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on International Trade |
| By: | Buelens, Christian; Tirpák, Marcel |
| Abstract: | We show that traditional gravity variables play a significant role in explaining trade flows related to global value chain participation We find evidence that cooperation costs – measured by linguistic and geographical proximity – are more relevant for trade that reflects cross-border production sharing. Applying an augmented gravity model framework to a newly-constructed dataset we find a positive association between bilateral FDI stock and both gross bilateral trade and the bilateral import-content of exports. We confirm this finding using an empirical case study on central and eastern European countries, which from a global perspective stand out both in terms of degree of global value chain-participation and size of inward FDI stock. Overall, we show that foreign investors play an active role in shaping host economies' export structure and their participation in international production networks. Policies that attract foreign direct investment would therefore constitute an indirect way to deepen a GVC-participation. JEL Classification: F14, F15, F21, L22 |
| Keywords: | foreign direct investment, global value chains, gravity model, value added trade |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20172060&r=int |
| By: | Przemyslaw Kowalski (OECD); Daniel Rabaioli (OECD) |
| Abstract: | State enterprises (SEs) have been increasingly competing with private firms in international markets, in terms of both cross-border trade and FDI. Given both the potentially positive contribution internationally trading and investing SEs can make, as well as the concerns raised about their competitive behaviour, there is an interest in elaborating policy approaches that minimise any potentially distortionary effects and at the same time restrain protectionist policies that may be directed at SEs. The growing interdependency between trade and FDI, the increased contestability and complexity of markets and the varied nature of state intervention in the economy today mean that policy approaches need to consistently cover issues which transcend the traditional boundaries between trade, investment and competition. This paper investigates how international trade and investment perspectives on SEs are being brought together in international trade and investment agreements and how they could be integrated further. It does so by examining both the ability of existing provisions to ensure a level playing field between private firms and SEs and the disparity in approaches to regulating international activities of SEs between international trade and investment treaties. The paper first reviews the work documenting international activities of SEs and the associated concerns, highlighting the example of the steel sector. Next, it discusses some of the non-binding approaches that can be used to level the playing field, before reviewing relevant provisions in multilateral and preferential trade and investment agreements and identifying potential gaps. The concluding section summarises the results and identifies key issues for policy consideration. |
| Keywords: | investment agreements, regulation, SOEs, state enterprises, state-owned enterprises, trade agreements |
| JEL: | F02 F13 F15 F21 F23 F5 F6 G34 G38 H1 H2 H4 H8 K2 K33 L3 L44 L5 |
| Date: | 2017–05–18 |
| URL: | http://d.repec.org/n?u=RePEc:oec:traaab:201-en&r=int |
| By: | Svetlana Ledyayeva |
| Abstract: | Nowadays global value chains (GVCs) play a central role in trade flows. This paper argues that GVCs can play an important role in transmission of national trade policy effects across borders. More specifically, this study examines how domestic export incentives can affect foreign countries` exporters in the presence of GVCs. Existing theoretical literature suggests that in addition to negative “competition for market share†effects, there can be positive effects, which propagate via backward and forward GVCs linkages. To the best of our knowledge, this paper is the first one that empirically tests these effects. In particular, using recent trade data for BRICs countries (Brazil, Russia, India and China) this study shows that in the GVCs world there can be both negative and positive effects of domestic export incentives for foreign exporters as theory predicts. According to our framework, positive effects propagate via GVCs linkages. |
| Keywords: | export, export policy, export subsidy, export incentive, global value chains, forward linkages, backward linkages, BRICs, Brazil, Russia, China, India |
| JEL: | F13 F14 O10 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:see:wpaper:2017:2&r=int |
| By: | KAWASE Tsuyoshi |
| Abstract: | This case is a dispute over the consistency of additional duties by Peru on certain agricultural products with the WTO Agreement of Agriculture (AoA) and the General Agreement on Tariffs and Trade (GATT), which are levied based on price ranges varying in relation to movements in the world market prices of these products. Both the panel and the Appellate Body found the measure in question in violation of the relevant provisions in accordance with the interpretation established by the precedents. The panel/Appellate Body ruling in this respect revealed political/economic implication of art.4.2 of AoA, and gave significant implication to Japan's tariff system on pork as well. This case has drawn more attention by the legal academic circle to the arguments in its admissibility, rather than its substantive issues. Peru, a complained party, claimed that Guatemala, a complainant, due to conclusion of a free trade agreement (FTA) between both countries, consented to the former's maintenance of the measure in question, so that the latter's bringing of the case to the WTO violated the good faith principle. Peru also argued the FTA had amended partially the WTO Agreement between both counties, or that it is permissible to maintain the measure in question, provided one interprets the relevant provisions of the WTO Agreement taking the FTA into consideration. While the Appellate Body considers roles played by FTAs in interpretation or inter se modification of the WTO Agreement as very limited, and consequently dismissed Peru's claims, this dispute again has posed to us a question as to how to reconcile a legal relationship between the WTO Agreement and regional economic agreements. |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rpdpjp:17016&r=int |
| By: | Patrick Alexander; Ian Keay |
| Abstract: | In this paper, we study the impact of Canada’s adoption of protectionist trade policy in 1879 on Canadian welfare. Under the National Policy the Canadian average weighted tariff increased from 14% to 21%. The conventional view is that this was a distortionary policy that negatively affected Canadian welfare. We argue that this view is incomplete because it ignores general equilibrium effects. Using a multi-industry general equilibrium model with differentiated goods, we show that the welfare effects of tariffs can potentially be positive, even for small open economies, due to their impact on the terms of trade. We apply these theoretical insights in a reassessment of the welfare consequences of the National Policy for Canada using newly compiled granular trade and production data from 1870 to 1913, and newly estimated historically contemporaneous import demand elasticities. Our results suggest that the National Policy’s tariff changes actually improved Canadian welfare by between 0.13% to 0.20% of gross domestic product, although a multilateral move to free trade would have resulted in an even better welfare outcome for Canadians. |
| Keywords: | Economic models, International topics, Trade Integration |
| JEL: | F F1 F13 F14 F4 F42 F6 F60 N N7 N71 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:17-18&r=int |
| 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 (Centre d'Etudes Prospectives et d'Informations Internationales); Roberta Piermartini (WTO); Nadia Rocha (WTO) |
| Abstract: | This paper considers the heterogenous trade effects of restrictive Sanitary and Phyto-Sanitary (SPS) measures on exporters of different sizes, and the channels via which aggregate exports fall: firm participation, export values and pricing strategies. We do so by matching a detailed panel of French firm exports to a new database of SPS regulatory measures that have been raised as of concern in the dedicated committees of the WTO. By using specific trade concerns to capture the restrictiveness of product standards, we focus only on standards that are perceived as trade barriers. We analyze their effects on three trade-related outcomes: (i) the probability to export and to exit the export market (the firm-product extensive margin), (ii) the value exported (the firm-product intensive margin), and (iii) export prices. We find that SPS concerns discourage the presence of exporters in SPS-imposing foreign markets. We also find a negative effect of SPS imposition on the intensive margins of trade. These negative effects SPS are attenuated in larger firms. |
| Keywords: | non-tariff barriers *,International trade,firm heterogeneity,multi-product exporters |
| Date: | 2015–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:pseose:hal-01299757&r=int |
| By: | Paolo Sgrignoli; Rodolfo Metulini; Zhen Zhu; Massimo Riccaboni |
| Abstract: | The relationship between international trade and foreign direct investment (FDI) is one of the main features of globalization. In this paper we investigate the effects of FDI on trade from a network perspective, since FDI takes not only direct but also indirect channels from origin to destination countries because of firms' incentive to reduce tax burden, to minimize coordination costs, and to break barriers to market entry. We use a unique data set of international corporate control as a measure of stock FDI to construct a corporate control network (CCN) where the nodes are the countries and the edges are the corporate control relationships. Based on the CCN, the network measures, i.e., the shortest path length and the communicability, are computed to capture the indirect channel of FDI. Empirically we find that corporate control has a positive effect on trade both directly and indirectly. The result is robust with different specifications and estimation strategies. Hence, our paper provides strong empirical evidence of the indirect effects of FDI on trade. Moreover, we identify a number of interplaying factors such as regional trade agreements and the region of Asia. We also find that the indirect effects are more pronounced for manufacturing sectors than for primary sectors such as oil extraction and agriculture. |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1705.02187&r=int |
| By: | Betts, Caroline; Giri, Rahul; Verma, Rubina |
| Abstract: | We develop a two country, three-sector model to quantify the effects of Korean trade policies for structural change from 1963 through 2000. The model features non-homothetic preferences, Armington trade, proportional import tariffs and export subsidies, and is calibrated to match sectoral value added data on Korean production and trade. Korea’s tariff liberalization increased imports and trade, especially agricultural imports, accelerating de-agriculturalization and intensifying industrialization. Korean subsidy liberalization lowered exports and trade, especially industrial exports, attenuating industrialization. Thus, while individually powerful agents for structural change, Korea’s tariff and subsidy reforms offset each other. Subsidy reform dominated quantitatively; lower trade, higher agricultural and lower industrial employment shares, and slower industrialization were observed than in a counterfactual economy with no post-1963 policy reform. |
| Keywords: | Trade policy, comparative advantage, industrialization, structural change. |
| JEL: | F13 F14 F43 O14 O41 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:79072&r=int |
| By: | Lionel Fontagné (PSE - Paris School of Economics); Antoine Berthou (Banque de France) |
| Abstract: | We estimate the elasticity of extra EU French firm-level exports with respect to applied tariffs – a variable trade cost. We implement a method controlling for unobserved firm characteristics driving selection in exports market, and controlling for the multilateral resistance terms. Results confirm a significant negative impact of tariffs on firm-level exports, with one fifth of this impact falling on the induced adjustment in the exporters' product mix. When controlling for this adjustment and focusing on the core exported products, the elasticity of the product-destination firm-level exports with respect to applied tariffs is estimated at about −2.5. |
| Keywords: | International trade, Firm heterogeneity, Multi-product exporters, Trade elasticity |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:pseose:hal-01299747&r=int |
| By: | Jean Chateau (OECD - OECD); 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); Jean Fouré (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique); Åsa Johansson (OECD - OECD); Eduardo Olaberría (OECD - OECD) |
| Abstract: | This paper presents long-term trade scenarios for the world economy up to 2060 based on a modelling approach that combines aggregate growth projections for the world with a detailed computable general equilibrium sectoral trade model. The analysis suggests that over the next 50 years, the geographical centre of trade will continue to shift from OECD to non-OECD regions reflecting faster growth in non-OECD countries. The relative importance of different regions in specific export markets is set to change markedly over the next half century with emerging economies gaining export shares in manufacturing and services. Trade liberalisation, including gradual removal of tariffs, regulatory barriers in services and agricultural support, as well as a reduction in transaction costs on goods, could increase global trade and GDP over the next 50 years. Specific scenarios of regional liberalisation among a core group of OECD countries or partial multilateral liberalisation could, respectively, raise trade by 4% and 15% and GDP by 0.6% and 2.8% by 2060 relative to the status quo. Finally, the model highlights that investment in education has an influence on trade and high-skill specialisation patterns over the coming decades. Slower educational upgrading in key emerging economies than expected in the baseline scenario could reduce world exports by 2% by 2060. Lower up-skilling in emerging economies would also slow down the restructuring towards higher value-added activities in these emerging economies. |
| Keywords: | General equilibrium trade model,long-term trade and specialisation patterns,trade liberalisation |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:hal:pseose:hal-01299777&r=int |
| By: | Mahdi Ghodsi (The Vienna Institute for International Economic Studies, wiiw); Julia Grübler (The Vienna Institute for International Economic Studies, wiiw); Oliver Reiter (The Vienna Institute for International Economic Studies, wiiw); Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | Abstract The global trade slowdown and the public resistance against attempts to stimulate trade through mega-regional trade deals are placing the role of non-tariff measures (NTMs) in the limelight of public discussions. In this paper, we examine the question how different types of non-tariff measures affected global trade during the period 1995-2014. We use information on NTMs notified to the WTO from the Integrated Trade Intelligence Portal (I-TIP), which allows us to differentiate between various NTM types, including technical barriers to trade (TBTs) and sanitary and phytosanitary (SPS) measures. The two main contributions of this work are the amendment of the I-TIP database to suit econometric analysis and the estimation of trade effects of NTMs at the HS 6-digit product level for more than 100 countries with a gravity approach. Roughly 60% of all estimates point towards a trade-impeding effect of NTMs. Aggregates by NTM-imposing countries and targeted products suggest that the positive effect on the demand side compensates the negative impact on the surging costs of the supply side for SPS measures. TBTs overall appear to be trade-impeding, in particular for high-income countries in Europe and Central Asia. |
| Keywords: | non-tariff measures, trade barriers, global trade, trade elasticity, gravity model, I-TIP |
| JEL: | F13 F14 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:wii:rpaper:rr:419&r=int |
| By: | Mustafa Sakr; Andre Jordaan |
| Abstract: | As literature remains sparse regarding emerging African multinational corporations (EAMNCs), this article focuses on examining the key pull factors (i.e. host country macroeconomic specifications) influencing the foreign market selection of South African and Egyptian multinational corporations as a case study of EAMNCs. Based on estimation of Random Effect and Negative Binomial models, it has been found that the market size, resources endowment and proximity between home and host country are significant pull drivers of both Egyptian and South African MNCs. While not affecting Egyptian MNCs, assets availability, trade openness, the service sector quality, export to host country and the official exchange rate of the receiving destination and quality of institutions have an influential impact on foreign market selection of the South African investors. Inflation neither affects the attention of Egyptian firms nor South Africans to choose a certain market to invest in. |
| Keywords: | South African MNCs, Egyptian MNCs, emerging African MNCs, Emerging MNCs, pull factor determinants of OFDI |
| JEL: | P45 F21 F23 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:680&r=int |
| By: | Anne-Célia Disdier (PSE - Paris-Jourdan Sciences Economiques - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique); 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); Mondher Mimouni (Office National de la Météorologie (Tamanrasset) - Office National de la Météorologie) |
| Abstract: | This paper investigates how tariff liberalization has aected exporting at the product-destination level in emerging countries. We use a highly disaggregated (6 digit level of the harmonized system HS classication) bilateral measure of market access to compare taris applied in 1996 and 2006, which includes the timing of the Uruguay Round and episodes of bilateral liberalization. Our econometric estimations consider impacts of tari cuts on three components of the trade margins: extensive margin of entry (new trade relationships at the product-destination level), extensive margin of exit (disappearance of existing relationships) and intensive margin of trade (deepening existing relationships). Our main estimates indicate that a reduction of bilateral applied taris of 1 percentage point increases the extensive margin of entry by 0.1% and the intensive one by 2.09%, while it reduces the extensive margin of exit by 0.25%. |
| Keywords: | tariffs,trade liberalization,emerging countries,margins of trade |
| Date: | 2015–07–24 |
| URL: | http://d.repec.org/n?u=RePEc:hal:pseose:hal-01299753&r=int |
| By: | Jacob, Arun; Graham, Louis; Moller, Anders K |
| Abstract: | Brexit might affect exports of some countries in the Asia-Pacific region disproportionately more than others. Simulation results, under different Brexit scenarios, show that the potential reduction in trade faced by least developed countries (LDCs) of the region can range from 16% to 50% of their current export value to the UK in key sectors such as fish, clothes, textiles and footwear. Simulations also show that it is the larger developing countries from the region that would benefit from any trade diversion that ensues in these sectors. Countries with higher exposure to Brexit induced risks need to engage in deeper analyses of the extent of such impacts and brace themselves for proactive discussions with the UK in order to limit negative impacts. |
| Keywords: | Brexit, LDCs, trade diversion, trade policy |
| JEL: | F13 F17 O24 P45 |
| Date: | 2017–03–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:78941&r=int |
| By: | Bo Gao (Durham Business School); Mich Tvede (Newcastle University) |
| Abstract: | In the present paper we introduce heterogeneity in productivity, entry cost and demand shocks in both domestic and foreign market. Depending on their characteristics firms choose to become pure exporters, ordinary exporters or non-exporters. Pure exporters serve exclusively foreign markets, ordinary exporters both markets and non-exporters exclusively home markets. Pure exporters face lower demand-adjusted foreign entry cost than demand-adjusted domestic entry cost. Pure exporters have lower productivity than ordinary exporters and non-exporters. Therefore depending on the share of pure exporters, the effect of trade on average productivity can be positive or negative. However, the effect of trade on welfare is positive because trade increases the set of available goods. Moreover we explore the effects of trade liberalizations. In particular, a decrease of foreign entry cost across firms pushes some pure exporters and non-exporters out of the market and some ordinary exporters to become pure exporters or non-exporters. Finally, we provide the supportive empirical evidence. |
| Keywords: | Pure Exporters, Market Entry Cost, Trade Liberalization, Productivity Premium |
| JEL: | F12 F13 L1 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:dur:durham:2017_05&r=int |
| By: | Njindan Iyke, Bernard |
| Abstract: | This paper sets out to answer the question: Is trade openness important for economic growth in the Central and Eastern European (CEE) countries? The policy-oriented measures of trade openness used in earlier studies have been argued to be subjective, while the simple outcome-oriented measures only capture one aspect of trade openness, namely: countries’ share of trade. Hence, following Squalli and Wilson (2011), the paper constructs a new outcome-oriented measure of trade openness which captures a country’ share of trade, and its interaction and interconnectedness with the rest of the world. Using fixed effects regressions for 17 CEE countries over the period 1994 – 2014, the paper finds trade openness to be important for growth within the CEE countries. In particular, the results show that increases in trade openness is associated with increases in real GDP per capita growth within these countries. The results appear significantly the same after we dropped Croatia and Estonia – two historically closed economies. |
| Keywords: | Trade Openness; Economic Growth; CEE Countries; Panel Data |
| JEL: | F21 F43 O47 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:78869&r=int |
| By: | Rafael Dix-Carneiro; Rodrigo R. Soares; Gabriel Ulyssea |
| Abstract: | This paper studies the effect of changes in economic conditions on crime. We exploit the 1990s trade liberalization in Brazil as a natural experiment generating exogenous shocks to local economies. We document that regions exposed to larger tariff reductions experienced a temporary increase in crime following liberalization. Next, we investigate through what channels the trade-induced economic shocks may have affected crime. We show that the shocks had significant effects on potential determinants of crime, such as labor market conditions, public goods provision, and income inequality. We propose a novel framework exploiting the distinct dynamic responses of these variables to obtain bounds on the effect of labor market conditions on crime. Our results indicate that this channel accounts for 75 to 93 percent of the effect of the trade-induced shocks on crime. |
| JEL: | F14 F16 K42 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23400&r=int |
| By: | Patrice Bougette (Université Côte d'Azur; GREDEG CNRS); Christophe Charlier (Université Côte d'Azur; GREDEG CNRS) |
| Abstract: | The paper analyzes the interactions between trade and renewable energy policies based on the EU--China Solar Panel dispute which is the most significant antidumping (AD) complaint in Europe. We build a price competition duopoly model with differentiated products and intra-industry trade in photovoltaic equipment. We provide two relevant types of AD duties. The optimal AD which maximizes social domestic welfare always increases with the feed-in tariff (FIT) program set in the home country. The appropriate AD -- equalizing the foreign firm's price on the domestic market with the foreign market price -- decreases with the FIT program. We show that the optimal FIT increases with the AD duty. Therefore, trade and renewable energy optimal policies may complement one another. When setting AD duties in clean energy sectors, it is important not to ignore the extent to which renewable energy is subsidized. |
| Keywords: | Antidumping, FIT, Solar Panels, Renewable Energy, Trade disputes, EU, China |
| JEL: | F18 L52 Q42 Q48 Q56 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:gre:wpaper:2017-17&r=int |
| By: | Igor Bagayev; Ronald B. Davies; Panos Hatzipanayotou; Panos Konstantinou; Marie Rau |
| Abstract: | In contrast to developed countries, developing nations are especially reliant on trade taxes, particularly tariffs, as a source of government revenue. As such, tariff liberalization provides them with an incentive to switch towards other revenue generating trade barriers such as anti-dumping duties. The effectiveness of this is potentially limited due to the greater enforcement challenges with the exporter specific anti-dumping relative to broad-based tariffs. We examine this by estimating the impact of anti-dumping measures for 82 importing countries from 2008-2014. We find that anti-dumping's trade effects are larger for countries with greater policy enforcement, especially in low income countries. Although the results are somewhat sensitive to the measure of enforcement, our overall findings indicate that for countries with weak enforcement, tariff liberalization combined with a shift towards non-tariff barriers like anti-dumping is likely to lower government revenues and hamper their ability to provide the infrastructure and education needed for development. |
| Keywords: | Anti-dumping; Enforcement; Non-tariff barriers; Tax revenues; Shadow economy |
| JEL: | F13 F15 H27 |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:ucn:wpaper:201706&r=int |
| By: | Hideo Konishi (Boston College); Chen-Yu Pan (Wuhan University) |
| Abstract: | Although protectionism became a salient issue in the 2016 presidential election campaign, both Republican and Democratic adminis- trations have been silently promoting free trade for decades. We set up a two-party electoral competition model in a two-dimensional policy space with campaign contributions by a group (exporting/multinational firms) that is interested in promoting free trade, for which voters do not have positive sentiment. Assuming that voters are impressionable to campaign spending for/against candidates, we analyze the optimal contract between the interest group and the candidates on policy is- sues and campaign contributions. If voters' negative sentiment to free trade is not too strong, the interest group tends to contribute to both candidates to make free trade a nonsalient issue, and the candidates compete over the other (ideological) dimension only. If votersíneg- ative sentiment to free trade is strong, the interest group tends to contribute to a more malleable candidate only. |
| Keywords: | electoral competition, campaign contribution, trade negotiation, GATT, preferential trade agreement, populism |
| JEL: | C72 D72 F02 F13 |
| Date: | 2017–05–05 |
| URL: | http://d.repec.org/n?u=RePEc:boc:bocoec:926&r=int |
| By: | Aurélien Poissonnier |
| Abstract: | Structural gravity models for trade stem from agnostic models of bilateral trade flows. Although more theoretically sound, they are much more complex to estimate. This difficulty is due to the multilateral resistance terms which account for the general equilibrium constraints of global trade and must be inferred from the rest of the model. In the present paper, I show that solving for these terms explicitly is a valid econometric approach for gravity models, including in panel data. I propose iterative solutions in Stata based on three different techniques. An example of these solutions on real data is presented. The results from this test confirm the necessity to account for the multilateral resistance terms in the estimation and raise some questions on the alternative solution using dummies. |
| JEL: | C13 F14 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:euf:dispap:040&r=int |
| By: | Keller, Wolfgang; Olney, Will |
| Abstract: | This paper examines the role of globalization in the rapid increase in top incomes. Using a comprehensive data set of thousands of executives at major U.S. firms from 1993-2013, we find that exports, along with technology and firm size, have contributed to rising executive compensation. Isolating changes in exports that are unrelated to the executive's talent and actions, we show that globalization has affected executive pay not only through market channels but also through non-market channels. Furthermore, exogenous export shocks raise executive compensation mostly through bonus payments in poor-governance settings, in line with the hypothesis that globalization has enhanced the executive's rent capture opportunities. Overall, these results indicate that globalization has played a more central role in the rapid growth of executive compensation and U.S. inequality than previously thought, and that rent capture is an important part of this story. |
| Keywords: | corporate governance; Distributional Effects; Executive compensation; Globalization; inequality |
| JEL: | F14 F16 F66 J31 M12 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12026&r=int |
| By: | Kreickemeier, Udo; Wrona, Jens |
| Abstract: | In their famous paper on the "Big Push", Murphy, Shleifer, and Vishny (1989) show how the combination of increasing returns to scale at the firm level and pecuniary externalities can give rise to a poverty trap, thereby formalising an old idea due to Rosenstein-Rodan (1943). We develop in this paper an oligopoly model of the Big Push that is very close in spirit to the Murphy-Shleifer-Vishny (MSV) model, but in contrast to the MSV model it is easily extended to the case of an economy that is open to international trade. Having a workable open-economy framework allows us to address the question whether globalisation makes it easier or harder for a country to escape from a poverty trap. Our model gives a definite answer to this question: Globalisation makes it harder to escape from a poverty trap since the adoption of the modern technology at the firm level is impeded by tougher competition in the open economy. |
| Keywords: | Poverty Traps,Multiple Equilibria,International Trade,Technology Upgrading,General Oligopolistic Equilibrium |
| JEL: | F12 O14 F43 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:249&r=int |
| By: | Grauwe, Paul De |
| Abstract: | The discussions about CETA, the Comprehensive Economic and Trade Agreement between Canada and the European Union, have focused almost exclusively on two questions. They are important but certainly not the most fundamental ones. In this article I first discuss these two questions and then turn to the more fundamental question of how far we should push globalisation. The first question at the centre of the debate around CETA concerns the way national regulations on environment, safety and health are made consistent with each other. To make trade possible in a world where trading partners have different rules about the environment, health and safety, a procedure must be followed to make these rules mutually acceptable. When, for example, two countries wish to trade in poultry, they must agree on what constitutes a healthy chicken. The attitude of many opponents of CETA in Europe is that European regulation is superior to the Canadian (or American in the context of TTIP), and that as a result Canadian and American chicken are suspect, if not poisonous. The implicit hypothesis of this attitude is that European governments care more about the health and safety of their citizens than the Canadian and American governments do about their citizens ... |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:eps:cepswp:11942&r=int |
| By: | Harashima, Taiji |
| Abstract: | The standard view on the economic impact of immigration has been criticized for its inability to solve the “immigration policy puzzle.” It also has a problem in that the “net” income of heterogeneous workers is equalized. These problems arise because the standard view generally depends on a production function in which the elasticity of substitution between heterogeneous workers is constant. This paper constructs an alternative production function in which the elasticity of substitution between heterogeneous workers is not constant and is instead based on a model of total factor productivity. The alternative view presented based on this production function indicates that an “open door” policy is not necessarily economically optimal for host countries under some conditions |
| Keywords: | Immigration; Immigration policy; Production function |
| JEL: | D24 E23 E24 F22 F62 F66 F68 |
| Date: | 2017–05–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:78821&r=int |
| By: | Akihito Asano; Michiru S Kosaka |
| Abstract: | We examine a partial tariff reduction policy in a speci c factor model with two import-competing sectors. When one of them enjoys a higher tariff and is also subject to a production subsidy, will a tariff reduction in the other import-competing sector be welfare improving? We argue that this second-best type question is highly relevant to Japan, and calibrate our model to its 2013 economy. We nd that the policy is undesirable and that even a complete subsidy removal is insufficient to make it desirable. Making it welfare improving requires the other sector's tariff be more than halved. |
| Keywords: | Tariff policy, domestic distortion, welfare, speci c factor model, Japanese economy |
| JEL: | F11 F13 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:acb:cbeeco:2017-650&r=int |
| By: | Simplice Asongu (Yaoundé/Cameroun); Jacinta C. Nwachukwu (Coventry University, UK) |
| Abstract: | This study employs interactive quantile regressions to assess the conditional role of foreign aid in reducing the potentially negative effect of terrorism on fuel exports in 78 developing countries for the period 1984-2008. Bilateral and multilateral aid indicators are used whereas terrorism includes: domestic, transnational, unclear and total terrorism dynamics. Interactive quantile regressions are used. The following findings are established. First, the effects of terrorism are both positive and negative across quantiles and specifications, with the impact most apparent in the highest and lowest quantiles. Second, while bilateral aid consistently decreases (increases) fuel exports at the top (bottom) quantiles, multilateral aid regularly decreases fuel exports in the top quantiles. Third, for negative thresholds in the 50th quartile and 90th decile, interaction effects between bilateral aid and terrorism dynamics are overwhelmingly not significant. Conversely, for transnational terrorism, the interaction effects between multilateral aid and terrorism dynamics significantly have negative thresholds. The hypothesis of a positive threshold is only confirmed for transnational terrorism and multilateral aid at the 90th decile. Justifications for unexpected signs and implications for fuel export policy and the management of multinational companies are discussed. This study contributes to the literature on the role of external flows in reducing the negative externalities of terrorism on development outcomes. |
| Keywords: | Exports; Foreign Aid; Terrorism; Natural Resources; Development |
| JEL: | F40 F23 F35 Q34 O40 |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:agd:wpaper:17/016&r=int |
| By: | Frohm, Erik; Gunnella, Vanessa |
| Abstract: | This paper studies the role of global input-output linkages in transmitting economic disturbances in the international economy. Our empirical results suggest that these sectoral spillovers are both statistically significant and of economic importance. We also provide evidence that it is not the interlinkages per se that matter for the international transmission but rather the presence of global hub sectors that are either large suppliers or purchasers of other sectors' inputs. When the links between these sectors and the rest of the global value chain are severed, the spillovers diminish strongly and eventually become statistically insignificant. This highlights the importance of the structure of the network for enabling spillovers and the prominent role played by hub sectors in the global economy. JEL Classification: E30, E32, F44, F62 |
| Keywords: | global value chains, input-output linkages, networks, spillovers |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20172064&r=int |
| By: | John Horton; William R. Kerr; Christopher Stanton |
| Abstract: | Digital labor markets are rapidly expanding and connecting companies and contractors on a global basis. We review the environment in which these markets take root, the micro- and macro-level studies of their operations, their ongoing evolution and recent trends, and perspectives for undertaking research with micro-data from these labor platforms. We undertake new empirical analyses of Upwork data regarding 1) the alignment of micro- and macro-level approaches to disproportionate ethnic-connected exchanges on digital platforms, 2) gravity model analyses of global outsourcing contract flows and their determinants for digital labor markets, and 3) quantification of own- and cross-country elasticities for contract work by wage rate. Digital labor markets are an exciting frontier for global talent flows and growing rapidly in importance. |
| JEL: | F15 F22 F23 J15 J31 J44 L14 L24 L26 L84 M55 O31 O32 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23398&r=int |
| By: | Raúl Serrano (University of Zaragoza); Isabel Acero-Fraile (University of Zaragoza); Natalia Dejo-Oricain (University of Zaragoza) |
| Abstract: | This paper examines if collaborative networks affect the export status and intensity in family firms. We suggest that the network effect is more relevant when the firm has low export intensity because when the firm is in the first stages of internationalization, networks are very useful to provide export resources and to solve common problems. However, this role becomes less relevant when firms show higher export intensity. For the empirical analysis, we use a dynamic Heckman-Probit model, using in the second stage a quantile regression model. |
| Keywords: | Family Firms; Networks; Internationalization; Export Intensity; Quantile regression |
| JEL: | F15 M21 N74 Q13 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:zar:wpaper:dt2017-04&r=int |
| By: | Marcos Duenas; Rossana Mastrandrea; Matteo Barigozzi; Giorgio Fagiolo |
| Abstract: | This paper analyzes the world web of mergers and acquisitions (M&As) using a complex network approach. We use data of M&As to build a temporal sequence of binary and weighted-directed networks, for the period 1995-2010 and 224 countries. We study different geographical and temporal aspects of the international M&As network (IMAN), building sequences of filtered sub-networks whose links belong to specific intervals of distance or time. Given that M&As and trade are complementary ways of reaching foreign markets, we perform our analysis using statistics employed for the study of the international trade network (ITN), highlighting the similarities and differences between the ITN and the IMAN. In contrast to the ITN, the IMAN is a low density network characterized by a persistent giant component with many external nodes and low reciprocity. Clustering patterns are very heterogeneous and dynamic. High-income economies are the main acquirers and are characterized by high connectivity, implying that most countries are targets of a few acquirers. Like in the ITN, geographical distance strongly impacts the structure of the IMAN: link-weights and node degrees are strongly non-linear, and an assortative pattern is present at short distances. |
| Keywords: | International Economics; Mergers and Acquisitions; Network Analysis; Geographical Distance |
| Date: | 2017–07–05 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2017/13&r=int |
| By: | Micossi, Stefano; Perissich, Riccardo |
| Abstract: | This paper attempts to map out Italy’s interests in the forthcoming Brexit negotiations, based on a number of economic and political hypotheses regarding what the UK’s opening position might be. In recent years, Italy has become a country of emigration again, with qualified young people seeking better paid and more rewarding jobs elsewhere in the EU. For this reason, Italy will mount a strong defence of existing internal market rules as an inseparable set of principles. This is not to say that Italy will not be helpful in the forthcoming Brexit negotiations, but there will be strict limits to its flexibility. Concessions to the UK’s demands for restrictions on labour mobility for EU citizens are likely to be opposed. An earlier version of this paper appears as a chapter in a VOX e-book entitled: What To Do With the UK? EU Perspectives on Brexit edited by Charles Wyplosz, and is published here with the kind permission of VOX. |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:eps:cepswp:11922&r=int |
| By: | Pilar Beneito (Department of Economic Analysis, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).); Carlos Chafer (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).) |
| Keywords: | current account imbalances, cost competitiveness, EMU, diff-in-differences |
| JEL: | F32 F45 C21 C23 |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:eec:wpaper:1703&r=int |
| By: | Ferrer, Jorge Núñez; Rinaldi, David |
| Abstract: | Given that the UK is one of the largest economies in the Europe Union – with per capita income above the EU average and therefore a net contributor – there have been concerns that the country’s decision to leave the EU could strongly impact the EU budget. On closer scrutiny, however, this paper finds that the impact will be rather small due to the effects of the UK rebate and to the potential contribution the UK would be obliged to make as a condition to obtain access to the internal market. If the UK remains outside the internal market, tariff revenues would make up a considerable share of the ‘net loss’. On balance, the authors conclude that the financial savings for the UK would be negligible and the impact on member states would be manageable. They also note that the impact on the classification of regions in EU Cohesion Policy is projected to be minimal and the European Fund for Strategic Investments is not affected by changes in membership. |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:eps:cepswp:11814&r=int |