nep-int New Economics Papers
on International Trade
Issue of 2018‒03‒26
43 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Multinational production and trade in services By Andrea Andrenelli; Charles Cadestin; Koen De Backer; Sébastien Miroudot; Davide Rigo; Ming Ye
  2. Export Competitiveness and Trade Agreements: Analysis and Insights from Israel’s Experience By Ronen, Eyal; Benizri, Yohan
  3. The Effect of International Trade on emerging economies: The case of India By Innocents EDOUN; Hews KGaphola
  4. India in the Regional Comprehensive Economic Partnership (RCEP) – Need for Caution. By Chandran, B.P. Sarath
  5. Institutions, Trade and Development: A Quantitative Analysis By Beverelli, Cosimo; Keck, Alexander; Larch, Mario; Yotov, Yoto
  6. The Chinese Export Displacement Effect Revisited By Christian Elleby; Wusheng Yu; Qian Yu
  7. What Do Trade Agreements Really Do? By Dani Rodrik
  8. International Import Competition and the Decision to Migrate: Evidence from Mexico By Majlesi, Kaveh; Narciso, Gaia
  9. Monitoring trade agreements: improving export performance and promoting industrialization in the goods-producing economies of the Caribbean By McLean, Sheldon; Singh, Ranjit
  10. Global Value Chains and Upgrading: What, When and How? By Gehl Sampath, Padmashree; Vallejo, Bertha
  11. Decomposing firm-product appeal:How important is consumer taste ? By Bee Yan Aw; Yi Lee; Hylke Vandenbussche
  12. Markups of Exporters and Importers: Evidence from Hungary By Hornok, Cecilia; Muraközy, Balázs
  13. Migration and FDI Flows By Neil Foster-McGregor; Michael Landesmann; Isilda Mara
  14. Do Employee Spinoffs Learn Markets from their Parents? Evidence from International Trade By Marc-Andreas Muendler; James E. Rauch
  15. US international economic policy in the Trump administration By Noland, Marcus
  16. Non-Tariff Measures and other Trade Measures for the Environment in ASEAN By Jaime DE MELO; Jean-marc SOLLEDER
  17. The Effects of Trade, Aid, and Investment on China's Image in Developing Countries By Eichenauer, Vera Z.; Fuchs, Andreas; Brueckner, Lutz
  18. Beyond the copper sector: Chile’s engagement in international production networks By Zaclicever, Dayna
  19. Quantifying the Losses from International Trade By Mike Waugh
  20. Labour Mobility in the PACER Plus By Alisi Kautoke-Holani
  21. South-South FDI: Is It Really Different? By Gold, Robert; Görg, Holger; Hanley, Aoife; Seric, Adnan
  22. Brexit: the economics of international disintegration By Thomas Sampson
  23. Globalization: Implications for firms in Germany By Görg, Holger; Hanley, Aoife
  24. Globalization and Income Inequality Revisited By Florian Dorn; Clemens Fuest; Niklas Potrafke
  25. How Global is FDI? Evidence from the Analysis of Theil Indices By Bickenbach, Frank; Liu, Wan-Hsin; Nunnenkamp, Peter
  26. Ramsey Taxation in the Global Economy By Chari, V. V.; Nicolini, Juan Pablo; Teles, Pedro
  27. Convergence in pollution terms of trade By Satoshi Honma; Yushi Yoshida
  28. The Impact of Globalization on the Agricultural Sector and Food Security By Hana Polá?ková
  29. Firms' Global Engagement and Management Practices By Görg, Holger; Hanley, Aoife
  30. A biography of Paul Krugman: contributions to Geography and Trade By José M. Gaspar
  31. An Assessment of Pakistan’s Export Performance and the Way Forward By Afia Malik; Ejaz Ghani; Musleh ud Din
  32. Global Imbalances and the Trade Slowdown By Caroline Freund
  33. Complexity, Centralization, and Fragility in Economic Networks By Carlo Piccardi; Lucia Tajoli
  34. Foreign-owned firms as agents of structural change in regions: the case of Hungary 2000-2009 By Zoltán Elekes; Ron Boschma; Balázs Lengyel
  35. The European Globalisation Adjustment Fund: Easing the pain from trade? By Grégory Claeys; André Sapir
  36. Foreign Investment and Domestic Productivity in the Czech Republic: A Quantitative Survey By Havranek, Tomas; Hampl, Mojmir
  37. Why Do Exporters and Multinational Firms Pay Higher Wages?:Evidence from Japanese Linked Employer–Employee Data By Ayumu Tanaka
  38. Institutional Legitimacy, Cross-Border Trade and Institutional Voids: Insights from the Cocoa Industry in Ghana By Amankwah-Amoah, Joseph; Debrah, Yaw; Nuertey, Dorcas
  39. The Economics of Non-Tariff Measures: A Primer By Jaime DE MELO; Ben SHEPHERD
  40. Export Market Exit and Financial Health in Crises Periods By Görg, Holger; Spaliara, Marina-Eliza
  41. How Much Market Access? A Case study of Jordan’s Exports to the EU By Stéphanie BRUNELIN; Jaime DE MELO; Alberto PORTUGAL-PEREZ
  42. United States–China Trade: President Trump's Misunderstandings By Ralph W. Huenemann
  43. On Using Exchange Rate for Promoting Exports By Atiq-ur-Rehman

  1. By: Andrea Andrenelli (OECD); Charles Cadestin (OECD); Koen De Backer (OECD); Sébastien Miroudot (OECD); Davide Rigo (OECD); Ming Ye (OECD)
    Abstract: Using the OECD analytical AMNE database, this paper provides new evidence on the services activities of multinational enterprises (MNEs) and discusses the relationship between cross-border trade in services and the production of services through foreign affiliates (“mode 3” trade in services in the General Agreement on Trade in Services). An econometric analysis indicates that policies restricting trade in services (as captured in the OECD Services Trade Restrictiveness Index) are associated with a lower output of foreign affiliates not only in services industries but also in the manufacturing sector. Moreover, services trade restrictions also impact the choice of firms when it comes to engaging in exports or in foreign direct investment to serve foreign markets. Overall, the results in this paper demonstrate the intertwined nature of manufacturing and services activities in global value chains.
    Keywords: FATS, global input-output, global value chains, mode 3, Multinational enterprises, multinational production, trade in services, trade in value-added
    JEL: F14 F23 L16 L23
    Date: 2018–03–19
  2. By: Ronen, Eyal; Benizri, Yohan
    Abstract: Israeli manufactured export performance has been on a growth path for the past two decades. This growth is partly due to the continuing shift in Israeli export specialization patterns from traditional products towards technology-intensified exports. However, Israel’s strong export competitiveness also derives from proliferating free trade agreements (FTAs) with its trading partners, especially the European Union (EU). This paper analyzes export statistics to provide data validating the positive impact of recent FTAs on Israel’s export comparative advantages across all sectors between 1995 and 2015. It employs an econometric framework to examine stability and specialization trends, as well as convergence. Furthermore, the authors add to the literature by performing a survival analysis, using the Kaplan-Meier Survival Rate model, to identify particular Israeli export sectors that have benefited from a longer pe- riod of competitive advantage than other sectors due to the EU-Israel Association Agreement.
    Keywords: Export Competitiveness, Survival Analysis, Trade Agreements.
    JEL: F13 F14
    Date: 2018
  3. By: Innocents EDOUN (Tshwane University of Technology); Hews KGaphola (TUT Business School)
    Abstract: Past and current studies indicate that, India is one of the fastest growing and most attractive economies in the world and has emerged as a desirable destination for Foreign Investment. Since 1991 India has been operating under strict policies which restricted the economy from an International trade, this drove more protectionism than open market trade. Indian government since 1991 introduced economic reform measures, to stimulate the economy. These reform measures in fiscal, reduction on the level of tariffs based on a large number of imports, exchange rate, the use of the exchange rate as the instrument for export promotion and trade policies. However, the reforms that were implemented in the Indian were not very different from the reforms undertaken by developing countries, the only alteration would be the swiftness with which they are implemented. India has one of the advantages which is the stability of its political climate. The current government and party that is in power have held the political landscape in place under control and this is providing the investor-friendly environment. India has gained influence within the global economy, this is demonstrated by India position in the international institutions like (G-8, G-20) and the free trade arrears with ASEAN, EU. This is also reflected by the by India's willingness to adopt international best practices in the production of the range of goods and services. India has attracted U$195bn in FDI over the past 5 years. ?India?s GDP for 2013, valued at US$ 1.9 trillion at current prices is the 10th largest in the world". The Indian government has a target of 8 per cent during the current Five Year Plan (2012-2017), for their economic growth, this is based on the demonstrated ability to sustain national economic growth.?This paper will elaborate more on the rationale to explore trade in India. Economic theory and empirical evidence have clearly established the links between Trade, Productivity, and Economic growth. Countries that have large internal markets have also benefited by integrating themselves into the world economy, and thus opening up their economies like South Africa and India as one of the BRICS countries. India is projected to be the fastest-growing economy in the world over the next several decades. Trading with different countries respectively has made India what it is regarded as trading hub of today after China in the BRICS Countries.
    Keywords: India, foreign Investment, economic growth, economic theory, trade
    JEL: F30 A10 F10
    Date: 2017–10
  4. By: Chandran, B.P. Sarath
    Abstract: Regional Comprehensive Economic Partnership (RCEP) is a large trade negotiation among 16 countries of Asia Pacific which aims to cover goods, services, investments, economic and technical cooperation, competition and intellectual property rights among these nations. The 16 RCEP countries include China, India, Japan, South Korea, Australia, New Zealand, and the 10-member ASEAN which represent more than 3.5 billion people and about 40 percent of global GDP. India already implemented a free trade agreement with ASEAN, Japan and South Korea and negotiating similar pacts with Australia and New Zealand. There are apprehensions that RCEP agreement will lead to large-scale import of manufactured goods from developed members of RCEP particularly China which enjoys a trade surplus of more than 50 billion US$ with India. Also, large coverage of items in the tariff reduction programme will lead to an influx of cheaper commodities into India affecting the manufacturing sector. Easy access to burgeoning Indian consumer market may affect a large number of informal players affecting their livelihoods. India’s gain primarily comes from the services sector which needs greater access to the members’ markets. Also, the previous experiences of India’s RTAs did not yield desirable results as India’s import increased rapidly compared to exports. In this context, the paper argues for India’s caution and push for a comprehensive agreement by including services sector where India’s advantage lies.
    Keywords: RCEP, Regional Trade Agreement, ASEAN, India,
    JEL: F13 F15 F17
    Date: 2018–01–25
  5. By: Beverelli, Cosimo (World Trade Organization); Keck, Alexander (World Trade Organization); Larch, Mario (University of Bayreuth); Yotov, Yoto (Drexel University)
    Abstract: We propose and apply methods to quantify the impact of national institutions on international trade and development. We are able to identify the direct impact of country-specific institutions on international trade within the structural gravity framework. Our approach naturally addresses the prominent issue of endogenous institutions. The empirical analysis offers robust evidence that stronger institutions promote trade. %Furthermore, we find that better institutions have a stronger impact on the imports of poor nations from rich countries than on their exports to rich countries. A series of sensitivity experiments confirm the robustness of our findings. A counterfactual analysis reveals that the changes in institutional quality in the poor countries in our sample between 1996 and 2006 have had, via their impact on imports from rich countries, significant and heterogeneous real GDP effects, varying between -5 and 5 percent. Our methods are readily applicable to identifying the impact of a wide range of country-specific variables on international trade.
    Keywords: Institutional Quality; International Trade; Development; Structural Gravity
    JEL: F10 F14 F16
    Date: 2018–02–26
  6. By: Christian Elleby (Department of Food and Resource Economics, University of Copenhagen); Wusheng Yu (Department of Food and Resource Economics, University of Copenhagen); Qian Yu (Department of Food and Resource Economics, University of Copenhagen)
    Abstract: China’s global export share has increased dramatically over the past decades. This development has prompted an empirical literature on whether Chinese exports displace those originated from elsewhere in various destination markets. In this paper we focus on the growth of China’s exports to the East African Community (EAC) countries and show how it has affected exports from the European Union (EU) to the EAC. Our main contribution to the literature on the displacement effect of Chinese exports is a set of total and relative displacement estimates based on different specifications of the gravity model where we control for country-year fixed effects so as to avoid the “gold medal mistake” of not accounting for time varying “multilateral resistance”. Our findings do not support the hypothesis that Chinese exports have displaced exports from other countries in general. Nor do they support the hypothesis that Chinese exports have displaced exports from EU countries to the EAC countries or elsewhere. There has been no displacement in the sense that, although exporters from the EU and elsewhere have lost market share to China, the value of their exports to the EAC and elsewhere have still increased.
    Keywords: habits, trade, gravity equation, export displacement, China, East African Community, European Union
    JEL: F13 F14 F15
    Date: 2018–03
  7. By: Dani Rodrik
    Abstract: As trade agreements have evolved and gone beyond import tariffs and quotas into regulatory rules and harmonization, they have become more difficult to fit into received economic theory. Nevertheless, most economists continue to regard trade agreements such as the Trans Pacific Partnership (TPP) favorably. The default view seems to be that these arrangements get us closer to free trade by reducing transaction costs associated with regulatory differences or explicit protectionism. An alternative perspective is that trade agreements are the result of rent-seeking, self-interested behavior on the part of politically well-connected firms – international banks, pharmaceutical companies, multinational firms. They may result in freer, mutually beneficial trade, through exchange of market access. But they are as likely to produce purely redistributive outcomes under the guise of “freer trade.”
    JEL: F13
    Date: 2018–02
  8. By: Majlesi, Kaveh (Lund University); Narciso, Gaia (Trinity College Dublin)
    Abstract: We analyze the effects of the increase in China's import competition on Mexican domestic and international migration. We exploit the variation in exposure to competition from China, following its accession to the WTO in 2001, across Mexican municipalities and estimate the effect of international competition on the individual decision to migrate. Controlling for individual and municipality features, we find that individuals living in municipalities more exposed to Chinese import competition are more likely to migrate to other municipalities within Mexico, while a negative effect is found on the decision to migrate to the US. In particular, we find that Chinese import competition reduces migrants' negative self- selection: the rising international competition lowers the likelihood of low-educated, low-income people to migrate to the US, by making them more financially constrained. We do not find any evidence that changes in demand for Mexican workers in the US drive our results.
    Keywords: import competition, domestic migration, international migration, negative self-selection
    JEL: F14 F16 F22 O15 R23
    Date: 2018–02
  9. By: McLean, Sheldon; Singh, Ranjit
    Abstract: This study focuses on the identification of the challenges and capacity constraints faced by enterprises in the sub-region in exploiting trade opportunities provided by Free Trade Agreements (FTAs) and Partial Scope Agreements (PSAs). It concentrates on the goods sector and case studies for Belize, Suriname, and Trinidad and Tobago, and seeks to develop a strategic framework aimed at addressing these challenges and constraints, thereby creating a platform for economic diversification and export expansion. It explores the recent trade performance of the countries in question under selected trade agreements; identifies challenges and constraints faced by exporters in these countries; and presents possible avenues for strengthening export expansion both at the intensive and extensive margins.
    Date: 2018–01–31
  10. By: Gehl Sampath, Padmashree (UNU-MERIT, UNCTAD, and University of Aalborg); Vallejo, Bertha (UNU-MERIT, and University of Tilburg)
    Abstract: This paper focuses on explaining how technological capabilities interact with trade and GVCs participation to foster upgrading. We analyse trade performance of 74 developing countries in 2000 and 2010 from a perspective of learning, to understand what variables account for technological diversification over time when countries trade, including through GVCs. We find that technological capabilities not only condition the initial determination of local firms in trade and GVCs, but they also determine the extent to which local firms in developing countries manage to leverage knowledge flows and move into activities of greater technological complexity from a dynamic perspective. Our results point to the critical role of national learning variables in countries' performance over time. While emerging economies have synergistic relationships between variables that explain technological capabilities and their trade and GVC performance, this is not the case for developing countries as whole in our sample.
    Keywords: Trade, global value chains (GVCs), technological capabilities, learning, developing countries, least developed countries (LDCs), structural change, diversification, policy
    JEL: F14 L14 L16 L23 O14 O19 O25 O31 O33 O43
    Date: 2018–03–08
  11. By: Bee Yan Aw (The Pennsylvania State University); Yi Lee (National Tsing Hua University); Hylke Vandenbussche (University of Leuven (KULeuven))
    Abstract: We develop and structurally estimate a trade model in order to identify the importance of consumer taste. The model separates taste from quality and productivity (TFPQ) at the firm-product level. Export data by destination countries allow us to identify the level of taste from consumer heterogeneity across destinations. We decompose export revenue into the contribution of taste,quality and costs. We find that taste is very important and explains about 50 % of the variation in export revenue. Productivity (TFPQ) differences between firm-products become more prominent than taste in explaining export success only when the cost elasticity of improving quality is high.
    Keywords: tastes, quality, productivity, exports, firm-product.
    JEL: F12 F14
    Date: 2018–03
  12. By: Hornok, Cecilia; Muraközy, Balázs
    Abstract: This paper studies the relationship between firm-level markups and trade status using balance sheet information linked to detailed trade data from Hungary between 1995-2003. We find that importing is strongly positively correlated with markups both across and within firms. We argue that this correlation can reflect three channels: self-selection, higher physical productivity resulting from access to a larger variety of inputs and quality upgrading based on high-quality imported intermediate inputs. We present evidence for the relevance of the latter channel by showing that the markup premium is higher when inputs arrive from developed countries and that importing is correlated with higher quality exports. We find limited evidence for exporter premium when controlling for importing. We argue that the small exporter premium results from the stronger competition in export markets relative to domestic ones. Our results strengthen arguments for policy focusing on promoting imports as a source of increased firm-level competitiveness.
    Keywords: markup premia,detailed trade data,quality,self-selection
    JEL: D22 D24 F14 L11 L60
    Date: 2018
  13. By: Neil Foster-McGregor (The Vienna Institute for International Economic Studies, wiiw); Michael Landesmann (The Vienna Institute for International Economic Studies, wiiw); Isilda Mara (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: In this paper we examine the importance of migrant stocks on FDI flows from a sample of 19 developed countries to around 150 partner countries using a modified version of the gravity model. Based on recent advances in the modelling of trade using the gravity model we include a variety of fixed effects to control for various sources of endogeneity and deal with the issue of many zero and negative values of FDI. We further adopt an instrumental variables approach to deal with potential simultaneity. Results suggest that migrant stocks are positively associated with higher FDI inflows and outflows, with the effects working largely by enhancing the strength of existing FDI relationships rather than developing new relationships. We find little evidence of heterogeneous effects by skill level of the migrants.
    Keywords: migration, FDI flows, gravity equation
    JEL: F22 F23
    Date: 2018–03
  14. By: Marc-Andreas Muendler; James E. Rauch
    Abstract: It is well established that employee spinoffs learn their parents’ technologies, but little is known about their demand-side learning. We exploit the identification in international trade data of parent markets (countries) to investigate whether exporting employee spinoffs of exporting parents have an advantage in accessing their parents’ markets over exporting comparison firms well positioned to learn those markets at arm’s length. We find that, controlling for the greater overlap of spinoffs with their parents’ export products, at entry spinoffs access 51 percent more parent markets than exporting firms in the same 4-digit industries and municipalities as the parents. This advantage shrinks monotonically with time, becoming statistically insignificant four years after entry, indicating that intrafirm learning provides spinoffs with a four-year head start over learning at arm’s length. Spinoffs do not overlap more than comparison firms with parent markets that the parents did not serve at spinoff entry, providing evidence against the alternative hypothesis that product overlap inadequately controls for greater technological similarity of spinoffs to parents. Firm entry into parent markets predicted by spinoff status does not lead to entry into “adjacent” markets the following year.
    Keywords: employee spinoffs, intrafirm learning, export spillovers, firm performance
    JEL: F14 L25 L26
    Date: 2018
  15. By: Noland, Marcus
    Abstract: President Donald Trump has emphasized three recurring themes regarding trade policy: the importance of trade balances, including bilateral trade balances, currency manipulation to gain unfair advantage in trade, and “disastrous” trade agreements. Asia figures prominently in these concerns. Trump withdrew the United States from the Trans-Pacific Partnership, is increasing contingent or process protection, demanding the renegotiation under duress of the North American Free Trade Agreement and the Korea-United States Free Trade Agreement. These policies are modeled quantitatively and results generated for sectoral output and employment at the state and metropolitan area level.
    Keywords: United States; Donald Trump; international trade; trade policy; trade war
    JEL: C54 F1 F13
    Date: 2018–01
  16. By: Jaime DE MELO (Ferdi); Jean-marc SOLLEDER (University of Geneva)
    Abstract: An open world trading system with low barriers to trade in Environmental Goods (EGs) and Environmental Services (ESs) accompanied by corrective SPS and TBT measures is necessary for the World Trading System to be compatible with the environmental objectives in the SDGs. So far, the political process and technical difficulties in defining EGs and ESs have plagued multilateral negotiations under the Doha Round and those under the Environmental Goods Agreement (EGA) resulting in lists of EGs and ESs with many weaknesses.The chapter explores differences in policy measures across broad categories of EGs and ESs. Comparisons of EG and non-EG groups reveal that applied tariffs are lower for EGs for all countries and group of countries regardless of the selected EG list. On average, descriptive indices of NTMs are quite similar for EG and non-EG product lists revealing few robust differences between EGs and non-EGs and across countries. However, the regulatory distance is less among ASEAN membership than among EGA membership, suggesting more favourable prospects for fruitful negotiations in the ASEAN group. The paper closes with gravity-based panel estimates of bilateral trade. Two results stand out: on average, NTMs restrict bilateral trade by about 20 percent, but not differently for EGs than for non-EGs or for ASEAN countries as a group relative to other countries. The chapter concludes with suggestions for reduction in tariffs for suitably defined EGs and more open regulatory measures for ESs.
    Keywords: NTM, non tariff measures
    Date: 2017–12
  17. By: Eichenauer, Vera Z.; Fuchs, Andreas; Brueckner, Lutz
    Abstract: One goal of China’s Go Out policy is to create goodwill in countries around the world. At the same time, China’s growing economic engagement has provoked much criticism. This paper is the first to study whether these activities change the attitudes of individuals in developing countries towards China at both the national and subnational level. Using repeated cross-sectional survey data from the Latinobarómetro, we analyze whether and how growing amounts of exports, foreign aid, and foreign direct investment from China to Latin America affect opinions on China within 18 Latin American countries over the 2002-2013 period. We run instrumental-variables regressions by exploiting exogenous variation in the supply of Chinese exports, aid, and investment proxied by China’s market penetration of developing countries outside Latin America. In contrast to the widespread criticism, we do not find evidence that China’s growing economic activities in the respective countries deteriorate average attitudes towards China — neither at the national nor the provincial level. However, our results show that the young, educated, and economically privileged population develops more positive views of China. We interpret this as evidence that China’s economic engagement creates winners and losers.
    Keywords: public opinion; exports; development assistance; foreign direct investment; China; Latin America; anti-Sinicism; soft power
    Date: 2018–03–23
  18. By: Zaclicever, Dayna
    Abstract: Although international trade has been a major driver of Chile’s economic growth in the last decades, exports remain highly concentrated in the mining and metals sectors (which capture copper products at different levels of processing). This export specialization pattern reflects in Chile’s insertion in international production networks, where it is positioned as an upstream provider of low and medium lowtechnology inputs. This document analyses Chile’s engagement in international value chains along the period 1995- 2014, providing evidence at both the aggregate and firm level.
    Date: 2018–02–28
  19. By: Mike Waugh (New York University)
    Abstract: This paper studies the welfare losses associated with exposure to international import competition. Empirically, we construct a measure of consumption at the local labor market level in the US, and exploit regional variation in exposure to imports from China in the early 2000s to study the response of consumption to trade shocks. We interpret this evidence within a standard incomplete market model with Ricardian trade across countries. The model features several mechanisms of partial insurance against adverse shocks to comparative advantage: self-insurance, variable labor supply, and migration. We calibrate model to match the observed consumption and labor market response (as measured in David, Dorn, and Hanson (2013)) to Chinese import competition and then quantify how much the losers from trade actually lost.
    Date: 2017
  20. By: Alisi Kautoke-Holani
    Abstract: Since the commencement of the Pacific Agreement on Closer Economic Relations Plus negotiations in 2009, the Pacific Forum Island Countries have maintained that their main gain from this Free Trade Agreement is in labour mobility. Free Trade Agreements, such as the Pacific Agreement on Closer Economic Relations Plus, are considered crucial for enhancing labour mobility gains for Pacific Forum Island Countries, particularly given the constraints associated with multilateral trade agreements and unilateral initiatives. In June 2017, the Pacific Agreement on Closer Economic Relations Plus was signed and included a side-arrangement on labour mobility. This article discusses the role of the Agreement in enhancing the development impact of labour mobility in Pacific sending countries and examines the text of the Movement of Natural Persons Chapter and the Arrangement on Labour Mobility to determine the potential gains for Pacific Forum Island Countries.
    Keywords: labour mobility, PACER Plus, Pacific, international trade, SWP
    Date: 2018–01–29
  21. By: Gold, Robert; Görg, Holger; Hanley, Aoife; Seric, Adnan
    Abstract: We compare the performance of Northern and Southern multinationals in Sub-Saharan Africa, and contrast it with local firms in the host country. Employing unique firm level data for 19 Sub-Saharan African countries, we show that firms receiving FDI outperform domestic ones, while the origin of the foreign investor is of minor importance. We use four different definitions of "South" to compare Northern and Southern FDI. Overall, we do not find strong differences in terms of firm productivity growth between Northern and Southern FDI, irrespective of how the latter is defined. We also find that employment growth is generally higher for firms receiving FDI from other African investors as compared to Northern FDI, and they also receive more technology transfer from their parent company abroad.
    Keywords: South-South FDI,productivity,performance differences,Africa
    JEL: F23 O14
    Date: 2017
  22. By: Thomas Sampson
    Abstract: Pro-Brexit rhetoric mixes up two distinct interpretations of what made people vote to Leave the European Union - and they have very different policy implications. As Thomas Sampson explains, those voters wanting to reclaim sovereignty may view the likely negative economic impact as a price worth paying. But 'left-behind' voters blaming Europe for their economic problems will need policies other than Brexit to address the underlying causes of their discontent.
    Keywords: Brexit, European Union, trade agreements, quantitative trade models, globalization
    JEL: F1 F5
    Date: 2018–03
  23. By: Görg, Holger; Hanley, Aoife
    Abstract: This paper, however, is not about evaluating whether or not Germany has, on aggregate, done well out of globalization. Rather, we dig deeper into the economy and acknowledge the fact that it is not countries that trade or invest, but rather firms. We therefore look at data at the micro (firm or establishment) level to shed light on questions such as: What types of firms are involved in trade or investments? What distinguishes these globalized firms, if anything, from firms that are not engaged in these international activities? What benefits are there for the firms and also their workers?
    Date: 2017
  24. By: Florian Dorn; Clemens Fuest; Niklas Potrafke
    Abstract: This paper re-examines the link between globalization and income inequality. We use data for 140 countries over the period 1970-2014 and employ an IV approach to deal with the endogeneity of globalization measures. We find that the link between globalization and income inequality differs across different groups of countries. There is a robust positive relationship between globalization and inequality in the transition countries including China and most countries of Middle and Eastern Europe. In the sample of the most advanced economies, neither OLS nor 2SLS results show any significant positive relationship between globalization and inequality. We conclude that institutions providing income insurance and education, which characterize most advanced economies but are less developed in transition economies, may have moderated effects of globalization on income inequality.
    Keywords: globalization, income inequality, redistribution, instrumental variable estimation, panel econometrics, development levels, transition economies, China
    JEL: D31 D63 F02 C26 H11 H20
    Date: 2018
  25. By: Bickenbach, Frank; Liu, Wan-Hsin; Nunnenkamp, Peter
    Abstract: It is open to question whether the intensified worldwide competition for FDI has reduced its traditionally strong concentration in a few large and relatively advanced host countries. We calculate and decompose Theil indices to track changes in absolute and relative concentration of FDI during the period 1970-2013. We find that both absolute and relative concentration decreased when excluding offshore financial centers from the overall sample. In addition to the narrowing gap between OECD and non-OECD countries, the concentration across non-OECD countries declined – for major subgroups and for both the absolute and relative measures. Finally, recent developments indicate that low-income countries are no longer at the losing end of the competition for FDI.
    Keywords: Foreign direct investment,concentration,Theil decomposition
    JEL: F21
    Date: 2017
  26. By: Chari, V. V.; Nicolini, Juan Pablo; Teles, Pedro
    Abstract: We study cooperative optimal Ramsey equilibria in the open economy addressing classic policy questions: Should restrictions be placed to free trade and capital mobility? Should capital income be taxed? Should goods be taxed based on origin or destination? What are desirable border adjustments? How can a Ramsey allocation be implemented with residence-based taxes on assets? We characterize optimal wedges and analyze alternative policy implementations.
    Keywords: Capital income tax; free trade; value-added taxes; border adjustment; origin- and destination-based taxation; production e
    JEL: E60 E61 E62
    Date: 2018–02
  27. By: Satoshi Honma; Yushi Yoshida (Faculty of Economics, Shiga University)
    Abstract: By implementing the world input-output tables for 40-countries by 35-industries to account for intermediate trade, we constructed the pollution terms of trade (PTT) on the basis of CO2 emissions between 1995 and 2009. We examine whether the PTTs have converged among the 40 countries in the past 15 years. The empirical evidence supports PTT convergence; PTT growth is negatively related to its initial level, and this empirical result is robust to various control variables.
    Keywords: World input-output table,International trade,Pollution haven hypothesis,Pollution terms of trade
    Date: 2018–03
  28. By: Hana Polá?ková (University of Economics in Bratislava)
    Abstract: We can look at the impacts of globalization on agriculture and food security from different angles. However, not all findings can be positive. Looking at the growth of international trade and the amount of pollutants released into the air when transporting goods or protecting crops against pests, globalization contributes to disruption of global ecosystem and climate change. As a result, climatic fluctuations and extreme weather events - droughts, floods or torrential rainfalls that cause arable soil leakage - are becoming more and more frequent. Subsequent non-crops can negatively affect GDP (especially in the case of agricultural economies) and endanger the food security of the country. Secondly the changes in structure of economies in favor of production with higher labor productivity and smaller proportion of agriculture can force some countries to import even basic food. These facts are also indirectly reflected in the social environment. The paper draws attention to the fact that such structure of economy is cyclically very sensitive and may adversely affect the development of the underlying macroeconomic indicators. It focuses on certain weaknesses in this trend. The sources come from databases of statistical offices and a genetic-historical analysis was used in the paper.
    Keywords: Food security, gross domestic product, structure of the economy, food imports
    JEL: Q18 E24 F18
    Date: 2017–10
  29. By: Görg, Holger; Hanley, Aoife
    Abstract: We investigate whether firms' "global engagement", either in the form of exporting or opening up affiliates abroad, is related to the change in their management performance. We use new and unique data from a recent large scale firm survey of management practices in Germany. We calculate management scores for firms as in Bloom et al. (2013), which indicate how structured management is in a given firm. We find that switching into exporting, and to a lesser degree opening up affiliates abroad, is related to improving management performance in the sense of having more structured management practices.
    Keywords: Management practices,global engagement,exporting,outward investment
    JEL: F2 L2 M2
    Date: 2017
  30. By: José M. Gaspar (Católica Porto Business School, Universidade Católica Portuguesa and CEF.UP)
    Abstract: This work consists of a short biographical survey on the academic life and work of the American economist Paul Robin Krugman. It seeks to shed light on his mains contributions to economic theory, mainly those due to which he was awarded with the Nobel Prize in Economics in 2008. His legacy in academia can be assessed through the recognition of his work in the identification of international trade patterns and the explanation on why spatial imbalances in the distribution of economic activities arise in an increasingly globalized economy. Through these contributions to trade theory and economic geography, Krugman is often credited as being one of the pioneering researchers in the New Trade Theory and the founding father of the New Economic Geography.
    Keywords: paul krugman; new trade theory; new economic geography
    JEL: R10 R12 R23
    Date: 2018–01
  31. By: Afia Malik (Pakistan Institute of Development Economics, Islamabad); Ejaz Ghani (Pakistan Institute of Development Economics, Islamabad); Musleh ud Din (Pakistan Institute of Development Economics, Islamabad)
    Abstract: This paper examines in detail Pakistan’s export performance in the light of emerging global challenges and identifies key structural and policy issues that stifle Pakistan’s exports. It is argued that Pakistan has lagged behind its comparators due to a combination of factors including lack of modern technology and human resource development, shortage of required skills, lack of quality certifications and conformity to international standards, poor physical infrastructure, lack of foreign direct investment, and high cost of doing business. The paper stresses that while regional economic integration can help Pakistan boost its exports, there is a need to introduce an appropriate regulatory and legal framework that streamlines cross-border flow of goods, people and vehicles with well-defined transit rights and arrangements. To improve global competitiveness, Pakistan needs to create competency in more labour intensive components of complex products gradually advancing to more skill and technology intensive activities. Moreover, there is a need to devise policies and strategies to promote technology upgradation, improve business climate, enhance institutional quality and support small and medium enterprises. These initiatives can be instrumental in achieving greater competitiveness which is essential to galvanise exports and thus enhance the country’s long term growth prospects.
    Date: 2017
  32. By: Caroline Freund (Peterson Institute for International Economics)
    Abstract: From the mid-1990s until the financial crisis, global trade grew twice as fast as global income, far faster than in previous or subsequent periods. During this period of rapid trade growth, global current account imbalances also expanded rapidly. If excess savings in some countries financed more consumption and investment in other countries, then trade and trade imbalances would move together. Greater capital mobility thus may help to explain why trade surged in the period before 2007 and why it slowed more sharply in later years when demand stalled. Consistent with this explanation, the countries that contributed most to global trade growth during the period of rapid trade growth also experienced large imbalances. Constraining trade deficits to historical norms, this paper shows that trade growth would have been more moderate in the late 1990s and early 2000s and stronger in subsequent years. Going forward, assuming global imbalances remain relatively unconstrained, the relationship between trade growth and income growth will likely be less stable than before the 1990s.
    Keywords: Current account adjustment, elasticity of trade to income
    JEL: F14 F32
    Date: 2018–02
  33. By: Carlo Piccardi; Lucia Tajoli
    Abstract: Trade networks, across which countries distribute their products, are crucial components of the globalized world economy. Their structure is strongly heterogeneous across products, given the different features of the countries which buy and sell goods. By using a diversified pool of indicators from network science and product complexity theory, we quantitatively confirm the intuition that, overall, products with higher complexity -- i.e., with larger technological content and number of components -- are traded through a more centralized network -- i.e., with a small number of countries concentrating most of the export flow. Since centralized networks are known to be more vulnerable, we argue that the current composition of production and trading is associated to high fragility at the level of the most complex -- thus strategic -- products.
    Date: 2018–02
  34. By: Zoltán Elekes; Ron Boschma; Balázs Lengyel
    Abstract: A growing body of literature shows that related diversification in regions is more common but unrelated diversification also happens. However, we have little understanding of what types of firms induce related and unrelated diversification in regions. We investigate the extent to which foreign-owned firms induce structural change in the capability base of 67 regions in Hungary between 2000 and 2009. Doing so, we aim to connect more tightly the disparate literatures of Evolutionary Economic Geography and International Business. Using novel methodology developed by Neffke et al. (2018), we find that foreign-owned firms show a higher deviation from the region?s average capability match than domestic firms, and therefore, tend to contribute more to structural change in regions.
    Keywords: foreign-owned firms, related diversification, unrelated diversification, evolutionary economic geography, MNEs, international business studies
    JEL: F23 O18 O19 O33 P25 R11
    Date: 2018–03
  35. By: Grégory Claeys; André Sapir
    Abstract: The European Union created the European Globalisation Adjustment Fund (EGF) in 2007 to co-fund, together with EU member states, policies to help workers negatively affected by globalisation find new jobs. The EGF was a political acknowledgment that the EU, which has exclusive competence over trade policy, needed to assume some budgetary responsibility for the economic displacement arising from globalisation. This policy contribution attempts to evaluate the EGF programme after ten years of implementation and in the context of the negotiations on the EU’s 2021-27 Multiannual Financial Framework. The EGF programme is relatively modest in size. During the decade from 2007 to 2016, it financed 147 cases (involving either large firms or regionally-concentrated groups of small firms), covering 140,000 dismissed workers. But only about half of the cases and job losses were related to globalisation. The other half were related to the economic and financial crisis, which became eligible for EGF assistance in 2009. Our evaluation addresses both the political visibility of the EGF programme and its economic effectiveness, and concentrates on cases and dismissed workers related to globalisation. The authors find the programme was highly politically visible in the sense that EGF beneficiaries tended to work for large firms prior to their redundancies and these job losses were widely reported in the media. The economic effectiveness of the EGF programme is more difficult to evaluate, mainly because the available data is insufficient. Estimates, however, suggest that only a small proportion of EU workers who lost their jobs because of globalisation received EGF financing. Unfortunately it is impossible at this time to assess whether workers who received EGF assistance did better in their job searches than those who did not receive EGF assistance. Three main recommendations are made to improve the EGF programme - 1) collect more and better data on EGF cases and assisted workers to enable a proper evaluation of the programme; 2) revise the eligibility criteria to qualify for EGF assistance and the co-funding rate for the contribution from low-income countries or regions; and 3) enlarge the scope of the EGF programme beyond globalisation to also assist workers displaced by intra-EU trade and offshoring that result from the working of the single market, which like international trade is also an exclusive competence of the EU. Corrections regarding Lawrence (2014) and Cernat and Mustilli (2017) have been implemented on this publication on 23 March 2018.
    Date: 2018–03
  36. By: Havranek, Tomas; Hampl, Mojmir
    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: F23
    Date: 2018
  37. By: Ayumu Tanaka
    Abstract: This study investigates the reasons why exporters, multinational enterprises (MNEs), and foreign-owned rms pay higher wages, using Japanese linked employer{employee data. It jointly examines the premiums for exporters, domestically owned MNEs, and foreign-owned rms and shows that observable plant and worker characteristics as well as region and industry xed e ects can account for almost all wage premiums of local exporters and domestically owned MNEs, whereas they cannot fully account for the wage premium for foreign rms. The results from quantile regressions reveal that the residual foreign wage premium is larger in the higher quantiles of the wage distribution.
    Keywords: wage premium, quantile regression, exporter, multinational enterprises, foreign-owned fiems
    JEL: F14 F16 J31
  38. By: Amankwah-Amoah, Joseph; Debrah, Yaw; Nuertey, Dorcas
    Abstract: In spite of a growing body of literature on market opportunism in emerging markets, it remains unclear how supply chain partners abuse the institutional voids emanating from weak markets and legal enforcement mechanisms. This study attempts to integrate the concept of ‘institutional voids’ with that of ‘opportunism in inter-firm relationship’ literature to examine how they create space and conditions for illegitimate activities to occur in a supply chain. Using insights from cocoa production and distribution in Ghana, we uncovered activities such as tampering, adjustment of weighing scales and smuggling as examples of illegitimate activities and abuses in the supply chain. The study revealed that these activities are manifestations of institutional voids arising from weak markets and legal enforcement mechanisms. An analysis of the supply chain partners’ activities illuminates our understanding of the underlying processes inherent in market opportunism. Taken together, the study demonstrates how smuggling and theft-to-smuggle have taken on new prominence as an escape response to the institutional voids in the country. The implications for future research are examined.
    Keywords: Africa; Ghana; cocoa industry; cross-border trade; supply chain; trade.
    JEL: M0 M1 M2
    Date: 2018
  39. By: Jaime DE MELO (Ferdi); Ben SHEPHERD (Developing Trade Consultants)
    Abstract: This paper takes the non-tariff measures (NTMs) codified and collected under the MAST (Multi-Agency Support Team) typology to study their economic effects, concentrating on the effects on prices, quantities and welfare. To this end, NTMs are categorized into six groups (tariff-like measures, quantitative restrictions, subsidies, rules of origin, frictional barriers to trade and standard-like measures). The effects of NTMs in each of these groups are then studied, relying on a partial equilibrium model under perfect competition where a diagrammatic presentation is mostly used to describe the effects of each category of NTM on prices, quantities produced, quantities traded, and welfare. The paper then reviews several case studies for developing countries, focusing both on the methodology used and on results.
    Keywords: Non-tariff measures
    Date: 2018–02
  40. By: Görg, Holger; Spaliara, Marina-Eliza
    Abstract: This paper uses rich firm-level data for the UK to investigate the link between firms' financial health and export exit, paying attention to the ERM currency crisis and the global financial crisis. Our results show that deterioration in the financial position of firms has increased the hazard of export exit during the 2007-09 crisis but has no significant effect on the early 1990s crisis. We also explore the extent to which firms in financially vulnerable industries face greater sensitivity of export exit to financial conditions. We conclude that firms in sectors with great reliance on external finance experience higher hazards of exiting the export market during the 2007-09 crisis.
    Keywords: financial health,financial vulnerability,exports,extensive margin,crises
    JEL: F1 L2 G3
    Date: 2017
  41. By: Stéphanie BRUNELIN (FERDI); Jaime DE MELO (Ferdi); Alberto PORTUGAL-PEREZ (FERDI)
    Abstract: The value of preferential market access schemes has fallen sharply. Drawing on a relaxation announcement of July 2016 simplifying origin requirements for access to the EU that should help restore market access, thereby alleviating the refugee crisis in Jordan, this paper argues that a simplification of origin requirements is a straightforward way to restore preferential market access. The paper compares the performance of Jordanian exports to the EU and the US under their respective FTAs. It shows that Jordanian exports to the US have grown more rapidly than exports to the EU over the last fifteen years. The study documents lower utilisation of preferences in the EU than in the US, especially in Textiles and Apparel (T&A) in spite of non-negligible preferences. Three contributing factors are identified: (i) higher adjusted preferences for apparel in the US than in the EU; (ii) greater competition from other suppliers (mostly from LDCs) in the EU market than in the US market; (iii) a simpler origin requirement in the case of the Jordan-US FTA. Comparative evidence from the two FTAs and econometric estimates suggest that this should help restore market access for Jordanian exports to the EU. These estimates provide additional evidence that origin requirements suppress market access. Other pathways to simplify origin requirements are offered in conclusion.
    JEL: F12 F13 F15
    Date: 2018–02
  42. By: Ralph W. Huenemann
    Abstract: President Trump's analysis of the persistent United States–China trade imbalance reveals fundamental misunderstandings of basic economics. During the 2016 campaign, candidate Trump made an important Big Promise with two facets: to bring back American jobs from other countries (especially China) and to eliminate the American trade deficit. But, as pointed out by Barack Obama in his farewell address, many of the American jobs were lost to factory automation, not to imports. Furthermore, if China's central bank had pursued a less interventionist foreign exchange rate policy, most of the labor-intensive imports from China would have been produced in other low-wage countries, not in domestic factories. Finally, and most importantly, the persistent American foreign trade deficits (with many countries, not just with China) arise from the domestic imbalance between taxes and government expenditures. Unless this budget imbalance is dealt with, the foreign trade imbalance will necessarily continue.
    Keywords: China, international trade, United States-China relations, President Trump
    Date: 2017–12–04
  43. By: Atiq-ur-Rehman (Pakistan Institute of Development Economics, Islamabad)
    Abstract: In recent years, Pakistani exports suffered large setback and especially textile exports decreased significantly. Some economists are suggesting devaluation1 of Pakistani Rupee to improve the exports [Javed, et al. (2016)]. Many countries including Pakistan have experimented devaluation in the past to boost exports, but most of these experiment did not bring desired results and a significant change in the balance of trade could not be observed. For example, value of Pakistani rupee declined by 20 percent during 1981-82 and by 34 percent during 2007-09. No improvement in trade could be observed after each episode of depreciation, on contrary, the gap between exports and imports widened. There are well known explanations in contemporary economic literature which explain this counterproductive impact of depreciation. However, analysing the impacts of depreciation and/or devaluation in context of trade only is never justifiable. The depreciation of local currency has serious implications for many other important economic indicators including external debt, tax revenue, budget deficit, current account deficit and domestic inflation. For H[DPSOHDRQHSHUFHQWUHGXFWLRQLQYDOXHRIORFDOFXUUHQF\µFDXVHV¶DQLQFUHDVH in external debt by the same percentage, measured in local currency. Due to this increase in the external debt, the amount needed for debt servicing shall also increase which increases the budget deficit and the current account deficits. The suggestion of depreciation could be supported only if the sum of expected gains from all kinds of its impacts are positive. Given the complexity of all this estimation, one can focus on external debt and balance of trade. The effect of depreciation on external debt can be easily counted, and the improvement in trade must be more than the increase in external debt to justify depreciation. Taking into account all these factors, particularly the debt factor, it could be easily seen that net impacts of devaluation are negative and extremely harmful for the Pakistan Economy.
    Keywords: Exchange Rate, J Curve, Currency Devaluation, Balance of Trade, External Debt
    JEL: B22 F40
    Date: 2017

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