nep-int New Economics Papers
on International Trade
Issue of 2018‒10‒22
39 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Exempted Sectors in Free Trade Agreements By Alan V. Deardorff; Rishi R. Sharma
  2. Global Value Chains and Middlemen. A Comparative Case- Study of Norwegian Agricultural Export By Jostein Vik; Gunn-Turid Kvam
  3. FDI to Japan and Trade Flows: A Comparison of BRICs, Asian Tigers and Developed Countries By Jacques Jaussaud; Serge Rey
  4. Once Again, Trade Openness and Growth: Are Trade in Value Added Concepts Different? By Halit Yanikkaya; Abdullah Altun
  5. Determinants of Foreign Direct Investment in Fast-Growing Economies: Evidence from the BRICS and MINT Countries By Simplice Asongu; Uduak S. Akpan; Salisu R. Isihak
  6. Quantifying the EU-Japan Economic Partnership Agreement By Toshihiro Okubo; Fukunari Kimura; Gabriel Felbermayr; Marina Steininger
  7. International Trade and the Transition to a More Resource Efficient and Circular Economy: A Concept Paper By Shunta Yamaguchi
  8. Imported input varieties and product innovation : evidence from five developing countries By Marijke J.D. Bos; Gonzague Vannoorenberghe
  9. International Trade in Western Balkan Countries: Analysis Based on the Gravity Model By Eniel Ninka; Engjell Pere
  10. Export innovation of SMEs through the extensive margin in Latin America By Park, Hyunju; Mulder, Nanno; Park, Yuri
  11. Structural Change and Global Trade By Logan Lewis; Ryan Monarch; Michael Sposi; Jing Zhang
  12. Labour market power and the distorting effects of international trade By Mertens, Matthias
  13. Bilateral De-Jure Exchange Rate Regimes and Foreign Direct Investment: A Gravity Analysis By Harms, Philipp; Knaze, Jakub
  14. Enforcement of Labor Regulation and the Labor Market Effects of Trade: Evidence from Brazil By Ulyssea, Gabriel; Ponczek, Vladimir
  15. Euro Area and U.S. External Adjustment: The Role of Commodity Prices and Emerging Market Shocks By Giovannini, Massimo; Kollmann, Robert; Ratto, Marco; Roeger, Werner; Vogel, Lukas
  16. Barriers to Trade in Environmental Goods: How Important they are and what should developing countries expect from their removal By Jaime De Melo; Jean-Marc Solleder
  17. Essays in International Trade and Banking By Lorenzo Trimarchi
  18. The role of FDI in structural change: Evidence from Mexico By Escobar, Octavio; Mühlen, Henning
  19. A Synthesis of the Effects of Exchange Rate Volatility on International Trade: A Meta-Regression Analysis By Jamal Bouoiyour; Refk Selmi
  20. Can Cleaner Environment Promote International Trade? Environmental Policies as Export Promoting Mechanisms By Ioanna Pantelaiou; Panos Hatzipanayotou; Panagiotis Konstantinou; Anastasios Xepapadeas
  21. China between external pressure and domestic policy reforms: In search of a balance By Langhammer, Rolf J.; Liu, Wan-Hsin
  22. Internationalization of emerging market firms: the role of Domestic agglomerations in reducing liability of origin. By Sandeep S; Rajesh Srinivas Upadhyayula
  23. International Taxation and Productivity Effects of M&As By Todtenhaupt, Maximilian; Voget, Johannes
  24. Source–Specific Demand Elasticities for Dates in International Trade By Dawood, Ali; Kinnucan, Henry
  25. Distance and the Multinational Wage Premium By Kreickemeier, Udo
  26. EU break-up? Mapping plausible pathways into alternative futures By Niclas Meyer
  27. The Role of Institutions and Immigrant Networks in Firms’ Offshoring Decisions* By Simone Moriconi; Giowanni Peri; Dario Pozzoli;
  28. Migration and invention in the age of mass migration By Andrea Morrison; Sergio Petralia; Dario Diodato
  29. Development gaps in the ASEAN process of regionalisation: mid-term prospects for their reduction. Paper presented at the SASE conference: Global Reordering: Prospects for Equality, Democracy and By Bruno Jetin; Pascal Petit
  30. ERSs and Trade in Natural Resources: The Impact on Economic Growth and Poverty in LDCs By Panos Hatzipanayotou; Panagiotis Konstantinou; Ioanna Pantelaiou; Anastasios Xepapadeas
  31. The Role of Comparative Advantage and Endowments in Structural Transformation By Giovanni Dosi; Matteo Tranchero
  32. Exit, Voice and Political Change: Evidence from Swedish Mass Migration to the United States By Karadja, Mounir; Prawitz, Erik
  33. The human capital selection of young males seeking asylum in Germany By Lange, Martin; Pfeiffer, Friedhelm
  34. Are Geographical Indications (GIs) Effective Value-adding Tools for Traditional Food? Insights from the new-born Japanese GIs System By Edi Defrancesco; Junko Kimura
  35. On Dynamic Gains from Free Trade : Discrete-time Infinite Horizon Case By Kubota, Hajime
  36. Is Geographical Indication Acting on Rice Export Price? By Georges Giraud; Julie Le Gallo; Hippolyte Boucher
  37. The impact of international immigration and cultural diversity on economic performance, public attitudes and political outcomes in European regions By Chasapopoulos, Panagiotis
  38. The Complex Interdependence of China's Belt and Road Initiative in the Philippines By Aaron Jed Rabena
  39. Return migrants’ self-selection: Evidence for Indian inventors By Stefano BRESCHI; Francesco LISSONI; Ernest MIGUELEZ

  1. By: Alan V. Deardorff (University of Michigan); Rishi R. Sharma (Colgate University)
    Abstract: Almost all participants in free trade agreements (FTAs) exclude at least a few products or sectors from complete tariff removal on the exports of their FTA partners. The positive tariffs that remain within an FTA are often the highest tariffs that the countries apply on an MFN basis. It seems plausible that such exclusions may be chosen because the domestic producers of these products are viewed as especially vulnerable to competition from imports from the partner country. In brief, they are especially Òsensitive sectors.Ó We develop this idea theoretically and then test it empirically on data from 37 countries in 240 importer-exporter pairs within FTAs. We find support for the sensitive-sector hypothesis only in the high-income countries. We find low-income countries, in contrast, to exempt sectors where bilateral tariff removal would be more likely trade diverting and therefore harmful. Our explanation for this, supported empirically, is not that they are following the advice of trade economists, but rather that they are avoiding loss of tariff revenue and also being influenced by the greater bargaining power of richer and/or larger partners in their FTAs.
    Keywords: sensitive sectors, exempted sectors, free trade agreements
    JEL: F13
    Date: 2018–10–15
  2. By: Jostein Vik; Gunn-Turid Kvam
    Abstract: International trade in agriculture open markets abroad for producers and suppliers. However, the capacity to serve these markets are not evenly distributed. For many exporters it is a challenge to access foreign markets and connect to global value chains (GVC). Agricultural markets are often characterised by asset specificity and oligopsonic market structures. These are features that tend to imply hierarchic governance structures and asymmetric dependencies. Thus, for the exporters, how to engage with partners in order to access foreign markets becomes critical. In this paper we explore how three export initiatives from Norwegian agriculture coordinate and connect to global value chains. We discuss the mode of governance, as well as the role of middlemen. We further discuss the characteristics of the coordination and the strategic implications for the exporting partners. The three cases are export of Whey protein concentrate (WPC 80) from Tine SA, export of the genetic material (The breed Norwegian Red) from Geno SA, and cured meat of lamb legs (fenalår) from the company Fenalår from Norway SA.
    Keywords: Agribusiness, Agricultural and Food Policy, Agricultural Finance
    Date: 2018–10–01
  3. By: Jacques Jaussaud (CREG - Centre de recherche et d'études en gestion - UPPA - Université de Pau et des Pays de l'Adour, CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour); Serge Rey (CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour)
    Abstract: Although still dominated by firms from developed countries, foreign direct investment (FDI) flows from developing nations have increased significantly. As academic literature reveals, FDI from developed versus developing countries follow different rationales. The strategies of these investors thereby differ, such that they also could have unique influences on the external trade of the host country. To test the link between FDI and trade, according to the level of development of the country of the investor, this study considers FDI to Japan from three groups of countries: the BRICs, the Asian Tigers (Korea, Singapore, Hong Kong and Taiwan) and developed countries (United States, Germany, United Kingdom, France, Netherlands and Switzerland). An econometric analysis of panel data, using a gravity model and an imperfect substitute goods model of trade, confirms that FDI affects the external trade of Japan, both exports and imports, depending on the type of country from which it originates.
    Keywords: FDI,Japan,Gravity model,Panel,Developing countries,MNC's
    Date: 2018–09–24
  4. By: Halit Yanikkaya (Department of Economics, Gebze Technical University); Abdullah Altun (Informatics and Information Security Research Center, The Scientific and Technological Research Council of Turkey)
    Abstract: This study compares the impacts of gross trade openness measures with trade openness in value added measures on economic growth for the years 1995-2014 by employing a dynamic panel data estimation. Our findings suggest that although gross trade shares promote growth, the estimated coefficient on trade shares in value added indicates the much more significant and larger effect on growth. Compared to gross terms, they also imply that while exports in value added terms have much larger growth effect, imports in value added terms have no impact on growth. We then evaluate the impacts of various trade policies on growth in terms of gross trade and trade in value added separately. Although our results imply the negative growth effects of gross import tariffs, tariffs in value added terms do not have any impact on growth. Overall our results imply that the growth effects of trade openness based on traditional gross figures considerably differs from those for trade openness based on value added terms. These results reaffirm that trade protectionism is essentially going to lower growth because exports shares regardless of their measurements and disaggregation levels promote growth.
    Keywords: growth, gross trade shares, trade in value added, trade policy
    JEL: F14 O24
    Date: 2018–10–09
  5. By: Simplice Asongu (Yaoundé/Cameroun); Uduak S. Akpan (SPIDER Solutions, Uyo, Nigeria); Salisu R. Isihak (Rural Electrification Agency, Nigeria)
    Abstract: This study employs panel analysis to examine the determinants of foreign direct investment (FDI) to Brazil, Russia, India, China, and South Africa (BRICS) and Mexico, Indonesia, Nigeria, and Turkey (MINT) using data for eleven years i.e. 2001 – 2011. First, it uses pooled time-series cross sectional analysis to estimate the model on determinants of FDI for three samples: BRICS only, MINT only, and BRICS and MINT combined; then, fixed effects model is also employed to estimate the model for BRICS and MINT combined. The results show that market size, infrastructure availability, and trade openness play the most significant roles in attracting FDI to BRICS and MINT while the roles of availability of natural resources and institutional quality are insignificant. Given that FDI inflow to a country has the potential of being mutually beneficial to the investing entity and host government, the challenge is on how BRICS and MINT can sustain the level of FDI inflow and ensure it results in economic growth and socio-economic transformation. To sustain the level of FDI inflow, governments of BRICS and MINT need to ensure that their countries remain attractive for investment. BRICS and MINT also need to ensure that their economies absorb substantial skills and technology spillovers from FDI inflow to promote sustainable long-term economic growth by investing more in their human capital. The study is significant because it contributes to literature on determinants of FDI by extending the scope of previous studies which often focus only on BRICS.
    Keywords: FDI, determinants, fast-growing economies, BRICS, MINT
    JEL: C52 F21 F23 O40 P37
    Date: 2018–01
  6. By: Toshihiro Okubo (Faculty of Economics, Keio University/CESifo); Fukunari Kimura (Faculty of Economics, Keio University/ERIA); Gabriel Felbermayr (ifo Institute, LMU, CESifo/GEP); Marina Steininger (ifo Institute)
    Abstract: This paper provides a quantitative analysis of the new EU-Japan free trade agreement (FTA), the biggest bilateral deal that both the EU and Japan have concluded so far. It employs a generalized variant of the Eaton-Kortum (2002) model, featuring multiple sectors, input-output linkages, services trade, and non-tariff barriers (NTBs). It uses the results of an econometric ex post analysis of a related existing FTA, the one between the EU and Korea, to approximate the expected reductions in the costs of NTBs. This approach yields long-run welfare effects for Japan of about 18 bn. USD per year (0.31% of GDP) and of about 15 bn.USD (0.10%) for the EU. On average, the agreement does not appear to harm third countries, but the Americas, Africa and MENA countries slightly lose. 14% of the welfare gains inside the FTA stem from tariffs, the remaining 86% from NTB reform, and the services sector account for more than half. In the EU, value added in the agri-food sector goes up most, while in Japan the manufacturing and services sectors gain.
    Keywords: Free Trade Agreements, General Equilibrium, Quantitative Trade Model
    JEL: F15 F17 N74
    Date: 2018–09–11
  7. By: Shunta Yamaguchi (OECD)
    Abstract: The transition towards a more resource efficient and circular economy has broad linkages with international trade through the emergence of global value chains as well as trade in second-hand goods, end-of-life products, secondary materials and waste. Despite of the potential linkages between trade and the circular economy, the existing research on this issue is limited to date. For this reason, this paper highlights the potential interaction of international trade and the circular economy in order to map out potential issues to address and to guide further research areas to explore on this topic. The paper first briefly introduces the circular economy concept and how trade can come into play, second highlights the various ways in which trade and the circular economy can potentially interact with one another, and third briefly concludes with potential ways forward and next steps.
    Keywords: circular economy, environment policy, resource efficiency, sustainable materials management, trade and environment, trade policy
    JEL: F18 O13 Q53 Q56
    Date: 2018–10–18
  8. By: Marijke J.D. Bos (Ministry of Economic Affairs, The Hague, Netherlands); Gonzague Vannoorenberghe (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: We examine how access to imported intermediate inputs affects firm-level product innovation in five developing counties. We combine trade data with survey data on innovation and develop a method to determine whether new inputs were essential for the product innovation. We find evidence that the number of newly imported varieties has a significant impact on product innovations that rely on new inputs and provide suggestive evidence that this effect comes from access to better quality imports. We extend our analysis to assess the consequences of the increase in the number of Chinese exporting firms on product innovation in developing countries.
    Keywords: product innovation, trade, new intermediate inputs
    JEL: F1
    Date: 2018–09
  9. By: Eniel Ninka; Engjell Pere
    Abstract: Abstract We adopt the gravity model to analyse the international trade relations of Western Balkan (WB) countries and of the WB region as a whole, using WIIW and World Bank data, over a period of 20 years (1995-2014). Data show a tendency toward better integration of WB countries with the world economy, increased openness of their economies, persistence of their trade deficits, and, for most of them, an improvement of the coverage ratio. For the region as a whole, the volume of international trade outpaced that of intra-regional trade reaching, in 2014, a difference of nearly 5 times. The main partner for the region remains the European Union, particularly Germany and Italy. The gravity model of exports of the WB region shows that its exports are positively impacted by the common language and common borders with third countries, by trade with European Union, and large and highly industrialized countries, while distance and region’s level of per capita Gross Domestic Product both have a negative impact. Considering the imports, the model shows that they are positively impacted by existence of common borders and language with the region, and by region’s and partner countries’ level of economic development, while the distance has again a negative impact.
    Keywords: Western Balkans, International trade relations, Gravity model, Economic integration
    JEL: C59 F14 F15
    Date: 2017–11
  10. By: Park, Hyunju; Mulder, Nanno; Park, Yuri
    Abstract: In Latin America and the Caribbean, there is little direct evidence on export innovation of small and medium-sized enterprises in (SMEs). This type of innovation refers to the adaptation of products and business processes to technical standards, tastes and other customer requirements in the target markets. The successful fulfillment of these requirements by a firm can be measured indirectly through the sale of a new product to an existing market, the entry of an existing product to a new destination, or both. These movements can be measured using firm-level customs data, as is done in this study for Chile, Colombia, Costa Rica, and Mexico for the period 2000 to 2015. The results confirm the well-known fact that a high share of SMEs enter and leave the universe of exporting firms each year. Among the four countries, exporting SMEs in Costa Rica had the lowest entry and exit rates and the highest survival rates. On average, SMEs in Costa Rica and Mexico incorporated more new products into their export basket than those in Chile and Colombia. This is because SMEs in the latter two countries exported mostly natural resources concentrated in few products, while SMEs in the former two countries were selling a relatively more diversified basket of manufactures. Within the sample, Costa Rica was the country where exporting SMEs added more destinations to their export basket each year. In contrast, Mexico was the one where SMEs added the smallest number of new destinations (less than one) on average, due to their great dependence on the United States as an export market. Export innovation is also analyzed with respect to the three dimensions (firms, products, and markets) simultaneously. For this purpose, the change in export value of each firm during this period is broken down into two parts. The first is the intensive margin, which refers to the change in export value of the same firms selling the same products to the same destinations. The second is the extensive margin, which has two components: (i) the extensive margin of entry (which reveals export innovation), including new combinations of companies, products and target markets, and (ii) the extensive margin of exit, referring to combinations of companies, products and destination markets that cease to exist. In all countries except Costa Rica, the extensive margin contributed proportionately more to the growth of exports of SMEs than to that of large companies. In Chile and Colombia, export innovation was concentrated in selling existing products to new markets. In contrast, in Costa Rica and Mexico the export of new products to established destinations was the predominant type of export innovation.
    Date: 2018–10–02
  11. By: Logan Lewis (Federal Reserve Board); Ryan Monarch (Federal Reserve Board); Michael Sposi (Southern Methodist University); Jing Zhang (Federal Reserve Bank of Chicago)
    Abstract: Services, which are less traded than goods, rose from 58 percent of world expenditure in 1970 to 79 percent in 2015. In a trade model featuring nonhomothetic preferences and input-output linkages, we find that such structural change has restrained the growth in world trade to GDP by 16 percentage points over this period. This magnitude is similar to how much declining trade costs have boosted openness. Moreover, structural change dampens the measured gains from trade by incorporating endogenous responses of expenditure shares to the trade regime. Ongoing structural change implies declining openness, even absent rising protectionism.
    Keywords: Globalization, Structural Change, International Trade.
    JEL: F41 L16 O41
    Date: 2018–10
  12. By: Mertens, Matthias
    Abstract: This article examines how trade shocks shape labour market imperfections that create market power in labour markets and prevent an efficient allocation of labour. I develop a framework for measuring such labour market distortions in monetary terms and document large degrees of those distortions in Germany's manufacturing sector. Import competition can only exert labour market disciplining effects when firms rather than workers have labour market power. Otherwise, export demand and import competition shocks tend to fortify existing distortions by amplifying labour market power structures. This diminishes the gains from trade compared to a model with perfectly competitive labour markets.
    Keywords: international trade,market power,labour markets,allocative efficiency
    JEL: D24 F14 F16 J50 L13 L60
    Date: 2018
  13. By: Harms, Philipp; Knaze, Jakub
    Abstract: This paper uses a newly constructed dataset on bilateral de-jure exchange rate regimes to estimate the effect of expected exchange rate volatility on foreign direct investment (FDI). The new dataset accounts for the fact that officially pegging to one currency is uninformative about the exchange rate regime prevailing vis-a-vis other currencies, and it allows characterizing bilateral exchange rate regimes based on countries' ex-ante announcements rather than ex-post observations. We present a simple model that suggests that announced exchange rate stability enhances bilateral FDI flows. The empirical evidence we provide offers some support to this claim: countries that are linked by a non-floating exchange rate regime seem to attract significantly more FDI from each other. In particular, relationships with no separate legal tender like currency unions are most favorable to FDI in both developed and developing countries. Moreover, we find substantial differences between developing and developed countries, with the effect of announced exchange rate stability being much stronger for the former group than for the latter.
    Keywords: Exchange rate regimes,Foreign direct investment,Gravity equation
    JEL: F21 F23 O24 F21 F23 O24
    Date: 2018
  14. By: Ulyssea, Gabriel (University of Oxford); Ponczek, Vladimir (Sao Paulo School of Economics)
    Abstract: How does enforcement of labor regulations shape the labor market effects of trade? To tackle this question, we exploit the Brazilian trade liberalization episode and exogenous variation in the intensity of both the trade shock and enforcement across local labor markets. Regions with stricter enforcement observed no increase in informal employment but large disemployment effects. Regions with weaker enforcement had no employment losses but substantial increases in informality. All effects are concentrated on unskilled workers, with no effects on skilled workers. The results indicate that informality acts as a buffer that reduces trade-induced adjustment costs in the labor market.
    Keywords: trade, enforcement of labor regulations, informality
    JEL: F16 K31
    Date: 2018–08
  15. By: Giovannini, Massimo; Kollmann, Robert; Ratto, Marco; Roeger, Werner; Vogel, Lukas
    Abstract: The trade balances of the Euro Area (EA) and of the US have improved markedly after the Global Financial Crisis. This paper quantifies the drivers of EA and US economic fluctuations and external adjustment, using an estimated (1999-2017) three-region (US, EA, rest of world) DSGE model with trade in manufactured goods and in commodities. In the model, commodity prices reflect global demand and supply conditions. The paper highlights the key contribution of the post-crisis collapse in commodity prices for the EA and US trade balance reversal. Aggregate demand shocks originating in Emerging Markets too had a significant impact on EA and US trade balances. The broader lesson of this paper is that Emerging Markets and commodity shocks are major drivers of advanced countries’ trade balances and terms of trade.
    Keywords: EA and US external adjustment,commodity markets,emerging markets
    JEL: F2 F3 F4 F2 F3 F4
    Date: 2018
  16. By: Jaime De Melo (FERDI - Fondation pour les Etudes et Recherches sur le Développement International, UNIGE - Université de Genève); Jean-Marc Solleder (UNIGE - Université de Genève)
    Abstract: Few developing countries have participated in the environmental goods agreement (EGA) negotiations to reduce barriers on trade in Environmental Goods (EGs). Reasons for this reluctance are first reviewed along with a comprehensive description of barriers to trade (tariffs and NTBs) on two lists of EGs used in negotiations comprised mostly industrial products (The APEC and WTO lists), and a third, a list of Environmentally Preferable Products (EPPs) more representative of the perceived interests of developing countries. The paper then revisits and extends the literature on the estimation of barriers to trade in EGs for these lists. These estimates are carried out with a structural gravity model and new data: (i) on bilateral (rather than MFN) tariffs, and; (ii) with a measure of regulatory overlap in bilateral trade to capture the often-observed pattern of greater bilateral trade among countries that share similar regulatory regimes. Results show that tariffs generally reduce the intensity of bilateral trade, often with little difference in statistical significance between the EG and non-EG group for each list. Regulatory harmonization, as captured by an increase in regulatory overlap is also estimated to be conducive to more intense bilateral trade.
    Date: 2018–09–27
  17. By: Lorenzo Trimarchi
    Abstract: This thesis consists of three chapters. The first two are regarding the political economy of international trade, the third is about empirical banking.Chapter 1 is titled "Suspiciously Timed Trade Disputes" and it is the result a joint work with Paola Conconi, David DeRemer, Georg Kirchsteiger, and Maurzio Zanardi. This Chapter is already published in the Volume 105 of the Journal of International Economics and it shows that electoral incentives crucially affect the initiation of trade disputes. Focusing on WTO disputes filed by the United States during the 1995-2014 period, we find that U.S. presidents are more likely to initiate a dispute in the year preceding their re-election. Moreover, U.S. trade disputes are more likely to involve industries that are important in swing states. To explain these regularities, we develop a theoretical model in which re-election motives can lead an incumbent politician to file trade disputes to appeal to voters motivated by reciprocity. The second chapter, titled "Trade Policy and the China Syndrome", analyzes how trade policy can be used to smooth the effects of trade liberalizations. The recent backlash against free trade is partially motivated by the decline in manufacturing employment due to rising import competition from China. Politicians in high-income countries have extensively used antidumping (AD) measures and other temporary trade barriers to protect their economies from rising Chinese imports. To estimate the causal effect of trade protection on industry outcomes, I construct a new instrument for AD measures based on the importance of an industry in swing states and the industry's experience at filing AD petitions. In this paper, I first show that trade policy contained the rise of Chinese imports in protected sectors, decreasing the annual growth rate of US imports from China in a range between 3% and 14% compared to the non-protected sectors. Second, I show that these protectionist measures have contained the "China Syndrome". In manufacturing sectors protected by AD measures, the annual growth rate of employment was between 2% and 24% higher compared to non-protected sectors. I find that previous studies that neglect the moderating impact of AD have underestimated the negative effects of Chinese import competition on US manufacturing employment by between 5% and 15%.The third chapter, titled "Bank Lending Standards and Credit to Firms during the Great Recession", is a joint work with Lorenzo Ricci and Giovanni Soggia. This chapter investigates the impact of unforeseen shifts in lending standards on firm credit in Italy on the onset of the Great Recession, using data from the Regional Bank Lending Survey to disentangle the effects of loan supply and demand.We combine our measure of change in bank supply with bank-firm loans retrieved from the credit register. Our proposed empirical strategy presents several benefits: it allows us to (i) estimate the impact of credit supply in the absence of an exogenous shock to banks, (ii) analyze credit policy throughout the sample period, and (iii) disentangle the effect of geographical heterogeneity within Italy using the rich information from our survey data. The effect of supply shocks differs across types of loans. A firm with a revocable credit line from a bank that tightens its lending standards suffers a reduction in credit growth more than if it had borrowed from a bank with unchanged lending standard. On the extensive margin, a supply shock decreases the acceptance probability of a new loan with a pronounced effect for term loans.
    Keywords: Antidumping; International Trade; Banking; Political Economy; US-China Trade Relationship
    Date: 2018–08–30
  18. By: Escobar, Octavio; Mühlen, Henning
    Abstract: Foreign direct investment (FDI) flows to Mexico are substantial and play an important role in the Mexican economy since the mid-1990s. These investments reflect the activities of multinational firms that shape to some extent the economic landscape and sectoral structure in this host country. We illustrate that there is considerable variation in the amounts of FDI and structural change within the country and across time. Based on this, the paper's main purpose is to analyze whether there is a significant impact of FDI on structural change. We conduct an empirical analysis covering the period 2006-2016. We use the fixed-effects estimator where the unit of observation is a Mexican state for which we calculate structural change from the reallocation of labor between sectors. The results suggest that (if any) there is a positive effect from FDI on growth-enhancing structural change. This effect depends critically on the lag structure of FDI. Moreover, there is some evidence that the positive effect (i) arises from FDI flows in the industry sector and (ii) is present for medium- and low-skilled labor reallocation.
    Keywords: FDI,structural change,labor reallocation,Mexico,multinational firms,economic development
    JEL: F21 L16 O10 O54
    Date: 2018
  19. By: Jamal Bouoiyour (CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour); Refk Selmi (CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour)
    Abstract: This paper surveys literature that investigates the effects of exchange rate uncertainty on international trade. We perform meta-regression analysis on 41 studies with 807 estimates. We show that the empirical works exhibit substantial publication selection and show a significant genuine exchange rate volatility effect on trade flows after correction of publication bias. In addition, the literature reveals a pronounced heterogeneity with respect to model specifications, samples, time horizons, and countries characteristics. The results appear robust among the different estimators and to the inclusion of dummies for the type of research outlet and publication year. These findings are supported by separate assessment of primary studies with, respectively, total exports and sectoral exports as the dependent variable. In comparison with the sectoral exports literature, the total exports literature seems more homogenous and its identified exchange rate volatility effect on trade is less conditional. In general, our most important advice for policy makers is that economic research does not reveal a single representative effect size.
    Keywords: Exchange rate volatility,International trade,Meta-regression analysis
    Date: 2018–09–24
  20. By: Ioanna Pantelaiou; Panos Hatzipanayotou (Athens University of Economics and Business); Panagiotis Konstantinou (AUEB); Anastasios Xepapadeas
    Abstract: We develop an international duopoly model where the firms export their output to a world-market. Production uses a depletable resource, and it generates pollution which affects negatively households welfare. Governments control pollution using (i) an emission tax, the revenue from which finances public pollution abatement, (ii) a revenue-recycling tax, refunded to the emitting firm contingent on reducing the cost of private pollution abatement, and (iii) an environmentally related standard. We evaluate them as (i) export promoting Non-Tariff Measures (NTMs) measuers, and (ii) resource conserving/depleting and welfare enhancing policy instruments. Our results indicate that, by and large (i) public pollution abatement works as an export-promoting but resource depleting mechanism, which under certain conditions can enhance welfare; (ii) revenue recycling works as an export-contracting but resource preserving mechanism, and (iii) environmental standards relative to public abatement work as an export-contracting but resource preserving mechanism, but relative to revenue recycling work in the opposite direction.
    Keywords: Emission taxation, Public Pollution Abatement, Recycling tax revenues, Environmental Related Standards, International Trade.
    JEL: F18 H23 Q58
    Date: 2018–02
  21. By: Langhammer, Rolf J.; Liu, Wan-Hsin
    Abstract: It was probably a combination of the objective of a constructive response to external headwind from the United States (US) and to some extent also from the European Union (EU) as concerns China's investment and trade policies on the one hand and the intrinsic insight that opening up the investment and trade sector in China would support its structural change on the other hand, why China in the first half of 2018 has launched a number of reform measures in inward investment and trade. These reform measures are introduced and discussed in more detail in this policy paper.
    Keywords: China,FDI,trade,tariff,United States
    Date: 2018
  22. By: Sandeep S (Indian Institute of Management Kozhikode); Rajesh Srinivas Upadhyayula (Indian Institute of Management Kozhikode; Indian Institute of Management Kozhikode)
    Abstract: The extant literature in institutional theory has found liabilities of origin (LOR) costs such as (i) capability based and (ii) legitimacy based costs as the major cost disadvantages faced by emerging market multinationals (EMNEs) while undertaking internationalization. Studies have pointed out that the treatment of institutions in International business (IB) have considered institutions at a national level, ignoring the role of sub-national institutions. This is particularly important for EMNEs as the institutional development in their home countries are highly uneven. Further, the recent studies in economic geography have also criticized the treatment of location in extant IB literature. They have also argued that location in extant IB literature is treated synonymously with a country or a nation state, expunging the nuanced examination or differentiation of locational features. Hence we observe that the role of sub-national institutions such as domestic agglomerations in the internationalization of EMNEs is under-reported in the extant literature. In this paper we explain the role of sub-national institutions such as domestic agglomerations in reducing LOR cost disadvantages (capability and legitimacy based cost disadvantages) and facilitating the outward internationalization of EMNEs.
    Keywords: institutional theory, liabilities of origin, emerging market multinationals
    Date: 2018–03
  23. By: Todtenhaupt, Maximilian; Voget, Johannes
    Abstract: We investigate the effect of international differences in corporate taxation on the realization of productivity gains in M&A deals. We argue that tax differentials distort the efficient allocation of productive factors following an M&A and thus mitigate the resulting productivity improvement. Using firm-level data on inputs and outputs of production as well as on corporate M&As, we estimate that a 1 percentage point increase in the absolute tax differential between the locations of two merging firms reduces the subsequent total factor productivity gain by 4.5%. This effect is less pronounced when firms can use international profit shifting to attenuate effective differences in taxation. In a complementary analysis, we use an event study design and a fixed effects model to explore the timing of the response of productivity, as well as, labor and capital input to the tax rate differential after the merger separately for the acquirer and the target. We show that our findings are mainly driven by deals with targets residing in locations with a tax advantage with respect to the acquirer. In these transactions, tax differentials reduce the post-merger adjustment in the target firm and inhibit the full realization of productivity gains.
    Keywords: M&A,productivity,international taxation
    JEL: F23 G34 H25 D24
    Date: 2018
  24. By: Dawood, Ali; Kinnucan, Henry
    Abstract: Dates are indispensable goods for people living in arid areas because of their nutritional value for the communities residing there. Market shares for date crops growing in the Middle East and North Africa are considerable. There are a big number of articles that estimate different kinds of elasticities for various types of goods produced in the Middle East and North Africa, but very few articles mention the estimation of demand elasticities of the most important agricultural commodities such as dates in these regions. In this article, a Rotterdam model is applied for world demand for dates with a particular focus on Iraq. Major exporters of dates are used with time-series data (1961-2013). The results show that date exports have become less price elastic. For instance, point estimates range from smallest to largest price effects, -0.31 for ROW to 0.03 for Iran. The own-price elasticities indicate that world demand of date is particularly sensitive to Tunisia date price (-0.99), also the world demand is sensitive in lower degrees to the rest of countries. The marginal budget share indicates Iraq has relatively a large marginal share, which is to be expected since it is, the largest supplier of date to the world, but significantly smaller for the rest of the countries. Moreover, the results shows that estimate income elasticities are positive, so date is a normal good. The expenditure elasticities suggests that there is a degree of expenditure proportionality (almost homothetic preferences) in the world demand of date, which indicates that the average budget share for each source may not vary with the level of total expenditures.
    Keywords: Demand and Price Analysis, International Relations/Trade
    Date: 2018–01–15
  25. By: Kreickemeier, Udo
    Abstract: Combining administrative data on German workers with commercial data on German producers, we find evidence that German subsidiaries of foreign multinationals, while paying a premium relative to other local producers, offer wages of similar size as German subsidiaries of German multinationals. Zooming in on foreign multinationals gives a more nuanced picture and reveals a so far unexplored distance effect that is prevalent in the data. Foreign multinationals pay lower wages than German multinationals if the ultimate owner is located in close proximity to Germany, whereas the opposite is true if the ultimate owner is located further away. To provide a rationale for this pattern, we develop a theoretical model that allows for firm-specific wages and emphasizes uncertainty about foreign wage payments as an important factor of the foreign investment decision. Due to this uncertainty, firms that have to pay high wages at home are more likely to seek investment abroad. High-wage firms are also more likely to actually produce abroad, once the foreign wage level has been revealed, explaining why multinationals pay higher wages than non-multinationals in the home and the host country of investment. In the model, the empirically observed distance effect on the multinational wage premium occurs since exporting as an alternative means of reaching foreign customers is less attractive for distant locations, and firms are therefore more willing to accept unfavorable (i.e. high wage) draws for foreign production in locations that are further away from their headquarters.
    Keywords: Multinational Wage Premium,Heterogeneous Firms,Distance Effects
    JEL: F12 F14 F21 F23
    Date: 2018
  26. By: Niclas Meyer
    Abstract: Following Brexit, the rise of populist Eurosceptics across the EU, Central Eastern Europe's flirtation with 'illiberal democracy' and the sovereign debt crisis, which essentially still remains unresolved ten years after it started, even some of the EU’s most enthusiastic supporters are today wondering whether the EU could actually break apart. In the paper, I propose the scenario-planning method to address this question and to think about the future of the EU in a structured way. While the method is already well established in the study of socio-technical systems, the paper tests its transferability to the political economy of the EU. Along two drivers, the material struggle to tame globalization and the ideational struggle to fill the void that is resulting from the deconstruction of neoliberalism, the paper maps four plausible pathways into alternative futures. I conclude with a discussion of the potential of scenario-planning to improve the transfer of knowledge from academia into practice.
    Keywords: EU, future, neoliberalism, populism, inequality
    Date: 2018–08
  27. By: Simone Moriconi (IÉSEG School of Management); Giowanni Peri (University of California, Davis); Dario Pozzoli (Copenhagen Business School);
    Abstract: The offshoring of production by multinational firms has expanded dramatically in recent decades, increasing these firms’ potential for economic growth and technological transfers across countries. What determines the location of offshore production? How do countries’ policies and characteristics affect the firm’s decision about where to offshore? Do firms choose specific countries because of their policies or because they know them better? In this paper, we use a very rich dataset on Danish firms to analyze how decisions to offshore production depend on the institutional characteristics of the country and firm-specific bilateral connections. We find that institutions that enhance investor protection and reduce corruption increase the probability that firms offshore there, while those that increase regulation in the labor market decrease such probability. We also show that a firm’s probability of offshoring increases with the share of its employees who are immigrants from that country of origin.
    Keywords: Offshoring, Product Market, Labor Regulations, Networks, Fixed start-up Costs
    Date: 2018–10
  28. By: Andrea Morrison; Sergio Petralia; Dario Diodato
    Abstract: More than 30 million people migrated to the US between the 1850s and 1920s. In the order of thousands became inventors and patentees. Drawing on an original dataset of immigrant inventors to the US, we assess the city-level impact of immigrants patenting and their potential crowding out effects on US native inventors. Our study contributes to the different strands of literature in economics, innovation studies and economic geography on the role of immigrants as carriers of knowledge. Our results show that immigrants? patenting is positively associated with total patenting. We find also that immigrant inventors crowd-in US inventors. The growth in US inventors? productivity can be explained also in terms of knowledge spill-overs generate by immigrants. Our findings are robust to several checks and to the implementation of an instrumental variable strategy.
    Keywords: immigration, innovation, knowledge spill-over, patent, age of mass migration, US
    JEL: F22 J61 O31 R3
    Date: 2018–10
  29. By: Bruno Jetin (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); Pascal Petit (CEPN - Centre d'Economie de l'Université Paris Nord (ancienne affiliation) - UP13 - Université Paris 13 - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The ASEAN region, with its 10-member states, as it stood at the beginning of the 21st century, presented huge gaps between levels of development of member states. Over the last two decades one observes a relative convergence in countries' levels (even if the gap is still quite important) but an increase in inequalities within countries. Even if this dual movement can be found in many groups of trade partners, and in first instance in the EU, the replication of this dual movement may be surprising in a set of countries with such differences in development levels. The paper will try to investigate whether this dual evolution is likely to persist or recede in the medium term and to what extent a regionalisation process, mainly based on trade liberalisation, is the main factor at work. An assessment of the contribution to this dual dynamic of the various sectors, whether agriculture, raw materials or manufacturing, will be attempted as it may hint at specific trade policies to limit rises in within-country inequalities which run the risk at the end to ruin the benefits of the regionalisation process. Historical specificities of Europe and ASEAN regional integration Regional integration is supposed to foster convergence of living standards on the long run as it creates catching-up opportunities for less developed member states. Better access to an enlarged market, attraction of foreign direct investment, transfer of technologies, improved infrastructure and connectivity are the economic drivers of the process of convergence. These economic factors combine with institutional and socio-political drivers such as political agreements on common policy objectives, adoption of common regulatory framework, procedures and norms regarding production, trade, skills, migration and sometimes, education and social rights.
    Date: 2018–06–23
  30. By: Panos Hatzipanayotou (Athens University of Economics and Business); Panagiotis Konstantinou (AUEB); Ioanna Pantelaiou; Anastasios Xepapadeas
    Abstract: We study the impact on economic growth of LDCs of environmentally related standards (ERSs) adopted by such economies to bypass non-tariff-measures (NTMs) imposed as environmental regulatory requirements on their exports of natural resources to developed importing countries. In particular, we develop an empirical growth model that incorporates the impacts of resource abundance and of ERSs, the latter being measured by the number of ISO14001 certificates which a LDC holds, on per capita GDP growth. This specification allows to test for the existence of the 'resource curse' and for the effects of ERSs on growth through their interaction with the resource abundance measure. Our results suggest that ERSs can be growth promoting and in certain cases a factor mitigating the 'resource curse' in LDCs. Thus, compliance with ERSs combined with aid in institution formation or technology transfers can allow LDCs to enhance economic growth and alleviate poverty.
    Keywords: Non-tariff measures; Environmentally related standards; Natural resource exports; Resource curse; Economic growth; Poverty
    JEL: F18 F43 O13 O44
    Date: 2017–02
  31. By: Giovanni Dosi; Matteo Tranchero
    Abstract: In this chapter we discuss the role of country's given conditions and endowment structures according to two theoretical perspectives. While `pure' theories of trade have mainly seen specialization according to one's comparative advantages as the key route to development, we outline a `heretic' point of view on the role of technological learning and absolute advantages for structural transformation. Such a theory will provide useful guidance to interpret the eects of unbridled globalization and the role of natural resources vis-a-vis industrial and trade policies in shaping the process of structural change.
    Keywords: structural change ; endowments; technological gaps; catching-up
    Date: 2018–10–18
  32. By: Karadja, Mounir (Department of Economics); Prawitz, Erik (Research Institute of Industrial Economics (IFN))
    Abstract: We study the political effects of mass emigration to the United States in the 19th century using data from Sweden. To instrument for total emigration over several decades, we exploit severe local frost shocks that sparked an initial wave of emigration, interacted with within-country travel costs. Our estimates show that emigration substantially increased the local demand for political change, as measured by labor movement membership, strike participation and voting. Emigration also led to de facto political change, increasing welfare expenditures as well as the likelihood of adopting more inclusive political institutions.
    Keywords: Migration; Political change; Labor mobility; Economic history
    JEL: D72 J61 P16
    Date: 2018–10–08
  33. By: Lange, Martin; Pfeiffer, Friedhelm
    Abstract: This study analyses the selection of recently arrived asylum seekers from Middle Eastern and African countries in Germany. The findings suggest that, on average, asylum seekers have 22 percent more years of schooling - the indicator used for human capital - when compared to same-aged persons from their country of origin. In addition, it is shown that asylum seekers in the sample often accumulated rather low or relatively high levels of schooling compared to same-aged persons in their countries of origin. This phenomenon is even more pronounced for parental education. It is demonstrated that the indicators of individual and parental human capital influence short-run integration outcomes in Germany, while work experience in the home country does not. The paper discusses potential economic explanations for the findings on immigrant selection and integration outcomes.
    Keywords: immigrant selection,asylum seekers,human capital,family background,integration
    JEL: F22 J15 J24
    Date: 2018
  34. By: Edi Defrancesco; Junko Kimura
    Abstract: A GI system for protection of agricultural products and foodstuffs has been recently introduced in Japan aiming to provide a tool for: i) tapping into rural development; ii) increasing exports; iii) preserving the traditional products’ heritage and iv) improve products’ differentiation. Twelve registered GIs are analysed by grouping them in four categories according to their target market and consumer awareness. Our direct survey findings show that each product category is mainly focused on one of the above-mentioned targets, has specific SWOT factors, has different expectations from the GI recognition, its GIs’ governance system works differently, and that specific well-tailored policies are needed.
    Keywords: Agribusiness, Agricultural and Food Policy, Agricultural Finance
    Date: 2018–10–01
  35. By: Kubota, Hajime
    Abstract: This paper shows the existence of gains from trade in a dynamic world free trade economy over a discrete-time infinite horizon with using Grandmont-McFadden's(1972) domestic income transfer policy which makes each consumer benefit from world free trade. For this purpose, this paper employs l∞, the space of all bounded sequences, as the underlying commodity space and l1, the space of all summable sequences, as the price space, with following the general equilibrium analysis of infinite dimensional commodity spaces developed by Bewley(1972), Mas-Colell(1986), and Zame(1987). Moreover, since gains from trade requires the comparison of two consumption bundles, one under free trade and the other under autarky, but transitivity of preferences assumed the comparison of three consumption bundles, this paper also drops transitive preferences to establish gains from trade in this dynamic world economy. Furthermore, since this paper uses general consumption sets instead of the positive orthant l∞+, the argument finding an equilibrium price in l1, requires the exclusion condition to consumption sets and the mixture condition to the production set. This paper also drops the cheaper point assumption used in Grandmont-McFadden(1972) and replaces it with a variant of McKenzie's(1959, 1981, 2002) irreducibility assumption and the strong irreducibility assumption of Boy-McKenzie(1993), requiring the interrelatedness of consumers in the world economy.
    Date: 2018–09
  36. By: Georges Giraud; Julie Le Gallo; Hippolyte Boucher
    Abstract: Representing 30% of food intake of 60% of planet’s inhabitants, rice is a staple food all over the world. According to FAO, worldwide rice production is about 504 million tons (milled basis) in 2017, while international rice trade is 45 million tons. With almost 9% exported, rice is not the top trade food commodity. 43% of wine worldwide produced is exported, 23% of wheat, 11% of maize and 7% of meat. The rice market is mainly composed of coarse rice all over the world. It also includes 18% of aromatic rice, coming from a limited number of countries where the pedoclimatic conditions and human know-how make a specific terroir. Aromatic rice is often protected by a Geographical Indication (GI). This is the case of Basmati, from India and Pakistan, using a collective trade mark since 2008 in Pakistan, and Jasmine from Thailand, bearing a Protected Geographical Indication (PGI) as Khao Hom Mali, since 2013.
    Keywords: Agribusiness, Agricultural and Food Policy, Agricultural Finance
    Date: 2018–10–01
  37. By: Chasapopoulos, Panagiotis (Tilburg University, School of Economics and Management)
    Abstract: The dissertation consists of three empirical studies in the field of International Immigration. The first chapter examines whether the effect of cultural diversity on economic performance of European regions is influenced by the level of generalized social trust and individuals’ trust in public institutions. The second chapter investigates how the origin and the skill level of immigrants in European regions affect natives’ attitudes toward them. The last chapter examines the impact of international immigration on electoral support for the radical right in Dutch municipalities.
    Date: 2018
  38. By: Aaron Jed Rabena
    Abstract: Complex interdependence refers to the multiple channels of interaction and agenda in interstate relations, which involve domestic (public and private) stakeholders and nonmilitary issues. Since the Belt and Road Initiative (BRI) came into being, most analyses have largely focused on infrastructure development. The BRI not only has the potential to impact a host government's socioeconomic agenda but also its overall bilateral relationship with China. It is therefore imperative to measure the progress and prospects of China's Belt and Road projects in the Philippines, in line with Beijing's strategic goal to deepen complex interdependence with partner†states, against the BRI's five major dimensions of cooperation: (a) policy coordination, (b) infrastructure development and connectivity, (c) trade and investment facilitation, (d) financial coordination and integration, and (e) people†to†people ties and connectivity. These, together with the examination of China's BRI projects in other Asian countries as modes of comparison, are crucial in assessing probable outcomes in the Philippines. The paper includes policy recommendations based on possible pitfalls and risks that may hamper the advancement of the Belt and Road projects in the Philippines and Sino†Philippine bilateral interaction.
    Keywords: Belt and Road Initiative, dimension of cooperation, Dutertenomics, sphere of confluence, strategic partnership
    Date: 2018–10–08
  39. By: Stefano BRESCHI; Francesco LISSONI; Ernest MIGUELEZ
    Abstract: Based on an original dataset linking patent data and biographical information for a large sample of US immigrant inventors with Indian names and surnames, specialized in ICT technologies, we investigate the rate and determinants of return migration. For each individual in the dataset, we both estimate the year of entry in the United States, the likely entry channel (work or education), and the permanence spell up to either the return to India or right truncation. By means of survival analysis, we then provide exploratory estimates of the probability of return migration as a function of the conditions at migration (age, education, patenting record, migration motives, and migration cohort) as well as of some activities undertaken while abroad (education and patenting). We find both evidence of negative self-selection with respect to educational achievements in the US and of positive self-selection with respect to patenting propensity. Based on the analysis of time-dependence of the return hazard ratios, return work migrants appear to be negatively self-selected with respect to unobservable skills acquired abroad, while evidence for education migrants is less conclusive.
    Keywords: immigration, innovation, inventor data, patent data
    JEL: F22 O15 O31
    Date: 2018

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