nep-int New Economics Papers
on International Trade
Issue of 2018‒07‒23
38 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Mitigating the adjustment costs of international trade By Akman, Sait; Brandi, Clara; Dadush, Uri; Draper, Peter; Freytag, Andreas; Kautz, Miriam; Rashish, Peter; Schwarzer, Johannes; Vos, Rob
  2. Brexit trade impacts and Mercosur's negotiations with Europe By Nogues, Julio
  3. GVCs and the Endogenous Geography of RTAs By Lionel Fontagné; Gianluca Santoni
  4. Managing Trade: Evidence from China and the US By Nicholas Bloom; Kalina Manova; Stephen Teng Sun; John Van Reenen; Zhihong Yu
  5. Brands in Motion: How Frictions Shape Multinational Production By Keith Head; Thierry Mayer
  6. Survey of gravity models of trade and labour, and a proposed trade-employment gravity model for the Philippines By Abueg, Luisito
  7. Assessment of the Benefits, Risks and Costs of the Transition to the Regime of Preferential Trade and Economic Interaction with the People's Republic of China By Knobel, Alexander
  8. Prospects for Reducing Barriers to Exports in the Context of the Participation of Russian Firms in Global Value Chains By Kuznetsov, Dmitriy; Sedalishchev, Vladimir; Knobel, Alexander
  9. Trade Revenue Implications of Trade Liberalization in Pakistan By Ahmad, Khalil; Ali, Safdar; Ali, Amjad
  10. Choked by Red Tape? The Political Economy of Wasteful Trade Barriers By Maggi, Giovanni; Mrázová, Monika; Neary, J Peter
  11. The age of mass migration in Latin America By Blanca Sánchez-Alonso
  12. Trade creation and trade diversion of regional trade agreements revisited: A constrained panel pseudo-maximum likelihood approach By Michael Pfaffermayr
  13. The US-China Trade Competition: An Overview By K M, SIBY; P, DR.ARUNACHALAM
  14. Investigation of the Relationship between the Intensity of International Trade and the Volatility of Paired Exchange Rates of the Russian Federation and its Trading Partners By Ponomarev, Yuriy; Rey, Aleksey; Radchenko, Darya
  15. Networks and trade By Bernard, Andrew B.; Moxnes, Andreas
  16. Obstacles and Enablers of Internationalization of Philippine SMEs Through Participation in Global Value Chains By Canare, Tristan A.; Francisco, Jamil Paulo; Labios, Jean Rebecca
  17. What’s in the annual database of Global Wine Markets, 1835 to 2016? By Kym Anderson; Vicente Pinilla
  18. From Tatopani to Rasuwa: An analysis of Nepal-China trade after the earthquake By Kharel, Paras
  19. A crise do regime multilateral de comércio internacional e a proliferação de acordos preferenciais de comércio By Patrícia Nasser de Carvalho; Beatriz Figueiredo Neto Assis; Kênia Marjory de Souza Oliveira
  20. Trade, Inequality, and Subjective Well-Being: Getting at the Roots of the Backlash Against Globalization By Barbara Dluhosch
  21. China’s Agricultural Import Potential By Minghao Li; Wendong Zhang; Dermot J. Hayes
  22. International trade and retail market performance and structure: Theory and empirical evidence By Meinen, Philipp; Raff, Horst
  23. Growing Against the Background of Colonization? Chinese Labor Market and FDI in a Historical Perspective By Hao Wang; Jan Fidrmuc; Yunhua Tian
  24. Incentives and Constraints of Informal Trade Between Nigeria and its Neighbours By Leena Koni Hoffmann; Paul Melly
  25. Sectoral Indices of the Terms of Trade: Development of Methodology and Overview for Russia By Magomedov, Rustam; Idrisova, Vittoria
  26. Prospects and Macroeconomic Consequences of the Development of Integration within the Framework of the EAEU By Kuznetsov, Dmitriy; Sedalishchev, Vladimir; Knobel, Alexander
  27. Determinants of FDI Attraction in the Manufacturing Sector in Mexico, 1999-2015 By Fonseca Felipe J.; Llamosas-Rosas Irving
  28. The Effects of Immigration in Developed Countries: Insights from Recent Economic Research By Anthony Edo; Lionel Ragot; Hillel Rapoport; Sulin Sardoschau; Andreas Steinmayr
  29. Trade facilitation, transport costs and the price of trucking services in East Africa By Eberhard-Ruiz, Andreas; Calabrese, Linda
  30. Of Mice and Merchants: Trade and Growth in the Iron Age By Jan David Bakker; Stephan Maurer; Jörn-Steffen Pischke; Ferdinand Rauch
  31. Collective Entry Deterrence and Free Riding: Airbus and Boeing in China By Patrice CASSAGNARD; Pierre REGIBEAU
  32. Comercio exterior de Colombia: Un análisis desde la ley de la ventaja comparativael. By José Tomás Pelaéz Soto
  33. The Impact of Exchange Rates and Their Volatility on Russia's Foreign Trade, Taking into Account its Membership in EAEU By Knobel, Alexander; Chentsov, Alexander
  34. Testing for causality between FDI and economic growth using heterogeneous panel data By Chanegriha, Melisa; Stewart, Chris; Tsoukis, Christopher
  35. How Importers May Hedge Demand Uncertainty By Horst Raff; Nicolas Schmitt; Frank Stähler
  36. Product innovation by supplying in domestic and foreign markets By Bratti, Massimiliano; Felice, Giulia
  37. Understanding the Social and Cultural Bases of Brexit By Tak Wing Chan; Morag Henderson; Maria Sironi; Juta Kawalerowicz
  38. Gravity and Migration before Railways: Evidence from Parisian Prostitutes and Revolutionaries By Morgan Kelly; Cormac Ó Gráda

  1. By: Akman, Sait; Brandi, Clara; Dadush, Uri; Draper, Peter; Freytag, Andreas; Kautz, Miriam; Rashish, Peter; Schwarzer, Johannes; Vos, Rob
    Abstract: The evidence demonstrating that nations gain from trade is overwhelming. However, trade liberalization can cause disruption to firms and workers, and its gains and losses are spread unevenly. While many gain from trade, import surges have sometimes undermined the economic viability of whole communities. Existing mechanisms specifically designed to mitigate trade adjustment costs are often inadequate. They can be a source of inefficiency and inequity since trade shocks are only a part of the economic uncertainty affecting workers. Gradualism in trade liberalization combined with preemptive measures to strengthen competitiveness, can help mitigate adjustment costs. Displaced workers are best helped using generally applied safety nets, not those specific to trade. But these are not enough. Trade adjustment requires mobility of factors. International coordination is required to support an open and predictable trading system under the WTO, as the greatest future source of trade shocks could be protectionism, not trade liberalization.
    Keywords: trade liberalization,protectionism,adjustment,inequality,China,international coordination,technology
    JEL: F16
    Date: 2018
  2. By: Nogues, Julio
    Abstract: We estimate that a hard Brexit would reduce UK imports of agro industrial products from the EU by 50% more than double the contraction in imports of other goods (22%). The UK Government has announced that it will substitute the CAP (Common Agricultural Policy) protectionist policies with market-oriented measures and policies that seek to protect the environment. Given Brexit, and given scarce negotiating resources, should Mercosur continue to give the same priority to negotiations with the EU as in recent years? The answer is most likely negative. For a number of reasons discussed in the text we argue that: i) negotiations with the EU are unlikely to deliver market access much in excess of what it has offered so far; ii) unlike these negotiations that have been dragging for around twenty years, there are clear circumstances indicating that an FTA with the UK could be completed in a relatively short period; iii) failing Mercosur to give these talks priority, other countries are more than likely to fill the UK trade gap triggered by Brexit; iv) if other countries do so, it is unlikely that in the future the UK would be willing to offer market access concessions as important as it is likely to do today and, v) the UK is one fifth of the EU GDP so balanced reciprocal concessions should be easier to achieve. What are the stakes at play? We offer back of the envelope estimates indicating that in value terms Mercosur could more than triple its meat exports and close to double its agro industrial exports to the UK within a time horizon that currently appears to be quite concrete and near.
    Keywords: Brexit; Mercosur; agro industry trade
    JEL: F1 F14 F17 Q1
    Date: 2018–06
  3. By: Lionel Fontagné (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Gianluca Santoni (CEPII - Centre d'études prospectives et d'informations internationales)
    Abstract: There has been considerable attention paid to the endogenous nature of regional trade agreements Geography, economic size, or common history help predicting signed agreements. However, not all signed RTAs are "natural" according to economic determinants, as trade negotiations can be used as a tool of external policy. Recent developments in terms of structural gravity help clarifying this debate by taking account of all theoretically relevant determinants of bilateral trade, as well as general equilibrium effects of signing an agreement. Indeed, the endogeneity of trade arrangements has a time dimension and is related to firm strategies. These are the two mechanisms addressed in this paper. We estimate the time-varying probability for a country pair to sign a trade agreement and build upon structural gravity in general equilibrium to determine how the patterns of Global Value Chains shape the evolving geography of optimal trade agreements. Our results confirm that the endogenous geography of RTAs is shaped by the development of GVCs.
    Abstract: Une grande attention a été accordée à la nature endogène des accords commerciaux régionaux. La géographie, la taille économique ou l'histoire commune aident à prévoir les accords régionaux (ACR) signés. Cependant, tous les ACR signés ne sont pas "naturels" du point de vue des seuls déterminants économiques, dans la mesure où les négociations commerciales peuvent être utilisées comme un outil de politique extérieure.Les développements récents en termes de modèles structurels de gravité des échanges aident à clarifier ce débat en prenant en compte l'ensemble des déterminants théoriques du commerce bilatéral. En effet, l'endogénéité des accords commerciaux a une dimension temporelle et est liée aux stratégies des firmes. Ces deux mécanismes sont abordés ici : nous estimons a probabilité pour chaque paire de pays de signer un accord commercial et utilisons la gravité structurelle en équilibre général pour déterminer comment les chaînes de valeur mondiales façonnent la géographie optimale des accords commerciaux. Nos résultats confirment que la géographie endogène des ACR est façonnée par le développement des chaînes de valeurs mondiales.
    Date: 2018–04–11
  4. By: Nicholas Bloom; Kalina Manova; Stephen Teng Sun; John Van Reenen; Zhihong Yu
    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: management, exports, product quality, productivity
    JEL: F10 F14 F23 L20 O19 O32
    Date: 2018–06
  5. By: Keith Head; Thierry Mayer
    Abstract: Following the 2016 Leave vote in the referendum on UK membership in the EU and the election of Donald Trump, trade agreements have entered a period of great instability. To predict the impact of possible disruptions to existing arrangements requires counterfactual analysis that takes into account the complex set of factors influencing the production and marketing strategies of multinational corporations. We estimate a model of multinational decision making in the car industry. This model predicts the production reallocation and consumer surplus consequences of changes in tariffs and non-tariff barriers induced by NAFTA termination, Brexit, Trans-Pacific and Trans-Atlantic integration agreements.
    Keywords: trade agreements, Brexit, tariffs, non-tariff barriers
    Date: 2018–06
  6. By: Abueg, Luisito
    Abstract: A review of literature on gravity models on international trade, with a proposed model for the Philippines linking trade and employment. This review of literature provides other aspects of gravity modelling, from its elementary formulation as proposed by Timbergen (1962) to current theoretical and empirical extensions.
    Keywords: gravity model, trade facilitation, behind-the-border barriers, free trade agreements, globalization, labour markets, employment, Philippine international trade
    JEL: F11 F14 F16
    Date: 2018–05
  7. By: Knobel, Alexander (Russian Presidential Academy of National Economy and Public Administration (RANEPA))
    Abstract: This paper analyze the trade regime, tariff and non-tariff measures of the PRC's trade policy, including TBT and SPS measures, issues of intellectual property rights protection, subsidies, public procurement, e-commerce, regulation of special economic zones. It also examines the situation of the Chinese economy in world production and trade, the issues of export specialization, competitiveness and participation in global value chains.
    Date: 2018–06
  8. By: Kuznetsov, Dmitriy (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Sedalishchev, Vladimir (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Knobel, Alexander (Russian Presidential Academy of National Economy and Public Administration (RANEPA))
    Abstract: The presented study considers and calculates using the most relevant data for the Russian economy the measure of Upstreamness, which reflects the average position of the industries in a representative value chain. This measure was used to demonstrate the main trends of Russian foreign trade in terms of position in global value chains. The values of Upstreamness obtained are also used to analyze the position of Russian firms in global value chains. The main conclusion of the work is that Russian enterprises tend to increase over time the number of stages of the production chain they are engaged, which contradicts the mechanisms prevailing in the literature, which indicate the desire of firms for specialization.
    Keywords: export, import, foreign trade, value chains, input-output tables, Upstreamness
    Date: 2018–06
  9. By: Ahmad, Khalil; Ali, Safdar; Ali, Amjad
    Abstract: This study attempts to investigate the effect of free trade on trade tax revenue in case of Pakistan during 1972-2014. For time series analysis, Autoregressive Distributed Lag (ARDL) model has been used for examining the long run co-integration among the variables and Vector Error-Correction model is used for short run dynamics of the variables. The empirical results show that quantitative trade restriction is positively linked with trade tax revenue. On the basis of empirical findings, this study suggests that trade liberalization has negative impact on trade tax revenue. We improve the volume of average tariff rate; it may cause to increase the trade tax revenue for Pakistan in both short run and long run.
    Keywords: Trade liberalization, Tariff rate, Trade tax revenue
    JEL: F10 F13 H2
    Date: 2018–05
  10. By: Maggi, Giovanni; Mrázová, Monika; Neary, J Peter
    Abstract: Red-tape barriers (RTBs) are an important source of trade costs, but have received little scholarly attention to date. Here we examine the economic-political determinants of RTBs and their effects on trade. Because of their wasteful nature, RTBs have very different implications from those of more traditional trade barriers. In particular, RTBs have important impacts on the extensive margin of trade, and respond in non-standard ways to changes in tariffs and natural trade costs. We argue that taking into account the endogenous response of RTBs is crucial for understanding the effects of tariff liberalization and globalization on trade and welfare.
    Keywords: International trade policy; Non-Tariff Measures; political economy; Red tape barriers
    JEL: D7 F13 F55
    Date: 2018–06
  11. By: Blanca Sánchez-Alonso (Dept. of Economics, Universidad CEU-San Pablo, Madrid)
    Abstract: The experiences of Latin American countries are not fully incorporated into current debates concerning the age of mass migration even though 13 million Europeans migrated to the region between 1870 and 1930. This paper draws together different aspects of the Latin America immigration experience. Its main objective is to rethink the role of European migration to the region, addressing several major questions in the economics of migration: whether immigrants were positively selected from their sending countries, how immigrants assimilated into the host economies, the role of immigration policies, and the long-run effects of immigration. Immigrants came from the economically backward areas of Southern and Eastern Europe, yet their adjustment to the host labour markets in Latin America seems to have been successful. The possibility of rapid social upgrading made Latin America attractive for European immigrants. Migrants were positively selected from origin according to literacy. The most revealing aspect of new research is showing the positive long-run effects that European immigrants had in Latin American countries. The political economy of immigration policies deserves new research, particularly for Brazil and Cuba. The case of Argentina shows a more complex scenario than the classic representation of landowners constantly supporting an open-door policy.
    Keywords: Historical migration, Latin America, Immigrants’ selection, Socioeconomic impact.
    JEL: N36 O15 J61
    Date: 2018–07
  12. By: Michael Pfaffermayr
    Abstract: For the estimation of structural gravity models using PPML with countrypair, exporter-time and importer-time effects it proves useful to exploit the equilibrium restrictions imposed by the system of multilateral resistances. This yields an iterative projection based PPML estimator that is unaffected by the incidental parameters problem. Further, in this setting it is straight forward to establish the asymptotic distribution of the structural parameters and that of counterfactual predictions. The present contribution applies the constrained panel PPML estimator to reconsider the trade creation and trade diversion effects of regional trade agreements. Results show significant trade creation effects of RTAs ranging in between 8.7 and 21.7 percent in 2012, but also point to substantial trade diversion in the range of -14.4 and -5.8 percent. These counterfactual predictions account for adjustment in multilateral trade resistances. The quite large confidence intervals of counterfactual predictions seem to be an overlooked issue in the literature.
    Keywords: Constrained Panel Poisson Pseudo Maximum Likelihood Estimation, International Trade, Gravity Equation, Structural Estimation
    JEL: F10 F15 C13 C50
    Date: 2018–07
    Abstract: An impending trade war between US and China, the world’s two largest economies can cause insurmountable consequences of unfathomable magnitude. It can cause distortions in the complex web of interconnected commodity and value chains sprawled across the boundaries, ultimately leading to suboptimal social welfare of the international community. The present paper intends to provide an overview of the US-China trade imbalance and resulting trade tensions that it begets .The paper analyses various reasons for the US- China trade competition and its implications on world trade quoting world bank data from 1992-2016 and concludes by proposing the likelihood of not getting the scenario escalated.
    Keywords: Trade war, global value chain, economic nationalism, protectionism, isolationism
    JEL: F10 F51
    Date: 2018–06–09
  14. By: Ponomarev, Yuriy (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Rey, Aleksey (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Radchenko, Darya (Russian Presidential Academy of National Economy and Public Administration (RANEPA))
    Abstract: This study analyzes the interaction of intensity of bilateral trade in goods and volatility of pairwise exchange rates between Russia and its major trade partners. While the bulk of existing economic literature considers mainly the one-side causal link from exchange rate volatility to trade in goods, and the negative impact of exchange rate fluctuations on the normal course of export and import transactions, this paper estimates simultaneously (for the first time for Russian trade data) the inverse relationship. This paper synthesizes a wide range of macro- and microeconomic data, including variables drawn from customs declarations. It also explores the effect on real effective exchange rate (REER) volatility of differences in short-term interest rates and stock markets' rates of growth in dyadic relationships between Russia and its trade partners. The study does not find support in statistical data for the hypothesis of impact of REER volatility on bilateral trade intensity, while the inverse hypothesis is shown to be statistically significant. Credit rate, macroeconomic trade intensity, and microstructural (based on customs declarations' data) channels have major impact on REER volatility in the sample dataset.
    Date: 2018–06
  15. By: Bernard, Andrew B.; Moxnes, Andreas
    Abstract: Trade occurs between firms both across borders and within countries, and the vast majority of trade transactions includes at least one large firm with many trading partners. This paper reviews the literature on firm-to-firm connections in trade. A growing body of evidence coming from domestic and international transaction data has established empirical regularities which have inspired the development of new theories emphasizing firm heterogeneity among both buyers and suppliers in production networks. Theoretical work has considered both static and dynamic matching environments in a framework of many-to-many matching. The literature on trade and production networks is at an early stage, and there are a large number of unanswered empirical and theoretical questions.
    Keywords: international trade; production networks; offshoring; productivity
    JEL: F10 F12 F14 L11 L21
    Date: 2018–04–01
  16. By: Canare, Tristan A.; Francisco, Jamil Paulo; Labios, Jean Rebecca
    Abstract: Small and medium-sized enterprises (SMEs) are important in many developing countries, including the Philippines. However, this sector remains much less productive than their large counterparts. One factor that can help SMEs achieve higher productivity is to connect them to global value chains (GVCs) through internationalization. However, SMEs are faced with a host of obstacles in trying to participate in GVCs. This paper attempts to determine the challenges and enablers of connecting small and medium businesses to GVCs. It uses data from a survey of Metro Manila SMEs and a set of key informant interviews of SME owners and of government officials tasked to assist SMEs. Findings show that Philippine SMEs are weakly linked to GVCs. The challenges and enablers can be grouped into five themes, namely: (1) competition in ASEAN and East Asia; 2) international standards, regulatory requirements, and local institutions; (3) role of the government; (4) international market demand and inputs supply; and (5) entrepreneurial mindset. Based on the results, some policy implications were formulated.
    Keywords: competition, Philippines, global value chains, SMEs, small and medium enterprises, Philippine SMEs, internationalization, exports
    Date: 2018
  17. By: Kym Anderson; Vicente Pinilla
    Abstract: This paper documents a new, unique annual database of global wine markets covering 1835 to 2016. The database expands enormously the opportunities for conducting studies on wine production, consumption and trade from an historical perspective for the world as a whole and for most relevant countries. The combination of this basic information with other economic variables such as real GDP, population, total merchandise trade, total crop area and the consumption of other alcoholic drinks has enabled us to generate myriad derived variables that are helpful for comparative analyses as well as for studying the two waves of globalization.
    Keywords: Wine History, Historical Databases, Economic History, Wine Economics
    JEL: N50 N70 Q13 Q17
    Date: 2018–07
  18. By: Kharel, Paras
    Abstract: This paper analyses changes in Nepal’s trade with China in the wake of the 2015 earthquake, which was followed by a blockade of the Nepal-India border. Using monthly trade data to obtain trade flows over sub-periods of less than a year, it first shows how the blockade compounded the earthquake’s blow to trade. It, then, dissects Nepal-China trade performance and patterns at the product level, customs point/route level and product-customs point/route level. With Tatopani-Zhangmu, the main commercial trading point on the Nepal-China border, shut after the earthquake and Rasuwagadhi-Kerung, a recently opened trading point with a barely motorable road, unable to fully absorb the diverted trade traffic, portions of Nepal’s overland imports from China were forced to take a costly detour via sea. The share of overland imports from China fell from 24 per cent before the earthquake to 12 per cent two years after the quake. There was a general shift towards using both sea and air routes rather than just a single route for imports. The time cost imposed by the enforced sea detour for imports is equivalent to a tariff of 18 per cent to 62 per cent. The share of overland exports to China fell from 69 per cent to 43 per cent. While changes in routes were stark for imports, they were modest for exports that initially used Tatopani. The limited route changes for exports occurred overwhelmingly towards the air route rather than the sea route. The relative importance of exports to China via air has increased, but total exports to China, as of the end of Fiscal Year 2016/17, were yet to be restored to pre-earthquake levels. The paper discusses likely issues in the future of Nepal-China trade through the lens of transport and transit, including the emergence of the Rasuwagadhi-Kerung option. As a landlocked country, Nepal’s strategy should be to diversify trade and transit routes, exploring all options. The temptation to make a cost-benefit analysis comparing trade costs along different routes, without factoring in the value of transit needs, must be avoided.
    Keywords: Nepal-China trade; Nepal-India relations; Nepal earthquake, Nepal-India border blockade; trade costs; transit; Tatopani-Zhangmu; Rasuwagadhi-Kerung; Nepal-China railway
    JEL: F13 F14 F15 Q54
    Date: 2018–06
  19. By: Patrícia Nasser de Carvalho (UFMG); Beatriz Figueiredo Neto Assis (UFMG); Kênia Marjory de Souza Oliveira (UFMG)
    Abstract: The aim of this paper is to analyze, theoretical and empirically, the crisis of the multilateral regime of international trade, taking into consideration the great difficulties faced by the World Trade Organization (WTO) over the past two decades. This crisis contributes to the proliferation of Preferential Trade Agreements (PTA)s, a 1990s process that has been intensified in the early part of this century and tends to remain.
    Keywords: WTO; crisis; Preferential Trade Agreements; Multilateralism; International Trade
    JEL: F13 F15
    Date: 2018–06
  20. By: Barbara Dluhosch
    Abstract: Many countries in the Western hemisphere are currently experiencing a backlash against globalization. Most of the research examining the issue has concentrated on international specialization and within-country income inequality as main drivers of the backlash. Doing so, the discussion has primarily revolved around the question whether and to what extend the income distribution has widened and whether trade is responsible indeed. However, political trends may be more grounded in perceptions than facts, thus giving rise to inappropriate populist policies. The difference matters all the more as the former may be accentuated by (social) media. Drawing mainly on subjective well-being (SWB) data from theWorld Values Survey (WVS) and income statistics from the Luxembourg Income Study (LIS), this paper shows in an international cross-section analysis that income inequality is perceived very differently depending on openness to trade. The relevance of perceptions has wider politico-economic implications in that it carries the risk of costly anti-trade policies, without necessarily narrowing the income distribution.
    Keywords: -Subjective Well-Being, International Trade, Income Distribution, Inequality, Identity
    JEL: F13 D63 D31
    Date: 2018–06
  21. 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
  22. 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
    JEL: F12 L11
    Date: 2018
  23. By: Hao Wang; Jan Fidrmuc; Yunhua Tian
    Abstract: This article investigates how the legacy of colonization shapes the impact of inward FDI on employment in the Chinese labor market. The analysis utilizes provincial panel on overall employment and employment in the service sector during 2006-15. We find that inward FDI significantly promotes employment and that this relationship is stronger in regions once colonized by Western countries. Conversely, regions with a legacy of Japanese colonization display a weaker, and even negative, relationship between FDI and employment. These findings are robust to controlling for the length and intensity of colonization, as well as for endogeneity of FDI.
    Keywords: foreign direct investment, colonization, human capital, China
    JEL: F21 F54 O15
    Date: 2018
  24. By: Leena Koni Hoffmann (Chatham House); Paul Melly (Chatham House)
    Abstract: The scale of unrecorded trade across the border between Nigeria, the region’s biggest economy and market, and its francophone neighbours is particularly high. Despite providing economic incentives, informal trade entails costs, complications and sometimes risks. This paper explores how policy choices and government actions continue to drive informality and the critical steps that might be taken to create a business environment that is more conducive and supportive of trade between West African neighbours on a formal basis. It goes on to examine the steps that have been taken since 2015 regarding trade promotion by West African states and considers the options for further policy action and public investment.
    Keywords: border co-operation, informal trade, regional integration, regional markets, trade network
    JEL: F1 F4 O1 Q1
    Date: 2018–07–18
  25. By: Magomedov, Rustam (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Idrisova, Vittoria (Russian Presidential Academy of National Economy and Public Administration (RANEPA))
    Abstract: The main purpose of the project is to study and calculation of industry in the terms of trade for Russia. The following tasks were solved: the comparison of different methodologies of the calculation of terms of trade of countries and industries was conducted; the major advantages and drawbacks of different methods were reveales; the analysis of existing theoretical approaches and the review of existing databases were conducted; the analysis of theoretical literature on the impact of tariff and non-tariff measures, subsides, productivity and exchange rate on terms of trade was conducted; the differences in terms of trade for different countries were analysed; the terms of trade for Russian manufacturing industries were calculated; the recommendations for using the results of the study were proposed. To solve these above stated problems, we used data on customs declaration.
    Date: 2018–06
  26. By: Kuznetsov, Dmitriy (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Sedalishchev, Vladimir (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Knobel, Alexander (Russian Presidential Academy of National Economy and Public Administration (RANEPA))
    Abstract: The purpose of this study is to assess the impact of various directions of economic integration within the framework of the EAEU on the economies of the countries of this association. The analysis is carried out on the basis of a computable general equilibrium (CGE) model, which is suitable for modeling non-tariff barriers and monopolistic competition. Based on the results obtained in the study, a conclusion is made on the priority of deepening economic integration within EAEU as compared to the expansion of the membership of the EAEU and to the FTA between the EAEU and the main trading partners of the EAEU countries.
    Keywords: computable general equilibrium model, ÅAEU, tariff liberalization, non-tariff barriers in trade
    Date: 2018–06
  27. By: Fonseca Felipe J.; Llamosas-Rosas Irving
    Abstract: Using an up-to-date database that improves the identification of the destination of the Foreign Direct Investment (FDI) among Mexican states and spatial panel econometric models that quantify the potential interactions and spillover effects, we analyze the main characteristics that help understand the regional distribution of manufacturing FDI in Mexico. Our main findings indicate the presence of a positive spatial relationship among states' FDI; for example, a higher investment creates a positive spillover effect on neighboring states' FDI and positive direct and indirect effects of human capital, agglomeration and states' fiscal margin. Based on the results of this research, key implications for public policy oriented to strengthen the FDI reside in increasing the average education level and improving tax revenue of Mexican states.
    Keywords: FDI;spatial panel econometric models;spillover effects
    JEL: C21 C23 R12
    Date: 2018–06
  28. By: Anthony Edo; Lionel Ragot; Hillel Rapoport; Sulin Sardoschau; Andreas Steinmayr
    Abstract: Immigrants currently account for 3.3% of the world’s population. We know that migration is demographically important, but what are its implications for the labour market, public finance and political landscape? To answer these questions, this report draws on recent literature on the economic and cultural effects of immigration on host societies, with a focus on evidence for European countries. Although the average effects of immigration on labour markets and public finance are marginal, immigration can create winners and losers in the native workforce. By affecting the skill composition of receiving economies, an immigration-induced increase in the labour supply can impact wage dispersion in host countries. It is cultural concerns, however, that tend to fuel scepticism towards immigration, with fiscal or labour market playing only a secondary role. A deeper understanding of these concerns is a precondition for designing policies that foster a positive atmosphere and combat negative attitudes towards immigrants and extreme voting.
    Date: 2018
  29. By: Eberhard-Ruiz, Andreas; Calabrese, Linda
    Abstract: We examine how increased trade facilitation affects the price for trucking services in East Africa. Using a combination of qualitative and quantitative data from primary and secondary sources we are able to provide a detailed account of the market structure of trucking services on a key trading route between Mombasa and Kampala, which is used by importers and exporters across the region. We find that trucking services on this route are provided on a competitive basis and that increased trade facilitation would lead to significantly lower transport prices. In total, we estimate that transport prices could fall by as much as 30% from their current levels through a combination of trade facilitation measures that reduce transit time and transit cost to a minimum.
    Keywords: trade facilitation; transport corridors; East African Community; trucking
    JEL: F14 L92 R41
    Date: 2018–01–31
  30. By: Jan David Bakker (University of Oxford and CEP); Stephan Maurer (University of Konstanz and CEP); Jörn-Steffen Pischke (LSE and CEP); Ferdinand Rauch (University of Oxford and CEP)
    Abstract: We study the causal connection between trade and development using one of the earliest massive trade expansions: the first systematic crossing of open seas in the Mediterranean during the time of the Phoenicians. We construct a measure of connectedness along the shores of the sea. This connectivity varies with the shape of the coast, the location of islands, and the distance to the opposing shore. We relate connectedness to local growth, which we measure using the presence of archaeological sites in an area. We find an association between better connected locations and archaeological sites during the Iron Age, at a time when sailors began to cross open water very routinely and on a big scale. We corroborate these findings at the level of the world.
    Keywords: Urbanization, locational fundamentals, trade
    JEL: F14 N7 O47
    Date: 2018–07–09
  31. By: Patrice CASSAGNARD; Pierre REGIBEAU
    Abstract: We propose a simple two-stages duopoly game where two firms produce an homogeneous good to satisfy the demand in a foreign market. First they decide whether to serve this market with exports or with foreign direct investments and then they play a one-shot Cournot-Nash game. This game has been made even more complex by the fact that foreign direct investments induce technological spillovers which imply the possible entry of a third firm. From the complete characterization of the equilibria we show that a small disadvantage of one of the both firms can conduce this firm to invest alone in the foreign country rather than export. In this case, the investment is motivated by the fact that the dissipation risk of both firm-specific assets to a local potential entrant -triopoly payoffs- is beared by the two firms whereas the gain -increased market share in duopoly- is captured by the firm which chooses to invest abroad. We have in mind the competition between Airbus and Boeing in China.
    Keywords: Entry Deterrence ; FDI ; Export ; Cournot duopoly ; Spillovers ; Airbus and Boeing
    Date: 2018–07
  32. By: José Tomás Pelaéz Soto (Faculty of Economics and Management, Pontificia Universidad Javeriana Cali)
    Abstract: The purpose of this paper is to analyze the principle of comparative advantage in the structure of international trade in Colombia. For this, the revealed comparative advantage index of Balassa (1965) is used. Two conclusions are drawn from the results: a) Colombia exhibits a comparative advantage in the bulk of its exports and, b) in relative terms, imports mostly items for which it has no comparative advantage.
    Keywords: Colombia, comercio internacional, ventaja comparativa, índice de Balassa
    JEL: F10 F14
    Date: 2018–07
  33. By: Knobel, Alexander (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Chentsov, Alexander (Russian Presidential Academy of National Economy and Public Administration (RANEPA))
    Abstract: The paper analyzes literature exploring the influence of exchange rate volatility on trade volume and it is shown that early estimates indicating a significant increase in trade between countries that are in currency unions are erroneous and are caused by a number of reasons related to the endogenous status of monetary unions and the existence trends in regression variables. One of the sections is devoted to a review of the literature on the general problems of the effects of exchange rates on trade; in it an extensive class of models describing consumers' demand for imported goods is considered. This is followed by a review of empirical studies, which, among other things, study the difference in the estimation of equations for cases of "small open economy" and "large open economy". In the practical part of the work, the influence of exchange rate volatility on the volume of trade is estimated using panel data for 214 countries of the world, using the proxy variable of the status of monetary unions.
    Keywords: Eurasion Economic Union; Integration policy; tariff and non-tariff barriers; volatility of exchange courses; international trade
    Date: 2018–06
  34. By: Chanegriha, Melisa (Middlesex University); Stewart, Chris (Kingston University London); Tsoukis, Christopher (Keele University)
    Abstract: In this paper we investigate the causal relationship between the ratio of FDI to GDP (FDIG)and economic growth (GDPG). We use innovative econometric methods which are based on the heterogeneous panel test of the Granger non-causality hypothesis based on the works of Hurlin (2004a), Fisher (1932, 1948) and Hanck (2013) using data from 136 developed and developing countries over the 1970-2006 period. According to the Hurlin and Fisher panel tests FDIG unambiguously Granger-causes GDPG for at least one country. However, theresults from these tests are ambiguous regarding whether GDPG Granger-causes FDIG for at least one country. Using Hanck’s (2013) panel test we are able to determine whether and for which countries there is Granger-causality. This test suggests that at most there are three countries (Estonia, Guyana and Poland) where FDIG Granger-causes GDPG and no countries where GDPG Granger-causes FDIG.
    Keywords: Granger-causality Tests; Panel Data; FDI; Economic Growth;
    JEL: C33 F21 F43 N10
    Date: 2018–05–23
  35. By: Horst Raff (University of Kiel); Nicolas Schmitt (Simon Fraser University); Frank Stähler (University of Tübingen, University of Adelaide, CESifo and NoCeT)
    Abstract: This paper examines how firms deal with demand uncertainty when importing intermediate goods takes time, and orders have to be placed before the realization of demand is known. We consider two strategies to hedge this uncertainty: building up inventory of imported goods, and relying on more expensive domestic supplies to cover peak demand. Which strategy is optimal depends on the price of imported relative to domestic goods, and on the degree of demand uncertainty. We also show that there are relative import prices and degrees of demand uncertainty for which the firm chooses not to hedge uncertainty and may thus stock out. The optimal hedging strategy implies a non-monotonic relationship between firm-level output volatility and the relative import price.
    Keywords: International trade, dual sourcing, inventory, demand uncertainty, rm-level output volatility
    JEL: F12 L81
    Date: 2018–07
  36. By: Bratti, Massimiliano (European Commission – JRC); Felice, Giulia (Politecnico di Milano)
    Abstract: This paper uses European firm-level survey data to provide some robust empirical evidence that suppliers engaged in production to order (PTO) for foreign firms are more likely to introduce product innovations than those engaged in PTO for domestic firms, even when differences in size, R&D and productivity are controlled for. We propose a demand-driven theoretical explanation based on the interactions between an upstream producer of a specialized input and a downstream producer in a framework of incomplete contracts, agency frictions, and imperfect information.
    Keywords: buyer, supplier, product innovation, production to order, foreign market
    JEL: D21 D22 F21 L23 O31
    Date: 2018–06
  37. By: Tak Wing Chan (Department of Social Science, UCL Institute of Education); Morag Henderson (Department of Social Science, UCL Institute of Education); Maria Sironi (Department of Social Science, UCL Institute of Education); Juta Kawalerowicz (Linkoping University)
    Abstract: We use data from a large scale and nationally representative survey to explore the social and cultural bases of Brexit. There are strong age and educational gradients in Brexit support. Net of individual characteristics, regional differences within England become insignificant. In fact, once local level of immigration is taken into account, people living in the English regions are less pro-Leave than Londoners. It is social status, not social class, which predicts Brexit support. Economic deprivation does not predict Brexit attitude. Individuals living in areas with a higher concentration of migrants are actually less pro-Brexit. But recent increase in immigration level has the opposite association. Individuals for whom being British is important are more likely to support Leave. But those who choose national identity over sub-national identity and those reporting omnivorous cultural consumption are less supportive of Brexit. Those who live in the county in which they were born are more pro-Leave, but those who have stronger ties with their neighbours and neighbourhood, and those who are more involved in civic associations are pro-Remain. Overall, our results do not support the 'left-behind' narrative of Brexit. Instead, we show a strong cultural dimension in Brexit support.
    Date: 2017–12–19
  38. By: Morgan Kelly (University College Dublin, CAGE and CEPR); Cormac Ó Gráda (University College Dublin and CAGE)
    Abstract: Although urban growth historically depended on large inflows of migrants, little is known of the process of migration in the era before railways. Here we use detailed data for Paris on women arrested for prostitution in the 1760s, or registered as prostitutes in the 1830s and 1850s; and of men holding identity cards in the 1790s, to examine patterns of female and male migration. We supplement these with data on all women and men buried in 1833. Migration was highest from areas of high living standards, measured by literacy rates. Distance was a strong deterrent to female migration (reflecting limited employment opportunities) that falls with railways, whereas its considerably lower impact on men barely changes through the nineteenth century.
    Keywords: Migration, gravity, prostitution.
    Date: 2018–06

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