nep-int New Economics Papers
on International Trade
Issue of 2018‒08‒27
fifty papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. The Impacts of Export Taxes on Agricultural Trade By Jayson Beckman; Carmen Estrades; Manuel Flores; Angel Aguiar
  2. The textile and clothing industry in Lesotho in the wake of the multi-fibre agreement phase-out By Ayoki, Milton
  3. The impact of multi-fibre agreement phase-out on Sub-Saharan Africa’s textiles and clothing exports By Ayoki, Milton
  4. New Marshall-Lerner Conditions for an Economy with Outward and Two-Way Foreign Direct Investment By Paul J.J. Welfens
  5. The Impact of Trade Liberalization on Firm Productivity and Innovation By Pian Shu; Claudia Steinwender
  6. Trade Diversion and the Initiation Effect: A Case Study of U.S. Trade Remedies in Agriculture By Colin A. Carter; Sandro Steinbach
  7. The EU-Georgia trade agreement: The impact on agricultural trade and welfare By Koester, Ulrich
  8. Sectoral and regional distribution of export shocks: What do two hundred thousand UK firm observations say? By Rafal Kierzenkowski; Peter Gal; Gabor Fulop; Dorothee Flaig; Frank van Tongeren
  9. Immigration and trade: the case study of Veneto region in Italy By Fiorentini, Riccardo; Verashchagina, Alina
  10. Global Value Chains and Inequality with Endogenous Labor Supply By Kei-Mu Yi; Eunhee Lee
  11. Goods and Factor Market Integration: A Quantitative Assessment of the EU Enlargement By Lorenzo Caliendo; Fernando Parro; Alessandro Sforza; Luca David Opromolla
  12. Entrepreneurial Risk and Diversification through Trade By Federico Esposito
  13. Canada’s Changing International Trade Landscape – Opportunities, Threats and Forgone Opportunities for the Beef Industry By Forrester, Kathryn
  14. Managing Trade: Evidence from China and the US By Nicholas Bloom; Kalina Manova; John Van Reenen; Stephen Teng Sun; Zhihong Yu
  15. Estimated Tariff Equivalents of Services NTMs By Lionel Fontagné; Cristina Mitaritonna; José Signoret
  16. Let' s Try Next Door: Technical Barriers to Trade and Multi-destination Firms By Lionel Fontagné; Gianluca Orefice
  17. Who's who in global value chains? A weighted network approach By Rossana Mastrandrea; Franco Ruzzenenti; João Amador; Sónia Cabral
  18. Britain & Africa: heading for the Brexit rocks By Kohnert, Dirk
  19. Market power in the international fertiliser market: empirical evidence for exports from Russia By Goretzki, Philipp; Perekhozhuk, Oleksandr; Glauben, Thomas; Loy, Jens-Peter
  20. The Impact of Immigration on Firm Level Offshoring By Olney , William W.; Pozzoli , Dario
  21. What are Migrants Willing to Pay for Better Home Country Institutions?: The Case of Viet Nam By Ngoc Thi Minh Tran; Michael P. Cameron; Jacques Poot
  22. New Zealand’s Trade Prospects in an Uncertain Trans-Pacific Partnership (TPP) Environment: Results from Gravity Model By Tsang, Cheuk Yan; Shakur, Shamim
  23. Financial Frictions, Trade, and Misallocation By David Kohn; Fernando Leibovici; Michal Szkup
  24. The Role of Economic Infrastructure in Promoting Exports of Manufactured Products: Trade Facilitation and Industrialization in the EAC By Shinyekwa, Isaac; Ntale, Anita
  25. The Role of Institutions and Networks in Firms' Offshoring Decisions By Moriconi, Simone; Peri, Giovanni; Pozzoli, Dario
  26. European Union and Big Four’s Position Towards the 16+1 Cooperation Platform By Iulia Monica, Oehler-Șincai; Costin, Lianu; Irina Gabriela, Rădulescu
  27. Has China Replaced Colonial Trade ? By Laurent Didier; Pamina Koenig
  28. Shift-Share Instruments and the Impact of Immigration By David A. Jaeger; Joakim Ruist; Jan Stuhler
  29. International trade in services and inequalities: empirical evaluation and role of tourism services By Sylvain Petit
  30. A Unified Model of International Business Cycles and Trade By Saroj Bhattarai; Konstantin Kucheryavyy
  31. The Distributional Effects of Trade: Theory and Evidence from the United States By Kirill Borusyak; Xavier Jaravel
  32. EU labour in agricultural sector of the United Kingdom By Barathova, Katarina
  33. Export Tariffs Combined with Public Investments as a Forest Conservation Policy Instrument By Gregor Schwerhoff; Johanna Wehkamp
  34. The Spoils of War: Trade Shocks during WWI and Spain’s Regional Development By Simon Fuchs
  35. Measuring Bilateral Exports of Value Added: A Unified Framework By Bart Los; Marcel P. Timmer
  36. The economic impacts of UK trade-enhancing industrial policies and their spillover effects on the energy system By Andrew Ross; Grant Allan; Gioele Figus; Peter G McGregor; J Kim Swales; Karen Turner
  37. Capital adjustment costs : implications for domestic and export sales dynamics By Liu, Yanping
  38. Upgrading Product Quality: The Impact of Tariffs and Standards By Jihyun Eum
  39. Regional Market Integration and City Growth in East Africa: Local but no Regional Effects? By Andreas Eberhard-Ruiz; Alexander Moradi
  40. A Synthesis of the Lewis Development Model and Neoclassical Trade Models By Gordon Menzies
  41. Is GATT/WTO Membership Decreasing Poverty in Developing Countries? By Kouwoaye, Amevi Rocard
  42. The Extensive Margin of Trade and Monetary Policy By Yuko Imura; Malik Shukayev
  43. Trade Liberalization, Absorptive Capacity and the Protection of Intellectual Property Rights By YAMAMOTO, Yohei
  44. Are Foreign Direct Investments in Agri-food Industry driven by Raw Agricultural Commodities Price Volatility? By Kone, Mankan M.
  45. Foreign Competition and Domestic Innovation: Evidence from U.S. Patents By David Autor; David Dorn; Gary Pisano; Gordon Hanson; Pian Shu
  46. Let’s talk about the Free Trade Agreement (FTA): The five ASEAN members highlighting Indonesia By Kiki Verico; Yeremia Natanael
  47. Trade in Environmental Goods: Empirical Exploration of Direct and Indirect Effects on Pollution by Country’s Trade Status By Zugravu-Soilita, Natalia
  48. Market Fundamentals and International Grain Price Volatility By Fabio Gaetano Santeramo
  49. U.S. Immigration and Policy Brain Waste By Ayoung Kim; Brigitte S. Waldorf; Natasha T. Duncan
  50. Uneven development patterns in global value chains By Bruno Carballa Smichowski; Cédric Durand; Steven Knauss

  1. By: Jayson Beckman; Carmen Estrades; Manuel Flores; Angel Aguiar
    Abstract: Export taxes, despite being applied by several countries, have not received the same scrutiny in multilateral trade negotiations as other trade barriers. This work seeks to provide more detail into the linkages between export taxes, trade, food prices, and poverty in the agriculture sector. We first focus on how export taxes have impacted trade and international prices, applying a dynamic econometric-based gravity framework. Results show that export taxes do not have a widespread impact on international prices, but rather that the impact is concentrated in a few goods, mainly dairy products, live plants, vegetables, oilseeds and oils. We then use a computable general equilibrium model to examine the impacts to trade and poverty if export taxes were to be removed. These results indicate that a removal of export taxes would not have a significant impact on global prices. However, regions that apply export taxes would have an increase in production and exports if they are removed. Some regions, mainly those that currently export commodities taxed in other countries, could be harmed by the removal of export taxes due to the increased competition of exports in international markets. Consumers would benefit from a fall in domestic prices.
    JEL: F1 F13 Q17
    Date: 2018–08
  2. By: Ayoki, Milton
    Abstract: This paper examines the textile and clothing (T&C) industry in Lesotho to ascertain the initial effects of the end of quotas and other restrictions on global trade in textile and clothing. Results show a dramatic decline in Lesotho’s T&C exports, both in value terms and export share in major markets in industrialised countries: the U.S. and the EU in the aftermath of the Agreement on Textile and Clothing (ATC). The export decline for Lesotho and for Sub-Saharan African countries as a group has not been accompanied by simultaneous or rapid shift of increasing T&C exports by Asian developing countries, who continue to export post-ATC at about the same levels of textile and clothing that they did before ATC phase out. While T&C exports from Lesotho and other African countries continue to decline, post-ATC, it is unclear if the end of the ATC quotas has been the main cause of that decline. Results do not provide clear evidence that the termination of the ATC has been a major contributing factor to the decline of Lesotho’s and SSA Africa’s T&C exports. Instead, we find evidence of simultaneous and rapid shift of increasing T&C exports from China to Lesotho and other African markets. Compared to competition in export markets, the influx of Chinese products imposes worse threat to the textile and clothing sector in Lesotho and the rest of Africa. Further to these, the utilisation of safeguard mechanisms by the U.S. and the continued option to maintain tariffs and other non-tariff barriers means that the end of ATC did not fully bring about “free trade” for clothing and textiles. These results raise important policy issues that could be considered in the ongoing negotiations on rules: trade remedies, particularly those dealing with safeguard and countervailing measures.
    Keywords: Agreement on Textile and Clothing (ATC), Multifibre arrangement, global textile and clothing exports, quota restrictions, trade remedies, Sub-Saharan Africa, Lesotho
    JEL: F13 F14 K33
    Date: 2016–12–22
  3. By: Ayoki, Milton
    Abstract: This paper analyses exports of textiles and clothing (T&C) from Sub-Saharan African countries in the decade leading to and after a phase out of the Agreement on Textile and Clothing (ATC) (Multi-fibre Agreement restrictions on T&C export)—from 1990s to 2016 using WTO and World Bank data sets—to ascertain the initial effects of the end of quotas and other restrictions on global trade in textile and clothing. Our results show a fall in exports of African countries in the aftermath of the ATC, and a simultaneous and gradual shift of increasing T&C exports by Asian countries (Asia & Pacific) into African markets at a much faster rate than their increase into the U.S. and EU markets. To the U.S, the Asian countries continue to export post-ATC at about the same levels of textile and clothing that they did before ATC phase out. Taken together, there is no clear evidence that the termination of the ATC has been a major contributing factor to the decline of Sub-Saharan Africa’s T&C exports. The utilisation of safeguard mechanisms by the U.S. and the EU and the continued option to maintain tariffs and other non-tariff barriers make it difficult to trace the effects of the end of ATC, but also raise important issues that could be considered in the WTO negotiations on rules: trade remedies (safeguard and countervailing measures) since the end of ATC did not bring about “free trade” for clothing and textiles.
    Keywords: Multifibre Agreement (MFA), Agreement on Textile and Clothing (ATC), quota restrictions, rules negotiations, trade remedies, textile and clothing exports, Sub-Saharan Africa.
    JEL: F13 K33
    Date: 2017–11–23
  4. By: Paul J.J. Welfens (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW))
    Abstract: Summary: The international debate about trade imbalances often puts the focus on the role of domestic GDP/foreign GDP and the role of real exchange rate changes – with respect to the latter adjustment channel, the standard question is whether or not the Marshall-Lerner condition is fulfilled. With outward foreign direct investment (FDI) and inward FDI becoming increasingly important, the question about the real exchange rate impact on the trade balance has to be restated as imports are proportionate to real gross national income and this indeed implies a new Marshall-Lerner condition. It is shown that with outward cumulated FDI, the modified condition is stricter than the traditional case and with both outward FDI and inward FDI, the elasticity requirement is ambiguous. “FDI globalization” might go along with unpleasant trade imbalance problems so that additional empirical research is needed as well as stronger international policy cooperation as high trade balance deficits/high trade balance surplus positions could be rather difficult to correct through exchange rate adjustments only. Looking at the import elasticities for all partner countries of the US – or country x – together is quite misleading for policymakers. Zusammenfassung: Die internationale Debatte zu Handelsbilanzungleichgewichten fokussiert häufig auf die Rolle von inländischem oder ausländischem Bruttoinlandsprodukt und die Rolle realer Wechselkursänderungen – dabei ist mit Blick auf letzteren Anpassungskanal ein gewichtige Standardfrage, ob die Marshall-Lerner Bedingung erfüllt ist. Mit der zunehmenden Bedeutung von Direktinvestitionsabflüssen und Direktinvestitionszuflüssen muss die Frage nach der Rolle des realen Wechselkurses mit Blick auf die Handelsbilanzreaktion neu gestellt werden, da die Güterimporte proportional zum realen Brutto-Nationaleinkommen sind; das bedeutet eine neue, veränderte Marshall-Lerner Bedingung. Gezeigt wird, dass bei kumulierten Auslandsdirektinvestitionen die modifizierte Bedingung strikter als die traditionelle Bedingung ist: Die Direktinvestitionsintensität, die ausländische Gewinnquote und die Größe des Landes relative zum Welteinkommen spielen nun zusätzlich eine wichtige Rolle. Hat man sowohl Zuflüsse wie Abflüsse bei Direktinvestitionen wird die Bedingung uneindeutig. “Direktinvestitions-Globalisierung” könnte von daher mit unerfreulichen Handelsbilanz-Ungleichgewichtsproblemen einhergehen, wobei zusätzliche empirische Forschung notwendig ist; ebenso zudem verstärkte international Politikkooperation, da hohe Defizit- oder Überschusspositionen kaum allein durch reale Wechselkursänderung zu korrigieren sind. Protektionismus-Politik, die zu Direktinvestitionen als Mittel zum Überspringen von Zollmauern führt, unterminiert die Handelsbilanzanpassung via reale Wechselkurse. Wenn man die Importelastizitäten für alle Handelspartner zusammen betrachtet, ist das irreführend für die Politik.
    Keywords: Trade balance, foreign direct investment, real exchange rate, macroeconomics, economic policy
    JEL: E22 E61 F10 F21 F31 F40 F41
    Date: 2018–07
  5. By: Pian Shu; Claudia Steinwender
    Abstract: This chapter reviews the empirical economics literature on the impact of trade liberalization on firms' innovation-related outcomes. We define and examine four types of shocks to trade flows: import competition, export opportunities, access to imported intermediates, and foreign input competition. Our review reveals interesting heterogeneities at the country and firm levels. In emerging countries, trade liberalization appears to spur productivity and innovation. In developed countries, export opportunities and access to imported intermediates tend to encourage innovation, but the evidence on import competition is mixed, especially for firms in the United States. At the firm level, the positive effects of trade on innovation are more pronounced at the initially more productive firms while the negative effects are more pronounced at the initially less productive firms.
    JEL: F13 F14 O3
    Date: 2018–06
  6. By: Colin A. Carter; Sandro Steinbach
    Abstract: This paper estimates the impact of U.S. trade remedy (TR) actions on agricultural trade from 1990 to 2014. Most previous studies of the effects of TR actions have left out agricultural products. We use a four-country oligopolistic trade model to study the impact of TR duties on imports from non-named countries, and we improve on methodological issues present in earlier studies. Our empirical results show that TR investigations benefit non-named foreign exporters and U.S. imports from non-named countries increase even before the implementation of a TR duty. The extent of trade diversion is positively related to the size of the duty. Moreover, we find evidence of an initiation effect revealed by a significant increase in imports from non-named countries that did not previously trade the relevant product with the United States. The considerable extent of trade diversion in agriculture provides robust evidence for leakage effects of TR laws which has a detrimental impact on their protective effect.
    JEL: F12 F14 Q17
    Date: 2018–06
  7. By: Koester, Ulrich
    Abstract: The EU has signed new agreements with Ukraine, Moldavia, and Ukraine, the so-called Deep and Comprehensive Free Trade Agreement (DCFTA). This policy brief only focuses on Georgia to exemplify the mythology and some important specifics of the participating countries that differ somewhat, but are important for assessing the impact. The agreement with Georgia became effective in September 2016; therefore, accurate estimation of the quantified effects was delayed for some time. This policy brief focusses on the free trade agreement on agricultural products. Georgia benefits from trade preferences for import to the EU and the EU likewise from exports to Georgia. It is foreseen that tariffs will be abolished completely in the future, but at present it is only Georgia which has abolished tariffs for imports from the EU. The EU has only reduced the World Trade Organization (WTO) bounded rates and, in addition, it still applies the so-called entry price system and even quotas for imports of garlic. Effects on trade might be important because the EU still highly protects agricultural imports and thus the standard of living for the 50 percent of Georgians living mainly from farming may improve. The findings are that Georgia may gain in total, if traders live in Georgia. The gain results from both redirection of Georgian exports from other destinations and additional exports of Georgian products. These additional exports to the EU may be replaced by additional imports from low price suppliers on the world market.
    Keywords: Agricultural and Food Policy, International Relations/Trade
    Date: 2017–08–10
  8. By: Rafal Kierzenkowski; Peter Gal; Gabor Fulop; Dorothee Flaig; Frank van Tongeren
    Abstract: This study explores the impact of export shocks on firms and re-aggregates results to derive distributional effects on sectors and regions. In a first step, firm level data are used to assess the empirical relationship between exports and three outcome variables – labour productivity, employment and wages. In a second step, an illustrative set of changes in trading relationships generate sectoral export shocks, which are simulated with the OECD METRO model of trade and subsequently fed into micro-level estimates. The method developed in this study can be applied to other countries, conditional on the availability of data. As an initial case study, the analysis is for the United Kingdom which has weak regional productivity outside London, partly related to sectoral and trade specialisation. In particular, the most productive regions are specialised in knowledge-intensive services and are more intensive in tradable services. The results suggest limited impacts of export shocks on sectoral employment, except for car and truck manufacturing, consistent with a high integration of the sector with European value chains. Labour productivity and wages are negatively affected across most sectors, but the effects are smaller on the services sector relative to the goods sector. Given that services activities are concentrated in more productive regions, these regions are more resilient to shocks. The United Kingdom has a strong comparative advantage in services sectors and promoting the opening of global services markets would be an important way to offset potential negative impacts of export shocks on the other sectors of the economy.
    Keywords: employment, European Union, exports, firms, productivity, regions, sectors, United Kingdom, wages
    JEL: D24 F14 F16 J21 J3 R12
    Date: 2018–08–08
  9. By: Fiorentini, Riccardo; Verashchagina, Alina
    Abstract: This paper investigates the relation between immigration and trade by focusing on Veneto region in Italy. The reference period is 2008-2015, interfering with the economic crisis, thus the results obtained can be time specific. The presence of immigrants in Veneto was constantly on the rise, also during the crisis, although at a slower pace compared to pre-crisis years. The question is which role could this play in ascertaining the stability, if not expansion, of trade relations between the region and the countries of immigrants' origin. The estimates of gravity model suggest a non-linear relationship between the number of immigrants and total exports from (imports to) the host-province to (from) the country of origin. The type of this relation moreover differs by sector of origin of trade. The effect on imports is mainly concentrated in manufacturing, whereas that on exports is more evenly distributed among several sectors. In particular, agriculture, mining, manufacturing, water supply and wastes managements are the ones which react positively by exporting more in response to increase in the number of immigrants. This could mean that further inflow of immigrants can potentially induce shifts in the structure of local economy of Veneto region which is highly dependent on international trade.
    Keywords: International Development, International Relations/Trade
    Date: 2017–07–31
  10. By: Kei-Mu Yi (University of Houston); Eunhee Lee (University of maryland)
    Abstract: We assess the role of global value chains transmitting global integration shocks to aggregate trade as well as distributional outcomes. We develop a multi-country general equilibrium trade model that features multi-stage production, with different stages having different productivities and using factors (occupations) with different intensities. The model also features a Roy mechanism, in which heterogeneous workers endogenously choose their sector and occupation. Country- and worker-level comparative advantages interact. A reduction in trade costs leads to countries specializing in their comparative advantage sectors and production stages. This specialization changes labor demand and also leads to more workers shifting to their comparative advantage sectors and occupations. With a special case of our model, we show that the intensity of the global value chain (GVC) magnifies the aggregate effects of trade liberalization, but it has a non-monotonic effect on the skill premia. We calibrate our model to the U.S., China, and the rest of the world in 2000 and we simulate a decline in China’s costs of trade, designed to mimic China’s entry into the WTO. Our simulation results imply an increase in the skill premium in both the U.S. and China, and the GVC, i.e., stage-level specialization, is critical to this outcome.
    Date: 2018
  11. By: Lorenzo Caliendo; Fernando Parro; Alessandro Sforza; Luca David Opromolla
    Abstract: The economic effects from labor market integration are crucially affected by the extent to which countries are open to trade. In this paper we build a multi-country dynamic general equilibrium model with trade in goods and labor mobility across countries to study and quantify the economic effects of trade and labor market integration. In our model trade is costly and features households of different skills and nationalities facing costly forward-looking relocation decisions. We use the EU Labour Force Survey to construct migration flows by skill and nationality across 17 countries for the period 2002-2007. We then exploit the timing variation of the 2004 EU enlargement to estimate the elasticity of migration flows to labor mobility costs, and to identify the change in labor mobility costs associated to the actual change in policy. We apply our model and use these estimates, as well as the observed changes in tariffs, to quantify the effects from the EU enlargement. We find that new member state countries are the largest winners from the EU enlargement, and in particular unskilled labor. We find smaller welfare gains for EU-15 countries. However, in the absence of changes to trade policy, the EU-15 would have been worse off after the enlargement. We study even further the interaction effects between trade and migration policies and the role of different mechanisms in shaping our results. Our results highlight the importance of trade for the quantification of the welfare and migration effects from labor market integration.
    JEL: E24 F13 F16 F22 J61 R13
    Date: 2017
  12. By: Federico Esposito
    Abstract: Demand shocks have been shown to be an important determinant of firm sales' variation across different markets. The key insight of this paper is that, in presence of incomplete financial markets, firms can reduce demand risk through geographical diversification. I first develop a general equilibrium trade model with monopolistic competition, characterized by stochastic demand and risk-averse entrepreneurs, who exploit the imperfect correlation of demand across countries to lower the variance of their total sales. Despite its complexity, I provide a novel analytical characterization of the firms problem and show that both entry and trade flows to a market are affected by its risk-return profile, which in turn depends on the multilateral covariance of the country's demand with all other markets. Moreover, I show that welfare gains from trade can be significantly higher than the gains predicted by standard models which neglect firm level risk. After a trade liberalization, risk-averse firms boost exports to countries that offer better diversification benefits. Hence, in these markets foreign competition becomes stronger, lowering the price level more. Therefore, countries with better risk-return profiles gain more from international trade, while riskier markets reap lower gains. I then use data on Portuguese firm-level international trade flows, from 1995 to 2005, to provide evidence that exporters behave in a way consistent with my model's predictions. Finally, policy counterfactuals reveal that, for the median country in the sample, the risk diversification channel increases welfare gains from trade by 15% relative to traditional models with risk neutrality.
    JEL: F1
    Date: 2017
  13. By: Forrester, Kathryn
    Abstract: Canada’s international trade landscape under which the Canadian beef industry must operate may change in important ways in the near future. The Trans Pacific partnership agreement provided additional opportunities for the beef industry, but those may now represent opportunities forgone in the wake of the recent US election. During the US election, there were explicit references to either renegotiating NAFTA or “tearing it up”. This thesis provides an analysis of the various possible effects on Canadian beef trade based on a variety of trade agreement outcome scenarios. The partial equilibrium Global Simulation Analysis (GSIM) model (Francois and Hall,2003) was adapted to undertake the analysis. This single product, multi-region model provided trade and welfare results that can be compared between scenarios that depend upon the retaining of NAFTA and the potential evolution of the TPP.Le paysage de commerce international dans lequel doit opérer l'industrie canadienne du bœuf pourrait changer de manière importante dans un avenir très rapproché. Le Partenariat transpacifique fournit des occasions supplémentaires pour l'industrie du bœuf qui pourraient maintenant devenir des occasions manquées étant donné les récentes élections américaines. Durant cette élection, la possibilité de modifier ou d'annuler l'ALENA a été soulevée explicitement. Cette thèse fournit une analyse des effets possibles de divers scénarios de dénouement concernant les ententes de commerce sur l'industrie du bœuf canadien. Le modèle d'équilibre partiel d'analyse de simulation mondiale (François et Hall, 2003) a été adapté afin d'entreprendre cette analyse. Ce modèle multirégion à produit unique fournit des résultats sur le commerce et le bien-être pouvant être comparés aux scénarios qui dépendent du maintien de l'ALENA et l'évolution potentielle du PTP.
    Keywords: International Relations/Trade
    Date: 2017
  14. By: Nicholas Bloom; Kalina Manova; John Van Reenen; Stephen Teng Sun; Zhihong Yu
    Abstract: We present a heterogeneous-firm model in which management ability increases both production efficiency and product quality. Combining six micro-datasets on management practices, production and trade in Chinese and American firms, we find broad support for the model's predictions. First, better managed firms are more likely to export, sell more products to more destination countries, and earn higher export revenues and profits. Second, better managed exporters have higher prices, higher quality, and lower quality-adjusted prices. Finally, they also use a wider range of inputs, higher quality and more expensive inputs, and imported inputs from more advanced countries. The structural estimates indicate that management is important for improving production efficiency and product quality in both countries, but it matters more in China than in the US, especially for product quality. Panel analysis for the US and a randomized control trial in India suggest that management exerts causal effects on product quality, production efficiency, and exports. Poor management practices may thus hinder trade and growth, especially in developing countries.
    JEL: F0
    Date: 2018–06
  15. 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); Cristina Mitaritonna (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique); José Signoret (USITC - U.S. International Trade Commission)
    Abstract: Quantifying the restrictiveness of NTMs for services has proven to be difficult. The main limitation has been the lack of comprehensive data, whether trade, policy, or microeconomic data. A first solution is to use a STRI approach whereby qualitative information is arbitrarily transformed into a quantitative measure of the restrictiveness of each measure. We use here a reduced form of the gravity approach to estimate services trade without relying on STRI information. Our results compare with those of Fontagné, Guillin, and Mitaritonna (2011) for the year 2004. We use the same method, for a larger set of countries. The tariff equivalents are inferred by comparing the inward multilateral resistance term for each country with that of a benchmark country. We provide ad valorem equivalents of restrictions on trade in services for 117 countries in 2011 using GTAP data of trade in services.
    Keywords: Non-Tariff Measures, Trade in Services, Ad-valorem Equivalents
    Date: 2016–08
  16. 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)
    Abstract: Highlights Stringent TBTs drive the average firm out of the market with a magnified effect for multi-destination players, who are encouraged to redirect their exports to other destinations (free of TBT concerns). Multi-destination firms are more likely to exit as a response to a stringent TBT. Thus, the imposition of a stringent TBT, by pushing multi-destination (high-productive) firms out of the market, reduces the average productivity of incumbent firms (i.e. the welfare of the imposing country). We combine aggregate estimations at sector-destination level with firm-level estimations and find that stringent TBTs represent mainly increases in fixed (more than variable) trade costs, with trade elasticity magnified for more homogeneous sectors.
    Keywords: Multi-destination Firms,Non-tariff Measures, TBT, Trade Margins
    Date: 2016–07
  17. By: Rossana Mastrandrea; Franco Ruzzenenti; João Amador; Sónia Cabral
    Abstract: This paper represents global value chains (GVCs) as weighted networks of foreign value added in exports, which allows for the identification of the specific roles of countries and for the quantification of their relative importance over time. A major structural change occurred in the beginning of the century as GVCs steadily turned into global networks, amid an unprecedented growth of value-added flows and the rise of China as a major player. First-order network metrics highlight the vital but also distinct roles of Germany, the US, China and Japan in the international organisation of production. Germany is very relevant both as a user and as a supplier of foreign inputs, while the US acts mostly as a supplier of value added to other countries. Second-order properties of networks shed light on the complex architecture of GVCs, notably in terms of cyclical triangular relationships. Germany's GVCs mostly root in direct relationships, while Japanese ones typically involve more than two countries.
    JEL: C67 D85 F14 F15
    Date: 2017
  18. By: Kohnert, Dirk
    Abstract: High-flying illusions on the part of the proponents and grim predictions of the sceptics characterize the controversy about Brexit. The article analyses five issues at stake for the Post-Brexit relationships between Britain, the EU and Africa with a focus on the Commonwealth Sub-Saharan Africa: market access, FDI, aid, security and partnership . The British government’s vision of a ‘Global Britain’ relies heavily on a reinforced co-operation with Commonwealth nations. However, most likely this would be possible only at the expense of the poor in Africa and elsewhere. Concerning security cooperation with Africa, London apparently exaggerated its defence input in order to enhance its bargaining position with the EU. It will be crucial for both the EU and UK to find post-Brexit agreements to stem irregular migration and the growth of jihadist groups and terrorism. In a nutshell, the analysis of these different policy field shows that expectations of Brexiteers and African politicians alike concerning an enhanced, partner-like Post-Brexit Commonwealth relationship are largely unfounded.
    Keywords: UK, Brexit, EU, Africa, international trade, tariffs, aid, security, partnership
    JEL: F10 F13 F2 F35 F54 G15 G2 H26 N17 N47 N77 O17 P16 Z13
    Date: 2018–08–15
  19. By: Goretzki, Philipp; Perekhozhuk, Oleksandr; Glauben, Thomas; Loy, Jens-Peter
    Abstract: This study presents empirical evidence for the behaviour of Russian exporters in the international fertiliser market. Russia is in the spotlight since the potash cartel has collapsed. In 2012, Russia became the world’s second-largest exporter increasing its potash exports from 1996 to 2012 more than two times. PTM approach developed by Krugman (1986, 1987) is chosen to test the market behaviour. Imperfect competition in the Russian export market for nitrogen fertilisers is revealed in two-thirds of the destination countries under study. In the export market for potash, a sufficiently perfect market is found in only one out of 9 countries.
    Keywords: Industrial Organization
    Date: 2017–08–28
  20. By: Olney , William W.; Pozzoli , Dario (Department of Economics, Copenhagen Business School)
    Abstract: This paper studies the relationship between immigration and offshoring by examining whether an influx of foreign workers reduces the need for firms to relocate jobs abroad. We exploit a Danish quasi-natural experiment in which immigrants were randomly allocated to municipalities using a refugee dispersal policy and we use the Danish employer-employee matched data set covering the universe of workers and firms over the period 1995-2011. Our findings show that an exogenous influx of immigrants into a municipality reduces firm-level offshoring at both the extensive and intensive margins. The fact that immigration and offshoring are substitutes has important policy implications, since restrictions on one may encourage the other. While the multilateral relationship is negative, a subsequent bilateral analysis shows that immigrants have connections in their country of origin that increase the likelihood that firms offshore to that particular foreign country.
    Keywords: Immigration; Offshoring
    JEL: F16 F22 F23 J61
    Date: 2018–04–12
  21. By: Ngoc Thi Minh Tran (University of Waikato); Michael P. Cameron (University of Waikato); Jacques Poot (University of Waikato)
    Abstract: We conduct the first contingent valuation investigation of the preference of international migrants for better home country institutional quality. Our study uses contingent valuation questions in a survey of Vietnamese migrants living in New Zealand (NZ) in 2016 to establish the compensating differentials that make those migrants indifferent between residing in New Zealand and returning to Viet Nam (VN) in hypothetical scenarios. We find that the estimated willingness to pay for an incremental unit improvement in institutional quality in Viet Nam is, on average, NZD 79.80 per week (approximately 33 percent of the average weekly wage in Viet Nam for the same period), and positively associated with the respondents’ age and the perceived importance of institutional quality in Viet Nam to their repatriation intentions. This study underscores the importance of institutional quality to migration decisions by showing that migrants are willing to trade-off part of their regular income for better home country institutional quality.
    Keywords: return migration; institutional quality; contingent valuation method; willingness to pay;Viet Nam
    JEL: F22 O15 H40
    Date: 2018–08–13
  22. By: Tsang, Cheuk Yan; Shakur, Shamim
    Keywords: International Relations/Trade
    Date: 2017
  23. By: David Kohn (Pontificia Universidad Católica de Chile); Fernando Leibovici (Federal Reserve Bank of St. Louis); Michal Szkup (University of British Columbia)
    Abstract: We investigate the extent to which financial frictions shape the effects a trade liberalization has on aggregate total factor productivity (TFP) and capital misallocation. We study a small open economy populated with heterogeneous entrepreneurs who differ in their productivity and are subject to financing constraints. Individuals choose whether to be workers or entrepreneurs, and entrepreneurs choose whether to export or not. We show how financial frictions distort these decisions and aggregate TFP. We calibrate the model to match key features of Chilean plant-level data and use it to quantify TFP losses due to misallocation. We then investigate how the presence of financial constraints affects the output and TFP gains from a trade liberalization. We find that lowering trade barriers has a stronger positive effect in less financially developed economies. The higher profits that result from a trade liberalization allow firms to accumulate assets and relax their credit constraint, which is particularly valuable in economies where firms are severely constrained.
    Date: 2018
  24. By: Shinyekwa, Isaac; Ntale, Anita
    Abstract: The paper estimates the impact of economic infrastructure on the exports of manufacturing products for the East African Countries, specifically, Uganda, Tanzania and Kenya. It departs from the literature that looks at infrastructure and development in general to facilitation of exports of manufactured products. An augmented gravity model is used to estimate the elasticities through which the proportion of economic infrastructure development required to generate a given proportion of exports of manufactured exports is calculated. Data used covers the period from 2001-2014 and is drawn from various sources including: COMTRADE, WEF, WDI and CEPII. Results provide evidence that that improvement in economic infrastructure generates huge gains in terms of export of manufactured exports; and there are more gains from hard infrastructure compared to soft infrastructure. Therefore the electricity, rail, road, airports infrastructure is paramount in boosting exports of manufactured products in the EAC region. It emerges that, transparency and accountability, internet connectivity and telephone subscription improve the efficiency and business environment which support the exportation of manufactured products. It is concluded that the mobilization of resources for investment in economic infrastructure to promote exports of manufactured products is inevitable for the EAC region.
    Keywords: Community/Rural/Urban Development, International Development, International Relations/Trade, Political Economy
    Date: 2017–09–04
  25. By: Moriconi, Simone; Peri, Giovanni; Pozzoli, Dario (Department of Economics, Copenhagen Business School)
    Abstract: The offshoring of production by multinational firms has expanded dramatically in recent decades, increasing the potential for economic growth and technological transfers. What determines the location of such offshore production? How do the policies and characteristics of countries affect these decisions? Do firms choose specific countries because of their policies or because they are more familiar with them? In this paper, we use a very rich dataset on Danish firms to analyze how their decisions regarding offshore production depend on institutional characteristics and firm-specific bilateral connections with these countries. We find that institutions that enhance investor protections and reduce corruption increase the probability of offshoring, while those that introduce regulatory constraints in the labor market discourage it. We also show that offshoring activities are more likely for firms that have developed networks in the country of destination.
    Keywords: Offshoring; product market; labor regulations; network; fixed costs
    JEL: F16 J24 J38
    Date: 2018–08–06
  26. By: Iulia Monica, Oehler-Șincai; Costin, Lianu; Irina Gabriela, Rădulescu
    Abstract: The aim of the present paper is to investigate the position towards the 16+1 framework from the standpoint of the EU as an entity and also the four largest EU countries in terms of GDP, namely Germany, Great Britain, France and Italy. The Big Four are the main recipients of Chinese FDI and are also the most active European exporters to China, while CEE concentrates only a small share of the EU-Chinese trade and investment flows. However, the Big Four are apprehensive with regard to China’s rising competitiveness through national reform policies (such as China 2025 Program) but also via acquisition of high-tech companies. In the competition with a stronger China, these countries and especially Germany consider that the Chinese presence in CEE, alongside the proposed investment projects in infrastructure, including harbours, represent a threat to their established positions in this region and their companies will lose market shares and big infrastructure contracts. Seen from another perspective, in the literature the new framework is considered as a lobby platform, intended to influence the EU decisions through CEE players, which is incompatible with the strategic Sino-EU partnership. As a matter of fact, the EU foreign policy is incoherent in major aspects, including EU-China relation as well. Therefore our investigation focuses on three main aspects. First, we explain how the lack of harmonization between the Big Four and the other EU member states is influencing EU policy towards China. Conferring the Big Four observer status at the 16+1 summits might mitigate tensions. Second we investigate whether the Big Four detain the supremacy in the EU to the detriment of the EU periphery. Third, we underline that the EU needs a common vision towards the Eurasian cooperation, as it includes a new element: the Belt and Road Initiative. One cannot support the BRI by criticizing the 16+1, as the latter is considered by the Chinese authorities a significant component of the BRI. In conclusion, if the CEE countries become a bridge or a wall in the Chinese-EU relations depends only on the ability of all actors to have a balanced relationship with each other.
    Keywords: China, Central and Eastern Europe (CEE), 16+1, BRI, Big Four, attitude, competition
    JEL: F50 F53 F59
    Date: 2017
  27. By: Laurent Didier (CEMOI - Centre d'Économie et de Management de l'Océan Indien - UR - Université de la Réunion); Pamina Koenig (UNIROUEN - Université de Rouen Normandie - NU - Normandie Université, 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: China is often suspected of taking over the extraordinary trade relationships that former colonies had within colonial empires. We detail the three reasons why China's trade flows with former colonies could exhibit unexpected levels after independence. Besides potential preferential bilateral relationships built after independence, the two expected determinants of trade flows are China's export capacity and the natural redirection caused by the increase in country pairs trade costs due to independence. We investigate and quantify the three reasons explaining the level of former colonies' trade flows with China. Using sequentially naive graphical representations and structural gravity equations, we show that methodological issues can be largely responsible for displaying and estimating abnormaly high trade levels between former colonies and China. We show that increased trade between these pairs of countries is the result of coinciding unilateral factors on each side which raise trade with all partners, instead of being driven by more intense bilateral preferences. We then measure the reorientation of trade flows from former colonies' metropoles towards China and show that independence has produced the expected redistribution: trade flows would be 15$\%$ lower with China, had former colonies not become independent.
    Keywords: bilateral effects,colonial trade, gravity equation, China, multilateral resistance
    Date: 2016–11
  28. By: David A. Jaeger (City University of New York Graduate Center); Joakim Ruist (University of Gothenburg); Jan Stuhler (Universidad Carlos III de Madrid)
    Abstract: A large literature exploits geographic variation in the concentration of immigrants to identify their impact on a variety of outcomes. To address the endogeneity of immigrants’ location choices, the most commonly-used instrument interacts national inflows by country of origin with immigrants’ past geographic distribution. We present evidence that estimates based on this “shift-share” instrument conflate the short- and long-run responses to immigration shocks. If the spatial distribution of immigrant inflows is stable over time, the instrument is likely to be correlated with ongoing responses to previous supply shocks. Estimates based on the conventional shift-share instrument are therefore unlikely to identify the short-run causal effect. We propose a “multiple instrumentation” procedure that isolates the spatial variation arising from changes in the country-of-origin composition at the national level and permits us to estimate separately the short- and long-run effects. Our results are a cautionary tale for a large body of empirical work, not just on immigration, that rely on shift-share instruments for causal inference.
    Keywords: immigration, geographic variation, shocks, multiple instrumentation, spatial analysis
    JEL: C36 J15 J21 J61
    Date: 2018–02
  29. By: Sylvain Petit (GDI - Gouvernance et développement insulaire - UPF - Université de la Polynésie Française, IDP LARIME - Institut du Développement et de la Prospective - EA 1384 - Laboratoire d'Analyses et de Recherches Interdisciplinaires en Management des Entreprises - IAE - Institut d'Administration des Entreprises - UVHC - Université de Valenciennes et du Hainaut-Cambresis)
    Abstract: This study investigates the impact of the international openness in tourism services trade on wage inequality between highly skilled, semiskilled and unskilled workers in the tourism industry. The sample covers 10 developed countries and expands over 15 years. A cointegrated panel data model and an Error Correction Model were used to distinguish between the short-and long-run effects. The results are compared to those of openness of business services and manufactured goods. The findings point out that tourism increases wage inequality at the expense of the least skilled workers in the long and the short-run. The results differ amongst countries.
    Keywords: tourism and poverty,inequality, trade of tourism services, openness trade,Error Correction Model (ECM), cointegrated panel model
    Date: 2017
  30. By: Saroj Bhattarai (University of Texas at Austin); Konstantin Kucheryavyy (University of Tokyo)
    Abstract: We present a general, competitive open economy business cycle model with capital accumulation, trade in intermediate goods, production externalities in the intermediate and final goods sectors, and iceberg trade costs. Our main theoretical result shows that models developed in the modern international trade literature that feature comparative advantage, monopolistic competition and cost of entry, and firm heterogeneity and cost of exporting are isomorphic, in terms of aggregate equilibrium, to versions of this competitive dynamic model under appropriate restrictions on the externalities. In particular, the restrictions apply on the overall scale of externalities, the split of externalities between the different factors of production, and the identity of the sectors with production externalities. Our quantitative exercise assesses whether various restricted versions of the general model, in forms they are typically considered in the literature, are able to resolve the well-known aggregate empirical puzzles in international business cycle models. Our theoretical result on isomorphism between models then provides insights on why they fail to do so in many instances. We thus provide a unified theoretical and quantitative treatment of the international business cycles and trade literatures in a general dynamic framework.
    Date: 2018
  31. By: Kirill Borusyak (Harvard University); Xavier Jaravel
    Abstract: Are the gains from trade unequally distributed in society? This paper presents new evidence on the distributional effects of trade on education groups in the U.S. through both consumer prices (expenditure channel) and wages (earnings channel). Our analysis, guided by a simple quantitative trade model, leverages linked datasets that cover the entire U.S. economy and include detailed spending data on consumer packaged goods and automobiles. First, we show that the expenditure channel is distributionally neutral due to offsetting forces. College graduates spend more on services, which are largely non-traded; however, their spending on goods is skewed towards industries, firms, and brands with higher import content. Second, on the earnings side, we find that college graduates work in industries that (1) are less exposed to import competition, (2) export more, (3) are more income-elastic, and (4) use fewer imported inputs. The first three forces cause trade liberalizations to favor college graduates; the fourth has the opposite effect. Finally, we combine and quantify the expenditure and earnings channels using the model. A 10% reduction of all import and export barriers generates a modest increase in inequality between education groups, primarily due to the earnings channel. Welfare gains are 16% higher for college graduates, whose real income increases by 2.02% compared to 1.74% for individuals without a college degree. Reductions of import barriers with China have qualitatively similar implications.
    Date: 2018
  32. By: Barathova, Katarina
    Abstract: Today, many EU states face labour shortages in different sectors of economy, including agricultural sectors. Labour migration represents the solution which enables countries to cope with this problem. This is also the case of agricultural sector of the United Kingdom. After the EU enlargement, out of all old Member States only the United Kingdom alongside with Ireland and Sweden granted people from the Central and Eastern Europe countries free access to their labour markets. In case of the UK this was seen as strategic step, since the government recognized the important role of migrant workers in the growth of the UK’s economy. Soon after enlargement, the UK became favourite destination of migrant workers from A-8 countries. In 2007, when another two countries – Bulgaria and Romania joined the EU, the economic situation was different and the UK decided to apply transitional arrangements. Despite this, there were a lot of migrants coming to the UK and most of them were working in agriculture, since for seasonal agricultural workers there was an exception. After the restrictions were removed in January, 2014, migration inflows from Bulgaria and Romania almost doubled. Before referendum in 2016, migration was an important issue and one of the main arguments of Leave campaign. Using available statistical data, the paper examines migration flows to the UK and describes key features of migration from EU with special focus on A-10 countries. The main objective is to evaluate the importance of migrant workers from these new Member States in the agriculture and food manufacturing industry of the UK and reveal possible implications associated with Brexit.
    Keywords: agriculture,migration,labour,horticulture,EU workers
    JEL: J61 F22 Q10
    Date: 2018
  33. By: Gregor Schwerhoff; Johanna Wehkamp
    Abstract: The forest conservation policy instrument REDD+ (Reducing Emissions from Deforestation and Forest Degradation) is designed to compensate governments of tropical countries for their efforts to conserve forests. Food insecure countries that are specialized in agriculture and have weak institutions, are likely to face difficulties to enforce forest conservation. This article explores how far export tariffs on agricultural goods combined with public investments, could be used as a forest conservation policy mix in such contexts. We first show empirically that structural constraints to forest conservation policies are particularly pronounced in one third of countries where REDD+ programs are planned to be rolled out. We then develop a two sector competing land use model with a domestic food producing and an exporting agricultural sector. We show that it is possible to combine export tariffs with public investments such that deforestation decreases, while agricultural production levels and food prices remain constant.
    Keywords: Environmental Economics and Policy
    Date: 2017–04–12
  34. By: Simon Fuchs (Toulouse School of Economics)
    Abstract: This paper analyzes to what extent labor market frictions limit the gains from market integration. I use an external demand shock to the Spanish economy as a natural experiment to identify and quantify the effect of labor mobility costs on Spain’s development. Using newly digitized trade and labor market data, I show that during WWI (1914-1918) a large, temporary and sectorally heterogeneous de- mand shock emanated from belligerent countries, as a result of which Spain ex- panded its manufacturing employment and exports, while income growth between the north and south in Spain diverged. To quantify and analyse the role of mo- bility costs I build and estimate a multi-sector economic geography model that al- lows for sectoral and spatial mobility costs. Spatial mobility costs dominated with an estimated 80% of reallocation of labor taking place within rather than between provinces. I use the estimated model to calculate counterfactuals to examine the effects of and interaction between output and input market integration: Comparing to the non-shock counterfactual I find that the WWI-shock increased manufactur- ing employment by 10%, and induced highly uneven spatial development with the north growing 27% faster. The shock constituted a 6% increase in market size and increased aggregate real incomes by 20%. Lowering mobility costs by 10% increases real income gains from the WWI-shock by an additional 3%, and exceeds gains in the non-shock scenario, suggesting that labor market integration and output market integration are complements.
    Date: 2018
  35. By: Bart Los; Marcel P. Timmer
    Abstract: We provide a unified framework for measuring bilateral exports of value added. We outline a general methodology that encompasses the measures introduced by Johnson and Noguera (2012) (value added consumed abroad) and Los et al. (2016) (value added in exports), to which we refer as VAX-C and VAX-D, respectively. In addition we suggest a novel third measure, VAX-P, which indicates the value added used abroad in the final stage of production. We show that they can all be derived with the method of hypothetical extraction in a general input-output model. This is helpful in comparing and contrasting their characteristics. As a corollary, we show that for VAX-C and VAX-P the sum of bilateral measures is equal to the corresponding aggregate measure, but that this is generally not true for VAX-D. We illustrate all measures with empirical examples computed on the basis of the World Input-Output Database. These indicators can found at
    JEL: F1
    Date: 2018–08
  36. By: Andrew Ross (Department of Economics, University of Strathclyde); Grant Allan (Department of Economics, University of Strathclyde); Gioele Figus (Department of Economics, University of Strathclyde); Peter G McGregor (Department of Economics, University of Strathclyde); J Kim Swales (Department of Economics, University of Strathclyde); Karen Turner (Centre for Energy Policy, University of Strathclyde)
    Abstract: The wider impacts of energy policy on the macro-economy are increasingly recognised in the academic and policy-oriented literatures. Additionally, the interdependence of energy and economy implies that a (policy) change in the non-energy system impacts on the energy system. However, such spillovers on the energy system have not been extensively researched. We begin by analysing the impacts of export promotion policies - a key element of the UK’s Industrial Strategy - on the energy system and energy policy goals. As the impacts of such policies are, in large part, transmitted via their effects on the economy, we adopt a computable general equilibrium model - UK-ENVI - that fully captures such interdependence. Our results suggest that an across-the-board stimulus to exports increases total energy use significantly. This does not come directly through energy exports, but indirectly through the energy sectors’ linkages to other sectors. Export led growth therefore impacts on energy use - and significantly so. This in turn is likely to have an adverse impact on emission targets. Policy makers should be aware of the fact that a successful implementation of the Industrial Strategy may create significant tensions with the UK’s Clean Growth Strategy, for example, and with the goals of energy policy more generally. The importance of this effect will in practice depend upon: the mix of goods and services that are exported (an issue that we shall address once the export strategy is published); the success of low-carbon policies. Ultimately, a knowledge of the nature and scale of these spillover effects of economic policies on the energy system creates the potential for more effective and efficient policy making.
    Keywords: energy policy, industrial strategy, trade policy
    JEL: C68 D58 Q43 Q48
    Date: 2018–08
  37. By: Liu, Yanping
    Abstract: Theoretical and empirical work on export dynamics has generally assumed constant marginal production cost and therefore ignored domestic product market conditions. However, recent studies have documented a negative contemporaneous correlation between firms´domestic and export sales growth, suggesting that firms can be capacity constrained in the short run and face increasing marginal production cost. This paper develops and estimates a dynamic model of export behavior incorporating short-term capacity constraints and endogenous capital investment. Consistent with the empirical evidence, the model features firms´sales substitutions across markets in the short term, and generates time-varying transition paths of firm responses through firms´ capital adjustments over time. The model is fit to a panel of plant-level data for Colombian manufacturing industries and used to simulate how firm-responses transition following an exchange-rate devaluation. The results indicate that incorporating capital adjustment costs is quantitatively important. First, it takes more than five years for firms to fully adjust to a permanent change of the exchange-rate process. Second, the long-run exchange rate elasticity of exports is substantially higher than that in the short run. Firms´expectation on the permanence of the policy changes also matters. The failure to accurately anticipate the duration of the devaluation results in reduction in firms`profits due to over- or under-investment in capital.
    Keywords: International trade ; heterogeneous firms ; capacity constraints ; capital adjustment costs ; firm dynamics ; firm panel data
    JEL: F12 L11 F14
    Date: 2018
  38. By: Jihyun Eum (Economic Research Institute, The Bank of Korea)
    Abstract: In this paper the effects of tariff reduction and enhanced standards on efforts to upgrade product quality are analyzed. Compliance costs are introduced into the model of competition and innovation where the rate of product quality upgrading is affected by both changes in tariffs and standards. Using disaggregated data for European food imports from 159 trading partners over the period 1995 to 2003 across 28 industries, it is found that the effect of lower tariffs and stricter standards on quality upgrading varies non-monotonically, whereby products that already have relatively higher quality are more likely to be upgraded but those having relatively lower quality are less likely to be upgraded.
    Keywords: Competition, Standards, Product quality upgrading, Distance-to-frontier
    JEL: F13 F14 O13
    Date: 2018–04–16
  39. By: Andreas Eberhard-Ruiz; Alexander Moradi
    Abstract: We investigate changes in the spatial concentration of economic activities after the establishment of a regional economic community between Kenya, Tanzania, and Uganda in 2001. Measuring city growth using satellite imagery of lights emanated out to space at night, we demonstrate that cities close to the community’s internal borders expanded more than other cities further away. The growth effect is temporary and also highly localized: only cities less than 90 minutes of travel from the border experience an acceleration in growth rates; after four years growth rates revert to their pre-treatment level. We show that this is consistent with an asymmetric reduction in trade costs for two types of trade modalities that co-exist in many parts of sub-Saharan Africa, local small-scale trade and regional large-scale trade, with a larger reduction in costs of the former. Yet, while local e?ects are relatively large, equivalent to a 5.6% higher GDP for cities near the EAC’s internal borders, they do not imply a large reorganisation of economic activity across space nor a substantial alteration of countries’ urban systems.
    Keywords: Market Integration; Trade; Cross-Border Trade; City Growth; Periphery; Africa
    JEL: F1 F14 F15 O17 O18 O55 R12
    Date: 2018
  40. By: Gordon Menzies (University of Technology Sydney)
    Abstract: A simplifed Lewis model with evidence-based assumptions treats all rural output as nontraded, and pays rural workers a convex combination of their average and marginal products. Lewis style transition is characterized as an increase in the weight on marginal product in the determination of the rural wage. This integration with standard trade models underscores the importance of trade for development, and predicts a real exchange rate appreciation for economies undergoing a Lewis style transition.
    Keywords: Dual Economy; Lewis Model; Neoclassical trade models
    JEL: F11 F31 F41 O13 O14
    Date: 2018–06–01
  41. By: Kouwoaye, Amevi Rocard
    Keywords: Agricultural and Food Policy, Food Security and Poverty, International Relations/Trade
    Date: 2017–01
  42. By: Yuko Imura; Malik Shukayev
    Abstract: Many central banks are contemplating whether to issue a central bank digital currency (CDBC). CDBC has certain potential benefits, including the possibility that it can bear interest. However, using CBDC is costly for agents, perhaps because they lose their anonymity when using CBDC instead of cash. I study optimal monetary policy when only cash, only CBDC, or both cash and CBDC are available to agents. If the cost of using CBDC is not too high, more efficient allocations can be implemented by using CBDC than with cash, and the first best can be achieved. Having both cash and CBDC available may result in lower welfare than in cases where only cash or only CBDC is available. The welfare gains of introducing CBDC are estimated as up to 0.64% for Canada.
    Keywords: Business fluctuations and cycles, Economic models, Firm dynamics, International topics, Monetary policy
    JEL: F44 E52 F12
    Date: 2018
  43. By: YAMAMOTO, Yohei
    Abstract: We propose a new method for the structural identification of a dynamic causal relationship in factor-augmented vector autoregression models based on changes in the unconditional shock variances that occur on a historical date. The proposed method can incorporate both observed and unobserved factors in the structural vector autoregression system and it allows the contemporaneous matrix to be fully unrestricted. We derive the asymptotic distribution of the impulse response estimator and consider a bootstrap inference method. Monte Carlo experiments show that the proposed method is robust to the misspecification of the contemporaneous matrix unlike the existing methods. Both the asymptotic and bootstrap methods obtain a satisfactory coverage rate when the shock of an observed factor is studied, although the latter is more accurate when the shock of an unobserved factor is considered. An empirical example based on the same data employed by Bernanke et al. (2005) provides similar point estimates and somewhat wider confidence intervals, thereby supporting their identification strategy.
    Keywords: dynamic casual effect, factor-augmented vector autoregression, identification through heteroskedasticity, impulse response
    JEL: C14 C22
    Date: 2018–08
  44. By: Kone, Mankan M.
    Keywords: Agribusiness, Agricultural and Food Policy, Production Economics, Risk and Uncertainty
    Date: 2017–01
  45. By: David Autor (Massachusetts Institute of Technology); David Dorn (University of Zurich); Gary Pisano; Gordon Hanson (University of California, San Diego); Pian Shu (Georgia Institute of Technology)
    Abstract: The competitive shock to the U.S. manufacturing sector spurred by rising China import competition could either catalyze or stifle innovation. Using three distinct sources of variation to identify rising trade exposure, we provide a causal analysis of the effect of surging import competition on U.S. innovative activities. Applying a novel internet-based matching algorithm to map all U.S. utility patents granted by 2013 to firm-level data, and carefully accounting for the shifting concentration of patenting activity across sectors, we document a robust, negative impact of rising Chinese competition on firm-level and technology class-level patent production. Accompanying this fall in innovation, global employment, sales, profitability, and R&D expenditure all decline within trade-exposed firms. The trade-induced contraction along all margins of adjustment and for all measures of valuation suggest that the primary response of firms to greater import competition is to scale back their global operations.
    Date: 2018
  46. By: Kiki Verico (Lecturer in Southeast Asian Economic Study at the Faculty of Economics and Business University of Indonesia (FEB UI) and Associate Director for Research of the LPEM FEB UI); Yeremia Natanael (Research Assistant of the LPEM FEB UI)
    Abstract: I empirically investigated the influence of residential location and housing unit characteristics on the labor force participation of childbearing women by applying quasi-experimental methods and taking a developing country’s perspective – where the family size tends to grow faster. While the choices of residential location and housing unit characteristics are rarely exogenous, it is important to deal with the endogeneity problem. I use instrumental variable models, with twin births and gender composition as the exogenous sources of variation in the family size, and exploit an enormous micro dataset from the Indonesian Census Population 2010. Previous works of literature have examined the effect of twin birth on the female labor supply, but less attention given to the housing decision. This study provides new evidence of a forward-looking behavior about the residential location and housing consumption due to household size effects and shows that such behavior will most likely influence the female labor supply
    Keywords: Trade Policy — Empirical Studies of Trade — Economic Integration — International Investment — Bilateral Trade Agreement — ASEAN — Indonesia
    JEL: F13 F14 F15 F21
    Date: 2018–07
  47. By: Zugravu-Soilita, Natalia
    Abstract: Based on panel data covering 114 countries in the world, this study investigates the direct, indirect and total effects of trade flows in environmental goods (EG) on total CO2 and SO2 emissions. Our system-GMM estimations reveal positive direct scale – [between-industry] composition effects prevailing on the negative direct technique – [within-industry] composition effects (if any), as well as compensating the significant indirect technique effects channelled by the stringency of environmental regulations and per capita income. If the net importers of EGs (namely from the APEC54 and WTO26 lists) are recurrently found to face increased pollution (in particular CO2 emissions) due to direct scale-composition effects of trade in EGs, the EGs’ net exporters are more likely to see their local pollution to decrease, in particular thanks to income-induced effects. We show that the direct, indirect and total effects of trade in EGs depend on the country’s net trade status, the EGs’ classification and the pollutant considered.
    Keywords: Environmental Economics and Policy
    Date: 2017–12–21
  48. By: Fabio Gaetano Santeramo
    Abstract: Several studies, focused on the understanding of price volatility determinants in agricultural commodity markets, revealed that the joint influence of a plethora of causes is able to generate market instability. We investigate the contribution of endogenous and exogenous factors to global price volatility of four major grain (wheat, rice, corn, barley), adopting a Seemingly Unrelated Regression Equations model. We analyze global volatility, to conclude on short-run and long-run dynamics of markets instability. Our paper builds on existing literature by proposing a richer set of determinants of grain price volatility.
    Keywords: Demand and Price Analysis, Risk and Uncertainty
    Date: 2017–07–31
  49. By: Ayoung Kim; Brigitte S. Waldorf; Natasha T. Duncan
    Abstract: The U.S. H-1B visa for highly-skilled immigrant labor and the accompanying H-4 visa for their dependents leads to structural constraints that exclude dependents from the labor force. Identifying H-1B recipients from the U.S. Census and American Community Surveys, we find that—despite the labor force exclusion—the vast majority of married H-1B recipients is accompanied by their spouses. This is particularly the case for male H-1B recipients, making wives rather than husbands carry most of the burden. Using a matched sample of married immigrants with work authorization, we estimate counterfactual labor force participation probabilities and wages for the sample of dependent H-4 spouses. We find that the policy-imposed labor force exclusion of H-4 spouses leads to substantial losses of spouses’ earnings and annual aggregate productivity loss of over US$2.1 billion.
    Keywords: Labor and Human Capital, Political Economy, Research Methods/ Statistical Methods
    Date: 2017–09–07
  50. By: Bruno Carballa Smichowski (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); Cédric Durand (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique); Steven Knauss (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper has three interconnected aims: proposing a novel and rigorous definition of a global value chain (GVC) that more easily permits the delineation of its frontiers; creating new indicators of GVC participation and value capture that can overcome the limitations of the existing ones; and offering empirical evidence demonstrating that participation in global value chains is part of an uneven development process that produces a variety of distinct integration patterns that differ with respect to economic and social outcomes. The paper is structured as follows. Section 1 offers a definition of GVCs that conceives the latter as a specific form of the division of labor and therefore facilitates the delineation of the frontiers of a GVC. Building on this definition, Section 2 proposes new indicators to measure GVC participation and value capture. Section 3 provides empirical evidence to argue that, contrary to what mainstream economics and international organizations state, larger participation in GVCs does not necessarily lead to higher levels of value capture. Section 4 offers some theoretical justifications to interpret these findings and adds other measures such as the level of productive investment and dimensions of social outcomes in order to better understand differentiated development patterns in GVCs. Sections 5, 6 and 7 empirically show the heterogeneity of development patterns in GVCs for 51 countries between 1995 and 2008. Using country-level data on GVC participation, value capture, investment rates and social indicators (Gini coefficient, labor's share of income, median income and employment rate), we perform a principal component analysis and a cluster analysis. We find three distinct development patterns in GVCs: reproduction of the core, immiserizing growth, and a social upgrading mirage. We conclude by underlying the apparent complementarity between these development patterns and by identifying some limitations of the paper that open the way to further research.
    Abstract: Cet article a trois objectif interconnectés : proposer une définition originale et rigoureuse d'une chaîne globale de valeur (CGV) qui permette de délimiter ses frontières plus facilement ; créer de nouveaux indicateurs de participation aux CGV et de capture de valeur qui puissent surmonter les limites de ceux qui existent actuellement ; et offrir des preuves empiriques qui montrent que la participation aux chaînes globales de valeur est un processus qui produit une variété de formes d'intégration qui différent en termes de résultats économiques et sociaux. L'article est organisé comme suit. La Section I offre une définition des CGV qui les conçoit comme une forme spécifique de la division du travail et facilite ainsi la démarcation des frontières d'une CGV. En s'appuyant sur cette définition, la Section II propose de nouveaux indicateurs pour mesurer la participation aux CGV et la capture de valeur. La Section 3 apporte des preuves empiriques pour argumenter que, contrairement à ce que l'économie orthodoxe et les organisations internationales soutiennent, une plus grande participation aux CGV ne conduit pas nécessairement à des niveaux de capture de valeur plus élevés. La Section 4 offre quelques justifications théoriques pour interpréter ces résultats et ajoute d'autres mesures telles que le niveau d'investissement productif et des indicateurs sociaux dans l'objectif de mieux comprendre les modèles de développement différentiés dans les CGV. Les Sections 5, 6 et 7 montrent empiriquement l'hétérogénéité des modèles de développement dans les CGV pour 51 pays entre 1995 et 2008. En utilisant des données de niveau national sur la participation aux CGV, la capture de valeur, le taux d'investissement et des indicateurs sociaux (coefficient de Gini, part des salaires dans le revenu, revenu médian et taux d'activité) nous réalisons une analyse en composantes principales et une analyse de cluster. Nous trouvons trois modèles de développement différentiés dans les CGV : reproduction du noyau, croissance appauvrissante et mirage de progrès social. Nous concluons en soulignant l'apparente complémentarité entre ces modèles de développement et en identifiant quelques limites de l'article qui ouvrent la voie à de la recherche future.
    Keywords: Global value chains,Value capture,Development Economics
    Date: 2016–07

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