nep-int New Economics Papers
on International Trade
Issue of 2018‒04‒23
thirty-two papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Different Dimensions of Brazil and Morocco Trade Flows: A Quantitative Assessment By Eduardo A. HADDAD; Fernando S. PEROBELLI; Flãvio V. VIEIRA; Vinicius A. VALE
  2. Romanian agrifood trade with the mediterranean countries – from the Barcelona declaration to the euro-mediterranean partnership By Gavrilescu, Camelia; Mateoc, Sirb Nicoleta; Mateoc, Teodor
  3. What Place does Luxembourg hold in Global Value Chains? By Di Filippo, Gabriele
  4. GVCs and the Endogenous Geography of RTAs By Lionel Fontagné; Gianluca Santoni
  5. German Export Survival in the First Globalisation By Wolf-Fabian Hungerland
  6. Analysis of Regional Trade Agreements Formed with the Participation of ASEAN By Volovik, Nadezhda
  7. Unraveling the economic performance of the CEEC countries: the role of exports and global value chains By Jan Hagemejer; Jakub Mućk
  8. The Trade Policy of Argentina, 1870-1913. A Study through Customs Legislation By Agustina Rayes
  9. Firm heterogeneity and exports in the Netherlands: Identifying export potential By Peter Zwaneveld; Raoul van Maarseveen; Steven Brakman; Harry Garretsen
  10. Is Regionalism Inherently Preferable to Multilateralism as a Means of Pursuing Trade Liberalisation in Services in Developing Countries? Evidence from Africa’s RTAs By Ayoki, Milton
  11. China's Changing Trade and the Implications for the CLMV By Koshy Mathai; Geoff Gottlieb; Gee Hee Hong; Sung Eun Jung; Jochen M. Schmittmann; Jiangyan Yu
  12. Markups, City Size, and Exports: Evidence from Japan By KONDO Keisuke
  13. Things have changed (or Have they?) Tariff protection and environmental concerns in the WTO By Petros C. Mavroidis; Damien Neven;
  14. Structure Demand Estimation of the Response to Food Safety Regulations in the Japanese Poultry Market By Qizhong YANG; Keiichiro HONDA; Tsunehiro OTSUKI
  15. Improving the Analysis of Trade Policy By Kehoe, Timothy J.; Pujolas, Pau S.; Rossbach, Jack
  16. International Joint Ventures and Internal versus External Technology Transfer: Evidence from China By Jiang, Kun; Keller, Wolfgang; Qiu, Larry; Ridley, William
  17. Optimal Tax Routing: Network Analysis of FDI diversion By Maarten van 't Riet; Arjan Lejour
  18. Heterogeneity in Conformism, Firm Selection, and Home Bias By Sergey Kichko; Pierre M. Picard
  19. Trade in Commodities and Business Cycle Volatility By Kohn, David; Leibovici, Fernando; Tretvoll, Hakon
  20. Analysis of the Impact of Reforming the Customs Business on Loading State Border Check Points in Russia By Gordeev, Dmitry
  21. The Structure of Multinational Sales under Demand Risk By Francesco Paolo Conteduca; Ekaterina Kazakova
  22. Forensics, Elasticities and Benford's Law: Detecting Tax Fraud in International Trade By Javorcik, Beata; Pakel, Banu Demir
  23. Internationalization of emerging market firms: the role of Domestic agglomerations in reducing liability of origin. By Sandeep S; Rajesh Srinivas Upadhyayula
  24. Fast-Track Authority: A Hold-Up Interpretation. By Levent Celik; Bilgehan Karabay; John McLaren
  25. “New Imported Inputs, Wages and Worker Mobility” By Italo Colantone; Alessia Matano; Paolo Naticchioni
  26. 수출이 국내 고용에 미치는 영향(The Employment Effect of Exports) By Whang, Unjung; Lee, Sooyoung; Kim, Hyuk Hwang; Kang, Youngho
  27. Production and Exports of Kidney Beans in the Kyrgyz Republic: Value Chain Analysis By Tilekeyev, Kanat; Mogilevskii, Roman; Abdrazakova, Nazgul; Dzhumaeva, Shoola
  28. Should they stay or should they go? Climate Migrants and Local Conflicts By Valentina Bosetti; Cristina Cattaneo; Giovanni Peri
  29. The effect of geographical distance on online transactions: Evidence from the Netherlands By Ali Palali; Bas Straathof; Rinske Windig
  30. Globalization and the New Normal By Alina Carare; Bertrand Candelon
  31. Dynamic Responses to Immigration By Colas, Mark
  32. Between Ideas and Interests The Spanich Fight for Free Trade, 1879-C. 1903 By Marcela Sabaté; José María Serrano

  1. By: Eduardo A. HADDAD; Fernando S. PEROBELLI; Flãvio V. VIEIRA; Vinicius A. VALE
    Abstract: Brazil and Morocco have been engaged in different forms of trade negotiations and committed to liberalize their trade, as they have concluded several bilateral and multilateral trade agreements whether within the WTO or in specific framework. This paper analyzes different facets of trade relations between Brazil and Morocco and assesses the potential for deeper trade integration between these two key players in the southern Atlantic. Trade flows between Brazil and Morocco have been concentrated in a few products and it is clear that there are significant opportunities to improve not only the magnitude of trade flows but also the range of products in the near future. Given the gap in terms of economic size, the Moroccan market does not draw more than 0.35% of the total Brazilian exports (45th market). The Chinese and the American markets are the most important destinations of Brazilian foreign sales, followed by some regional economies like Argentina and Chile. For Morocco, Brazil is relatively more important as a market for national exports, representing, in 2014, 4.6% of total exports and thus, placing itself as the third most important destination for Moroccan exports, after France and Spain. One can say that a significant part of the bilateral trade between Brazil and Morocco is closely associated to the agricultural value chain. Morocco provides fertilizers, while Brazilians exports to Morocco concentrate mainly on agricultural products. The regional distribution of value added effects of Moroccan exports to Brazil reveals that fertilizers exports benefits, direct and indirectly, almost all Moroccan regions, in spite of the concentration of mining and processing activities in specific locations. Simulations have been conducted to assess the impact of the elimination of tariffs and export subsidies on trade between the two countries. On one hand, there is a potential increase in welfare in Brazil equal to USD 212.46 in a context of bilateral liberalization. On the other hand, welfare in Morocco and in the ROW may potentially face a decrease (equivalent to USD 88.03 and USD 64.32, respectively). The divergence in results can be explained in part by the different sizes of these two economies, the share of each economy in the international trade, and the degrees of specialization and inter-sectorial integration in each country. Notwithstanding, there would be potential gainers and losers in both countries.
    Keywords: Brazil, Morocco, Bilateral trade, Trade barriers, Agricultural products, trade in value added, Specialization, Computable General Equilibrium Model
    Date: 2018–01
  2. By: Gavrilescu, Camelia; Mateoc, Sirb Nicoleta; Mateoc, Teodor
    Abstract: Romania had important trade relations with the Mediterranean countries since before 1990. Subsequently, in both the pre-accession and post-accession period, this group of countries took together about 47% of the extra-EU Romanian agri-food exports and 16% of the extra-EU imports (averages 2002-2016). On the other hand, the imports of vegetables from the Mediterranean area are severely competing the Romanian domestic production (which is rather large, but is very poorly organized all along the supply chains), while the imports of fruit are competing the EU domestic production and intra-EU trade. The present paper is analyzing the dynamics and changes in competitiveness of the Romanian agri-food trade with the Mediterranean countries, in terms of value and volume, composition by products and partners. The results show a significant increase in the Romanian exports to the Mediterranean countries (which lead to the shift of the country’s regional trade balance from negative to positive since 2010), as well as competitiveness gains on the main destinations markets in the region.
    Keywords: agri-food trade, Romania, Euro-Mediterranean Partnership, competitiveness
    JEL: F14 Q17
    Date: 2017–11–16
  3. By: Di Filippo, Gabriele
    Abstract: The paper analyses the place held by Luxembourg in global value chains (GVC) by relying on trade in value added data retrieved from OECD inter-country input-output tables, available over the period 1995-2011. The analysis is multifaceted as the role of Luxembourg in GVC is analyzed across 50 advanced and emerging market economies, at the country level, at the sector level and over time. Results show that Luxembourg acts as an important chain-link in GVC as evidenced by its strong upstream and downstream interconnections with other partner countries. Luxembourg is primarily a buyer of foreign value added and less a seller of domestic value added. The major part of Luxembourg’s GVC trading partners is located in Western Europe suggesting that the supply chain network is not global for Luxembourg but rather regional. Notwithstanding this, the share of East Asian and Eastern European emerging countries - albeit relatively low compared to advanced economies - is increasing over the period of analysis. A similar observation prevails for the geographical breakdown of the origin (destination) of foreign (domestic) value added for domestic (foreign) final demand at the end of the value chain. The analysis unveils that Luxembourg possesses a comparative advantage in GVC in the finance and insurance industry. It is from the latter sector that the country retrieves the most important share of value added from GVC participation.
    Keywords: International trade, Global value chains, Gross trade statistics, Trade in value added statistics, Inter-country input-output tables
    JEL: D57 F14 F20 F21 F23
    Date: 2018–02–09
  4. By: Lionel Fontagné (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Gianluca Santoni (CEPII - Centre d'études prospectives et d'informations internationales)
    Abstract: There has been considerable attention paid to the endogenous nature of regional trade agreements Geography, economic size, or common history help predicting signed agreements. However, not all signed RTAs are “natural" according to economic determinants, as trade negotiations can be used as a tool of external policy. Recent developments in terms of structural gravity help clarifying this debate by taking account of all theoretically relevant determinants of bilateral trade, as well as general equilibrium effects of signing an agreement. Indeed, the endogeneity of trade arrangements has a time dimension and is related to firm strategies. These are the two mechanisms addressed in this paper. We estimate the time-varying probability for a country pair to sign a trade agreement and build upon structural gravity in general equilibrium to determine how the patterns of Global Value Chains shape the evolving geography of optimal trade agreements. Our results confirm that the endogenous geography of RTAs is shaped by the development of GVCs.
    Abstract: Une grande attention a été accordée à la nature endogène des accords commerciaux régionaux. La géographie, la taille économique ou l'histoire commune aident à prévoir les accords régionaux (ACR) signés. Cependant, tous les ACR signés ne sont pas "naturels" du point de vue des seuls déterminants économiques, dans la mesure où les négociations commerciales peuvent être utilisées comme un outil de politique extérieure.Les développements récents en termes de modèles structurels de gravité des échanges aident à clarifier ce débat en prenant en compte l'ensemble des déterminants théoriques du commerce bilatéral. En effet, l'endogénéité des accords commerciaux a une dimension temporelle et est liée aux stratégies des firmes. Ces deux mécanismes sont abordés ici : nous estimons a probabilité pour chaque paire de pays de signer un accord commercial et utilisons la gravité structurelle en équilibre général pour déterminer comment les chaînes de valeur mondiales façonnent la géographie optimale des accords commerciaux. Nos résultats confirment que la géographie endogène des ACR est façonnée par le développement des chaînes de valeurs mondiales.
    Date: 2018–04–11
  5. By: Wolf-Fabian Hungerland
    Abstract: How were trade relations structured in the first globalisation? Previous literature has highlighted the strong activity of the extensive margin during the first globalisation, i.e. that here was substantial entry and exit. However, so far little is known about what happens between market entry and exit. Traditional narratives of the first globalisation relying on the Heckscher-Ohlin factor endowments or the gravity model are mute about these features of the data. In this paper I study the survival margin of international trade and wonder how long trade relationships lasted and what factors mattered for the duration ofexports. Using product-evel export data from 1889 to 1913, I find that the first years of an export were the most hazardous. The median length of an export spell was 2 years, only about 60 per cent survived the first year, and a mere third of exports lasted longer than 3 years. However, once exporters survived the first two years they face less hazard from year to year. I take Rauch and Watson’s (2003) search cost model of trade relationships and derive hypotheses that I test in order shed light on the duration of Germany’s exports. Key to this model is that a fraction of exports serve to learn about market conditions. I quantify this learning, and my findings suggest that search costs as well as reliability turn out to have been important for export survival, and so did prior export experience. In other words, learning to export was a salient feature of Germany’s experience in the first globalisation.
    Keywords: Survival margin, exports ,first globalisation, Imperial Germany
    JEL: F14 F19 N73 O14
    Date: 2018–03
  6. By: Volovik, Nadezhda (Russian Presidential Academy of National Economy and Public Administration (RANEPA))
    Abstract: Regional economic integration has proved itself in the world practice as a successful model of strategic development. Liberalization of customs tariffs, as well as unification and removal of non-tariff restrictions within the integration associations are carried out faster than in the whole world trading system. At present, 419 regional trade agreements (RTS) have been signed, of which more than half are agreements on free trade zones (FTAs). In the context of a certain decrease in the intensity of Russia's interaction with Western partners, the escalation of activity in the Asia-Pacific region (the most dynamically growing world region) acquires special significance for the Eurasian Economic Union (EAEC). A key area of ??international cooperation for the EEMA is the implementation of the formats of modern comprehensive agreements on free trade zones. The ASEAN countries have rich experience in concluding regional trade agreements. In total, they concluded more than 80 bilateral and multilateral RTAs. Thus, currently there are multilateral RTAs (the so-called ASEAN 1) ASEAN-China, ASEAN-India, ASEAN-the Republic of Korea and ASEAN-Australia-New Zealand.
    Date: 2018–03
  7. By: Jan Hagemejer (Narodowy Bank Polski, Faculty of Economic Sciences, University of Warsaw); Jakub Mućk (Narodowy Bank Polski, Warsaw School of Economics)
    Abstract: In this study we assess the importance of exports and global value chains (GVC) participation on economic growth. Using novel methods and an extensive dataset, we decompose GDP growth in the Central and Eastern European (CEEC) countries to show that in over a large part of the period of transition and integration with the EU, exports have played a predominant role in shaping economic growth. We also show that exports have been the major factor driving the convergence of the CEEC countries with their advanced counterparts. We employ panel methods to analyze the determinants of growth of exported value added and show that the major growth drivers in the analyzed period of 1995−2014 are GVC participation, imports of technology and capital deepening.
    Keywords: economic growth, international trade, GVC, heterogeneous panels, common correlated effects estimation, CEEC
    JEL: C23 F21 O33
    Date: 2018
  8. By: Agustina Rayes
    Abstract: The literature dedicated to the study of Argentine commercial policy during the period 1870-1913 has alternately established it as liberal, protectionist or fiscalist. In this research, we propose to study it mainly from the customs laws - although we also use other dispositions, resolutions and decrees related to the subject. Our hypothesis is that the Argentine trade policy cannot easily be categorized, because it showed both signs of liberalization and protectionism, and fiscal intentions. In effect, sectors with interests, sometimes similar and sometimes dissimilar, influenced the evolution of trade policy. This paper has been divided into four parts. It begins by presenting which the tax-free exports and imports were. It then goes on to observe which products paid export and import duties, what was the weight of customs duties on state revenues, what the average tariff levels were, and what the difference between nominal protection and implicit protection was. In the next section, we present what elements should be studied in order to reach a complete analysis of the commercial policy, which includes the reconstruction of the effective tariffs of the period, both for exports and for imports. Finally, we make a balance (still provisional) based on the main findings of this research.
    Date: 2018–04
  9. By: Peter Zwaneveld (CPB Netherlands Bureau for Economic Policy Analysis); Raoul van Maarseveen (CPB Netherlands Bureau for Economic Policy Analysis); Steven Brakman (RUG); Harry Garretsen (RUG)
    Abstract: According to the Melitz (2003) model, potential exporters have to be sufficiently productive to overcome the entry costs of foreign markets. Once firms pass this productivity threshold, they all export. However, empirical evidence indicates that a substantial share of high-productive firms do not export. Stimulating these highly productive firms to export is of interest to policy makers, as this provides these firms with new growth opportunities. In this paper, we focus specifically on this group of high-productive non-exporters and identify the factors that might prevent them from successfully exporting. We employ a large micro-dataset for Dutch firms both in services and manufacturing for the period 2010-2014. Our findings are threefold. First, high productivity is an important, but not a sufficient condition for exporting. Firm size (substitute for productivity), import status, and foreign ownership are also important. Second, firm location is crucial. A location in peripheral areas prevents high productive firms from exporting; especially a location in the Northern part of the Netherlands reduces the probability to export. Third, our set-up identifies individual firms that are potential exporters.
    JEL: F12 F14
    Date: 2018–01
  10. By: Ayoki, Milton
    Abstract: This paper assessed the effectiveness of regional agreements (RTAs) in tackling many of the hurdles that potentially impede access to and presence in services markets. From the approaches and disciplines within the services trade frameworks and framework of the GATS, most major RTAs are at the same pace with GATS in securing the rule making interface between domestic regulation and trade in services, the necessity test, cross border trade in services, and mutual recognition and emergency safeguards and subsidies issues, but lag behind GATS in areas of policy sensitivities and handling of critical sectors such as telecommunication and financial services. As such, regionalism may not be a preferred means of pursuing trade liberalisation in sectors where policy sensitivities are high. Second, effective access to services markets and services exports performance involve interplay of a large number of policies measures, including those not typically falling within the scope to the services trade frameworks. Beyond reforms in services trade frameworks such as pursuing regional regulatory harmonization, Africa need to be alert to domestic policies and ensure that proper coordination exists with national officials in related policy areas. Third, entry restrictions and regulatory barriers retards growth of services exports sector as incumbent firms have no incentive to improve productivity to stay ahead of competition.
    Keywords: Trade in Services, Regionalism and Multilateralism, Developing Countries, Africa and the GATs.
    JEL: F13 F15
    Date: 2018–03–29
  11. By: Koshy Mathai; Geoff Gottlieb; Gee Hee Hong; Sung Eun Jung; Jochen M. Schmittmann; Jiangyan Yu
    Abstract: China’s trade patterns are evolving. While it started in light manufacturing and the assembly of more sophisticated products as part of global supply chains, China is now moving up the value chain, “onshoring” the production of higher-value-added upstream products and moving into more sophisticated downstream products as well. At the same time, with its wages rising, it has started to exit some lower-end, more labor-intensive sectors. These changes are taking place in the broader context of China’s rebalancing—away from exports and toward domestic demand, and within the latter, away from investment and toward consumption—and as a consequence, demand for some commodity imports is slowing, while consumption imports are slowly rising. The evolution of Chinese trade, investment, and consumption patterns offers opportunities and challenges to low-wage, low-income countries, including China’s neighbors in the Mekong region. Cambodia, Lao P.D.R., Myanmar, and Vietnam (the CLMV) are all open economies that are highly integrated with China. Rebalancing in China may mean less of a role for commodity exports from the region, but at the same time, the CLMV’s low labor costs suggest that manufacturing assembly for export could take off as China becomes less competitive, and as China itself demands more consumption items. Labor costs, however, are only part of the story. The CLMV will need to strengthen their infrastructure, education, governance, and trade regimes, and also run sound macro policies in order to capitalize fully on the opportunities presented by China’s transformation. With such policy efforts, the CLMV could see their trade and integration with global supply chains grow dramatically in the coming years.
    Keywords: Trade partners;Global trade;Trade flows;Trade patterns;trade,labor,clmv
    Date: 2016–09–01
  12. By: KONDO Keisuke
    Abstract: The present study deals with variations in markups between and within cities in the Japanese manufacturing sector using the markups estimated at the establishment level. Recent models on monopolistic competition with endogenous price-cost markups show that markups in larger cities are lower since competition is tougher in larger cities. With respect to the within-city variation in markup, firms producing differentiated products at lower costs charge higher markups. This empirical study supports these theoretical predictions. The findings suggest that markups are partly balanced between establishment and regional factors when highly productive, large establishments are located in large cities. Furthermore, this study finds that exporting establishments face global competition in export markets, similar to large domestic markets. Therefore, highly productive, large establishments can export their products by charging high markups.
    Date: 2018–03
  13. By: Petros C. Mavroidis (Columbia Law School and University of Neuchâtel); Damien Neven (Graduate Institute of International and Development Studies);
    Abstract: This paper considers the APEC and proposed EGA agreements which grant tariff concession in favor of "green" goods. We ?find that the practical signi?cance of the APEC agreement should not be overestimated as it involves modest tariff concessions over a subset of goods which are not heavily traded. Still, these agreements involve a paradigm shift to the extent that they use tariffs concessions negotiated on a purilateral basis as a policy instrument to meet public policy concern, instead of making market access conditional on meeting national regulations. We model the mechanism through which these tariff preferences provide incentives to change production in favor of green goods in exporting countries and highlight the challenges that the implementation of these agreements involve.
    Keywords: WTO, APEC, EGA, Tari¤s, Terms of Trade, ex outs
    JEL: K40
    Date: 2018–01
  14. By: Qizhong YANG (JSPS Research Fellowship for Young Scientists (PD)); Keiichiro HONDA (Faculty of Administration, Prefectural University of Kumamoto); Tsunehiro OTSUKI (Osaka School of International Public Policy, Osaka University)
    Abstract: Since their implementation in 1995, the Agreements on the Application of Sanitary and Phytosanitary Measures and Technical Barriers to Trade of the World Trade Organization have played an increasingly important role in the conduct of international negotiations. This study employs the method of moments estimator proposed by Berry, Levinsohn, and Pakes (1995) and Nevo (2001) to estimate the effect of Japanese pesticide residue standards on poultry consumption with a particular focus on the maximum residue limits (MRLs) on pesticide and veterinary drugs. The results confirm that more stringent MRLs on pesticide and veterinary drugs enhance the demand for poultry imports by ensuring higher food safety. The results shed light on Japanese consumers’robust preference for food safety. Further counterfactual experiments of alternative MRLs show that the demand-enhancing effect may vary among the exporting countries, and appears to be more prominent for imported poultry from developed countries.
    Keywords: Poultry consumption, Maximum residue limit, Random-coefficient model
    JEL: D18 F14 L10
    Date: 2018–03
  15. By: Kehoe, Timothy J. (Federal Reserve Bank of Minneapolis); Pujolas, Pau S. (McMaster University); Rossbach, Jack (Georgetown University Qatar)
    Abstract: The standard model that economists use to analyze the impact of trade reforms systematically underpredicts changes in trade patterns. It not only underestimates overall trade magnitudes, but also fails to predict which industries experience the largest trade increases. This failure results from not accounting for rapid growth in post-liberalization trade of the products that these industries produce. {{p}} This paper documents these weaknesses and demonstrates an alternative methodology. {{p}} Our modified model performs better because it accounts for the rapid growth of trade in products that were traded in small quantities prior to the reduction of trade barriers. {{p}} We offer a method for integrating this insight about least-traded products into the standard model and suggest that such models not only will produce more accurate predictions, but also will forecast larger welfare gains from trade liberalization.
    Date: 2018–01–23
  16. By: Jiang, Kun; Keller, Wolfgang; Qiu, Larry; Ridley, William
    Abstract: This paper studies international joint ventures, where foreign direct investment is performed by a foreign and a domestic firm that together set up a new firm, the joint venture. Employing administrative data on all international joint ventures in China from 1998 to 2007-roughly a quarter of all international joint ventures in the world-we find, first, that Chinese firms chosen to be partners of foreign investors tend to be larger, more productive, and more likely subsidized than other Chinese firms. Second, there is substantial technology transfer both to the joint venture and to the Chinese joint venture partner, an external, intergenerational technology transfer effect that this paper introduces. Third, with technology spillovers typically outweighing negative competition effects, joint ventures generate on net positive externalities to other Chinese firms in the same industry. Joint venture externalities are large, perhaps twice the size of wholly-owned FDI spillovers, and it is R&D-intensive firms, including the joint ventures themselves, that benefit most from these externalities. Furthermore, the positive external joint venture effect is larger if the foreign firm is from the U.S. rather than from Japan or Hong Kong, Macau, and Taiwan, while this effect is virtually absent in broad sectors that include economic activities for which China's FDI policy has prohibited joint ventures.
    Keywords: competition effects; Foreign direct investment; international joint ventures; partner selection; technology spillovers
    JEL: F14 F23 O34
    Date: 2018–03
  17. By: Maarten van 't Riet (CPB Netherlands Bureau for Economic Policy Analysis); Arjan Lejour (CPB Netherlands Bureau for Economic Policy Analysis)
    Abstract: The international corporate tax system is considered as a network and, just like for transportation, ‘shortest’ paths are computed, minimizing tax payments for multinational enterprises when repatriating profits. We include corporate income tax rates, withholding taxes on dividends, double tax treaties and the double taxation relief methods. We find that treaty shopping leads to an average potential reduction of the tax burden on repatriated dividends of about 6 percentage points. Moreover, an indicator for centrality in the tax network identifies the United Kingdom, Luxembourg and the Netherlands, amongst others, as the most important conduit countries. Tax havens do not have a crucial role in treaty shopping. In the regression analysis we find that the centrality indicators are robustly significant explanatory variables for bilateral FDI stocks. This also holds for our treaty shopping indicator.
    JEL: F23 H25 H26 H87
    Date: 2017–04
  18. By: Sergey Kichko ("National Research University Higher School of Economics, Russian Federation "); Pierre M. Picard (CREA, Université du Luxembourg)
    Abstract: This paper discusses the impact of conformism on product quality, firm selection, and trade patterns. It shows that when consumers have a higher degree of conformism and/or their distribution of conformism becomes more concentrated, the equilibrium average demand falls while product quality rises in a closed economy. In an international trade context, this strengthens the home consumption bias when consumers conform to the behavior of local people. The home bias is mitigated under globalization where individuals tend to conform to people worldwide. The paper also discusses the conditions under which conformism and conspicuousness are reconciled.
    Keywords: heterogeneity in conformism; product quality; firmheterogeneity; home bias
    JEL: L11 F12
    Date: 2018
  19. By: Kohn, David; Leibovici, Fernando (Federal Reserve Bank of St. Louis); Tretvoll, Hakon
    Abstract: This paper studies the role of the patterns of production and international trade on the higher business cycle volatility of emerging economies. We study a multi-sector small open economy in which firms produce and trade commodities and manufactures. We estimate the model to match key cross-sectional differences across countries: emerging economies run trade surpluses in commodities and trade deficits in manufactures, while sectoral trade flows are balanced in developed economies. We find that these differences amplify the response of emerging economies to fluctuations in commodity prices. We show evidence consistent with these findings using cross-country data.
    Keywords: International business cycles; output volatility; emerging economies
    JEL: E32 F4 F41 F44
    Date: 2018–03–01
  20. By: Gordeev, Dmitry (Russian Presidential Academy of National Economy and Public Administration (RANEPA))
    Abstract: As a result of 2014, Russia's foreign trade turnover amounted to about 820 million tons and 700 billion US dollars. In 2015, the figures fell significantly and amounted to 750 million tons and 404 billion US dollars. In 2016 cargo traffic in physical terms increased to 767 million tons, but decreased in value to 363 billion US dollars. The key drivers of the changes for the period from 2014 to 2016 were the following: the imposition of mutual sanctions between the Russian Federation and foreign states, the unstable political situation in Ukraine and the trade blockade on the part of Ukraine. As a result, there was a redistribution of cargo flows between the points of admission on the border of the Russian Federation. In addition, the redistribution of freight flows is influenced by barriers related to the customs administration system, which are faced by companies engaged in foreign economic activities. The purpose of this work is to build a methodology and conduct a quantitative assessment of the impact of customs reform in Russia on the loading of checkpoints, including analysis of the product and geographical aspects. The results of the assessment will allow to build priorities for the arrangement of existing checkpoints on the basis of gravitation to them from the side of freight carriers.
    Date: 2018–03
  21. By: Francesco Paolo Conteduca; Ekaterina Kazakova
    Abstract: This paper analyzes the effects of demand risk on the location and sales structure of multinational firms. We build a structural model of horizontal FDI with firms that are heterogeneous in terms of risk aversion and productivity. Firms decide on the location of their production plants, the set of countries to serve from these plants, and the volume of sales for each plant. These decisions hinge both on the expected demand for each market and the correlation structure of demand realizations across destination markets. Ceteris paribus, markets that offer better hedging opportunities to multinationals induce larger sales and are more attractive locations for production. We use firm-level data for German multinational companies to estimate firm-specific risk aversion coefficients as well as other model parameters. We find that multinationals are heterogeneously risk averse. Finally, in a counterfactual analysis, we show how a reduction in tariffs for goods imported into China changes the trade flows to the other countries, the sign of the change depending on the correlation structure.
    Keywords: FDI, Multinational Enterprise, Demand Risk, Risk Aversion, Export Platform
    JEL: F12 F23 L23
    Date: 2017–12
  22. By: Javorcik, Beata; Pakel, Banu Demir
    Abstract: By its very nature, tax evasion is difficult to detect as the parties involved have an incentive to conceal their activities. This paper offers a setting where doing so is possible because of an exogenous shock to the tax rate. It contributes to the literature by proposing two new methods of detecting evasion in the context of border taxes. The first method is based on Benford's law, while the second relies on comparing price and trade cost elasticities of import demand. Both methods produce evidence consistent with an increase in tax evasion after the shock. The paper further shows that evasion induces a bias in the estimation of trade cost elasticity of import demand, leading to miscalculation of gains from trade based on standard welfare formulations. Finally, welfare predictions are derived from a simple Armington trade model that accounts for tax evasion.
    Keywords: Benford's law; border taxes; tax evasion; trade financing
    JEL: F10
    Date: 2018–03
  23. By: Sandeep S (Indian Institute of Management Kozhikode); Rajesh Srinivas Upadhyayula (Indian Institute of Management Kozhikode; Indian Institute of Management Kozhikode)
    Abstract: The extant literature in institutional theory has found liabilities of origin (LOR) costs such as (i) capability based and (ii) legitimacy based costs as the major cost disadvantages faced by emerging market multinationals (EMNEs) while undertaking internationalization. Studies have pointed out that the treatment of institutions in International business (IB) have considered institutions at a national level, ignoring the role of sub-national institutions. This is particularly important for EMNEs as the institutional development in their home countries are highly uneven. Further, the recent studies in economic geography have also criticized the treatment of location in extant IB literature. They have also argued that location in extant IB literature is treated synonymously with a country or a nation state, expunging the nuanced examination or differentiation of locational features. Hence we observe that the role of sub-national institutions such as domestic agglomerations in the internationalization of EMNEs is under-reported in the extant literature. In this paper we explain the role of sub-national institutions such as domestic agglomerations in reducing LOR cost disadvantages (capability and legitimacy based cost disadvantages) and facilitating the outward internationalization of EMNEs.
    Keywords: institutional theory, liabilities of origin, emerging market multinationals
    Date: 2018–03
  24. By: Levent Celik; Bilgehan Karabay; John McLaren
    Abstract: A central institution of US trade policy is Fast-Track Authority (FT), by which Congress commits not to amend a trade agreement that is presented to it for ratification, but to subject the agreement to an up-or-down vote. We offer a new interpretation of FT based on a hold-up problem. If the US government negotiates a trade agreement with the government of a smaller economy, as the negotiations proceed, businesses in the partner economy, anticipating the opening of the US market to their goods, may make sunk investments to take advantage of the US market, such as quality upgrades to meet the expectations of the demanding US consumer. As a result, when the time comes for ratification of the agreement, the partner economy will be locked in to the US market in a way it was not previously. At this point, if Congress is able to amend the agreement, the partner country has less bargaining power than it did ex ante, and so Congress can make changes that are adverse to the partner. As a result, if the US wants to convince such a partner country to negotiate a trade deal, it must first commit not to amend the agreement ex post. In this situation, FT is Pareto-improving.
    JEL: F13 F15
    Date: 2018–03
  25. By: Italo Colantone (Bocconi University. Via Roentgen 1, 20136, Milan (Italy).); Alessia Matano (University of Barcelona, AQR-IREA, Avinguda Diagonal 690, 08034,Barcelona (Spain)); Paolo Naticchioni (Roma Tre University IZA and INPS. Roma Tre University. Via Chiabrera 199, 00145, Rome (Italy))
    Abstract: We provide a comprehensive assessment of the effects of new imported inputs on wage dynamics, on the skill-composition of the labor force, on worker mobility, and on the efficiency of matching between firms and workers. We employ matched employeremployee data for Italy, over 1995-2007. We complement these data with information on the arrival of new imported inputs at the industry level. We find new imported inputs to have a positive effect on average wage growth at the firm level. This effect is driven by two factors: (1) an increase in the white-collar/bluecollar ratio; and (2) an increase in the average wage growth of blue-collar workers, while the wage growth of white collars is not significantly affected. The individual-level analysis reveals that the increase in the average wage of blue collars is driven by the displacement of the lowest paid workers, while continuously employed individuals are not affected. We estimate the unobserved skills of workers following Abowd et al. (1999). We find evidence that new imported inputs lead to a positive selection of higher-skilled workers, and to an improvement in positive assortative matching between firms and workers.
    Keywords: New imported inputs, wages, matched employer-employee data. JEL classification:F14, F16.
    Date: 2018–04
  26. By: Whang, Unjung (Korea Institute for International Economic Policy); Lee, Sooyoung (Korea Institute for International Economic Policy); Kim, Hyuk Hwang (Korea Institute for International Economic Policy); Kang, Youngho (Soongsil University)
    Abstract: 높은 청년실업, 제조업 일자리 감소 등 최근의 위축된 고용시장은 "고용 없는 수출 및 성장" 을 반영하듯 좀처럼 호전되지 않고 있다. 수출의 고용창출 능력이 과거에 비해 크게 축소되었다는 사실에 대해서는 일반적으로 동의하나, 그 원인을 규명하는 연구는 매우 미흡한 실정이다. 이에 본 연구는 다양한 분석방법론을 활용하여 수출과 고용 간 관계를 살펴보고, 이를 통해 수출이 고용에 미치는 긍정적인 효과가 약화된 주요 원인으로 구조적 요인(수출산업의 구성변화)을 강조하였다. 또한 분석결과를 토대로 수출-고용 간 선순환 구조를 강화하기 위한 유용한 정책시사점을 도출하였다. 위축된 고용시장의 회복을 제조업 수출 확대의 기대 속에서 찾고 있는 한국의 실정을 감안해볼 때 본 연구의 부가가치가 클 것으로 보인다. Labor intensive industry-oriented export strategy (beginning in the 1970s), which once led to successful industrialization and economic growth, seems to have lost its effect in a situation where export expansion does not lead to job creation. The fact that exports do not create sufficient jobs is a problem faced by the Korea as a manufacturing-based export-driven economy. In Korea, which is highly dependent on exports, it is important to look into the main reasons why the virtuous circle between exports and employment has weakened considerably. This study begins with the question of what is the main reason why export growth does not lead to sufficient job creation, and examines the relationship between exports and employment from various perspectives.
    Keywords: Employment Effect; Exports
    Date: 2017–12–27
  27. By: Tilekeyev, Kanat; Mogilevskii, Roman; Abdrazakova, Nazgul; Dzhumaeva, Shoola
    Abstract: This report provides results of the study of the kidney bean (Phaseolus vulgaris) production and the marketing value chain in the Kyrgyz Republic. The main tool of this survey is field study of farmers, dealers-wholesalers, and bean exporters with elements of quantitative and qualitative methods, as well as the results of desk analysis using open sources of information. The report analyzes agrotechnical conditions for bean production, including data on bean-related phytosanitary safety and the situation with bean-related food safety standards when exporting it and marketing problems in foreign markets. Findings of the study include the main barriers and constraints to increasing domestic production, improving bean quality and processing, and improving the phytosanitary situation and food safety standards; recommendations on Kyrgyz bean market improvement are also included.
    Keywords: kidney beans, exports, production, value chain
    JEL: Q12 Q13 Q17
    Date: 2018–03–01
  28. By: Valentina Bosetti; Cristina Cattaneo; Giovanni Peri
    Abstract: There is extensive evidence that higher temperature increases the probability of local conflict. There is also some evidence that emigration represents an important margin of adaptation to climatic change. In this paper we analyse whether migration influences the link between warming and conflicts by either attenuating the effects in countries of origin and/or by spreading them to countries of destination. We find that in countries where emigration propensity, as measured by past diaspora, was higher, increases in temperature had a smaller effects on conflict probability, consistent with emigration functioning as "escape valve" for local tensions. We find no evidence that climate-induced migration increased the probability of conflict in receiving countries.
    JEL: F22 H56 Q34 Q54
    Date: 2018–03
  29. By: Ali Palali (CPB Netherlands Bureau for Economic Policy Analysis); Bas Straathof (CPB Netherlands Bureau for Economic Policy Analysis); Rinske Windig (CPB Netherlands Bureau for Economic Policy Analysis)
    Abstract: The rise of online trade alters the role of distance between (potential) buyers and sellers. We use data from eBay subsidiary, one of the largest online trading platforms in the Netherlands, to estimate how distance affects the probability of a transaction between small geographical regions. We find that distance negatively and modestly affects the probability of having a transaction between two regions, and that the distribution of this probability is highly skewed: ranging from a change of 0.000 to -0.008 percentage points per marginal kilometer. The unconditional probability of a transaction is 27 percent. Distance is less influential for: advertisements with more photos advertisements placed by high-frequency advertisers for new goods in comparison to second hand goods. This suggests that information frictions might be the driving force behind the distance effect on online trade in the Netherlands.
    JEL: D44 R12
    Date: 2017–10
  30. By: Alina Carare; Bertrand Candelon
    Abstract: This study expands the empirical specification of Cerra and Saxena (2008), and allows short-term output growth regimes to be determined by globalization. Relying on a non-linear dynamic panel representation, it reconciles the earlier results in the literature regarding the two opposite narratives of the effects of globalization on output growth. Countries experience higher growth, on average, the more open and integrated they are into the world. However, once they reach a certain globalization threshold (endogenously estimated), countries may also experience a new normal, persistently lower short-term output growth following a financial crisis. The benefits, as well as vulnerabilities, accrue earlier in the globalization process for low- and middle-income countries. To solely reap the globalization benefits on growth, sound policies should be in place to mitigate the negative effects stemming from increased vulnerabilities brought by globalization.
    Date: 2018–04–06
  31. By: Colas, Mark (Federal Reserve Bank of Minneapolis)
    Abstract: I analyze the dynamic effects of immigration by estimating an equilibrium model of local labor markets in the US. The model includes firms in multiple cities and sectors which combine capital, skilled and unskilled labor in production, and forward-looking workers who choose their sector and location each period as a dynamic discrete choice. A counterfactual unskilled immigration inflow leads to an initial wage drop for unskilled workers and a wage increase for skilled workers. These effects dissipate rapidly as unskilled workers migrate away from heavily affected cities and workers shift toward unskilled intensive industries. Effects on lifetime utility are small.
    Keywords: Immigration; Labor market dynamics; Local labor markets
    JEL: J2 J31 J62
    Date: 2018–01–29
  32. By: Marcela Sabaté; José María Serrano
    Abstract: This paper reconstructs the composition and activism of the Spanish free trade Asociación para la Reforma de los Aranceles de Aduanas (Association for the Reform of Customs Tariffs), whose archives have long been lost. The Asociación was created in 1859, dissolved in 1869 and reconstituted in 1879 as a response to the protectionist reaction. We study its procedures and arguments and link its strong activism in the 1880s, just when free trade organizations in continental Europe faded, with the delayed Spanish protectionist backlash.
    Keywords: Trade Policy and Diverse Paths of Globalization: Tariffs, Market Integration, and Political Economy in Europe, America, and Asia, 1870-1939)
    Date: 2018–04

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