nep-int New Economics Papers
on International Trade
Issue of 2018‒04‒16
38 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Do RTAs Increase Bilateral Trade in the MENA Region? By Roesmara Donna, Duddy; Widodo, Tri; Adiningsih, Sri
  2. Market Opening, Growth and Employment By Frank van Tongeren; Dorothee Flaig; Jared Greenville
  3. The Impact of Agricultural Trade on Economic Growth in North Africa: Econometric Analysis by Static Gravity Model By Bakari, Sayef; Mabrouki, Mohamed
  4. The Role of Governance Quality in Increasing Intra-ASEAN Trade By Setyastuti, Rini; Adiningsih, Sri; Widodo, Tri
  5. The causal linkage between trade openness and economic growth in Argentina: Evidence from the ARDL and VECM techniques. By Hlalefang Khobai; Nomahlubi Mavikela
  6. International Trade, Quality Sorting and Trade Costs: The Case of Cognac By Charlotte Emlinger; Viola Lamani
  7. Trade impacts of South Asian Free Trade Agreements: The case of Sri Lanka By Taguchi, Hiroyuki
  8. The US Gains from Trade: Valuation Using the Demand for Foreign Factor Services By Arnaud Costinot; Andrés Rodríguez-Clare
  9. Non-tariff and Overall Protection: Evidence Across Countries and Over time By Zhaohui Niu; Chang Liu; Saileshsingh Gunessee; Chris Milner
  10. Export Survival of Manufacturing Firms in Ethiopia:Empirical Evidence By Tsadkan Araya, Gebreyesus; Cherkos Meaza, Gebregergis
  11. Twin Peaks By Defever, F.; Riaño, A.
  12. Liberalization and Welfare Conditions of a Developing Economy: A General Equilibrium Analysis By Mitra, Sudeshna; Gupta, Kausik
  13. Taking stock of firm-level and country-level benefits from foreign direct investment By Bruno, Randolph Luca; Campos, Nauro F.; Estrin, Saul
  14. NAFTA and the Wages of Married Women By Shushanik Hakobyan; John McLaren
  15. Recovery from Financial Crises in Peripheral Economies, 1870-1913 By Peter H. Bent
  16. Do emigrants self-select along cultural traits? Evidence from the MENA countries By Frédéric DOCQUIER; Aysit TANSEL; Riccardo TURATI
  17. Firms and Economic Performance: A view from Trade By Alessandra Bonfiglioli; Rosario Crinò; Gino Gancia
  18. Floods and Exports: An Empirical Study on Natural Disaster Shocks in Southeast Asia By Kaori Tembata; Kenji Takeuchi
  19. Global Migration in the 20th and 21st Centuries: the Unstoppable Force of Demography By Thu Hien DAO; Frédéric DOCQUIER; Mathilde MAUREL; Pierre SCHAUS
  20. Uncertainty, Imperfect Information, and Learning in the International Market By CHEN Cheng; SENGA Tatsuro; SUN Chang; ZHANG Hongyong
  21. The FDI-growth nexus in South Africa: A re-examination using quantile regression approach By Hlalefang Khobai; Nicolene Hamman; Thando Mkhombo; Simba Mhaka; Nomahlubi Mavikela; Andrew Phiri
  22. Long-run cointegration between foreign direct investment, direct investment and unemployment and South Africa By Nampasa Chella; Andrew Phiri
  23. Unequal vulnerability to climate change and the transmission of adverse effects through international trade By Karine Constant; Marion Davin
  24. The relationship between trade openness and economic growth: The case of Ghana and Nigeria By Hlalefang Khobai; Nwabisa Kolisi; Clement Moyo
  25. Tracing value-added and double counting in sales of foreign affiliates and domestic-owned companies By Miroudot, Sébastien; ye, ming
  26. A Rebalancing Act for China and Africa; The Effects of China’s Rebalancing on Sub-Saharan Africa’s Trade and Growth By Roger Nord; Wenjie Chen
  27. Production Integration in the European Union By Hakan Nordström; Harry Flam
  28. Activation of the Integration Agenda of the Eaec in the Context of Changing the Regional Architecture in the Apr By Aliev, Timur; Flegontova, Tatiana; Kuznetsova, A; Pyzhikov, Nikita; Ponomareva, Olga
  29. Understanding the challenges to the world trading system By Crowley, M.
  30. The Distribution of Gains from Globalization By Valentin F. Lang; Marina Mendes Tavares
  31. A Perfect Specialization Model for Gravity Equation in Bilateral Trade based on Production Structure By Majid Einian; Farshad Ranjbar Ravasan
  32. Foreign multinationals, selection of local firms, and regional productivity in Indonesia By Saito, Hisamitsu
  33. The economic consequences of the Brexit Vote By Born, Benjamin; Müller, Gernot J.; Schularick, Moritz; Sedlacek, Petr
  34. East Asia’s Pattern of Export Specialization: Does Indonesia Compete with Japan, China, Hong Kong, Korea and Singapore? By Ervani, Eva; Widodo, Tri; M. Purnawan, Edhie
  35. Selective Immigration, Occupational Licensing, and Labour Market Outcomes of Foreign-Trained Migrants By Tani, Massimiliano
  36. Spillover Implications of China's Slowdown for International Trade By Patrick Blagrave; Esteban Vesperoni
  37. Non-Tariff Measures: Data and Quantitative Tools of Analysis By Alessandro NICITA; Jaime DE MELO
  38. China Spillovers; New Evidence From Time-Varying Estimates By Davide Furceri; João Tovar Jalles; Aleksandra Zdzienicka

  1. By: Roesmara Donna, Duddy; Widodo, Tri; Adiningsih, Sri
    Abstract: Middle East and North Africa (MENA) is an area with some special character, i.e. not easy to realize the process of integration and the country with abundant natural resources have better trade performance. This study aims to analyze the effects of RTAs to the trade of countries in MENA regions. The Gravity Model used to test the effects of democracy on trade. Estimation is done with several models, i.e. FE, RE, MLE, and PPML. The effects of RTAs on trade in MENA regions are varies. AA (Agadir Agreement) affects without trade creation, but trade diversion (1.41 percent) in the block and creates exports and imports with countries outside the block. The AMU (Arab Maghreb Union) affects through trade creation (4.07 percent) in blocks and imports diversion from outside into blocks. COMESA (Common Market for Eastern and Southern Africa) affects through trade creation (7.09 percent) in the blocks and export and import diversion from outside into blocks. The GAFTA (Greater Arab Free Trade Region) affects through trade creation (2.57 percent) in the blocks and export and imports creation outside the block. While the GCC (Gulf Cooperation Council) affects through export and import creation (2.59 percent). From this results can be concluded that RTAs increase bilateral trade in MENA region through several ways and various effect.
    Keywords: trade, export, RTA, Gravity Model, MENA
    JEL: F14 F17
    Date: 2018–03–11
  2. By: Frank van Tongeren (OECD); Dorothee Flaig (OECD); Jared Greenville (OECD)
    Abstract: What can further market integration contribute to growth and employment? A series of hypothetical trade reform scenarios explores what countries at different levels of development can expect to gain from reforming tariffs, non-tariff barriers, trade facilitation and domestic support to agriculture. Simulations of multilateral and regional trade agreements with the OECD METRO model show that positive effects are higher when more countries participate in trade integration because it broadens market opportunities, widens the range of products at lower prices, and reduces trade diversion. Smaller economies especially benefit. Firms in these economies can better specialise in international production networks as they have access to larger and more differentiated markets and also benefit from enhanced market access on the products they already produce. While trade integration boosts demand and lifts wages and factor returns, the required production adjustments also leads to reallocation of workers between sectors. The analysis highlights some of the distributional implications and emphasises the need for labour force adjustment policies to accompany trade integration.
    Keywords: agriculture support, Asia, CGE model, income distribution, International trade, market access, regional trade agreements
    JEL: C54 C68 F13 F15 F16 Q17
    Date: 2018–04–11
  3. By: Bakari, Sayef; Mabrouki, Mohamed
    Abstract: The contribution of this paper is investigating the influence of agricultural exports and agricultural imports on economic growth in North Africa Countries since it’s never been processed before. To endeavor this purpose annual data was collected for the period 1982 – 2016 and was tested by using correlation analysis and the static gravity model. Empirical analyses show that agricultural trade has a positive correlation with gross domestic product, but it appears that agricultural exports and gross domestic product have a weak correlation. The static gravity model estimation shows that agricultural exports have a positive on economic growth. However, agricultural imports have not any effect on economic growth. These results appear that agricultural exports are a fountain of economic growth in North Africa Countries. For this reason, it is very important to refine agricultural investment, and create more dynamic agricultural trade openness policies.
    Keywords: Agricultural Exports, Agricultural Imports, Economic Growth, Correlation Analysis, Static Gravity Model, North Africa.
    JEL: F11 F14 O44 O55 Q17 Q18
    Date: 2018–02
  4. By: Setyastuti, Rini; Adiningsih, Sri; Widodo, Tri
    Abstract: ASEAN countries have liberalized intra-ASEAN trade over the last 20 years by establishing the ASEAN Free Trade Area (AFTA). Recently, they committed achieving the ASEAN Economic Community (AEC) with the timeline set at 2015. Policy measures are being implemented based on the AEC Blueprint agreed upon 2007. One of the several motives behind this implementation is that they thought that an expansion of intra-ASEAN trade would promote economic development of the ASEAN countries as the expansion of exports would result in output growth and the expansion imports would improve productive efficiency. In the other hand, countries have to strengthen institutions in order to promote economic and trade cooperation. This article focus on exploring the role of institutions (governance quality) in increasing exports between ASEAN countries during the period 2000-2015 using the augmented gravity model. We use data from DOTS (IMF), World Development Indicators (World Bank) and World Governance Indicators (World Bank). The result suggest that institutions of ASEAN countries, as well as the governance quality of the ASEAN countries have positive and significant effect in increasing exports between ASEAN Countries.
    Keywords: Trade, ASEAN, Institutions, Governance Quality, Export, Gravity model
    JEL: F14 F17
    Date: 2018–03–11
  5. By: Hlalefang Khobai (Department of Economics, Nelson Mandela University); Nomahlubi Mavikela (Department of Economics, Nelson Mandela University)
    Abstract: The Ricardian-Heckscher-Ohlin trade model drawn from Solow's (1957) model points out that since the country allocates its resources more efficiently after opening up based on its comparative advantages that openness to international trade will bring only a one-time increase in output, therefore having no implications for long-run growth. This led to this study investigating the causal relationship between economic growth and trade openness in Argentina covering the period between 1970 and 2016. Foreign direct investments and capital are incorporated as additional variables to form a multivariate framework. The findings from the ARDL bounds test validated the existence of a long run relationship between economic growth, trade openness, foreign direct investment and capital in Argentina. The results further indicated that there is a long run causality flowing from trade openness, foreign direct investment and capital to economic growth. These results presents a fresh perspective to trade policy makers in Argentina.
    Keywords: Trade Openness, Economic growth, ARDL, VECM, Argentina
    JEL: C1 F14 F41 F43
    Date: 2017–10
  6. By: Charlotte Emlinger; Viola Lamani
    Abstract: This paper tests empirically the validity of the Alchian and Allen effect, using an original dataset of French Cognac exports by quality designations. More specifically, we estimate the impact of trade costs on the share and relative price of high quality Cognac. The definition of quality, based on the minimum time in oak of the youngest eau-de-vie used in creating the blend, is subject to regulations and is constant and objective, which makes the case of Cognac particularly relevant to analyze the impact of different trade costs on the quality mix. Our estimation proceeds in two parts. First, we investigate to what extent distance and customs duties impact the Cognac quality mix from 1996 to 2013. Second, we assess the impact of a variation in trade costs, through the adoption of containerization, on the quality mix of Cognac exports between 1969 and 2013. Our results confirm the Alchian and Allen effect: per-unit trade costs increase the share of high quality Cognac and have the opposite impact on its relative price.
    Keywords: Quality mix, luxury product, distance, tariffs.
    JEL: F10 F13 F14
    Date: 2018
  7. By: Taguchi, Hiroyuki
    Abstract: This article aims to examine the trade effects of the South Asian FTAs including regional and bilateral ones with a focus on Sri Lanka, by applying a gravity trade model as an analytical framework. The study specifically targets the following three FTAs: the South Asian Free Trade Agreement (SAFTA) enforced in 2006, the India-Sri Lanka Free Trade Agreement (ISFTA) in 2001, and the Pakistan-Sri Lanka Free Trade Agreement (PSFTA) in 2005. The outcomes of the gravity trade model estimation suggested that the trade creation effects were identified in the ISFTA, while those were not verified in the SAFTA, and that the PSFTA had the trade creation effects only on the Sri Lankan imports. Those results seems to reflect the differentials in the preferential tariff rates and in the presence of negative list among the individual FTA frameworks. In particular, ISFTA could have the predominant positive effects on Sri Lankan trade flows due to its lowest preferential tariff rates since the early stage of its enforcement, and thus the SAFTA effect might be crowded out at the current stage of Sri Lankan trade.
    Keywords: the South Asian Free Trade Agreement (SAFTA), the India-Sri Lanka Free Trade Agreement (ISFTA), the Pakistan-Sri Lanka Free Trade Agreement (PSFTA), the South Asian Association for Regional Cooperation (SAARC), and gravity trade model
    JEL: F13 F14 O53
    Date: 2018–03
  8. By: Arnaud Costinot; Andrés Rodríguez-Clare
    Abstract: About 8 cents out of every dollar spent in the United States is spent on imports. What if, because of a wall or some other extreme policy intervention, imports were to remain on the other side of the US border? How much would US consumers be willing to pay to prevent this hypothetical policy change from taking place? The answer to this question represents the welfare cost from autarky or, equivalently, the welfare gains from trade. In this article, we discuss how to evaluate these gains using the demand for foreign factor services. The estimates of gains from trade for the US economy that we review range from 2 to 8 percent of GDP.
    JEL: F10 F11 F12 F14 F15 F17
    Date: 2018–03
  9. By: Zhaohui Niu; Chang Liu; Saileshsingh Gunessee; Chris Milner
    Abstract: This paper analyzes the evolution of the incidence and intensity of non-tariff measures (NTMs). It extends earlier work by measuring protection from NTMs over time from a newly available database and provides evidence on the evolution of NTMs. In particular, building on Kee, Nicita and Olarreaga (2009), this paper estimates the ad valorem equivalents (AVEs) of NTMs for 97 countries at the product level over the period 1997 to 2015. We show that the incidence and the intensity of NTMs were both increasing over this period, with NTMs becoming an even more dominant source of trade protection. We are also able to investigate the evolution of overall protection derived jointly from tariffs and NTMs. The results show that the overall protection level, for most countries and products, has not decreased despite the fall in tariffs associated with multilateral, regional and bilateral trade agreements in recent decades. We also document an increase in overall trade protection during the recent 2008 financial crisis. Overall, this study sheds light on an under-researched aspect of trade liberalization: the proliferation and increase of NTMs.
    Keywords: Non-tariff barriers, tariff equivalents, protection
    Date: 2018
  10. By: Tsadkan Araya, Gebreyesus; Cherkos Meaza, Gebregergis
    Abstract: This study used panel data for manufacturing firms from 2006 to 2016 to analyze the patterns and determinants of export survival of exporting firms in Ethiopia. The empirical investigation has two parts: non-parametric and semi-parametric methods. The non-parametric method analyzes the survivor function and the hazard (exit) rate of firms on the whole sample and by groups, while the semi-parametric analyzes a regression outputs based on the discrete-time model of proportional hazard model. The result from the survivor function analysis shows that, at the end of the study period, the number of firms that survive in export market are more than 50%. Moreover, the result of the hazard rate reveals as the duration of time increases, the rate at which firms exit the export market decreases sharply. With regard to our semi-parametric analyses, we examine the factors that affect survival of manufacturing firms in international market and observed the direction of the impacts they have on the survival rates. The findings show that large and medium firms, firms that have higher productivity, export oriented firms, private owned enterprises, firms located in textile and garment industries, firms located outside Addis Ababa and firms categorized as importers have higher probability of staying in export markets than the others.
    Keywords: Export survival, Cox-model, Ethiopia
    JEL: F10 F14 F18 L6 L60 Y4
    Date: 2018–03–21
  11. By: Defever, F.; Riaño, A.
    Abstract: Received wisdom suggests that most exporters sell the majority of their output domestically. In this paper, however, we show that the distribution of export intensity not only varies substantially across countries, but in a large number of cases is also bimodal, displaying what we refer to as twin peaks. We reconcile this new stylized fact with an otherwise standard, two-country model of trade in which firms are heterogeneous in terms of the demand they face in each market. We show that when firm-destination-specific revenue shifters are distributed lognormal, gamma, or Frechet with sufficiently high dispersion, the distribution of export intensity has two modes in the boundaries of the support and their height is determined by a country's size relative to the rest of the world. We estimate the deep parameters characterizing the distribution of export intensity. Our results show that when the conditions for the existence of twin peaks are met, differences in relative market size can explain most of the observed variation in the distribution of export intensity across the world.
    Date: 2017–10–20
  12. By: Mitra, Sudeshna; Gupta, Kausik
    Abstract: The paper attempts to analyze the impact of trade liberalization policy, in terms of FDI, on the level of informal competitive wage rate as well as on the size of the informal sectors of a developing economy with dualistic economic structure in a general equilibrium framework. The wage rate earned by the informal workers has been considered here as a proxy for their living standard. In this paper it is found that FDI raises the level of wage rate of the informal workers and consequently raises their standard of living. It is also found in this paper that FDI expands both formal and informal manufacturing sectors in the urban areas whereas it contracts the rural agricultural informal sector. In this structure an attempt has also been made to analyze the effects on the welfare level of the economy for a drive towards liberalization through FDI by assuming Sen (1974) type social welfare function which considers inequality in income distribution.
    Keywords: Informal sector, informal wage, liberalization, foreign capital, inequality, welfare.
    JEL: F10 F11 F16 I30 J31 O17
    Date: 2017–12
  13. By: Bruno, Randolph Luca; Campos, Nauro F.; Estrin, Saul
    Abstract: The empirical literature has not reached a conclusion as to whether foreign direct investment (FDI) yields spillovers when the host economies are emerging. Instead, the results are often viewed as conditional. For macro studies, this means that the existence and scale of spillover effects is contingent on the levels of institutional, financial or human capital development attained by the host economies. For enterprise level studies, conditionality relates to the type of inter-firm linkages; forwards, backwards, or horizontal. In this paper, we conduct a systematic meta-analysis on emerging economies to summarize these effects and throw light on the strength and heterogeneity of these conditionalities. We propose a new methodological framework that allows country- and firm-level effects to be combined. We hand-collected information from 175 studies and around 1100 estimates in Eastern Europe, Asia, Latin America and Africa from 1940 to 2008. The two main findings are that: (a) “macro” effects are much larger than enterprise-level ones, by a factor of at least six; and (b) the benefits from FDI into emerging economies are substantially less “conditional” than commonly thought.
    Keywords: foreign direct investment; overall effects; firm-to-firm effects; meta-regression-analysis; enterprise performance; aggregate productivity.
    JEL: F23 O12
    Date: 2018–02–14
  14. By: Shushanik Hakobyan; John McLaren
    Abstract: Using US Census data for 1990-2000, we estimate effects of NAFTA on US wages, focusing on differences by gender. We find that NAFTA tariff reductions are associated with substantially reduced wage growth for married blue-collar women, much larger than the effect for other demographic groups. We investigate several possible explanations for this finding. It is not explained by differential sensitivity of female-dominated occupations to trade shocks, or by household bargaining that makes married women workers less able to change their industry of employment than other workers. We find some support for an explanation based on an equilibrium theory of selective non-participation in the labor market, whereby some of the higher-wage married women workers in their industry drop out of the labor market in response to their industry's loss of tariff. However, this does not fully explain the findings so we are left with a puzzle.
    JEL: F13 F16 J31
    Date: 2018–03
  15. By: Peter H. Bent
    Abstract: What drives recoveries after financial crises? I address this question for the 1870-1913 “first era of globalization,” a period when international economic integration meant that terms of trade movements could have significant national-level impacts, but before governments were engaged in widespread economic management. Protectionism was one of the few economic policy options available at this time. The impacts of these two factors–terms of trade and tariff rates–over this period have been studied before. But previous studies have not looked specifically at how these factors influenced recoveries from financial crises. I find that tariff shocks had a positive impact on GDP in post-crisis periods, while terms of trade shocks had a slightly negative impact. The tariff results are especially pronounced in temperate economies. Overall this suggests that national governments, through trade policies, played a more significant role in shaping economic outcomes during this period than is typically recognized.
    Date: 2018–04
  16. By: Frédéric DOCQUIER (Université Catholique de Louvain); Aysit TANSEL (Middle East Technical University (Turkey)); Riccardo TURATI (IRES - Université Catholique de Louvain)
    Abstract: This paper empirically investigates whether emigrants from MENA countries self-select on cultural traits such as religiosity and gender-egalitarian attitudes. To do so, we use Gallup World Poll data on individual opinions and beliefs, migration aspirations, short-run migration plans, and preferred destination choices. We find that individuals who intend to emigrate to OECD, high-income countries exhibit significantly lower levels of religiosity than the rest of the population. They also share more gender-egalitarian views, although the effect only holds among the young (aged 15 to 30), among single women, and in countries with a Sunni minority. For countries mostly affected by Arab Spring, since 2011 the degree of cultural selection has decreased. Nevertheless, the aggregate effects of cultural selection should not be overestimated. Overall, self-selection along cultural traits has limited (albeit non negligible) effects on the average characteristics of the population left behind, and on the cultural distance between natives and immigrants in the OECD countries.
    Keywords: international migration, self-selection, cultural traits, gender-egalitarian attitudes, religiosity, MENA region.
    JEL: F22 O15 J61 Z10
    Date: 2018–03
  17. By: Alessandra Bonfiglioli; Rosario Crinò; Gino Gancia
    Abstract: We use transaction-level US import data to compare firms from virtually all countries in the world competing in a single destination market. Guided by a simple theoretical framework, we decompose countries'market shares into the contribution of the number of firm-products, their average attributes (quality and efficiency) and heterogeneity around the mean. Our results show that the number of firm-products explains half of the variation in sales, while the remaining part is equally accounted for by average attributes and their dispersion. Quality is the main driver of firm heterogeneity (explaining between 75% and 100%). We then study how the distribution of firm-level characteristics varies across countries, and we explore some of its determinants. Countries with a larger market size tend to be characterized by a more dispersed distribution of firms'sales, especially due to heterogeneity in quality. These countries also tend to be more likely to host superstar firms, although this is not the only source of higher heterogeneity. To further explore the role of exceptional firms, we develop a novel decomposition that separates the contribution of heterogeneity from that of granularity. While individual firms matter, we find that heterogeneity is more important than granularity for explaining sales.
    Keywords: US imports, firm heterogeneity, international trade, prices, Quality, variety, granularity
    JEL: F12 F14
    Date: 2018–03
  18. By: Kaori Tembata (Graduate School of Economics, Kobe University); Kenji Takeuchi (Graduate School of Economics, Kobe University)
    Abstract: This study analyzes the effects of climate-related disasters on international trade in Southeast Asia. We use monthly trade data to examine the relationship between disaster shocks and exports. The empirical analysis shows that natural disasters have a significant negative effect on exports. The estimation results suggest that flooding causes immediate export losses of USD 305–557 million. In addition, we find that the effect persists in the post-disaster period, with floods causing annual export losses of USD 2.54 billion in total. We further investigate the impact of disasters by product group and show that disasters are negatively associated with the exports of agricultural and manufacturing products. The findings suggest that extreme weather events have severe repercussions on Southeast Asia, where exports play an important role in economic development.
    Keywords: Climate change; Exports; Extreme weather; Flood; Natural disaster; Southeast Asia; Storm
    Date: 2018–04
  19. By: Thu Hien DAO (IRES - Université Catholique de Louvain); Frédéric DOCQUIER (Université Catholique de Louvain); Mathilde MAUREL (Centre d'Economie de la Sorbonne CNRS - Université Paris 1); Pierre SCHAUS (Department of Computer Science and Engineering - Université catholique de Louvain)
    Abstract: This paper sheds light on the global migration patterns of the past 40 years, and produces migration projections for the 21st century, for two skill groups, and for all relevant pairs of countries. To do this, we build a simple model of the world economy, and we parameterize it to match the economic and socio-demographic characteristics of the world in the year 2010. We conduct a backcasting exercise which demonstrates that our model fits the past trends in international migration very well, and that historical trends were mostly governed by demographic changes. We then describe a set of migration projections for the 21st century. In line with backcasts, our world migration prospects and emigration rates from developing countries are mainly governed by socio-demographic changes: they are virtually insensitive to the technological environment. As far as OECD countries are concerned, we predict a highly robust increase in immigration pressures in general (from 12 in 2010 to 17-19% in 2050 and 25-28% in 2100), and in European immigration in particular (from 15% in 2010 to 23-25% in 2050 and 36-39% in 2100). Using development policies to curb these pressures requires triggering unprecedented economic takeoffs in migrants countries of origin. Increasing migration is therefore a likely phenomenon for the 21st century, and this raises societal and political challenges for most industrialized countries.
    Keywords: international migration, migration propects, world economy, Inequality
    JEL: F22 F24 J11 J61 O15
    Date: 2018–03
  20. By: CHEN Cheng; SENGA Tatsuro; SUN Chang; ZHANG Hongyong
    Abstract: This paper uses a unique dataset of Japanese multinational affiliates, which contains information on sales forecasts, to detect information imperfection and learning in the international market. We document three stylized facts concerning affiliates' forecasts. First, forecast errors (FEs) of sales decline with the affiliate's age. Second, if the parent firm has previous export experience to the region where its affiliate is set up, the entering affiliate starts with a smaller absolute value of FEs. Third, FEs of sales are positively correlated over time and this positive correlation becomes stronger when the affiliates are located further away from Japan. In total, we view these facts as direct evidence for the existence of imperfect information and learning in the international market. We then build up and quantify a dynamic industry equilibrium model of trade and foreign direct investment (FDI), which features information rigidity and learning, in order to explain the documented facts. Counterfactual analysis shows that the variance of time-invariant demand draws and that of transitory shocks have qualitatively different and quantitatively important implications for dynamic patterns of trade/multinational production, dynamic selection, and aggregate productivity.
    Date: 2018–03
  21. By: Hlalefang Khobai (Department of Economics, Nelson Mandela University); Nicolene Hamman (Department of Economics, Nelson Mandela University); Thando Mkhombo (Department of Economics, Nelson Mandela University); Simba Mhaka (Department of Economics, Nelson Mandela University); Nomahlubi Mavikela (Department of Economics, Nelson Mandela University); Andrew Phiri (Department of Economics, Nelson Mandela University)
    Abstract: This study sought to contribute to the growing empirical literature by investigating the effects of FDI on per capita GDP growth for South Africa using time series data collected between 1970 and 2016. In differing from a majority of previous studies we use quantile regressions which investigates the effects of FDI on economic growth at different distributional quantiles. Puzzling enough, our empirical results show that FDI has a negative influence on welfare at extremely low quantiles whereas at other levels this effect turns insignificant. Contrary, the effects of domestic investment on welfare is positive and significant at all levels. Collectively, these result have important implications for policymakers in South Africa.
    Keywords: FDI, Economic growth, Quantile regression, Global financial crisis, South Africa.
    JEL: C21 E31 E22 F43 O40
    Date: 2017–07
  22. By: Nampasa Chella (Department of Economics, Nelson Mandela University); Andrew Phiri (Department of Economics, Nelson Mandela University)
    Abstract: The primary objective of this paper is to investigate the relationship between foreign direct investment, domestic investment and unemployment in South Africa. Our mode of empirical investigation is the autoregressive distributive lag (ARDL) cointegration model which provides the advantage of accommodating for a mixture of levels stationary and difference stationary time series variables and is applied to quarterly data collected between 1970 and 2014. Our empirical results point to the existence of a negative effect of domestic investments on unemployment levels whereas foreign direct investment appears to have no significant effect on reducing unemployment levels. Collectively, these results hold crucial implications for South African policymakers.
    Keywords: FDI, domestic investment, unemployment, ARDL, cointegration, South Africa, developing country.
    JEL: C22 C32 E22 E24
    Date: 2017–11
  23. By: Karine Constant; Marion Davin
    Abstract: In this paper, we consider the unequal distribution of climate change damages in the world and we examine how the underlying costs can spread from a vulnerable to a non-vulnerable country through international trade. To focus on such indirect effects, we treat this topic in a North-South trade overlapping generations model in which the South is vulnerable to the damages entailed by global pollution while the North is not. We show that the impact of climate change in the South can be a source of welfare loss for northern consumers, in both the short and the long run. In the long run, an increase in the South’s vulnerability can reduce the welfare in the North economy even in the case in which it improves its terms of trade. In the short run, the South’s vulnerability can also represent a source of intergenerational inequity in the North. Therefore, we emphasize the strong economic incentives for non-vulnerable - and a fortiori less-vulnerable - economies to reduce the climate change damages on - more - vulnerable countries.
    Date: 2018–02
  24. By: Hlalefang Khobai (Department of Economics, Nelson Mandela University); Nwabisa Kolisi (Department of Economics, Nelson Mandela University); Clement Moyo (Department of Economics, Nelson Mandela University)
    Abstract: This study purposed to determine the long run relationship between trade openness and economic growth in Ghana and Nigeria covering the period between 1980 and 2016. It incorporated investment, exchange rates and inflation as the additional variables. To test for stationarity of the data, the augments Dickey-Fuller (ADF) (Dickey and Fuller, 1981), the Phillips and Perron (1988) and the DF-GLS test proposed by Elliot, Rothenberg and Stock (1996) were sued. The Autoregressive distributed lag (ARDL) model was employed in this study to examine the long run relationship between the variables. The findings of the study suggested existence of a long run relationship among the variables for both countries. The results further showed that trade openness has a positive impact on economic growth and significant at the 1% level in Ghana while in Nigeria trade openness has a negative but insignificant effect on economic growth. These results imply that different policy measures should be put into place for each of these two countries.
    Keywords: Trade Openness, Economic growth, Nigeria, Ghana.
    JEL: C10 F14 F41
    Date: 2017–09
  25. By: Miroudot, Sébastien; ye, ming
    Abstract: In this paper, we propose a new accounting framework for the decomposition of value-added into domestic, foreign and double counting terms in domestic sales. In this framework, we show where the value-added double counting is derived from and give an explicit expression of domestic and foreign double counting terms based on the Inter-Country Input-Output (ICIO) tables’ Ghosh insight. We can distinguish domestic sales from exports and trace the value added and double counting in sales of foreign affiliates and domestic-owned enterprises. Based on this framework, we then calculate the value-added by foreign-owned and domestic-owned firms in exports and in domestic sales by using an Inter-Country Input-Output table split according to ownership. Preliminary results suggest that there is much more double counting in sales of foreign affiliates than in exports and that more value-added is created through exports than through sales of foreign affiliates in world GDP.
    Keywords: inter-country input-output, value-added decomposition, global value chains, foreign affiliates
    JEL: E01 F23 L14
    Date: 2018–03–14
  26. By: Roger Nord; Wenjie Chen
    Abstract: How does China’s new growth model affect sub-Saharan Africa? To address this question, this paper first looks at the growing ties between China and Africa; attempts to estimate more precisely the impact on growth through the trade channel; and finally draws some policy implications regarding whether this means an end of the Africa Rising narrative or merely the beginning of a new chapter.
    Keywords: Economic growth;Trade;Trade policy;Trade relations;China, growth, sub-Saharan Africa, trade channel, Africa Rising
    Date: 2017–04–07
  27. By: Hakan Nordström; Harry Flam
    Abstract: Measured by trade in intermediate inputs, economic integration has increased between 2000 and 2014 between members of the European Union and even more with non-members. Integration is negatively related to economic size and positively to the number of years as a member. Germany is the largest hub in the production network and the centre of gravity has moved eastward. Older member states are increasingly exporting service inputs and new member states primary and manufacturing inputs. Wages are increasing faster in countries with low initial wages, indicating wage convergence as a result of production integration.
    Keywords: global value chains, economic integration, input-output models, wage convergence
    JEL: E10 F10 J31
    Date: 2018
  28. By: Aliev, Timur (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Flegontova, Tatiana (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Kuznetsova, A (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Pyzhikov, Nikita (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Ponomareva, Olga (Russian Presidential Academy of National Economy and Public Administration (RANEPA))
    Abstract: In this paper, authors analyze possible scenarios of activation of the integration agenda of the EAEU, taking into account changes and challenges occurring in the regional architecture of the Asia-Pacific region. In particular, they analyze current activity of the EAEU regarding the formation of regional trade agreements. Authors also give recommendations on the substantive content of future trade agreements. The work contains visions of the concept of "The Great Eurasian partnership" and the ways of its implementation.
    Date: 2018–03
  29. By: Crowley, M.
    Abstract: This paper discusses the challenges to the world trading system presented by the Brexit vote in the UK and the election of Trump in the U.S. It reviews two recent books and several papers that inform our understanding of these issues.
    Keywords: World Trade Organization, trade agreements, world trading system, trade policy
    JEL: F02 F13
    Date: 2018–04–06
  30. By: Valentin F. Lang; Marina Mendes Tavares
    Abstract: We study economic globalization as a multidimensional process and investigate its effect on incomes. In a panel of 147 countries during 1970-2014, we apply a new instrumental variable, exploiting globalization’s geographically diffusive character, and find differential gains from globalization both across and within countries: Income gains are substantial for countries at early and medium stages of the globalization process, but the marginal returns diminish as globalization rises, eventually becoming insignificant. Within countries, these gains are concentrated at the top of national income distributions, resulting in rising inequality. We find that domestic policies can mitigate the adverse distributional effects of globalization.
    Date: 2018–03–13
  31. By: Majid Einian; Farshad Ranjbar Ravasan
    Abstract: Although initially originated as a totally empirical relationship to explain the volume of trade between two partners, gravity equation has been the focus of several theoretic models that try to explain it. Specialization models are of great importance in providing a solid theoretic ground for gravity equation in bilateral trade. Some research papers try to improve specialization models by adding imperfect specialization to model, but we believe it is unnecessary complication. We provide a perfect specialization model based on the phenomenon we call tradability, which overcomes the problems with simpler initial. We provide empirical evidence using estimates on panel data of bilateral trade of 40 countries over 10 years that support the theoretical model. The empirical results have implied that tradability is the only reason for deviations of data from basic perfect specialization models.
    Date: 2018–03
  32. By: Saito, Hisamitsu
    Abstract: We examine whether the entry of multinational firms into a region induces the exit of low-productivity local firms from the market and the extent to which this improves regional productivity. For this purpose, we employ establishment-level data on the food manufacturing industry in Indonesia. After controlling for spillover effects, we find a greater left truncation in productivity distribution of local firms in regions with larger number of multinational firms. In addition, we find that this effect has greater impacts on regional productivity than spillover effects. Therefore, in order to maximize the regional benefits of foreign direct investment, governments should facilitate the entry and exit of local firms.
    Keywords: Firm selection; Regional productivity; Spillovers
    JEL: F23 L11 R12
    Date: 2018–03–07
  33. By: Born, Benjamin; Müller, Gernot J.; Schularick, Moritz; Sedlacek, Petr
    Abstract: This paper introduces a data-driven, transparent and unbiased method to calculate the economic costs of the Brexit vote in June 2016. We let a matching algorithm determine a combination of comparison economies that best resembles the growth path of the UK economy before the Brexit referendum. The economic cost of the Brexit vote is the difference in output between the UK economy and and its synthetic doppelganger. We show that, contrary to public perception, by the third quarter of 2017 the economic costs of the Brexit vote are already 1.3% of GDP. The cumulative costs amount to almost 20 billion pounds and are expected to grow to more than 60 billion pounds by end-2018. We provide evidence that heightened policy uncertainty has already taken a toll on investment and consumption.
    Keywords: Brexit; European Union; policy uncertainty; synthetic control method
    JEL: E65 F13 F42
    Date: 2017–11
  34. By: Ervani, Eva; Widodo, Tri; M. Purnawan, Edhie
    Abstract: The purpose of this paper is to analyze the comparative advantage of East Asian countries (China, Japan, Hong Kong, South Korea, Singapore and Indonesia) and to investigate whether Indonesia is competing in the similar groups of products - based on the 3-digit SITC Revision 2 for 237 groups of products published by the UN-COMTRADE. First, we calculate the Revealed Symmetric Comparative Advantage (RSCA) index to know the pattern of comparative advantage for each the East Asian countries. Second, we calculate the distribution of RSCA (value of mean, median, standard deviation and skewness of comparative advantage) from each the East Asian countries to analyze the dynamics of comparative advantage. Third, we examine the correlation of Indonesia’s RSCA with the RSCA of each the East Asian countries for the period 1995-2015 to determine whether Indonesia has a similar pattern of specialization and whether competing in the same product market with the East Asian countries. The result of the analysis shows that China is the biggest competitor for Indonesia, and Japan has very different patterns of specialization.
    Keywords: RSCA, Distribution of RSCA, RSCA Correlation, Specialization Pattern
    JEL: F10 F14 F17
    Date: 2018–03–11
  35. By: Tani, Massimiliano (University of New South Wales)
    Abstract: This paper studies occupational licensing as a possible cause of poor labour market outcomes among economic migrants. The analysis uses panel data from Australia, which implements one of the world's largest selective immigration programmes, and applies both cross-sectional and panel estimators. Licensing emerges as acting as an additional selection hurdle, mostly improving wages and reducing over-education and occupational downgrade of those working in licensed jobs. However, not every migrant continues working in a licensed occupation after settlement. In this case there is substantial skill wastage. These results do not change over time, after employers observe migrants' productivity and migrants familiarise with the workings of the labour market, supporting the case for tighter coordination between employment and immigration policies to address the under-use of migrants' human capital.
    Keywords: skilled immigration, over-education, occupational downgrade, immigration policy, occupational licensing
    JEL: J8 J24 J61
    Date: 2018–02
  36. By: Patrick Blagrave; Esteban Vesperoni
    Abstract: Using a panel vector autoregression and a novel measure of export-intensity-adjusted final demand, this note studies spillovers from China’s economic transition on export growth in 46 advanced and emerging market economies. The analysis suggests that a 1 percentage point shock to China’s final demand growth reduces the average country’s export growth by 0.1–0.2 percentage point. The impact is largest in Emerging Asia, where an export-growth-accounting exercise suggests that China’s economic transition has reduced average export growth rates by 1 percentage point since early 2014. Other countries linked to China’s manufacturing sector, as well as commodity exporters, are also significantly affected. This suggests that trading partners need to adjust to an environment of weaker external demand as China completes its transition to a more sustainable growth model.
    Keywords: Export growth;Exports;Asia and Pacific;China;Commodities;Manufacturing;Spillovers;Trade;export intensity, final demand, economic transition, advanced economies, emerging market economies, Emerging Asia, commodity exporters, external demand, sustainable growth, growth model, slowdown, international trade, GDP, GDP growth, export volume, export volume growth
    Date: 2016–09–27
  37. By: Alessandro NICITA (FERDI); Jaime DE MELO (Ferdi)
    Abstract: This paper provides a tour d’horizon on where we stand with the information, and analysis of Non-Tariff Measures (NTMs). The analysis of NTMs has been fragmentary, not keeping pace with their increasing prevalence and their increasing complexity. Capturing and classifying these NTMs is still a daunting task because of the data limitations identified in this paper: comprehensiveness, diversification, lack of precision, dimensionality, time dimension (NTMs are rarely available for several years which makes it difficult to control for confounding factors). Most NTM data inventories are registered on a binary basis restricting the use of descriptive statistics to a few indices. Disentangling precautionary from protectionist motives of NTMs is difficult as the presence and/or intensity of NTMs is likely to depend on import volumes. Quantity-based and price-based approaches to estimate AVEs are discussed along with methods to measure distortionary costs of NTMs. Examples of ‘top down’ and ‘bottom up’ approaches are shown to reveal some stylized patterns. Among these, trade costs have been falling around the world, but low-income countries are not catching up, for reasons likely to include the uneven effects of reductions in transport costs and the greater cost-raising effects of technical barriers to trade for low-income countries. For all income groups, the average trade restrictiveness of NTMs is estimated to be higher than the average restrictiveness of tariffs and the average restrictiveness of NTMs is estimated to be higher for low-income countries.
    Keywords: Non-tariff measures
    Date: 2018–03
  38. By: Davide Furceri; João Tovar Jalles; Aleksandra Zdzienicka
    Abstract: Until recently, China has been the leading contributor to global economic growth and—since the recent global financial crisis—a stabilizing driver of its evolution. However, as China recently began to rebalance its economy away from investment and exports and toward consumption, its GDP growth slowed significantly—partly reversing the country’s contribution to global output and trade growth—and is expected to continue to decline gradually over the medium term. There is little consensus regarding the consequences of a China’s growth slowdown for the rest of the world, with some arguing that a significant slowdown in China may have large implications and possibly lead to a worldwide recession if the “rebalancing” process is not well managed, and others suggesting that even a significant slowdown in China is unlikely to have large global effects, as its role in the world economy is still limited This note contributes to the ongoing debate by analyzing how growth shocks in China affect particular regions and country groups and how the impact and key transmission channels of these growth shocks have increased over time. It finds that historically, the average impact of growth shocks in China on global output has been statistically significant but limited, but since the early 2000s, the magnitude of spillovers has significantly increased. Trade linkages remain the main transmission channels, with larger effects for net commodity exporters and countries mostly exporting manufacturing goods. Also, spillover effects tend to be larger during periods of high global uncertainty and have been positively associated with an increase in the share of industry in total value in China, which suggests an important role of the “rebalancing” process.
    Keywords: Exports;Asia and Pacific;Commodities;China;Manufacturing;Industry;Trade;growth, global economic growth, global financial crisis, rebalancing, growth slowdown, recession, shocks, transmission channels, trade linkages, time-varying estimates, GDP, spillovers
    Date: 2016–11–23

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