nep-int New Economics Papers
on International Trade
Issue of 2016‒10‒16
28 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Participation in Global Value Chains in Latin America: Implications for Trade and Trade-Related Policy By Charles Cadestin; Julien Gourdon; Przemyslaw Kowalski
  2. What Next for Multilateral Trade Talks? Quantifying the Role of Negotiation Modalities By Yvan Decreux; Lionel Fontagné
  3. Using Foreign Factors to Enhance Domestic Export Performance: A Focus on Southeast Asia By Javier Lopez Gonzalez
  4. Multilateralism and Regionalism in the South Pacific: World Trade Organization and Regional Fora as Complementary Institutions for Trade Facilitation By Richard Pomfret
  5. The Superstar and the Followers: Intra-Firm Product Complementarity in International Trade By Arnarson, Björn Thor
  6. Mirror trade statistics between China and Latin America By Benita, Francisco; Urzúa, Carlos M.
  7. Wage Inequality and Skill Supplies in a Globalised World By Lorenzo Rotunno; Adrian Wood
  8. A micro-funded theory of multilateral resistance to migration By Marchal, Léa; Naiditch, Claire
  9. On the suitability of alternative competitiveness indicators for explaining real exports of advanced economies By Fischer, Christoph; Hossfeld, Oliver; Radeck, Karin
  10. Industry Global Value Chains, Connectivity and Regional Smart Specialisation in Europe. An Overview of Theoretical Approaches and Mapping Methodologies By Emanuela Todeva; Ruslan Rakhmatullin
  11. The interaction between trade and FDI: the CEE countries experience By Claudiu Tiberiu Albulescu; Daniel Goyeau
  12. Quantitative Trade Models: Developments and Challenges By Timothy J. Kehoe; Pau S. Pujolas; Jack Rossbach
  13. FDI effects on the labor market of host countries By Hale, Galina; Xu, Mingzhi
  14. Implementing the Trade Facilitation Agreement: From vision to reality By Neufeld, Nora
  15. Should the host economy invest in a new industry? The roles of FDI spillovers, development level and heterogeneity of firms By Huu Thanh Tam Nguyen; Ngoc-Sang Pham
  16. Does the Foreign Income Shock in a Small Open Economy DSGE Model Fit Croatian Data? By Vladimir Arčabić; Tomislav Globan; Ozana Nadoveza; Lucija Rogić Dumančić; Josip Tica
  17. Trade and the Size Distribution of Firms: Evidence from the German Empire By Marcus Biermann
  18. Linking Services to Manufacturing Exports By Arnarson, Björn Thor; Gullstrand, Joakim
  19. Linking jobs in global supply chains to demand By Kizu, Takaaki.; Kühn, Stefan.; Viegelahn, Christian.
  20. What consequences would a post-Brexit China-UK trade deal have for the EU? By Alicia García-Herrero; Jianwei Xu
  21. Global Value Chains Mapping: Methodology and Cases for Policy Makers. Thematic Work on Value Chain Mapping in the Context of Smart Specialisation By Emanuela Todeva; Ruslan Rakhmatullin
  22. Are Commodity Price Booms an Opportunity to Diversify? Evidence from Resource-dependent Countries By Clement ANNE
  23. The possible effects of Brexit to the South African Economy By Jacob Twala
  24. Selection, Trade, and Employment: The Strategic Use of Subsidies By Hassan Molana; Catia Montagna
  25. Global supply chains : insights into the Thai seafood sector By Errighi, Lorenza.; Mamic, Ivanka.; Krogh-Poulsen, Birgitte.
  26. Global Strategy of Asian Market Enterprises By Sircar, Sanjoy; Agrawal, Rajat; SK, Shanthi; Reddy, Kotapati Srinivasa
  27. The Politics of FDI Expropriation By Marina Azzimonti
  28. Global supply chains in the food industry : insights from the Asia- Pacific region By Frenkel, Stephen.; Mamic, Ivanka.; Greene, Laura.

  1. By: Charles Cadestin; Julien Gourdon; Przemyslaw Kowalski
    Abstract: This paper characterises the extent of GVC participation in selected countries of Latin America. It looks deeper into certain key trade policy-related aspects of Latin American trade integration with the potential to improve GVC participation. Latin America has a dense web of intra and extra-regional preferential trade agreements (PTAs). Nevertheless, the overlap, duplication and conflicts among the different rules and standards governing trade under these PTAs are likely reducing the benefits of these agreements. This is prompting renewed interest in the idea of linking or harmonising the various Latin American PTAs. To help inform this debate, this study analyses the impact of rules of origin (RoO) and non-tariff measures (NTMs) on GVC integration in the region, and examines relevant harmonisation initiatives.
    Keywords: trade policy, non-tariff measures, global value chains, trade agreements
    JEL: F1 F2 F6
    Date: 2016–10–11
  2. By: Yvan Decreux (ITC (UNCTAD-WTO) - International Trade Center - WTO - UNCTAD); Lionel Fontagné (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: What are the lessons from the DDA from a forward looking point of view? A decade of negotiations is likely to go nowhere. This paper argues that absence of a landing-zone was in the data. Quantitative tools modelling the detail of the modalities predicted failure but were not taken seriously: the design of the negotiation implied that any achievements of the Round could only be limited. Such feebleness was induced by the way multilateral negotiations were organized – in separate groups, without much consideration for, or understanding of, how the different elements added up to more than the sum of the parts. We put sensible figures on that argument by using a dynamic computable general equilibrium model of the world economy, addressing exceptions, flexibilities as well as the non-linear design of the liberalization formulas, a reduction in domestic support, the phasing out of export subsidies in agriculture, as well as trade facilitation. Our conclusion is that negotiators have to go back to simplicity and re-bundle the topics if they wish to revamp multilateral negotiations.
    Keywords: Doha Development Round,Computable General Equilibrium Models,Trade facilitation
    Date: 2015
  3. By: Javier Lopez Gonzalez
    Abstract: A country or firm's position in the value chain will largely depend on its comparative advantage, and therefore the mix of skills and resource endowments it brings to international production. For some, this might initially involve specialising in the labour intensive segments while others may specialise in the high-tech elements. In either case what matters is whether participation leads to growing economic activity. This paper discusses how countries can use foreign value added to enhance their domestic export performance. It shows that foreign sourcing is a complement to, rather than substitute for, the creation of domestic value added and employment in exports highlighting how, with GVCs, export competitiveness is inextricably linked to importing. The paper discusses how ASEAN countries can leverage different policies in order to make the most out of GVCs.
    Keywords: globalisation, trade, South East Asia, global value chains, exports
    JEL: F12 F13 F14 F15 F63 F66 F68
    Date: 2016–10–11
  4. By: Richard Pomfret
    Abstract: As World Trade Organization (WTO) membership becomes almost universal, the Pacific island countries stand out as the largest group of outsiders. As the islands seek to replace reliance on preferential trading arrangements by competitive exports, market access and trade facilitation have become key policy concerns. In this context, WTO membership and regional or bilateral trade agreements are complementary institutions for increasing the potential success of new exports. The WTO sets out agreed principles for market access, and membership includes a dispute resolution process that provides redress against unjustified obstacles to exports, whilst trade facilitation in the sense of overcoming particular cost-raising obstacles to trade is better delivered by regional and bilateral agreements. The argument is supported by evidence from Pacific and other small island economies.
    Keywords: Pacific islands, trade facilitation, WTO
    Date: 2016–10–10
  5. By: Arnarson, Björn Thor (Department of Economics, Lund University)
    Abstract: This paper investigates whether the exports of different products by the same firm are systematically interconnected. Using Swedish firm-registry data from 1997-2011, I first document that the distribution of firm export sales is skewed towards their best performing products (‘superstars’). I then use a novel instrumental variable approach to identify if the ‘superstar’ products induce more trade of non-superstar products. I find evidence that the exports of low-ranked (non-star) products of a firm complement the exports of a single superstar product to each destination. Extending the ‘superstar’ concept to a ‘superstar core’ of products strengthens this result (this includes the top decile of products in terms of export value). The results show that a 1% increase in the exports of the superstar product and the superstar core increases the exports of non-star products by 0.13% and 0.376%. Hence, I find that the exports of non-star products complements the superstar while conversely, the same complementarity is not found using low-ranked products as placebo-superstars. The main contribution of this paper is identifying a new, sizeable and systematic intra-firm-destination one-way complementarity between products that is missing in the current models of multi-product exporters.
    Keywords: Multi-product firms; product complementarity; spillovers; intra-firm spillover; international trade; inter-product spillover
    JEL: F10 F13 F14 L10 L20
    Date: 2016–10–11
  6. By: Benita, Francisco (Tecnológico de Monterrey); Urzúa, Carlos M. (Tecnológico de Monterrey)
    Abstract: This paper contrasts the mirror trade statistics between China and twenty Latin American countries during the 2009-2014 years, after adding to the Chinese side the trade figures corresponding to Hong Kong, and adjusting for some valuation issues. Using the resulting panel data, the paper then explores some of the possible explanatory variables, in the case of Latin America, which can account for the significant trade misinvoicing that is found among most of the countries involved.
    Keywords: China, Latin America, mirror statistics, trade misinvoicing, statistical capacity, financial openness
    JEL: F14 H83 O53 O54
    Date: 2016–01
  7. By: Lorenzo Rotunno (Aix-Marseille University (Aix-Marseille School of Economics), CNRS, & EHESS); Adrian Wood (University of Oxford)
    Abstract: We investigate empirically how the relative wages of skilled and unskilled workers vary with their relative supplies in open economies. The investigation is based on a Heckscher-Ohlin model that is more general than the canonical version and related to recent advances in trade theory. Our results bridge the gap between trade economists and labour economists in views on the role of national labour markets in wage determination when countries trade. As labour economists believe, relative wages are sensitive to variation in skill supplies in open economies. As trade economists believe, however, this sensitivity decreases with openness to trade.
    Keywords: Heckscher-Ohlin, trade and wages, wage inequality, labour markets
    JEL: F11 F16 J23 J31
    Date: 2016–10
  8. By: Marchal, Léa; Naiditch, Claire
    Abstract: This paper provides a micro-funded theory of multilateral resistance to migration analyzing how financial constraints determine migration trends. We build a RUM model in which we explicitly introduce the budget constraint in the migration decision: individuals cannot afford migrating to a destination for which the migration cost (which depends on the immigration policy of the destination country) is higher than their current income. We find that the migration rate between two countries depends on the characteristics of the origin and destination countries and their relative accessibility, and also on a budget constraint term. This term depends on the attributes of alternative destinations. Thus, the model exhibits multilateral resistance to migration. We perform a numerical analysis based on 23 European countries in 2008 and evidence multilateral resistance to migration induced by the implementation of intra-EU migration restrictions following the 2004 EU enlargement.
    Keywords: Migration,Budget constraint,Immigration policy,RUM model,Multilateral resistance to migration
    JEL: F22 J61 O15 C63
    Date: 2016
  9. By: Fischer, Christoph; Hossfeld, Oliver; Radeck, Karin
    Abstract: Real exports are commonly specified as depending on an indicator of price competitiveness and on a measure of foreign activity. This study empirically investigates the suitability of alternative competitiveness indicators in explaining real exports for a broad group of advanced economies. To this end, a panel cointegration analysis is conducted, augmented by a forecasting exercise. In the latter, repeated sampling techniques are used in order to avoid arbitrary sample splits. We find that broad price- and cost-based indicators are to be preferred to narrow price based measures such as CPI- or PPI-deflated real exchange rates. Furthermore, the evidence points towards using world trade as the external activity variable instead of GDP- or real imports-based measures.
    Keywords: international price competitiveness,real export demand,price elasticity of exports
    JEL: C23 F14 F31 F47
    Date: 2016
  10. By: Emanuela Todeva (BCNED - Business Clusters, Networks and Economic Development); Ruslan Rakhmatullin (European Commission - JRC)
    Abstract: This paper is the second paper in a series of three papers on Global Value Chains (GVCs), developed under the auspices of the Joint Research Centre (JRC) of the European Commission. It provides a clear understanding and comparison of existing theories and methodologies for mapping value chains and offer a demonstration of the use of such methodologies in the context of S3 and strategic interventions at regional, national and cluster level. The paper provides an overview of five distinctive theoretical frameworks to global value chain research, and related to them methodologies for mapping GVCs, and analysis of patterns of industry diversification and integration. The paper highlights that mapping interconnected industry capabilities at a global scale and GVC analysis requires the use of data on the operations of multinational enterprises (MNEs). This discussion is intricately linked to the third paper in the series, which presents a new methodological approach using a bespoke database of the most innovative biopharma MNEs, describing the step-by-step procedure for building the MNE database and mapping the biopharma GVC at country, region and cluster level. Our policy recommendations are co-aligned with the existing framework - EU industrial policy: ‘Towards Industrial Renaissance’, Regional growth through Smart Specialisation Strategy, COSME programme for SME support, building Circular Economy for sustainable and inclusive growth, cluster internationalisation, and other relevant policy initiatives by the European Commission.
    Keywords: global value chains, methodology, mapping, smart specialisation, industrial modernisation, regional policy, European Union
    Date: 2016–10
  11. By: Claudiu Tiberiu Albulescu (UPT - Politehnica University of Timisoara - Politehnica University of Timisoara); Daniel Goyeau (CRIEF - Centre de Recherche sur l'Intégration Economique et Financière - Université de Poitiers)
    Abstract: Inside the EU, the commercial integration of the CEE countries has gained remarkable momentum before the crisis appearance, but it has slightly slowed down afterwards. Consequently, the interest in identifying the factors supporting the commercial integration process is high. Recent findings in the new trade theory suggest that FDI influence the trade intensity but the studies approaching this relationship for the CEE countries present mixed evidence, and investigate the commercial integration of CEE countries with the old EU members. Against this background, the purpose of this paper is to assess the CEE countries' intra-integration, focusing on the Czech Republic, Hungary, Poland and the Slovak Republic. For each country we employ a panel gravitational model for the bilateral trade and FDI, considering its interactions with the other three countries in the sample on the one hand, and with the three EU main commercial partners on the other hand. We investigate different facets of the trade – FDI nexus, resorting to a fixed effects model, a random effects model, as well as to an instrumental variable estimator, over the period 2000-2013. Our results suggest that outward FDI sustains the CEE countries' commercial integration, while inward FDI has no significant effect. In all the cases a complementarity effect between trade and FDI is documented, which is stronger for the CEE countries' historical trade partners. Consequently, these findings show that CEE countries' policymakers are interested in encouraging the outward FDI toward their neighbour countries in order to increase the commercial integration.
    Keywords: FDI,trade,complementarity,substitution,panel models
    Date: 2016–09–07
  12. By: Timothy J. Kehoe; Pau S. Pujolas; Jack Rossbach
    Abstract: Applied general equilibrium (AGE) models, which feature multiple countries or regions, multiple sectors, and input-output linkages across sectors in a Walrasian general equilibrium framework, have been the dominant tool for evaluating the impact of trade liberalization since the 1980s. We provide an overview of the historical development of AGE models and a guide as to how they are used to perform policy analysis. We then review and document shortcomings in the performance of AGE models in predicting the sectoral effects of past trade reforms, that is, we show that AGE models often perform poorly. We provide suggestive evidence that incorporating some of the recent advances in quantitative trade theory in AGE models can improve their predictive ability.
    JEL: F11 F13 F14 F17
    Date: 2016–09
  13. By: Hale, Galina (Federal Reserve Bank of San Francisco); Xu, Mingzhi (University of California, Davis)
    Abstract: This paper surveys literature on impact of foreign direct investments (FDI) on host country’s labor market, including employment, wages, labor productivity, skill premium, and inequality. Meta-analysis of empirical findings suggests that there is solid consensus with respect to wages: in both developing and developed countries FDI leads to higher wages in target firms and industries. Majority of the papers also find positive productivity spillovers as well as increase in skill premium as a result of FDI, especially in developing economies. We analyze all the findings together to address possible mechanisms of FDI effects on labor in target firms, in competing firms, and in vertically related firms. We present a stylized model that is consistent with many empirical regularities found in meta-analysis of empirical literature.
    Date: 2016–09–21
  14. By: Neufeld, Nora
    Abstract: After a decade of negotiations and additional preparatory work, the WTO Trade Facilitation Agreement (TFA) is poised to enter into force. It promises to streamline and substantially prune the red tape that all too often slows and impedes international commerce - thereby significantly reducing both cost and time needed to do business across borders. The paper chronicles the path from the conclusion of the talks at the 2013 Bali Ministerial Conference to the present day as we prepare for the Agreement to take effect. It reviews the state of the ratification process, analyses implementation schedules and outlines work still to be done. The study shows that the emerging application of the TFA, like its negotiation, has once again confounded the sceptics - who first doubted that a TF Agreement would see the light of day and then questioned if it would ever be put into practice. While plenty remains to be done to implement the TFA across the full WTO membership, its entry into force is set to happen - a valedictory moment.
    Keywords: Trade Facilitation Agreement,TFA,trade facilitation negotiations,category A, B and C notifications,ratification,entry into force,WTO Agreement,amendment protocol,Bali Ministerial Conference
    Date: 2016
  15. By: Huu Thanh Tam Nguyen (EPEE - Centre d'Etudes des Politiques Economiques - Université d'Evry-Val d'Essonne); Ngoc-Sang Pham (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We consider a small open economy with two productive sectors (an old and a new). There are two types of firms in the new industry: a well planted multinational firm and a potential domestic firm. Our framework highlights a number of results. First, in a poor country with low return of training and weak FDI spillovers, the domestic firm does not exist in the new industry requiring a high fixed cost. Second, once the host economy has the capacity to create the new firm, the productivity of the domestic firm is the key factor allowing it to enter into the new industry, and even eliminate the multinational firm. Interestingly, in some cases where FDI spillovers are strong, the country should invest in the new industry, but not train specific workers. Last, credit constraints and labor/capital shares play important roles in the competition between the multinational firm and the domestic one.
    Keywords: FDI spillovers,investment in training,heterogeneous firms,entry cost
    Date: 2014–10
  16. By: Vladimir Arčabić (Faculty of Economics and Business, University of Zagreb); Tomislav Globan (Faculty of Economics and Business, University of Zagreb); Ozana Nadoveza (Faculty of Economics and Business, University of Zagreb); Lucija Rogić Dumančić (Faculty of Economics and Business, University of Zagreb); Josip Tica (Faculty of Economics and Business, University of Zagreb)
    Abstract: The paper compares theoretical impulse response functions from a DSGE model for a small open economy with an empirical VAR model estimated for the Croatian economy. The theoretical model fits the data well as long as monetary policy is modelled as a fixed exchange rate regime. The paper considers only a foreign output gap shock. A positive foreign shock increases domestic GDP and prices and decreases terms of trade, which is in compliance with theoretical assumptions. Interest rates behave differently than suggested by the estimated DSGE model, which could be explained with an unconventional interest rate transmission channel in Croatia.
    Keywords: DSGE, foreign income shocks, exchange rate, Croatia, gross domestic product, Eurozone
    JEL: E32 F41
    Date: 2016–09–21
  17. By: Marcus Biermann
    Abstract: What is the effect of trade on the size distribution of firms? We collect historical data between 1882 and 1907 from the German Empire to address this question. Our data allow us to match three data sets according to the same geographic boundaries: industry census data, railway and waterway trade data. The key findings are that trade integration impacts the firm size distribution heterogeneously across three size categories. We find evidence of a stark shift in employment and firm share from small and medium firms towards larger firms. A "Bartik" instrument is proposed to argue that the correlations described are indeed causal. We provide evidence for a fall in transport costs and technology adoption as mechanisms to explain the stylized facts observed in the data
    Keywords: Firm size distribution, firm heterogeneity, technology adoption, German Empire
    JEL: F14 F15
    Date: 2016–10
  18. By: Arnarson, Björn Thor (Department of Economics, Lund University); Gullstrand, Joakim (Department of Economics, Lund University)
    Abstract: In this paper we analyse the interplay between services and manufacturing. This is done through identifying and quantifying a direct link between manufacturing exports and the sales by service providers. For identification of this transmittance mechanism, with the help of highly detailed geographic data, we create a Localised Export Exposure (LEE) variable that captures the variation in demand for service inputs based on nearby exporters. Since service firms are much less geographically specialised than manufacturing firms, we observe a high variation in their exposure to demand changes. This spatial variation in the demand for service inputs results from a variation in local export volumes (LEE); which is used to assess the interplay between manufacturing exports and services. Our results show that a 1% increase in exports increases the volume of sales of service firms by 0.2% (and employment within the firm by 0.06%). The results show also that the link is highly local and the strongest impact is within 20 km of the shock.
    Keywords: Spillovers; Services; Manufacturing Exports; Input-output linkages
    JEL: F10 F14 F60
    Date: 2016–10–13
  19. By: Kizu, Takaaki.; Kühn, Stefan.; Viegelahn, Christian.
    Abstract: In its recent World Employment and Social Outlook, the ILO published estimates of the number of jobs related to global supply chains (GSCs) for 40 countries in 1995–2013. This paper provides a detailed description of the methodology that was used for the estimation and documents the links between GSC-related jobs and demand. The paper shows evidence on the number of jobs supported by demand in different export destinations and analyzes the number of GSC-related jobs in different country groups. In particular, we find evidence for the changing role of China, from a country in which GSC-related jobs are located to a country whose import demand creates these jobs elsewhere. We also show that production linkages between emerging economies create an increasing number of jobs. When focusing on jobs related to manufacturing GSCs, trends in GSC-related jobs reveal the increasing importance of the services sector. Finally, we conduct a sectoral regression analysis and provide evidence that increased GSC participation of a sector as a supplier can be associated with a drop in the wage share. We show that this result holds regardless of whether advanced or emerging economies are the final export destination, where demand originates.
    Keywords: value chains, employment, wages, productivity, location of industry, labour statistics, statistical method, statistical analysis
    Date: 2016
  20. By: Alicia García-Herrero; Jianwei Xu
    Abstract: Brexit means that the United Kingdom could be able to run its own trade policy, which opens the door for the potential negotiation of a free trade agreement between the UK and China. Alicia Garcia-Herrero and Hianwei Xu show that a UK-China FTA will be neither easy nor clearly advantageous for the UK - It will be difficult for the UK to reach an agreement with China without first establishing a new post-Brexit partnership with the EU. Negotiating tariffs with other WTO members will be a pre-condition if the UK exits the EU customs union, and this process will require time and effort. Even if the UK reaches an agreement with China, the UK cannot serve as a back door for Chinese products to enter the EU, because the EU is very likely use rules of origin to close any such loopholes. The UK and the other EU economies differ in most of their exports to China, so there would be very limited substitution between them. It therefore seems that establishing a new trade relationship with the EU would be a more urgent task for the UK in the post-Brexit world, rather than an FTA with China. Under such circumstances, the UK might need to postpone its trade negotiations with other economies outside of EU, including China. This goes beyond the current discussion of the illegality of the UK starting to negotiate trade deals before it leaves the EU. The issue is whether it makes economic sense for the UK to do so, and the answer is no. In fact, the more the UK reaches an independent favourable trade agreement with China after Brexit, the harder it will be for the UK to strike a good deal with EU. In the meantime, it is also urgent for the UK to negotiate with the main WTO members on tariffs, because outside the EU, the UK might not participate in the EU schedule of concessions. The best strategy for the UK would be to negotiate with the other WTO members with the EU-based tariffs as a starting point, to avoid negotiating over terms separately and also to maintain a close relationship with the EU.
    Date: 2016–10
  21. By: Emanuela Todeva (BCNED - Business Clusters, Networks and Economic Development); Ruslan Rakhmatullin (European Commission - JRC)
    Abstract: This paper is a paper in a series of work on Global Value Chains (GVCs), developed under the auspices of the Joint Research Centre (JRC) of the European Commission. It builds upon the theoretical discussion presented in the first two papers and offers a new methodological approach for mapping GVCs, using a bespoke dataset of the most innovative biopharma MNEs. The paper takes the example of the global biopharma value chain and describes the step-by-step procedure for mapping interconnected capabilities at a global scale, the concentration of biopharma capabilities in Europe, and two cases of regional and national specialisation in this sector. The proposed methodological approach contains two distinctive methodologies – for top-down global value chain mapping of an established industry sector (such as biopharma), and for a bottom-up mapping of capabilities within the GVC that operate at specific locations. Both methodologies can be applied to emerging sectors and segments driven by key enabling technologies, such as photonics, advanced materials, 3D printing, or renewable energy, or any other cross-sectoral value chains. The paper includes two cases of application of this methodology at regional and national level. These are the cases of Bulgaria and the Greater South East of England in the UK. The novel methodology and methods for data collection and visualisation demonstrate the linkages across segments of the biopharmaceutical GVC and the position of firms at the cross-section of biotechnology discovery and pharmaceutical drug development and manufacturing activities, managing a complex network of outsourcing, insourcing and supply relationships, through a vast empire of subsidiaries around the world. Capturing and representing the value-chain within biopharma MNEs enables policy makers to understand the complexity of industry organisation across multiple locations around the world and the global knowledge and resource linkages that drive further growth in the sector.
    Keywords: regional policy, value chains, GVCs, case study, BioPharma, regional level, smart specialisation
    Date: 2016–10
  22. By: Clement ANNE
    Abstract: The recent commodity price drop has renewed attention on the importance to diversify resource-dependent economies in particular to limit their exposure to commodity price volatility. While commodity price booms can be an opportunity to diversify the economy if managed properly, it remains an empirical question whether this has effectively been the case. Using a panel of 78 resource-dependent countries over 1970-2012 we tackle this question thanks to cointegration analysis, dynamic macro-panel estimators, as well as analyses of diversification outcomes during selected commodity price boom and bust episodes. While our econometric results evidence a stable and significant impact of commodity price booms on export concentration through a more concentrated mix of already exported products, this relationship includes both an increase in export concentration during commodity price booms and an increase in export diversification during commodity price drops. We also evidence a higher increase in export concentration during the 2000s commodity price booms than the 1970s, which explains the urging current need of most resource-dependent countries to diversify.
    JEL: Q02 O14 O13 F14
    Date: 2016–10
  23. By: Jacob Twala (KwaZulu-Natal Provincial Treasury)
    Abstract: On 23 June this year, the UK voted to leave the European Union (EU) after 43 years of membership. The vote to leave the EU has already been felt in the UK and globally. Whether or not the UK eventually leaves the EU, the global economic fall-out is already considerable and South Africa (SA) is no exception. In the helm of this background this presentation provides an overview of the possible effects of Brexit to the South African economy. The presentation/speech focuses mainly on the trade relations between SA and United Kingdom (UK), thereby outlining both the direct and indirect effects of Brexit. The primary focus of the direct impact is on UK’s direct investment in South Africa. The indirect impact is mainly on financial, currency and commodity markets as well as the UK’s tourist flows to South Africa.
    Keywords: Brexit, South African Economy
  24. By: Hassan Molana; Catia Montagna
    Abstract: We study how the interaction between economic openness and competitive selection affects the effectiveness of employment and entry subsidisation. Within a heterogeneous-firms model with endogenous labour supply, optimal employment subsidies are shown to have pro- or anti-competitive effects on industry selection depending on whether the economy is open or not. Selection effects resulting from international competition and fiscal externalities imply that non-cooperative policies may entail under-subsidisation of employment. Entry subsidies always have pro-competitive selection effects on the industry, but are shown to be less effective in raising employment and welfare than employment subsidies.
    Keywords: optimal policy, employment subsidies, competitive selection, international trade
    JEL: E61 F12 F42
    Date: 2016–10
  25. By: Errighi, Lorenza.; Mamic, Ivanka.; Krogh-Poulsen, Birgitte.
    Abstract: In recent decades, the Thai seafood sector has expanded on a global scale by using foreign labour and inputs, while exporting processed and semi- processed seafood products to the largest economies including the United States, the EU and Japan. Growing international market shares and economic development have been achieved through the attraction of foreign capital, the achievement of good sanitary standards and investment in appropriate infrastructure in the sector. Therefore, the Thai seafood sector is an example of economic upgrading through participation in global supply chains (GSCs). However, while the sector is a key contributor to growth and employment for Thailand, social upgrading has been limited to levels and processes in the supply chain where there is a direct interaction with international buyers and more exposure to consumers. Severe decent work deficits have been documented in fishing and pre-processing activities, including the use of forced and child labour. Such deficits can be attributed to weak governance, which has been mostly related to deficiencies in public enforcement in the sector. By illustrating key economic trends, decent work challenges and public and private governance in the Thai seafood GSCs, the case study presented in this paper is an example of how social upgrading is not always tied to economic upgrading, if governance gaps persist. It is also an illustration of how governments may seek to improve legislation and enforcement in GSCs.
    Keywords: food industry, fishery worker, decent work, value chains, good practices, Thailand, industrie alimentaire, travailleur de la pêche, travail décent, chaînes de valeur, bonnes pratiques, Thaïlande, industria de la alimentación, trabajador de la pesca, trabajo decente, cadenas de valor, buenas prácticas, Tailandia
    Date: 2016
  26. By: Sircar, Sanjoy; Agrawal, Rajat; SK, Shanthi; Reddy, Kotapati Srinivasa
    Abstract: Emerging Markets have recently been attracting increasing attention in investors’ minds as the post financial meltdown of 2008 and the series of Euro crises have been casting a deep shadow of gloom and uncertainty on the economic performance of the developed economies. Specifically, two important issues are associated with the internationalization of Asian market enterprises (AMEs), namely free-flow of investment at ease of exchange norms and the recent global financial crisis. In addition, availability of free-cash-flows and limited expansion of local markets are the other major factors that push many AMEs to choose internationalization as a growth strategy. Thus, all the papers are original contributions in this special issue and it is our view that they will lead to better understanding of the implications of managing global strategy from a cross section of Asian companies and a richer understanding of the theoretical issues in global strategic management.
    Keywords: Global Strategy, Emerging Economies, Asia, Internationalization, Global Diversification, Firm performance; International Business Strategy
    JEL: M1 M16
    Date: 2015
  27. By: Marina Azzimonti
    Abstract: I examine the role of political instability as a potential explanation for the lack of capital flows from rich countries to poor countries (i.e. the `Lucas Paradox'). Using panel data from 1984 to 2014, I document the following: (i) developed countries exhibit larger inflows of foreign direct investment (FDI), (ii) countries subject to high investment risk are those that typically receive low FDI inflows, and (iii) investment risk is generally higher in fractionalized and politically unstable economies. These findings suggest a negative relationship between political instability and FDI through the investment risk channel. I then inspect the theoretical mechanism using a dynamic political-economy model of redistribution, wherein policymakers have access to an expropriation technology that can be used to extract resources from foreign investors. The proceeds are used to finance group-specific transfers to domestic workers, but hinder economic growth by discouraging FDI. Different social groups compete to gain control of this instrument, but face a probability of losing power at each point in time. The greater the degree of political turnover is, the stronger the incentives to expropriate when in power. A key force driving this result is redistributive uncertainty, since there is a possibility that no transfers will be received in the future. The mechanism is supported by the finding that investment risk (a measure that captures the degree to which the extraction technology is used) is negatively related to FDI and government stability. Finally, I show that the political equilibrium exhibits over-expropriation and under-investment even when there is no political uncertainty because fractionalized societies suffer from static inefficiencies due to the presence of a common pool problem.
    JEL: E6 F38 F43 H2 H21
    Date: 2016–09
  28. By: Frenkel, Stephen.; Mamic, Ivanka.; Greene, Laura.
    Abstract: Increasingly, local food markets supplied by small farmers are being replaced by global supply chains (GSCs) dominated by lead retailers, most of them based in developed countries. Workers employed by suppliers often work in low-paid, insecure, and only semi-skilled jobs. To stimulate improvements in participant firm productivity, thereby promoting decent work, it is important to understand the salient features and dynamics of food GSCs, including how these are governed. This research has focused on food GSCs, particularly with regard to the Asia-Pacific region, and has found these supply chains to be extended, heterogeneous, and sensitive to consumer safety concerns. While participation in GSCs offers the potential for social and economic upgrading, in practice there is little evidence of this occurring. Case studies of four lead retailers highlight a preoccupation with mitigating reputational risk arising from food quality failures and, to a lesser extent, risks arising from suppliers’ sub- standard labour and environmental practices. Risks are mitigated through lead retailer enforcement of process standards regarding food quality and private regulation of first-tier suppliers, often based on third-party certification and auditing for labour and environmental standards. The report concludes by considering the implications of these and related findings for the ILO Decent Work Agenda. The focus is on public interventions designed to facilitate improved standards, and participation by stakeholders in the design and regulation of such interventions.
    Keywords: value chains, production management, food industry, employment, workers rights, working conditions, Asia, Pacific, chaînes de valeur, gestion de la production, industrie alimentaire, emploi, droits des travailleurs, conditions de travail, Asie, Pacifique, cadenas de valor, administración de la producción, industria de la alimentación, empleo, derechos de los trabajadores, condiciones de trabajo, Asia, Pacífico
    Date: 2016

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