nep-int New Economics Papers
on International Trade
Issue of 2018‒08‒20
48 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. The Role of Export Restrictions in Agricultural Trade By Estrades, Carmen; Flores, Manuel; Lezama, Guillermo
  2. Sanitary and Phyto-Sanitary Measures: Assessment, Measurement, and Impact By Grant, Jason; Arita, Shawn
  3. Services Liberalisation, Export Similarity and Trade in Services By Wenxi Lu
  4. Collateral Damage? Labour Market Effects of Competing with China - at Home and Abroad By Pedro S. Martins; João Pereira dos Santos; Mariana Tavares; Sónia Cabral
  5. Can Tax Regulation and Administration Practices Impact Foreign Direct Investments? By Gohar S. Sedrakyan
  6. Trade Adjustment Dynamics and the Welfare Gains from Trade By George Alessandria; Horag Choi; Kim Ruhl
  7. Gravity and Comparative Advantage: Estimation of Trade Elasticities for the Agricultural Sector By Kari E.R. Heerman; Ian M. Sheldon
  8. Trade Linkages and Firm Value: Evidence from the 2018 US-China “Trade War” By Yi Huang; Chen Lin; Sibo Liu; Heiwai Tang
  9. The Short and Long-Run Effects of International Environmental Agreements on Trade By Josh Ederington; Mihai Paraschiv; Maurizio Zanardi
  10. Currency Wars? Unconventional Monetary Policy Does Not Stimulate Exports By Andrew K. Rose
  11. The impact of Brexit on trade patterns and industry location: a NEG analysis By Pasquale Commendatore; Ingrid Kubin; Iryna Sushko
  12. The Political Economy of Trade and Migration: Evidence from the U.S. Congress By Paola Conconi; Giovanni Facchini; Max F. Steinhardt; Maurizio Zanardi
  13. FDI, Service imports and Export development By Wenxi Lu
  14. International trade in services: Evidence for Portuguese firms By Birgitte Ringstad; João Amador; Sónia Cabral
  15. The impact of Chinese textile imports on employment and value added in the manufacturing sector of the South African economy. By Bonga-Bonga, Lumengo; Biyase, Mduduzi
  16. India’s Act East Policy: Walking the Talk By Chakraborty, Debashis; Chakraborty, Anushree
  17. Outcome of the Nairobi WTO 10th Ministerial conference - Implications for the EAC cotton sector development By Munu, Martin Luther; Shinyekwa, Isaac
  18. Behavior in reverse: Reasons for return migration By Stark, Oded
  19. A Coasian Model of International Production Chains By Fally, Thibault; Hillberry, Russell
  20. Making (Small) Firms Happy. The Heterogeneous Effect of Trade Facilitation Measures By Lionel Fontagné; Gianluca Orefice; Roberta Piermartini
  21. FDI Return Differentials: An Explanation Based on Offshore Profit Shifting By Jennifer Koncz-Bruner; Dylan Rassier; Fatih Guvenen; Kim Ruhl
  22. The Biophysical and Economic Geographies of Global Climate Impacts on Agriculture By Uris Baldos; Thomas Hertel; Frances Moore
  23. Output, renewable and non-renewable energy production, and international trade: Evidence from EU-15 countries By HALICIOGLU, Ferda; Ketenci, Natalya
  24. Economic Integration and Democracy: An Empirical Investigation By Giacomo Magistretti; Marco Tabellini
  25. Trade in Tasks and the Organization of Firms By Dalia Marin; Jan Schymik; Alexander Tarasov
  26. Optimal Infant Industry Protection By B Ravikumar; Raymond Riezman; Yuzhe Zhang
  27. Impact of hard and soft infrastructure: Evidence from the EU partners, North Africa and CEECs By Mathilde Maurel; Hugo Lapeyronie; Bogdan Meunier
  28. Trade liberalization, Skilled Intermediate input and Wage Distribution By Mandal, Biswajit; Roy, Sangita
  29. Does Outward Foreign Investment Matter for Canadian Productivity? Evidence from Greenfield Investments By Naveen Rai; Lena Suchanek; Maria Bernier
  30. Is there justification for levy expenditure on export promotion and market development in the agricultural sector in South Africa? By Lubinga, H. Moses; Mazibuko, Ndumiso; Ngqangweni, Simphiwe; Potelwa, Y. Xolisiwe; Nyhodo, Bonani
  31. Innovation and the Patterns of Trade: A Firm-Level Analysis By Ana Maria Santacreu; Liliana Varela
  32. The International Elasticity Puzzle Is Worse Than You Think By Lionel Fontagné; Philippe Martin; Gianluca Orefice
  33. Redistributing the Gains From Trade Through Progressive Taxation By Spencer G. Lyon; Michael E. Waugh
  34. The Extensive Margin of Trade and Monetary Policy By Imura, Yuko; Shukayev, Malik
  36. Of Mice and Merchants: Trade and Growth in the Iron Age By Bakker, Jan; Maurer, Stephan E; Pischke, Jörn-Steffen; Rauch, Ferdinand
  37. Training, Offshoring, and the Job Ladder By Nezih Guner; Alessandro Ruggieri; James Tybout
  38. Geographical Indication (GI) in the wine industry: Does it matter? By Lubinga, H. Moses; Ngqangweni, Simphiwe; Nyhodo, Bonani; Potelwa, X. Yolanda; van der Walt, Stephanie; Phaleng, Lucius; Ntshangase, Thandeka
  39. A Compendium and Analysis of the Research Conducted by CATPRN By Meilke, Karl D.
  40. Time Zone Differences, Communication Cost and Service Trade By Mandal, Biswajit; Prasad, Alaka Shree
  41. The IT Revolution and the Globalization of R&D By Lee G. Branstetter; Britta M. Glennon; J. Bradford Jensen
  42. Immigration and Government Spending in OECD Countries By Hippolyte D'Albis; Ekrame Boubtane; Dramane Coulibaly
  43. Agribusiness, trade and investment trends in Africa By Lekgau, Sydwell; Matlou, Clementine Ringetani; Lubinga, H. Moses
  44. Transport liberalization and regional imbalances with endogenous freight rates By Francesco Di Comite
  45. High-Skill Immigration, Innovation, and Creative Destruction By Gaurav Khanna; Munseob Lee
  46. Income Inequality, Productivity, and International Trade By Hsu, Wen-Tai; Lu, Lin; Picard, Pierre
  47. One Belt One Road and the reconfiguration of China-EU relations By Xieshu Wang; Joel Ruet; Xavier Richet
  48. Immigration and Redistribution By Alberto Alesina; Armando Miano; Stefanie Stantcheva

  1. By: Estrades, Carmen; Flores, Manuel; Lezama, Guillermo
    Abstract: Between 2006 and 2011, in a global context of rising food prices, many countries applied price-isolating policies. Export restrictions were among the measures most frequently applied. However, as countries are not obliged to notify WTO about the imposition of export restrictions, there is not good information about the measures applied. We fill this void by building a comprehensive database on export restrictions applied in the agricultural sector worldwide between 2005 and 2014. We name it the Export Restriction in Agriculture (ERA) database, and we use it to analyze the incidence of export restrictions by country, type of product, type of measure, and time span. Using the ERA database, we assess the effects of export restrictions on agricultural trade and global food prices in the period 2005-2013. To do so, we estimate a disaggregated gravity model of trade where the effects of export restrictions and import tariffs on traded values and volumes allowed us to infer the existence of an effect on prices. Clear evidence of export restrictions affecting world prices is limited to a handful of sectors, and weak evidence suggests that it may exist in some other sectors. We also find weak evidence of an impact of import promoting policies on agricultural prices. These results highlights the idea that export restrictions should be addressed at the multilateral level, but negotiations on export restrictions should not be disassociated from talks on other price-insulating policies.
    Keywords: Agricultural and Food Policy, International Relations/Trade
    Date: 2017–04–25
  2. By: Grant, Jason; Arita, Shawn
    Abstract: Although recent data collection have revealed a large and diverse universe of non-tariff measures (NTMs), identification and quantification of these measures remain elusive. While much has been written on the subject, the extant literature has been unable to effectively diagnose the most critical areas of NTM concern, sorting out how and to what extent the trade effects vary across different types of measures, and the development of a suitable framework to address these policies in multilateral and regional trade arenas. The purpose of this paper is to shed new light on the landscape of sanitary and phytosanitary (SPS) measures affecting agri-food trade by exploiting detailed information from the World Trade Organization’s (WTO) SPS committee meeting minutes on specific trade concerns (STCs) as a way to ‘reveal’ major cross-cutting NTM concerns faced by exporters. We catalogue the nature and duration of these measures across countries, products and specific classes of NTMs for the period 1995-2014. Our analysis indicates that developed countries play a significant role notifying specific concerns, although developing country notifications are on the rise. The results suggest that the WTO’s SPS trade concern discussion mechanism may facilitate the resolution of SPS concerns, with success often depending on the type of concern and the participation of Members as raising the issue or maintaining the measure. While most SPS concerns are resolved, the distribution of concerns exhibits sharp peaks and heavy right tails with some concerns lasting more than a decade. Animal diseases and tolerances are identified as recurring concerns in meat and fruit and vegetable trade, respectively, with concerns related to testing and quarantine, customs and administration procedures, certification and import permits also on the rise. A first-pass empirical assessment indicates that SPS concerns impart significant reductions to Members’ agricultural exports. While the SPS trade effects are heterogeneous across types of measures, countries maintaining or raising the measure, and the product sectors considered, they are consistently negative and strikingly large in magnitude, even for some of the largest countries in global agri-food trade. Thus, the analysis and results have important policy implications in terms of targeting SPS areas for discussion.
    Keywords: Agricultural and Food Policy, International Relations/Trade
    Date: 2017–05–01
  3. By: Wenxi Lu (School of Economics, University of Adelaide)
    Abstract: Studies show that service activities are essential for promoting manufacturing productivity and economic development. This raises an important question of how to promote services trade and whether policy liberalisation contributes to its development. The study examines the impact of policies on trade in services across countries using export data from UN Comtrade, where restrictions on trade as a result of policy are measured by the Services Trade Restrictiveness Index (STRI). The estimations are in the form of a log-linear gravity model analyzing the effect of STRI on bilateral services trade and one-sided service exports. Our results show that a one per cent increase in the overall STRI brings about a 0.25%–0.29% decrease in bilateral services trade and a 0.04% decrease in service exports. In addition, goods trade networks and export similarity show significant and positive impacts on services trade.
    Keywords: trade in service; Services Trade Restriction Index; export similarity
    JEL: F13 F14 F15
    Date: 2018–06
  4. By: Pedro S. Martins; João Pereira dos Santos; Mariana Tavares; Sónia Cabral
    Abstract: The increased range and quality of China's exports is a major ongoing development in the international economy with potentially far-reaching effects. In this paper, we examine the impact of the China's integration in international trade in the Portuguese labour market. On top of the direct effects of increased imports from China studied in previous research, we focus on the indirect labour market effects stemming from increased export competition in third markets. Our findings, based on matched employer-employee data in the 1991-2008 period, indicate that workers' earnings and employment are significantly negatively affected by China's competition, but only through the indirect 'market-stealing' channel. In contrast to evidence for other countries, the direct effects of Chinese import competition are mostly non-significant. The results are robust to a number of checks, and the negative impacts of indirect competition are found to be stronger for women, older and less educated workers, and workers in domestic firms.
    JEL: F14 F16 J31
    Date: 2018
  5. By: Gohar S. Sedrakyan (International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State Univeristy)
    Abstract: We examine the impacts of the indicators contributing to the effectiveness of tax regulation performances described by the topic of Paying Taxes in Doing Business report on the foreign direct investment inflows. We further focus on the effects the same determinants have on two different modes of FDI: greenfield FDI and cross-border mergers and acquisitions (M&As). This study uses panel data of one hundred fifty-six countries across all regions. The methodology applies random effects econometric tool to conduct a global investigation on the relation between the level of tax regulation and administration performances and the types of FDI, with further more focalized extraction of information applied to seventeen geographic regions. The main findings suggest that while the high degree model does not detect strong significant relations between factors of tax administration and types of FDI; however, a more scrupulous analysis by regions reveals strong correlations between effective tax regulations and levels of foreign direct investment flows to host economies. Additionally, the study suggests that differentiated factors of tax administration and regulation tools should be considered due to the regional affiliation of a potential host economy to drive foreign investments. The results of the study can be used as a guidance for country administrators in assessment of those specific determinants that could lead to improvement of targeted types of FDI in their specific country as part of a given region. Also, the investors may find the results useful for the evaluation of tax regulations and administration performances in potential host countries in terms of targeted investments. Length: 41 pages
    Date: 2018–07
  6. By: George Alessandria (University of Rochester); Horag Choi (Monash University); Kim Ruhl (Pennsylvania State University)
    Abstract: We study how the transitions following a trade reform are shaped by the time it takes for new exporters to grow in the export market. We introduce time and risk into the xed-variable cost tradeo central to general equilibrium heterogeneous rm trade models: Investing in exporting gradually and stochastically lowers the costs of exporting. The model captures the tendency of new exporters to export on a small scale, to have low survival rates, and to take time to grow into large exporters. In the model, aggregate trade dynamics arise from producer-level decisions to invest in lowering their future variable export costs, and tari reforms generate time-varying trade elasticities. We show that the gains from reducing taris arise from substituting away from rm creation and towards export capacity. This is in stark contrast to the static models that dominate the literature. The strength of this substitution is determined largely by the size of new exporters and their ability to grow into successful exporters. We calibrate the model and estimate the welfare gains from reducing taris, which dier substantially from the long-run changes in consumption or trade. We show that the welfare gain cannot be recovered from a static trade model or from formulas based on those models. Because aggregate trade grows slowly, the long-run eects are strongly discounted and, thus, are not the key determinants of the welfare gains from a change in trade policy. We also nd that policy prescriptions based on static models can predict a loss from trade reform when our dynamic model predicts a gain.
    Date: 2018
  7. By: Kari E.R. Heerman; Ian M. Sheldon
    Abstract: In this paper, a structural gravity model is presented which features intra-sector heterogeneity in agricultural productivity systematically linked to land and climate characteristics. The “systematic heterogeneity” (SH) gravity model predicts that countries with similar land and climate characteristics tend to specialize in the same agricultural products. Agricultural trade flow elasticities then depend on comparative advantage, with larger-magnitude trade flow responses predicted among countries more likely to specialize in similar agricultural products and thus compete head-to-head in foreign markets. This is in contrast to standard log-linear gravity models, which impose a restrictive pattern of trade flow elasticities that depend only on absolute advantage in the agricultural sector. We also show how the SH gravity model can accommodate product-specific trade costs. This allows the model to analyze changes in the dispersion of trade costs across products. Such analysis cannot be carried out in a standard gravity model, in which trade costs are assumed constant. Our results confirm economically and statistically significant heterogeneity in the effects of the variables that typically proxy for trade costs in gravity models and demonstrate that the SH gravity model is able to overcome the limitations imposed by the restrictive pattern of elasticities in a standard gravity model.
    JEL: F11 F14 Q17
    Date: 2018–06
  8. By: Yi Huang (IHEID, Graduate Institute of International and Development Studies, Geneva); Chen Lin (University of Hong Kong); Sibo Liu (University of Hong Kong); Heiwai Tang (Johns Hopkins University)
    Abstract: On March 22, 2018, Trump proposed to impose tariffs on up to $50 billion of Chinese imports leading to a significant concern over the “Trade War” between the US and China. We evaluate the market responses to this event for firms in both countries, depending on their direct and indirect exposures to US-China trade. US firms that are more dependent on exports to and imports from China have lower stock and bond returns but higher default risks in the short time window around the announcement date. We also find that firms’ indirect exposure to US-China trade through domestic input-output linkages affects their responses to the announcement. These findings suggest that the structure of US-China trade is much more complex than the simplistic view of global trade that engendered Trump’s “Trade War” against China.
    Keywords: Stock returns, event study, trade policy, offshoring, input-output linkages, global value chains
    JEL: F10 G12 G14 O24
  9. By: Josh Ederington; Mihai Paraschiv; Maurizio Zanardi
    Abstract: Does the ratification of an international environmental agreement (IEA) reduce a country’s competitiveness on world markets? In this paper, we take a gravity regression approach to answering this question by using industry-level bilateral trade data and employing time-varying country fixed effects to control for the endogeneity of treaty participation. We find that ratifying an IEA has significant (albeit small) negative effects on the exports of a country’s median manufacturing industry as well as a compositional shift towards exporting cleaner goods. However, we also show that this negative competitive effect on the median manufacturing industry disappears in the long-run. In fact, the positive compositional shift becomes stronger in the long-run as a ratifying country sees a further decline in exports of dirtier industries which is more than compensated for by an increase in exports of cleaner industries, with an overall positive but negligible effect on employment.
    Keywords: international environmental agreements, trade flows, gravity equation
    JEL: F14 F18 F53 Q56
    Date: 2018
  10. By: Andrew K. Rose
    Abstract: I investigate whether countries that use unconventional monetary policy (UMP) experience export booms. I use a popular gravity model of trade which requires neither the exogeneity of UMP, nor instrumental variables for UMP. In practice, countries that engage in UMP experience a drop in exports vis-á-vis countries that are not engaged in such policies, holding other things constant. Quantitative easing is associated with exports that are about 10% lower to countries not engaged in UMP; this amount is significantly different from zero and similar to the effect of negative nominal interest rates. Thus, there is no evidence that countries have gained export markets through unconventional monetary policy; currency wars that have been launched have also been lost. UMP is also associated with a comparable drop in imports and exchange rates, suggesting that countries engage in UMP when they are experiencing adverse macroeconomic shocks concurrent with those that eviscerate international trade.
    JEL: E58 F14
    Date: 2018–07
  11. By: Pasquale Commendatore (University of Naples ‘Federico II’); Ingrid Kubin (Department of Economics, Vienna University of Economics and Business); Iryna Sushko (Institute of Mathematics, NASU, and Kyiv School of Economics)
    Abstract: We explore the effects of Brexit on trade patterns and on the spatial distribution of industry between the United Kingdom and the European Union and within the EU. Our study adopts a new economic geography (NEG) perspective developing a linear model with three regions, the UK and two separated regions composing the EU. The 3-region framework and linear demands allow for different trade patterns. Two possible ante-Brexit situations are possible, depending on the interplay between local market size, local competition and trade costs: industrial agglomeration or dispersion. Considering a soft and a hard Brexit scenario, the ante-Brexit situation is altered substantially, depending on which scenario prevails. UK firms could move to the larger EU market, even in the peripheral region, reacting to the higher trade barriers, relocation representing a substitute for trade. Alternatively, some EU firms could move in the more isolated UK market finding shelter from the competition inside the EU. We also consider the post-Brexit scenario of deeper EU integration, leading to a weakening of trade links between the EU and the UK. Our analysis also reveals a highly complex bifurcation sequence leading to many instances of multistability, intricate basins of attraction and cyclical and chaotic dynamics.
    Keywords: capacity constraint, depreciation constraint, nonnegativity constraint, piecewise smooth system, border collision bifurcation, centre bifurcation
    JEL: C61 C63 F41
    Date: 2018–08
  12. By: Paola Conconi; Giovanni Facchini; Max F. Steinhardt; Maurizio Zanardi
    Abstract: We systematically examine the drivers of U.S. congressmen's votes on trade and migration reforms since the 1970's. Standard trade theory suggests that reforms that lower barriers to goods and migrants should have similar distributional effects, hurting low-skilled U.S. workers while benefiting high-skilled workers. In line with this prediction, we find that House members representing more skilled-labor abundant districts are more likely to support both trade and migration liberalization. Still, important differences exist: Democrats favor trade reforms less than Republicans, while the opposite is true for immigration reforms; welfare state considerations and network effects shape support for immigration, but not for trade.
    Keywords: trade reforms, immigration reforms, roll-call votes
    JEL: F1 F22
    Date: 2018–08
  13. By: Wenxi Lu (School of Economics, University of Adelaide)
    Abstract: The ability of an economy to export high-quality products is a function of its key fundamentals, such as capital, technologies and its institutions. This chapter examines the relationship between export quality, FDI activities and level of service imports across different countries. The study develops a panel framework to empirically examine the dynamic pattern of export upgrading and factors directly affecting countries’ export performance. We find that services importing, FDI activities and level of per capita income positively affect export upgrading.
    Keywords: export quality; industrial upgrading; FDI; services trade
    JEL: F13 F14 F15
    Date: 2018–06
  14. By: Birgitte Ringstad; João Amador; Sónia Cabral
    Abstract: This paper describes the main features of Portuguese international trade of non-tourism services, using a new transaction-level database on services trade merged with detailed balance-sheet data. We find that a few two-way traders with diversified service and geographical portfolios account for a substantial share of exports and imports. Compared with one-way traders, two-way traders are larger, older, more productive and more profitable. We also unveil new evidence on the bi-modality of the distributions of export intensity, with density concentrating on both ends of the distribution. Moreover, considering all margins of firms' services trade and controlling for several firm characteristics, the intensive margins of exports and imports of services are positively related to both productivity and profitability. Regarding the extensive margins, the number of different types of services imported by a firm is also positively associated with its performance.
    JEL: F1 F14 L25
    Date: 2018
  15. By: Bonga-Bonga, Lumengo; Biyase, Mduduzi
    Abstract: With the increased trade linkage between China and African economies, this paper endeavours to assess the dynamic impacts of Chinese textile imports on the employment and value added in the manufacturing sector of the South African economy. The paper makes use of the structural vector autoregressive (SVAR) methodology with sign restrictions. Moreover, based on this methodology, the paper conducts a counterfactual analysis to uncover what would have happened to employment and value added trends in the manufacturing sector in South African textile in the absence of trade with china. The results of the empirical analysis show that total employment responds negatively to shocks to import from China. Moreover, total value added in the manufacturing sector reacts negatively to positive shocks to textile imports from China.
    Keywords: Textile industry, China, South Africa, SVAR, sign restrictions
    JEL: C54 F14 F16
    Date: 2018
  16. By: Chakraborty, Debashis; Chakraborty, Anushree
    Abstract: After independence, for four decades, India relied on the development supports from the ‘West’, both from the West European countries and the United States as well as from the Soviet Union. While interaction with the Southeast and East Asian economies continued in international forums like the Non-Aligned Movement (NAM), a long-term strategic partnership was missing for various reasons. After initiating the economic liberalization policies in 1991, the country adopted a ‘Look East Policy’ (LEP) with a two-track approach in mind. While on one hand, Japan, Singapore and South Korea were considered as source of technology and investment, high growth rate in several economies of East and Southeast Asia was instrumental in considering them as high potential export markets. India subsequently strengthened the ties with the ‘East’ by becoming Sectoral Dialogue Partner of ASEAN in 1992, covering trade, tourism, investment and science and technology. India’s ‘Act East Policy’ (AEP) came into effect when the current Prime Minister Mr. Narendra Modi at his maiden visit to ASEAN-India Summit in 2014 emphasized on practicing more action-oriented policy towards ASEAN and the wider East Asia. The policy is not a strict foreign policy shift. Under close examination, AEP emerged to be continuation and further deepening of the LEP launched. While trade and investment remain central to India’s outreach to Southeast Asia, under the present NDA government, the country has emerged as the net security provider of the region. In 2015, the Prime Minister visited five East Asian countries at various occasions. There have been other high level diplomatic visits to the East, followed by the appropriate diplomatic channels. Therefore, AEP has brought a great sense of speed and priority in engaging with the East Asian countries in general and Southeast Asia in particular. The current paper examines the opportunities that this new narrative offers for India-East Asia relations in days to come, especially in the current geo-political set-up. At the end, it attempts to seek answers to India’s drive towards greater linkages with this Asian sub-region, both in economic and strategic platforms.
    Keywords: India, Act East Policy, Regional Trade Agreements, Trade in Value Added
    JEL: F13 F15
    Date: 2018–06–08
  17. By: Munu, Martin Luther; Shinyekwa, Isaac
    Abstract: The paper examines the outcomes of the World Trade Organization (WTO) 10th Ministerial Conference (MC10) in Nairobi, what is termed the Nairobi package (WTO, 2015). Specifically, we investigate the implications of the package for the cotton sector development in the economy of the EAC as well as in the economies of member countries, with special focus on Uganda, Kenya and Tanzania. The paper employs a desk review and a quantitative approach to simulate the effects of removal of subsidies on cotton production, prices and export earnings in the 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. We conclude that EAC countries need to monitor the implementation of the decision on the elimination of export subsidies and increase cotton production to take advantage of these opportunities.
    Keywords: Crop Production/Industries, Farm Management, Institutional and Behavioral Economics, International Relations/Trade
    Date: 2018–05–30
  18. 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: reasons for return migration
    JEL: F22 F24 I31 J61
    Date: 2018
  19. By: Fally, Thibault; Hillberry, Russell
    Abstract: International supply chains require coordination of numerous activities across multiple countries and firms. We adapt a model of supply chains and apply it to an international trade setting. In each chain, the measure of tasks completed within a firm is determined by a tradeoff between transaction costs and diseconomies of scope linked to management of a larger measure of tasks within the firm. The structural parameters that determine firm scope explain variation in supply-chain length and gross-output-to-value-added ratios, and determine countries' comparative advantage along and across supply chains. We calibrate the model to match key observables in East Asia, and evaluate implications of changes in model parameters for trade, welfare, the length of supply chains and countries' relative position within them.
    Keywords: Boundary of the firm; Fragmentation of production; Trade in intermediate goods; transaction costs
    JEL: F10 L23
    Date: 2018–07
  20. By: Lionel Fontagné (PSE - Paris School of Economics, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique); Gianluca Orefice (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique); Roberta Piermartini (WTO)
    Abstract: Highlights The Trade Facilitation Agreement will have asymmetric effect on heterogeneous exporters. We merge French customs data with a new database of Trade Facilitation Indicators released recently by the OECD. Better information availability, advance ruling and appeal procedures mainly benefit small firms. The simplification of documents and automation tend to favor large firms. One explanation is that trade facilitation reduces the scope for corruption at borders, to the benefit of large firms. Making (Small) Firms Happy. The Heterogeneous Effect of Trade Facilitation Measures
    Keywords: Trade Facilitation, Heterogeneous Firms, Extensive Margin, Intensive Margin
    Date: 2017–02–24
  21. By: Jennifer Koncz-Bruner (bureau of economic analysis); Dylan Rassier (Bureau of Economic Analysis); Fatih Guvenen (University of Minnesota); Kim Ruhl (Pennsylvania State University)
    Abstract: Abstract Beginning in the mid-1990s, U.S. multinational enterprises began to rapidly shift some profit that would otherwise be earned in the United States to their offshore affiliates located in low-tax jurisdictions. While much as been written about the implications of offshore profit shifting for the U.S. tax base, little is known about the effects of profit shifting on measurement in the domestic economy. Using confidential firm-level data from the Bureau of Economic Analysis, we develop a methodology to measure the profit shifted offshore by U.S. multinational enterprises. In 1990, profit shifting was less than one percent of U.S. private business sector value added. By 2008, profit shifting was about 2.5 percent of U.S. private business sector value added. Reattributing these profits back to the U.S. economy increases U.S. GDP. How does this affect measurement of the U.S economy? We show that accounting for the rapid increase in profit shifting adds to GDP and productivity growth rates for 1994–2008, partially mitigating the productivity slowdown found in official statistics. Most of the profit shifting lies in R&D intensive firms and industries. Our adjusted measure of GDP in R&D intensive industries is as much as 8 percent larger than that found in official statistics. Profit shifting matters for measurements beyond just headline GDP. For 2014, we find that adjusting for profit shifting roughly halves the U.S. trade deficit because adjusting for profit shifting doubles the trade surplus in services (our adjustment does not change the goods trade balance). The profit we reattribute to the United States is capital income, which adds 1.9 percentage points to the decline in the net labor share. The profit reattributed to the United States decreases the income earned by U.S. multinational enterprises on their foreign direct investments (and raises their domestic earnings). As a result, our adjustment reduces the rate of return on U.S. direct investment abroad from 7.3 percent to 3.0 percent, roughly eliminating the difference between the rate of return earned by U.S. multinationals on their foreign investments and the rate of return earned by foreign multinationals on their investments in the United States. In addition, the adjusted data show an even steeper decline in the US labor share in the last 20 years than what was previously documented in earlier work using unadjusted data. Finally, reattributing profits also has implications for the share of corporate profits earned by private business relative to C-corporations: it mitigates the decline in the share earned by the latter relative to what was found in unadjusted data.
    Date: 2018
  22. By: Uris Baldos; Thomas Hertel; Frances Moore
    Abstract: This paper explores the interplay between the biophysical and economic geographies of climate change impacts on agriculture. It does so by bridging the extensive literature on climate impacts on yields and physical productivity in global crop production, with the literature on the economic geography of climate change impacts. Unlike previous work in this area, instead of using a specific crop model or set of models, we instead employ a statistical meta-analysis which encompasses all studies available to the IPCC-AR5 report. This comprehensive approach to the assessment of the biophysical impacts of climate change has the added advantage of permitting us to isolate specific elements of the biophysical geography of climate impacts, such as the role of initial temperature, and differential patterns of warming across the globe. We combine these climate impact estimates with the GTAP model of global trade in order to estimate the national welfare changes which are decomposed into three components: the direct (biophysical impact) contribution to welfare, the terms of trade effect, and the allocative efficiency effect. We find that the terms of trade interact in a significant way with the biophysical geography of climate impacts. Specifically, when we remove the biophysical geography, the terms of trade impacts are greatly diminished. And when we allow the biophysical impacts to vary across the empirically-estimated uncertainty range, taken from the meta-analysis, we find that the welfare consequences are highly asymmetric, with much larger losses at the low end of the yield distribution than gains at the high end. Furthermore, by drawing on the estimated statistical distribution of trade elasticities, we are also able to explore the interplay between economic and biophysical uncertainties. Here, we find that regional welfare is most sensitive to extremely adverse yield outcomes in the presence of uncertainty in trade elasticities.
    JEL: Q17 Q54
    Date: 2018–06
  23. By: HALICIOGLU, Ferda; Ketenci, Natalya
    Abstract: This research presents first empirical evidence on the dynamic relationship between output, renewable and non-renewable energy production, international trade, capital and labour in the case of the EU-15 countries over the period of 1980-2015 for individual countries as well as a group. A simple production function of capital and labour is extended as such that it incorporates the impact of renewable and non-renewable energy inputs, and international trade on output level. Econometric estimations of the extended production equations are carried out via ARDL approach to cointegration for individual country cases and panel GMM econometric technique for the entire EU-15. The ARDL empirical results indicate the existence of cointegration relationships amongst the variables in the case of seven countries of the EU-15, in addition to the GMM based, long-run relationship for the entire EU-15 as a panel. The ARDL procedure suggests that the relative impact of renewable and non-renewable energy inputs on output levels vary considerably for individual countries. The GMM results demonstrate the existence of the relative importance of renewable and non-renewable energy inputs along with international trade on output in the EU-15 countries. This paper also discusses policy implications of the empirical results, as well as offering policy recommendations.
    Keywords: Output, International trade, renewable and non-renewable energy, Cointegration, EU-15 countries
    JEL: C22 F14 F18 Q43
    Date: 2018
  24. By: Giacomo Magistretti (Northwestern University); Marco Tabellini (Harvard Business School, Business, Government and the International Economy Unit)
    Abstract: We study whether economic integration fosters the process of democratization and the channels through which this might happen. Our analysis is based on a large panel dataset of countries between 1950 and 2014. We instrument actual trade with predicted trade constructed by estimating a time-varying gravity equation similar to Feyrer (2009). We find that economic integration has a positive effect on democracy, driven by trade with democratic partners and stronger for countries with lower initial levels of economic and institutional development. These results are consistent with a learning/cultural exchange process whereby economic integration promotes the spread of democracy from more to less democratic countries. We corroborate this interpretation by providing evidence against alternative mechanisms, such as income effects, human capital accumulation, and trade-induced changes in inequality.
    Keywords: democracy, institutional development, economic integration, international trade.
    JEL: F14 F15 P16
    Date: 2018–07
  25. By: Dalia Marin; Jan Schymik; Alexander Tarasov
    Abstract: In this paper, we incorporate trade in tasks into Marin and Verdier (2012) to examine how offshoring affects the way firms organize. We show that offshoring of production tasks and of managerial tasks can lead to more decentralized management and to larger executive wages in open economies. We study the predictions of the model with original firm level data and find that offshoring firms are 18% more decentralized than non-offshoring firms. We also find that offshoring of managers increases the level of decentralized management in open industries, but reduces the level of decentralized management in sufficiently closed industries.
    Keywords: international trade with endogenous organizations, the rise of human capital, theory of the firm, multinational firms, CEO pay
    JEL: F12 F14 L22 D23
    Date: 2018–07
  26. By: B Ravikumar (Federal Reserve Bank of St Louis); Raymond Riezman (University of Iowa); Yuzhe Zhang (Texas A&M University)
    Abstract: We consider a dynamic model in which a domestic firm has a positive marginal cost of production and a foreign firm has zero marginal cost. With free trade the foreign firm would serve the entire domestic market and the domestic firm would not produce. We assume that there is a social benefit for the domestic nation if the domestic firm produces. This could be, for example, because there is learning by doing at the firm level that spills over to other domestic firms. We also assume that the domestic firm can stochastically improve its technology and produce at zero cost. This probability is increasing in domestic production. However, whether the domestic firm has transitioned to zero cost or not is private information. We use a mechanism design approach to deliver optimal protection in the presence of such persistent private information. Our incentive-compatible protection policy induces the domestic firm to reveal its true cost. Our results are as follows. First, the import quota i.e., the fraction of the domestic market served by the foreign firm, increases over time. Second, when the domestic firm announces that it has transitioned to zero cost, the firm receives a one time lump sum payment. Finally, there is an endogenous cutoff date at which time the protection ends. This policy can be implemented by announcing (i) a market share policy, (ii) a domestic subsidy policy, and (iii) a tariff rate policy, and providing the domestic firm with an initial quantity of assets. The domestic firm decides whether or not to participate in the policy. If not, it exits and takes outside option of zero. If yes, it must follow the market share policy. The tariff rate is chosen such that the foreign firm makes zero profits every period. The subsidy rate is chosen such that the domestic firm's loss per unit in each period is limited to the difference between its marginal cost of production and the price charged by the foreign firm. The domestic firm would offset its loss by depleting its assets. At the time of transition to zero cost, the domestic firm would have no loss and would have the asset balance as its lump sum reward.
    Date: 2018
  27. By: Mathilde Maurel (FERDI - Fondation pour les Etudes et Recherches sur le Développement International, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Hugo Lapeyronie (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Bogdan Meunier (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: In this paper, we analyze how a set of slow moving determinants affect trade between the EU on one hand, and CEECs (Central and Eastern European countries) and African countries on the other hand, over the period 2005-2012. We focus on two sets of slow moving determinants, doing business institutions and logistical infrastructure, as well as embassies and ambassadors, by controlling for many other possible time-invariant trade cost determinants. Trade is disentangled for three types of goods: primary goods, parts and components and capital goods. Methodologically, we first derive dyadic country-pair fixed effects and in a second stage we correlate fixed effects with a set of influential factors. In our analysis, (i) we identify the beneficial effects of soft and hard infrastructure; (ii) we compare the latter with the benefit of opening an embassy and also compute the extra trade that would follow a move towards a better score of the trade facilitation and doing business indicators; and (iii) we show that a huge part of the missing bilateral trade fixed effect of North African countries is accounted for by soft and hard infrastructure, and that diplomatic activity is also a powerful driver of regional integration.
    Keywords: Gravity,trade facilitation,regionalism
    Date: 2016–11–13
  28. By: Mandal, Biswajit; Roy, Sangita
    Abstract: This paper proposes a simple theoretical model of a small open economy comprising of four sectors including formal and informal ones. One sector produces skilled intermediate input for the importable production. Though other two sectors use labour and capital (land), labour is segregated as skilled or unskilled. Following traditional specification we also assumed that the skilled labours are employed in the formal sector and unskilled labours are employed in the informal sector. One of the distinguishing features of the present paper is the use of skilled intermediate input in import competing sector. So, in a sense import competing sector uses both skilled and unskilled labour. In such backdrop we tried to study the impact of trade liberalization on absolute and relative wage(s). It has been found that irrespective of factor intensity ranking both types of workers lose owing to tariff cut whereas under reasonable condition wage disparity between skilled and unskilled workers is reduced. These results seem to be quite sensible though the structure is slightly different from the conventional set up.
    Keywords: informality; skilled- unskilled labour; wage gap
    JEL: D5 D50 J31
    Date: 2017
  29. By: Naveen Rai; Lena Suchanek; Maria Bernier
    Abstract: This paper seeks to understand how outward foreign direct investment (FDI) affects the productivity of Canadian firms. We estimate the impact of outward greenfield investment on measures of firm-level productivity using FDI data from roughly 2,000 Canadian firms and more than 4,000 outward FDI projects over the 2003–14 period. Combining matching techniques with a difference-in-difference approach, we find that firms that invest abroad tend to see more important productivity gains one to two years after the investment, compared with firms that are otherwise similar but remain domestic, suggesting that outward investment has beneficial implications for investing firms. Further, panel regression analysis at the provincial level shows that an increase in the number of outward investment projects is found to be associated with higher productivity growth, particularly for investments in OECD countries. The result suggests that learning or technological spillover effects are particularly important when investing in countries close to the home country’s technological frontier.
    Keywords: Firm dynamics; Productivity
    JEL: D24 F21 F23
    Date: 2018
  30. By: Lubinga, H. Moses; Mazibuko, Ndumiso; Ngqangweni, Simphiwe; Potelwa, Y. Xolisiwe; Nyhodo, Bonani
    Abstract: South Africa’s industries in the agricultural sector spend some of the statutory levy income on export promotion and market development (EPMD) activities. Some industries argue that levy expenditure on EPMD activities generates satisfactory returns on investment but empirical evidence is yet to be presented to support the argument. Hence, this study fills this gap by building a unique dataset based on levy expenditure on EPMD for four industries (citrus, deciduous fruits, table grapes and wine) and using econometric analysis to assess the impact of EPMD on exports, net agricultural income and social welfare over a ten years’ period (2006- 2015). Furthermore, we estimate the returns generated on exports, agricultural net income and social welfare per Rand of levy expenditure on exports, net agricultural income and social welfare. In the analysis, we control for unobserved heterogeneity, multi-collinearity and reverse causality. Results suggest that levy expenditure on EPMD has a statistically significant positive impact on exports, net income and social welfare across all industries. On average, a unit increase in levy expenditure on EPMD leads to an increase in exports by 7.3 percent (table grapes and deciduous fruits), 5.6 percent (wine), 5.25 percent (citrus). For agricultural net income, a unit increase in levy expenditure on EPMD is on average associated with a 7.5 percent, 4.9 percent, 4.3 percent and 3.6 percent increase for table grapes, citrus, wine and deciduous fruits, respectively. Across all industries, the range of social welfare improvement lies between 0.2 percent and 0.4 percent per unit increase in levy expenditure on EPMD. Furthermore, results suggest that one Rand spent on EPMD for the four industries in question on average generates a R404 increase in exports, R39 of additional agricultural net income and a US$26 worth of improvement in social welfare. All in all, levy expenditure on EPMD plays a key role in fostering exports, agricultural net income and social welfare improvement. Policy wise, there is need for mobilisation of more resources to facilitate the EPMD initiative into new markets and products for the industries.
    Keywords: Agribusiness, Agricultural and Food Policy, Crop Production/Industries, Industrial Organization, International Relations/Trade, Marketing, Productivity Analysis, Research Methods/ Statistical Methods
    Date: 2017–09–11
  31. By: Ana Maria Santacreu (Federal Reserve Bank of Saint Louis); Liliana Varela (University of Warwick)
    Abstract: What are the effects of trade liberalizations on firms' innovation incentives? What types of a firm's innovations are more affected by these liberalizations: product or process innovation, basic or fundamental innovation? How do changes in a firm's innovation activities after trade liberalizations affect a country's patterns of trade? We examine these questions both empirically and theoretically, through the lenses of a quantifiable model of trade and innovation. Recent empirical studies have found that trade liberalizations substantially affect firms' innovation activities (see Bloom, Draca, and Van Reenen (2015), Autor et al (2016), Coelli, Moxnes and Ulltveit-Moe (2016)). However, there is no consensus on the direction of the effect on innovation. Bloom, Draca, and Van Reenen (2015) and Coelli, Moxnes and Ulltveit-Moe (2016) find that declines in trade frictions increase innovation, whereas Autor el al. (2016) find that trade liberalization reduces firms' patens and R&D expenses. The ambiguity of these results shows the need of structural models to understand the channels through which trade affects firms' incentives to innovate. These models can quantify the importance of the market size and foreign competition channels embedded in trade liberalizations, and rationalize the ambiguity of the empirical findings. Moreover, these models can shed light on the effect that changes in firms' innovation incentives has on a country's patterns of trade. Our first contribution is empirical. We provide empirical evidence on the effect that the accession of China to the WTO in the early 2000s had on the innovation activities of French firms. In particular, we break down innovation activities by categories and study what activities were more affected by changes in trade frictions. We merge three datasets reporting information on firms' R&D and innovation activities, trade and balance sheets over the period 1993-2016. Our R&D data comes from the national survey on firms' R&D and innovation activities and reports information on R&D expenditures, patents, product and process innovation, basic and fundamental innovation, area of research, among others. The custom and balance sheet data provide information on all firms' exports and imports by country destination and origin, sales, capital, and employment. These extensive datasets allow us to build detailed measures of the different activities involved in the innovation process over a long panel, and to measure firms' exposure to the Chinese trade shock. Our second contribution is theoretical. We develop and quantify a model of trade, innovation and firms' dynamics to explain our empirical findings. From a theoretical perspective, the effect of a decline in trade frictions depends on two forces: (i) a market size effect, and ii) a foreign competition effect. The first effect increases investment in innovation, as firms benefit from serving a larger market. The second effect decreases the incentives to innovate, as firms face larger competition from abroad. In this case, the direction of the evolution of comparative advantage determines whether a firm finds it or nor profitable to invest in innovation. Which force dominates determines whether the net effect on innovation after a trade liberalization is positive, negative or neutral. One sector-sector models of Ricardian trade without knowledge spillovers predict that decreases in trade frictions have negligible effects on innovation since the market effect cancels out the foreign competition effect (see Atkeson and Bustein (2010) and Buera and Oberfield (2017)). A recent attempt to model these channels has been done by Sampson (2016), Somale (2016), and Cai, Li and Santacreu (2017), among others, by introducing sectoral linkages in production and knowledge spillovers to previous models of trade and innovation. These papers do not model explicitly the role of the firm in taking innovation, export, entry and exit decisions. Our model builds on Atkeson and Burstein (2010) and Atkeson and Burstein (2017). Atkeson and Burstein (2010) develop a model of trade and innovation without knowledge spillovers, in which innovation is modeled as the introduction of new products in the economy. We augment their model by adding knowledge spillovers and process and product innovations of incumbent firms as in Atkeson and Burstein (2017), who study the effect of innovation policies in a closed economy. In the model, the dynamics of productivity are driven endogenously by innovation of entering forms and product and process innovation of incumbent firms. Changes in trade costs have a direct effect on both product and process innovation in the economy. Our model allows us to disentangle the role of the market size effect and the foreign competition effect on these results. Furthermore, changes in innovation translate into changes in productivity, which in turn has an effect on the patterns of trade of the economy. We calibrate the model to data on innovation and trade for French firms during the period 1996-2016. We then perform a counterfactual exercise that consists of a reduction in trade frictions between China and France, and analyze quantitatively the effect that such trade reform has on innovation and the patterns of trade. Our paper provides a unified framework of trade and innovation at the firm level that allows us to obtain aggregate implications of trade liberalizations.
    Date: 2018
  32. By: Lionel Fontagné (PSE - Paris School of Economics, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique); Philippe Martin (ECON - Département d'économie - Sciences Po); Gianluca Orefice (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique)
    Abstract: We estimate three international price elasticities using exporters data: the elasticity of firm exports to export price, tariff and real exchange rate shocks. In standard trade and international macroeconomics models these three elasticities should be equal. We find that this is far from being the case. We use French firm level electricity costs to instrument for export prices and provide a first estimate of the elasticity of firm-level exports to export prices. The elasticity of exports is highest, around 5, for export prices followed by tariffs, around 2, and is lowest for the real exchange rate, around 0.6. The large discrepancy between these elasticities makes us conclude that the international elasticity puzzle is actually worse than previously thought. Moreover, we show that because exporters absorb part of tariffs and exchange rate movements, estimates of export elasticities that do not take into account export prices are biased.
    Keywords: international elasticity puzzle,export prices,Elasticity,International Trade and Macroeconomics,Export Price,Firm exports
    Date: 2017–02
  33. By: Spencer G. Lyon; Michael E. Waugh
    Abstract: Should a nation's tax system become more progressive as it opens to trade? Does opening to trade change the benefits of a progressive tax system? We answer these question within a standard incomplete markets model with frictional labor markets and Ricardian trade. Consistent with empirical evidence, adverse shocks to comparative advantage lead to labor income losses for import-competition-exposed workers; with incomplete markets, these workers are imperfectly insured and experience welfare losses. A progressive tax system is valuable, as it substitutes for imperfect insurance and redistributes the gains from trade. However, it also reduces the incentives for labor to reallocate away from comparatively disadvantaged locations. We find that optimal progressivity should increase with openness to trade with a ten percentage point increase in openness necessitating a five percentage point increase in marginal tax rates for those at the top of the income distribution.
    JEL: E1 F11 H21
    Date: 2018–06
  34. By: Imura, Yuko (Bank of Canada); Shukayev, Malik (University of Alberta, Department of Economics)
    Abstract: This paper studies the effects of monetary policy shocks on firms’ participation in exporting. We develop a two-country dynamic stochastic general equilibrium model in which heterogeneous firms make forward-looking decisions on whether to participate in the export market and prices are staggered across firms and time. We show that while lower interest rates and a currency depreciation associated with an expansionary monetary policy help to increase the value of exporting, the inflationary effects of the policy stimulus weaken the competitiveness of some firms, resulting in a contraction in firms’ export participation. In contrast, positive productivity shocks lead to a currency depreciation and an expansion in export participation at the same time. We show that, overall, the extensive margin is more sensitive to firms’ price competitiveness with other firms in the export market than to exchange rate movements or interest rates.
    Keywords: Exporter dynamics; monetary policy; firm heterogeneity; exchange rate
    JEL: E52 F12 F44
    Date: 2018–07–30
  35. By: Shui, Shangnan; Beghin, John C.
    Abstract: This study investigates impacts on the U.S. cotton industry of textile trade liberalization using a multi-market equilibrium displacement model. Textile trade liberalization would induce small chang~s in the total demand for U.S. cotton but would affect considerably U.S. cotton demand structure, making U.S. cotton growers more dependent on world markets.
    Keywords: Crop Production/Industries, International Relations/Trade
  36. By: Bakker, Jan; Maurer, Stephan E; Pischke, Jörn-Steffen; Rauch, Ferdinand
    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.
    Date: 2018–07
  37. By: Nezih Guner (CEMFI); Alessandro Ruggieri (Universitat Autonoma de Barcelona, Barcelona GSE); James Tybout (Pennsylvania State University)
    Abstract: Over the past 40 years, labor market conditions in the United States and elsewhere have rapidly evolved. Skill premiums have grown, jobs in the middle of the skill distribution have become relatively scarce, and job and worker turnover rates have declined. At the same time, the fraction of the population attending college has grown, much of the manufacturing work force has shifted into services, and on-the-job training times have increased for high-skill workers. This paper interprets these patterns through the lens of a dynamic structural model that explains workers' human capital accumulation and earnings trajectories over their life cycles. The basic idea is as follows. Before entering the labor market, high school graduates who differ in their ability (human capital) levels decide whether to attend college. After their schooling decisions, skilled (college educated) and unskilled workers enter into the labor market and match with firms that produce different tasks. Firms that produce the same task differ in their idiosyncratic productivity levels. Once employed, workers build human capital through experience, and may also invest in on-the-job training. Both types of human capital accumulation induce wage growth over their life cycles, and this growth is augmented by the arrival of job offers from "poaching" employers, which force firms to compete for their services. But their wages fall if product market shocks throw them into unemployment, interrupting their human capital accumulation and reducing their bargaining power with potential new employers. Tasks, which are produced by one worker-one pair firms are demanded by firms that produce differentiated consumption goods. Consumption good producers can obtain different tasks they need for production from domestic or foreign markets. Tasks differ extent to which they can be obtained from foreign markets. Offshoring, and import competition affect workers' careers through all of these mechanisms. While improving productive efficiency, these shocks destroy jobs in the trade-exposed occupations, change job offer arrival rates for each worker type, and change incentives to invest in college degrees. Also, by reducing the relative demand for mid-skill occupations, they affect workers' incentives to invest in on-the-job training.
    Date: 2018
  38. By: Lubinga, H. Moses; Ngqangweni, Simphiwe; Nyhodo, Bonani; Potelwa, X. Yolanda; van der Walt, Stephanie; Phaleng, Lucius; Ntshangase, Thandeka
    Abstract: Despite the increasing competitiveness of South Africa’s wine industry globally and the industry’s outstanding number of geographical indications (GIs), the impact of these GIs on wine exports has not been assessed (and if it has been assessed such work is not publicly available or not seen by the authors). Understanding the impact of the GIs is critical in enhancing informed policy decisions towards securing more geographical indicators for wines and other products. In addition, the unearthed evidence may be the basis for more government interventions in support of the initiative while protecting the good reputation in communities where production occurs. Based on E-Bacchus database for GI, we use the gravity flow model framework to empirically analyse the effect of GI on South Africa’s wine exports to the European Union (EU). Three proxies are used to capture the impact of GI. Results suggest that GI fosters South Africa’s wine exports into the EU irrespective of the proxy used. With respect to the dummies, GI leads to an increase in South Africa’s wine exports by about 170 percent (0.169, p<0.1). When the actual number of GI names was used, the estimated coefficient (0.007, p<0.1) also suggests that GI enhances wine exports into the EU by 0.7 percent. While using the difference between the number of GI names for South Africa and EU, findings show that GI is associated with 87 percent increase in wine exports. Conclusively, GI positively impact on South Africa’s wine exports into the EU.
    Keywords: Agribusiness, Agricultural and Food Policy, Crop Production/Industries, Food Security and Poverty, Industrial Organization, International Relations/Trade, Productivity Analysis, Research Methods/ Statistical Methods
    Date: 2017–09–11
  39. By: Meilke, Karl D.
    Abstract: The Canadian Agricultural Trade Policy and Competitiveness Network (CATPRN) was funded by Agriculture and Agrifood Canada from late 2004 until early 2013. This paper has three objectives: 1) to chronicle the published output of the CATPRN; 2) to provide an evaluation of its published output based on download data taken from AgEcon Search; and 3) to draw some lessens with respect to the impact of publically funded Networks such as the CATPRN.
    Keywords: Agricultural and Food Policy, International Relations/Trade, Teaching/Communication/Extension/Profession
    Date: 2016–12
  40. By: Mandal, Biswajit; Prasad, Alaka Shree
    Abstract: The paper explains how service trade has been facilitated because of the availability and development of Information and Communication Technology (ICT). With this, the paper points out to the budding theory of time zone (TZ) differences and trade where time zone difference between two countries evokes service trade given the availability of ICT. A general equilibrium framework is taken to explain the effect of trade across non overlapping time zones on factor prices and output. Results show a rise in wage of skilled labour and a fall in rent. The result is conditional on the assumptions of factor intensity. In case of output, the sector exploiting the time zone difference is seen to expand while the other contracts. This outcome, however is independent of the assumption of factor intensity.
    Keywords: Time Zones, Outsourcing, Services, Trade
    JEL: F1 F11
    Date: 2018
  41. By: Lee G. Branstetter; Britta M. Glennon; J. Bradford Jensen
    Abstract: Since the 1990s, R&D has become less geographically concentrated, and has seen especially fast growth in emerging markets. One of the distinguishing features of the R&D globalization phenomenon is its concentration within the software/IT domain; the increase in foreign R&D has been largely concentrated within software and IT-intensive multinationals, and new R&D destinations are also more software and IT-intensive multinationals than traditional R&D destinations. In this paper we document three important phenomena: (1) the globalization of R&D, (2) the growing importance of software and IT to firm innovation, and (3) the rise of new R&D hubs. We argue that the shortage in software/IT-related human capital resulting from the large IT- and software-biased shift in innovation drove US MNCs abroad, and particularly drove them abroad to “new hubs” with large quantities of STEM workers who possessed IT and software skills. Our findings support the view that the globalization of US multinational R&D has reinforced the technological leadership of US-based firms in the information technology domain and that multinationals’ ability to access a global talent base could support a high rate of innovation even in the presence of the rising (human) resource cost of frontier R&D.
    JEL: F23 O32 O57
    Date: 2018–06
  42. By: Hippolyte D'Albis (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Ekrame Boubtane (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique, 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); Dramane Coulibaly (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper evaluates the fiscal effect of international migration. It first estimates a structural Vector Autoregressive model on a panel of 19 OECD countries over the period 1980-2015, in order to quantify the impact of a migration shock. Empirical results suggest that international migration had a positive impact on the economic and fiscal performance of OECD countries. It then proposes an original theoretical framework that highlights the importance of both the demographic structure and the intergenerational public transfers. Hence, OECD countries seems to have benefited from a \demographic dividend" of international migration since 1980.
    Keywords: Immigration,public spending,overlapping-generation model,panel VAR
    Date: 2018–08
  43. By: Lekgau, Sydwell; Matlou, Clementine Ringetani; Lubinga, H. Moses
    Abstract: This paper answers three questions, namely: (i) Is Africa trading with its self-enough? (ii) What are the driving and restraining forces of agribusiness development in Africa? (iii) Why agribusiness development, trade and invest in Africa? A review of relevant literature coupled with panel data econometric estimation based on 12 African countries for a period of 11 years (spanning from 2005 to 2015) was used to address the stated questions. Findings suggest that African countries are trading less with each other as compared to trading with non-African countries. Intra-African trade is dominated by grains, followed by vegetables and fruits and South Africa is a key trading partner on the continent. The increasing in population dynamics, urbanization, growing middle class with differential incomes, increase in consumption patterns on basic and diversified products and food waste are some of the driving forces of agribusiness while identified restraining forces include policy uncertainties, lack of infrastructure, trade distortions and climate change. Policy implications: There is need to; enact free trade within Africa (removal of trade barriers), develop infrastructure across the continent, and ensure political stability given that these factors will lead to increased development of agribusiness sector, more investment and competitive intra-Africa trade.
    Keywords: Agribusiness, Crop Production/Industries, International Development, International Relations/Trade, Marketing, Political Economy
    Date: 2017–09–11
  44. By: Francesco Di Comite (European Commission - JRC)
    Abstract: This paper develops a tractable two-region New Economic Geography model with footloose capital and endogenous freight rates to investigate the welfare implications and long-run industry reallocation patterns triggered by transport liberalization. Two policy scenarios are considered: one where a unique tariff per route is imposed, independently of the direction of shipment, and one of complete deregulation. Carriers in fully deregulated transport markets are shown to charge higher markups in shipments towards the periphery. This pricing behavior counterbalances the welfare-decreasing agglomeration forces associated with lowering trade costs and ensures welfare gains in both region in the short and long run.
    Keywords: Transport liberalization; endogenous transport costs; regional imbalances; Home Market Effect
    JEL: L98 R12 R58 O18
    Date: 2018–07
  45. By: Gaurav Khanna; Munseob Lee
    Abstract: Economists have identified product entry and exit as a primary channel through which innovation impacts economic growth. In this paper, we document how high-skill immigration affects product reallocation (entry and exit) at the firm level. Using data on H-1B Labor Condition Applications (LCAs) matched to retail scanner data on products and Compustat data on firm characteristics, we find that H-1B certification is associated with higher product reallocation and revenue growth. A ten percent increase in the share of H-1B workers is associated with a two percent increase in product reallocation rates -- our measure of innovation. These results shed light on the economic consequences of innovation by high-skill immigrant to the United States.
    JEL: D22 D24 F22 J61
    Date: 2018–07
  46. By: Hsu, Wen-Tai (School of Economics, Singapore Management University); Lu, Lin (Department of Economics, Tsinghua University); Picard, Pierre (CREA, University of Luxembourg)
    Abstract: This paper discusses the effect of income inequality on selection and aggregate productivity in a general equilibrium model with non-homothetic preferences. It shows the existence of a negative relationship between the number and quantity of products consumed by an income group and the earnings of other income groups. It also highlights the negative effect of a mean-preserving spread of income on aggregate productivity through the softening of firms’ selection. This effect is however mitigated in the presence of international trade. In a quantitative analysis, it is shown that an excessively large mean-preserving spread of income may harm the rich as it raises firms’ markups on their purchases. This is contrary to the general belief that income inequality benefits the rich.
    Date: 2018–07–11
  47. By: Xieshu Wang (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique); Joel Ruet (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique); Xavier Richet (ICEE - ICEE - Intégration et Coopération dans l'Espace Européen - Etudes Européennes - EA 2291 - Université Sorbonne Nouvelle - Paris 3)
    Abstract: The context of EU-China relations has dramatically changed over the past five years. China's interest in Europe has expanded geographically and substantially. At the broader diplomatic and strategic level, the OBOR initiative has come to symbolize China's growing significance in international affairs, reshaping regional dynamics. The European Commission and the Chinese government have agreed to enhance synergies in connectivity platforms. However, new investment trends and trade relations with China are highly differentiated across Europe and across sectors. The lack of a clearly defined OBOR plan in most European countries is weakening their bargaining power. In the meantime, China is following its flexible foreign policy approach when dealing with the EU. So far, the OBOR projects in Europe are mainly focusing on transport and infrastructure in Central, Eastern and Southern Europe. We are witnessing the reconfiguration of international institutions and the emergence of a more multi-polar global order.
    Keywords: governance,One Belt One Road,connectivity,infrastructure,investment
    Date: 2017–03
  48. By: Alberto Alesina; Armando Miano; Stefanie Stantcheva
    Abstract: We design and conduct large-scale surveys and experiments in six countries to investigate how natives' perceptions of immigrants influence their preferences for redistribution. We find strikingly large biases in natives' perceptions of the number and characteristics of immigrants: in all countries, respondents greatly overestimate the total number of immigrants, think immigrants are culturally and religiously more distant from them, and are economically weaker – less educated, more unemployed, poorer, and more reliant on government transfers – than is the case. While all respondents have misperceptions, those with the largest ones are systematically the right-wing, the non-college educated, and the low-skilled working in immigration-intensive sectors. Support for redistribution is strongly correlated with the perceived composition of immigrants – their origin and economic contribution – rather than with the perceived share of immigrants per se. Given the very negative baseline views that respondents have of immigrants, simply making them think about immigration in a randomized manner makes them support less redistribution, including actual donations to charities. We also experimentally show respondents information about the true i) number, ii) origin, and iii) “hard work” of immigrants in their country. On its own, information on the “hard work” of immigrants generates more support for redistribution. However, if people are also prompted to think in detail about immigrants' characteristics, then none of these favorable information treatments manages to counteract their negative priors that generate lower support for redistribution.
    JEL: D71 D72 H2
    Date: 2018–06

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