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on International Trade |
| By: | Karyne B. Charbonneau; Anthony Landry |
| Abstract: | We build upon new developments in the international trade literature to isolate and quantify the long-run economic impacts of tariff changes on the United States and the global economy. In particular, we apply the most recent data and trade elasticity estimates to the Ricardian model of Caliendo and Parro (2015) to quantify the long-run impacts of the recently applied and proposed tariff changes, including the U.S. tariffs on steel and aluminum imports and the rounds of additional tariffs between the United States and China. To fit the reality of the current trade policy shift, our analysis also allows for quotas and endogenizes trade balances. Overall, our results suggest that the newly imposed and proposed tariff schemes imply considerable changes in trade flows and sectoral output reallocations, but modest impacts on long-run aggregate prices and output levels. |
| Keywords: | Recent economic and financial developments, Trade Integration |
| JEL: | F11 F13 F14 F15 F50 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:18-57&r=int |
| By: | James J. Fetzer; Tina Highfill; Kassu W. Hossiso; Thomas F. Howells, III; Erich H. Strassner; Jeffrey A. Young |
| Abstract: | This paper presents experimental tables created by the U.S. Bureau of Economic Analysis comparing industry-specific shares of the components of total output of globally engaged firms located in the United States that are part of a multinational enterprise with those of firms that are part of an enterprise entirely located in the United States. Recent research has shown both the importance of accounting for trade in value added when estimating bilateral trade flows and that multinational enterprises located in the United States account for the lion’s share of U.S. trade in goods and services. However, trade in value added is typically accounted for using input-output tables that are aggregated across all types of firms. The experimental tables are consistent with other research showing that value added as a share of output is lower for foreign-owned firms compared with domestic-owned firms and that exports and imports as a share of output is larger for foreign-owned firms. We also find heterogeneity in the composition of output among different types of domestic-owned firms. Future work will analyze this heterogeneity in more detail using establishment-level data on production and trade. |
| JEL: | D57 F23 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25249&r=int |
| By: | Simplice A. Asongu (Yaoundé/Cameroon); Uduak S. Akpan (Uyo, Akwa Ibom State, 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 O50 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:afe:wpaper:18/032&r=int |
| By: | Van Der Sluis, E.; Durowah, O. |
| Abstract: | We assess the role of aid for trade (AFT) and foreign direct investment (FDI) in poverty reduction. We analyze their impacts across different country-level income groups and between agriculture-dependent economies and those that are not. Based on data for 91 developing countries, and employing fixed effects and random effects models, our empirical analyses indicate that AFT flows have a robust and positive effect on poverty reduction but the effect differs across countries by income groups and the impact is largest in LDCs. The analyses also show that while AFT may be effective, the extent to which it reduces poverty depends on the policies and quality of institutions in the recipient country. AFT is most effective in reducing poverty: (1) when directed to infrastructure and to trade policies and regulations; and (2) for economies with relatively small dependencies on agriculture. Also, AFT directed to infrastructure and trade policies and regulations increase, while AFT to productive capacity reduces net FDI inflows. Acknowledgement : Support for this paper was provided by the South Dakota Agricultural Experiment Station. |
| Keywords: | Food Security and Poverty |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:277307&r=int |
| By: | Nilsson Hakkala, Katariina; Wang, Maria; Kuusi, Tero |
| Abstract: | Abstract This Brief analyzes president Trump’s trade policy and its implications for Finland. We focus on the import tariffs imposed by the Trump administration and the counter tariffs imposed by EU and China and evaluate their effects through international value-added chains on Finland. The findings suggest that the overall impact of the new tariffs is small. The largest employment reductions in Finland are caused by the tariffs on EU exports to the US. Furthermore, we argue that the unpredictability of president Trump’s policies and the threat of a trade war has a significant effect on global market stability. The WTO has also been facing a crisis due to the actions of Trump’s administration. Our analysis emphasizes the importance of a stable and predictable trade system, which president Trump has been undermining. |
| Keywords: | Trade policy, Tariffs, Value-added chains, Employment |
| JEL: | F13 |
| Date: | 2018–11–28 |
| URL: | http://d.repec.org/n?u=RePEc:rif:briefs:73&r=int |
| By: | Freitas, C.; Silva, F. |
| Abstract: | The general objective of this paper was to verify the relationship between the quality of the products and the Brazilian agricultural exports. In addition, we sought to identify the effects of the exporter's income, distance and SPS and TBT measures on the quality of exported products. For that, Brazilian agricultural export data (HS 4-digit) for the 97 main tradings partners in the period from 1997 to 2016 was used. Among the results obtained for the analyzes related to the trade with new markets, it was identified negative effects of quality both on the probability of accessing new markets and on the share of trade made with them. For the intensive margin, the value exported with existing partners, the estimated coefficients showed that the increase in quality is associated with a higher exported amount. In addition, this research identified a positive effect of income and distance on quality. Finally, the issuance of SPS and TBT measures by Brazilian importers also led to an improvement in the quality of agricultural products exported by the country. Acknowledgement : |
| Keywords: | International Relations/Trade |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:277273&r=int |
| By: | Jin, Y.; Jin, S. |
| Abstract: | This paper analyzes the heterogeneous impacts of exchange rate volatility on Chinese food exporters. Previous researches that employed country or sector-level aggregated data has yielded controversy conclusions in estimating effects of exchange rate uncertainty on agricultural trade. In this paper, we construct highly disaggregated Chinese food firm-level census data with destination-specific export data from 2000 to 2013 (215,783 sample firms), to discuss the influence based on firm-level characters. In general, this empirical research illustrates that the exchange rate fluctuation has significant negative effects on both trade prices and volumes. More importantly, we find that different firm-level characters (performance and scale) may reinforce or weaken the impact of this volatility on each firm. And this result is robust to different measures and econometric specifications. Acknowledgement : The authors gratefully acknowledge the support from the National Natural Science Foundation of China (NNSFC-71273233, 71333011), the Major Program of the Key Research Institute of Chinese Ministry of Education (No. 15JJD790032). |
| Keywords: | International Relations/Trade |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:277197&r=int |
| By: | Audi, Marc; Ali, Amjad |
| Abstract: | Trade liberalization plays a significant role in the development of an economy as all countries have insufficient resources and depend on trade to grow and prosper. The key objective of this study is to explore the relationship of trade liberalization on women empowerment. It also aims to find out whether it is beneficial for gender gap or not. This study utilizes the sample of five SAARC countries for the time period of 15 years, that is, from 2000 to 2014. It emphasizes on tariffs and regulatory trade barriers, which are considered significant indicators of trade liberalization, along with the freedom of trade, that is a composite index. The gender gap is measured through the female to male participation rate, whereas, gender development index (GDI) is used as a relative measure of women empowerment after adjusting HDI for gender disparity in three dimensions. The other control variable incorporated in this study includes: gross domestic product growth, education of female, the female unemployment rate and the hiring regulations & minimum wage standards. The econometric technique applied is the pooled ordinary least squares (OLS) method along with various diagnostic tests. When trade liberalization goes up, it increases the GDI, meaning lower gender disparity, which in turn refers to greater women empowerment. The research concludes that whenever the trade liberalization increases, it does not reduce the gender gap, which means the female to male participation rate goes down. It encourages women to actively participate in the labor market, but it does not play a role in reducing gender gap. Education of the female is essential because it creates awareness among girls and enhances their skills, which leads to empowering women, making them self-sufficient and active participants in the economic activity, which can improve their standard of living. |
| Keywords: | Gender Gap, Trade liberalization |
| JEL: | F1 J0 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:90191&r=int |
| By: | Fiankor, D.-D.; Martinez-Zarzoso, I.; Brummer, B. |
| Abstract: | Empirical evidence on the trade-governance nexus tends to show that institutional differences restrict bilateral trade flows. In this paper, we introduce governance gap as a measure of the degree to which governance and institutions differ between countries. Using a sample of EU imports from 193 exporting countries, we examine the potential of voluntary food certification as surrogate institutions to overcome the governance gap at the country level. Our results show that while widening governance gaps lead to lower bilateral exports, the interaction of certification and the governance gap is positively associated with bilateral exports, hence partially offsetting the direct trade-inhibiting effects Acknowledgement : This research was financially supported by the German Research Foundation (DFG) through the GlobalFood Program (grant number RTG 1666). We thank the GlobalGAP Head Office, Cologne for providing us data on certification. Dela-Dem Doe Fiankor gracefully acknowledges financial support from the Katholischer Akademischer Ausl ?ander-Dienst (KAAD), Germany |
| Keywords: | International Relations/Trade |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:277113&r=int |
| By: | Natalya Ayzenberg (Melentiev Energy Systems Institute SB RAS); Igor Bykadorov (Sobolev Institute of Mathematics SB RAS); Sergey Kokovin (National Research University Higher School of Economics) |
| Abstract: | We explore the impact of reciprocal, specific or ad valorem, import tariffs on welfare among N symmetric countries (a free-trade agreement)—using the standard Krugman’s one-sector trade model, with unspecified variable-elasticity preferences (mostly under decreasing elasticity of utility). Without transport costs, any tariff is harmful, a specific import subsidy (export tariff) can be welfare-improving, whereas ad valorem tariffs or subsidies are always harmful. Under transport costs, a small ad valorem tariff can be beneficial; moreover, under sufficiently high transport costs, both kinds of tariffs can be become beneficial. The reason is mitigated distortion: excessive entry under decreasingly elastic utility. |
| Keywords: | transport, tariff |
| JEL: | Z |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:204/ec/2018&r=int |
| By: | Judit Ricz (Institute of World Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences) |
| Abstract: | Outward Foreign Direct Investments (OFDI) from Emerging Multinational Enterprises (EMNEs) is a rather recent phenomenon that has significantly changed the patterns of the international capital markets, with important consequences also for the host countries’ economies. On the global scene Brazil was among the new significant emerging foreign investors, that has shown impressive investment growth in the 2000s. This paper investigates the host country determinants of Brazilian OFDI, with mainly (though not exclusively) focusing on the East Central European (ECE) region. Besides empirical interest on the main locational determinants of Brazilian FDI, we are also interested in the more theoretically oriented question whether Brazilian foreign investments follow the patterns of the established theories on FDI motivations. |
| Keywords: | Brazil, OFDI, internationalization, multilatinas, EMNEs, pull factors, homecountry determinants, East Central European region |
| JEL: | F21 F2 G11 O54 P12 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:iwe:workpr:246&r=int |
| By: | Leblebicioglu, Asli; Weinberger, Ariel |
| Abstract: | The secular decline in the labor share since the 1980's is a global phenomenon, and a trend that is concurrent with large liberalization episodes worldwide. In this paper we investigate the liberalization episode in India during the 1990's, which has been characterized by large and unexpected changes in trade and foreign investment policies. Contrary to what might be expected given the reduction in the aggregate data, we uncover a trade channel that raises the labor-to-capital relative factor shares in India. A reduction in capital tariffs and liberalization of FDI raise the share of income paid to labor relative to capital. Our results reveal access to foreign capital as a new mechanism through which openness affects factor shares. An increasing share of foreign capital in the total capital stock provides a capital-augmenting technical change and potentially reduces rental rates, both of which raises the relative labor share. We find capital and R&D intensities, and the borrowing capacity of the firm, to be important determinants of the factor share response to openness. Finally, we identify domestic deregulation policies and credit expansion as potential determinants of the observed decline in the labor share. |
| Keywords: | Labor share, trade liberalization, foreign capital, openness |
| JEL: | E25 F13 F16 O24 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:90270&r=int |
| By: | B. Ravikumar (Federal Reserve Bank of St. Louis); Ana Maria Santacreu (Federal Reserve Bank of St. Louis); Michael Sposi (Southern Methodist University & Federal Reserve Bank of Dallas) |
| Abstract: | We compute welfare gains from trade in a dynamic, multicountry model with capital accumulation and trade imbalances. We develop a gradient-free method to compute the exact transition path following a trade liberalization. We find that (i) larger countries accumulate a current account surplus, and financial resources flow from larger countries to smaller countries, boosting consumption in the latter, (ii) countries with larger short-run trade deficits accumulate capital faster, (iii) the gains are nonlinear in the reduction in trade costs, and (iv) capital accumulation accounts for substantial gains. The net foreign asset position before the liberalization is positively correlated with the gains. The tradables intensity in consumption goods production determines the static gains, and the tradables intensity in investment goods production determines the dynamic gains that include capital accumulation. |
| Keywords: | Welfare gains, Dynamics, Capital accumulation, Trade imbalances |
| JEL: | E22 F11 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:smu:ecowpa:1810&r=int |
| By: | Wen Chen; Bart Los; Marcel P. Timmer |
| Abstract: | Recent studies document a decline in the share of labour and a simultaneous increase in the share of residual (‘factorless’) income in national GDP. We argue the need for study of factor incomes in cross-border production to complement country studies. We define a GVC production function that tracks the value added in each stage of production in any country-industry. We define a new residual as the difference between the value of the final good and the payments to all tangibles (capital and labour) in any stage. We focus on GVCs of manufactured goods and find the residual to be large. We interpret it as income for intangibles that are (mostly) not covered in current national accounts statistics. We document decreasing labour and increasing capital income shares over the period 2000-14. This is mainly due to increasing income for intangible assets, in particular in GVCs of durable goods. We provide evidence that suggests that the 2000s should be seen as an exceptional period in the global economy during which multinational firms benefitted from reduced labour costs through offshoring, while capitalising on existing firm-specific intangibles, such as brand names, at little marginal cost. |
| JEL: | E01 E22 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25242&r=int |
| By: | Simbarashe Mhaka (Department of Economics, Nelson Mandela University); Leward Jeke (Department of Economics, Nelson Mandela University) |
| Abstract: | This paper presents the impact of economic size, market size and exchange rate on South Africa’s trade flows with the European Union under the Trade Development and Cooperation Agreement (TDCA). The paper also examines the effects of economic size, market size and exchange rate on South African trade flows with members of the Southern African Customs Union and of the European Union in what is called the European Union-Southern African Development Community Economic Partnership Agreement (EU-SADC EPA. The study exploits panel data on international trade of South Africa over the period 2000-’16. The empirical analysis relies on a panel data econometrics framework as an estimation technique for the gravity model of trade. In the panel data approach, the pooled OLS, fixed effects and random effects models are used for estimation. The results indicate a positive relationship between South Africa’s economic/market size and South Africa’s trade flows in the TDCA. In the EU-SADC EPA, the results show a positive relationship between economic size and market size with South Africa’s trade flows in the EU-SADC EPA. However, in the TDCA, the exchange rate and the trading partner’s market size have a negative outcome on South Africa trade flows. A negative relationship is shown between the exchange rate and South Africa’s trade flows in the EU-SADC EPA. The results also show that it is better for South Africa to trade in the EU-SADC EPA than to remain in the TDCA. The paper recommends that policy-makers select trading partners based on the sizes of their markets and economies. |
| Keywords: | trade flows, economic size, market size, exchange rate, gravity model |
| JEL: | C23 F13 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:mnd:wpaper:1836&r=int |
| By: | Egger, Hartmut; Fischer, Christian |
| Abstract: | We show in this paper that trade in tasks can explain increasing resistance to globalization in industrialized countries. In a traditional trade model of a small open economy, we demonstrate that schooling provides protection against losses from trade if trade increases the relative price of the skill-intensive good. Furthermore, increasing public schooling expenditure may help securing support for trade reform by a majority of voters. However, this conclusion is no longer true, if education provides task-specific skills and trade in tasks makes some of these skills obsolete in the open economy. In this case, increasing public schooling expenditure may be of limited help to secure support for trade reform by a majority of voters, even if the reform is welfare-improving. Our analysis suggests to change the education system to one that provides broader, less-specialized skills in order to facilitate trade reforms. Although such skills may be less productive, they do not become obsolete in the open economy and therefore increase the likelihood that a proposal for a welfare-improving trade reform is successful in a referendum. |
| Keywords: | Resistance to globalization,Trade in tasks,Public education,Majority voting |
| JEL: | F11 F50 D72 I28 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:305&r=int |
| By: | Giuseppe Berlingieri; Frank Pisch; Claudia Steinwender |
| Abstract: | We study whether and how the technological importance of an input – measured by its cost share – is related to the decision of whether to “make” or “buy” that input. Using detailed French international trade data and an instrumental variable approach based on self-constructed IO tables, we show that French multinationals vertically integrate those inputs that have high cost shares. A stylized incomplete contracting model with both ex ante and ex post inefficiencies explains why: technologically more important inputs are “made” when transaction cost economics type forces (TCE; favoring integration) overpower property rights type forces (PRT; favoring outsourcing). Additional results related to the contracting environment and headquarters intensity consistent with our theoretical framework show that both TCE and PRT type forces are needed to fully explain the empirical patterns in the data. |
| JEL: | F10 F14 F23 L16 L22 L23 O14 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25286&r=int |
| By: | Bruno Merlevede; Angelos Theodorakopoulos (-) |
| Abstract: | This paper analyses whether indirect effects of internationalisation occur through the domestic supply chain. We investigate productivity effects for a given firm resulting from the import or export of intermediate inputs by domestic upstream and downstream industries. Using a rich sample of manufacturing firms in 19 EU countries, we find evidence that domestic access to intermediate inputs that are also destined to foreign countries is associated with higher levels of revenue productivity. Further, our results highlight two common, but important, misspecification biases: ignoring the dynamic nature of productivity and estimating a value-added instead of a gross-output production function. |
| Keywords: | Offshoring, Inshoring, Supply Chain, Total Factor Productivity, Trade, Learning |
| JEL: | D22 D24 D57 D83 F14 L25 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:rug:rugwps:18/949&r=int |
| By: | Fabrizio Antenucci |
| Abstract: | According to the recent economic literature, international trade has had a significant influence on the US labour market, due to the import penetration of Chinese products. In particular, according to David Author and his co-authors, Chinese import would have caused a “China syndrome”, i.e. strong employment contraction as well as negative impact on the cumulated earnings of workers in the areas most exposed to this competition. Although it can be maintained that, in recent decades, international trade has had a negative impact on the US labour market, in this paper it is claimed that, from a theoretical point of view, import penetration does not represent an appropriate index to detect the influence of international trade on the labour market. The aim of this paper is to offer an alternative analysis tool, the Trade Openness Index, which could exceed the limits of the Factor Content of Trade and the Stolper-Samuelson theorem. |
| Keywords: | Trade, Globalization, Deindustrialization, Labour Market Adjustment, Technical progress |
| JEL: | E24 F10 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:rtr:wpaper:0242&r=int |
| By: | Julia Grübler; Oliver Reiter; Robert Stehrer |
| Abstract: | Since the beginning of 2017, a paradigm change in international trade policy is observed. While the protectionist agendas are on the rise, the EU and Japan signed an Economic Partnership Agreement (EPA) on 17 July 2018. It is the most ambitious agreement of the EU with any Asian state. The study estimates the effect of the EU-Japan EPA for Austria based on qualitative analysis and a structural gravity model. The model predicts small but positive effects of around 0.01% of GDP for Austria. Highest gains are expected for manufactured goods, particularly in the medium- and high-tech sectors. |
| Keywords: | Economic partnership, Free Trade Agreement, EPA, FTA, EU, Japan, South Korea, tariffs, non-tariff measures, structural Gravity model |
| JEL: | D58 F13 O24 Q17 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:wsr:ecbook:2018:i:vii-001&r=int |
| By: | Simplice A. Asongu (Yaoundé/Cameroon); Ivo J. Leke (University of Saskatchewan, Saskatoon, Canada) |
| Abstract: | The study investigates whether development assistance can be used to crowd-out the negative effect of terrorism on international trade. The empirical evidence is based on a panel of 78 developing countries for the period 1984-2008 and Quantile Regressions. The following main findings are established. First, bilateral aid significantly reduces the negative effect of transnational terrorism on trade in the top quantiles of the trade distribution. Second, multilateral aid also significantly mitigates the negative effect of terrorism dynamics on trade in the top quantiles of the trade distributions. It follows that it is primarily in countries with above median levels of international trade that development assistance can be used as an effective policy tool for dampening the adverse effects of terrorism on trade. Practical implications are discussed. |
| Keywords: | Exports; Foreign Aid; Terrorism; Development |
| JEL: | F40 F23 F35 Q34 O40 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:afe:wpaper:18/027&r=int |
| By: | Giulia De Masi; Giorgio Ricchiuti |
| Abstract: | Fragmentation of production certainly is a possible channel of economic contagion and is playing a key role in the study of Systemic Risk. The investments abroad of firms implicitly create long range economic dependencies between investors and the economies of destination, possibly triggering contagion phenomena. Complex Network theory is a primary tool to highlight economic mutual relationships and paths of economic contagion, shedding light on intrinsic systemic risks. In this paper we reconstruct the networks of EU28 foreign direct investments and we study the networks' evolution from 2003 to 2015 for 38 economic sectors. Our analysis aims at detecting the change of topological properties of foreign direct investment network during the crisis, in order to assess its effect on the architecture of economic relationships. Trough a detailed study of correlations at different time lags between network measurements and macroeconomic variables, we assess systemic risks based on network topology. The main results are: (i) a sharp change of network topology from a sparse to a strongly clusterized network is clearly visible before the crisis and a quantitative evaluation of the network communities is given; (ii) after the crisis, investments from EU28 investors are mainly concentrated in EU28 countries there the Union becomes on of core cluster; (iii) time-lagged correlations between macro-economic variables and topological measurements show that network's topology measures anticipate the change of macro-economic variables. |
| Keywords: | Foreign Direct Investment, Economic networks, Projected network, Systemic Risks |
| JEL: | F23 D85 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:frz:wpaper:wp2018_27.rdf&r=int |
| By: | Uchenna R. Efobi (Covenant University, Ota, Ogun State, Nigeria); Simplice A. Asongu (Yaoundé, Cameroon); Ibukun Beecroft (Covenant University, Ota, Ogun State, Nigeria) |
| Abstract: | This paper examines the effect of foreign aid in the terrorism-FDI nexus while considering the extent of domestic corruption-control (CC). The empirical evidence is based on a sample of 78 developing countries. The following findings are established: the negative effect of terrorism on FDI is apparent only in countries with higher levels of CC; foreign aid dampens the negative effect of terrorism on FDI only in countries with high levels of CC. The result is mixed when foreign aid is subdivided into its bilateral and multilateral components. Our findings are in accordance with the stance that bilateral aid is effective in reducing the adverse effect of terrorism on FDI. Multilateral aid also decreases the adverse effect of other forms of terrorism that can neither be classified as domestic nor as transnational. Policy implications are discussed. |
| Keywords: | Conflict; Developing countries; Foreign investment |
| JEL: | D74 F21 F35 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:afe:wpaper:18/041&r=int |
| By: | Horn, Henrik (Research Institute of Industrial Economics (IFN)); Norbäck, Pehr-Johan (Research Institute of Industrial Economics (IFN)) |
| Abstract: | International investment agreements have become increasingly controversial. The agreements are alleged to be beset with a large number of deficiencies that harm host countries in particular. For instance, they are said to cause “regulatory chill”, to distorts investment patterns, and to lead to excessive litigation due to the Investor-State Dispute Settlement (ISDS) mechanisms they almost invariably contain. Many of the issues brought up in this debate have evident economic aspects. But until recently there has been very little economic literature on the driving forces behind these agreements, on their appropriate design, and on their effects. There is a nascent theoretical literature on investment agreements and regulatory expropriations, however. This literature is still very much in its infancy. The purpose of this note is to explain in non-technical terms some observations that emerge from this early literature. |
| Keywords: | International investment agreements; Regulatory chill; Expropriation; ISDS |
| JEL: | F21 F23 F53 K33 |
| Date: | 2018–11–22 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1250&r=int |
| By: | Roman Stöllinger (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | This research report investigates the relationship between the growing integration into global and regional value chains (VCs) and structural change in the South and South East Asian (SEA) region. The analysis includes a sample of 60 developed and developing countries covered in the OECD’s Inter-Country Input-Output Tables. Focusing on the SEA region, we find the usual inverted U-shaped relationship between the manufacturing share and per capita income. With regards to the impact of growing VC integration, the econometric results suggest a small positive effect of the overall VC integration on the change in the manufacturing share at the global level. Very similar patterns are found for the South and South East Asian region, however, with a large degree of country heterogeneity. The main beneficiaries from VC integration in the region in terms of the relative importance of manufacturing in the economy include for example Korea and Thailand. Unexpectedly, no significant differences in the (manufacturing-related) structural impacts of regional and global VCs could be identified. |
| Keywords: | global value chains, structural change, competitiveness, economic development |
| JEL: | F15 O19 O25 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:wii:rpaper:rr:436&r=int |
| By: | Wolfgang Keller; Hâle Utar |
| Abstract: | This paper shows that globalization has far-reaching implications for the economy’s fertility rate and family structure because they influence work-life balance. Employing population register data on new births, marriages, and divorces together with employer-employee linked data for Denmark, we show that lower labor market opportunities due to Chinese import competition lead to a shift towards family, with more parental leave taking and higher fertility as well as more marriages and fewer divorces. This pro-family, pro-child shift is driven largely by women, not men. Correspondingly, the negative earnings implications of the rising import competition are concentrated on women, and gender earnings inequality increases. We show that the choice of market versus family is a major determinant of worker adjustment costs to labor market shocks. While older workers respond to the shock rather similarly whether female or not, for young workers the fertility response takes away the adjustment advantage they typically have–if the worker is a woman. We find that the female biological clock–women have difficulties to conceive beyond their early forties–is central for the gender differential, rather than the composition of jobs and workplaces, as well as other potential causes. |
| JEL: | F16 J12 J13 J16 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25247&r=int |
| By: | Michael Landesmann (The Vienna Institute for International Economic Studies, wiiw); Sandra M. Leitner (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | Do High-Skilled Third-Country (i.e. Non-EU) Migrants Contribute to Productivity Growth? In order to foster innovation and enhance economic development and growth, attracting skilled professionals from abroad has become an important policy goal in many economies, initiating a global race for talent. This paper looks at the private company sector in a group of 13 old EU Member States and examines the role of high-skilled third-country (HS-TC) migrants for innovation – as captured by real labour productivity and total factor productivity (TFP) growth – between 2004 and 2015. It utilises four different indicators of HS-TC migration and defines high skills in terms of either educational attainment (ISCED classification) or the skills required in an occupation (ISCO classification) which helps identify the presence of a jobs-skills mismatch for HS-TC migrants. Taking into account the endogenous nature of HS-TC migration, we find some selective evidence of a negative causal link between the share of HS‑TC migrants, on the one hand, and labour productivity and TFP growth, on the other. Furthermore, differences in the results for the ISCED- and ISCO-based skills measures point to a non-negligible jobs‑skills mismatch in terms of an over-representation of HS-TC migrants in lower productivity occupations. We also find that HS-TC migrants are relatively less productive than HS EU migrants. Results for selected individual industries are more mixed, with some industries even benefiting in productivity terms from a higher share of HS-TC migrant workers. |
| Keywords: | high-skilled third-country migrants, innovation, EU, real labour productivity growth, total factor productivity growth |
| JEL: | O15 F22 D24 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:wii:wpaper:158&r=int |
| By: | Godwin Olasehinde-Williams (Department of Economics, Eastern Mediterranean University); Mehmet Balcilar (Department of Economics, Eastern Mediterranean University); Muhammad Shahbaz (Montpelier Business School, Montpelier, France) |
| Abstract: | This study applies bootstrap panel Granger causality test of to examine the causal relationship between globalization and insurance market activities in large emerging market economies. Economic, social, political and overall globalization indices are considered separately, and 3 alternative measures of globalization (hybrid, de facto and de jure) are also used in each case for our estimations. The empirical results confirm the following; first, empirical outcomes are sensitive to the choice of globalization measure used. Second, cross-sectional dependence and cross-country heterogeneity exist among large emerging market economies. Third, causality varies across large emerging economies with different conditions, and social globalization has the most widespread effect on insurance market activities. |
| Keywords: | Globalization, Insurance Markets, Bootstrap panel Granger causality, Large Emerging Market Economies |
| JEL: | C23 G22 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:emu:wpaper:15-40.pdf&r=int |
| By: | Aparicio Fenoll, Ainoa (Collegio Carlo Alberto); Kuehn, Zoë (Universidad Autónoma de Madrid) |
| Abstract: | This paper studies whether individuals tend to migrate to countries where their skills are scarce or abundant. Focusing on English language skills, we test whether immigrants who are proficient in English choose to move to countries where many or few individuals speak English. We use the introduction of English classes into compulsory school curricula as an exogenous determinant for English proficiency of migrants of different ages, and we consider cohort data on migration among 29 European countries, where English is not the official language and where labor mobility is essentially free. Our estimation strategy consists of refined comparisons of cohorts, and we control for all variables traditionally included in international migration models. We find that immigrants who are proficient in English move to countries where fewer individuals speak English, and where hence their skills are scarce. We also show that similar results hold for general skills. |
| Keywords: | migration, English language skills, choice of destination country |
| JEL: | F22 I20 J24 J61 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11907&r=int |
| By: | Friebel, Guido; Manchin, Miriam; Mendola, Mariapia; Prarolo, Giovanni |
| Abstract: | Irregular migrants from Africa and the Middle East flow into Europe along land and sea routes under the control of human smugglers. The demise of the Gaddafi regime in 2011 marked the opening of the Central Mediterranean Route for irregular border crossing between Libya and Italy. This resulted in the immediate expansion of the global smuggling network, which produced an asymmetric reduction in bilateral distance between country pairs across the Mediterranean sea. We exploit this source of spatial and time variation in irregular migration routes to estimate the elasticity of migration intentions to illegal moving costs proxied by distance. We build a novel dataset of geolocalized time-varying migration routes, combined with cross-country survey data on individual intentions to move from Africa (and the Middle East) into Europe. Netting out any country-by-time and pair-level confounders we find a large negative effect of distance along smuggling routes on individual migration intentions. Shorter distances increase the willingness to migrate especially for youth, (medium) skilled individuals and those with a network abroad. The effect is stronger in countries closer to Libya and with weak rule of law. |
| Keywords: | Human Smuggling; illegal migration; International Migration; Libyan Civil War |
| JEL: | K23 K42 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13326&r=int |
| By: | William J. Collins; Ariell Zimran |
| Abstract: | The repeated failure of Ireland's potato crop in the late 1840s led to a major famine and a surge in migration to the US. We build a dataset of Irish immigrants and their sons by linking males from 1850 to 1880 US census records. For comparison, we also link German and British immigrants, their sons, and males from US native-headed households. We document a decline in the observable human capital of famine-era Irish migrants compared to pre-famine Irish migrants and to other groups in the 1850 census, as well as worse labor market outcomes. The disparity in labor market outcomes persists into the next generation when immigrants’ and natives’ sons are compared in 1880. Nonetheless, we find strong evidence of intergenerational convergence in that famine-era Irish sons experienced a much smaller gap in occupational status than their fathers. The disparities are even smaller when the Irish children are compared to those from observationally similar native white households. A descriptive analysis of mobility for the famine-era Irish sons indicates that more Catholic surnames and birth in Ireland were associated with less upward mobility. Our results contribute to literatures on immigrant assimilation, refugee migration, and the Age of Mass Migration. |
| JEL: | F22 J61 J62 N31 O15 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25287&r=int |
| By: | James Harrigan; Ariell Reshef; Farid Toubal |
| Abstract: | We study the impact of firm level choices of ICT, R&D, exporting and importing on the evolution of productivity and its bias towards skilled occupations. We use a novel measure of the propensity of a firm to engage in technology investment and adoption: its employment of workers with STEM (science, technology, engineering and math) skills and experience who we call “techies”. We develop a methodology for estimating firm level productivity that allows us to measure both Hicks-neutral and skill-augmenting technology differences, and apply this to administrative data on French firms in the entire private sector from 2009 to 2013. We find that techies and importing of intermediate inputs raise skill-biased productivity, while imports also raise Hicks-neutral productivity. We also find that higher firm-level skill biased productivity raises low-skill employment even as it raises the ratio of skilled to unskilled workers. This is because of the cost-reducing effect of higher productivity. The techie and trade effects are large, and can account for much of the aggregate increase in skilled employment from 2009 to 2013. |
| JEL: | D2 D24 F1 F16 J2 J23 J24 O52 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25295&r=int |
| By: | Lens, Dries (University of Antwerp); Marx, Ive (University of Antwerp); Vujic, Suncica (University of Antwerp) |
| Abstract: | Despite being one of the most prolific spenders on active labour market policies, and investing heavily in civic integration programmes, family policies and career and diversity plans, the native-migrant employment gap in Belgium is still one of the largest among EU and OECD countries. Past research has shown that even after controlling for human capital and other socio-demographic factors a large unexplained gap (often called ethnic gap or penalty) remains. This paper investigates how the motive for migrating to Belgium contributes to the native-migrant employment gap. Based on data from the 2014 Belgian LFS Ad Hoc Module on the labour market situation of migrants and their immediate descendants, we compare the employment outcomes of labour migrants (with and without a job prior to migration), family reunion migrants, student migrants and refugees with those of the native-born. In line with previous studies, we establish that refugees and family reunion migrants' employment likelihood is lower when compared to labour migrants and natives. Refugees who do work tend to do so in temporary jobs and in jobs that are below their skill levels. However, temporary employment is also prevalent among labour migrants without a job prior to migration and over qualification is a specific challenge for male student migrants. |
| Keywords: | immigration, reason for migration, employment outcomes |
| JEL: | F22 J15 J61 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11906&r=int |
| By: | Hoen, Maria F. (Ragnar Frisch Centre for Economic Research); Markussen, Simen (Ragnar Frisch Centre for Economic Research); Røed, Knut (Ragnar Frisch Centre for Economic Research) |
| Abstract: | Using Norwegian administrative data, we examine how exposure to immigration over the past decades has affected natives' relative prime age labor market outcomes by social class background. Social class is established on the basis of parents' earnings rank. By exploiting variation in immigration patterns over time across commuting zones, we find that immigration from low‐income countries has reduced social mobility and thus steepened the social gradient in natives' labor market outcomes, whereas immigration from high‐income countries has leveled it. Given the large inflow of immigrants from low-income countries to Norway since the early 1990s, this can explain a considerable part of the relative decline in economic performance among natives with lower class background, and also rationalize the apparent polarization of sentiments toward immigration. |
| Keywords: | immigration, intergenerational mobilty |
| JEL: | J62 J15 J24 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11904&r=int |
| By: | Claudius Gräbner; Philipp Heimberger (The Vienna Institute for International Economic Studies, wiiw); Jakob Kapeller; Florian Springholz |
| Abstract: | A Review of Existing Measures and Empirical Practices This paper surveys existing measures of economic openness understood as the degree to which non-domestic actors can or do participate in a domestic economy. We introduce a typology of openness indicators which distinguishes between ‘real’ and ‘financial’ openness as well as between ‘de facto’ and ‘de jure’ measures of openness, and show that this classification indeed captures different dimensions of economic openness. The main contribution of the paper is to supply a comprehensive and novel data set of openness indicators available for interested researchers. Based on this effort, we analyse some trends in economic openness over time and provide a correlation analysis across indicators. Finally, we explore the practical implications of choosing from different openness measures within a growth regression framework and highlight that researchers should make the choice of the indicator based on explicit theoretical justifications that correspond to their specific research questions. |
| Keywords: | economic openness, trade openness, financial openness, globalisation |
| JEL: | F00 F40 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:wii:wpaper:157&r=int |