nep-int New Economics Papers
on International Trade
Issue of 2017‒07‒16
forty-six papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. The Importance of Biosecurity: How Diseases Can Affect International Beef Trade By Mike Webb; John Gibson; Anna Strutt
  2. Georgia's post-accession structural reform challenges By Arveladze, G.; Smeets, Maarten
  3. Regional Comprehensive Economic Partnership (RCEP): Progress and Challenges By La, Meeryung
  4. Firms and trade in downturns By Di Ubaldo, Mattia
  5. Domestic Taxes and Export Composition: Evidence from VAT Adoption Worldwide By Sharma, Rishi
  6. Demand for Child Labor in a Dynamic North-South Trade Model By Kristian Estévez
  7. TO THE THRESHOLD AND BEYOND: SIZE, PRODUCTIVITY AND (SCALE) BARRIERS TO EXPORT By Stefano Costa; Federico Sallusti; Claudio Vicarelli; Davide Zurlo
  8. Exporter Heterogeneity and Price Discrimination: A Quantitative View By Ina Simonovska; ARIEL WEINBERGER; Jae Wook Jung
  9. On the seemingly incompleteness of exchange rate pass-through to import prices: Do globalization and/or regional trade matter? By Antonia Lopez-Villavicencio; Valérie Mignon
  10. Education, Governance, Trade and Distance: Impact on Technology Diffusion and the East Asia-Latin America Productivity Gap By Schiff, Maurice
  11. The gun-slave hypothesis and the 18th century British slave trade By Whatley, Warren
  12. The Role of Gravity Models in Estimating the Economic Impact of Brexit By Graham Gudgin; Ken Coutts; Neil Gibson; Jordan Buchanan
  13. The future of global value chains: Business as usual or “a new normal”? By Koen De Backer; Dorothee Flaig
  14. Foreign direct investment and the poverty reduction nexus in Tanzania By Magombeyi, Mercy T; Odhiambo, Nicholas M
  15. Migration and Trade Ows: New Evidence from Spanish Regions By D'Ambrosio, Anna; Montresor, Sandro
  16. Do Environmental Regulations Effect FDI decisions? The Pollution Haven Hypothesis Revisited By Yoon, Haeyeon; Heshmati, Almas
  17. Bounding the Price Equivalent of Migration Barriers - Working Paper 428 By Michael Clemens; Claudio E. Montenegro; Lant Pritchett
  18. A new empirical test of the infant-industry argument : the case of Switzerland protectionism during the 19th century By Léo CHARLES
  19. Trade and Women By Shepherd, Ben; Stone, Susan
  20. The Impact of a Natural Disaster on Foreign Direct Investment and Vertical Linkages By Hayato Kato; Toshihiro Okubo
  21. Populism and the Economics of Globalization By Dani Rodrik
  22. Les échanges de bovins vivants et de viande bovine dans le monde et dans l’UE : trajectoires productives et commerciales des principaux pays impliqués By Vincent Chatellier
  23. Trade Misinvoicing: What can we Measure? By Tandon, Suranjali; Rao, R. Kavita
  24. Knowledge Transfer and Intra-Firm Trade By Sotiris Blanas; Adnan Seric
  25. Knocking on Tax Haven's Door: Multinational Firms and Transfer Pricing By Ronald Davies; Julien Martin; Mathieu Parenti; Farid Toubal
  26. Ensuring accountability in modern trade policy By Matthes, Jürgen; Maselli, Ilaria
  27. Trade Liberalization, Transboundary Pollution and Market Size By Rikard Forslid; Toshihiro Okubo; Mark Sanctuary
  28. Determinants of Intra-Firm Trade By Sotiris Blanas; Adnan Seric
  29. Long run Relationship between Trade in Goods and Trade in Services of India By Panickers Villa, Arunhari
  30. A kormányzás hatása a közvetlen külföldi tőkebefektetésekre Latin-Amerikában By Biró, Flóra Panna; Márkus, Ádám; Erdey, László
  31. Truncated Firm Productivity Distributions and Trade Margins By Coughlin, Cletus C.; Bandyopadhyay, Subhayu
  32. An Injury to One Is an Injury to All: Terrorism's Spillover Effects on Bilateral Trade By Pham, Cong S.; Doucouliagos, Chris
  33. The Heckscher-Ohlin Model with Monopolistic Competition and General Preferences By Federico Etro
  34. Demand, Markups and the Business Cycle. Bayesian Estimation and Quantitative Analysis in Closed and Open Economies By Lilia Cavallari; Federico Etro
  35. Essays in Indian trade policy By Saha, Amrita
  36. Can Trade Help Achieve the Employment Targets of the Sustainable Development Goals? By Vandenberg, Paul
  37. Industrial Policy and the Timing of Trade Liberalization By Till F. Hollstein; Kristian Estévez
  38. Sectoral Level Analysis of India’s Bilateral Trade over 2001-2015 By Aggarwal, Sakshi
  39. Export controls and competitiveness in African mining and minerals processing industries By Barbara Fliess; Ernst Idsardi; Riaan Rossouw
  40. Sanctions and Consequent Effects on North Korea's Trade By Choi, Jangho; Im, Sojeong
  41. The FDI-growth nexus in South Africa: A re-examination using quantile regression approach By Khobai, Hlalefang; Hamman, Nicolene; Mkhombo, Thando; Mkaha, Simba; Matolweni, Nomahlubi; Phiri, Andrew
  42. M&As, investment and financing constraints By Stiebale, Joel; Wößner, Nicole
  43. The Future of Globalization By Uri Dadush
  44. Does Migrating with Children Influence Migrants’ Occupation Choice and Income? By Xing, Chunbing; Wei, Yinheng
  45. Upstreamness of employment and global financial crisis in Poland: the role of position in the global value chains By Jan Hagemejer; Joanna Tyrowicz
  46. Does globalization worsen environmental quality in developed economies? By Shahbaz, Muhammad; Syed, Jawad; Kumar, Mantu; Hammoudeh, Shawkat

  1. By: Mike Webb (University of Waikato); John Gibson (University of Waikato); Anna Strutt (University of Waikato)
    Abstract: We quantify effects of disease outbreaks on agricultural trade with a gravity model of impacts of foot and mouth disease (FMD) and bovine spongiform encephalopathy (BSE) on beef trade. We account for official FMD status and for the impact of recent disease outbreaks. During and after a FMD outbreak, exporting countries substitute away from markets recognized as FMD-free toward lower value markets not recognized as FMD-free. Similarly, a country that has experienced BSE will export less to markets that have not experienced BSE and more to markets that have. Regaining official recognition of FMD-free status may aid recovery but does not negate the effects of a recent FMD outbreak. Models of FMD impacts should incorporate these medium-run effects, otherwise costs of an outbreak may be greatly understated. For countries not free of FMD, if the disease were to be eradicated an exporter should eventually be able to substitute towards higher value FMD-free markets. The value of this change in export market profile should be counted when considering the benefits of FMD eradication programs.
    Keywords: beef; biosecurity; BSE; FMD; food safety; gravity model; international trade
    JEL: F14 Q17
    Date: 2017–07–06
  2. By: Arveladze, G.; Smeets, Maarten
    Abstract: The process leading to WTO accession is complex, requires solid domestic coordination mechanisms in the acceding country, a rethinking of its economic and trade policies and significant domestic structural reforms. It often implies the creation of new institutions designed to coordinate and implement the policies at the national level, as was the case in Georgia. The analysis offered in this working paper addresses some of the challenges that Georgia faced during its WTO accession and the many economic reforms that were undertaken after it became a full member of the WTO in 2000. Today, Georgia has one of the most liberal trade regimes and largely benefits from the new trade opportunities that WTO accession has offered. Even though Georgia has been a WTO member for long, it continues its domestic economic reforms in order to further strengthen its international competitiveness for goods and services. This working paper discusses the various measures taken by Georgia and how it uses and implements some of the main WTO provisions to that effect. This includes the ratification of the TFA by Georgia as part of its commitment to reduce transaction costs, enhance efficiency and reduce lengthy and costly administrative processes at the border. Trade capacity building at the technical level has also contributed to human and institutional capacity building in Georgia and developing a better understanding of the rights and obligations of WTO membership thus facilitating Georgia's fuller integration into the multilateral trading system.
    Keywords: trade policy,negotiations,structural adjustment,post-accession,policy coherence
    JEL: F13 F15 F53
    Date: 2017
  3. By: La, Meeryung (Korea Institute for International Economic Policy)
    Abstract: The Regional Comprehensive Economic Partnership (RCEP) is an ongoing free trade agreement involving ASEAN member states (AMSs) and six trading partners: Australia, China, India, Japan, South Korea and New Zealand. RCEP negotiations were launched in November 2012, and 18 rounds of negotiation have been held, along with six ministerial meetings and three intersessional meetings. Two chapters, namely "Economic and Technical Cooperation" and "Small and Medium-sized Enterprises," have been concluded, and other chapters are still in progress with some of them nearing conclusion. To date, progress in the RCEP negotiations has been sluggish due to disagreement over the modality of tariff reduction on trade in goods, liberalization of services, and investment framework. In regard to trade in goods, it is known that the proportion of products committed to eliminate tariffs has not been finalized yet. It is hard to balance the interests of RCEP participating countries (RPCs) due to the different industrial structures and levels of development among participating countries. It seems unrealistic to expect conclusion of the RCEP by the end of this year, but it is likely that considerable progress will be made during ASEAN's 50th anniversary. With the global trade slowdown, the importance of the RCEP to keep markets open and deepen integration is increasing. RPCs should continue their efforts to reach high-standard and economically meaningful outcomes. The agreed outcome should be able to reduce intra-regional transaction costs through simplification and harmonization of rules of origin, customs procedures and standards. Since RPCs have already established over-lapping FTAs with member countries, it needs significant improvements over the existing ASEAN+1 FTAs to induce economically meaningful gains from the RCEP.
    Keywords: RCEP; ASEAN
    Date: 2017–06–12
  4. By: Di Ubaldo, Mattia
    Abstract: My research lies at the intersection of international trade and industrial economics. I contribute to the firms and trade literature, both empirically and theoretically, focusing on the impact of the financial crisis of 2008-09 on various dimensions of firms' activities. In particular, I study the response of international trade to the shock, focusing on the reaction of importers to the reduction in demand. Additionally, I explore the impact of the crisis on firms' innovation decisions, together with the implications of this for firms' export participation. I pursue these avenues of research as the Great Recession constituted a large shock, impacting severely various aspects of firms' operations. This allowed me to study the impacts of the fall in demand on trade, and the effects of liquidity scarcity on innovation and exporting. In Chapter 2 I exploit detailed Slovenian custom data to explore the product dimension of the trade crisis. I find that imports of inputs accounting for a larger share of firms' costs underwent an enhanced reaction during the event. This finding is explained with an inventory adjustment model which predicts a more than proportionate adjustment for high cost-share inputs because of their higher storage costs. In the Chapter 3 and 4, I concentrate on the effects of the 2008 crisis on firms' innovation decisions and selection into exporting. I augment the Melitz and Ottaviano (2008) framework to include process innovation subject to liquidity constraints, and show that a reduction in liquidity for innovation has opposing outcomes on innovators and exporters: innovative activity is reduced but entry into exporting is stimulated by a reduction in the industry-wide degree of competition. Evidence supporting these theoretical predictions is found in an empirical analysis with Slovenian firm level data in Chapter 4.
    Date: 2016–11
  5. By: Sharma, Rishi (Department of Economics, Colgate University)
    Abstract: In principle, a VAT should be neutral with regards to both the level and composition of exports. In practice, this may not be the case because exporters in many countries receive incomplete VAT refunds. When VAT refunds are incomplete, the exports of industries that rely heavily on intermediate goods are especially likely to be negatively affected by a VAT. Motivated by these considerations, this paper uses trade data for over 100 countries spanning 1962-2015 to evaluate the differential effect of the VAT across industries. I find that an industry with a 10% point higher intermediate goods share of output sees a decline in exports of over 8% relative to an industry with a lower share. This effect is particularly pronounced for low-income countries and essentially absent for high-income countries.
    Keywords: value-added tax; exports; export composition
    JEL: H87 H25 F10 F13 F14
    Date: 2017–01–01
  6. By: Kristian Estévez (Universitat de Barcelona)
    Abstract: This paper examines how trade liberalization affects the demand for child labor employing a dynamic North-South trade framework. Innovating firms in the North are assumed to be heterogeneous and differ in their marginal costs while imitating firms in the South are homogeneous and may employ children in production to reduce their marginal cost. The demand for child labor is dependent not only on domestic factors such as wages of adults and children, but also on the endogenous rate of innovation in the North and the rate in which these goods are imitated in the South. Reductions in trade costs increase the demand for new goods produced in the North and reduce the demand for old goods produced in the South. An increase in the population of the North and/or South will increase the overall demand for child labor although the child labor participation rate will increase (decrease) when the population in the North (South) increases.
    Keywords: Child Labor, Firm Heterogeneity, North-South Trade.
    JEL: F1 J4 O1
    Date: 2017
  7. By: Stefano Costa (Italian National Institute of Statistics); Federico Sallusti (Italian National Institute of Statistics); Claudio Vicarelli (Italian National Institute of Statistics); Davide Zurlo (Italian National Institute of Statistics)
    Abstract: DMaking use of a firm-level dataset for the universe of Italian exporting firms collected by ISTAT, we identify the minimum combinations of size and productivity that Italian manufacturing firms need to achieve (in their own industry) in order to access international markets. These “export thresholds” are estimated by applying for the first time in economics the ROC (Receiver Operating Characteristics) methodology, so far widely used in other disciplines (e.g. medicine, machine learning, natural sciences). The results of the analysis allow us to provide, for each industry: (1) a mapping of the upper and lower-side of the distribution of firms with respect to the export threshold, stressing the size-productivity combination choices of exporting and non-exporting units; (2) the relative weight of productivity and size in determining the export threshold in a given industry; 3) the best lever of policy to be used in order to increase firms’ intensive margin (the share of exported turnover) as well as the extensive margin for the Italian economy (the share of exporting firms). The methodology proposed in this paper can also open the field to further important developments. In particular, our empirical model could be augmented to point out other determinants of the thresholds than size and productivity, especially those related to the industry structure or regulation. Such “exogenous” dimensions of the export thresholds would help better detect effective policy interventions to reduce barriers to trade
    Keywords: ROC analysis, export threshold, intensive and extensive margin of exports
    JEL: F14 L60 L11
    Date: 2017
  8. By: Ina Simonovska (UC Davis); ARIEL WEINBERGER (University of Oklahoma); Jae Wook Jung (Korea Institute for International Economic Policy)
    Abstract: We quantify a class of commonly-employed general equilibrium models of international trade and pricing-to-market that feature firm-level heterogeneity and consumers with non-homothetic preferences. We demonstrate theoretically that the models lack the flexibility to match salient features of US firm-level data. Consequently, we outline a theoretical framework that can reconcile the documented price dispersion across firms and markets, while maintaining consistency with cross-sectional observations on firm productivity and sales. We calibrate the model's parameters to match bilateral trade flows across 71 countries as well as the productivity and sales advantages of US exporters over non-exporters. We find that the calibrated model accounts for the majority of the dispersion in prices of tradables across countries of different income levels, while maintaining a tight quantitative fit to firm-level data. Given its additional flexibility, the model quantitatively outperforms the existing alternatives and yields welfare gains for the US that are 14-54% higher, but at the cost of loss of tractability.
    Date: 2017
  9. By: Antonia Lopez-Villavicencio; Valérie Mignon
    Abstract: This paper assesses the impact of globalization and regionalization on exchange rate pass-through (ERPT) into import prices in three core eurozone countries. To this end, we consider various indicators of globalization and rely on both aggregated (i.e., country level) and disaggregated (i.e., good level) data. Using quarterly data since 1992, we do not find compelling evidence that global factors cause a structural change in the degree of exchange rate pass-through. Indeed, increased trade openness or lower trade tariffs push up ERPT in some sectors, though results are quite sparse. However, regionalization, defined as a higher proportion of intra-EU imports' share in total imports, reduces the pass-through in a more generalized way. Most importantly, we show that ERPT incompleteness generally observed in the literature is in appearance only and not at play when intra-EU trade is controlled for. Overall, our findings show that ERPT is complete and significant in numerous sectors, meaning that exchange rate changes still exert important pressure on domestic prices.
    Keywords: exchange rate pass-through; import prices; globalization; eurozone.
    JEL: E31 F31 F4 C22
    Date: 2017
  10. By: Schiff, Maurice (World Bank)
    Abstract: This paper examines the impact of education, trade, governance and distance on technology diffusion and TFP in Latin America – specifically South America and Mexico (SAM) – and East Asia, over the 32 years preceding the Great Recession (1976–2007). Findings are: i) TFP rises with education, trade, governance (ETG) and trade's R&D content, and falls with distance to the (closest) North; ii) the East Asia – SAM education gap's impact equals that of trade plus governance; iii) an increase in SAM's ETG to East Asia's level raises TFP by over 100 percent and fully accounts for its TFP gap with East Asia; and iv) South America's TFP loss relative to Mexico due to its greater distance to 'US–Canada' (Europe and Japan) is 9.30 (0.02) percent.
    Keywords: East Asia and LAC, technology diffusion, productivity, education, trade, governance, distance
    JEL: F22 J61
    Date: 2017–06
  11. By: Whatley, Warren
    Abstract: The Gun-Slave Hypothesis is the long-standing idea that European gunpowder technology played a key role in growing the transatlantic slave trade. I combine annual data from the Transatlantic Slave Trade Database and the Anglo-African Trade Statistics to estimate a Vector Error Correction Model of the 18th century British slave trade that captures four versions of the Gun-Slave Hypothesis: guns-for-slaves-in-exchange, guns-for-slaves-in-production, slaves-for-guns-derived and the gun-slave cycle. Three econometric results emerge. (1) Gunpowder imports and slave exports were co-integrated in a long-run equilibrium relationship. (2) Positive deviations from equilibrium gunpowder “produced” additional slave exports. This guns-for-slaves-in-production result survives 17 placebo tests that replace gunpowder with non-lethal commodities imports. It is also confirmed by an instrumental variables estimation that uses excess capacity in the British gunpowder industry as an instrument for gunpowder. (3) Additional slave exports attracted additional gunpowder imports for 2-3 more years. Together these dynamics formed a gun-slave cycle. Impulse-response functions generate large increases in slave export in response to increases in gunpowder imports. I use these results to explain the growth of slave exports along the Guinea Coast of Africa in the 18th century.
    JEL: F66 N43 N47 N73 N77 O33
    Date: 2017
  12. By: Graham Gudgin; Ken Coutts; Neil Gibson; Jordan Buchanan
    Abstract: The predictions of the Treasury, OECD and IMF for the long-term impact of Brexit remain influential. They provide an important context for the Brexit negotiations and underpin the belief of Scottish and Irish nationalists that Brexit strengthens their case for independence or Irish unity. Because these predictions have received limited scrutiny they are examined in detail in this paper. The bases of the predictions are similar for each of the three organisations. In each case estimates are made of the impact of Brexit on trade and on foreign direct investment. This is followed by an estimate of the knock-on effect on productivity. The OECD and IMF also include an assessment of the impact of lower migration. The aggregate impact of these factors is then fed into a macro-economic model to obtain a forecast for GDP. Much of the final impact depends on the estimate for trade which, in each case, is assessed using a ‘gravity model’. Because gravity models are inaccessible to the general public, they are explained here in comprehensible terms. In addition the Treasury’s gravity model results are replicated and examined in detail. Our conclusion is that different versions of the model give a range of results and that most versions give a smaller trade impact than that reported by the Treasury, OECD or IMF. In particular, equations which estimate the average impact of EU membership on exports of goods tend to over-predict UK exports to the EU. This implies that the average impact of EU membership applies less to the UK than to the other EU member states. The further implication is that these official predictions of the impact of Brexit are overly pessimistic.
    Keywords: Brexit; Gravity Model; H M Treasury; IMF; Trade: macroeconomic forecasts; OECD
    JEL: C54 E24 E44 H24
    Date: 2017–06
  13. By: Koen De Backer (OECD); Dorothee Flaig (OECD)
    Abstract: The rapid growth of global value chains (GVCs) has been an important driver of globalisation during the past decades. But the international fragmentation of production appears to have lost momentum and GVCs seem to have stalled in recent years. The world economy is facing a number of structural shifts that may dramatically change the outlook of GVCs in the coming years. The empirical evidence evaluating the potential impact of these shifts however largely lags behind, which makes these discussions somewhat speculative. By describing how these shifts will likely evolve over the next 10 to 15 years and calculating their effects on global production and trade, the scenarios in this paper offers new - empirically funded - insights on the future of GVCs.
    Date: 2017–07–11
  14. By: Magombeyi, Mercy T; Odhiambo, Nicholas M
    Abstract: In this study, we investigate the causality between poverty reduction and foreign direct investment (FDI) inflows in Tanzania using time-series data from 1980 to 2014. In order to capture multidimensional aspects of poverty reduction, we employ three poverty reduction measures, namely, household consumption expenditure (pov1), infant mortality rate (pov2), and life expectancy (pov3). We use the autoregressive distributed lag (ARDL) bounds testing approach to cointegration and ECM-based causality model within a trivariate setting to examine this linkage. Our results show that there is a distinct unidirectional causality from poverty reduction to FDI in the short run and in the long run when poverty reduction is measured by household consumption expenditure and life expectancy. A unidirectional causality is confirmed from FDI to poverty reduction in the short run and no causality is recorded in the long run when infant mortality rate is used as a poverty reduction proxy. Based on these findings, we can conclude that the causal relationship between FDI and poverty reduction in Tanzania is sensitive to the proxy used to measure the level of poverty and to the time span considered.
    Keywords: Tanzania; Household Consumption Expenditure; Life Expectancy; Infant Mortality rate; Granger-causality
    Date: 2017–06
  15. By: D'Ambrosio, Anna; Montresor, Sandro (University of Turin)
    Abstract: We analyze migrants' pro-trade e ects through a theory-consistent gravity model augmented with migration variables - both immigration and emigration. We take subnational units, i.e. Spanish NUTS3 regions and allow for subnationally heterogeneous multilateral resistance terms, implying diversified exporting capacity of provinces. We implement an econometric strategy based on Head and Mayer (2014), which leads us to selecting the Gamma PML estimator. Comparing the Gamma with OLS estimator we highlight some shortcomings of previous literature. In particular, language commonality is found to magnify the pro-trade effect of immigrants, differently from previous literature; both emigrants' and immigrants' networks are found to exert a positive and significant pro-trade effect, but in different ways: immigrants affect trade through their local networks, whereas emigrants affect trade through their national networks. security programs.
    Date: 2017–06
  16. By: Yoon, Haeyeon; Heshmati, Almas
    Abstract: In an attempt to verify the pollution haven hypothesis, this study investigates the impact of environmental regulations on foreign direct investment (FDI). We use Korean outward FDI data covering the manufacturing sector for 2009-15. The study not only considers the stringency but also the enforcement of environmental regulations when measuring the degree of the host country’s environmental regulations. Since the pollution haven’s effects indicate moving the polluting production stages from the home country to other (host) countries, we distinguish between investments in the ‘production’ part from that in the non-production part using location information about the host country. The main results of the estimation of a FDI model show that the stricter the regulations in host countries in Asia the lower the FDI both intensively and extensively to those countries. This supports the prevalence of the effects of pollution havens. However, before we separate the FDI into the production part, the effect of environmental regulations on FDI is hindered by the FDI in the non-production part. The results indicate that environmental regulations are determinants of FDI in the production part, while environmental regulations do not have a significant effect on FDI decisions when the entire FDI is considered.
    Keywords: Pollution haven hypothesis,environmental regulation,foreign direct investment
    JEL: F23 K32 L51 Q56
    Date: 2017
  17. By: Michael Clemens; Claudio E. Montenegro; Lant Pritchett
    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 US 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.
    Keywords: migration, labor mobility, migrant selection theory, migration barriers, policy
    JEL: F22 J61 J71 O15
    Date: 2016–07
  18. By: Léo CHARLES
    Abstract: I employ the “granger causality” test to determine the nature of Swiss protectionism during the first wave of globalization (1886-1913). This test is applied for the first time to test if the protectionism takes the form of an infant-industry protection. I argue that if tariffs cause exports flow, the economy implement a protection following List’s principles. I use a highly disaggregated database of exports flow and tariffs at the product level. It allows dealing with a panel-VAR structure to test my hypothesis. In the descriptive study I show that Switzerland protectionism is moderate and selective, giving argument in favour of an infant industry protection. Then, the result of the “granger causality” test clearly shows that my different measures of protection “granger cause” exports flows. This article gives a new empirical test of the infant industry protection argument.
    Keywords: International trade, Protectionism, First Globalization
    JEL: F13 N13 N73
    Date: 2017
  19. By: Shepherd, Ben (Asian Development Bank Institute); Stone, Susan (Asian Development Bank Institute)
    Abstract: We outline the various channels through which women are part of the global trading economy. It focuses on women as consumers, workers, business owners, and informal cross-border traders. Trade theory offers rich implications for the relationship between gender and trade, but depends on patterns of consumption and production that may differ across countries. As an example, we examine the case of agricultural products, a sector in which products are consumed relatively more intensively by women than by men. The evidence shows that tariffs are higher in this sector, which means that women consumers are disadvantaged relative to men. On the other hand, the extension of export opportunities in developing countries in light manufacturing industries, such as apparel, can offer important prospects for women workers; these opportunities are often their entry point into the formal labor market, and provide an independent income that can change household power dynamics in a favorable way. New empirical evidence from developing country firms shows that internationally engaged firms tend to employ a higher proportion of women workers. However, much remains to be done. Discriminatory norms are deeply engrained in all countries, and are reflected in a global gender wage gap. Moreover, women-owned businesses, although active in the international economy, face specific obstacles that make it harder for them to grow and succeed. Although trade has the potential to support gender-inclusive growth and development, it will be important to get domestic regulatory settings right, so that a positive cycle can result.
    Keywords: women; trade; sustainable development goals; SDGs; gender; gender wage gap; trade liberalization; informal economy
    JEL: F15 J16
    Date: 2017–01–26
  20. By: Hayato Kato (Faculty of Economics, Keio University); Toshihiro Okubo (Faculty of Economics, Keio University)
    Abstract: How do multinational enterprises (MNEs) affect the host country through their vertical industrial linkages when large natural disasters occur? To answer this question, we develop a simple theoretical framework and show that, as trade costs decline, the host country is first dominated by MNEs and then later by local firms. Thus, when natural disasters seriously damage capital, the industrial configurations in the host country switch from domination by MNEs to domination by local firms. The replacement of MNEs with local firms can raise the welfare of the host country.
    Keywords: MNEs, Natural disasters, Industrial linkage
    JEL: F12 F23 Q54
    Date: 2017–06–10
  21. By: Dani Rodrik
    Abstract: Populism may seem like it has come out of nowhere, but it has been on the rise for a while. I argue that economic history and economic theory both provide ample grounds for anticipating that advanced stages of economic globalization would produce a political backlash. While the backlash may have been predictable, the specific form it took was less so. I distinguish between left-wing and right-wing variants of populism, which differ with respect to the societal cleavages that populist politicians highlight. The first has been predominant in Latin America, and the second in Europe. I argue that these different reactions are related to the relative salience of different types of globalization shocks.
    JEL: F02
    Date: 2017–06
  22. By: Vincent Chatellier
    Abstract: The increase in beef consumption in several Asian countries is helping to strengthen competitive games between the world's leading beef exporters, including Australia, India, Brazil and the United States. The main importers of beef and veal, including the United States, China (with Hong-Kong), Japan and Russia, have some differentiated trajectories according to changes in domestic demand for beef and veal, sanitary conditions in supplier countries and sometimes geopolitical issues. The European Union, which is experiencing both a decline in its production and consumption of beef, is not a major player in international trade in this sector. Domestic demand is largely satisfied by European products and significant flows of live cattle and beef take place between Member States. Using the available customs databases both on a global scale (Comtrade and Baci) and the European Union (Comext), this article proposes an analysis on the evolution of the productive and commercial situation of the main players in the beef cattle sector for the period 2000 to 2015.
    Keywords: international trade, exchange, exports, imports, beef, live cattle
    JEL: Q13 Q17
    Date: 2017
  23. By: Tandon, Suranjali (National Institute of Public Finance and Policy); Rao, R. Kavita (National Institute of Public Finance and Policy)
    Abstract: The existing studies on trade misinvoicing have focussed on the discrepancy in reported trade statistics between developing and developed countries. The estimates based on such methods rely on the assumption that developed countries report their trade statistics correctly. In this paper, we provide evidence that trade misinvoicing between developed countries is in fact large and any esti-mate based on such method may not provide an accurate representation of the dimensions of trade misinvoicing in the world. Further, there is need to develop a methodology by which one can attribute the misinvoicing to one or the other trade partner. To address this problem, we offer an alternative methodology. Since the exports of a country are necessarily imports of another country we use do-mestic factors to predict the export and import misinvoicing for a sample of large misinvoicers for the period 1990 to 2014. Such estimates allow us to establish whether the discrepancy can be at-tributed to the export or the import side for all countries. We find that the domestic factors better explain the export side, therefore, allowing us to estimate illicit flows through trade misinvocing us-ing the export misinvoicing by all countries.
    Keywords: illicit financial flows ; misinvoicing ; developing countries ; corruption ; tariffs ; capital controls
    JEL: H26 H87 F
    Date: 2017–07
  24. By: Sotiris Blanas; Adnan Seric
    Abstract: Using a unique sample of foreign affliates in Sub-Saharan Africa, we study the relationship of the extensive and intensive margins of their intra-firm trade with knowledge transfer to them from their parent companies. We find that the engagement of foreign affliates in intra-firm trade and their share of intra-firm trade are positively associated with the probability of these receiving crucial parental assistance in the use of patents, trademarks, and brand names, technology and know-how, access to foreign supplier network, and access to global markets. Foreign afiliates which engage in intra-firm trade and those with a higher share of this type of trade also receive more important overall parental assistance. The positive associations between intra-firm trade and knowledge transfer in the form of patents, trademarks and brand names are weaker in countries with relatively strong legal rights than in countries with relatively weak legal rights. Our findings point to the interplay between property rights and intangible assets theories of the multinational firm by suggesting that the joint role of knowledge ows in production and of multinational firm boundaries as facilitators of transfers of tangibles and intangibles is crucial.
    Keywords: knowledge transfer, intra-firm trade, foreign affliates, Sub-Saharan Africa
    JEL: F14 F21 F23 L21 L23 L24
    Date: 2017
  25. By: Ronald Davies; Julien Martin; Mathieu Parenti; Farid Toubal
    Abstract: This paper analyzes the transfer pricing of multinational firms. Intra-firm prices may systematically deviate from arm's length prices for two motives: pricing to market and tax avoidance. Using French firm-level data on arm's length and intra-firm export prices, we find that the sensitivity of intra-firm prices to foreign taxes is reinforced once we control for pricing-to-market determinants. Most importantly, we find no evidence of tax avoidance if we disregard tax haven destinations. Tax avoidance through transfer pricing is economically sizable. The bulk of this loss is driven by the exports of 450 firms to ten tax havens.
    Date: 2017
  26. By: Matthes, Jürgen; Maselli, Ilaria
    Abstract: Attempts to foster trade liberalisation with a new generation of trade agreements aimed at lowering non-tariff barriers face opposition among the general public. Many fear that trade liberalisation risks lowering the level of protection embedded in regulations that are aimed at safeguarding social rights, health and the environment. Such criticism cannot be ignored. As we argue in this paper, by clarifying its view on this issue, the EU can further strengthen the position in fora like the G7 and the G20 where the topic of trade is currently under discussion. But along which lines? Regulatory cooperation, in the context of the new generation of trade agreements, is promising, reasonable and controllable. If done correctly, regulatory cooperation will benefit consumers and not threaten consumer protection. However, a regulatory cooperation body needs transparency and a set of rules to be fully accountable to EU citizens. Looking at the way the same issue was dealt with in the context of monetary policy and independent central banks, we propose a mix of provisions that aim at defining a clear mandate, enforcing transparency of operations and establishing a reputation.
    JEL: F13 F6 E42
    Date: 2017
  27. By: Rikard Forslid (Department of Economics, Stockholm University); Toshihiro Okubo (Faculty of Economics, Keio University); Mark Sanctuary (Stockholm School of Economics)
    Abstract: This paper uses a monopolistic competitive framework to study the impact of trade liberalization on local and global emissions. We focus on the interplay of asymmetric emission taxes and the home market effect and show how a large-market advantage can counterbalance a high emission tax, so that trade liberalization leads firms to move to the large high-tax economy. Global emissions decrease when trade is liberalized in this case. We then simulate the model with endogenous taxes. The larger country, which has the advantage of the home market effect, will be able to set a higher Nash emission tax than its smaller trade partner, yet still maintain its manufacturing base. As a result, a pollution haven will typically not arise in this case as trade is liberalized. However, global emission increases as a result of international tax competition, which underscores that the importance of international cooperation increases as trade becomes freer.
    Keywords: Trade liberalization, transboundary pollution, home market effect, transportation costs, emission tax
    JEL: F12 Q52
    Date: 2017–06–23
  28. By: Sotiris Blanas; Adnan Seric
    Abstract: By exploiting a unique sample of foreign affliates in Sub-Saharan Africa, we study previously examined and unexamined firm-level determinants of intra-firm trade. We document that foreign affliates engaging in intra-firm trade are relatively few and that the majority of these also engage in trade at arm's length, which accounts for an important fraction of their total trade. The identified firm-level determinants of intra-firm trade are consistent with property rights and intangible assets theories of the multinational firm, with international production hierarchies theories, as well as with theories of different FDI types and of multinational activity under credit constraints.
    Keywords: intra-firm trade determinants, foreign affliates, Sub-Saharan Africa
    JEL: F19 F23 L21 L23 L25
    Date: 2017
  29. By: Panickers Villa, Arunhari
    Abstract: The exchange of goods, services and capital across the borders of different countries is known as international trade. This type of trade is important as it promotes and encourages the growth, movement and purchase of different goods and services from one country to another. This means that what one country does not have it can purchase from another country. International trade has economic, political and social importance for the countries engage in it and it has been on the rise in the recent years. With the advent of globalization and subsequent opening up of trade, the international trade pattern has acquired a new shape across geographies. An increase in both economic and trade liberalization paid off well for India, as its trade to GDP ratio has increased last few years. The present study made an attempt to estimate long run relationship between trade in goods and trade in services of India. The study found that there exist a long run relationship between trade in goods and trade in services of India.
    Keywords: Trade in Goods, Trade in services , Johansen Cointegration Test
    JEL: F19
    Date: 2017–07–10
  30. By: Biró, Flóra Panna; Márkus, Ádám; Erdey, László
    Abstract: This paper examines the impact of good governance on foreign direct investment in Latin American countries. According to the available literature the relation is generally positive i.e. good governance makes a country attractive. The relation is not obvious in case of Latin America and other developing countries as researchers found contradictory results. I was expecting a positive relation between the Worldwide Governance Indicators and FDI regarding the source countries, and opposite relation in case of the target countries. In theory it can be explained why high levels of corruption make the target country either more or less attractive. In order to have accurate results it is recommended to do the research for certain country groups. The study covers 18 Latin-American target countries, and 29 source countries that have been chosen from the largest investors in the World. Even though the FDI inflow is high - that can be explained by the level of development in the target countries, their connections with developed countries and the available natural resources - only a few papers have examined what determines capital flows in these countries. The time interval of the analysis is also an important factor in this case, as determinants of capital flows in the end of the 20th century differ from those of the beginning of the 21st century. The aim of my research is to find out whether these results contradicting most of the theory and empirical analysis still prevail in the region. This paper provides an explanation for these opposite findings, by focusing on previous studies with special attention to the relation between corruption and FDI. The gravity model was used for the empirical analysis, which is also a new approach to study FDI. WGI were included into the model as well, along with the basic explanatory variables of the equation. Separate tests were made for each governance indicator to avoid multicollinearity, and several model specifications and panel estimations were compared. Results according to the best model show that good governance is not always significant but mostly a factor of attractiveness.
    Keywords: FDI, Governance, WGI, Gravity Equation, PPML
    JEL: F21
    Date: 2016–11
  31. By: Coughlin, Cletus C. (Federal Reserve Bank of St. Louis); Bandyopadhyay, Subhayu (Federal Reserve Bank of St. Louis)
    Abstract: A standard theoretical prediction is that average exports are independent of tariff rates when the underlying distribution of firm productivities is assumed to be the widely-used Pareto distribution. Assuming that the underlying distribution has no upper bound is undoubtedly inaccurate and produces theoretical results at odds with empirical results. In contrast, we show that upper-truncation of the Pareto distribution makes average exports rise with trade liberalization. This result is derived analytically, and is supported by simulations. We extend our analysis to the cases of lognormal and Fréchet distributions, which are also frequently used by trade economists. Our findings for lognormal and Fréchet distributions are qualitatively similar to the findings using the truncated Pareto.
    Keywords: Truncated probability distributions; Extensive and intensive margins of trade; Import tariff; Pareto; Lognormal; Fréchet.
    JEL: F1
    Date: 2017–07–07
  32. By: Pham, Cong S. (Deakin University); Doucouliagos, Chris (Deakin University)
    Abstract: In this paper we investigate whether the effects of terrorism in one country spillover to affect trade in neighboring nations. Using a sample of more than 160 countries from 1976 to 2014, we report robust evidence that terrorist attacks in a nation's contiguous neighbors significantly reduce bilateral trade. Each additional terrorist attack in a neighboring country reduces bilateral trade by nearly 0.013% on average, which translates into a reduction of about $6.4 million USD in total trade. Trade effects from terrorist incidents are higher in sub-Sahara. Adverse trade effects hold for different flow and stock measures of terrorism, and even for terrorist incidents with zero casualties. Spillovers from terrorism are relatively long-lived, depressing bilateral trade up to five years after a terrorist event. Our findings are consistent with terrorism adversely impacting bilateral trade through several channels: psychological distress, higher trade costs arising from increased trade insecurity and regulatory burden, and adverse effects on income and trade reform.
    Keywords: terrorism, spillovers, bilateral trade
    JEL: F14 D74 H56
    Date: 2017–06
  33. By: Federico Etro (Department of Economics, University Of Venice Cà Foscari)
    Abstract: I extend the neoclassical 2x2x2 trade model to general preferences over a variety of goods supplied under monopolistic competition in a sector while the other sector is perfectly competitive. Non-homothetic preferences deliver pricing to market, incomplete pass-through and market size effects. Under realistic conditions, the differentiated goods are sold at a higher price in the capital-abundant country.
    Keywords: Monopolistic competition, Heckscher-Ohlin Model, non-homothetic preferences, international trade
    JEL: F11 F12
    Date: 2017
  34. By: Lilia Cavallari (Department of Economics, University of Rome III); Federico Etro (Department of Economics, University Of Venice Cà Foscari)
    Abstract: We generalize the demand side of a Real Business Cycle model introducing non-homothetic preferences over differentiated final goods. Under monopolistic competition this generates variable markups that depend on the level of consumption. We estimate a flexible preference specification through Bayesian methods and obtain countercyclical markups. The associated closed-economy model magnifies the propagation of shocks (compared to perfect competition or fixed markups) through additional substitution effects on labor supply and consumption. In an open-economy framework, it also generates positive comovements of output, labor and investment and reduces consumption correlation between countries: in particular, a positive shock in the Home country reduces its markups and improves its terms of trade, which promotes consumption in the Home country but also production in the Foreign country to exploit the increased profitability of exports.
    Keywords: RBC, variable markups, non-homothetic preferences, international macroeconomics
    JEL: E1 E2 E3
    Date: 2017
  35. By: Saha, Amrita
    Abstract: My thesis explores the political economy of trade protection in India. The first essay outlines the political economy of trade protection in India. My second essay asks: Has Protection really been for Sale in India? To answer this question, I use a unique dataset to explain the political economy of trade protection since liberalisation. The traditional Grossman and Helpman (1992) (GH henceforth) model of Protection for Sale (PFS henceforth) is used with a new measure of political organization. I undertake cross-sectional analysis for several years from 1990-2007 and use the pooled dataset. The third essay outlines the modified PFS framework that introduces a new measure of lobbying effectiveness to analyse how heterogeneity in lobbying affects trade protection. The underlying framework is based on the idea that government preferences or the market structure of the industry can influence lobbying effectiveness. The empirical evidence provides estimates on effectiveness and examines its determinants. The fourth essay explores: Is Protection still for Sale with Lobbying Effectiveness? I undertake an estimation of the modified PFS model against the conventional results presented in my second essay. I examine if differences in lobbying effectiveness can explain the variation in tariff protection levels across Indian manufacturing sectors and construct a direct measure of lobbying effectiveness for Indian manufacturing. Finally, I include additional political factors of importance to Indian trade policy. The fifth essay asks: Join Hands or Walk Alone? I examine the factors that affect the choice of lobbying strategy of Indian manufacturing firms for trade policy and consider the exclusive use of a single strategy, to lobby collectively (Join hands) and lobby individually (Walk Alone), along with the possibility of a dual strategy i.e. a combination of collective and individual lobbying using information from a primary survey across 146 firms. The results are new for India and reveal the overall preference of a dual lobbying strategy.
    Date: 2016–10
  36. By: Vandenberg, Paul (Asian Development Bank Institute)
    Abstract: We ask whether trade can help to achieve the employment targets of the Sustainable Development Goals. The focus is on Goal 8, which is to “promote sustained, inclusive and sustainable growth, full and productive employment, and decent work for all.” The theoretical and empirical links between trade and employment are examined to suggest whether trade has a positive or negative impact on the quantity and quality of employment. At the aggregate level, trade has a positive impact on welfare, which can lead to job creation. However, freer trade causes some sectors and firms to expand and others to shrink. This adjustment process creates both a demand for labor in some sectors and job losses in others. Government policies to cushion the impact of adjustment and facilitate the movement of labor from declining to rising sectors are discussed.
    Keywords: trade; trade liberalization; SDGs; MDGS; jobs; employment; unemployment; trade adjustment; labor market
    JEL: F10 J00 O10
    Date: 2017–01–27
  37. By: Till F. Hollstein (Universitat de Barcelona); Kristian Estévez (Universitat de Barcelona)
    Abstract: In a closed (open) economy with a learning-by-doing externality in the manufacturing sector, Matsuyama (1992) found a positive (negative) link between the level of agricultural productivity and economic growth. We extend that framework by introducing a labor subsidy to induce industrialization. We make three contributions to the existing literature. First, we show that a comparative advantage in manufacturing is not a necessary condition for a small open economy to industrialize. Relative sectoral TFP growth determines whether the fraction of labor in manufacturing increases over time. Second, the timing of trade liberalization determines structural development and the use of a labor subsidy can allow a small open economy to industrialize early. Third, we analyze the labor subsidy when there is trade among two open economies. We find that there exists a unique subsidy which enables both economies to industrialize. Therefore, a country with a comparative advantage in producing the manufactured good could benefit from their trading partner using labor subsidies compared to not trading with them at all.
    Keywords: Labor Subsidy, Production Externality, Industrialization, International Trade.
    JEL: O13 O14 O41 F43
    Date: 2017
  38. By: Aggarwal, Sakshi
    Abstract: The paper explores the sectoral level analysis of India’s IIT with rest of world (ROW), to try to identify the key determinants of IIT in the selected sectors for the Indian economy in the 21st century. It also examines the patterns and determinants of India’s intra-industry trade (IIT) in 7 major sectors during 2001-2015 in a panel data framework. The empirical results indicate that Vertical Intra-Industry Trade (VIIT) significantly explains India’s IIT pattern in Base Metals, Chemical, Machinery & Electrical Equipment, Textiles & Garments and Iron & Steel sectors. The analysis further shows that VIIT-type trade pattern is observed with lower income group countries whereas HIIT-type trade emerged with higher income group countries in case of Leather & Footwear and Vehicles and Transport Equipment sectors. The results also concludes that trade facilitation may significantly enhance IIT level with respect to India’s high income partners among all the sectors except Textiles & Garments and Iron & Steel segment; while it may also enhance IIT level with respect of lower income partners in Vehicles and Transport Equipment segment. Interestingly, the preferential trade dummy is found to be significant in limited sectors, implying less influence of the RTA partnerships on trade balance.
    Keywords: Trade Policy, Intra-Industry Trade, LPI, Empirical Studies of Trade
    JEL: F13 F14
    Date: 2017–06–28
  39. By: Barbara Fliess (OECD); Ernst Idsardi (UK Department of Work and Pensions); Riaan Rossouw (North-West University)
    Abstract: Governments may decide to control the export of unprocessed raw materials hoping that this will promote local downstream industries. There is scant empirical examination of the actual outcomes of such policies put in place. This paper describes use of export control measures by four minerals-rich African countries and looks for effects on activities downstream from the extractive sector that may be attributed to these measures. The measures studied are export taxes, non-automatic export licensing requirements and outright export bans. The industries are manganese in Gabon, lead in South Africa, copper in Zambia and chromite in Zimbabwe. For the empirical analysis the Revealed Comparative Advantage (RCA) index is calculated tracking over 20 years the relative global performance of the local mining and processing industries, for the specific minerals studied. The effect of the restrictive measures is investigated by way of identifying structural breaks in the level of the RCA index, for both the raw mineral and related processed products. The results suggest that use of export restrictions as a tool for stimulating local mineral processing does not pay off. There was no improvement in the revealed comparative advantage of processed products presumed to benefit from export controls on the raw material. Moreover, the measures may have undermined the overall performance of the industries in some of the cases studied because the relative export performance of the mined minerals deteriorated.
    Keywords: Africa, export tax, revealed comparative advantage, structural break, value chain of mining
    JEL: F1 F2 L7 O1
    Date: 2017–07–12
  40. By: Choi, Jangho (Korea Institute for International Economic Policy); Im, Sojeong (Korea Institute for International Economic Policy)
    Abstract: This paper aims to show how neighboring countries' bilateral sanctions have changed the trade patterns of the DPRK, and how extensive they are. We can see how much the DPRK has sacrificed its potential growth to pursue its nuclear program, and how it would recover if the DPRK freezes its nuclear program and sanctions by its neighbors are subsequently eased or lifted. Sanctions against the DPRK caused changes in trade patterns, which is referred to as trade diversion. The sanctions sender cuts off economic relations including trade to achieve its goal, and the sanctions target country diversifies its trade routes to mini-mize the negative effects of sanctions. Trade diversion can be decomposed into four categories: trade suspension, trade substitution, detour (bypass) trade, and trade creation. The DPRK’s changes in trade are an exemplary case of trade diversion after bilateral sanctions were imposed by Japan (in 2006) and South Korea (2010). The most drastic form of change in the DPRK's trade had been trade suspension after the sanctions have been imposed. Roughly, about $189 million's worth of trade was suspended between the DPRK and Japan after 2006, and about $298 million has been suspended in inter-Korean trade after 2010. Trade substitution is the next significant change in the DPRK's trade, in which the target country increases trade with existing trade partners other than the sanctions sender countries. In the case of the DPRK, after Japan's bilateral sanctions, South Korea and China became target countries of its trade substitution. In 2006, inter-Korean trade soared by 113.1%, and trade between the DPRK and China increased by 95.2%, substituting its previous trade with Japan. In 2010, trade between the DPRK and China increased by 195.0% due to South Korea's sanctions. Detour (bypass) trade is the unintended effect of sanction. Regardless of the sanctioned country's intentions, even after the sanctions the target country's trade with sanctions sender country is likely to be maintained due to preexisting economic relations via a third country, instead of direct trade between sanctions sender and target countries. Changes to the sender countries' sanctions against the DPRK would take the form of either tightening or loosening of the sanctions. If the DPRK would continue to implement nuclear missile tests or develop other weapons of mass destruction (WMD), sanctions would not only continue, but also are likely to be strengthened, as can be seen in the recent UNSCR sanctions mandate adding 15 DPRK individuals and 4 entities in the sanctions blacklist in early June. However, in order for the sanctions to be effective, the cooperation of the DPRK's major trade partner and key patron, China, is imperative. Conditions for loosening sanctions would require the DPRK's suspension of its development of WMDs, including its nuclear weapons program. Despite the fact that causes for sanctions are multifaceted, the main impetus for any easing of existing sanctions would come from the DPRK's suspension of its WMD development, including its nuclear weapons program.
    Keywords: Sanction; Trade of North Korea; North Korea Economy
    Date: 2017–06–17
  41. By: Khobai, Hlalefang; Hamman, Nicolene; Mkhombo, Thando; Mkaha, Simba; Matolweni, Nomahlubi; Phiri, Andrew
    Abstract: This study sought to contribute to the growing empirical literature by investigating the effects of FDI on per capita GDP growth for South Africa using time series data collected between 1970 and 2016. In differing from a majority of previous studies we use quantile regressions which investigates the effects of FDI on economic growth at different distributional quantiles. Puzzling enough, our empirical results show that FDI has a negative influence on welfare at extremely low quantiles whereas at other levels this effect turns insignificant. Contrary, the effects of domestic investment on welfare is positive and significant at all levels. Collectively, these result have important implications for policymakers in South Africa.
    Keywords: FDI; Economic growth; Quantile regression; Global financial crisis; South Africa.
    JEL: C21 C31 E22 F43 O40
    Date: 2017–07–12
  42. By: Stiebale, Joel; Wößner, Nicole
    Abstract: We use a panel data set of European firms to analyse the effects of domestic and international M&As on target firms' investment, growth and financial constraints. Combining propensity score matching with a difference-in-differences estimator, our results indicate that upon acquisition, target firms obtain better access to external finance, are characterized by higher levels of tangible and intangible assets, and display lower dependence of investments and cash savings to the availability of internal funds. We also provide evidence that these effects are concentrated among acquisitions during the 2007-2009 financial crisis, relatively small target firms, and domestic rather than foreign acquisitions.
    Keywords: Mergers and Acquisitions,Financial Constraints,Investment,Firm Growth,Financial Crisis,Foreign Ownership
    JEL: F61 F23 G01 G34 L25 D22 D24
    Date: 2017
  43. By: Uri Dadush
    Abstract: Despite the threat posed by right-wing nationalism, left wing populism, and protectionism, this is not the end of globalization. The most likely scenario is a continuation of globalization at a rate like that of the last ten years and perhaps even acceleration as the world catches up on lost time in the wake of the financial crisis and its many aftershocks. However, in recent years a formidable resistance to globalization has arisen, and the risk of a sharp and temporary slowdown in global economic integration cannot be dismissed. Policy- makers and businesses should persist with their internationalization strategies, but also must take steps to mitigate the risk of protectionism.
    Date: 2017–05
  44. By: Xing, Chunbing (Asian Development Bank Institute); Wei, Yinheng (Asian Development Bank Institute)
    Abstract: We study the impact of migrant children on their parents’ occupation choice and wage income using a dataset from a household survey conducted in 2011. We find that the heads of migrant households with school-age children earn significantly less than those who left them at their place of hukou registration. This result holds when we control for personal characteristics, migration duration, origin location, and family structure. Households migrating with school-age children have a higher probability of doing so within the prefecture/province of their hukou registration and are less likely to target coastal regions. After controlling for migration scope and destination location, the presence of children does not influence wages of migrant household heads. We also find that the presence of children below the age of six has no impact on the income of migrant household heads. Our results suggest that the hukou system still impedes labor mobility.
    Keywords: migrants; migration; occupation choice; education; hukou system
    JEL: I28 J12 J13 J18
    Date: 2017–01–26
  45. By: Jan Hagemejer (Narodowy Bank Polski; University of Warsaw; Group for Research in Applied Economics (GRAPE)); Joanna Tyrowicz (Group for Research in Applied Economics (GRAPE); University of Warsaw)
    Abstract: The emergence of global value chains leads to fragmentation of the production processes and reallocation of those processes across countries. With increasing number of production stages, the manufacturing process is located increasingly further away from the consumer. Literature suggests that fragmentation of production increases the international transmission of shocks. The global financial crisis is believed to lead to consolidation and shortening of global value chains and amplification of demand shocks along the global value chains, the so-called bullwhip effect. In this paper we study the effects of global financial crisis on employment, focusing specifically on the role of the distance from final demand (upstreamness) in this adjustment. We find that upstreamness matters for both labor demand and adjustment in employment during the periods of crisis, but this relationship is heterogeneous across countries. While the reaction to the crisis is indeed amplified further away from final demand, contrary to our expectations it is mostly channeled through lower job creation rates rather than faster job destruction. Moreover, the adverse effects of the crisis are lower in foreign firms, this difference does not depend on the distance from final demand.
    Keywords: upstreamness, global value chains, employment, global financial crisis
    JEL: F16 F62 F66
    Date: 2017
  46. By: Shahbaz, Muhammad; Syed, Jawad; Kumar, Mantu; Hammoudeh, Shawkat
    Abstract: We examine the causal relationship between globalization and CO2 emissions for 25 developed economies in Asia, North America, Western Europe and Oceania using both time series and panel data techniques, spanning the annual data period of 1970–2014. Because of the presence of cross-sectional dependence in the panel, we employ Pesaran’s (2007) cross-sectional augmented panel unit root (CIPS) test to ascertain unit root properties. The Westerlund (2007) cointegration test is also used to ascertain the presence of a long-run association between globalization and carbon emissions. The long-run heterogeneous panel elasticities are estimated using the Pesaran (2006) common correlated effects mean group (CCEMG) estimator and the Eberhardt and Teal (2010) augmented mean group (AMG) estimator. The causality between the variables is examined by employing the Dumitrescu and Hurlin (2012) and Emirmahmutoglu and Kose (2011) Granger causality tests. The empirical results reveal that globalization increases carbon emissions, and thus the globalization-driven carbon emissions hypothesis is valid. This empirical analysis suggests insightful policy guidelines for policy makers using ‘globalization’ as an economic tool for better long-run environmental policy.
    Keywords: Carbon Emissions, Causality, Globalization
    JEL: A10
    Date: 2017–07–01

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