nep-int New Economics Papers
on International Trade
Issue of 2018‒07‒16
thirty-one papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. China's economic integration with the Greater Mekong Sub-region: An empirical analysis by a panel dynamic gravity model By Shahriar, Saleh; Qian, Lu; Kea, Sokvibol
  2. International trade: Who is left behind and what to do about it By Ann Harrison
  3. Managing Trade: Evidence from China and the US By Bloom, Nicholas; Manova, Kalina; Sun, Stephen Teng; Van Reenen, John; Yu, Zhihong
  4. Has Eastern European Migration Impacted UK-born Workers? By Sascha O. Becker; Thiemo Fetzer
  5. Impact of PTA on Trade Margins of LDCs in Sub- Saharan Africa: Evidence from the EBA By Ofei, Edmund Okraku
  6. Domestic Spillovers and Foreign Networks in Exporting By Shibi He; Volodymyr Lugovskyy
  7. Skill, Innovation and Wage Inequality: Can Immigrants be the Trump Card? By Gouranga Gopal Das; Sugata Marjit
  8. Taking the Skill Bias out of Global Migration By BIAVASCHI Costanza; BURZYNSKI Michal; ELSNER Benjamin; MACHADO Joël
  9. The determinants of aggregate and disaggregated import demand in Ghana By Vacu, Nomfundo P.; Odhiambo, Nicholas M.
  10. A Model of Heterogeneous Firm Matches in Cross-Border Mergers & Acquisitions By Steven Brakman; Harry Garretsen; Michiel Gerritse; Charles van Marrewijk
  11. Special and Differential Treatment of Developing Countries in the WTO Agreement on Trade Facilitation: Is there a cause for optimism? By Ayoki, Milton
  12. “Flying Geese” Paradigm: Review, Analytical Tool, and Application By Widodo, Tri; Setyastuti, Rini; Adiningsih, Sri
  13. Farm Size, Technology Adoption and Agricultural Trade Reform: Evidence from Canada By Brown, W. Mark; Ferguson, Shon; Viju, Crina
  14. Forecasting Imports with Information from Abroad By Christian Grimme; Robert Lehmann; Marvin Noeller
  15. International Remittances and Poverty Reduction: Evidence from Asian Developing Countries By Yoshino, Naoyuki; Taghizadeh-Hesary, Farhad; Otsuka, Miyu
  16. Exchange rate and trade balance linkage: sectoral evidence from Thailand based on nonlinear ARDL By Suwanhirunkul, Suwijak; Masih, Mansur
  17. Reforming the migration governance system By Khasru, Syed Munir; Mahmud, Kazi Mitul; Nahreen, Avia
  18. Trade Linkages and Transmission of Oil Price Fluctuations in a Model Incorporating Monetary Variables By Taghizadeh-Hesary, Farhad; Rasoulinezhad, Ehsan; Yoshino, Naoyuki
  19. China’s Agricultural Import Potential By Minghao Li; Wendong Zhang; Dermot J. Hayes
  20. International Outsourcing, Environmental Costs, and Welfare By Choi, Jai-Young; Yu, Eden S. H.
  21. Born Globals, BGs: Who Are They? By Hamza El Guili
  22. Brain Drain-Induced Brain Gain and the Bhagwati Tax: Are Early and Recent Paradigms Compatible? By Schiff, Maurice
  23. Subjective Well-Being among Communities Left Behind by International Migrants By Lara, Jaime
  24. Labour policy and multinational firms: the "race to the bottom" revisited By Anindya Bhattacharya; Debapriya Sen
  25. Determinants of FDI for Spanish regions: Evidence using stock data By Miriam Camarero; Laura Montolio; Cecilio Tamarit
  26. Aggregate statistics on trafficker-destination relations in the Atlantic slave trade By Franses, Ph.H.B.F.; van den Heuvel, W.
  27. Facilitating Economic Development Through Employment Opportunities for Migrant Workers By Anusha Mahendran
  28. The size and effects of emigration and remittances in the Western-Balkans: Forecasting based on a Delphi process By Marjan Petreski; Blagica Petreski; Despina Tumanoska; Edlira Narazani; Fatush Kazazi; Galjina Ognjanov; Irena Jankovic; Arben Mustafa; Tereza Kochovska
  29. Global Market Power By De Loecker, Jan; Eeckhout, Jan
  30. International Environmental Agreements and Trading Blocks - Can Issue Linkage Enhance Cooperation? By Effrosyni Diamantoudi; Eftichios Sartzetakis; Stefania Strantza
  31. Going Abroad to Innovate? The Role of Entrepreneurial Orientation in Foreign Business Expansion for Japanese Small and Medium-Sized Manufacturers By Yamamoto, Satoshi; Kan, Viktoriya; Bartnik, Roman

  1. By: Shahriar, Saleh; Qian, Lu; Kea, Sokvibol
    Abstract: The purpose of this study is to fill an existing gap in the literature by addressing the following research question: what are the major determinants of China's regional economic integration with the Greater Mekong Sub-regional countries (GMS), namely; Cambodia, Laos, Myanmar, Thailand and Vietnam? The author measures the economic integration in terms of bilateral trade and foreign direct investment (FDI). In accordance with the literature, the present study adopts a panel gravity framework method to analyze the significant factors affecting the bilateral aggregate exports flows of China with five economies of the Greater Mekong sub-region. Data were collected from both the Chinese national and the international sources over the period of 23 years, spanning from 1993 to 2016. The time period was chosen on the consideration of data availability. The result shows that the gravity model is econometrically fitted to our dataset. Among other factors GDP, bilateral exchange rate, and population have a positive impact on regional trade integration with the GMS. The author's second-stage regression analysis confirms that China's accession to the WTO impacts positively on the bilateral trade. China's accession to the WTO is a significant factor for facilitation of trade flows. As expected, distance hinders regional trade. Furthermore, the role of historical trade relationship between China and GMS countries is estimated in the dynamic model. The result shows that China's trade relationship with GMS countries is determined historically.
    Keywords: China,regional economic integration,dynamic gravity model,Greater Mekong Sub region (GMS),exports,panel data
    JEL: F14 F15
    Date: 2018
  2. By: Ann Harrison
    Abstract: We examine globalization’s effects on those left behind in both industrial and emerging markets. While access to global markets has lifted billions out of poverty in emerging markets, the benefits have not been equally shared. Trade has hurt less skilled workers in rich and poor countries. These unequal consequences have contributed to a backlash against globalization in developed countries, which now threatens the global trading system and access to that system for emerging markets. We conclude by proposing some solutions which cover both global trade policy prescriptions as well as country-level programs to compensate losers from globalization.
    Keywords: trade, “leaving no one behind”, globalization, inequality
    JEL: F02 F16 D63
    Date: 2018–07
  3. By: Bloom, Nicholas; Manova, Kalina; Sun, Stephen Teng; Van Reenen, John; Yu, Zhihong
    Abstract: We present a heterogeneous-firm model in which management ability increases both production efficiency and product quality. Combining six micro-datasets on management practices, production and trade in Chinese and American firms, we find broad support for the model's predictions. First, better managed firms are more likely to export, sell more products to more destination countries, and earn higher export revenues and profits. Second, better managed exporters have higher prices, higher quality, and lower quality-adjusted prices. Finally, they also use a wider range of inputs, higher quality and more expensive inputs, and imported inputs from more advanced countries. The structural estimates indicate that management is important for improving production efficiency and product quality in both countries, but it matters more in China than in the US, especially for product quality. Panel analysis for the US and a randomized control trial in India suggest that management exerts causal effects on product quality, production efficiency, and exports. Poor management practices may thus hinder trade and growth, especially in developing countries.
    Keywords: exports; Management; product quality; productivity
    JEL: F10 F14 F23 L20 O19 O32
    Date: 2018–06
  4. By: Sascha O. Becker (University of Warwick); Thiemo Fetzer (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 Classification: R23, N44, Z13
    Date: 2018
  5. By: Ofei, Edmund Okraku
    Abstract: This study investigates the impact of the EU preferential trade agreement of Everything but Arms on the extensive and intensive margins of exports of least developed countries in Sub-Saharan Africa. The extensive margin is defined as the quantity of exported products while the intensive margin is defined as the value of exported products. The study employs the difference-indifference estimator together with fixed effects for a country bilateral product data defined at the HS 6-digit level to investigate the impact for the period 1995-2015. The findings are that the EBA has not had any impact on both trade margins of LDCs in SSA although it has impacted positively on some specific industries. The study goes further to explain how the LDCs in SSA could benefit from the EBA through complementary policies.
    Keywords: trade margins, PTA, EBA, difference-in-difference, least developed countries
    JEL: F1 F13 F14 F4 O1 O24
    Date: 2017–05–23
  6. By: Shibi He (Indiana University); Volodymyr Lugovskyy (Indiana University)
    Abstract: We explore the effects of Domestic Spillovers (other domestic firms exporting a good to a given country) and Foreign Networks (links to other countries via firm’s trading partners) on the firm’s choice of new export destinations. By matching Colombian exporting and Chilean importing and exporting firms between 2007 and 2016, we show that both effects matter and that they amplify each other. Jointly these effects are more important than geographic proximity measures, import and export growth, and market size combined. Domestic spillovers are relatively more important, especially for identifying the persistent exporters, which export to a new destination for more than a year.
    Keywords: Firm-level, Spillover, Networks, Trade
    Date: 2018–07
  7. By: Gouranga Gopal Das; Sugata Marjit
    Abstract: With the ensuing immigration reform in the US, the paper shows that targeted skilled immigration into the R&D sector that helps low-skilled labor is conducive for controlling inequality and raising wage. Skilled talent-led innovation could have spillover benefits for the unskilled sector while immigration into the production sector will always reduce wage, aggravating wage inequality. In essence, we infer: (i) if R&D inputs contributes only to skilled sector, wage inequality increases in general; (ii) for wage gap to decrease, R&D sector must produce inputs that goes into unskilled manufacturing sector; (iii) even with two types of specific R&D inputs entering into the skilled and unskilled sectors separately, unskilled labor is not always benefited by high skilled migrants into R&D-sector. Rather, it depends on the importance of migrants’ skill in R&D activities and intensity of inputs. Inclusive immigration policy requires inter-sectoral diffusion of ideas embedded in talented immigrants targeted for innovation.
    Keywords: HIB, immigration, innovation, wage gap, skill, R&D, policy, RAISE Act
    JEL: F22 J31 O15
    Date: 2018
  8. By: BIAVASCHI Costanza; BURZYNSKI Michal; ELSNER Benjamin; MACHADO Joël
    Abstract: Global migration is heavily skill-biased, with tertiary-educated workers being four times more likely to migrate than workers with a lower education. In this paper, we quantify the global impact of this skill bias in migration. Based on a quantitative multi-country model with trade, we compare the current world to a counterfactual with the same number of migrants, where all migrants are neutrally selected from their countries of origin. We find that most receiving countries benefit from the skill bias in migration, while a small number of sending countries is significantly worse off. The negative effect in many sending countries is completely eliminated ? and often reversed ? once we account for remittances and additional migration-related externalities. In a model with all our extensions, the average welfare effect of skill-biased migration in both OECD and non-OECD countries is positive.
    Keywords: migration; skill selection; global welfare; Skill bias; remittances; brain gain; brain drain
    JEL: F22
    Date: 2018–07
  9. By: Vacu, Nomfundo P.; Odhiambo, Nicholas M.
    Abstract: This paper examines the determinants of both aggregate and disaggregated import demand in the case of Ghana for the period from 1985 to 2015. The study employed the newly developed autoregressive distributed lag (ARDL) bounds testing approach. The explanatory variables employed include gross national income, exports of goods and services, consumer spending, government spending, investment spending, relative import price and trade liberalisation policy. The study finds that in the long run, aggregate import demand is positively determined by exports of goods and services and consumer spending. However, it was found to be negatively determined by relative import price, trade liberalisation policy and government spending. The results further confirm that gross national income, exports of goods and services and consumer spending are positive long-run and short-run determinants of import demand for consumer goods. It is found that in the long run, import demand for intermediate goods is positively determined by government spending and consumer spending, but negatively determined by exports of goods and services. Import demand for capital goods is found to be positively determined by gross national income and exports of goods and services, but negatively determined by investment spending in the long run. The short-run findings suggest that aggregate import demand is positively affected by exports of goods and services, investment spending and consumer spending, but negatively affected by relative import price and trade liberalisation policy. Import demand for consumer goods is positively influenced by consumer spending. Finally, import demand for intermediate goods is found to be positively determined by investment spending, government spending and consumer spending, while import demand for capital goods is positively associated with exports of goods and services and investment spending in the previous period, but negatively associated with previous period gross national income, investment spending and government spending.
    Keywords: ARDL Approach, Import demand, Ghana
    Date: 2018–07–10
  10. By: Steven Brakman; Harry Garretsen; Michiel Gerritse; Charles van Marrewijk
    Abstract: In contrast to empirical evidence, recent theories of cross-border mergers and acquisitions (M&As) assume perfect knowledge transfers – from high to low productivity firms – between acquirer and target. Using the Melitz (2003) model of heterogeneous firms, we develop a matching model of cross-border M&As which allows for both perfect and imperfect knowledge transfers, where the latter leads to assortative matching on productivity for firms in cross-border M&As. This is in line with stylized facts (because M&As frequently occur between firms of similar productivity) and in contrast to the proximity-concentration trade-off (in which only the most productive firms have a physical presence in foreign markets). Allowing for M&As raises the firm viability cut-off level, average productivity and welfare in our model. The welfare benefits are weaker for more imperfect knowledge transfers.
    Keywords: cross-border merger & acquisitions, knowledge transfers, productivity differences
    JEL: F20 L10
    Date: 2018
  11. By: Ayoki, Milton
    Abstract: The growing evidence of market failure, uncertainties in international cooperation and complexities of the problems of global inequalities has made special and differential treatment of developing countries (S&DT) not only increasingly necessary, but also increasingly difficult. In this paper, we examine the S&DT measures in the WTO Agreement on Trade Facilitation (TFA), in addressing the delicate balance between the concerns of developing countries and fostering the TFA’s objectives of expediting the movement, release and clearance of goods, including goods in transit. We find that, while the S&DT appears, in the face value, to offer flexibility for developing countries especially the least developed countries in implementation of the TFA, this flexibility has been eroded by conditioning assistance and support for capacity building to notification of commitments. The linking of support to commitment creates not only dilemma for developing countries on the timing of commitment (implementation) but also exposes them to risks of taking on increasing commitment before prerequisite capacity. Given the ‘best endeavour’ nature of the relevant provisions, it is not apparent that the benefits of implementing the Agreement will outweigh its costs if developed countries relegate on their promise to provide assistance and support for capacity building.
    Keywords: Trade Facilitation Agreement, Development Issues, Special and Differential Treatment, Developing Countries, Trade and Development, Least Developed Countries, World Trade Organization (WTO).
    JEL: F13 K33
    Date: 2018–06–25
  12. By: Widodo, Tri; Setyastuti, Rini; Adiningsih, Sri
    Abstract: The paradigm of the "Flying Geese" (FG) industrialization pattern is often referred to in the process of industrialization in the Southeast Asia region. This paper consists of three main sections: literature study, empirical analytical tool, and application with the Southeast Asia case study. Firstly, the paper discusses the paradigm of FG industrialization starting from Akamatsu's early concept to the modern concept of "multi-sequentialist". Secondly, this paper proposes an empirical analysis tool ("Product Mapping") which is a combination of the main variables in the FG paradigm, dynamic comparative advantage and net-export or net-import. Two indicators of Revealed Symmetric Comparative Advantage (RSCA) and Trade Balance Index (TBI) are used. Thirdly, the empirical analysis tool is then applied to analyze the FG paradigm in the ASEAN region. We find that the flying geese paradigm have occurred in the ASEAN with the slow “catching up” process.
    Keywords: Flying geese, Comparative advantage.
    JEL: F10 F14 F17
    Date: 2018–06–04
  13. By: Brown, W. Mark (Statistics Canada); Ferguson, Shon (Research Institute of Industrial Economics (IFN)); Viju, Crina (Institute of European, Russian and Eurasian Studies)
    Abstract: Using detailed census data covering over 40,000 farms in Alberta, Saskatchewan and Manitoba, Canada, we document the vast and increasing farm size heterogeneity, and analyze the role of farm size in adapting to the removal of an export subsidy in 1995. We find that larger farms were more likely to switch to new labor-saving tillage technologies in response to the large negative shock to grain prices caused by the reform. Small- and medium-sized farms responded to the reform by adopting the more affordable minimum tillage technology. We develop a simple model of heterogeneous farms and technology adoption that can explain our findings. The results suggest that farm size plays a crucial role in determining farm-level adaptation to agricultural trade reform. Consistent with the Alchian-Allen hypothesis, the increase in per-unit trade costs due to the reform was associated with farms shifting their production of crops from low-value wheat to higher value canola.
    Keywords: Agricultural Trade Liberalization; Export Subsidy; Technical Change; Farm Size; Firm Heterogeneity
    JEL: F14 O13 Q16 Q17 Q18
    Date: 2018–06–20
  14. By: Christian Grimme; Robert Lehmann; Marvin Noeller
    Abstract: Globalization has led to huge increases in import volumes, but the literature on import forecasting is still in its infancy. We introduce the first leading indicator especially constructed for total import growth, the so-called Import Climate. It builds on the idea that the import demand of the domestic country should be reflected in the expected export developments of its main trading partners. A foreign country’s expected exports are, in turn, determined by business and consumer confidence in the countries it trades with and its price competitiveness. In a pseudo out-of-sample, real-time forecasting experiment, the Import Climate outperforms standard business cycle indicators at short horizons for France, Germany, Italy, and the United States for the first release of import data. For Spain and the United Kingdom, our leading indicator works particularly well with the latest vintage of import data.
    Keywords: import climate, import forecasting, survey data, price competitiveness
    JEL: F01 F10 F17
    Date: 2018
  15. By: Yoshino, Naoyuki (Asian Development Bank Institute); Taghizadeh-Hesary, Farhad (Asian Development Bank Institute); Otsuka, Miyu (Asian Development Bank Institute)
    Abstract: International remittances represent the second most important source of external funding for developing countries after foreign direct investment (FDI). We examine the impact of international remittances on poverty reduction using panel data for 10 Asian developing countries. In terms of the dependent variables, we set three poverty indicators: poverty headcount ratio, poverty gap ratio, and poverty severity ratio. Results show that international remittances have a statistically significant impact on the poverty gap ratio and poverty severity ratio under the random effect model of ordinary least squares (OLS) estimates. A 1% increase in international remittances as a percentage of gross domestic product (GDP) can lead to a 22.6% decline in the poverty gap ratio and a 16.0% decline in the poverty severity ratio in the sample of 10 Asian developing countries from 1981 to 2014. In addition, results show that per capita GDP increase and trade openness can decrease poverty measures, and higher inflation rates may be one of the causes of the poverty.
    Keywords: remittances; poverty reduction; developing Asia
    JEL: I31 I32 I38
    Date: 2017–07–07
  16. By: Suwanhirunkul, Suwijak; Masih, Mansur
    Abstract: Exchange rate has been managed to improve trade balance in many countries to increase economic growth. However, the relationship between exchange rate and trade balance is inconclusive both in the long-run and short-run. Thus, to improve trade balance effectively, the relationship needs to be studied. Therefore, this paper will examine the relationship in Thailand by applying novel approach NARDL which would give more robust result than former techniques. The paper finds that relationship exists, and that depreciation improves trade balance for the whole country in the long-run but have mixed results for different sectors due to elasticity of demand for import and export. However, trade balance is worsened in the short-run according to J-curve theory. These results imply that there is a tradeoff of depreciation between short-run and long-run, and between exporting sectors and importing sectors. Policymaker could moderately depreciate the currency to boost trade balance but needs to effectively manage the cost incurred.
    Keywords: exchange rate, trade balance, nonlinear ARDL, Thailand
    JEL: C22 C58 F1 F31
    Date: 2018–06–16
  17. By: Khasru, Syed Munir; Mahmud, Kazi Mitul; Nahreen, Avia
    Abstract: This paper analyzes and identifies the deficiencies in the current migration governance system, delineates pressing and structural challenges to global governance of forced migration and recommends pathways through which the Group 20, which is an informal forum comprised of the 19 most influential economies in the world and the EU, could play a seminal role to mobilize reform in the current global refugee management system, advocate for better policy formulation and enhanced policy coherence, encourage equitable burden sharing and improve refugee transport and resettlement services in origin, first asylum, transition and destination countries.
    Keywords: G20,global refugee governance,refugee burden sharing,refugee resettlement and transition,developing asylum countries,forced migration governance
    JEL: O19 R58 Z13
    Date: 2018
  18. By: Taghizadeh-Hesary, Farhad (Asian Development Bank Institute); Rasoulinezhad, Ehsan (Asian Development Bank Institute); Yoshino, Naoyuki (Asian Development Bank Institute)
    Abstract: We attempt to ascertain how sharp oil price changes can affect oil-exporting and oil-importing economies. To this end, we applied a simultaneous equation model (SEM) through a weighted two-stage least squares estimation method to different countries with business relations from Q1 2000 to Q4 2015. In the case of oil-exporting countries—Iran, the Russian Federation, United Arab Emirates, Indonesia, and Kazakhstan—our findings revealed that they totally benefit from oil price increases. In the case of oil-importing countries, the effects are more diverse. To derive a better interpretation, we divided them into four groups: European Union (EU) members (Germany, Italy, the Netherlands, and Poland); East Asian economies (Japan; the People’s Republic of China; the Republic of Korea; Viet Nam; Taipei,China; Singapore; and Hong Kong, China); Commonwealth of Independent States (Ukraine and Belarus); and others (United States, India, and Turkey). Our results showed that all these countries importing oil face a negative supply shock, except Turkey, which benefits directly from an oil price shock. Furthermore, the indirect effect coefficient received through trade for all these countries was positive.
    Keywords: crude oil price; trade linkage; direct and indirect effect of oil shocks
    JEL: C30 E32 Q43
    Date: 2017–09–07
  19. By: Minghao Li (Center for Agricultural and Rural Development (CARD)); Wendong Zhang (Center for Agricultural and Rural Development (CARD)); Dermot J. Hayes (Center for Agricultural and Rural Development (CARD))
    Abstract: As part of the current trade negotiations between the United States and China, China has suggested that it may lower trade barriers and increase agricultural imports from the United States. In this policy brief, we provide an overview of China’s tariff and non-tariff trade barriers and estimate China’s import potential if these barriers are removed. We find that China’s importation of major U.S. commodities has the potential to increase significantly. For example, in our medium-growth scenario, China will potentially increase U.S. pork import value by $8.9 billion if all trade barriers are removed.
    Date: 2018–06
  20. By: Choi, Jai-Young (Asian Development Bank Institute); Yu, Eden S. H. (Asian Development Bank Institute)
    Abstract: We explore the welfare consequences of international outsourcing in the presence of resulting environmental damage in a three-stage model of North–South trade. In stage 1, outsourcing firms in the North (e.g., United States and Europe)cause environmental damage to the vendor country in the South, as exemplified by the People’s Republic of China. But, as its primary goal, the South pursuing economic development is willing to bear the costs of environmental degradation. Moving into Stage II, the environmental deterioration becomes so severe in the South that the vendor country begins to tackle the environmental problem by enacting government regulations. As a result, the costs and, hence, the prices of outsourced goods and services tend to increase for the firms in the North. However, the environmental protection measures undertaken generally fall short of the levels needed to restore the environmental quality acceptable by World Health Organization standards. We present a framework for analyzing the effects of international outsourcing on environment and, ultimately, social welfare in terms of gains and losses under three alternative scenarios regarding no, partial, or full accountability for outsourcing induced environmental damages. The policy implication is clear: to fully resolve the environmental problem in Stage III, the implementation of strong regulations or the fostering international cooperation is desirable; that is, until the environmental costs of outsourcing are fully accounted for by the outsourcing firms in the North. Such firms, however, may react by resorting to insourcing, diversified outsourcing and other strategies.
    Keywords: outsourcing; labor-augmenting effect; environmental costs; internalization; vendor countries
    JEL: F11 F13 F22
    Date: 2018–06–13
  21. By: Hamza El Guili (University of Abdelmalek Essasdi, Morocco)
    Abstract: The acceptance and recognition of born global firms (BGs) as relevant and singular organizations across the world’s economy has been flourishing in the recent years. Born globals are commonly entrepreneurial and relatively young small and medium sized enterprises (SMEs), with limited resources. Although these restrictions and constraints, BGs initiate their internationalization process from early stages. Thus, they conduct their internationalization process more rapidly than traditional firms operating in domestic markets and using incremental processes. Nevertheless, theories on BGs are still not fully developed by researchers. Few studies have tried to advance theoretical reflections on born global firms and their internationalization. This paper examines how research on BGs internationalization has emerged and its development over time. Furthermore, it identifies the challenges faced by these firms when they internationalize and gives future research suggestions to academicians for the advance of the research in the internationalization of born global firms.
    Keywords: SMEs, Internationalization, Born globals, Early internationalization
    Date: 2018–05
  22. By: Schiff, Maurice (World Bank)
    Abstract: Based on a welfare-maximization model of skilled migration where education generates a positive externality, this paper examines whether the early view regarding brain drain's (BD) negative impact on source countries and the Bhagwati tax (BT) associated with it, is compatible with the recent more optimistic BD-induced brain gain view. I derive BD's impact on education, welfare, optimal education subsidy (s), and a combination of s and BT, when residents' (emigrants') weight in the government's objective function is 1 (1 − β), with β ε [0,1]. I find that: i) education, welfare and s are higher (lower) under an open than under a closed economy for 1 − β larger (smaller) than the ratio of source-country to host-country income; ii) s and BT are 'policy complements,' i.e., they are positively related; and iii) BT increases with β and reaches a maximum at β = 1. Two implications and a proposal are: a) The early literature focused on resident – rather than on migrant – welfare (the β = 1 case), which is precisely where the optimal BT is largest; b) A second policy instrument should be useful, especially if there are constraints on making changes in the other one. Thus, as opening up the economy implies a lower s, raising BT should be beneficial if, say, parents' and teachers' organizations make it politically difficult if not impossible to reduce s; c) A proposal for collecting the tax is presented.
    Keywords: brain drain, brain gain, Bhagwati tax, education subsidy, welfare
    JEL: F20 F22 I25 O15
    Date: 2018–05
  23. By: Lara, Jaime
    Abstract: This article assesses the impact of international migration on the subjective well-being of communities of origin in Mexico. Using a representative national survey and an empirical strategy with instrumental variables, we find that higher migratory intensity, at the municipal level, increases life satisfaction among men and women. There is a negative effect on emotional states of women, but an improvement in emotional states of men. Without controlling for schooling, a variable affected by international migration, men have a lower satisfaction with their perspective of future. Overall, the evidence in Mexico shows that the effects of international migration in the communities of origin are complex and with differential effects based on gender.
    Keywords: life satisfaction; emotions; Mexican migration
    JEL: I31 O15
    Date: 2018
  24. By: Anindya Bhattacharya; Debapriya Sen
    Abstract: This paper revisits the "race to the bottom" phenomenon in a simple game theoretic framework. We consider two countries and one multinational firm, which requires two inputs that are imperfect substitutes. In the benchmark model the labour of each country specializes in a distinct input. Seeking to maximize their labour incomes, countries simultaneously announce wages following which the firm chooses its labour employment in each country. We show that "race to the bottom" (countries setting minimum possible wages) is never an equilibrium. Moreover there are equilibria with "race to the top", that is, countries set maximum possible wages. This result is robust in an extended model where prior to competing in wages, each country can make input-specific investments to make its labour available for one or both inputs. Provided the production function of the firm is not asymmetrically intensive in either one of the two inputs, there are equilibria of the extended game with specialization (that is, countries invest in distinct inputs) as well as "race to the top".
    Keywords: race to the bottom; race to the top; labour policy; multinational; constant elasticity of substitution
    JEL: J42 O11
    Date: 2018–07
  25. By: Miriam Camarero (Jaume I University. Department of Economics, Av. de Vicent Sos Baynat s/n, E-12071 Castellón, Spain); Laura Montolio (University of Valencia, Department of Applied Economics II, Av. dels Tarongers, s/n Eastern Department Building E-46022 Valencia, Spain); Cecilio Tamarit (University of Valencia, INTECO Joint Research Unit. Department of Applied Economics II. PO Box 22.006 - E-46071 Valencia, Spain)
    Abstract: After two decades of academic debate on the factors that determine FDI, the discussion still remains open. This article empirically investigates the determinants of FDI activity from a macroeconomic point of view, using Spanish regional data (NUTS 2) for the period 2004-2013. We apply the Poisson Pseudo-Maximum-Likelihood estimator with country-origin fixed effects in a gravity framework. The empirical analysis revealed the following allocation patterns: FDI locational strategies in the Spanish regions are determined significantly by the economic potential and competitiveness of the regions and, in a lesser extent, by the productive capacity. We also confirm the adequacy of using the stock of FDI and obtain an improved specification of the model compared to previous empirical literature based on FDI flows. The results allow us to draw some policy implications about the prospective promotion of incoming FDI at the subnational level.
    Keywords: Foreign Direct Investment determinants; PPML; Gravity model; Spanish regions
    JEL: F21 R12 C23
    Date: 2018–09
  26. By: Franses, Ph.H.B.F.; van den Heuvel, W.
    Abstract: The available aggregated data on the Atlantic slave trade in between 1519 and 1875 concern the numbers of slaves transported by a country and the numbers of slaves who arrived at various destinations (where one of the destinations is “deceased”). It is however unknown how many slaves, at an aggregate level, were transported to where and by whom, that is, we know the row and column totals, but we do not known the numbers in the cells of the matrix. In this paper we use a simple mathematical technique to fill in the void. It allows us to estimate the trends in the deceases per transporting country, and also to estimate the fraction of slaves who went to own colonies or to others. For example, we estimate that of all the slaves who were transported by the Dutch only about 7 percent went to Dutch colonies, whereas for the Portuguese this number is about 37 percent.
    Date: 2018–06–01
  27. By: Anusha Mahendran (Curtin University, Australia)
    Abstract: The World Bank for several years has endorsed an agenda of promoting economic development through labour migrant programs in many regions including the Oceanic-Pacific region. Evidence also seems to indicate that the effective facilitation of economic development through labour migrant programs requires appropriate matching of migrant workers to suitable employment opportunities in industry sectors within host countries where there exists relevant vacancies that migrant workers could be matched to and that they would be able to undertake in a meaningful way. As such, the analysis of pertinent labour market data relating to industry sectors experiencing labour shortages within host countries is necessary to accurately identify occupational groups which require an influx of appropriately matched migrant workers to meet labour demand. In addition such labour market data analysis would also enable the extent of the labour shortages across the job categories within the specific sectors to be astutely assessed and evaluated, which is likely to contribute to improving the overall success of the labour migrant policies and programs that are developed and implemented. To this end, this paper provides a summary analysis of the potential employment opportunities for migrant workers within specific occupational groups across relevant industry sectors in potential host countries.
    Keywords: economic development, employment opportunities for migrant workers
    Date: 2018–05
  28. By: Marjan Petreski; Blagica Petreski; Despina Tumanoska; Edlira Narazani; Fatush Kazazi; Galjina Ognjanov; Irena Jankovic; Arben Mustafa; Tereza Kochovska
    Date: 2016–12
  29. By: De Loecker, Jan; Eeckhout, Jan
    Abstract: To date, little is known about the evolution of market power for the economies around the world. We extract data from the financial statements of over 70,000 firms in 134 countries, and we analyze and document the evolution of markups over the last four decades. We show that the average global markup has gone up from close to 1.1 in 1980 to around 1.6 in 2016. Markups have risen most in North America and Europe, and least in emerging economies in Latin America and Asia. We discuss the distributional implications of the rise in global market power for the labor share and for the profit share.
    Date: 2018–06
  30. By: Effrosyni Diamantoudi (Concordia University); Eftichios Sartzetakis (University of Macedonia); Stefania Strantza (Concordia University)
    Abstract: This paper examines the stability of International Environmental Agreements (IEAs) in an economy with trade. We extent the basic model of the IEAs by letting countries choose emission taxes and import tariffs as their policy instruments in order to manage climate change and control trade. We define the equilibrium of a three-stage emission game. In the first stage, each country decides whether or not to join the agreement. In the second stage, countries choose simultaneously - cooperatively or non-cooperatively - tariff and tax levels. In the third stage, taking countries’ decisions as given, firms compete a la Cournot in the product markets. Numerical analysis illustrates that the interaction between trade and environment policies is essential in enhancing cooperation. Contrary to the IEA model, stable agreements are larger and more efficient in reducing aggregate emissions and improving welfare. Moreover, the analysis shows that the size of a stable agreement increases in the number of countries affected by the externalities.
    Keywords: Environmental Agreements
    JEL: D6 Q5 C7
    Date: 2018–07
  31. By: Yamamoto, Satoshi; Kan, Viktoriya; Bartnik, Roman
    Abstract: This paper explores why a specific group of highly specialized Japanese toolmakers have chosen to expand their limited customer base to include Germany, despite strong cultural and geographical differences. Analyzing the phenomenon through the theoretical lens of International Entrepreneurship research, we find that compared to existing Japanese customers, Japanese SMEs perceived the German customers as less hierarchically dominant and more open and appreciative of their products. Japanese SMEs cited a highly interactive learning relationship with their German customers as a strong potential source for product and process innovation. In sum, we find that this the aspiration for innovativeness is a key motivator for these specialized Japanese SMEs to expand their business to Germany.
    Keywords: Innovativeness, Internationalization, IEO, Japanese manufacturers, German Customers
    Date: 2018–06

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