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on International Trade |
| By: | Benedikt Heid; Mario Larch; Yoto V. Yoto |
| Abstract: | We propose a simple method to identify the effects of unilateral and non-discriminatory trade policies on bilateral trade within a theoretically-consistent empirical gravity model. Specifi-cally, we argue that structural gravity estimations should be performed with data that include not only international trade flows but also intra-national trade flows. The use of intra-national sales allows identification of the effects of non-discriminatory trade policies on the importer side (e.g. most favored nation tariffs) and on the exporter side (e.g. export subsidies), even in the presence of exporter and importer fixed effects. An important byproduct of our approach is that it can be used to recover estimates of the export-supply elasticity and of the import-demand elasticity. We demonstrate the effectiveness of our techniques in the case of MFN tariffs and “Time to Export” as representative determinants of trade on the importer and on the exporter side, respectively. Our methods can be extended to quantify the impact on trade of any country-specific characteristics as well as any non-trade policies. |
| Keywords: | gravity model, non-discriminatory trade policies, tariffs, subsidies, time to export, trade elasticity of substitution |
| JEL: | F10 F13 F14 F47 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6735&r=int |
| By: | Mamoon, Dawood |
| Abstract: | The recent evidence of rising wage inequalities in developing countries in favour of skilled labor has challenged the Hecksher-Ohlin model. After providing empirical evidence by employing 28 measures of trade integration that trade significantly cause inequality, the paper carries out a theoretical discussion to suggest that wage inequality between skilled and unskilled labor has factor endowment dimension. There are significant inequalities in education attainment in developing countries that exacerbate inequality when these countries trade in international markets in predominantly capital intensive products. A more trade among developing countries might benefit the unskilled as trade in local or regional clusters within the South may enable these countries to also export more labor intensive products and thus benefitting the unskilled. |
| Keywords: | Integration, Trade Clusters, Inequality, |
| JEL: | F13 F14 F15 J2 J20 |
| Date: | 2017–10–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:82268&r=int |
| By: | Andrea Ariu; Holger Breinlich; Gregory Corocs; Giordano Mion |
| 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 and use the estimated model for counterfactual analysis. In particular, we look at the quantitative impact of reductions in goods and services barriers between the US and the EU. Our findings have important implications for the design of trade policy. They suggest that a liberalization of service trade can have quite direct and sizable effects on goods trade and vice-versa, and that jointly liberalizing goods and services trade brings about substantial complementarities. |
| Keywords: | trade in services, trade in goods, complementarity, firm-level analysis, discrete choice models |
| JEL: | F10 F13 F14 L60 L80 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1510&r=int |
| By: | ITO Kazuyori |
| Abstract: | In this dispute, while Colombia's compound tariff system was judged as violating Article 2 of the General Agreement on Tariffs and Trade (GATT), Colombia argued that the violation could be justified under Article 20(a) of GATT, which exceptionally allows member states to adopt trade restrictive measures that are necessary to "protect public morals," because Colombia introduced the compound tariff system in order to prevent money laundering, drug trafficking, and organized crime. The Appellate Body admitted that each country has wide discretion as to what constitutes "public morals" in its society, but also emphasized that the trade restrictive measure in question must have a real effect on achieving the protection of public morals. This ruling will contribute to prevent member states from abusing this exceptional clause. Then, how should we design trade restrictions in order to prevent money laundering? Ensuring consistency with World Trade Organization (WTO) Agreements is of great importance because the battle against money laundering calls for a comprehensive regulative framework including trade restrictions. This paper tries to find a legal and effective way of trade regulations to fight against money laundering based on the interpretive framework of an exceptional clause formulated through several precedents. |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rpdpjp:17030&r=int |
| By: | Giammario Impullitti; Omar Licandro; Pontus Rendahl |
| Abstract: | We study the gains from trade in an economy with oligopolistic competition, firm heterogeneity, and innovation. Oligopolistic competition together with free entry make markups responsive to firm productivity and trade costs. Lowering trade costs reduces markups on domestic sales but increases markups on export sales, as firms do not pass the entire reduction in trade costs onto foreign consumers. Nevertheless, the downward pressure dominates and the average markup declines, deterring firms from entering the market and leading to higher market concentration. Neither the increased concentration nor the incomplete pass-through of trade costs to export markups are strong enough to compensate for the increase in competition on domestic sales. Thus the overall effect of trade on markups is pro-competitive and a key source of the associated welfare gains. In addition to markups, selection and innovation provide additional channels through which the trade-induced effect on competition impacts welfare. In a quantitative exercise, we decompose the total gains from trade into these three contributing channels; we find that innovation plays a small but non-negligible role, while the main component is equally split between the pro-competitive and the selection channel. |
| Keywords: | gains from trade, heterogeneous firms, oligopoly, innovation, endogenous markups, endogenous market structure |
| JEL: | F12 F13 O31 O41 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6727&r=int |
| By: | Inmaculada C. Alvarez; Javier Barbero; Andres Rodriguez-Pose; Jose L. Zofio |
| Abstract: | This article examines the extent to which national institutional quality affects bilateral sectoral trade flows, as well as whether the conditioning role of institutions for trade has been waxing or waning with time. Based on a new trade theory framework, we derive a sectoral gravity equation, including novel variables corresponding to the exporterÕs labour competitiveness levels, along with importerÕs price indices and sectoral incomes, and analyse industry specific bilateral trade flows of 186 countries for the period 1996-2012. We address potential endogeneity and econometric drawbacks by means of Poisson Pseudo-Maximum Likelihood estimation methods. The results indicate that both the institutional conditions at destination and the institutional distance between exporting and importing countries are relevant factors for bilateral trade. Moreover, the effect associated to institutional conditions at destination moderately increases over time. This is a robust outcome across economic sectors, with higher values for agriculture and raw materials than for manufacturing and services. |
| Keywords: | Relatedness, international trade, gravity equation, institutional quality, public policy |
| JEL: | F10 Z18 D02 K4 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1729&r=int |
| By: | Mark Kruger; Walter Steingress; Sri Thanabalasingam |
| Abstract: | Chinese real export growth decelerated considerably during the last decade. This paper argues that the slowdown largely resulted from China moving to a more sophisticated mix of exports: China produced more sophisticated goods over which it had pricing power instead of producing greater volumes of less sophisticated products. Indeed, we show that the share of highly sophisticated products in Chinese exports increased steadily over time and that Chinese exports became less price sensitive, suggesting increased pricing power. Further, a decomposition of China’s market share gains shows that China continues to gain market share despite exporting products with higher-than-average world prices. China’s continuous gain in global export market share suggests that its export machine is far from broken. |
| Keywords: | Development economics, Exchange rates, International topics |
| JEL: | F14 F17 O10 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocadp:17-15&r=int |
| By: | Fabrice Defever; Alejandro Riaño |
| Abstract: | Received wisdom suggests that most exporters sell the majority of their output domestically. In this paper, however, we show that the distribution of export intensity not only varies substantially across countries, but in a large number of cases is also bimodal, displaying what we refer to as twin peaks. We reconcile this new stylized fact with an otherwise standard, two-country model of trade in which firms are heterogeneous in terms of the demand they face in each market. We show that when firm-destination-specific revenue shifters are distributed lognormal, gamma, or Fréchet with sufficiently high dispersion, the distribution of export intensity has two modes in the boundaries of the support and their height is determined by a country’s size relative to the rest of the world. We estimate the deep parameters characterizing the distribution of export intensity. Our results show that when the conditions for the existence of twin peaks are met, differences in relative market size can explain most of the observed variation in the distribution of export intensity across the world. |
| Keywords: | exports, export intensity distribution, bimodality, firm heterogeneity |
| JEL: | F12 F14 C12 O50 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6729&r=int |
| By: | Sébastien Jean; Ariell Reshef |
| Abstract: | Trade liberalization affects the economy via three main channels: (1) efficiency/productivity gains, (2) purchasing power gains for consumers, and (3) consequences on incentives and governance. These give rise to adjustment costs and distributional impacts, as well as potentially large environmental consequences. Much of the impact of possible increases in EU trade barriers can be seen as forfeiting gains from trade, and it would also entail adjustment costs. Possible (but often unlikely) gains for workers in protected industries will be offset by increases in the cost of imported inputs, hurting competitiveness. This is increasingly important due to the rise of global value chains. Protection can also trigger a trade war, with widespread consequences; Noland et al. (2016) estimate that nearly 4.8 million jobs might be lost by 2019 in the U.S. in case of a full-blown trade war. We calculate that for Europe more than 20% of the value of total manufacturing extra-EU imports is composed of products that are not produced locally; this implies that substitution with local production is unlikely in the short to medium run. We discuss two recent episodes of protectionist policies: the U.S. safeguard on tire imports from China (2009-2011), and the U.S. safeguard measure on steel products vis-à-vis all source countries (2002-2003). In both cases, the estimated employment benefit in the industry protected was insignificant, while negative impacts on downstream industries were disproportionately large, including outsourcing jobs overseas. Protected sectors witnessed higher stock share prices – benefitting owners, not workers – and even this was offset by declines in downstream industries. We assess plausible scenarios for the future, in relation with the context of the recent U.S. presidential election. While the new administration’s policy remains highly uncertain, we discuss three main directions it might take: bilateralism, aggressive use of trade defense, and breach of agreed principles. We argue that the best way for the E.U. to defend its interests requires monitoring closely the U.S. practices, defending the rules-based system, and displaying resolve in the willingness to impose reciprocity. |
| Keywords: | International Trade;Protectionnism;Adjustment Costs;Safeguard measure |
| JEL: | F13 F16 P16 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:cii:cepipb:2017-18&r=int |
| By: | Liu, Ailan; Tang, Bo |
| Abstract: | This paper investigates the impact of the US and China’s foreign aids to Africa on trade flows between donor and recipient countries. Evidence from the gravity model estimates reveals that the two donors’ exports are strengthened by their aids to African partners. Interestingly, China’s aid shows a positive effect on its total volume of trade and imports from Africa, while the aid from the US exhibits little impact on the US-Africa total trade and its imports from Africa. A possible explanation for such a difference could be due to the dissimilar national interests of donors in Africa. This study finally suggests that African countries should accelerate the pace of advancing domestic economies and rely less on foreign assistance, in order to establish a fairer and more equal international economic order. |
| Keywords: | Foreign aid, Aid-trade relations, Gravity model |
| JEL: | F35 P33 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:82276&r=int |
| By: | Yao Amber Li (Hong Kong University of Science and Technology); Valerie Smeets (Department of Economics and Business Economics, Aarhus University, Denmark); Frederic Warzynski (Department of Economics and Business Economics, Aarhus University, Denmark) |
| Abstract: | In this paper, we use a detailed production survey in the Chinese manufacturing industry to estimate both revenue and physical productivity and relate our measurements to firms' trade activity. We find that Chinese exporters for largely export oriented products like leather shoes or shirts appear to be less efficient than firms only involved on the domestic market based on the standard revenue productivity measure. However, we show strong positive export premium when we instead consider physical productivity. The simple and intuitive explanation of our results is that exporters charge on average lower prices. We focus more particularly on the role of processing trade and find that price differences are especially (and probably not surprisingly) large for firms involved in this type of contractual arrangements. |
| Keywords: | Productivity, prices, processing trade, China |
| JEL: | L2 D2 F14 |
| Date: | 2017–11–23 |
| URL: | http://d.repec.org/n?u=RePEc:aah:aarhec:2017-12&r=int |
| By: | Tomberger, Patrick |
| Abstract: | r4d Working Paper 2016/4 by Patrick Tomberger |
| Abstract: | The vertical fragmentation of the production chains of final goods causes new challenges for governments with respect to employment policies. But data on this fragmentation processes remains limited. This paper contributes to the literature with the construction of a database on labour value added and employment embodied in the production of final goods and exports, accounting for globally fragmented supply chains. It is based on Global Trade Analysis Project (GTAP) input-output data and covers 25 sectors and up to 64 countries for the years 1997, 2001, 2004, 2007 and 2011 and extends comparable databases with respect to the coverage of developing countries. |
| Date: | 2016–07–04 |
| URL: | http://d.repec.org/n?u=RePEc:wti:papers:1114&r=int |
| By: | CHABÉ-FERRET Bastien; MACHADO Joël; WAHBA Jackline |
| Abstract: | Using a unique French dataset, we analyze the relationship between remigration intentions and several immigrants' behaviors in the host and origin countries addressing the potential endogeneity of remigration intentions. We also investigate the potential trade-off and complementarities between various immigrants' investment behaviors. We _find that temporary migrants are more likely to invest in the country of origin but less likely to invest in the host country. Moreover, our results suggest a trade-off between immigrants' investment in the home and in the host country. |
| Keywords: | Temporary migration; intention to leave; return intention; remittances; investment; house ownership; language |
| JEL: | F22 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:irs:cepswp:2017-17&r=int |
| By: | Sampson, Thomas |
| Abstract: | This paper develops an idea flows theory of trade and growth with heterogeneous firms. Entrants learn from incumbent firms and the diffusion technology is such that learning depends not on the frontier technology, but on the entire distribution of productivity. By shifting the productivity distribution upwards, selection causes technology diffusion and in equilibrium this dynamic selection process leads to endogenous growth without scale effects. On the balanced growth path, the productivity distribution is a traveling wave with a lower bound that increases over time. The free entry condition implies trade liberalization must increase the dynamic selection rate to offset the profits from new export opportunities. Consequently, trade integration raises long-run growth. Dynamic selection is a new source of gains from trade not found when firms are homogeneous. Calibrating the model implies dynamic selection approximately triples the gains from trade compared to heterogeneous firm economies with static steady states. |
| JEL: | F12 O33 O41 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:62623&r=int |
| By: | Danakol, Seçil Hülya; Estrin, Saul; Reynolds, Paul; Weitzel, Utz |
| Abstract: | There are conflicting predictions in the literature about the relationship between FDI and entrepreneurship. This paper explores how foreign direct investment (FDI) inflows, measured by lagged cross-border mergers and acquisitions (M&A), affect entrepreneurial entry in the host economy. We have constructed a micro panel of more than two thousand individuals in each of seventy countries, 2000-2009, linked to FDI by matching sectors. We find the relationship between FDI inflows and domestic entrepreneurship to be negative across all economies. This negative effect is much more pronounced in developed than developing economies and is also identified within industries, notably in manufacturing. Policies to encourage FDI via M&A need to consider how to counteract the prevailing adverse effect on domestic entrepreneurship. |
| Keywords: | foreign direct investment; entrepreneurship; new firm entry; spillovers |
| JEL: | J1 |
| Date: | 2017–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:68118&r=int |
| By: | Häußermann, Johann Jakob |
| Abstract: | In Fairness in Practice – A Social Contract for a Global Economy (2012) Aaron James proposes a substantial normative framework for a theory of fairness in the global economy. Based on a distinctive methodology of interpretive constructivism, James argues for an internal justification of fairness requirements in the field of international trade, and consequently defends three basic egalitarian principles of fairness. However, Mathias Risse and Gabriel Wollner, among others, have criticized James’s view for multiple reasons. In the following article, I will first engage with their critique, contending that their arguments do not prove that James’s view should be dismissed. Instead, I will introduce a new proposal, arguing that it is rather by a notion of differential treatment of countries that James’s account should be complemented. Taking into account all the relevant differences between countries, the concept of differential treatment allows for the provision and establishment of equal participation as a basis for considerations of fairness. To this end, I shall therefore propose an additional fourth principle of fairness called Equal Participation. I argue that it is necessary to significantly expand James’s contractualist and practice-dependent foundations, in order to reconcile crucial methodological concerns and to render James’s formulations applicable to current debates on free trade agreements. The article will conclude with an exploration of the applicability of this new approach to current trade policy issues, illustrating not only its practicability but also the urgent need for normative considerations in the context of international trade agreements. |
| Keywords: | International Trade; Free Trade Agreements; Fairness; Special and Differential Treatment; Constructivism; Aaron James |
| JEL: | D63 F13 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:82246&r=int |
| By: | Cai, Jie (Shanghai University of Finance and Economics); Li, Nan (International Monetary Fund); Santacreu, Ana Maria (Federal Reserve Bank of St. Louis) |
| Abstract: | We develop and quantify a multi-country and multi-sector endogenous growth model in which comparative advantage and the stock of knowledge are endogenously determined by innovation and knowledge diffusion. We quantify the effect of trade liberalization on innovation, comparative advantage and welfare in a framework that features intersectoral production and knowledge linkages that are consistent with the data. A reduction in trade frictions induces a reallocation of innovation and comparative advantage across sectors: innovation reallocates towards sectors that experience larger increases in comparative advantage, and comparative advantage reallocates towards sectors with stronger knowledge spillovers. Furthermore, knowledge spillovers amplify the effect of a trade liberalization as countries and sectors benefit from foreign technology. In contrast to standard one sector models of trade and innovation without knowledge spillovers, we find significant dynamic gains from trade. These gains are mainly driven by innovation and knowledge diffusion across sectors and countries. |
| Keywords: | Technology Diffusion; R&D; Patent Citations; International Trade |
| JEL: | F12 O33 O41 O47 |
| Date: | 2017–10–23 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:2017-029&r=int |
| By: | Evenett, Simon J; Fritz, Johannes |
| Abstract: | The trade distortions implemented during the Great Depression of the 1930s and the global slump of the early 1980s influenced the subsequent evolution of the world trading system, not least because policymakers recognised the deficiencies in existing trade rules. Evidence is presented here on the incidence and trade coverage of the principal means by which governments have discriminated against foreign commercial interests since the onset of the global economic crisis. This evidence is hard to square with claims that multilateral trade rules held back protectionism. Preparing the ground to fix the flaws in current rules and in dispute settlement should be part of the WTO's future work programme. |
| Keywords: | global economic crisis; protectionism; world trade; WTO |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12412&r=int |
| By: | Sampson, Thomas |
| Abstract: | The allocation of skilled labor across industries shapes inter-industry wage differences and wage inequality. This paper shows the ranking of industries by workforce skill differs between developed and developing countries and develops a multi-sector assignment model to understand the causes and consequences of this fact. Heterogeneous agents leverage their ability through their span of control over an homogeneous input. In equilibrium, higher skill agents sort into sectors where the cost per efficiency unit of input is lower. Consequently, skill allocation is endogenous to country-sector specific variation in input productivity and costs and when the ranking of sectors by effective input costs differs across countries there is an assignment reversal. Assignment reversals between North and South have novel implications for how trade affects wages because they imply the Stolper-Samuelson theorem does not hold. Instead, each country has a comparative advantage in its high skill sector and output trade integration causes the relative wage of high skill workers, and wage inequality within the high skill sector, to increase in both countries |
| JEL: | F11 F16 J24 J31 |
| Date: | 2016–02–17 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:65429&r=int |
| By: | Kokoulina, Liudmila O. |
| Abstract: | The research aims to identify the knowledge sharing mechanisms underlying the export promotion program (EPP) for Russian IT companies. Particularly, the research studies the processes and effects of EPP organized by non-commercial organization RUSSOFT. This program was conducted in 2014-2015 for approx. one hundred Russian high-tech companies and included participation in several global trade fairs, exhibitions and conferences, as well as series of seminars and webinars on legal, financial and marketing aspects of internationalization. The research aims to uncover knowledge sharing mechanisms that took place during these events. |
| Keywords: | knowledge creation, knowledge sharing, Russia, export promotion program, IT industry, case study, high-tech companies, export promotion program, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:sps:cpaper:8675&r=int |
| By: | Manova, Kalina; Yu, Zhihong |
| Abstract: | We examine the global operations of multi-product firms. We present a flexible heterogeneous-firm trade model with either limited or strong scope for quality differentiation. Using customs data for China during 2002-2006, we empirically establish that firms allocate activity across products in line with a product hierarchy based on quality. Firms vary output quality across their products by using inputs of different quality levels. Their core competence is in varieties of superior quality that command higher prices but nevertheless generate higher sales. In markets where they offer fewer products, firms concentrate on their core varieties by dropping low-quality peripheral goods on the extensive margin and by shifting sales towards top-quality products on the intensive margin. The product quality ladder also governs firms' export dynamics, both in general and in response to the exogenous removal of MFA quotas on textiles and apparel. Our results inform the drivers and measurement of firm performance, the effects of trade reforms, and the design of development policies. |
| Keywords: | trade; trade reforms; multi-product firms; product quality; export prices |
| JEL: | L81 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:83599&r=int |
| By: | Magdalena M. Ulceluse |
| Abstract: | The paper contributes to existing debates concerning the effectiveness of immigration policies, by investigating the particular case of transitional arrangements implemented during the European Union enlargement rounds of 2004 and 2007. A number of authors have argued that instead of deterring immigration, the arrangements have changed the channels EU8 and EU2 migrants have chosen to enter the country of destination, by becoming self-employed. Self- employed individuals were not subjected to restrictions. Our results suggest that EU2 migrants have indeed turned to self-employment as a way to circumvent the restrictions, and point to a substitution effect in the case of EU8 migrants. The results have broader research and policy implications, revealing the importance of considering the effect immigration policies have in shaping the volume and skill composition of migrants, as well as their labour market trajectories and subsequent economic activities. |
| Keywords: | transitional arrangements, immigration policy, immigrant self-employment, EU enlargement, EU mobility |
| JEL: | J15 J18 J61 J68 |
| Date: | 2017–11–13 |
| URL: | http://d.repec.org/n?u=RePEc:cel:dpaper:47&r=int |
| By: | Marie-Agnes Jouanjean; Julien Gourdon; Jane Korinek |
| Abstract: | Integration into Global value chains (GVCs) provides opportunities for economic growth and development. However, the nature and extent of these opportunities differ across countries and sectors, and participation in GVCs can support processes of economic transformation in a variety of ways depending on the type of GVC. This paper explores some of the linkages between GVC participation and economic transformation at the sectoral level, with a view to assisting countries in assessing the various policy options for maximising their comparative advantages and their benefits from GVC participation. Three aspects of the relationship between GVC participation – defined as the use of foreign intermediates and integration into international production networks – and economic transformation are explored: i) sectoral differences in upgrading dynamics; ii) the role of services; and iii) resilience to external shocks. A range of qualitative and empirical approaches are used to explore and test the robustness of the relationship for three sectors presenting different characteristics in terms of their trade dynamics and links with economic transformation: mining and quarrying; motor vehicles, trailers and semi-trailers; and transport and storage services. |
| Keywords: | Developing Countries, Economic Transformation, Global Value Chain, Multi-Regional Input Output, Network Analysis, Sectoral Analysis, Services; Resilience, Upgrading |
| JEL: | F14 |
| Date: | 2017–11–27 |
| URL: | http://d.repec.org/n?u=RePEc:oec:traaab:207-en&r=int |
| By: | David Gaukrodger (OECD) |
| Abstract: | Compensation for adjudicators is generally considered as a core issue for judicial independence and for attracting good judges in the institutional design for courts. This paper examines compensation systems for adjudicators and dispute settlement administrators in investor-state dispute settlement (ISDS). The paper uses in part a comparative perspective based on approaches in domestic courts in advanced economies, an approach rarely taken in analysing investor-state arbitration. The first section of the paper provides historical context and examines the reform of remuneration of judges to replace private litigant fees with salaries in colonial America and the United States, France and England in the 18th and early 19th centuries. Subsequent sections address debates over the impact of compensation systems on adjudicators; contemporary approaches to the compensation of judges in advanced economies; the co-existence in advanced economies of national courts with salaried judges since the early 19th century with generally strong support for commercial arbitration based on ad hoc fee-based remuneration; and similarities and differences between commercial arbitration and investment arbitration, focusing how the largely similar compensation systems may have different effects and be differently perceived by the public. Annexes to the paper report on discussions about adjudicator compensation at the 2016 OECD Investment Treaty Conference and gather some preliminary facts about adjudicator and dispute administrator compensation in investor-state arbitration as well as the investment court system included in the recent EU-Canada CETA trade and investment agreement. |
| Keywords: | Alexander Hamilton, arbitrator compensation, bilateral investment treaties, comparative law, conflicts of interest, court fees, dispute settlement, domestic courts, economic incentives, foreign investment, international commercial arbitration, international economic law, international investment, international investment agreements, international investment law, investment arbitration, investment treaties, investment treaty policy, investor protection, investor-state dispute settlement, ISDS, Jeremy Bentham, judicial compensation, legal history, litigant fees, Voltaire |
| JEL: | H4 J3 J33 J44 K23 K33 K41 L33 N20 N4 |
| Date: | 2017–11–24 |
| URL: | http://d.repec.org/n?u=RePEc:oec:dafaaa:2017/5-en&r=int |
| By: | Crescenzi, Riccardo; Pietrobelli, Carlo; Rabellotti, Roberta |
| Abstract: | This paper explores the location strategies of Multinational Enterprises (MNEs) from emerging countries (EMNEs) in search for regional strategic assets. The analysis is based on a systematic comparison between EMNEs and multinationals from advanced countries (AMNEs) in order to unveil similarities and differences between these two major sources of foreign investments into the regions of the European Union. The empirical results suggest that EMNEs follow a distinct logic in their location strategies because they are attracted by the availability of technological competences only when their subsidiaries pursue more sophisticated and technology-intensive activities. Conversely EMNEs share some behavioural similarities with AMNEs in their response to the spatial agglomeration of investments. |
| Keywords: | innovation; regions; multinationals; European Union |
| JEL: | F21 F23 O33 R12 R58 |
| Date: | 2016–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:64603&r=int |
| By: | Emine Boz; Gita Gopinath; Mikkel Plagborg-Møller |
| Abstract: | We document that the U.S. dollar exchange rate drives global trade prices and volumes. Using a newly constructed data set of bilateral price and volume indices for more than 2,500 country pairs, we establish the following facts: 1) The dollar exchange rate quantitatively dominates the bilateral exchange rate in price pass-through and trade elasticity regressions. U.S. monetary policy induced dollar fluctuations have high pass-through into bilateral import prices. 2) Bilateral non-commodities terms of trade are essentially uncorrelated with bilateral exchange rates. 3) The strength of the U.S. dollar is a key predictor of rest-of-world aggregate trade volume and consumer/producer price inflation. A 1% U.S. dollar appreciation against all other currencies in the world predicts a 0.6--0.8% decline within a year in the volume of total trade between countries in the rest of the world, controlling for the global business cycle. 4) Using a novel Bayesian semiparametric hierarchical panel data model, we estimate that the importing country's share of imports invoiced in dollars explains 15% of the variance of dollar pass-through/elasticity across country pairs. Our findings strongly support the dominant currency paradigm as opposed to the traditional Mundell-Fleming pricing paradigms. |
| JEL: | E5 F1 F3 F4 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23988&r=int |
| By: | Panibratov, Andrei Yu.; Dikova, Desislava; Veselova, Anna S. |
| Abstract: | We apply the OLI framework to examine investment motives and internalization preferences of Russian multinationals in 2007-2013. To examine investment motives we use panel data of 322 observations; to test internalization choice we use cross-sectional data of 318 M&A deals. Our analysis shows that classic investment motives Ó market, resource, asset-seeking Ó provide a limited explanation of what attracts Russian acquirers abroad. We extend the OLI-model to include institutional distance and find that it plays a critical role in explaining Russian M&A activity. We employ a specific ownership advantage, government ownership, and discover that partial government ownership discourages Russian firms from pursuing full ownership in M&As. Further, Russian multinationals benefit from internalization advantages in tandem with location advantages derived from natural-resource endowments. |
| Keywords: | internationalization, foreign direct investments, FDI, invesments, Russia, OLI, OLI-model, M&A, M&A activity, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:sps:cpaper:8686&r=int |
| By: | Johannes Boehm; Swati Dhingra; John Morrow |
| Abstract: | The presence of global value chains challenges the neoclassical idea of the firm since it implies firms are not monolithic but are rather interdependent on the larger economic environment. Examining establishments, the smallest units of production within firms, sheds light on the microeconomic incentives determining the location of production and whether a firm produces a good or sources it. Most work on multiproduct firms looks at developed countries, but constraints on firm growth are greater in developing economies. We examine multiproduct establishments in India during a high growth period. Multiproduct establishments made up the bulk of manufacturing production, and their product turnover contributed 28 per cent to net sales growth. Unlike the nineties which witnessed drastic liberalization, establishments in the two-thousands dropped products at rates similar to those for the US. Sales dispersion across products also predicts product addition. |
| Keywords: | multiproduct firms, product adoption, product diversity |
| JEL: | L1 L2 M2 O3 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1509&r=int |
| By: | Uwe Jirjahn |
| Abstract: | From a theoretical viewpoint the relationship between foreign ownership and unionization is ambiguous. On the one hand, foreign owners have better opportunities to undermine workers' unionization. On the other hand, workers of foreign-owned firms have an increased demand for the protection provided by unions. Which of the two opposing influences dominates can vary according to moderating circumstances. This study shows that firm size and industry-level bargaining play a moderating role. The relationship between foreign ownership and unionization is negative in larger firms whereas it is positive in smaller firms. Coverage by industry-level collective bargaining makes a positive relationship both stronger and more likely. |
| Keywords: | Corporate Globalization, Foreign Direct Investment, Union Membership, Firm Size, Centralized Collective Bargaining |
| JEL: | F23 J51 J52 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:trr:wpaper:201709&r=int |
| By: | Michael Jetter; Saskia Moesle; David Stadelmann |
| Abstract: | This paper revisits the hypothesis that landlocked regions are systematically poorer than regions with ocean access, using panel data for 1,527 subnational regions in 83 nations from 1950-2014. This data structure allows us to exploit within-country-time variation only (e.g., regional variation within France at one point in time), thereby controlling for a host of unobservables related to country-level particularities, such as a country's unique history, cultural attributes, or political institutions. Our results suggest lacking ocean access decreases regional GDP per capita by 10 - 13 percent. We then explore potential mechanisms and possible remedies. First, national political institutions appear to play a marginal role at best in the landlocked-income relationship. Second, the income gap between landlocked and non-landlocked regions within the same nation widens as i) GDP per capita rises, ii) international trade becomes more relevant for the nation, and iii) national production shifts to manufacturing. Finally, we find evidence consistent with the hypothesis that national infrastructure (i.e., transport-related infrastructure and rail lines) can alleviate the lagging behind of landlocked regions. |
| Keywords: | landlockedness, geography, GDP per capita, trade openness, infrastructure |
| JEL: | E43 H54 O18 O40 R12 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6733&r=int |
| By: | Stephen J. Redding; David E. Weinstein |
| Abstract: | We develop a new framework for aggregating from micro to macro patterns of trade. We derive price indexes that determine comparative advantage across countries and sectors and the aggregate cost of living. If firms and products are imperfect substitutes, we show that these price indexes depend on variety, average demand/quality and the dispersion of demand/quality-adjusted prices, and are only weakly related to standard empirical measures of average prices, thereby providing insight for elasticity puzzles. Of the cross-section (time-series) variation in comparative advantage, 50 (90) percent is accounted for by variety and average demand/quality, with average prices contributing less than 10 percent. |
| Keywords: | comparative advantage, trade, prices, quality, variety |
| JEL: | F11 F12 F14 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1513&r=int |
| By: | Annalisa Marini (Department of Economics, University of Exeter); Steve McCorriston (Department of Economics, University of Exeter) |
| Abstract: | We address the transmission of commodity price shocks and assess how source-specific shocks spillover to other exporting countries.Applying a multi-country panel VAR, we show that a model that allows for cross-country interdependencies is an appropriate specification of commodity markets. Source-specific shocks therefore have both direct and spillover effects and the results indicate that these spillover effects are both statistically and economically significant. Accounting for these spillover effects has important implications for understanding commodity price dynamics and the management of price shocks in both exporting and importing countries. |
| Keywords: | PVAR, Commodity Price Transmission, Spillovers |
| JEL: | F00 C3 C5 Q1 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:exe:wpaper:1708&r=int |
| By: | Meagher, Kate; Manna, Laura; Bolt, Maxim |
| Abstract: | This introductory article explores the transformative potential of global connections for African workers. It challenges recent claims that African workers have become functionally irrelevant to the global economy by examining the shift of global demand for African workers from formal to increasingly informalised labour arrangements, mediated by social enterprises, labour brokers and graduate entrepreneurs. Focusing on global employment connections initiated from above and from below, we consider why global labour linkages have tended to increase rather than reduce problems of vulnerable and unstable working conditions within African countries, and consider the economic and political conditions needed for African workers to capture the gains of inclusion in the global economy. |
| JEL: | N0 |
| Date: | 2016–03–22 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:66276&r=int |
| By: | Tahiri, Noor Rahman |
| Abstract: | The present study attempts the impact of foreign direct investment on gross domestic product (GDP) of Afghanistan by taking a time- series data for the period of 2001-2014. It is applied ordinary least square (OLS) method through simple regression. T-statistic is significant and P-value is also significant at 5% level. The F-test was also significant at 5% level so the overall model is significant. The results indicated that there is positive significance relationship between foreign direct investment and gross domestic product (GDP) in Afghanistan. The study suggests that Government may focus on to attracting foreign direct investment and improve its agriculture and mine sector latest technology and Machineries for better economic growth. |
| Keywords: | Capital formation, GDP, FDI, Inflation |
| JEL: | C02 D22 |
| Date: | 2017–10–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:82264&r=int |
| By: | Netz, Nicolai; Parey, Matthias; Ruhose, Jens; Waldinger, Fabian |
| Abstract: | We measure selection among high-skilled emigrants from Germany using predicted earnings. Migrants to less equal countries are positively selected relative to non-migrants, while migrants to more equal countries are negatively selected, consistent with the prediction in Borjas (1987). Positive selection to less equal countries reflects university quality and grades, and negative selection to more equal countries reflects university subject and gender. Migrants to the United States are highly positively selected and concentrated in STEM fields. Our results highlight the relevance of the Borjas model for high-skilled individuals when credit constraints and other migration barriers are unlikely to be binding. |
| Keywords: | emigrants; high-skilled; migrant selection; migrants |
| JEL: | F22 I23 J61 O15 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12403&r=int |
| By: | Frédéric Docquier (FNRS & IRES, Université Catholique de Louvain (Belgium), and FERDI (France)); Aysit Tansel (Middle East Technical University (Turkey), IZA (Germany) and ERF (Egypt)); Riccardo Turati (IRES, Université Catholique de Louvain (Belgium)) |
| Abstract: | This paper empirically investigates whether emigrants from MENA countries self-select on cultural traits such as religiosity and gender-egalitarian attitudes. To do so, we use Gallup World Poll data on individual opinions and beliefs, migration aspirations, short-run migration plans, and preferred destination choices. We find that individuals who intend to emigrate to OECD, high-income countries exhibit significantly lower levels of religiosity than the rest of the population. They also share more gender-egalitarian views, although the effect only holds among the young (aged 15 to 30), among single women, and in countries with a Sunni minority. For countries mostly affected by Arab Spring, since 2011 the degree of cultural selection has decreased. Nevertheless, the aggregate effects of cultural selection should not be overestimated. Overall, self-selection along cultural traits has limited (albeit non negligible) effects on the average characteristics of the population left behind, and on the cultural distance between natives and immigrants in the OECD countries. |
| Keywords: | International migration, self-selection, cultural traits, gender-egalitarian attitudes, religiosity, MENA region. |
| JEL: | F22 J61 Z10 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:koc:wpaper:1716&r=int |
| By: | Chella, Namapsa; Phiri, Andrew |
| Abstract: | The primary objective of this paper is to investigate the relationship between foreign direct investment, domestic investment and unemployment in South Africa. Our mode of empirical investigation is the autoregressive distributive lag (ARDL) cointegration model which provides the advantage of accommodating for a mixture of levels stationary and difference stationary time series variables and is applied to quarterly data collected between 1970 and 2014. Our empirical results point to the existence of a negative effect of domestic investments on unemployment levels whereas foreign direct investment appears to have no significant effect on reducing unemployment levels. Collectively, these results hold crucial implications for South African policymakers. |
| Keywords: | FDI; domestic investment; unemployment; ARDL; cointegration; South Africa; developing country. |
| JEL: | C22 C32 E22 E24 |
| Date: | 2017–11–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:82371&r=int |
| By: | Barjamovic, Gojko; Chaney, Thomas; Cosar, Kerem; Hortacsu, Ali |
| Abstract: | We analyze a large dataset of commercial records produced by Assyrian merchants in the 19th Century BCE. Using the information collected from these records, we estimate a structural gravity model of long-distance trade in the Bronze Age. We use our structural gravity model to locate lost ancient cities. In many instances, our structural estimates confirm the conjectures of historians who follow different methodologies. In some instances, our estimates confirm one conjecture against others. Confronting our structural estimates for ancient city sizes to modern data on population, income, and regional trade, we document persistent patterns in the distribution of city sizes across four millennia, even after controlling for time-invariant geographic attributes such as agricultural suitability. Finally, we offer evidence in support of the hypothesis that large cities tend to emerge at the intersections of natural transport routes, as dictated by topography. |
| Keywords: | economic geography; economic history; Trade |
| JEL: | F10 N9 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12408&r=int |
| By: | Ermolaeva, Lyubov A.; Pantic, Bojan |
| Abstract: | It is widely recognized that corporate political ties (CPT) in general lead to better organizational performance and higher firm value (Fisman, 2001; Frynas, Mellahi and Pigman, 2006; Goldman, Rocholl and So, 2009) however there are empirical evidence that the presence of CPT under certain circumstances causes negative effects on firm value (e.g. Aggarwal, Meshke & Wang, 2012; Hersh, Netter & Pope, 2008). The investigated case of RusalÙ³ investments in Montenegrin aluminum plant demonstrates that CPT did not improve the organizational performance but even result in Rusal escaping from Montenegro. The aim of the study is to reveal/uncover the process through which corporate political ties (CPT) transform from valuable asset to a costly liability by unswerving following research questions: why corporate political ties change over time? And how this change impacts the MNE strategy in the foreign market? |
| Keywords: | political ties, EMNEs, multinational companies, entreprises, Balkans, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:sps:cpaper:8619&r=int |