|
on International Trade |
| By: | Jean Balié (Food and Agricultural Organization of the United Nations, Rome (IT).); Davide Del Prete (IMT Lucca, Laboratory for the Analysis of Complex Economic Systems (IT) and Food and Agricultural Organization of the United Nations, Rome (IT).); Emiliano Magrini (Food and Agriculture Organization of the United Nations, Rome (IT).); Pierluigi Montalbano (Department of Economics and Social Sciences, Sapienza University of Rome (IT).); Silvia Nenci (Department of Economics, University of Roma Tre (IT)) |
| Abstract: | The most recent literature on international trade highlights the key role of global value chains (GVCs) in structural transformation, development and growth. The common perception is that Africa, unlike most Latin American and Asian countries, has neither been able to intercept the main changes in trade patterns nor enter massively into global production networks. This work provides some insight into this topic. Using the EORA Input-Output Tables, we analyze whether bilateral import tariffs and shifts in trade regimes associated with regional trade agreements affect the backward participation (i.e., the use of foreign inputs for exports) and forward participation (i.e., the use of domestic intermediates in third country exports) of the SSA countries’ agriculture and food GVCs. Our results show that, despite their low world trade shares, GVC participation in SSA economies is increasing over time, mainly upstream as suppliers of unprocessed inputs. Furthermore, we show that the value added demand for SSA agricultural products primarily originates from the EU and emerging countries rather than from regional partners. Finally, by making use of a “gravity-like” identification strategy, we also find evidence that bilateral trade protection significantly affects GVC backward and forward participation in agriculture and food. These results call for a refinement of trade policy priorities in SSA. |
| Keywords: | global value chains, agro-food activities, multi-region input-output tables, bilateral trade policies, gravity model, Sub-Saharan Africa. |
| JEL: | F15 L23 O11 O55 Q17 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:saq:wpaper:4/17&r=int |
| By: | Staritz, Cornelia; Frederick, Stacey |
| Abstract: | At the beginning of the 2000s, the introduction of the African Growth and Opportunity Act (AGOA) combined with Multi-Fibre Arrangement (MFA) quotas contributed to a boom in foreign direct investment (FDI) in the Sub-Saharan African (SSA) apparel industry, leading to a major growth in exports and jobs. Beyond this, the possibility of exploiting the spillover potential of this FDI raised significant hopes of developing a locally-embedded SSA apparel export industry. The paper explores the level and nature of FDI spillovers and the factors supporting and constraining them focusing on three of the leading SSA apparel exporter countries - Kenya, Lesotho, and Swaziland. We find that despite significant investments to attract FDI, virtually no locally-owned apparel firms are exporting or subcontracting, local value added remains low, local participation in management is limited, and domestic suppliers are almost absent in core and even most non-core inputs. In addition to domestic absorption capacity, the potential for and the nature of FDI spillovers is determined by the strategy of foreign investors and the governance of global value chains (GVCs). We find across all countries FDI strategies that severely limit spillover potential, including a concentration in low value added activities, external control of sourcing, and reliance on expatriates in managerial and technical positions. This is aggravated by a weak domestic absorptive capacity through weak skills development, barriers in the domestic business climate, ineffective policies to support local small and medium enterprises, and a missing local. |
| Keywords: | foreign direct investment,spillovers,global value chains,apparel,Sub-Saharan Africa |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:oefsew:59&r=int |
| By: | Marchal, Léa; Nedoncelle, Clément |
| Abstract: | We investigate the export-enhancing effect of foreign workers at the firm level. We first develop a theoretical framework of heterogeneous firms, assuming that foreign workers allow for productivity gains and convey valuable information on foreign markets. We illustrate that foreign workers foster exports at the extensive and the intensive margins. This effect can be decomposed in a general effect - to which any foreign worker contributes - and a destination-specific effect - to which only foreign workers who were born in the export destination contribute. We test these theoretical predictions using French firm-level data over the 1997-2008 period and a propensity score matching method to address endogeneity concerns. We find that foreign-born workers, and especially skilled individuals, foster exports at both margins. On average, a firm employing foreign-born workers exports 30% more in value than a control firm. We find evidence that this increase is spread over all destinations, suggesting that the effect of foreign-born workers goes beyond a destination-specific informational channel. |
| Keywords: | Foreign-born workers,Exports,Firms,Heterogeneity,Productivity |
| JEL: | F14 F22 F16 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwkwp:2071&r=int |
| By: | Onasis Tharcisse Adétumi GUEDEGBE |
| Abstract: | Trade integration is a prerequisite for the success of any economic integration project. The factors hindering trade integration therefore constitute a bottleneck to the economic integration project of the countries of the Economic Community of West African States (ECOWAS), which is an effective means of coping with the substantial expansion of sub-regional food demand. The aim of this paper is to highlight the factors that constrain trade flows and increase the cost of trade in the Community. It focuses on three categories of factors: tariff measures, non-tariff measures and the quality of infrastructure and logistics. It emerges that the question of rules of origin and delays in compliance with the agreements seem to hamper the process of liberalization. Non-tariff barriers are ubiquitous and fairly diverse, as are the procedural barriers associated with them. Finally, trade remains hampered by medium to low levels of logistics performance and infrastructure quality |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:ocp:ppaper:pb-1632&r=int |
| By: | Cornelius Hirsch; Harald Oberhofer |
| Abstract: | Agricultural support levels are at a crossroad with reduced distortions in OECD countries and increasing support for agricultural producers in emerging economies over the last decades. This paper studies the determinants of distortions in the agricultural markets by putting a specific focus on the role of trade policy. Applying various different dynamic panel data estimators and explicitly accounting for potential endogeneity of trade policy agreements, we find that an increase in the number of bilateral free trade agreements exhibits significant short- and long-run distortion reducing effects. By contrast, WTO’s Uruguay Agreement on Agriculture has not been able to systematically contribute to a reduction in agriculture trade distortions. From a policy point of view our findings thus point to a lack of effectiveness of multilateral trade negotiations. |
| Keywords: | Agricultural distortions; WTO; bilateral trade agreements, panel data |
| JEL: | C23 C26 F13 F14 |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:wsr:wpaper:y:2017:i:176&r=int |
| By: | Krenz, Astrid; Abeliansky, Ana |
| Abstract: | There has been a wide debate on whether democracy actually has an effect on economic outcomes, and especially on international trade. In reality, economies very active in the international trading network are not necessarily the most democratic countries. With a new estimation strategy, we analyze this relationship taking a look at the distribution of countries’ trading activity. Using a panel quantile estimation framework, we find a stronger relationship at the lower quantiles, especially for the import activity. Our results suggest that the impact of democratization on trade is more important when countries trade less: the marginal benefit of democratization decreases as countries trade more. The results are robust to different institutional variables and even to instrumental variables estimation. Our results demonstrate that the effect of democracy on trade is underestimated using Ordinary Least Squares estimation for the group of countries for which the effect is statistically significant for, namely those countries that are active in the lower quantiles of the trading distribution. |
| JEL: | F14 F63 C21 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145788&r=int |
| By: | Iliev, Dragomir (Tsenov Academy of Economics); Stefanov, Galin (Tsenov Academy of Economics); Yotov, Yoto (School of Economics) |
| Abstract: | We use the empirical gravity model of international trade to evaluate the borders in manufacturing trade between Bulgaria and the European Union (BG-EU). Our results suggest that in 2006 the BG-EU border was quite large and not statistically different from the average border in our sample of 69 countries. As expected, our estimates confirm that the trade border between Bulgaria and the EU members was very large, and much larger than the average sample border, before the collapse of communism. The border fell sharply in the early to mid-90s, but it followed the average sample trend since then. We also document weak asymmetries in the BG-EU border in favor of EU exports to Bulgaria. Our results point to a series of extensions and further analysis. |
| Keywords: | Bulgarian Trade Border with EU; Structural Gravity; Integration |
| JEL: | F10 F13 F14 |
| Date: | 2017–01–16 |
| URL: | http://d.repec.org/n?u=RePEc:ris:drxlwp:2017_002&r=int |
| By: | Vuong, Van Anh; Maican , Florin; Orth, Matilda; Roberts, Mark |
| Abstract: | In this paper we develop a structural empirical model that allows us to estimate the impact of R&D on firm profitability through two channels. In the first channel, R&D investment by the firm can impact the firm’s production efficiency and lower its marginal cost. This productivity channel raises the firm’s sales and profits in both the domestic and export market. The second channel is specific to exporting firms where R&D acts to increase the demand for the firm’s products in foreign markets. Using micro data for Swedish manufacturing firms from 2000-2010 we estimate the impact of R&D investment on the unobserved component of the firm’s productivity and export market demand. Our empirical results show that firm R&D investment has a statistically significant, positive effect on both the future productivity and the future export demand of the firm. For high-tech industries, we find that the impact of R&D investments on the demand shocks is twice as large as its impact on productivity. On the other hand, the impact of R&D investments on productivity in the low-tech industries is higher than on demand shocks. |
| JEL: | D22 F10 L60 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145945&r=int |
| By: | Congressional Budget Office |
| Abstract: | In CBO's view, the consensus among economic studies is that preferential trade agreements have had small positive effects on the U.S. economy. Although the benefits of those agreements tend to accrue to everyone, the costs have been concentrated among workers and businesses exposed to greater competition from U.S. trade agreement partners. |
| JEL: | F10 F13 F16 F60 |
| Date: | 2016–09–29 |
| URL: | http://d.repec.org/n?u=RePEc:cbo:report:519240&r=int |
| By: | Dauth, Wolfgang; Findeisen, Sebastian; Südekum, Jens |
| Abstract: | This paper addresses the impact of rising international trade exposure on individual earnings profiles in heterogeneous worker-establishment matches. We exploit rich panel data on job biographies of manufacturing workers in Germany, and apply a high-dimensional fixed effects approach to analyze endogenous mobility between plants, industries, and regions in response to trade shocks. Rising import penetration reduces earnings within job spells, and it induces workers to leave the exposed industries. Intra-industry mobility to other firms or regions are far less common adjustments. This induced industry mobility mitigates the adverse impacts of import shocks in the workers' subsequent careers, but their cumulated earnings over a longer time horizon are still negatively affected. By contrast, we find much less evidence for sorting into export-oriented industries, but the earnings gains mostly arise within job spells. These results point at an asymmetry in the individual labour market response to trade shocks: Import shocks trigger substantial "push effects", whereas the "pull effects" of export shocks are weaker. |
| JEL: | F16 J31 R11 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145522&r=int |
| By: | Claessens, Stijn; Hassib, Omar; Van Horen, Neeltje |
| Abstract: | This paper provides new insights into how financial globalization relates to international trade. Exploiting unique, time-varying, bilateral data on foreign bank ownership for many countries, we show that greater local foreign bank presence, especially from the importing country, is associated with higher exports in sectors more dependent on external finance. The association, which only arises for emerging markets, is stronger when these countries' institutions are weaker. The presence of a bank from the importing country is also associated with higher exports in sectors with more opaque products. Results are robust to controlling for domestic financial development and a full set of fixed effects. An event study confirms findings and shows impacts to be more pronounced when a foreign bank enters through an M&A. Imports also increase after entry, but less so. Overall, results suggest that foreign banks facilitate trade by increasing the availability of external finance and helping overcome information asymmetries. |
| Keywords: | credit constraints; Financial Development; foreign banks; International Trade |
| JEL: | F14 F15 F21 F36 G21 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11821&r=int |
| By: | Jeffrey J. Schott (Peterson Institute for International Economics) |
| Abstract: | As promised throughout the campaign, one of the first acts carried out by President Donald Trump was to order the US Trade Representative to withdraw formally from the Trans-Pacific Partnership (TPP)—a megaregional trade agreement between the United States and 11 other countries. The administration instead plans to pursue new bilateral trade pacts in the Asia-Pacific region. Schott explains why a regional deal like the TPP is far more likely to yield larger US gains with fewer US concessions than the administration’s favored bilateral approach. He reexamines the TPP deal and recommends ways it could be improved, including by adding enforceable currency manipulation provisions to the main trade deal and omitting the investor-state dispute settlement provision. A revamped, enlarged, and probably renamed Asia-Pacific pact that includes Korea, Colombia, and Taiwan, among others, would significantly expand the value of the original TPP deal, achieve greater regional integration, and expend less US political capital than a country-by-country bilateral approach. |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:iie:pbrief:pb17-7&r=int |
| By: | Lubinga, Moses H. |
| Abstract: | Although South Africa exhibits an increasing positive trend in agricultural exports, poverty still remains a considerable challenge in the country. This study sought to determine whether South Africa’s increasing trend in agricultural export performance translated into lower poverty levels between 1996 and 2014. Specifically, the study evaluated the effects of export intensity of agricultural goods disaggregated by end-use category on poverty outcomes with the help of the concept of ‘policy complementarities”. Rather than the commonly used poverty measures such as poverty head count ratio and poverty gap, relative poverty is used in this study. Export intensity is individually interacted with proxies of access to credit, educational and governance systems to capture the role of policy complementarities. To address the reverse causality problem associated with exports and poverty, a Two Stage Squares (2SLS) estimator was used. Results suggest that South Africa’s agricultural trade performance exhibits significant poverty reducing effects. In presence of supportive complementary domestic policies (e.g. increased access to credit), increasing exports of household consumption goods and intermediate goods reduces poverty outcomes by 21% and 15.2%, respectively. Results also suggest that imports of household consumables significantly reduce poverty levels by 9.5-22%, depending on the model used. Conclusively, South Africa’s good performance in agricultural trade translated into poverty reduction. Policy wise, there is need to further enhance the populace’s education levels, increase people’s confidence in public institutions of governance, as well as boost the depth of the financial sector. It is also necessary to promote importation of household consumables, particularly those that are not necessarily produced in the country. |
| Keywords: | Poverty, Access to credit, Global value chains, 2SLS estimator, Agricultural and Food Policy, Consumer/Household Economics, Food Security and Poverty, International Relations/Trade, Research Methods/ Statistical Methods, Resource /Energy Economics and Policy, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ags:zanamc:253094&r=int |
| By: | Baier, Scott (Clemson University); Kerr, Amanda (Clemson University); Yotov, Yoto (School of Economics) |
| Abstract: | We review and interpret the main theoretical developments in the gravity literature from its very early, a-theoretical applications to the latest structural contributions. We also discuss challenges and implement methods to estimate empirical gravity equations. We finish with a presentation and examples of numerical simulations with the structural gravity model. Throughout the analysis we attempt to emphasize the links and importance of transportation costs for the trade literature and we outline avenues where we believe interdisciplinary contributions between the international trade and transportation economics fields will be most valuable. |
| Keywords: | Structural Gravity; Estimation; Simulation; Transportation Costs |
| JEL: | F10 F11 F14 F17 R40 |
| Date: | 2017–02–12 |
| URL: | http://d.repec.org/n?u=RePEc:ris:drxlwp:2017_005&r=int |
| By: | Jonas Frank |
| Abstract: | Economic sanctions are a popular diplomatic tool for countries to enforce political demands abroad or to punish non-complying countries. There is an ongoing debate in the literature if this tool is effective in reaching these goals. This paper adds to the literature by treating sanctions like a negative form of trade agreements. In order to quantify the direct effects of sanctions on the trade flows between countries I make use of a gravity equation controlling for country pair, importer-year, and exporter-year fixed effects. The estimates reveal that there is a significant decrease in the value of trade after the introduction of sanctions. In a second step, trade diversion is introduced as a potential instrument for countries to soften the negative impact of sanctions. However, the estimates reveal no evidence for trade diversion. |
| Keywords: | gravity, international trade, trade sanctions |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:wsr:wpaper:y:2017:i:174&r=int |
| By: | Onaran, Özlem |
| Abstract: | In this brief we discuss the impact on the economy through five channels via the effects of Brexit on trade, migration, budget deficit, private investment, and the depreciation of the pound. Moving forward, a Brexit deal that minimizes damage for working people would require minimum distortion to the relationship with Europe. This requires negotiating membership to the customs union as well as access to the single market. |
| Keywords: | UK Referendum; Brexit; Europe; inequality; wages; globalization; migration; capital mobility; |
| JEL: | E12 E22 E25 |
| Date: | 2017–02–07 |
| URL: | http://d.repec.org/n?u=RePEc:gpe:wpaper:16297&r=int |
| By: | Mesagan, Ekundayo |
| Abstract: | This study focused on the role foreign direct investment plays in the relationship between quality environment and economic growth in Nigeria from 1970 to 2013. The ordinary least squares technique was employed and the key variables include carbon emission, human capital, per capita income, FDI, trade openness, interest rate, inflation rate and the interaction term between environment and FDI. The result showed that all the variables are stationary at first difference and that long run relationship exists among them. It is observed that FDI ratio and environment negatively impact GDP over the period, but the interaction between FDI and environment positively impact economic growth. It is recommended that the country should reform its environmental policies to attract proper and appropriate technology to boost its economic progress as suggested by the interaction term in the model. |
| Keywords: | Environment; Economic Growth; Foreign Direct Investment; Nigeria. |
| JEL: | F18 F21 O12 |
| Date: | 2015–08–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:76722&r=int |
| By: | Saul Estrin; Milica Uvalic |
| Abstract: | The paper explores the impact of foreign direct investment (FDI) on the economies of the Western Balkans during their transition to a market system. The paper recalls the political and historical circumstances that have delayed transition in the Western Balkans economies, and draws attention to the specific features of FDI that have influenced their economic development. The main hypotheses are formulated and basic tests performed on data from the manufacturing sector. However, data limitations mean that we can only test for horizontal, rather than vertical, spillovers and in practice we are not able to identify many significant horizontal spillover effects. This finding can probably be explained by various factors – institutional, economic and political – that have constrained FDI effects in the Western Balkan economies in comparison with the Central East European countries. Our work has important policy implications; in order to accelerate economic development, Western Balkan policymakers may need to implement more effective economic policies. |
| Keywords: | foreign direct investment; Balkans; transition; spillover effects |
| JEL: | F23 L53 P33 |
| Date: | 2016–06–02 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:67004&r=int |
| By: | Lubinga, Moses H.; Potelwa, Yolanda; Ntshangase, Thandeka; Nyhodo, Bonani; Ngqangweni, Simphiwe |
| Abstract: | This work evaluates the effect of the Generalised System of Preferences (GSP1) on EU’s fruit imports from Southern African Development Community (SADC) member countries during 2005-2014, using a new and advanced micro-econometric tool known as the Triple- Difference estimator. The estimator is advantageous given that it is robust to policy endogeneity and it uses a very flexible benchmark to which the intensive margin and extensive margin of trade performance are compared. Two preference margin measures are used as proxies for the preferential treatment granted to SADC member countries by the EU. Furthermore, highly disaggregated data at HS 6-Digit level, for 12 SADC member countries and 27 EU member states are used for the analysis. The analysis employed takes into consideration of zero-trade flows. Empirical results suggest that the EU-GSP scheme generally has a significant positive impact on EU’s fruit imports from SADC member countries. Notably, the Least Developed Countries (LDCs) benefited more from the scheme as compared to the non-LDCs. |
| Keywords: | Triple-Difference estimator, General System of Preference, SADC, Fruits, Agribusiness, Agricultural and Food Policy, Crop Production/Industries, International Development, International Relations/Trade, Marketing, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ags:zanamc:253092&r=int |
| By: | Nyhodo, Bonani; Ntshangase, Thandeka; Ngqangweni, Simphiwe |
| Abstract: | The possible erosion of preferential market access, South Africa’s access to the USA market under AGOA, is expected to lead to losses in the South Africa economy, albeit minimal. This study used, as a policy shock, the introduction by USA of applied tariffs on selected imported agricultural products (beverages and tobacco; sugar; and vegetables, fruits and nuts) from South Africa. The methodology used to quantify the effects of the stated policy change is the standard GTAP model with database from GTAP database version 7. In terms of the overall effect (looking at Equivalence Variation, EV, in the case of GTAP model) the South African economy stands to lose about $3.11 million as a result of the removal of the preferential access under AGOA. These losses will be driven mostly by losses on terms of trade and allocative efficiencies while other effects are contributing positively (even though very minimally). The quantities of industry outputs for the selected products are expected to decline while the rest will benefit positively. The trade balance for the selected products stand to worsen while other products are expected to benefit (driven by reduction in exports). There will also be labour demand loses (loss of jobs); capital demand loses (reduction in investments) coupled with shift in the land demand. Overall the economy stands to lose because of the erosion of the AGOA treatment. |
| Keywords: | Agricultural and Food Policy, Consumer/Household Economics, Demand and Price Analysis, Food Security and Poverty, International Relations/Trade, Livestock Production/Industries, Political Economy, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ags:zanamc:253091&r=int |
| By: | Martin, Will |
| Abstract: | Current US proposals for destination-based corporate taxes that effectively combine a value-added tax (VAT) and a wage subsidy raise important policy questions for countries considering them, and for their trading partners. This tax/subsidy package would not create trade barriers or export subsidies, and any changes in trade would result from the measures’ distributional consequences or short-run impacts on output. The package would leave business profits and rents untaxed, placing the burden of the tax entirely on consumers, with no offset from exchange rate appreciation. If anything, its introduction could cause a short-run real exchange rate depreciation. A key concern regarding this package is its small, volatile, and vulnerable revenue yield. At current US consumption and labor shares of gross domestic product (GDP), a 20 percent corporate cash-flow tax with a wage subsidy would generate only around 2 percent of GDP in revenues, a result that could be obtained with much less volatility from a 2.8 percent tax without the wage subsidy. Under the tax/subsidy regime, revenues would become negative if consumption and labor shares returned to their historical norms, requiring increases in other taxes. A 20 percent tax would raise consumer prices by up to 27 percent, taking into account state sales taxes, sharply cutting the living standards of people on fixed incomes. The average combined consumption tax rate of 33 percent would be the highest in the world and more than double the world-average VAT rate, creating incentives for avoidance and evasion. |
| Keywords: | Value Added Tax; taxes; fiscal policies; labour market; labor market; remuneration; income; subsidies; trade; economics; international trade; living standards; cash flow, VAT; corporate tax; cash-flow taxation; GST; social VAT, F13 Trade Policy, International Trade Organizations; F41 Open Economy Macroeconomics; H22 Taxation and Subsidies: Incidence; H25 Business Taxes and Subsidies including sales and value-added (VAT); H26 Tax Evasion, |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:1606&r=int |
| By: | Sallai, Dorottya |
| Abstract: | The paper investigates how multinational subsidiaries develop their political strategies within the constraints of institutional duality. Based on the empirical investigation of western subsidiaries operating in the post-socialist institutional context of Hungary, I develop a model that illustrates how political capabilities – affected by institutional duality - underpin the lobbying strategy of MNE subsidiaries. The article makes a theoretical connection between the literatures on institutional duality and corporate political activity (CPA) and makes three distinct theoretical contributions. First, I transfer the analysis of nonmarket strategies from the institutional to the firm level, by opening the black box of how subsidiaries develop host country strategies. Second, by focusing on the process of how subsidiaries turn external and internal resources into political capabilities, I argue that institutional duality should be viewed as an endogenous aspect of the institutional framework, which equips firms with political capabilities, rather than an exogenous factor that constraints companies and disadvantage them in the host environment (Nell et al., 2014, Tempel et al., 2006). Third the study contributes to the theory of MNE parent-subsidiary management literature by extending our knowledge on how parent strategies affect the development of subsidiary’s political strategies. |
| Keywords: | Emerging markets; lobbying; political strategies; institutional duality; capabilities; corporate political activities (CPA); |
| JEL: | F23 P16 |
| Date: | 2017–01–06 |
| URL: | http://d.repec.org/n?u=RePEc:gpe:wpaper:16152&r=int |
| By: | Holzmann, Carolin Maria |
| Abstract: | This paper investigates transfer pricing as tax avoidance before and after reforms of anti-avoidance legislation. The reforms introduced and tightened obligatory documentation requirements for transfer prices to enforce that multinational enterprises (MNEs) set internal transfer prices at an arm’s-length. Linking data from the Microdatabase Statistics on International Trade in Services that comprehends prices of MNEs’ international service transactions to the Microdatabase Direct Investment, I create a unique, novel data set to obtain information on whether MNEs’ transaction partners are affiliated companies or not. The results provide empirical evidence for tax-motivated transfer pricing during the entire first decade of the 2000s. Interestingly, MNEs target different types of service transactions for profit shifting via transfer pricing depending on the at the time applicable anti-shifting legislation. The findings show transfer pricing legislation to be effective in case of service transactions with observable market values. In contrast, the results clearly reveal the short-comings of transfer pricing legislation in case of intellectual property (IP) where an effective enforcement of the arm’s-length principle is very limited as market values are unobservable. Here, the findings suggest the need for a change in tax policy in order to effectively prevent base erosion in case of IP-related transfer pricing. |
| JEL: | F23 H25 H32 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145929&r=int |
| By: | Damiaan Persyn (European Commission – JRC) |
| Abstract: | There exist marked differences in the educational attainment of immigrants, depending on both the level and distribution of income in the country of origin and destination. This paper estimates an education-specific gravity equation for migration between European countries. Given the lack of data on migration flows by level of education, these are proxied by the difference in resident migrants by nationality and level of education, between the years 2000 and 1990. I find that highly educated individuals are more likely to migrate. They are less sensitive to geographical and cultural distance as barriers to migration, but are not unambiguously more responsive to wage differentials. Controlling for education-specific wage differences between origin and destination removes only part of the observed differences in migration behaviour between education groups. |
| Keywords: | International migration, Random utility model, Education |
| JEL: | F22 J61 O15 C25 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc104494&r=int |
| By: | Sawako Maruyama (Graduate School of Economics, Kobe University) |
| Keywords: | Economic Integration, EU, EEA, FTA, Sweden |
| JEL: | F15 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:koe:wpaper:1704&r=int |
| By: | Simplice Asongu (Yaoundé/Cameroun); Jacinta C. Nwachukwu (Coventry University, UK) |
| Abstract: | This study extents the literature on responses to a recent World Bank report on the African poverty tragedy by assessing the effect of globalisation on inclusive human development in 51 African countries for the period 1996-2011. Political, economic, social and general globalisation variables are used. The empirical evidence is based on Generalised Method of Moments (GMM) and Instrumental Quantile Regressions (IQR). While estimated coefficients are not significant in GMM results, for IQR, globalisation positively affects inclusive human development and the beneficial effect is higher in countries with high initial levels of inclusive development. The main economic implication is that in the post-2015 development agenda, countries would benefit more from globalisation by increasing their levels of inclusive development. |
| Keywords: | Globalisation; inequality; inclusive development; Africa |
| JEL: | E60 F40 F59 D60 O55 |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:agd:wpaper:16/049&r=int |
| By: | Yves Jégourel |
| Abstract: | Si les produits énergétiques sont de toute évidence au cœur des relations géopolitiques, d’autres « commodities » ne peuvent être négligées pour expliquer certaines évolutions de la scène économique et politique internationale. L’acier compte parmi celles-ci et ce, depuis le XIX siècle. Qu’en est-il aujourd’hui ? Dans un contexte d’une demande interne atone, l’expansion considérable de la production chinoise mais également de ses exportations pèsent lourdement sur la santé des sidérurgistes « historiques ». Des mesures anti-dumping ont ainsi été adoptées aux Etats-Unis, en Europe ou au Maroc dans le but de restaurer la compétitivité des industries locales sur les marchés nationaux. Il appartient aux autorités compétentes de juger de la légitimité de telles mesures, mais force est de constater toute l’importance des enjeux politiques dans ce domaine, qu’ils soient nationaux ou internationaux. |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:ocp:ppaper:pb-1702&r=int |
| By: | Øystein Bieltvedt Skeie |
| Abstract: | This paper assesses the redistribution of foreign direct investments (FDI) and tax revenues among countries due to multinationals’ response to international differences in corporate tax systems. The paper briefly reviews the literature on the tax sensitivity of FDI and uses a consensus estimate of this sensitivity in combination with bilateral FDI data to compute hypothetical bilateral FDI positions in the absence of tax rate differences. In a second step, tax revenue effects are estimated by assuming a conventional rate of return on investment. For most OECD countries, the effects of tax rate differentials on FDI positions range between -15% and 15% of current FDI positions. The calculated effects of taxes on FDI reflect real investments as well as tax planning behaviours and the methodology cannot distinguish between these two channels. The methodology only captures part of the tax planning activities of multinationals, since some of these activities are not reflected in the size of the FDI positions. Différences internationales de fiscalité des entreprises, investissements directs à l'étranger et recettes fiscales Ce document évalue la redistribution des investissements directs étrangers (IDE) et des recettes fiscales entre les pays en raison de la réponse des multinationales aux différences internationales entre les systèmes d'imposition des sociétés. Le document examine brièvement la littérature sur la sensibilité des IDE à la fiscalité et utilise une estimation du consensus de cette sensibilité en combinaison avec des données d'IDE bilatéraux pour calculer les positions d'IDE bilatéraux hypothétiques en l'absence de différences de taux d'imposition. Dans un deuxième temps, les effets sur les recettes fiscales sont estimés en supposant un taux conventionnel de retour sur investissement. Pour la plupart des pays de l'OCDE, les effets des écarts de taux d'imposition sur les stocks d'IDE se situent entre -15% et 15% des stocks d'IDE effectifs. Les effets calculés de la fiscalité sur les IDE reflètent des investissements réels ainsi que les comportements de planification fiscale et la méthodologie ne permet pas de distinguer entre ces deux canaux. La méthodologie ne capte qu'une partie des activités de planification fiscale des multinationales, puisque certaines de ces activités ne sont pas reflétées dans la taille des stocks d'IDE. |
| Keywords: | corporate tax, foreign direct investment, multinational tax planning |
| JEL: | F21 F23 H25 H26 |
| Date: | 2017–02–16 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1359-en&r=int |
| By: | Daly, Vince (Kingston University London); Hullah, Farid (Muhammad Ali Jinnah University); Rauf, Abdur (University of Azad Jammu and Kashmir); Khan, Ghulam Y (University of Azad Jammu and Kashmir) |
| Abstract: | This study analyzes the impact of globalization on unemployment in Pakistan, using annual data for the period 1980 to 2013. Using the ARDL econometric framework, we find that the economic, political and social aspects of globalisation differ in their effects. The data suggest that political and social integration, whilst beneficial in the short run, increase the long run expected unemployment rate. Economic integration appears to be only marginally beneficial in the short run; it is significantly beneficial in the long run but cointegration with the other aspects of globalisation means that it cannot fully counteract their undesirable long-run effect. |
| Keywords: | Globalization; Unemployment; ARDL; Pakistan |
| JEL: | O11 O19 |
| Date: | 2017–02–15 |
| URL: | http://d.repec.org/n?u=RePEc:ris:kngedp:2017_002&r=int |
| By: | Wassmann, Pia |
| Abstract: | The abolishment of passport and any other type of border controls at the German-Polish and German-Czech border in December 2007 provoked public concerns that open border would increase cross-border crime. Despite these widespread concerns, empirical research on whether the public fears were justified is still scarce. Based on data from the official German Police Crime Statistic, the paper evaluates whether the implementation of the Schengen Agreement in Poland and the Czech Republic in December 2007 affected crime rates in German regions bordering these two countries. Effects are identified by regression-adjusted difference-in-difference estimation on matched samples that allows evaluating the Schengen effects in a causal way. Preliminary results show that no significant Schengen effect can be observed for the most common types of criminal offenses. These findings suggest that in contrast to public concerns, German NUTS3 regions bordering Poland and the Czech Republic have not experienced an increase in crime as a result of the implementation of the Schengen Agreement of its Eastern neighbors. In light of the current discussion on the future of the Schengen zone and borderless Europe, this is quite an important result. |
| JEL: | R10 K40 F60 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145878&r=int |
| By: | John M. Luiz; Dustin Stringfellow; Anthea Jefthas |
| Abstract: | We demonstrate that firms can exploit their knowledge of ‘weak’ institutional settings and turn it into a source of advantage as they internationalize into locations with similar institutional ‘weaknesses.’ Using the case of one Africa’s most successful multinational enterprises we illustrate the value gained from initially capitalizing upon institutional complementarity (utilizing the comparative advantage linked to institutional know-how) by exploiting the experience of the home country’s environment into similar settings. Over time and through learning-by-doing, pressure arose to diversify the risk linked with over-exposure to institutional uncertainty and country risk, and this was associated with the process of institutional substitution into more advanced countries. We see an emerging multinational learning and building its capabilities by leveraging off its understanding of its home country institutional environment. |
| Keywords: | Emerging multinational enterprises, institutional voids, African multinational, firm and country specific advantages, institutional leverage capability |
| JEL: | F23 M16 L66 |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:658&r=int |
| By: | Onaran, Özlem; Guschanski, Alexander |
| Abstract: | The EU Referendum in the UK on 23 June laid bare long existing divisions in the country. Throughout the campaign, the leave side diverted their discontent to a scapegoat of immigration and fuelled xenophobia. While there is consensus that the result is linked to inequality, the impact of migration on inequality is contested. Our recent research shows that inequality in the UK increased not because of migration, i.e. the mobility of labour, but because of the increased fallback options of capital related to increased capital mobility in the form of FDI and financialisation; declining fallback options of labour related to the decline in collective bargaining power, deregulation of the labour market, zero hours contracts and false self-employed contracts, austerity, housing crisis and rising household debt, which itself is linked to financialisation and inequality. The irony is that in fact, migration does not have a negative impact on the share of wages in total income and real wages even in the service sectors predominantly hiring low-skilled labour, which also employ a large share of migrants. The quick conclusions related to the impact of immigration on inequality, without adequately decomposing the impact of all other factors, misses the point that correlation is not causation. The real solution to inequality requires regulating finance and the corporate governance of corporations, taming capital mobility, increasing public investment in social infrastructure and housing, regulating the labour market and improving the legislation to increase the voice of trade unions and collective bargaining coverage. In an alternative economy where the balance of power shifts in favour of labour and unions have a strong voice, if migrants come to work, it is possible to set the terms and conditions under which they work by the local workforce. Conversely, in the current situation where the bargaining power of workers has been dramatically eroded with respect to capital, high capital mobility and low wages elsewhere in Eastern Europe and the world will mean the firms will relocate or offshore parts of their production abroad, even if migration can be limited after Brexit. |
| Keywords: | UK Referendum; Brexit; Europe; inequality; wages; globalization; migration; capital mobility; financialisation; bargaining; union density; government spending; |
| Date: | 2016–07–04 |
| URL: | http://d.repec.org/n?u=RePEc:gpe:wpaper:15630&r=int |
| By: | Magombeyi, Mercy Tsile; Odhiambo, Nicholas Mbaya |
| Abstract: | This paper investigates the direct impact of foreign direct investment inflows (FDI) on poverty reduction in South Africa from 1980 to 2014. Unlike the majority of the previous studies that relied on one poverty measure, this study employs three poverty reduction measures, namely, household consumption expenditure (Pov1), infant mortality rate (Pov2), and life expectancy (Pov3). The poverty proxies have been chosen based on the need to capture poverty in its multidimensional nature, which has not been fully explored in the literature. Using the recently developed autoregressive distributed lag approach (ARDL), the empirical findings of this study reveals that the impact of FDI on poverty reduction is sensitive to the poverty reduction proxy and the time under consideration, i.e., whether the analysis is conducted in the long run or in the short run. When infant mortality rate (Pov2) is used as a proxy for poverty reduction, FDI has a positive impact on poverty reduction in the long run and a negative impact on poverty reduction in the short run. However, when poverty reduction is proxied by household consumption expenditure and life expectancy, the study found no significant relationship between FDI and poverty reduction in South Africa ??? irrespective of whether the analysis is conducted in the short run or in the long run. |
| Keywords: | Poverty Reduction; Foreign Direct Investment; Household Consumption Expenditure; Infant Mortality Rate; Life Expectancy |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:uza:wpaper:22006&r=int |
| By: | Michael A. Clemens; Ethan G. Lewis; Hannah M. Postel |
| Abstract: | An important class of active labor market policy has received little rigorous impact evaluation: immigration barriers intended to improve the terms of employment for domestic workers by deliberately shrinking the workforce. Recent advances in the theory of endogenous technical change suggest that such policies could have limited or even perverse labor-market effects, but empirical tests are scarce. We study a natural experiment that excluded almost half a million Mexican ‘bracero’ seasonal agricultural workers from the United States, with the stated goal of raising wages and employment for domestic farm workers. We build a simple model to clarify how the labor-market effects of bracero exclusion depend on assumptions about production technology, and test it by collecting novel archival data on the bracero program that allow us to measure state-level exposure to exclusion for the first time. We cannot reject the hypothesis that bracero exclusion had no effect on U.S. agricultural wages or employment, and find that important mechanisms for this result include both adoption of less labor-intensive technologies and shifts in crop mix. |
| JEL: | F22 J08 J38 J61 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23125&r=int |