nep-int New Economics Papers
on International Trade
Issue of 2018‒03‒19
37 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Let’s try next door: Technical Barriers to Trade and multi-destination firms By Lionel Fontagné; Gianluca Orefice
  2. Was Federation Uniting or Dividing? The Impact of the Customs Union of 1901 on Australian Trade Relationships By William Coleman
  3. The extensive and intensive margins of exports of firms in developing and emerging countries By Regis, Paulo José
  4. The relationship between the Chinese "going out" strategy and international trade By Abeliansky, Ana Lucia; Martínez-Zarzoso, Inmaculada
  5. Beyond Tariff Reductions: What Extra Boost From Trade Agreement Provisions? By Swati Dhingra; Rebecca Freeman; Eleonora Mavroeidi
  6. Impact of European food safety border inspections on agri-food exports: Evidence from Chinese firms By Matthias Beestermöller; Anne-Célia Disdier; Lionel Fontagné
  7. Anti-Migration as a Threat to Internationalization? By Hatzigeorgiou, Andreas; Lodefalk, Magnus
  8. Impact Of Trade Openness On Economic Growth: Empirical Evidence From South Africa By Malefane, Malefa Rose; Odhiambo, Nicholas M.
  9. Migration and Servicification: Do Immigrant Employees Spur Firm Exports of Services? By Hatzigeorgiou, Andreas; Lodefalk, Magnus
  10. Employment implications of trade and changes in skills demand evidence from selected countries By Tarjáni, Hajnalka.
  11. Interaction between firm-level and host-country characteristics and multinationals' integration choices By Charlie Joyez
  12. Importing, Exporting and Aggregate Productivity in Large Devaluations By Joaquin Blaum
  13. Fluctuations in renewable electricity supply: Gains from international trade through infrastructure? By Ziesemer, Thomas
  14. Foreign direct investment in sub-Saharan Africa: Beyond its growth effect By Wako, Hassen Abda
  15. How to Attract Quality FDI? By Moran, Theodore H.; Görg, Holger; Seric, Adnan; Krieger-Boden, Christiane
  16. Linking Armington and CET Elasticities of Substitution and Transformation to Price Elasticities of Import Demand and Export Supply: A Note for CGE Practitioners By Hans Lofgren; Martin Cicowiez
  17. Building a better trade model to determine local effects: A regional and intertemporal GTAP model By Pham Van Ha; Tom Kompas; Hoa-Thi-Minh Nguyen; Chu Hoang Long
  18. Five Reasons Why the Focus on Trade Deficits Is Misleading By Robert Z. Lawrence
  19. A Multidimensional Approach to Trade Policy Indicators By Diego A. Cerdeiro; Rachel J. Nam
  20. Norms, Networks, Power, and Control: Understanding Informal Payments and Brokerage in Cross-Border Trade in Sierra Leone By van den Boogaard, Vanessa; Prichard, Wilson; Jibao, Samuel
  21. La politique commerciale au service de la politique climatique By Lionel Fontagné; Jean Fouré
  22. How Will Brexit Affect Tax Competition and Tax Harmonization? The Role of Discriminatory Taxation By Clemens Fuest; Samina Sultan
  23. Gains from multinational competition for crossborder firm acquisition By Koska, Onur A.
  24. The effect of Double Taxation Treaties and Territorial Tax Systems on Foreign Direct Investment: Evidence for Spain By Castillo-Murciego, Ángela; López Laborda, Julio
  25. Agro-processing and horticultural exports from Africa : By Fukase, Emiko; Martin, Will
  26. Trade and Climate: Towards Reconciliation By Dominique Bureau; Lionel Fontagné; Katheline Schubert
  27. Protectionism and the Business Cycle By Alessandro Barattieri; Matteo Cacciatore; Fabio Ghironi
  28. Steuart, Smith, and the ‘system of commerce’: international trade and monetary theory in late-18th century british political economy By Maurício C. Coutinho; Carlos Eduardo Suprinyak
  29. The democracy and economic growth nexus: Do FDI and government spending matter? Evidence from the Arab world By Bougharriou, Nouha; Benayed, Walid; Gabsi, Foued Badr
  30. Return or Not Return? The Role of Home-Country Institutional Quality in Vietnamese Migrants’ Return Intentions By Ngoc Thi Minh Tran; Michael P. Cameron; Jacques Poot
  31. Firm Employment Resilience and FDI: Evidence from Italy By FERRAGINA, Anna Maria; MAZZOTTA, Fernanda
  32. The integration of migrants in OECD regions: A first assessment By Marcos Diaz Ramirez; Thomas Liebig; Cécile Thoreau; Paolo Veneri
  33. Foreign Investment and Domestic Productivity in the Czech Republic: A Quantitative Survey By Hampl, Mojmir; Havranek, Tomas
  34. On the evolution of comparative advantage: path-dependent versus path-defying changes By Nicola Daniele Coniglio; Davide Vurchio; Nicola Cantore; Michele Clara
  35. Irish enterprise exporting patterns in goods and services By Lawless, Martina; Siedschlag, Iulia; Studnicka, Zuzanna
  36. The International Elasticity Puzzle Is Worse Than You Think By Lionel Fontagné; Philippe Martin; Gianluca Orefice
  37. Making globalization work: remarks at the Central Bank of Brazil, São Paulo, Brazil By Dudley, William

  1. By: Lionel Fontagné (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Gianluca Orefice (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique)
    Abstract: Stringent Technical Barriers to Trade (TBT) are expected to drive exporters out of the markets imposing these hurdles. In addition, more able multi-destination exporters can refocus on TBT-free markets and reorient their exports. By matching a database of TBT measures raised as concerns at the WTO (Specific Trade Concerns -- STCs), with a firm-level panel of French exporters, we show the complex effects of restrictive TBT measures on the different margins of trade. We show that the negative effect of TBT on export participation is magnified for multi-destination firms, which can divert their exports towards TBT-free destinations. Moreover, we conduct aggregate level estimations to show that the effect of stringent TBTs in reducing export flows is magnified in more homogeneous sectors. Observing the shape of the firm distribution at sectoral level and the aggregate response of export to trade cost, we shed light on the fixed component of the additional cost imposed by TBTs on exporters.
    Keywords: Non-tariff measures, TBT, Multi-destination Firms, Trade Margins,TBT,Multi-destination Firms,Trade Margins JEL Codes: F13
    Date: 2018–01
  2. By: William Coleman
    Abstract: In 1901 Australia abolished six internal, state-based tariff walls, and replaced them with a common external tariff. What was the impact of this establishment of a custom union (CU) of the six newly federated states? The presumption then, and today, is that it would have fostered intra-Australian trade, while inhibiting Australian international trade. The paper seeks to scrutinise this presumption through using previously unutilised quantitative evidence, deployed in the form of various analytical measures of the strength of trade relationships. In doing so the paper contributes to a topic that has been left relatively unexamined. Although there exists a literature that draws near the question of the impact of the Federation customs union on Australia’s trade relations (Patterson 1968; Lloyd 2008, 2015, 2016), with one prominent exception (Irwin 2006), the topic itself has not been directly addressed. In some respects the results of the present paper’s investigation are mildly corroborative of the presumption that Federation customs union ‘nationalised’ trade: in the decade subsequent to the formation of the Australian customs union in 1901 the export ties of the larger states with the rest of Australia strengthened, while their trade with the rest of the world tended to stagnate. In the same vein, the export relations of the rest of the world to Australia also tended to falter. But, pointing to a conclusion of a very different character, the export orientation of the three smaller states to the rest of the world actually increased in the wake of Federation, and the exports of most of the smaller states to the larger states actually waned. The impacts of the Federation Customs union, then, seem to present a fractured picture rather than a simple one.
    Keywords: customs union, federation, tariff
    JEL: F13 F14 F15
    Date: 2018–02
  3. By: Regis, Paulo José (Division of Economics, Xi'an Jiaotong-Liverpool University)
    Abstract: Using a dataset of over 86,000 firms from 179 surveys in developing and emerging countries, this paper presents evidence of the relationship between the margins of trade and productivity. Consistent with heterogeneous firm theoretical models, firms with high productivity have both greater likelihood of exporting (extensive margin) and higher export volume (intensive margin). Access to credit increases likelihood of entry to international markets; however, credit does not increase export volume. Size is a robust indicator of exporting status and the volume of exports. Firms with foreign ownership participation tend to be exporters, while those with state participation tend not to be.
    Keywords: margins of trade, productivity, access to finance, developing and emerging countries
    JEL: D24 F14 F10
    Date: 2018–02–08
  4. By: Abeliansky, Ana Lucia; Martínez-Zarzoso, Inmaculada
    Abstract: This study is the first to estimate a system of simultaneous gravity equations for Chinese exports, imports and foreign direct investment (FDI) using a sample of 167 countries over the period 2003-2012. The main results indicate that trade and outward FDI are complementary. In particular, the authors show that outward Chinese FDI is related to higher exports and imports and that China trades more with countries hosting Chinese FDI. Results are also robust to the use of instrumental variables. Therefore, the popular claim that Chinese investment could be detrimental for developing countries is not supported by the data.
    Keywords: international trade,foreign direct investment,China
    JEL: F14 F21 F59
    Date: 2018
  5. By: Swati Dhingra; Rebecca Freeman; Eleonora Mavroeidi
    Abstract: There is a growing recognition that for developed economies, like the UK, tariff-free market access is just one of a number of measures that ease cross-border trade flows. Modern trade agreements go beyond tariff reductions by setting rules, such as market access and regulation of foreign service providers. We examine the contribution of deep non-tariff provisions on international trade in goods and services. Using a gravity model, we find that provisions related to services, investment, and competition make up half of the overall impact of economic integration agreements on trade flows. These deep provisions have larger effects for trade in services than for trade in goods, and their relative contribution is highest in sectors that facilitate supply chain activity, such as transportation and storage. We apply our sectoral estimates of deep provisions to examine two counterfactuals of the UK signing bilateral deals with the US and with China and India. We find that negotiating services, investment, and competition provisions in these future deals would boost trade relatively more in professional, scientific, and technical activities in the UK.
    Keywords: trade agreements, integration agreements, EIAs, trade policy, provisions, non-tariff barriers
    JEL: F10 F13 F14 F15
    Date: 2018–03
  6. By: Matthias Beestermöller (LMU Munich - University of Munich); Anne-Célia Disdier (PSE - Paris School of Economics); Lionel Fontagné (PSE - Paris School of Economics, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The cost of complying with a sanitary standard is certain. However, such measure introduces uncertainty for exporters in relation to border rejections. Shipments may fail to pass inspections and may be refused entry into the importing country. This risk is shaped by variance in the quality of the exported product, and the stringency of the border controls. We examine how the risk of rejection at European borders on safety grounds is affecting Chinese agri-food exporters. We combine information from the European Rapid Alert System for Food and Feed with Chinese firm-level export data by product, destination and year for the period 2000-2011. Information externalities and reputation effects are important. Border rejections amplify the turnover among firms at the extensive margin of trade. This risk is curbing small exporters and resulting in a concentration of Chinese exports among big exporters.
    Keywords: Food Safety,Border inspections,Import refusals,Uncertainty,Firm heterogeneity
    Date: 2018
  7. By: Hatzigeorgiou, Andreas (The Ratio Institute); Lodefalk, Magnus (The Ratio Institute and Örebro University)
    Abstract: Do anti-migration sentiments threaten internationalization? One major argument of the pro-Brexit campaign in the UK was that Brexit would allow greater control over immigration. The most recent US presidential election also focused on the issue of immigration. Anti-migration sentiments could constitute a threat to internationalization considering that migrants can help lower costs associated with internationalization. Despite the vast literature on the migration-trade nexus and its important implications for policy, however, there are very few examples where governments and policymakers have highlighted the role of migration for trade and other aspects of internationalization. One explanation could be the lack of an accessible and comprehensive survey of the available theory and evidence on the nexus between migration and internationalization. This article intends to bridge this gap. We review and discuss over 100 published papers on the subject, from the pioneering country-level studies to the nascent firm-level studies that exploit employeremployee data. To our knowledge, this is the first paper to provide a wide-ranging review of both the different strands of theory related to the relationship between migration and internationalization, as well as early and new empirical results on this nexus. We find substantial support in the literature of an internationalization facilitating influence of migration. The evidence can be found in various settings, from individual small countries to groups of large countries, in both developed and less developed economies, and for regions and firms. Although the evidence suggests that migration can help to increase confidence and facilitate the flow of information between countries, which reduces the costs of—and improves the prospects for—internationalization, we also find substantial gaps and inconsistencies in the previous literature. More research is therefore needed. The theory is still incomplete and does not provide a coherent framework for explaining the interlinkages between migration and internationalization. Furthermore, a large part of the empirical literature has been based on aggregate data, which has stood in the way of robust evidence on the direction of causation and the main mechanisms at play. The nascent firm-level approach has the potential to bridge several of the existing knowledge gaps, but the research is still in its initial stages. Our aim is that this article will encourage future research, which will fill in the missing pieces. In addition, we hope the article can help policymakers formulate better policies for the promotion of internationalization.
    Keywords: Migration; networks; information; trade; foreign direct investment
    JEL: D20 D80 F14 F16 F22 F23 J61
    Date: 2017–12–22
  8. By: Malefane, Malefa Rose; Odhiambo, Nicholas M.
    Abstract: This paper examines the impact of trade openness on economic growth in South Africa. The study employs the autoregressive distributed lag (ARDL) bound testing approach to investigate the dynamic impact of trade openness on economic growth. Unlike some previous studies, the current study uses four proxies of trade openness, with each proxy addressing a different aspect of trade openness. The first proxy of trade openness is derived from the ratio of exports plus imports to gross domestic product (GDP). The second proxy is the ratio of exports to GDP, while the third proxy is the ratio of imports to GDP. The last proxy is an index of trade openness, which accounts for the country size and geography. Based on the long run empirical results, this study finds that trade openness has a positive and significant impact on economic growth when the ratio of total trade to GDP is used as a proxy, but not when the three other proxies are employed. However, in the short run, when the first three proxies of openness are used, the study finds trade openness to have a positive impact on economic growth, but not so when the trade openness index is employed. These results, therefore, suggest that the promotion of policies that support international trade is relevant in the South African economy.
    Keywords: ARDL; economic growth; exports; imports; South Africa; trade openness
    Date: 2018–03–12
  9. By: Hatzigeorgiou, Andreas (The Ratio Institute); Lodefalk, Magnus (The Ratio Institute and Örebro University)
    Abstract: Many countries display remarkably high dependence on services for production and employment that is incommensurate with their level of services exports. One explanation is that trade in services is more sensitive to informal and behind-the-border trade barriers such as information friction and inadequate access to foreign networks. Immigrant employees may provide access to and appeal in foreign markets through their knowledge of—and contacts in—their former home countries. We develop a heterogeneous firm framework to guide our empirical analysis and draw on new employer-employee data for nearly 30,000 Swedish firms during the period 1998-2007. The results suggest that immigrant employees facilitate services exports. Hiring one additional foreign-born worker can increase services exports by approximately 2.5 percent, on average, with a stronger effect found for skilled and newly arrived immigrants.
    Keywords: Trade; firms; migration; services; networks
    JEL: D80 F10 F20
    Date: 2017–12–15
  10. By: Tarjáni, Hajnalka.
    Abstract: This paper provides analysis on the implications of international trade on employment and skills demand in selected countries, including Cambodia, Ghana, Jordan, Malawi,Morocco, Myanmar, the Philippines, Tunisia and Viet Nam. It is based on a number of background studies which were prepared to support the implementation of the ILO’s Skills for Trade and Export Diversification Programme in these countries. These countries are at different stages of opening up to trade and integration to the global economy, and pursue different strategies to realise growth through trade. The paper looks at trends in exports between 2000–2015, and discusses the direct and indirect effects of exports on production and employment in interconnected sectors of the domestic economy. Subject to the limited availability of labour market data from most of these countries, the paper seeks corresponding changes in the structure of employment, and summarises information one xisting skills imbalances.
    Keywords: 1, 2, 3, 4
    Date: 2017
  11. By: Charlie Joyez (Université Paris-Dauphine, PSL Research University,IRD, LEDa, DIAL)
    Abstract: This paper extends the traditional international make or buy dilemma with a twofold contribution. First it considers joint-ventures, breaking with the common dichotomy. Second, it introduces a second source of heterogeneity among multinational rms, besides productivity: internationalization experience, which provides the rms complementary assets than does the total factor productivity (TFP). While both TFP and experience foster international integration, TFP is found to be more determinant in countries with strong contractual institutions and (only) experience matters in less certain destinations. The predictions from our reduced-form model are supported by the empirical examination of 6,321 French foreign aliates in 87 countries.
    Keywords: FDI, joint-venture, foreign ownership, Firm heterogeneity, total factor productivity, Gradual Internationalization.
    JEL: F23 F21 D24 L24
    Date: 2018–01
  12. By: Joaquin Blaum (Brown University)
    Abstract: Large economic crises are characterized by sharp currency devaluations, collapses in imports and declines in aggregate TFP. The standard mechanism for the decline in aggregate productivity is that firms' access to foreign inputs is restricted when foreign goods become more expensive. The effect of the crisis therefore crucially depends on the degree of substitutability between domestic and foreign inputs in firms’ technologies. Because this elasticity is typically estimated above unity, recent quantitative trade models imply that import shares, both at the firm and aggregate level, should decrease after a crisis. I provide evidence that in fact aggregate import shares increase after large depreciations, such as Mexico 1994, Brazil 1998, the East Asian crisis in 1997 and Argentina 2001, among others. Using Indonesian firm-level data, I show that this fact is explained by the entry of new exporters, as well as by existing exporters increasing their export intensity, after the devaluation. Because exporting is an import-intensive activity, this can account for the increase in the aggregate import share. These facts suggest that understanding the macroeconomic effects of large crises requires a joint account of the import and export behavior of firms. To explore this hypothesis, I develop a model with firm heterogeneity where exporting and importing decisions are made jointly. Exporting and importing are complementary activities because increases in revenue and reductions in unit cost interact in the profit function. I discipline the model to match salient features of the Indonesian micro data. I explore the effects of a devaluation on aggregate productivity and compare the results to the standard model of the literature which only features the importing channel. [work in progress].
    Date: 2017
  13. By: Ziesemer, Thomas (UNU-MERIT, and SBE, Maastricht University)
    Abstract: 113 countries report producing electricity from non-hydro renewable sources and thereby participate in the global energy transition. This paper shows through a dynamic panel data analysis that imports of electric currents have increased and exports have decreased through the higher share of renewables in electricity production, controlling for other factors. On the one hand more cables have been built recently; but on the other hand some countries are blocking electricity shocks technologically as they suffer from free trade temporarily when receiving supply shocks. This shows that trade currently helps dealing with fluctuations of supply, but temporary losses for recipients of shocks may require payments to leave the borders open.
    Keywords: Gains from trade, electric current, gravity, infrastructure, renewables, fluctuations, electricity supply, electricity shocks
    JEL: F14 F15 F18 F59 H54 O33
    Date: 2018–02–27
  14. By: Wako, Hassen Abda (UNU-MERIT)
    Abstract: This study relates Foreign Direct Investment (FDI) to economic growth, institutional quality and manufacturing value added. To this end, it uses dynamic panel data techniques that allow for parameter heterogeneity and possible non-stationarity in the series. The results confirm that economic growth, institutional quality, and natural resources, each play a positive role in attracting FDI. Besides, institutional quality is not an 'environmental variable' that simply determines economic growth and FDI inflows; it is itself affected both of these variables. Specifically, economic growth enhances institutional quality, whereas FDI appears to raise corruption and undermine the rule of law and accountability. The evidence found also reveals the existence of 'institutional' resource curse - emanating from both natural resources and FDI. Furthermore, FDI has contributed to the 'premature' deindustrialisation of the region, except in a few cases where it is non-resource-seeking. While most of these results are in agreement with some previous studies, the study also identifies detrimental institutional and deindustrialising effects of FDI which have hitherto been overlooked. A policy implication is that countries should be selective on the type of FDI they try to attract by weighing its positive growth effect against its deindustrialising and adverse institutional effects.
    Keywords: FDI, foreign investment, direct investment, Economic Growth, Institutions, Deindustrialisation, sub-Saharan Africa
    JEL: F21 F23 O14 O43
    Date: 2018–02–23
  15. By: Moran, Theodore H.; Görg, Holger; Seric, Adnan; Krieger-Boden, Christiane
    Abstract: Foreign direct investment in developing countries has got a bad reputation in some popular discussions where it is set tantamount to first world’s postcolonial exploitation of the raw materials and cheap labour from the third world, associated with pictures of leaking oil fields and collapsing factories. While this does happen, data show that FDI in developing countries increasingly flows to medium- to high-skilled manufacturing sectors rather than to resource-intensive and low-skilled sectors. And as skill levels needed by FDI increase, so do wage levels (ILO 2007, Coniglio et al. 2015). Accordingly, many emerging economies have built their success to a considerable degree on FDI flows to cover their enormous need for investments. The trick here is to attract "Quality FDI" that links foreign investors into the local host country economy. The current KCG Policy Paper provides evidence-based suggestions of how developing countries may attract Quality FDI successfully.
    Date: 2017
  16. By: Hans Lofgren; Martin Cicowiez (CEDLAS-FCE-UNLP.)
    Abstract: Armington and constant-elasticity-of-transformation (CET) functions are routinely used in computable general equilibrium (CGE) Models to model foreign trade. The CET function is applied to producer decisions about whether to export and or sell at home. Decisions by domestic demanders whether to purchase imports or domestic output are covered by the Armington function. The Armington function is a constant-elasticity-of-substitution (CES) function. This note is concerned with the links between (a) price elasticities of import demand and constant elasticities of substitution between demand for imports and domestic output; and (b) price elasticities of export supply and constant elasticities of transformation between supply to exports and domestic market. These links are important since researchers often may wish to compare estimates of price elasticities to the price elasticities implied by elasticities of substitution and transformation. In this note, price elasticities related to each function are derived from their representation in many CGE models – the function itself and a first-order optimality condition. In an appendix, these representations are derived from cost minimization and revenue maximization given prices and the “technology” embodied by the Armington and CET functions.
    Date: 2018–02
  17. By: Pham Van Ha; Tom Kompas; Hoa-Thi-Minh Nguyen; Chu Hoang Long
    Abstract: Intertemporal CGE models allow agents to respond fully to current and future policy shocks. This property is particularly important for trade policies, where tariff reductions span over decades. Nevertheless, intertemporal CGE models are dimensionally large and computationally difficult to solve, thus hindering their development, save for those that are scaled-down to only a few regions and commodities. Using a recently developed solution method, we address this problem by building an intertemporal version of a GTAP model that is large in dimension and can be easily scaled to focus to any subset of GTAP countries or regions, without the need for ‘second best’ recursive approaches. Specifically, we solve using a new parallel-processing technique and matrix reordering procedure, and employ a non-steady state baseline scenario. This provides an effective tool for the dynamic analysis of trade policies. As an application of the model, we simulate a free trade scenario for Vietnam with a focus on the recent Trans-Pacific Partnership (TPP). Our simulation shows that Vietnam gains considerably from the TPP, with 60 of the gains realised within the first 10 years despite our assumption of a gradual and linear removal of trade barriers. We also solve for intertemporal and sector-specific effects on each industry in Vietnam from the trade agreements, showing an added advantage of our approach compared to standard static and recursive GTAP models.
    Keywords: Intertemporal CGE modelGTAPTrans-Pacific Partnership (TPP)EU-Vietnam Free Trade AgreementVietnam
    Date: 2018–01
  18. By: Robert Z. Lawrence (Peterson Institute for International Economics)
    Abstract: President Trump has asserted that trade balances are a key measure of a nation’s commercial success and that large US trade deficits prove that past trade approaches have been flawed. But trade deficits are not in fact a good measure of how well a country is doing with respect to its trade policies. Many of the assumptions on which the administration’s beliefs rest are not supported by the evidence. This Policy Brief argues that trade deficits are not necessarily bad, do not necessarily cost jobs or reduce growth, and are not a measure of whether foreign trade policies or agreements with other countries are fair or unfair. Efforts to use trade policy and agreements to reduce either bilateral or overall trade deficits are also unlikely to produce the effects the administration claims they will and instead lead to friction with US trading partners, harming the people the policies claim to help.
    Date: 2018–03
  19. By: Diego A. Cerdeiro; Rachel J. Nam
    Abstract: We present and discuss a set of indicators to help assess countries’ trade policies. The indicators relate to three policy areas – trade in goods, trade in services, and FDI. Given concerns about the direction of global trade policy, we also consider a set of more granular measures that reflect the evolution of countries’ policies since the 2008 financial crisis. We propose a simple approach to present the multidimensional aspects of trade policy that, by shedding light on relative openness across areas, can facilitate policy discussions. In the cross-section of countries, we find a diversity in the type of measures adopted, both between and (since the 2008 financial crisis) within policy areas, lending support to the approach based on multiple indicators. The indicators’ time series suggest that advanced and, especially, emerging economies are moving toward more open regimes over time, although recently progress has, with some exceptions, slowed across the board. Lastly, our findings also call for stronger efforts to objectively quantify the different aspects of countries’ trade regimes. More data, both across countries and in terms of policy areas that significantly affect trade, are needed for better-informed policy discussions.
    Date: 2018–02–21
  20. By: van den Boogaard, Vanessa; Prichard, Wilson; Jibao, Samuel
    Abstract: Recent research has cast light on the variety of informal payments and practices that govern the day-to-day interactions between traders and customs agents at border posts in low-income countries. Building on this literature, this paper draws on survey and qualitative evidence in an effort to explore which groups are most advantaged and disadvantaged by the largely informal processes and norms governing cross-border trade. We find that understanding variation in strategies and outcomes across traders can only be effectively understood with reference to the importance of norms, networks, power, and the logic of control.
    Keywords: Governance,
    Date: 2018
  21. By: Lionel Fontagné (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Jean Fouré (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique)
    Abstract: S’il constitue une avancée, l’Accord de Paris, entré en vigueur en novembre 2016, pose un certain nombre de questions, notamment quant à la responsabilité « commune mais différenciée » – qui se traduit par des engagements très variables d’un pays signataire à l’autre –, mais aussi concernant l’articulation entre politique climatique et politique commerciale. Pour réduire les émissions de gaz à effet de serre (GES), une politique commerciale ferait-elle mieux qu’une politique climatique ? À défaut, pourrait-elle inciter à des engagements plus ambitieux de réduction des émissions ? Cette Lettre montre, à partir de simulations d’un modèle dynamique de l’économie mondiale développé au CEPII, que la politique commerciale seule n’est pas un bon outil pour limiter les émissions de CO2, mais qu’elle peut venir compléter une politique plus ambitieuse.
    Keywords: gaz à effet de serre, protectionnisme, commerce international,climat
    Date: 2017–01–25
  22. By: Clemens Fuest; Samina Sultan
    Abstract: This paper develops a model of tax competition with three countries, which initially form a union where countries refrain from using different tax rates in different sectors of the economy. We study the impact of one country leaving the union. We show that the introduction of discriminatory taxation in one country increases tax policy heterogeneity within the remaining union. Moreover, the incentives for the two remaining countries to harmonize their tax rates decline. We discuss these results in the context of the debate about the tax policy implications of Brexit.
    Keywords: international taxation, tax competition, preferential tax regimes
    JEL: H20 H73
    Date: 2017
  23. By: Koska, Onur A.
    Abstract: This study shows that when there is multinational competition for foreign acquisition, the strategic use of a consumer welfare argument in regulating foreign market entry leads to a preemptive foreign acquisition. Even under fierce competition, foreign acquisition will emerge as part of a non-cooperative equilibrium (although multinationals would have gained more had they been able to credibly commit to a cooperative equilibrium of independent foreign sales, either via greenfield investment or trade under complete liberalization) which increases local welfare by more than both the case without foreign market entry and the case with foreign market entry via independent foreign sales.
    Keywords: cross-border firm acquisitions,foreign market entry regulations,greenfield investment,trade,consumer welfare
    JEL: F23
    Date: 2018
  24. By: Castillo-Murciego, Ángela; López Laborda, Julio
    Abstract: The present paper evaluates the effect of Double Taxation Treaties and the Territorial Tax System of countries on Spain's inward and outward FDI for the period 1993-2013. Estimations produce a positive and statistically significant effect of Treaties for both samples when using a simple binary variable for measuring the effect of the mere existence of the same. These outcomes keep for old and new Treaties and for the sub-sample of developed partner countries of Spain. However, regarding developing countries, the positive result exists only for the outbound sample. Also for the global samples and the sub-samples of developed countries, there is an additional positive effect on investments for countries applying the Territorial Tax System for taxing foreign income.
    Keywords: Foreign Direct Investment,Double Taxation Treaty,Territorial Tax System,Spain
    JEL: F21 F23 H25 H32 H87
    Date: 2018
  25. By: Fukase, Emiko; Martin, Will
    Abstract: This paper analyzes the principal features of agro-processing and horticultural exports from SSA and explores policy alternatives based on simulation analyses. We first provide a conceptual section focusing on changing patterns of processing and exports (section 2). We then examine how the pattern of exports from Africa compares with the pattern in other regions (section 3). Following that, we examine the directions of trade in African agricultural exports and the patterns of protection facing, and imposed by, African countries (section 4). Next, we turn to simulation exercises to examine the impacts of potential reforms on exports of processed and horticultural exports from Africa (section 5). With this as background, we turn to consider the options for policy makers in Africa (section 6).
    Keywords: trade; horticulture; agricultural trade; exports; trade policies; trade barriers; economic policies,
    Date: 2017
  26. By: Dominique Bureau; Lionel Fontagné (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Katheline Schubert
    Abstract: To limit greenhouse-gas emissions, is it necessary to restrict international trade? By dissociating where products are produced from where they are consumed, international trade contributes significantly to greenhousegas emissions worldwide, especially when goods are transported. It also displaces the location of emissions: the consumption-induced carbon footprint of OECD countries is higher than their level of emissions. Large emerging countries find themselves in the opposite case. However, halting international trade would be particularly ineffective to reduce GHG emissions. According to oursimulations, raising average import tariffs to 17% (as opposed to current 5%, except for agricultural products) and accepting a fall in aggregate production of 1.8% would only lead to 3.5% GHG emission reduction by 2030. We confirm that a uniform and moderate import tariff imposed by a “club” of countries adopting ambitious and binding policies to fight climate change, against all imports from countries outside of the club, would be effective.
    Keywords: international trade, international transport, greenhouse gas emissions
    Date: 2017–01–30
  27. By: Alessandro Barattieri; Matteo Cacciatore; Fabio Ghironi
    Abstract: We study the consequences of protectionism for macroeconomic fluctuations. First, using high-frequency trade policy data, we present fresh evidence on the dynamic effects of temporary trade barriers. Estimates from country-level and panel VARs show that protectionism acts as a supply shock, causing output to fall and inflation to rise in the short run. Moreover, protectionism has at best a small positive effect on the trade balance. Second, we build a small open economy model with firm heterogeneity, endogenous selection into trade, and nominal rigidity to study the channels through which protectionism affects aggregate fluctuations. The model successfully reproduces the VAR evidence and highlights the importance of aggregate investment dynamics and micro-level reallocations for the contractionary effects of tariffs. We then use the model to study scenarios where temporary trade barriers have been advocated as potentially beneficial, including recessions with binding constraints on monetary policy easing or in the presence of a fixed exchange rate. Our main conclusion is that, in all the scenarios we consider, protectionism is not an effective tool for macroeconomic stimulus and/or to promote rebalancing of external accounts.
    JEL: E31 E52 F13 F41
    Date: 2018–02
  28. By: Maurício C. Coutinho (Universidade de Campinas); Carlos Eduardo Suprinyak (Cedeplar/UFMG)
    Abstract: Though contemporaries, Adam Smith and Sir James Steuart are commonly portrayed as men belonging to different eras. Whereas Smith went down in history both as founder of Classical Political Economy and patron of economic liberalism, Steuart became known as the last, outdated advocate of mercantilist policies in Britain. Smith himself was responsible for popularizing the notion of the ‘system of commerce’ as an approach to political economy that dominated British thought during the early modern period. As it evolved into a historiographical concept, the mercantile system came to be seen as an international trade theory grounded upon the fallacious doctrine of the favorable balance of trade. In the Wealth of Nations, however, Smith puts limited emphasis on international trade as a theoretical concern. His analysis of the subject, moreover, was marred by lack of analytical clarity, which caused him to be chastised by some among his followers who adhered more enthusiastically to the free trade cause. Given Smith’s doubtful credentials as a free trade theorist, in this paper we try to analyze the reasons that led him and Steuart to be historically placed on opposite sides of the mercantilist divide. To do so, we analyze the works of both authors in depth, showing that their disagreements in matters of economic policy have chiefly to do with different views about the role of money in the economy. Additionally, we explore how early-19th century writers helped forge the intellectual profiles of both Steuart and Smith.
    Keywords: Free trade, money, mercantilism, Adam Smith, James Steuart
    JEL: B11 B12 E40 F10
    Date: 2018–02
  29. By: Bougharriou, Nouha; Benayed, Walid; Gabsi, Foued Badr
    Abstract: The purpose of the paper is to examine the direct and indirect links between democracy and economic growth. To do so, the authors estimate a dynamic panel simultaneous equations model on a sample of 16 Arab countries during the period 2002-2013. This study focuses on two particular channels through which democracy affects growth, namely FDI inflows and public consumption expenditure. The results show that there is no clear relationship between democracy and economic growth in the Arab countries, which confirms the skeptical approach. The ambiguity of this relationship can be explained by the fact that democracy promotes growth indirectly by stimulating FDI inflows and hinders growth by generating higher public consumption expenditure.
    Keywords: democracy,economic growth,FDI,government spending,Arab world,dynamic panel simultaneous equations model
    JEL: C3 O40 P16
    Date: 2018
  30. By: Ngoc Thi Minh Tran (University of Waikato); Michael P. Cameron (University of Waikato); Jacques Poot (University of Waikato)
    Abstract: Previous research has shown that institutions matter in decisions regarding migration. This paper extends investigation of the role of institutional quality in migration to the return intentions of international migrants. Using data from a web-based survey that we conducted in OECD countries in 2016, we examine both micro-level and macro-level determinants of the intentions to repatriate among Vietnamese migrants. The results of our logistic regression analysis suggest that those migrants who attach greater importance to the institutional quality in Viet Nam are less likely to have the intention to return than other Vietnamese migrants. However, there is considerably heterogeneity by gender. The concern about institutional quality in Viet Nam is only statistically significant for males. Nonetheless, our findings underscore the necessity of institutional reforms in Viet Nam to encourage return migration for development.
    Keywords: institutional quality; international migration; return intentions; Viet Nam
    JEL: F22 O15
    Date: 2018–03–03
  31. By: FERRAGINA, Anna Maria (CELPE - Centre of Labour Economics and Economic Policy, University of Salerno - Italy); MAZZOTTA, Fernanda (CELPE - Centre of Labour Economics and Economic Policy, University of Salerno - Italy)
    Abstract: Making use of an original data set we investigate the employment dynamics of a panel of Italian manufacturing firms over 2002-2010, allowing the global crisis to impact differently on firms growth trajectories according to firm involvement in FDI, controlling for firm size, age, financial conditions. We estimate a GMM System dynamic panel model and investigate whether foreing multinational firms show a different path of employment adjustment during the 2008 Global Re-cession. This paper is the first to test this issue for Italy and follows the benchmarking literaure on other countries. The results on a policy ground support the idea that FDI has no impact on employment resilience.
    Keywords: FDI; Employment adjustment; Dynamic panel analysis; System GMM
    JEL: C41 F21 F23 J31 L11 L25 L60
    Date: 2017–12–30
  32. By: Marcos Diaz Ramirez (OECD); Thomas Liebig (OECD); Cécile Thoreau; Paolo Veneri (OECD)
    Abstract: This paper provides an assessment of the presence of migrants, their characteristics and integration outcomes across OECD regions, based on a new OECD database on immigrant integration at the regional level. It reveals the wide diversity of the presence of migrants within countries, as well as the specific patterns observed in the way migrants locate and integrate in society across regions. For example, migrants tend to be more spatially concentrated in capital-city and metropolitan regions than the native-born population. What is more, highly-educated migrants are more likely to locate in the same regions where the highly-educated natives concentrate, a trend that is not observed for the low-educated foreign-born. Integration outcomes of migrants, relative to the native-born, are measured through a variety of labour market and housing indicators. The paper also provides preliminary findings on public attitudes towards migrants across regions, which suggest that attitudes tend to be more positive in regions with larger shares of foreign-born population.
    Keywords: Integration, Migration, Regions
    JEL: F22 R10
    Date: 2018–03–14
  33. By: Hampl, Mojmir; Havranek, Tomas
    Abstract: In this paper we take stock of the evidence concerning the effect of foreign direct investment (FDI) on the productivity of locally owned firms in the Czech Republic. To this end, we collect 332 estimates previously reported in journal articles, working papers, and PhD theses. We find that the mean reported externality arising for domestic firms due to the presence of foreign firms (the “FDI spillover”) is zero. There is no evidence of publication bias, i.e., no sign of selective reporting of results that are statistically significant and show an intuitive sign. Nevertheless, we find that the overall spillover effect is positive and large when more weight is placed on estimates that conform to best-practice methodology. Our results suggest that, as of 2018, a 10-percentage-point increase in foreign presence is likely to lift the productivity of domestic firms by 11%. The effect is even larger for joint ventures, reaching 19%.
    Keywords: Foreign direct investment; productivity; spillovers; meta-analysis
    JEL: C83 F23 O12
    Date: 2018–03–01
  34. By: Nicola Daniele Coniglio (Università degli Studi di Bari "Aldo Moro"); Davide Vurchio (Università di Roma 3); Nicola Cantore (UNIDO); Michele Clara (UNIDO)
    Abstract: The diversification of production and trade is considered almost unanimously a fundamental policy goal, particularly for developing economies whose export baskets are heavily concentrated on a few products. In what direction trade diversification ought to take place is, however, subject to fierce debate. The Product Space (PS) framework (Hausmann and Klinger, 2007; Hidalgo et al. 2007) is a recent contribution in the economic literature that has proved very influential in policy circles. It argues that the endowment of production capabilities (technologies, production factors, institutions etc.) determines what countries produce today but it also constrains what they can produce in the future as it is uncommon that countries develop a comparative advantage in goods that do not draw from the same pool of capabilities (unrelated products). Contributions along such line argue that defying the initial comparative advantage can be a risky policy decision with high probability of failure. The main objective of this contribution is to use a novel methodology to investigate whether the patterns of diversification of a sample of 177 countries over the period 1995-2015 conform or not to the prediction of the PS framework. We find evidence of a high degree of path-dependence but our analysis suggests also that a significant number of new products that entered countries’ export baskets were unrelated to the initial productive specialization (path-defying changes). We shed light on the determinants of these ‘radical’ patterns of diversification and show they are associated with higher economic growth. The results of this study have important policy implications in particular for the design of industrial policies aimed at actively shaping countries’ structural transformation.
    Keywords: path-dependence; product space; trade diversification; industrial policy
    JEL: F1 O1 O3
    Date: 2018–03
  35. By: Lawless, Martina; Siedschlag, Iulia; Studnicka, Zuzanna
    Date: 2017
  36. By: Lionel Fontagné (PSE - Paris School of Economics, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique); Philippe Martin (ECON - Département d'économie - Sciences Po); Gianluca Orefice (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique)
    Abstract: We estimate three international price elasticities using exporters data: the elasticity of firm exports to export price, tariff and real exchange rate shocks. In standard trade and international macroeconomics models these three elasticities should be equal. We find that this is far from being the case. We use French firm level electricity costs to instrument for export prices and provide a first estimate of the elasticity of firm-level exports to export prices. The elasticity of exports is highest, around 5, for export prices followed by tariffs, around 2, and is lowest for the real exchange rate, around 0.6. The large discrepancy between these elasticities makes us conclude that the international elasticity puzzle is actually worse than previously thought. Moreover, we show that because exporters absorb part of tariffs and exchange rate movements, estimates of export elasticities that do not take into account export prices are biased.
    Keywords: international elasticity puzzle,export prices,Elasticity,International Trade and Macroeconomics,Export Price,Firm exports
    Date: 2017–02
  37. By: Dudley, William (Federal Reserve Bank of New York)
    Abstract: Remarks at the Central Bank of Brazil, São Paulo, Brazil.
    Keywords: standards of living; competitiveness; protectionism; flow of capital; trade agreements; global GDP; open trade; global rules-based system; Trade Facilitation Agreement; trade balance; trade policy
    Date: 2018–03–01

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