nep-int New Economics Papers
on International Trade
Issue of 2018‒03‒05
33 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Multinational enterprises and global value chains: the OECD analytical AMNE database By Charles Cadestin; Koen De Backer; Isabelle Desnoyers-James; Sébastien Miroudot; Davide Rigo; Ming Ye
  2. Tariff Cooperation in Free Trade Areas By Mai, Joseph; Stoyanov, Andrey
  3. Quality and Gravity in International Trade By Flach, Lisandra; Unger, Florian
  4. Unraveling the economic performance of the CEEC countries. The role of exports and global value chains By Jan Hagemejer; Jakub Muck
  5. GVCS and centrality: Mapping key hubs, spokes and the periphery By Chiara Criscuolo; Jonathan Timmis
  6. The involvement in global value chains and its policy implication in Vietnam By Taguchi, Hiroyuki
  7. China’s evolving role in global production networks: Implications for Trump’s trade war By Prema-chandra Athukorala
  8. Exchange Rates and the Working Capital Channel of Trade Fluctuations By Valentina Bruno; Se-Jik Kim
  9. Foreign Direct Investment and Women Empowerment: New Evidence on Developing Countries By Rasmané Ouedraogo; Elodie Marlet
  10. A partial equilibrium analysis of India's agricultural export to GCC: looking beyond the status quo(2009-2015) By Ayyub, Salahuddin; Manral, Prerana
  11. Israel’s Immigration Story: Winners and Losers By Assaf Razin
  12. The Impact of Protective Measures in Integration Associations on International Trade By Baeva, Marina; Knobel, Alexander; Zaytsev, Yuriy; Loshchenkova, Anna
  13. The anatomy of a trade collapse: The UK, 1929-33 By De Bromhead, Alan; Fernihough, Alan; Lampe, Markus; O'Rourke, Kevin H.
  14. BREXIT and FDI: Key Issues and New Empirical Findings By Paul J.J. Welfens; Fabian J. Baier
  15. Exchange Rate Movements, Firm-Level Exports and Heterogeneity By A. Berthou; E. Dhyne
  16. How to become a leader in an emerging new global market: The determinants of French wine exports, 1848-1938 By María Isabel Ayuda; Hugo Ferrer-Pérez; Vicente Pinilla
  17. Frankel and Romer revisited By Kyvik Nordås, Hildegunn
  18. Does Informal Employment Respond to Growth Opportunities? Trade-Based Evidence from Bangladesh By Prodyumna Goutam; Italo A. Gutierrez; Krishna B. Kumar; Shanthi Nataraj
  19. Exchange rate movements,firm-level exports and heterogeneity By Antoine Berthou; Emannuel Dhyne
  20. I’m Neither Racist nor Xenophobic, but: Dissecting European Attitudes towards a Ban on Muslims’ Immigration By Marfouk, Abdeslam
  21. Aid to agriculture, trade and take-off By Alessandra Pelloni; Thanasis Stengos; Ilaria Tedesco
  22. Skills, Population Aging, and the Pattern of Trade By Gu, Ke; Stoyanov, Andrey
  23. New Estimates for Direction of Trade Statistics By Marco Marini; Robert Dippelsman; Michael Stanger
  24. Openness and Productitvity of the Swiss Economy By Föllmi, Reto; Fuest, Angela; an de Meulen, Philipp; Micheli, Martin; Schmidt, Thorsten; Zwick, Lisa
  25. Asymmetry, Uncertainty and International Trade By Syed Hassan; Sarosh Shabi; Taufiq Choudhry
  26. The causality between economic growth and immigration in EU/EFTA member states By Manuel González Gómez; Mª Soledad Otero Giráldez
  27. Cross-Border Trade, Insecurity and the Role of Customs: Some Lessons from Six Field Studies in (Post-) Conflict Regions By Cantens, Thomas; Raballand, Gaël
  28. Economic Effects of Standard-Like Nontariff Measures: Analytical and Methodological Dimensions By John C. Beghin; Bo Xiong
  29. Where Does Multinational Investment Go with Territorial Taxation? Evidence from the UK By Li Liu
  30. Impacts of an Ice-Free Northeast Passage on LNG Trading: Transport Routes and Optimal Capacity Planning By Schach, Michael; Madlener, Reinhard
  31. German FDI in the Czech Republic - Employment effects in the home country By Schäffler, Johannes; Moritz, Michael
  32. Impacts of an Ice-Free Northeast Passage on LNG Markets and Geopolitics By Schach, Michael; Madlener, Reinhard
  33. BREXIT: Key Analytical Issues and Insights from Revised Economic Forecasts By Paul J.J. Welfens; David Hanrahan

  1. By: Charles Cadestin (OECD); Koen De Backer (OECD); Isabelle Desnoyers-James (OECD); Sébastien Miroudot (OECD); Davide Rigo (OECD); Ming Ye (OECD)
    Abstract: In order to better understand the interdependencies between trade and investment in global value chains (GVCs), the OECD has developed a new dataset on the Activities of Multinational Enterprises (AMNE). This dataset starts from official AMNE statistics and combines the information with Inter-Country Input-Output (ICIO) tables to provide new insights on the trade-investment nexus in GVCs. This dataset allows the contribution of domestic firms, multinational enterprises (MNEs) and their foreign affiliates to global trade and production to be assessed. This paper details the methodology that was used to create the data, as well as the main assumptions and challenges in the work.
    Keywords: global input-output, global value chains, linkages, Multinational enterprises, trade in value-added
    JEL: F14 F23 L16 L23
    Date: 2018–02–27
  2. By: Mai, Joseph; Stoyanov, Andrey
    Abstract: This paper develops a model of endogenous trade policy formation to study the impact of free trade agreements (FTA) on external trade policies of member states when they internalize the intra-bloc welfare effects. This model is empirically tested using global trade data covering 170 countries and 177 FTAs established between 1988 and 2011. We find empirical evidence of tariff cooperation between members of FTAs. Using three different measures of political relations (the affinity scores from the UN General Assembly Voting Data, dyad alliances data, and bilateral events and interactions data), we show that members with good political relations cooperate more on external tariff policy after formation of FTAs. On average, an increase in the market share of FTA partners' firms by one standard deviation is associated with about 3 percentage points increase in external tariffs.
    Keywords: Free trade agreements, cooperative trade policies, import tariffs
    JEL: F13 F14 F15
    Date: 2018–02–06
  3. By: Flach, Lisandra; Unger, Florian
    Abstract: This paper introduces endogenous quality innovations in a multi-country heterogeneous firm model and derives implications for the gravity equation. Using aggregate trade data and firm-level data, we confirm the theoretical predictions: fixed costs have a lower impact on exports and on the share of exporters in industries with a high degree of vertical product differentiation. Quality innovations change the trade elasticity with respect to fixed costs through the extensive margin, whereas the elasticity with respect to variable costs remains unaffected. We estimate the parameters of our model and simulate a reduction in fixed trade costs. Accounting for quality lowers gains from trade and leads to more heterogeneous effects across industries compared to a model without vertical differentiation.
    Keywords: Gravity; Heterogeneous Firms; International Trade; product quality
    JEL: F12 F14 L11
    Date: 2018–01
  4. By: Jan Hagemejer; Jakub Muck
    Abstract: In this study we assess the importance of exports and global value chains (GVC) participation for economic growth. Using novel methods and an extensive dataset, we decompose GDP growth in the Central and Eastern European (CEEC) countries to show that in a large part of the period of transition and integration with the EU, exports have played a predominant role in shaping economic growth. We also show that exports have been the major factor driving the convergence of the CEEC countries with their advanced counterparts. We employ panel methods to analyze the determinants of growth of exported value added and show that the major growth drivers in the analyzed period of 1995-2014 are GVC participation, imports of technology and capital deepening.
    Keywords: economic growth, international trade, GVC, heterogeneous panels, common correlated effects estimation, CEEC
    JEL: C23 F21 O33
    Date: 2018–02
  5. By: Chiara Criscuolo; Jonathan Timmis
    Abstract: This paper uses “centrality” metrics to reflect position with Global Value Chains (GVCs). Central sectors reflect those that are highly connected (both directly and indirectly) and influential within globalproduction networks, whereas peripheral sectors exhibit weak linkages and are less influential. Applying these metrics to OECD ICIO data, reveals there have been profound changes in the structure of GVCs over the period 1995-2011. Whilst some activities remain clustered around the same key hubs as was the case at the start of the period (e.g. motor vehicles), for others there have been dramatic changes in the geography of economic activity (e.g. IT manufacturing), whereas other activities have become more influential for value chains almost universally (e.g. IT services). Several emerging economies and their industries have become more central to global production networks. We find this is particularly true of most peripheral industries of Eastern European countries, with their growing importance coinciding with the timing of their EU accession. Asian value chains have also undergone substantial reorganisation. In particular, the centrality of Japanese industries has fallen from an initial position of being the key hub within Asian value chains and the bulk of this fall does not appear to be due to the decline in size of the Japanese economy over this period. This is in contrast with trends in foreign value added content of exports of these Japanese industries, which increased over the same time period, illustrating that the centrality measure does not seem to simply reflect features captured by existing GVC metrics.
    Keywords: centrality, global value chains, input-output tables, international trade, network analysis
    JEL: C67 F12 F14 O57
    Date: 2018–02–23
  6. By: Taguchi, Hiroyuki
    Abstract: This article examines the involvement pattern in global value chains (GVCs) with its policy implication in Vietnam, in comparison with those of the other Asian countries, by using the OECD value-added-trade data. The study first identified the “smile curve” as the average pattern of the Asian GVCs development paths in total manufactures, in which the domestic value share to exports declines at the early development stage and regains itself at the later stage with the turning point being at 2,015 US dollars as per capita GDP. The study then found that the Vietnamese economy stood at the critical position in its GVCs development path, such that the Vietnamese current per capita GDP is very close to 2,015 US dollars, the Asian average turning point in total manufactures. The sectoral analysis in Vietnam also implied that sophisticated manufacturing sectors needs to be transformed from only assembling activities toward developing domestic capacities to produce parts and components. The Government policies in Vietnam thus matter to nurture local productive capacities, and the “enterprise clustering” and “linkages development” should be the key strategies to facilitate technological transfers from international firms to local ones in line with the GVCs involvement.
    Keywords: Global value chains, Vietnam, Value-added-trade data, Manufactures, Local productive capacities
    JEL: F14 L60 O53
    Date: 2018–02
  7. By: Prema-chandra Athukorala (Arndt-Corden Department of Economics, Crawford School of Public Policy, Australian National University)
    Abstract: This paper examines China’s evolving role in global production networks and its implications for assessing the potential impact of the ‘trade war’ declared by President Trump. The analysis, which is based on a systematic disaggregation of trade based on global production sharing into components and final assembly, suggests that the Sino-US trade gap is a structural phenomenon driven by the pivotal role played by China within East Asia cantered production networks. The global competitiveness of US MNEs depends on their ability to use China as the production base for supplying the rest of the world, and China is now an important supplier of components used in US manufacturing. Given this intricate interdependence between the two economies within global production networks, attempt to impose punitive tariffs on China is bound to face formidable opposition from business interests in the United States. Even if the protectionist threat becomes a reality, the impact may not be as damaging as commonly thought because global production sharing has considerably weakened the link between relative prices and trade flows.
    Keywords: China, global production networks, Sino-US trade dispute, punitive tariffs, MNEs
    JEL: F13 F14 F59
    Date: 2017–06
  8. By: Valentina Bruno; Se-Jik Kim
    Abstract: Global value chains (GVCs) figure prominently in global trade and lie at the intersection of two important themes. The first is the financing requirement for working capital. The second is the prevalence of dollar invoicing in global trade.
    Keywords: global value chains, dollar invoicing, global liquidity
    JEL: F36 F41 G20
    Date: 2018–01
  9. By: Rasmané Ouedraogo; Elodie Marlet
    Abstract: This paper assesses the effects of foreign direct investment (FDI) on gender development and gender inequality. In fact, FDI through increased labor demand, technological spillovers but mostly through corporate social responsibility and economic growth, can potentially influence women’s welfare. Using a panel dataset of 94 developing countries from 1990 to 2015, we find that FDI inflows improve women’s welfare and decrease gender inequality. However, the impact is lower in countries where women have low access to resources and face a heavier burden to open a business. This suggests that for countries to fully benefit from FDI inflows, they should ensure that women can enjoy free access to the labor market and associated income.
    Date: 2018–01–25
  10. By: Ayyub, Salahuddin; Manral, Prerana
    Abstract: GCC fulfills 60 to 90 percent of its food demand through imports. Currently GCC imports 12 percent of its Agriculture products from India. An effort has been made in this paper to understand the trend and pattern of India’s Agriculture export to GCC with the help of Descriptive Statistics and to find out the impact of tariff reduction on India’s agriculture export to GCC Partial Equilibrium Analysis (Smart Analysis) has been used and BRCA has been used to find out the agriculture products where India has comparative advantage in GCC import market and to make a comparative analysis of GCC countries as a destination of India’s agriculture export. In case of zero tariff in GCC, India’s agriculture export will see highest growth in Saudi Arabia ($106 Million) followed by UAE ($89 Million), Kuwait ($40 Million), Qatar ($23 Million), Oman ($22 Million) and Bahrain ($6 Million). Out of 231 agriculture products, India has highest average number of products with BRCA in Qatar (76), followed by Oman (74), Kuwait (67), Bahrain (59), UAE (52) and Saudi Arabia (28).
    Keywords: GCC, India, Smart Analysis, RCA
    JEL: F1 F17 Q1
    Date: 2017–07
  11. By: Assaf Razin
    Abstract: The exodus of Soviet Jews to Israel in the 1990s was a unique event. 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. 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 winners and losers from immigration. This paper provides a rigorous explanation for a possible link between the immigration wave and the changed level of redistribution in Israel’s welfare state.
    JEL: F2 H0
    Date: 2018–02
  12. By: Baeva, Marina (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Knobel, Alexander (Gaidar Institute for Economic Policy, Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Zaytsev, Yuriy (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Loshchenkova, Anna (Russian Foreign Trade Academy, Gaidar Institute for Economic Policy)
    Abstract: In this paper, we consider the introduction of measures to protect the domestic market (anti-dumping, countervailing and special protective measures) by countries, conduct appropriate investigations, and introduce sanitary and phyto-sanitary measures against a specific trading partner in 1995-2015. The paper analyzes the theoretical aspects and assesses the consequences of the introduction of protective measures by the member countries of integration associations such as NAFTA, MERCOSUR, ASEAN, the Pacific Alliance, the EAEC, the TTP (signatory countries) and the TAP (negotiating countries), against the partners in the merger and third countries. In addition, the work separately examines the protective measures imposed by and against Russia.
    Date: 2017–02–12
  13. By: De Bromhead, Alan; Fernihough, Alan; Lampe, Markus; O'Rourke, Kevin H.
    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 N70 N74
    Date: 2018
  14. By: Paul J.J. Welfens (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW)); Fabian J. Baier (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW))
    Abstract: Summary This contribution takes a new look at the gravity equation model in relation to foreign direct investment of leading industrialized countries which presents a useful basis for assessing certain potential impacts arising from BREXIT. The gravity equation estimated allows considering the case of BREXIT and the broader role of EU membership and other variables. Looking at the period from 1985 to 2012 for a dataset which contains 34 OECD countries: The PPML dyadic fixed estimations take into account a broad set of approaches and variables, respectively. Besides the traditional variables of the EU/EU single market membership of the source country and of the host country, we further consider the role of trade openness as well as corporate tax rates and the ratio of inward FDI stock to total capital stock. The analysis shows that trade openness is a variable which can be largely replaced by the inward FDI stock/capital stock ratio so that gravity FDI modeling with a strong emphasis on trade openness is likely to overstate the role of trade and to understate the role of relative FDI accumulation effects. The implication for BREXIT analysis is that the UK will face three impulses for FDI inflows: (1) leaving the EU single market will strongly reduce FDI inflows; (2) if foreign ownership in the UK capital stock should strongly increase in the run-up to the BREXIT year 2019, part of the dampening effects of leaving the EU will be mitigated by the increase of the FDI stock/capital stock ratio which in turn is likely to reflect a Froot-Stein effect related to a real Pound deprecation 2016-2018; (3) to the extent that the UK government will want to reinforce output growth through higher FDI inflows, a reduction of corporate taxation could generate high effects – but could also stimulate a downward international corporate tax reduction game. Zusammenfassung: Dieser Artikel leistet einen neuen Beitrag zur Analyso von Direktinvestitionsflüssen führender Industrieländer mithilfe des Gravitationsmodells, was eine nützliche Grundlage für die Bewertung bestimmter potenzieller Auswirkungen von BREXIT darstellt. Die Gravitationsgleichung ermöglicht die Berücksichtigung des BREXIT-Falles, der umfassenderen Rolle der EU-Mitgliedschaft und anderer Variablen. Betrachtet wird der Zeitraum von 1985 bis 2012 für einen Datensatz, der 34 OECD-Länder enthält: Der dyadische PPML-Fixed-Effects Schätzer berücksichtigt eine breite Palette von Ansätzen bzw. Variablen. Neben den traditionellen Variablen der Mitgliedschaft der EU bzw. des EU-Binnenmarktes im Herkunfts- und im Empfängerland, betrachten wir die Rolle der Handelsoffenheit sowie der Körperschaftssteuersätze und des Verhältnisses der FDI-Bestände zum gesamten Kapitalbestand. Die Analyse zeigt, dass die Handelsoffenheit eine Variable ist, die weitgehend durch die FDI-Aktien- / Kapitalstock-Quote ersetzt werden kann, so dass die FDI-Modellierung mit Schwerpunkt auf Handelsoffenheit die Rolle des Handels überbewerten und die Rolle der relativen kummulierten FDI-Effekte unterbewerten. Die Analyse zeigt, dass der BREXIT für das Vereinigte Königreich drei Effekte für die FDI-Zuflüsse haben wird: (1) wenn der EU-Binnenmarkt verlassen wird, werden die FDI-Zuflüsse stark sinken; (2) Sollte die ausländische Beteiligung am britischen Kapitalstock im Vorfeld des BREXIT-Jahres 2019 stark ansteigen, wird ein Teil der dämpfenden Auswirkungen des EU-Austritts durch die Erhöhung der FDI-Aktien-/Kapitalstockquote gemildert, dies reflektiert einen Froot-Stein-Effekt, der sich auf eine reale Pfund-Abwertung 2016-2018 bezieht; (3) In dem Maße, in dem die britische Regierung das Produktionswachstum durch höhere FDI-Zuflüsse verstärken will, könnte eine Senkung der Unternehmensbesteuerung hohe Auswirkungen haben – könnte aber auch eine Senkungsspirale des internationalen Steuersatzes stimulieren.
    Keywords: Foreign direct investment, BREXIT, gravity equation, corporate taxation, EU single market
    JEL: C32 E65 F21 F23 O52
    Date: 2018–01
  15. By: A. Berthou; E. Dhyne
    Abstract: This paper provides an estimation of the reaction of firm-level exports consecutive to real exchange rate movements, the exchange rate elasticity of exports. Following recent theoretical works emphasizing the role played by firm heterogeneity, we test in particular how the exchange rate elasticity may be affected by firm-level productivity, and how the heterogeneous reaction of different firms may contribute to shape the aggregate reaction of countries' exports. The analysis relies on a unique cross-country micro-based dataset of exporters available for 11 European countries (2001-2011), which details in particular information about firms' productivity and export performance. Our results show that while the average exchange rate elasticity across firms is quite weak, it is also highly heterogeneous. The least productive firms within each country and sector tend to react more to real exchange rate movements than the most productive firms. This weak reaction of highly productive and large exporters tends to reduce the macroeconomic exchangerate elasticity in all countries. Cross-country differences in the shape of the productivity distribution among exporters have a strong influence on the macroeconomic exchange rate elasticity: countries populated with a higher density of low productive firms tend to respond more to exchange rate movements in terms of aggregate exports than countries populated with highlyproductive exporters.
    Keywords: Firm-level exports, heterogeneity, exchange rates movements.
    JEL: F12 F14 F31
    Date: 2018
  16. By: María Isabel Ayuda (Universidad de Zaragoza, Department of Economic Analysis, Faculty of Economics and Business Studies); Hugo Ferrer-Pérez (CREDA-UPC-IRTA, Edifici ESAB-PMT); Vicente Pinilla (Universidad de Zaragoza and Instituto Agroalimentario de Aragón -IA2- (Universidad de Zaragoza-CITA), Department of Applied Economics)
    Abstract: When studying the emergence of new global markets it is essential to consider how countries and companies compete to obtain advantageous positions. Our objective is to study how France obtained an initial leadership position in the new global wine market which it subsequently consolidated. We will also analyse the main determinants of its exporting success. In order to do this we have quantified its exports and examined its evolution and its principal export markets. We have also used a gravity model for both ordinary wine and high quality wine in order to establish the key variables that explain this evolution. The article highlights the great efforts made by the exporters to improve the quality of their products and increase their sales using modern marketing techniques. Our econometric results also show some significant differences between the determinants of exports for the two types of wine. However, the exports of both products suffered the strong impact of a series of major events, such as The First World War, the Russian Revolution, the Prohibition in the United States and the Great Depression. The case of wine shows that the collapse of the first globalisation was not the same for all types of product.
    Keywords: Globalisation waves, Wine trade, French wine exports
    JEL: F14 N53 N54 N70 Q17
    Date: 2018–02
  17. By: Kyvik Nordås, Hildegunn (Örebro University School of Business)
    Abstract: Frankel and Romer (1999) proposed an instrument variable for trade intensity to robustly assess the causal impact of international trade on standards of living. The instrument is based on OLS estimates of the gravity equation and has been widely used in the literature. In this note I show that the instrument is unrelated to income in the mid-2000s. Re-estimating the gravity equation using PPML, I show that the resulting instrument is strongly related to GDP per capita, but weakly correlated with trade, suggesting that what is captured may be a direct link between geography and income.
    Keywords: Trade; economic growth; instrument variables
    JEL: F43
    Date: 2018–02–26
  18. By: Prodyumna Goutam; Italo A. Gutierrez; Krishna B. Kumar; Shanthi Nataraj
    Abstract: Informal employment accounts for the majority of employment in many developing countries, yet its relevance to growth, and its links with the formal sector, remain poorly understood. A widely held view is that informality eventually gives way to formality as countries develop. In this paper, we examine the effects of growth opportunities — in the form of export-induced demand in Bangladesh — on four types of employment: formal, casual, unpaid, and self-employment. At an aggregate level, export-induced demand increases the levels of all four types of employment. We also conduct a district-level analysis, constructing a shift-share measure of trade exposure that relies on national, industry-level variation in exports, coupled with pre-existing, district-level shares of employment by industry. We find that the direct impact of trade is to increase labor force participation and formal employment. When we also include the indirect impacts of trade, in the form of induced demand through supply chain linkages, we find an even larger impact on labor force participation. The results also suggest that trade triggers an immediate increase in both formal and casual employment, as well as a longer-run increase in self-employment. We conclude that labor response to growth opportunities such as trade is not limited to formal employment, and a more nuanced understanding of informality in the growth process is needed.
    Date: 2017–07
  19. By: Antoine Berthou (Banque de France, 31 rue Croix des Petits Champs, 75001 Paris); Emannuel Dhyne (Economics and Research Department, NBB)
    Abstract: This paper provides an estimation of the reaction of the firm-level exports consecutive to real exchange rate movements – the exchange rate elasticity of exports. Following recent theoretical works emphasizing the role played by firm heterogeneity, we test in particular how the exchange rate elasticity may be affected by firm-level productivity, and how the heterogeneous reaction of different firms may contribute to shape the aggregate reaction of countries’ exports. The analysis relies on a unique cross-country micro-based dataset of exporters available for 11 European countries (2001-2011), which details in particular information about ??rms’ productivity and export performance. Our results show that while the average exchange rate elasticity across firms is quite weak, it is also highly heterogeneous. The least productive firms within each country and sector tend to react more to real exchange rate movements than the most productive firms. This weak reaction of highly productive and large exporters tends to reduce the macroeconomic exchange rate elasticity in all countries. Cross-country differences in the shape of the productivity distribution among exporters have a strong influence on the macroeconomic exchange rate elasticity: countries populated with a higher density of low productive firms tend to respond more to exchange rate movements in terms of aggregate exports than countries populated with highly productive exporters.
    Keywords: Firm-level exports, heterogeneity, exchange rates movements.
    JEL: F12 F14 F31
    Date: 2018–01
  20. By: Marfouk, Abdeslam
    Abstract: During his presidential campaign, the new elected President of U.S., Donald Trump, called for a complete ban on Muslims from entering the United States. Although numerous European observers have been shocked by his racist proposal, using the most recent round of the European Social Survey, this paper found that a sizeable proportion of Europeans support a similar ban in their own countries, e.g. Czech Republic (54%), Hungary (51%), Estonia (42%), Poland (33%), and Portugal (33%). The paper also provides evidence that racism and immigration phobia play a key role in shaping Europeans’ support of a ban on Muslim immigration. This finding challenges the discourse and campaigns of the populist groups who exploit the ‘Islamization of Europe’ rhetoric successfully and use various pretexts to justify a call for a ban on Muslims’ immigration, e.g. the threat to security, secularism, democracy, Western ‘identity’, culture and values.
    Keywords: Internatonal migration,discrimination,islamophobia,racism,public opinion
    JEL: F22 J71 J79
    Date: 2018
  21. By: Alessandra Pelloni (Department of Economics and Finance, University of Rome Tor Vergata, Italy; Rimini Centre for Economic Analysis); Thanasis Stengos (Department of Economics, University of Guelph, Canada; Rimini Centre for Economic Analysis); Ilaria Tedesco (International Fund for Agricultural Development, Italy)
    Abstract: This paper studies the effect of foreign aid to agriculture on the industrialization process of developing countries. Our theoretical analysis suggests a dichotomy between closed and open economies as regards the impact of aid given for productive purposes to the primary sector. Our empirical results confirm our analysis, as we find the effect is positive for landlocked countries only.
    Keywords: Dual economy, Agricultural aid, Industrialization, Landlocked countries
    JEL: F1 F4 O1 O4 Q1
    Date: 2018–02
  22. By: Gu, Ke; Stoyanov, Andrey
    Abstract: In this paper we investigate a particular mechanism through which differences in demographic composition across countries affect international trade flows. Some cognitive functions are known to vary across the adult life span, and in particular the ability to update skills and adapt to changes in working conditions. As a country's population is getting older, it becomes increasingly difficult for firms to find workers with up-to-date skills. As a result, countries with aging populations will start losing comparative advantage in industries that rely heavily on workers' ability to adapt to frequent changes in working conditions. We test this hypothesis and find robust empirical evidence for a significant negative effect of population aging on comparative advantage of a country in industries which are intensive in skill adaptability of the labor force, in both the cross-sectional and the dynamic panel data sets.
    Keywords: worker adaptability, comparative advantage, population aging
    JEL: F14 F16 J11
    Date: 2018–01–31
  23. By: Marco Marini; Robert Dippelsman; Michael Stanger
    Abstract: In March 2017, the IMF published an upgrade of its Direction of Trade Statistics (DOTS) dataset. This paper documents the new methodology that has been developed to estimate missing observations of bilateral trade statistics on a monthly basis. The new estimation procedure is founded on a benchmarking method that produces monthly estimates based on official trade statistics by partner country reported at different times and frequencies. In this paper we describe the new estimation methodology. Additional data sources have also been incorporated. We also assess the impact of the new estimates on trade measurement in DOTS at global, regional, and country-specific levels. Finally, we suggest some developments of DOTS to strenghten its relevance for IMF bilateral and multilateral surveillance.
    Keywords: Merchandise trade;Benchmarking, Cross-Sectional Models, Existence and Stability Conditions of Equilibrium, Methodology for Collecting, Estimating, and Organizing Macroeconomic Data
    Date: 2018–01–24
  24. By: Föllmi, Reto; Fuest, Angela; an de Meulen, Philipp; Micheli, Martin; Schmidt, Thorsten; Zwick, Lisa
    Abstract: This paper analyzes the connection between openness and economic performance in Switzerland. Considering different dimensions of openness, we show that the Swiss economy classifies as relatively open. Nevertheless, there still is potential to further increase international integration, particularly through deregulation in the services sector. We also show that for some branches in the Swiss manufacturing sector, increases in international trade are associated with higher productivity in the long run. With regard to financial openness, we show that in the aftermath of the financial crisis, Switzerland mainly suffered from capital retrenchment. Foreign capital inflows were of minor importance. Short-run costs due to the high volatility of capital flows might therefore be lower than widely perceived.
    Keywords: Productivity, Openness, Trade Barriers
    JEL: O40 F10 F30
    Date: 2018–03
  25. By: Syed Hassan (School of Management, Swansea University); Sarosh Shabi (School of Management, Swansea University); Taufiq Choudhry (School of Business, University of Southampton)
    Abstract: This paper studies the role of economic policy uncertainty on the US trade with Canada, China, Germany, Japan and the United Kingdom. This paper contributes to the literature by analysing the asymmetric impact of policy uncertainty on the US trade from December 1989 to December 2016. Results suggest that there is a negative relationship between the economic policy uncertainty and the US trade flows. Further, US trade responds more sensitively to rise in the uncertainty as compared to an equal negative shock, confirming the asymmetric hypothesis both in the short and long run. Comparing the respective uncertainty indices, US EPU has a significantly greater impact on the trade relative to the EPU of its trading partners. These findings have both demand and supply side implications i.e. increase in the economic policy uncertainty can reduce the aggregate consumption significant as well as due to uncertain profit margins, businesses can choose to delay long term investment projects and inventory levels resulting in a wide spread recessionary effect on the US business cycle.
    Keywords: Economic policy uncertainty, international trade.
    JEL: E3 E32
    Date: 2018–02–28
  26. By: Manuel González Gómez; Mª Soledad Otero Giráldez
    Abstract: The EU/EFTA Member States attract yearly a large population of immigrants. Economists, demographers, historians and sociologists generally agree that the need to fill labor market gaps and the income differences between host and sending countries explain migration into industrialized nations. They also recognize that demographic changes that occur through immigration have important economic effects. However, regarding the existence of economic repercussions of migration, there is no conclusive evidence on the relationship between economic growth and immigration. To this end, the Granger Long-run causality based on the Error Correction Model (ECM) and Johansen cointegration technique and Granger Causality Test were applied to Eurostat database for EU/EFTA nations.
    Keywords: Cointegration; foreign population; economic growth, Granger causality test
    JEL: J61 O15
    Date: 2017–09
  27. By: Cantens, Thomas; Raballand, Gaël
    Abstract: Africa, and especially the Sahel, has experienced frequent recurrences of armed conflicts and terrorist acts in the last decade. This paper is based on six field studies, in Chad, Mali, Sudan, Tunisia, Libya and the Central African Republic. It reflects on the governance of trade in border regions during a (post-)conflict situation, exploring the practices and strategies of customs officials operating at insecure borders. It demonstrates the unintended consequences of security policies – especially on trade, and consequently on revenue generation. It further shows how customs administrations de facto leave it to customs officers on the ground and importers to agree on an acceptable tax burden to prevent smuggling and a new upsurge in violence to a certain extent. Idiosyncratic and pragmatic approaches by customs seem to play a major role at the local level.
    Keywords: Taxation,
    Date: 2017
  28. By: John C. Beghin; Bo Xiong
    Abstract: We provide a selective review of the empirical international trade literature on nontariff measures (NTMs) acting like standards–the so-called technical measures under the MAST classification. This review focuses on analytical and methodological dimensions involved in evaluating these NTMs and their economic effects, and draws from established approaches to measure standard-like NTMs and rigorous models used to quantify their effects on trade and welfare. The quantification of technical measures and the assessment of their effects are often entangled. We present each of these major approaches and methodologies with some formalism and details to help guide future investigations of technical measures select a suitable approach for their empirical strategy. An annex contains a more advanced technical formulation for interested readers. We also identify respective and potential pitfalls of each approach and methodology. Promising research directions are suggested for further work quantifying and assessing the economic effects of standard-like NTMs.
    Date: 2016–10
  29. By: Li Liu
    Abstract: In 2009, the United Kingdom changed from a worldwide to a territorial tax system, abolishing dividend taxes on foreign repatriation from many low-tax countries. This paper assesses the causal effect of territorial taxation on real investments, using a unique dataset for multinational affiliates in 27 European countries and employing the difference-in-difference approach. It finds that the territorial reform has increased the investment rate of UK multinationals by 15.7 percentage points in low-tax countries. In the absence of any significant investment reduction elsewhere, the findings represent a likely increase in total outbound investment by UK multinationals.
    Keywords: Europe;Foreign direct investment;United Kingdom;corporate tax policy, multinational firms, Business Taxes and Subsidies, General
    Date: 2018–01–12
  30. By: Schach, Michael (RWTH Aachen University); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))
    Abstract: We analyze the significance of an ice-free Northeast Passage (NEP) as a shipping route for LNG, and the impacts on alternative transport routes and -capacities. The following aspects are considered: (1) Trends in LNG production, particularly in the Russian Arctic; (2) Developments in the Asian LNG consumer market; (3) Specifics and prospects of Arctic shipping. The major LNG trade flows between producers and the Asian consumer market are modeled. Methods from Operations Research are contrasted and the Cycle-Cancelling Algorithm applied to the transportation problem, in order to achieve a cost-optimal capacity allocation. The impacts of demand variations and a chokepoint shutdown on transport routes and -capacities are considered. Concepts from competition theory are used to model the effects on LNG pricing. The key finding is that an ice-free NEP is highly relevant for shipping activities of Russian LNG producers. It constitutes a competitive advantage and notably impacts the supply competition and pricing on the Asian LNG market. A discussion of results and a conclusion critically reflect upon the research undertaken, providing an outlook and suggestions for future research.
    Keywords: LNG; Northeast Passage; Arctic Shipping; Logistics; Cycle-Cancelling Algorithm
    JEL: Q30 Q40
    Date: 2017–09
  31. By: Schäffler, Johannes; Moritz, Michael (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "Do investments in the Czech Republic lead to employment growth or employment losses in the German firms involved? To address this question, a unique database about German firms with foreign direct investment (FDI) in the Czech Republic and firms without FDI in any country has been established within the IAB-ReLOC project. By developing a new method for linking firm-level data with establishment-level data of the Institute for Employment Research (IAB), this database is now linked with the IAB employment data. As the exact dates of the investments in the Czech Republic are known, the employment development of firms with Czech affiliates and firms without FDI is compared for the same time periods. The analysis shows that the two observation groups actually develop differently. In the years after the investment, the employment of multinational enterprises (MNEs) in the home country shrinks relative to the employment of the reference group (non-MNEs). The negative trend continues for up to five years. However, not all types of jobs are affected adversely. The downward trend refers to medium- and low-skilled workers only, whereby the demand for high-skilled workers even increases after the investment." (Author's abstract, IAB-Doku) ((en))
    JEL: J23 F23
    Date: 2018–02–20
  32. By: Schach, Michael (RWTH Aachen University); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))
    Abstract: We examine the relevance of an ice-free Northeast Passage as a shipping route, especially for LNG-supplying and -consuming countries. Four aspects are considered in-depth: (1) Develop-ments in natural gas production in the Russian Arctic; (2) Trends and strategies of major Asian LNG-consuming countries; (3) Geopolitical significance of the Northeast Passage; (4) Geo-graphical and climatic particularities of the Arctic. The analysis also comprises an assessment of the competitiveness of Russian LNG exports along the Northeast Passage, a discussion of the impacts on LNG transport routes and markets, and an evaluation of the geopolitical impli-cations of this new shipping route. We find that an ice-free NEP is relevant for maritime bulk and particularly LNG shipping, and thus of great geopolitical importance and strategic interest for countries such as Russia, the US, China, Japan, and South Korea.
    Keywords: LNG Markets; Geopolitics; Northeast Passage; Arctic; Russia; Asia
    JEL: Q30 Q40
    Date: 2017–04
  33. By: Paul J.J. Welfens (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW)); David Hanrahan (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW))
    Abstract: Summary This contribution takes a look at the forecasts of macroeconomic indicators from 2015, i.e. prior to the BREXIT referendum, and 2017. The revised indicators indeed show that BREXIT has a significant impact on output growth, inflation and foreign exchange dynamics, with lower projected GDP growth already visible in the short term. The findings support the analysis of the Treasury, amongst others, in their study of 2016. Key analytical issues are discussed here including the information deficit during the referendum campaign, but also the policy options and challenges facing the United Kingdom and EU27 as the UK attempts to reinforce output growth in the coming years. Zusammenfassung: Dieser Beitrag befasst sich mit den Prognosen der makroökonomischen Indikatoren aus dem Jahr 2015, d.h. vor dem BREXIT-Referendum und 2017. Die überarbeiteten Indikatoren zeigen, dass der BREXIT erhebliche Auswirkungen auf das Produktionswachstum, die Inflation und die Wechselkursdynamik hat und das projizierte BIP-Wachstum schon kurzfristig geringer sichtbar ist. Die Ergebnisse stützen die Analyse des Finanzministeriums, unter anderem, die in ihrer Studie von 2016. Hier werden wichtige analytische Fragen erörtert, darunter das Informationsdefizit während der Kampagne für das Referendum, aber auch die politischen Optionen und Herausforderungen, vor denen das Vereinigte Königreich und die EU27, zur Steigerung des Produktionswachstums in den kommenden Jahren, steht.
    Keywords: Brexit, UK, economic forecasts, revisions
    JEL: E00 E60 F5 C5
    Date: 2018–01

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NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.