nep-int New Economics Papers
on International Trade
Issue of 2019‒05‒13
29 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Georgia’s Economic Performance: Bright Spots and Remaining Challenges By Tinatin Akhvlediani; Peter Havlik
  2. Intellectual Property, Tariffs, and International Trade Dynamics By Mandelman, Federico S.; Waddle, Andrea L.
  3. Innovation Activities and Export Performance of Canadian Small and Medium-Sized Agri-Food Firms By Lota Dabio Tamini; Aristide B. Valéa
  4. Trade Negotiations and Global Relations: Emerging Players and Actors By Serrano Caballero, Enriqueta; Ojo, Marianne
  5. What gains and distributional implications result from trade liberalization? By Maria Bas; Caroline Paunov
  6. The effect of the single currency on exports: comparative firm-level evidence By Tibor Lalinsky; Marian Jaanika Meriküll
  7. Effects of foreign aid on income through international trade By Martínez-Zarzoso Inma
  8. Multinational Expansion in Time and Space By Garetto, Stefania; Oldenski, Lindsay; Ramondo, Natalia
  9. Did the euro change the nature of FDI flows among member states? By Sondermann, David; Vansteenkiste, Isabel
  10. The impact of global value chains on the euro area economy By Gunnella, Vanessa; Al-Haschimi, Alexander; Benkovskis, Konstantins; Chiacchio, Francesco; de Soyres, François; Di Lupidio, Benedetta; Fidora, Michael; Franco-Bedoya, Sebastian; Frohm, Erik; Gradeva, Katerina; Lopez-Garcia, Paloma; Koester, Gerrit; Nickel, Christiane; Osbat, Chiara; Pavlova, Elena; Schmitz, Martin; Schroth, Joachim; Skudelny, Frauke; Tagliabracci, Alex; Vaccarino, Elena; Wörz, Julia; Dorrucci, Ettore
  11. Creating a Disaggregated CGE Model for Trade Policy Analysis: GTAP-MVH By Peter B. Dixon; Maureen Rimmer; Nhi Tran
  12. The selection of high-skilled emigrants By Parey, Matthias; Ruhose, Jens; Waldinger, Fabian; Netz, Nicolai
  13. Regional Migration and Wage Inequality in the West African Economic and Monetary Union By Esther Mirjam Girsberger; Romuald Meango; Hillel Rapoport
  14. Trade Blocs and Trade Wars during the Interwar Period By Jacks, David S.; Novy, Dennis
  15. Average income, income inequality and export unit values By Hélène Latzer; Florian Mayneris
  16. Trade policy repercussions: the role of local product space -Evidence from China By Julien Gourdon; Laura Hering; Stéphanie Monjon; Sandra Poncet
  17. Price Transmission in Commodity Networks By Annalisa Marini; Steve McCorriston
  18. Fighting unfair trade, leveling the playing field, enforcing trade rights. The construction of trade protection in the United States and the European Union By Josue Mathieu
  19. Integrating a Global Supply Chain Model With a Computable General Equilibrium Model By Peter B. Dixon; Maureen Rimmer
  20. Domestic and cross border spillover effects of corporate tax policy in Africa By Jean-François Brun; Seydou Coulibaly
  21. Evidence for Gross Domestic Product growth time delay dependence over Foreign Direct Investment. A time-lag dependent correlation study By Marcel Ausloos; Ali Eskandary; Parmjit Kaur; Gurjeet Dhesi
  22. Economic Effects of the USA - China Trade War: CGE Analysis with the GTAP 9.0a Data Base By Enkhbayar Shagdar; Tomoyoshi Nakajima
  23. Are exporters more environmentally friendly? A re-appraisal that uses China's micro-data By Pei, Jiansuo; Sturm, Bodo; Yu, Anqi
  24. Are the Gulf States poised to become Uganda’s No. 1 trading partners? Emerging trends and imperatives By Ayoki, Milton
  25. Aid targeting to fragile and conflict-affected states and implications for aid effectiveness By Carment David; Samy Yiagadeesen
  26. Does trust among banks matter for bilateral trade? Evidence from shocks in the interbank market By Silvia Del Prete; Stefano Federico
  27. Estimating US Consumer Gains from Chinese Imports By Liang Bai; Sebastian Stumpner
  28. Immigration and Secular Stagnation By Kaz Miyagiwa; Yoshiyasu Ono
  29. Climate change, migration, and irrigation By Théo Benonnier; Katrin Millock; Vis Taraz

  1. By: Tinatin Akhvlediani; Peter Havlik (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Georgia has long been one of the most trade-open economies in the world. It joined WTO in 2000 and currently has a free trade agreement with the EU and EFTA, as well as with Turkey, the CIS and China. Georgia has been also one of the most business-friendly countries. The basic objectives of Georgia’s trade policy are integration, liberalisation, diversification and transparency. The Association Agreement (AA) with the EU signed in June 2014 and in force since July 2016 lays the foundations for far-reaching political and economic cooperation with the EU and serves as a backbone for reforms. The Deep and Comprehensive Free Trade Area (DCFTA) agreement that represents a part of AA envisages a gradual implementation of reforms in areas such as trade, environment, agriculture, tourism, energy, transport and education with the aim to bring Georgia in line with EU standards. The DCFTA sets a path for further reforms in trade-related policies, such as hygiene standards for agriculture products, the approximation of regulations for industrial products, enforcement of intellectual property rights at the border, rules on public procurement and approximation to EU rules in the services area. However, there is no prospect for EU membership in the Agreement. Georgia has been suffering from chronic goods trade and current account deficits; the export base has been very narrow. Foreign trade has been regionally focused on its neighbouring partners. Russia is the largest export market, ahead of Azerbaijan, Armenia, Turkey and China. Among the EU countries, the biggest markets for Georgian exports are Bulgaria and Romania. Exports are highly concentrated and there has not been much export diversification yet. The key exports to the EU include copper ores (39% of the total), nuts, nitrogen fertilisers and mineral oils. The DCFTA apparently has not had much positive effect on Georgian exports to the EU so far, despite some spectacular increases by individual products. Rather than in goods exports, Georgia has a competitive advantage in services, especially in tourism and transit transport. Georgia has been also relatively successful in attracting foreign direct investment (FDI) cumulated inward FDI stocks amounted to about EUR 4,000 per capita as of mid-2018. A development strategy combining existing competitive advantages of tourism with domestic agriculture (using the excellent domestic wine and delicious local food), supported by structural reforms in the agricultural sector and targeted FDI policies, could be a viable option to foster inclusive economic growth and mitigate external vulnerabilities.
    Keywords: Georgia, foreign trade, foreign direct investment, economic integration
    JEL: E6 F13 P33 O24 O52
    Date: 2019–04
  2. By: Mandelman, Federico S. (Federal Reserve Bank of Atlanta); Waddle, Andrea L. (University of Richmond)
    Abstract: The emergence of global value chains not only leads to a magnification of trade in intermediate inputs but also to an extensive technology diffusion among the different production units involved in arms-length relationships. In this context, the lack of enforcement of intellectual property rights has recently become a highly controversial subject of debate in the context of the China-U.S. trade negotiations. This paper analyzes the strategic interaction of tariff policies and the enforcement of intellectual property rights within a quantitative general equilibrium framework. Results indicate that, in principle, tariffs could be an effective deterrent for weak protections for intellectual property. Moreover, weakening enforcement may be a strong deterrent for raising tariffs. These results combined indicate that there is scope for international cooperation on these fronts.
    Keywords: tariffs; intellectual property rights; technology capital transfers; international trade
    JEL: F13 F21 F41 F42 F51
    Date: 2019–05–01
  3. By: Lota Dabio Tamini; Aristide B. Valéa
    Abstract: Canadian small and medium-sized firms face two major challenges, namely, that of innovation in supporting their growth and improving their competitiveness and that of access to international markets. The objective of this study is to analyze the impact of research and Development (R&D) investment on the export performance of Canadian agri-food companies and on that of related sectors, namely, the textile and clothing sector and the manufacture of leather goods and similar products. We used impact assessment methods to analyze the effects of firms' innovation activities on their export performance. First, we analyzed explanatory factors for R&D expenses; second, we analyzed the impact of R&D on extensive (market access) and intensive (trade value) margins of trade. In doing so, we used Statistics Canada's National Accounts Longitudinal Microdata File (NALMF) for 2010 to 2015, which is coupled with the Trade by Exporter Characteristics (TEC) database. The size of firms and their support from the Canadian government affect their propensity to invest in R&D, the value of R&D expenses and their intensity, as measured from the ratio of R&D to sales of goods and services. Overall, our results show that investment in R&D has a positive impact on the export performance of agri-food SMEs. Les petites et moyennes entreprises (PME) canadiennes font face à deux grands enjeux soit celui de l’innovation afin notamment de soutenir leur croissance et améliorer leur compétitivité et celui de l’accès aux marchés internationaux. Le présent projet de recherche a pour objectif d’analyser l’impact des investissements en recherche et développement (R&D) sur les performances à l’exportation des entreprises agroalimentaires canadiennes et de celles de secteurs connexes soit les industries du textile et des vêtements et de la fabrication de produits du cuir et produits analogues. Les méthodes d’évaluation d’impact seront utilisées pour analyser les effets des activités d’innovation des entreprises sur leurs performances à l’exportation. Dans un premier temps, les facteurs explicatifs des investissements en R&D sont analysé. Puis nous analysons les effets des investissements en R&D sur les marges extensive (accès aux marchés) et intensive (valeur du commerce). Nous utilisons le Fichier de micro données longitudinales des comptes nationaux (NALMF) de Statistique Canada pour la période de 2010 à 2015 qui est couplé au fichier du programme de Commerce selon les caractéristiques des exportateurs (TEC). La taille des entreprises et l’appui du gouvernement canadien sont déterminants dans la probabilité d’investir dans la R&D ainsi que le montant de ces investissements et son intensité mesurée par le ratio du montant investit sur les ventes totales de biens et services des PME agroalimentaires.
    Keywords: Research and development,Agri-food,Small and medium-sized firm,Extensive margin of international trade,Intensive margin of international trade, Recherche et développement,Agroalimentaire,Petites et moyennes entreprises,Marge extensive du commerce international,Marge intensive du commerce international
    JEL: F14 Q16 Q17
    Date: 2019–05–03
  4. By: Serrano Caballero, Enriqueta; Ojo, Marianne
    Abstract: The EU's development policy seeks to eradicate poverty, promote the sustainable development of developing countries, defend human rights and democracy and promote gender equality and overcome environmental and climate challenges. Development aid is a limited resource. For this reason, the Union is committed to the effectiveness of aid and promotes close relations with partner countries in terms of programming and implementing development actions. With this perspective, the "EU Code of Conduct on the division of labor in the field of development policy" was adopted in 2007, and the "Operational framework on the effectiveness of development aid" was adopted in 2011. These measures are consistent with the international measures undertaken in response to the 2005 Paris Declaration of the OECD, which promotes ownership, harmonization, alignment, results and mutual responsibility in development assistance. Amidst highly anticipated outcomes from ongoing trade talks between US and China, Brexit negotiations outcomes, as well recently concluded NAFTA negotiations, the atmosphere surrounding global trade relations could not be more highly charged. This volume not only illustrates how the changing face, landscape and scene of political economy and international trade relations are significantly impacting financial stability, regulatory, legal and financial related actors; but also highlights and explains how certain actors are contributing in addressing those instabilities which are threatening current global spheres as a result of recent developments.
    Keywords: international organizations; regional policies of cooperation and integration; trade relations; Sustainable Development; Financial Markets; Integration and Stability; Brexit; NAFTA; European Union; non governmental organisations; actors; international relations
    JEL: F1 F13 F18 F2 F23 F3 K2
    Date: 2019
  5. By: Maria Bas (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Caroline Paunov (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 (TFPG) 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 worker's 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),skill premium,markups,price,foreign inputs quality and variety,firm-product-level data,Ecuador
    Date: 2019–02
  6. By: Tibor Lalinsky (National Bank of Slovakia); Marian Jaanika Meriküll (Eesti Pank)
    Abstract: We investigate how adopting the euro affects exports using firmlevel data from Slovakia and Estonia. In contrast to previous studies, we focus on countries that adopted the euro individually and had different exchange rate regimes prior to doing so. Following the New Trade Theory we consider three types of adjustment: firm selection, changes in product varieties and changes in the average value of the exports that compose the exports of individual firms. The euro effect is identified by a difference in differences analysis comparing exports to the euro area countries with exports to the non-euro area EU countries. The results highlight the importance of the transaction costs channel related to exchange rate volatility. We find the euro has a strong pro-trade effect in Slovakia, which switched to the euro from a floating exchange rate, while it has almost no effect in Estonia, which had a fixed exchange rate to the euro prior to the euro changeover. Our findings indicate that the euro effect manifested itself mainly through the intensive margin and that the gains from trade were heterogeneous across firm characteristics.
    Keywords: international trade, common currency areas, euro adoption, transaction costs, Slovakia, Estonia, firm-level data
    JEL: F14 F15
    Date: 2019–03
  7. By: Martínez-Zarzoso Inma
    Abstract: This paper presents a review of recent studies that estimate the trade effects of foreign aid.It also provides new results obtained using panel data techniques to estimate the direct effects of aid on international trade, accounting for countries’ participation in free trade agreements, and the indirect effects that aid exerts on income through trade. A structural gravity model of trade augmented with aid and free trade agreement variables is estimated for a cross-section of 33 donor countries and 125 recipient countries over the period 1995 to 2016. In a second step, the indirect effect of aid on income is estimated using a control function approach and instrumental variable techniques.The main results indicate that development aid has a robust direct effect on donor exports (the effect on recipient exports, however, is not robust). It also has an indirect positive effect on income levels in the recipient countries. The effects are heterogeneous and vary by region.
    Keywords: bilateral aid,Exports,Foreign aid,Gravity model,International trade,Free trade
    Date: 2019
  8. By: Garetto, Stefania; Oldenski, Lindsay; Ramondo, Natalia
    Abstract: This paper studies the expansion patterns of the multinational enterprise (MNE) in time and space. Using a long panel of US MNEs, we document that: MNE affiliates grow by exporting to new markets; the activities of MNE affiliates persist during the affiliate's life, usually starting with sales to their host market and eventually expanding to export markets; and MNE affiliates' entry into new locations does not depend on the location of preexisting affiliates. Informed by these facts, we develop a multi-country quantitative dynamic model of the MNE that features heterogeneity in firm-level productivity, persistent aggregate shocks, and a rich structure of costs that affect MNE expansion. Importantly, MNE affiliates can decouple their locations of production and sales, and endogenously choose to enter or exit the host and the export markets. We introduce a compound option formulation that allows us to capture in a tractable way the rich heterogeneity that is observed in the data and that is necessary for quantitative analysis. Using the calibrated model, our quantitative application to Brexit reveals that export platforms are important for understanding the reallocation of MNE activity in time and space, and that the nature of the frictions to MNE activities matters for aggregate firm dynamics.
    Keywords: Firm Dynamics; Foreign direct investment; multinational firms; sunk costs
    JEL: F1
    Date: 2019–04
  9. By: Sondermann, David; Vansteenkiste, Isabel
    Abstract: In this paper we investigate the impact of the euro integration process on the drivers of FDI inflows. We show theoretically and empirically that the single currency alters the drivers of FDI inflows across its Member States. Estimating bilateral gravity models of FDI inflows into euro area countries, we show that the euro facilitates intra-euro area vertical FDI flows but reduces incentives for horizontal or market seeking FDI. Instead, horizontal FDI flows stemming from investor countries located outside the monetary union increase. Such flows are however not more likely be directed towards euro area countries with larger domestic markets but rather to countries that are close to large euro area markets and that have higher quality institutions. Overall, these results suggest that while the euro has been beneficial to FDI inflows into the monetary union, the impact differs significantly across countries. The global financial crisis does not change our main findings. Our results are robust to various economic specifications. JEL Classification: F21, F23, F45, O43
    Keywords: economic structures, euro, euro area countries, Foreign direct investment, institutions
    Date: 2019–04
  10. By: Gunnella, Vanessa; Al-Haschimi, Alexander; Benkovskis, Konstantins; Chiacchio, Francesco; de Soyres, François; Di Lupidio, Benedetta; Fidora, Michael; Franco-Bedoya, Sebastian; Frohm, Erik; Gradeva, Katerina; Lopez-Garcia, Paloma; Koester, Gerrit; Nickel, Christiane; Osbat, Chiara; Pavlova, Elena; Schmitz, Martin; Schroth, Joachim; Skudelny, Frauke; Tagliabracci, Alex; Vaccarino, Elena; Wörz, Julia; Dorrucci, Ettore
    Abstract: The studies summarised in this paper focus on the economic implications of euro area firms’ participation in global value chains (GVCs). They show how, and to what extent, a large set of economic variables and inter-linkages have been affected by international production sharing. The core conclusion is that GVC participation has major implications for the euro area economy. Consequently, there is a case for making adjustments to standard macroeconomic analysis and forecasting for the euro area, taking due account of data availability and constraints. JEL Classification: F6, F10, F14, F16, E3
    Keywords: euro area, global value chains, international interlinkages, international trade, vertical specialisation
    Date: 2019–04
  11. By: Peter B. Dixon; Maureen Rimmer; Nhi Tran
    Abstract: Thousands of economists spread across almost every country use the GTAP model to analyze trade policies including trade wars and trade agreements. GTAP has an impressive regional coverage (140 countries) but the standard commodity coverage (57 commodities/industries) can cause frustration when tariffs on narrowly defined products are being negotiated. This paper sets out a method for disaggregating commodities/industries in computable general equilibrium models such as GTAP and applies it to GTAP's motor vehicle sector. The method makes use of readily available highly disaggregated trade data supplemented by detailed input-output data where available and data from a variety of other sources such as commercial market reports.
    Keywords: GTAP disaggregation motor vehicle sector intra-NAFTA tariffs
    JEL: C68 F13 F14 F17
    Date: 2019–04
  12. By: Parey, Matthias; Ruhose, Jens; Waldinger, Fabian; Netz, Nicolai
    Abstract: We measure selection among high-skilled emigrants from Germany using predicted earnings. Migrants to less equal countries are positively selected relative to non-migrants, while migrants to more equal countries are negatively selected, consistent with the prediction in Borjas (1987). Positive selection to less equal countries reflects university quality and grades, and negative selection to more equal countries reflects university subject and gender. Migrants to the United States are highly positively selected and concentrated in STEM fields. Our results highlight the relevance of the Borjas model for high-skilled individuals when credit constraints and other migration barriers are unlikely to be binding.
    JEL: F22 I23 J61 O15
    Date: 2017–11–29
  13. By: Esther Mirjam Girsberger (Economics Discipline Group, University of Technology Sydney); Romuald Meango (Max-Planck Institute for Social Law and Social Policy, Munich); Hillel Rapoport (Paris School of Economics, Universit´e Paris 1 Panth´eon-Sorbonne; CEPII; IZA)
    Abstract: This paper investigates the impact of regional migration on average wages and wage inequality in the West African Economic and Monetary Union (UEMOA). We exploit a unique data from a unified labour force household survey which covers natives and migrants in the seven economic capitals of the region. We estimate the counterfactual wage distributions of UEMOA migrants in absence of migration to evaluate the effect of regional migration. We find that regional migration increases the average wage by 1.8% and it entails a decrease in inequality in the UEMOA region between -1.5% (for the Gini coefficient) and -4.5% (for the interquartile ratio). The decrease in inequality in the UEMOA region is driven by a reduction in inequality between countries, while the migration effect on within-inequality differs across countries and remains overall small. When accounting for possible general equilibrium effects of migration on stayers’ wages, we find a similar or even stronger decrease in inequality, yet a smaller increase in the average wage. With general equilibrium effects, (negatively-) intermediately selected UEMOA migrants depress the average wage of natives in their host country and lead to a slight increase of the average wage among natives in the sending country, with the former effect dominating. Moreover, regional migration in the UEMOA mostly flows from countries with low wages to countries with higher wages. In combination with the general equilibrium effects described above this leads to a larger decrease in between-country inequality than in a setting with exogenous wages.
    Keywords: Migration; inequality; Gini index; West Africa
    JEL: F22 J61
    Date: 2019–02–21
  14. By: Jacks, David S.; Novy, Dennis
    Abstract: What precisely were the causes and consequences of the trade wars in the 1930s? Were there perhaps deeper forces at work in reorienting global trade prior to the outbreak of World War II? And what lessons may this particular historical episode provide for the present day? To answer these questions, we distinguish between long-run secular trends in the period from 1920 to 1939 related to the formation of trade blocs (in particular, the British Commonwealth) and short-run disruptions associated with the trade wars of the 1930s (in particular, large and widespread declines in bilateral trade, the narrowing of trade imbalances, and sharp drops in average traded distances). We argue that the trade wars mainly served to intensify pre-existing efforts towards the formation of trade blocs which dated from at least 1920. More speculatively, we argue that the trade wars of the present day may serve a similar purpose as those in the 1930s, that is, the intensification of China- and US-centric trade blocs.
    Keywords: Commonwealth; distance; Gravity; interwar period; Trade Blocs; trade wars
    JEL: F1 F3 N7
    Date: 2019–05
  15. By: Hélène Latzer (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne, CEREC - Université Saint-Louis - Bruxelles); Florian Mayneris (UQAM - Université du Québec à Montréal)
    Abstract: This paper analyses the relationship between a country's income distribution and its exports' unit values. Using bilateral export flows, we not only confirm the positive relationship between a country's average income and the quality of its exports, but further identify a heterogeneous impact of income inequality: we find a greater income spread to be beneficial for an exporter's unit values in the case of poor countries only. These results are robust to the inclusion of controls for other determinants of export unit values, as well as to the use of alternative measures of income inequality and of the quality index. We finally show that this heterogeneous impact of income inequality along the average income dimension is consistent with models emphasizing the role of the composition of local demand in determining the comparative advantage of countries in terms of quality.
    Keywords: Income distribution,Export Unit Values,Product quality,Trade,Home market effect
    Date: 2018–10
  16. 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
  17. By: Annalisa Marini (University of Exeter); Steve McCorriston (University of Exeter)
    Abstract: We address the transmission of commodity price shocks and assess how source- specific shocks spillover to other exporting countries. Applying a multi-country panel VAR, we show that in a model that allows for cross-country interdependencies source- specific shocks have both direct and spillover effects. The results indicate that these spillover effects are an important feature of commodity price transmission. Accounting for these spillover effects has important implications for understanding commodity price dynamics and the management of price shocks in both exporting and importing countries.
    Keywords: PVAR, Commodity Price Transmission, Spillovers
    JEL: F00 C3 C5 Q1
    Date: 2019
  18. By: Josue Mathieu
    Abstract: The PhD dissertation studies the construction of trade protection in the United States and the European Union. It focuses in particular on measures of contingent protection, comprising anti-dumping duties, countervailing duties and safeguards. The dissertation adopts a constructivist approach based on narrative analysis: broadening the conventional scope of political economy research on trade, the analysis combines the study of narratives with the concept of ‘discourse coalition’. The period under investigation spans over the period 2010-2014, covering the Obama Administration and the mandate of European Commissioner for trade Karel De Gucht. Adopting a comparative approach of the US and EU trade policy, the dissertation provides a detailed analysis of the US administration’s and the European Commission’s discourses on trade protection, and includes an analysis of a large array of other actors’ alternative, or competing constructions of contingent protection. The dissertation demonstrates that a specific type of unilateral enforcement plays an underestimated role in the construction of contingent protection. It also emphasizes that policy actors consider contingent protection as necessary to convince people that the trading system is fair; the research proposes the concept of ‘discursive embedded liberalism’ to account for this specific construction of trade protection. The research underlines elements of continuity and change, showing that many elements of the current crisis within the international trade regime were already in the making in the period under investigation.
    Keywords: international trade; unfair trade; dumping; subsidies; European Union; US trade policy; trade policy
    Date: 2019–03–19
  19. By: Peter B. Dixon; Maureen Rimmer
    Abstract: Global supply chain (GSC) trade results from decisions by firms producing final goods to allocate underlying tasks to dedicated facilities in different countries. These decisions create cross-border flows of products at various stages of completion. We demonstrate a divide-and-conquer approach to integrating GSC and computable general equilibrium (CGE) models: the models are solved separately and information is passed between them. A stylized integrated model suggests that by providing low-skilled jobs in developing countries, GSC trade accelerates the transfer of labour out of low-marginal-productivity agriculture in these countries into higher-marginal-productivity manufacturing. At the same time, GSC trade can leave high-income countries having to transfer considerable fractions of their workforce out of manufacturing and into services. After potentially expensive structural adjustment, high-income countries may be left in the long run with no more than a small equilibrium welfare gain or even a loss.
    Keywords: Global supply chain trade computable general equilibrium CSC-CGE integration benefits/costs of GSC
    JEL: F12 C68 C63
    Date: 2019–05
  20. By: Jean-François Brun (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique); Seydou Coulibaly (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique, BAD - Banque africaine de développement / African Development Bank)
    Abstract: This paper examines spillover effects in corporate tax policy for African economies. Using a balanced panel data in statutory corporate income tax (CIT) rate for 34 African countries over the period 1995-2013, we find positive interaction between CIT rates in Africa only when common time trend effects are not controlled. We conclude that the evidence of pure corporate tax competition among African countries is weak. These countries' tendency to implement similar fiscal policies under the common intellectual assistance may explain the positive slope reaction between their CIT rates. Regarding corporate tax base spillovers, estimation results indicate that cuts in foreign countries' average corporate tax rate reduce the host country's corporate tax base. When the host country reacts to a one percentage point cut in foreign countries' CIT rates by cutting its own CIT rate in the same proportion, this ultimately results in a net erosion of its corporate tax base by 0.4%. This represents a 2.3 % loss of corporate tax revenue. Moreover, we find strategic complement responses in corporate tax base policies suggesting that countries react to the uptake of measures that tend to reduce the corporate tax burden in other countries by also undertaking similar measures.
    Keywords: Tax competition,Corporate income tax,Instrumental variable estimation,System GMM,Africa
    Date: 2019–04–09
  21. By: Marcel Ausloos; Ali Eskandary; Parmjit Kaur; Gurjeet Dhesi
    Abstract: This paper considers an often forgotten relationship, the time delay between a cause and its effect in economies and finance. We treat the case of Foreign Direct Investment (FDI) and economic growth, - measured through a country Gross Domestic Product (GDP). The pertinent data refers to 43 countries, over 1970-2015, - for a total of 4278 observations. When countries are grouped according to the Inequality-Adjusted Human Development Index (IHDI), it is found that a time lag dependence effect exists in FDI-GDP correlations. This is established through a time-dependent Pearson 's product-moment correlation coefficient matrix. Moreover, such a Pearson correlation coefficient is observed to evolve from positive to negative values depending on the IHDI, from low to high. It is "politically and policy "relevant" that the correlation is statistically significant providing the time lag is less than 3 years. A "rank-size" law is demonstrated. It is recommended to reconsider such a time lag effect when discussing previous analyses whence conclusions on international business, and thereafter on forecasting.
    Date: 2019–05
  22. By: Enkhbayar Shagdar (Economic Research Institute for Northeast Asia (ERINA)); Tomoyoshi Nakajima (Economic Research Institute for Northeast Asia (ERINA))
    Abstract: An analysis of the economic effects of the ongoing USA-China trade war using the standard CGE Model and GTAP Data Base 9.0a revealed that both parties will be worse-off from this trade friction, having welfare losses and real GDP contractions regardless of international capital mobility status—i.e. whether the capital is internationally mobile or not. Moreover, the results indicated that the negative economic and trade impacts on China would be larger compared to those of the USA. Although, other countries and regions would be better-off having positive changes in their welfare and real GDP, their magnitudes were much lower than losses of the USA and China. Therefore, as a whole, the global economy will be worse-off as a result of this trade war between the world’s two largest economies, the USA and China.
    Keywords: Trade policy, CGE models
    JEL: F13 C68
    Date: 2018–12
  23. By: Pei, Jiansuo; Sturm, Bodo; Yu, Anqi
    Abstract: Is a firm's ability to export an important determinant of environmental performance? To answer this question, we construct a unique micro dataset that merged two rich firm-level datasets for China for 2007. When combining this new dataset with well-received empirical specifications, we found that both export status and export intensity are associated with lower sulfur dioxide (SO2) emissions intensity. In addition to the traditional OLS estimation, we verified this association by using the propensity score matching method. Our findings show that the baseline result still holds. In short, exporters are more environmentally friendly than non-exporters,which is in line with previous evidence reported for developed economies. We further discuss mechanisms that explain the observed pattern and show that exporters realize higher abatement efforts compared to non-exporters. This study complements the literature in terms of providing China's micro evidence on SO2 abatement efforts. It also serves as a first step toward a better understanding of the impact of trade on the environment, especially in developing countries.
    Keywords: Exporters and the environment,firm heterogeneity,SO2 emissions,abatement
    JEL: F18 Q53 Q56
    Date: 2019
  24. By: Ayoki, Milton
    Abstract: For centuries, Europe has been an important market for products from Sub-Saharan Africa. In the turn of the twenty-first century, however, the boundary of the trade geography dramatically changed, with African products increasingly going to the Gulf region. Using the World Bank WITS database, this paper examines the nature and evolution of the Uganda’s exports to the Gulf States over the last 15 years. Evidence shows high exports concentration within the top-5 products—precious stones and glass, raw materials, animal, vegetable, and consumer goods—with Uganda’s strongest revealed comparative advantage (RCA) being in vegetables. Uganda’s RCA profile has evolved over the years; its export sector strengths changed from hides and skins, and stone and glass, to vegetables and is trending towards animals and food products. This trend partly reflects the dynamic natures of the Gulf markets, suggesting continuous efforts at both government and industry level, to harness productivity and product quality, to stay ahead of completion.
    Keywords: Bilateral trade, revealed comparative advantage, Uganda, Gulf States, Bahrain, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates (UAE)
    JEL: F13 F14 F15
    Date: 2019–01–31
  25. By: Carment David; Samy Yiagadeesen
    Abstract: While significant amounts of foreign aid have been allocated to the group of so-called fragile and conflict-affected states in recent years, it is not clear whether that aid is targeted to where it is most needed.This paper extends recent work by Carment and Samy, and focuses on aid targeting in fragile states by using the Country Indicators for Foreign Policy fragility index together with sectoral aid flows from the Organisation for Economic Co-Operation and Development’s Creditor Reporting System. Specifically, it considers six country-cases from a threefold typology of states and evaluates the performance of these countries in terms of their fragility relative to the types of aid that they have received.The paper argues that aid is poorly targeted in fragile states, and by considering the sectoral allocation of aid it also contributes indirectly to the related issue of aid effectiveness.
    Keywords: Aid effectiveness,Conflict,Foreign aid,Fragile states
    Date: 2019
  26. By: Silvia Del Prete (Bank of Italy); Stefano Federico (Bank of Italy)
    Abstract: Do financial crises have an impact on trade flows via a shock to corporate risk or to bank risk? Focusing on Italy’s exports during a period characterized by both the global financial crisis and by the sovereign debt crisis, we exploit the prediction of standard trade models according to which financial shocks should be magnified by the time needed to ship a good to the importer’s country and by sector-level financial vulnerability. We also use bank-pair data on Italian banks’ assets and liabilities vis-à-vis their foreign bank counterparts in a specific country to construct proxies for the availability of trade finance in a given market. We find evidence of a negative impact of financial shocks on exports, especially to more distant countries and in more financially vulnerable sectors. The main channels seem to be mainly related to an increase in corporate risk (reflecting shocks to bank finance and to buyer-supplier trade credit), while the ‘contagion effect’ of shocks stemming from bank risk seems to be much less significant.
    Keywords: bilateral trade, interbank markets, counterparty risk
    JEL: G21 F14 F30 G30 L20
    Date: 2019–04
  27. By: Liang Bai; Sebastian Stumpner
    Abstract: We estimate the size of US consumer gains from Chinese imports during 2004-2015. Using barcode-level price and expenditure data, we construct inflation rates under CES preferences, and use Chinese exports to Europe as an instrument. We find significant negative effects of Chinese imports on US prices. This effect is driven by both changes in the prices of existing goods and the entry of new goods and it is similar across consumer groups by income or region. A simple benchmarking exercise suggests that Chinese imports led to a 0.19 ppt annual reduction in the price index for consumer tradables.
    Keywords: Chinese Import Penetration, Consumer Gains.
    JEL: F14
    Date: 2019
  28. By: Kaz Miyagiwa; Yoshiyasu Ono
    Abstract: We examine the effect of immigration on the host-country economy in the dynamic model that can deal with secular unemployment. Immigration has contrasting effects, depending on the economic state of the host country. If it suffers from unemployment, an influx of immigrants worsens unemployment and decreases consumption by natives. If instead the host country has full employment, immigration boosts native consumption while maintaining full employment, provided that immigrants are not too numerous. An influx of too many immigrants however can trigger stagnation. We also find that immigrants’ remittances are harmful to natives under full employment but beneficial under secular stagnation.
    Date: 2019–05
  29. By: Théo Benonnier (ENS Cachan - École normale supérieure - Cachan); Katrin Millock (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Vis Taraz (Smith College)
    Abstract: Climate change will affect both international and internal migration. Earlier work finds evidence of a climate-migration poverty trap: higher temperatures reduce agri- cultural yields, which in turn reduce emigration rates in low-income countries, due to liquidity constraints. We test whether access to irrigation modulates the climate- migration poverty trap, since irrigation protects crops from heat. We regress measures of international and internal migration on decadal averages of temperature and rain- fall, interacted with country-level data on irrigation and income. We find that irri- gation access significantly weakens the climate-migration poverty trap, demonstrating the importance of considering alternative adaptation strategies when analyzing climate migration.
    Keywords: International migration,Rural-urban migration,Climate change,Agriculture,Irrigation
    Date: 2019–04

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