nep-int New Economics Papers
on International Trade
Issue of 2018‒08‒13
33 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Let’s talk about the Free Trade Agreement (FTA): The five ASEAN members highlighting Indonesia By Verico, Kiki; Natanael, Yeremia
  2. Beyond Normalization of Trade Ties - A Pakistan – India Free Trade Agreement (FTA): A Stochastic Frontier Gravity Model (SFGM) Approach By Kamal, Asmma
  3. Mitigating the Adjustment Costs of International Trade By Uri Dadush; Sait Akman; Clara Brandi; Peter Draper; Andreas Freytag; Miriam Kautz; Peter Rashish; Johannes Schwarzer; Rob Vos
  4. The Globalization of Farmland: Theory and Empirical Evidence By Rabah Arezki; Christian Bogmans; Harris Selod
  5. Granular Comparative Advantage By Cecile Gaubert; Oleg Itskhoki
  6. Currency Unions, Trade, and Heterogeneity By Natalie Chen; Dennis Novy
  7. Globalisation and national trends in nutrition and health -a grouped fixed-effects approach to inter-country heterogeneity By Lisa Oberländer; Anne-Célia Disdier; Fabrice Etilé
  8. The pursuit of industrialization in the EAC region: The role of trade facilitating infrastructure in promoting exports of manufactured goods By Shinyekwa, Isaac; Ntale, Anita
  9. Our Trade Tensions Will Persist Beyond Trump By Uri Dadush
  10. Promoting labour market integration of refugees with trade preferences: Beyond the EU-Jordan compact By Temprano Arroyo, Heliodoro
  11. Misreported Trade By Mohammad Farhad; Michael Jetter; Abu Siddique; Andrew Williams
  12. Contesting an international trade agreement By Matthew T. Cole; James Lake; Ben Zissimos
  13. Welfare and Regional Integration Agreements: Lessons for Africa By Fatima Ezzahra Mengoub; Tharcisse Guedegbe; Will Martin
  14. At the roots of China's striking performance in textile exports: a comparison with its main Asian competitors By D. Baiardi; C. Bianchi
  15. Gravity and Migration before Railways: Evidence from Parisian Prostitutes and Revolutionaries By Kelly, Morgan; Ó Gráda, Cormac
  16. Trade Exposure and Electoral Protectionism: Evidence from Japanese politician-level data By ITO Banri
  17. Of Mice and Merchants: Trade and Growth in the Iron Age By Jan David Bakker; Ferdinand Rauch; Stephan Maurer; Jörn-Steffen Pischke
  18. The Geography of NGO Activism against Multinational Corporations By Sophie Hatte; Pamina Koenig
  19. Trade Credit in Global Supply Chains By Jiangtao FU; Petr MATOUS; TODO Yasuyuki
  20. Managers as Knowledge Carriers - Explaining Firms' Internationalization Success with Manager Mobility By Philipp Meinen; Pierpaolo Parrotta; Davide Sala; Erdal Yalcin
  21. Foreign Direct Investment in Canada – The Case for Further Openness and Transparency By Daniel Schwanen
  22. Trump's tariff’s impact on Africa and the ambiguous role of African agency By Kohnert, Dirk
  23. Who Voted for Brexit? Individual and Regional Data Combined By Alabrese, Eleonora; Becker, Sascha O.; Fetzer, Thiemo; Novy, Dennis
  24. An Analysis of Impact of Exchange Rate Volatility on the Indian Manufacturing Exports By haider, salman; Adil, Masudul hasan
  25. Propagation of Shocks by Natural Disasters through Global Supply Chains By KASHIWAGI Yuzuka; TODO Yasuyuki; Petr MATOUS
  26. Electricity Consumption, Economic Growth and Trade Openness in Kazakhstan: Evidence from Cointegration and Causality By Khan, Saleheen; Jam, Farooq Ahmed; Shahbaz, Muhammad; Mamun, Md Al
  27. Financial Development and International Trade By Leibovici, Fernando
  28. Attracting Foreign Direct Investment in Infrastructure By Gerda Dewit; Dermot Leahy
  29. Comparative Advantage in Digital Trade By Alan V. Deardorff
  30. Behavior in Reverse: Reasons for Return Migration By Stark, Oded
  31. Brexit No Deal: The Budgetary Impact on CAP - Greece and the EU27 By Oliver Mas
  32. Mexican agriculture and policy under NAFTA By George A. Dyer; Alan Hernández-Solano; Pablo Meza-Pale; Héctor Robles-Berlanga; Antonio Yúnez-Naude
  33. How Do Migration and Remittances Affect Inequality? A Case Study of Mexico By Zsoka Koczan; Franz Loyola

  1. By: Verico, Kiki; Natanael, Yeremia
    Abstract: This paper attempts to assess the role of FTA (Free Trade Agreement) in enhancing both the trade and investment in both levels of the country and the region. This paper chooses Indonesia as the country and five ASEAN member states (Indonesia, Malaysia, Thailand, Philippines, and Vietnam) as the regional case of study. This paper uses net export & intra-trade and FDI inflows & intra-FDI as the dependent variables for trade and investment respectively. Period of analysis is 25 years from 1992 to 2016. This paper found that FTA utilization is effective to increase trade and investment at both the country and regional level with certain control variables. It found that ASEAN is ready to move from intra-regional trade to intra-regional investment. Therefore, the ASEAN Economic Community is on the right track and in the right time for ASEAN. At the bilateral level, this study proposed that the net export surplus is the aim for the negotiation to the lower income per capita trading partner while FDI inflow from the trading partner is the aim for the higher income one. From non-regression model, this paper found that the role of FTA center is necessary to optimize the utilization of FTA.
    Keywords: Trade Policy, Empirical Studies of Trade, Economic Integration, International Investment, Bilateral Trade Agreement, ASEAN, Indonesia
    JEL: F13 F14 F15 F21
    Date: 2018–07–16
  2. By: Kamal, Asmma
    Abstract: Several studies have estimated a large bilateral trade potential and have emphasized on normalization of trade ties between Pakistan and India, the two largest economics in the South Asian region. However, this paper explores the possibility of bilateral trade beyond MFN (Most-favoured Nation) basis and examines the potential of a deeper economic integration through a Free Trade Agreement (FTA) between Pakistan and India. In the above context, this paper employs the Stochastic Frontier Gravity Model (SFGM) to quantitatively measure the influence of “behind the border” constraints on achieving Pakistan’s maximum export potential towards India during 2013-15. Results confirm that Pakistan has a large unrealized export potential with India. They further indicate that the potential for an FTA appears to be significant, but contingent upon the effective reduction of “behind the border” constraints limiting Pakistan’s export potential.
    Keywords: Free Trade Agreement (FTA), Pakistan, India, Stochastic Frontier Gravity Model (SFGM), Regional trade
    JEL: F1 F14 F15
    Date: 2016–11–18
  3. By: Uri Dadush; Sait Akman; Clara Brandi; Peter Draper; Andreas Freytag; Miriam Kautz; Peter Rashish; Johannes Schwarzer; Rob Vos
    Abstract: In the present era of globalization and rapid technological advance living standards across the world have risen at unprecedented rates, and over a billion people have been lifted out of poverty. The theoretical and empirical evidence demonstrating that nations gain from trade is overwhelming (Irwin, 2015). However, trade has distributional consequences and gains and losses are spread unevenly. The policy challenge is how to promote and deepen trade integration while ensuring that the losers from trade liberalization are assisted and the cost of their adjustment is mitigated. As the G-20 leaders concluded in their declaration last year "We recognise that the benefits of international trade and investment have not been shared widely enough. We need to better enable our people to seize the opportunities and benefits of economic globalisation." (G20, 2017) It is a fact that, in many instances, the sudden rise in competition from imports, especially – but not only – from China and other low-income countries and the formerly planned economies of Eastern Europe, have caused considerable disruption. These import surges have sometimes undermined the economic viability of localities and whole communities. While some cities and regions have thrived as they have taken advantage of the expansion of export markets across the world, many individuals, communities, and localities have been unable to adjust.
    Date: 2018–06
  4. By: Rabah Arezki; Christian Bogmans; Harris Selod
    Abstract: This paper is the first to provide both theoretical and empirical evidence of farmland globalization whereby international investors directly acquire large tracts of agricultural land in other countries. A theoretical framework explains the geography of farmland acquisitions as a function of cross-country differences in technology, endowments, trade costs, and land governance. An empirical test of the model using global data on transnational deals shows that international farmland investments are on the aggregate likely motivated by re-exports to investor countries rather than to world markets. This contrasts with traditional foreign direct investment patterns where horizontal as opposed to vertical FDI dominates.
    Date: 2018–06–22
  5. By: Cecile Gaubert; Oleg Itskhoki
    Abstract: Large firms play a pivotal role in international trade, shaping the export patterns of countries. We propose and quantify a granular multi-sector model of trade, which combines fundamental comparative advantage across sectors with granular comparative advantage embodied in outstanding individual firms. We develop an SMM-based estimation procedure, which takes full account of the general equilibrium of the model, to jointly estimate these fundamental and granular forces using French micro-data with information on firm domestic and export sales across manufacturing industries. We find that granularity accounts for about 20% of the variation in realized export intensity across sectors, and is more pronounced in the most export-intensive sectors. In turn, idiosyncratic firm dynamics accounts for a large share of the evolution of a country's comparative advantage over time. Governments face strong incentives to target trade policy at large individual foreign exporters, and to use lenient antitrust regulation at home to substitute for beggar-thy-neighbor trade policy.
    JEL: D20 D43 F10 F40
    Date: 2018–07
  6. By: Natalie Chen; Dennis Novy
    Abstract: How do trade costs affect international trade? This paper offers a new approach. We rely on a flexible gravity equation that predicts variable trade cost elasticities, both across and within country pairs. We apply this framework to the effect of currency unions on international trade. While we estimate that currency unions are associated with a trade increase of around 38 percent on average, we find substantial underlying heterogeneity. Consistent with the predictions of our framework, we find effects around three times as strong for country pairs associated with small import shares, and a zero effect for large import shares. Our results imply that conventional homogeneous currency union estimates do not provide helpful guidance for countries considering to join a currency union. Instead, countries need to take into account the distribution of their trade shares to assess the impact of trade costs.
    Keywords: currency unions, euro, gravity, heterogeneity, trade costs, trade elasticity, translog
    JEL: F14 F15 F33
    Date: 2018
  7. By: Lisa Oberländer (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); Anne-Célia Disdier (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); Fabrice Etilé (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: Using a panel dataset of 70 countries spanning 42 years (1970-2011), we investigate the distinct effects of social globalisation and trade openness on national trends in markers of diet quality (supplies of animal proteins, free fats and sugar, average body mass index – BMI – and diabetes prevalence). Our key methodological contribution is the application of a grouped fixed-effects (GFE) estimator, which extends linear fixed-effects models. The GFE estimator partitions our sample into distinct groups of countries in order to control for time-varying unobserved heterogeneity that follows a group-specific pattern. We find that increasing social globalisation has a significant impact on the supplies of animal protein and sugar available for human consumption, as well as on mean BMI. Specific components of social globalisation such as information flows (via television and the Internet) drive these results. Trade openness has no effect on dietary outcomes or health. These findings suggest that the social and cultural aspects of globalisation should receive greater attention in research on the nutrition transition.
    Keywords: trade openness,grouped fixedeffects,nutrition transition,obesity,social globalisation,panel data
    Date: 2017–05
  8. By: Shinyekwa, Isaac; Ntale, Anita
    Abstract: In December 2015, the World Trade Organization (WTO) held its 10th Ministerial Conference (MC10) in Nairobi, Kenya. The meeting adopted the “Nairobi package” of decisions targeting agriculture, cotton and issues related to least-developed countries. This brief examines the implications of the Nairobi package for the development of cotton sector in the East African Community (EAC). The results indicate that the removal of subsidies would reduce cotton production among the top producing countries, reducing their export earnings while increasing both production and export earnings in the EAC. Therefore, the EAC needs to monitor the implementation the agreement and increase cotton production to take advantage of the opportunity.
    Keywords: Agribusiness, Crop Production/Industries, International Relations/Trade, Political Economy
    Date: 2018–06–26
  9. By: Uri Dadush
    Abstract: Looming trade wars unsettle investors and endanger the global economic upswing. The long-term consequences of a withdrawal from global markets, were it to occur, would be much worse. Productivity growth, already low, could turn negative. Citizens would see inflationary pressures escalate with the price of imported products, and their living standards would decline. Large investments have been made in value chains that span the world and turning back would be enormously costly. To avoid this catastrophe, one must look beyond the policy drama in Washington and instead focus more closely on the underlying causes of the trade tensions. The fault lines of the world trading system were visible long before the arrival of Mr. Trump and his departure from the scene will not make them disappear. When his administration ends, whether in January 2024, January 2020 or sooner, truncated by his legal troubles, there may be a return to civility in trade relations, but not to normality.
    Date: 2018–05
  10. By: Temprano Arroyo, Heliodoro
    Abstract: Trade preferences provide a potential policy tool for supporting refugee employment in countries of first asylum. Thus, in the context of the EU-Jordan Compact agreed in 2016, the EU eased the rules of origin for Jordanian exporters employing a minimum share of Syrian refugees. The use of trade preferences to encourage the labour market integration of refugees is consistent with the new, developmental approach to refugee protection advocated by the recent literature and enshrined in the Comprehensive Refugee Response Framework adopted by the UN in 2016. The paper looks at the so-far disappointing impact of the EU-Jordan agreement on rules of origin, as well as the experience with two relevant U.S. preferential programmes (the Qualified Industrial Zones initiative for Egypt and Jordan and the African Growth and Opportunity Act) that have generated substantial export growth and employment. It then discusses the conditions under which trade preferences can prove an effective instrument for refugee integration and makes some concrete policy recommendations.
    Keywords: migration,refugees,integration,trade preferences
    JEL: F13 F22
    Date: 2018
  11. By: Mohammad Farhad; Michael Jetter; Abu Siddique; Andrew Williams
    Abstract: This paper introduces a methodology to measure misreported trade in a consistent way across countries and over time. Our methodology does not require any assumptions about which countries may be more or less likely to misreport – rather, all indices are derived endogenously with available trade data. We derive seven specific indices related to overall misreporting, as well as over- and under-reporting of exports and imports. Applying this method to existing bilateral trade data on the HS 4-digit level from 1996-2015, we present several rankings and describe a few prominent cases, such as China. Overall, our indices can explain intuitive developments well and should help researchers to study countries’ trade misreporting in a global dimension that is comparable across countries and over time. We conclude the paper with an application, focusing on the role of tariff and VAT rates as predictors of import under-reporting. As predicted by economic theory, case studies, and economic intuition, we find positive correlations for both tariff and VAT rates with import under-reporting. These results are robust to the inclusion of potentially confounding factors, as well as country- and time-fixed effects.
    Keywords: international trade, trade misreporting, tariffs rates, VAT rates
    JEL: F13 F14 H26
    Date: 2018
  12. By: Matthew T. Cole (California Polytechnic State University); James Lake (Southern Methodist University); Ben Zissimos (University of Exeter Business School)
    Abstract: We develop a new theoretical political economy framework, called a "parallel contest", that emphasizes the political fight over trade agreement (TA) ratification within countries. TA ratification is inherently uncertain in each country, where anti- and pro-trade interest groups contest each other to influence their own governments' ratification decision. Unlike prior literature, the protection embodied in negotiated TA tariffs reflects a balance between the liberalizing force of lobbying and inherently protectionist government preferences. Moreover, new international political externalities emerge that are not internalized by governments that just internalize terms of trade externalities.
    Keywords: Trade Agreement, ratification, tariff, contest, lobbying, contribution, externalities
    JEL: C72 F02 F13
    Date: 2018–07
  13. By: Fatima Ezzahra Mengoub; Tharcisse Guedegbe; Will Martin
    Abstract: In the developing world, regional integration is frequently seen as an opportunity to promote development. However, historical facts and economic literature remind us that the success of economic integration is not always guaranteed, and numerous considerations should be taken into account in designing such agreements. This short paper considers the broad reasons for countries forming regional integration agreements, including strengthening trade relations, improving investments, boosting economic performance, and finally, enhancing foreign relations. It also explores the travails of the multilateral trading system and then considers the differences between Customs Unions and Free Trade Areas. Finally, it analyzes the approaches used to evaluate the basic economic impacts of agreements.
    Date: 2018–07
  14. By: D. Baiardi; C. Bianchi
    Abstract: This paper analyzes the determinants of China's striking performance in textile exports in the time period 2001-2016. We integrate the analysis by Lall and Albaladejo (World Development, 2004), based only on China and its main Asian competitors' market share dynamics, by estimating an extended version of a traditional export function, derived from the imperfect substitute model, including a proxy of non-price competitiveness. The key long-run elasticities for each Asian exporter are thus computed and discussed in a panel-data framework, and the different export performances are examined taking into account the interaction between the estimated parameters and the growth rates of relative prices, world income and product quality. Lastly, we decompose the textile export growth differences between China and its rivals into the three main channels of trade competition, i.e. price, quantity and quality. Our findings show that China is crowding out most of its rivals with a competitive strategy based on a mix of low and decreasing relative prices and non-price policies aiming at stimulating export volumes. However, certain weaknesses in the Chinese trade prospects emerge when quality improvement is considered.
    Keywords: Textile exports, Outperformance, Displacement, Competitiveness, Cross-country comparisons, Panel data analysis
    JEL: C23 F14 L67
    Date: 2018
  15. By: Kelly, Morgan; Ó Gráda, Cormac
    Abstract: 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 or joining the army in the 1790s, to examine patterns of female and male migration. We supplement these with data on all women and men buried in 1833. We find that distance was a stronger deterrent to female migration than to male (consistent with more limited employment opportunities for women) that falls with the appearance of railways. Migration was highest from areas of high living standards, measured by literacy rates, with the largest impact again for women, especially those from higher social classes.
    Date: 2018–07
  16. By: ITO Banri
    Abstract: This study empirically examines the effect of economic shocks of trade on trade policy preferences of candidates who run for national elections, using politician-level data of Japan during the period 2009-2014. The focus of this research is the examination of how the influence of trade shocks measured by import competition with China on politicians' trade policy preferences is related to election pressure. The results reveal that an increase in import exposure of goods for production use deters candidates from supporting trade liberalization even after considering offset by export exposure. Among other points, this protectionist effect is more pronounced for challengers than for incumbents, for candidates who run for the Lower House election and are exposed to stronger pressures of elections than those who run for the Upper House election, and for candidates with weak voter support than for those who are supported by a substantial majority. Taking these findings into account, politicians who face trade shocks tend to appeal to protectionist trade policies as the pressures of elections become stronger.
    Date: 2018–05
  17. By: Jan David Bakker; Ferdinand Rauch; Stephan Maurer; Jörn-Steffen Pischke
    Abstract: We study the causal connection between trade and development using one of the earliest massive trade expansions: the ï¬ rst 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 ï¬ nd 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 ï¬ ndings at the level of the world.
    Keywords: Urbanization, locational fundamentals, trade
    JEL: F14 N7 O47
    Date: 2018–07–06
  18. By: Sophie Hatte (UNIL - Université de Lausanne); Pamina Koenig (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, UNIROUEN - Université de Rouen Normandie - NU - Normandie Université, PSE - Paris School of Economics)
    Abstract: Non-governmental organizations (NGOs) regularly denounce the behavior of multinational corporations throughout the world, however their motivations for choosing the targets of their campaigns remain largely unknown. Using a new and rich dataset listing activists' campaigns towards multinational firms, we reveal important regularities in the geography and internationalization of advocacy NGOs activity. For example, 49\% of US NGOs select a foreign target firm, however, 75\% of campaigns targeting foreign firms involve an action taking place in the country of the NGO. We build on these facts to analyze the country-level determinants of NGOs campaigns, and estimate a triadic gravity equation for campaigns, involving the NGO, firm and action countries. Our variables of interest are the bilateral links between the country pairs, measuring how well the audience of the NGO identifies to the target of the campaign. Our results reveal a campaigning bias towards home firms and firms originating from familiar countries.
    Keywords: microeconomy of globalization,NGOs campaigns,multinational firms,gravity equation
    Date: 2017–05
  19. By: Jiangtao FU; Petr MATOUS; TODO Yasuyuki
    Abstract: This study examines how trade credit is utilized in global supply chains, using a unique dataset that includes information on firm-level supplier-customer relationships for major firms in the global economy. We focused on two potential factors of trade credit: firms' upstreamness in global supply chains and competition among suppliers, or similarly, the bargaining power of customers. Although recent literature found a positive correlation between upstreamness and trade credit, we find the correlation is insignificant when we control for competition among suppliers and the bargaining power of customers. The correlation between firms' upstreamness and trade credit is positive and significant only in Japan. In contrast, we find that the competition among suppliers and bargaining power of customers are positively and significantly correlated with trade credit in a robust manner. Because upstreamness and competition among suppliers are often positively correlated, our finding suggests the need to incorporate competition in the literature on trade credit and upstreamness.
    Date: 2018–07
  20. By: Philipp Meinen; Pierpaolo Parrotta; Davide Sala; Erdal Yalcin
    Abstract: How does “what managers know” affect firm performance on international markets? This question is of considerable importance in the international economic literature. Answering it will be key for comprehending the way firms’ varying performance on international markets is shaped by the human factor. This paper proposes managerial mobility as an integral part of such an answer. Catering products to an international customer base entails a learning process, which, to a large degree, stems from the experience of doing it. Therefore, different employers immensely contend for managers’ highly valuable export experience. As managers can accept better and better positions from several offers, they may become highly mobile, thus having a notable impact on possibly multiple firms’ internationalization. Exploiting a rich panel data set, the paper thoroughly tests this idea by discriminating between knowledge ascribable to managers’ former job experience and that attributable to their personal background. The paper uses a novel identification strategy grounded in on-the-job search theory to correct estimates for the presence of self-selected mobility flows. A core finding of the paper is that the maximum return to expertise acquisition is realized for those managers with previous experience in commercializing differentiated products in specific markets.
    Keywords: management, mobility, experience, export
    JEL: F14 F16 F23 M12
    Date: 2018
  21. By: Daniel Schwanen (C.D. Howe Institute)
    Abstract: Canada’s performance in attracting foreign direct investment faces serious headwinds, according to a new report from the C.D. Howe Institute. In “Foreign Direct Investment in Canada – The Case for Further Openness and Transparency” author Daniel Schwanen makes a case for more open and transparent foreign investment rules in Canada.
    Keywords: Trade and International Policy; Foreign Investment
    JEL: F21
  22. By: Kohnert, Dirk
    Abstract: The international discussion of Trump's dispute over import tariffs for steel, aluminum and even cars are so far focused on the big global players. However, smaller African countries in particular suffer too from the planned punitive tariffs, similar to the famous African proverb, "When elephants fight, it is the grass that suffers". After years of talk on partnership for economic development (AGOA, Cotonou Agreement, EPAs, etc) Trump’s tariffs mean a severe blow to participatory foreign trade and sustainable industrialization in Africa. Egypt and South Africa for example, the potentially most affected African countries, face massive job losses and earning opportunities, with all the consequences that this entails for their already fragile economy and the population in dire poverty. Trump’s intervention thus joins the continued power politics of former colonial powers vis à vis Africa. Nevertheless, despite these asymmetric power relations, unfair trade relations and the desolate state of African infant industries are not necessarily due to externalities but often home-made. African agency plays an ambiguous role in enhancing participatory trade and indigenous industrialization.
    Keywords: foreign trade, tarrifs, USA, Africa, South Africa, Egypt, Nigeria, agency, corruption,
    JEL: F13 F51 F52 H21 N67 N77 P16 P52 Z1
    Date: 2018–06–19
  23. By: Alabrese, Eleonora (Department of Economics, University of Warwick); Becker, Sascha O. (Department of Economics,and CAGE (Competitive Advantage in the Global Economy), University of Warwick, CEPR,CESifo, ifo,IZA and ROA); Fetzer, Thiemo (Department of Economics, University of Warwick & SERC); Novy, Dennis (Department of Economics, University of Warwick, CEPR, CESifo and CEP/LSE)
    Abstract: Previous analyses of the 2016 Brexit referendum used region-level data or small samples based on polling data.The former might be subject to ecological fallacy and the latter might suffer from small-sample bias. We use individual-level data on thousands of respondents in Understanding Society, the UK’s largest household survey, which includes the EU referendum question. We find that voting Leave is associated with older age, white ethnicity,low educational attainment, infrequent use of smart phones and the internet,receiving benefits, adverse health and low lifesatisfaction. These results coincide with corresponding patterns at the aggregate level of voting areas.We therefore do not find evidence of ecological fallacy. In addition, we show that prediction accuracy is geographically heterogeneous across UK regions,with strongly pro-Leave and strongly pro-Remain areas easier to predict. We also show that among individuals with similar socioeconomic characteristics, Labour supporters are more likely to support remain while Conservative supporters are more likely to support Leave
    Keywords: Aggregation ; Ecological Fallacy ; European Union ; Populism ; Referendum ; UK JEL Classification: D72 ;I10 ;N44 ;R20 ;Z13
    Date: 2018
  24. By: haider, salman; Adil, Masudul hasan
    Abstract: This paper analyses the impact of real exchange rate volatility of Indian on bilateral exports of India’s manufactured commodities. Four major commodities viz Engineering goods, Cotton yarn, fabrics made ups, etc., Chemicals & allied products, and Leather & manufactures, for the period 1999 to 2013. Five major trading partners of India i.e., USA, UK, Germany, Italy, and Hong-Kong are chosen for the panel data analysis. Result shows the statistically insignificant impact of exchange rate volatility on the exports of all commodities except for Chemicals and Allied product. Real GDP found to be positive and significant for all commodities. The real exchange rate has no significance in explaining exports of these commodities. The results support forex market efficiency with regard to exports.
    Keywords: exchanged rate risk; manufactured commodities; panel data; India
    JEL: F11 F17 F31
    Date: 2017–10–05
  25. By: KASHIWAGI Yuzuka; TODO Yasuyuki; Petr MATOUS
    Abstract: This study investigates the indirect effects of shocks by Hurricane Sandy that hit the United States in 2012. Using firm-level data on global supply chains, we examine how sales growth of firms inside and outside the United States changed when their suppliers or clients were damaged by the hurricane. Our results show that the effect of damaged firms on their transaction partners in the United States is negative and statistically significant, while the effect on their partners outside the United States is insignificant. Alternative specifications suggest that internationalized firms' ability to substitute for damaged partners most likely explains the absence of international propagation.
    Date: 2018–06
  26. By: Khan, Saleheen; Jam, Farooq Ahmed; Shahbaz, Muhammad; Mamun, Md Al
    Abstract: We investigate the relation between electricity consumption and economic growth by incorporating trade openness, capital, and labor in production function of Kazakhstan using annual data for 1991-2014. We apply the ARDL bounds testing and the VECM Granger causality approach to examine long run and causality relation between the variables. Our results confirm the existence of long run relation among the series. The empirical evidence reveals that electricity consumption adds in economic growth. Trade openness stimulates economic growth, and capital and labor promote economic growth, as well. The causality analysis shows that electricity consumption Granger causes economic growth and trade openness. We also document feedback effect between trade openness and economic growth. Our study provides new insights for policy makers to articulate a comprehensive economic, trade and energy policy to sustain long run economic growth in Kazakhstan.
    Keywords: Electricity, Economic growth, Kazakhstan, VECM
    JEL: A10
    Date: 2018–07–01
  27. By: Leibovici, Fernando (Federal Reserve Bank of St. Louis)
    Abstract: This paper studies the industry-level and aggregate implications of financial development on international trade. I set up a multi-industry general equilibrium model of international trade with heterogeneous firms subject to financial frictions. Industries differ in capital-intensity, which leads to differences in external finance dependence. The model is parameterized to match key features of firm-level data. Financial development leads to substantial reallocation of international trade shares from labor- to capital-intensive industries, with minor effects at the aggregate-level. These findings are consistent with estimates from cross-country industry-level and aggregate data.
    Date: 2018–08–01
  28. By: Gerda Dewit (Department of Economics, Finance and Accounting, Maynooth University.); Dermot Leahy (Department of Economics, Finance and Accounting, Maynooth University.)
    Abstract: We examine optimal policy of a host developing country towards a foreign firm that can provide local infrastructure. In the main model, two types of infrastructural goods, one provided by the foreign firm and the other by a publicly owned firm, are complementary inputs for a domestic competitive final goods sector. We show that, due to strategic interaction between the infrastructure providers, average-cost pricing, though inferior for the consumer, is superior to marginal-cost pricing from an overall welfare perspective. In addition, when the home firm maximises profit, domestic surplus is maximised, but the domestic consumer loses from this.
    Date: 2018
  29. By: Alan V. Deardorff (University of Michigan)
    Abstract: Digital trade takes a variety of forms, several of which are examined here with regard to whether they can be explained by comparative advantage. The five forms of digital trade considered are 1) physical products that are advertised, ordered, and/or paid for digitally, but transported by normal trade means; 2) digital products (music, movies, books, software) that are transmitted to purchasers via the internet and are most likely to be marketed and paid for via that as well; 3) services that are provided remotely by digital means; 4) data storage and computer applications accessible in the ÒcloudÓ; and 5) web platforms that serve an international audience and are supported by advertising. I argue that the first three of these can be well explained by comparative advantage, but there are problems with the last two.
    Keywords: digital trade, comparative advantage
    JEL: F1 F11
    Date: 2017–11–13
  30. By: Stark, Oded
    Abstract: Received research shows numerous motives for migration, but fewer reasons for return migration. This paper aims to correct this imbalance. Twelve reasons for return migration are presented and discussed briefly. The reasons listed are derived from research on migration conducted by the author in the course of the past three and a half decades. The purpose of the paper is to pull together the insights gained from that research so as to formulate a base for future inquiry, both analytical and empirical. In addition, just as research on motives for migration can help to establish the reasons for return migration, research on the latter can help to deepen understanding of the former. Moreover, in a great many circumstances and for a variety of reasons, countries that host migrants may want them to leave. In such circumstances, enacting policies that align with motives for return migration will be more efficient than devising measures that are independent of these motives.
    Keywords: Food Security and Poverty, Labor and Human Capital
    Date: 2018–07–31
  31. By: Oliver Mas (Ministry of Rural Development and Food (Greece))
    Abstract: The EU and the UK are currently negotiating the framework of a new bilateral relationship as a result of the UK’s decision to leave the EU. This briefing paper explores the direct consequences of Brexit on the Common Agricultural Policy (CAP) Budget of the European Union for final years (2019-2020) of the current Multi-annual Financial Framework (MFF) and investigates the ramifications for CAP Budgets of all EU Member States with a case study of Greece. Drawing on various recent contributions to the debate on the consequences of Brexit and the future of Europe, such as the research for the EU AGRI Committee and the budgetary research conducted by Alan Matthews. The paper will evaluate the scenario that the UK leaves the EU without a deal on the 29th March 2019 resulting in no transition deal or financial settlement. This scenario would leave an unprecedented funding gap for final year and three quarters of the current MFF period. This paper will also evaluate the options the EU has in order to limit the budgetary impact. The negotiations see both the EU and UK increasing rhetoric of a ‘No Deal’ outcome and both preparing for the consequences of a ‘No Deal’, thus the significance of understanding the potential implications of a ‘No Deal’ is of increasing importance.
    Keywords: Brexit; CAP; Greece; Agricultural Policy
    JEL: Q18
    Date: 2018
  32. By: George A. Dyer (Desarrollo y Alimentación Sustentable, A. C.); Alan Hernández-Solano (Universidad Nacional Autónoma de México); Pablo Meza-Pale (Desarrollo y Alimentación Sustentable A.C.; Instituto Politécnico Nacional); Héctor Robles-Berlanga (Subsidios al Campo en México); Antonio Yúnez-Naude (Desarrollo y Alimentación Sustentable A.C.; El Colegio de México)
    Abstract: On the eve of the North American Free Trade Agreement (NAFTA), models predicted the transformation of Mexican agriculture, with imports precipitating the decline of domestic supply of staples, particularly corn, while fruit-and-vegetable exports drove sectoral growth. Trade flows have met expectations, but Mexican agriculture has not: both staple and specialty crops expanded during NAFTA’s first decade, while their gross value declined; just as unexpectedly, their value has risen sharply since 2005. The Ministry of Agriculture (SAGARPA) has been credited with the apparent success of this export-led strategy, upholding the results-based management (RBM) of sectoral policy abetted by the National Council for the Evaluation of Social Development Policy (CONEVAL). This study offers a critical assessment of Mexican agricultural policy and its management in light of the sector’s performance during the last 25 years. We report trends in the volume and value of agricultural output, land use, yields and prices. Using simple accounting methods, we show that price decreases accounted entirely for the sector’s decline between 1993 and 2005. Since then, 67.0% of staples’ gross value growth has be linked to rising prices, 27.4% to yield gains, and 5.6% to land-use change. For fruits and vegetables, these figures are 27.3, 50.0 and 22.7%. However, there is little evidence linking agricultural performance and policy. Only staple yields fall within policy’s purview; yet yields of irrigated staples other than corn have stagnated this century. Additional evidence calls into question the success of RBM, including the dearth of diagnoses and impact evaluations supporting it. Their absence has not prevented constant reforms that systematically violate the integrity of the policy cycle. Official acknowledgement of drivers of growth will reveal the risks to Mexican agriculture, including its vulnerability to price fluctuations and reliance on select crops for growth. Academic engagement is a prerequisite for RBM’s success.
    Keywords: Results based management, SAGARPA, CONEVAL, corn, Mexico
    JEL: C53
    Date: 2018–06
  33. By: Zsoka Koczan; Franz Loyola
    Abstract: The poverty-reducing effects of remittances have been well-documented, however, their effects on inequality are less clear. This paper examines the impact of remittances on inequality in Mexico using household-level information on the receiving side. It hopes to speak to their insurance role by examining how remittances are affected by domestic and external crises: the 1994 Mexican Peso crisis and the Global Financial Crisis. We find that remittances lower inequality, and that they become more pro-poor over time as migration opportunities become more widespread. This also strengthens their insurance effects, mitigating some of the negative impact of shocks on the poorest.
    Date: 2018–06–14

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