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on International Trade |
| By: | Alejandro Graziano; Kyle Handley; Nuno Limão |
| Abstract: | We estimate the uncertainty effects of preferential trade disagreements. Increases in the probability of Britain’s exit from the European Union (Brexit) reduce bilateral export values and trade participation. These effects are increasing in trade policy risk across products and asymmetric for UK and EU exporters. We estimate that a persistent doubling of the probability of Brexit at the average disagreement tariff of 4.5% lowers EU-UK bilateral export values by 15 log points on average, and more so for EU than UK exporters. Neither believed a trade war was likely. |
| JEL: | E02 F02 F1 F5 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25334&r=all |
| By: | Maria Bas; Pamela Bombarda; Sébastien Jean; Gianluca Orefice |
| Abstract: | Inequalities between workers of different skills have been growing in the era of globalization. Firms' internationalization mode has an impact on job stability. Exporting firms are not only exposed to different foreign shocks, they also pay skill-intensive fixed costs to serve foreign markets. This implies that, for larger exporters, the labor demand for skilled workers is expected to be less volatile than for unskilled workers. In this paper we study the relationship between firms' export activity and job stability across employment skills. Relying on detailed firm-level data from France for the period 1996-2007, we show that firms with higher export intensity exhibit a lower volatility of skilled labor demand relative to the volatility of unskilled labor demand. Our identification strategy is based on an instrumental variable approach to provide evidence on the causal effect of the export performance of the firm on the volatility of employment of different skills. Our findings suggest that exporting increases the stability of skilled jobs, but feeds the precariousness of unskilled ones. |
| Keywords: | Exports;Employment Volatility;Skiller Labor;Firm-level Data |
| JEL: | F1 F16 L25 L60 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:cii:cepidt:2018-20&r=all |
| By: | Konstantins Benkovskis (Bank of Latvia); Jaan Masso (University of Tarty); Olegs Tkacevs (Bank of Latvia); Priit Vahter (University of Tartu); Naomitsu Yashiro (Organisation for Economic Co-operation and Development) |
| Abstract: | This paper investigates the effect of export entry on productivity, employment and wages of Latvian and Estonian firms in the context of global value chains (GVCs). Like in many countries, exporting firms in Latvia and Estonia are more productive, larger, pay higher wages and are more capital-intensive than non-exporting firms. While this is partly because firms that are originally more productive and have better performances are more likely to enter exports, Latvian and Estonian firms also realise more than 23% and 14% higher labour productivity level respectively as the result of export entry. Export entry also increases employment and average wages. Gains in productivity and employment are particularly large when firms enter exports that are related to participation in knowledge-intensive activities found in the upstream of GVCs. For instance, Latvian firms that start exporting intermediate goods or non-transport services (which include knowledge-intensive services) enjoy significantly higher productivity gains than those starting to export final goods or transport services. These findings underscore the importance of innovation policies that strengthen firms' capabilities to supply highly differentiated knowledge-intensive goods and services to GVCs. |
| Keywords: | productivity, global value chain, exports, Latvia, Estonia |
| JEL: | F12 F14 O19 O57 |
| Date: | 2018–06–20 |
| URL: | http://d.repec.org/n?u=RePEc:ltv:wpaper:201803&r=all |
| By: | Manuel Barron (Universidad del Pacífico); Willy Sacio |
| Abstract: | When export promotion agencies target specific products, they can crowd-out exports of other products, if firms focus on exporting the products for which they receive assistance, or foster them, if firms leverage the know-how and contacts acquired from the program. Thus, the net effect on total exports and export composition is theoretically ambiguous. We estimate the effects of Sierra Exportadora, one of Peru's flagship export promotion agencies, on its beneficiaries' exports of non-sponsored products. Using a comprehensive dataset of exporters we show that beneficiary firms exports of non-sponsored products increased by 20%, roughly as much as exports of sponsored products. We show that a large fraction of this change is due to changes in the extensive margins, suggesting that beneficiary firms leveraged contacts and know-how acquired from the program to export new non-sponsored products. We find that the effects are larger for firms with more pre-program experience exporting and higher pre-treatment exports. |
| Keywords: | Export promotion, within-firm spillovers, trade policy |
| JEL: | F13 F14 L25 O24 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:apc:wpaper:138&r=all |
| By: | Auer, Raphael; Bonadio, Barthelemy; Levchenko, Andrei A. |
| Abstract: | Abstract We provide a quantitative assessment of both the aggregate and the distributional effects of revoking NAFTA, using a multi-country, multi-sector, multi-factor model of world production and trade with global input-output linkages. Revoking NAFTA would reduce US welfare by about 0.2%, and Canadian and Mexican welfare by about 2%. The distributional impacts of revoking NAFTA across workers in different sectors are an order of magnitude larger in all three countries, ranging from -2.7 to 2.26% in the United States. We combine the quantitative results with information on the geographic distribution of sectoral employment, and compute average real wage changes in each US congressional district, Mexican state, and Canadian province. We then examine the political correlates of the economic effects. Congressional district-level real wage changes are negatively correlated with the Trump vote share in 2016: districts that voted more for Trump would on average experience greater real wage reductions if NAFTA is revoked. |
| Keywords: | Distributional Effects; NAFTA; protectionism; quantitative trade models; trade policy |
| JEL: | F11 F13 F16 J62 R13 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13393&r=all |
| By: | Giammario Impullitti (University of Nottingham & CESifo); Omar Licandro (University of Nottingham, IAE-CSIC & Barcelona GSE); Pontus Rendahl (University of Cambridge, Center for Macroeconomics (CFM) & CEPR) |
| Abstract: | We study the gains from trade in a new model with oligopolistic competition, firm heterogeneity, and innovation. Lowering trade costs reduces markups on domestic sales but increases markups on export sales, as firms do not pass the entire reduction in trade costs onto foreign consumers. Trade liberalisation can also reduce the number of firms competing in each market, thereby increasing markups on both domestic and export sales. For the majority of exporters, however, the pro- competitive effect prevails and their average markups decline. The incomplete pass-though and the reduction in the number of competitors instead dominate for top-exporters – the top 0.1% of firms – which end up increasing their markup. In a quantitative exercise we find that the aggregate effect of trade-induced markup changes is pro-competitive and accounts for the majority of the welfare gains from trade. Trade-induced changes in competition affect survival on domestic and export markets and firms’ decision to innovate. All exporters, and especially the top exporters, increase their market size after liberalisation which, in turn, encourages them to innovate more. Hence, top exporters contribute negatively to welfare gains by increasing their markups but positively by increasing innovation and productivity. Firms’ innovation response accounts for a small but non-negligible share of the welfare gains while the contribution of selection is U-shaped, being negative for small liberalisations and positive otherwise. A more globalised economy is therefore populated by larger, fewer and more innovative firms, each feature representing an important source of the gains from trade. |
| Keywords: | gains from trade, heterogeneous firms, oligopoly, innovation, endogenous markups, endogenous market structure |
| JEL: | F12 F13 O31 O41 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:aim:wpaimx:1839&r=all |
| By: | Kern, Milena (University of Salzburg); Paetzold, Joerg (University of Salzburg); Winner, Hannes (University of Salzburg) |
| Abstract: | Trade in services is often hampered by domestic administrative barriers, even when countries are members of the same regional trade agreement. We exploit a large reform in the European Union (the EU Service Directive) targeted to reduce such administrative hurdles in cross border service provision to estimate its effects on service trade. We employ a difference-in-difference strategy and a Pseudo Poisson Maximum Likelihood (PPML) panel approach to estimate gravity equations with multiple high-dimensional fixed effects. On average, the reform increased intra-EU trade in targeted services by about 40%. This effect of the reform on trade volume is corroborated by several robustness and placebo checks. Finally, a disaggregated analysis reveals significant differences between countries and service sectors. |
| Keywords: | Service trade; trade liberalisation; gravity equation |
| JEL: | F13 F14 F15 |
| Date: | 2018–12–12 |
| URL: | http://d.repec.org/n?u=RePEc:ris:sbgwpe:2018_009&r=all |
| By: | OECD |
| Abstract: | This report synthesises OECD work analysing agricultural policies, markets and trade. It highlights recent developments in agricultural markets and policies and considers how these have changed the source and nature of the gains from multilateral reform, and considers opportunities for further reforms.In large part, gains from further reform come from the opportunities to increase income and jobs through increasing agro-food sector participation in global and domestic value chains. Countries can enhance the overall competitiveness of their agro-food sectors though more open trade policies and reducing the impacts of measures that raise trade costs. This includes reducing distorting domestic support and market access barriers, including to agro-food imports; ensuring that non-tariff measures are appropriate, transparent, and science-based; and reducing barriers to services trade. |
| Keywords: | agricultural policy, Agricultural trade, global value chains, non-tariff measures, policy reforms, trade in services |
| JEL: | F13 Q17 Q18 |
| Date: | 2019–01–07 |
| URL: | http://d.repec.org/n?u=RePEc:oec:agraaa:118-en&r=all |
| By: | Alan Asprilla (University of Lausanne); Nicolas Berman (Aix-Marseille Univ., CNRS, EHESS, Centrale Marseille, AMSE & CEPR); Olivier Cadot (University of Lausanne, CEPR & FERDI); Melise Jaud (University of Lausanne & World Bank) |
| Abstract: | This paper identifies the effect of trade policy on market power through new data and a new identification strategy. We use a large dataset containing export values and quantities by product and destination for all exporting firms in 12 developing and emerging countries over several years, merged with destination-product specific information on tariffs and non-tariff barriers. We identify market power by observing how exporting firms price discriminate across markets in reaction to variations in bilateral exchange rates. Pricing-to-market is prevalent in all regions of our sample, even among small firms, although it is increasing in firm size, in accordance with theory. More importantly, we find that the effect of non-tariff measures is not isomorphic to that of tariffs: the pricing-to-market behavior we observe suggests that, while tariffs reduce the market power of foreign firms through classic rent-shifting effects, non-tariff measures alter market structure and reinforce the market power of non-exiting firms, domestic and foreign ones alike. |
| Keywords: | trade policy, non-tariff measures, tariffs, exchange rate, price discrimination |
| JEL: | F12 F13 F14 D40 F31 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:aim:wpaimx:1848&r=all |
| By: | Roberto Antonietti; Jasmine Mondolo |
| Abstract: | Domestic institutions are recognized as important in attracting foreign direct investment (FDI) and spurring economic development in host countries, but FDI can also affect and shape domestic institutions. In this paper we use extensive data on the quality of institutions and on inward FDI in 127 countries over a period of 22 years to see whether attracting FDI improves the quality of institutions in the host economies. We distinguish between different types of institution, FDI and country, and we estimate a series of pooled ordinary least squares, fixed effects, and dynamic panel data models to address endogeneity. Our findings suggest that higher amounts of inward FDI improve the average quality of institutions in recipient countries. This holds particularly when the quality of institutions is measured in terms of political stability, regulatory quality and rule of law, and when host countries are developing or transition economies. |
| Keywords: | quality of institutions, foreign direct investment, panel data |
| JEL: | F23 O43 O57 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1842&r=all |
| By: | Sónia Araújo; Thomas Chalaux; David Haugh |
| Abstract: | The rapid integration of emerging market economies (EMEs) into world trade over the past three decades has raised widespread concerns about the effects this is having on trade-exposed sectors in advanced OECD countries. An analysis of international trade patterns of over 4000 products between 1995 and 2015 shows that the export product overlap between advanced OECD economies and EMEs has been increasing. However, the product overlap between advanced countries is still higher and increasing faster, suggesting that competitive pressures in export product markets on advanced economies is mainly coming from other OECD members. Regression analysis corroborates this finding, supporting the idea that competition from EMEs remains relatively moderate. Regression analysis show that a move to specialise in a product by the United States exerts about twice as much competitive pressure as a similar decision in China. However, competition effects on average are small compared to changes in world demand as drivers of country competitiveness at the individual product level. The negative effect of a one standard deviation decrease in world demand for a product exerts 8 times more pressure than a one standard deviation increase in specialisation of the United States for that product. In short, specialising in what the world wants to buy remains the key for export performance. |
| Keywords: | advanced countries, competition, competitiveness, emerging market economies, EMEs, exports, OECD, performance, product specialisation, trade |
| JEL: | F14 F15 |
| Date: | 2018–12–19 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1526-en&r=all |
| By: | Ufuk Akcigit; Sina T. Ates; Giammario Impullitti |
| Abstract: | How do import tariffs and R&D subsidies help domestic firms compete globally? How do these policies affect aggregate growth and economic welfare? To answer these questions we build a dynamic general equilibrium growth model where firm innovation endogenously determines the dynamics of technology, market leadership and trade flows, in a world with two large open economies at different stages of development. Firms R&D decisions are driven by (i) the defensive innovation motive, (ii) the expansionary innovation motive, and (iii) technology spillovers. The theoretical investigation illustrates that, statistically, globalization boosts domestic innovation through induced international competition. Accounting for transitional dynamics, we use our model for policy evaluation and compute optimal policies over different time horizons. The model suggests that the introduction of the Research and Experimentation Tax Credit in 1981 proves to be an effective policy response to foreign competition, generating substantial welfare gains in the long run. A counterfactual exercise shows that increasing tariffs as an alternative policy response improves domestic welfare only when the policymaker cares about the very short run, or when there is retaliation by the foreign economy. Protectionist measures generate large dynamic losses by distorting the impact of openness on innovation incentives and productivity growth. Finally our model predicts that a more globalized world entails less government intervention, thanks to innovation-stimulating effects of intensified international competition. |
| Keywords: | economic growth, short- and long-run gains from globalization, foreign technological catching-up, innovation policy, trade policy, competition |
| JEL: | F13 F43 O40 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1589&r=all |
| By: | Alan Asprilla (UNIL - Université de Lausanne); Nicolas Berman (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, CEPR - Center for Economic Policy Research - CEPR); Olivier Cadot (UNIL - Université de Lausanne, CEPR - Center for Economic Policy Research - CEPR, FERDI - Fondation pour les Etudes et Recherches sur le Développement International); Melise Jaud (UNIL - Université de Lausanne, The World Bank - The World Bank) |
| Abstract: | This paper identifies the effect of trade policy on market power through new data and a new identification strategy. We use a large dataset containing export values and quantities by product and destination for all exporting firms in 12 developing and emerging countries over several years, merged with destination-product specific information on tariffs and non-tariff barriers. We identify market power by observing how exporting firms price discriminate across markets in reaction to variations in bilateral exchange rates. Pricing-to-market is prevalent in all regions of our sample, even among small firms, although it is increasing in firm size, in accordance with theory. More importantly, we find that the effect of non-tariff measures is not isomorphic to that of tariffs: the pricing-to-market behavior we observe suggests that, while tariffs reduce the market power of foreign firms through classic rent-shifting effects, non-tariff measures alter market structure and reinforce the market power of non-exiting firms, domestic and foreign ones alike. |
| Keywords: | trade policy,non-tariff measures,tariffs,exchange rate,price discrimination |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01945660&r=all |
| By: | Dominik Boddin; Frank Stähler |
| Abstract: | This paper discusses how international trade is organized from export to trans-boundary transport to import. All evidence suggests that the transport sector is independent, may exercise market power and features strong economies of scale. We develop a model of a transport industry that operates under imperfect competition and economies of scale and two generic trade models in which export and import activities are either organized at arm’s length or in a vertical partnership. Using a large dataset of maritime transport costs, tariffs and export prices, we test the model predictions and find that economies of scale beat market power: a decline in the tariff implies a decline in freight rates. Furthermore, our results are consistent only with international trade being organized in vertical partnerships because a tariff increase does not lead to a decrease in export prices. |
| Keywords: | trade costs, transport costs, export prices, vertical integration |
| JEL: | F12 F14 R40 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7378&r=all |
| By: | Lanz, Rainer; Lundquist, Kathryn; Mansio, Grégoire; Maurer, Andreas; Teh, Robert |
| Abstract: | Two far-reaching developments have increased the trade opportunities for SMEs in developing countries. Firstly, the rise of the internet and advances in ICT have reduced trade-related information and communication costs. Secondly, the international fragmentation of production has increased the opportunities for SMEs to specialize in narrow activities at various stages along the production chain. Using firm-level data from the World Bank's Enterprise Survey, we test whether digital connectivity, as captured by whether a firm has a website or not, facilitates the participation of manufacturing SMEs from developing countries in global value chains (GVCs). We find robust evidence that digital connectivity facilitates the participation of manufacturing SMEs in GVCs in terms of both backward and forward linkages. SMEs with a website tend to import a higher share of their inputs used for production and export a higher share of their sales as compared to SMEs without a website. Furthermore, the findings indicate that the effect of having a website on GVC participation is stronger for SMEs than for large firms. Beyond digital connectivity at the firm level, we also assess the role of a country's ICT infrastructure in facilitating GVC participation of SMEs. We find that SMEs tend to participate more in GVCs in countries where a higher share of the population has fixed broadband subscriptions. This result also holds if we control for other country-level factors such as the quality of logistics services, rule of law and access to finance. Our findings can provide guidance for policy makers in developing countries about the importance of investing in ICT infrastructure, creating a regulatory and policy environment conducive to e-commerce, and providing SMEs and workers with the digital skills and knowledge to use ICT technologies efficiently. |
| Keywords: | e-commerce,developing countries,small and medium-sized enterprises,global value chains |
| JEL: | F14 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wtowps:ersd201813&r=all |
| By: | Carol Newman; John Page; John Rand; Abebe Shimeles; Måns Söderbom; Finn Tarp |
| Abstract: | This study combines evidence from interviews in seven countries with (i) government institutions responsible for attracting foreign direct investment (FDI), (ii) 102 multinational enterprises (MNEs), and (iii) 226 domestic firms linked to these foreign affiliates as suppliers, customers, or competitors. The purpose of the interviews was to identify whether relations between MNEs and domestic firms lead to direct transfers of knowledge/technology. We first document that there are relatively few linkages between MNEs and domestic firms in sub-Saharan Africa compared with Asia. However, when linkages are present in sub-Saharan Africa, they raise the likelihood of direct knowledge/technology transfers from MNEs to domestic firms as compared with linked-in firms in Asia. Finally, we do not find that direct knowledge/technology transfers are more likely to occur via FDI than through trade. As such, our results are not consistent with the view that tacit knowledge transfers are more likely to occur through localized linkages. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp2018-161&r=all |
| By: | Brender, Agnes |
| Abstract: | The relationship between ideology and government decisions is a major field of research in economics and political sciences. Particularly the influence of government ideology on security issues of special interest. This paper analyses the relationship between government orientation and arms exports. Therefore, bilateral trade data for conventional weapons is regressed on data of government orientation. The results indicate that left-wing governments are more likely to grant arms export licences than governments of other partisan orientation. The finding is robust to the inclusion of control variables checking for further characteristics of the exporter government. Including interaction terms shows, that left-wing governments care about the human rights protection in importing countries and prefer to export to countries which are not involved in a conflict. |
| Keywords: | Arms trade,government orientation,partisan ideology |
| JEL: | F19 F59 H11 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ilewps:21&r=all |
| By: | Edward J. Balistreri; Christoph Böhringer; Thomas F. Rutherford |
| Abstract: | Mainstream economic wisdom favoring cooperative free trade is challenged by a wave of disruptive trade policies. In this paper, we provide quantitative evidence concerning the economic impacts of tariffs implemented by the United States in 2018 and the subsequent retaliations by partner countries. Our analysis builds on a multi-region multi-sector general-equilibrium simulation model of the global economy that includes an innovative monopolistic-competition structure of bilateral representative firms. |
| Keywords: | applied economic analysis, multi-region models, trade policy, monopolistic competition, trade wars |
| JEL: | C68 F12 F17 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7382&r=all |
| By: | Ermolaeva, L.; Freixanet, J.; Panibratov, A. |
| Abstract: | Exporters' advantages have been discussed in the literature for many decades. Scholars report positive influence of export on firm'’ productivity, efficiency, innovativeness etc. However different contexts suggest different outcomes of the exporting activity. The aim of this study is to analyze the interplay between firms' absorptive capacity, export orientation and innovation strategy of Russian firms. We argue that for Russian firms developed absorptive capacity is an essential antecedent of exporting capacity. Moreover absorptive capacity not only affects firms’ export strategies but is affected itself by export and innovation strategy of the firm. We test our hypotheses using Confirmatory Factor Analysis (CFA). The data was collected by survey of Russian exporters. Total sample accounts 107 observations. |
| Keywords: | internationalization, export, innovation,, absorptive capacity, Russia, |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:sps:wpaper:15108&r=all |
| By: | Tröster, Bernhard; Raza, Werner; Grohs, Hannes; Grumiller, Jan; Staritz, Cornelia; von Arnim, Rudi |
| Abstract: | The European Union (EU) and Tunisia launched negotiations on a Deep and Comprehensive Free Trade Area (DCFTA) in 2015. So far, progress has been limited. The enhanced integration of the Tunisian economy into the EU single market involves several controversial topics. Above and beyond the elimination of tariffs in sensitive agricultural sectors, these concern in particular the liberalization of trade in services, investment and public procurement. At the same time, the negotiations take place under challenging economic, political and social circumstances within the country and the MENA region, which call for a particularly prudent approach. Our assessment of expected economic impacts points to negative GDP effects and minor employment effects in Tunisia in the short to medium term in the case of full tariff liberalization and extensive harmonisation of the regulatory frameworks. Therefore, in the negotiations, the EU should prioritize short-term benefits for the Tunisian economy, mitigate adjustments costs and pro-actively support productive development and upgrading. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:oefsep:282018&r=all |
| By: | Ron Alquist (AQR Capital Management); Nicolas Berman (Aix-Marseille Univ., CNRS, EHESS, Centrale Marseille, AMSE & CEPR); Rahul Mukherjee (Department of Economics, Graduate Institute of International and Development Studies); Linda L. Tesar (Department of Economics, University of Michigan & NBER) |
| Abstract: | We develop a model of cross-border acquisitions in which the foreign acquirer's ownership choice reflects a trade-off between easing the target's credit constraints and the costs of operating in an environment with weak institutions. Data on domestic and foreign acquisitions in emerging markets over the period 1990-2007 support the model predictions. The share of full foreign acquisitions is higher in sectors more reliant on external finance, in countries with lower financial development, and in countries with higher institutional quality. Sectoral external finance dependence accentuates the effect of country-level financial development and institutional quality. By contrast, the level of foreign ownership in partial acquisitions is insensitive to institutional factors and depends weakly on financial factors. |
| Keywords: | foreign direct investment, foreign ownership, mergers and acquisitions, financial development, institutional quality |
| JEL: | F21 F23 G34 L24 L60 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:aim:wpaimx:1847&r=all |
| By: | Fabio Santeramo (Dipartimento di Scienze Agrarie, degli Alimenti e dell'Ambiente - Department of the Sciences of Agriculture, Food and Environment [University of Foggia] - Università degli Studi di Foggia - University of Foggia); Emilia Lamonaca (Dipartimento di Scienze Agrarie, degli Alimenti e dell'Ambiente - Department of the Sciences of Agriculture, Food and Environment [University of Foggia] - Università degli Studi di Foggia - University of Foggia) |
| Abstract: | The increasing policy interests and the vivid academic debate on non-tariff measures (NTMs) has stimulated a growing literature on how NTMs affect agri-food trade. The empirical literature provides contrasting and heterogeneous evidence, with some studies supporting the 'standards as catalysts' view, and others favouring the 'standards as barriers' explanation. To the extent that NTMs can influence trade, understanding the prevailing effect, and the motivations behind one effect or the other, is a pressing issue. We review a large body of empirical evidence on the effect of NTMs on agri-food trade and conduct a meta-analysis to disentangle potential determinants of heterogeneity in estimates. Our findings show the role played by the publication process and by study-specific assumptions. Some characteristics of the studies are correlated with positive significant estimates, others covary with negative significant estimates. Overall, we found that the effects of NTMs vary across types of NTMs, proxy for NTMs, and levels of details of studies. Not negligible is the influence of methodological issues and publication process. |
| Keywords: | Non-tariff measures,Trade standards,Meta-analysis,Trade barriers |
| Date: | 2018–11–15 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01923685&r=all |
| By: | Ayumu Ken Kikkawa; Akira Sasahara |
| Abstract: | Increasing international flows of goods, services, and financial assets have been shown to increase a country's welfare through various channels. This paper studies the interaction between a country's welfare gains from international trade and its sovereign’s access to bond markets. We do so by incorporating a sovereign bond market into a simple Armington (1969) trade model. While standard trade models suggest surprisingly small gains from trade, our model implies that introducing channels through a sovereign bond market greatly magnifies the gains from trade. |
| Keywords: | Gains from trade,Sovereign debt,Sovereign default,Trade openness |
| JEL: | F14 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:190820&r=all |
| By: | Monras, Joan |
| Abstract: | How does the US labor market absorb low-skilled immigration? I address this question using the 1995 Mexican Peso Crisis, an exogenous push factor that raised Mexican migration to the US. In the short run, high-immigration locations see their low-skilled labor force increase and native low-skilled wages decrease, with an implied inverse local labor demand elasticity of at least -.7. Mexican immigration also leads to an increase in the relative price of rentals. Internal relocation dissipates this shock spatially. In the long run, the only lasting consequences are a) lower wages and employment rates for low-skilled natives who entered the labor force in high-immigration years, and b) lower housing prices in high-immigrant locations, since Mexican immigrant workers disproportionately enter the construction sector and lower construction costs. I use a quantitative dynamic spatial equilibrium many-region model to obtain the counterfactual local wage evolution absent the immigration shock, to analyze the role of unilateral state level immigrant restrictive laws, and to study the role of housing markets. |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13394&r=all |
| By: | Elena Rusticelli; David Haugh; Axelle Arquie; Lilas Demmou |
| Abstract: | The increase of emerging market economies in international trade and rapid rise in global trade intensity over the past three decades has been accompanied by growing, regionally concentrated, discontent with trade in advanced OECD countries. One of the main concerns is the negative effects of growing import competition on employment. This paper focuses on manufacturing sector employment because of its high trade exposure and potential for wider spillovers. It finds that while trade appears to have only a minor association with manufacturing employment shares at the national level compared with technology, trade has an important role in regional labour market developments due to the geographical concentration of industrial activities. The "sticky" nature of manufacturing employment and sometimes inefficient inter-regional migration mean that trade shocks to local manufacturing can affect entire regional labour markets, leading to widening regional inequalities. Policies should, in particular, focus on boosting regional resilience to industry related shocks, whether they come from trade or technology by building local capacity, both in terms of people – more educated labour is more mobile across jobs – and innovation. |
| Keywords: | employment, inequality, labour market, manufacturing, regions, technology, trade, wages |
| JEL: | F16 J61 O19 |
| Date: | 2018–12–21 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1530-en&r=all |
| By: | Gersbach, Hans; Schetter, Ulrich; Schmassmann, Samuel |
| Abstract: | We analyze public investment in basic research in a multi-country, multi-industry environment with international trade. In our economy, basic research generates ideas which private firms take up in applied research to develop new varieties. Such development requires industryspecific know-how. A country's current specialization in international trade thus determines which ideas can be commercialized domestically. We demonstrate that the equilibrium is consistent with key patterns observed from the data. We then compare basic research investments of national governments with optimal investments of a global social planner. We show that national investments are inefficient along three dimensions: (1) There is typically too little total investment in basic research. (2) Basic research is too heavily concentrated in industrialized countries. (3) And basic research is potentially insufficiently directed to support innovation in complex, high-tech industries. |
| Keywords: | applied research, basic research, economic growth, international trade, knowledge spillover, optimal policy |
| JEL: | F10 F43 H40 O31 O38 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:usg:econwp:2018:16&r=all |
| By: | Ron Alquist (AQR Capital Management); Nicolas Berman (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, CEPR - Center for Economic Policy Research - CEPR); Rahul Mukherjee (Department of Economics, Graduate Institute of International and Development Studies); Linda Tesar (Department of Economics, University of Michigan, NBER - National Bureau of Economic Research - National Bureau of Economic Research) |
| Abstract: | We develop a model of cross-border acquisitions in which the foreign acquirer's ownership choice reflects a trade-off between easing the target's credit constraints and the costs of operating in an environment with weak institutions. Data on domestic and foreign acquisitions in emerging markets over the period 1990-2007 support the model predictions. The share of full foreign acquisitions is higher in sectors more reliant on external finance, in countries with lower financial development, and in countries with higher institutional quality. Sectoral external finance dependence accentuates the effect of country-level financial development and institutional quality. By contrast, the level of foreign ownership in partial acquisitions is insensitive to institutional factors and depends weakly on financial factors. |
| Keywords: | foreign direct investment,foreign ownership,mergers and acquisitions,financial development,institutional quality |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01945577&r=all |
| By: | Uri Dadush; Yana Myachenkova |
| Abstract: | The trade agreements that the European Union has with North African countries – with Algeria, Egypt, Morocco and Tunisia – are often seen as having delivered disappointing results since they came into force during the 2000s. The four North African countries have seen insufficient growth in their exports to the EU, and have undergone only limited diversification. In the meantime, the EU’s exports to North Africa have grown quite rapidly. Economic growth in North Africa has been well short of what is needed to reduce chronic under-employment, especially of young people. The EU trade agreements with North Africa could generate additional, large benefits if they either directly led to or at least incentivised behind-the-border reforms to make the North African countries more competitive in international markets. Though this reform is the responsibility of the governments of North African countries, the EU could provide stronger incentives to improve the business environment. Meanwhile, in agriculture, were the North African countries able to compete with the EU on an even playing field, agriculture’s share of domestic value-added would almost certainly be significantly larger and rural poverty correspondingly lower than at present. Nevertheless, the agreements have been judged too harshly. They helped generate large amounts of trade, though not enough was done on the domestic front to derive the maximum benefit from them. Moreover, the domestic and international environment has been unfavourable, impeding North Africa’s progress. Over much of the relevant period, the EU grew sluggishly, and North African countries faced sharply increasing competition on European markets from China and the eastern Europe countries that joined the EU in 2004 and after. Generally, countries that acceded to the EU have done much better than the countries of North Africa. While the countries of North Africa are not EU candidates, there is much that they and the EU can learn from the example of the former accession countries in terms of how a new generation of trade agreements between the EU and North Africa could be deeper and more comprehensive than currently, and could be accompanied by increased aid for trade. |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:ocp:rpaper:pp1811&r=all |
| By: | Miguel Almunia (CUNEF and CEPR); Pol Antràs (Harvard University, NBER and CEPR); David López-Rodríguez (Banco de España); Eduardo Morales (Princeton University, NBER and CEPR) |
| Abstract: | We exploit plausibly exogenous geographical variation in the reduction in domestic demand caused by the Great Recession in Spain to document the existence of a robust, within-firm negative causal relationship between demand-driven changes in domestic sales and export flows. Spanish manufacturing firms whose domestic sales were reduced by more during the crisis observed a larger increase in their export flows, even after controlling for firms’ supply determinants (such as labor costs). This negative relationship between demand-driven changes in domestic sales and changes in export flows illustrates the capacity of export markets to counteract the negative impact of local demand shocks. We rationalize our findings through a standard heterogeneous-firm model of exporting expanded to allow for non-constant marginal costs of production. Using a structurally estimated version of this model, we conclude that the firm-level responses to the slump in domestic demand in Spain could well have accounted for around one-half of the spectacular increase in Spanish goods exports (the so-called “Spanish export miracle”) over the period 2009-13. |
| Keywords: | vent-for-surplus, exports, domestic slump, increasing marginal cost |
| JEL: | F12 F14 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:1844&r=all |
| By: | Schneiderheinze, Claas; Dick, Eva; Lücke, Matthias; Rahim, Afaf; Schraven, Benjamin; Villa, Matteo |
| Abstract: | Regional migration within Africa and other developing regions is vital for the economic development of countries of origin and destination and for the welfare of migrants and their families (as recognized by the Sustainable Development Goal 10.7). Going forward, regional migration will be a crucial tool for countries of origin and destination to adapt to demographic trends and environmental changes. Although regional organizations have invested increasing efforts in the promotion of orderly, safe and regular migration, they have received scant acknowledgment in international policies and processes. Yet, they are the most important and most promising entities to promote more liberal migration regimes. The international community, and G20 countries in particular, should support capacity building for these regional organizations and involve them fully in relevant policy dialogues. |
| Keywords: | international migration governance,regional migration,regional integration,African migration |
| JEL: | F22 F55 O19 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:201882&r=all |
| 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. |
| Keywords: | Productivity;Skill Bias;Skill Augmenting;Labor Demand;Outsourcing;Globalization;R&D;ICT |
| JEL: | D24 F16 J24 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:cii:cepidt:2018-21&r=all |
| By: | Lisa Simon |
| Abstract: | Whether individuals choose occupations that teach general or specific skills can have important implications on how protected they are from changing conditions on the labor market. This paper looks at the impact of growing up in a region exposed to structural change caused by import competition on vocational occupation choices using longitudinal social security data for Germany. Results show that individuals enter more skill-specific occupations like manufacturing and less general occupations like services if exposed to higher local import competition. Lifetime earnings are adversely affected, which can be attributed to vocational occupation choices. |
| Keywords: | Trade shocks, occupational choice, vocational education, occupational skill specificity, local labor markets |
| JEL: | J24 J21 F14 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ifowps:_281&r=all |
| By: | Santeramo, Fabio Gaetano; Lamonaca, Emilia |
| Abstract: | The increasing interest of policymakers and academics on non-tariff measures (NTMs) has stimulated a growing literature on their effects on agri-food trade of African countries. The empirical evidence, however, are ambiguous: some studies suggest that NTMs are trade barriers, others suggest they have a catalyst role for trade. Understanding the drivers of these contrasting effects and the prevailing one would allow to draw important conclusions. We review, through a meta-analytical approach, a set of empirical studies that quantify the effects of NTMs on African agri-food trade. We find a prevalence of the trade-impeding effects. Our results also help explaining differences in NTMs’ effects due to methodological and structural heterogeneity. Moreover the effects of NTMs vary across types of NTMs and analysed commodities. We conclude by comparing our findings with existing literature and emphasize which research areas deserve further investigation such as intra-Africa trade or trade effects of technical NTMs. |
| Keywords: | Non-tariff measures; African trade; Trade barrier; Trade catalyst; Literature review. |
| JEL: | F13 N57 Q17 Q18 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:91206&r=all |
| By: | OECD |
| Abstract: | This report builds on the OECD’s longstanding work measuring government support in agriculture, fossil fuels, and fisheries in order to estimate support and related market distortions in the aluminium value chain. Results show that non-market forces, and government support in particular, appear to explain some of the recent increases in aluminium-smelting capacity. While government support is commonly found throughout the aluminium value chain, it is especially heavy in the People’s Republic of China and countries of the Gulf Cooperation Council. Looking across the whole value chain also shows subsidies upstream to confer significant support to downstream activities, such as the production of semi-fabricated products of aluminium. Overall, market distortions appear to be a genuine concern in the aluminium industry, and one that has implications for global competition and the design of trade rules disciplining government support. |
| Keywords: | global value chains, government support, market distortions, subsidies, Trade |
| JEL: | F23 G38 H25 H81 L61 |
| Date: | 2019–01–07 |
| URL: | http://d.repec.org/n?u=RePEc:oec:traaab:218-en&r=all |
| By: | Furceri, Davide; Hannan, Swarnali; Ostry, Jonathan D.; Rose, Andrew K |
| Abstract: | We study the macroeconomic consequences of tariffs. We estimate impulse response functions from local projections using a panel of annual data that spans 151 countries over 1963-2014. We find that tariff increases lead, in the medium term, to economically and statistically significant declines in domestic output and productivity. Tariff increases also result in more unemployment, higher inequality, and real exchange rate appreciation, but only small effects on the trade balance. The effects on output and productivity tend to be magnified when tariffs rise during expansions, for advanced economies, and when tariffs go up, not down. Our results are robust to a large number of perturbations to our methodology, and we complement our analysis with industry-level data. |
| Keywords: | Exchange rate; inequality; output; productivity; protection; trade balance; unemployment |
| JEL: | F13 O11 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13389&r=all |
| By: | Assaf Razin |
| Abstract: | Large capital inflows are understandably viewed as dangerous in emerging markets living with memories of recent currency crises: in Israel foreign capital provided crucial funding for investment in the country’s showcase technology sector. Israel is now solidly established as a high-tech powerhouse—a place where budding venture capitalists from emerging market countries flock to learn how to develop an innovation ecosystem. However, the domestic market alone is far too small and homegrown capital formation insufficient to foster that innovation. Globalization has been essential. The paper reviews the crucial role which globalization forces played Israel’s transformation from low tech to high tech economy. Special emphasis is placed on foreign direct investment as a driver for the high-tech transformation. |
| JEL: | F21 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25351&r=all |
| By: | Christopher J. Erceg; Andrea Prestipino; Andrea Raffo |
| Abstract: | We study the short-run macroeconomic effects of trade policies that are equivalent in a friction-less economy, namely a uniform increase in import tariffs and export subsidies (IX), an increase in value-added taxes accompanied by a payroll tax reduction (VP), and a border adjustment of corporate pro.t taxes (BAT). Using a dynamic New Keynesian open-economy framework, we summarize conditions for exact neutrality and equivalence of these policies. Neutrality requires the real exchange rate to appreciate enough to fully offset the effects of the policies on net exports. We argue that a combination of higher import tariffs and export subsidies is likely to trigger only a partial exchange rate offset and thus boosts net exports and output (with the output stimulus largely due to the subsidies). Under full pass-through of taxes, IX and BAT are equivalent but VP is not. We show that a temporary VP can increase intertemporal prices enough to depress aggregate demand and output, even when wages are sticky. These contractionary effects are especially pronounced under fixed exchange rates. |
| Keywords: | Trade policy ; Fiscal policy ; Exchange rates ; Fiscal devaluation |
| JEL: | E32 F30 H22 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgif:1242&r=all |
| By: | Sébastien Jean; Gianluca Santoni |
| Abstract: | The tariff duties already enforced or threatened by the Trump administration are likely to increase costs and prices in the US economy, but by how much? To address this question, we identify and quantify three channels: direct taxation, cost increase linked to taxes on intermediate inputs, and altered pricing strategy resulting from strategic complementarities across firms. Evidence from three recent episodes of additional tariff protection show that our framework provides sensible assessments of ensuing price increases, which usually materialize gradually and do not reach their maximum level for at least four months. We reckon that the additional duties enforced up to December 2018 should increase inflation in the US by 0.25% to 0.38%. Should all US imports from China be hit with a 25% tariff, the total inflationary impact would range between 0.66% and 0.99%. Levying 25% additional duties on imports of autos and auto parts would more or less double down this effect, by adding 0.67% to 1.03% to inflation if all providers are targeted, and 0.47% to 0.73% if Canada and Mexico are excluded. These estimates show that the additional duties considered by the Trump administration, if applied extensively, might push up consumer prices by more than one percentage point. This is far from negligible from the point of view of both consumers’ purchasing power and financial stability, thus potentially seriously limiting the administration’s room for maneuver. The contrast with China is stark; there, the inflationary impact of retaliatory measures is small, and more than counterbalanced by the wide-ranging tariff cuts enforced over the last year. |
| Keywords: | Tariff Duties;Inflation;United States;Protectionism |
| JEL: | F13 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:cii:cepipb:2018-23&r=all |
| By: | Blank, Sven; Egger, Peter H.; Merlo, Valeria; Wamser, Georg |
| Abstract: | This paper suggests a quantifiable multi-sector-multi-country economic model of goods and services production and consumption. It calibrates overall (variable and fixed) costs to market-specific sales by sector and decomposes these costs into observable and unobservable components. In an empirical analysis based on census-type data on firm-sector-country sales of German services sellers as well as sector-country-by-sector-country input-output matrices for various economies and sectors, the paper provides the following insights. The overall (variable and fixed) costs on seller-to-customer-market transactions in services have quite a high distance equivalent and are reduced substantially by preferential market access for services through trade agreements. If all countries considered abandoning existing preferential market access to services, this would reduce their real consumption by up to 7.7 percent with a similar decline in real wages and real dividends (depending on the country). If one country alone abandoned its preferential services market access reciprocally with its partners, the effect would be smaller. However, it would still involve a decline of real consumption of 0.3 percent for a country as large (and as remote relative to continental Europe) as the United Kingdom. For most economies, depending on their input-output structure, de-liberalizing preferential services-market access would have adverse spillover effects on manufacturing (in terms of real wages as well as dividends). |
| Keywords: | Services trade,De-liberalization,Structural estimation,Counterfactual analysis |
| JEL: | F12 F14 F15 F17 L11 L25 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdps:472018&r=all |
| By: | Donaubauer, Julian; Kannen, Peter; Steglich, Frauke |
| Abstract: | Geocoding firm-level data and matching them to georeferenced household survey data, we are the first to analyze whether the presence of foreign investors is associated with changes in local corruption around foreign-owned production facilities in Sub-Saharan African countries. Applying an estimation strategy that explores the spatial and temporal variation in the data, we find that the presence of foreign firms increases bribery among people living nearby. We show this effect to work through two mechanisms, namely via increased economic activity and partly via norm transmission. |
| Keywords: | FDI,corruption,georeferenced data,Sub-Saharan Africa |
| JEL: | D1 F21 F23 O12 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwkwp:2118&r=all |
| By: | Davide Furceri; Swarnali A. Hannan; Jonathan D. Ostry; Andrew K. Rose |
| Abstract: | We study the macroeconomic consequences of tariffs. We estimate impulse response functions from local projections using a panel of annual data that spans 151 countries over 1963-2014. We find that tariff increases lead, in the medium term, to economically and statistically significant declines in domestic output and productivity. Tariff increases also result in more unemployment, higher inequality, and real exchange rate appreciation, but only small effects on the trade balance. The effects on output and productivity tend to be magnified when tariffs rise during expansions, for advanced economies, and when tariffs go up, not down. Our results are robust to a large number of perturbations to our methodology, and we complement our analysis with industry-level data. |
| JEL: | F13 O11 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25402&r=all |
| By: | Brender, Agnes; Pfaff, Katharina |
| Abstract: | Small arms and light weapons (SALWs) imports have been found to be linked to a worsening of human rights conditions in the importing state. In this paper, we reexamine the relationship of government’s SALW imports and the decision to engage in violations of physical integrity rights using updated and more reliable repression data as well as proposing a different estimation strategy. Analyzing physical integrity rights violations and SALW imports of 176 countries from 1991 to 2010, empirical results indicate that SALW imports have a negative impact on respect for physical integrity rights. When disaggregating findings by regime type, we find that SALW imports in autocracies are associated with more repression, while we have mixed results for democracies. |
| Keywords: | arms trade,SALW,repression |
| JEL: | F14 H56 K33 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ilewps:22&r=all |
| By: | Marlies Piek (Department of Economics, Stellenbosch University); Dieter von Fintel (Department of Economics, Stellenbosch University) |
| Abstract: | This paper measures the impact of South African minimum wages on small and large firm employment in a sector that is exposed to international competition (agriculture) and one that is not (retail). Our results highlight that small firms in a tradable sector are the most vulnerable to minimum wage legislation. In particular, small farms shed jobs, while larger farms employed more unskilled workers as a result of minimum wages. Small firms were more affected by the minimum wage as they employed a higher proportion of low-skilled, low-wage workers. In contrast, large farms employed a lower proportion of low-skilled workers and used a more capital-intensive production process and were thus less affected by the legislation. While this shift represents a short-run response to minimum wages, it intensifies a long-run movement towards fewer, larger, more capital-intensive farms. Retail firms, on the other hand, do not exhibit the same behaviour, with zero employment losses in both small and large firms. This difference in result can be explained by the fact that firms that face international competition cannot easily increase prices when faced with wage increases. Non-tradable sectors, such as retail, can increase prices and shift the burden of higher labour costs onto the consumer as they do not face international competition. The effects of minimum wages in South Africa is, therefore, more complex than what previous research shows. We argue that an undifferentiated national minimum wage can result in intra-industry concentration and inequality could grow. This is true even if the economy-wide impact of a national minimum wage could be potentially benign. |
| Keywords: | Minimum wages, employment effects, firm size, international trade, concentration |
| JEL: | F16 J43 J81 K31 L11 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:sza:wpaper:wpapers312&r=all |
| By: | Julika Herzberg (Aachen university); Oliver Lorz (Aachen university) |
| Abstract: | In this paper, we set up a theoretical model to study how unilateral policies aimed at improving transparency for consumers concerning the source of certain raw materials influence prices, illegal mining activities and welfare. The model distinguishes two regions in the world, North and South. Firms in the North import natural resources from the South to produce final consumption goods. In one of the countries, in the South, local groups attempt to access natural resources, which results in rent seeking conflicts with the government and illegal mining. We find that a unilateral embargo against the conflict country as well as certification of legal mines can reduce rent seeking and illegal mining with different welfare consequences in the countries involved. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:201838&r=all |
| By: | Soh Kaneko (Oita University); Naoki Yoshihara (School of Management, Kochi University of Technology) |
| Abstract: | This paper analyzes the persistency of the unequal exchange of labor (UE) in international trade. An intertemporal model of a world economy is defined with a leisure preference and no discount factor. Every incompletely specialized free trade equilibrium is characterized as having non-persistent UE, which verifies the convergence of economies without relying on economic growth or diminishing returns to scale. In particular, it characterizes a subclass of equilibria in which the sequence of real interest rates does not converge to zero, but UE tends to disappear while equivalently the distribution of capital assets tends to be equalized in the long run. |
| Keywords: | Unequal exchange of labor, a world economy with a leisure preference, non-stationary relative prices of commodities |
| JEL: | D51 D63 D91 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:kch:wpaper:sdes-2018-19&r=all |
| By: | Minford, Patrick (Cardiff Business School) |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdf:wpaper:2019/1&r=all |
| By: | Gene M. Grossman; Elhanan Helpman |
| Abstract: | We characterize trade policies that result from political competition when assessments of well-being include both material and psychosocial components. The material component reflects, as usual, satisfaction from consumption. Borrowing from social identity theory, we take the psychosocial component as combining the pride and self-esteem an individual draws from the status of groups with which she identifies and a dissonance cost she bears from identifying with those that are different from herself. In this framework, changes in social identification patterns that may result, for example, from increased income inequality or heightened racial and ethnic tensions, lead to pronounced changes in trade policy. We analyze the nature of these policy changes. |
| JEL: | D72 D91 F13 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25348&r=all |
| By: | Fouarge, Didier (ROA / Dynamics of the labour market); Özer, Merve Nezihe (General Economics 0 (Onderwijs)); Seegers, Philipp (General Economics 2 (Macro)) |
| Abstract: | Personality traits are influential in individual decision-making but have been overlooked in economic models of migration. This paper investigates the relation between Big Five personality traits and individuals’ migration intentions among alternative destinations that vary in their culture distance. We hypothesize that Big Five personality traits may alter individuals’ migration decision and destination choice through their influence on perceived psychic costs and benefits of migration. We test our hypotheses using the Fachkraft survey conducted among university students in Germany. We find that extraversion and openness are positively associated with migration intentions, while agreeableness, conscientiousness, and emotional stability negatively relate to migration intentions. We show that openness positively and extraversion negatively relate to the willingness to move to culturally distant countries even when we control for geographic distance and economic differences between countries. Using language as a cultural distance indicator provides evidence that extravert individuals are less likely to prefer linguistically distant countries while agreeable individuals are more inclined to consider such countries as alternative destinations. |
| Keywords: | migration intention, destination choice, cultural distance, Big Five personality traits |
| JEL: | D91 J61 Z10 |
| Date: | 2018–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:unm:umagsb:2018028&r=all |
| By: | Kellermann, Kim Leonie; Winter, Simon |
| Abstract: | We empirically examine the relationship between shares of foreigners in a district and the share of votes cast in that district for the Alternative für Deutschland (AfD), the major anti-immigrant party in the 2017 German parliamentary election. The classic theory on the political economy of migration supposes that immigration fosters opposing sentiments among the natives due to fiercer competition for jobs, housing and public goods. Notably, the vote distribution in the 2017 election suggests that AfD vote shares are higher in districts with fewer foreign inhabitants. We exploit administrative data on election results and district-specific features to study a potentially causal effect. As the share of foreigners in a district may be endogenous, we apply an IV approach, using the number of working permits as an instrument for the share of foreign residents. Our results corroborate the Contact Theory, which states that more intensive exposure to and contact with immigrants reduce the propensity for anti-immigrant voting. We find that a 10 % increase in the population share of foreigners is associated with a 2.6 % lower vote share for the AfD. By contrast, a strong increase in the number of asylum seekers positively adds to AfD support. |
| Keywords: | migration,anti-immigrant parties,contact theory,ethnic competition,economic competition |
| JEL: | D72 D91 J15 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ciwdps:52018&r=all |
| By: | Nicolas Berman (Aix-Marseille Univ., CNRS, EHESS, Centrale Marseille, AMSE & CEPR); Vincent Rebeyrol (Toulouse School of Economics, University of Toulouse Capitole); Vincent Vicard (CEPII & Banque de France) |
| Abstract: | This paper provides direct evidence that learning about demand is an important driver of firms' dynamics. We present a model of Bayesian learning in which firms are uncertain about their idiosyncratic demand in each of the markets they serve, and update their beliefs as noisy information arrives. Firms are predicted to update more their beliefs to a given demand shock, the younger they are. We test and empirically confirm this prediction, using the structure of the model together with exporter-level data to identify idiosyncratic demand shocks and the firms’ beliefs about future demand. Consistent with the theory, we also find that the learning process is weaker in more uncertain environments. |
| Keywords: | firm growth, belief updating, demand, exports, uncertainty |
| JEL: | D83 F14 L11 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:aim:wpaimx:1846&r=all |
| By: | Panibratov, A.; Klishevich, D. |
| Abstract: | State-owned enterprises are considered an important phenomenon in the contemporary international business research which has a particular focus on the internationalization of such companies. The most prominent examples of globalizing state companies are the enterprises from emerging markets, whose economies are traditionally shaped a lot by the state influence and where historical legacy still influences the development of economy. This study examines the relationship of the state ownership and internationalization which is still far from being clear, since research on this topic produced controversial results. The controversy may be grounded in the different contexts where state companies operate. We study the Russian state companies, that are the least studied among the emerging market countries, and promise to reveal the insights on the internationalization strategies of SOEs. We examine the association of the state ownership degree and the internationalization level on the sample of state- and private-owned enterprises that are the 250 largest Russian exporters for the 4 years from 2013 to 2016. The results indicate that state ownership degree is negatively associated with the internationalization intensity, but only in case of the indirect state ownership, which we explain with the argumentation of the public agenda that companies pursue indirectly. Russian state companies are considered to have both commercial and strategic goals, and the latter may be connected to the geopolitical aspirations of the government. Firms with indirect state affiliation are used by the government as a leverage to reach non-market goals. Thus, the state pursues strategic (as opposed to commercial) agenda indirectly. |
| Keywords: | internationalization, state-owned enterprises, multinational enterprise, MNC, Russia, |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:sps:wpaper:15116&r=all |
| By: | HUR, Jung; YOON, Haeyeon |
| Abstract: | This study examines resource reallocation within firms by investigating how firms change their product portfolios in response to a fall in trade costs. Using Korean firm-product data, we show that firms experiencing large tariff reductions under the Korea-US free trade agreement are more likely to shrink their product scope. They not only decrease the number of products but also specialize their production in specific products. Furthermore, we show that those specific products are relatively more productive than others within firm by estimating a firm-product efficiency. Dropped and added products tend to be less efficient than incumbent products. However, given the sharp increase in added products’ efficiencies after they enter, the above result may not indicate the low efficiency of new products, but rather the time needed to become organized and profitable. After considering the production distributions of incumbent products within firms, this study finds that firms tend to increase the proportion of efficient products in response to tariff reductions. In other words, firms allocate resources from less efficient products to more efficient ones. |
| Keywords: | Multi-product firms, Product mix, Product scope, Tariffs, KORUS FTA |
| JEL: | F10 F15 L11 L25 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:hit:hiasdp:hias-e-82&r=all |
| By: | Ege Aksu (The Graduate Center, CUNY, Economics); Refik Erzan (Department of Economics, Bogazici University); Murat Guray Kirdar (Department of Economics, Bogazici University) |
| Abstract: | We estimate the effects of the arrival of 2.5 million Syrian migrants in Turkey by the end of 2015 on the labor market outcomes of natives, using a difference-in-differences IV methodology. We show that relaxing the common-trend assumption of this methodology -unlike recent papers in the same setting- makes a substantial difference in several key outcomes. Despite the massive size of the migrant influx, no adverse effects on the average wages of men or women or on total employment of men are observed. For women, however, total employment falls -which results mainly from the elimination of part-time jobs. While the migrant influx has adverse effects on competing native workers in the informal sector, it has favorable effects on complementary workers in the formal sector. We estimate about one-to-one replacement in employment for native men in the informal sector, whereas both wage employment and wages of men in the formal sector increase. Our findings, including those on the heterogeneity of effects by age and education, are consistent with the implications of the canonical migration model. In addition, increases in prices in the product market and in capital flow to the treatment regions contribute to the rise in labor demand in the formal sector. |
| Keywords: | Labor Force and Employment; Wages; Immigrant Workers; Formal and Informal Sectors; Syrian Refugees; Turkey; Difference-in-differences; Instrumental Variables. |
| JEL: | J21 J31 J61 C26 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:koc:wpaper:1815&r=all |
| By: | Wales, W.; Shirokova, G.; Bogatyreva, K.; Germain, R. |
| Abstract: | Since its emergence, entrepreneurial orientation (EO) has grown in prominence to represent a central concept in corporate entrepreneurship. Despite the importance of EO, in-sufficient attention has been devoted to EO in emerging markets and transitional economies. In this paper, we examine the international exposure of managers within an emerging market context as a driver of their firms’ EO formation as well other potentially impactful forces such as foreign competition growth in their domestic market and the level of involvement into in-ternational economic activity within the region where the firm operates. We explore the focal relationships using a sample of 769 manufacturing firms from Russia, a BRIC country that has received very little attention within the literature on corporate entrepreneurship in general and EO in particular. Our findings indicate importance of managerial international exposure and industry foreign competition growth in the process of EO formation. At the same time, the former is shown to be a context-specific EO driver. Implications are discussed. |
| Keywords: | entrepreneurial orientation, international exposure, regional involvement into international economic activity, Russia, |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:sps:wpaper:15121&r=all |
| By: | Gholamreza Hajargasht; Prasada Rao |
| Abstract: | Over the past five decades a number of multilateral index number systems have been proposed for spatial and cross-country price comparisons. These multilateral indexes are usually expressed as solutions to systems of linear or nonlinear equations. In this paper, we provide general theorems that can be used to establish necessary and sufficient conditions for the existence and uniqueness of the Geary-Khamis, IDB, Neary and Rao indexes as well as potential new systems including two generalized systems of index numbers. One of our main results is that the necessary and sufficient conditions for existence and uniqueness of solutions can often be stated in terms of graph-theoretic concepts and a verifiable condition based on observed quantities of commodities. |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1811.04197&r=all |