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on International Trade |
| By: | AYODOTUN, Ayorinde; FARAYIBI, Adesoji |
| Abstract: | This study employed panel data from 1995 to 2012 to model the determinants of imports in sub-Sahara Africa. Also, it assesses the long-run and short-run elasticities of aggregate imports and their components and considers the impact of trade liberalization. Fixed effects and Random effect estimation were done for the model. The results indicate that domestic income, foreign exchange reserves and trade liberalization all play significant roles both in the short-run and long-run import demand levels in sub-Sahara Africa. Therefore, trade policy authorities who aim at reducing imports to correct balance-of-payments imbalances in the long run should focus their efforts on policies that will reduce purchasing power at the macroeconomic level and implement policies that will ensure an increased domestic supply. |
| Keywords: | Import demand; Relative Prices; Income; Determinants, Sub-Sahara Africa |
| JEL: | F1 F13 |
| Date: | 2016–08–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:73225&r=int |
| By: | Lionel Fontagné; Cristina Mitaritonna; José E. Signoret |
| Abstract: | Quantifying the restrictiveness of NTMs for services has proven to be difficult. The main limitation has been the lack of comprehensive data, whether trade, policy, or microeconomic data. A first solution is to use a STRI approach whereby qualitative information is arbitrarily transformed into a quantitative measure of the restrictiveness of each measure. We use here a reduced form of the gravity approach to estimate services trade without relying on STRI information. Our results compare with those of Fontagné, Guillin, and Mitaritonna (2011) for the year 2004. We use the same method, for a larger set of countries. The tariff equivalents are inferred by comparing the inward multilateral resistance term for each country with that of a benchmark country. We provide ad valorem equivalents of restrictions on trade in services for 117 countries in 2011 using GTAP data of trade in services. Get the new CEPII database on Estimated Tariff Equivalents of Services NTMs |
| Keywords: | Non-Tariff Measures;Trade in Services;Ad-valorem Equivalents |
| JEL: | F13 F14 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:cii:cepidt:2016-20&r=int |
| By: | Lommatzsch, Kirsten; Silgoner, Maria; Ramskogler, Paul |
| Abstract: | It has been argued that the increasing importance of global value chains necessitates a modification of conventional competitiveness measures. We compile a broad dataset including value added trade, gross exports and conventional and value added based real exchange rates. To sharply focus on external competitiveness, a new price competitiveness indicator is introduced, the TWULC (Trade Weighted Unit Labour Cost indicator). It weights sector-specific cost trends according to sector shares in exports. Econometric tests for a panel of 38 countries show that the focus on value added trade generally improves the explanatory power of export equations. Value added exports’ sensitivity towards real exchange rates is up to four times higher than that of gross exports. Real effective ex-change rates focusing on exporting industries and on value added weights yield more robust results across the specifications, but do not systematically outperform the more conventional measures of price of cost competitiveness. JEL Classification: F14, J30 |
| Keywords: | competitiveness, external trade, labour costs |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20161936&r=int |
| By: | Amador, João; Cabral, Sónia |
| Abstract: | Global Value Chains (GVCs) became the paradigm for the production of most goods and services around the world. Hence, interconnections among countries can no longer be adequately assessed through standard bilateral gross trade flows and new methods of analysis are needed. In this paper, we compute measures of network analysis and apply visualisation tools to value added trade flows in order to understand the nature and dynamics of GVCs. The paper uses data on the bilateral foreign value added in exports for the period 1995-2011 and, in each year, GVCs are represented as directed networks of nodes (countries) and edges (value added flows). The analysis is extended beyond total trade flows to discuss the distinct roles of goods and services in GVCs. Moreover, the differences between Germany, the US, China and Russia as major suppliers of value added in GVCs are also examined. JEL Classification: F12, F14, C67 |
| Keywords: | global value chains, input-output tables, international trade, network analysis |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20161931&r=int |
| By: | Jan Van Hove; Sophie Soete |
| Abstract: | De onderhandelingen over het Transatlantic Trade and Investment Partnership (TTIP) hebben geleid tot een belangrijk debat omtrent de impact van TTIP op handel en welvaart. Dit LES formuleert opmerkingen bij de TTIP onderhandelingen vanuit een economisch perspectief. We staan ook stil bij de Belgische export performantie in de Verenigde Staten en de potentiële impact van TTIP op de Belgische export. De impact van TTIP is complex en niet eenduidig. Daaruit besluiten we dat TTIP in hoofdzaak gemotiveerd kan worden vanuit globale strategische overwegingen. De uitgebreide onderhandelingsagenda dreigt te leiden tot een snel en oppervlakkig akkoord. We pleiten voor een akkoord op langere termijn met meer diepgang waarbij diverse thema’s buiten TTIP worden gehouden. TTIP leidt via diverse kanalen tot een potentiële groei van de Belgische export naar de Verenigde Staten: 1) Verdere tariefliberalisering zal vooral specifieke sectoren ten goede komen. Specifiek voor België lijkt hierin vooral potentieel te zitten voor de Voedingsindustrie en de Textiel-, Leder- en Schoenenindustrie; 2) De afbouw van niet-tarifaire belemmeringen zal de export stimuleren in de belangrijkste Belgische exportsectoren (Chemie, Vervoersmaterieel, Machines); en 3) Er is duidelijk ruimte voor meer productdiversificatie in de Belgische export naar de Verenigde Staten. Het aantal Belgische exporteurs naar de VS is beperkt en relatief sterk geconcentreerd in een aantal industriële sectoren. Het belang van TTIP is dus beperkt tot een selectie van Belgische exporteurs, tenzij TTIP helpt betere markttoegang tot de Verenigde Staten te realiseren voor nieuwe exporteurs. Vooral KMO’s hebben nood aan een sterke ondersteuning om de Amerikaanse markt te betreden. |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:548034&r=int |
| By: | Jana Šimáková (Department of Finance and Accounting, School of Business Administration, Silesian University) |
| Abstract: | This paper examines short-term and long-term effects of exchange rate changes on bilateral agricultural foreign trade in the Visegrad countries. Johansen cointegration test is employed to analyze the long-term relationship and VEC model to explore the short-term effects of exchange rate. Dataset covers period 1999 - 2014. Agricultural product groups are based on the SITC classification. Results show only some agricultural sectors significantly connected with exchange rate movements in the long-term. Effects of currency depreciation are ambiguous and cannot be generalized across the analyzed product categories but increasing in particular trade balances after currency depreciation dominates its decreasing. |
| Keywords: | exchange rate; agricultural sector; trade balance; cointegration; Visegrad |
| JEL: | F14 F31 Q17 |
| Date: | 2016–08–16 |
| URL: | http://d.repec.org/n?u=RePEc:opa:wpaper:0033&r=int |
| By: | Sylvanus Kwaku Afesorgbor (Department of Economics and Business Economics, Aarhus University, Denmark) |
| Abstract: | The paper examines the impact of two main instruments of economic diplomacy — regional integration and commercial diplomacy on export flows among African states. We test whether there is any evidence of a trade-off or complementary interaction between these two instruments in trade facilitation. We compare the effects of these two instruments of economic diplomacy on bilateral trade by employing a gravity model for 45 African states over the period 1980-2005. The results show that bilateral diplomatic exchange is a relatively more significant determinant of bilateral exports among African states compared to regional integration. We also find a nuanced interaction between these two instruments of economic diplomacy: the trade–stimulating effect of diplomatic exchange is less pronounced among African countries that shared membership of the same regional bloc. Generally, this could mean that there exists a trade-off between regional integration and commercial diplomacy in facilitating exports or a lack of complementarity between these two instruments of economic diplomacy. |
| Keywords: | Economic Diplomacy, Regional Integration, Bilateral Diplomacy, African Trade |
| JEL: | F51 F14 O55 |
| Date: | 2016–08–18 |
| URL: | http://d.repec.org/n?u=RePEc:aah:aarhec:2016-09&r=int |
| By: | Bastien Chabé-Ferret (FNRS and UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)); Joël Machado (University of Luxembourg, CREA); Jackline Wahba (University of Southampton, Economics Division) |
| Abstract: | This paper studies how return migration intentions affect immigrants' behavior. Using a unique French data set, we analyze the relationship between return plans and several immigrants' behaviors in the host and origin countries addressing the potential endogeneity between return plans and different investment decisions. We also investigate the potential trade-off and complementarities between various immigrants' investment behaviors. We find that temporary migrants are more likely to remit and invest in the country of origin, but less likely to invest in the host country. Moreover, our results show that there is no trade-off between immigrants' investment in the home and in the host country. In turn, we find substantial heterogeneity in behavior across migrants of different origins. |
| Keywords: | Temporary Migration, Return Intention, Remittances |
| JEL: | F22 F24 D14 |
| Date: | 2016–07–29 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvir:2016016&r=int |
| By: | Guglielmo Maria Caporale; Anamaria Sova; Robert Sova |
| Abstract: | Using annual data for the period 1992-2012, this paper examines trade flows between China and its main trade partners in Asia, North America and Europe, and whether increasing trade has led to industrial structural adjustment and changes in China’s trade patterns. The analysis is based on both economic indicators and the estimation of a gravity model, and applies recently developed panel data methods that explicitly take into account unobserved heterogeneity, specifically the fixed effect vector decomposition (FEVD) technique. The findings confirm the significant change in China’s trading structure associated with the fast growth of foreign trade. In particular, there has been a shift from resource- and labour-intensive to capital- and technology-intensive exports. |
| Keywords: | gravity model; panel data analysis; trade specialisation; comparative advantage |
| JEL: | C23 F14 F15 |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:nva:unnvaa:wp03-2016&r=int |
| By: | Monteiro, José-Antonio |
| Abstract: | This paper reviews the different types of provisions explicitly addressing small and medium enterprises (SMEs), including micro firms (MSMEs), in regional trade agreements (RTAs). The analysis covers the 270 RTAs currently in force and notified to the WTO as of April 2016. The analysis shows that half of all the notified RTAs, namely 136 agreements, incorporate at least one provision mentioning explicitly SMEs. These SMEs-related provisions are highly heterogeneous and differ in terms of location in the RTA, language, scope and commitments. Many of the SMEsrelated provisions are only found in a single or couple of RTAs. A limited but increasing number of RTAs incorporate specific provisions in dedicated articles or even chapters on SMEs. Although the number of detailed SMEs-related provisions included in a given RTA has tended to increase in recent years, most SMEs-related provisions remain couched in best endeavour language. The two most common categories of SMEs-related provisions found in RTAs are provisions (1) promoting cooperation on SMEs and (2) specifying that SMEs and/or programs supporting SMEs are not covered by the RTAs' obligations provisions. Other types of SMEs-related provisions, incorporated in a limited number of RTAs, refer, inter alia, to government procurement, trade facilitation, electronic commerce, intellectual property, or transparency. |
| Keywords: | Regional Trade Agreements,Small and Medium-Sized Firms (SME) |
| JEL: | F13 F15 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wtowps:ersd201612&r=int |
| By: | Lehmus, Markku; Suni, Paavo |
| Abstract: | Leaving the EU reduces the UK output significantly relative to the baseline in all three trade scenarios (EEA, FTA and WTO) analyzed in the paper. The WTO scenario assumes the loosest links with the EU and biggest barriers to trade and hence, it implies the greatest negative impact on the UK economy, whereas the negative impact is the smallest in the EEA scenario. Brexit affects the Finnish economy via the weakening British economy along with its global impacts. Nevertheless, the effects on the Finnish economy seem to be to some extent more positive than what is observed in analyzed countries. The better development is due to the improved price competitiveness born by adjustments in the effective exchange rates and, also, a favorable combination of relevant trade partners, comprising for instance Russia and China that are relatively immune to the negative effects of Brexit. After the negative short-run hit caused by Brexit, the Finnish export industries are able to win new market shares from the UK industries. This simulation result concerning the long-run development looks very optimistic for Finland. It does not take into account the possible negative effects of Brexit on the EU integration process that may disrupt the single market. For these reasons, there is a substantial probability for more negative effects on the Finnish economy as well. |
| Date: | 2016–08–23 |
| URL: | http://d.repec.org/n?u=RePEc:rif:briefs:48&r=int |
| By: | Ramstetter, Eric D. |
| Abstract: | This paper examines how foreign multinational enterprises (MNEs) have grown in Vietnam’smanufacturing and trade industries, and tries to shed light on how MNE takeovers ofVietnamese firms have affected employment, and wages between 2000 and 2012. Althoughthe scale of MNE activity has been substantial and grown in recent years, there are substantialdiscrepancies in measures of MNE shares from alternative sources and uncertainty over theactual share of MNEs in Vietnamese production or employment. On the other hand, thenumber of MNE takeovers has been very small and they appear to have played only a smallrole in changes of MNE shares. Rather, changes in MNE shares have resulted primarily fromthe entry and exit MNEs and changes in the scale of MNE activity. |
| Keywords: | Multinational enterprises, state-owned enterprises, ownership, employment, wages, Multinational enterprises, state-owned enterprises, ownership, employment, wages, F23, J31, L60, O53 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:agi:wpaper:00000102&r=int |
| By: | Bobeica, Elena; Christodoulopoulou, Styliani; Tkačevs, Olegs |
| Abstract: | This paper studies the importance of price and cost competitiveness for intra- and extra-euro area trade flows of euro area countries. A standard error correction framework shows that price competitiveness is a relatively more important driver of trade flows outside the euro area as compared to those within the monetary union, especially for exports, that tend to be more sensitive to relative prices than imports. We consider various measures of competitiveness and conclude that it is difficult to single out one that outperforms the others; based on an encompassing test, measures based on labour costs appear to contain relatively more information for trade flows, particularly for exports outside the euro area. The key policy implication is that to adjust competitiveness disequilibria within the monetary union, measures besides those aimed at price and cost adjustments should be pursued in the deficit countries, such as structural policies fostering non-price competitiveness. JEL Classification: F14, F15, F41 |
| Keywords: | error correction model, intra- and extra-euro area trade, price and cost competitiveness |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20161941&r=int |
| By: | David R. DeRemer (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences) |
| Abstract: | The principle of reciprocity is central to trade cooperation. Economic theory characterizes reciprocal policy changes that guide nations from noncooperative policies to the Pareto efficiency frontier. This paper extends the theory of reciprocity to a wide range of settings relevant for 21st century trade negotiations. Global value chains and rigid institutional constraints can lead to nations lacking the policy space necessary to influence relevant local prices abroad. Trade agreements then have a role in addressing these local price externalities in addition to the usual terms-of-trade externality. Yet we show that the standard concept of reciprocity---policy changes that equally increase net export value at world prices---can nonetheless guide nations toward the efficiency frontier. The crucial condition for reciprocity's application is that the policy changes which undo the terms-of-trade inefficiencies also undo the other inefficiencies. We find a set of policies such that no nation can gain from any reciprocal unwinding of trade commitments, and we show that these policies are globally efficient. Such stable policies are then a suitable prediction for trade negotiation outcomes when local price externalities matter. We derive the new predicted outcome and explore its relevance for existing theory and empirics of trade cooperation, including settings with imperfect competition, political economy, and global value chains. |
| Keywords: | trade agreements, principle of reciprocity, GATT/WTO, global value chains |
| JEL: | F12 F13 F15 L24 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:has:discpr:1613&r=int |
| By: | Juliane Proelss (Concordia University); Denis Schweizer (Concordia University); Volker Seiler (Paderborn University) |
| Abstract: | Rare earth elements (REEs) have gained increasing attention recently for several key reasons: 1) they are vital to many strategic industries, 2) they are relatively scarce, 3) they frequently exhibit high price fluctuations, 4) China holds a quasi-monopoly on their mining, and 5) China’s REE policy, which was overly restrictive and led to a formal complaint from the U.S., Japan, and the EU at the World Trade Organization (WTO) in 2012. This paper investigates whether the announcement of a WTO dispute resolution case can influence governmental changes in existing policies. We find empirical support for this notion, because REE prices exhibit a structural break around the announcement of the WTO dispute, and show lower variance ratios for all tested REEs afterward. This indicates a tendency toward efficiency, although REE prices still do not follow a random walk. Similarly, we find that the stock price informativeness of companies in the REE industry increases after the announcement, reflecting more firm-specific than marketwide information and less governmental influence. Finally, we show that the model uncertainty for option pricing models decreases, which we measure by the lower pricing differences among them. |
| Keywords: | Market Efficiency, Rare Earth Elements, Stock Price Informativeness, Structural Break Tests, Variance Ratio Tests, World Trade Organization (WTO) |
| JEL: | C22 C58 F13 G14 G18 G28 Q02 Q38 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:pdn:ciepap:97&r=int |
| By: | Chatterjee, Tonmoy; Gupta, Kausik |
| Abstract: | This paper deals with the aspect of trade in health services in the form of health care quality innovation from North to South in the presence of well established state interference in South. In accordance to the above mentioned scenario we have framed a theoretical structure where our health care is acting as a monopoly and the government has detected income transfer from richer people of South to the poorer section of South as an action to heal the welfare of the society. From such kind of set up we have discussed several possibilities through which a South based Multinational Health Service Provider (MNHSP) can export their health care quality innovation to the patients of North. Overall, we find price discrimination of the MNHSP between the Southern branches of MNHSP and the Northern branches of MNHSP with some standardisation is the main source of trade in health care innovation at least in our case. |
| Keywords: | Health quality innovation, International trade, Full information dynamic game and Income transfer |
| JEL: | C7 D4 F12 F23 I11 |
| Date: | 2016–04–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:73128&r=int |
| By: | Bruce A. Blonigen; Donghyun Lee |
| Abstract: | While there has been significant research to explore the determinants (and frictions) of foreign direct investment (FDI), past literature primarily focuses on country-wide FDI patterns with little examination of sectoral heterogeneity in FDI. Anecdotally, there is substantial sectoral heterogeneity in FDI patterns. For example, a substantial share of FDI (around 40-50%) is in the manufacturing sector, yet manufacturing accounts for a relatively small share of production activity in the developed economies responsible for most cross-border M&A. In this paper, we extend the Head and Ries (2008) model of cross-border M&A to account for sectoral heterogeneity and estimate the varying effects of FDI frictions across sectors using cross-border M&A data spanning 1985 through 2013. We find that non-manufacturing sectors generally have greater sensitivity to cross-border M&A frictions than is true for manufacturing, including such frictions as physical distance, cultural distance, and common language. Tradeability is positively associated with greater cross-border M&A, and is an additional friction for the many non-manufacturing sectors because they consist of mainly non-tradeable goods. |
| JEL: | D22 F21 F23 G34 L22 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22546&r=int |
| By: | AYODOTUN, Ayorinde; FARAYIBI, Adesoji |
| Abstract: | The economy of most developing countries, especially those in the Sub-Saharan Africa (SSA) has been subjected to periodic fluctuations in the world market since the implementation of structural adjustment program (SAP) due to the impact of trade liberalization. This has no doubt affected the structure of imports in this sub region since then. This paper provides an empirical study of the structure of imports in Sub-Saharan Africa from 1995 to 2012. In its methodology, trend analysis is used to profile the structure of imports in SSA. Evidence from the analysis showed that the description of the trend of imports and its determinants in the Sub-Saharan Africa has particularly enabled policy makers to be conversant with the structure of imports for better policy decision that will drive domestic production and trade efficiency. The study among others thus recommends a stabilization policy that will reduce the dependence on imports and reduce import demand in SSA. |
| Keywords: | Imports; Relative Prices; Total Income; Import Structure, Sub-Sahara Africa |
| JEL: | F0 F02 F1 F13 |
| Date: | 2016–08–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:73278&r=int |
| By: | Monteiro, José-Antonio |
| Abstract: | The last 25 years have witnessed a rapid increase in regional trade agreements (RTAs). Although RTAs generally aim at lowering tariff and non-tariff trade barriers, an increasing number of trade agreements extend their scope to cover specific policy areas such as environmental protection and sustainable development. This paper establishes a comprehensive typology and quantitative analysis of environment-related provisions included in RTAs. The analysis covers all the RTAs currently into force that have been notified to the WTO between 1957 and May 2016, namely 270 trade agreements. While environmental exceptions, along with environmental cooperation continue to be the most common types of environment-related provisions, many other different types of provisions are incorporated in an increasing number of RTAs. The common feature of all environment-related provisions, including environmental exceptions, is their heterogeneity in terms of structure, language and scope. |
| Keywords: | Regional Trade Agreements,Environment,Sustainable Development |
| JEL: | F13 F18 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wtowps:ersd201613&r=int |
| By: | David R. DeRemer (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences) |
| Abstract: | This paper considers trade agreements in a sufficiently general framework to encompass both imperfectly competitive market structures and income effects in government objectives. We show that governments choose globally efficient policies if they act as if they do not value the impact of their policies on their terms of trade. The results confirm that additional international externalities that arise in imperfectly competitive settings are the result of government failure to equate markups between sectors with domestic policies, not demand-side factors. |
| Keywords: | trade agreements, income effects, non-homothetic preferences |
| JEL: | F12 F13 F15 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:has:discpr:1616&r=int |
| By: | Jamal Ibrahim Haidar |
| Abstract: | This paper studies whether export sanctions cause export deflection. Using exporter-level data, I show how two-thirds of Iranian exports were de?ected to non-sanctioning countries, and at what cost. I show that aggregate Iranian exports actually increased after sanctions. Even though sanctions did not reduce Iranian exports, they exercised pressure on Iranian exporters, who incurred welfare losses as they had to reduce prices and increase quantities while exporting to a new destination. |
| URL: | http://d.repec.org/n?u=RePEc:qsh:wpaper:445126&r=int |
| By: | Lili Yan Ing (Economic Research Institute for ASEAN and East Asia (ERIA), University of Indonesia); Olivier Cadot (University of Lausanne, Centre for Economic Policy Research (CEPR) and Foundation for International Development Study, and Research FERDI); Janine Walz (The World Bank) |
| Abstract: | We construct an index of transparency in non-tariff measures based on notifications to the World Trade Organization under the agreements on sanitary and phytosanitary measures and on technical barriers to trade, the existence of a trade portal giving ready access to trade-relevant regulations, the existence of NTM data collected under the Multi-Agency Support Team classification, and the results of an experiment conducted between 2015 and 2016 where we asked for specific regulations concerning the import of a particular product on behalf of a private company. The resulting country ranking shows that the Organisation for Economic Co-operation and Development countries are, by and large, the most transparent, but also shows that the Association of Southeast Asian Nations member states score well compared to other developing countries. |
| Keywords: | International trade, non-tariff measures, transparency, governance, index, ranking |
| JEL: | F12 F13 F14 F15 F16 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:era:wpaper:dp-2016-23&r=int |
| By: | Gabor Bekes (Institute of Economics - Centre for Economic and Regional Studies, Hungarian Academy of Sciences and CEPR); Cecilia Hornok (Kiel Institute for the World Economy); Balázs Muraközy (Institute of Economics - Centre for Economic and Regional Studies, Hungarian Academy of Sciences) |
| Abstract: | We use a unique cross-section survey of manufacturing firms from four European countries (France, Germany, Italy, Spain) linked with balance sheet data to study the relationship between key aspects of globalization and firm-level markups. The main results are: (i) Exporting is positively correlated with markups; (ii) Importing intermediate inputs and outsourcing are also positively correlated with markups; (iii) Firms with affiliates have higher markups than other firms, while simply membership in a group or being foreign-owned seem to be less important; (iv) Perceived competition from low-cost markets is negatively correlated with markups; (v) Higher quality production and innovation, especially if it results in IP, has a strong positive relationship with markups; (vi) While these variables are correlated, they are significant in a joint model including all four groups, and `fully globalized' firms tend to charge around 100% higher markups than non-globalized firms. |
| Keywords: | markups, exporting, importing, FDI, innovation |
| JEL: | D22 D24 F14 L11 L60 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:has:discpr:1618&r=int |
| By: | Stefania Garetto (Boston University) |
| Abstract: | A large body of empirical work documents that prices of traded goods change by a smaller proportion than real exchange rates between the trading countries (incomplete pass-through). I present a Ricardian model of trade and international price-setting with heterogeneous firms, Bertrand competition and incomplete information. The model implies that: 1) firm-level pass- through is incomplete and a U-shaped function of firm-level productivity and market share; and 2) controlling for firm market share, producers operating under incomplete information, like for example new entrants in a market, exhibit lower pass-through rates than producers operating under complete information. Estimates from a panel data set of cars prices support the predictions of the model. |
| Keywords: | Heterogeneous firms, incomplete information, incomplete pass-through |
| JEL: | F12 F31 L13 D44 |
| Date: | 2016–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:bos:wpaper:wp2016-004&r=int |
| By: | Vinokurov, Evgeny; Libman, Alexander; Pereboyev, Vladimir |
| Abstract: | For almost two decades, regional cooperation and integration has remained one of the most pertinent issues of economic policy in the post-Soviet countries. There have been hundreds of initiatives and projects that aimed at deeper bilateral and regional cooperation and integration. In many cases, these initiatives had overlapping membership and objectives, or they ceased to exist, or were re-established by the same actors. Agreements with similar content, such as free trade areas or customs unions, were signed over and over again by the same countries. This variety of outcomes needed a comprehensive system to monitor and assess the current processes of economic, political and social interaction between countries. The CIS region did not possess any of these comprehensive studies and measurements. Therefore the assessments normally had to be done on ad-hoc basis. The blank space was filled by the large-scale research project initiated and implemented by the Eurasian Development Bank. The outcome of the project was the System of Indicators of Eurasian Integration. |
| Keywords: | regional integration; economic integration; post-Soviet; Russia; Eurasia; Eurasian Economic Union |
| JEL: | F13 F15 F5 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:61909&r=int |
| By: | Philip Gunby (University of Canterbury); Yinghua Jin; W. Robert Reed (University of Canterbury) |
| Abstract: | Foreign direct investment (FDI) has been linked to economic growth in a number of countries. Productivity spillovers at the firm level have been identified as a key element in the process by which FDI stimulates economic growth. Moreover, there is evidence of FDI-related productivity spillovers in China. Whether these spillovers have been of sufficient size to affect growth at the aggregate level, however, is an empirical question. We apply meta-analysis to the corresponding empirical literature to find an answer. Our main finding is that the effect of FDI on Chinese economic growth is much smaller than one would expect from a naïve aggregation of existing estimates. Publication bias and a profusion of estimates based on less preferred study and sample characteristics have served to inflate observed estimates. Once these effects are accounted for, the estimated effect of FDI on Chinese economic growth is reduced to statistical insignificance. This suggests that the cause(s) of the Chinese “economic miracle†likely lie elsewhere. |
| Keywords: | Meta-analysis, FDI, China, economic growth |
| JEL: | O11 O53 F21 |
| Date: | 2016–07–26 |
| URL: | http://d.repec.org/n?u=RePEc:cbt:econwp:16/15&r=int |
| By: | Cororaton, Caesar B. |
| Abstract: | Using a global computable general equilibrium model, the paper analyzes the potential effects of Regional Comprehensive Economic Partnership (RCEP) on the Philippine economy. The analysis involves an 80-percent reduction in tariffs and 10 percent in nontariff barriers within RCEP member-countries over a 10-year period. The results indicate trade creation within RCEP. Exports of RCEP to nonmembers decline. Within RCEP, the improvement in exports of the six non-ASEAN members is relatively higher than the Association of Southeast Asian Nations (ASEAN) members. Viet Nam benefits the most among ASEAN members. Exports of the rest of ASEAN increase as well, including the Philippines. The entry of cheaper rice in the Philippines benefits lower income households. The entry of cheaper textiles benefits the garments industry. On the whole, Philippine gross domestic product improves by 3 percent and welfare by USD 2 billion. Philippine poverty declines from 24.9 percent to 23.3 percent. |
| Keywords: | Philippines, ASEAN, Regional Comprehensive Economic Partnership (RCEP), regional trade, global CGE, poverty indicator |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:phd:rpseri:dp_2016-30&r=int |
| By: | Timothy J. Kehoe; Pau S. Pujolas; Kim J. Ruhl |
| Abstract: | We show that a trade model with an exogenous set of heterogeneous firms with fixed operating costs has the same aggregate outcomes as a span-of-control model. Fixed costs in the heterogeneous-firm model are entrepreneurs’ forgone wage in the span-of-control model. |
| JEL: | D31 D43 F12 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22514&r=int |
| By: | Gerhard Toews; Pierre-Louis Vezina |
| Abstract: | This paper examines the effect of large oil and gas discoveries on foreign direct investment in developing economies using a new project-level dataset. We document a large increase in non-resource FDI in the 2 years following a giant discovery, an event which is unpredictable due to the uncertain nature of exploration. We find that the value and the number of FDI projects increase by 30% following a discovery and that the number of source countries and target sectors increase by 14%. We interpret this FDI response as evidence for the news-driven business-cycle hypothesis within a developing country setting and highlight FDI bonanzas as an important development channel for resource rich economies. |
| Keywords: | giant discoveries, news shocks, investment |
| JEL: | F21 F23 Q32 Q33 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:oxcrwp:177&r=int |
| By: | Karim El Mokri; Tayeb Ghazi |
| Abstract: | The Atlantic basin holds a strategic place in the global economy given the systemic importance that the northern part of the region represents. However, this area remains very heterogeneous with significant differences between the economies within it. The analysis conducted in this policy brief also shows the lack of synchronization of the economic cycle among the countries in the region, and especially the low level of trade and financial integration of the African part of the basin. In addition, we find that African countries continue to suffer from weak integration between them. These factors certainly favor the need for Africa to identify and seize the opportunities provided by the Atlantic area, and especially to accelerate domestic reforms in order to increase their productive capacities, exploit potential intercontinental economic synergies, while paying particular attention to the global economic changes with regard to Asia’s possible role in the coming years. |
| Keywords: | Atlantic, development, Economy, Africa, growth, integration, GDP, imports,exports |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:ocp:ppaper:pb-1619&r=int |
| By: | Davies, Ronald B.; Siedschlag, Iulia; Studnicka, Zuzanna |
| Abstract: | The design of optimal tax policy, especially with respect to attracting FDI, hinges on whether taxes affect multinational firms at the extensive or the intensive margins. Nevertheless, the literature has not yet explored the simultaneous impact of taxation on FDI on these two margins. Using firm-level cross-border investments into Europe during 2004-2013, we do so with a Heckman two-step estimator, an approach which also allows us to endogenize the number of investments and include home country and parent firm characteristics. We find that taxes affect both margins, particularly for firms that invest only once, with 92 percent of tax-induced changes in aggregate inbound FDI driven by movements at the extensive margin. In addition, we find significant effects of both home country and parent firm characteristics, pointing towards the granularity of investment decisions. |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp537&r=int |
| By: | Teresa C. Fort |
| Abstract: | This paper provides direct empirical evidence on the relationship between technology and firms’ global sourcing strategies. Using new data on U.S. firms’ decisions to contract for manufacturing services from domestic or foreign suppliers, I show that changes in firm use of communication technology between 2002 to 2007 can explain almost one quarter of the increase in fragmentation over the period. The effect of firm technology also differs significantly across industries; in 2007, it is 20 percent higher, relative to the mean, in industries with production specifications that are easier to codify in an electronic format. These patterns suggest that technology lowers coordination costs, though its effect is disproportionately higher for domestic rather than foreign sourcing. The larger impact on domestic fragmentation highlights its importance as an alternative to offshoring, and can be explained by complementarities between technology and worker skill. High technology firms and industries are more likely to source from high human capital countries, and the differential impact of technology across industries is strongly increasing in country human capital. |
| JEL: | F14 F23 L23 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22550&r=int |
| By: | Salahodjaev, Raufhon; Yuldashev, Oybek; Omanbayev, Bekhzod |
| Abstract: | This study explores the factors that attract foreign direct investment (FDI) in Post-Communist countries. To do so, for the first time in the extant literature on ex-communist countries, we use panel data over the period 1990-2015. The key findings are as follows: (a) the rate of return and enrollment in education and cost of fuel are negatively associated with FDI inflows to Post-Communist countries; and (b) there is a positive link between FDI inflows to the region and stability of political regime and rule of law; (c) our estimates further confirm the market seeking hypothesis for the nature of FDI to the Post-Communist countries. |
| Keywords: | FDI; determinants; Post-Communist; rule of law; democracy; market seeking. |
| JEL: | F2 |
| Date: | 2016–08–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:73277&r=int |
| By: | Marjit, Sugata |
| Abstract: | The recent Brexit episode is being interpreted in some quarters as an anti-globalisation backlash. Free trade does not promise gains for all without a proper compensating mechanism that allows winners to bribe the losers. Also standard prediction of trade theory does point towards increasing wage inequality for the relatively skill abundant developed world. Theoretical discussion on compensating mechanism that addresses inequality is rare in trade literature. In a simple HOS model we consider tax policies that keep the pre-trade degree of inequality unchanged between skilled and unskilled workers. We discuss the problem of existence of such an inequality-neutral tax rate that generates a positive increment in the after tax skilled wage. Existence of such a mechanism is contingent on the initial degree of inequality and is independent of whether the tax is progressive or proportional. |
| Keywords: | Trade Model, Wage inequality, Compensation mechanism, Tax policy. |
| JEL: | D63 F11 H20 H23 J31 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:73110&r=int |
| By: | Aguiar, Angel; Caitlyn Carrico; Thomas Hertel; Zekarias Hussein; Robert McDougall; Badri Narayanan |
| Abstract: | This paper extends the GTAP framework to aid in the analysis of changes to public procurement policies. In terms of data developments, government investment demand data is estimated for each of the 57 GTAP Commodities in the 140 regions of version 9. In addition, the origin of imports by end use (i.e., for firms, private consumption, government consumption, and investment) is determined following the recent literature. Another layer of valuation is also introduced, which captures the preferences towards domestic production. In terms of model extensions, there is a new nest in the production structure that allows for different procurement regimes, and the origin of imports by agents’ end use is incorporated. We illustrate this framework by simulating the impact of a hypothetical reduction in the domestic preference in one of the newly introduced procurement regimes. Future work should focus on estimation of these domestic preference margins. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:gta:workpp:5146&r=int |
| By: | Luiz Felipe Brandão Osório |
| Abstract: | A União Europeia configura um experimento nas relações internacionais que desperta as reações mais variadas, passando desde a euforia extremada ao ódio nacionalista. Essa confusão de sentimentos deve-se não apenas à ampla gama de matérias abarcadas e nem à complexidade orgânica da instituição, mas, notadamente, às análises superficiais que emanam da doutrina tradicional, as quais ainda teimam em pairar no âmbito da superfície, dedicando-se à aparência dos fenômenos internacionais, sem adentrar em sua real essência concreta e total. Destarte, para que se desenvolva um estudo consistente é imperioso que se compreenda a integração europeia em seus aspectos mais recônditos, sem desconsiderar sua forma política e jurídica, mas delas partindo para que se desvende a realidade de sua economia política. A partir deste exercício, será possível apreender o que a experiência europeia pode trazer à realidade sul-americana. The European Union set up an experiment in international relations that arouses the most varied reactions, going from extreme euphoria to nationalist xenophobia. This feeling of confusion is due not only to the wide range of issues that are embraced nor the organic complexity of the institution, but, principally, to superficial analysis emanating from the traditional doctrine, which still stubbornly lies on the surface, focusing in the appearance of international phenomena, without entering into its real concrete and full essence. Thus, in order to develop a consistent study is fundamental to understand European integration in their most hidden aspects, without disregarding their political and legal form, but up to them until unravelling the reality of its political economy. Up to this point it is possible to understand which lesson could be extracted from European experience to South American reality |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:ipe:ipetds:2219&r=int |