nep-int New Economics Papers
on International Trade
Issue of 2017‒10‒15
57 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Going It Alone in the Asia-Pacific: Regional Trade Agreements Without the United States By Peter A. Petri; Michael G. Plummer; Shujiro Urata; Fan Zhai
  2. The Role of Standards in North-South Trade: The Case of Agricultural Exports from Sub-Saharan African Countries to the EU By Susanne Fricke; Geoffrey Chapman
  3. The Growth Dynamics of New Export Entrants in Kenya: a Survival Analysis By Peter W. Chacha; Lawrence Edwards
  4. The interconnections between services and goods trade at the firm-level By Andrea Ariu; Holger Breinlich; Gregory Corcos; Giordano Mion
  5. Promoting Coherence between PTAs and the WTO through Systemic Integration By Pamela Apaza Lanyi; Armin Steinbach
  6. The Impact of Trade on Inequality in Developing Countries By Nina Pavcnik
  7. The contribution of services trade policies to connectivity in the context of aid for trade By Roy, Martin
  8. Shield the US from Imports! – GDP Impacts on Finland and Other European Union Member States By Ali-Yrkkö, Jyrki; Kuusi, Tero
  9. Re-estimating the effects of stricter standards on trade: endogeneity matters By Anirudh Shingal; Malte Ehrich; Liliana Foletti
  10. The role of foreign banks in trade By Claessens, Stijn; Hassib, Omar; van Horen, Neeltje
  11. Foreign Ownership and the Export and Import Propensities of Developing-Country Firms By Boddin, Dominik; Raff, Horst; Trofimenko, Natalia
  12. Trade Policy Uncertainty and the Structure of Supply Chains By Peter Schott; Justin Pierce; Georg Schaur; Sebastian Heise
  13. Trade Integration in Colombia: A Dynamic General Equilibrium Study with New Exporter Dynamics By Oscar Avila; George Alessandria
  14. Rules of Origin as Non-Tariff Measures: Towards Greater Regulatory Convergence By Bernard Hoekman; Stefano Inama
  15. Integrating Africa: Some Trade Policy Research Priorities and Challenges By Bernard Hoekman; Dominique Njinkeu
  16. One-off Export Events By Geishecker, Ingo; Schröder, Philipp; Sørensen, Allan
  17. Firm heterogeneity and aggregate business services exports : Micro evidence from Belgium, France, Germany and Spain By Andrea Ariu; Elena Biewen; Sven Blank; Guillaume Gaulier; María Jesus González,; Philipp Meinen,; Daniel Mirza; Cesar Martín,; Patry Tello
  18. The Impact of FTAs on Procurement Behavior of Japanese Firms' Overseas Affiliates By URATA Shujiro; KATO Atsuyuki
  19. The Imact of Brexit on Foreign Investment and Production By Andrea Waddle; Ellen McGrattan
  20. American divergence : lost decades and Emancipation collapse in Latin American and the Caribbean 1820-1870 By Tena Junguito, Antonio; Federico, Giovanni
  21. Services Trade Policy and Sustainable Development By Matteo Fiorini; Bernard Hoekman
  22. Economic Governance, Regulation and Services Trade Liberalization By Matteo Fiorini; Bernard Hoekman
  23. Import Competition and Vertical Integration: Evidence from India By Vencappa, Dev; Stiebale, Joel
  24. International Transfer Pricing and Tax Avoidance : Evidence from Linked Trade-Tax Statistics in the UK By Li Liu; Tim Schmidt-Eisenlohr; Dongxian Guo
  25. Wage Premium of Exporting Plants in Japan: Do plant and firm size matter? By ITO Koji
  26. Free Trade Agreements, Customs Unions In Disguise? By Teti, Feodora; Felbermayr, Gabriel; Yalcin, Erdal
  27. Effects of Trade Liberalization on the Gender Wage Gap: Evidences from Panel Data of the Indian Manufacturing Sector By Manabu Furuta; Prabir Bhattacharya; Takahiro Sato
  28. Wholesalers, Indirect Exports, Geography, and Economies of Scope: Evidence from firm transaction data in Japan By ITO Tadashi; NAKAMURA Ryohei; MORITA Manabu
  29. Trade Liberalization, Growth, and FDI: A Structural Estimation Framework By Larch, Mario; Anderson, James E.; Yotov, Yoto V.
  30. Washington Slept Here: How Donald Trump Caught the Politicians Napping on Trade By Craig VanGrasstek VanGrasstek
  31. Agricultural Trade Reform, Reallocation and Technical Change: Evidence from the Canadian Prairies By Brown, Mark; Ferguson, Shon; Viju, Crina
  32. Economics and Politics of International Investment Agreements By Henrik Horn; Thomas Tangerås
  33. TPP, American National Security, and Chinese SOEs By Raj Bhala
  34. On the relationship between the breadth of PTAs and trade flows By Falvey, Rod; Foster-McGregor, Neil
  35. 'Distance from the core' and new export survival: Evidence from Chilean exporters By Daniel Goya; Andrés Zahler
  36. Trade in Commodities and Emerging Market Business Cycles By Hakon Tretvoll; Fernando Leibovici; David Kohn
  37. Trading in Turbulent Times: A short Narrative of India’s External Trade in Recent Times By Kumar, Dr.B.Pradeep
  38. Aid for Trade and International Transactions in Goods and Services By Bernard Hoekman; Anirudh Shingal
  39. State Ownership and transparency in Foreign Direct Investment: Loose-Lipped Leviathan? By Robert Weiner; Anthony Cannizzaro
  40. Multinational firms and the extractive sectors in the 21st century: Can they drive development? By Narula, Rajneesh
  41. WTO and SOEs: Overview of Article XVII and related provisions of the GATT 1994 By Andrea Mastromatteo
  42. Export innovation: The role of new imported inputs and multinationality By Castellani, Davide; Fassio, Claudio
  43. Free Markets, State Involvement, and the WTO: Chinese State Owned Enterprises (SOEs) in the Ring By Petros C. Mavroidis; Merit E. Janow
  44. Product Churning, Reallocation, and Chinese Export Growth By Hu, Zhongzhong; Rodrigue, Joel; Tan, Yong; Yu, Chunhai
  45. Trade Agreements, Regulatory Sovereignty and Democratic Legitimacy By Bernard Hoekman; Charles Sabel
  46. Economics of WTO plus: No to Conflict and Yes to Regionalism By Mamoon, Dawood
  47. The Import of “cultural goods” and emigration: an unexplored relation By Mauro Lanati; Alessandra Venturini
  48. Global value chains, national innovation systems and economic development By Fagerberg, Jan; Lundvall, Bengt-Åke; Srholec, Martin
  49. Firm Reorganization, Chinese Imports, and US Manufacturing Employment By Ildikó Magyari
  50. Gender Gap is a Trade Trap: The Road Ahead for International Development By Mamoon, Dawood
  51. Acquisitions, Markups, Efficiency, and Product Quality: Evidence from India By Stiebale, Joel; Vencappa, Dev
  52. Do Investment and Innovation Boost Export? An Analysis on European Firms By OA Carboni; G. Medda
  53. Liberalization of European migration and the immigration of skilled people to Sweden By Ejermo, Olof; Zheng, Yannu
  54. Macedonian Exports By Vladimir Gligorov
  55. NMEs and The Double Remedy Problem By Thomas J. Prusa
  56. Was Brexit Caused by the Unhappy and the Old? By Liberini, Federica; Oswald, Andrew J; Proto, Eugenio; Redoano, Michela
  57. The fallacy of the globalization trilemma: reframing the political economy ofglobalization and implications for democracy By Thomas I. Palley

  1. By: Peter A. Petri (Peterson Institute for International Economics); Michael G. Plummer (Johns Hopkins University); Shujiro Urata (Waseda University); Fan Zhai (Former Managing Director, China Investment Corporation)
    Abstract: The withdrawal of the United States from the Trans-Pacific Partnership (TPP) in early 2017 led the remaining 11 countries in that trade and investment agreement to explore alternative ways to sustain economic integration in the Asia-Pacific region. This Working Paper shows that, without the United States, these 11 countries can achieve significant gains from high-quality, TPP-like agreements among themselves and from what might have to be a less rigorous but wider agreement in a separate, 16-member Asian trade negotiation, the Regional Comprehensive Economic Partnership (RCEP). Either of these multilateral options would yield benefits greater than those that would flow from bilateral agreements between individual countries and the United States alone, and gains from such accords could grow over time. For example, expanding the TPP without the United States to five other Asia- Pacific economies, all of which have expressed interest in the TPP in the past, would yield global income gains that rival those expected from the original TPP that included the United States, and the gains are even larger for some members. The United States, meanwhile, would suffer losses from such arrangements in two ways: first, because it would forego the benefits that would otherwise accrue from the relatively large TPP agreement, and second, because the new Asia-Pacific agreements would reduce US exports to the region as countries shift their trade to competitors of the United States. In the longer run, a new Asia-Pacific agreement or agreements would keep trade liberalization on the global agenda and likely attract further interest from large partners, including Europe. Eventually, the United States might observe that it is losing out and change its mind about joining these larger trade blocs.
    Keywords: Trade, TPP, RCEP, Asia-Pacific
    JEL: F15 F14 F13 F17
    Date: 2017–10
  2. By: Susanne Fricke (Friedrich Schiller University Jena, Jena, Germany); Geoffrey Chapman (The University of Nottingham, Nottingham, UK)
    Abstract: The impact of product and production standards on trade flows is of critical relevance for developing countries aiming at a higher participation in world trade. While economic theory suggests that the effect of standards on trade can entail two opposing forces, acting either as non-tariff barrier to trade or as a competitive advantage on the world market, empirical evidence on the trade effect of standards remains ambiguous. We contribute to the literature by scrutinizing a set of 132 international agricultural standards, and their impact on export flows of the four main agricultural export products from Sub-Saharan African (SSA) countries to the EU. Our analysis includes cocoa, fruits, vegetables and coffee. We apply the gravity model of trade via the Poisson Pseudo Maximum Likelihood (PPML) estimator to both an aggregate estimation of the four product groups, as well as a product-specific estimation. The aggregate estimation yields a twofold result on the impact of standards on export flows: In a given year, the introduction of any of the standards in the EU leads to a significant reduction in exports, while the count of the standards in place in the EU has a significantly positive effect. This result is less distinct for the product-specific estimation, yielding both significantly positive and significantly negative impacts when analysing the impact of the 132 standards separately. Additionally, our results show that the SSA producers' 'ability to comply' with international standards positively impacts agricultural export flows. Moreover, we find a positive interaction between the effect of the introduction of any of the standards and the 'ability to comply'. This implies that a high 'ability to comply' with international standards can mitigate negative effects, or promote positive effects, on SSA export flows in instances when a standard is introduced in the EU.
    Keywords: Agricultural Trade, International Standards, Gravity Models
    JEL: F14 Q17
    Date: 2017–10–04
  3. By: Peter W. Chacha; Lawrence Edwards
    Abstract: This paper uses firm-level transaction dataset from Kenya to examine the entry and growth dynamics of new exporters in international markets and the factors associated with survival in foreign markets. The findings show that for the new exporters, once their trade relationship manages to survive the initial year of entry, it grows and expands overtime contributing substantially to the nation’s exports. However, survival beyond the first year is only for a few. Firm export behaviour such as a large initial trade value of a transaction, exporting differentiated products, exporting a larger number of products and serving a large number of destination countries plays a significant role in the survival of exporters in international markets.
    Keywords: Survival of new exporters, Export duration, Kenya
    JEL: F10 F14 D22
    Date: 2017–09
  4. By: Andrea Ariu (Economics Department, LMU University Munich, Germany; IFO, Germany; CRENOS); Holger Breinlich (School of Economics, University of Nottingham, UK, CEP, UK and CEPR, UK); Gregory Corcos (CREST and Economics Department, Ecole polytechnique, France.); Giordano Mion (Department of Economics, University of Sussex, UK; CEP, UK; CEPR, UK and CESifo, Germany.)
    Abstract: In this paper we study how international trade in goods and services interact at the firm level. Using a rich dataset on Belgian firms during the period 1995-2005, we show that: i) firms are much more likely to source services and goods inputs from the same origin country rather than from different ones; ii) increases in barriers to imports of goods reduce firm-level imports of services from the same market, and conversely. We build upon a discrete-choice model of goods and services input sourcing that can reproduce these facts to design our econometric strategy. The results suggest that a liberalization of service trade has direct and sizable effects on goods trade and vice-versa. Moreover, sourcing goods and services from the same origin brings substantial complementarities to both.
    Keywords: Trade in Services; Trade in Goods; Complementarity; Firm-level Analysis; Discrete Choice Models.
    JEL: F10 F13 F14 L60 L80
    Date: 2017–10
  5. By: Pamela Apaza Lanyi; Armin Steinbach
    Abstract: The proliferation of preferential trade agreements (PTAs) has resulted in a heterogeneous re-gime of trade rules applicable among WTO Members. The interplay between PTA and WTO rules has several implications, including risks of legal tensions and incoherence between both regimes, as well as between overlapping networks of PTAs. Consequently, adjudicative bod-ies both under regional PTAs and global WTO dispute settlement mechanisms are increasingly confronted with taking account of alien legal sources for the purpose of interpretation. Co-herence between PTA and WTO rules thus depends on the degree to which adjudication at both levels – PTA and WTO – allows integration of alien legal sources. This paper explores the role of systemic integration as a method of interpretation under public international law allowing adjudicating bodies to deal with possible tensions and promote coherence within international trade law. It traces the various approaches to systemic integration pertaining to international trade rules as employed under both WTO and PTA adjudication. While systemic integration offers a public international law tool for reducing fragmentation of substantial law, there is heterogeneity in adjudicative practice regarding the readiness to employ systemic in-tegration for the purpose of interpretation. The article identifies possible avenues through which future dispute settlement could exploit the potential for coherence through systemic integration, as well as elements which could be taken into consideration when integrating multilateral and preferential rules. It also provides insight on how PTAs could facilitate the application of systemic integration by adjudicating bodies at both levels.
    Keywords: International trade, dispute settlement, regional agreements, interpretation, coherence
    Date: 2017–03
  6. By: Nina Pavcnik
    Abstract: This paper assesses the current state of evidence on how international trade shapes inequality and poverty through its influence on earnings and employment opportunities. While the focus is mainly on developing countries, in part because we have more evidence in that context, the discussion draws parallels to the empirical evidence from developed countries. The paper also discusses perceptions about international trade in over 40 countries at different levels of development, including perceptions on trade’s overall benefits for the economy, trade’s effect on the livelihood of workers through wages and jobs, and trade’s contribution to inequality. The paper concludes with a survey of evidence on several policies that could mitigate the adverse effects of import competition.
    JEL: F1 F13 F14 F16 J2 O17 O24
    Date: 2017–09
  7. By: Roy, Martin
    Abstract: This paper examines how services trade and policies contribute to connectivity. It highlights the economic relevance of services and identifies some key channels through which trade in services contributes to physical and digital connectivity. The paper examines the impact of services trade policies on connectivity in view of recent research showing their impact on sectoral performance, economic welfare and development. Finally, it discusses the positive contribution that aid for trade can make in support of services policies. The paper finds that services sectors play a multifaceted and significant role in connecting countries to the international trading system, and matter greatly to economic development and the achievement of the Sustainable Development Goals (SDGs). Services significantly affect connectivity by: (i) providing the basic infrastructure to support trade in goods; (ii) facilitating supply chains and entering trade as value added embodied in goods; (iii) providing the backbone that enables e-commerce and the on-line supply of services; (iv) and enhancing export diversification through their cross-border electronic supply. The paper underscores that services trade policies have a fundamental impact on connectivity. Restrictions to investment and cross-border trade in services remain high and widespread. But an enabling policy environment - promoting competition, openness to trade and investment, and adequate regulatory frameworks - can enhance connectivity, lower trade costs, and foster growth and economic performance. For example, improving the policy environment for services sectors can help attract the FDI required to meet the SDGs and develop the ICT infrastructure needed to bridge the digital divide. Aid for Trade can play a supportive role in this regard.
    Keywords: WTO,GATS,trade in services,aid for trade,digital trade
    JEL: F13 F15 F53 L8 L96
    Date: 2017
  8. By: Ali-Yrkkö, Jyrki; Kuusi, Tero
    Abstract: We analyze the value-added impacts of rising (United States) US protectionism on Finland and other European Union (EU) member states. The president of the US has proposed tariff increases, particularly on imports from Mexico and China to the US, while the threat of protectionism also involves more direct tariffs against EU exports to the US. We apply a measurement framework for the decomposition of value-added trade to the US grounded on hypothetical extraction, a mathematical technique based on an input-output representation of the global economy. Our results show that trade to the US continues to be an important source of the value added for Finland as well as the majority of the EU, even during the temporary slowdown of trade during the Great Recession. For many countries, trade to the US represents over 10% of the value added from exports to all countries. We find that a large majority of the value added for both Finland and the EU goes directly as intermediate or final goods and services to the US. Much less value added is generated via other countries through either their intermediate or direct final exports to the US. The other most important trade channel is through Germany. We investigate the effect of the trade barriers in several counterfactual scenarios. Using standard export elasticity estimates, we find that the value added generated by Finland and other EU countries through Mexico and China to the US would decline drastically if the US launched tariff rises on imports from Mexico and China to the US. The impacts would be significantly worse if the US raised tariff rates on direct imports from EU countries.
    Keywords: Global value chain, GVC, tax, tariff, customs, border, GDP, impact, indirect
    JEL: F13 F14 F23 L23
    Date: 2017–10–04
  9. By: Anirudh Shingal; Malte Ehrich; Liliana Foletti
    Abstract: In their meta-analysis of estimates of the impact of technical barriers to trade, Li and Beghin (2012) note that studies using pesticides Maximum Residue Levels (MRLs) tend to find more trade impeding effects, but these studies do not directly address the problem of endogeneity in the standards-trade relationship. Using pesticides MRL data for 53 countries over 2005-2014, we re-examine the trade effects of stricter standards accounting fully for endogeneity using three-way fixed effects. We find that the direction of the estimated trade effects gets reversed and we discuss why endogeneity biases the estimates downwards. In another original contribution, we examine the standards-trade relationship by the direction of imposition of stricter standards for a large panel. Our results suggest that stricter standards facilitate trade, irrespective of who imposes them.
    Keywords: Sanitary and Phytosanitary Measures, MRL Regulation, Relative Stringency, Endogeneity, Trade, Gravity
    JEL: F13 F14 I18
    Date: 2017–03
  10. By: Claessens, Stijn (Bank of England); Hassib, Omar (Bank of England); van Horen, Neeltje (Bank of England)
    Abstract: This paper provides new insights into how financial globalization relates to international trade. Exploiting unique, time-varying, bilateral data on foreign bank ownership for many countries, we show that, for emerging markets, greater local foreign bank presence, especially from the importing country, is associated with higher exports in sectors more dependent on external finance. The association does not arise for advanced countries and is stronger when institutions are weaker. The presence of a bank from the importing country is also associated with higher exports in sectors with more opaque products. Results are robust to controlling for domestic financial development and a full set of fixed effects. An event study confirms findings and shows impacts to be more pronounced when a foreign bank enters through an M&A. Imports also increase after entry, but less so. Overall, results suggest that foreign banks facilitate trade in emerging markets by increasing the availability of external finance and helping overcome information asymmetries.
    Keywords: Foreign banks; international trade; credit constraints; financial development
    JEL: F14 F15 F21 F36 G21
    Date: 2017–04–10
  11. By: Boddin, Dominik; Raff, Horst; Trofimenko, Natalia
    Abstract: This paper uses micro-data from the World Bank Enterprise Surveys to investigate how foreign ownership affects the likelihood of manufacturers in developing countries to export and/or import both directly and in- directly. Applying propensity score matching to control for differences across firms, we find that foreign ownership raises the propensity of a firm to export by over 17 and the propensity to import by more than 13 percentage points.
    JEL: F12 F14 F23 O19
    Date: 2017
  12. By: Peter Schott (Yale School of Management); Justin Pierce (Board of Governors of the Federal Reserv); Georg Schaur (University of Tennessee); Sebastian Heise (Federal Reserve Bank of New York)
    Abstract: We model the impact of changes in trade policy uncertainty on supply chains and show that a reduction in the probability of a trade war can foster the adoption of “Japanese”-style procurement practices, in which domestic buyers ensure the provision of high-quality inputs from foreign suppliers via long-term, just-in-time relationships. Empirically, we first show that the model provides a useful framework for analyzing shipments between U.S. importers and foreign exporters, and then demonstrate that a change in U.S. trade policy that eliminated the possibility of substantial increases in U.S. tariffs on Chinese goods coincides with a shift towards “Japanese” procurement. Our estimated general equilibrium model shows that the shift led to substantial U.S. welfare gains.
    Date: 2017
  13. By: Oscar Avila (University of Rochester); George Alessandria (University of Rochester)
    Abstract: We study trade integration in Colombia over a long period through the lens of GE model with new exporter dynamics in which exporters invest in accumulating a better shipping technology. We emphasize the relationship between the firm-level export intensity and aggregate export intensity disciplines the changes in technology and policy accounting for this integration. We find that a common decline in tariffs can account for about 75 percent of the growth in exports as a share of manufacturing sales. We attribute the remaining 25 percent to an increase in the success of investments in export market access. We show that about 10 percent of the increase is accounted for through the endogenous accumulation of an improved exporting technology by existing exporters.
    Date: 2017
  14. By: Bernard Hoekman; Stefano Inama
    Abstract: This paper examines some of the features of rules of origin (RoO) that makes these policy instruments nontariff measures, reflects on the causes of the longstanding deadlock in the WTO on multilateral harmonization of non-preferential RoO, and reviews recent trends in RoO included in recent preferential trade agreements(PTAs) involving the EU and/or the US. These reveal a steady and substantial movement towards adoption of similar approaches and illustrate that cooperation to reduce the trade-impeding effects of differences in RoO across jurisdictions is feasible. We argue that from a trade facilitation perspective such cooperation can and should pursue greater convergence between preferential and nonpreferential RoO, building on the developments observed in PTAs.
    Keywords: Rules of origin, WTO, nontariff measures, trade agreements, convergence
    JEL: F13 F15 F53
    Date: 2017–09
  15. By: Bernard Hoekman; Dominique Njinkeu
    Abstract: This paper discusses opportunities for trade policy research to contribute more to efforts to integrate African markets, a stated policy priority for African leaders. Much of the economic research in this area has sought to quantify aggregate trade costs and the potential welfare impacts of reducing such costs, including through regional integration. This is important, but we argue that more focus is needed on the ‘micro’ dimensions of regional integration. These center on the trade-restricting effects of nontariff measures and regulatory policies and their political economy underpinnings. Of particular importance is research on mechanisms to support market integration initiatives that recognize the multidimensional nature of the sources of trade costs in Africa, and the associated political economy forces within and between countries and regional economic communities.
    Keywords: trade costs, nontariff measures, trade facilitation, regional integration, services markets
    JEL: F13 F15 O19 O55
    Date: 2017–09
  16. By: Geishecker, Ingo; Schröder, Philipp; Sørensen, Allan
    Abstract: An astonishing 33 % of all export spells in Danish data turn out to be isolated single-month one-off export transactions. On average, for an export-active firm, one-off events generate 17 % of foreign sales. These patterns do not sit well with available trade models. To reconcile theory with the data, we introduce passive (i.e., buyer-side driven) exporting. Our empirical investigation establishes novel stylized facts on firm and destination characteristics associated with one-off exporting.
    JEL: F14 F12 L10 D40
    Date: 2017
  17. By: Andrea Ariu (University of Geneva, Switzerland,Georgetown University, USA and CRENOS, Italy); Elena Biewen (Deutsche Bundesbank); Sven Blank (Deutsche Bundesbank); Guillaume Gaulier (Banque de France and CEPII); María Jesus González, (Banco de España); Philipp Meinen, (Deutsche Bundesbank); Daniel Mirza (University François Rabelais de Tours, LEO-CNRS (Orleans), Banque de France and CEPII.); Cesar Martín, (Banco de España); Patry Tello (Banco de España)
    Abstract: This paper uses detailed micro data on service exports at the firm-destination-service level to analyse the role of firm heterogeneity in shaping aggregate service exports in Belgium, France,Germany and Spain from 2003 to 2007. We decompose the level and the growth of aggregate service exports into different trade margins paying special attention to firm heterogeneity within countries. We find that the weak export growth of France is at least partly due to poor performance by small exporters. By contrast, small exporters are the most dynamic contributors to the aggregate exports of Belgium, Germany and Spain. Our results highlight the importance of firm heterogeneity in understanding aggregate export growth.
    Keywords: service exports, firm heterogeneity, cross-country micro data study
    JEL: F14
    Date: 2017–09
  18. By: URATA Shujiro; KATO Atsuyuki
    Abstract: In Japan, the effect of free trade agreements (FTAs) has been argued in the discussion of the changes in the external and internal industrial structure. Japanese firms have formed sophisticated regional supply chain networks and increased overseas production over the last decades, with an aim of increasing their competitiveness in the global market. There are contrasting views on export expansion by FTAs in such regionalization and globalization of the Japanese industry. Some policymakers and researchers are concerned as FTAs would facilitate the hollowing out of the Japanese industry. Others argue that FTAs would prevent the hollowing out by increasing the role of the Japanese industry in the supply chains. This paper examines how FTAs affect the supply chains at the firm level by investigating the behavior of overseas affiliates of Japanese firms, and provides statistical evidence for this argument as well as draws implications for industrial policies. The findings indicate that FTAs contribute to the increase in the share of imports from Japan, particularly from their parent firm, to total procurement for the overseas affiliates of Japanese firms, suggesting that FTAs increase the significance of the Japanese industry in the supply chains and possibly have stopped/slowed down hollowing out.
    Date: 2017–09
  19. By: Andrea Waddle (University of Richmond); Ellen McGrattan (University of Minnesota)
    Abstract: In this paper, we estimate the impact of increasing costs on foreign producers following a withdrawal of the United Kingdom from the European Union (popularly known as Brexit). Our predictions are based on simulations of a multicountry neoclassical growth model that includes multinational firms investing in research and development (R&D), brands, and other intangible capital that is used nonrivalrously by their subsidiaries at home and abroad. We analyze several post-Brexit scenarios. First, we assume that the United Kingdom unilaterally imposes tighter restrictions on foreign direct investment (FDI) from other E.U. nations. With less E.U. technology deployed in the United Kingdom, U.K. firms increase investment in their own R&D and other intangibles, which is costly, and welfare for U.K. citizens is lower. If the European Union remains open, its citizens enjoy a modest gain from the increased U.K. investment since it can be costlessly deployed in subsidiaries throughout Europe. If instead we assume that the European Union imposes the same restrictions on U.K. FDI, then E.U. firms invest more in their own R&D, benefiting the United Kingdom. With costs higher on both U.K. and E.U. FDI, we predict a significant fall in foreign investment and production by U.K. firms. The United Kingdom increases international lending, which finances the production of others both domestically and abroad, and inward FDI rises. U.K. consumption falls and leisure rises, implying a negligible impact on welfare. In the European Union, declines in investment and production are modest, but the welfare of E.U. citizens is significantly lower. Finally, if, during the transition, the United Kingdom reduces current restrictions on other major foreign investors, such as the United States and Japan, U.K. inward FDI and welfare both rise significantly.
    Date: 2017
  20. By: Tena Junguito, Antonio; Federico, Giovanni
    Abstract: The period 1820-1870, commonly referred to as the 'lost decades', is widely regarded as the key moment in the opening of the gap between Latin America and the Unites States. We test this statement with a new export series and some tentative estimates of GDP trends. The overall performance of Latin American countries was quite good, although not outstanding. Mexico was hit by a foreign policy crisis, but the only real losers were the British and French colonies in the Caribbean. The emancipation of slaves caused a collapse in their exports, favoring other tropical countries, including Cuba and Brazil. Further South, independent countries such as Argentine and Chile increased their share of world trade. Overall, most of the divergence during the period 1820-1870 in the Americas was between tropical countries rather than between Latin America and North America.
    Keywords: Independence and Emancipation; Early Nineteenth century; Latin America and the Caribbean; International Trade
    JEL: N10 F14
    Date: 2017–10–01
  21. By: Matteo Fiorini; Bernard Hoekman
    Abstract: The realization of many of the sustainable development goals (SDGs) depends on bolstering the performance of services sectors and improving access to specific services in developing countries. We show that prevailing services trade and investment policies impact on access to services that matter for the realization of a number of SDGs: lower trade restrictiveness is an instrument that can enhance the performance of domestic services sectors. An implication is that pursuit of the SDGs should include a focus on facilitating trade and investment in services.
    Keywords: Services, trade policy, sustainable development goals
    JEL: L8 O10 O24
    Date: 2017–08
  22. By: Matteo Fiorini; Bernard Hoekman
    Abstract: Many agreements to liberalize trade in services tend to be limited in scope. Concerns about possible negative regulatory consequences of services liberalization is one reason for this. In this paper we provide quantitative estimates of the impact of governance quality on the magnitude of the potential productivity gains of external services trade liberalization, and, in the context of the EU, their distribution across member states. Our findings suggest that greater effort to design trade agreements with a view to improving economic governance would benefit both the EU as well as its trading partners. There is significant scope to incorporate elements of the approaches that have been used in the EU single market context into external trade agreements, and to use the latter to further the realization of a single EU market for services.
    Keywords: trade in services, regulation, trade agreements, economic governance
    JEL: F13 F15 O43
    Date: 2017–05
  23. By: Vencappa, Dev; Stiebale, Joel
    Abstract: This paper uses a rich firm-product panel data set of Indian manufacturing firms to analyze the relationship between import competition and vertical integration. Exploiting exogenous variations from changes in India's trade policy, we find that import competition induced by falling output tariffs increases vertical integration by domestic firms, with the effects concentrated in rather homogenous product categories, among firms that mainly operate on the domestic market and in larger firms.
    JEL: F23 G34 L25 D22 D24
    Date: 2017
  24. By: Li Liu; Tim Schmidt-Eisenlohr; Dongxian Guo
    Abstract: This paper employs unique data on export transactions and corporate tax returns of UK multinational firms and finds that firms manipulate their transfer prices to shift profits to lower-taxed destinations. It uncovers three new findings on tax-motivated transfer mispricing in real goods. First, transfer mispricing increases substantially when taxation of foreign profits changes from a worldwide to a territorial approach in the UK, with multinationals shifting more profits into low-tax jurisdictions. Second, transfer mispricing increases with a firm's R&D intensity. Third, tax-motivated transfer mispricing is concentrated in countries that are not tax havens and have low-to-medium-level corporate tax rates.
    Keywords: Transfer pricing ; Corporate taxation avoidance ; Multinational firms
    JEL: F23 H25 H32
    Date: 2017–10–04
  25. By: ITO Koji
    Abstract: Do the benefits firms obtain through globalization go to their workers? For example, do workers in exporting firms receive higher compensation than those in non-exporting firms? To investigate this, this paper constructs cross-sectional employer-employee data by merging plant and worker data, estimates a Mincer-type wage function in Japan's manufacturing sector, and examines the existence of the part of wages that are purely correlated with exports and that cannot be explained by any other characteristics of the workers and plants. The results of the estimation indicate that the wages of exporting plants are higher than those at non-exporting plants even after controlling for the characteristics of workers and plants, and the estimation of plant and firm size shows that the wage differential correlated with exports is remarkable for relatively smaller plants or firms. In addition, according to the Blinder-Oaxaca decomposition, the portion of the wage differential correlated with exports constitutes less than 10% of the wage premium of exporters, but for plants on a smaller scale, the export premium constitutes a certain share, i.e., around 30%.
    Date: 2017–10
  26. By: Teti, Feodora; Felbermayr, Gabriel; Yalcin, Erdal
    Abstract: We document a hitherto overlooked stylized fact: countries’ external tariff schedules are surprisingly similar. The correlation is particularly striking for countries belonging to the same deep preferential trade agreement (PTA). We show that most of this is due to selection effects rather than to ex post convergence. This has an important implication: In most PTAs, for a vast majority of products, trade deflection is not profitable even in the absence of costly rules of origin.
    JEL: F10 F13 F15
    Date: 2017
  27. By: Manabu Furuta (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan); Prabir Bhattacharya (School of Social Sciences, Heriot-Watt University, Edinburgh, Scotland, UK); Takahiro Sato (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)
    Abstract: This paper examines the effects of trade liberalization on the gender wage gap in the Indian manufacturing sector during the period 2000 to 2007. We find that trade liberalization has had the effect of widening the gender wage gap in the labour-intensive, but not in the capital-intensive, industries. The explanations offered for the widening gender wage gap are in terms of the Stolper-Samuelson effect and trade-induced skill biased technical change. Policy implications of the findings are noted.
    Keywords: Gender wage gap, Trade liberalization, Manufacturing sector, India
    JEL: F16 J16 J31
    Date: 2017–09
  28. By: ITO Tadashi; NAKAMURA Ryohei; MORITA Manabu
    Abstract: This study examines wholesalers' roles in manufacturers' exports in Japan. First, it is shown that, as in the case of the manufacturing sector, productivity sorting on overseas activities is also present in the case of wholesalers. Namely, only the most productive wholesaler firms can engage in foreign direct investment, and the next productive ones can participate in export activities, while the least productive ones conduct domestic transactions only. Second, we investigate how wholesalers facilitate manufacturers' export activities in the form of indirect exports. We have found that wholesalers through which manufacturing firms indirectly export their goods are predominantly located in Tokyo or Osaka. The probability of indirect exports is negatively correlated with distance between manufacturers and wholesalers, but there are certain threshold distances at 300 to 500 kilometers, over which the chance of indirect exports turns null. Another notable finding is that wholesalers' productivities have positive correlation with the chance of indirect exports whereas manufacturers' productivities do not matter. The number of manufacturers from which a wholesaler purchases goods is found to have a positive correlation with the probability of indirect exports, which is a type of economies of scope effect.
    Date: 2017–09
  29. By: Larch, Mario; Anderson, James E.; Yotov, Yoto V.
    Abstract: We develop a structural framework that accounts for and decomposes the relationships between trade, physical capital accumulation, and FDI. As a byproduct, our theory delivers a FDI-gravity system. The FDI-gravity estimates are similar to the corresponding trade indexes, however, we also document some notable differences between them. A counterfactual experiment simulating the effects of trade liberalization between Canada and the EU demonstrates the capabilities of our framework.
    JEL: F10 F43 O40
    Date: 2017
  30. By: Craig VanGrasstek VanGrasstek
    Abstract: This paper explores how Donald Trump managed first to secure the Republican Party nomination, and then an upset victory in the general election, by running on an unapologetically protectionist platform. It argues Trump filled a political vacuum by taking positions long rejected by political professionals in both major parties and appealing to a class of potential voters that had been neglected. The analysis starts with a review of the decades-long economic transition in which producers of labor-intensive goods either became more international, thus switching from a protectionist to a pro-trade orientation, or died, thus becoming politically irrelevant. The net result was a reduction in the demand for and use of protectionist measures, and a steep decline in the political salience of trade (as measured in bills dealing with trade issues introduced in Congress, in the prominence of trade on White House agendas, and campaign promises to restrict imports). Trump recognized the large and untapped reservoir of potential votes in the post-industrial underclass that globalization left behind, and succeeded by prosecuting an unorthodox pro-protectionism campaign in which the usual sources of pro-trade campaign finance were rendered irrelevant.
    Keywords: US trade policy, public policy, protectionism, US Presidential election
    JEL: D72 F13 J58
    Date: 2017–01
  31. By: Brown, Mark (Statistics Canada); Ferguson, Shon (Research Institute of Industrial Economics (IFN)); Viju, Crina (Institute of European, Russian and Eurasian Studies)
    Abstract: We decompose the impact of trade reform on technology adoption and land use to study how aggregate changes were driven by reallocation versus within-farm adaptation. Using detailed census data covering over 30,000 farms in Alberta, Saskatchewan and Manitoba, Canada we find a range of new results. We find that the reform-induced shift from producing low-value to high-value crops for export, the adoption of new seeding technologies and reduction in summer fallow observed at the aggregate level between 1991 and 2001 were driven mainly by the within-farm effect. In the longer run, however, reallocation of land from shrinking and exiting farms to growing and new farms explains more than half of the aggregate changes in technology adoption and land use between 1991 and 2011.
    Keywords: Agricultural Trade Liberalization; Export Subsidy; Technical Change; Farm Size; Firm Heterogeneity
    JEL: F14 O13 Q16 Q17 Q18
    Date: 2017–09–26
  32. By: Henrik Horn; Thomas Tangerås
    Abstract: We analyze the optimal design and implications of international investment agreements. These are ubiquitous, potent and heavily criticized state-to-state treaties that compensate foreign investors against host country policies. Optimal agreements cause national but not global underregulation ("regulatory chill"). The incentives to form agreements and their distributional consequences depend on countries’ unilateral commitment possibilities and the direction of investment flows. Foreign investors benefit from agreements between developed countries at the expense of the rest of society, but not in the case of agreements between developed and developing countries.
    Keywords: Foreign direct investment, expropriation, international investment agreements, regulatory chill.
    JEL: F21 F23 F53 K33
    Date: 2017–04
  33. By: Raj Bhala
    Abstract: Free trade agreements (FTAs) are about far more than free trade. They are about national security. A trade deal may be ambitious in liberalizing or managing cross-border flows in goods, services, intellectual property (IP), and people. But, to argue for or against an FTA solely along the axis of free-versus-managed trade is to miss another vital purpose the deal can, and indeed should, advance: national security.This article makes two points. First, TPP exemplifies the possibility of national security enhancement of the United States. That may occur through the containment of China and its ruling Chinese Communist Party (CCP). Second, the debate over the definition of “state owned enterprise” (SOE) is one among many illustrations in TPP of the link between national security, trade, and containment. The 12 nations negotiating TPP were aware of this link, and deliberated the definition of “SOE.” TPP excluded the Middle Kingdom from the founding members, while the founders wrote TPP rules to bind China if it subsequently joined the deal. Chinese SOEs were of concern to them, for bona fide national security reasons, and so also were legitimate sovereign interests in providing goods and services through their own SOEs. The evaluation by America and its 11 TPP partners, as to which entities should be included in the scope of SOE disciplines, led to a set of clear rules.
    Keywords: TPP, SOE, China, national security, international trade, FTA
    Date: 2017–01
  34. By: Falvey, Rod (Bond Business School, Bond University); Foster-McGregor, Neil (UNU-MERIT, Maastricht University)
    Abstract: This paper uses matching econometrics to extend the literature investigating the impact of Preferential Trading Arrangements (PTAs) on goods trade flows. Heterogeneity in PTAs is accounted for through a 'provision count index' derived from data provided in a recent World Bank study (Hofmann et al, 2017). PTA formation now involves two separate, sequential decisions - first, whether two trading partners should form a PTA and, second, if they do, how broad that agreement should be. We find that our explanatory variables are significant for both decisions, but often have opposing effects on each. Using our matched PTA and non-PTA groups of country-pairs, we estimate a dose response function which indicates that arrangements with few provisions and arrangements with many provisions do not appear to have a significant impact on goods trade flows between their members. PTAs in an intermediate range are shown to have a significant positive effect. We then relate these outcomes to the actual content of the PTAs using the concept of 'provision intensity'.
    Keywords: Preferential Trade Agreements, Trade Flows, PTA Breadth
    JEL: F10 F15 O24
    Date: 2017–09–15
  35. By: Daniel Goya; Andrés Zahler
    Abstract: An important part of aggregate export growth is due to firms adding new varieties to their export baskets. We contribute to the literature on export flow survival by showing that a measure of the 'distance' between a new export and the previous export basket is a significant determinant of the survival of a new firm-product export flow. We present evidence suggesting that the measure we use is a good proxy for the theoretical 'distance from the core' in Eckel and Neary (2010), and that it is capturing technological, rather than demand complementarities across products.
    Keywords: Export diversification, extensive margin, export survival, product proximity.
    JEL: F14 L25 O30
    Date: 2017–10
  36. By: Hakon Tretvoll (BI Norwegian Business School); Fernando Leibovici (Federal Reserve Bank of St. Louis); David Kohn (Universidad Catolica de Chile)
    Abstract: This paper studies the role of the sectoral composition of production and trade in accounting for emerging market business cycles. We document that in emerging economies the production of commodities is a larger share of total production than in developed ones, and that they run larger sectoral and aggregate trade imbalances. We set up a small open economy model that produces commodities and manufactures and trades them with the rest of the world. We contrast the implied business cycle dynamics of two economies that are respectively calibrated to match the observed differences between developed and emerging countries. In the model, shocks to the relative price of commodities lead to much larger fluctuations in output, net exports and TFP in the emerging economy, accounting for the higher volatility that we observe in the data. A key driver of these effects is that emerging economies consume relatively more manufactures than they produce.
    Date: 2017
  37. By: Kumar, Dr.B.Pradeep
    Abstract: This paper dwells on the changing structure of India’s foreign trade in the post reform period and attempts to portray some of the recent trends in foreign trade and initiatives. The foreign trade scenario in the pre-reform period was guided by the protectionist policies of the government. The protectionist policies and the consequent expenditure that the Government doled out in an ambitious movement to aid the manufacturing sector prevented, in retaliation, our chances to squeeze international market for India’s exports. In the post reform period, the easing of QRs and the cut in TRs led to augmenting the volume of trade which is evident from the fact that the share of foreign trade in the country’s GDP burgeoned to over 40 percent in 2014 from a level as low as 14 percent in the initial years of post-reform period. This apparently shows greater and deeper diversification that the direction of trade has witnessed in recent times, thanks to change in foreign trade policies in terms both tariff and quota. However developments like GFM had its dampening effect on Indian economy although it withstood such effects thanks to the strong macroeconomic and structural bases. Trade variables of the country pertaining to the post-Brexit period do not show any substantiate evidence to prove that Brexit has had a strong disincentive effect on the foreign trade of India
    Keywords: Key Words: Global Financial Meltdown, Balance of Payment (BoP), QR and TR, Brexit, Demonetization, Make in India, Current Account Deficit (CAD), Foreign Direct Investment (FDI)
    JEL: F10
    Date: 2017–09–05
  38. By: Bernard Hoekman; Anirudh Shingal
    Abstract: The empirical literature on aid for trade (AfT) mainly considers its effects on merchandise trade and investment. In this paper we examine the relationship between AfT and trade in services as well as trade in goods over 2002-2015 in both aggregate and bilateral analysis. We observe complementarities between services AfT and merchandise trade, reflecting the fact that most AfT is aid allocated to services sectors that are important inputs into production and trade in goods. The analysis suggests that most categories of AfT are not associated with greater trade in services. Only AfT directed towards economic infrastructure, notably transport and energy, is robustly associated with higher volumes of services trade. Given the importance of services for many low-income countries and the growing potential to harness new technologies to expand services trade, the results suggest a greater focus on disaggregated analysis of different categories of AfT to better understand how AfT can do more to support trade in services. Of particular note is that AfT to bolster productive capacity is strongly associated with greater merchandise trade whereas no such relationship is observed for services trade, suggesting AfT efforts do more to target capacity weaknesses that constrain growth in services trade.
    Keywords: Aid for trade, services trade, goods trade, complementarities, infrastructure
    JEL: F10 F14 F35
    Date: 2017–09
  39. By: Robert Weiner (George Washington University); Anthony Cannizzaro (Catholic University of America)
    Abstract: We contribute to literature on state-owned multinationals by examining an understudied element of MNE strategy - transparency. Drawing insight from accounting, finance and political science, we develop theory and hypotheses regarding ownership effects on FDI disclosure. We argue that transparency of outward FDI depends on both state ownership and home- and host-country institutions. We also posit that host governments harness their SOEs to exploit information disclosed by foreign MNEs, discouraging inward FDI transparency. We test our hypotheses using a unique transaction-level database from the global petroleum industry. Analyzing a sample of 965 investment disclosures across 81 developing and developed countries, we find state ownership reduces MNE transparency; SOEs are less sensitive to host-country political risk than private firms; SOEs from better-governed countries are more transparent; and regardless of ownership, foreign MNEs are more opaque when investing in the presence of a host-country SOE.
    Date: 2017
  40. By: Narula, Rajneesh (Henley Business School, University of Reading)
    Abstract: Historically, extractive sector MNEs have been seen as an obstacle to sustainable development, because they operated in enclaves with limited local engagement. Import-substitution policies aimed to increase the local benefits of these resources, restricting FDI. Since liberalisation, extractive MNEs have re-engaged with developing countries through looser governance structures with greater potential for linkages. Despite the potential, few host countries have seen meaningful MNE-led development because of weak domestic firms and poor location advantages. New MNEs from emerging economies have not shown a greater propensity to local linkages. Only countries that have continued to invest in location advantages have seen substantial benefits.
    Keywords: sustainable development, MNEs, linkages, emerging economies, extractives, natural resources, infrastructure, enclaves
    JEL: F23 F54 O14
    Date: 2017–09–21
  41. By: Andrea Mastromatteo
    Abstract: By acting as a trader, a State may influence the direction of international trade through its purchases and sales decisions without resort to other more direct means of intervention such as the application of tariffs and quotas. The GATT recognizes that States may choose to participate in international commerce in competition with private firms, but it does not leave them with a free hand when it comes to carrying out their trading activities. The core rules regulating a State's trading operations are found in Article XVII and related provisions of the GATT 1994. In the 70 years since their adoption, developments in both the GATT 1947 and the WTO have uncovered a set of seldom employed and relatively shallow disciplines rooted in the principle of non-discrimination, raising doubts about their relevance to the kinds "State trading" activities undertaken today. It remains true, however, that while State trading enterprises continue to operate across the world, and fundamental questions about the full reach and scope of the existing rules endure, it cannot be excluded that the limits of Article XVII and related provisions of the GATT 1994 may well be explored in the future practice of WTO Members, thereby clarifying their regulatory function in the modern trading system.
    Keywords: STEs, SOEs, Article XVII, China
    Date: 2017–02
  42. By: Castellani, Davide (University of Reading); Fassio, Claudio (CIRCLE, Lund University)
    Abstract: This paper focuses on the determinants of export innovation, that is innovation in a firm’s export product portfolio. We argue that this novel measure is an important proxy of the overall competitiveness of exporters. We identify two main factors that contribute to the introduction of export innovations at the firm level: importing new inputs and being part of a multinational group. Based on a sample of more than 14,000 Swedish manufacturing firms over the period 2001-2012, we show that importing new inputs is a key determinant of innovation in exported products, even after controlling for multinationality and a number of other firm characteristics. The effect of new imports is particularly strong for small firms and is mainly due to the import of new intermediate inputs. Being part of a multinational group has instead an ambivalent effect on export innovations of Swedish firms: while small firms acquired by foreign MNEs show a short term reduction in export innovation, this is not true for large firms, which instead increase their export innovation when they establish subsidiaries abroad or become part of a Swedish-owned multinational group.
    Keywords: innovation; importing; exporting; multinational enterprises; Sweden
    JEL: F23 O30
    Date: 2017–10–05
  43. By: Petros C. Mavroidis; Merit E. Janow
    Abstract: The WTO has struggled with the treatment of nonmarket economies (NMEs). What was a nonissue in the original GATT (because of the homogeneity of participants) became quite an issue with the accession of formally centrally planned economies, which were not transformed to market economies, at least not in the eyes of the incumbents. Contracting this issue has proved to be so far always wanting, and leaving it to adjudicators has not produced good results either. With respect to Chinese SOEs this risks continuing to be an issue, since the contractually agreed deadline (2016) after which China should not be treated as NME anymore, risks proving to be full of holes and loopholes.
    Keywords: NME (nonmarket economy), SOE (state-owned enterprise), WTO
    JEL: K40 F13
    Date: 2017–03
  44. By: Hu, Zhongzhong; Rodrigue, Joel; Tan, Yong; Yu, Chunhai
    Abstract: This paper quantifies the separate contribution of idiosyncratic productivity and demand growth on aggregate Chinese exports. We develop firm, product, market and year specific measures of productivity and demand. We use these measures to document a number of novel findings that distinguish the growth of Chinese exports. First, we document that changes in demand explain nearly 78–89% of aggregate export growth, while only 11–22%of export growth is determined by productivity growth. Second, our results highlight two mechanisms which contribute significantly to aggregate export growth: the rapid reallocation of market shares towards products with growing demand, and high rates of product exit among low demand products. Investigating the mechanisms underlying these results we find that new exporters suffer demand shocks which are 66% smaller than those observed for incumbent producers in the same product market. By comparison, we find that there is only an 8% difference on average between the productivity of new and incumbent exporters.Repeating our exercise with revenue productivity reveals much smaller differences. This is largely attributed to differential movements in prices and marginal costs.
    Keywords: Exports, China, Productivity, Demand
    JEL: D24 F12 L11 L25
    Date: 2017–10–07
  45. By: Bernard Hoekman; Charles Sabel
    Abstract: Governments increasingly are seeking to use bilateral and regional trade agreements to reduce the cost-increasing effects of differences in product market regulation. They also pursue regulatory cooperation independent of trade agreements. It is important to understand what is being done through bilateral or plurilateral mechanisms to address regulatory differences, and to identify what, if any, role trade agreements can play in supporting international regulatory cooperation. This paper reflects on experience to date in regulatory cooperation and the provisions of recent trade agreements involving advanced economies that have included regulatory cooperation. We argue for a re-thinking by trade officials of the modalities and design of trade negotiations and the incorporation of institutional mechanisms that draw on insights of experimentalist governance approaches to enhance the scope for international regulatory cooperation.
    Keywords: Trade agreements, regulation, international cooperation, sovereignty, legitimacy
    JEL: F02 F15 K23
    Date: 2017–07
  46. By: Mamoon, Dawood
    Abstract: The paper makes a case for effective regionalism in South Asia by developing such conflict mitigation strategies between India and Pakistan that exploit their proximity to global trade. The welfare enhancing measures for nation states become more startling when they not only invest in institutional development but also become an active part of the global village with regionalism as a viable means to achieve this objective.
    Keywords: Trade, Institutions, Education, Regionalism, Conflict Mitigation
    JEL: P1 P16 P17 P4 P48
    Date: 2017–10–06
  47. By: Mauro Lanati; Alessandra Venturini
    Abstract: The paper examines the effect of the import of cultural goods as defined by UNESCO (2009): cultural heritage, performance, visual arts, books, audio-visual material and design on emigration decisions. The import of cultural goods, by affecting individual preferences, reduces the cost of any migration move and favors outflows towards exporting countries. A gravity model for 33 OECD destination countries and 184 sending ones has been estimated for the period 2009-2013. The issue of identification and endogeneity has been addressed through the inclusion of a comprehensive set of fixed effects and by instrumenting cultural imports with past flows and an imputed share of cultural imports à la Card (2001). The positive relationship is robust across different classifications for cultural goods, areas of destination and alternative econometric techniques
    Keywords: Migration, trade in cultural goods, gravity model
    JEL: F16 F22 Z10
    Date: 2017–04
  48. By: Fagerberg, Jan (TIK, University of Oslo); Lundvall, Bengt-Åke (Aalborg University); Srholec, Martin (CERGE EI)
    Abstract: This paper deals with the role of global value chains (GVC) and other aspects of “openness” for economic development. To analyse the issue a comprehensive framework that allows for the inclusion of a range of relevant factors including not only different form of openness, such as GVC participation, but also technological and social capabilities, is developed. The analysis is based on evidence from 125 countries, including many developing nations, over the period 1997-2013. It is shown that economic growth reflects the strength of the national innovation system and that GVC participation is not the potent driver of economic growth that tends to be assumed.
    Keywords: Global value chains; openness; capability; national innovation system; economic development
    JEL: F43 O10 O30 O40 O57
    Date: 2017–10–05
  49. By: Ildikó Magyari
    Abstract: What is the impact of Chinese imports on employment of US manufacturing firms? Previous papers have found a negative effect of Chinese imports on employment in US manufacturing establishments, industries, and regions. However, I show theoretically and empirically that the impact of offshoring on firms, which can be thought of as collections of establishments – differs from the impact on individual establishments - because offshoring reduces costs at the firm level. These cost reductions can result in firms expanding their total manufacturing employment in industries in which the US has a comparative advantage relative to China, even as specific establishments within the firm shrink. Using novel data on firms from the US Census Bureau, I show that the data support this view: US firms expanded manufacturing employment as reorganization toward less exposed industries in response to increased Chinese imports in US output and input markets allowed them to reduce the cost of production. More exposed firms expanded employment by 2 percent more per year as they hired more (i) production workers in manufacturing, whom they paid higher wages, and (ii) in services complementary to high-skilled and high-tech manufacturing, such as R&D, design, engineering, and headquarters services. In other words, although Chinese imports may have reduced employment within some establishments, these losses were more than offset by gains in employment within the same firms. Contrary to conventional wisdom, firms exposed to greater Chinese imports created more manufacturing and nonmanufacturing jobs than non-exposed firms.
    Date: 2017–01
  50. By: Mamoon, Dawood
    Abstract: The paper provides an outline of effective gender parity policy in South Asia with a special reference to Pakistan. The need of gender parity as an economic goal is identified by linking gender empowerment as a need to create better trade policy framework. This may provide strong public sector commitment towards bringing and implementing such laws that focus on more female participation in formal schooling as well as skill development.
    Keywords: Education, Trade, Gender Empowerment, International Development
    JEL: F1 F16
    Date: 2017–10–06
  51. By: Stiebale, Joel; Vencappa, Dev
    Abstract: We use a rich firm-product panel data set to analyze the effects of domestic and foreign acquisitions on Indian manufacturing firms. Our results indicate that, on average, acquisitions are associated with increases in quantities and markups and lower marginal costs in target firms. We also provide evidence that the quality of products increases while quality-adjusted prices fall upon acquisitions. The effects are most pronounced if acquirers are located in technologically advanced countries.
    JEL: F23 G34 L25 D22 D24
    Date: 2017
  52. By: OA Carboni; G. Medda
    Abstract: It is widely recognized that innovative firms have an advantage in terms of competitiveness which allow them to successfully operate in global markets. Coincidently, entering and surviving in global markets require additional tangible assets aimed at the expansion of production capacity. This work investigates innovation activities and tangible investments as factors enhancing exporting propensities and performances by the firms. Particularly emphasis is given to product innovation, as it is directly related to the penetration of foreign markets. More in detail, we empirically study a) the relationship between product innovation and export intensity, and b) between tangible investment and export in a large sample of European firms. The analysis controls for internal and external structural characteristics, taking into account that innovative activities, resources devoted to the accumulation of tangible assets, and export intensity are simultaneously determined. The results suggest that both product innovation and tangible investment have a positive and significant impact on the export intensity of firms.
    Keywords: r&d;innovation;tangible investment;export;simultaneous equations
    Date: 2017
  53. By: Ejermo, Olof (CIRCLE, Lund University); Zheng, Yannu (CIRCLE, Lund University)
    Abstract: Migration policies can have a strong impact on the selection of immigrants, who in turn can affect the host country’s innovation development. This paper examines the effects of the liberalization of migration on the skill composition of immigrants from the EU-15 to Sweden after the inception of the European Economic Area (EEA) in 1994. We examine its effect on immigrants’ education levels and probability of becoming an inventor, comparing immigrants from the EU-15 with those from other developed regions in difference-in-differences regressions. The results show that, the liberalization of migration had a negative effect on the educational profile of new EU-15 immigrants in the short run, but there is no such effect in the long run. Moreover, the liberalization of migration has no systematic effect on the EU-15 immigrants’ probability of becoming an inventor neither in the short nor the long run. These patterns are consistent with the theoretical implication that reduction in migration costs associated with the EEA mainly stimulated migration from the lower end of the education distribution.
    Keywords: Human capital; Immigration; Innovation; Selection; Skill level
    JEL: J15 J24 N30 O31
    Date: 2017–10–05
  54. By: Vladimir Gligorov (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: The Macedonian economy has weathered the post-2008 crisis better than most countries in the Balkans. Investments and exports have sustained growth and the performance of the labour market has somewhat improved. With exports to GDP at around 50%, the small, landlocked economy remains relatively closed, though not necessarily by Balkan standards. Also, with an unemployment rate above 20%, which has tended to be even higher for decades now, there is clearly untapped potential for growth and development. Export-led growth is what the long-term macroeconomic framework has been designed for. There is a fixed exchange rate regime since 1994. Fiscal policy aimed at a balanced general budget for most of the pre 2008 period. Overall, the real exchange rate was not misaligned, so that a more active income and fiscal policy was available post-2008. Finally, an open foreign trade regime, with free trade with the EU and within the regional market of CEFTA, was supportive of growing exports in the last ten or so years. The tradable sector remains small for the size of the economy, not sufficiently diversified and internationalised, with a dominance of larger firms, and not appropriately innovative. A small open economy in the context of internationalisation of production and trade grows through exports by expanding its tradable sector along both the extensive and the intensive margins. That also means that there is a lot of space for innovative activities that can access the large, primarily European market, even if those are small and medium-size companies. With export-led growth remaining the main policy end, the economy is adapted to the stability that the long-term policy framework provides. There are possible improvements to the fiscal system and there is the need of better targeting of public investments. The main policy interventions should be in support of innovation, easier access to the product market in support of entrepreneurship, support for internationalisation of economic activities, and as much support for innovation as possible. Both public policies and the financial system should be supportive of these improvements in the product market. Finally, sustain growth and catching up with the more developed economies require sustained and efficient active labour market policies to bring the unemployment rate down to low single digits. With productivity improvements, the level of the Macedonian economy is about 20% below potential. With a potential growth rate of around 4%, within a generation Macedonian GDP per capita can be close to the EU average.
    Keywords: Macedonia, trade, innovation, internationalisation, growth
    JEL: F14 F41
    Date: 2017–10
  55. By: Thomas J. Prusa
    Abstract: In 2007 the US reversed its long-standing policy prohibiting the simultaneous imposition of anti-dumping duties (ADDs) and countervailing duties (CVDs) against non-market economies. The EU followed the US’ lead and also began imposing simultaneous ADDs and CVDs. The practice, however, leads to double remedies, which are when a domestic subsidy is offset by both an ADD and CVD. The WTO Appellate Body recently ruled that double remedies were inconsistent with the Agreement on Subsidies and Countervailing Measures and that the burden was on the investigating authorities to ensure that double remedies were not being imposed.
    Keywords: anti-dumping, non-market economies, china
    Date: 2017–02
  56. By: Liberini, Federica (ETH, Zurich); Oswald, Andrew J (University of Warwick); Proto, Eugenio (University of Warwick); Redoano, Michela (University of Warwick)
    Abstract: On 23 June 2016, the United Kingdom voted to leave the European Union (so-called ‘Brexit’).This paper uses newly released information, from the Understanding Society data set, to examine the characteristics of individuals who were for and against Brexit. Two new findings emerge. First, unhappy feelings contributed to Brexit. However, contrary to commonly heard views, the key channel of influence was not through general dissatisfaction with life. It was through a person’s narrow feelings about his or her own financial situation. Second, despite some commentators’ guesses, Brexit was not caused by old people. Only the very young were substantially pro-Remain.
    Keywords: Referendum, European Union, Brexit, Voting. JEL Classification: D72
    Date: 2017
  57. By: Thomas I. Palley
    Abstract: This paper argues Rodrik?s (2011) globalization trilemma is analytically mistaken. Rather than a trilemma, globalization poses a dilemma between more globalization and reduced national policy space. Not only may globalization shrink policy space, it may also twist it. The character of the twist depends on the type of globalization. There is no inherent contradiction between globalization and the democratic nation state. However, globalization has significant implications for the content of democratic politics which it tends to restrict. Furthermore, globalization can generate policy lock-in (Palley, 2017) which permanently reduces policy space. That has enormous implications for democracy and future democratic policymaking.
    Keywords: Globalization, trilemma, dilemma, policy space, policy lock-in,democracy
    JEL: F0 F02 F50
    Date: 2017

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