|
on International Trade |
| By: | Abdelaaziz Aït Ali; Rim Berahab |
| Abstract: | This study assesses and compares the determinants of intra-trade in the Economic Community of West African States (ECOWAS) and the Association of Southeast Asian Nations (ASEAN). Regarding the adopted methodology, we estimate two versions of the gravity model over intra-trade. For the two communities, the first model captures standard effects of the exporting and the importing economic size, the distance, contiguity, while the second model incorporates, as additional explanatory variables, the quality of infrastructure and the bilateral complementarity. The Pseudo Poisson Maximum Likelihood (PPML) technique is used to offset the systematic heteroscedasticity bias. The results show that the effort of export in ECOWAS captured through the elasticity to export is surprisingly higher than the ASEAN, once we control for the infrastructure and complementarity. Transaction costs, captured, inter alia, through the landlockness variable, are very informative in this case, as they has lost significance in the augmented gravity model mainly for the ECOWAS, meaning that what matters the most in this case is infrastructure base and complementarity index that allows the country to overcome geographic constraints. Then, we simulate the potential or the theoretical trade within the ECOWAS and compare it to observed data, using the coefficients estimated over the ASEAN. Results suggest that trade potential within the ECOWAS, remains below the potential given by the gravity model, especially for small economies in the community. This calls for pro-active strategic policies that aim to reap the benefits of trade liberalization and fulfill the potential. This comes through closing Africa’s infrastructure gap to reduce trade costs and the promotion of economic diversification. In fact, estimation results display higher sensitiveness to infrastructure and complementarity indexes in the ECOWAS than the ASEAN. Nonetheless, trade dynamics are more complicated and depend on several factors of which the centrality of local product competitiveness. The latter can indeed determine how far ECOWAS’s products can replace foreign products at least in the domestic market. A brief analysis of revealed comparative advantage (RCA) shows that aside from primary commodities, the majority of products imported by the ECOWAS are supplied by other countries who have a stronger RCA. |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:ocp:rpaper:rp1809&r=all |
| By: | James Lake (Southern Methodist University); Tibor Besedes (Georgia Institute of Technology); Tristan Kohl (University of Groningen) |
| Abstract: | What causes U.S. trade with Mexico and Canada to continue growing faster, for up to a decade, relative to countries with which the U.S. does not have a free trade agreement? Baier and Bergstrand (2007) suggest that tariff phase-out and delayed pass-through of tariffs into import prices could cause such prolonged differential import growth. We examine how tariff cuts negotiated under the Canada-US Free Trade Agreement and the North American Free Trade Agreement (NAFTA) affected U.S. import growth in 1989�2016 using detailed product-level data on tariff phase-out in the original treaties. We find essentially no evidence for the tariff phase-out or delayed pass through explanations. Rather, we find evidence for an important role played by NAFTA tariff cuts reducing the impacts of frictions at various extensive margins. |
| Keywords: | Free Trade Agreements, CUSFTA, NAFTA, trade, phase-out, tariffs, extensive margin. |
| JEL: | F1 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:smu:ecowpa:1903&r=all |
| By: | Bekkers, Eddy; Teh, Robert |
| Abstract: | The WTO Global Trade Model is employed to project the medium-run economic effects of a global trade conflict. The trade conflict scenario is based on recent estimates in the literature of the difference between cooperative and non-cooperative tariffs. The study provides three main insights. First, the projected macroeconomic effects in the medium run are considerable. A global trade conflict started in 2019 would lead to a reduction in global GDP in 2022 of about 1.96% and a reduction in global trade of about 17% compared to the baseline. For context global GDP fell about 2.1% and global trade 12.4% in the global financial crisis of 2009. Second, behind the single-digit aggregate production effects there are much larger, double-digit sectoral production effects in many countries, leading to a painful adjustment process. In general, a global trade conflict leads to a reallocation of resources away from the most efficient allocation based on comparative advantage. Third, the large swings in sectoral production lead to substantial labour displacement. On average 1.15% and 1.74% of high-skilled and low-skilled workers respectively would leave their initial sector of employment. |
| Keywords: | computable general equilibrium (CGE) model,Nash tariffs,revealed comparative advantage (RCA),labour displacement |
| JEL: | B41 C63 F13 F16 F51 F53 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wtowps:ersd201904&r=all |
| By: | Andrea Andrenelli; Iza Lejárraga; Sébastien Miroudot; Letizia Montinari |
| Abstract: | Global value chains (GVCs) have sharpened the interdependencies between trade and foreign direct investment (FDI). Using a novel micro-level dataset covering about 27 000 corporate relationships of 147 multinational enterprises (MNEs) in 13 sectors, new evidence is provided on how firms organise their production globally by combining trade with investment, and on a range of non-equity, contract-based partnerships. The analysis leads to five stylised facts. First, MNE activities are a combination of trade, FDI and strategic partnerships. All firms rely on a mix of these different types of corporate relationships. Second, the configuration of trade, investment and strategic partnerships varies across sectors, firms and markets. The results highlight considerable firm-level heterogeneity within the same industry and across the different modes of entry. Third, investment performs various functions in GVCs. In addition to traditional forms of FDI such as “market-seeking” or “input-seeking”, investment “in capabilities” or “conglomerate” FDI also account for a relevant share of equity-based relationships. Fourth, support business functions emerge as key building blocks in GVCs, which suggests that policy reforms in transversal services sectors that support all GVCs should merit special attention. Fifth, GVCs display a clear geographical organisation. While domestic corporate relationships may lead to higher volumes of activities, in terms of the number of relationships MNEs have more partners abroad. Moreover, the large majority of GVC interactions take place within OECD countries. Overall, the complex and heterogeneous interlinkages observed in modern firm strategies highlight the importance of ensuring a level playing field for both trade and investment. |
| Keywords: | investment, multinational enterprises, Trade |
| JEL: | L23 L24 F23 |
| Date: | 2019–04–25 |
| URL: | http://d.repec.org/n?u=RePEc:oec:traaab:227-en&r=all |
| By: | Roy, Martin |
| Abstract: | Services have long been perceived as playing a secondary role in world trade. In particular, the role of services trade policies and multilateral services commitments often tends to be downplayed. However, in value added terms, services account for about 50% of world trade and are significant in exports of countries of all levels of development. In addition, cross-border trade is expanding as a result of technological advances, and the supply of services by foreign affiliates (mode 3) exceeds trade through other modes of supply. Services trade policies, which cover a wide range of "inside-the-border" measures, are an important determinant of foreign direct investment, economy-wide productivity, manufacturing competitiveness and exports, and flows of services value added. This paper underscores, on the basis of recent services data and a growing body of research on the impact of services policies, the role of services trade in economic development, trade integration, and inclusiveness. It argues that the limited attention given to services trade policies and to international commitments is increasingly out of step with the role of services in the global economy. Indeed, services trade policies are often restrictive and multinational commitments are generally modest. Taking steps to raise the profile of services trade within government policy-making would help close this gap and highlight the contribution of services trade policy to a wide range of broader national objectives that have an important services dimension, whether SME and gender policy, or the achievement of Sustainable Development Goals (SDGs). |
| Keywords: | WTO,GATS,trade in services,trade in value added |
| JEL: | F13 F15 F53 L8 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wtowps:ersd201901&r=all |
| By: | Razin, Assaf; Sadka, Efraim |
| Abstract: | Globalization, in the form of financial flows, which is always advantageous on an aggregative level, typically creates winners and losers, if left exclusively to market forces. The effects of financial globalization on income inequality depends on whether the country exports its capital to the rest of the world or imports capital from abroad. In the capital-exporting case, financial globalization drives up return to savings and drives down wages. In the capital-importing case, financial globalization tends to raise wages but lower return on savings. Therefore, the distributive policies of the welfare state in its role of spreading the gains from financial globalization to various income groups varies, depending on whether the country exports, or imports capital. The paper demonstrates that typical welfare-state redistribution policies, governed by a majority of the population, spreads the globalization's gains from trade to all income groups, even those who are low skilled and have small capital endowments. Therefore, financial globalization of a welfare- state economy generates a Pareto improvement. At the same time, globalization, through enhanced capital mobility and high-skill emigration diminishes the generosity of the welfare state. |
| Keywords: | Capital Export; capital import; Gains from trade; generosity of welfare state |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13684&r=all |
| By: | Yuqing Xing (National Graduate Institute for Policy Studies, Tokyo, Japan) |
| Abstract: | Many American multinational corporations (MNCs) have turned into factory-less. They outsource the production of their products to foreign companies and derive the largest share of their revenue from the intellectual property of core technologies and brand names. When factory-less American MNCs sell their products assembled by foreign contract manufacturers in overseas markets, they actually gexport h the value added attributed to their intellectual property embedded in those physical goods. However, conventional trade statistics are compiled based on the value of goods crossing national borders, as declared to customs. The value added of the intellectual property is generally not recorded as part of US exports. We use Apple, a typical factory-less American company that employs exclusively foreign contact manufacturers to assembly its products, as a case to illustrate why and how conventional trade statistics underestimate actual US exports in the age of global value chains. According to our analysis of this case, if the value added of Apple intellectual property sold to foreign consumers was counted as part of US exports, total US exports in 2015 would increase by 3.4%, and its trade deficit would decrease by 7.0%. In terms of bilateral trade, the value added under examination here would raise the US exports to China and Japan by 16.6% and 8.6% respectively, and lower its trade deficit with the two countries by 5.2% and 7.8% accordingly. |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:ngi:dpaper:19-01&r=all |
| By: | Antonello Zanfei (Department of Economics, Society & Politics, Universit? di Urbino Carlo Bo); Andrea Coveri (Department of Economics, Society & Politics, Universit? di Urbino Carlo Bo); Mario Pianta (Scuola Normale Superiore, Florence) |
| Abstract: | The modern process of digitalization of the world economy entails global flows of investment in technology-based industries and knowledge activities located upstream of value chains. This work exploits the wealth of information offered by the fDi Markets database to provide an overview about the geographical patterns of FDIs and of specialization in digital industries and in technological activities.We showremarkable differences across both advanced and emerging economies in this respect. Europe is both a big attractor and a big investor in digital related business, but relies on emerging economies more to offshore production than to set up R&D labs in these countries. By contrast, North American economies are more prone to engage in knowledge intensive FDIs towards the most dynamic emerging countries than is the case of Europe.Emerging economies also play a large variety of rolesinglobal flows of investment in digital industries.However, with the relevant exceptions of China, India and the Four Asian Tigers, inward and outward FDIsof Emerging economies are predominantlyproduction-oriented, with a lower involvement in R&D, Design and ICT activities. Hence, the observed patterns of FDIs appear to consolidate existing hierarchies in digital related global production networks, creating limited upgrading opportunities in the case of most emerging economies. |
| Keywords: | Foreign direct investment, globalization, digitalization, global value chains. |
| JEL: | F12 F21 F23 L23 M21 O30 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:urb:wpaper:19_03&r=all |
| By: | Assaf Razin; Efraim Sadka |
| Abstract: | Globalization, in the form of financial flows, which is always advantageous on an aggregative level, typically creates winners and losers, if left exclusively to market forces. The effects of financial globalization on income inequality depends on whether the country exports its capital to the rest of the world or imports capital from abroad. In the capital-exporting case, financial globalization drives up return to savings and drives down wages. In the capital-importing case, financial globalization tends to raise wages but lower return on savings. Therefore, the distributive policies of the welfare state in its role of spreading the gains from financial globalization to various income groups varies, depending on whether the country exports, or imports capital. The paper demonstrates that typical welfare-state redistribution policies, governed by a majority of the population, spreads the globalization’s gains from trade to all income groups, even those who are low skilled and have small capital endowments. Therefore, financial globalization of a welfare- state economy generates a Pareto improvement. At the same time, globalization, through enhanced capital mobility and high-skill emigration diminishes the generosity of the welfare state. |
| JEL: | F2 H0 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25772&r=all |
| By: | Krenz, Astrid |
| Abstract: | I investigate the relationship between the extensive margins of imports and exports (the number of countries traded with and the number of goods traded) and firm productivity using a newly constructed and rich panel data set of German manufacturing firms for the years 2009-2014. I do for the first time construct a data set based on German trade data and firm data that accounts for the substantial change in the German register of firms statistics after 2012. The extensive margins are significantly and positively associated with firm-level productivity both for West and East German firms in cross-sectional estimations, which is in line with the previous literature. Productivity is higher in firms that import and export more goods and trade with more countries. However, results based on panel analyses reveal that especially for East German firms the relationship becomes insignificant when unobserved firm heterogeneity is controlled for. The results point to a high degree of firm heterogeneity, of factors that are relevant and differ within the firm only, for firms in East Germany. |
| Keywords: | Extensive margins of trade,Firm Productivity,Germany,Firm Heterogeneity |
| JEL: | F14 L25 L60 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cegedp:369&r=all |
| By: | Aaditya Mattoo; Robert W. Staiger |
| Abstract: | How should economists interpret current trade wars and the recent U.S. trade actions that have initiated them? In this paper we offer an interpretation of current U.S. trade actions that is at once more charitable and less forgiving than that typically offered by economic commentators. More charitable, because we argue that it is possible to see a logic to these actions: the United States is initiating a change from “rules-based” to “power-based” tariff bargaining and is selecting countries with which it runs bilateral trade deficits as the most suitable targets of its bargaining tariffs. Less forgiving, because the main costs of these trade tactics cannot be avoided even if they happen to “work” and deliver lower tariffs. Rather, we show that the main costs will arise from the use of the tactics themselves, and from the damage done by those tactics to the rules-based multilateral trading system and the longer-term interests of the United States and the rest of the world. |
| JEL: | F02 F13 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25762&r=all |
| By: | Aaron B. Flaaen; Ali Hortaçsu; Felix Tintelnot |
| Abstract: | We analyze several rounds of U.S. import restrictions against washing machines. Using retail price data, we estimate the price effect of these import restrictions by comparing the price changes of washers with those of other appliances. We find that in response to the 2018 tariffs on nearly all source countries, the price of washers rose by nearly 12 percent; the price of dryers—a complementary good not subject to tariffs—increased by an equivalent amount. Factoring in the effect of dryers and price increases by domestic brands, our estimates for the 2018 tariffs on washers imply a tariff elasticity of consumer prices of between 110 and 230 percent. The 2016 antidumping duties against China—which accounted for the overwhelming majority of U.S. imports—led to minor price movements due to subsequent production relocation to other export platform countries. Perhaps surprisingly, the 2012 antidumping duties against Korea led to relocation of production to China, actually resulting in lower washer prices in the United States. We find that our measure of the tariff elasticity of consumer prices may differ in sign and magnitude from conventional pass-through estimates which are based on a regression of country-specific import price changes on country-specific tariff changes. Production relocation effects, price changes by domestic brands, and price changes of complementary goods all contribute to the differences between these measures. |
| JEL: | F12 F13 F23 L23 L68 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25767&r=all |
| By: | Krenz, Astrid |
| Abstract: | Female-run firms are less likely to be exporters although they exert positive influence in various aspects in an economy and society. With a new and comprehensive data set on manufacturing plants, I investigate the exporter productivity premium of female-run firms in Germany. The results show that female-run firms gain a higher exporter-productivity premium than male-run firms. I find evidence for selection into exporting but no impact for learning from exporting for female-run exporting firms. These results give hint to discrimination barriers that female-run firms face when they are exporting as compared to male-run firm exporters. |
| Keywords: | Gender Inequality,Exporter-Productivity Premium,Germany,Firm Heterogeneity |
| JEL: | F14 L25 L60 O12 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cegedp:368&r=all |
| By: | Mnasri, Ayman; Nechi, Salem |
| Abstract: | This paper proposes new estimation techniques for gravity models with zero trade values and heteroscedasticity. We revisit the standard PPML estimator and we propose an improved version. We also propose various Heckman estimators with different distributions of the residuals, nonlinear forms of both selection and measure equations, and various process of the variance. We add to the existent literature alternative estimation methods taking into account the non-linearity of both the variance and the selection equation. Moreover, because of the unavailability of pre-set package in the econometrics software (Stata, Eviews, Matlab, etc.) to perform the estimation of the above-mentioned Heckman versions, we had to code it in Matlab using a combination of fminsearch and fminunc functions. Using numerical gradient matrix G, we report standard errors based on the BHHH technique. The proposed new Heckman version could be used in other applications. Our results suggest that previous empirical studies might be overestimating the contribution of the GDP of both import and export countries in determining the bilateral trade. |
| Keywords: | Gravity model, Heteroscedasticity; Zero Trade values; New Heckman; New PPML |
| JEL: | C01 C10 C13 C15 C60 F10 F14 |
| Date: | 2019–04–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:93426&r=all |
| By: | Lanz, Rainer; Lee, Woori; Stolzenburg, Victor |
| Abstract: | This paper brings together three strands of literature on the determinants of international trade − distance, formal, and informal institutions − to explain differences in export performance across countries. Using an augmented gravity model, we find that the importance of formal institutions (rule of law) for bilateral trade increases with distance. Similarly, the pro-trade effect of informal institutions (migrant networks) is larger for distant countries. After confirming that informal institutions can substitute for weak formal institutions in promoting trade, we finally show that this substitution effect does not decrease with distance. Our findings contribute to explaining the persistent negative effect of distance on the export performance of many developing countries despite reductions in trade costs, and provide guidance to policy makers in terms of trade reform, regional trade liberalization and export promotions strategies. |
| Keywords: | International trade,Distance,Rule of law,Migrant networks |
| JEL: | D23 F14 F22 L14 O43 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wtowps:ersd201903&r=all |
| By: | Bekkers, Eddy |
| Abstract: | This paper compares the solution methods and baseline calibration of three different quantitative trade models (QTMs): computable general equilibrium (CGE) models, structural gravity (SG) models and models employing exact hat algebra (EHA). The different solution methods generate identical results on counterfactual experiments if baseline trade shares or baseline trade costs are identical. SG models, calibrating the baseline to gravity-predicted shares, potentially suffer from bias in the predicted welfare effects as a result of misspecification of the gravity equation, whereas the other methods, calibrating to actual shares, potentially suffer from bias as a result of random variation and measurement error of trade flows. Simulations show that predicted shares calibration can generate large biases in predicted welfare effects if the gravity equation does not contain pairwise fixed effects or is estimated without domestic trade flows. Calibration to actual shares and to fitted shares based on gravity estimation including pairwise fixed effects display similar performance in terms of robustness to the different sources of bias. |
| Keywords: | quantitative trade models,baseline calibration,free trade agreements,gravity estimation |
| JEL: | F13 F14 F15 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wtowps:ersd201902&r=all |
| By: | William W. Olney (Williams College) |
| Abstract: | This paper examines the economic implications of the Jones Act, which is a 1920 U.S. cabotage law that restricts domestic waterborne shipments to American vessels. Since the passage of the Act, there has been a dramatic rise in the Asian maritime industry which has caused American shipbuilding to become uncompetitive. It is now eight times more expensive to build a large merchant ship in the U.S., and as a result most American shipyards have closed and the number of American built ships has plummeted. Thus, the Jones Act requirement that domestic shipments be transported on American built ships has become more onerous over time. The first set of findings show that this has reduced waterborne trade between U.S. states relative to other modes of transport, relative to waterborne exports, and especially in coastal states. Second, there is evidence that this reduction in domestic trade, due to the Jones Act, has increased prices within U.S. states, although the magnitude of this effect is modest. These findings support common, but to date unverified, claims that the Jones Act impedes domestic trade and drives up prices. |
| Keywords: | Trade policy, Non-tariff barriers, Cabotage, Jones Act, Domestic trade |
| JEL: | F13 F14 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:wil:wileco:2019-03&r=all |
| By: | Lungu, Ioana |
| Abstract: | The African Continental Free Trade Area marks a historic decision on the road to regional economic integration on the continent. If implemented, the agreement has the potential to make a significant impact on improving the livelihoods of the African people, by increasing intra-African trade and generating new employment opportunities on an integrated African labour market. |
| Keywords: | international trade,regional economic integration,Africa,development,labor market |
| JEL: | J21 J24 O10 O40 F15 F16 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:195255&r=all |
| By: | Inaki Arto (Basque Centre for Climate Change – BC3); Jose M. Rueda-Cantuche (European Commission – JRC); Ignacio Cazcarro (Basque Centre for Climate Change – BC3); Antonio F. Amores (European Commission – JRC); Erik Dietzenbacher (University of Groningen); M. Victoria Roman (European Commission – JRC); Zornitsa Kutlina-Dimitrova (European Commission – TRADE) |
| Abstract: | The European Commission identified trade policy as a core component of the European Union's 2020 Strategy. The fast changing global economy, characterised by the dynamic creation of business opportunities and increasingly complex production chains, means that it is now even more important to fully understand how trade flows affect income generation. Gathering comprehensive, reliable and comparable information on this is crucial to support evidence-based policymaking. Guided by that objective, the European Commission's Joint Research Centre (JRC) and the Commission's Directorate General for Trade have collaborated to produce this publication. It aims to be a valuable tool for trade policymakers. Following up the first edition (Arto et al., 2015), the report features a series of indicators to illustrate in detail the relationship between trade and income (i.e. value added) generation for the EU as a whole and for each EU Member State using the World Input-Output Database (WIOD), 2016 release (Timmer et al., 2015, 2016), as the main data source. This information has been complemented with data on labour compensation by skill from EUKLEMS. All the indicators relate to the EU's exports to the rest of the world so as to reflect the scope of EU trade policymaking. Most indicators are available as off 2000 but, due to data constraints, the indicator on labour compensation split by skill is only available from 2008 to 2014. The geographical breakdown of the data includes the 28 EU Member States, Australia, Brazil, Canada, China, India, Indonesia, Japan, Mexico, Norway, Russia, South Korea, Switzerland, Turkey, Taiwan, the United States of America, and an aggregate "Rest of the World" region. On the basis of the value added embodied in every million EUR worth of exports in 2014 and more recent data on international trade in goods and services, this report also provides projections elaborated by the JRC for 2017 using a different methodology, so they should be taken with caution. The information presented in this pocketbook is complemented with an electronic version allowing downloads of the tables with the complete time series (2000-2014 and 2017). |
| Keywords: | Income, Exports, European Union |
| JEL: | C67 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc113072&r=all |
| By: | Michael Sposi (Southern Methodist University) |
| Abstract: | The age distribution evolves asymmetrically across countries, influencing relative saving rates and labor supply. Emerging economies experienced faster increases in working age shares than advanced economies did. Using a dynamic, multi-country model I quantify the effect of demographic changes on trade imbalances across 28 countries since 1970. Counterfactually holding demographics constant reduces net exports in emerging economies and boosts them in advanced economies. On average, a one percentage point increase in a country's working age share, relative to the world, increases its ratio of net exports to GDP by one-third of a percentage point. These findings alleviate the allocation puzzle. |
| Keywords: | Demographics, Trade imbalances, Dynamics, Labor supply. |
| JEL: | F11 F21 J11 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:smu:ecowpa:1902&r=all |
| By: | Inaki Arto (Basque Centre for Climate Change – BC3); Jose M. Rueda-Cantuche (European Commission – JRC); Ignacio Cazcarro (Basque Centre for Climate Change – BC3); Antonio F. Amores (European Commission – JRC); Erik Dietzenbacher (University of Groningen); M. Victoria Roman (European Commission – JRC); Zornitsa Kutlina-Dimitrova (European Commission – TRADE) |
| Abstract: | The European Commission identified trade policy as a core component of the European Union's 2020 Strategy. The fast changing global economy, characterised by the dynamic creation of business opportunities and increasingly complex production chains, means that it is now even more important to fully understand how trade flows affect employment. Gathering comprehensive, reliable and comparable information on this is crucial to support evidencebased policymaking. Guided by that objective, the European Commission's Joint Research Centre (JRC) and the Commission's Directorate General for Trade have collaborated to produce this publication. It aims to be a valuable tool for trade policymakers. Following up the first edition (Arto et al, 2015), the report features a series of indicators to illustrate in detail the relationship between trade and employment for the EU as a whole and for each EU Member State using the new World Input-Output Database (WIOD), 2016 release (Timmer et al, 2015, 2016), as the main data source. This information has been complemented with data on employment by age, skill and gender from other sources such as EUKLEMS. All the indicators relate to the EU exports to the rest of the world so as to reflect the scope of EU trade policymaking. Most indicators are available as off 2000 but, due to data constraints, the indicators on employment split by skill, gender and age are only available from 2008 to 2014. The geographical breakdown of the data includes the 28 EU Member States, Australia, Brazil, Canada, China, India, Indonesia, Japan, Mexico, Norway, Russia, South Korea, Switzerland, Turkey, Taiwan, the United States of America, and an aggregate "Rest of the World" region. On the basis of the number of jobs embodied in every million EUR worth of exports in 2014 and more recent data on international trade in goods and services, this report also provides projections elaborated by the JRC for 2017 using a different methodology, so they should be taken with caution. The information presented in this pocketbook is complemented with an electronic version allowing downloads of the tables with the complete time series (2000-2014 and 2017). |
| Keywords: | Employment, Exports, European Union |
| JEL: | C67 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc113071&r=all |
| By: | Andri Chassamboulli; Giovanni Peri |
| Abstract: | In this paper we analyze the economic effects of different immigration policies in a model capturing economic and institutional features crucial to understand the migrant flows into the US. We explicitly differentiate among the most relevant channels of immigration to the US: family-based, employment-based and undocumented. Moreover we explicitly account for earning incentives to migrate and for the role of immigrant networks in generating job-related and family-related immigration opportunities. Hence, we can analyze the effect of policy changes through those channels. We find that all types of immigrants generate larger surplus to US firms than natives do. Restricting their entry has a depressing effect on job creation and, in turn, on native labor markets. We also show that substituting family-based entry with employment-based entry, and maintaining the total inflow of immigrants unchanged, produces a stimulus to job creation and native earnings. |
| Keywords: | Immigration, Networks, Job creation, Unemployment, Wages |
| JEL: | F22 J61 J64 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:ucy:cypeua:06-2019&r=all |
| By: | Inaki Arto (Basque Centre for Climate Change – BC3); Jose M. Rueda-Cantuche (European Commission – JRC); Ignacio Cazcarro (Basque Centre for Climate Change – BC3); Antonio F. Amores (European Commission – JRC); Erik Dietzenbacher (University of Groningen); M. Victoria Roman (European Commission – JRC) |
| Abstract: | The European Commission identified trade policy as a core component of the European Union's 2020 Strategy. The fast changing global economy, characterised by the dynamic creation of business opportunities and increasingly complex production chains, means that it is now even more important to fully understand how trade flows affect employment in the EU economy. Gathering comprehensive, reliable and comparable information on this is crucial to support evidence-based policymaking. Guided by that objective, the European Commission's Joint Research Centre (JRC) produced this publication. It aims to be a valuable tool for EU policymakers covering trade policy, industrial policy, employment policy and the European Semester. Following up Arto et al. (2015), this report features a series of indicators to illustrate in detail the relationship between international trade, income and employment for the EU as a whole and for each EU Member State using the World Input-Output Database (WIOD), 2016 release (Timmer et al., 2015, 2016), as the main data source. This information has been complemented with labour data by age, skill and gender from other sources such as EUKLEMS. All the indicators relate to the EU exports of goods and services consumed in another EU country or sold as intermediate to another EU country. Effects of intra-EU trade supplying inputs to other EU countries to produce exports of goods and services sold to non-EU countries are not reported here but in other JRC publications: "EU exports to the world: Effects on Employment" (Arto et al., 2018a) and "EU exports to the world: Effects on Income" (Arto et al., 2018b). Most indicators are available as off 2000 but, due to data constraints, the indicators on employment split by skill, gender and age are only available from 2008 to 2014. The geographical breakdown of the data includes the 28 EU Member States. The information presented in this pocketbook is complemented with an electronic version allowing downloads of the tables with the complete time series (2000-2014). |
| Keywords: | Employment, Income, Exports, European Union |
| JEL: | C67 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc113073&r=all |
| By: | Barnette, Justin; Park, Jooyoun |
| Abstract: | We investigate the training choices made by workers entering the Trade Adjustment Assistance (TAA) program. This is important as more workers enter these types of programs due to technological change and globalization. We show that workers that choose a training occupation beyond their skill level (skill overshooting) or previous wage level (wage overshooting) achieve higher earnings and wage replacement rates with the cost being that it lowers their reemployment rates. Specifically, skill overshooting lowers the reemployment rates for these workers by 2.0 to 3.2 percentage points, but they enjoy an increase in their earnings by 2.0 - 2.2 percent. Wage overshooting leads to a similar decline in the reemployment rate (2.2 percentage points) but shows a much larger increase in their earnings (6.9 to 8.5%). The findings are robust to various subsamples. |
| Keywords: | TAA, job training, wage replacement, ALMP |
| JEL: | F16 J08 J68 |
| Date: | 2019–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:93412&r=all |
| By: | Bergh, Andreas (Lund University) |
| Abstract: | This note describes how research on the link between globalization and openness has changed over time. Early contributions assumed that countries develop welfare states to compensate for volatility caused by economic openness (the compensation hypothesis). Recent findings have cast doubts on several steps in the causal chain implied by the compensation hypothesis. In many ways economic openness has been shown to be particularly beneficial for countries with high taxes and high income equality. Countries with large welfare states can use economic openness to mitigate some of the unintended side-effects of social protection and high taxes. The compensation hypothesis can thus be reformulated: Through trade, the citizens in large welfare states can enjoy some of the benefits associated with cheap labor and high wage dispersion despite their domestic economy being characterized by the opposite. |
| Keywords: | Economic integration; Welfare state; Globalization |
| JEL: | E02 F10 H53 |
| Date: | 2019–04–16 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1273&r=all |
| By: | Johannes Boehm (Département d'économie); null null (Centre for Economic Performance); John Morrow (King‘s College London [London]) |
| Abstract: | Multiproduct firms dominate production, and their product turnover contributes substantially to aggregate growth. Theories propose that multiproduct firms grow by diversifying into products which need the same know-how or capabilities, but are less clear on what these capabilities are. Input output tables show firms co-produce in industries that share intermediate inputs, suggesting input capabilities drive multiproduct production patterns. We provide evidence for this in Indian manufacturing: the similarity of a firm’s input mix to an industry’s input mix predicts entry into that industry. We identify the direction of causality from the removal of size-based entry barriers in input markets which made firms more likely to enter industries that were similar in input use to their initial input mix. We rationalize this finding with a model of industry choice and economies of scope to estimate the importance of input capabilities in determining comparative advantage. Complementarities driven by input capabilities make a firm on average 5% (and up to 15%) more likely to produce in an industry. Entry barriers in input markets constrained the comparative advantage of firms and were equivalent to a 10.5 percentage point tariff on inputs. |
| Keywords: | Multiproduct firms; Firm capabilities; Vertical input linkages; Comparative advantage; Economies of scope; Size-based policies |
| JEL: | F11 L25 M2 O3 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/1dn2prktaq9p3949il1h9ds86b&r=all |
| By: | Michael Bleaney; Mo Tian |
| Abstract: | Shifts in the bilateral real exchange rate between the countries of migrants’ origin and destination alter the real value of international remittances in origin currency relative to their real value in destination currency. Theoretical models predict a response in the form of some adjustment in remittances, measured in either currency. We construct real effective exchange rates weighted by migrant stocks for a large sample of countries to investigate the matter empirically. The evidence shows that remittances as a share of destination countries’ GDP tend to remain virtually unchanged, so that real exchange rate movements predominantly affect the real value of remittances in terms of origin countries’ currency. Possible explanations of this are discussed. |
| Keywords: | exchange rates, migration, remittances |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcre:19/06&r=all |
| By: | Simplice A. Asongu (Yaoundé/Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa) |
| Abstract: | This study examines the hypothesis that foreign aid dilutes the positive role of taxation on political governance. The empirical evidence is based on the Generalised Method of Moments and 53 African countries for the period 1996-2010. For more policy options, the dataset is disaggregated into fundamental characteristics of African development based on income levels, legal origins, natural resources and landlockedness. While the hypothesis is invalid in baseline Africa, low income and English common law countries of the continent, the research cannot conclude on its validity for other fundamental characteristics of development. Policy implications, caveats and directions for future research are discussed. |
| Keywords: | Foreign Aid; Political Economy; Development; Africa |
| JEL: | B20 F35 F50 O10 O55 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:agd:wpaper:19/020&r=all |
| By: | Jan Wessel (Institute of Transport Economics, Muenster) |
| Abstract: | Both qualitative and quantitative improvements for five different transport infrastructure types are evaluated with respect to their transport-mode-specific trade effects. Strong trade increases are found for survey-based quality indicators of airport and railroad infrastructure. For road trade, the road density is more important than the quality of road infrastructure. Additionally, the infrastructure quality of transit countries is an important trade flow driver of the land transport modes road and railroad. For the analysis of these effects, I use a gravity equation model with European trade flows that are disaggregated over five different transport modes. In combination with the quality and quantity indicators for each corresponding type of transport infrastructure, it is possible to directly estimate the unique trade effects for each infrastructure type. Moreover, a novel cross-mode analysis is conducted to estimate interdependencies and cross-effects that exist between different transport infrastructure types and different transport modes. |
| Keywords: | Transport Infrastructure, Bilateral Trade, Gravity Equations. |
| JEL: | F14 F17 R40 O18 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:mut:wpaper:27&r=all |
| By: | Hochmuth, Brigitte; Moyen, Stephane; Stähler, Nikolai |
| Abstract: | How do labor market reforms affect international competitiveness and net foreign assets? To answer this question, we build a two-region RBC model with labor market frictions, idiosyncratic consumption risk, and limited cross-sectional heterogeneity to establish a direct link between labor market reforms and changes in net foreign assets via a precautionary savings channel. We apply the model to simulate far-reaching labor market reforms in Germany during the mid-2000s. We find that reducing the generosity of unemployment benefits decreases wages, fosters employment and augments competitiveness as well as trade. In addition, we can explain a significant share of the observed increase in German net foreign assets. A standard representative agent framework is not able to generate any notable effects on net foreign assets and the current account. |
| Keywords: | unemployment benefits reform,current account imbalances,precautionary savings,Hartz reform |
| JEL: | E21 E24 F16 F41 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdps:132019&r=all |