nep-int New Economics Papers
on International Trade
Issue of 2019‒01‒14
37 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Technology, Market Structure and the Gains from Trade By Giammario Impullitti; Omar Licandro; Pontus Rendahl
  2. The impacts of energy prices on industrial foreign investment location: evidence from global firm level data By Aurélien Saussay; Misato Sato
  3. Factors Influencing ASEAN FDI and the Policy Implications By Jeong, Hyung-Gon; Lee, Boram; Pek, Jong Hun
  4. Assessing the Intra-Arab Trade Integration and Potential: Evidence from Stochastic Frontier Gravity Model By Ebaidalla Mahjoub Ebaidalla; Mohammed Elhaj Mustafa Ali
  5. World Resources Determine World Prices By Guo, Baoping
  6. The Economic Consequences of the 2018 US-China Trade Conflict: A CGE Simulation Analysis By Tsutsumi, Masahiko
  7. Global Value Chains and Business Environment: Which Factors Do Really Matter? By Marion Dovis; Chahir Zaki
  8. The fracturing of globalization: Implications of economic resentments and geopolitical contradictions By Thomas Palley
  9. Environmental regulation and eco-industry trade: Theory and evidence from the European Union By Carl Gaigné; Lota-D Tamini
  10. Spotting export potential and implications for employment in developing countries By Cheong, David.; Decreux, Yvan.; Spies, Julia.
  11. Economic History and Contemporary Challenges to Globalization By Kevin Hjortshøj O'Rourke
  12. Uneven Growth in the Extensive Margin : Explaining the Lag of Agricultural Economies By Ourens, Guzman
  13. Trade Policy in a Sovereign Palestinian State: What are the Options in a Final Settlement? By Johanes Agbahey; Khalid Siddig; Harald Grethe; Jonas Luckmann
  14. Commodities and International Business Cycles By Myunghyun Kim
  15. Modeling Dynamic Transport Network with Matrix Factor Models: with an Application to International Trade Flow By Elynn Y. Chen; Rong Chen
  16. Proliferation of Globalization and its Impact on Labor Markets in Advanced Industrial Nations and Developing Nations. By Rashid, Muhammad Mustafa
  17. Trade Liberalization and the Agglomeration of Heterogeneous Entrepreneurs By Forslid, Rikard; Okubo, Toshihiro
  18. ¬¬¬¬¬¬From Nonrenewable to Renewable Energy and Its Impact on Economic Growth: Silver Line of Research & Development Expenditures in APEC Countries By Zafar, Muhammad Wasif; Shahbaz, Muhammad; Hou, Fujun; Sinha, Avik
  19. Bargaining Power in Firm-to-Firm Relationships - ‎Two Methodologies to Detect Outliers in the Census Trade Data By Sebastian Heise
  20. Foreign Demand and Greenhouse Gas Emissions: Empirical Evidence with Implications for Leakage By Geoffrey Barrows; Hélène Ollivier
  21. Mixed Market Structure, Competition and Market Size: How Does Product Mix Respond? By Aya Elewa
  22. Challenges Facing Intra-Regional Trade among North African Countries By Ali, Abdelrahman Elzahi Saaid
  23. Who is NOT voting for Brexit anymore? By Alabrese, Eleonora; Fetzer, Thiemo
  24. Immigration and Public Finances in OECD Countries By Hippolyte D'Albis; Ekrame Boubtane; Dramane Coulibaly
  25. Trade Policy and Input Liberalization: The Effect on Egyptian Firms’ Productivity By Inmaculada Martinez-Zarzoso; Mona Said; Chahir Zaki
  26. On the China factor in international oil markets: A regime switching approach By Jamie L. Cross; Chenghan Hou; Bao H. Nguyen
  27. How openness to trade rescued the Irish economy By McQuinn, Kieran; Varthalitis, Petros
  28. The impact of China’s one belt one road Initiative in Africa: the Evidence from Kenya By DOSSOU, TOYO AMEGNONNA MARCEL
  29. Transmission of U.S. Monetary Policy to Commodity Exporters and Importers By Myunghyun Kim
  30. Global Value Chain Participation and Prospects for Local Upgrading in the Egyptian-Chinese Economic and Trade Cooperation Zone By Safa Joudeh
  31. Trade Openness: An Effective tool for Poverty Alleviation or an Instrument for Increasing Poverty Severity? By Ahmed Mohamed Ezzat
  32. Robots worldwide the impact of automation on employment and trade By Carbonero, Francesco.; Ernst, Ekkehard; Weber, Enzo.
  33. Activism and Trade By Pamina Koenig; Sandra Poncet
  34. International tourism in Italy: recent trends, potential demand and a comparison with the main European competitors By Emanuele Breda; Rita Cappariello; Valentina ROmano
  35. Mapping and measuring the effectiveness of labour-related disclosure requirements for global supply chains By Phillips, Nicola.; LeBaron, Genevieve.; Wallin, Sara.
  36. Does Financial Sector Development Augment Cross Border Capital Flows? By Pragya Atri; Abhijit Sen Gupta
  37. Does Trade, Structural Transformation and Income Convergence: Empirical Evidence from the EU and the ASEAN By Devasmita Jena; Alokesh Barua

  1. By: Giammario Impullitti (School of Economics, University of Nottingham - UON - University of Nottingham, UK, CESifo - Center for Economic Studies and Ifo for Economic Research - CESifo Group Munich); Omar Licandro (School of Economics, University of Nottingham - UON - University of Nottingham, UK, Instituto de Análisis Económico (CSIC) and Barcelona GSE); Pontus Rendahl (Faculty of Economics, University of Cambridge, CFM - Center for Macroeconomics , 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
    Date: 2018–11
  2. By: Aurélien Saussay (CIRED & OFCE, Sciences Po, Paris); Misato Sato (Grantham Research Institute on Climate Change and the Environment, LSE)
    Abstract: This paper analyzes the role of energy prices in firms’ investment location decisions in the manufacturing sector. Building on the application of discrete choice theory to the firm location problem, we specify a conditional logit model linking bilateral foreign direct investment (FDI activity to relative energy prices. We then empirically test this link using a global dataset of M&A deals in the manufacturing sector covering 41 countries between 1995 and 2014, using econometric techniques adapted from the estimation of gravity models. The results suggest that upon deciding to invest, firms are attracted to regions that have lower energy prices. However, counterfactual simulations reveal that unilateral implementation of a $50/tCO2 carbon tax by various coalitions of countries is expected to have limited negative impact on the attractiveness of economies to foreign industrial investments. Hence, our results support the pollution haven effect, but find the magnitude is limited and could be addressed with targeted measures in the most energy intensive sectors.
    Keywords: FDI, Mergers and Acquisitions, energy prices, firm location, competitiveness impacts, carbon leakage
    JEL: F21 H23 Q52
    Date: 2018–12
  3. By: Jeong, Hyung-Gon (Korea Institute for International Economic Policy); Lee, Boram (Korea Institute for International Economic Policy); Pek, Jong Hun (Korea Institute for International Economic Policy)
    Abstract: This study examines the characteristics of ASEAN FDI and doing business conditions by income level, and conducts an empirical analysis of the determinants of ASEAN FDI to draw policy implications for further eco-nomic cooperation between Korea and ASEAN. Based on the analysis of the characteristics of ASEAN FDI, most ASEAN FDI in all income groups is of the vertical type. Only FDI in Singapore showed a market-seeking, horizontal FDI pattern among the ASEAN high-income group. Based on the primary component analysis to determine factors influencing the FDI inflow of 10 ASEAN countries between 2003 and 2014, Factor 1 includes four variables of "starting a business: time," "time to import," "time to export," and "resolving insolvency: recovery rate" and Factor 2 includes four variables of "enforcing contract: time," "starting a business: procedures," "trade openness," and "exports of goods and services." Finally the paper suggests the following three policy recommendations. Firstly, the Korean government should make efforts for standardization of Rules of Origin thorugh RCEP negotiations. Secondly, the Korean government could provide institutional support via FTA and BITs to strengthen Korea-ASEAN economic cooperation. Thirdly, the Korean government should pursue a strategy of focus to enhance the ASEAN business environment.
    Keywords: ASEAN; FDI
    Date: 2018–08–17
  4. By: Ebaidalla Mahjoub Ebaidalla (University of Khartoum); Mohammed Elhaj Mustafa Ali
    Abstract: Following the theoretical background on production theory, this study employs a stochastic frontier gravity model (SFGM) to investigate the intra-Arab trade performance and potential over the period 1998-2015. The trade performance against the maximum possible level of potential trade is measured by a stochastic frontier. The emphasis of this study is to detect the presence of ‘behind the border’ and ‘beyond the border’ constraints on trade flow among Arab countries, which have been neglected by previous studies. The empirical results indicate that ‘behind the border’ constraints are responsible for a considerable gap between potential and actual trade among Arab countries. That is to say these constraints obstruct realizing the full trade potential despite the fact that these countries have initiated many trade arrangements to promote intra-trade during the last five decades. The results also reveal that the influence of ‘behind the border’ constraints on trade flows between Arab countries have been decreasing over time. Moreover, the efficiency scores of intra-Arab trade indicate a relatively low degree of trade integration among Arab countries, confirming the existence of both ‘behind the border’ and ‘beyond the border’ rigidities against intra-Arab trade. Finally, the paper ends with some policy implications to remove these barriers as a necessary condition to realize trade potential among Arab states.
    Date: 2018–11–07
  5. By: Guo, Baoping
    Abstract: This paper derived a general equilibrium of the Heckscher-Ohlin model for the context of two-factor, multiple-commodity, and multiple-country (2 x N x M model). The equalized factor price (PFE) and world commodity price at the equilibrium are just the prices Dixit and Norman predicted, that the prices from equilibriums remains the same when the allocation of factor endowments changes within (the 2 x N x M) IWE box. The study shows how price-trade equilibriums reached for multiple countries and how world prices was determined. The equilibrium and world price structure shows that world (factor endowments) resources determine the world price. This is another core understanding of international trade.
    Keywords: IWE; Factor price equalization; Heckscher-Ohlin; Equilibrium price; equalized factor price; Dixit-Norman
    JEL: F1 F10 F14 F15
    Date: 2017–11
  6. By: Tsutsumi, Masahiko
    Abstract: This paper aims at evaluating the economic consequences of the 2018 US-China trade conflict. The potential impact of the proposed tariff increases is calculated using a global CGE model. Capital deepening and technological spillover induced by trade are also taken into account to explore the long-run influence. We can derive the following implications.First, the additionally imposed tariffs on goods alone declines the GDP in the US and China by 0.1% and 0.2%, respectively. The equivalent variation in the US and China is reduced by 9.8 billion and 35.2 billion USD, respectively. Although other countries gain from trade diversion, losses exceed gains globally.Second, considering the effect from capital deepening and technological spillover induced by trade makes the situation worse. The GDP in the US and China declines by 1.6% and 2.5%, respectively. The equivalent variation in the US and China is reduced by 199.5 billion USD and 187.1 billion USD, respectively. Again, the trade diversion is not large enough to recover losses in these countries.Third, the imposed tariffs distort relative prices, resulting in changes to the global production structure. Both the US and China lose their comparative advantage in transport, electronic, and machinery equipment production, while other countries expand their production in these sectors.Finally, China’s retaliatory tariff increases worsens the US economy to some extent, but it comes at a cost to the Chinese economy. In the long run, retaliation is not an appropriate policy response
    Keywords: the US, China, Tariff, Trade Policy, Retaliation, CGE model
    JEL: F13 F17 F51
    Date: 2018–12
  7. By: Marion Dovis (Aix-Marseille University); Chahir Zaki
    Abstract: This study attempts to assess the effect of business environment on the possibility of a firm to be part of a global value chain. Hence, it provides a bridge between two active literatures on global value chains (GVC) and business environment. Using a comprehensive firm-level dataset from the World Bank Enterprise Survey (WBES, with a special focus on the case of MENA countries), the contribution of the paper is threefold. First, it provides various and more consistent measures of GVC. Second, it examines the association between an array of business environment variables (infrastructure, labor conditions, access to finance, fiscal policy, enforcement of contracts, easiness of permits, informality, trade procedures and security) on the likelihood of integrating a GVC. Third, for these business environment variables, our paper compares both perception-based (based on firms’ perceptions) and factual (based on facts whether from the WBES or from the Doing Business dataset) impediments that might be hindering a firm’s participation in a GVC. Our main findings show that, for factual variables, the number of procedures to get electricity, the lack of credit bureau coverage, the number of tax payments, the cost to resolve insolvency, the number of documents to export, the number of procedures to register property and protecting minority investors have a negative and significant association with the integration into a GVC. For perception-based variables, the following variables are perceived as statistically significant constraints for GVC: transport, labor regulations and informality.
    Date: 2018–12–19
  8. By: Thomas Palley
    Abstract: The last forty years have witnessed a third wave of globalization which can be termed “neoliberal globalization”. Now, there are indications that the era of neoliberal globalization might be drawing to a close, as evidenced by the trade war between the US and China. This paper argues that the fracturing of neoliberal globalization reflects the growing impact of economic resentments and geopolitical contradictions. The paper presents a simple analytical framework that constructs the global economy in terms of a core consisting of the US, China, and the EU. It then examines how globalization creates economic resentments and geopolitical tensions within and between members of the core, thereby fracturing globalization. The rise of US – China geopolitical competition promises to twist the character of the global economic order, which stands to be shaped by strategically motivated economic integrations and recalibrations rather than generalized global economic integration. The paper then extends the analysis to non-core country blocs and examines how they are impacted by globalization and the rise of US – China geopolitical competition.
    Keywords: Neoliberal globalization, economic resentments, geopolitical contradictions.
    JEL: F02 F50 F59
    Date: 2019–01
  9. By: Carl Gaigné (SMART - Structures et Marché Agricoles, Ressources et Territoires - INRA - Institut National de la Recherche Agronomique - AGROCAMPUS OUEST); Lota-D Tamini (CREATE - CREATE)
    Abstract: In this paper, we theoretically and empirically study the impact of environmental taxation on trade in environmental goods (EGs). Using a trade model in which the demand for and supply of EGs are endogenous, we show that the relationship between environmental taxation and demand for EGs follows a bell-shaped curve. Above a cutoff tax rate, a higher pollution tax rate can reduce the bilateral trade of EGs because there are too many low-productivity suppliers of EGs. Our empirical results confirm our main findings using data regarding the EU-27 countries. We also theoretically and empirically show that environmental taxation has a monotonically positive impact on the extensive margin of trade. Furthermore, we show that if countries apply an environmental tax rate equals to the "optimal" tax rate, 4.03% (e.g., the tax rate maximizing international trade of EGs), then trade in EGs would experience an increase of 22 percentage points.
    Abstract: Dans cet article, nous étudions théoriquement et empiriquement l'impact de la taxation environnementale sur le commerce international des biens environnementaux (EG). A partir d'un modèle d'économie internationale dans lequel la demande et l'offre d'EG sont endogènes, nous montrons que la relation entre la fiscalité environnementale et la demande d'EG suit une courbe en forme de cloche. Au-dessus d'un seuil de taux d'imposition, un accroissement de la fiscalité environnementale peut réduire les importations d'EG, en raison de l'entrée de nouveaux fournisseurs d'EG à faible productivité favorisant l'accroissement des prix. Nos résultats empiriques confirment nos principales conclusions en utilisant des données des pays de l'UE-27. Nous montrons également théoriquement et empiriquement que la fiscalité environnementale a un impact positif sur le nombre de pays en mesure d'exporter des biens EG. En outre, nous montrons que si les pays appliquaient une taxe environnementale égale à la taxe "optimale", à savoir 4, 03% (par exemple, le taux qui maximisent le commerce international des biens EG), le commerce des biens EG augmenterait de 22 points de pourcentage.
    Keywords: technologie propre,taxation environnementale,international trade,environmental good,environmental taxation,bien environnemental,commerce international
    Date: 2018
  10. By: Cheong, David.; Decreux, Yvan.; Spies, Julia.
    Abstract: Access to information about untapped export opportunities at the sectoral and product levels can help governments design policies and strategies that use export development as a means to foster inclusive and sustainable growth. By identifying products and markets for which a country has underutilized export potential, a country can seize export opportunities that have been missed and, in some cases, remove the bottlenecks that prevent the country’s firms from realizing their export potential. The International Trade Center (ITC) has developed a methodology to compute the extent of unrealized export potential at the sectoral and product levels given data on supply, demand, and trade costs. This paper, which is an outcome of an ILO-ITC collaboration, extends the methodology to measure how the utilization of a country’s export potential would translate into the expansion and upgrading of employment by population groups (e.g., women, youth, high- versus low-skilled workers, etc.). Such projections could inform a country’s development strategies as they provide information on the sectors and products that promise more of both export revenue and jobs.
    Keywords: export promotiion, development, developing country
    Date: 2018
  11. By: Kevin Hjortshøj O'Rourke
    Abstract: The paper surveys three economic history literatures that can speak to contemporary challenges to globalization: the literature on the anti-globalization backlash of the nineteenth century, focused largely on trade and migration; the literature on the Great Depression, focused largely on capital flows, the gold standard, and protectionism; and the literature on trade and warfare.
    JEL: F02 N70
    Date: 2018–12
  12. By: Ourens, Guzman (Tilburg University, Center For Economic Research)
    Abstract: This paper documents that growth in the extensive margin is on average lower in the agricultural sector than in other activities. I introduce this new fact into a simple model of trade with expanding-variety growth, to show its relevance for regions specialized in the lagging sector. Diversity-loving consumers endogenously reduce the share of their expenditure devoted to that sector. The region specialized in it receives a decreasing share of world income, which results in diverging income and welfare trajectories with respect to the rest of the world. Appropriating a decreasing share of world value pushes downward the relative wage of the agricultural region and lowers the price of its exports relative to that of its imports, resulting in terms of trade deterioration. The prediction of falling terms of trade for the region specialized in the lagging agricultural sector is supported by empirical evidence and separates the results of my theory from those obtained in a similar model of uneven output growth between sectors. I present empirical evidence for the main testable results of the model. This theory is the first replicating these facts without the need of heterogeneous consumers or products, nor resorting to political or institutional explanations.
    Keywords: diversification; agricultural economies; growth; welfare
    JEL: F43 O13 Q17
    Date: 2018
  13. By: Johanes Agbahey (Humboldt-Universitä zu Berlin); Khalid Siddig; Harald Grethe; Jonas Luckmann
    Abstract: Economic development and trade performance in Palestine are strongly affected by the unusual links between the Palestinian and Israeli economies. After years of occupation and sluggish economic growth, the signature of the Paris Protocol was expected to achieve a rapid growth of the Palestinian economy and healthier economic relations with Israel. However, due to the asymmetry of power between the negotiating parties and the incomplete implementation of the Protocol provisions, the Palestinian economic and trade performances remain low. Both economic and security conditions call for a re-negotiation of the terms of the Protocol. There is a wide consensus that a final solution to the conflict should provide for a Palestinian state with unambiguous borders, and full control over economic policies. In line with such a solution, this paper provides an assessment of the impact of different trade policies and exchange rate regimes, using a general equilibrium model that allows for a quantification of the outcomes. The model is modified to consider a multi-trade-partners set-up, a differentiated treatment for large and small trade shares, and tariff rate quotas. The paper also addresses the unemployment problem in Palestine and assesses its connections with trade policy. The results show that a liberal and non-discriminatory trade regime provides the highest benefits for the Palestinian economy, in terms of welfare effects, GDP growth and job creation. The results also show the impact the exchange rate regime has on the outcomes of trade policies. Subsequently, a full control over trade and monetary policy instruments will improve the capacity of the Palestinian authorities to address the prevailing unemployment and sluggish economic growth.
    Date: 2018–10–23
  14. By: Myunghyun Kim (Economic Research Institute, The Bank of Korea)
    Abstract: I introduce commodities and countries¡¯ different commodity trade structures into an otherwise standard two-country model to analyze international business cycles between the U.S. and commodity-exporting countries. In the model, only the foreign country (the commodity-exporting country) produces commodities and exports them to the home country (the U.S., the commodity-importing country). The model produces international business cycle statistics that are closer to the data than a standard model. In particular, the output correlation between the two countries increases and the consumption correlation falls compared to the standard model. Notably, unlike standard models, this model yields an output correlation that exceeds the consumption correlation, which mitigates the ¡°quantity anomaly¡± that was previously noted in the literature. Commodity consumption and the complementarity between commodities and noncommodity goods in consumption play key roles in generating this result.
    Keywords: International Business Cycles, Commodity-exporting countries, Commodity Trade Structures
    JEL: F40 F41 F44
    Date: 2018–12–28
  15. By: Elynn Y. Chen; Rong Chen
    Abstract: International trade research plays an important role to inform trade policy and shed light on wider issues relating to poverty, development, migration, productivity, and economy. With recent advances in information technology, global and regional agencies distribute an enormous amount of internationally comparable trading data among a large number of countries over time, providing a goldmine for empirical analysis of international trade. Meanwhile, an array of new statistical methods are recently developed for dynamic network analysis. However, these advanced methods have not been utilized for analyzing such massive dynamic cross-country trading data. International trade data can be viewed as a dynamic transport network because it emphasizes the amount of goods moving across a network. Most literature on dynamic network analysis concentrates on the connectivity network that focuses on link formation or deformation rather than the transport moving across the network. We take a different perspective from the pervasive node-and-edge level modeling: the dynamic transport network is modeled as a time series of relational matrices. We adopt a matrix factor model of \cite{wang2018factor}, with a specific interpretation for the dynamic transport network. Under the model, the observed surface network is assumed to be driven by a latent dynamic transport network with lower dimensions. The proposed method is able to unveil the latent dynamic structure and achieve the objective of dimension reduction. We applied the proposed framework and methodology to a data set of monthly trading volumes among 24 countries and regions from 1982 to 2015. Our findings shed light on trading hubs, centrality, trends and patterns of international trade and show matching change points to trading policies. The dataset also provides a fertile ground for future research on international trade.
    Date: 2019–01
  16. By: Rashid, Muhammad Mustafa
    Abstract: The purpose of this paper is to provide insights into how the proliferation of globalization has impacted labor markets both in advanced industrialized nations and well as developing nations. Insightful analysis will be drawn from Oatley (2011) on division of labor, Jaumotte and Tytell (2007) on labor compensation, Hahn and Narjoko (2013) on the impact on South Asian Countries, Basu (2016) on wage as a share of GDP and Wallace, Gauchat and Fullerton (2011) on the impact of globalization and labor markets on inequality.
    Keywords: Globalization, Labor Markets
    JEL: J0 J3 J4
    Date: 2018–12–10
  17. By: Forslid, Rikard; Okubo, Toshihiro
    Abstract: This paper introduces spatial sorting of heterogeneous entrepreneurs (firms) in the 'footloose entrepreneur' trade and geography model. The model generates agglomeration from a uniform space contrary to the 'footloose capital' model. The model also generates spatial sorting in reverse productivity order with the least productive entrepreneur being the first to relocate.
    Keywords: agglomeration; Heterogeneous Firms; trade liberalization
    JEL: F12 F15 R12
    Date: 2018–12
  18. By: Zafar, Muhammad Wasif; Shahbaz, Muhammad; Hou, Fujun; Sinha, Avik
    Abstract: This study disaggregates energy, i.e. non-renewable and renewable energy consumption, and investigates its effect on economic growth. The time period of 1990-2015 is used to examine Asia Pacific Economic Cooperation (APEC) countries. This paper determines the cross-sectional dependence and employs a second-generation panel unit root test for precise estimation. The Pedroni and Westerlund cointegration tests are used to examine the long-run equilibrium relationship between the variables and confirm the presence of cointegration in the long run. The FMOLS and DOLS approaches are applied to investigate long-term output elasticities between the variables. The results show the stimulating role of energy (renewable and nonrenewable) consumption in economic growth. Research and development expenditures and trade openness have a positive effect on economic growth. Moreover, the time series individual country analysis also confirms that renewable energy has a positive impact on economic growth. The Granger causality analysis reveals the unidirectional causal relationship running from renewable energy consumption to economic growth and economic growth to non-renewable energy. This empirical evidence suggests that countries should increase investment in renewable energy sectors and plan for development in renewable energy for sustainable energy growth.
    Keywords: Renewable Energy, Nonrenewable Energy, Economic Growth, Trade, FMOLS, APEC
    JEL: A1
    Date: 2018–12–03
  19. By: Sebastian Heise
    Abstract: This note develops two methodologies to detect possibly incorrectly reported shipment values and quantities in the Longitudinal Foreign Trade Transactions Database (LFTTD). Both approaches seek to identify outliers in terms of unit values, defined as the ratio of value and quantity shipped. The first methodology examines trades in the far tails of the cross-sectional unit value distribution across importers or exporters, and highlights those trades that appear incompatible with a given U.S. firm's own transactions. The second approach identifies outliers as cases where a unit value jumps by an order of magnitude compared to a U.S. firm's transactions over the past two years. While both approaches reveal that outliers are relatively rare, the note highlights several cases where outliers were very large and possibly affected trade statistics. The note further presents distributions of outliers by value and discusses the countries and products that exhibit the largest shares of outliers. It also presents a number of examples to showcase that outliers identified by the two methodologies appear suspicious also to a human looking at the data. The note concludes with a discussion of the advantages and the disadvantages of the two approaches. The code files referenced in this file are available to Census employees and will hopefully be of use going forward.
    Date: 2017–04
  20. By: Geoffrey Barrows (CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE ParisTech - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique, X - École polytechnique); Hélène Ollivier (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics)
    Abstract: With asymmetric climate policies, regulation in one country can be undercut by missions growth in another. Previous research finds evidence that regulation erodes the competitiveness of domestic firms and leads to higher imports, but increased imports need not imply increased emissions if domestic sales are jointly determined with export sales or if emission intensity of manufacturing adjusts endogenously to foreign demand. In this paper, we estimate for the first time how production and emissions of manufacturing firms in one country respond to foreign demand shocks in trading partner markets. Using a panel of large Indian manufacturers and an instrumental variable strategy, we find that foreign demand growth leads to higher exports, domestic sales, production, and CO2 emissions, and slightly lower emission intensity. The results imply that a representative exporter facing the average observed foreign demand growth over the period 1995-2011 would have increased CO2 emissions by 1.39% annually as a result of foreign demand growth, which translates into 6.69% total increase in CO2 emissions from Indian manufacturing over the period. Breaking down emission intensity reduction into component channels, we find some evidence of product-mix effects, but fail to reject the null of no change in technology. Back of the envelope calculations indicate that environmental regulation that doubles energy prices world-wide (except in India) would only increase CO2 emissions from India by 1.5%. Thus, while leakage fears are legitimate, the magnitude appears fairly small in the context of India.
    Keywords: leakage,trade and environment,product mix,technological change
    Date: 2018–11
  21. By: Aya Elewa (Paris School of Economics)
    Abstract: Assuming a double heterogeneity; within industry firm heterogeneity and within firm product heterogeneity, this paper investigates how multiproduct firms respond to tougher competition and greater market size across destinations. Building a theoretical model where monopolistically competitive and oligopolistic firms coexist in the same market, the paper studies how an increase in market size affects both types of firms’ behavior. The model shows that the final impact of bigger market size on the product-mix of multiproduct firms depends on the level of fixed entry costs. For low level of entry costs, big firms increase their product-mix when they export to larger markets as they benefit from scope economies. Yet, when fixed costs are prohibitive, a larger market induces firms to skew their export sales toward their core product. Very strong confirmation of this non-monotonic effect of market size was found for Egyptian exporters across export market destinations.
    Date: 2018–10–28
  22. By: Ali, Abdelrahman Elzahi Saaid (The Islamic Research and Teaching Institute (IRTI))
    Abstract: The high rate of unemployment and the slow progress of economic growth in most North African countries have spotlighted the importance of inter-regional trade among them as an alternative solution to achieve inclusive growth in the long run. This paper investigates challenges facing intra-regional trade for the North African Arab countries, namely: Mauritania, Sudan, Egypt, Morocco, Libya, and Algeria. Beside that, the study attempt to identify the possible trade linkages and the elements of succession to boom inter-regional business among these countries. This study lays out the options that policymakers can adopt to overcome these challenges. The results reveal that in spite of the existent of the linkages between these countries that might lead to the successful inter-regional trade among them, there are more challenges, which have hindered its contribution based on the highly requested inclusive economic growth. The results of this study show a strong policy implication for the policy makers in these countries that might support the facilitation and the promotion of interregional trade among them.
    Keywords: Economic Integration; Inter- regional Trade; Trade-integration; OIC
    Date: 2017–07–11
  23. By: Alabrese, Eleonora (University of Warwick); Fetzer, Thiemo (University of Warwick and CAGE)
    Abstract: Using estimates of support for Leave across UK local authority areas constructed from a comprehensive 20,000 strong survey, we show that both the level and the geographic variation capturing differential degrees of support for Leave have changed significantly since the 2016 EU referendum. A lot of area characteristics, many of which were previously associated with higher levels of support for Leave, are now significant correlates capturing a swing towards Remain. They include, for example, the degree to which local authorities receive transfers from the EU or the extent to which their economies rely on trade with the EU, along with past electoral support for UKIP (and the BNP) and exposure to immigration from Eastern Europe. Lastly, exposure to austerity since 2010 is among the strongest individual correlates weakening the support for Leave. The evidence is consistent with the argument that the small margin of victory of Leave in 2016 was, to a significant extent, carried by protest voters, who used the EU referendum to voice their discontent with domestic social and economic developments, particularly, austerity. Lastly, we present some evidence suggesting that the UK public, even in Leave supporting areas, would be much more willing to make compromises on free movement and aspects of single market membership compared to what appears to be the UK governments negotiation objective.
    Keywords: Brexit, protest voting, globalization, European Union JEL Classification: D72, F5, F6, H3, H5
    Date: 2018
  24. By: Hippolyte D'Albis (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique); Ekrame Boubtane (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique); Dramane Coulibaly (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper shows that the macroeconomic and fiscal consequences of international migration are positive for OECD countries, and suggests that international migration produces a demographic dividend by increasing the share of the work- force within the population. The estimation of a structural vector autoregressive model on a panel of 19 OECD countries over the period 1980-2015 reveals that a migration shock increases GDP per capita through a positive effect on both the ratio of working-age to total population and the employment rate. International migration also improves the fiscal balance by reducing the per capita transfers paid by the government and per capita old-age public spending. To rationalize these findings, an original theoretical framework is developed. This framework highlights the roles of both the demographic structure and intergenerational public transfers and shows that migration is beneficial to host economies characterized by aging populations and large public sectors.
    Keywords: Immigration,public finances,overlapping-generation model,panel VAR
    Date: 2018–12–14
  25. By: Inmaculada Martinez-Zarzoso (Georg-August Universitaet Goettingen); Mona Said; Chahir Zaki
    Abstract: This paper explores the link between trade liberalization and firms’ performance in Egypt combining macro and micro data. Using the Economic Census of Egypt 2013, we examine the association between tariffs and non-tariffs measures (NTM) imposed on intermediate inputs and total factor productivity (TFP). In a first step TFP is estimated as the residual of a Cobb-Douglas/Translog production function and in the second, TFP is regressed on weighted tariffs and NTM imposed on intermediate inputs. Egyptian input-output tables are used to construct the weights. Our main findings show a positive and significant association between imported inputs and value-added and a significantly negative relationship between tariffs and TFP.
    Date: 2018–10–14
  26. By: Jamie L. Cross; Chenghan Hou; Bao H. Nguyen
    Abstract: We investigate the relationship between world oil markets and China's macroeconomic performance over the past two decades. Our analysis starts by proposing a simple method for disentangling real economic activity stemming from China and the rest of the world. We then consider a sufficiently large set of dynamic VAR models to distinguish between abrupt and gradual changes in the macroeconomic relationships and volatility clustering in the shocks. A model exercise shows that a Markov-switching model is preferred to previously used models in the literature. When investigating the role of oil market shocks on China's output, we find that oil supply shocks tend to elicit a positive response, while the response of oil demand shocks is negative. Next, when analyzing world oil price dynamics, we find that demand shocks have had significant positive impacts over the past two decades. The average proportion of oil price variation explained by demand from China and rest of world demand are around 30 percent over the sample period. Importantly, while China specific effects are relatively constant, rest of world aggregate demand shocks are found to have larger impact during times of global macroeconomic downturn. This highlights the importance of our model comparison exercise. Finally, we find that the recent 2014/15 oil price drop was due to a combination of increased oil supply and decreased demand from China.
    Keywords: Oil prices, China, Vector autoregression (VAR), Markov-switching, Sign restrictions
    Date: 2018
  27. By: McQuinn, Kieran; Varthalitis, Petros
    Abstract: In this paper we examine the performance of the Irish economy over the period 2008 to 2014. In particular we examine whether the recovery observed was due to the successful adoption of structural reforms in labour and product markets or whether the improved performance was due to a rebalancing of the Irish economy, post 2008, away from the disproportionate influence of the construction (non-tradable) sector and back to the more productive tradable sector? Prior to 2007 had seen the emergence of a significant, property-related credit boom which resulted in the Irish economy being increasingly influenced by the non-tradable sector. This was in sharp contrast to the earlier period of the Celtic tiger, which had mainly relied on export-orientated growth. We use a small open economy DSGE model with a tradable and a non-tradable sector to examine this issue. Our results suggest that the financial crisis acted as a rebalancing mechanism for the Irish economy, with the tradable sector contracting less and recovering quicker than the non-tradable sector. Our model-based simulations indicate that the Irish recovery is mostly export-driven with structural reforms playing a very minor role in stimulating growth in the immediate period after the crisis.
    Keywords: Trade, Openness, Reforms, DSGE
    JEL: F3 F41 F43
    Date: 2018–12–06
    Abstract: One belt one road is big initiative that is proposed by president Xi Jingping in 2013 to boost the global economy .the initiative concerns china and 64 countries especially Asia, Europe and Africa, the purpose of the initiative is to promote international trade them itself. China considers Kenya in Africa the hub who is the way that can help to enter Africa because Kenya is trying to growth its economy. The aims of this article is to show the positive impact of one belt one road initiative in Kenya in terms of regional Economic cooperation in East Africa, Economic growth, Infrastructure development.
    Keywords: one Belt and one Road, Kenya, Economic growth, Infrastructure Development,
    JEL: R1 R10 R12
    Date: 2018
  29. By: Myunghyun Kim (Economic Research Institute, The Bank of Korea)
    Abstract: This paper studies international transmission of U.S. monetary policy shocks to commodity exporters and importers. After first showing empirically that the shocks have stronger effects on commodity exporters than on importers, I then augment a standard three-country model to include commodities. Consistent with the empirical evidence, the model indicates that an expansionary monetary policy shock to the U.S. increases the aggregate output of commodity exporters by more than that of importers. This is because the increased U.S. aggregate demand triggered by the shock leads to greater U.S. demand for commodities and higher real commodity prices, and thus the exports of commodity exporters increase relative to those of commodity importers. Furthermore, I show that if commodity exporters¡¯ currencies are pegged to the U.S. dollar, then the U.S. monetary policy shocks have stronger spillovers to commodity exporters and importers. In the event that the U.S. becomes a net energy exporter, the shocks will have weaker effects on commodity exporters and stronger impacts on importers.
    Keywords: Monetary policy shocks, International transmission, Commodity exporters, Commodity importers, VAR with external instruments
    JEL: E52 F42 Q43
    Date: 2018–12–18
  30. By: Safa Joudeh (SOAS University of London)
    Abstract: This paper focuses on the global integration of economic zones for the movement of knowledge and technology. Using the case of China’s Economic and Trade Cooperation Zone in Egypt, it examines the dynamics of coordinating global value chain activity in a foreign-operated industrial cluster highlighting two main determinants of achieving technological progress, industrial planning and institutional dynamics. The key question asked is whether a framework for the operation of economic zones that is controlled by lead economies can succeed in enhancing industrial competitiveness of domestic enterprises. As evidenced by this case study, the organisation of global production, including decisions relating to the choice of location, industry focus, vertical cooperation and shifts in value chain activity, is not determined endogenously within the chain but by the policy imperatives of the lead economy. The opportunity for domestic enterprises to participate in global production are strategically circumscribed by nodal firms that play a role in organising global production. The argument put forward is that accelerating GVC participation, fails to ensure the vertical move upward of domestic enterprises, and may counter the development of indigenous capabilities in the host economy.
    Date: 2018–12–26
  31. By: Ahmed Mohamed Ezzat (Arab Academy for Science, Technology and Maritime Transport)
    Abstract: Several studies focus on the effects of trade openness on poverty alleviation through studying the effect on money-metric measures of poverty. Hence, they ignore the other dimensions of individual’s well-being. Even those who studied the effect of money-metric poverty found that the ground argument that trade openness alleviates poverty in developing countries is fragile. Moreover, in most cases testing this relationship in developing countries resulted in a negative relationship. Most of studies stressed on the importance of mitigating the negative effects of trade openness on poverty in the short term. The main contribution of this paper is to add the non-money-metric measures of poverty in testing the impact of trade openness on both multidimensional poverty and its intensity. The paper has attempted to review the literature that supports and opposes the effects of trade openness on multi-dimensional poverty and its severity. Additionally, a dynamic panel model is estimated to test this relationship relying on macroeconomic data set for countries in MENA region. The paper supports that trade openness restricts the efforts to alleviate both of multidimensional poverty and its intensity in MENA countries. This underscores the need for governments to provide complementary policies aimed at bringing the benefits of trade openness to those in extreme poverty.
    Date: 2018–11–07
  32. By: Carbonero, Francesco.; Ernst, Ekkehard; Weber, Enzo.
    Abstract: In this paper we shed light on the role of robots in emerging economies and analyze the impact of automation on the global organization of production.
    Keywords: 1, 2, 3
    Date: 2018
  33. By: Pamina Koenig (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, UNIROUEN - Université de Rouen Normandie - NU - Normandie Université); Sandra Poncet (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, PSE - Paris School of Economics)
    Abstract: This paper studies the effect of activism on the imports of consumer products, by focusing on an event which generated massive consumer mobilization against neglecting firms, namely the collapse of the Rana Plaza building affecting the textile industry in Bangladesh. We hypothesize that this episode was a main shock in the perceived quality of clothing producers sourcing in Bangladesh. Using detailed import flows on textile goods from OECD countries, we analyze whether the imports of consumer products were affected by the disclosure of information, in countries differently exposed to the collapse. To proxy the amount of information received by individuals in different countries, we use the nationality of the firms involved in the Rana Plaza building: soon after the disaster, NGOs and the media insisted on the origin countries of the neglecting companies, publishing the list of misbehaving firms by nationality. We use a difference-indifference approach to compare the imports from Bangladesh of countries having been differently associated in the news to the Rana Plaza collapse. Results show a post-disaster decrease in imports for countries whose firms were directly involved in the Rana Plaza building. The effect has to be interpreted relatively to the evolution of imports of similar countries, however not linked to the collapsed Rana Plaza knitting factories. While aggregate imports from Bangladesh continue to increase during the whole period (2010-2016), there is a marked disruption that affects countries whose brands were named and shamed by activists and the media after the disaster. No such differential pattern is observed for non-textile goods. Our results are robust to a variety of checks.
    Keywords: activism,multinational firms,trade,imports,clothing industry Keywords: activism,clothing industry
    Date: 2018–12
  34. By: Emanuele Breda (Bank of Italy); Rita Cappariello (Bank of Italy); Valentina ROmano (Bank of Italy)
    Abstract: This work analyses the pattern of expenditure by foreign tourists in Italy and of Italy’s market share of the world’s exports of tourism services since the beginning of the last decade. The paper proposes a comparison with the other main euro area countries, focusing in particular on the years following the global financial crisis. This study utilizes data from the Bank of Italy’s Survey on International Tourism for a structural analysis of international travel flows to Italy and the dynamics of foreign tourists’ expenditure in Italy and its macro-areas, considering the evolution of “potential” demand.
    Keywords: international tourism, market shares, foreign demand
    JEL: F14 L83
  35. By: Phillips, Nicola.; LeBaron, Genevieve.; Wallin, Sara.
    Abstract: This study analyses the global rise of disclosure legislations as an approach to governing labour standards in global supply chains.
    Keywords: 1, 2, 3
    Date: 2018
  36. By: Pragya Atri (Jawaharlal Nehru University); Abhijit Sen Gupta (Asian Development Bank)
    Abstract: The sharp increase in volatility of capital flows in recent years has resulted in many countries altering the regulations governing the flow of foreign capital only to find such changes having a limited impact. We postulate that one reason for the limited effectiveness of such changes in regulations is the level of financial sector development in the country. As a country enhances its level of financial sector development, it also develops more and more sophisticated financial instruments. The more advanced the domestic financial instruments are, and the deeper is the integration of the domestic financial markets with the world markets, the greater is the likelihood of developing strategies to bypass capital account management measures. In this paper, we undertake various empirical techniques to identify the impact of financial sector development on capital flows, accounting for regulatory regime. The empirical results indicate that there is a threshold effect in the financial sector development capital flow relationship. In particular, financial sector development augments greater integration with global capital flows only above a threshold level. Below the threshold level we find financial development reduces the extent of integration with global capital markets. Length: 34 pages
  37. By: Devasmita Jena (Jawaharlal Nehru University); Alokesh Barua (Jawaharlal Nehru University)
    Abstract: The objective of the paper is to provide a comparative overview of per capita income convergence in the EU and the ASEAN nations over the period 2000-2014 and empirically assess the role of trade on income convergence. Previous studies on the issue of per capita income convergence was based on the concepts of beta and sigma convergence. In this paper, the convergence analysis in the EU and the ASEAN is done using measure of income inequality developed by Theil. Theil index of inequality is a multisectoral analytical approach that allows us to examine the process of structural changes that unfold in the EU and ASEAN by the forces of trade, factor movement and other policy changes. In order to examine the structural shift, we have decomposed income into its major components- agriculture, industry and services and panel data analysis is employed using individual theil ratios. The major finding of this paper is that trade is an important catalysis for per capita income convergence in the EU and the ASEAN countries, with international trade having greater impact than inter-regional trade. The difference in impact of extra-regional trade and intra-regional trade is higher in the case of EU than in the case of ASEAN. Further, trade has caused rise in per capita income in a greater extent in the lower income countries of the two groups in comparison with relatively higher income countries, leading to narrowing the gap in per capita income across countries. In addition to trade, factor mobility (capital and labour mobility) were also found to be determinants of per capita income convergence in the EU and the ASEAN. In order to capture policy variable, extended regression model is considered with government expenditure as one of the explanatory variable, in addition to trade and factor mobility. Government expenditure was found to have positive and significant impact on the per capita income convergence across the countries of the EU and ASEAN. However, the impact of government expenditure veils the impact of capital and labour mobility in the case of the EU and labour mobility in the case of the ASEAN.Length:30 pages

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