nep-int New Economics Papers
on International Trade
Issue of 2019‒01‒28
43 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Revisiting Time as a Trade Barrier: Evidence from a Panel Structural Gravity Model By Harald Oberhofer; Michael Pfaffermayr; Richard Sellner
  2. How Do Technical Barriers to Trade Affect Foreign Direct Investment? By Mahdi Ghodsi
  3. Dynamic Changes and Effects of Agro-Food GVCS By Jared Greenville; Kentaro Kawasaki; Marie-Agnes Jouanjean
  4. The Intensive Margin in Trade By Ana Fernandes; Peter J. Klenow; Sergii Meleshchuk; Martha Denisse Pierola; Andres Rodriguez-Clare
  5. Trade and Vertical Differentiation By Pierre M. Picard; Alessandro Tampieri
  6. Aggregation and the Gravity Equation By Stephen J. Redding; David E. Weinstein
  7. The impact of FDI on economic growth in Tunisia: An estimate by the ARDL approach By Bouchoucha, Najeh; Ali, Walid
  8. Intra-EEA Stri Database: Methodology and Results By Sebastian Benz; Frédéric Gonzales
  9. Merger Policy in a Quantitative Model of International Trade By Holger Breinlich; Volker Nocke; Nicolas Schutz
  10. The KOF Globalisation Index - Revisited By Savina Gygli; Florian Haelg; Niklas Potrafke; Jan-Egbert Sturm
  11. Knowledge Remittances: Does Emigration Foster Innovation? By Thomas Fackler; Yvonne Giesing; Nadzeya Laurentsyeva
  12. Are global value chains receding? The jury is still out. Key findings from the analysis of deflated world trade in parts and components By Guillaume Gaulier; Aude Sztulman; Deniz Ünal
  13. Trade and Domestic Policies in Models with Monopolistic Competition By Alessia Campolmi; Harald Fadinger; Chiara Forlati
  14. Impacts of China Coal Import Tariff against US on Global Economy and CO2 Emissions By Septiyas Trisilia, Mustika; Widodo, Tri
  15. Globalization and Income Inequality in Latin America: A Review of Theoretical Developments and Recent Evidence By Yoshimichi Murakami
  16. Untapped Potential: Intra-Regional Trade in the Western Balkans By Plamen Kaloyanchev; Ivan Kusen; Alexandros Mouzakitis
  17. International Technology Transfer Policies By Andrea Andrenelli; Julien Gourdon; Evdokia Moïsé
  18. The OECD Digital Services Trade Restrictiveness Index By Janos Ferencz
  19. Trade and credit: revisiting the evidence By Eduardo Gutiérrez; Enrique Moral-Benito
  20. International trade, development traps, and the core-periphery structure of income inequality By Hartmann, Dominik; Bezerra, Mayra; Lodolo, Beatrice; Pinheiro, Flávio L.
  21. Trade Uncertainty and Investment in the Euro Area By Christian H Ebeke; Jesse Siminitz
  22. Trade in Tasks and the Organization of Firms By Dalia Marin; Jan Schymik; Alexander Tarasov
  23. International Knowledge Spillovers By Johannes Eugster; Giang Ho; Florence Jaumotte; Roberto Piazza
  24. Spatial Correlation, Trade, and Inequality: Evidence from the Global Climate By Jonathan I. Dingel; Kyle C. Meng; Solomon M. Hsiang
  25. The Asian integration agenda of the Eurasian Economic Union By Bagdasaryan, Kniaz (Багдасарян, Княз)
  26. North-South trade agreements and the quality of institutions: Panel data evidence By Schneider, Sophie Therese
  27. Improving the Developmental Impact of Multinational Enterprises:Policy and Research challenges By Rajneesh Narula,; André Pineli
  28. FDI, banking crises and growth: direct and spill over effects By Brahim Gaies; Stéphane Goutte; Khaled Guesmi
  29. Immigration and new firm formation: Evidence from a quasi-experimental setting in Germany By Jahn, Vera; Steinhardt, Max Friedrich
  30. Internationalization of African SMEs: Context, Trends and Challenges By Hamza El Guili
  31. Export Take-Offs and Acceleration: Unpacking Cross-Sector Linkages in the Evolution of Comparative Advantage By Dany Bahar; Samuel Rosenow; Ernesto Stein; Rodrigo Wagner
  32. What Are We Talking about When We Talk about Digital Protectionism? By Susan Aaronson
  33. Refugees’ Self-selection into Europe: Who Migrates Where? By Cevat Giray Aksoy; Panu Poutvaara
  34. Financial development and FDI flows: evidence from advanced economies By Konstantinos Dellis
  35. Where Did Good Jobs Go? Acemoglu and Marx on Induced (Skill Replacing) Technical Change By Korkut Alp Erturk
  36. Firm-level Drivers of Export Performance and External Competitiveness in Italy By Emanuele Brancati; Raffaele Brancati; Dario Guarascio; Andrea Maresca; Manuel Romagnoli; Antonello Zanfei
  37. Further Tests of Ahn, Khandelwal, and Wei’s (2011) Model of Intermediated Trade By Jianhua Duan; Xuefeng Qian; Kuntal K. Das; Laura Meriluoto; W. Robert Reed
  38. Do Skilled Migrants Compete with Native Workers? Analysis of a Selective Immigration Policy By Sara Signorelli
  39. Occupation-skill mismatch and selection of immigrants: Evidence from the Portuguese labor market By Tijan L. Bah
  40. Main forms of interaction between Russian regions and ASEAN countries By Pakhomov, Alexander (Пахомов, Александр)
  41. Trade and Cross-Border Data Flows By Francesca Casalini; Javier López González
  42. Frontloaded Income Taxation of Old-Age Pensions: For Efficiency and Fairness in a World of International Labor Mobility By Bernd Genser; Robert Holzmann
  43. Institutions and Customs Duty Evasion By Sébastien Jean; Cristina Mitaritonna; Antoine Vatan

  1. By: Harald Oberhofer; Michael Pfaffermayr; Richard Sellner
    Abstract: In this paper we revisit the evidence on the effects of time spent on border-crossing procedures for international trade using a theory-consistent structural gravity model. We exploit a rich panel data set including domestic trade flows and employ a recent econometric estimator that exhibits favorable asymptotic properties. The results indicate a significant negative effect of the time required for border procedures that is driven by the time needed for document preparation. We find that an additional day spent on those procedures corresponds to an ad valorem tariff equivalent of 0.82 percentage points. The parameters of our structural model are used to simulate three counterfactual scenarios, quantifying the effect of past and potential future trade facilitation efforts for middle, low and high income countries. Full endowment general equilibrium effects suggest that lower and middle income countries benefit most in all scenarios in terms of trade and welfare. In times of stagnating multilateral and bilateral trade liberalization efforts, unilateral implementation of trade facilitation carries the potential to induce an alternative stimulus for trade and welfare, especially for low and middle income countries.
    Keywords: structural gravity model, trade facilitation, counterfactual analysis, time to export and import, middle and low income countries
    JEL: C31 F10 F13
    Date: 2018
  2. By: Mahdi Ghodsi (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Evidence from Central, East and Southeast Europe Trade liberalisation and the EU enlargement in the past two decades allowed European multinational enterprises (MNEs) to benefit from production fragmentation in Central, East and Southeast Europe (CESEE). Recent studies show that market regulations and standards that are embedded within Technical Barriers to Trade (TBTs) might not necessarily hamper trade but improve the quality of products, production procedures, and market efficiencies. However, complying with the regulations embedded in the TBTs imposed by a host country might be costly enough to discourage MNEs from investing there. Furthermore, MNEs from countries that impose more regulations and standards might be more capable of investing abroad. This article analyses how TBTs imposed by both home and host countries affect inward FDI stocks in the CESEE countries during the period 1996-2016. The results suggest that Specific Trade Concerns (STCs) raised on trade-restrictive TBTs imposed by CESEE countries induce ‘tariff jumping’ motives of investment to these countries, while regular TBTs as indications of positive externalities and efficiency gains at home discourage outward FDI. Besides, FDI stocks by non-EU28 countries are found to be stimulated by regular quality TBTs imposed by the host economies.
    Keywords: CESEE, FDI, MNE, quality NTM, TBT, TBT STC, regulations and standards, tariff jumping
    JEL: F13 F14 F21 F23
    Date: 2019–01
  3. By: Jared Greenville (OECD); Kentaro Kawasaki (OECD); Marie-Agnes Jouanjean (OECD)
    Abstract: Global value chains (GVCs) in agriculture and food sectors are becoming an important part of the agro-food trading landscape, influencing both the nature of the gains from trade and the impacts of trade policies. This study explores the changes in trade in value added that are occurring within agro-food GVCs and the implications that participation in agro-food GVCs has had on the agro-food sectors. It makes use of a database on trade in value added for 22 agro-food sectors derived from the Global Trade Analysis Project (GTAP) database. The study finds that between 2004 and 2014, agro-food sectors have been increasing their participation in GVCs and that the links created within these production networks have become more “global” in nature. At the same time, agro-food GVCs have become increasingly centred around hubs in the People’s Republic of China and Germany where large amounts of value added are funnelled before reaching the end consumer. The study also finds that participation in agro-food GVCs is beneficial for sector development and growth – both in aggregate terms and in terms of domestic value added from exports. Of key importance has been the use of foreign value added and access to a wide diversity of imported inputs. However, policies that restrict trade and limit market openness reduce participation and sector growth and development – including policies that create barriers to trade in agro-food products themselves. In addition, the study finds that the use of services value added in exports is an important factor that contributes to sector growth, which highlights the importance of the broader policy environment to enhance the benefits from agro-food GVCs.
    Keywords: agricultural trade, Agriculture, global value chains, GTAP, multi-regional output
    JEL: F14 Q17
    Date: 2019–01–28
  4. By: Ana Fernandes; Peter J. Klenow; Sergii Meleshchuk; Martha Denisse Pierola; Andres Rodriguez-Clare
    Abstract: The Melitz model highlights the importance of the extensive margin (the number of firms exporting) for trade flows. Using the World Bank’s Exporter Dynamics Database (EDD) featuring firm-level exports from 50 countries, we find that around 50 percent of variation in exports is along the extensive margin—a quantitative victory for the Melitz framework. The remaining 50 percent on the intensive margin (exports per exporting firm) contradicts a special case of Melitz with Pareto-distributed firm productivity, which has become a tractable benchmark. This benchmark model predicts that, conditional on the fixed costs of exporting, all variation in exports across trading partners should occur on the extensive margin. We find that moving from a Pareto to a lognormal distribution allows the Melitz model to match the role of the intensive margin in the EDD. We use likelihood methods and the EDD to estimate a generalized Melitz model with a joint lognormal distribution for firm-level productivity, fixed costs and demand shifters, and use “exact hat algebra” to quantify the effects of a decline in trade costs on trade flows and welfare in the estimated model. The welfare effects turn out to be quite close to those in the standard Melitz-Pareto model when we choose the Pareto shape parameter to fit the average trade elasticity implied by our estimated Melitz-lognormal model, although there are significant differences regarding the effects on trade flows.
    Date: 2018–12–07
  5. By: Pierre M. Picard; Alessandro Tampieri
    Abstract: This paper discusses a trade model with many countries, many goods produced in multiple quality versions, and non-homothetic preferences. It embeds in the same model a series of results that have been empirically confirmed: high-income countries specialize in the production of high-quality goods and trade more of those. Richer countries purchase more high-quality varieties. They import more high-quality products from the most productive exporters. The paper then studies the impact of productivity and population changes on the quality composition of exports. It finally explains why countries import higher quality goods from more distant countries.
    Keywords: vertical differentiation, horizontal differentiation, trade, income heterogeneity.
    JEL: F12 F16 L11 L15
    Date: 2019
  6. By: Stephen J. Redding; David E. Weinstein
    Abstract: One of the most successful empirical relationships in international trade is the gravity equation, which relates bilateral trade flows between an origin and destination to bilateral trade frictions, origin characteristics, and destination characteristics. A key decision for researchers in estimating this relationship is the level of aggregation, since the gravity equation is log linear, whereas aggregation involves summing the level rather than the log level of trade flows. In this paper, we derive an exact Jensen's inequality correction term for the gravity equation in a nested constant elasticity of substitution (CES) import demand system, such that a log-linear gravity equation holds exactly for each nest of this demand system. We use this result to decompose the effect of distance on bilateral trade in the aggregate gravity equation into the contribution of a number of different terms from sectoral gravity equations. We show that changes in sectoral composition make a quantitatively relevant contribution towards the aggregate effect of distance, particularly for more disaggregated definitions of sectors.
    JEL: C43 F10 F14
    Date: 2019–01
  7. By: Bouchoucha, Najeh; Ali, Walid
    Abstract: This paper attempts to examine the impact of foreign direct investment on economic growth in Tunisia using times series data for the period 1980-2015. In this study, we used the ARDL (Autoregressive Lag Distribution) approach to study the short-term and long-term relationship between foreign direct investment and economic growth. The empirical findings show that FDI has positive impact on economic growth in both the short and the long term. For the other determinants of economic growth, we have shown that domestic investment and human capital have had a positive and significant effect on the economic growth of the Tunisian economy in the short run rather than in the long run. On the other hand, the degree of trade openness has a negative effect on short-term and long-term economic growth.
    Keywords: FDI, economic growth, Tunisia, ARDL
    JEL: F0 F43
    Date: 2019–01–14
  8. By: Sebastian Benz (OECD); Frédéric Gonzales (OECD)
    Abstract: This paper presents new data on regulatory barriers affecting services trade within the European Economic Area (EEA), covering 25 EEA countries, 22 sectors and five years (2014-2018). Following the methodology of the OECD Services Trade Restrictiveness Index (STRI), qualitative information is scored and weighted to produce binary composite indices. The resulting intra-EEA STRIs reveal that services trade restrictiveness within the Single Market is considerably lower than the applied MFN regime of those EEA members. Moreover, they show that EEA members have achieved significant regulatory harmonisation through their integration process.
    Keywords: composite indicators, services trade restrictions, Trade in services, trade liberalisation, trade policy
    JEL: F13 F15 F55
    Date: 2019–01–28
  9. By: Holger Breinlich; Volker Nocke; Nicolas Schutz
    Abstract: In a two-country international trade model with oligopolistic competition, we study the conditions on market structure and trade costs under which a merger policy designed to benefit domestic consumers is too tough or too lenient from the viewpoint of the foreign country. We calibrate the model to match industry-level data in the U.S.\ and Canada. Our results suggest that at present levels of trade costs, merger policy is too tough in the vast majority of sectors. We also quantify the resulting externalities and study the impact of different regimes of coordinating merger policies at varying levels of trade costs.
    Keywords: Mergers and Acquisitions, Merger Policy, Trade Policy, Oligopoly, International Trade
    JEL: F12 F13 L13 L44
    Date: 2018–09
  10. By: Savina Gygli; Florian Haelg; Niklas Potrafke; Jan-Egbert Sturm
    Abstract: We introduce the revised version of the KOF Globalisation Index, a composite index measuring globalization for every country in the world along the economic, social and political dimension. The original index was introduced by Dreher (2006) and updated in Dreher et al. (2008). This second revision of the index distinguishes between de facto and de jure measures along the different dimensions of globalization. We also disentangle trade and financial globalization within the economic dimension of globalization and use time-varying weighting of the variables. The new index is based on 43 instead of 23 variables in the previous version. Following Dreher (2006), we use the new index to examine the effect of globalization on economic growth. The results suggest that de facto and de jure globalization influence economic growth differently. Future research should use the new KOF Globalisation Index to re-examine other important consequences of globalization and why globalization was proceeding rapidly in some countries, such as South Korea, but less so in others.
    Keywords: globalization, composite indicators
    JEL: F15 F36 F43 F53 O19 O24 O57 Y10
    Date: 2018
  11. By: Thomas Fackler; Yvonne Giesing; Nadzeya Laurentsyeva
    Abstract: Does the emigration of skilled individuals necessarily result in losses for source countries due to the brain drain? Combining industry-level patenting and migration data from 32 European countries, we show that emigration in fact positively contributes to innovation in source countries. We use changes in the labour mobility legislation within Europe as exogenous variation to establish causality. By analysing patent citation data, we further provide evidence that these positive effects are driven by knowledge flows that are triggered by emigrants. While skilled migrants are not inventing in their home country anymore, they contribute to cross-border knowledge and technology diffusion and thus help less advanced countries to catch up to the technology frontier.
    Keywords: migration, innovation, knowledge spillovers, patent citations, EU enlargement
    JEL: F22 J61 O33 O31 O52
    Date: 2018
  12. By: Guillaume Gaulier; Aude Sztulman; Deniz Ünal
    Abstract: In this article, we examine the dynamics of Global Value Chains (GVCs) since the 2000s. Did it show a marked expansion up to the Great Recession and did GVCs begin a downturn in the 2010s? To better understand the evolution of GVCs at the world level, we use very detailed trade data for 2000 to 2016, which distinguishes different production stages along the GVC. In particular, among intermediate goods, we focus on Parts and Components (P&C) rather than semi-finished products since the manufacture of P&C corresponds to activities more embedded in GVCs. We control, also, for the global business cycle and price effects using an original production stages deflator based on detailed bilateral trade unit-values. This new GVC indicator shows moderate growth over the study period with no trend reversal. In the electronics sector, where GVCs are particularly well-developed, we observe contrasting effects: the share in P&C trade for office machinery and computers has decreased, while it has increased in the case of telecommunications equipment, the flagship IT revolution industry. Also, counts of clients or suppliers by stages of production indicate higher and growing geographical diversity for P&C.
    Keywords: Global Value Chains;Parts and Components – P&C;Trade in Volume; Electronics
    JEL: F14 F15 L60
    Date: 2019–01
  13. By: Alessia Campolmi; Harald Fadinger; Chiara Forlati
    Abstract: We consider unilateral and strategic trade and domestic policies in single and multi-sector versions of models with CES preferences and monopolistic competition featuring homogeneous (Krugman, 1980) or heterogeneous firms (Melitz, 2003). We first solve the world-planner problem to identify the efficiency wedges between the planner and the market allocation. We then derive a common welfare decomposition in terms of macro variables that incorporates all general-equilibrium eects of trade and domestic policies and decomposes them into consumption and production-eciency wedges and terms-of-trade effects. We show that the Nash equilibrium when both domestic and trade policies are available is characterized by first-best-level labor subsidies that achieve production efficiency, and inefficient import subsidies and export taxes that aim at improving domestic terms of trade. Since the terms-of-trade externality is the only beggar-thy-neighbor motive, it remains the only reason for signing trade agreements in this general class of models. Finally, we show that when trade agreements only limit the strategic use of trade taxes but do not require coordination of domestic policies, the latter are set inefficiently in the Nash equilibrium in order to manipulate the terms of trade.
    Keywords: Heterogeneous Firms, Trade Policy, Domestic Policy, Trade Agreements, Terms of Trade, Efficiency, Tariffs and Subsidies
    JEL: F12 F13 F42
    Date: 2018–10
  14. By: Septiyas Trisilia, Mustika; Widodo, Tri
    Abstract: This paper examines the impacts of China coal import tariff against US on global economy and CO2 emissions. Using Global Trade Analysis Project Environmental (GTAP-E) model, coal import tariff was found to generate trade deflection and trade depression phenomena. Then, US and China’s would have welfare loss, but Indonesia and Australia would seem gainers from this tariff war. Furthermore, skilled and unskilled labor will decline in coal’s industry in US and increase in China. Finally, it is also found evidence that China coal import tariff was not good policy because not only the global economy, the environment would be disadvantaged by increasing CO2.
    Keywords: Import tariff, Coal, Carbon dioxide emissions, GTAP
    JEL: F18 Q5 Q54
    Date: 2019–01–04
  15. By: Yoshimichi Murakami (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)
    Abstract: Although Latin American countries (LACs) experienced an increase in income inequality after their integration into global economy in the1980s and 1990s, they experienced a decrease in income inequality in the 2000s. This study attempts to identify the channels through which globalization has affected the increase and decrease in income inequality in LACs, based on a review of theoretical developments and empirical evidence. This study finds that the Stolper–Samuelson effects, within-industry skill-biased technological change, offshoring from developed countries, and technology or quality upgrading of high-productivity firms are the major channels for the increasing income inequality. This study also finds that the reduction in inequality in the 2000s can be mainly explained by an increase in the relative supply of skilled workers in Mexico, while it can be explained by the Stolper–Samuelson effect in South American countries such as Brazil and Chile.
    Keywords: Commodity boom, Firm heterogeneity, Global value chains, Offshoring of tasks, Skill-biased technological change, Stolper–Samuelson effect
    JEL: F16 O15 O54
    Date: 2018–05
  16. By: Plamen Kaloyanchev; Ivan Kusen; Alexandros Mouzakitis
    Abstract: Strengthening regional economic integration has been set as a priority by the leaders in the Western Balkans. In this context, the paper examines merchandise trade patterns in the region and tries to identify the main drivers of and obstacles to intra-regional trade. Although intra-regional trade comes second in importance, after trade with the EU, it underperformed and was in a relative decline in the last decade. The structure of intra-regional trade has been rather stable and remained concentrated in goods with low value added. The trade of the region with Russia, China and Turkey is less pronounced and is systematically skewed towards imports from them. The results of a gravity model of trade show that intra-regional trade has been positively driven by the level of economic activity and to some degree by cultural factors, like language similarity, while non-tariff barriers significantly reduce trade exchanges between the countries in the region. Contrary to expectations, geographical proximity did not come out as a statistically significant factor impacting trade dynamics in the examined period. Nonetheless, the poor connectivity in the region, attested by a number of indicators and other studies, is a major obstacle to economic development. Therefore, recent initiatives to support regional economic development by reducing non-tariff barriers and improving regional transport corridors seem to be well-placed.
    JEL: F14
    Date: 2018–04
  17. By: Andrea Andrenelli (OECD); Julien Gourdon (OECD); Evdokia Moïsé (OECD)
    Abstract: Concerns are growing about policies and measures that restrict market access with the effect of “forcing” technology transfer. Efforts to target forced technology transfer are complicated by the sometimes blurred line between voluntary and mutually agreed upon technology transfers and that which is perceived to be, or is in fact, compelled. This study presents a discussion of the continuum of measures related to international technology transfer (ITT) and aims to identify those measures that pose the greatest concern over their potential to compel disclosure of commercially valuable and sensitive technology. It then briefly presents information on provisions in international trade and investment agreements that are relevant to ITT. The last section presents the perspective from the private sector in order to better understand how firms engage in technology transfers through research collaboration, licensing, joint ventures, and equity investments. The analysis in this report indicates that involuntary technology transfer is a complex issue, and it aims to provide a way for policy makers to think through the issues, to apply a systematic and analytical approach to assessing which policies are of the greatest concern.
    Keywords: competition, FDI, innovation, intellectual property, International trade
    JEL: F1 F13 F15 F23 O3
    Date: 2019–01–24
  18. By: Janos Ferencz (OECD)
    Abstract: The rapid acceleration of digital transformation has had profound implications for services trade but the benefits of digitalisation risk being derailed by existing and emerging trade barriers. The OECD Digital Services Trade Restrictiveness Index (Digital STRI) is a new tool that identifies, catalogues, and quantifies cross-cutting barriers that affect services traded digitally. It consists of two components, the regulatory database and indices, which bring together comparable information from 44 countries. The Digital STRI shows a diverse and complex global regulatory environment affecting trade in digitally enabled services. Moreover, over the past years, the indices show an increasingly tightening regulatory environment highlighting that further international cooperation and dialogue is needed to maximise the benefits of digitalisation.
    Keywords: digital trade, Digital transformation, digitally enabled services, regulation, services trade restrictions
    JEL: F13 F14
    Date: 2019–01–23
  19. By: Eduardo Gutiérrez (Banco de España); Enrique Moral-Benito (Banco de España)
    Abstract: This paper explores the effects of bank lending shocks on export behavior of Spanish firms. For that purpose, we combine Balance of Payments data on exports at the firmproduct-destination level with a matched bank-firm dataset incorporating information on the universe of corporate loans from 2002 to 2013. Armed with this dataset, we identify bankyear specific credit supply shocks following Amiti and Weinstein (2018) and estimate their impact on firms’ exports at the product-destination level. According to our estimates, credit supply shocks have sizable effects on both the intensive margin (amount exported) and the extensive margin of trade (decision to export).
    Keywords: credit shocks, exports, firm level data
    JEL: F10 F30 F40 G15 G21 G32
    Date: 2019–01
  20. By: Hartmann, Dominik; Bezerra, Mayra; Lodolo, Beatrice; Pinheiro, Flávio L.
    Abstract: Research on economic complexity has shown that a country's type of exports conditions its future path of economic diversification and economic growth. Yet little emphasis has been put on the inequality associated with the types of products traded between countries and different regions of the world. Here we analyze the income inequality associated with the imports and exports of 116 countries in the period from 1970 to 2010. Our analysis shows that methods from network science and visual complexity research can help to reevaluate old theories in economics, such as coreperiphery structures in international trade or structural development traps. Our results illustrate that the core-periphery structure of global trade affects not only the income inequality between countries, but also the income inequality within countries. Moreover, they reveal the structural constraints that developing and emerging economies face in promoting inclusive growth and benchmark their productive transformations with cases of successful catching up and developed economies. The results show that countries, such as South Korea or Germany, have benefited from outsourcing high inequality products. In contrast, some middle-income countries, such as Brazil or South Africa, face structural development constraints consisting of a large average distance of their export products to low inequality products and a "gravitational force" towards high inequality products. Finally, developing economies, such as Nicaragua or Sri Lanka face a double development trap for inclusive growth, as their economies depend on both a large share of high inequality exports and imports.
    Keywords: trade,inequality,economic complexity,development trap
    Date: 2019
  21. By: Christian H Ebeke; Jesse Siminitz
    Abstract: We analyze the impact of trade policy uncertainty on investment in the euro area. Our identification strategy assumes that countries that are relatively more dependent on global trade networks exhibit a higher sensitivity of investment with respect to trade uncertainty. We find that the investment-to-GDP ratio is on average 0.8 percentage points lower for five quarters following a one standard deviation increase in the level of trade uncertainty. We demonstrate that these results are unlikely to be driven by omitted variables and that they are robust to different measures of trade uncertainty and trade openness. Our analysis suggests that the detrimental effect of trade tensions goes beyond lower trade growth, as uncertainty can reduce investment and the economy’s long-term growth potential.
    Date: 2018–12–11
  22. By: Dalia Marin; Jan Schymik; Alexander Tarasov
    Abstract: In this paper, we incorporate trade in tasks into Marin and Verdier (2012) to examine how offshoring affects the way firms organize. We show that offshoring of production tasks and of managerial tasks can lead to more decentralized management and to larger executive wages in open economies. We study the predictions of the model with original firm level data and find that offshoring firms are 18% more decentralized than non-offshoring firms. We also find that offshoring of managers increases the level of decentralized management in open industries, but reduces the level of decentralized management in sufficiently closed industries.
    Keywords: international trade with endogenous organizations, the rise of human capital, theory of the firm, multinational firms, CEO pay
    JEL: F12 F14 L22 D23
    Date: 2018–09
  23. By: Johannes Eugster; Giang Ho; Florence Jaumotte; Roberto Piazza
    Abstract: How important is foreign knowledge for domestic innovation outcomes? How is this relation shaped by globalization and the attendant intensification of international competition? Our empirical approach extends the previous literature by analyzing a large panel comprising industries in both advanced and emerging economies over the past two decades. We find that barriers to the domestic diffusion of foreign knowledge have fallen significantly for emerging economies. For all countries, and especially for emerging economies, inflows of foreign knowledge have a growing and quantitatively important impact on domestic innovation. Controlling for the amount of domestic R&D, we find evidence that increases in international competitive pressure at the industry level had a positive effect on domestic innovation outcomes
    Date: 2018–12–10
  24. By: Jonathan I. Dingel; Kyle C. Meng; Solomon M. Hsiang
    Abstract: This paper shows that greater global spatial correlation of productivities can increase cross-country welfare dispersion by increasing the correlation between a country’s productivity and its gains from trade. We causally validate this general-equilibrium prediction using a global climatic phenomenon as a natural experiment. We find that gains from trade in cereals over the last half-century were larger for more productive countries and smaller for less productive countries when cereal productivity was more spatially correlated. Incorporating this general-equilibrium effect into a projection of climate-change impacts raises projected international inequality, with higher welfare losses across most of Africa.
    JEL: F11 F14 F18 O13 Q17 Q54 Q56
    Date: 2019–01
  25. By: Bagdasaryan, Kniaz (Багдасарян, Княз) (The Russian Presidential Academy of National Economy and Public Administration)
    Abstract: The paper considers prospective directions of integration cooperation of the EAEU with the countries and groupings of Asia. The aim of the study is to determine the possibilities and limitations of the common foreign economic policy of the Eurasian Economic Union in this area.
    Keywords: integration, Eurasian Economic Union, preferential agreement, free trade area, trade in services
    Date: 2018–12
  26. By: Schneider, Sophie Therese
    Abstract: Since 1990, not only the number of signed preferential trade agreements (PTAs) has increased, but also their depth. That means, PTAs include comprehensive rules, which go way beyond tariff reductions, such as property rights, competition or investment provisions. This paper argues that especially in North-South agreements there is a diffusion of institutional quality from developed to developing countries. First, a PTA may affect institutions because it can serve as a network for political exchange and second, the regulations and commitments stipulated in it may affect local institutions in the South. I empirically investigate if there are positive effects of being a member in a PTA on the quality of institutions in developing countries by accounting for the number and the depth of PTAs using the Design of Trade Agreements (DESTA) database, established by Dür, Baccini and Elsig (2014). I create a large panel data set covering 32 years to account for endogeneity of several controls. The results support the hypothesis that deep PTAs lead to an improved quality of institutions in the South. The results differ with respect to the type of agreement and region.
    Keywords: deep trade agreements,institutions,panel data
    JEL: F13 F14 C23 C26
    Date: 2018
  27. By: Rajneesh Narula, (Henley Business School, University of Reading); André Pineli (Henley Business School, University of Reading)
    Abstract: We summarize the key empirical evidence on the nexus between MNEs and development, focusing on issues that are relevant for the formulation, implementation and assessment of policies by host developing countries. We also delve into what we do not know, as well as topics for which the evidence is still quite blurred. We discuss the reasons for the absence of clear evidence, and potential avenues for future research to improve policies. Although most countries rely on MNEs/FDI as a central plank of their development strategy, the collective weight of academic research has not led to a fine-tuning of policy implementation. Countries still rely on policies for which evidence is sparse, or no longer valid in an era of globalisation. Much of the literature has focused on externalities and spillovers, and has deemphasised the other ‘effects’ of MNE activity, implicitly assuming that MNEs are almost always beneficial for development. Few rents are costless when the opportunity costs of scarce resources are considered, especially in the longer term. Despite the abundance of empirical studies (of increasing sophistication), most ignore the significance of structural change. Growth and the interaction with MNE activity is not linear or monotonic over time, because the economy itself is in a constant state of flux.
    Keywords: multinational enterprises, economic development, developing countries, GDP growth, spillovers,public policy
    JEL: D62 F23 O14 O19 O24
    Date: 2018–09
  28. By: Brahim Gaies; Stéphane Goutte (LED - Université Paris 8); Khaled Guesmi
    Abstract: This study suggests a new decomposition of the effect of foreign direct investment (FDI) on the long-term growth of developing countries. It reveals that FDI not only has a direct positive effect on growth, but also increases it by reducing the recessionary effect resulting from a banking crisis. However, these advantages are conditioned by the FDI threshold, which in turn depends on the "absorption capacity" of the host country. JEL: F65, F36, G01, G15
    Keywords: growth,FDI,system GMM,panel logit model 2
    Date: 2019–01–09
  29. By: Jahn, Vera; Steinhardt, Max Friedrich
    Abstract: This paper analyzes in how far immigration affects firm formation at the regional level. For this purpose, we exploit a placement policy in Germany in the 1990s for immigrants of German origin from Eastern Europe and the former Soviet Union. Our panel regressions suggest that immigration had a positive impact on regional firm formation. The most likely mechanisms driving this result are labor supply-side effects and positive implications of cultural diversity. Overall, our paper demonstrates that immigration induced changes in local labor supply can partially be absorbed by the creation of firms.
    Keywords: immigration,placement policy,economic impact,firms
    JEL: F22 L26 R11
    Date: 2018
  30. By: Hamza El Guili (University of Abdelmalek Essaadi, Tangier, Morocco)
    Abstract: There has been an important increase in the international and inter-continental operations of African SMEs over the last decade, because of the emergence of regional “champions†, able to compete with foreign multinationals, present in the continent since many decades, but also because of the emergence of innovative and creative SMEs, capable to meet the market needs of various consumers of Africa. Understanding the particular international business landscape in Africa draws attention to several ignored research questions and research aspects, requiring further research and exploration, to contextualize the SMEs’ internationalization of African firms. This paper highlights relevant areas/aspects needed while studying the internationalization of SMEs, by bringing back the historical context of the continent. Next, this paper contributes to the understanding of the internationalization of African SMEs by analyzing the trends and opportunities of the research in this field. Finally, the challenges and the risks of the internationalization of African firms will be analyzed, in order to set the limits of the nature of internationalization of the continent’s SMEs.
    Keywords: Africa, SMEs, emerging markets, firms internationalization
    Date: 2018–05
  31. By: Dany Bahar; Samuel Rosenow; Ernesto Stein; Rodrigo Wagner
    Abstract: The transition into non-traditional export activities attracts important policy and academic attention. Using international trade data, we explore how alternative linkages relate to the take-off and acceleration of export industries. Concretely, we run a horse-race among alternative Marshallian linkages across sectors: input-output relations, technology and labor. Technology has a predictive power depending on the specification used. We consistently find, however, that export take-offs are more likely to occur in sectors that are upstream to already competitive export industries. Our findings, which are mostly driven by developing economies, are consistent with Albert Hirschman’s 60-year-old view that the forces behind upstream linkages fueled the growth of new competitive industries in the developing world.
    Keywords: relatedness, comparative advantage, patents, labor, upstream, downstream
    JEL: O14 O33 F14
    Date: 2018
  32. By: Susan Aaronson (George Washington University)
    Abstract: For almost a decade, executives, scholars, and trade diplomats have argued that filtering, censorship, localization requirements, and domestic regulations are distorting the cross-border information flows that underpin the internet. Herein I use process tracing to examine the state and implications of digital protectionism. I make five points: First, I note that digital protectionism differs from protectionism of goods and other services. Information is intangible, highly tradable, and some information is a public good. Secondly, I argue that it will not be easy to set international rules to limit digital protectionism without shared norms and definitions. Thirdly, the US, EU, and Canada have labeled other countries policies’ protectionist, yet their arguments and actions sometimes appear hypocritical. Fourth, I discuss the challenge of Chinese failure to follow key internet governance norms. China allegedly has used a wide range of cyber strategies, including distributed denial of service (DDoS) attacks (bombarding a web site with service requests) to censor information flows and impede online market access beyond its borders. WTO members have yet to discuss this issue and the threat it poses to trade norms and rules. Finally, I note that digital protectionism may be self-defeating. I then draw conclusions and make policy recommendations.
    Keywords: data, internet, e-commerce, digital trade, data flows, WTO, protectionism
    JEL: F1 F5
    Date: 2018
  33. By: Cevat Giray Aksoy; Panu Poutvaara
    Abstract: About 1.4 million refugees and irregular migrants arrived in Europe in 2015 and 2016. We model how refugees and irregular migrants are self-selected. Using unique datasets from the International Organization for Migration and Gallup World Polls, we provide the first large-scale evidence on reasons to emigrate, and the self-selection and sorting of refugees and irregular migrants for multiple origin and destination countries. Refugees and female irregular migrants are positively self-selected with respect to education, while male irregular migrants are not. We also analyze how border controls affect destination country choice.
    Keywords: Refugees, self-selection, human capital, predicted income
    JEL: J15 J24 O15
    Date: 2019
  34. By: Konstantinos Dellis (University of Piraeus – Bank of Greece)
    Abstract: Foreign direct investment (FDI) has grown dramatically as a major form of international capital transfer over the past decades. This rapid growth in cross border investment has to a large part been due to the reduction in trade and investment barriers, the harmonization and mutual recognition of regulation and the removal of domestic impediments through reform and privatization (see OECD, 2001). Amongst the numerous FDI determinants studied in the literature, the development and depth of the financial sector has gained importance during the last decade. According to the Paradox of Finance hypothesis, despite the fact that Multinational Corporations (MNCs) are not locally financially constrained their affiliates interact significantly with the domestic financial system. Hence, a deep and efficient financial system should act as a pull factor for FDI flows. Using up-to-date FDI data for advanced and emerging economies, this research explores the role of previously unavailable financial variables in attracting FDI flows. The results show that fostering an efficient financial sector with diversified funding sources for enterprises contributes to increased participation by Multinational Corporations in the host economy. This insightful policy implication for advanced economies is that the restructuring of the financial system can contribute to economic recovery through the FDI channel as well. Finally, the results highlight the importance for the full implementation of the Banking Union and the Capital Markets Union in the EU.
    Keywords: Foreign Direct Investment; Financial Development; Economic Growth; Advanced Economies
    JEL: O43 F21 G20
    Date: 2018–12
  35. By: Korkut Alp Erturk
    Abstract: The paper lays out a hypothesis about the effect global oversupply of labor had on induced technological change, clarifying how it might have contributed to the demand reversal for high skill workers and other recent observed trends in technological change in the US. The argument considers the effect of market friendly political/institutional transformations of the 1980s on technology as they created a potential for an integrated global labor market. The innovations induced by the promise of this potential eventually culminated in the creation of global value chains and production networks. These required large set up costs and skill enhancing innovations, but once in place they reduced the dependence of expanding low skill employment around the globe on skill intensive inputs from advanced countries, giving rise to the wellobserved high skill demand reversal and sputtering of IT investment.
    Keywords: Income inequality, job polarization, skill downgrading, induced technological change, organization of work, craft economy, global production networks JEL Classification: F60, F15, 030, E10, B51
    Date: 2019
  36. By: Emanuele Brancati; Raffaele Brancati; Dario Guarascio; Andrea Maresca; Manuel Romagnoli; Antonello Zanfei
    Abstract: This paper provides an in-depth study on the main firm-level drivers of external competitiveness during the recent crisis in Italy. We contribute to the debate on the Italian international position by presenting evidence based on a unique sample survey database (the MET dataset). Overall, our results confirm the high degree of heterogeneity of the Italian corporate sector and the well-known differences between internationalised and domestic companies in terms of performance as well as structure and behaviour. In particular, the data highlight not only the correlation between internationalisation and innovative activities but also a positive change of attitude of Italian firms towards these strategies. Our analysis shows that, whilst structural factors play a key role for external competitiveness (size, location, industry, etc.), other critical firm-level aspects, especially those related to strategic profiles, technological capabilities, and ‘proactive’ behaviour, trigger superior performances. To this extent, our policy suggestions focus on the need to sustain and foster innovative activities to improve aggregate competitiveness.
    JEL: F14 L25 O31 O33
    Date: 2018–09
  37. By: Jianhua Duan; Xuefeng Qian; Kuntal K. Das (University of Canterbury); Laura Meriluoto (University of Canterbury); W. Robert Reed (University of Canterbury)
    Abstract: This study subjects Ahn, Khandelwal, and Wei’s (2011) model of intermediary trade to a series of additional tests. Using data mostly sourced independently from AKW, we demonstrate that we are able to reproduce the evidence supporting their three main predictions for Chinese exports. However, further tests reveal that these results are not robust. When we repeat the analysis underlying their first prediction with more recently available data, we estimate coefficients that are wrong-signed and significant. When we re-analyze the evidence supporting their second and third predictions, we find that the full sample results mask significant heterogeneity across Chinese regions. In many cases, key coefficients are insignificant. In a few cases, they are wrong-signed and significant. Finally, we find that there are multiple versions of a key variables measuring the number of required import documents by country, and that results are not robust across versions.
    Keywords: Intermediaries, Exports, Productivity, Heterogeneous firms, China
    JEL: F1
    Date: 2019–01–01
  38. By: Sara Signorelli (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)
    Abstract: In recent yearsWestern countries are expressing growing concerns about the regulation of migration flows and many are considering adopting some form of selective immigration policy. This paper analyzes the labor market effects of one of such reforms introduced in France in 2008 with the aim of encouraging the inflow of foreign workers with skills that are scarce among the local labor force. The analysis relies on administrative employer-employee data and it is based on a difference-in-differences approach. Results show that the reform increased the hiring of foreign workers in target occupations without causing any harm to native employment. As a result, the overall stock of labor grew in these jobs. Entry wages are lowered by 4% among natives and by 9% among foreigners, suggesting that these two groups may not be perfect substitutes, even when they are employed for the exact same task. Yet, the negative pressure on salaries seems to disappear after the first three years, as opposed to the positive impact on employment. The effects are stronger for the occupations with the most severe lack of native candidates and for those with an average salary largely above the minimum wage, indicating that the reform was successful in attracting candidates with rare skills and relatively high productivity.
    Keywords: Immigration,Employment,Wage,Occupations,France
    Date: 2019–01
  39. By: Tijan L. Bah
    Abstract: This paper aims at investigating how the occupational placement of immigrants relative to their qualifications a ect their self-selection. Using an administrative matched employer-employee data set for Portugal for the years 2002-2009, we first estimate the probability that an average worker from a particular country is overeducated, matched, or undereducated relative to the skill needs of the occupation he takes upon immigration. Second, using these estimated probabilities, we analyze how overeducation and appropriate skill-occupation matches a ect selection of immigrants from 40 origin countries. The results suggest that overeducation leads to negative self-selection of immigrants into the Portuguese labor market. Furthermore, the evidence suggests that appropriate occupation-skill matches a ect migration selection positively. These results imply that receiving countries' selective policies aimed at attracting high skilled immigrants should also focus on reducing occupation-skill mismatch probably through degree recognition and standardization in collaboration with sending countries.
    Keywords: Selection, Occupation-Skill Mismatch, Portugal, Immigrants, Waste, Immigration
    Date: 2018
  40. By: Pakhomov, Alexander (Пахомов, Александр) (The Russian Presidential Academy of National Economy and Public Administration)
    Abstract: The article examines main directions of interregional cooperation in economic and social fields between the Russian federal subjects and ASEAN states. This cooperation has a growing trend and positive impact on the development of Russian federal subjects’ foreign economic activity and on the humanitarian sphere.
    Keywords: subjects of Federation, ASEAN States, international cooperation, foreign economic complex, social sphere.
    Date: 2018–12
  41. By: Francesca Casalini (OECD); Javier López González (OECD)
    Abstract: The ubiquitous exchange of data across borders has given rise to a range of concerns by governments and citizens about some of the effects of so much information being collected and used, often without the knowledge of data subjects. This has led countries to condition or prohibit the transfer of data abroad, affecting trade in the process. This paper develops an indicative taxonomy of domestic approaches to cross-border data flow regulation and local storage requirements; it then surveys international instruments that address the question of international data transfers. The paper then examines the issues that data flow restrictions might raise for consumers and businesses. Against this backdrop, the paper highlights the challenge of finding balance between ensuring that important objectives, such as consumer privacy and security, are met while maintaining the benefits from free flows of data, including the benefits from increased and more inclusive digital trade.
    Keywords: data-flows, Digital economy, privacy, trade policy
    JEL: F13 O3
    Date: 2019–01–23
  42. By: Bernd Genser; Robert Holzmann
    Abstract: Strong evidence shows that the existing pattern of cross-border pension taxation in OECD countries and beyond is extremely diverse and inconsistent, generating a double fairness dilemma for individuals and countries alike. This paper argues that this dilemma cannot be solved within the current network of double-taxation treaties. Instead, it proposes a new approach for the taxation of old-age pensions in a world of high and increasing cross-border mobility of workers and pensioners. The paper demonstrates that a coordinated move to frontloaded pension taxation and exclusive source taxation would pave the way for an international pension tax order that eliminates the double fairness dilemma. An additional innovative element of frontloaded pension taxation is presented: the decoupling of individual tax assessment and tax payment, which may help curb political opposition against frontloaded pension taxation and smooth transitional effects after its introduction.
    Keywords: pension taxation, international taxation, international migration, double taxation convention
    JEL: H24 H55 H87 F22
    Date: 2018
  43. By: Sébastien Jean; Cristina Mitaritonna; Antoine Vatan
    Abstract: Tariff receipts are important for many countries but their collection is often problematic. To analyze why and to what extent this occurs we first model customs duty evasion as an interaction between customs officers considered to be corruptible law enforcers, and importing firms. In this context, higher tariffs generally lead to greater customs duty evasion but their marginal impact is decreasing, and may turn negative above a given threshold if customs officers adapt their inspection effort endogenously. While transparency (the probability of effective control) always limits evasion, we show that ease of enforcement (e.g. ease of establishing the shipment`s true value) matters only if customs officers do not collude with importers. Our empirical analysis spans 55 importing countries over the period 2001-2010 and confirms our predictions. This lends support to the assumptions of endogenous inspection effort and widespread collusion. World Trade Organization membership is found also to limit the extent of duty evasion.
    Keywords: Tax Evasion;Customs Duty;Institutions;International Trade
    JEL: J13 H26 K42
    Date: 2018–12

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