nep-int New Economics Papers
on International Trade
Issue of 2019‒04‒08
35 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Changes in Canada’s Preferential Trade Network and the Welfare Effects in Agricultural Markets By Ghazalian, Pascal L.; Mosadegh Sedghy, Bahareh
  2. What gains and distributional implications result from trade liberalization? By Bas, Maria; Paunov, Caroline
  3. Measuring trade in value added: How valid is the proportionality assumption? By Arianto Patunru; Prema-chandra Athukorala
  4. Technology, Market Structure and the Gains from Trade By Impullitti, G.; Licandro, O., Rendahl, P.; Rendahl, P.
  5. 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
  6. TPP11 (CPTPP): Its Implications for Japan-Latin America Trade Relations in Times of Uncertainty By Mikio Kuwayama
  7. Revenue, Welfare and Trade Effects of European Union Free Trade Agreement on South Africa By GUEI, KORE MARC ANTOINE
  8. Globalization and the fall of markups By Michał Gradzewicz; Jakub Mućk
  9. Joining Global Production Networks: Experience and Prospects of India By Prema-chandra Athukorala
  10. Services and Manufacturing in Global Value Chains: Is the Distinction Obsolete? By Miroudot, Sébastien
  11. Inequality and Trade Policy: Pro-Poor Bias of Contemporary Trade Restrictions By Ural Marchand, Beyza
  12. Brain Drain and Brain Gain in Italy and Ireland in the Age of Mass Migration By Matteo Gomellini; Cormac Ó Gráda
  13. Chinese Capital Flows to African Economies and Real Bilateral Exchange Rates By Coletta Frenzel Baudisch
  14. “The Institutional Adjustment Margin to Import Competition: Evidence from Italian Minimum Wages” By Alessia Matano; Paolo Naticchioni; Francesco Vona
  15. Are US antidumping cases being crowded out by other forms of protectionism? A natural experiment By Prashant Desai; Robert M. Feinberg
  16. Machine imports, technology adoption and local spillovers By Békés, Gábor; Harasztosi, Péter
  17. Distance(s) and the Volatility of International Trade(s) By Mehl, Arnaud; Schmitz, Martin; Tille, Cédric
  18. Global production networks and the evolution of industrial capabilities: Does production sharing warp the Product Space? By Russell Thomson; Prema-chandra Athukorala
  19. Macroeconomic Shocks and Trade Balance Adjustments in Papua New Guinea By Nguyen, Bao; Sum, Dek
  20. Rent seeking for export licenses: Application to the Vietnam rice market By Tan Ngoc Vu; Duc Hong Vo; Michael McAleer
  21. Trade policy repercussions: the role of local product space -Evidence from China By Julien Gourdon; Laura Hering; Stéphanie Monjon; Sandra Poncet
  22. Enhancing countries' fitness with recommender systems on the international trade network By Hao Liao; Xiao-Min Huang; Xing-Tong Wu; Ming-Kai Liu; Alexandre Vidmer; Mingyang Zhou; Yi-Cheng Zhang
  23. The economic importance of the Belgian ports : Flemish maritime ports, Liège port complex and the port of Brussels – Report 2017 By Elena Gueli; Pascal Ringoot; Marc Van Kerckhove
  24. Comparative Studies of Cross-border M&A and Greenfield Investments in Response to Changes in Tax Regulation and Administration of Host Economies By Gohar S. Sedrakyan
  25. A simple model of corporate bailouts in a globalized economy By Nelly Exbrayat; Thierry Madiès; Stéphane Riou
  26. Firm Heterogeneity and the Activity of Japanese Manufacturing Multinationals in India By Hiroyuki Nishiyama; Azusa Fujimori; Takahiro Sato
  27. The Chinese are Here: Firm Level Analysis of Import Competition and Performance in Sub-Saharan Africa By Darko, Christian K.; Occhiali, Giovanni; Vanino, Enrico
  28. Understanding protectionism: Empirical analysis of protectionist attitudes in the EU By Kolev, Galina V.
  29. Spatial market efficiency of grain markets in Russia and global food security: A comparison with the USA By Svanidze, Miranda; Götz, Linde Johanna
  30. How Britain Unified Germany: Endogenous Trade Costs and the Formation of a Customs Union By Huning, Thilo; Wolf, Nikolaus
  31. Oil Prices and Inflation: Identifying Channels for Oil Exporters By Vugar Ahmadov; Salman Huseynov; Peter Pedroni
  32. Labor Market Shocks and the Demand for Trade Protection: Evidence from Online Surveys By Rafael Di Tella; Dani Rodrik
  33. FDI, multinationals and structural change in developing countries By Pineli, Andre; Narula, Rajneesh; Belderbos, Rene
  34. The Effect of Immigration on the Well-Being of Native Populations: Evidence from the United Kingdom By Papageorgiou, Athanasios
  35. Spillovers and Exports: A Meta-Analysis By Jianhua Duan; Kuntal K. Das; Laura Meriluoto; W. Robert Reed

  1. By: Ghazalian, Pascal L.; Mosadegh Sedghy, Bahareh
    Abstract: There have been some important changes in Canada’s preferential trade network over the last few years. At the regional level, the re-negotiations over the NAFTA produced the generally-resembling USMCA. At the inter-regional level, the CETA and the CPTPP marked significant steps toward promoting Canada’s trade with distant countries. This paper overviews the corresponding regional and inter-regional trade preferences for agricultural products. It examines the welfare effects of the USMCA and more pronounced regional preferential schemes, and those of the CETA and the CPTPP for Canada in the agricultural markets. It assesses the welfare outcomes from different scenarios involving various combinations of presence and absence of regional and inter-regional trade preferences. The analysis underlines that the deepening of the North American market integration would lead to increases in national welfare. It shows that inter-regional trade preferences could exceed the USMCA/NAFTA in promoting imports in some cases, resulting in increases in Canada’s national welfare. However, inter-regional trade preferences may not entirely substitute for the losses in welfare resulting from the absence/elimination of regional trade preferences in some other cases. This paper suggests that Canada would generally benefit from higher national welfare levels across agricultural markets through a simultaneous network of regional and inter-regional trade preferences.
    Keywords: Agricultural Trade; CETA; CPTPP; NAFTA; Preferential Trade Agreement; Trade Barriers; USMCA; Welfare
    JEL: F13 F15 Q17
    Date: 2019–03–27
  2. By: Bas, Maria (University of Paris 1, Centre d'Economie de la Sorbonne (CES)); Paunov, Caroline (OECD, Directorate for Science, Technology and Innovation)
    Abstract: This paper investigates the distributional impacts of trade liberalization across firms, consumers and workers. Using firm-product-level census data for Ecuador, we exploit exogenous tariff changes at entry to the World Trade Organization. We show that with input tariff cuts firms access higher quality and new input varieties. Consequently, firms increase their product scope and quality, while their production’s skill-intensity increases and costs decrease. “Real” productivity (TFPQ) increases only in the medium run, following adjustments to produce more and higher quality products. Positive immediate revenue productivity (TFPR) gains result because firms’ markups increase. Consumers still gain as quality-adjusted prices decrease and varieties increase. Workers benefit differentially: skilled workers’ wages rise compared to less skilled workers’ wages. Input-tariff liberalization also has distributional impacts across firms. Only more productive firms with high markups increase product scope and quality and gain market shares. With output-trade liberalization the least productive firms decrease their product scope.
    Keywords: gains from trade, input and output tariff reductions, product scope, product quality, market share, quantity and revenue total factor productivity, TFPQ, TFPR, skills premium, Ecuador
    JEL: F16 O30 D22 O12 O54 L60
    Date: 2019–02–13
  3. By: Arianto Patunru; Prema-chandra Athukorala
    Abstract: The validity of the ‘proportionality assumption’ made in estimating value added in exports using aggregate input-output tables is tested using separately compiled domestic- and imported-input matrices for Indonesia, Thailand, Malaysia, Taiwan, and Australia. The results show that the use of the proportionality assumption results in overestimation of value-added exports, and that the magnitude of the bias becomes amplified when the export composition of a country shifts from primary products to manufactured goods through integration into global production networks.
    Keywords: trade in value-added, global production networks, input-output analysis
    JEL: F13 F14 O19 O24
    Date: 2019
  4. By: Impullitti, G.; Licandro, O., Rendahl, P.; Rendahl, P.
    Abstract: We study the gains from trade in a new model with oligopolistic competition, firm heterogeneity, and innovation. Lowering trade costs reduces markups on domestic sales but increases markups on export sales, as firms do not pass the entire reduction in trade costs onto foreign consumers. Trade liberalisation can also reduce the number of firms competing in each market, thereby increasing markups on both domestic and export sales. For the majority of exporters, however, the procompetitive effect prevails and their avera ge markups decline. The incomplete pass-though and the reduction in the number of competitors instead dominate for top-exporters – the top 0:1% of firms which end up increasing their markup. In a quantitative exercise we find that the aggregate effect of trade-induced markup changes is pro-competitive and accounts for the majority of the welfare gains from trade. Trade-induced changes in competition affect survival on domestic and export markets and firms’ decision to innovate. All exporters, and especially the top exporters, increase their market size after liberalisation which, in turn, encourages them to innovate more. Hence, top exporters contribute negatively to welfare gains by increasing their markups but positively by increasing innovation and productivity. Firms’ innovation response accounts for a small but non-negligible share of the welfare gains while the contribution of selection is U-shaped, being negative for small liberalisations and positive otherwise. A more globalised economy is therefore populated by larger, fewer and more innovative firms, each feature representing an important source of the gains from trade.
    Keywords: Gains from Trade, Heterogeneous Firms, Oligopoly, Innovation, Endogenous Markups, Endogenous Market Structure.
    JEL: F12 F13 O31 O41
    Date: 2018–11–26
  5. 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.
    Keywords: global value chains, parts and components – P&C, trade in volume, electronics.
    JEL: F14 F15 L60
    Date: 2019
  6. By: Mikio Kuwayama (Research Fellow of Kobe University Research Institute for Economics and Business (RIEB) and Managing Director of the Japan Association of Latin America and the Caribbean (JALAC))
    Abstract: The paper examines the economic and political implications of the entry into force of the TPP11 (CPTPP) on trade relations between Japan and Latin America amid the increasing anti-globalism sentiments and protectionism in the world economy. The paper argues that its entry in force sends the world the message that Japan is prepared to play a leading role in preserving the multilateral trading system and that the benefits of TPP11 are significant; it has a potential to discourage harmful trade policies by building a 21st-century rules-based trading system, with a possibility that its trade rules will become the de facto trade rules of the Asia-Pacific region. The TPP also differs from other conventional mega FTAs by incorporating development dimensions into trade negotiations. In addition, TPP11 is likely to fill a geopolitical vacuum created by the retreat of U.S. global leadership, which is unlikely, at least for now, to be filled by China's "socialist-type" trade liberalism. Another benefit of TPP11 might be that it will open to Latin America new venues and ways to construct strategic relations with the Asia-Pacific countries, and rewrite integration strategies within the proper LAC region. A more unified and enlarged regional market resulting from joint efforts between the Alliance and Mercosur, on the one hand, and more connected regional markets with the EU, EFTA and Asia-Pacific countries (e.g., Australia, Canada, Korea, Singapore, and possibly Japan), on the other, will enhance the attractiveness of LAC as a region. However, as the membership of the Pacific Alliance expands, there might emerge two similar, overlapping transpacific mega agreements in progress; this might pose a challenge to the ongoing "Japan-led" TPP process.
    Date: 2019–03
    Abstract: The study used the partial equilibrium WITS-SMART Simulation Model to assess the impact of liberalization under the Trade Development and Cooperation Agreement (TDCA) of a free trade area between the EU and South Africa. The findings of the study reveal that total trade effects in South Africa are likely to surge by US$1.036 billion with a total welfare valued at US$134 million. Dismantling tariffs on all EU goods would be beneficial to consumers through net trade creation. Total trade creation would be US$782 million. However, South African producers are likely to contribute a trade diversion of US$254 million which has a negative impact on consumer welfare. The country might also experience a revenue loss amounting to US$562 million due to the removal of tariffs. On trade, the country’s export and import to the EU is expected to increase by US$12.419 million and US$1.266 million respectively. To mitigate revenue loss, the country should try to diversify its current tax base.
    Keywords: Revenue, Welfare, Trade Effects, EU FTA, South Africa
    JEL: F10 F17
    Date: 2017–10–25
  8. By: Michał Gradzewicz (Narodowy Bank Polski); Jakub Mućk (Narodowy Bank Polski)
    Abstract: This paper provides the evidence of a fall of markups of price over marginal costs in Poland over the last 15 years. Markups were calculated using a census of firms and the methodology proposed by De Loecker and Warzynski (2012). The fall of markups, by 18.6% for median and by 13.1% for weighted mean and experienced by 70% of firms, is robust to several empirical identification strategies. Moreover, the decline of markups is not related to changes in a sectoral composition and firms demography and is most severe in exporting firms. Our empirical results relate the fall of markups to globalization and emergence of the Global Value Chains. We show that the increasing reliance on imported components in production, together with rising concentration of domestic firms on export markets are the main factors behind the observed compression of markups. We also document a hump-shaped (U-shaped) relationship between foreign value added in exports (distance from final demand) and markups.
    Keywords: markup, globalization, GVC, competition
    JEL: C23 D22 D4 L11
    Date: 2019
  9. By: Prema-chandra Athukorala
    Abstract: Cross-border dispersion of different stages/slices of the production processes within vertically integrated global industries (‘global production sharing’) has been a key structural change in the global economy over the past four decades. This paper examines opportunities created by this phenomenon for developing countries for export expansion and India’s experience with exploiting these opportunities from a comparative East Asian perspective. The analysis reveals that India has so far failed fitting into global production networks in electronics and electrical goods, which have been the prime movers of export dynamism in China and the other high-performing East Asian countries. The findings of this study provide further support to the case made in a number of influential studies for completing the unfinished reform agenda, encompassing both trade and investment policy reforms and ‘behind-the-border’ reforms. Tightening behind the border discipline is much more important for linking India into global production networks than for the expansion of the standard labour intensive products and other conventional exports. There is also a strong case, based on the experiences in East Asia and elsewhere, for combining further reforms with a proactive investment promotion campaign to attract multinational enterprises (MNEs) engaged in global production networks.
    Keywords: India, global production networks, global production sharing, export performance
    JEL: F13 F21 F23
    Date: 2018
  10. By: Miroudot, Sébastien (Asian Development Bank Institute)
    Abstract: Many studies discuss the “de-industrialization” or “servicification” of economies in both developed and developing countries. Such studies rely on statistics that distinguish a manufacturing from a service sector. But in the age of global value chains (GVCs), it becomes increasingly difficult to disentangle manufacturing from service activities. Goods are produced with services, services are produced with goods, some manufacturing firms are factory-less, and companies tend to sell solutions to customers by bundling goods with services. This business reality has important implications for trade and industry analysis. Against this backdrop, the paper introduces a taxonomy of service activities in GVCs and describes the main statistical challenges in assessing the contribution of manufacturing and services to output, value added, or trade. It then reviews three approaches that take GVCs into account in the analysis of income, comparative advantage, and productivity to address these challenges. As statisticians are working on improving the framework for understanding global production, policymakers should be aware of the blurring lines between goods and services.
    Keywords: de-industrialization; servicification; global value chains
    JEL: F14 F23 L60 L80
    Date: 2019–03–04
  11. By: Ural Marchand, Beyza (University of Alberta, Department of Economics)
    Abstract: This paper studies the pro-poor bias of contemporary trade policy in India by estimating the household welfare effects of eliminating the current protection structure. The elimination of a pro-poor trade policy is expected to have lower welfare gains or higher welfare loss at the low end of the per capita expenditure distribution. The paper first constructs trade restrictiveness indices for household consumption items and industry affiliations using both tariffs and the ad valorem equivalent of non-tariff barriers. The welfare effects are estimated through its impacts on household expenditure and earnings. The results indicate that Indian trade policy is regressive through the expenditure channel as it disproportionately raises the cost of consumption for poorer households, while it is progressive through the earnings channel in urban areas and neutral in rural areas. The net distributional effect through these two channels is estimated to be regressive, and elimination of current trade protection structure is expected to reduce inequality. These results indicate that a trade protection structure that designed as a progressive trade policy through the earnings channel may induce price effects that are regressive through the expenditure channel.
    Keywords: Trade Protection; Consumption Inequality; Poverty
    JEL: D31 F14 I30 O12
    Date: 2019–03–27
  12. By: Matteo Gomellini; Cormac Ó Gráda
    Abstract: Emigrants from Italy and Ireland contributed disproportionately to the Age of Mass Migration. That their departure improved the living standards of those they left behind is hardly in doubt. Nevertheless, a voluminous literature on the selectivity of migrant flows— both from sending and receiving country perspectives—has given rise to claims that migration generates both ‘brain drains’ and ‘brain gains’. On the one hand, positive or negative selection among emigrants may affect the level of human capital in sending countries. On the other hand, the prospect of emigration and return migration may both spur investment in schooling in source countries. This essay describes the history of emigration from Italy and Ireland during the Age of Mass Migration from these perspectives.
    Keywords: Migration; Brain Drain; Brain Gain; Human Capital; Italy; Ireland
    JEL: F22 J61 N33 O15
    Date: 2019–03
  13. By: Coletta Frenzel Baudisch (Justus Liebig University Giessen)
    Abstract: Since the turn of the millennium, China opened up internationally both in terms of its current account (trade) and its capital account, even though the opening of the latter happened de facto, not de jure. With respect to China being Africa's largest trading partner and developing investor in combination with its desire for African natural resources, we embark on an analysis of the impact of several categories of Chinese capital flows to African economies on the bilateral real exchange rate. We conduct a panel data analysis by means of a Hausman-Taylor-estimation over the period 2003-2016. Our results suggest that capital flows from China to Africa in the form of mainly economic cooperation projects, but also FDI contribute to an appreciation of the local currencies vis à vis the RMB, while no such effect appears for aid fl ows from China. The former two categories may pose a risk of Dutch Disease effects. Since many African countries have pegged their currencies to the Euro, and the Renminbi abandoned its peg to the US Dollar over the sample period, valuation effects of capital fl ows must be interpreted in this context.
    Keywords: real bilateral exchange rates, FDI, economic cooperation, aid, trade, Sino-African economic relations.
    JEL: F19 F21 F35
    Date: 2019
  14. By: Alessia Matano (AQR-IREA, University of Barcelona); Paolo Naticchioni (AQR-IREA, University of Barcelona); Francesco Vona (AQR-IREA, University of Barcelona)
    Abstract: A growing body of research has contributed to understanding the labor market and political effects of globalization. This paper explores an overlooked aspect of trade-induced adjustments in the labor market: the institutional aspect. We take advantage of the two-tier collective bargaining structure of the Italian labor market, whereby the first tier entails setting minimum wages at the contract level. Using an instrumental variable strategy and exploiting variations in contract-level exposure to trade, we find for the 1995-2003 period that on average, the surge in imports decreased contractual minimum wages by 1.5%. This impact increased with the increase in the share of unskilled workers employed under this contract. This negative institutional effect contrasts with a nonsignificant effect of trade on total wages, with the latter becoming positive and large only for highly skilled workers.
    Keywords: bargained minimum wages; import competition; labor market institutions; skills JEL classification: J50, F16, J31, J24
    Date: 2019–04
  15. By: Prashant Desai; Robert M. Feinberg
    Abstract: The issue of substitutability between various modes of import protection has been studied by economists in various ways. Since President Donald Trump came into office and soon started imposing tariffs, the need by US firms to file antidumping (AD) cases would seem to have been reduced. We explain quarterly US AD filings, based on data from 1995 through 2016, and then predict US AD petitions for 2017 and 2018. We reject a hypothesis of substitution away from AD in the Trump era of general protectionism, but do find some support for the notion that protection moves downstream, with greater than predicted AD filings in downstream metals sectors.
    Keywords: Antidumping; trade policy substitution; Trump tariffs
    JEL: F13
    Date: 2019
  16. By: Békés, Gábor; Harasztosi, Péter
    Abstract: In less developed economies import can be the primary source of adopting new technologies in the form of modern production equipment. This paper explores the spread of manufacturing machinery across locations and investigates the effects of previous importers on the firms' decision to import certain types of foreign machines. Using a uniquely compiled Hungarian firm-level dataset for the 1992-2003 period, we find that the probability of importing a particular piece of sector specific machinery is positively affected by the presence of local firms previously importing the same machine. A similar pattern is found with regards to the choice of source country. While these results offer evidence of positive externalities, we find that these benefits are concentrated in large and foreign owned companies.
    Keywords: agglomeration; impact of technology adoption; machine imports; trade-related spillovers
    JEL: D22 F14 R12
    Date: 2019–03
  17. 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.
    Keywords: distance; Gravity; Great Trade Collapse; international finance; International trade; volatility
    JEL: F10 F30
    Date: 2019–03
  18. By: Russell Thomson; Prema-chandra Athukorala
    Abstract: Do production capabilities of countries evolve from existing capabilities, or do they emerge de novo? The Product Space approach developed by Hidalgo, Klinger, Barabási & Hausmann (2007) postulates that a country’s existing industrial structure largely determines its opportunities for industrial upgrading. We advance the Product Space approach to accommodate the role of global production sharing. Using a newly constructed multi-country dataset of manufacturing exports that distinguishes between trade within global production networks and traditional horizontal trade we show that existing industrial structure has a lesser impact on industrial upgrading within vertically integrated global industries.
    Keywords: Product space, global production sharing, global production networks, manufacturing exports
    JEL: F14 F23 O14 O24
    Date: 2018
  19. By: Nguyen, Bao; Sum, Dek
    Abstract: Previous studies have mostly focused on the relationship between macroeconomic shocks and trade balance adjustments of resource-rich countries while largely overlooked countries with trade composition of high resource-export and strong import-dependence such as Papua New Guinea. Utilising a Bayesian Vector Autoregressive (BVAR) model, we quantify the relative importance of macroeconomic shocks on the country's trade balance adjustments and examine how they evolve over time. Our identification strategy takes advantage of the fact that shocks generated from the resource sector and non-resource sector would have heterogeneous impacts on trade activity. We document that at a different point in time, all identified shocks except inflation contributed significantly to the fluctuations in trade balance with varying magnitude. The impulse responses show that one standard deviation of devaluation in the real exchange rate and resource boom lead to an immediate improvement in the trade balance. Shocks in the non-resource sector and inflation are found to have a positive impact on the trade balance, but they are mostly statistically insignificant.
    Keywords: Bayesian VAR, Trade Balance, Resource-Rich Developing Countries, Import-dependent, Papua New Guinea
    JEL: F14 F31 F32
    Date: 2019–03–26
  20. By: Tan Ngoc Vu (Business and Economics Research Group Ho Chi Minh City Open University, Vietnam.); Duc Hong Vo (Business and Economics Research Group Ho Chi Minh City Open University, Vietnam.); Michael McAleer (Department of Quantitative Finance National Tsing Hua University, Taiwan and Econometric Institute Erasmus School of Economics Erasmus University Rotterdam, The Netherlands and Department of Quantitative Economics Complutense University of Madrid, Spain And Institute of Advanced Sciences Yokohama National University, Japan.)
    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
  21. By: Julien Gourdon (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique); Laura Hering (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne); Stéphanie Monjon (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique); Sandra Poncet (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne)
    Abstract: Our study shows that the relatively under-studied VAT export rebate system is a major industrial policy of the Chinese authorities to support exports. We use city-specific export-quantity data at the HS6-product level over the 2003-12 period to assess how changes in the VAT export tax have affected China's export performance. We are particularly interested in how the impact of this policy varies within products across cities depending on how well connected the targeted product is to the local productive structure. Our difference-indifference estimates exploit an eligibility rule disqualifying some export flows from the rebates. Our results suggest that a one percent rise in the VAT export tax leads to a 6.6% relative decrease in eligible export quantities. We then show that the effectiveness of this export tax policy is magnified when it applies to products with denser links with the local productive structure. Hence export benefits from VAT export rebates are greater for cities that have the necessary capabilities and resources to carry out the activities supported by this rebate policy.
    Keywords: VAT system,policy evaluation,export tax,export performance,trade elasticity,product relatedness,China
    Date: 2019–03–13
  22. By: Hao Liao; Xiao-Min Huang; Xing-Tong Wu; Ming-Kai Liu; Alexandre Vidmer; Mingyang Zhou; Yi-Cheng Zhang
    Abstract: Prediction is one of the major challenges in complex systems. The prediction methods have shown to be effective predictors of the evolution of networks. These methods can help policy makers to solve practical problems successfully and make better strategy for the future. In this work, we focus on exporting countries' data of the international trading network. A recommendation system is then used to identify the products corresponding to the production capacity of each individual country, but are somehow overlook by the country. Then, we simulate the evolution of the country's fitness if it would have followed the recommendations. The result of this work is the combination combine these two methods to provide insights to countries on how to enhance the diversification of their exported products in a scientific way and improve national competitiveness significantly, especially for developing countries.
    Date: 2019–04
  23. By: Elena Gueli (National Bank of Belgium); Pascal Ringoot (National Bank of Belgium); Marc Van Kerckhove (National Bank of Belgium)
    Abstract: This Working Paper analyses the economic importance of the Belgian ports largely based on annual accounts data for the year 2017. As the years prior to 2017 have been described in earlier papers in the same series, the emphasis lies on the figures for 2017 and the developments between 2016 and 2017 . After the stagnation in 2016, direct value added at the Belgian ports rose by 7.3% from € 18 052 million to € 19 368 million (current prices) or roughly 4.4% of Belgium’s GDP. All ports, with the exception of the Liège port complex, contributed to value added growth at the Belgian ports. The ports of Antwerp and Ghent were the most important players. The biggest contributing sectors to value added growth were the chemical industry and, to a lesser extent, cargo handling and the metalworking industry. In 2017, indirect value added was around 82% of direct value added. Direct value added increased significantly at the ports of Ghent, Brussels and Antwerp, by 13.4%, 16.0% and 6.1% respectively. The increase by more than 3% of direct value added at the ports of Zeebrugge and Ostend was also substantial. Direct value added fell by 2.4% at the Liège port complex. After the decline between 2012 and 2015, direct employment at the Belgian ports was up for the second year in a row. Between 2016 and 2017, the number of direct full-time equivalent jobs rose by 0.8%, from 115 401 to 116 311 or approximately 2.8% of Belgium’s total domestic employment. All ports, with the exception of Ostend and Brussels, contributed to employment growth at the Belgian ports. The ports of Antwerp and Ghent were the most important players. The biggest contributing sectors to employment growth were cargo handling and, to a lesser extent, the chemical industry. In 2017, indirect employment was around 120% of direct employment. Direct employment increased by around 1% at the ports of Antwerp, Ghent and Zeebrugge. Growth at the Liège port complex was more modest at 0.4%. The number of direct full-time equivalent jobs fell at the ports of Ostend and Brussels, by 1.2% and 4.2% respectively. The pattern of investment is closely linked to projects and is therefore highly volatile. After the decline between 2012 and 2014, direct investment at the Belgian ports was up for the third year in a row. Between 2016 and 2017, investment was up by 2.4%, from € 4 711 million to € 4 825 million. The port of Ghent and, to a lesser extent, the Liège port complex contributed to investment growth at the Belgian ports. The biggest contributing sectors to investment growth were the ‘port construction and dredging’ sector and, to a lesser extent, cargo handling, and the energy and chemical industries. Based on the figures of the traffic, the Flemish ports can be considered as real bridgeheads for trade with the UK. Developments regarding the modalities and consequences of the Brexit therefor should be followed with the greatest attention. Given the existing import and export volumes in terms of tonnage, it seems it will mostly be a challenge in Zeebrugge and to some extent for Antwerp. As a supplier to both China and the United States, Belgium is indirectly involved in trade between the two countries. If protectionism would close the United States off to exports from abroad, Belgian economy might get impacted one of the most in Europe.
    Keywords: Belgian ports, microeconomic data, direct effects, indirect effects, input-output table
    JEL: C13 C43 C67 C81 J21 J49 L91 L92 R11 R15 R41
    Date: 2019–03
  24. By: Gohar S. Sedrakyan (International Center for Public Policy, Georgia State University, USA)
    Abstract: We study and compare the impact of tax indicators, described by Paying Taxes scores of Doing Business report, on two modes of FDI in equity capital- greenfield FDI and cross-border mergers and acquisitions (M&As). Then, we apply 25 percent improvement to each tax factor and evaluate this effect on inbound flow of FDI determinants. The study compares four methods-the ordinary least squares, random-effects, fixed-effects, and Hausman-Taylor models- applied to the panel data for one hundred sixty countries for the period from 2009 to 2017. The consummate range of Hausman-Taylor tools when applied to studies of panel datasets with time-varying, time-invariant and endogenous parameters of tax administration reveals the divergence among the factors appealing to M&A and greenfield investors. The study assesses the higher sensitivity of M&A to the factors of economic development, overall business friendliness and location of a potential host economy. The countries at the lower end of GDP per capita performance are more likely to attract foreign direct investments, if the message about the domestic reforms in tax regulations and administration targets greenfield investors.
    Date: 2019–04
  25. By: Nelly Exbrayat (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique); Thierry Madiès (Université de Fribourg - University of Fribourg); Stéphane Riou (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique)
    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 firm s 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
    Date: 2019
  26. By: Hiroyuki Nishiyama (School of Economics, University of Hyogo, Japan); Azusa Fujimori (Faculty of Management, Osaka Seikei University, Japan); Takahiro Sato (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)
    Abstract: This paper anatomizes the linkage between country/region characteristics and Japanese MNE activity in India from both theoretical and empirical sides. We construct a North-South firm-heterogeneity model with FDI and exchange rate. We use this model to make three contributions: First, we theoretically reveal how country characteristics affect the average sales of the firm in the host country. Secondly, we make clear the state-level characteristics on three main industrialized areas in India using the data from some valuable databases. Thirdly, we estimate determinant factors of average sales of each Japanese affiliate firms in India focusing on regional characteristics derived in the theoretical part using firm-level data. We also construct several proxy variables of determinant factors of average sales in state-level and put into estimated regression equation. This empirical analysis targets at the 1990s and 2000s. Over this period, India enjoyed steady economic growth and it can be linked with increase of FDI inflow and technological spillover from MNEs. We find out that some regional characteristics such as level of human-capital or transportation cost in each state and also exchange rate have a significant effect on average sales of each Japanese affiliate firms in India.
    Keywords: Firm heterogeneity, foreign direct investment, India, Japanese multinational enterprises
    JEL: F10 F12 F23 L25 O53 R30
    Date: 2019–03
  27. By: Darko, Christian K.; Occhiali, Giovanni; Vanino, Enrico
    Abstract: This study uses firm level data on 19 Sub-Saharan Africa countries between 2004 and 2016 to provide a rigorous analysis on the impact of Chinese import competition on productivity, skills, and performance of firms., We measure import competition and ports accessibility at the city-industry level to identify the relevance of firms’ location in determining the impact of Chinese imports competition. To address endogeneity concerns, a time-varying instrument for Chinese imports based on the interaction between an exogenous geographic characteristic and a shock in transportation technology is developed. The results show that imports competition has a positive impact on firm performance, mainly in terms of productivity catch-up and skills upgrading. Of particular interest is the finding that the effects of import competition from China are stronger for more remote firms that have lower port accessibility, an indication that Chinese imports in remote areas improves productivity of laggard firms, employment, and intensity of skilled workers. Our findings indicate that African firms are improving their performance as a consequence of the higher Chinese import intensity, mainly through direct competition and the use of higher quality inputs of production sourced from China.
    Keywords: Research Methods/ Statistical Methods
    Date: 2018–05–24
  28. By: Kolev, Galina V.
    Abstract: A changing landscape in trade policy in recent years is undoubtedly related to changing voter preferences. Based on Eurobarometer survey data, the present paper investigates both the factors determining the level of support for protectionism and the striking inconsistency of responses to questions related to free trade and protectionism. EU citizens are more likely to support protectionism when the economy runs smoothly and rejects protectionism if the national economy is not in the best shape. Unemployment, bad economic situations as well as negative feelings regarding immigration are identified as possible reasons to call for protectionism while respondents are favouring free trade at the same time. The inconsistent attitudes toward free trade and protectionism are a matter of lacking knowledge of political issues. Better educated EU citizens are all less likely to support free trade and protectionism at the same time. This applies to respondents who show a higher level of knowledge regarding basic EU-related facts as well as to those who discuss political matters with friends more often. A possible way to tackle this problem is a broad information strategy covering the topics of international econom-ics across several media channels. Especially radio, press and internet are identified as media which seem to contribute to a better understanding of these complex issues.
    JEL: F13 F59
    Date: 2019
  29. By: Svanidze, Miranda; Götz, Linde Johanna
    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: spatial market efficiency,grain production potential,Russia,TVECM,regularized Bayesian estimator
    Date: 2019
  30. By: Huning, Thilo; Wolf, Nikolaus
    Abstract: We analyze the foundation of the German Zollverein as an example of how geography can shape institutional change. We show how the redrawing of the European map at the Congress of Vienna 1815, notably Prussia's control over the Rhineland and Westphalia, affected the incentives for policymakers to cooperate. Our argument comes in three steps. First, we show that the new borders were not endogenous to trade. They were at odds with the strategy of Prussia in 1815, but followed from Britain's intervention at Vienna regarding the Polish-Saxon question. Second, we develop a theoretical framework, where state planners set tariffs on imports and transits to maximize revenue. We show that in a world with transit tariffs a revenue-maximizing state planner faces a trade-off between benefits from cooperation and the cost of losing geographical advantage. In a third step we calibrate the model combining historical data on prices, freight rates, and market sizes with GIS data on lowest costs routes under endogenous tariffs. We then run counterfactuals to show how borders affected incentives: if Prussia would have succeeded with her strategy to gain the entire Kingdom of Saxony instead of the western provinces, the Zollverein would not have formed. We conclude that geography can shape institutional change. To put it differently, as a collateral damage to her intervention at Vienna, Britain unifed Germany.
    Keywords: Customs Union; Economic Geography; Germany; Trade agreements; Transit Trade
    JEL: D74 F13 F15 F55 N73
    Date: 2019–03
  31. By: Vugar Ahmadov (Central Bank of Azerbaijan Republic); Salman Huseynov (Central Bank of Azerbaijan Republic); Peter Pedroni (Williams College)
    Abstract: In this paper, we study oil price pass through into domestic inflation in a panel of oil exporting countries and propose a methodology to disentangle potential effects of different transmission channels. In particular, we investigate effects of three transmission channels, namely, import (cost) channel, exchange rate channel, and fiscal (demand) channel and quantify the relative importance of them. We find that the most important channel is the import channel and the least important one is the fiscal channel in contrast to wildly held belief. This finding, though surprising, can be explained by vast heterogeneity and rising integration among countries. We also find that institutional arrangements such as exchange regime, existence of fiscal rules and sovereign wealth funds are important pillars of a lower inflation environment in oil exporting countries.
    Keywords: Panel VAR, Oil Exporting Countries
    JEL: C22 C23 E31
    Date: 2018–01–02
  32. By: Rafael Di Tella; Dani Rodrik
    Abstract: We study preferences for government action in response to layoffs resulting from different types of labor-market shocks. We consider the following shocks: technological change, a demand shift, bad management, and three kinds of international outsourcing. Respondents are given a choice among no government action, compensatory transfers, and trade protection. In response to these shocks, support for government intervention generally rises sharply and is heavily biased towards trade protection. Demand for import protection increases significantly in all cases, except for the “bad management” shock. Trade shocks generate more demand for protectionism, and among trade shocks, outsourcing to a developing country elicits greater demand for protectionism than outsourcing to a developed country. The “bad management” shock is the only scenario that induces a desired increase in compensatory transfers. Effects appear to be heterogeneous across subgroups with different political preferences and education. Trump supporters are more protectionist than Clinton supporters, but preferences seem easy to manipulate: Clinton supporters primed with trade shocks are as protectionist as baseline Trump voters. Highlighting labor abuses in the exporting country increases the demand for trade protection by Clinton supporters but not Trump supporters.
    JEL: F16
    Date: 2019–03
  33. By: Pineli, Andre (Henley Business School, University of Reading); Narula, Rajneesh (Henley Business School, University of Reading); Belderbos, Rene (UNU-MERIT, Maastricht University and KU Leuven)
    Abstract: Economic development can be defined as a process in which output growth is accompanied by qualitative changes in the structures of production and employment. Can FDI affect this process? This paper looks for answers in two ways. First, it reviews the extant knowledge about the relationship between MNE activity and economic development in developing countries. Core theoretical and conceptual issues are presented and the key findings of both microeconomic (FDI linkages and spillovers) and macroeconomic (FDI-growth nexus) empirical studies are discussed. The main message of both streams of literature is that FDI has the potential to catalyse development, but actual outcomes are contingent on several factors, such as the absorptive capacity of domestic firms and the level of development of local financial markets. Second, the paper addresses the relationship between FDI and structural change more directly, in a cross-country context, using a two-step estimation approach that is consistent with both theoretical arguments and previous empirical findings which suggest that the FDI-development nexus is highly country-specific. The results confirm such heterogeneity and suggest that the interaction between the sectoral concentration of FDI and the development stage of the country plays a role in determining the development impact of FDI.
    Keywords: foreign direct investment, multinational enterprises, developing countries, economic development, structural change
    JEL: D62 F23 L16 O11 O14 O19 O24
    Date: 2019–02–14
  34. By: Papageorgiou, Athanasios
    Abstract: Immigration has long been a controversial topic in the political landscape of the United Kingdom. Public scepticism over the adverse effects of immigration has largely determined the outcome of the recent referendum on the UK’s membership in the EU. This is especially the case for certain demographic groups, such as older people who tend to be more opposed to immigration. The aim of this study is to explore the relationship between migrant inflows and the subjective well-being of natives in the United Kingdom. The empirical analysis relies on a combined dataset from the British Household Panel Survey (BHPS) and the UK Household Longitudinal Study (UKHLS) for the entire UK covering the period 2004-2016, while subjective well-being is captured by life satisfaction and general happiness. Using respondents’ geographic identifiers allows us to map net migration at the local authority level. Our results suggest that immigration has only a minor effect on the subjective well-being of natives. We also examine how our estimates vary across socio-demographic groups and conclude that there is some degree of heterogeneity in terms of gender, age, marital and job status, although our results are not statistically significant. To account for endogeneity and reverse causality we apply the instrumental variable (IV) approach. The IV results suggest a positive effect of immigration on natives’ well-being, however the magnitude of the estimated coefficient appears to be quite small. Furthermore, we perform several additional tests to ensure the robustness of our estimates. Finally, we suggest that labour market and health outcomes may be two possible channels through which migrant inflows affect the subjective well-being of British natives.
    Keywords: Subjective well-being; Immigration; Fixed effects; Local authority district; UK
    JEL: C23 F22 I31 R23
    Date: 2018–09
  35. By: Jianhua Duan; Kuntal K. Das (University of Canterbury); Laura Meriluoto (University of Canterbury); W. Robert Reed (University of Canterbury)
    Abstract: This study uses meta-analysis to analyze the empirical literature on spillovers and exports. It collects 3,291 estimated spillover effects from 99 studies. The estimated spillover effects in the literature span a large number of types and measures of both exports and spillovers. As a result, we transform estimates to partial correlation coefficients (PCCs). We analyze these transformed effects using four different versions of Weighted Least Squares estimators, incorporating both meta-analytic “Fixed Effects” and “Random Effects”. Our analysis produces three main findings. First, while we estimate a mean overall effect of spillovers on exports that is statistically significant, the size of the effect is economically negligible. Second, we find evidence of positive publication bias using conventional Funnel Asymmetry Tests. However, the size of the estimated publication bias is small, and disappears in some regressions when other explanatory variables are included in the analysis. Third, using both Bayesian Model Averaging and frequentist WLS estimation, we find that some data, estimation, and study characteristics are significant in some regressions. However, only a few of the characteristics are robust, and none are large in size.
    Keywords: Spillovers, Exports, Meta-analysis; Meta-Regression Analysis; Bayesian Model Averaging, Partial Correlation Coefficient
    JEL: D62 F10 F20 O30 C80
    Date: 2019–04–01

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