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on International Trade |
| By: | Montalbano, Pierluigi (University of Roma Tre, University of Sussex); Nenci, Silvia (University of Roma Tre); Pietrobelli, Carlo (, and UNU-MERIT, Maastricht University) |
| Abstract: | This work explores the relationship between exports, Global Value Chains' (GVCs) participation and position, and firms' productivity. To this aim, we combine the most recent World Bank Enterprise Survey in Latin American and Caribbean (LAC) countries with the OECD-WTO trade in value added data. To explore the above relationship we adopt an extended version of the standard Cobb-Douglas output function including indicators of export performance and GVCs. We control for heterogeneity among firms (by country, region, and industry), sample selection, firms' characteristics and reverse causality. Our empirical outcomes confirm the presence of a positive relationship between participation in international activities and firm performance. They also show that both participation in GVCs and position within GVCs matter. These findings have strong policy implications and may help policymakers in choosing the best policy options to enhance the link between GVCs integration and firms' productivity. |
| Keywords: | Firm productivity, Exports, Trade in Value added, Global Value Chains, GCVs, learning by supplying |
| JEL: | F14 F61 D24 L22 O54 |
| Date: | 2017–07–05 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2017030&r=int |
| By: | Nadim Ahmad; Timon Bohn; Nanno Mulder; Marcel Vaillant; Dayna Zaclicever |
| Abstract: | Traditionally, the main source of data used to measure countries’ participation in international production networks or global value chains (GVCs) has been conventional international trade statistics. However, international fragmentation of production has weakened the analytic interpretability of these data as intermediate goods but also services cross borders many times on the way to their final destination. This is often referred to as the double (or multiple)-counting problem of international trade Statistics. This, in turn, has led to the development of a new branch of trade statistics, referred to as Trade in Value-Added (TiVA) providing new insights on GVCs, and corresponding databases, notably the OECD-WTO TiVA database, which provide a measure of international interdependencies through the construction of global input-output tables that show how producers in one country provide goods and/or services to producers and consumers in others. But with the field still relatively new, many users are struggling to fully understand how these new indicators should be used and indeed how they have been constructed. This document is designed to address those difficulties, providing, where appropriate guidance on “dos” and “don’ts”. It also reviews many other typical GVC indicators derived outside of input-output frameworks; recognising that gross measures of trade, and indicators derived from them, remain important and relevant for policy making. |
| Keywords: | global value chain indicators, globalisation indicators, international fragmentation of production, trade in value-added |
| JEL: | C40 F1 M00 |
| Date: | 2017–07–18 |
| URL: | http://d.repec.org/n?u=RePEc:oec:stdaaa:2017/8-en&r=int |
| By: | Pamela Bombarda; Stefania Marcassa (Université de Cergy-Pontoise, THEMA) |
| Abstract: | We examine how the presence of heterogenous multinational rms matters for the aggregate welfare implications of trade by comparing models with only export, intra-firm activity, and pure multination production. We show that extensive mar- gins depend on both supply and demand parameters, and are not longer constant. We use a theoretical comparative static to isolate the additional component of wel- fare associated with intra- rms trade and to show that models of multinational production have new aggregate welfare implications. The model is then calibrated to analyze counterfactual scenarios. We find that truncation through multinational production is associated with the largest welfare gains from liberalization. |
| Keywords: | MNFs, multinational production, intra- rm trade, welfare. |
| JEL: | F12 F23 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ema:worpap:2017-14&r=int |
| By: | Zhaohui Niu; Chang Liu; Saileshsingh Gunessee; Chris Milner |
| Abstract: | This paper analyzes the evolution of the incidence and intensity of non-tariff measures (NTMs). It extends earlier work by measuring protection from NTMs over time from a newly available database and provides evidence on the evolution of NTMs. In particular, building on Kee, Nicita and Olarreaga (2009), this paper estimates the ad valorem equivalents (AVEs) of NTMs for 97 countries at the product level over the period 1997 to 2015. We show that the incidence and the intensity of NTMs were both increasing over this period, with NTMs becoming an even more dominant source of trade protection. We are also able to investigate the evolution of overall protection derived jointly from tariffs and NTMs. The results show that the overall protection level, for most countries and products, has not decreased despite the fall in tariffs associated with multilateral, regional and bilateral trade agreements in recent decades. We also document an increase in overall trade protection during the recent 2008 financial crisis. Overall, this study sheds light on an under-researched aspect of trade liberalization: the proliferation and increase of NTMs. |
| Keywords: | Non-tariff barriers, tariff equivalents, protection JEL Codes: F13, F14 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:not:notgep:17/08&r=int |
| By: | Riccardo Fiorentini (Department of Economics (University of Verona)); Alina Verashchagina (Department of Economics (University of Verona)) |
| Abstract: | This paper investigates the relation between immigration and trade by focusing on Veneto region in Italy. The reference period is 2008-2015, interfering with the economic crisis, thus the results obtained can be time specific. The presence of immigrants in Veneto was constantly on the rise, also during the crisis, although at a lower pace compared to pre-crisis years. The question is which role could this play in ascertaining the stability, if not expansion, of trade relations between the region and the countries of immigrants' origin. The estimates of gravity model suggest a non-linear relationship between the number of immigrants and total exports from (imports to) the host-province to (from) the country of origin, the type of this relation moreover differs by sector of origin of trade. Higher presence of immigrants can potentially induce shifts in the structure of local economy, especially if it is highly dependent on international trade like in the case of Veneto |
| Keywords: | Immigration, Exports, Imports, Gravity model, Dose-response function |
| JEL: | F10 F14 F22 R10 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:ver:wpaper:03/2017&r=int |
| By: | Thomas Kuhn (Department of Economics, Chemnitz University of Technology); Radomir Pestow; Anja Zenker (Department of Economics, Chemnitz University of Technology) |
| Abstract: | In this paper, we discuss the endogenous formation of climate coalitions in the tradition of the issue-linkage literature. In particular, we propose a preferential free trade agreement on which a climate coalition should be built. The basic idea is that the benefits of free trade provide strong incentives for free riders to join the coalition. As a framework, a multi-stage strategic trade model is used in which a country may discourage greenhouse gas emissions by setting an emissions cap effective on a permit market. In addition, a discriminatory import tariff is imposed on dirty goods. However, at the heart of our approach are the trade privileges granted to coalition members shifting the terms of trade favourably without prodiving incentives towards eco-dumping. As a main result, we find that trade liberalisation is much more effective in building climate coalitions than a single-issue environmental agreement. The parametrical simulation of the model in particular shows that participation in joint emission reduction is higher, consumption patterns are more environmentally friendly, and coalitional welfare is improved. As a policy implication, negotiations on climate treaties and free trade arrangements should be integrated. |
| Keywords: | Climate Change, International Environmental Agreements, Free Trade, Issue Linkage, Tradable Permits, Strategic Trade Policy |
| JEL: | Q54 Q56 F18 F15 Q58 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:tch:wpaper:cep011&r=int |
| By: | Esiyok, Bulent; Ugur, Mehmet |
| Abstract: | Foreign direct investment (FDI) flows into Vietnam have increased significantly in recent years and are distributed unequally between provinces. This paper aims to investigate the locational determinants of FDI in 62 Vietnamese provinces and whether spatial dependence is a significant factor that both researchers and policy-makers should take into account. We report that province-specific percapita income, secondary education enrolment, labor costs, openness to trade, and domestic investment affect FDI directly within the province itself and have indirect effects on FDI in neighboring provinces. The direct and indirect effects coexist with spill-over effects and spatial dependence between provinces. Our findings indicate that FDI in Vietnam reflects a combination of complex vertical and export platform motivations on the part of foreign investors; and an agglomeration dynamics that may perpetuate the existing regional disparities in the distribution of FDI capital between provinces. |
| Keywords: | Foreign direct investment, spatial dependence, agglomeration, Vietnam |
| JEL: | C31 F23 R11 |
| Date: | 2015–11–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:80254&r=int |
| By: | Kim, Jong Duk (Korea Institute for International Economic Policy); Cho, Moon hee (Korea Institute for International Economic Policy); Eom, Jun Hyun (Korea Institute for International Economic Policy); Chung, Min-Chirl (Korea Institute for International Economic Policy) |
| Abstract: | 본 보고서는 한국이 체결한 자유무역협정(FTA)을 반영하여 평가한 한국의 서비스 분야 규제완화가 한국의 서비스업과 제조업의 외국인직접투자(FDI) 유입에 미치는 영향을 연구하였다. 본 연구를 통하여 다음과 같은 사실을 발견하였다. 첫째, 전반적으로 한국의 FDI 유입은 세계적 FDI의 흐름에 부합하는 것으로 나타났다. 선진국으로부터의 FDI 유입이 압도적이다. 미국과 일본으로부터의 FDI 유입이 큰 비중을 차지하는 가운데 유럽 국가들로부터의 FDI 유입도 중요한 비중을 차지한다. 경제 규모가 큰 중국으로부터의 유입 증가도 한 특징이다.다음으로 자본집약도가 높은 전기전자, 화공, 기계장비 등의 제조업과 금융, 유통, 사업서비스 등의 FDI 유입 비중이 높았다. 아울러 2000년 이후 한국은 서비스 FDI 유입이 제조업 FDI 유입에 비해 두 배 가까이 크다는 것도 특징이라하겠다. 반면 대부분의 선진국에서는 인수합병(M&A) 위주의 FDI 흐름이 나타나는데 한국은 아직 M&A의 비중이 낮다. 둘째, 경제협력개발기구(OECD) 서비스무역제한지수(STRI)를 한국이 체결한 2015년까지의 FTA를 반영하여 연도별로 새로 도출하였다. 반영 결과 한국은 FTA를 통해 법률·회계·통신 분야에서 최혜국 대우 기준에 비해 추가적인 규제완화와 개방이 이루어졌으며 그 외의 분야에서는 STRI상의 개선은 없는 것으로 나타났다. 셋째, 서비스 규제완화가 세계 38개국으로부터 한국으로의 외국인직접투자유입에 어떠한 영향을 미치는지 분석하였다. 서비스업 분야의 경우 사전에 예상한 바와 같이 서비스 규제완화가 서비스업 분야의 외국인직접투자 유입에 긍정적인 역할을 한 것으로 나타났다. 한편 서비스 규제완화가 제조업 분야의 외국인직접투자 유입에도 긍정적인 역할을 한 것으로 분석되었는데 이는 제3장 에서 논의한 바와 같이 서비스 규제완화가 전 산업에 걸쳐 기업 운영 시 발생하는 고정 간접비용을 낮추었기 때문으로 판단된다. English Abstract: This report investigates the reduction of regulatory restrictiveness in services sectors in Korea using recent free trade agreements in effect and studies its impact on FDI inflows. The research outcomes provide three main findings as follows. First, FDI inflows of Korea closely follow the trend of global FDI flows. FDI inflows to Korea from developed economies have appeared dominant; FDI inflows from the U.S., Japan and European economies account for the major share. The increase of FDI inflows from China is significant. Moreover, the FDI inflow shares of capital-intensive industries such as electronic, chemical, and machinery in manufacturing and financial, distribution, and business in services are also large. The fact that FDI inflows in services have become two times larger than those in manufacturing since early 2000’s is noteworthy. In the meantime, while FDI flows in forms of M&A in most developed economies, M&As as a form of FDI are still less prevalent in Korea. Second, Korea’s services trade restrictiveness indices provided by the OECD are updated and recalculated reflecting the FTAs recently put in force. Further liberalization through recent FTAs in force is identified in legal, accounting and telecommunications services. Third, this report analyzes the impact of services liberalization on FDI inflows in Korea. As suggested in theoretical predictions, further services liberalization through FTAs plays a positive role in FDI inflows in Korea. Such outcomes are derived not only in services sectors but in manufacturing sectors as well. |
| Keywords: | Service Sector; FDI Inflow; STRI |
| Date: | 2016–12–30 |
| URL: | http://d.repec.org/n?u=RePEc:ris:kieppa:2016_005&r=int |
| By: | Kimberly Beaton; Aliona Cebotari; Xiaodan Ding; Andras Komaromi |
| Abstract: | The paper applies a network analysis framework to analyze the regional and global integration of Latin American and Caribbean (LAC) countries. We compare network-based measures of trade integration to conventional measures, decomposing integration along several dimensions to better understand the sources of trade connectivity and their impact on growth. The paper finds that LAC countries are relatively well integrated in terms of links to diversified markets, but the strength of those links is weak. Comparing trade integration to predictions from gravity models, we find many LAC countries have significant scope to improve connectivity and increase their roles in regional and world trade networks. |
| Date: | 2017–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:17/148&r=int |
| By: | Lee, Sooyoung (Korea Institute for International Economic Policy) |
| Abstract: | The last decade of the world trade has been marked by an unprecedented collapse, quick recovery, slowdown, another drop, and recovery. To study cyclical and structural aspects of the recent trend of trade, I use both aggregate and disaggregated trade statistics of a small open economy, South Korea, whose economic success and growth have been heavily dependent on exports. The aggregate trend of the country is surprisingly similar to that of the world, which is why the trend of Korea's export is called a proxy for the world. I show that while the last drop of trade after 2015 has cyclical aspects, there is evidence that the continued slowdown from 2012 is structural: (1) the so-called 'China factor' is found in the analysis of trade-income elasticity of the world and China for imports from Korea. (2) The bilateral trade barriers between Korea and its important trading partners are universally tightening. I also show that the firm sizes, destination countries, and the mode of transactions affect disaggregated trade flows during the slowdown periods. It is advisable to diversify main export products to lower the effect of oil prices on export prices and to strengthen the cooperation with ASEAN countries, whose trade barriers have exceptionally diminished throughout the last decade. |
| Keywords: | The Great Trade Collapse; Trade Slowdown; Trade Elasticity; Trade Barriers; Korea |
| Date: | 2017–06–15 |
| URL: | http://d.repec.org/n?u=RePEc:ris:kiepwp:2017_003&r=int |
| By: | Jesper Lindé; Andrea Pescatori |
| Abstract: | We study the robustness of the Lerner symmetry result in an open economy New Keynesian model with price rigidities. While the Lerner symmetry result of no real effects of a combined import tariff and export subsidy holds up approximately for a number of alternative assumptions, we obtain quantitatively important long-term deviations under complete international asset markets. Direct pass-through of tariffs and subsidies to prices and slow exchange rate adjustment can also generate significant short-term deviations from Lerner. Finally, we quantify the macroeconomic costs of a trade war and find that they can be substantial, with permanently lower income and trade volumes. However, a fully symmetric retaliation to a unilaterally imposed border adjustment tax can prevent any real or nominal effects. |
| Date: | 2017–07–07 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:17/151&r=int |
| By: | Giulia Brancaccio; Myrto Kalouptsidi; Theodore Papageorgiou |
| Abstract: | We leverage detailed data on vessel movements and shipping contracts to shed new light on world trade costs and trade flows. The data reveal new facts about shipping patterns, and motivate us to build a framework modeling the behavior of exporters and ships. Our framework has two novel features: (i) trade costs are endogenous and determined jointly with trade flows; as a result, they depend on the entire network of countries; (ii) search frictions between exporters and ships can limit trade. We estimate the model and recover flexibly the matching process between ships and exporters. Endogenous trade costs provide a novel link to understand trade patterns and we showcase this by considering the impact of (i) an improvement in shipping efficiency; (ii) a slow-down in China; (iii) the opening of the Northwest Passage; (iv) search frictions. |
| JEL: | F1 F14 L0 L91 R4 R41 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23581&r=int |
| By: | Constant, Amelie F. (Princeton University); Zimmermann, Klaus F. (UNU-MERIT, and Maastricht University) |
| Abstract: | This paper examines the migration and labour mobility in the European Union and elaborates on their importance for the existence of the EU. Against all measures of success, the current public debate seems to suggest that the political consensus that migration is beneficial is broken. This comes with a crisis of European institutions in general. Migration and labour mobility have not been at the origin of the perceived cultural shift. The EU in its current form and ambition could perfectly survive or collapse even if it solves its migration challenge. But it will most likely collapse, if it fails to solve the mobility issue by not preserving free internal labour mobility and not establishing a joint external migration policy. |
| Keywords: | labour mobility, migration, European Union, refugees |
| JEL: | D01 D02 D61 F02 F16 F22 F66 |
| Date: | 2017–03–29 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2017018&r=int |
| By: | László Békési (Magyar Nemzeti Bank (Central Bank of Hungary)); Lorant Kaszab (Magyar Nemzeti Bank (Central Bank of Hungary)); Szabolcs Szentmihályi (Magyar Nemzeti Bank (Central Bank of Hungary)) |
| Abstract: | In this paper we adopt the Hungarian version of the EAGLE (Euro Area GLobal Economy) model. The version of the EAGLE model used in this paper allows for the high import content of export a typical feature of small open economies such as Hungary. We study the e/ects of four globally important shocks on Hungary: i) a slowdown of the Chinese economy, ii) more restrictive US monetary policy, iii)areductioninoilprices, andiv)more protectionist US trade policy. We found these policies to have non-negligible indirect e/ects (beyond the relatively small direct ones) on Hungary mostly due to the workings of the shock to the eurozone which is our main trade partner. |
| Keywords: | Multi-country DSGE, price and wage rigidity, EAGLE model, trade matrix, import content of export, local currency pricing, monetary policy shock, consumption preference shock, markup-shock. |
| JEL: | E12 E13 E52 E58 F11 F41 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:mnb:wpaper:2017/7&r=int |
| By: | Borraz, Fernando; Zipitría, Leandro |
| Abstract: | We propose a decomposition of the border effect in international trade by controlling for differences in competition in local markets. An extension of the Hotelling (1929) model shows that the availability of local substitutes increases price dispersion and biases the estimation of the border effect. We test these predictions using detailed price database at the supermarket level for Uruguay. This stylized setting makes it possible to control for other potential explanations of the border effect (i.e., exchange rates, taxes, or transport costs). We find that for those goods without local competitors the border estimation increases substantially, while for those goods that do have local competitors the effect of border is negligible. As the literature suggests, results should be even larger for different countries than for different cities. The methodology developed in the paper allows a finer explanation for understanding the relevance of borders in price dispersion. |
| Keywords: | border effect,price dispersion,competition |
| JEL: | F14 F15 L13 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:87&r=int |
| By: | Falvey, Rod (Bond Business School, Bond University); Foster-McGregor, Neil (UNU-MERIT, and Maastricht University) |
| Abstract: | Bilateral Investment Treaties (BITs) are an increasingly used policy instrument to encourage FDI inflows, particularly inflows into developing countries. In this paper we estimate a gravity model of FDI flows from a sample of OECD countries to a broader sample of developing economies, examining the impact of BITs on these flows. BITs are signed between highly heterogeneous country-pairs, with important differences found in terms of the institutional and economic distance between BIT signatories. These differences may help explain the mixed results on the effects of BITs on FDI flows in the existing literature, with our exploration of non-linearities in this relationship suggesting that the effects of BITs are increasing in the difference in GDP and GDP per capita between source and host. BITs appear to have no impact upon FDI flows for country-pairs that are too dissimilar in terms of the strength of their political institutions. |
| Keywords: | Foreign Direct Investment, FDI Inflows, Developing countries, Economic development, Bilateral Investment Treaties, Heterogeneous Effects |
| JEL: | C21 F21 O16 |
| Date: | 2017–06–19 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2017027&r=int |
| By: | Olga Timoshenko (The George Washington University); Daniel Dias (Board of Governors of the Federal Reserv); Paulo Bastos (The World Bank) |
| Abstract: | We document new facts about the evolution of firm performance and prices in international markets, and propose a theory of firm dynamics emphasizing the interaction between learning about demand and quality choice to explain the observed patterns. Using data from the Portuguese manufacturing sector, we find that: (1) firms with longer spells of activity in export destinations tend to ship larger quantities at lower prices; (2) older exporters tend to use more expensive inputs; (3) revenue growth within destinations (conditional on initial size) tends to decline with market experience; and (4) input prices and quantities tend to increase with revenue growth within firms. We develop a model of endogenous input and output quality choices in a learning environment that is able to account for these patterns. Counterfactual simulations reveal that minimum quality standards on traded goods reduce welfare by lowering entry in export markets and reallocating resources from old and large towards young and small firms. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed017:179&r=int |
| By: | Alessandro Borin (Bank of Italy); Virginia Di Nino (Bank of Italy, European Central Bank); Michele Mancini (Bank of Italy); Massimo Sbracia (Bank of Italy) |
| Abstract: | In the five years 2011-2015 global trade fell short of expectations to a much larger extent than global GDP. We show that two key features of real trade flows - their high volatility and their procyclicality - are the cause behind the cyclicality of the income elasticity of trade. This property implies that when real GDP growth is positive but below its long-run trend, then the income elasticity of trade is also below its own long-run trend. Therefore, when real GDP growth turns out to be weaker than expected, the forecast error on trade volumes is amplified by the fact that the income elasticity of trade also happens to be lower than predicted. We then analyze the implications of our findings for cross-country differences in the elasticity, the role played by long-run and cyclical factors in the weakness of trade in the aftermath of the Great Recession, and the accuracy of existing trade forecasts, which we significantly improve by exploiting real-time data on business conditions. |
| Keywords: | global trade, trade elasticity, trade forecasts, trade slowdown, international business cycle. |
| JEL: | E32 F1 F4 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1126_17&r=int |
| By: | Christopher Sands |
| Keywords: | Trade and International Policy |
| JEL: | F1 |
| URL: | http://d.repec.org/n?u=RePEc:cdh:ebrief:261&r=int |
| By: | Rafael Dix-Carneiro; Brian K. Kovak |
| Abstract: | We use both longitudinal administrative data and cross-sectional household survey data to study the margins of labor market adjustment following Brazil's early 1990s trade liberalization. We document how workers and regional labor markets adjust to trade-induced changes in local labor demand, examining various adjustment margins, including earnings and wage changes; interregional migration; shifts between tradable and nontradable employment; and shifts between formal employment, informal employment, and non-employment. Our results provide insight into the regional labor market effects of trade, and have important implications for policies that address informal employment and that assist trade-displaced workers. |
| JEL: | F14 F16 J46 J61 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23595&r=int |
| By: | Simplice Asongu (Yaoundé/Cameroun) |
| Abstract: | This study investigates the effect of globalisation on governance in 51 African countries for the period 1996-2011. Four bundled governance indicators and four globalisation (political, economic, social and general) variables are used. The empirical evidence is based on Instrumental Variable Quantile Regressions. The motivation for the estimation technique is that blanket governance-globalisation policies are not likely to succeed unless they are contingent on initial levels of governance and tailored differently across countries with low, intermediate and high levels of governance. The following findings are established. First, globalisation promotes good governance. Second, for the most part, the effect of globalisation is higher in terms of magnitude in the bottom quantiles of the political, institutional and general governance distributions. Third, the impact of globalisation is overwhelmingly higher in terms of magnitude in the top quantiles of the economic governance distribution. |
| Keywords: | Africa; Governance; Globalization |
| JEL: | F10 F30 I30 O10 O55 |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:agd:wpaper:17/026&r=int |
| By: | Brancaccio, Giulia; Kalouptsidi, Myrto; Papageorgiou, Theodore |
| Abstract: | We leverage detailed data on vessel movements and shipping contracts to shed new light on world trade costs and trade flows. The data reveal new facts about shipping patterns, and motivate us to build a framework modeling the behavior of exporters and ships. Our framework has two novel features: (i) trade costs are endogenous and determined jointly with trade flows; as a result, they depend on the entire network of countries; (ii) search frictions between exporters and ships can limit trade. We estimate the model and recover flexibly the matching process between ships and exporters. Endogenous trade costs provide a novel link to understand trade patterns and we showcase this by considering the impact of (i) an improvement in shipping efficiency; (ii) a slow-down in China; (iii) the opening of the Northwest Passage; (iv) search frictions. |
| Keywords: | Geography; matching function estimation; search frictions; shipping; Trade Costs; Trade Flows; trade imbalances; Transportation |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12141&r=int |
| By: | William Hanlon (UCLA) |
| Abstract: | Can temporary initial input cost advantages have a long-run impact on the spatial distribution of production and trade? I study this question in the context of the international shipbuilding industry during the transition from wood to metal ship production (1850-1912). Input price advantages gave Britain an early lead in metal shipbuilding, while the U.S. and Canada specialized in wood ship production. However, after 1890, Britain's initial price advantages disappeared. By comparing production patterns on the Atlantic Coast of North America, which faced British competition, to the Great Lakes, which were isolated from competition, I show that British competition substantially reduced the ability of North American producers to transition to metal ship production. I also exploit additional sources of variation to show how government protection and support moderated these effects for some Atlantic Coast producers, allowing them to survive the demise of wood shipbuilding. Finally, I provide evidence that the mechanism driving the persistence of Britain's lead was the development of large pools of skilled craft workers. These results shed light on the role of past conditions in influencing current production and trade patterns and with implications for the use of industrial policy and tariff protection. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed017:140&r=int |
| By: | Pascalau, Razvan; Qirjo, Dhimitri |
| Abstract: | This paper uses data on emissions per capita of ten air pollutants and municipal waste to investigate the potential impact of the Transatlantic Trade and Investment Partnership (TTIP) on the empirical validity of the Environmental Kuznets Curve (EKC). Using a dataset of the twenty-eight EU members and of the U.S. over a twenty-five year period, the results in this paper provide robust and statistically significant evidence consistent with the EKC argument for CO2, CH4, and HFCs/PFCs/SF6, respectively. Further, the paper finds a monotonically increasing relationship between income per capita and emissions per capita in the cases of GHGs, SF6, and NO2, respectively. In addition, this paper finds that the EKC’s turning point values of each pollutant are sensitive to the econometric approach and/or to the employed control variables. Finally, the study reports statistically significant evidence suggesting a U-shaped relationship between emissions per capita of SO2 or SOx and income per capita. |
| Keywords: | Free Trade; Environmental Kuznets Curve; TTIP. |
| JEL: | F18 F53 Q56 |
| Date: | 2017–07–14 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:80192&r=int |
| By: | Gustavo Adler; Carolina Osorio Buitron |
| Abstract: | Monetary policy entails demand augmenting and demand diverting effects, with its impact on the trade balance—and spillovers to other countries—depending on the relative magnitude of these opposing effects. Using US data, and a sign-restricted structural VAR identification strategy, we investigate how monetary policy shocks affects the trade balance, shedding light on the importance of the two effects. Overall, the results indicate that monetary policy has a meaningful impact on the trade balance. A monetary loosening (tightening) leads to a strengthening (weakening) of the overall trade balance, indicating that, on average, demand diversion dominates. This effect of monetary policy on trade is revealed in full when distinguisging between trading partners with fixed exchange rates—for which only demand augmenting operates—and flexible exchange rates—for which both effects operate. We also explore spillover differences between conventional and unconventional monetary policy, as well as changes in spillovers in the postcrisis period (due to an impaired monetary transmission mechanism). While our results suggest that monetary policy comes with spillovers through trade, they should not be interpreted as evidence against the use of this policy instrument as such. From a global perspective, optimal monetary policy should be assessed in conjunction with deployment of other policy measures, inclluding the ability of recipient countries to deploy their own policy measures to offset undesirable spillovers. |
| Date: | 2017–06–28 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:17/142&r=int |
| By: | Salamat Ali |
| Abstract: | This article uses a novel dataset from Pakistan for the recent period (2000–2013) to examine the effects of domestic currency depreciation on agricultural exports and investigate various channels of influence. It conducts an integrated analysis of prices and quantities, together with firm-level trade flows, by using the exchange rates of the actual currencies of invoicing at the transaction level. The study finds that exchange rate movement positively affects both intensive and extensive margins (IM and EM). The increase in the IM operates mainly through the channel of prices, whereas the response of quantities is relatively smaller. Moreover, depreciation improves the EM of firms and products and expands the client base within existing markets. These responses vary widely across products, markets, exporting experience, exchange rate regimes and invoicing currencies. |
| Keywords: | Firms in agriculture, Exchange rate, Currency of transaction, Trade margins JEL Codes: F13, F14, O13, O24, Q17 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:not:notgep:17/09&r=int |
| By: | VENEZIANI, Roberto; YOSHIHARA, Naoki |
| Abstract: | An axiomatic analysis of the concept of unequal exchange (UE) between countries is developed in a dynamic general equilibrium model that generalises Roemer’s [22] economy with a global capital market. The class of UE definitions that satisfy three fundamental properties - including a correspondence between wealth, class and UE exploitation status - is completely characterised. It is shown that this class is nonempty and a definition of UE exploitation between countries is proposed, which is theoretically robust and firmly anchored to empirically observable data. The full class and UE exploitation structure of the international economy is derived in equilibrium. |
| Keywords: | Exploitation, classes, unequal exchange, international economy |
| JEL: | D63 F02 B51 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:hit:hiasdp:hias-e-49&r=int |
| By: | Anthony Edo |
| Abstract: | This paper investigates the dynamics of wage adjustment to an exogenous increase in labor supply by exploiting the sudden and unexpected inflow of repatriates to France created by the independence of Algeria in 1962. I track the impact of this particular supply shift on the average wage of pre-existing native workers across French regions in 1962, 1968 and 1976. I find that regional wages decline between 1962 and 1968, before returning to their pre-shock level 15 years after. While regional wages recovered, this particular supply shock had persistent distributional effects. By increasing the relative supply of high educated workers, the inflow of repatriates contributed to the reduction of wage inequality between high and low educated native workers over the whole period considered (1962-1976). |
| Keywords: | Labor Supply Shock,;Wages;Immigration;Natural Experiment. |
| JEL: | F22 J21 J61 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:cii:cepidt:2017-13&r=int |
| By: | Jean-Pascal Bassino; Pablo Jensen; Matteo Morini |
| Abstract: | Network analysis techniques remain rarely used for understanding international management strategies. Our paper highlights their value as research tool in this field of social science using a large set of micro-data (20,000) to investigate the presence of networks of subsidiaries overseas. The research question is the following: to what extent did/do global Japanese business networks mirror organizational models existing in Japan? In particular, we would like to assess how much the links building such business networks are shaped by the structure of big-size industrial conglomerates of firms headquartered in Japan, also described as HK. The major part of the academic community in the fields of management and industrial organization considers that formal links can be identified among firms belonging to HK. Miwa and Ramseyer (Miwa and Ramseyer 2002; Ramseyer 2006) challenge this claim and argue that the evidence supporting the existence of HK is weak. So far, quantitative empirical investigation has been conducted exclusively using data for firms incorporated in Japan. Our study tests the Miwa-Ramseyer hypothesis (MRH) at the global level using information on the network of Japanese subsidiaries overseas. The results obtained lead us to reject the MRH for the global dataset, as well as for subsets restricted to the two main regions/countries of destination of Japanese foreign investment. The results are robust to the weighting of the links, with different specifications, and are observed in most industrial sectors. The global Japanese network became increasingly complex during the late 20th century as a consequence of increase in the number of Japanese subsidiaries overseas but the key features of the structure remained rather stable. We draw implications of these findings for academic research in international business and for professionals involved in corporate strategy. |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1707.05699&r=int |