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on International Trade |
| By: | Raffaele Giammetti (Universita' Politecnica delle Marche) |
| Abstract: | This paper challenges and complements existing studies on the economic impact of Brexit providing a discussion of the UK's decision to leave the EU and how it will affect international trade networks and value-added. Using the World Input-Output Database, we develop a multi-sector inter-country model that allows us to identify all the channels through which the economic effects of Brexit would propagate. The inclusion of global value chains and indirect Brexit effects in the model leads to estimates that diverge with the results of the main literature. Indeed our findings, suggest that Brexit could be risky and costly not only for the UK but also for many EU countries. Furthermore, building on the Dietzenbacher and Lahr (2013) method of hypothetical expansion, we develop a second model and present the first empirical analysis on the consequences of domestic import substitution and trade diversion policies in Input-Output schemes. We found that allowing sectors and countries to partly substitute foreign products, leads to significantly lower losses for both macro-regions. In the second model, the UK and EU27 would lose, at worst, the 0.05 and 0.5 percent of value-added, respectively. |
| Keywords: | Brexit, trade barriers, tariffs, input-output analysis, value chains, import substitution, production networks. |
| JEL: | C67 R15 F13 F14 O21 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:anc:wmofir:152&r=all |
| By: | Culas, Richard J.; Timsina, Krishna P. |
| Abstract: | The trade between Australia and China was minimal prior to 1972; however substantial increase in merchandise trade occurred from the 1970’s through to 2011-12, which was generated through the continuous development of economic relationships between the two countries. The China-Australia Free Trade Agreement (ChAFTA) became enforced on the 20th December 2015 to strengthen the relationship between the two countries with a view to expanding their export and import industries. Specifically, ChAFTA includes the elimination or reduction of trade barriers between the countries in the form of tariffs or quotas. Removal of trade barriers will enable Australian local industries to explore new markets and investment opportunities. In particular, the agreement will provide major preferential market access for Australia with an advantage over its major agricultural competitors, including the United States, Canada and the European Union. The barriers to Australian agricultural exports will be removed across a range of products including beef, lamb, pork, dairy, wine, hides and skins, horticulture, barley and other grains, seafood and processed food. This paper reviews the potential benefits of free trade with China in relation to major agricultural commodities and their possible impacts on the development of farm economy and regional Australia. Analysis shows ChAFTA will be beneficial to increase the welfare in Australia but varies across the regions. Overall merchandise export trade is dominated by Western Australia along with low proportion of import merchandise trade with China, which shows WA will take more advantage of ChAFTA compared to other States and Territories. However, benefits received for specific sectors are varying across the States and Territories. Result revealed Victoria will be benefitted more from dairy (whole milk production); Queensland will be benefitted more from beef and New South Wales (NSW) will be benefitted more from summer crops, sheep meat, oilseed crops and wool compared to other States and Territories. In addition, this paper also analyses the possible impact of ChAFTA on excluded commodity (wheat) using Revealed Comparative Advantage (RCA) index. Result shows higher RCA on Australian wheat to trade with China compared to the world and other countries which having free trade agreement with Australia. In addition, among different States, South Australia has more RCA on wheat trade with China followed by Victoria, Western Australia and New South Wales. Therefore, it would be worthy to start negotiation for preferential FTA on wheat with China. |
| Keywords: | International Relations/Trade |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aare19:285077&r=all |
| By: | Yarlina Yacoub (Universitas Tanjungpura, Indonesia Author-2-Name: Nindya Lestari Author-2-Workplace-Name: Universitas Tanjungpura, Indonesia Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:) |
| Abstract: | Objective – This study aims to determine the relationship between FDI and trade and its effect on economic growth in ASEAN-5 countries using the Engel-Granger causality method. Methodology/Technique – The study uses OLS panel regression analysis to identify the relationship between the variables in each country. The results of the Engel-Granger causality test indicate that there is a two-way relationship between economic growth and FDI, and economic growth and international trade. Findings – When tested together through panel regression, it is concluded that the best model is a random effect method (REM) in which FDI and international trade significantly influence economic growth in the same direction. However, the relationship between FDI and international trade and its effect on economic growth in Indonesia, the Philippines and Thailand was negative, whilst in Malaysia and Singapore the relationship has a directional trend. Novelty – To reinforce the FDI inflows, authorities should continue the progressive reduction of barriers, and increase the sophistication of quality exports to compete in the global market. This paper is the first of its kind to analyze the role of both FDI and exports in the ASEAN5 economies using panel analysis. Type of Paper: Empirical. |
| Keywords: | Economic Growth; FDI; Openness; Engle-Granger Causality. |
| JEL: | F02 F10 F41 |
| Date: | 2019–03–13 |
| URL: | http://d.repec.org/n?u=RePEc:gtr:gatrjs:jber164&r=all |
| By: | Thiemo René Fetzer; Carlo Schwarz |
| Abstract: | Are retaliatiory tariffs politically targeted and, if so, are they effective? Do countries designing a retaliation response face a trade-off between maximizing political targeting and mitigating domestic economic harm? We use the recent trade escalation between the US, China, the European Union (EU) and the North American Free Trade Agreement (NAFTA) countries to answer these questions. We find substantial evidence that retaliation was directly targeted to areas that swung to Donald Trump in 2016 (but not to other Republican candidates running for office in the same year). We further assess whether retaliation was optimally chosen using a novel simulation approach constructing counterfactual retaliation responses. For China and particularly, for Mexico and Canada, the chosen retaliation appears suboptimal: there exist alternative retaliation bundles that would have produced a higher degree of political targeting, while posing a lower risk to damage the own economy. We further present evidence that retaliation produces economic shocks: US exports on goods subject to retaliation declined by up to USD 15.28 billion in 2018 and export prices have dropped significantly. Lastly, we find some evidence suggesting that retaliation is effective: in areas exposed to retaliation Republican candidates fared worse in the 2018 Midterm elections, and similarly Presidential approval ratings, especially among Democrats, have declined. |
| Keywords: | trade war, tariff, targeting, political economy, elections, populism |
| JEL: | F13 F14 F16 F55 D72 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7553&r=all |
| By: | Alessandra Bonfiglioli (Queen Mary University of London); Rosario Crinò (Università Cattolica del Sacro Cuore); Gino Gancia (Queen Mary University of London) |
| Abstract: | We use transaction-level US import data to compare firms from virtually all countries in the world competing in a single destination market. Guided by a simple theoretical framework, we decompose countries' market shares into the contribution of the number of firm-products, their average attributes (quality and efficiency) and heterogeneity around the mean. To further explore the role of exceptional firms, we also develop a novel decomposition that separates the contribution of heterogeneity from that of granularity. Our results show that the number of firm-products explains half of the variation in sales, while the remaining part is equally accounted for by average attributes and their dispersion. Quality is the main driver of firm heterogeneity. While individual firms matter, we find that heterogeneity is more important than granularity for explaining sales. We then study how the distribution of firm-level characteristics varies across countries, and we explore some of its determinants. Countries with a larger market size tend to be characterized by a more dispersed distribution of firms' sales, especially due to heterogeneity in quality. These countries also tend to be more likely to host superstar firms, although this is not the only source of higher heterogeneity. |
| Keywords: | US Imports, Firm Heterogeneity, International Trade, Prices, Quality, Variety, Granularity |
| JEL: | F12 F14 |
| Date: | 2018–11–08 |
| URL: | http://d.repec.org/n?u=RePEc:qmw:qmwecw:876&r=all |
| By: | Egger, Peter; Erhardt, Katharina |
| Abstract: | Structural quantitative work in international economics typically treats trade policy as log-linearly related to trade costs and as exogenous. This paper proposes a structural approach that allows for a non-parametric relationship and treats tariff and non-tariff trade-policy variables as potentially endogenous in log-linear estimation. We document that the data reject the assumption of log-linearity of trade costs in both the tariff- and the non-tariff-policy domains. Specifically, the partial impact of a change in tariffs is strongest for low policy barriers and medium levels of tariffs but generally decreases in the level of both non-tariff barriers and tariff barriers. To give a relevant illustration, we assess the effects of a unilateral increase of US tariffs on Chinese imports by 10 percentage points and document that the estimated effects on real bilateral trade-flow changes would be largely underestimated by standard approaches. |
| Keywords: | Generalized propensity scores; Gravity models; Non-parametric methods; Semi-parametric methods; trade policy |
| JEL: | C14 F13 F14 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13602&r=all |
| By: | Marius BRÜLHART (FERDI); Olivier CADOT (Faculté des hautes études commerciales - Université de Lausanne); Alexander HIMBERT (University of Lausanne) |
| Abstract: | Does international trade help or hinder the economic development of border regions relative to interior regions? Theory tends to suggest that trade helps, but it can also predict the reverse. The question is policy relevant as regions near land borders are generally poorer, and sometimes more prone to civil conflict, than interior regions. We therefore estimate how changes in bilateral trade volumes affect economic activity along roads running inland from international borders, using satellite night-light measurements for 2,186 border-crossing roads in 138 countries. We observe a significant ‘border shadow’: on average, lights are 37 percent dimmer at the border than 200 kilometers inland. We find this difference to be reduced by trade expansion as measured by exports and instrumented with tariffs on the opposite side of the border. At the mean, a doubling of exports to a particular neighbor country reduces the gradient of light from the border by some 23 percent. This qualitative finding applies to developed and developing countries, and to rural and urban border regions. Proximity to cities on either side of the border amplifies the effects of trade. We provide evidence that local export-oriented production is a significant mechanism behind the observed effects. |
| Keywords: | Trade liberalization, border regions, economic geography, night lights data |
| JEL: | F14 F15 R11 R12 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:fdi:wpaper:4784&r=all |
| By: | Maarten Bosker; Bastian Westbrock |
| Abstract: | In this paper, we develop a network perspective on the welfare gains from trade in today’s internationally fragmented supply chains. Towards this end, we study a Ricardian trade model featuring trade in final and intermediate products, and introduce a novel comparative statics approach to decompose the total welfare effects of an arbitrary trade cost shock into several meaningful, easily quantifiable, components. This approach uncovers a unique feature of supply chain trade: the gains from trade are not so much determined by a country's own access to the technologies and markets of its direct trading partners, but rather by its supply chain exposure to countries further up- and downstream in the global supply chain. We develop a set of simple statistics to measure each country’s supply chain exposure, show how it predicts the gains from trade, and identify each country's key trade intermediaries, i.e., other nations that primarily leverage its supply chain exposure. |
| Keywords: | global supply chains, gains from trade, network diffusion, network exposure, trade intermediation |
| JEL: | F10 F11 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7552&r=all |
| By: | Hidehiko Matsumoto (Economist, Institute for Monetary and Economic Studies, Bank of Japan (E-mail: hidehiko.matsumoto@boj.or.jp)) |
| Abstract: | This paper develops a quantitative small-open-economy model to assess the optimal pace of foreign reserve accumulation by emerging and developing countries. In the model, reserve accumulation depreciates the real exchange rate and attracts foreign direct investment (FDI) inflows, which promotes productivity growth through endogenous firm dynamics. The economy is also subject to sudden stops in the form of an occasionally binding constraint on foreign borrowing, and accumulated reserves are used to prevent severe economic downturns. The model shows that two factors are the key determinants of the optimal pace of reserve accumulation: the elasticity of the foreign borrowing spread with respect to foreign debt, and the entry cost for FDI entry. The model suggests that these two factors can explain a substantial amount of the cross-country variation in the observed pace of reserve accumulation. |
| Keywords: | Foreign Reserve Accumulation, Foreign Direct Investment, Sudden Stops, Endogenous Growth, Real Exchange Rate, Gross Capital Flows |
| JEL: | F23 F31 F32 F41 F43 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:ime:imedps:19-e-04&r=all |
| By: | Aw-Roberts, Bee Yan; Lee, Yi; Vandenbussche, Hylke |
| Abstract: | This paper documents the importance of consumer taste in trade flows using Belgian firm-product customs data by destination. We identify consumer taste through the use of a control function approach and estimate it jointly with other demand parameters using a very flexible demand specification. Consumer taste is identified for every trade flow. The results show that taste decreases in distance but this relationship is not monotonic. The contribution of consumer taste to actual export revenue ranges between 1-31% depending on the product category in the food industry. Overall, the demand shifters, taste and product quality explain twice as much of the variation in export revenues than cost. |
| Keywords: | consumer heterogeneity; exports; firm-product; productivity; Quality; tastes |
| JEL: | F14 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13614&r=all |
| By: | Takeo Hoshi; Kozo Kiyota |
| Abstract: | Promotion of inward foreign direct investment (FDI) into Japan has been an important policy in the Abenomics growth strategy. This paper examines if we observe positive impacts of the policy in the data. We first estimate a gravity model of bilateral FDIs using data for 35 OECD countries as destination countries. In estimating the model, we handle zero values for FDI stock explicitly. We take the model prediction as a reasonable counterfactual and compare that to the actual inward FDI stock for Japan. Although the actual inward FDI stock has been growing and is likely to achieve the goal of 35 trillion yen by 2020, the growth under the Abe administration has been comparable to or slightly lower than the counterfactual suggested by the estimated model. We also estimate the model without Japan as a destination country and use the estimated model to calculate the counterfactual level of Japan’s inward FDI. Although we expect the gap between the counterfactual and the actual become narrower if Abenomics policy has been successful, we fail to find that. These results cast a doubt on the effectiveness of the Abenomics policies to encourage inward FDI at least as of 2015. |
| JEL: | F21 O24 O38 O53 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25680&r=all |
| By: | Alessandra Bonfiglioli (Queen Mary University of London and CEPR); Rosario Crinò (Università Cattolica del Sacro Cuore, Dept. of Economics and Finance, CEPR and CESifo); Gino Gancia (Queen Mary University of London, CREi and CEPR) |
| Abstract: | We use transaction-level data to study changes in the concentration of US imports. Concentration has fallen in the typical industry, while it is stable by industry and country of origin. The fall in concentration is driven by the extensive margin: the number of exporting firm has grown, and the number of exported products has fallen more for top firms. Instead, average revenue per product of top firms has increased. At the industry level, top firms are converging, but top firms within country are diverging. These facts suggest that intensified competition in international markets coexists with growing concentration among national producers. |
| Keywords: | Superstar Firms, Concentration, US Imports, Firm Heterogeneity, International Trade |
| JEL: | E23 F12 F14 L11 R12 |
| Date: | 2019–02–28 |
| URL: | http://d.repec.org/n?u=RePEc:qmw:qmwecw:883&r=all |
| By: | Dagmara Nikulin (Gdansk University of Technology, Gdansk, Poland; Gdansk University of Technology, Gdansk, Poland); Joanna Wolszczak-Derlacz (Gdansk University of Technology, Gdansk, Poland); Aleksandra Parteka |
| Abstract: | This paper investigates how involvement in Global Value Chains (GVCs) affects working conditions. We use linked employer-employee data from the Structure of Earnings Survey merged with industry-level statistics on GVCs based on the World Input-Output Database. The sample consists of almost 9 million workers in 24 European countries in 2014. Given the multidimensional nature of the dependent variable, we compare the estimates resulting from a Mincerian wage model with zero-inflated negative binomial regressions that analyse other aspects of working conditions (overtime work and bonus payments). As to the impact of production fragmentation on social upgrading, wages prove to be negatively related to sectoral GVC involvement. Workers in sectors more deeply involved in GVCs have lower and less stable earnings, meaning worse working conditions; on the other hand, they are also less likely to have to work overtime, which one may see as a sign of better labour standards. |
| Keywords: | working conditions, Global Value Chains, wellbeing of workers, social upgrading |
| JEL: | F16 J81 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:gdk:wpaper:54&r=all |
| By: | Mehl, Arnaud; Schmitz, Martin; Tille, Cédric |
| Abstract: | Does distance matter for the volatility of international real and financial transactions? We show that it does, in addition to its well-established relevance for the level of trade. A simple model of trade with endogenous markups shows that demand shocks have a larger impact on trade between more distant countries. We test this implication in two steps, relying on a broad range of real and financial transactions measures, as well as several different metrics of distance (physical, linguistic, and internet). We first show that during the Great Trade Collapse of 2007-09 international transactions fell more between countries that are more distant along the various metrics, and find that the different distance measures magnify each other’s respective impacts. We then focus on a longer panel analysis of trade in goods and show that trade is more volatile between more distant countries, with again a magnification pattern across metrics of distance. JEL Classification: F10, F30 |
| Keywords: | distance, gravity, Great Trade Collapse, international finance, international trade, volatility |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20192252&r=all |
| By: | Heyman, Fredrik (Research Institute of Industrial Economics (IFN)); Sjöholm, Fredrik (Department of Economics, Lund University) |
| Abstract: | Globalization has increased in recent decades, resulting in structural changes of production and labor demand. This paper examines how the increased global engagement of firms affects the structure of the workforce. We find that the aggregate distribution of occupations in Sweden has become more skilled between 1997 and 2013. Moreover, firms with a high degree of international orientation have a relatively skilled distribution of occupations and firms with low international orientation have a relatively unskilled distribution of occupations. High- and low-skilled occupations have increased in importance whereas middle-skilled occupations have declined with a resulting job polarization. We also discuss and analyze the role played by new technology and automatization. |
| Keywords: | Occupations; Job polarization; Globalization; Multinational enterprises; Exporter; Automatization |
| JEL: | F10 F16 F23 |
| Date: | 2019–03–25 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1268&r=all |
| By: | Karine Constant (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEM - Université Paris-Est Marne-la-Vallée - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12); Marion Davin (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier) |
| Abstract: | In this paper, we consider the unequal distribution of climate change damages in the world and we examine how the underlying costs can spread from a vulnerable to a non-vulnerable country through international trade. To focus on such indirect effects, we treat this topic in a North-South trade overlapping generations model in which the South is vulnerable to the damages entailed by global pollution while the North is not. We show that the impact of climate change in the South can be a source of welfare loss for northern consumers, in both the short and the long run. In the long run, an increase in the South's vulnerability can reduce the welfare in the North economy even in the case in which it improves its terms of trade. In the short run, the South's vulnerability can also represent a source of intergenerational inequity in the North. Therefore, we emphasize the strong economic incentives for non-vulnerable - and a fortiori less-vulnerable - economies to reduce the climate change damages on - more - vulnerable countries. |
| Keywords: | overlapping generations,international trade,heterogeneous damages,climate change |
| Date: | 2018–12–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpceem:hal-01947416&r=all |
| By: | Wael Bousselmi (CREST - Centre de Recherche en Economie et Statistique [Bruz] - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz]); Patrick Sentis (MRM - Montpellier Research in Management - UM1 - Université Montpellier 1 - UM3 - Université Paul-Valéry - Montpellier 3 - UM2 - Université Montpellier 2 - Sciences et Techniques - UPVD - Université de Perpignan Via Domitia - Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School - UM - Université de Montpellier); Marc Willinger (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier) |
| Abstract: | We examine how the Brexit announcement influenced the long-run market performance of British and European listed firms. Using daily data and a sample composed of 3,015 European listed firms (805 UK and 2,210 non-UK), we find that, over a 12-month horizon, the Brexit announcement negatively affected the long-run market performance of UK firms (regardless of their business activities) and European non-British (non-UK hereafter) firms that conduct most of their business activities within the British area. We also provide evidence that, after the Brexit announcement, analysts' earnings forecasts and the realized accounting decreased and the return volatility increased for UK firms |
| Keywords: | financial market,event study,Brexit,buy-and-hold,macroeconomic news |
| Date: | 2018–12–14 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpceem:hal-01954920&r=all |
| By: | Mary Amiti; Stephen J. Redding; David Weinstein |
| Abstract: | This paper explores the impacts of the Trump administration’s trade policy on prices and welfare. Over the course of 2018, the U.S. experienced substantial increases in the prices of intermediates and final goods, dramatic changes to its supply-chain network, reductions in availability of imported varieties, and complete passthrough of the tariffs into domestic prices of imported goods. Overall, using standard economic methods, we find that the full incidence of the tariff falls on domestic consumers, with a reduction in U.S. real income of $1.4 billion per month by the end of 2018. We also see similar patterns for foreign countries who have retaliated against the U.S., which indicates that the trade war also reduced real income for other countries. |
| JEL: | F13 F14 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25672&r=all |
| By: | Felbermayr, Gabriel; Steininger, Marina |
| Abstract: | When, about twenty years ago, the Euro was created, one objective was to facilitate intra-European trade by reducing transaction costs. Has the Euro delivered? Using sectoral trade data from 1995 to 2014 and applying structural gravity modeling, we conduct an ex post evaluation of the European Monetary Union (EMU). In aggregate data, we find a significant average trade effect for goods of almost 8 percent, but a much smaller effect for services trade. Digging deeper, we detect substantial heterogeneity between sectors, as well as between and within country-pairs. Singling out Germany, and embedding the estimation results into a quantitative general equilibrium model of world trade, we find that EMU has increased real incomes in all EMU countries, albeit at different rates. E.g., incomes have increased by 0.3, 0.6, and 2.1 percent in Italy, Germany, and Luxembourg, respectively. |
| Keywords: | Euro,Trade,General Equilibrium,Quantitative Trade Models,European Union |
| JEL: | F15 F17 N74 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwkwp:2121&r=all |
| By: | Jeffery J. Reimer, Gary W. Williams, Rebekka M. Dudensing, Harry M. Kaiser |
| Abstract: | Do export promotion and related market development programs successfully achieve their objectives? Are they cost effective and a profitable investment of public funds (Kaiser et al., 2005)? This article highlights recent research that assesses how the United States economy is affected by private- and taxpayer-funded promotion activities. Recent studies suggest that U.S. market development programs, which promote U.S. agricultural exports and producer welfare, also have positive net effects on the rest of the economy as measured by changes in GDP and jobs. Private-sector contributions to these programs have been growing, and these efforts may become more necessary as products become further differentiated and specialized. |
| Keywords: | Agricultural and Food Policy |
| Date: | 2017–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:ags:tamagr:285197&r=all |
| By: | Vu, T.N.; Vo, D.H.; McAleer, M.J. |
| Abstract: | The paper develops a model to examine rent seeking in innovation and export licenses, with an application to Vietnam rice exports. Firms can lobby for export restrictions or for free trade. Innovation is introduced as a cost-reducing technology. The analysis focuses on the innovation incentives of the firm lobbying for export restrictions, and the determinants of lobbying incentives. The analysis shows that firms lobbying for export restrictions may have lower incentives to adopt technological innovations under export restrictions than under free trade. The findings can help to identify economic inefficiency when the political elites use export restrictions to seek rents. |
| Keywords: | Trade restrictions, export licenses, innovation, monopoly, rent seeking, free trade, economic development |
| JEL: | D72 G1 L12 O13 Q55 |
| Date: | 2019–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:ems:eureir:115607&r=all |
| By: | Carroll, Daniel R. (Federal Reserve Bank of Cleveland); Hur, Sewon (Federal Reserve Bank of Cleveland) |
| Abstract: | How are the gains and losses from trade distributed across individuals within a country? First, we document that tradable goods constitute a larger fraction of expenditures for poor households. Second, we build a trade model with nonhomothetic preferences—to generate the documented relationship between tradable expenditure shares, income, and wealth—and uninsurable earnings risk—to generate heterogeneity in income and wealth. Third, we use the calibrated model to quantify the differential welfare gains and losses from trade along the income and wealth distribution. In a numerical exercise, we permanently reduce trade costs so as to generate a rise in import share of GDP commensurate with that seen in the data from 2001 to 2014. We find that households in the lowest wealth decile experience welfare gains over the transition, measured by permanent consumption equivalents, that are 67 percent larger than those in the highest wealth decile. |
| Keywords: | trade gains; inequality; consumption; |
| JEL: | E21 F10 F13 |
| Date: | 2019–03–22 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedcwq:190600&r=all |
| By: | Svanidze, Miranda; Götz, Linde |
| Abstract: | Using a threshold vector error correction model approach we find the wheat market of Russia segmented, with the primary grain export region poorly integrated into the domestic market. Results also indicate that trade costs are high, hindering spatial market efficiency of wheat markets in Russia. In addition, our study demonstrates that, by including the USA as benchmark country, a comparative approach enables a more comprehensive assessment of the spatial market efficiency of the wheat market in Russia. The study shows that the distinction between grain production and export potential, especially for markets located in peripheral regions of Russia, is essential to correctly identify Russia's future role for global food security. As a general conclusion, besides raising agricultural production potential it is also essential to strengthen spatial market efficiency in the agricultural sector to boost agricultural export potential and to increase global food security. |
| Keywords: | Crop Production/Industries, Food Security and Poverty, International Relations/Trade |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iamodp:285196&r=all |
| By: | Douadia Bougherara (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Carole Ropars-Collet (AGROCAMPUS OUEST); Jude Saint-Gilles (SMART - Structures et Marché Agricoles, Ressources et Territoires - INRA - Institut National de la Recherche Agronomique - AGROCAMPUS OUEST) |
| Abstract: | We use Almost Ideal Demand Systems (AIDS) models estimated by the nonlinear seemingly unrelated regression (SUR) method on scanner data (i) to examine the demand for ecolabeled food products (organic and fair trade) as a function of the good having a private label (PL) or a national brand (NB) and (ii) to assess the impact of information campaigns promoting organic and fair trade products. We find that while demand is elastic for NB organic milk and NB fair trade coffee, it is inelastic for their PL counterpart. As for organic eggs, demand is always inelastic. Cross-price elasticities show substitutability between ecolabeled and conventional goods but only within the NB goods (milk and eggs) and within the PL goods (milk and coffee), but also complementarity between NB conventional and PL ecolabeled goods (milk and coffee). Finally, we find that while information campaigns increase the predicted expenditure shares of PL organic milk by 33%, of NB fair trade coffee by 50%, they decrease the predicted expenditure shares of PL conventional eggs but only by 3%. These effects are non-lasting. |
| Keywords: | information campaign,organic,fair trade |
| Date: | 2018–12–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpceem:hal-01947418&r=all |
| By: | Nelly Exbrayat (Univ Lyon, UJM Saint-Etienne, GATE UMR 5824, F-42023 Saint-Etienne, France); Thierry Madiès (University of Fribourg, Faculté des sciences économiques et sociales, boulevard de Perolles, 90, 1700 Fribourg (Switzerland)); Stéphane Riou (Univ Lyon, UJM Saint-Etienne, GATE UMR 5824, F-42023 Saint-Etienne, France) |
| Abstract: | This paper explores how globalization influences the decision of governments to rescue inefficient domestic firms when bailouts affect firms'markups. We develop a model of international trade where immobile domestic enterprises (DOEs) compete with foreign enterprises (FOEs) in an oligopolistic market. The decision to bail out DOEs leads to lower corporate tax revenues if FOEs are immobile whereas tax revenues might increase if FOEs are mobile. Interestingly, the mobility of FOEs makes governments more prone to rescue inefficient domestic firms because tax competition reduces the opportunity cost of a bailout policy in terms of public good provision. |
| Keywords: | bailout of manufacturing firms, tax competition, trade costs, firm mobility |
| JEL: | F12 F15 D21 H25 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:1913&r=all |
| By: | Selcuk Gul |
| Abstract: | This study examines the relation between real domestic sales and real exports for Turkish manufacturing firms. Dynamic panel data estimations based on firm level data for the period 2004 to 2014 suggest that the two variables are substitutes. Holding other factors constant, we estimate that a 10 percent decline in real domestic sales increases the real exports by about 2.6 percent, on average. However, this correlation differs among manufacturing sub-sectors, which are defined according to 2-digit NACE classification. Results indicate that substitutability between domestic and foreign sales is stronger for export-oriented, low-leveraged and younger firms. In addition, we observe that the degree of substitution between real domestic sales and exports strengthens significantly when the domestic demand conditions are weak. This shows that exporter firms in manufacturing industry have the elasticity to shift from domestic to international markets as a response to domestic demand shocks. |
| Keywords: | Domestic sales, Exports, Domestic demand, Dynamic panel data |
| JEL: | C23 D22 F14 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:tcb:wpaper:1902&r=all |
| By: | Antonella Nocco; Gianmarco I. P. Ottaviano; Matteo Salto |
| Abstract: | How should multilateral trade policy be designed in a world in which countries differ in terms of market access and technology, and firms with market power differ in terms of productivity? We answer this question in a model of monopolistic competition in which variable markups increasing in firm size are a key source of misallocation across firms and countries. We use `disadvantaged' to refer to countries with smaller market size, worse state of technology (in terms of higher innovation and production costs), and worse geography (in terms of more remoteness from other countries). We show that, in a global welfare perspective, optimal multilateral trade policy should: promote the sales of low cost firms to all countries, but especially to disadvantaged ones; trim the sales of high cost firms to all countries, but especially to disadvantaged ones; reduce firm entry in all countries, but especially in disadvantaged ones. This would not only restore efficiency but also reduce welfare inequality between advantaged and disadvantaged countries if their differences in market size, state of technology and geography are large enough. |
| Keywords: | International trade policy, monopolistic competition, firm heterogeneity, pricing to market, multilateralism |
| JEL: | D4 D6 F1 L0 L1 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1610&r=all |
| By: | Ljungberg, Jonas (Department of Economic History, Lund University) |
| Abstract: | Which have been the consequences of the euro for integration and economic performance in the Baltic Sea region? After the collapse of the Soviet Union, the three Baltic states and Poland have been rapidly catching-up with Western Europe. The Great Recession became a great setback for the former, while less so for Poland. A difference is the monetary policy: the Polish zloty depreciated in the critical moment of the crisis, while currency boards with the aim of joining the euro bestowed appreciation for the Baltics and Finland. Contrary to the purpose, monetary integration has not fostered integration in trade, and the share of the Eurozone in Baltic trade has stagnated. A comparison with other countries in the Baltic Sea region suggests that the euro provides “the golden fetters” of our time. Emigration, also a kind of integration, has become a safety valve with severe social and economic consequences for the Baltic states. |
| Keywords: | economic growth; integration; exports; EMU; Baltic Sea region; exchange rates |
| JEL: | E39 E42 F14 F15 F43 N14 |
| Date: | 2019–03–20 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:luekhi:0198&r=all |
| By: | Lim, Sunghun |
| Abstract: | Can the modern-day developing economies leapfrog manufacturing sector to directly to service sector through the global agricultural production? Global value chains (GVCs) has changed the nature of production around the world. Especially, the rise of global value chains (GVCs) in agriculture has been a salient feature of the world economy over recent years. Despite their importance for the world economy, it is, however, unclear whether participation in GVCs leads the structural transformation ─ that is, the move from an economy primarily based on agriculture to an economy primarily based on manufacture, and then on service. In this paper, I investigate the impact of the participation of GVCs in the agricultural sector on structural transformation in countries by using cross-country panel data for 183 countries (including 48 African countries) from 1990 to 2013. By using country-fixed effects, I find that in response to greater agricultural value chains participation, manufacturing employment remains stable, but employment in the services sector increases. In other words, modern-day developing economies are leapfrogging manufacturing to directly develop their services sector through GVCs in agriculture. This result is strongly and significantly robust to various model specifications with year fixed effects, regional-specific fixed effects, and time monotonicity. Also, by using alternative measures of structural transformation such as GDP shares by sectors or female employment shares, the results are still strongly robust. I measure the extent of agricultural GVCs by adopting the recent method by Wang et al. (NBER, 2017) at the country level. I control for agricultural trade policies, domestic policy to agriculture as well as agricultural land areas, urban population growth, and demographic structure of countries. This is an important result by providing the original evidence that the agricultural GVCs participation has played a significant role in economic development in the world. |
| Keywords: | International Development |
| Date: | 2019–03–27 |
| URL: | http://d.repec.org/n?u=RePEc:ags:umaesp:285103&r=all |
| By: | Diego USECHE; Ernest MIGUELEZ; Francesco LISSONI |
| Abstract: | Based on a relational view of international business, we investigate the role of migrant inventors in Cross-Border Merger & Acquisitions (CBM&As) undertaken by R&D-active firms. We hypothesize that the migrant inventors’ international social networks can be leveraged upon by their employers in order to spot and/or integrate the knowledge bases of acquisition targets in the inventors’ home country. We nuance our hypothesis by means of several conditional logistic regressions on a large matched sample of deals and control cases. The impact of migrant inventors increases with the distance between countries and for targets located in countries with weak administrative/legal systems, as well as when targets are either innovative or belong to high-tech sectors or to the same sector as the acquirer, and for full versus partial acquisitions. |
| Keywords: | cross-border mergers and acquisitions, migration, inventors, PCT patents |
| JEL: | F22 F23 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:grt:wpegrt:2019-03&r=all |
| By: | Nicholas Outlon (Centre for Macroeconomics (CFM); London School of Economics (LSE); NIESR; ESCoE) |
| Abstract: | What effect, if any, do changes in the terms of trade have on the level of output (GDP) or welfare? I examine this issue through two versions of a textbook, Hecksher-Ohlin-Samuelson (HOS), two-good model of a small, open economy. In the first version both goods are for final consumption. In the second, one good is an imported intermediate input into the other. In both versions, economic theory suggests that an improvement in the terms of trade raises welfare (consumption) but leaves aggregate output (GDP) unchanged. This follows from a continuous-time analysis using Divisia index numbers. I then show that a national income accountant applying the principles of the 2008 System of National Accounts (SNA) would reach the same conclusions. |
| Keywords: | GDP, Welfare, SNA, Hecksher-Ohlin-Samuelson, Terms of trade, Divisia |
| JEL: | E01 F11 C43 D60 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:cfm:wpaper:1906&r=all |
| By: | Sakiru, Olatunji Y |
| Abstract: | This study sets out to examine the “effect of economic growth and exchange rate on FDI, a comparative analysis of Nigeria and Ghana between the years 1990 to 2000”. Ghana and Nigeria were colonized by Britain and gained independence three years apart, that is, In March 6, 1957 Ghana gained her independence which makes her three years older than Nigeria, they are both members of the commonwealth. This note sets out to beam its search light on the comparative analysis of the effect of economic growth and exchange rate on FDI of both countries between 1990-2000 when both countries were thirty-three and thirty years old respectively. Coupled with the fact that both countries are developing economies. Data from World Development Indicators is used to run an ordinary least square or regression analysis. It was discovered that both economic growth and exchange rate are not a good predictor of foreign direct investment for both countries. |
| Keywords: | FDI, Growth and Exchange Rate |
| JEL: | E6 |
| Date: | 2019–03–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92849&r=all |
| By: | Blumenstock, Joshua; Chi, Guanghua; Tan, Xu |
| Abstract: | What is the value of a social network? Prior work suggests two distinct mechanisms that have historically been difficult to differentiate: as a conduit of information, and as a source of social and economic support. We use a rich 'digital trace' dataset to link the migration decisions of millions of individuals to the topological structure of their social networks. We find that migrants systematically prefer 'interconnected' networks (where friends have common friends) to 'expansive' networks (where friends are well connected). A micro-founded model of network-based social capital helps explain this preference: migrants derive more utility from networks that are structured to facilitate social support than from networks that efficiently transmit information. |
| Keywords: | Big Data; Development; migration; networks; social capital; Social Networks |
| JEL: | D85 O12 O15 R23 Z13 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13611&r=all |
| By: | Kangni Kpodar (International Monetary Fund (IMF)); Kodjovi Eklou (International Monetary Fund (IMF)); Stefania Fabrizio (International Monetary Fund (IMF)) |
| Abstract: | This paper investigates the impact of domestic fuel price increases on export growth in a sample of 77 developing countries over the period 2000-2014. Using a fixed-effect estimator and the local projection approach, we find that an increase in domestic gasoline or diesel price adversely affects real non-fuel export growth, but only in the short run as the impact phases out within two years after the shock. The results also suggest that the negative effect of fuel price increase on exports is mainly noticeable in countries with a high-energy dependency ratio and countries where access to an alternative source of energy, such as electricity, is constrained, thus preventing producers from altering energy consumption mix in response to fuel price changes. |
| Keywords: | Retail fuel prices,Fuel Subsidies,Export growth,Developing countries |
| Date: | 2019–02–15 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02059517&r=all |
| By: | Hyeongwoo Kim; Ying Lin; Henry Thompson |
| Abstract: | A group of researchers has asserted that the rate of exchange rate pass-through (ERPT) to domestic prices has declined substantially over the last few decades. We revisit this claim of a downward trend in ERPT to the Consumer Price Index (CPI) in a vector autoregressive (VAR) model for US macroeconomic data under the current floating exchange rate regime. Our VAR approach nests the conventional single equation method, revealing very weak evidence of ERPT during the pre-1990 era, but statistically significant evidence of ERPT during the post-1990 era, sharply contrasting with previous findings. After statistically confirming a structural break in ERPT to total CPI via Hansen's (2001) test procedure, we seek the source of the structural break with disaggregated level CPIs, pinning down a key role of energy prices in the break. The dependency of US energy consumption on imports increased since the 1990s until the recent recession. This change magnifies effects of the exchange rate shocks on domestic energy prices, resulting in greater responses of the total CPI via this energy price channel. |
| Keywords: | Exchange Rate Pass Through; Disaggregated CPI; Structural Break; Oil Price Shock |
| JEL: | E31 F31 F41 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:abn:wpaper:auwp2019-01&r=all |