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on International Trade |
| By: | Kyle Bagwell; Robert W. Staiger; Ali Yurukoglu |
| Abstract: | This paper develops a model of international tariff negotiations to study the design of the institutional rules of the GATT/WTO. We embed a multi-sector model of trade between multiple countries into a model of inter-connected bilateral negotiations over tariffs. Using 1990 trade flows and tariff outcomes from the Uruguay Round of GATT/WTO negotiations, we estimate country-sector productivity levels, sector-level productivity dispersion, iceberg trade costs, and country-pair bargaining parameters. We use the estimated model to simulate an alternative institutional setting for multilateral tariff negotiations in which the most-favored-nation requirement is abandoned. We find that abandonment of the most-favored-nation requirement would result in inefficient over-liberalization of tariffs and a deterioration in world-wide welfare relative to the negotiated outcomes in the presence of the most-favored-nation requirement. |
| JEL: | F11 F13 L4 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24273&r=int |
| By: | Tamminen, Saara; Niemi, Janne; Nilsson Hakkala, Kristiina |
| Abstract: | The CETA agreement aims to remove especially various non-tariff measures (NTMs) on trade and investment stemming from regulatory practices, in addition to the nearly full elimination of tariffs between the EU and Canada. This report analyses the expected impacts of the agreement to the Finnish economy with a GTAP CGE model and microdata analyses on the current trade structures. The expected GDP impact of 0.04 percent to Finland is slightly higher than the EU average (0.03 percent). In terms of value added, most sectors in Finland grow minimally as a result of the CETA. The highest bilateral trade effects are found for motor vehicles and transport equipment industries where both bilateral exports and imports are expected to increase by over 100 percent. Further, the extensive liberalisation of services trade is likely to have some positive effects for Finland as some 30-50 percent of the current domestic value added from Finnish exports to Canada originated from service exports. Even nearly total opening of public procurement markets to EU exporters in Canada is not, again, likely to result in very large benefits for EU firms in absolute terms, while some increases are possible. The reduction of fixed and marginal costs of exporting in the CETA agreement is likely to open the Canadian market to Finnish SME exporters, which have not entered the Canadian market as well as other export markets until now. |
| Keywords: | EU-Canada Comprehensive Economic and Trade Agreement, |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:fer:resrep:187&r=int |
| By: | Békés, Gábor; Muraközy, Balázs |
| Abstract: | How do firms enter international markets? To answer this question, this paper uses a unique multi-country firm-level dataset which, besides direct exporting and FDI, provides explicit information on a number of internationalization modes: indirect exporting, outsourced manufacturing and service FDI. We present a theoretical framework in which modes requiring higher and higher commitment have progressively higher fixed and lower marginal costs. By estimating multinomial and ordered logit models, we present evidence in line with such a sorting framework with respect to TFP and innovativeness. We identify three 'clusters' of modes: indirect exporters are similar to non-exporters, direct exporters and outsourced manufacturers constitute a second cluster while service and manufacturing FDI are the most demanding internationalization modes. |
| Keywords: | export; FDI; Firm Heterogeneity; internationalization mode; ordered logit; Outsourcing; sorting |
| JEL: | F14 F23 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12639&r=int |
| By: | Bratti, Massimiliano (University of Milan); De Benedictis, Luca (University of Macerata); Santoni, Gianluca (CEPII, Paris) |
| Abstract: | In this paper we highlight a new complementary channel to the business and social network effect à la Rauch (2001) through which immigrants generate increased export flows from the regions in which they settle to their countries of origin: they can become entrepreneurs. Using very small-scale (NUTS-3) administrative data on immigrants' location in Italy, the local presence of immigrant entrepreneurs (i.e. firms owned by foreign-born entrepreneurs) in the manufacturing sector, and on trade flows in manufacturing between Italian provinces and more than 200 foreign countries, we assess the causal relationship going from diasporas and immigrant entrepreneurs towards export flows. Both the size of the diaspora and the number of immigrant entrepreneurs have a positive, significant and economically meaningful effect on exports. We find that increasing the stock of (non-entrepreneur) immigrants by 10% would lead to a 1.7% increase in exports in manufacturing towards immigrants' countries of origin, while increasing the number of immigrant entrepreneurs in manufacturing by 10% would raise exports by about 0.6%. We also show that, besides these bilateral effects, the population of immigrant entrepreneurs raises a province's overall competitiveness and export flows towards all potential destinations. |
| Keywords: | exports, immigrants, gravity model, immigrant entrepreneurs, Italy |
| JEL: | F10 F14 F22 R10 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11280&r=int |
| By: | Anderson, Kym; Wittwer, Glyn |
| Abstract: | Since Britain accounts for a major share of the world's wine imports, and EU member countries include the world's major wine exporters, Brexit and subsequent UK and EU27 bilateral free-trade agreements (FTAs) have the potential to disrupt wine markets globally. We use a model of the world's national wine markets, projected to 2025, to examine potential impacts of Brexit and a series of follow-on bilateral FTAs. The scenarios assume a UK-EU27 FTA is followed by EU27 bilateral FTAs with Australia and New Zealand and then UK bilateral FTAs with those two plus South Africa and Chile (with whom the EU already has FTAs). The new EU-Japan FTA is also assessed. Brexit's impact comes more from assumed changes to the UK's income growth and the pound's exchange rate than to its tariffs. The bilateral trade consequences of the trade-diverting and trade-creating effects of each additional FTA are highlighted. They are then compared with the effects of a multilateral agreement to remove all wine import tariffs globally. Unrealistic though this is, it exposes the far bigger contributions to wine producers and consumers that could emerge from a single multilateral undertaking than from several bilateral or regional FTAs. |
| Keywords: | Brexit; global wine market modeling; preferential trading agreements |
| JEL: | F13 F14 F15 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12621&r=int |
| By: | Jung, Jae Wook (Korea Institute for International Economic Policy) |
| Abstract: | Africa is one of the most economic-integrated continents by a number of regional trade agreements in the continent. There are about 30 bilateral and multilateral trade agreements within the continents so that each African country is a member of at least one regional trade agreement. Trade between African countries, however, barely exceeds 10% of the total trade of Africa, which is much lower than other continents' intra-regional trade share. This discrepancy between many regional trade agreements and small intra-continent trade share tells that regional economic integrations in Africa are very unsuccessful trade liberalization policies to promote trade. This paper examines a reason why trade liberalization policies in Africa fail. In particular, we investigate the impact of trade agreements in Africa on trade conditional on financial market development and political instability. An empirical study finds that Africa countries' poor financial market accessibility and political instability are key barriers to trade integration in the region. These two factors can explain most disadvantage of African countries in their intra-regional trade. In a dynamic regression, the two factors depress the long-run growth of trade due to trade liberalization in the region significantly, while African continent dummy variable that captures other unobserved trade obstacles in the region has much less effect on trade compared to the literature on African regional economic integration. |
| Keywords: | Regional Trade Agreements; Financial Market Development; Political Stability; Africa |
| JEL: | F13 F14 F15 F36 N77 |
| Date: | 2017–11–19 |
| URL: | http://d.repec.org/n?u=RePEc:ris:kiepwp:2017_005&r=int |
| By: | Zaclicever, Dayna |
| Abstract: | This document combines information from input-output tables with trade data to provide new evidence on Latin American and the Caribbean countries’ gross forward participation in international production networks (i.e., as exporters of intermediate products that are incorporated into other countries’ exports). The data show a limited insertion into extra-regional value chains (with the main exception of Mexico), as well as significantly lower levels of intra-regional production integration than countries in other regions. However, both extra and intra-regional linkages vary greatly across countries. |
| Keywords: | INTEGRACION ECONOMICA, COMERCIO INTERNACIONAL, COOPERACION INDUSTRIAL, PRODUCCION INDUSTRIAL, ECONOMIC INTEGRATION, INTERNATIONAL TRADE, INDUSTRIAL COOPERATION, INDUSTRIAL PRODUCTION |
| Date: | 2017–12–31 |
| URL: | http://d.repec.org/n?u=RePEc:ecr:col025:43192&r=int |
| By: | Emmanuel , Igbinoba (Diversity Watch Limited England) |
| Abstract: | Recent development economic literatures theorize that South-South trade and foreign investment may have a larger impact on economic growth in developing economies than North-South trade and investment, since investors from the South are more familiar with local developing markets and business practices, which increases their productivity spillovers (Aykut and Goldstein 2007). Amighini and Sanfilippo (2014) provided evidence that South-South trade and investments stimulate product diversification in light manufacturing industries such as agroprocessing, plastic, textile and leather production. The Belt and Road Initiative (BRI) launched in 2013, aims to create economic opportunities as well as improve and establish new trading routes between China and connected regions. This paper attempts to evaluate the degree of trade relations between China and selected African countries along the Maritime Silk Route (MSR) and further appraise the trade potentials and gains inherent for African economies through the initiative. To achieve our objective, we apply quantitative techniques in trade evaluation to enable us explore and estimate the degree and intensity of trade engagements amongst selected Sino-African silk route countries, identify the trade opportunities and potentials, which are critical for increased trade engagements between both parties along the route and to explore some of the channels through which the maritime route can impact on investment, trade and economic growth in Africa. Findings from the analysis indicate that while the degree of trade integration is unbalanced and favourable to China relative to Africa, the trade pattern and structure are observed to be more complementary than competitive, and this provides Africa with ample opportunity to engage in product upgrading and diversification, critical for structural transformation. |
| Keywords: | Maritime Silk Route; Belt and Road; Africa; Trade Complementarity; Trade Competitiveness |
| JEL: | F15 F17 F18 O24 |
| Date: | 2017–12–19 |
| URL: | http://d.repec.org/n?u=RePEc:ris:kiepwp:2017_007&r=int |
| By: | Robert M. Feinberg; Kara M. Reynolds |
| Abstract: | Empirical studies have found that countries may respond strategically to the antidumping petitions filed against their exporters through their own retaliatory actions. Although most previous studies have focused on retaliatory antidumping filings, in this paper we explore another potential avenue for strategic response—filing a complaint under the World Trade Organization's (WTO) Dispute Settlement Understanding. Using a panel of global antidumping filings between 1995 and 2011, we analyze under what conditions countries will choose to retaliate through either an antidumping petition or a WTO dispute, and to what degree these two strategies are complementary or act as substitutes. We find statistical evidence that countries are more likely to file a WTO dispute when they have also filed a retaliatory antidumping petition, suggesting that these two strategies may be complementary. |
| JEL: | F13 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:amu:wpaper:2017-08&r=int |
| By: | Shandre Mugan Thangavelu; Wang Wenxiao; Sothea Oum |
| Abstract: | The paper studies the degree of servicification (or the role of services as inputs in manufacturing) of selected 61 Asian countries in terms of global value chain (GVC) activities at the sectoral level using domestic and foreign services from 1995 to 2011. We explore empirically the possible sources of servicification of the economies in terms of the factors driving the expansion of servicification. We categorize servicification activities into two types: (a) domestic servicification using domestic services and (b) foreign servicification using foreign value-added content in domestic exports. Servicification is confirmed in selected Asian countries, particularly in 16 East Asian countries associated with the Regional Comprehensive Economic Partnership (RCEP) negotiation. However, the selected Asian countries tend to have lower domestic servicification levels, but higher foreign servicification levels as compared to the overall sample of countries in the study. Countries with higher participation rates and lower positions in GVCs tend to have higher levels of foreign servicification across the sectors. In contrast, countries with higher participation rates and higher positions in GVCs tend to use more domestic services in manufacturing exports. The effect is larger for Asian countries as compared to the developed countries in the sample. The study also highlights the role of technical improvement and institutional as key factors in the development of services in the global production value chain. |
| Keywords: | global value chains, servicification, institutions, RCEP countries |
| JEL: | F14 F55 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:era:wpaper:dp-2017-12&r=int |
| By: | Chandran, B.P. Sarath |
| Abstract: | India signed a FTA with ASEAN in the year 2009 came into effect on 1 January 2010. The paper looks in to the trade impact of India ASEAN Free Trade Agreement using an augmented Gravity model using a panel data framework. The study used a balanced panel data set of 11050 bilateral trade for 650 country pair for 17 years. Different panel data estimation techniques such as Pooled OLS method (POLS), Maximum likelihood Estimation Method (MLE), Fixed Effect with Vector Disintegration (FEVD), Between Effect (BE) and Random Effect Method (RE) are applied to the dataset to arrive at appropriate modeling method. Fixed Effect with Vector Decomposition (FEVD) was found suitable for explaining the trade flow. The results show the possibility of greater trade between India and ASEAN countries through RTA. Since the initial tariff levels are higher in India compared to ASEAN, ASEAN is likely to gain more in the short term. For India to exploit the trade potential with ASEAN the FTA should be operationalized in the services and investment domain. |
| Keywords: | Gravity Model, FTA, Trade Creation, India, ASEAN. |
| JEL: | F13 F14 F15 |
| Date: | 2018–01–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:84183&r=int |
| By: | Laaser, Claus-Friedrich; Rosenschon, Astrid |
| Abstract: | With respect to its GDP of markedly more than US$ 2,000 billion, India is the seventh largest economy in the world, with respect to population it is even the second largest. Therefore, India has a substantial market potential. The authors analyze in how far the fast growing Indian economy has unexploited options to integrate itself into the international division of labor, to what extent India is actually integrated into the world economy, and what are the country's regional and sectoral trade patterns. India's integration patters are analyzed between the poles of a global and a regional design during the last two decades. These issues are addressed by using a detailed dataset of India's foreign trade statistics, and from a more analytical perspective by virtue of a gravity model. It turns out that India's overall integration into the international division of labor is still far from being completed and leaves ample room for improvement. So far, India is trading intensely with some specific partners, like the USA, and particularly with the Arabian countries around the Arabian Gulf. These quite distinct links are more or less the result of the commodity pattern of India's export and import flows, primarily the exchange of crude oil with oil products, and intermediate inputs as well as finalized products of the jewelry industry. One can conclude that the increasing dominance of these product lines are one of the main drivers behind the apparent shift towards Asian trading partners in general, as the trading partners' analysis by continents reveals. In addition, India's mutual trade relations with China have greatly improved during the observation period. During these two decades, China and its special economic zone Hong Kong constantly gained importance as one of India's trading partner according to the results of the gravity model. With respect to the labor-intensity of commodity exports India is lagging behind. It has left space to its Asian competitors. Even exports to the USA which have retained their position as prime export destination - albeit with a shrinking export share - have been dominated by the two prominent product lines of jewelry and mineral oil products. Looking at European partners there is still ample space for India to integrate more intensely in the pertinent international division of labor with most of the European countries. Only on India's export side the former links to the United Kingdom as the old colonial power seem to be rather intact, and also Germany has over proportional links to India, at least with respect to India's exports. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwkbw:13&r=int |
| By: | Marc-Andreas Muendler; James E. Rauch |
| Abstract: | It is well established that employee spinoffs learn their parents’ technologies, but little is known about their demand-side learning. We exploit the identification in international trade data of parent markets (countries) to investigate whether exporting employee spinoffs of exporting parents have an advantage in accessing their parents’ markets over exporting comparison firms well positioned to learn those markets at arm’s length. We find that, controlling for the greater overlap of spinoffs with their parents’ export products, at entry spinoffs access 51 percent more parent markets than exporting firms in the same 4-digit industries and municipalities as the parents. This advantage shrinks monotonically with time, becoming statistically insignificant four years after entry, indicating that intrafirm learning provides spinoffs with a four-year head start over learning at arm’s length. Spinoffs do not overlap more than comparison firms with parent markets that the parents did not serve at spinoff entry, providing evidence against the alternative hypothesis that product overlap inadequately controls for greater technological similarity of spinoffs to parents. Firm entry into parent markets predicted by spinoff status does not lead to entry into “adjacent” markets the following year. |
| JEL: | F14 L25 L26 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24302&r=int |
| By: | Hoekman, Bernard; Nelson, Doug |
| Abstract: | The post Second World War liberal trade order has been a driver of global economic growth and rising average per capita incomes. This order confronts increasing opposition, reflecting concerns about adjustment costs and distributional effects of globalization, and the ability to pursue national policy goals. At the same time the development of complex production relations distributed across many countries calls for cooperation on a variety of regulatory policies. Contrary to what is argued by opponents of globalization, this does not imply one size fits all rules that constitute a threat to national sovereignty and democratic legitimation. There remains an important 'traditional' integration agenda that centers on rule-making by major trading powers on policies that generate negative international spillovers. But the core challenge for the political economy of 21st Century trade agreements is to support regulatory cooperation to better govern international production and address the non-pecuniary externalities associated with greater economic integration. |
| Keywords: | trade agreements; globalization; WTO; adjustment costs; economic integration; political economy |
| JEL: | F02 F13 F15 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12620&r=int |
| By: | Avi Goldfarb; Daniel Trefler |
| Abstract: | This paper explores the international dimensions of the economics of artificial intelligence. Trade theory emphasizes the roles of scale, competition, and knowledge creation and knowledge diffusion as fundamental to comparative advantage. We explore key features of AI with respect to these dimensions and describe the features of an appropriate model of international trade in the context of AI. We then discuss policy implications with respect to investments in research, and behind-the-border regulations such as privacy, data localization, standards, and competition. We conclude by emphasizing that there is still much to learn before we have a comprehensive understanding of how AI will affect trade. |
| JEL: | F1 O33 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24254&r=int |
| By: | Dauth, Wolfgang (University of Würzburg); Findeisen, Sebastian (University of Mannheim); Suedekum, Jens (Heinrich Heine University Düsseldorf) |
| Abstract: | We study the impact of trade exposure in the job biographies, measured with daily accuracy, of 2.4 million workers in Germany. To profit from export opportunities, workers adjust through increased employer switching. Highly skilled workers benefit the most, consistent with an increase in skill demand. The incidence of import shocks falls mostly on low-skilled workers, as they are not able to adjust as well as medium- and high-skilled workers. Imports also destroy rents by workers at high-wage plants who separate from their original firm. We connect our results to the growing theoretical literature on the labor market effects of trade. |
| Keywords: | work biographies, individual labor market responses, international trade, worker mobility, Germany |
| JEL: | F16 J31 R11 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11299&r=int |
| By: | Lewis, Logan T. (Federal Reserve Board); Monarch, Ryan (Federal Reserve Board); Sposi, Michael J. (Federal Reserve Bank of Dallas); Zhang, Jing (Federal Reserve Bank of Chicago) |
| Abstract: | Since 1970, services has risen from 50 percent of the world’s final consumption expenditures to nearly 80 percent. Services are also far less traded between countries than goods. Thus, as consumers become more service-oriented, the world will become “less open”, affecting international trade volumes. Using a general equilibrium trade model with non-homothetic preferences and endogenous shifts in consumption behavior, we quantify the impact of such structural change on global trade across 27 countries. We find that world trade as a fraction of GDP would have been about 23 percentage points or 70 percent higher by 2015 if country-level expenditure patterns were unchanged from 1970 onwards. Income effects explain about one-quarter of this counterfactual. Without input-output linkages in production, the counterfactual increase in world trade with no structural change would be even greater. Finally, the process of structural transformation toward services systematically impedes the gains from trade. |
| JEL: | F41 L16 O41 |
| Date: | 2018–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:feddgw:333&r=int |
| By: | Razin, Assaf |
| Abstract: | The exodus of Soviet Jews to Israel in the 1990s was a unique event. The extraordinary experience of Israel, which has received three quarter million migrants from the Former Soviet Union within a short time, is also relevant for the current debate about globalization. The immigration wave was distinctive for its large high skilled cohort, and its quick integration into the domestic labor market. Immigration also changed the entire economic landscape: it raised productivity, underpinned by the information technological surge, and had significant impact on income inequality. This paper provides an explanation for a possible link between immigration and the level of redistribution in Israel's welfare state. |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12662&r=int |
| By: | de Bromhead, Alan; Fernihough, Alan; Lampe, Markus; O'Rourke, Kevin Hjortshøj |
| Abstract: | A recent literature explores the nature and causes of the collapse in international trade during 2008 and 2009. The decline was particularly great for automobiles and industrial supplies; it occurred largely along the intensive margin; quantities fell by more than prices; and prices fell less for differentiated products. Do these stylised facts apply to trade collapses more generally? This paper uses detailed, commodityspecific information on UK imports between 1929 and 1933, to see to what extent the trade collapses of the Great Depression and Great Recession resembled each other. It also compares the free trading trade collapse of 1929-31 with the protectionist collapse of 1931-3, to see to what extent protection, and gradual recovery from the Great Depression, mattered for UK trade patterns. |
| Keywords: | Great Depression; Great Recession; trade; protectionism |
| JEL: | F14 N74 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12626&r=int |
| By: | Willem THORBECKE |
| Abstract: | Safe asset demand and currency manipulation increase the U.S. dollar and the U.S. current account deficit. Deficits in manufacturing trade cause dislocation and generate protectionism. Dynamic ordinary least squares (OLS) results indicate that U.S. export elasticities exceed unity for automobiles, toys, wood, aluminum, iron, steel, and other goods. Elasticities for U.S. imports from China are close to one or higher for footwear, radios, sports equipment, lamps, and watches, and exceed 0.5 for iron, steel, aluminum, miscellaneous manufacturing, and metal tools. Elasticities for U.S. imports from other countries are large for electrothermal appliances, radios, furniture, lamps, miscellaneous manufacturing, aluminum, automobiles, plastics, and other categories. For U.S. exports and especially for U.S. imports from China, trade in more sophisticated products are less sensitive to exchange rates. Stock returns on many of the sectors with high export and import elasticities also fall when the dollar appreciates. Several manufacturing industries are thus exposed to a strong dollar. Policymakers could weaken the dollar and deflect protectionist pressure by promoting the euro, yen, and renminbi as alternative reserve currencies. |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:18005&r=int |
| By: | Jota Ishikawa; Hodaka Morita; Hiroshi Mukunoki |
| Abstract: | This study explores the effect of parallel imports (PIs) when the producer may discriminate repair and maintenance services against PI units. This service discrimination weakens intra-brand competition and reduces the degree of price convergence between countries. If the producer makes costly activities to improve the quality of the good, permitting PIs in the presence of the service discrimination could lower the quality, because lower quality leads to a larger price gap. Consequently, it is possible that prices increase, consumers lose, and welfare deteriorates in both countries. This negative welfare effect is more likely to emerge as trade liberalization proceeds. |
| Keywords: | parallel imports, service discrimination, goods quality, welfare, trade liberalization |
| JEL: | F12 F13 F10 D42 L41 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6850&r=int |
| By: | Facchini, Giovanni (University of Nottingham); Liu, Maggie Y. (Smith College); Mayda, Anna Maria (Georgetown University); Zhou, Minghai (University of Nottingham) |
| Abstract: | We analyze the effect of China's integration into the world economy on workers in the country and show that one important channel of impact has been internal migration. Specifically, we study the changes in internal migration rates triggered by the reduction in trade policy uncertainty faced by Chinese exporters in the U.S. This reduction is characterized by plausibly exogenous variation across sectors, which we use to construct a local measure of treatment, at the level of a Chinese prefecture, following Bartik (1991). This allows us to estimate a difference-in-difference empirical specification based on variation across Chinese prefectures before and after 2001. We find that prefectures facing the average decline in trade policy uncertainty experience an 18 percent increase in their internal in-migration rate – this result is driven by migrants who are "non-hukou", skilled, and in their prime working age. Finally, in those prefectures, working hours of "native" unskilled workers significantly increase – while the employment rates of neither native workers nor internal migrants change. |
| Keywords: | hukou, immigration, internal migration, trade policy uncertainty |
| JEL: | F22 J61 O15 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11279&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: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:18-10&r=int |
| By: | FURUSAWA Taiji; INUI Tomohiko; ITO Keiko; Heiwai TANG |
| Abstract: | This paper studies how firms' offshoring decisions shape a country's domestic production networks. We develop a model in which heterogeneous firms source inputs from multiple industries located in different domestic regions and foreign countries. Input sourcing entails communication with suppliers, which is endogenously increasing in the differentiation of inputs. The model predicts that firms are less likely to source differentiated inputs, especially from distant domestic and foreign suppliers, due to costly communication. Triggered by foreign countries' export supply shocks, firms start offshoring inputs from foreign suppliers, which displaces the less productive domestic suppliers in the same industry (the direct displacement effect). The resulting decline in marginal costs induces firms to start sourcing from the more productive and distant domestic suppliers within industries (within-industry restructuring effect), but possibly also from nearby suppliers that produce inputs that are more differentiated than those supplied by existing suppliers (the industry composition effect). The net effect of offshoring on a firm's domestic production networks depends on the relative strength of the three effects, which we verify using data for 4.5 million buyer-seller links in Japan. Based on a firm-level instrument, we find that after offshoring, firms are less likely to drop suppliers on average, but more so for the larger ones. They tend to add nearby suppliers producing differentiated inputs. These results suggest that firms' offshoring may increase the spatial concentration of domestic production networks. |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:18004&r=int |
| By: | Blaise Gnimassoun |
| Abstract: | Regional integration in Africa is a subject of great interest, but its impact on income has not been studied sufficiently. Using cross-sectional and panel estimations, this paper examines the impact of African integration on real per capita income in Africa. To do this, we consider intra-African trade and migration flows as quantitative measures reflecting the intensity of regional integration. In order to address the endogeneity concerns, we use a gravity-based IV strategy. Our results show that, from a long-term perspective, African integration has not been strong enough to generate a positive, significant and robust impact on real per capita income in Africa. However it appears to be significantly income-enhancing in the short term but only through inter-country migration. These results are robust to a wide range of specifications. Further analysis shows that economic diversification, financial development and the quality of transport and telecommunication infrastructure significantly affect the impact of intra-African trade on per capita income. Their improvement would make intra-African trade income-improving. Our policy recommendations have been formulated in this direction. |
| Keywords: | Income per capita, Trade, International Migration, Economic Integration, Africa. |
| JEL: | E64 F14 F22 F15 O55 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2018-09&r=int |
| By: | Tsuyoshi Kawase; Masahito Ambashi |
| Abstract: | This paper analyses the disciplines of state-owned enterprises (SOEs) stipulated in Chapter 17 of the Trans-Pacific Partnership Agreement (TPP). The introduction of the extensive disciplines on SOEs was led by the concern that SOEs are likely to disturb fair international competition regime by conducting business activities not depending on economic rationality and anticompetitive activities. Major provision of this chapter includes definitions and the scope of application, commercial considerations and non-discriminatory treatment, non-commercial assistance, and transparency. While Chapter 17 can be appreciated as the first comprehensive and detailed discipline on SOEs including that of the WTO-plus, it still has problems and remaining issues concerning the disciplines. Nevertheless, the very fact that the TPP includes specific rules for SOEs is appreciated as a first step towards disciplining them in the future. |
| Keywords: | State-owned enterprise, Trans-Pacific Partnership (TPP), Commercial considerations, Non-discriminatory treatment, Non-commercial assistance, Transparency |
| JEL: | F13 H25 K33 L32 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:era:wpaper:dp-2017-13&r=int |
| By: | Bosker, Maarten; Buringh, Eltjo |
| Abstract: | Iceberg transport costs are one of the main ingredients of modern trade and economic geography models: transport costs are modelled by assuming that a fraction of the goods shipped "melts in transit''. In this paper, we investigate whether the iceberg assumption applies to the costs of transporting the only good that literally melts in transit: ice. Using detailed information on Boston's nineteenth-century global ice trade, we show that ice(berg) transport costs in practice were a combination of a true ad-valorem iceberg cost: melt in transit, and freight, (off)loading and insurance costs. The physics of the melt process and the practice of insulating the ice in transit imply an immediate violation of the iceberg assumption: shipping ice is subject to economies scale. |
| Keywords: | Boston; ice trade; iceberg transport costs |
| JEL: | F1 N51 N7 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12660&r=int |
| By: | Dramane Coulibaly; Blaise Gnimassoun; Valérie Mignon |
| Abstract: | Following the dynamics of globalization, international migration has increased dramatically since the 1990s. Given that these migrations may obscure the natural demographic structure of nations, they are likely to explain a significant part of global imbalances. This paper tackles this issue by investigating the role played by international migration in the dynamics of global imbalances. To this end, we rely on an overlapping generations model to derive the theoretical relationship between international migration and current account position. Through a series of robust estimates, we empirically investigate this relationship by relying on a panel of 157 developed and developing countries over the period 1990-2014. Our results point to substantial effects of international migration. Specifically, we show that an increase in migration improves national savings and the current account balance in the destination country, while it has opposite impacts in the origin country. These effects are particularly pronounced in developing economies, explaining the structural current account deficits that most of them face. |
| Keywords: | International migration, current account, global imbalances, remittances. |
| JEL: | F22 F32 O55 C33 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2018-10&r=int |
| By: | Moritz Lennert |
| Abstract: | In this paper, I present the results of ongoing experimentations with micro-data data of firms in order to develop better insights into the economic specialization and openness to trade of regions. Using newly developed indicators, one based on Huff-like models and another on Marcon and Puech's M function, I explore the possibilities offered by building analyses on the basis of point data instead of the classic regional aggregations. |
| Keywords: | Economic geography; Spatial concentration; Regional trade; Location quotient; Micro-data |
| JEL: | R12 F17 R15 R10 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/266631&r=int |
| By: | Moritz Lennert |
| Abstract: | Just as general economic theory and policy, regional economic development policy has undergone a strong supply-side turn in the last decades. While this approach has allowed to better understand what drives differences in regional capacity to engage in successful development trajectories, it completely neglects the question of the location and spatial scale of the demand for a region's production. One reason for this neglect lies in the absence of empirical data on regional export activity and the fairly crude methods used to model it. This paper presents the results of a new model that provides more fine-grained data on regional exports and thus allows a first approach of the spatial patterns of production-consumption relationships at regional scale. Analysis of these results reinforces the notion that different regions have different export spaces and thus need differentiated policies. It also highlights, however, the importance of demand-side policies at different scales for the development of regional economies. |
| Keywords: | regional development; regional exports; supply-side; demand-side; economic modelisation |
| URL: | http://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/266640&r=int |
| By: | Slivko, Olga |
| Abstract: | Economic literature acknowledges the impact of immigration on cross-border patenting and scientific publications. However, the role of immigration ows in the dissemination of knowledge in a broader sense is yet to be assessed. In this paper, I estimate the effect of immigration on the facilitation of online knowledge reagrding destination countries in the native languages of immigrants. To quantify online knowledge, I focus on one of the world's most viewed online knowledge platforms, Wikipedia. I combine data on immigration ows between the pairs of immigrants' origin and destination countries with contributions to Wikipedia describing the countries of immigrants' destinations in the languages spoken in immigrants' origin countries. I specifically focus on knowledge domains describing science and culture. In order to draw a causal inference, I use shocks to immigration due to economic and political crises as exogenous shocks to Wikipedia content and analyze subsequent changes in the contributions to Wikipedia. An increase in immigration yields more knowledge contributed to Wikipedia about science and culture in destination countries in the native languages of the origin countries. Interestingly, the increase in contributions is driven by anonymous contributors. In the Wikipedia community, these are considered occasional contributors who care personally about the topics they contribute to. The increase in content generated anonymously is driven by longer contributions. |
| Keywords: | Immigration,Knowledge dissemination,Online knowledge,Wikipedia |
| JEL: | L17 O15 O33 H41 L86 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:18008&r=int |
| By: | Udo Broll; Soumyatanu Mukherjee |
| Abstract: | This paper extends the decision problem of a multinational regarding how much to invest abroad optimally under uncertainties stemmed from the exchange rate movements, with the presence of a correlated background risk, in a two moment decision model. This framework is based upon the utility from the expected value and the standard deviation of the uncertain random total profit of the multinational firm. This modelling approach allows us to explore not only how much a risk averse investor optimally invests abroad when facing uncertainties regarding the exchange rate movements; but also to discover how does (and under what conditions) any perturbation in the background risk (which is linearly related to the endogenous exchange rate risks) affect the optimal foreign investment decision for a risk averse investor. All comparative static effects are described in terms of the relative sensitivity of the investor towards risk. This simplest possible analytical framework is useful for explicit empirical estimation of risk aversion elasticities in the literature of multinational firm and FDI decision. |
| Keywords: | Multinational firm; Exchange rate risk; Two moment decision model; Background risk; Risk aversion elasticity. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:not:notgep:18/02&r=int |
| By: | Antman, Francisca M. (University of Colorado, Boulder) |
| Abstract: | While scholars have long studied the economics of migration, increasing waves of international and regional migration around the world have placed greater focus on the varied impacts of migration in recent years. Critical to this line of research is an examination of the important role that women play in both sending and destination areas. This chapter addresses various aspects of the relationship between women and migration, including key ways in which non-migrant women are affected by migration, as well as how female migrants affect families and labor markets in both source and destination communities. Selection factors and determinants of female migration, as well as the gendered impacts of migrant networks, are also discussed. |
| Keywords: | migrant selection, women, left behind, gender, migration, networks |
| JEL: | F22 O15 R23 J16 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11282&r=int |
| By: | Tani, Massimiliano (University of New South Wales) |
| Abstract: | This paper studies whether migration policy, besides managing a country's population size, is a suitable tool to influence immigrants' labour market outcomes. To do so, it uses a migration policy change that occurred in Australia in the late 1990s and data collected by the Longitudinal Survey of Migrants to Australia. The statistical techniques employed in the empirical analysis consistently reveal that the policy change has no detectable impact on the employment rate, wages, over-education, occupational downgrading, and (self-reported) use of skills for male immigrants, who account for about 75% of the sample, while they have a modest short-term positive impact on female immigrants. These results support the view that migration policy is an ineffective policy tool to influence migrants' labour market outcomes. However, the economic relevance of making an effective use of migrants' skills provides scope for close coordination between immigration and employment policy to ensure that efforts in attracting foreign talent are not dissipated by labour market frictions and other inefficiencies. |
| Keywords: | skilled immigration, labour market, over-education, immigration policy |
| JEL: | J15 J24 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11241&r=int |
| By: | David A. Jaeger; Joakim Ruist; Jan Stuhler |
| Abstract: | A large literature exploits geographic variation in the concentration of immigrants to identify their impact on a variety of outcomes. To address the endogeneity of immigrants' location choices, the most commonly-used instrument interacts national inflows by country of origin with immigrants' past geographic distribution. We present evidence that estimates based on this "shift-share" instrument conflate the short- and long-run responses to immigration shocks. If the spatial distribution of immigrant inflows is stable over time, the instrument is likely to be correlated with ongoing responses to previous supply shocks. Estimates based on the conventional shift-share instrument are therefore unlikely to identify the short-run causal effect. We propose a "multiple instrumentation" procedure that isolates the spatial variation arising from changes in the country-of-origin composition at the national level and permits us to estimate separately the short- and long-run effects. Our results are a cautionary tale for a large body of empirical work, not just on immigration, that rely on shift-share instruments for causal inference. |
| JEL: | C36 J15 J21 J61 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24285&r=int |
| By: | Moritz Lennert |
| Abstract: | Not much data exists on regional, intra-national exports. Differentestimation methods exist of which some use proxies such as transportflows and others are modeling results, based either on the location-quotient or on gravity. Some of these models do not take into accountdistance, or if they do they generally use aggregated spatial data, leadingto biases. This paper presents an approach that applies a bottom-up point-by-point gravity model on individual firms, using national input-outputtables as input for correctly constraining the model. The model is applied tothe case of Belgian NUTS 3 regions. |
| Keywords: | intra-national trade; distance-based methods; input-output model; gravity model |
| URL: | http://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/266638&r=int |
| By: | Moritz Bosbach (Università di Napoli Federico II); Ornella Wanda Maietta (Università di Napoli Federico II and CSEF) |
| Abstract: | This study aims to ascertain whether the implicit price paid for Fair Trade coffee in regular supermarkets is influenced by the stock of social capital in the territory where consumers live. A hedonic regression set-up is adopted, based on Italian scanner data taken at NUTS3 level. Regressors include attributes described on the label, which contain separate certifications for Fair Trade and organic/eco-label status, plus various indicators of social capital and their interactions with the Fair Trade and organic/eco-label attributes. The consumers’ implicit price paid for the Fair Trade attribute is significantly and positively affected by a social capital proxy, which is the percentage of co-op members over total employment. |
| Keywords: | ethical consumption; hedonic regression; scanner data |
| JEL: | C50 D12 L66 Z13 |
| Date: | 2018–02–17 |
| URL: | http://d.repec.org/n?u=RePEc:sef:csefwp:492&r=int |