total exports during 2009-11. The estimation is also presented for four single-digit SIC categories of products for this period. Behind the border constraints are evident for SIC 0 (agriculture, forestry and fish products) and SIC 2 (manufactured products) that combined account for approximately 80 percent of Pakistan’s exports. The estimation results by country further demonstrate that behind the border constraints affect the pattern of trade through the non-realization of bilateral trade potential. In the post-financial crisis era, Pakistan needs to further develop its institutional capacity to promote competitive exports given the explicit and implicit beyond the border trade barriers it faces and work to remove political obstacles to regional trade.
    JEL: F13 O24 O19
    Date: 2016–06
  12. By: Kurtovic, Safet; Halili, Blerim; Maxhuni, Nehat
    Abstract: Bilateral trade elasticity is important in the analysis of the international trade flows and their anticipation in the process of establishing macroeconomic policy. Our research is based on bilateral data and the assessment of the influence of currency depreciation on the bilateral trade elasticity of B&H and its seven leading trade partners from Central and Southeast Europe. We applied the ARDL econometric technique in the research. In the short term we investigated the presence of the Marshall-Lerner condition (M-L condition) for Croatia and FYR Macedonia, while in the long term we investigated the presence of the M-L condition for Slovenia. In addition, we investigated, in certain cases, the presence of the J-curve, i.e. long-term impact of currency depreciation on the elasticity of export and import demand function. Finally, based on the application of diagnostic statistics and stability tests, the stability of the coefficient was confirmed in the majority of cases.
    Keywords: M-L condition, J-curve, elasticity, exchange rate, trade
    JEL: F14 F31 F32
    Date: 2016–06–05
  13. By: Caroline Freund; Sarah Oliver
    Abstract: Regulatory standards protect consumers from defective products, but they impede trade when they differ across countries. The Transatlantic Trade and Investment Partnership (TTIP) seeks to reduce distortions in the automobile and other industries. This paper evaluates the equivalence of automobile regulations in the United States and the European Union in terms of catastrophe avoidance and estimates the trade gains from improved regulatory coherence. The UN 1958 Agreement on automobiles, which offers a framework for harmonizing regulations among signatories, is used to quantify the trade effect of regulatory convergence. The removal of regulatory differences in autos is estimated to increase trade by 20 percent or more. The effect on trade from harmonizing standards is only slightly smaller than the effect of EU accession on auto trade. The large economic gains from regulatory harmonization imply that TTIP has the potential to improve productivity while lowering prices and enhancing variety for consumers.
    Keywords: Regulatory harmonization, difference-in-differences, trade agreement
    Date: 2015–09
  14. By: Cosimo Beverelli; Matteo Fiorini; Bernard Hoekman
    Abstract: We study the effect of services trade restrictiveness on manufacturing productivity for a broad cross-section of countries at different stages of economic development. Decreasing services trade restrictiveness has a positive indirect impact on the manufacturing sectors that use services as intermediate inputs in production. We identify a critical role of local institutions in shaping this effect: countries with high institutional capacity benefit the most from services trade policy reforms in terms of increased productivity in downstream industries. We argue that this reflects the characteristics of many services and services trade and provide a theoretical framework to formalize our suggested mechanisms.
    Keywords: services trade, institutions, productivity
    JEL: F14 F15 F61 F63
    Date: 2015–09
  15. By: Caroline Freund (Peterson Institute for International Economics); Gary Clyde Hufbauer (Peterson Institute for International Economics); Euijin Jung (Peterson Institute for International Economics)
    Abstract: Small and medium-sized enterprises (SMEs) employ about half the American workforce, and as a result their needs are deemed important for the economic health of the United States. From this perspective, the fact that 98 percent of exporters are small businesses suggests that trade is a critical component to the economic vitality of SMEs. Proponents of trade agreements argue that such agreements open markets to businesses of all sizes and that simplifying customs and promoting e-commerce can especially help small businesses. But critics of trade agreements cite the relatively high share of total exports by large firms as an indication that large firms—and their investors—are the main beneficiaries of open markets. This Policy Brief examines the evidence for these conflicting claims and shows that exports from both small and large firms are boosted when trade barriers are reduced. Foreign market liberalization offers as much to small firms as it offers to large firms. One important difference is that exports from small firms are likely to be boosted by increased participation—i.e., more firms export when trade costs fall—while exports from large firms are more likely to grow in volume—i.e., each firm exports more.
    Date: 2016–06
  16. By: Yu Sheng (Crawford School of Public Policy)
    Abstract: This paper uses the GTAP Static model to predict the potential impact of economic growth in China on bilateral trade between China and Australia in 2025, under three different scenarios representing the business-as-usual, the successful reform and the stagnation cases respectively. The results show that exports from Australia to China will continue to increase in both absolute and relative terms, irrespective of which economic growth path China takes, partly due to the strong complementary relationship of production between the two countries. The results also indicate that education service exports will become a new engine of bilateral trade in addition to agricultural and mineral products. Furthermore, comparing the results obtained from the three scenarios shows how successful reform will bring more benefits to both China and Australia in trade, which provides useful insights for policy making to facilitate bilateral economic relationship.
    JEL: E17 F17 F43
    Date: 2016–07
  17. By: James Harrigan; Ariell Reshef; Farid Toubal
    Abstract: Using administrative employee-firm-level data on the entire private sector from 1994 to 2007, we show that the labor market in France has polarized: employment shares of high and low wage occupations have grown, while middle wage occupations have shrunk. During the same period, the share of hours worked in technology-related occupations ("techies") grew substantially, as did imports and exports, and we explore the causal links between these trends. Our paper is among the first to analyze polarization in any country using firm-level data, and we show how polarization occurred within firms, but mostly due to changes in the composition of firms (between firms). Motivated by the fact that technology adoption is mediated by technically qualified managers and technicians, we use a new measure of the propensity of a firm to adopt new technology: its employment share of techies. Using the subsample of firms that are active over the whole period, we show that firms with more techies in 2002 saw greater polarization, and grew faster, from 2002 to 2007. Offshoring reduced employment growth. Among blue- collar workers in manufacturing, importing caused skill upgrading while exporting caused skill downgrading. To control for the endogeneity of firm-level techies and trade in 2002, we use values of techies and trade from 1994 to 1998 as instruments. We conclude that technological change, mediated through techies, is an important cause of polarization in France. Firm-level trade had important effects in manufacturing.
    Keywords: job polarization;technological change;offshoring;skill bias;firm level data
    JEL: J2 O3 D3 F1 F16 F66
    Date: 2016–06
  18. By: Chisik,Richard Asher; Onder,Harun; Qirjo,Dhimitri
    Abstract: This study considers the role of demand-driven changes arising from population aging and how they affect the pattern of international trade as well as trade and immigration policy. An aging society can see a welfare-reducing reduction in its share of manufacturing output and this reduction is magnified by a decrease in trade costs (an increase in globalization). Immigration can ameliorate this outcome if it is directed toward younger immigrants. A unilateral tariff increase can also reduce firm delocation from an aging country, however, a reciprocated tariff increase will unambiguously harm the country with the older average population.
    Keywords: Debt Markets,Economic Theory&Research,Emerging Markets,Markets and Market Access,Population Policies
    Date: 2016–06–30
  19. By: Thais Nuñez-Rocha (Centre d'Economie de la Sorbonne)
    Abstract: A new branch of the literature on international trade and environment suggests that developing countries are becoming waste havens for their developed counterparts, due to environmental regulation differences with trade partners. This paper analyses the effectiveness of the Basel Convention formalisation in the European Union (EU-WSR), by studying the impact of the EU-WSR on hazardous waste trade, first on the less developed EU countries, and then on regions of developing countries. It does so, by means of a gravity model framework applied to a panel data-set. Results show that there is no enough evidence to call for waste haven effect in the less developed EU countries, with both aggregated and disaggregated measures of environmental regulations, but increasing institution efficiency differences could lead to increasing imports of waste. In the regional analysis, there is no evidence of the efficacy of the EU-WSR. These findings provide insights into the efficacy of European engagements on waste trade, indicating that there is no simple answer as to its effect
    Keywords: Hazardous waste; waste haven effect; international trade; international environmental agreements; difference-in-differences; log-linear and ppml gravity model
    JEL: F13 F18 Q53 Q56 Q58
    Date: 2016–05
  20. By: Rachel Brewster; Claire Brunel; Anna Maria Mayda
    Abstract: In this paper we claim that, in the WTO Appellate Body (AB)’s ruling in US — Countervailing Measures (China), the AB decision has not put in question the practice of imposing countervailing duties (CVDs). While the US has formally “lost” the case, a change in the procedures and tests used to motivate the CVD will allow the US to continue using this policy tool on the specified products. From an economic point of view, this is not welcome news since CVDs have the standard distortionary effects of tariffs and could go against environmental goals. From a political-economy point of view, the CVDs in this case appear driven by pressure of domestic manufacturers of clean energy technology and products.
    Keywords: Environmental goods, countervailing duties, WTO.
    Date: 2015–09
  21. By: Riccardo Crescenzi; Kerwin Datu; Simona Iammarino
    Abstract: Although one of the core questions in the study of multinational enterprises (MNEs) has been typically that of where their different operations take place, the spatial dimension of MNE investments and functions is still relatively underexplored in the literature. This paper investigates the networks formed by Foreign Direct Investment (FDI) by applying network analysis techniques drawn from the world city network literature. Data is extracted from the fDi Markets database to describe and analyse the geography of FDI flows between a set of 3,500 cities and towns within the European Union (EU) Member States and their neighbourhood. The paper identifies hierarchical patterns of relations between different types of locations, and gains a finer-scaled appreciation of sectoral and functional specialisations of different regions within Europe.
    Date: 2016–07
  22. By: Bertoli, Simone (CERDI, University of Auvergne); Fernández-Huertas Moraga, Jesús (Universidad Carlos III de Madrid); Keita, Sekou (CERDI, University of Auvergne)
    Abstract: The effect of immigration on host and origin countries is mediated by the way migrants take their labor supply decisions. We propose a simple way of integrating the traditional random utility maximization model used to analyze location decisions with a classical labor demand function at destination. Our setup allows us to estimate a general upper bound on the elasticity of the migrant labor supply that we take to the data using the evolution of the numbers and wages of temporary overseas Filipino workers between 1992 and 2009 to different destinations. We find that the migrant labor supply elasticity can be very large. Temporary migrants are very reactive to economic conditions in their potential destinations.
    Keywords: labor supply elasticity, temporary migration, international migration, multilateral resistance to migration
    JEL: F22 J31 J38 J61 O15
    Date: 2016–07
  23. By: Adil Khan Miankhel (Embassy of Pakistan)
    Abstract: Along with other routes, the Afghanistan-Pakistan Transit Trade Agreement (APTTA) is being used by informal traders for smuggling goods into Pakistan. Despite enforcement measures, smuggling continues. Informal traders import goods into Afghanistan, and then route those goods back to Pakistan through informal channels to take advantage from the arbitrage opportunity provided by the differences in applied tariff/taxes between the two countries. Therefore, in addition to strict enforcement measures, the issue of informal trade needs to be handled through incentive measures.
    JEL: F13 O24 O19
    Date: 2016–06
  24. By: Chen, Zhao (Fudan University, China); Fang, Tony (Memorial University of Newfoundland)
    Abstract: The rapid growth and high levels of internationalization by Chinese firms, raise a natural interest in the study of the factors which have led the notable international presence of Chinese firms. To contribute to this effort, we use data from the 2008-10 survey of China's High-tech firms, conducted by the Chinese Ministry of Science and Technology, to estimate the determinants of Chinese firm outward FDI (OFDI). In our analysis, the primary independent variables include high-tech intensity, human capital acquisition, and institutional factors. We have also controlled for various firm characteristics such as firm age, total value of fixed assets, and firm ownership. Estimation from our fixed-effects model uncovers a number interesting patterns in OFDI outcomes. Most notable, among the significant determinants of OFDI, the number of Chinese returnees employed by a firm seems to be more important than tax reduction policies. Further, the effects of the Chinese returnees have a stronger effect on non state-controlled firms than they do for state-controlled firms. This finding is intuitive, since the Chinese returnees who were trained in the West have an understanding of product markets, labour markets, financial markets, language and business culture, and trade laws in both China and the West. Their unique skill sets and knowledge appear to serve as an important catalysts in the growth of OFDI and internationalization by Chinese firms.
    Keywords: OFDI, Chinese firm internationalization, panel data
    JEL: F21 M16 F23
    Date: 2016–07
  25. By: Sébastien Miroudot; Håkan Nordström
    Abstract: In the past five years, the concept of “global value chain” (GVC) has become popular to describe the way firms fragment production into different stages located in different economies. The “made in the world” narrative suggests that production today is global with inputs coming from all parts of the world before being assembled into final products also shipped all over the world. The empirical basis of this story has however been questioned, suggesting that supply chains are regional rather than global. In this paper we offer a comprehensive review of the evidence based on the World Input-Output Database (WIOD), including new indicators counting the number of domestic and foreign production stages, border crossings and geographic length of the supply chains. The study covers 1995 to 2011. All evidence points in the same direction. The made in the world narrative is correct as far as the direction is concerned, but we still have a long way to go. On average, globalization proceeds at 40 kilometres a year.
    Keywords: Fragmentation of production, vertical specialization, global value chain
    JEL: F14 L16 L23
    Date: 2015–09
  26. By: El-Sahli, Zouheir (Department of Economics, Lund University); Gullstrand, Joakim (Department of Economics, Lund University); Olofsdotter, Karin (Department of Economics, Lund University)
    Abstract: Using Swedish firm-level data on all firms and their affiliates abroad, we investigate what observable firm and country characteristics affect the size of affiliate firms in a particular destination. We employ the richness of the data to investigate the importance of destination country factors in explaining firm outward FDI activities and distinguish between the factors that affect such activities in manufacturing versus services firms as well as vertical versus horizontal investments. Our results lend support to existing theories of multinational activity, including observable differences between vertical and horizontal manufacturing firms, as well as between services and manufacturing FDI firms.
    Keywords: outward FDI; globalization; FDI destination; heterogeneous firms
    JEL: F10 F20
    Date: 2016–07–04
  27. By: Petros C. Mavroidis; Robert Wolfe
    Abstract: Private standards are increasing in number, and they affect trade, but their status in the WTO remains problematic. Standards-takers are typically countries with little bargaining power, who cannot affect their terms of trade and thus, even if they possess domestic antitrust laws, will find it hard to persuade standard-setters to take account of their interests. Our concern is to bring more of these standards within the normative framework of the trade regime—that is, we worry that these private forms of social order can conflict with the fundamental norms of transparency and nondiscrimination. The WTO membership has consumed itself in endless discussions regarding mundane, legalistic issues, and has not moved at all towards addressing the real concerns of developing countries. We discuss one aspect of the problem: How reclusive should the WTO allow product standards to be? We argue that the WTO should adopt a “Reference Paper” that would encourage its members to apply WTO rules for adopting those standards that already come under the aegis of the WTO to private standards. In the absence of centralized enforcement, utopia in the WTO legal paradigm, transparency disciplines imposed on standard-setters is the best the WTO could offer to those who are negatively affected by private standards.
    Keywords: WTO, private standards, TBT Agreement, transparency
    JEL: K40
    Date: 2016–03
  28. By: Robert M. Feinberg; Kara M. Reynolds
    Abstract: Empirical studies have found that countries may respond strategically to the antidumping petitions filed against their exporters through their own retaliatory actions. Although most previous studies have focused on retaliatory antidumping filings, in this paper we explore another potential avenue for strategic response—filing a complaint under the World Trade Organization’s (WTO) Dispute Settlement Understanding. Using a panel of global antidumping filings between 1995 and 2011, we analyze under what conditions countries will choose to retaliate through either an antidumping petition or a WTO dispute, and to what degree these two strategies are complementary or act as substitutes. We find statistical evidence that countries are more likely to file a WTO dispute when they have also filed retaliatory antidumping petition, suggesting that these two strategies may be complementary. JEL classification: F13
    Keywords: WTO Dispute Settlement, Antidumping
    Date: 2016
  29. By: Mostafa Beshkar; Adam S. Chilton
    Abstract: After not applying countervailing duty (CVD) law against non-market economies (NMEs) for two decades, the United State opened a CVD investigation against China in 2006. After extensive litigation, a U.S. appeals court ruled that it was illegal to apply CVD law to NMEs. While that ruling was being appealed, the U.S. Congress passed legislation stipulating that the application of CVD law to NMEs starting in 2006 was legal. China challenged this legislation at the WTO. The dispute resulted in a ruling that left open the possibility that the legislation violated the GATT, as well as a finding that the United States must investigate its application of countervailing and antidumping duties against China. This dispute has implications for a number of current WTO debates including: whether Appellate Body rulings create binding precedent, whether the Appellate Body should have authority to remand cases, and what information should be required in panel requests.
    Keywords: Non-Market Economies, Countervailing and Antidumping Duties, Precedents, Remand Authority, World Trade Organization
    Date: 2015–10
  30. By: Marco Di Cintio, Marco Di Cintio; Sucharita Ghosh, Sucharita Ghosh; Emanuele Grassi, Emanuele Grassi
    Abstract: This paper studies firms’ decisions to export and invest in R&D and their effects on employment growth and labor flows for a sample of Italian SMEs operating in the manufacturing industry. After accounting for the under-reporting of R&D in SMEs, our quantile regressions reveal that (i) R&D is associated with higher employment growth rates, higher hiring rates and lower separation rates; (ii) R&D-induced exports are negatively related to employment growth and accessions and positively related to separations; and (iii) pure exports are not a driver of employment growth and labor flows.
    Keywords: Exports, R&D, Firm Growth, Quantile Regression, Research Methods/ Statistical Methods, J63, M51, O31, F14,
    Date: 2016–07–04
  31. By: Lechthaler, Wolfgang
    Abstract: This paper studies the effects of protectionism as a business cycle instrument. In normal times, protectionism reduces international trade, distorts production and reduces output. However, in a liquidity trap protectionism lowers the real interest rate because inflation goes up while the nominal interest rate is stuck at the zero lower bound. This stimulates consumption and output.
    Keywords: Business cycle policy,Protectionism,Liquidity trap
    JEL: E12 E60 F13
    Date: 2016
  32. By: Daniel Rais
    Abstract: SECO Working Paper 7/2016
    Date: 2016–07–01
  33. By: Sunde, Tafirenyika
    Abstract: The article empirically investigated economic growth as a function of foreign direct investment and exports in South Africa. The article applied the autoregressive distributed lag model, known as the ARDL bounds testing approach to cointegration for the long run relationship between economic growth, foreign direct investment and exports. The error correction model was used to examine the short run dynamics; and the VECM Granger causality approach was used to investigate the direction of causality. The article confirmed cointegration between economic growth, foreign direct investment and exports. The article indicates that both foreign direct investment and exports spur economic growth. The VECM Granger causality analysis found unidirectional causality between economic growth and foreign direct investment running from foreign direct investment to economic growth, unidirectional causality between foreign direct investment and exports running from foreign direct investment to exports and bidirectional causality between economic growth and exports. The article confirms the FDI-led growth hypothesis for South Africa. On the policy front, the government should stimulate foreign direct investment through incentives to investors, creation of a good macroeconomic environment and a careful utilisation of loose monetary policy to grow the economy.
    Keywords: Economic growth, foreign direct investment, ARDL, stationarity, South Africa
    JEL: E2 E22 E6
    Date: 2016–03
  34. By: Restrepo-Estrada, Maria Isabel; Tena Junguito, Antonio
    Abstract: The oft-mentioned failure of the economic integration of South America contrasts with the North American, European and East Asian experiences. While low levels of development, geographical and historical explanations are at the root of our understanding of South America's scarce regional trade integration, due to data limitations such explanations have been little analyzed quantitatively in the long run before the Second World War. We use for the first time a new database on bilateral trade for 11 countries of the region between 1870 and 1950. Our results confirm the conventional view of the existence of a historical handicap of regional trade in the Americas, especially during the commodity boom of the Atlantic globalization prior to the First World War.
    Keywords: 19th and 20th Centuries; the Americas; revealed trade preferences; Regional trade
    JEL: F1 N7
    Date: 2016–07–01
  35. By: Simplice Asongu (Yaoundé/Cameroun); Uchenna Efobi (Covenant University, Nigeria); Vanessa S. Tchamyou (Yaoundé, Cameroon)
    Abstract: This study assesses the effect of globalisation on governance in 51 African countries for the period 1996-2011. Ten bundled and unbundled governance indicators and four globalisation variables are used. The empirical evidence is based on Generalised Method of Moments. The following findings are established. First, on political governance, only social globalisation improves political stability while only economic globalisation does not increase voice & accountability and political governance. Second, with regard to economic governance: (i) only economic globalisation significantly promote regulation quality; (ii) social globalisation and general globalisation significantly advance government effectiveness and (iii) economic globalisation and general globalisation significantly promote economic governance. Third, as concerns institutional governance, whereas only social globalisation improves corruption-control, the effects of globalisation dynamics on the rule of law and institutional governance are not significant. Fourth, the impacts of social globalisation and general globalisation are positive on general governance. It follows that: (i) political governance is driven by voice and accountability compared to political stability; (ii) economic governance is promoted by both regulation quality and government effectiveness from specific globalisation angles and (iii) globalisation does not improve institutional governance for the most part. Theoretical contributions and policy implications are discussed.
    Keywords: Africa; Governance; Globalization
    JEL: F10 F30 I30 O10 O55
    Date: 2016–05
  36. By: Etzo, Ivan
    Abstract: This paper investigates the impact of migration on both inbound and outbound Japanese tourism flows during the period 2000-2013. The results reveal that the stock of immigrants in Japan represents an important determinant of inbound tourism flows. The effect remains positive and statistically significant after disaggregating the flows by purpose of visit, though the impact is higher for “holiday” than for “business” arrivals. The number of Japanese residing abroad does not affect the inbound tourist arrivals. On the contrary, they exert a noticeable effect on outbound tourism flows, whilst immigrants in Japan seem not to have a significant effect.
    Keywords: outbound tourism, inbound tourism, migration, Japan
    JEL: F22 L83
    Date: 2016–06
  37. By: Patrick Messerlin
    Abstract: This paper uses different sources of data to assess the relative level of openness of the public procurement markets of major trading nations, with a specific focus on the European Union (EU). The data reveal a picture that is very different from what is commonly argued to be the case by policymakers in the EU. The divergence between discourse and reality is in part a reflection of the absence of appropriate data on government sourcing patterns, suggesting greater effort is needed to both compile more accurate statistics and to take into account basic economic factors such as the size of economies.
    Keywords: Government procurement, home bias, openness, trade negotiations
    Date: 2015–11
  38. By: Manfred Elsig; Bernard M. Hoekman; Joost Pauwelyn
    Abstract: International law, political science and economics scholars are all concerned with analyzing the performance of the WTO as an organization. In this paper we focus on the objectives that these different disciplines attribute to the WTO and how performance is assessed against these objectives. The literature in all three fields is vibrant, but the focus of each discipline is often on very different dimensions of WTO performance. While this implies significant complementarity across disciplines it also suggests potential opportunity costs in foregone synergies. Even when similar phenomena are the focus of analysis, different concepts, connotations and labels makes cross-disciplinary debate less efficient or prohibits it altogether. Greater effort to promote cross-fertilization across disciplines would enrich and strengthen research on the performance of the WTO.
    Keywords: International cooperation, WTO, performance evaluation, multidisciplinary analysis
    JEL: F02 F13 F53
    Date: 2016–02
  39. By: Daniel Rais
    Abstract: SECO Working Paper No 2016/08: The Halal Act is the first law in Indonesia, a Muslim majority nation, requiring Halal certification and labeling. Prior to the law, the Indonesian Council of Ulama (MUI) oversaw voluntary Halal certification. While Islamic organizations in Indonesia have praised the emergence of this law, local and foreign business entities have expressed their anxiety over whether such requirements would mean extra costs for them. The Halal Act involves several WTO issues, which could raise questions of Indonesia’s compliance with its WTO obligations. There have been a number of WTO cases where panel and the Appellate Body evaluated the concept of ‘public morals’. The question is how to balance this moral/religious objective and the means used to achieve such objective so that they are not more trade restrictive than necessary? It is also important to note that although Indonesia has the largest Muslim population in the world, the Indonesian constitution itself specifies that the country is not a Muslim nation and recognizes the existence of more than five religions in the country. This paper seeks to examine the WTO TBT consistency of the new Indonesian Halal Act and whether mandatory halal certification and labeling can be defended as an exception to WTO law.
    Date: 2016–06–28
  40. By: James C. Hartigan
    Abstract: In its Final Modification for Reviews the U.S. DOC announced on February 14, 2012 that it would cease the use of zeroing in the calculation of anti-dumping (AD) margins in all reviews as of April 16, 2012. However, it did not pertain to targeted dumping. In its Final Rule of April 22, 2014, it codified substantial discretion in calculating AD duties, including the use of zeroing, in targeted dumping. Thus the panel in Shrimp II erred in not finding “as such” inconsistency by the U.S. with the AD Agreement, despite this not being a targeted dumping complaint. Given the record of the U.S. in complying with zeroing petitions, it should have incurred the burden of proof, which is not satisfied by these pronouncements. Market structure should be used by panels in “as applied” inconsistency determinations. Viet Nam should have included an Art. 3 violation in its complaint.
    Keywords: Zeroing, Anti-Dumping, Targeted Dumping, Final Modification/ Final Rule, Non-Market Entity
    Date: 2015–10

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