nep-int New Economics Papers
on International Trade
Issue of 2017‒04‒02
53 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Examining Trade Response of Armington-Krugman-Melitz Encompassing Module in a CGE Model By Ken Itakura; Kazuhiko Oyamada
  2. Economic Effects of Anti-Dumping Duties: Protectionist Measures or Trade Remedies? By Choi, Nakgyoon
  3. Import Competition from and Offshoring to Low-Income Countries: Implications for Employment and Wages at U.S. Domestic Manufacturers By Fariha Kamal; Mary E. Lovely
  4. Analyses of EU RoHS/ELV Directives Based on an AGE Model with Melitz-type Trade Specification By Kazuhiko Oyamada; Kaoru Nabeshima; Etsuyo Michida
  5. Intra-regional vs extra-regional liberalization trade in Central America By Pedro Caldentey; Manuel Alejandro Cardenete; Adolfo Cristóbal; Olexandr Nekhay
  6. Asymmetric influence of distance on french international trade 1850-1913 By Stephane Becuwe; Bertrand Blancheton; Leo Charles; Matthieu Clement
  7. On the Interaction between Trade Reforms and Labor Market Regulation: Evidence from the MENA Countries’ Labor Markets By Selwaness, Irène; Zaki, Chahir
  8. Comparative Advantage of Value Added in Exports: The Role of Offshoring and Transaction Costs By Choi, Nakgyoon; Park, Soonchan
  9. A Short-Term Export Forecasting Model Using Input-Output Tables By Pyo, Hak K.; Oh, Soo Hyun
  10. A Portrait of Firms Participating in Global Value Chains By Davide Rigo
  11. The globalisation of inflation: the growing importance of global value chains By Auer, Raphael; Borio, Claudio; Filardo, Andrew J
  13. Income inequality and the quality of imports By Ciani, Andrea
  14. Trade in Intermediate Goods: Implications for Productivity and Welfare in Korea By Kim, Young Gui; Pyo, Hak K.
  15. Trade Policy and Redistribution when Preferences are Non-Homothetic By Do, Quy-Toan; Levchenko, Andrei A.
  16. Comparing Apples to Apples: Estimating Consistent Partial Effects of Preferential Economic Integration Agreements By Egger, Peter; Tarlea, Filip
  17. The effect of globalisation on energy footprints: Disentangling the links of global value chains By Kaltenegger, Oliver; Löschel, Andreas; Pothe, Frank
  18. International competitiveness and investment: simulations with a bilateral trade model By Rossella Bardazzi; Leonardo Ghezzi
  19. Does trade openness contribute to driving financing flows for development? By Brun, Jean-François; Gnangnon, Sèna Kimm
  20. Evaluation of Trade Potentiel among Morocco and Senegal using an Advanced Gravity Model By RAOUF Radouane; Azzedine GHOUFRANE
  21. The Impact of Chinese Economic Structural Changes on Korea's Exports to China By Shin, Kotbee; Choi, Bo Young
  22. Tariffs, Vertical Oligopoly, and Market Structure By ARA Tomohiro; Arghya GHOSH
  23. Assortative Matching of Exporters and Importers By SUGITA Yoichi; TESHIMA Kensuke; Enrique SEIRA
  24. All these worlds are yours, except India: The effectiveness of export subsidies in Nepal By Fabrice Defever; José-Daniel Reyes; Alejandro Riaño; Gonzalo Varela
  25. Identifying Heterogeneity in the Production Components of Globally Engaged Business Enterprises in the United States By James Fetzer; Erich Strassner
  26. Cluster Report; Trade Integration in Latin America and the Caribbean By International Monetary Fund
  27. Comparative Advantage and Biased Gravity By Scott French
  28. A Sustainable Immigration Policy for the EU By Ritzen, Jo; Kahanec, Martin
  29. To Whom Does Outward FDI Give Jobs? By Kang, Youngho; Whang, Unjung
  30. The New Economic Case for Migration Restrictions: An Assessment By Michael A. Clemens; Lant Pritchett
  31. A Predictive System for International Trade Growth By Chon, Sora
  32. The “Smile Curve†: where Value is Added along Supply Chains By Armando Rungi; Davide Del Prete
  33. Economic shocks and changes in global production structure : methods for measuring economic resilience By Hashiguchi, Yoshihiro; Yamano, Norihiko; Webb, Colin
  34. Bounding the Price Equivalent of Migration Barriers By Michael A. Clemens; Claudio Montenegro; Lant Pritchett
  35. Senegal—a service economy in need of an export boost By E. Philip English
  36. Global Skill-Based Immigration Policies and Israel's Brain Drain By Razin, Assaf
  37. Divorce settlement or leaving the club? A breakdown of the Brexit bill By Zsolt Darvas; Konstantinos Efstathiou; Inês Goncalves Raposo
  38. Trade Liberalization and the Costs and Benefits of Informality of Labor: An Intertemporal General Equilibrium Model for Egypt By Abeer Elshennawy; Dirk Willenbockel
  39. The effect of news on the radicalization of public opinion towards immigration By Massimiliano Agovino; Maria Rosaria Carillo; Nicola Spagnolo
  40. Trade and Trade Policy Issues in the United Nations’ Millennium Development Goals and the Sustainable Development Goals By Messerlin, Patrick
  41. Heterodox vs Orthodox Adjustment in Venezuela:An Assessment of the effects of the restriction on imports using a CGE model By Ramón E. Key-Hernández; Claudina Villarroel
  42. Making (Small) Firms Happy. The Heterogeneous Effect of Trade Facilitation Measures By Lionel Fontagné; Gianluca Orefice; Roberta Piermartini
  43. Migrants and the Making of America: The Short and Long Run Effects of Immigration during the Age of Mass Migration By Nunn, Nathan; Qian, Nancy; Sequeira, Sandra
  44. The Effects of Immigration on Social Expenditure in Host Countries By Takuya Matsuyama; Tomomi Miyazaki
  45. Moving to the Adjacent Possible: Discovering Paths for Export Diversification in Rwanda By Ricardo Hausmann; Jasmina Chauvin
  46. Medición de los efectos de un aumento del 20% de las tarifas de Estados Unidos sobre la economía mexicana a través de modelización multisectorial By Luz Dary Beltrán Jaimes; Manuel Alejandro Cardenete; María del Carmen Delgado
  47. Labor Market Flexibility and FDI: Evidence from OECD Countries By Choi, Hyelin
  48. Commerce et climat : pour une réconciliation By Dominique Bureau; Lionel Fontagné; Katheline Schubert
  49. Democracy and Trade—Evidence along the Distribution of Trading Activity By Astrid Krenz; Ana Abeliansky
  50. Migration patterns and labor market outcomes in Tunisia By Anda David; Mohamed Ali Marouani
  51. Environmental Policy Instruments and Uncertainties Under Free Trade and Capital Mobility By Shreekar Pradhan; J. Scott Holladay; Mohammed Mohsin; Shreekar Pradhan
  52. Food price volatility in developing countries – the role of trade and storage By Matthias Kalkuhl; Lukas Kornher; Matthias Kalkuhl; Irfan Mujahid
  53. Managing the Impact of Climate Change on Migration: Evidence from Mexico By Isabelle Chort; Maelys de la Rupelle

  1. By: Ken Itakura; Kazuhiko Oyamada
    Abstract: Computable General Equilibrium (CGE) models have been widely used for quantifying economic impacts of free trade agreements and economic partnership agreements. For the recent examples, it is estimated that Trans-Pacific Partnership (TPP) will increase Japanese real GDP by 0.66%, according to Cabinet Secretariat (2013) in Japan. Pacific Economic Cooperation Council (2012) also estimated that the impact of TPP on Japanese real GDP would be 2.0% higher by 2020. Both of the estimates are based on simulation results obtained from global CGE model; the former uses the GTAP model (Hertel, (1997), and McDougall (2003)), and the latter develops their own global CGE model (Zhai (2008), and Petri et al. (2012)). The difference in the estimated economic effects seems to be large, however, it is not surprising since the components taken into their estimates are different. Petri et al. (2012) considers exhaustive components of liberalization; such as removing tariffs, reducing non-tariff barriers, liberalizing trade in services and foreign direct investment. On the other hand, Cabinet Secretariat (2013) estimates the impact of removing tariffs, thereby resulted in the lower estimate. Beside the difference in the components of liberalization, it is more interesting for us to ponder the difference in trade specification used in their global CGE model. Petri et al. (2012) define their trade module by following Melitz (2003) based on product differentiation at the firm level. The GTAP model has been using the conventional Armington (1969) specification based on product differentiation at the country level. Thus, we are interested in comparing different trade specifications in global CGE model and its implications for resulting estimates of economic impacts of trade liberalization.This paper introduces the AKME module following the modeling strategy in Dixon and Rimmer (2012) and Oyamada (2013). We modify the GTAP model (Hertel, 1997), which is a global CGE model widely used by researchers for quantifying policy impact. We redefine trade flow information stored in the benchmark GTAP Data Base, and implement a calibration procedure established in Oyamada (2013) and Oyamada (2014b). We run simulation of trade liberalization to draw a comparison between different trade specifications, decomposing the trade response in detail. Since there exits only a handful of attempts to compare the trade effects by examining the AKME module, we provide another results for further insights. Impacts of liberalization on regional trade are amplified as we switch trade specification from the standard GTAP model to Armington, Krugman, and Melitz in turn. By introducing “sourcing-by-agent”, we can decompose the simulation results on regional imports into agent specific demands, which is not available in the standard GTAP model. Also with the sourcing-by-agent, we can identify the intra-manufactured trade flows as the largest share. Further decomposition reveals that intensive margin trade effects are more pronounced in Krugman specification, whereas extensive margin trade effects are significant in Melitz specification. These decompositions clearly enrich our interpretation of trade liberalization.
    Keywords: Global, Trade issues, General equilibrium modeling
    Date: 2015–07–01
  2. By: Choi, Nakgyoon (Korea Institute for International Economic Policy)
    Abstract: This paper studied the effects of anti-dumping measures on the imports to investigate whether the trade restriction effect of an anti-dumping duty is dominant in the US, the EU, China, and India from 1996 to 2015. Our results indicate that a 1% increase in the anti-dumping duties decreases the import of the targeted product by about 0.43~0.51%. The actual statistics, however, show that the total import of the targeted products increased by about 30 percent while an anti-dumping duty was in force. That indicates that an anti-dumping duty is just a temporary import relief. This paper also investigated whether an anti-dumping duty is terminated in the case that the injury would not be likely to continue or recur if the duty were removed. The increase in market share, MFN tariff rate, and dumping margin turns out to decrease the hazard of termination of an anti-dumping duty, but the increase in value added increases the hazard of termination. Generally speaking, this result indicates that the WTO member countries have regulated the overuse of an anti-dumping measure. It also implies that anti-dumping duties have been used as a tool for trade remedy. The findings of this paper show that there is a country- and industry-wise heterogeneous characteristic in the effect as well as termination of an anti-dumping duty. To conclude, an anti-dumping duty is not necessarily a protectionist measure if it is effectively controlled by the WTO rules. In this sense, the WTO member countries need to introduce a more transparent mechanism and due process.
    Keywords: Trade Restriction Effect; Termination Of An Anti-dumping Duty
    JEL: F13 F14
    Date: 2016–12–30
  3. By: Fariha Kamal; Mary E. Lovely
    Abstract: Using confidential linked firm-level trade transactions and census data between 1997 and 2012, we provide new evidence on how American firms without foreign affiliates adjust employment and wages as they adapt to import competition from low-income countries. We provide stylized facts on the input sourcing strategies of these domestic firms, contrasting them with multinationals operating in the same industry. We then investigate how changes in firm input purchases from low-income countries as well as domestic market import penetration from these sources are correlated with changes in employment and wages at surviving domestic firms. Greater offshoring by domestic firms from low-income countries correlates with larger declines in manufacturing employment and in the average production workers’ wage. Given the negative association, however, the estimated magnitudes are small, even for a narrow measure of offshoring that includes only intermediate goods. Import penetration of U.S. markets from these sources is associated with relatively larger changes in employment for arm’s length importing firms, but has no significant correlation with employment changes at firms that do not trade. Given differences in the degree of both offshoring and import penetration, we find substantial variation across industries in the magnitude of changes associated with low-income country imports.
    Keywords: import competition, offshoring, U.S. manufacturing, employment, wages
    JEL: F14 F16 F66 L25 L60 J31
    Date: 2017–01
  4. By: Kazuhiko Oyamada; Kaoru Nabeshima; Etsuyo Michida
    Abstract: Modeling non-tariff barriers (NTBs) has long been a challenge for builders of applied general equilibrium (AGE) models, since NTBs are not straightforwardly connectable to economic variables included in a model unlike taxes or tariffs, in addition to the fact that information on NTBs is not easy to collect, sort out complication, or quantitatively evaluate. Non-tariff measures are introduced in order not only to protect local industries, but also to regulate the domestic market. In consequence, NTBs may generate different kinds of economic effects, i.e., protection effects as well as supply- and demand-shifting effects (Fugazza and Maur (2008)). Protection effects may be generated by measures which restrict trade raising cost. Supply-shifting effects may be caused by regulations which specify and affect production processes, such that prevent the sales of hazardous products and create standards to increase compatibility and interoperability. Demand-shifting effects may be brought by rules which affect consumers' behaviors, such that obligate to provide certain information related to the sold commodity. Protection effects can be assessed by two different approaches. One approach uses ad-valorem equivalent (AVE) estimates of NTBs based on the difference between the world price and the domestic price in the importing or exporting country, which has been widely adopted by previous AGE analyses, such as Andriamananjara, Ferrantino and Tsigas (2003) and Fugazza and Maur (2008). Another one focuses on the additional cost of production that firms have to bear in order to export to a specific foreign market. This kind of cost is considered by the seminal work of Melitz (2003) where intra-industry resource allocation among heterogeneous firms plays an important role. The purpose of this study is to show the usefulness of an AGE model with the Melitz-type trade specification in assessing the impact of technical regulations, taking the case of European Union (EU) Restriction of Hazardous Substances/End of Life Vehicles (RoHS/ELV) directives. In addition, we also explore cases when demand-shifting effects incur, changing the importer's preference on variety (LoV). The AGE model used in this study is calibrated to the GTAP 8.1 database for 2007. The original 129 countries/regions and 57 commodities/activities are respectively aggregated to six and five. The regions consist of the European Union (r01), United States of America (r02), Japan (r03), China (r04), ASEAN (r05), and Rest of the World (r06). The five sectors are the Primary Industry (i01), Services (i02), Motor Vehicles & Parts (i03), Electronic Equipment (i04), and Other Manufacturing (i05). Sectors i03 through i05 are assumed to be imperfectly competitive with increasing returns to scale (IRTS), while the other two are characterized by constant returns to scale (CRTS). Sector i01 uses a sector specific factor, such as land and natural resources, in addition to capital, labor, and intermediate goods in its production process, while Sector i02 provides a fraction of its output as the inter-regional shipping supply. Some of the parameters and exogenous variables are determined by the author based on the empirical studies such as done by Ardelean (2006) and Melitz and Redding (2013). To include the Melitz-type trade specification, only the Pareto shape parameter is required as addition information, since the choice of initial numbers of firms or levels of fixed costs will not affect simulation results expressed as deviations from the baseline (Oyamada (2014). Simulations with a special focus on the strength of the importer's love of variety (LoV), the key findings can be summarized as follows: (A) raising the fixed cost to make sales in the EU market brings reasonable results that exports of the targeted commodities (i03 for ELV and i04 for RoHS) to EU from outside regions shrink while the intra-regional trade within EU expands when the LoV is not so strong as Ardelean (2006) suggests; (B) when LoV is strong as assumed in the theoretical model by Melitz (2003), totally opposite embarrassing results are obtained; (C) when the strength of LoV is gradually changed from zero to unity, there is a point around 0.8 where effects of increasing the fixed export cost reverse; (D) consequently, demand-shifting effects incur in the direction to moderate the total impact when the strength of LoV is not so strong.
    Keywords: EU, USA, Japan, China, and ASEAN, General equilibrium modeling, Trade issues
    Date: 2015–07–01
  5. By: Pedro Caldentey (Universidad Loyola Andalucía); Manuel Alejandro Cardenete (Universidad Loyola Andalucía); Adolfo Cristóbal (Universidad Loyola Andalucía); Olexandr Nekhay (Universidad Loyola Andalucía)
    Abstract: The countries in the Central American region (henceforth CA: Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica and Panamá) have signed multiple trade agreements in the recent past. Sometimes the whole CA worked as a unified agent, for instance vis à vis the United States or the European Union. In other cases, some individual countries took the initiative to extend their list of freely tradeable goods and services. CA exports and imports very extensively with the United States (39% of the aggregate exports). However, the recent growth of the intra-regional trade has been especially remarkable. The experts emphasize that such trade generates more internal added value than the inter-regional one, which may allow for higher local welfare and a more favorable external balance for CA. Our simulations try to evaluate which alternative is locally preferable, taking into account that any intra-regional trade liberalization would stimulate sectors that compete for productive resources with the world exports. To that purpose, our first shock will be an elimination of existing tariffs at the intra-regional level while keeping the protection against imports from the rest of the world. In our second simulation, we will keep the current level of tariffs within CA, while reducing with the shock the barriers to the inter-regional trade with the United States. Taking this background into account, we use a perfectly competitive GTAP CGE model based on the GTAP 9 database, to assess the impact of the different scenarios, based on the current trade relationships. Our intention is then advising the CA authorities as to which range of trade negotiations should be prioritized today.
    Keywords: GTAP, applied general equilibrium, trade liberalization, Central America
    JEL: C68 D58
    Date: 2016–03
  6. By: Stephane Becuwe; Bertrand Blancheton; Leo Charles; Matthieu Clement
    Abstract: This article uses a new database to test the influence of distance on French international trade during the first globalization to test the influence of distance on French international trade during the first globalization Using a gravity model methodology, we study exports and imports separately to better underline opposing trends in the two flows. As expected, distance has a globally negative impact on trade. For imports the negative impact decreases over time, however for exports the negative impact strengthens. If French imports fit well with the literature on transaction costs, developments in exports tell a different story. Despite a fall in transaction costs France had some difficulty in exporting to distant emerging countries at the end of the nineteenth century. These results suggest a bad geographical diversification of exports.
    Keywords: France, Trade issues, Growth
    Date: 2015–07–01
  7. By: Selwaness, Irène; Zaki, Chahir
    Abstract: Using a panel of MENA countries, this paper tries to examine the interaction between trade reforms and labor market regulations on the outcome of the labor market. The theoretical predictions on this literature show that the effects of trade liberalization in any given country are conditional on the nature of labor market regulations since trade liberalization is more likely to have a positive impact on employment and wages in countries with flexible labor markets and vice versa. Moreover, more regulated labor markets tend to have higher wages at the expense of sector wide employment. Our main findings show that labor market rigidity reduces the positive impact of trade reform on employment. While this result is stronger for females, it is not for males.
    Keywords: Labor Market Rigidity,Trade,MENA
    JEL: F14 F16 J08 J88
    Date: 2017
  8. By: Choi, Nakgyoon (Korea Institute for International Economic Policy); Park, Soonchan (Kongju National University)
    Abstract: This study tests whether Ricardian comparative advantage is valid for value added in exports that does not include intermediate inputs imported from various industries in a number of countries. Using a panel data on valued added contents of bilateral exports, we find that changes in the labor productivity lead to growth of value added in exports. This implies that Ricardian comparative advantage is an important determinant of exports in longitudinal changes. The estimated coefficients of the observed productivity turn out to be larger than those of CDK (2012), implying that Ricardian comparative advantage has greater influence on determining the patterns of trade in a world with global value chains. This study also investigates the role of offshoring and transaction costs in comparative advantage. We use data on value added in exports, offshoring in materials and services, and transaction costs at the country and industry-level for the period 1995-2009 calculated from World Input-Output Table which covers 40 countries and 14 manufacturing industries. Employing a system GMM estimator to alleviate the potential endogeneity problem, we find that services offshoring has positive effects on comparative advantage while material offshoring affects it negatively. We also find that transaction costs have a negative effect on comparative advantage. Moreover, it turned out that there is a magnification effect of transaction costs on the induced value added in exports.
    Keywords: Value Added In Exports; Offshoring; Transaction Costs
    JEL: F12 F14
    Date: 2016–10–10
  9. By: Pyo, Hak K. (Korea Institute for International Economic Policy); Oh, Soo Hyun (Korea Institute for International Economic Policy)
    Abstract: Korea's export performance has exhibited a remarkable downturn since the end of 2014, declining over the 12 months of 2015 by about eight percent in nominal terms. Conjecturing this to reflect depreciation of the Japanese Yen and, during the second half of 2015, of the Chinese Yuan coupled with a sudden decline in China's import demand, we apply an Armington (1969)-type trade model to match international trade data with input-output tables in order to identify the sources of export variation in Korea and, as a bridge between the theoretical model and empirical input-output table, to analyze the effect of income (GDP) and exchange rate variation. The major findings of the present study are three-fold. First, the estimated long-run elasticity (0.067) of trading partners' GDP on Korea's export is a lot smaller than the static short-run elasticity (0.755) of their GDP in nominal terms and the estimate of static short-run elasticity (0.462) of GDP in real terms. Second, we find that Korean Won's real depreciation helps boost Korea's real exports in the short-run but its effect turns out to have a slightly negative effect in the long-run which implies that the positive effect of real depreciation of the Won may not last long. Third, we also find that a depreciation of Japanese Yen and Chinese Yuan in nominal terms has negative effects on Korean exports in the short-run, but the Japanese Yen's real depreciation facilitates increases in Korea's real exports consistently in both the short-run and long-run. The effects of the exchange rate variation cannot be unidirectional in both short-run and longrun because the variation affects the relative competitiveness of imported intermediate goods. According to our findings, Korean exports, given a positive income shock in trading partner countries, tend to be replaced by foreign alternatives which reflects a tightening of technology as well as price competition in the global market, and suggests as an optimal export promotion strategy for Korea the pursuit of technological progress and a diversification policy that encompasses both destination and export products.
    Keywords: Exchange Rate Variation; Input-Output Table; Export Forecasting
    JEL: F17 F31 F47
    Date: 2016–05–27
  10. By: Davide Rigo (IHEID, The Graduate Institute of International and Development Studies, Geneva)
    Abstract: This paper presents new stylized facts on developing-nation firms that both import and export, drawing on data from the World Bank's Enterprise Surveys. Using a sample of 124 developing nations, I show that such two-way trading firms, a proxy for global value chains (GVC) participation, are more likely to run training programs, use foreign-licensed technology, possess quality certifications, and communicate with customers and suppliers via the internet. Using the same sample, I also show that local suppliers, i.e. non-trading domestic firms, are more likely to engage in internet-based communication, and hold quality certificates and licences to foreign technology for stronger downstream input-output linkages with two-way trading firms. Overall, these results suggest that the fragmentation of production processes, both internationally and domestically, have significantly affected firms' characteristics in developing and emerging economies.
    Keywords: Firm-level Evidence, Global Value Chains, Technology Adoption
    JEL: F13 F14 F15 F61 O14
    Date: 2017–03–23
  11. By: Auer, Raphael; Borio, Claudio; Filardo, Andrew J
    Abstract: Greater international economic interconnectedness over recent decades has been changing inflation dynamics. This paper presents evidence that the expansion of global value chains (GVCs), ie cross-border trade in intermediate goods and services, is an important channel through which global economic slack influences domestic inflation. In particular, we document the extent to which the growth in GVCs explains the established empirical correlation between global economic slack and national inflation rates, both across countries and over time. Accounting for the role of GVCs, we also find that the conventional trade-based measures of openness used in previous studies are poor proxies for this transmission channel. The results support the hypothesis that as GVCs expand, direct and indirect competition among economies increases, making domestic inflation more sensitive to the global output gap. This can affect the trade-offs that central banks face when managing inflation.
    Keywords: global value chain; globalisation; inflation; input-ouput linkages; international inflation synchronisation; monetary policy; Phillips curve; production structure; Supply Chain
    JEL: E31 E52 E58 F02 F14 F41 F42 F62
    Date: 2017–03
  12. By: ARMAN MAZHIKEYEV; Huw Edwards
    Abstract: A period of new Eurasian Regional Integration has already begun in parts of the For- mer Soviet Union. Following the experience of European Union, the `troika' (namely, Kaza- khstan, Russia and Belarus) are working toward establishment of a Eurasian Union. The troika have taken serious steps, in a speedy manner, toward the formation of an Eurasian region (the Eurasian Customs Union, the CIS Free Trade Agreement, and the Single Eco- nomic Space, and the Eurasian Economic Union). However, whether all the members and the entire region will achieve the gains from fast EU like integration and the union will be marked as successful one is yet being questioned. Studies believe that the union has more of a political rather than an economic motivation, that could result in negative economic externalities rather then gains.This study attempt to assess the impact of asymmetry and symmetry in bargaining in deeper Eurasian regional integration. The analysis carried out using the modern multi- country multi-sector CGE approach with suitable specications with a number of trade costs measures using the gravity concept. The novelty in this study is the use of implicit trade costs obtained using Overall Trade Cost Index (Novy [69]) which then has been decomposed into policy (tari and non-tari), non-policy (markups and value added costs) and transport costs econometrically. We rstly performed shallow integration scenario simulation with actual changes in tari rates from 2009 to (expected rates for) 2015 of the troika, rest of CIS and aggregate ROW multilaterally. Further we used Overall Trade Cost Indices for EU and CIS countries from the WB-ESCAP trade costs database to make assumptions regarding multilateral changes in NTBs, border, transport and other costs in two deeper integration scenarios of equal and unequal (bias toward Russia) treatment of members.Based on the results of simulation work, we can conclude that if there will be equal treatment of members of the new integration, the members will likely benet from the gains and positive externalities of deeper integration in the future. However, if we take account of the Russian bargaining power and future asymmetric treatment of members, smaller members Kazakhstan, Belarus, plus other joiners are less likely receive expected gains. This work does not take account of other changes in policies (Russia's WTO assessment, sanctions against Russia by the Western Bloc, impact of situations in Ukraine-Russian borders etc.) but changes in trade costs (NTBs, taris, transport and border costs and value added costs).
    Keywords: UK, Modeling: new developments, General equilibrium modeling
    Date: 2015–07–01
  13. By: Ciani, Andrea
    Abstract: This paper investigates how income inequality affects the quality of imported products. In a heterogeneous-firms trade model, I show that higher inequality increases total expenditure leading to a reduction in unit value and quality of imported goods. To test this prediction, I employ detailed firm-level trade data for the period 2001- 2006. I empirically document that higher inequality is associated with lower unit value and lower quality of imported products. This negative relation is due to firm-level heterogeneous responses to variations in total expenditure. Incumbent firms react to an increase in total expenditure caused by higher inequality lowering unit values, while firms entering the same market for the first time supply goods of lower quality.
    Keywords: Income Inequality,Unit Value,Quality,Trade
    JEL: F14 L11 L15 O15
    Date: 2017
  14. By: Kim, Young Gui (Korea Institute for International Economic Policy); Pyo, Hak K. (Seoul National University)
    Abstract: There have been voluminous contributions such as Daudin et al. (2011), Johnson and Noguera (2012), Koopmans et al. (2010), and Trefler and Zhu (2010) in measuring value added trade based on input-output tables as generalizations of the vertical specialization measures following Hummels et al. (2001). These studies focused on trade in intermediate goods as a key feature of recent global trade. In the case of Korea, about 50% of total exports and 70% of its total imports are intermediate goods trade. This paper contributes to the discussion about the trade in intermediate goods and productivity by revisiting Basu (1995), Jones (2011), and Lee and Pyo (2007) to examine implications of trade in intermediate goods for macroeconomic business cycles and productivity and welfare at the current stage of Korean development. The major revision of the Basu (1995) model is attempted by decomposing intermediate goods into domestically produced intermediate inputs and imported intermediate inputs to investigate implications of the model in a small open economy. The major finding is that the procyclicality of the intermediate goods usage relative to labor usage and TFP changes in both value added and gross-output regressions are significantly weaker in a small open economy like Korea than the large economy of the United States. We also investigate the effects of misallocation and multiplier effects due to intermediate goods on industrial productivity and efficiency following the model of Jones (2011). Since the effects of misallocation can be intensified through the industrial input-output structure of the economy, we calculate the intermediate goods multiplier by Korea's 29 manufacturing industries. We find technical changes and the degree of inefficiency are related with the magnitude of multipliers, but we leave a fundamental identification problem to future research.
    Keywords: Imported Intermediate Goods; Productivity; Business Cycle; Misallocation
    JEL: E20 F10 O10
    Date: 2016–12–30
  15. By: Do, Quy-Toan; Levchenko, Andrei A.
    Abstract: We compare redistribution through trade restrictions vs. domestic lump-sum transfers. When preferences are non-homothetic, even domestic lump-sum transfers affect relative prices. Thus, contrary to the conventional wisdom, domestic lump-sum transfers are not necessarily superior to distortionary trade policy. We develop this argument in the context of food export bans imposed by many developing countries in the late 2000s.
    Keywords: non-homothetic preferences; redistribution; trade restrictions
    JEL: F13 O24 Q17
    Date: 2017–03
  16. By: Egger, Peter; Tarlea, Filip
    Abstract: Trade and trade policy such as the membership in preferential economic integration agreements (PEIAs; e.g., customs unions or free-trade areas) are jointly determined by the same factors. Therefore, work on the causal effects of trade policy on trade relies on the selection on observables, with propensity-score matching being the leading example. Conditional on some compact metric (the score) of observable joint determinants of PEIAs and trade flows, the causal average partial effect of PEIAs on trade is obtained from a simple (weighted) mean comparison of trade flows between members and non-members. A key prerequisite for this approach to obtain consistent estimates is that the score is balanced: similarity of country pairs in the score (the propensity of PEIA membership) means similarity in each and everyone of the observables behind it. Otherwise the effect estimates may be biased, and one would mis-ascribe nonparametric effects of differences in individual observables to PEIA membership. We demonstrate that there is a severe upward bias of PEIA effects on trade flows from lack of covariate balancing in real-world data, employ a remedy of this bias through entropy balancing, and quantify the bias for partial as well as general-equilibrium effects.
    Keywords: Balancing property; Causal effects; Entropy balancing; Gravity models; Preferential economic integration agreements; Propensity score estimation; Weighting regression
    JEL: F13 F14 F15
    Date: 2017–03
  17. By: Kaltenegger, Oliver; Löschel, Andreas; Pothe, Frank
    Abstract: This paper investigates the impact of global value chains on energy footprints. Energy footprints are consumption-based indicators which record the energy used to produce a country's final demand. In order to disentangle key characteristics of global value chains and their effects on the global energy footprint, we employ structural decomposition analyses (SDA). Furthermore, the analysis combines a retrospective with a prospective SDA approach. After an analysis of the global energy footprint for the period between 1995 and 2009, we discuss three scenarios of international integration and their implications for energy footprints for the period from 2009 to 2030. Our results show that the global energy footprint has increased by 29.4% from 1995 to 2009, and the scenarios indicate that it will increase by another 23.5% until 2030. Economic activity is the most important driver for the increase in energy footprints. Rising final demand alone would have increased the global energy footprint by 47.0% between 1995 and 2009. The composition of countries from where consumption and investment goods come adds another 12.6%. Sectoral energy intensity reductions are the most important decelerator of energy use (-27.8%). There is a substantial contribution of changing global value chains on the rise in the global energy footprint (7.5%): Stronger backward linkages in global value chains increased the global energy footprint by 5.5% between 1995 and 2009. Changes in the regional composition of intermediate inputs raised it by another 1.8%. The shift of the world economy towards East Asia alone would have increased the global energy footprint by 3.0%. The sectoral composition of global value chains, on the other hand, had a negligible effect on energy footprints.
    Keywords: Energy footprints,Global value chains,Structural decomposition analysis,Logarithmic mean Divisia index,Multi-regional input-output analysis,Environmental-economic accounting
    JEL: C43 C67 C82 F18 Q43
    Date: 2017
  18. By: Rossella Bardazzi (Dipartimento di Scienze per l'Economia e l'Impresa); Leonardo Ghezzi
    Abstract: The Eurozone crisis has exposed several weaknesses of the European Monetary Union economies. Slow productivity growth and competitiveness losses on international markets have been growing since the beginning of the 2000s and became evident during the recent downturn. A policy action to increase capital stock accumulation through investment could generate a double dividend: increasing domestic demand and stimulating the competitive position of European economies on international markets. This paper aims to assess the impact of an expansionary capital stock policy on the external competitiveness of EU. The analysis employs a Bilateral Trade Model built at INFORUM with several distinguishing characteristics: a comprehensive bilateral dataset, econometric estimation of key parameters, and emphasis on sectoral details. Our findings show that a capital stock increase is effective in enhancing EU trade shares although differences between sectors and markets are significant in two key destinations of European commodity exports: China and the US.
    Keywords: Bilateral trade, multisectoral modelling, EU competitiveness, policy simulation
    JEL: F14 C51 C55
    Date: 2017
  19. By: Brun, Jean-François; Gnangnon, Sèna Kimm
    Abstract: Trade has been recognized in the 2030 development Agenda as well as in the Addis Ababa Agenda for Action as an important means for the implementation of the Sustainable Development Goals (SDGs). This paper questions whether trade openness could be an important driver of financing for development flows, notably development aid (ODA), Foreign Direct Investment (FDI) inflows, and government public revenue, the latter being the ultimate financing source for development for any country. The paper also takes advantage of the framework of analysis to investigate the interplay between these three types of financial flows. Relying on an unbalanced panel dataset comprising 125 countries, of which 37 are Least Developed Countries (LDCs), the empirical analysis uses the three stage least squares econometric approach and provides two important pieces of evidence: first, international trade openness is an important tool for driving financial flows for development, including government public revenue, development aid and FDI. As a result, it could contribute to mobilizing the substantial financial resources needed for development, including for the implementation of the SDGs. Second, there are strong interactions (complementarity and substitutability) between these three types of financing for development flows.
    Keywords: Trade Openness,Government public revenue,ODA inflows,FDI Inflows
    JEL: F13 F30 P33 O11
    Date: 2017
  20. By: RAOUF Radouane; Azzedine GHOUFRANE
    Abstract: In this paper, we are interested in the trade potential between Morocco and Senegal. To do this, in the first part, we analyzed the structure of foreign trade in both countries and the nature of their bilateral trade. It appears that, like most African countries, Morocco's and Senegal’s trade flows are largely done with their Western partners. Senegal remains the main partner of Morocco in West Africa with a very small share in its total trade (less than 5% of Moroccan flows are heading to Africa).In the second part, and to estimate the potential of trade, the use of a gravity model based on panel data seems to be the most appropriate approach. We selected a random effects model using generalized least squares. This model focuses on a sample of 25 countries (16 African and 9 non-African countries), which is spread over the period 2001-2013. The estimation was carried out to assess the trade potential with Senegal and the rest of the sample countriesThe results of this work show that Morocco's commercial potential to Senegal as in a number of African countries is very low or nonexistent. For the rest of the countries and in this case the traditional partners (Germany, France, Italy, The Netherlands), Morocco has a strong commercial potential. The same result was reached in trade with Algeria and Egypt with a commercial potential that exceeds 4 times the observed exports.
    Keywords: Morocco, Developing countries, Regional modeling
    Date: 2015–07–01
  21. By: Shin, Kotbee (Korea Institute for International Economic Policy); Choi, Bo Young (Korea Institute for International Economic Policy)
    Abstract: This paper examines the structural changes of the Chinese economy and how they have affected Korea's exports to China. Focusing on the evolution of China's role in the global value chain, we estimate the impact of China's external demand and domestic demand. We also shed light on the effect of compositional changes in China's GDP on Korea's exports to China. The results of the VAR analysis suggest that external demand had a significant impact on Korea's exports to China prior to 2008, while Chinese domestic demand became more important afterwards. Moreover, Chinese investment is the most important factor in determining Korea's exports to China, and Chinese private consumption has recently been gaining relevance.
    Keywords: VAR; Chinese Structural Change; Korean Exports To China
    JEL: F10 F14 F40
    Date: 2016–08–10
  22. By: ARA Tomohiro; Arghya GHOSH
    Abstract: We study the impact of market thickness on the optimal tariff in vertical specialization. We show that, in the exogenous market structure where the extensive margin is fixed and only the intensive margin responds to trade policy, when the Home optimal tariff is higher, the thicker is the Home final-good market (relative to the Foreign intermediate-good market). In the endogenous market structure where both extensive and intensive margins respond to trade policy, this relationship is overturned and as the Home optimal tariff is higher, the thinner is the Home final-good market. We also show that our analysis has an advantage of separately deriving the impact of tariffs on the extensive and intensive margins of homogeneous goods.
    Date: 2017–03
  23. By: SUGITA Yoichi; TESHIMA Kensuke; Enrique SEIRA
    Abstract: We develop a novel approach to detect Beckerian positive assortative matching (PAM) of exporters and importers by capability. Conventional approaches examining firm characteristics across matches in cross-sectional data suffer from an endogeneity problem when firm characteristics reflect unobserved partner characteristics. Instead, using the entry of new exporters induced by trade liberalization as an exogenous shock to the capability rank of incumbent exporters, we investigate resulting re-matching patterns among incumbent exporters and importers. Examining Mexico-U.S. textile/apparel trade that experienced a surge in Chinese exporters after the Multi-Fibre Arrangement's end, we provide the first evidence for Beckerian PAM in exporter-importer relationships.
    Date: 2017–03
  24. By: Fabrice Defever; José-Daniel Reyes; Alejandro Riaño; Gonzalo Varela
    Abstract: This paper evaluates the effect on firm-level export outcomes of the Cash Incentive Scheme for Exports program provided by the Government of Nepal. The analysis utilizes customs-level data for 2011-14, combined with information on the subsidy payments made to individual firms provided by the Central Bank of Nepal. The Cash Incentive Scheme for Exports cash subsidy is available to firms exporting a select group of products, and requires firms to export to countries other than India. Overall, the subsidy has not produced a significant impact on firm-level export values, prices, quantities, or their growth rates. However, the study finds a small positive effect on the number of eligible products exported to countries other than India and the number of destination markets reached among firms that receive the subsidy. These results are consistent with the fact that the subsidy was granted primarily to large exporters that were already shipping eligible products to countries other than India. The findings suggest that although the cash subsidy has not produced a significant increase in exports, it has achieved a positive impact on export diversification for firms that were already satisfying the scheme’s eligibility criteria.
    Keywords: Export Subsidies; Export Diversification; Performance Requirements; Trade Policy; Nepal JEL Codes: F12; F13; O47.
    Date: 2017
  25. By: James Fetzer; Erich Strassner
    Abstract: Recent research has shown both the importance of accounting for trade in value added when estimating bilateral trade flows and that multinational enterprises located in the U.S. account for the lion’s share of U.S. trade in goods and services. However, trade in value added is typically accounted for using input-output tables that are aggregated across all types of firms. This paper presents experimental tables created by the U.S. Bureau of Economic Analysis comparing industry specific shares of the components of total output between globally engaged firms located in the United States that are part of a multinational enterprise (U.S. parents and U.S. affiliates) with those of firms that are part of an enterprise entirely located in the United States. The experimental tables will show to the extent possible how the components of total output differ between different types of firms. Future work will analyze this heterogeneity in more detail using establishment level data on production and trade.
    Keywords: United States, Trade issues, General equilibrium modeling
    Date: 2015–07–01
  26. By: International Monetary Fund
    Abstract: This cluster report takes stock of and explores opportunities for trade integration in Latin America and the Caribbean (LAC). Drawing on a set of 12 analytical studies that will be issued as working papers, the report examines the determinants of trade, explores the potential to enhance LAC’s trade integration, and assesses the associated economic and social effects. To deepen understanding of the region’s policy options and trade strategies, the report also incorporates the views of LAC country authorities based on responses to a survey. This provides an opportunity to examine the alignment of recommendations based on the analytical findings with the region’s current trade policy priorities, with the caveat that the survey was conducted between late 2015 and mid-2016, prior to the most recent developments in the global trade landscape.
    Keywords: Puerto Rico;Suriname;Peru;Trinidad and Tobago;Grenada;Guatemala;Guyana;Haiti;Honduras;Jamaica;Mexico;Nicaragua;Panama;Paraguay;Chile;Colombia;Costa Rica;Dominica;Dominican Republic;Ecuador;El Salvador;Antigua and Barbuda;Argentina;Asia and Pacific;Bahamas, The;Barbados;Belize;Bolivia;Brazil;Western Hemisphere;Saint Kitts and Nevis;Saint Lucia;Saint Vincent and the Grenadines;
    Date: 2017–03–10
  27. By: Scott French (School of Economics, UNSW Business School, UNSW)
    Abstract: Gravity estimation based on sector-level trade data is generally misspecified because it ignores the role of product-level comparative advantage in shaping the effects of trade barriers on sector-level trade flows. Using a model that allows for arbitrary patterns of product-level comparative advantage, I show that sector-level trade flows follow a generalized gravity equation that contains an unobservable, bilateral component that is correlated with trade costs and omitted by standard sector-level gravity models. I propose and implement an estimator that uses product-level data to account for patterns of comparative advantage and find the bias in sector-level estimates to be significant. I also find that, when controlling for product-level comparative advantage, estimates are much more robust to distributional assumptions, suggesting that remaining biases due to heteroskedasticity and sample selection are less severe than previously thought.
    Keywords: international trade, product-level, misspecification, heteroskedasticity, multi-sector
    JEL: F10 F14 C13 C21 C50
    Date: 2017–01
  28. By: Ritzen, Jo (IZA and Maastricht University); Kahanec, Martin (Central European University)
    Abstract: A sustainable EU Immigration Policy aims to contribute to a vibrant European society through more effectively and selectively managed immigration from outside the EU, more attention to integration of immigrants, more rooting out of discrimination, more asylum centres close to areas of conflict, and more attention to education and training in areas where refugees have settled. Immigration from outside the EU is often opposed, mainly because of sluggish integration combined with tensions in actual and perceived values between immigrants and native populations. These divisions affect not only the first generation of immigrants, but also those that follow. We propose a sustainable, win-win policy fostering the benefits of immigration and in line with the preferences of EU citizens holding not only positive but also more sceptical views on immigration while relying on adherence to human rights. The proposed policy is directed towards more effectively and selectively managed immigration based on the employability potential of the immigrant, combined with more attention to integration and stricter measures to fight discrimination. We also acknowledge the need for a robust policy framework to cope with asylum and abrupt large-scale waves of refugees wanting to enter the EU, resulting from conflicts, natural catastrophes, and other sudden or violent events. We propose screening of asylum-seekers close to for refugee camps surrounding countries they have fled to determine migrants' refugee status, channelling them either as economic migrants, selected on their employability, or through a humanitarian scheme that respects the EU's multilateral and bilateral commitments. Such a humanitarian scheme would be embedded into education-cooperation policies, to provide better opportunities to qualify for admission and substantially greater support for refugees.
    Keywords: migration, EU, migration policy, humanitarian migration, refugees, economic migrants, immigrant integration, asylum policy
    JEL: F22 J15 J61 J68
    Date: 2017–03
  29. By: Kang, Youngho (Soongsil University); Whang, Unjung (Korea Institute for International Economic Policy)
    Abstract: In this paper, we examine the impact of outward foreign direct investment (OFDI) on the overall employment, using Korean industry-level data for the period 2007-2014. We further decompose the effects of OFDI into types of foreign investment and workers' skill levels, separately for each employment status (permanent and temporary), so that we capture whether the MNEs initiating foreign investment prefer to employ temporary instead of permanent workers. Our main findings show that there is little evidence of the impact of OFDI on the overall industry employment of permanent workers, while OFDI is positively associated with the overall employment of temporary workers. Besides, OFDI leads to an increase in the number of jobs created for mediumskilled workers regardless of employment status, whereas there is a negative relationship between OFDI and the temporary employment of low-skilled workers. To be more specific, efficiency-seeking and export-platform-seeking types of OFDI is associated with an increase in the employment of mediumskilled workers.
    Keywords: Foreign Direct Investment; Industry-level Employment; Skill Level; Employment Status
    JEL: F20 J21
    Date: 2016–09–30
  30. By: Michael A. Clemens; Lant Pritchett (Center for International Development at Harvard University)
    Abstract: For decades, migration economics has stressed the effects of migration restrictions on income distribution in the host country. Recently the literature has taken a new direction by estimating the costs of migration restrictions to global economic efficiency. In contrast, a new strand of research posits that migration restrictions could be not only desirably redistributive, but in fact globally efficient. This is the new economic case for migration restrictions. The case rests on the possibility that without tight restrictions on migration, migrants from poor countries could transmit low productivity ("A" or Total Factor Productivity) to rich countries—offsetting efficiency gains from the spatial reallocation of labor from low to high-productivity places. We provide a novel assessment, proposing a simple model of dynamically efficient migration under productivity transmission and calibrating it with new macro and micro data. In this model, the case for efficiency-enhancing migration barriers rests on three parameters: transmission, the degree to which origin-country total factor productivity is embodied in migrants; assimilation, the degree to which migrants’ productivity determinants become like natives’ over time in the host country; and congestion, the degree to which transmission and assimilation change at higher migrant stocks. On current evidence about the magnitudes of these parameters, dynamically efficient policy would not imply open borders but would imply relaxations on current restrictions. That is, the new efficiency case for some migration restrictions is empirically a case against the stringency of current restrictions.
    Date: 2016–02
  31. By: Chon, Sora (Korea Institute for International Economic Policy)
    Abstract: The objective of this paper is to suggest a new predictive system for international trade, based on an unobserved component model. We employ the predictive system developed by Pastor and Stambaugh (2009), which is unlike other conventional predictive regression models. This paper derives an equivalent linear predictive regression from the predictive system, and explains why the proposed predictive system is able to achieve superior out-of-sample predictive power. When predictors are imperfect in an estimated equation, the equation fails to utilize all information from the predictors' past history, and unexplained variations are captured by residuals in the estimated equation. With the use of the predictive system, we can more effectively deal with the dynamics of imperfect predictors. For empirical illustration, we show that, in the case of Korea's export and import growth rates, the predictive system has better out-of-sample predictive powers than the conventional regressions based on Root Mean Squares Error (RMSE). Results from an out-of-sample analysis show that, compared to the benchmark model, the predictive system improves forecast precision by 18.90% for the export growth rate, and by 7.95% for the import growth rate.
    Keywords: Predictive System; Time-Series Analysis; Unobserved Component
    JEL: C22 C32 C53 F17
    Date: 2016–08–10
  32. By: Armando Rungi (IMT School for advanced studies); Davide Del Prete (IMT School for advanced studies)
    Abstract: In this paper we analyze where value is added along supply chains on a sample of more than 2 million of firms in the European Union. We detect a non-linear U-shaped relationship between the value added generated by firms and their position on a productive sequence, for which tasks at the top and at the bottom show higher value added. Our findings are in line with previous hypotheses on the existence of a so-called 'smile curve', resumed by both business and economic studies and discussed at length in international fora. Our results are robust to different empirical strategies for flexible functional forms. As far as we know, ours is the first firm-level successful attempt to test for value generation along supply chains. Further, we find empirical support for a phenomenon of domestic retention of value added by MNEs, which may prefer keeping at home the tasks at higher potential to safeguard present and future competitive advantages. By country, intermediate stages of production are at higher value when performed by foreign as liates, whereas domestic producers retain higher value at the very top and at the very bottom of the supply chain, organized either as independent suppliers or as domestic a¢ liates. Although an economic theory is still missing for explaining how and why value generation is non-linear along a typical technological sequence, here we argue that a microfoundation with firm-level data is useful for understanding the growth potential of countries' specialization patterns along di¤erent segments of supply chains.
    Keywords: global value chains, global supply chains, downstreamness, smile curve, downstream- ness, value added, heterogeneous firms, multinational enterprises
    JEL: F23 F15 F14 L23 L25 L22
    Date: 2017–03
  33. By: Hashiguchi, Yoshihiro; Yamano, Norihiko; Webb, Colin
    Abstract: Conventional studies into the impacts of economic shocks using global input-output tables (sensitivity analyses) assume stable production structures and thus, only reveal the marginal impacts of changes in final demand. However, when economic shocks occur, whether at home or abroad, economic agents are expected to react to reduce the negative impact or amplify the positive effects. The ability of a country to contain economic losses can be defined as the resilience to economic shocks. Using the OECD's annual Inter-Country Input-Output (ICIO) tables, 1995 to 2011, this paper investigates the relationship between changes in final demand and production structures for 61 economies. Our findings are summarized as follows. Production and final demand structures tend to change to reduce the negative feedbacks from final demand shocks. During economic downturns, structures tend to change so that the dependency on domestic services increases, while the dependency on domestic demand for goods, and the dependency on foreign demand for domestic goods and services, both decrease. Therefore, the domestic service sector seems to play a key role in temporarily containing the negative feedback. Countries that are able to prop up their economy by domestic service sectors instead of domestic goods and foreign sectors are more resilient to negative economic shocks.
    Keywords: International trade, Input-output tables, Industrial structure, World, Economic resiliency, Structural changes, Input-output, Global value chains
    JEL: C14 D57 E12 F47
    Date: 2017–03
  34. By: Michael A. Clemens; Claudio Montenegro; Lant Pritchett (Center for International Development at Harvard University)
    Abstract: Large international differences in the price of labor can be sustained by differences between workers, or by natural and policy barriers to worker mobility. We use migrant selection theory and evidence to place lower bounds on the ad valorem equivalent of labor mobility barriers to the United States, with unique nationally-representative microdata on both U.S. immigrant workers and workers in their 42 home countries. The average price equivalent of migration barriers in this setting, for low-skill males, is greater than $13,700 per worker per year. Natural and policy barriers may each create annual global losses of trillions of dollars.
    Date: 2016–03
  35. By: E. Philip English
    Abstract: This paper first summarizes the macroeconomic and trade performance of Senegal, emphasizing the limits of traditional exports. It then focuses on three export sectors which have had some success in the past and have good potential for future growth: tourism, horticulture and information technology-enabled services. Sector-specific constraints are identified including beach erosion and hotel quality (tourism), access to land (horticulture), and lack of competition and skilled labour (information technology). Common problems include the absence of strategies and reliable data, tax administration, and the need for a stronger dialogue with the private sector.
    Keywords: exports, services, tourism, horticulture, telecommunications
    Date: 2016
  36. By: Razin, Assaf
    Abstract: US attracts more high skill immigrants than Europe. One key factors is US research centers. US universities and research centers, funded directly and indirectly by the US federal and state governments, attract talented researchers from all over the world. Many of them remained in the US after completing their original term of education, training or research. Many became citizens. In the confines of the generous welfare state, low skill immigrants impose fiscal burden on the native born. In contrast, high-skill immigrants help in relieving the burden. This is the economic rationale behind skill-based immigration policies. The other side of the skill bias in immigration policy is that the international migration of skilled workers (the so-called brain drain) deprives the origin country from its scarce resource - human capital. Israel supply of high skill workers is unique. Today, Israel ranks third in the world in the number of university graduates per capita, after the United States and the Netherlands. It possesses the highest per capita number of scientists in the world, The paper links Israel's brain drain to skill-based immigration policies, prevailing in the advanced economies. The paper links Israel's brain drain to skill-based immigration policies, prevailing in the advanced economies.
    JEL: F22 H10 J1
    Date: 2017–03
  37. By: Zsolt Darvas; Konstantinos Efstathiou; Inês Goncalves Raposo
    Abstract: The ‘Brexit bill’ is an expected payment to be made by the United Kingdom that would settle its financial commitments when it leaves the European Union. While authors of this Working Paper consider the financial settlement the least important economic issue in the Brexit negotiations, a conditional agreement at least on the methodology for calculating the Brexit bill could be a prerequisite for the more meaningful discussions on the new EU-UK economic relationship after Brexit, such as future trade, financial services and labour mobility cooperation. To bring transparency to the debate and to foster a quick agreement on the bill, the authors make a comprehensive attempt to quantify the various assets and liabilities that might be factors in the financial settlement. The size of the Brexit bill will depend on fundamental political compromises and choices, which is discussed. Based on the different scenarios, the long-run net Brexit bill could range from €25.4 billion to €65.1 billion, possibly with a large upfront UK payment followed by significant EU reimbursements later.
    Date: 2017–03
  38. By: Abeer Elshennawy; Dirk Willenbockel
    Abstract: Utilizing an Intertemporal General Equilibrium model for Egypt, this paper seeks to analyze the interaction between informality of labor and trade liberalization. Although it is documented in the literature that trade liberalization can be associated with short run transitional unemployment, we find that in the presence of informal labor markets this seizes to occur. Informality thus reduces the adjustment costs to trade liberalization. Policy makers are thus encouraged to exploit the benefits of informality. Issues related to the sequencing of formalization and trade liberalization were also explored. In this regard, we find that it is not advisable that formalization precedes trade liberalization as the gains foregone by delaying trade policy reform are likely to dominate the outcome. See above See above
    Keywords: Egypt, Trade issues, General equilibrium modeling
    Date: 2015–07–01
  39. By: Massimiliano Agovino; Maria Rosaria Carillo; Nicola Spagnolo (-)
    Abstract: This paper analyses the effects of newspaper coverage and the tone of news on immigration on the attitude of natives towards immigration in 19 countries (World Values Survey Database) for the period 2005-2009. The results can be summarised as follows: coverage and the negative tone of news have a significant effect in reducing the attitudes towards immigration for people with high trust in the media; for those with low trust in the media, news on immigration has no significant effects. In the latter case coverage and the negative tone of news radicalizes individuals’ prior preferences and prejudices on immigration, where the latter are proxied by individual political orientations.
    Keywords: Fuzzy analysis, Immigration, News
    JEL: H89 J15 Z19
    Date: 2016–09–01
  40. By: Messerlin, Patrick (Asian Development Bank Institute)
    Abstract: This paper presents an overview of the trade and policy issues in the United Nations’ Millennium Development Goals (MDGs) and the Sustainable Development Goals (SDGs). It assesses the dramatic changes in the political, economic, and business background from the early 2000s (shaping the MDGs) to the early 2010s (designing the SDGs). These changes rarely get the attention they merit, despite their profound consequences on how to use—or not use—trade policies for promoting development. Following this, it examines the three major phases in the MDG/SDG progress: first, a pro-trade agenda during the preparation of the MDG Report (2002–2005) insisting on the positive impact of trade for development if—a big if—economically sound trade policies are adopted; then, uninspiring MDG8 Gap Reports cantoned in the increasingly sterile—and economically unsound—World Trade Organization negotiations during the implementation period of the MDGs (2007–2015); finally, the ignorance of the trade potential for a “better life” during the preparation of the SDGs (2013–2015). The paper also provides a telling comparison of the MDGs’ and SDGs’ very different inputs and outputs. The paper concludes by stressing the largely ignored common regulatory agenda between trade policies and the SDGs, arguing that a well-designed trade policy could play a key role for improving domestic regulations, and, hence, contribute to the SDGs’ ultimate goal—a “better life”.
    Keywords: UN MDGs; SDGs; trade; trade policy; trade regulation; norms; mutual equivalence
    JEL: F10 O10
    Date: 2017–01–16
  41. By: Ramón E. Key-Hernández; Claudina Villarroel
    Abstract: This article aims to simulate the effects of an orthodox adjustment (in place) vs one unorthodox adjustment (counterfactual), assessing the external component to both types of programs. In the case of the heterodox adjustment it refers to adjustment via quantitative restriction on imports (setting quantities). For the orthodox adjustment it refers to an adjustment of the exchange rate (setting prices).The model includes 10 activities: agriculture, oil and refining, mining, manufacturing, electricity, construction, trade, transport and communications, financial services, and other services. To model the effects of import restrictions, a condition of complementarity is introduced in a standard CGE model as Hosoe et al. (2010). The income generated by this restriction is assigned to the corporate sector. 1.If the government's goal is to reduce the trade deficit / increase the trade surplus orthodox adjustment via prices proves to be more efficient than heterodox adjustment via quantities. This is in terms of lower loss of global economic activity and loss of consumer utility. 2.The adjustment via quantities (restriction on imports) is not sustainable over time because have the following effects: drop in tax revenues and stagnating exports. 3.The adjustment via prices (exchange rate adjustment) generates the foundations of the post-recovery over time because it produces: increased tax revenues and boosting exports.
    Keywords: Venezuela, General equilibrium modeling, Developing countries
    Date: 2015–07–01
  42. By: Lionel Fontagné (PSE - Paris School of Economics, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique); Gianluca Orefice (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique); Roberta Piermartini (WTO)
    Abstract: Highlights The Trade Facilitation Agreement will have asymmetric effect on heterogeneous exporters. We merge French customs data with a new database of Trade Facilitation Indicators released recently by the OECD. Better information availability, advance ruling and appeal procedures mainly benefit small firms. The simplification of documents and automation tend to favor large firms. One explanation is that trade facilitation reduces the scope for corruption at borders, to the benefit of large firms. Making (Small) Firms Happy. The Heterogeneous Effect of Trade Facilitation Measures
    Keywords: Trade Facilitation, Heterogeneous Firms, Extensive Margin, Intensive Margin
    Date: 2017–02–24
  43. By: Nunn, Nathan; Qian, Nancy; Sequeira, Sandra
    Abstract: We study the effects of European immigration to the United States during the Age of Mass Migration (1850-1920) on economic prosperity today. We exploit variation in the extent of immigration across counties arising from the interaction of fluctuations in aggregate immigrant flows and the gradual expansion of the railway network across the United States. We find that locations with more historical immigration today have higher incomes, less poverty, less unemployment, higher rates of urbanization, and greater educational attainment. The long-run effects appear to arise from the persistence of sizeable short-run benefits, including greater industrialization, increased agricultural productivity, and more innovation.
    Keywords: economic development; historical persistence; Immigration
    JEL: B52 F22 N72 O10 O40
    Date: 2017–03
  44. By: Takuya Matsuyama (Graduate School of Economics, Kobe University); Tomomi Miyazaki (Graduate School of Economics, Kobe University)
    Abstract: This paper examines the relationship between immigration and social welfare expenditure in the host countries using OECD panel data. Particular focus is placed on the age structure and educational level of immigrants. Empirical results show that while unskilled immigrants including asylum seekers are not necessarily a burden to the host countries, medium and highly skilled immigrants contribute to a decrease in social expenditure. In particular, highly skilled immigrants mitigate the increase in social expenditure related to welfare for the elderly driven by the aging of immigrants.
    Keywords: Immigration, social welfare expenditure
    JEL: J15 J61 H55
    Date: 2017–03
  45. By: Ricardo Hausmann (Center for International Development at Harvard University); Jasmina Chauvin (Center for International Development at Harvard University)
    Abstract: How can Rwanda, which currently has one of the lowest levels of income and exports per capita in the world, grow and diversify its economy in presence of significant constraints? We analyze Rwanda's historical growth and trade performance and find that Rwanda's high transportation costs and limited productive knowledge have held back greater export development and have resulted in excessive rural density. Three basic commodities – coffee, tea, and tin – made up more than 80 percent of the country's exports through its history and still drive the bulk of export growth today. Given Rwanda’s high population density and associated land scarcity, these traditional exports cannot create enough jobs for its growing population, or sustainably drive future growth. Rwanda needs new, scalable activities in urban areas. In this report, we identify a strategy for greater diversification of exports in Rwanda that circumvents the key constraints and is separately tailored for regional and global export destinations. Our results identify more than 100 tradable products that lie at Rwanda's knowledge frontier, are not intensive in Rwanda's scarce resources, and economize on transportation costs. Our analysis produces a vision of a more diversified Rwanda, which can be used as a guide for investment promotion decisions. We illustrate an approach that can be applied to other settings in order to identify opportunities for export diversification that take seriously local constraints and external market opportunities.
    Date: 2015–04
  46. By: Luz Dary Beltrán Jaimes (Instituto Politécnico Nacional de México); Manuel Alejandro Cardenete (Universidad Loyola Andalucía); María del Carmen Delgado (Universidad Loyola Andalucía)
    Abstract: The goal of this research is to simulate the possible effects of the 20% increase in tariffs on the Mexican economy. The price model used is based on a general equilibrium linear model. With this price model, the estimate of the impact of the effects of a US tariff increase of 20% on the Mexican economy is roughly estimated, simulating this increase on prices in the rest of the world. In this way, it is possible to calculate the effects on consumer prices and welfare represented in this case by the CPI. The main result shows that the impact of the increase of the prices of the rest of the world to the increase of the tariffs in the United States on the CPI is inflationary with an increase of around 4%.
    Keywords: Social accounting matrix, Input-output analysis, Applied general equilibrium, Consumer price index.
    JEL: C68 D58 E31 R13
    Date: 2017–03
  47. By: Choi, Hyelin (Korea Institute for International Economic Policy)
    Abstract: This paper examines the impact of labor market regulations on FDI and employment and production of the foreign firms using an index on employment protection along with a number of employees and establishments, and production of foreign affiliates provided by the OECD. The empirical results show that strict employment protection discourages initial entry of foreign firms as well as the employment and production of foreign firms. The result is robust to various specifications in which the strictness of the labor market is measured by the unionization rate and severance pay for redundancy dismissal. Therefore, the attention of policymakers should not be limited to tax incentives, cash grants, and relaxation of market regulations but extend also to labor market deregulation and non-wage cost, to attract more foreign firms into their countries.
    Keywords: Foreign Direct Investment; Employment Protection; Labor Market Flexibility
    Date: 2016–07–29
  48. By: Dominique Bureau (Ministère de l'environnement - Ministère de l'Environnement); Lionel Fontagné (PSE - Paris School of Economics, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique); Katheline Schubert (PSE - Paris School of Economics)
    Abstract: Pour limiter les émissions mondiales de gaz à effet de serre, doit-on restreindre les échanges internationaux, comme le défendent les promoteurs des « circuits courts » ? Nous expliquons que ce n’est pas le libre-échange qui détruit le climat, mais le fait que celui-ci se développe en l’absence d’une tarification du carbone d’application suffisamment générale et au niveau adéquat. Pour réconcilier commerce international et climat, nous formulons des propositions visant à mieux faire travailler ensemble les différentes branches de régulation internationale afin d’assurer l’essor de la coopération climatique.
    Keywords: climat, commerce international, gaz à effet de serre, protectionnisme
    Date: 2017–01–10
  49. By: Astrid Krenz; Ana Abeliansky
    Abstract: This paper analyzes the impact of democracy on trade along the distribution of countries' trading activity. We find a stronger relationship between democracy and trade at the lower quantiles of the trading activity, especially for the importing activity. Our results imply that the impact of democratization on trade is more important at a lower level of trading activity. Democratization's marginal benefit decreases over the distribution of the trading activity. We specially focus on a widely neglected issue in the literature: economies with higher trading activity are not necessarily the most democratic countries in the world. We find particular differences in the case of China, Malaysia, Mexico and Russia. Quantile regressions offer a powerful tool to detect these interdependencies. Using a conditional mean estimation methodology only leads to the wrong conclusion that the relationship between democracy and trade remains the same across the distribution of the trading activity and across different countries. See above See above
    Keywords: NA, Trade issues, Trade issues
    Date: 2015–07–01
  50. By: Anda David; Mohamed Ali Marouani
    Date: 2017
  51. By: Shreekar Pradhan; J. Scott Holladay; Mohammed Mohsin; Shreekar Pradhan
    Abstract: We analyze the properties of environmental policy instruments in the face of uncertainty for an economy that is open to international trade and capital mobility (open economy). We incorporate three static environmental policy instruments which could be inefficient: cap-and-trade, pollution tax and emission intensity standard in our model and evaluate their properties under an exogenous temporary productivity shocks to simulate business cycles and an exogenous temporary abatement cost shock to represent reduced costs of clean inputs (for example cheap natural gas due to fracking). We then compare impacts on welfare, pollution levels, outputs, consumption, investment, supply of labor and trade flows in the economy. To date this literature has either focused on either economies under autarky or in a static modeling framework with a focus on strategic interaction among agents and thus ignore an additional channel of international trade and capital mobility that may smooth the intensity of business cycle shock or abatement cost breakthrough. We develop a small open economy (SOE) dynamic stochastic general equilibrium (DSGE) model where we incorporate international trade and capital mobility. We evaluate long term properties and use DYNARE to evaluate short term (dynamic) properties. Our results suggest that the preferred environmental policy instrument varies with the source of uncertainty. The cap-and-trade policies are best suited to smooth the business cycle while pollution taxes and intensity targets are most effective in the face of abatement cost shocks. We find that the magnitude of the productivity shock's impact on the economy swamps the impact of an abatement cost shock. This suggests that a cap-and-trade policy, which performs best in the face of productivity shocks, should be the preferred policy instrument in most cases. In our model, calibrated to Canadian data, a one standard deviation productivity shock has nearly an order of magnitude larger impact than a one standard deviation abatement cost shock.
    Keywords: Canadian Economy, Energy and environmental policy, Business cycles
    Date: 2015–07–01
  52. By: Matthias Kalkuhl; Lukas Kornher; Matthias Kalkuhl; Irfan Mujahid
    Abstract: International agricultural commodity markets have experienced high volatility in recent years which raised concerns about food security and poverty impacts in developing countries. Most existing research to understand price dynamics in developing countries uses either partial or general equilibrium models (typically with annual time resolution) or time-series analysis with monthly, weekly or daily frequency. While the former approach allows analyzing structural determinants of prices like transaction costs or trade policies, it does not allow to model short-term price fluctuations and volatility. The second approach using time-series models, however, has problems combining high-frequency price data with slow-moving structural variables like infrastructure, trade regime, policy interventions or annual harvest shocks. The work at hand overcomes the shortcomings of both approaches and contributes to the ongoing discussion on drivers of food price volatility by looking at structural causes of domestic food price instability in developing countries which are particularly affected by increasing international price volatility. We first develop an equilibrium trade model that is able to explain how several explanatory variables such as storage policy, production variability, trade policy, transaction costs and international market volatility affect domestic price variability. In doing so, the equilibrium model provides a theory-based prediction on the relevance and direction these variables which is then tested in the empirical model. The empirical model uses a comprehensive data set of grain prices in more than 70 developing countries and innovative approaches to measure policy involvement. It addresses nonlinearities with respect to different country types and impacts of stabilization policies. The empirical analysis employs a dynamic panel, estimated by system generalized method of moment (GMM) that successfully accounts for changes in volatility over time. The panel approach also accounts for country and crop fixed effect. The regression results support the evidence that international price volatility and institutional quality strongly impact on domestic price volatility. New evidence is provided with respect to heterogeneity between study countries. According to this, grain stocks are particularly price stabilizing in food importing countries that are most dependent on international trade. Furthermore, the spill-over of international volatility is almost double for importer countries. Non significance of production shocks for intra-annual volatility does not differ from the exiting empirical literature. Distinguishing between high and low intervention countries shows that market related variables as stocks, trade policies, general inflation, and institutional quality are unimportant or less important to explain volatility in countries with interventionist governments. Regression results for public storage and food aid distribution look inconsistent as we find the level of public stocks to increase volatility, while food aid distribution stabilizes prices. On the other hand, the level of public stocks does not necessarily capture the extent of market intervention and further research is required to clearly extract the effects. Most insightful are the findings with respect to trade policies and regional integration. Insulation policies significantly reduce domestic price volatility not only for exporters but also for trade switchers at relevant margins. Using a unique data set on bilateral trade agreements, we find the relative share of regional trade to have a dominant stabilization effect on all types of countries. These results emphasize the positive effect of regional integration on trade flows and trade policy volatility. From this, a clear policy recommendation towards regional market integration can be deduced.
    Keywords: Several developing countries (>70), Agricultural issues, Developing countries
    Date: 2015–07–01
  53. By: Isabelle Chort (LEDa, UMR DIAL-Paris-Dauphine); Maelys de la Rupelle (THEMA, Université de Cergy-Pontoise)
    Abstract: This paper uses state-level migration flow data between Mexico and the U.S. from 1999 to 2011 to investigate the migration response to climate shocks and the mitigating impact of an agricultural cash-transfer program (PROCAMPO) and a disaster fund (Fonden). Our results suggest that droughts increase undocumented migration. Fonden amounts are found to mitigate the effect of climate shocks by lowering the undocumented migration response to precipitation anomalies. Similarly an increase in the share of PROCAMPO funds to the ejido sector decreases undocumented migration after a shock. By contrast, we find no robust evidence of a mitigating impact on documented migration.
    Keywords: International migration, Climate change, Public policies, Weather variability, Natural disasters, Mexico-U.S. migration.
    JEL: F22 Q54 Q18 J61
    Date: 2017–03

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