nep-int New Economics Papers
on International Trade
Issue of 2018‒05‒28
twenty-six papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. The Dynamics of Comparative Advantage in the ASEAN Region By Setyastuti, Rini; Adiningsih, Sri; Widodo, Tri
  2. Slamming the door on trade policy discretion? The WTO Appellate Body’s ruling on market distortions and production costs in EU—Biodiesel(Argentina) By Meredith A. Crowley; Jennifer A. Hillman
  3. NAFTA Termination: Legal Process in Canada and Mexico By Tetyana Payosova; Gary Clyde Hufbauer; Euijin Jung
  4. 21st Century Trade Agreements and the Owl of Minerva By Bernard Hoekman; Douglas Nelson
  5. Trade openess and economic growth in SADC countries By Clement Moyo; Hlalefang Khobai
  6. One Way to the Top: How Services Boost the Demand for Goods By Ariu, Andrea; Mayneris, Florian; Parenti, Mathieu
  7. The analysis of the economic impact of Brexit on the European Union By Ana-Maria Holobiuc
  8. On the Bi- and Uni-lateral Trade Effects of EMU Membership By Larch, Mario; Wanner, Joschka; Yotov, Yoto
  9. Shifting Towards a Consumer-Centered Economy and the Implications for International Trade By Helble, Matthias
  10. Competitiveness at the country-sector level: New measures based on global value chains By Marczak, Martyna; Beissinger, Thomas
  11. The tale of two international phenomena: International migration and global imbalances By Dramane Coulibaly; Blaise Gnimassoun; Valérie Mignon
  12. Water Content in Trade: A Regional Analysis for Morocco By Eduardo A. Haddad; Fatima Ezzahra Mengoub, Vinicius A. Vale
  13. Convergence in pollution terms of trade By Satoshi Honma; Yushi Yoshida
  14. Populism and the Economics of Globalization By Rodrik, Dani
  15. Long-Term Relatedness between Countries and International Migrant Selection By Krieger, Tim; Renner, Laura; Ruhose, Jens
  16. 디지털상거래가 무역과 고용에 미치는 영향(The Impact of E-commerce on International Trade and Employment in Korea) By Lee, Kyu Yub; Bae, Chankwon; Lee, Sooyoung; Park, Ji Hyun; Yoo, Saebyul
  17. Flipping the Script for Skilled Immigrant Women: What Suggestions Might Critical Social Work Offer? By Dalon Taylor
  18. ASEAN Countries in Russia's Foreign Economic Policy at the Present Stage: New Opportunities and Limitations By Pakhomov, Alexander; Makarov, Andrei; Bagdasaryan, Kniaz
  19. Protection for Sale with Price Interactions and Incomplete Pass-Through By Barbara Annicchiarico; Enrico Marvasi
  20. Factor endowment--commodity output relationships in a three-factor two-good general equilibrium trade model: Further analysis By Yoshiaki Nakada
  21. Are non-tariff measures and tariffs substitutes? Some panel data evidence By Zhaohui Niu; Chris Milner; Saileshsingh Gunessee; Chang Liu
  22. Structural Change, Trade and Global Production Networks By Michael Landesmann; Roman Stöllinger
  23. Consumer Arbitrage in Cross-Border E-commerce By José Anson; Mauro Boffa
  24. The Labor Market Effects of Immigration Enforcement By East, Chloe N.; Luck, Philip; Mansour, Hani; Velasquez, Andrea
  25. Heterogeneous Sectoral Growth Effects of FDI in Egypt By Shimaa Elkony; Hilary Clistina Ingham; Robert Allan Read
  26. Cherry Picking versus Lemon Grabbing: Target Selection of Cross-Border and Domestic Acquisitions in Japan By Ralf Bebenroth; Pao-Lien Chen

  1. By: Setyastuti, Rini; Adiningsih, Sri; Widodo, Tri
    Abstract: The performance of a country’s in international trade changes depending on its dynamic comparative advantage. The country with a rapid catching-up process has generally also shown a rapid structural transformation. This article addressed to answer two questions. How does the shift in comparative advantage or specialization in the ASEAN region? What is the exact position of countries in the Flying Geese model? We use data on exports and imports by commodities and by exporting countries taken from UN-COMTRADE. The classification of commodities follows 3-digit SITC Revision 2, consisting of 239 groups of products (SITC). The products mapping is constructed by using the RSCA (Revealed Symmetric Comparative Advantage) as the indicator of comparative advantage and TBI (Trade Balance Index) as the indicator of export import activities. The analytical tool, “products mapping” is used to examine the flying gees pattern. The results show that ASEAN featured product in 1990 was dominated by SITC 0 product (food and live animals), after twenty five years by 2015 SITC 7 (machinery and transportation) products are relatively more dominant in ASEAN export products. In 1990-2015 period, it is shown that the average magnitude of RSCA in ASEAN countries has decreased followed by an increase in the standard deviation value. It indicates that the occurance of product specialization that has a high comparative advantage and a decline in products that have low comparative advantages. Using a significance level 5%, it appears that ASEAN countries as a whole are experiencing significant dynamic changes in comparative advantage. From the pattern of Flying Gees, it can be said that the process of “catch up” in ASEAN member countries is not running as expected because the country that leads in the composition of flying gees only consists of certain countries only, namely Singapore, Malaysia, Indonesia, Thailand and Philippines.
    Keywords: Comparative Advantage, RSCA, TBI, Flying Geese, ASEAN
    JEL: F14 F17
    Date: 2018–05–06
  2. By: Meredith A. Crowley; Jennifer A. Hillman
    Abstract: This paper presents a legal-economic analysis of the Appellate Body’s decision that the WTO’s Anti-Dumping Agreement (ADA) precludes countries from taking into account government-created price distortions of major inputs when calculating anti-dumping duties, made in EU-Biodiesel (Argentina). In this case, the EU made adjustments to the price of biodiesel’s principal input – soybeans – in determining the cost of production of biodiesel in Argentina. The adjustment was made based on the uncontested finding that the price of soybeans in Argentina was distorted by the existence of an export tax scheme that resulted in artificially low soybean prices. The Appellate Body found that the EU was not permitted to take tax policy-induced price distortions into account in calculating dumping margins. We analyze the economic rationale for Argentina’s export tax system, distortions in biodiesel markets in Argentina and the EU, and the remaining trade policy options for addressing distorted international prices. We also assess whether existing subsidies disciplines would be more effective in addressing this problem and conclude that they would not.
    Keywords: WTO, anti-dumping, export tax, cost adjustment, government distortion, subsidy
    JEL: F13 F53
    Date: 2017–12
  3. By: Tetyana Payosova (Harvard Law School); Gary Clyde Hufbauer (Peterson Institute for International Economics); Euijin Jung (Peterson Institute for International Economics)
    Abstract: The mechanics of US withdrawal from the North American Free Trade Agreement (NAFTA) have been widely explored, with an emerging consensus among legal experts that President Donald Trump does have the authority to pull out of the accord. This Policy Brief examines the legal procedures in Canada and Mexico in the event that either country decides to withdraw or terminate NAFTA. Relative to the United States, Canada and Mexico have clearer legal procedures. To terminate NAFTA in Canada, the Department of International Trade would send the notice to withdrawal upon approval by the Cabinet and the Order in Council. In Mexico, the president can notify withdrawal from NAFTA under Article 2205, following Senate approval. To raise tariffs to the MFN level, Canada requires amendment of federal statutes that requires passage in both chambers of the Parliament through regular procedures. To raise its tariffs, Mexico requires a bill to amend federal legislation that has the approval of the Senate and the Chamber of Deputies. While the legal powers to withdraw from NAFTA commitments are very broad in all three partner countries, political and economic constraints greatly narrow the scope of action. Canada conducts about 64 percent of its two-way merchandise trade with the United States; the figure for Mexico is 63 percent; and the United States depends on Canada and Mexico for 29 percent of its global commerce.
    Date: 2018–04
  4. By: Bernard Hoekman; Douglas Nelson
    Abstract: The post Second World War liberal trade order has been a driver of global economic growth and rising average per capita incomes. This order confronts increasing opposition, reflecting concerns about adjustment costs and distributional effects of globalization, and the ability to pursue national policy goals. At the same time the development of complex production relations distributed across many countries calls for cooperation on a variety of regulatory policies. Contrary to what is argued by opponents of globalization, this does not imply one size fits all rules that constitute a threat to national sovereignty and democratic legitimation. There remains an important ‘traditional’ integration agenda that centers on rule-making by major trading powers on policies that generate negative international spillovers. But the core challenge for the political economy of 21st Century trade agreements is to support regulatory cooperation to better govern international production and address the non-pecuniary externalities associated with greater economic integration.
    Keywords: Trade agreements, globalization, WTO, adjustment costs, economic integration, political economy
    JEL: F02 F13 F15
    Date: 2018–01
  5. By: Clement Moyo (Department of Economics, Nelson Mandela University); Hlalefang Khobai (Department of Economics, Nelson Mandela University)
    Abstract: In spite of the wave of liberalisation studied during the past decades, the debate still remains open on the issue of the trade openness and economic growth nexus. The paper reviews the relationship between trade openness and economic growth for 11 SADC countries for the period between 1990 and 2016. Investments, labour and inflation are incorporated in the model to form a multivariate framework. The study employed the ARDL-bounds test approach and the Pooled Mean Group (PMG) model to estimate the long run relationship among the variables. The evidence suggests that co-integration is detected at the 1% level in all countries with the exception of Malawi, Mauritius, Swaziland and Tanzania. Co-integration is only detected at the 10% level in Tanzania while Malawi, Mauritius and Swaziland the null of no co-integration is not rejected. Furthermore, the PMG results revealed that trade openness has a negative impact on economic growth in the long-run. A positive relationship between the variables was found only in the short-run.
    Keywords: Trade Openness, Economic growth, ARDL model, PMG model, SADC
    JEL: F14 F10 C33 C13 C01
    Date: 2018–05
  6. By: Ariu, Andrea; Mayneris, Florian; Parenti, Mathieu
    Abstract: In this paper, we take advantage of a uniquely detailed dataset on firm-level exports of both goods and services to show that demand complementarities between services and goods enable firms to boost their manufacturing exports by also providing services. The positive causal effect of services accounts for up to 25% of the manufacturing exports of bi-exporters (i.e. the firms that export both goods and services), and 12% of overall goods exports from Belgium. We find that by associating services with their goods, bi-exporters increase both the quantities and the prices of their goods. To rationalize these findings, we develop a new model of oligopolistic competition featuring one-way complementarity between goods and services, product differentiation, and love for variety. By supplying services with their goods, firms increase their market share, and hence their market power and markup. The model then shows that exporting services acts as a demand shifter for firms, increasing the perceived quality of their products. Going back to the data, we find strong confirmation for this mechanism.
    Keywords: Demand complementarities; Goods & services; Firm-level exports; Quality
    JEL: F10 F14 L80
    Date: 2018–05
  7. By: Ana-Maria Holobiuc (Bucharest University of Economic Studies)
    Abstract: The European Union has been considered over time a guarantor of the regional stability and prosperity, being also recognized as one of the most influential player in the global economic arena. However, the European Union has recently faced significant political and economic challenges, such as the migration and refugee crisis, the United Kingdom’s withdrawal, the increasing power of Russia and the enhancement of the terrorist threat. The purpose of this paper is to present the economic consequences of the United Kingdom's withdrawal from the European Union, a decision that represents a turning point in the history of over half a century of the regional group. In this regard, the study encompasses the critical review of the literature on this topic and the analysis of the relevant statistical data. The perspectives of theoreticians are extensive and sometimes diverging. While some analysts believe that Brexit will undermine the European integration project, others consider that the effects will be manageable by the remaining 27 Member States. Analyzing the statistical data on GDP, stocks of FDI, trade in goods and services, we have revealed that the United Kingdom plays an important role in shaping the economic power of the European bloc. Consequently, with the completion of Brexit, it is likely that the economic power of the European Union will diminish, particularly in terms of GDP and trade in goods and services.
    Keywords: European Union, Brexit, economic power, international trade
    JEL: F15 F50
    Date: 2018–05
  8. By: Larch, Mario (University of Bayreuth); Wanner, Joschka (University of Bayreuth); Yotov, Yoto (Drexel University)
    Abstract: We propose a simple theoretically consistent adjustment for structural gravity estimations of the EMU impact on international trade. Our methods result in two contributions to the related literature. First, we show that proper control for intra-national trade flows leads to larger, positive, and statistically significant bilateral EMU effects. Second, the introduction of intra-national trade flows enables us to identify unilateral EMU effects on trade between members and non-member countries. The unilateral effects are also positive, sizable and statistically significant.
    Keywords: Currency Unions; Euro Effects; EMU; Unilateral EMU Effect; Structural Gravity Models
    JEL: F10 F14 F15 F33
    Date: 2018–04–30
  9. By: Helble, Matthias (Asian Development Bank Institute)
    Abstract: Globalization has radically changed the way goods and services are produced. The impact of globalization on production has been driven mainly by two determinants: In a first phase, a quick fall in transportation costs between countries and in a second, more recent phase, a drastic lowering of international communications costs. We argue that we are currently witnessing the start of another epochal change. Advances in communication and information technology enable companies to have more and more knowledge about the individual consumer. Consequently, products and services can be marketed more specifically or can be customized according to the customer’s preference. We call this new era the consumer-centered economy. The consumer-centered economy is challenging our standard trade and development theories in which consumers are typically assumed to be identical. We predict that the success of countries and firms will depend on how well they are able to integrate consumer information into the process of value addition. Producing standardized goods and services will offer little perspectives for economic development, even when integrated into regional value chains.
    Keywords: international trade; trade costs; production networks; consumer; customization
    JEL: F14
    Date: 2018–02–20
  10. By: Marczak, Martyna; Beissinger, Thomas
    Abstract: We propose the so-called domestic "embodied unit labor costs" (EULC) at the country-sector level as a new cost-related basis for measures of international competitiveness. EULC take into account that a sector's labor costs constitute only a small share of its total cost which to a large extent consist of expenses for inter- mediate goods from other sectors. In line with a simple Leontief-type model, the proposed measure is constructed as a weighted average of unit labor costs of all do- mestic sectors contributing to the final goods of a specific sector. The contribution is expressed in value-added terms and takes global supply chains into account. We also show how EULC can be consistently calculated for sectoral aggregates such as the tradable goods sector. Based on EULC we propose the 'embodied real effec- tive exchange rate' (EREER) at the country-sector level as a new competitiveness indicator where the relevance of trading partners is quantified by an appropriate value-added measure. The chosen value-added concept replaces gross exports tra- ditionally used as the weight basis in effective exchange rates. Using the World Input-Output Database (WIOD) we employ the proposed indicators to shed new light on changes in cost competitiveness at the sectoral level for Germany, and compare the empirical evidence with selected other euro area countries.
    Keywords: unit labor costs,real effective exchange rate,global supply chains,input-output analysis,sectoral analysis,international competitiveness,WIOD,Germany
    JEL: J30 C67 E01 F16 F23
    Date: 2018
  11. By: Dramane Coulibaly; Blaise Gnimassoun; Valérie Mignon
    Abstract: Following the dynamics of globalization, international migration has increased dramatically since the 1990s. Given that these migrations may obscure the natural demographic structure of nations, they are likely to explain a significant part of global imbalances. This paper tackles this issue by investigating the role played by international migration in the dynamics of global imbalances. To this end, we rely on an overlapping generations model to derive the theoretical relationship between international migration and current account position. Through a series of robust estimates, we empirically investigate this relationship by relying on a panel of 157 developed and developing countries over the period 1990-2014. Our results point to substantial effects of international migration. Specifically, we show that an increase in migration improves national savings and the current account balance in the destination country, while it has opposite impacts in the origin country. These effects are particularly pronounced in developing economies, and attenuated by migrants' remittances.
    Keywords: International migration, current account, global imbalances, remittances
    JEL: F22 F32 O55 C33
    Date: 2018
  12. By: Eduardo A. Haddad; Fatima Ezzahra Mengoub, Vinicius A. Vale
    Abstract: This paper reports the results of an application using an interregional input-output matrix for Morocco together with regional information on water consumption by sectors. We develop a trade-based index that reveals the relative water use intensities associated with specific interregional and international trade flows. We estimate, for each flow associated with each origin-destination pair, measures of trade in value added and trade in water that are further used to calculate our index. We add to the existing literature on virtual water flows by encompassing the subnational perspective in the case study of a country that shows a “climate divide†: while a great part of the southern territory is located in the Sahara Desert, with serious water constraints, the northern part is relatively more privileged with access to this natural resource. Furthermore, we compare that Trade-Based Index of Water Intensity to similar metrics related to the use of other natural resources.
    Keywords: Water accounting; integrated ecologic-economic modelling; interregional input-output.
    JEL: Q25 Q56 C67 D57 R15
    Date: 2018–05–21
  13. By: Satoshi Honma; Yushi Yoshida (Faculty of Economics, Shiga University)
    Abstract: By implementing the world input-output tables for 40-countries by 35-industries to account for intermediate trade, we constructed the pollution terms of trade (PTT) on the basis of CO2 emissions between 1995 and 2009. We examine whether the PTTs have converged among the 40 countries in the past 15 years. The empirical evidence supports PTT convergence; PTT growth is negatively related to its initial level, and this empirical result is robust to various control variables.
    Keywords: World input-output table,International trade,Pollution haven hypothesis,Pollution terms of trade
    Date: 2018–03
  14. By: Rodrik, Dani (Harvard University)
    Abstract: Populism may seem like it has come out of nowhere, but it has been on the rise for a while. I argue that economic history and economic theory both provide ample grounds for anticipating that advanced stages of economic globalization would produce a political backlash. While the backlash may have been predictable, the specific form it took was less so. I distinguish between left-wing and right-wing variants of populism, which differ with respect to the societal cleavages that populist politicians highlight. The first has been predominant in Latin America, and the second in Europe. I argue that these different reactions are related to the relative salience of different types of globalization shocks.
    Date: 2017–06
  15. By: Krieger, Tim (University of Freiburg); Renner, Laura (University of Freiburg); Ruhose, Jens (Leibniz University of Hannover)
    Abstract: This paper studies the effect of the long-term relatedness between countries, measured by their genetic distance, on educational migrant selection. Analyzing bilateral migrant stocks of the 15 main destination countries and 85 sending countries for the year 2000, we find that migrant selection and genetic distance follow a nonlinear J-shaped pattern: at low levels of genetic distance, increases in genetic distance reduce the positive selection of migration. However, at higher levels of genetic distance, this pattern is reversed and migration becomes more positively selected. We complement this finding by showing that the net benefits of genetic distance are strongly decreasing for low-skilled migrants with increasing genetic distance, while high-skilled migrants are less responsive to genetic distance in general. Results are robust to conditioning on bilateral control variables, including various destination- and sending-country-specific fixed effects and applying an instrumental-variables approach that exploits exogenous variation in genetic distances in the year 1500.
    Keywords: long-term relatedness, genetic distance, culture, international migration, selection
    JEL: F22 J61 Z1
    Date: 2018–04
  16. By: Lee, Kyu Yub (Korea Institute for International Economic Policy); Bae, Chankwon (Korea Institute for International Economic Policy); Lee, Sooyoung (Korea Institute for International Economic Policy); Park, Ji Hyun (Korea Institute for International Economic Policy); Yoo, Saebyul (Korea Institute for International Economic Policy)
    Abstract: 우리나라의 디지털상거래 시장규모는 2013년에 이미 1,000조 원을 넘어섰으며, 특히 2015년과 2016년 두 해에는 기업과 소비자 간 디지털상거래 수출실적이 전년대비 약 82% 증가했다. 디지털상거래 시장의 중요성에도 불구하고 우리나라에 존재하는 기초자료는 디지털상거래 시장의 규모와 성장추세, 디지털상거래 수출입 거래품목 등에 대한 단편적 분석이 대부분이다. 또한 디지털상거래의 확산이 기존 무역을 대체하거나 보완하는지, 고용을 창출하거나 파괴하는지, 보다 근본적으로 디지털상거래 기업과 비디지털상거래 기업 간 식별되는 차이점이 있는지에 대한 분석을 찾아보기 어렵다. 본 연구는 우리나라 디지털상거래에 대한 체계적인 현황 분석과 디지털상거래와 무역 및 고용에 관한 실증 분석을 통해 디지털상거래의 활성화를 위한 정책적 시사점을 얻는 것을 목적으로 한다. 이를 통해 본 보고서는 중소기업에 대한 디지털상거래 지원정책, 통관절차, 소비자보호, 한중일 전자상거래 및 디지털싱글마켓, 국경 간 디지털상거래로부터 파생되는 신무역통상이슈, 제4차 산업혁명(디지털경제) 대응, 한미 FTA 개정협상(디지털상거래 분야) 등에 대해 우리나라 정부가 디지털상거래와 관련한 단기 및 중장기적 정책 방향을 설정할 때 활용할 수 있는 기초자료로서 쓰임이 있다. The first goal of this study is to characterize the e-commerce market in Korea. To show the characteristics of e-commerce market in Korea, we collect the 2010-2016 e-commerce data provided by the Korea Customs, the online shopping trend survey from 2000 to 2016 by the Korea Statistics, and the 2000-2016 reports (including micro-data from 2013 to 2015) from National Information Society Agency, the e-commerce reports and data from 2010 to 2015 by the US Census, and other referenced data in reports including UNCTAD and market agencies. We have carefully summarized and compared the latest trends and features of the e-commerce market in Korea, having the scope of each dataset in mind. We also provides some caveats in interpreting figures in e-commerce import and export data from the Korea Statistics and the Korea Customsin order not to misguide readers in interpreting the different values between them. Many interesting features of the e-commerce market in Korea are included in the study.
    Keywords: E-commerce; International Trade; Employment in Korea
    Date: 2017–12–27
  17. By: Dalon Taylor (School of Social Work Department)
    Abstract: Research on skilled immigrant women revealed that they are losing their professional skills and career identity due to lack of employment and underemployment, postmigration. These negative outcomes in employment are reported as key factors in the economic instability they face in host countries. On the other hand, reports indicate that economic growth for host countries have increased through skilled immigration. In fact, countries such as Canada, United States, Australia and others, continue to revise their immigration policies to attract more highly skilled immigrants, due to reported benefits. So how are skilled immigrant women in particular, coping with the negative impact of skilled migration that is more favourable for host countries? More importantly, what suggestions for changes and action might critical social work offer to transform current disproportionate outcomes? This paper provides a brief discussion on the reported labour market outcomes for skilled immigrant women in Canada. It includes a critical assessment of the challenges they face to re-enter the labour market in Canada and argue that the current outcomes are direct manifestations of discriminatory practices, beyond the scope of the labour market alone. The paper highlights reported economic benefits of skilled migration for host countries such as Canada, and raise questions about possible systemic actors in the substandard results for skilled immigrant women. The paper draws on a critical social work perspective to discuss alternatives to improving outcomes for skilled immigrant women and concludes with suggestions for changes in the current social and employment prospects for skilled immigrant women.
    Keywords: skilled immigrant women, critical social work, economic migration
    Date: 2018–03
  18. By: Pakhomov, Alexander (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Makarov, Andrei (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Bagdasaryan, Kniaz (Russian Presidential Academy of National Economy and Public Administration (RANEPA))
    Abstract: In this review is analyzed the current economic and integration processes in ASEAN member States in the context of opportunities and constraints for the implementation of the future foreign economic policy of Russia in the South-East Asia region. Currently most of the countries of the Association belong to the dynamic developing countries in the world that have significant natural and economic potential and large market, and also form a common economic space within the framework of the grouping and are reaching a new level of integration with major foreign partners. Besides one of the Eurasian Economic Union (EAEU) member states priority is the establishment of preferential relations with third party countries at the present stage. It is noticeable that EAEU approached some positive tendency with the Association of South-East Asian Nations in recent years.
    Date: 2018–04
  19. By: Barbara Annicchiarico (Universita degli Studi di Roma2 "Tor Vergata"); Enrico Marvasi (Politecnico di Milano)
    Abstract: We extend the protection for sale model of Grossman and Helpman (1994) by introducing a general model of monopolistic competition with variable markups and incomplete pass-through. We show that the structure of protection emerging in the political equilibrium not only depends on the weight attached by governments to consumer welfare when making their policy decision, but also on the degree of market power of firms and on the terms-of-trade variations due to the degree of pass-through. Overall, our results highlight the importance of demand characteristics in shaping the structure of protection and are consistent with the occurring of protectionism also in unorganized industries.
    Keywords: Protection for Sale, Monopolistic Competition, Incomplete Pass-Through, Endogenous Markups
    JEL: F1 F13
    Date: 2018
  20. By: Yoshiaki Nakada
    Abstract: The position of the EWS (economy-wide substitution)-ratio vector determines the Rybczynski sign pattern, which expresses the factor endowment--commodity output relationships, and the Stolper-Samuelson sign pattern, which expresses the commodity price--factor price relationships in a three-factor two-good general equilibrium trade model (see Nakada (2016a)). In this article, we show that the EWS-ratio vector exists on the line segment. Using this relationship, we develop a method to estimate the position of the EWS-ratio vector. We derive a sufficient condition for extreme factors to be economy-wide complements, which implies "a strong Rybczynski result." Additionally, we derive a sufficient condition for a specific Stolper-Samuelson sign pattern to hold. We assume factor-intensity ranking is constant. This article provides a basis for further applications.
    Date: 2018–05
  21. By: Zhaohui Niu; Chris Milner; Saileshsingh Gunessee; Chang Liu
    Abstract: The question of the substitutability or complementarity between non-tariff measures (NTMs) and tariffs is unresolved in the extant literature. Using newly available detailed estimates of ad-valorem equivalent (AVE) of NTMs over time, this paper examines this relationship for a sample of 80 economies for 4949 products at the 6-digit HS level over the period 2003-2015. This data allows a panel data methodology to be employed, with the relationship between NTMs and tariffs being investigated in both levels and changes. The data also allows for the modelling of the lagged adjustment of NTMs to tariffs, which is consistent with a causal relationship and sensibly represents the nature of administrative decision-making process involved in implementing NTM changes. It also allows other specific, fixed effects affecting the relationship to be captured. Trade policy substitution is found overall when the models are estimated in both levels and changes, with this holding for both OECD and non-OECD countries. There is, as is to be expected, some heterogeneity across products/sectors, with stronger substitution in the case of products with above average tariff cuts as a result of the Uruguay Round. The measured elasticity of NTM increase with respect to tariff decline is relatively small, but given much higher levels of NTM than tariff protection in general the results indicate fairly complete substitution between policy instruments in absolute terms.
    Keywords: Non-tariff measures; tariffs; substitutes; complements; trade policy
    Date: 2018
  22. By: Michael Landesmann (The Vienna Institute for International Economic Studies, wiiw); Roman Stöllinger (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: An ‘Appropriate Industrial Policy’ for Peripheral and Catching-up Economies The global economy has been undergoing rapid structural change the impressive development processes in a range of emerging economies have induced strong shifts in global trade shares; international production networks (IPNs) are characterising regional and global trading relationships and we observe also persistent changes in the positions of countries in global value chains due to rather rapid technological and human capital upgrading. The aim of this paper is to assess these developments, but also discuss the importance of – what we call – ‘appropriate industrial policy’ (AIP) for countries at different developmental stages to support their position in the current global context. We emphasise in particular the role of AIP for European low- and medium-income economies (LMIEs) as the recent financial and economic crisis has shown that they are particularly vulnerable with respect to ‘structural external imbalances’ and thus policies to support their tradable sectors are of great importance.
    Keywords: appropriate industrial policy, structural change, structural upgrading, Emerging Europe, emerging economies, international production networks, global value chains, catching up, industrial policy and industrial organisation
    JEL: L16 L52 F15 F14
    Date: 2018–05
  23. By: José Anson; Mauro Boffa
    Abstract: In today's internet markets consumers can search for, find and compare prices worldwide. Online, information circulates faster than offline and arbitrage opportunities such as the ones arising from currency shocks are easily unveiled. In this paper, we estimate for the first time exchange rate elasticities for cross-border e-commerce transactions. Exploiting a new high-frequency database on international transactions of parcels, we find that a 1 % appreciation of the domestic currency increases e-commerce imports by 0.7 %. Comparing the result with traditional estimates in offline markets, this implies a 50 % exchange rate pass-through online.
    Keywords: Online trade, Arbitrage, Exchange rate pass-through
    JEL: F F
    Date: 2018–03
  24. By: East, Chloe N. (University of Colorado Denver); Luck, Philip (University of Colorado Denver); Mansour, Hani (University of Colorado Denver); Velasquez, Andrea (University of Colorado Denver)
    Abstract: This paper examines the effects of reducing the supply of low-skilled immigrant workers on the labor market outcomes of domestic workers. We use temporal and geographic variation in the introduction of Secure Communities (SC), a county-based immigration enforcement policy, combined with data over 2005-2014 from the American Community Survey to estimate a difference-in-difference model with geographic and time fixed effects. We find evidence that SC had a negative impact on the employment of low-skilled non-citizen workers, who are likely to be directly affected by the policy. Importantly, we also find that SC negatively impacted the employment of citizens working in middle to high-skill occupations. This is the first paper to provide quasi- experimental evidence on the labor market effects of immigration enforcement policies on citizens across the occupational skill distribution, which is of paramount importance given the current immigration policy debates.
    Keywords: international migration, labor demand, immigration policy
    JEL: F22 J11 J23
    Date: 2018–04
  25. By: Shimaa Elkony; Hilary Clistina Ingham; Robert Allan Read
    Abstract: This paper is one of the first to investigate the sectoral dimension/perspective of FDI spillovers. It examines empirically the heterogeneous technology effects and efficiency gains of FDI across economic sectors in Egypt between 1990 and 2007. The results reveal many aspects of the aggregation bias of cross-country studies. In aggregate, inflows of FDI have no significant impact upon growth in Egypt; instead, growth is driven by government investment. The disaggregated analysis however, reveals that FDI has distinct sector-specific effects on the Egyptian economy that derive exclusively from investment in the Telecommunication & Information Technology. FDI in Services however, generates negative growth effects. The sectoral growth effects of FDI also depend upon the region of origin. Although the growth impact of FDI in Telecommunications from both the Middle East & North Africa (MENA) and Western economies is positive, the finding is primarily driven by investment from the latter nations. Further, there is some evidence to support the view that FDI into the Manufacturing & Petroleum sector from the MENA region has adverse growth effects. There is also limited evidence to suggest that ‘market-seeking’ Western (European and US) capital flows into the Services sector have conspicuous ‘crowding-out’ effects.
    Keywords: Foreign Direct Investment, Sectoral Spillovers, Egypt
    JEL: F23 O11 O14 O47
    Date: 2018
  26. By: Ralf Bebenroth (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan); Pao-Lien Chen (Institute of Technology Management National Tsing Hua University)
    Abstract: This paper investigates whether foreign firms overtake better local targets relative to domestic firms. Building on the geographic proximity and the value creation argument, we make predictions about whether domestic or foreign firms "cherry pick" the targets or "grab lemons". Our findings from a sample of local targets in Japan acquired by domestic and cross domestic acquirers show that both groups cherry-pick local targets, but they evaluate them differently. Targets with a better financial performance are more likely overtaken by domestic acquirers whereas those with a larger employee or market size are more likely overtaken by foreign acquirers.
    Keywords: Cross-border acquisitions, Target selection, Cherry-picking, Geographic proximity, Value creation
    Date: 2018–05

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