nep-int New Economics Papers
on International Trade
Issue of 2018‒07‒09
forty-two papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. The long run impact of foreign direct investment, exports, imports and GDP: evidence for Spain from an ARDL approach By Verónica Cañal-Fernández; Julio Tascón Fernández
  2. Has Eastern European Migration Impacted UK-born Workers? By Becker, Sascha O.; Fetzer, Thiemo
  3. One-off Export Events By Ingo Geishecker; Philipp J.H. Schröder; Allan Sørensen
  4. How does the regular work of WTO influence regional trade agreements? By McDaniels, Devin; Molina, Ana Cristina; Wijkström, Erik
  5. Trade Network Reconstruction and Simulation with Changes in Trade Policy By Yuichi Ikeda; Hiroshi Iyetomi
  6. Foreign Direct Investments: A Comparison of EAEU, DCFTA and Selected EU-CEE Countries By Peter Havlik; Gabor Hunya; Yury Zaytsev
  7. Associating Turkey with the Transatlantic Trade and Investment Partnership: A costly (re‐) engagement? By Altay, Serdar
  8. Revisiting the causal effects of exporting on productivity: Does price heterogeneity matter? By Tewodros Ayenew Wassie
  9. Adjustment to Trade Opening: The Case of Labor Share in India's Manufacturing Industry By Gupta, Prachi; Helble, Matthias
  10. When Britain turned inward: Protection and the shift towards Empire in interwar Britain By Kevin Hjortshøj O'Rourke; Alan de Bromhead; Alan Fernihough; Markus Lampe
  11. Deep Integration: Considering the Heterogeneity of Free Trade Agreements By Jaime Ahcar; Jean-Marc Siroën
  12. Foreign Multinationals and Vietnamese Firm Exports, 2010-2013 By Eric D. , Ramstetter
  13. Foreign Ownership and Exports of Thai Manufacturing Plants by Industry in 1996 By Eric D. , Ramstetter
  14. Specialization within global value chains: The role of additive transport costs By Lanz, Rainer; Piermartini, Roberta
  15. Participation in global value chains and varieties of development patterns By Bruno Smichowski; Cédric Durand; Steven Knauss
  16. International Joint Ventures and Internal vs. External Technology Transfer: Evidence from China By Kun Jiang; Wolfgang Keller; Larry D. Qiu; William Ridley
  17. WTO trade monitoring ten years on: Lessons learned and challenges ahead By Bogetoft Pedersen, Peter; Diakantoni, Antonia; Pérez del Castillo, Carlos; Mkhitarian, Amaliia
  18. The anatomy of a trade collapse: The UK, 1929-33 By Kevin Hjortshøj O'Rourke; Alan de Bromhead; Alan Fernihough; Markus Lampe
  19. How do informal institutions influence inward FDI? A systematic review By Jasmine Mondolo
  20. Exporting, importing and wages in Africa Evidence from matched employer- employee data By Duda-Nyczak, Marta.; Viegelahn, Christian,
  21. Impact of Exchange Rate on Vietnam-China Bilateral Trade: Findings from ARDL Approach By Pham, Tuan; Tran, Thi Ha
  22. The Changing Structure of Immigration to the OECD: What Welfare Effects on Member Countries? By Michal Burzynski; Frédéric Docquier; Hillel Rapoport
  23. FDI as a contributing factor to economic growth in Burkina Faso: How true is this? By Zandile, Zezethu; Phiri, Andrew
  24. Two Great Trade Collapses: The Interwar Period & Great Recession Compared By Kevin Hjortshøj O'Rourke
  25. GVC centrality and productivity: Are hubs key to firm performance? By Chiara Criscuolo; Jonathan Timmis
  26. Estimating Trade-Related Adjustment Costs in the Agricultural Sector in Iran By Omid Karami; Mina Mahmoudi
  27. International Trade and Retail Market Performance and Structure: Theory and Empirical Evidence By Philipp Meinen; Horst Raff
  28. International trade and retail market performance and structure: Theory and empirical evidence By Meinen, Philipp; Raff, Horst
  29. Exchange Rates, International Trade, and Growth: Re-evaluation of Undervaluation By Sokolova, Maria V.
  30. Skill Selection and American Immigration Policy in the Interwar Period By Alexander A. J. Wulfers
  31. Making investment work for productivity-enhancing, inclusive and sustainable development: What we know, and what we would still like to know By Görg, Holger
  32. The Hardships of Long Distance Relationships: Time Zone Proximity and Knowledge Transmission within Multinational Firms By Dany Bahar
  33. The Effect of Emigration on Household Labor Supply: Evidence from Central Asia and South Caucasus By Paul, Saumik
  34. Trade and currency weapons By Agnès Bénassy-Quéré; Matthieu Bussière; Pauline Wibaux
  35. The belt and road initiative: A hybrid model of regionalism By Grimmel, Andreas; Li, Yuan
  36. The Impact of Trade and Technology on Skills in Viet Nam By Poole, Jennifer; Santos-Paulino, Amelia; Sokolova, Maria; DiCaprio, Alisa
  37. The Effect of Skilled Emigration on Real Exchange Rates through the Wage Channel By Ouyang, Alice Y.; Paul, Saumik
  38. Trade Networks and Economic Fluctuations in Asia By Giudici, Paolo; Huang, Bihong; Spelta, Alessandro
  39. Exporters, importers and employment firm-level evidence from Africa By Duda-Nyczak, Marta.; Viegelahn, Christian.
  40. Heterogeneous Effects of Migration on Child Welfare: Empirical Evidence from Viet Nam By Morgan, Peter J.; Trinh, Long Q.
  41. Customs Administration in Russia: What to Do? By Balandina, Galina; Ponomarev, Yuriy; Sinelnikov-Murylev, Sergei G.; Tochin, Andrey
  42. Immigration and the Reallocation of Work Health Risks By Giuntella, Osea; Mazzonna, Fabrizio; Nicodemo, Catia; Vargas-Silva, Carlos

  1. By: Verónica Cañal-Fernández (Department of Economics Faculty of Economics and Business University of Oviedo); Julio Tascón Fernández (Department of Economics Faculty of Economics and Business University of Oviedo)
    Abstract: This paper analyses the relationship between foreign direct investment (FDI), exports and economic growth in Spain using annual time series data for the period 1970 to 2016. To examine these linkages the autoregressive distributed lag (ARDL) bounds testing approach to cointegration for the long-run is applied. The error correction model (ECM) is used to examine the short-run dynamics and the vector error correction model (VECM) Granger causality approach is used to investigate the direction of causality. The results confirm a long-run relationship among the examined variables. The Granger causality test indicates a strong unidirectional causality between FDI and exports with direction from FDI to exports. Besides, the results for the relationship between FDI and economic growth are interesting and indicate that there is no significant Granger causality from FDI to economic growth and vice-versa.
    Keywords: Foreign direct investment; exports; imports; GDP; ARDL bounds; causality
    JEL: C22 E31 E50
    Date: 2018–04
  2. By: Becker, Sascha O. (University of Warwick); Fetzer, Thiemo (University of Warwick)
    Abstract: The 2004 accession of 8 Eastern European countries to the European Union (EU) was accompanied by fears of mass migration. The United Kingdom - unlike many other EU countries - did not opt for temporary restrictions on the EU’s free movement of labour. We document that following EU accession more than 1 million people (ca. 3% of the UK working age population) migrated from Eastern Europe to the UK. We show that they mostly settled in places that had limited prior exposure to immigration. We provide evidence that these areas subsequently saw smaller wage growth at the lower end of the wage distribution and increased pressure on the welfare state, housing and public services. Using novel geographically disaggregated data by country-of-origin, we measure the effects of Eastern European migration on these outcomes for the UK-born and different groups of immigrants. Our results are important in the context of the UK’s Brexit referendum and the ongoing EU withdrawal negotiations in which migration features as a key issue.
    Keywords: Political Economy ; Migration ; Globalization ; EU
    JEL: R23 N44 Z13
    Date: 2018
  3. By: Ingo Geishecker (European University Viadrina, Faculty of Business Administration and Economics, Germany.); Philipp J.H. Schröder (Department of Economics and Business Economics, Aarhus University, Denmark); Allan Sørensen (Department of Economics and Business Economics, Aarhus University, Denmark)
    Abstract: Isolated single-month one-off export transactions (observed once in a 49-month window) turn out to be the dominant spell length in granular firm-product-destination trade data. Moreover, on average, for an export-active firm, such one-off events generate a significant part of foreign sales. These patterns cannot be explained by the lumpiness of trade (e.g., seasonal shipments), nor do they sit well with available trade models. To reconcile theory with the data, we introduce passive (i.e., buyer-side driven) exporting in addition to proactive exporting. Our empirical investigation establishes novel stylized facts on firm and destination characteristics associated with one-off exporting.
    JEL: F14 F12 L10 D40
    Date: 2018–06–28
  4. By: McDaniels, Devin; Molina, Ana Cristina; Wijkström, Erik
    Abstract: This paper illustrates how the work of the WTO's standing committees is fuelling regulatory cooperation between WTO members, and inspiring RTA negotiators. We explore, as a case study, how the WTO TBT Committee has shaped provisions on international standards in RTAs, and focus on the extent to which RTAs have assimilated the WTO TBT principles for development of international standards (the Six Principles), arguably the most important decision taken by the TBT Committee over last 20-plus years. Our analysis covers 260 RTAs, and shows that while most RTAs are silent on the matter, one quarter have provisions where the Parties commit to implement WTO TBT principles, and, among these, a few go further still - for example by naming specific international standardizing bodies which are relevant in certain sectors. In addition, the RTAs sharpen and harden the Six Principles by making them directly applicable to the parties.
    Keywords: regional Trade Agreements,international standards,international cooperation,coherence,non-tariff barriers,technical barriers to trade,regulation
    JEL: F13 F15 F53 F55 K33 L15
    Date: 2018
  5. By: Yuichi Ikeda; Hiroshi Iyetomi
    Abstract: The interdependent nature of the global economy has become stronger with increases in international trade and investment. We propose a new model to reconstruct the international trade network and associated cost network by maximizing entropy based on local information about inward and outward trade. We show that the trade network can be successfully reconstructed using the proposed model. In addition to this reconstruction, we simulated structural changes in the international trade network caused by changing trade tariffs in the context of the government's trade policy. The simulation for the FOOD category shows that import of FOOD from the U.S. to Japan increase drastically by halving the import cost. Meanwhile, the simulation for the MACHINERY category shows that exports from Japan to the U.S. decrease drastically by doubling the export cost, while exports to the EU increased.
    Date: 2018–06
  6. By: Peter Havlik (The Vienna Institute for International Economic Studies, wiiw); Gabor Hunya (The Vienna Institute for International Economic Studies, wiiw); Yury Zaytsev
    Abstract: Foreign direct investment (FDI) has been the main driver of restructuring and modernisation in Central and Eastern Europe. This paper looks into FDI stocks and flows in a dynamic and cross-country perspective, comparing the key EAEU countries (Belarus, Kazakhstan and Russia) as well as DCFTA countries (Georgia, Moldova and Ukraine) with selected EU-CEE peers (Hungary, Poland, Romania and Slovakia) in the neighbourhood. The study shows that EAEU and DCFTA countries have not been particularly attractive for foreign investors taking out round tripping inflows from offshore destinations, the accumulated FDI would be even lower. This explains a lot why restructuring in the region stalls. This pattern can change only with marked improvements in the domestic regulatory environment and investment climate.
    Keywords: foreign direct investment, FDI flows and stocks, Eastern Europe, Belarus, Georgia, Moldova, Kazakhstan, Russia, Ukraine, FDI by key partners and sectors
    JEL: C82 F13 F14 O57 P23
    Date: 2018–06
  7. By: Altay, Serdar
    Abstract: Policy debate on the implications of the Transatlantic Trade and Investment Partnership (TTIP) for Turkey has focused almost exclusively on “how” Turkey can/will take part in a forthcoming transatlantic deal. Turkey's association with a TTIP has largely been conceived as an inevitable and beneficial policy choice to re‐engage Ankara with the Atlantic alliance and emerging transatlantic trade framework. The arguments for extending TTIP to Turkey have mostly been built upon a conventional understanding of preferential trade agreements. The debate has not provided a comprehensive assessment of costs and benefits for Turkey's exclusion from or joining TTIP as it dismissed multiple dimensions of the “deep integration” agenda which underpinned the transatlantic talks. This paper intends to contribute to the “why” debate with a thorough analysis of critical issues on the transatlantic agenda by evaluating economic and policy implications of TTIP both for exclusion and association scenarios together with associated compliance and adjustment costs.
    Keywords: TTIP, Turkey, Preferential Trade Agreements
    JEL: F13
    Date: 2018
  8. By: Tewodros Ayenew Wassie (Department of Economics, University of Sheffield)
    Abstract: In most empirical studies that establish the export-productivity relationships, output is measured in values rather than in quantities. This makes it difficult to distinguish between productivity and within-firm changes in price that could occur following exposure to international markets. Using detailed data on quantity and prices from Ethiopian manufacturing firms in the period 1996-2005, this paper distinguishes efficiency from revenue based productivity and examines what this means for the estimated relationship between exporting and productivity. The main results show that exporters are more productive than non-exporters in terms of revenue based productivity and this is explained by both self-selection and learning effects. However, when correcting for price heterogeneity, exporters appear to be similar to non-exporters both before and after export entry. Overall, the results suggest that the increase in firm-level productivity following entry into foreign markets is associated with changes in prices as opposed to productive efficiency.
    Keywords: Export; revenue productivity; physical productivity; price heterogeneity; Africa; Ethiopia
    JEL: F14 D22 O14 O55
    Date: 2018–12
  9. By: Gupta, Prachi (Asian Development Bank Institute); Helble, Matthias (Asian Development Bank Institute)
    Abstract: We study how manufacturing plants in India adjusted to trade liberalization during the period 1998–1999 to 2007–2008. We estimate how the labor share changed due to tariff reduction. Our results indicate that a decline in output tariffs led to an increase in the labor share of income. In contrast, a fall in input tariffs led to a decrease in the labor share. Controlling for factor intensity, we find that in technology-intensive and human capital resource-intensive sectors, both a decline in input and output tariff rates led to a decline in labor share. A fall in tariffs only led to an increase in labor share for labor-intensive and low-technology plants. Hence, India’s bias toward capital- and technology-intensive production explains the overall decline in labor share in the post reform period. Furthermore, the empirical results show that labor adjustment occurred more efficiently in Indian states with flexible labor laws.
    Keywords: trade reforms; labor share; India; manufacturing
    JEL: F13 F16 L60
    Date: 2018–05–10
  10. By: Kevin Hjortshøj O'Rourke; Alan de Bromhead; Alan Fernihough; Markus Lampe
    Abstract: Abstract International trade became much less multilateral during the 1930s. Previous studies, looking at aggregate trade flows, have argued that discriminatory trade policies had comparatively little to do with this. Using highly disaggregated information on the UK’s imports and trade policies, we find that policy can explain the majority of Britain’s shift towards Imperial imports in the 1930s. Trade policy mattered, a lot.
    Keywords: trade policy, interwar period
    JEL: F13 F14 N74
    Date: 2017–02–13
  11. By: Jaime Ahcar (LEDa - Laboratoire d'Economie de Dauphine - Université Paris-Dauphine); Jean-Marc Siroën (LEDa - Laboratoire d'Economie de Dauphine - Université Paris-Dauphine)
    Abstract: Regional Trade Agreements have emerged in an environment of stalled multilateral tradenegotiations. Although the impact of Regional Trade Agreements on international tradehas been well documented, scant attention has been paid to empirical studies exploringtheir heterogeneity from the point of view of deep integration. We set out to determinewhether deeper Regional Trade Agreements promote trade more effectively than lessambitious ones. We generate credible deep integration indicators using two recentlyavailable datasets from the World Trade Organization and the World Trade Institute. Wethen test the effect of depth on trade using a gravity model. We treat additive indicatorsas factor variables and use multiple correspondence analysis to obtain distilled indicatorsof deep integration to offer new insights and confirm recent deep integration findings.We find that deeper Regional Trade Agreements increase trade more than shallowagreements do, irrespective of whether the provisions they contain are within or beyondthe competence of the World Trade Organization.
    Keywords: International Trade,Trade Liberalization,Regional Trade Agreements,Deep Integration,Gravity Model
    Date: 2017
  12. By: Eric D. , Ramstetter
    Abstract: This paper examines the role foreign multinational enterprises (MNEs) played in Vietnamese firm exports during 2010-2013. Consistent with patterns observed in commodity export data, MNEs are found to account for the majority of firm exports during this period. Wholly-foreign MNEs (WFs), which accounted for the vast majority of MNE production in Vietnam, accounted for most MNE exports. Both WFs and MNE joint ventures (JV) made larger direct contributions to exports than to production or employment, as observed in other Asian developing economies. There was a strong tendency for WFs to have the highest export propensities (export-turnover ratios) followed by JVs. Manufacturing firms exported over four-fifths of the total in most years. Tobit estimates that controlled for the effects of firm size, capital intensity, liquidity, location, and industry affiliation for manufacturers indicate WFs also had the highest conditional export propensities, followed by JVs, private firms, while export propensities tended to be similar in state-owned enterprises (SOEs) and private firms in most industries. Because Vietnam imposes few ownership restrictions on MNEs, these results imply that MNEs generally prefer to export from WFs rather than JVs, and are consistent with previous results for Thailand and Indonesia, for example.
    Keywords: Multinational enterprises, state-owned enterprises, ownership, exports, F14, F23, L33, L60, L81, O53
    Date: 2018–06
  13. By: Eric D. , Ramstetter
    Abstract: This paper investigates how foreign multinational enterprises (MNEs) contributed to exports by Thai manufacturing plants at the industry level in 2006. The mean export-sales ratio (export propensities) in heavily-foreign MNEs with foreign ownership shares of 90 percent or more exceeded 50 percent and heavily-foreign MNEs accounted for one-third of plant exports. Minority-foreign (10-49% foreign shares) and majority-foreign (50-89% shares) MNEs combined to account for another one-fifth of plant exports but had lower export propensities, about 30 percent and 40 percent, respectively. The mean export propensity for local plants in 20 sample industries was only 15 percent. In large samples of all 20 industries combined, econometric estimates controlling for industry affiliation with intercept dummies as well as the effects of the scale, age, factor intensities or labor productivity, and BOI-promotion status of plants also indicated that export propensities were the highest in heavily-foreign MNEs, followed by majority-foreign MNEs, minority-foreign MNEs, and lastly by local plants. Moreover, ownership-related differences in export propensities were highly significant statistically. When inter-industry heterogeneity was more fully accounted for by allowing slope coefficients as well as intercepts to differ among the 20 industries, export propensities were the highest in heavily-foreign MNEs and significantly higher than in local plants in 12 industries. However, differences among MNE ownership groups were usually insignificant and MNE-local differentials in export propensities differed substantially among industries, suggesting it is important account for inter-industry heterogeneity as fully as possible.
    Keywords: ownership, multinational enterprises, exports, Thailand, manufacturing, F14, F23, L33, L60, L81, O53
    Date: 2018–06
  14. By: Lanz, Rainer; Piermartini, Roberta
    Abstract: This paper studies the factors of comparative advantage within global value chains relying on a framework where comparative advantage is measured through the interaction of country and industry characteristics. We find that good institutions give a comparative advantage in the later stages of the production process, whereas good transport infrastructure gives an advantage in the early stages of production. We explain these results with a simple theoretical framework that shows how predicted patterns of specializations depend on whether trade costs are additive or multiplicative.
    Keywords: global value chains,quality of transport infrastructure,quality of institutions,comparative advantage,upstreamness,production networks,trade costs
    JEL: F13 F14 L60
    Date: 2018
  15. By: Bruno Smichowski; Cédric Durand (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique); Steven Knauss (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This article explores the variety of socioeconomic outcomes from global value chains (GVCs) participation through a crosscountry analysis. In order to bridge the methodological and theoretical gap between GVCs critical insights and recent uses of the framework by international institutions, it proposes a novel definition of trade in GVCs and elaborates new indicators of GVC participation and value capture. Using these indicators and data from the Trade in Value added database it presents new descriptive statistics. Through principal component and cluster analyses it identifies three distinctive development patterns related to various degrees and modes of GVC participation: social upgrading mirage, reproduction of the core, and unequal growth. It finally discusses the complementarity of these patterns and explains why the results obtained challenge the narrative that GVC participation per se is a recipe for development.
    Date: 2018–06–17
  16. By: Kun Jiang; Wolfgang Keller; Larry D. Qiu; William Ridley
    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 international technology transfer not only to the joint venture itself but also to the Chinese joint venture partner firm. Third, with technology spillovers typically outweighing negative competition effects, joint ventures generate 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: international joint ventures, partner selection, technology spillovers, foreign direct investment, competition effects
    JEL: F14 F23 O34
    Date: 2018
  17. By: Bogetoft Pedersen, Peter; Diakantoni, Antonia; Pérez del Castillo, Carlos; Mkhitarian, Amaliia
    Abstract: A decade has passed since the onset of the global financial crisis in 2008. Less than a month after the collapse of the investment bank Lehman Brothers, an internal Secretariat Task Force was established by the WTO Director-General to monitor the trade related developments associated with the global financial crisis. When G20 Leaders met in London in early 2009 they mandated the WTO, together with other international bodies, to monitor and report publicly on the G20 adherence to resisting protectionism and promoting global trade and investment. Ten years of trade monitoring later, and notwithstanding widespread anti-trade rhetoric, a protectionist backlash has not materialized. Although there have been worrying increases in the application of certain trade restrictive policy measures, the overall reality has been less alarmist. The paper will provide an introduction to the WTO trade monitoring exercise. It will show how the idea and the principles behind the current trade monitoring effort have origins that go back considerably further than the financial crisis. The paper will also provide an overview of selected trends and developments identified by the monitoring exercise since 2009. Finally, the paper will address some of the challenges facing the WTO monitoring exercise as it enters its tenth year.
    Keywords: trade monitoring,protectionism,trade restrictions,trade facilitation
    JEL: F13 F14
    Date: 2018
  18. By: Kevin Hjortshøj O'Rourke; Alan de Bromhead; Alan Fernihough; Markus Lampe
    Abstract: Abstract A recent literature explores the nature and causes of the collapse in international trade during 2008 and 2009. The decline was particularly great for automobiles and industrial supplies; it occurred largely along the intensive margin; quantities fell by more than prices; and prices fell less for differentiated products. Do these stylised facts apply to trade collapses more generally? This paper uses detailed, commodity specific information on UK imports between 1929 and 1933, to see to what extent the trade collapses of the Great Depression and Great Recession resembled each other. It also compares the free trading trade collapse of 1929-31 with the protectionist collapse of 1931-3, to see to what extent protection, and gradual recovery from the Great Depression, mattered for UK trade patterns.
    Keywords: Great Depression; Great Recession; trade; protectionism
    JEL: F14 N74
    Date: 2018–01–22
  19. By: Jasmine Mondolo (University of Padova)
    Abstract: In the last fifteen years, the literature on international economics and international business has been paying increasing attention to informal institutions and to how they affect a variety of economic variables, inward FDI in particular. The main aims of this work are: to shed more light on a puzzling, elusive concept -informal institutions- also by drawing comparisons with related constructs; to overview the main types of informal institution and their effects on FDI inflows; to conduct a meta-analysis to explore the heterogeneity across empirical studies focusing on the effects of informal institutions on FDI inflows. The main findings of the present work are as follows: according to most of the existing literature, informal institutions, such as trust, social networks and corruption, matter for the purpose of attracting FDI. The sign is significantly determined by the type of informal institution considered. In particular, social networks and factors typically facilitating or in favour of FDI - such as trust and a positive attitude to liberalism - have a significant and positive impact on inward FDI, and this especially holds when the host country is a developing economy.
    Keywords: informal institutions, FDI, systematic review
    JEL: A13 D02 F21
    Date: 2018–06
  20. By: Duda-Nyczak, Marta.; Viegelahn, Christian,
    Abstract: This paper studies wages in exporting and importing firms of the manufacturing sector in Africa, using firm-level data and employer-employee- level data from the World Bank Enterprise Surveys. We find that exporters pay on average higher wages to their workers than non-exporters. It is gains from economies of scale that explain the positive wage premium of exporters, rather than differences in skill utilization, the employment of certain types of workers, or technology transfers. In contrast, there is no evidence for a positive firm-level wage premium of importing, at least after controlling for firm age, and the wage premium of importing at the employee-level is estimated to be negative. The paper also finds indirect evidence for a weaker bargaining power of workers employed by importers. These results fit into the African context, where the comparative advantage of firms in export markets is mainly based on low costs than on quality, and where firms import predominantly out of necessity than out of choice. Finally, the paper provides evidence that a gender wage gap is absent within trading firms, while we find evidence for a gender wage gap in non-trading firms.
    Date: 2018
  21. By: Pham, Tuan; Tran, Thi Ha
    Abstract: Using both aggregate and disaggregate data, the purpose of this study was to examine the effects of VND/CNY exchange rate (including exchange rate level and volatility) on trade flows between Vietnam and China. For this analysis, Autoregressive Distributed Lag (ARDL) model is applied. In the disaggregate models, long-run results indicate that 9 import commodities (approximately 28.67% of total import value) are sensitive to real exchange rate level, and 9 export commodities (approximately 39,146% of total export value) also respond to changes in exchange rate level. Most of unaffected commodities are raw, intermediate, and simply processed products (the biggest component in total import volume). In addition, the study found that export commodities are more sensitive to exchange rate volatility than import commodities. Notably, the results of aggregate model indicate that there is no statistical evidence of any linkage between exchange rate and trade (export and import). In other words, exchange rate is likely to be ineffective to improve trade balance between Vietnam and China. This is noticeable signal in term of effective coordination between the monetary and trade policy of Vietnam
    Keywords: Vietnam, China, Exchange Rate, Import, Export, ARDL
    JEL: E3 E4 E5 E6 F1 F4
    Date: 2018–06–18
  22. By: Michal Burzynski; Frédéric Docquier; Hillel Rapoport
    Abstract: We investigate the welfare implications of two pre-crisis immigration waves (1991–2000 and 2001–2010) and of the post-crisis wave (2011–2015) for OECD native citizens. To do so, we develop a general equilibrium model that accounts for the main channels of transmission of immigration shocks – the employment and wage effects, the fiscal effect, and the market size effect – and for the interactions between them. We parameterize our model for 20 selected OECD member states. We find that the three waves induce positive effects on the real income of natives, however the size of these gains varies considerably across countries and across skill groups. In relative terms, the post-crisis wave induces smaller welfare gains compared to the previous ones. This is due to the changing origin mix of immigrants, which translates into lower levels of human capital and smaller fiscal gains. However, differences across cohorts explain a tiny fraction of the highly persistent, cross-country heterogeneity in the economic benefits from immigration.
    Keywords: Immigration;Welfare;Crisis;Inequality;General Equilibrium
    JEL: C68 F22 J24
    Date: 2018–06
  23. By: Zandile, Zezethu; Phiri, Andrew
    Abstract: Much emphasis has been placed on attracting FDI into Burkina Faso as a catalyst for improved economic growth within the economy. Against the lack of empirical evidence evaluating this claim, we use data collected from 1970 to 2017 to investigate the FDI-growth nexus for the country using the ARDL bounds cointegration analysis. Our empirical model is derived from endogenous growth theoretical framework in which FDI may have direct or spillover effects on economic growth via improved human capital development as well technological developments reflected in urbanization and improved export growth. Our findings fail to establish any direct or indirect effects of FDI on economic growth except for FDI’s positive interaction with export-oriented growth, albeit being constrained to the short-run. Therefore, in summing up our recommendations, political reforms and the building of stronger economic ties with the international community in order to raise investor confidence, which has been historically problematic, should be at the top of the agenda for policymakers in Burkina Faso.
    Keywords: Foreign direct investment; economic growth; Burkina Faso; West Africa; ARDL cointegration.
    JEL: C13 C32 C51 F21 O40
    Date: 2018–06–11
  24. By: Kevin Hjortshøj O'Rourke
    Abstract: Preliminary version of a paper prepared for IMF-BNM-IMFER Conference on Globalization in the Aftermath of the Crisis and the IMF Economic Review. The research on which this paper is based was in part funded by the European Research Council under the European Union's Seventh Framework Programme (FP7/2007-2013) / ERC grant agreement no. 249546. The paper draws on many collaborations, and I am extremely grateful to my co-authors: Miguel Almunia, Agustin Bénétrix, Roberto Bonfatti, Alan de Bromhead, Barry Eichengreen, Alan Fernihough, Ronald Findlay, William Hynes, David Jacks, Markus Lampe, Gisela Rua, and Jeffrey Williamson. The usual disclaimer applies.
    Date: 2017–09–20
  25. By: Chiara Criscuolo; Jonathan Timmis
    Abstract: This paper uses “centrality” metrics to reflect the changing structure of Global Value Chains (GVCs), contrasting central hubs and peripheral countries and sectors, and examine how these changes impact firm productivity. Using cross-country firm-level data from ORBIS, the paper finds that changing position within GVCs can play a role in the catch up of firms, but the results are heterogeneous across firms and countries. Firstly, becoming more central is associated with faster productivity growth of smaller firms, nonfrontier businesses, and of firms in smaller economies and in post-2004 EU member countries. And these correlations weaken with firm size and with proximity to the frontier, such that when one ignores firm heterogeneity and only considers average effects, there is no correlation for the average firms in the data. Secondly, the (centrality weighted) average productivity of buyers matters for the productivity of firms in our data overall, however this is particularly true for firms in large economies, for non-frontier and for smaller firms. The policy environment, such as flexible labour markets, better access to finance, stronger contract enforcement and simplified export procedures, appears to be important in translating the changing structure of GVCs into faster productivity growth of these non-frontier firms.
    Keywords: centrality, firms, global value chains, network analysis, Productivity
    JEL: D22 F12 F14 L25
    Date: 2018–06–25
  26. By: Omid Karami; Mina Mahmoudi
    Abstract: Tariff liberalization and its impact on tax revenue is an important consideration for developing countries, because they are increasingly facing the difficult task of implementing and harmonizing regional and international trade commitments. The tariff reform and its costs for Iranian government is one of the issues that are examined in this study. Another goal of this paper is, estimating the cost of trade liberalization. On this regard, imports value of agricultural sector in Iran in 2010 was analyzed according to two scenarios. For reforming nuisance tariff, a VAT policy is used in both scenarios. In this study, TRIST method is used. In the first scenario, imports' value decreased to a level equal to the second scenario and higher tariff revenue will be created. The results show that reducing the average tariff rate does not always result in the loss of tariff revenue. This paper is a witness that different forms of tariff can generate different amount of income when they have same level of liberalization and equal effect on producers. Therefore, using a good tariff regime can help a government to generate income when increases social welfare by liberalization.
    Date: 2018–06
  27. By: Philipp Meinen; Horst Raff
    Abstract: Based on a theoretical model featuring heterogeneous retailers that may source globally and operate as chains, we derive a number of hypotheses that link trade integration to retail firm performance and to the structure of retail markets. We empirically test these predictions using Danish microdata for the period 1999 to 2008. We find that importing retailers are larger, more profitable, and have a higher propensity to have multiple shops than domestically sourcing firms. While this is partly due to self-selection, we also present evidence for improved perfor-mance caused by firms’ importing activities. Moreover, we find that retail imports are associated with a higher exit probability of small retailers and greater local retail market concentration. Overall, we obtain support for the model’s predictions and argue that the observed adjustments may imply additional gains from trade absent from models lacking a distribution sector.
    Keywords: international trade, consumer goods, retailing, retail chains, market concentration
    JEL: F12 L11
    Date: 2018
  28. By: Meinen, Philipp; Raff, Horst
    Abstract: Based on a theoretical model featuring heterogeneous retailers that may source globally and operate as chains, we derive a number of hypotheses that link trade integration to retail firm performance and to the structure of retail markets. We empirically test these predictions using Danish microdata for the period 1999 to 2008. We find that importing retailers are larger, more profitable, and have a higher propensity to have multiple shops than domestically sourcing firms. While this is partly due to self-selection, we also present evidence for improved performance caused by firms' importing activities. Moreover, we find that retail imports are associated with a higher exit probability of small retailers and greater local retail market concentration. Overall, we obtain support for the model's predictions and argue that the observed adjustments may imply additional gains from trade absent from models lacking a distribution sector.
    Keywords: international trade,consumer goods,retailing,retail chains,market concentration
    JEL: F12 L11
    Date: 2018
  29. By: Sokolova, Maria V. (Asian Development Bank Institute)
    Abstract: We show that regional trade integration shifts the burden of the exchange rate adjustment towards the less integrated trading partners. Thus, they bear the cost of trade balance expansion, while competitive exchange rate moves vis-a-vis regional trade agreement (RTA) trading partners result in no expansion or deterioration of the overall trade balance. First, using the data on 138 countries that have been involved in regional trade integration through signing regional trade agreements (RTAs) since 1990, we show that upon a 10% depreciation towards non-RTA trading partners results in a 4.4% improvement of the aggregate trade balance. A similar competitive depreciation towards RTA trading partners has resulted in an average 3.7% deterioration of the aggregate trade balance. Second, we confirm that RTA participation can act as a good proxy for trade integration, and test the results with alternative measures of trade balance. Third, we use a simple model framework based on the current account adjustments to put the empirical findings into the theoretical frame. Altogether, we indicate that regional trade integration in the form of RTAs should be taken into account in questions related to the competitive exchange rate effects and trade balance adjustment.
    Keywords: trade balance; regional trade agreements; competitive depreciation; economic integration; terms-of-trade
    JEL: F10 F13 F14 F15 F40 F41
    Date: 2017–03–03
  30. By: Alexander A. J. Wulfers
    Abstract: Abstract The Age of Mass Migration came to an end in the interwar period with new American immigration restrictions, but did this end affect some potential migrants more than others? I use previously unanalysed data from passenger lists of ships leaving Bremen, one of the major European ports of emigration, between 1920 and 1933, to identify occupations and skill levels of individual migrants. The main focus of the paper is on the role that policy played in influencing the selection of migrants. I study the American quota laws of 1921, 1924, and 1929, and find that increasingly strict quotas led to an increase in the skill level of migrants as well as a shift from agricultural to manufacturing workers first, and from manufacturing to professional workers later.
    Keywords: immigration policy, skill selection, quotas, United States, Bremen, interwar period
    JEL: J15 N32 N34
    Date: 2018–01–25
  31. By: Görg, Holger
    Abstract: Goal 8 of the UN Sustainable Development Goals (SDGs) calls for promoting "sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all". One driver that may help to achieve this goal is foreign direct investment (FDI). It has the potential to foster productivity growth and generate quality employment, and also - though many globalization critics may disagree - to help moving towards more socially and environmentally sustainable business practices (e.g., Görg, Hanley, Hoffmann, Seric, 2015). This short note reviews briefly what we do know from recent work using large scale firm level datasets about the potential benefits or costs of foreign direct investment as regards these aspects. It then sets out what else we would want to know, and how to go about collecting this knowledge. Based on this, some policy conclusions are offered.
    Date: 2018
  32. By: Dany Bahar
    Abstract: Using a unique dataset on worldwide multinational corporations with precise location of headquarters and affiliates, I present evidence of a trade-off between distance to the headquarters and the knowledge intensity of the foreign subsidiary’s economic activity, emerging from dynamics related to the proximity-concentration hypothesis. This trade-off is strongly diminished the higher the overlap in working hours between the headquarters and its foreign subsidiary. In order to rule out biases arising from confounding factors, I implement a regression discontinuity framework to show that the economic activity of a foreign subsidiary located just across the time zone line that increases the overlap in working hours with its headquarters is, on average, about one percent higher in the knowledge intensity scale. I find no evidence of the knowledge intensity and distance trade-off weakening when a non-stop flight exists between the headquarters and the foreign subsidiary. The findings suggest that lower barriers to real-time communication within the multinational corporation play an important role in the location strategies of multinational corporations.
    Keywords: multinational firms, multinational corporations, knowledge, location, proximity concentration hypothesis, FDI
    JEL: F23 L22 L25
    Date: 2018
  33. By: Paul, Saumik (Asian Development Bank Institute)
    Abstract: Using a novel data set, this paper find that households with migrants experience a 26% drop in the labor force participation rate in four economies (Armenia, Azerbaijan, the Kyrgyz Republic, and Tajikistan) from the Central Asia and South Caucasus region. It is twice as large for households with permanent migrants as for households with seasonal migrants. The results do not alter in the presence of selection on unobservables, model misspecification, and selection bias due to the absence of more productive workers. Direct evidence on the remittances that each household received is not available. The empirical findings do, however, suggest the possibility of an increase in reservation wages.
    Keywords: emigration; labor mobility
    JEL: F22 J61
    Date: 2018–03–15
  34. By: Agnès Bénassy-Quéré (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Matthieu Bussière (Banque de France - Banque de France); Pauline Wibaux (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The debate on trade wars and currency wars has re-emerged since the Great recession of 2009. We study the two forms of non-cooperative policies within a single framework. First, we compare the elasticity of trade flows to import tariffs and to the real exchange rate, based on product level data for 110 countries over the 1989-2013 period. We find that a 1 percent depreciation of the importer's currency reduces imports by around 0.5 percent in current dollar, whereas an increase in import tariffs by 1 percentage point reduces imports by around 1.4 percent. Hence the two instruments are not equivalent. Second, we build a stylized short-term macroeconomic model where the government aims at internal and external balance. We find that, in this setting, monetary policy is more stabilizing for the economy than trade policy, except when the internal transmission channel of monetary policy is muted (at the zero-lower bound). One implication is that, in normal times, a country will more likely react to a trade "aggression" through monetary easing rather than through a tariff increase. The result is reversed at the ZLB.
    Keywords: tariffs,exchange rates,trade elasticities,protectionism
    Date: 2018–06
  35. By: Grimmel, Andreas; Li, Yuan
    Abstract: Initiated under the Presidency of Xi Jinping in 2013, the Belt and Road Initiative (BRI) is still a young, yet a fast-developing and most ambitious regionalist project. Despite BRI's great potential to shape international trade and - more broadly - international relations amongst participating countries and beyond, scientific studies so far have largely neglected the question of how BRI goes together with contemporary approaches of regionalism and regional integration. This article argues that BRI constitutes a type of hybrid regionalism that seems to largely elude the old-new-regionalism divide and instead, it embraces elements of both traditions. In order to elucidate this double nature of the project, we will first discuss the idea of integration theory that has been developed in the context of the European integration process as well as such approaches that came up in the context of approaches of new regionalism. On this basis, and by referring to central elements of BRI as well as current developments in the framework of the project, we will shed light on the parallels and differences of BRI with "old" and "new" regionalism.
    Keywords: Belt and Road Initiative,New Silk Road,Old regionalism,New regionalism,Regional integration,China
    Date: 2018
  36. By: Poole, Jennifer (Asian Development Bank Institute); Santos-Paulino, Amelia (Asian Development Bank Institute); Sokolova, Maria (Asian Development Bank Institute); DiCaprio, Alisa (Asian Development Bank Institute)
    Abstract: Market-oriented reforms, such as liberalizing trade and encouraging foreign direct investment, can generate large efficiency gains for a country. However, there is also concern that lower-skilled workers are increasingly being replaced by technology and that more globalized markets are harming employment opportunities. We investigate these issues by exploring household surveys from Viet Nam, combined with information on the task content of occupations, industrial exposure to international trade, and access to technology across the country. We assess the extent to which exposure to foreign markets and access to digital technologies affect the demand for different types of skills, by exploiting the fact that provinces vary in the degree of access to digital technologies and industries vary in the degree of exposure to foreign markets. We also extend much of the literature to consider the interplay between trade and technology on labor demand. On its own, technological change does not appear to be a main driver of the demand for skill in Viet Nam. Increased trade, rather, does expand employment opportunities across both skilled and unskilled workers. Consistent with classic trade theory, the increase is stronger for manual and routine tasks, shifting the composition of the labor force toward lower-skilled workers. However, the increase in manual and routine employment opportunities in response to the trade shock is smaller in areas of the country with access to digital technologies, providing suggestive evidence of the routine-biased nature of technology. From a policy standpoint, our work contributes to an understanding of job requirements and job security in an increasingly technology-driven and integrated world economy. Our research also offers insights for other lesser developing countries that face similar challenges.
    Keywords: Viet Nam; trade; information technology; skills
    JEL: F16 J24 O33
    Date: 2017–08–08
  37. By: Ouyang, Alice Y. (Asian Development Bank Institute); Paul, Saumik (Asian Development Bank Institute)
    Abstract: Building on an analytical model, we provide cross-country empirical evidence that net skilled emigration appreciates bilateral real exchange rates through the wage channel in source countries. Chains of causality in the presence of the Law of One Price run through the “spending effect” and the “resource allocation effect,” analogous to the remittance-based Dutch disease effect. A pricing-to-market model allows pass-through for both traded and nontraded prices when the Law of One Price is violated. The skilled emigration elasticity of real exchange rate is estimated to be in the range of between .6 and .8, with internal prices playing a dominant role. Alternative model specifications show robust outcomes.
    Keywords: emigration; exchange rate; the Dutch disease
    JEL: F22 F31
    Date: 2018–03–16
  38. By: Giudici, Paolo (Asian Development Bank Institute); Huang, Bihong (Asian Development Bank Institute); Spelta, Alessandro (Asian Development Bank Institute)
    Abstract: We present a new methodology, based on tensor decomposition, to map dynamic trade networks and assess their strength in spreading economic fluctuations at different periods of time in Asia. Using monthly merchandise import and export data across 33 Asian economies, together with the United Sates, the European Union, and the United Kingdom, we detect the modularity structure of the evolving network and we identify communities and central nodes inside each of them. Our findings show that data are well represented by two communities, in which the People's Republic of China and Japan play the major role. We then analyze the synchronization between GDP growth and trade, and apply our model to the prediction of economic fluctuations. Our findings show that the model leads to an increase in predictive accuracy, as higher order interactions between countries are taken into account.
    Keywords: Asia; Trade Network; Tensor decomposition; Community detection
    JEL: C58 C63 G01
    Date: 2018–04–06
  39. By: Duda-Nyczak, Marta.; Viegelahn, Christian.
    Abstract: This paper studies the relation between firms’ export and import status, and the quantity and types of employment they offer, using firm-level data from 47 African countries in 2006-14. The paper also analyses how the quality of policies at the country-level relates to the difference between exporters and non-exporters, and between importers and non-importers. This paper shows that both exporters and importers employ on average more full-time permanent workers than their respective non-trading counterparts, even after controlling for a wide range of firm-level characteristics. This employment premium is larger in countries with a better quality of infrastructure. In addition, importers employ higher shares of non-production workers compared with non-importers. In addition, both exporters and importers are characterized by higher shares of female employment than their non-trading counterparts. Successful gender policies are positively associated with the female employment premium of trading firms. This paper also finds that there is a larger proportion of temporary workers in the workforce of exporters compared with non- exporters, but a better developed rural sector reduces this difference in the use of temporary manpower. The results presented in this paper suggest that the quality of policies has an impact on the extent to which trading firms are able to generate decent job opportunities in Africa.
    Keywords: commercial policy, commercial enterprise, trade, working conditions, Africa
    Date: 2017
  40. By: Morgan, Peter J. (Asian Development Bank Institute); Trinh, Long Q. (Asian Development Bank Institute)
    Abstract: We examine the heterogeneous effect of migration on left-behind children’s education and labor in Viet Nam. Since decisions to attend school and to work are jointly determined, we use a simultaneous equation modeling approach to estimate the effect of migration on child education and labor. Since migration also affects household welfare, we also integrate household welfare into our system of equations. We use a unique household-level data set collected in 2012 and 2014 in rural Viet Nam. We find that migration of other family members does not affect a child’s decision to attend school directly, but does so indirectly through an increase in time spent at work. However, migration might increase household income, and this may also have a positive effect on child education and reduce child labor. We also find some heterogeneous effects by type of migration (migration for education and migration for work purposes) as well as effects of sending money to migrants and receiving money from migrants on household income, child labor, and ultimately child education.
    Keywords: child education; child labor; child welfare; migration; Viet Nam
    JEL: D01 D13 J13
    Date: 2018–04–25
  41. By: Balandina, Galina (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Ponomarev, Yuriy (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Sinelnikov-Murylev, Sergei G. (Russian Foreign Trade Academy; Gaidar Institute for Economic Policy; Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Tochin, Andrey (Russian Presidential Academy of National Economy and Public Administration (RANEPA))
    Abstract: Modern customs administration in Russia in comparison with the best world practices provides insufficient efficiency both for the state and for participants in foreign economic activity. The level of unreliable declaring by the business or importing goods into the country bypassing the established rules remains high. This leads to such negative consequences as unfair competition, evasion from payment of internal taxes, escalation of shadow turnover. The discretionary powers of customs authorities and their officials with existing control technologies (the multiplicity of supervisory bodies and the lack of necessary interaction between them) create conditions for administrative pressure on the business that promotes corruption.
    Date: 2018–06
  42. By: Giuntella, Osea; Mazzonna, Fabrizio; Nicodemo, Catia; Vargas-Silva, Carlos
    Abstract: This paper studies the effects of immigration on the allocation of occupational physical burden and work injury risks. Using data for England and Wales from the Labour Force Survey (2003-2013), we find that, on average, immigration leads to a reallocation of UK-born workers towards jobs characterized by lower physical burden and injury risk. The results also show important differences across skill groups. Immigration reduces the average physical burden of UK-born workers with medium levels of education, but has no significant effect on those with low levels. We also find that that immigration led to an improvement selfreported measures of native workers’ health. These findings, together with the evidence that immigrants report lower injury rates than natives, suggest that the reallocation of tasks could reduce overall health care costs and the human and financial costs typically associated with workplace injuries.
    Keywords: Immigration,labor-market,physical burden,work-related injuries,health
    JEL: J61 I10
    Date: 2018

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