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on International Trade |
| By: | Costa, Rui (London School of Economics); Dhingra, Swati (London School of Economics); Machin, Stephen (London School of Economics) |
| Abstract: | This paper presents new evidence on international trade and worker outcomes. It examines a big world event that produced an unprecedentedly large shock to the UK exchange rate. In the 24 hours in June 2016 during which the UK electorate unexpectedly voted to leave the European Union, the value of sterling plummeted. It recorded the biggest depreciation that has occurred in any of the world's four major currencies since the collapse of Bretton Woods. Exploiting this variation, the paper studies the impact of trade on wages and worker training. Wages and training fell for workers employed in sectors where the intermediate import price rose by more as a consequence of the sterling depreciation. Calibrating the estimated wage elasticity with respect to intermediate import prices to theory uncovers evidence of a production complementarity between workers and intermediate imports. This provides new direct evidence that, in the modern world of global value chains, it is changes in the cost of intermediate imports that act as a driver of the impact of globalization on worker welfare. The episode studied and the findings add to widely expressed, growing concerns about poor productivity performance relating to skills and to patterns of real wage stagnation that are plaguing contemporary labour markets. |
| Keywords: | exchange rate depreciation, trade, wages, training, deskilling |
| JEL: | F14 F31 J24 J31 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12380&r=all |
| By: | Fernandes, Ana M.; Klenow, Peter J.; Meleshchuk, Sergii; Pierola, Martha Denisse; Rodríguez-Clare, Andrés |
| Abstract: | The Melitz model highlights the importance of the extensive margin (the number of firms exporting) for trade flows. Using the World Bank’s Exporter Dynamics Database (EDD) featuring firm-level exports from 50 countries, we find that around 50% of variation in exports is along the extensive margin — a quantitative victory for the Melitz framework. The remaining 50% on the intensive margin (exports per exporting firm) contradicts a special case of Melitz with Pareto-distributed firm productivity, which has become a tractable benchmark. This benchmark model predicts that, conditional on the fixed costs of exporting, all variation in exports across trading partners should occur on the extensive margin. We find that moving from a Pareto to a lognormal distribution allows the Melitz model to match the role of the intensive margin in the EDD. We use likelihood methods and the EDD to estimate a generalized Melitz model with a joint lognormal distribution for firm-level productivity, fixed costs and demand shifters, and use “exact hat algebra” to quantify the effects of a decline in trade costs on trade flows and welfare in the estimated model. The welfare effects turn out to be quite close to those in the standard Melitz-Pareto model when we choose the Pareto shape parameter to fit the average trade elasticity implied by our estimated Melitz-lognormal model, although there are significant differences regarding the effects on trade flows. |
| Keywords: | Trade; Exports; Trade flows; Firms |
| JEL: | F1 F12 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:9569&r=all |
| By: | Prema-Chandra Athukorala; C. Veeramani |
| Abstract: | This paper examines the growth trajectory and the current state of Indian automotive industry, paying attention to factors that underpinned its transition from the import-substitution phase to export orientation through integration into global production networks. Following the liberalisation reforms, India has emerged as a significant producer of compact cars within global automobile production networks. Interestingly there are no significant differences in prices of compact cars sold in the domestic and foreign markets. This suggest that cost competitiveness of Indian cars sold in foreign markets is not rooted solely in the prevailing high tariffs on imported cars in India. Market confirming policies implemented over the past two decades, which marked a clear departure from the protectionist past, have been instrumental in transforming the Indian automobile industry in line with ongoing structural changes in the world automobile industry. Capacity development propelled by the entry of global carmakers and parts and components producers to set up production bases in the country and leaning through competition in foreign markets have been the key factors behind India’s emergence as a production base within global automobile production networks. |
| Keywords: | India, automobile industry, global production networks, trade policy, foreign direct investment |
| JEL: | F13 F14 L92 L98 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:pas:papers:2018-14&r=all |
| By: | Scott L. Baier; Jeffrey H. Bergstrand; John P. Bruno |
| Abstract: | Three years ago, very few economists would have imagined that one of the newest and fastest growing research areas in international trade is the use of quantitative trade models to estimate the economic welfare losses from dissolutions of major countries’ economic integration agreements (EIAs). In 2016, “Brexit” was passed in a United Kingdom referendum. Moreover, in 2019, the existence of the entire North American Free Trade Agreement (NAFTA) is at risk if the United States withdraws - a threat President Trump has made if the proposed United States-Mexico-Canada Agreement is not passed by the U.S. Congress. We use state-of-the-art econometric methodology to estimate the partial (average treatment) effects on international trade flows of the six major types of EIAs. Armed with precise estimates of the average treatment effect for a free trade agreement, we examine the general equilibrium trade and welfare effects of the elimination of NAFTA (and for robustness U.S. withdrawal only). Although all the member countries’ standards of living fall, surprisingly the smallest economy, Mexico, is not the biggest loser; Canada is the biggest loser. Canada's welfare (per capita income) loss of 2.11 percent is nearly two times that of Mexico's loss of 1.15 percent and is nearly eight times the United States’ loss of 0.27 percent. The simulations will illustrate the important influence of trade costs - international and intranational - in contributing to the gains (or losses) from an economic integration agreement's formation (or elimination). |
| Keywords: | international trade, economic integration agreements, gravity equations |
| JEL: | F10 F13 F14 F15 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7678&r=all |
| By: | Jakubik, Adam; Piermartini, Roberta |
| Abstract: | This paper studies how WTO rules and flexibilities shape its members' trade policy responses to import shocks. Guided by a cost benefit analysis model and using a unique database of tariff bindings for all WTO countries over the 1996-2011 period, we show that WTO commitments affect members' trade policy. More stringent bindings reduce the likelihood of responding to import shocks by raising tariffs and increase the likelihood of contingent measures. We argue that this reduces overall trade policy uncertainty. In a counterfactual scenario where WTO members can arbitrarily increase tariffs they are 4.5 times more likely to do so than under current bindings. |
| Keywords: | trade agreements,trade policy,trade policy uncertainty,anti-dumping |
| JEL: | F13 F14 F53 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wtowps:ersd201906&r=all |
| By: | Huysmans, Martijn |
| Abstract: | A key objective of EU trade policy is to obtain wider protection for its specialty foods, known as Geographical Indications (GIs). While the WTO provides some protection for GIs under Trade Related Aspects of Intellectual Property (TRIPS), the EU has successfully considered additional protection for its GIs a red line in recent Free Trade Agreements (FTAs). FTAs are negotiated by the Commission but require member state approval. Given that both Greece and Italy have threatened not to ratify CETA over insufficient GI protection, GIs clearly matter. This article provides and analyzes new data on GI protection in 11 recent EU trade agreements. It finds that EU FTAs are more likely to protect GIs with higher sales values and from countries in the South of Europe, where GIs are highly salient because of gastronationalism. These findings illustrate how economic and political considerations shape and enable EU policy exports. |
| Keywords: | Agricultural and Food Policy, International Relations/Trade |
| Date: | 2019–03–05 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aesc19:289668&r=all |
| By: | Angela Cheptea (SMART - Structures et Marché Agricoles, Ressources et Territoires - INRA - Institut National de la Recherche Agronomique - AGROCAMPUS OUEST); Catherine Laroche-Dupraz (SMART - Structures et Marché Agricoles, Ressources et Territoires - INRA - Institut National de la Recherche Agronomique - AGROCAMPUS OUEST) |
| Abstract: | A recent trend of literature investigates how international trade compensates or accentuates the differences in countries' endowments in water resources and whether trade regulation should be used to improve the use of water resources at the global level. In this paper, we develop a simple model establishing a positive link between the demand for irrigation water of agricultural producers and the international price of irrigated goods. Unlike previous works, that focus on the cost of water resources, we emphasize the price of traded goods as a key element of the shadow value of water used in agriculture. We test our model empirically using data on 159 irrigated crops exported by 183 countries, and find that countries' irrigation behavior is strongly linked to the global price of crops. This indicates that agricultural producers internalize the price of irrigation water. The export price effect is stronger when countries are net exporters of irrigated crops and weaker for internationally traded crops that constitute a pillar of most countries' domestic food security, such as cereals. Our results provide elements for the broader issue of the economically efficient use of water resources in agriculture. |
| Abstract: | Des travaux récents dans la littérature analysent comment le commerce international attenue ou renforce les différences de dotation en eau entre les pays et si la réglementation du commerce pourrait être utilisée pour améliorer l'utilisation des ressources en eau au niveau mondial. Dans ce papier nous développons un modèle simple identifiant un lien positif entre la demande en eau d'irrigation des producteurs agricoles et le prix international des produits irrigués. Contrairement aux travaux précédents qui s'intéressent au coût des ressources en eau, nous mettons en avant le prix des biens échangés comme un élément central du prix virtuel de l'eau d'irrigation. Nous testons en suite notre modèle à l'aide des données sur 243 produits irrigués exportés par 185 pays et trouvons un lien fort entre le comportement des pays en matière d'irrigation et le prix mondial des produits irrigués. Ce résultat indique que les producteurs agricoles internalisent dans leur décisions le prix de l'eau d'irrigation. L'effet du prix à l'exportation est plus fort lorsque les pays sont des exportateurs nets de cultures irriguées et plus faible pour produits essentiels pour assurer la sécurité alimentaire, tels que les céréales. Nos résultats enrichissent la discussion sur la question plus large de l'utilisation rationnelle d'un point de vue économique des ressources en eau dans l'agriculture. |
| Keywords: | eau virtuelle,water resources,virtual water,international trade,agri-food product,irrigation,ressource en eau,commerce international,produit agroalimentaire,rrigation |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02154603&r=all |
| By: | Bakari, Sayef; Sofien, Tiba |
| Abstract: | The objective of this paper is to examine the impact of openness, foreign investment inflows, and domestic investment on economic growth for the case of 24 Asian economies over the time span 2002-2017 through the use of the fixed and random effect models. Our empirical results pointed out that domestic investment positively influences economic growth. However, we found that foreign direct investment and exports are negatively affecting the growth path. Also, the population, imports, and final consumption expenditure have no real impact on economic growth. Due to the importance of the positive externalities linked to the trade openness and foreign direct investments inflow, in terms of technology transfer bias, financial capacities, human expertise, large markets size, and spillover effect added to the domestic capacities and the national investment, the pace of the phenomenal economic performance of the Asian economies is very well justified. |
| Keywords: | Trade openness, FDI, Domestic Investment, Economic Growth. |
| JEL: | E22 F14 F15 O16 O47 O53 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:94453&r=all |
| By: | Michalak, Katja; Naqvi, Nadeem |
| Abstract: | The principal result of this paper is that under endogenous international capital mobility inward FDI reduces the incidence of child labor if stimulated by a country’s trade policy of granting protection to the sector that employs child labor. Child labor persists, however, if there is exogenous inward FDI and it is small in magnitude; it is eradicated in equilibrium if this FDI is sufficiently large. If the supply of capital in the country is fixed, granting greater tariff protection or higher export subsidy to a sector that employs child labor reduces its incidence, and may eventually eliminate it. Since a country’s aggregate real income decreases as the import tariff increases, it may sometimes face the dilemma of having to choose between higher real GDP or fewer child workers as an entailment of its foreign trade policy. These results are obtained under standard assumptions about technology, and maximizing behavior on the part of both producers and families, with the latter maximizing a Kanger-Sen non-binary preference ranking relation subject to their budget constraints. (171 words) |
| Keywords: | child labor, FDI, trade policy, International Labor Organization, World Trade Organization, India, United Sates of America |
| JEL: | F16 O12 O15 |
| Date: | 2019–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:94497&r=all |
| By: | Inaki Arto (Basque Centre for Climate Change – BC3); Erik Dietzenbacher (University of Groningen); Jose Manuel Rueda-Cantuche (European Commission - JRC) |
| Abstract: | The increase in the fragmentation of production across countries and the subsequent growth in the trade of intermediate products have raised concerns about the suitability of conventional trade statistics to understand the economic consequences of trade. Several authors have attempted to disentangle value added content of trade. This technical report proposes a novel framework that enables to: (1) fully decompose the factor content of bilateral trade measured at the border; and (2) account for the role of the different countries and industries participating in the global vale chain. Furthermore, because of the country and industry detail of this approach, it able to provide a new extension of the standard value added to exports ratio, and also reconcile the “sink-based†and “source-based†methods commonly used to report the value added in trade. |
| Keywords: | global value chain, vertical specialization, international trade |
| JEL: | F01 F14 F23 L14 C67 D57 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc116694&r=all |
| By: | Der Boghossian, Anoush |
| Abstract: | This paper looks at the various trade policies WTO Members have put into place to foster women's economic empowerment. The analysis below is based on the information provided by WTO Members as part of their Trade Policy Review (TPRs) process from 2014 to 2018. Reports from the WTO Secretariat, governments as well as the question and answer sessions were examined for the purpose of this paper.1 In the last 4 years, the trade policies of 111 WTO Members were under review. About 70% of them have reported at least one trade policy targeting women's economic empowerment. Overall, in four years, almost half of the WTO membership has implemented trade policies in support of women (at least one). Most (about 70%) of the WTO Members2 under review have integrated women's empowerment in their national or regional trade strategy. They focused their policy activity to three main areas or sectors: * Financial and non-financial incentives to the private sector and women owned/led Micro, Small and Medium Enterprises (MSMEs): 30% of members3 have focused their trade policies in support of women owned/led companies. * Agriculture and fishery: 15.5 % of members4 under review have included policies in relations with agriculture and fisheries in support of women's empowerment. * Government procurement: 9% of members5 under review have included policies in relations with government procurement in support of women's empowerment. |
| Keywords: | gender,international trade,women's economic empowerment,trade policy,WTO,international trade rules,Aid for Trade |
| JEL: | F1 F13 F19 O1 O19 Z0 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wtowps:ersd201907&r=all |
| By: | Prema-chandra Athukorala |
| Abstract: | Thanks to the market-oriented reforms undertaken since the early 1990s, the Kyrgyz Republic has emerged as one of the most globally integrated economies in the former Soviet space and the centre of entrepôt trade in Central Asia. However, the patterns of global economic integration of the Kyrgyz economy have so far been rather lopsided. While there have been some notable changes in the structure of exports in line with the country’s comparative advantage, export expansion has not kept pace with rapid import penetration in the economy. This has led to increased dependence of the economy on migrant-worker remittances and external financing. The composition of external financing has begun to shift from grants and concessionary loans towards borrowing at commercial rates, thus potentially exposing the economy to additional external economic shocks. A major contemporary policy challenge faced by the country is broadening the export base. This requires speedy implementation of behind-the-border reforms to supplement the significant opening of the economy to foreign trade and investment. |
| Keywords: | Kyrgyz Republic, transition economy, landlocked countries, export performance |
| JEL: | F13 O53 P27 P33 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:pas:papers:2018-24&r=all |
| By: | Giordano, Claire; Lopez-Garcia, Paloma |
| Abstract: | Firms are heterogeneous, even within narrowly defined sectors. This paper surveys the relevant theoretical and empirical literature on firm heterogeneity and external trade. By innovatively exploiting rich cross-country micro-aggregated data sourced from the ECB Competitiveness Research Network (CompNet), this study then investigates the main implications of firm heterogeneity for trade of EU countries, showing a set of stylised facts. On the one hand, exporting firms are larger, more productive and pay higher wages than non-exporting firms. Only these firms are able to bear export costs, related to various factors, such as tariff and non-tariff trade barriers, the quality of the legal system or access to finance. Hence, only few enterprises actually export, and the intensity of aggregate export concentration within few large firms varies across countries and sectors. On the other hand, opening to trade boosts individual firms’ productivity growth, via a number of channels, and also enhances allocative efficiency across firms, in turn increasing aggregate productivity growth. One of the main standard determinants of export growth, namely changes in the real effective exchange rate, impacts aggregate performance differently across countries and sectors, depending on sectoral composition and on firm characteristics within a given sector JEL Classification: F14, L25 |
| Keywords: | firm heterogeneity, productivity, real effective exchange rates, Trade |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:2019225&r=all |
| By: | Bakari, Sayef; Sofien, Tiba |
| Abstract: | Since the beginning of the third millennium, the Chinese agricultural exports increase at a strong pace. In this context, this paper aims to answer the question if the agriculture trade promotes Chinese economic growth by employing the ARDL bounds testing for the study period from 1984 to 2017. In the long-run, our highlights reported that domestic investment and agricultural exports have a positive effect on economic growth. However, agricultural imports have a significant negative impact on growth. In the short-run, our insights reported a positive and significant effect of domestic investment, agricultural imports and agricultural exports on economic growth. The positive impact of agriculture exports on growth is due to the importance of agriculture in terms of creating jobs and opportunities for the economy as a whole. Also, sufficient national investment in the agriculture sector leads to enlarging these opportunities and then improves the Chinese economic growth. |
| Keywords: | Agricultural trade; economic growth; ARDL bounds testing |
| JEL: | F11 F14 O47 O53 Q17 Q18 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:94614&r=all |
| By: | Der Boghossian, Anoush |
| Abstract: | Aid for Trade supports developing and least-developed countries in building their trade capacity and in increasing their exports by turning market access opportunities into market presence. It does so by addressing four key areas: trade policy & regulations; economic infrastructure; building productive capacity; and trade-related adjustment. The WTO-led Initiative works with a broad cross-section of stakeholders to: highlight needs (of developing and least-developed countries and regional organizations), mobilize resources (including donors, international financial institutions and other international organizations) and monitor impacts and effectiveness (with OECD and other international organizations). Through Aid for Trade, the WTO has been focusing on women with the aim of building their capacity to trade and using trade as a tool for their economic development. Gender equality is an inherent part of Aid for Trade. This has also been reflected in the Buenos Aires Declaration on Trade and Women's Economic Empowerment which identified Aid for Trade as a key instrument to assist members in "analysing, designing and implementing more gender-responsive trade policies". Three key facts on women's economic empowerment through Aid for Trade * Donors and partner countries have been devoting increasing attention to gender dimensions in Aid for Trade. Both groups have gradually and increasingly integrated gender into their Aid for Trade objectives. They are now at par. The 2019 Monitoring and Evaluation Exercise reveals that women's economic empowerment is now high on both donors and partner countries agendas. Today, 84% of donors' aid-for-trade strategy and 85% of partner countries national or regional development strategy seek to promote women's economic empowerment. * The main target group of gender related Aid for Trade is women entrepreneurs. * While gender is now fully part of members aid-for-trade objectives, it has not been fully integrated in their aid for trade priorities. This disconnection between objectives and priorities could explain the difficulty in assessing the real impact of aid for trade on women's economic empowerment. This also shows the challenges to translate objectives into effective programming. Aid for Trade flows confirm this trend |
| Keywords: | gender,international trade,women's economic empowerment,trade policy,WTO,international trade rules,Aid for Trade |
| JEL: | F1 F13 F19 O1 O19 Z0 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wtowps:ersd201908&r=all |
| By: | Alejandro Ayuso-Díaz (Universidad Carlos III); Antonio Tena-Junguito (Universidad Carlos III) |
| Abstract: | During the interwar years, Japanese industrialisation accelerated alongside the expansion of industrial exports to regional markets. Trade blocs in the interwar years were used as an instrument of imperial power to foster exports and as a substitute for productivity to encourage industrial production. The historiography on Japanese industrialisation in the interwar years describes heavy industries’ interests in obtaining access to wider markets to increase economies of scale and reduce unit costs. However, this literature provides no quantitative evidence that proves the success of those mechanisms in expanding exports. In this paper we scrutinise how Japan—a relatively poor country—used colonial as well as informal power interventions to expand regional markets for its exports, especially for the most intensive human capital sector of the industrializing economy. |
| Keywords: | International Trade, Empires, Trade blocs, Japan, Interwar years |
| JEL: | F14 N15 N75 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:hes:wpaper:0153&r=all |
| By: | Deasy Pane; Arianto A. Patunru |
| Abstract: | ‘Learning-by-exporting’ hypothesis suggests that once a firm enters a foreign market, its productivity will increase thanks to the exposure to new knowledge and experience abroad. We test this hypothesis using Indonesia’s firm level data from 2000 to 2012. The methodology involves scrutinizing the learning process of exporters by incorporating ‘export age’ – the number of years engaged in exporting activities – as an explanatory variable in the model. We find that exporter’s total factor productivity increases with export age, but not linearly. Furthermore, larger exporting firms and those in particular industries undergo a clearer learning process. However, even though export experience can boost productivity, it is only applicable for firms that have high productivity from the beginning, supporting the ‘self-selection’ hypothesis. |
| Keywords: | Indonesia, learning-by-exporting, Indonesia, export performance, productivity |
| JEL: | F12 F14 L23 L25 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:pas:papers:2019-05&r=all |
| By: | Soumendra N. Banerjee; Jayjit Roy; Mahmut Yasar |
| Abstract: | The relevance of analyzing whether exporting rms engage in greater pollution abatement cannot be overemphasized. For instance, the question relates to the possibility of export promotion policies being environmentally benecial. In fact, the issue is especially relevant for developing countries typically characterized by ine/ective environmental regulation. However, despite the signicance of the topic, the extant literature examining the environmental consequences of rm-level trade is skewed toward developed countries. Moreover, the existing contributions rarely attend to concerns over non-random selection into exporting. Accordingly, we employ cross-sectional data across Indonesian rms as well as a number of novel identication strategies to assess the causal e/ect of exporting on abatement behavior. Two of the approaches are proposed by Millimet and Tchernis (2013), and entail either minimizing or correcting for endogeneity bias. The remaining methods, attributable to Lewbel (2012) and Klein and Vella (2009), rely on higher moments of the data to obtain exclusion restrictions. While we largely nd exporting to encourage pollution abatement, the estimated impacts are more pronounced after accounting for selection into exporting. Key Words: Exporting, Environment, Pollution Abatement, Instrumental Variables, Treatment Efects |
| JEL: | C26 F18 F23 Q4 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:apl:wpaper:19-10&r=all |
| By: | Prema-chandra Athukorala; Arianto A. Patunru |
| Abstract: | The paper is motivated by the current emphasis on the share of domestic value added in exports (SVEX) as a policy criterion for export development strategy in developing countries. Our hypothesis is that, the policy emphasis on SVAD, which harks back to the import substitution era, is not consistent with the objectives of achieving economic growth with employment generation in this era of economic globalisation. We test this hypothesis by examining relationship of SVEX with both export-induced employment and the total domestic value added (TVAD) or the contribution of exports to GDP by applying the standard input-output methodology to data from the Indonesian manufacturing. Our findings do not support the widely held view in policy circles that industries characterised by higher SVAD have the potential to make a greater contribution to employment generation and TVAD. The policy inference is that in this era of economic globalisation, in designing export development policy, policy makers should focus on the export potential of industries rather than on the share of domestic value added of exports |
| Keywords: | Indonesia, linkages, value added, global value chain, global production sharing |
| JEL: | F13 F14 O19 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:pas:papers:2019-06&r=all |
| By: | Russell Thomson; Prema-chandra Athukorala |
| Abstract: | Do production capabilities of countries evolve from existing capabilities or 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. However, this is difficult to reconcile with the export dynamism of many developing countries such as Thailand, Malaysia, Costa Rica and Vietnam that transformed from primary commodity dependence to exporters of dynamic manufactured products. In each of these cases, global production sharing facilitated industrial transition. In this paper, 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 find that that existing industrial structure has smaller impact, but trade openness has greater impact, on industrial upgrading within vertically integrated global industries. |
| Keywords: | industrialization, product space, global production sharing, fragmentation |
| JEL: | L60 O14 F14 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:pas:papers:2019-07&r=all |
| By: | Jacks, David S. (Simon Fraser University and NBER); Novy, Dennis (University of Warwick, CAGE and CEPR) |
| 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 Classification: F1, F3, N7 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:424&r=all |
| By: | Drechsel, Thomas; Tenreyro, Silvana |
| Abstract: | Emerging economies, particularly those dependent on commodity exports, are prone to highly disruptive economic cycles. This paper proposes a small open economy model for a net commodity exporter to quantitatively study the triggers of these cycles. The economy consists of two sectors, one of which produces commodities with prices subject to exogenous international fluctuations. These fluctuations affect both the competitiveness of the economy and its borrowing terms, as higher commodity prices are associated with lower spreads between the country's borrowing rate and world interest rates. Both effects jointly result in strongly positive effects of commodity price increases on GDP, consumption, and investment, and a negative effect on the total trade balance. Furthermore, they generate excess volatility of consumption over output and a large volatility of investment. Besides explicitly incorporating a double role of commodity prices, the model structure nests the various candidate sources of shocks proposed in previous work on emerging economy business cycles. Estimating the model on Argentine data, we find that the contribution of commodity price shocks to fluctuations in post-1950 output growth is in the order of 38%. In addition, commodity prices account for around 42% and 61% of the variation in consumption and investment growth, respectively. We find transitory productivity shocks to be an important driver of output fluctuations, exceeding the contribution of shocks to the trend, which, though smaller, is not negligible |
| Keywords: | 681664-Research on Macroeco-nomic Fluctuations and Trade |
| JEL: | N0 |
| Date: | 2018–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:86517&r=all |
| By: | ITO Keiko; IKEUCHI Kenta; Chiara CRISCUOLO; Jonathan TIMMIS; Antonin BERGEAUD |
| Abstract: | This paper explores how changes in both position and participation in Global Value Chain networks affect firm innovation. The analysis combines matched patent-firm data for Japan with measures of GVC network centrality and GVC participation utilizing the OECD Inter-Country Input-Output Tables for the period 1995 to 2011. We find that Japan's position in the GVCs has shifted from being at the core of Asian value chains towards the periphery relative to other countries in the network, i.e. becoming less "central". We use China's WTO accession as an instrumental variable for changes in Japanese centrality. Our analysis shows that increases in forward centrality – as a key supplier - tends to be positively associated with increasing firm patent applications. Firms in key hubs within GVCs, more specifically as key suppliers, appear to benefit from knowledge spillovers from various customers and downstream markets. |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:19028&r=all |
| By: | Kancs, d'Artis (European Commission – JRC); Persyn, Damiaan (European Commission – JRC) |
| Abstract: | We estimate the variety gains of trade in Estonia, Latvia and Lithuania following the fall of the iron curtain more than a quarter of a century ago. We apply the methodology of Feenstra (1994); Broda and Weinstein (2006); Ardelean and Lugovskyy (2010) and Soderbery (2015) to domestic and international trade data for the period 1988-1997. Although, there was a decline in the number of local varieties during this period, an increase in the number of import varieties from the EU more than outweighed this decline. The increasing variety of imported goods from EU countries substantially lowered the cost of living, resulting in welfare gains to consumers that range from 0.73% in Latvia to 1.28% of GDP per year in Estonia. |
| Keywords: | variety growth, welfare gains, trade integration, iron curtain |
| JEL: | C68 F12 F14 F17 R12 R23 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:jrs:wpaper:201901&r=all |
| By: | Rahim, Sikander |
| Abstract: | (Abstract) CAPITAL, TECHNICAL PROGRESS AND INTERNATIONAL TRADE Much has been written about the objection originally formulated by Piero Sraffa to the use of production functions and aggregate capital and of the disputes that ensued, but there seems to be no systematic explanation in one place of why this objection is crucial to the foundations of economic theory and why the various attempts to escape it fail. This paper is an attempt provide one. First, it presents the reasoning of the objection and shows how the arguments against it are either fallacious or too restricted to be useful. Second, it shows how technical progress and international trade give two more reasons for the same objection, which, though logically independent, only became apparent because of the first. From these it follows that neither technical progress nor international trade can be plausibly described or explained if capital goods are not treated as heterogeneous goods manufactured with the use of capital goods. This leads to a more realistic depiction of technical progress as the outcome of the R&D of competing firms. (For brevity, government activities are left out.) The implications for international trade are described briefly. This paper is not a survey; it is confined to the minimum needed to establish its contentions. Its discussion of the disputes has mostly been said before, but it covers some gaps that seem to have been overlooked. It adds to the discussion in that the disputes did not take up the implications of technical progress and international trade. |
| Keywords: | Capital theory, technical progress, R&D, international trade |
| JEL: | B51 F10 F11 O31 O32 O34 |
| Date: | 2018–12–21 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:94432&r=all |
| By: | Lim, Sunghun |
| Abstract: | Can modern-day developing economies transform their economies by participating in global value chains (GVCs)? The rise of global value chains (GVCs) has changed the nature of production around the world over recent years. Conventionally, companies used to produce goods primarily in one country. That has all changed. Modern-day, a single finished product often results from manufacturing and assembly in multiple countries, with each step in the process adding value to the final product. Although the transition out-of-agriculture is an important aspect of economic development in developing countries, it is unclear whether participation in global value chains (GVCs) fosters a structural transformation ─ the process whereby economic activity is reallocated from agriculture to manufacturing, and then from manufacturing to the services sector. In this paper, I investigate the effect of the participation in agricultural GVCs on the structural transformation. Using multi-region input-output data to measure GVC participation and crosscountry data for 183 countries for the period 1990-2013. I find that in response to greater agri-food global value-chain participation, modern-day agrarian economies are leapfrogging manufacturing to directly develop their services sector, which runs counter to conventional structural transformation narratives. This result is strongly robust to (i) various alternative specifications (i.e., regional-year fixed effects, a linear time trend, country-specific time trends, regional-specific time trends, all along with country fixed effects and country-specific year fixed effects), (ii) an alternative measure of structural transformation (GDP and employment shares), and (iii) an alternative measure of GVCs. By slicing the data, I also find that the move of structural transformation is statistically unclear in low-income countries. This is important for agri-food industrial, trade, and development policy by providing original evidence that believing in “onesize- fits-all” might draw the wrong policy recommendations for different countries in the context of global value chains. |
| Keywords: | Agricultural and Food Policy, Industrial Organization |
| Date: | 2019–04–15 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aesc19:289684&r=all |
| By: | Kym Anderson; Sundar Ponnusamy |
| Abstract: | Understanding how and why economies structurally transform as they grow is crucial for sound national policy making. Typically analysts of this issue focus on sectoral shares of GDP and employment. This paper extends that to include exports, including of services. It also considers mining in addition to agriculture and manufacturing, and recognizes some of the products of those four sectors are nontradable. The theory section’s general equilibrium model provides hypotheses about structural change in different types of economies as they grow, and tests them econometrically with annual data for a sample of 117 countries for the period 1991-2014. The results point to the futility of adopting protective policies aimed at slowing de-agriculturalization and subsequent de-industrialization in terms of sectoral shares, since those trends inevitably will accompany economic growth. Fortuitously governments now have far more efficient and equitable ways of supporting the adjustments needed by people choosing or being pushed to leave declining industries. |
| Keywords: | patterns of structural change, comparative advantage, productivity growth, declining sectors |
| JEL: | D51 E23 F11 F43 N50 N60 O13 O14 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:pas:papers:2018-26&r=all |
| By: | Boxell, Levi; Dalton, John T.; Leung, Tin Cheuk |
| Abstract: | Can the slave trade explain Africa's propensity for conflict? Using variation in slave exports driven by the interaction between foreign demand shocks and heterogeneity in trade costs, we show that the slave trade increased conflict propensities in pre-colonial Africa and that this effect has persisted to the present. Moreover, we find empirical evidence suggesting two related mechanisms for this persistence--natural resources and national institutions. These results "decompress" history by connecting the short-run and long-run effects of the African slave trade. |
| Keywords: | slave trade; conflict; resource curse; institutions; Africa |
| JEL: | N47 N57 O13 |
| Date: | 2019–06–13 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:94468&r=all |
| By: | Quint Wiersma (Vrije Universiteit Amsterdam, The Author-Name: Sabien Dobbelaere; Vrije Universiteit Amsterdam, The Netherlands) |
| Abstract: | This paper examines the impact of WTO membership on the extensive and intensive margins of product and labor market power of Chinese manufacturing firms during the period 1999--2006. We first identify a firm's regime of competitiveness, corresponding to a combination of a product market setting and a labor market setting, at any point in time through implementing the testing procedure of Kodde and Palm (1986), the distance test. Our descriptive differences-in-differences analysis shows that an industry's dominant regime of competitiveness is stable over time. Exploiting variation in input and output tariff reductions after WTO accession across industries, we then show that on the extensive margin, reducing tariffs on intermediate inputs decreases the likelihood of shifting firms away from an imperfectly competitive labor market setting where the marginal employee is paid a real wage either above or below her marginal product (i.e.\ wage markup or markdown). In contrast, falling tariffs on final goods increases the likelihood of switching firms away from setting wage markdowns. On the intensive margin, trade liberalization via input tariff reductions is found to increase a firm's price-cost markup but to decrease the degree of wage-setting power that a firm possesses. Such joint responses of firms' pricing behavior to trade policy changes are important for understanding increased inter-firm wage disparities. |
| Keywords: | Rent sharing, monopsony, price-cost markups, trade liberalization, firm panel data, hypothesis testing, inequality restrictions |
| JEL: | L20 C12 J30 |
| Date: | 2019–06–02 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20190037&r=all |
| By: | Opeyemi Akinyemi (Covenant University, Ota, Ogun State, Nigeria); Uchenna Efobi (Covenant University, Ota, Ogun State, Nigeria); Simplice A. Asongu (Yaoundé, Cameroon); Evans Osabuohein (Covenant University, Ota, Nigeria) |
| Abstract: | The paper investigates the dynamic relationship between renewable energy usage and trade performance in sub-Saharan Africa (SSA), while considering the conditioning role of corruption control, regulatory quality, and the private sector access to finance. Focusing on 42 SSA countries for the period 2004-2016, and engaging the System generalized method of moments (GMM) technique for its estimation, this study found a negative relationship between renewable energy usage and the indicators of trade performance. However, with corruption control, improved regulatory framework, and better finance for the private sector, there are potentials for a positive net impact of renewable energy usage on manufacturing export. For renewable energy and total trade nexus, we find that improved regulatory framework and better finance for the private sector are important conditioning structures. These findings are significant because they highlight the different important structures of SSA countries that improve the effect of renewable energy use on trade outcomes. For instance, the consideration of the financial, institutional and regulatory frameworks in SSA countries in conditioning the renewable energy-trade nexus stipulates a clear policy pathway for countries in this region as the debate for transition to the use of renewable energy progresses. |
| Keywords: | Environment; Green growth; Trade performance; Pollution |
| JEL: | C5 F1 Q4 Q5 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:agd:wpaper:19/032&r=all |
| By: | Bruno Carballa Smichowski (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique); Cédric Durand (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique); Steven Knauss (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | These supporting documents are for the paper "Participation in global value chains and varieties of development patterns." |
| Date: | 2019–05–30 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cepnwp:hal-02137360&r=all |
| By: | Chengyuan Han; Dirk Witthaut; Marc Timme; Malte Schr\"oder |
| Abstract: | Quantifying the importance and power of individual nodes depending on their position in socio-economic networks constitutes a problem across a variety of applications. Examples include the reach of individuals in (online) social networks, the importance of individual banks or loans in financial networks, the relevance of individual companies in supply networks, and the role of traffic hubs in transport networks. Which features characterize the importance of a node in a trade network during the emergence of a globalized, connected market? Here we analyze a model that maps the evolution of trade networks to a percolation problem. In particular, we focus on the influence of topological features of the node within the trade network. Our results reveal that an advantageous position with respect to different length scales determines the success of a node at different stages of globalization and depending on the speed of globalization. |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1906.06092&r=all |
| By: | Dany Bahar; Prithwiraj Choudhury; Hillel Rapoport |
| Abstract: | We investigate the relationship between the presence of migrant inventors and the dynamics of innovation in the migrants’ receiving countries. We find that countries are 25 to 50 percent more likely to gain advantage in patenting in certain technologies given a twofold increase in the number of foreign inventors from other nations that specialize in those same technologies. For the average country in our sample this number corresponds to only 25 inventors and a standard deviation of 135. We deal with endogeneity concerns by using historical migration networks to instrument for stocks of migrant inventors. Our results generalize the evidence of previous studies that show how migrant inventors “import” knowledge from their home countries which translate into higher patenting. We complement our results with micro-evidence showing that migrant inventors are more prevalent in the first bulk of patents of a country in a given technology, as compared to patents filed at later stages. We interpret these results as tangible evidence of migrants facilitating the technology-specific diffusion of knowledge across nations. |
| Keywords: | innovation, migration, patent, technology, knowledge |
| JEL: | O31 O33 F22 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7690&r=all |
| By: | Bahar, Dany (Brookings Institution); Choudhury, Prithwiraj (Harvard Business School); Rapoport, Hillel (Paris School of Economics) |
| Abstract: | We investigate the relationship between the presence of migrant inventors and the dynamics of innovation in the migrants' receiving countries. We find that countries are 25 to 50 percent more likely to gain advantage in patenting in certain technologies given a twofold increase in the number of foreign inventors from other nations that specialize in those same technologies. For the average country in our sample this number corresponds to only 25 inventors and a standard deviation of 135. We deal with endogeneity concerns by using historical migration networks to instrument for stocks of migrant inventors. Our results generalize the evidence of previous studies that show how migrant inventors "import" knowledge from their home countries which translate into higher patenting. We complement our results with micro-evidence showing that migrant inventors are more prevalent in the first bulk of patents of a country in a given technology, as compared to patents filed at later stages. We interpret these results as tangible evidence of migrants facilitating the technology-specific diffusion of knowledge across nations. |
| Keywords: | innovation, migration, patent, technology, knowledge |
| JEL: | O31 O33 F22 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12382&r=all |
| By: | Ralph Sonenshine |
| Abstract: | The recent increase in trade tensions between the US and its primary trading partners has resulted in the imposition of tariffs and retaliatory tariffs. Economic theory would suggest the imposition of tariffs would result in price inflation and lower import volumes. However, there are a variety of other factors, such as product differentiation and imperfect competition that influence tariff rate pass-through levels. This study sheds light on the factors impacting tariff rate pass through by assessing the tariff rate elasticity of imports from 1996 to 2015 in two key manufacturing segments, electrical machinery and passenger vehicles. We find tariff rate pass-through rates are lower in more concentrated domestic product-markets as monopsony power enables buyers to lower the tariff pass-through rate or to push the burden of the tariff onto foreign suppliers. In addition, lower tariff rate pass-through rates prevail in more differentiated domestic product-markets, as quality variations reduce the likelihood that foreign sellers can fully pass along the tariff in terms of higher prices. |
| Keywords: | tariff, market power, product differentiation |
| JEL: | G02 G12 G18 G34 |
| URL: | http://d.repec.org/n?u=RePEc:amu:wpaper:2019-04&r=all |
| By: | Pablo Blanchard (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Adriana Peluffo (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Dayna Zaclicever (Comisión Económica para América Latina) |
| Abstract: | International trade is considered a vehicle for technology diffusion, which in turn can induce productivity growth. Particularly, imports may give domestic firms access to a larger variety and/or better quality of intermediate or capital inputs in which new technologies are embodied. However, the lack of sufficiently skilled labor, an issue especially relevant for small developing countries, may prevent firms from taking advantage of these technologies. Using a panel of Uruguayan manufacturing firms for the period 1997-2008, we explore the impact of imported inputs on firms’ productivity and evaluate whether the effect is mediated by the firm’s absorptive capacity, proxied by the proportion of skilled labor. We use two alternative approaches. Firstly, we apply a two-stage approach by first estimating firms’ productivity and then using impact evaluation techniques to analyze causality between imported inputs and productivity. Secondly, we use a direct approach, estimating TFP with imported inputs as a state variable. Our results show that imported intermediates have an enhancing effect on Uruguayan firms’ productivity, and that absorptive capacity plays an important role on this effect. |
| Keywords: | productivity, imports, absorptive capacity |
| JEL: | F14 D24 O33 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:ulr:wpaper:dt-03-19&r=all |
| By: | Benchekroun, H.; Ray Chaudhuri, A. (Tilburg University, Center For Economic Research); Tasneem, Dina |
| Abstract: | We consider a common-pool renewable resource differential game. We show that within this dynamic oligopolistic framework, free trade may lead to a lower discounted sum of consumer surplus and of social welfare than autarky. Trade restrictions may be supported based on both resource conservation and efficiency motives. A priori, this fi…nding is not straightforward; a move from Autarky to Free Trade causes industry output to fi…rst increase and then decrease over time. While producers are shown to be always worse off under free trade than under autarky, consumers are better off in the short run and worse o¤ in the long run. We determine the conditions under which the long-run effects outweigh the short-run effects of trade, leading to a decrease in the discounted sum of not only consumer surplus, but also social welfare. |
| Keywords: | renewable resources; international trade; fisheries; common property |
| JEL: | F10 Q20 Q22 Q27 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiucen:41c456ca-4ff9-470d-a93b-40d648459ddb&r=all |
| By: | Njangang, Henri; Luc, Nembot Ndeffo; Nawo, Larissa |
| Abstract: | This paper contributes to the understanding of the other neglected effects of foreign direct investment by analysing how foreign direct investment affects financial development in the short-run and long-run for a panel of 49 African countries over the period 1990-2016. The empirical evidence is based on Pooled Mean Group (PMG) approach. With three panels differentiated by income level, the following findings are established: first, while there is a positive and significant long-run relationship between foreign direct investment and financial development in Africa, in the short-run the effect of foreign direct investment on financial development is negative. Second, the effect of foreign direct investment is positive and significant in the long-run in the three sub-samples. However, in the short-run, the effect of foreign direct investment is negative and significant in lower-income countries and non-significant in lower-middle-income and upper-middle-income countries. Overall we find a strong evidence supporting the view that foreign direct investment promotes financial development in African countries in the long-run. |
| Keywords: | Foreign direct investment, financial development, Pooled Mean Group, Africa |
| JEL: | F23 O16 O55 |
| Date: | 2019–06–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:94362&r=all |
| By: | Oulton, Nicholas |
| Abstract: | What effect, if any, do changes in the terms of trade have on the level of output (GDP) or welfare? I examine this issue through two versions of a textbook, Hecksher-Ohlin-Samuelson (HOS), two-good model of a small, open economy. In the first version both goods are for final consumption. In the second, one good is an imported intermediate input into the other. In both versions, economic theory suggests that an improvement in the terms of trade raises welfare (consumption) but leaves aggregate output (GDP) unchanged. This follows from a continuous-time analysis using Divisia index numbers. I then show that a national income accountant applying the principles of the 2008 System of National Accounts (SNA) would reach the same conclusions. |
| Keywords: | GDP; welfare; SNA; Hecksher-Ohlin-Samuelson; terms of trade; Divisia |
| JEL: | E01 F11 C43 D60 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:100945&r=all |
| By: | Rodríguez, Marisol; Stein, Ernesto H.; Vlaicu, Razvan |
| Abstract: | This paper examines individual-level support for trade liberalization, relates it to beliefs about trade, and measures its sensitivity to positive and negative framing. The data come from the 2018 Latinobarometro survey of eighteen countries, in which the authors embedded a survey experiment to study framing effects. It is found that respondents are generally favorable to increased trade with other countries, based on perceived trade benefits to employment, prices, and product variety. Support for trade is unaffected by positive framing but is highly sensitive downward to employment loss framing. Positive framing does shift upward respondent beliefs that trade increases product variety and reduces prices, but also raises concerns about low wages. Negative framing substantially reduces the prevailing beliefs that trade is associated with high employment, and there is no offsetting effect on the consumption side. Trade support levels and sensitivity display heterogeneity across education levels consistent with skill-based theories of trade, as well as interesting country, age, gender, and income heterogeneity. |
| Keywords: | Trade liberalization; Trade preferences; Trade beliefs; Survey experiment; Framing |
| JEL: | D72 F13 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:9603&r=all |
| By: | Bennett, Richard; Pfuderer, Simone |
| Abstract: | Since antiquity donkey products have been attributed medicinal, rejuvenating and beautifying properties. In China medicinal and rejuvenating effects have been attributed to a gelatin, called ejiao, produced from donkey hides. In this paper, we analyse the demand for and supply of donkey hides. Ejiao has a long tradition in Traditional Chinese Medicine but it used to be a product reserved for the elite in Chinese society. A number of drivers have substantially increased the demand for ejiao over the last three decades. Economic development has made ejiao affordable for a much larger section of the Chinese population and it is now one of the most widely used products in Traditional Chinese Medicine. Over the last few years, the Chinese government has put policies in place to increase the use of Traditional Chinese Medicine, leading to a further increase in demand for ejiao. We conclude, therefore, that overall demand for ejiao is likely to continue to increase. We analyse the supply of donkey hides in China and globally. The rapid economic development in China has not only led to an increase in demand for ejiao but also to a rapid decrease in the domestic supply of donkeys. We use systems dynamics modelling to assess the potential of donkey farming in China in the medium and longer term. Our modelling exercise shows that even under very optimistic assumptions, current attempts to increase donkey farming in China will not meet the demand in the short term but has potential in the medium to longer term. Thus, international trade in donkey hides is likely to continue to play an important role, at least in the short term and a number of countries have given permission for donkey slaughter houses to be built. We use the systems dynamics model to assess the potential of countries to sustainably supply donkey hides over the next decade. The model shows that trade can contribute to the supply of donkey hides but it will be not possible to meet the current demand. Thus prices are likely to continue to increase. We conclude that there is currently a shortfall in supply of donkey hides that cannot be met either within China or from other countries. For this reason, fake ejiao products and illegal activities are likely to continue to characterise the donkey hide and ejiao markets. |
| Keywords: | Demand and Price Analysis, Livestock Production/Industries |
| Date: | 2019–04–15 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aesc19:289683&r=all |
| By: | Stefania Borelli (Department of Social Sciences and Economics, Sapienza University of Rome (IT).); Giuseppe De Arcangelis (Department of Social Sciences and Economics, Sapienza University of Rome (IT).); Majlinda Joxhe (CREA-University of Luxembourg.) |
| Abstract: | We assess the effect of migration on the production structure in a selection of European countries for the pre-Great Recession period 2001-2009. We propose a labor-task approach where the infl ow of migrants raises the relative supply of manual-physical (or simple) tasks and therefore favors simple-task intensive sectors. We use the US O*NET database in conjunction with European labor data to calculate the index of simple-task intensity at the industry and country level. The analysis confirms that a rise in employment migration rates has a generalized positive impact, but that value added increases significantly more in sectors that use more intensively simple tasks. A traditional shift-share instrument is used to overcome possible endogeneity problems. |
| Keywords: | International Migration, Labor Tasks, ONET, Rybczynski Effect. |
| JEL: | F22 C25 J24 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:saq:wpaper:6/19&r=all |
| By: | Thomas Sampson |
| Abstract: | This paper studies the origins and consequences of international technology gaps. I develop an endogenous growth model where R&D efficiency varies across countries and productivity differences emerge from firm-level technology investments. The theory characterizes how innovation and learning determine technology gaps, trade and global income inequality. Countries with higher R&D efficiency are richer and have comparative advantage in more innovation-dependent industries where the advantage of backwardness is lower and knowledge spillovers are more localized. I estimate R&D efficiency by country and innovation-dependence by industry from R&D and bilateral trade data. Calibrating the model implies technology gaps, due to cross-country differences in R&D efficiency, account for around one-quarter to one-third of nominal wage variation within the OECD. |
| Keywords: | technology gaps, trade, technology investment, Ricardian comparative advantage, international income inequality |
| JEL: | F11 F43 O14 O41 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1627&r=all |
| By: | Nes, Kjersti; Schaefer, K. Aleks |
| Abstract: | This research investigates the extent to which retailers' responses to detection of food hazards in the international supply chain hinge on whether the specific hazard detected represents an acute (versus chronic) health risk. We construct an econometric model that matches data on EU border rejections noticed under the Rapid Alert System for Food and Feed (RASFF) from 20062015 with 6-digit-level data on bilateral fruit and vegetable trade flows to analyze the effects of mycotoxin detection relative to the detection of excess pesticide residues on international sourcing. We find that the presence of mycotoxins - which can present acute human health risks - reduces future shipments into the EU by approximately 32% and has cost suppliers more than $43 billion in lost trade over the sample period. In contrast, border rejections due to pesticide residues - primarily a chronic health risk - do not have a statistically significant effect on international trade flows. |
| Keywords: | Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety |
| Date: | 2018–11–20 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aesc19:289664&r=all |
| By: | Giuseppe De Arcangelis (Department of Social Sciences and Economics, Sapienza University of Rome (IT).); Rama Dasi Mariani (Department of Social Sciences and Economics, Sapienza University of Rome (IT).) |
| Abstract: | The US-based O*NET database is commonly used for multi-country studies on labor markets and migration by assuming invariant occupation technology, i.e. the quantitative assignment of tasks to occupations. We claim that the OECD dataset PIAAC (Programme for the International Assessment of Adult Competencies) could provide a valid alternative to obtain country-specific task measures. The US presence in both datasets allows us to compare the consistency of the two data sources along two dimensions. First, we compute the correlation coefficients between aggregate task indexes and they are very high (rarely less than 0.7). Secondly, we use the PIAAC database to replicate the empirical model in Peri and Sparber (2009) on US natives’ task upgrading after a migration shock, and the results are strikingly similar to the original O*NET-based estimates. The multi-country variability of PIAAC-based task indexes for European countries are non-negligible; hence, we recommend these PIAAC-based measures for future multi-country analysis. |
| Keywords: | Occupational Network Information (O*NET), Programme for the International Assessment of Adult Competencies (PIAAC), Migration, Task Upgrading. |
| JEL: | J24 C81 F22 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:saq:wpaper:5/19&r=all |
| By: | Evzen Kocenda (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Czech Republic); Karen Poghosyan (Central Bank of Armenia, Economic Research Department, Yerevan, Armenia) |
| Abstract: | In this paper we analyze export sophistication based on a large panel dataset (2001?2015; 101 countries) and using various estimation algorithms. Using Monte Carlo simulations we evaluate the bias properties of estimators and show that GMM-type estimators outperform instrumentalvariable and fixed-effects estimators. Based on our analysis we document that GDP per capita and the size of the economy exhibit significant and positive effects on export sophistication; weak institutional quality exhibits negative effect. We also show that export sophistication is path-dependent and stable even during a major economic crisis, which is especially important for emerging and developing economies. |
| Keywords: | international trade; export sophistication; emerging and developing economies; specialization; dynamic panel data; Monte-Carlo simulation; panel data estimators |
| JEL: | C52 C53 F14 F47 O19 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:ara:wpaper:001&r=all |
| By: | Hassan Benchekroun; Amrita Ray Chaudhuri; Dina Tasneem |
| Abstract: | We consider a common-pool renewable resource differential game. We show that within this dynamic oligopolistic framework, free trade may lead to a lower discounted sum of consumer surplus and of social welfare than autarky. Trade restrictions may be supported based on both resource conservation and effciency motives. A priori, this fi nding is not straightforward; a move from Autarky to Free Trade causes industry output to first increase and then decrease over time. While producers are shown to be always worse off under free trade than under autarky, consumers are better off in the short run and worse off in the long run. We determine the conditions under which the long-run effects outweigh the short-run effects of trade, leading to a decrease in the discounted sum of not only consumer surplus, but also social welfare. |
| URL: | http://d.repec.org/n?u=RePEc:win:winwop:2019-01&r=all |
| By: | Ljungwall, Christer; Bohman, Viking |
| Abstract: | The Belt and Road Initiative is gradually moving China and its economy beyond the reach of Western sanctions and reducing the economic impact that a US naval blockade could have. Christer Ljungwall and Viking Bohman contend that, without a measured Western response, this could increase the likelihood of Chinese aggression in regional territorial disputes. |
| JEL: | N0 |
| Date: | 2017–11–29 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:86891&r=all |
| By: | SHIMAMOTO Daichi; Yu Ri KIM; TODO Yasuyuki |
| Abstract: | This study examines the effect of social interactions on exporting activities of micro, small, and medium-sized enterprises (MSMEs) in traditional apparel and textile clusters in Vietnam. To deal with econometric issues due to the reflection problem of Manski and endogeneity of network formation, we apply the estimation method developed by Bramoullé et al. (2009). Specifically, we eliminate the sub-network fixed effects using within transformation and instrument the average share of exports among peers of the focal firm by attributes of its peers' peers. This method enables us to identify the effects of exporting activities of the focal firm's peers on its own exporting activities (the endogenous effect according to Manski) and the effect of its peers' attributes (the exogenous effect). We find that peers' export share has a negative and significant effect on own export share, suggesting that the negative competition effect surpasses the positive learning effect. We also find that firms are encouraged to export by their large peers, possibly because firms can obtain technology spillovers from large peers and thus can be productive enough to start exporting. |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:19020&r=all |
| By: | Epstein, Gil S. (Bar-Ilan University); Katav-Herz, Shirit (Academic College of Tel-Aviv Yaffo) |
| Abstract: | Population ageing affects most countries, especially developed ones. The elderly have increased in number as a result of increased longevity and a parallel decline in fertility. This phenomenon is placing an increasing burden on the young to finance intergenerational transfers to the old, which is creating a threat to the stability of the pension system and the long-run viability of society as a whole. One possible solution is to permit more immigration, which will both increase the labor force and broaden the tax base. Increasing immigration has a variety of effects on the local population, which vary according to age and wealth. One of these is the threat to local social norms and culture since immigrants tend to maintain the culture of their country of origin. This effect increases with the number of immigrants and reduces the attractiveness of immigration as a solution to population ageing. This paper examines immigration as a solution to the problem of ageing population, while considering the implication of immigration on social norms. |
| Keywords: | immigration, social norms, population ageing, intergenerational transfers, attitude toward immigrants |
| JEL: | J11 J15 J61 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12368&r=all |
| By: | Ghosh, sudeshna |
| Abstract: | This paper explores the ‘globesity’ hypothesis that is, it examines, the effect of globalization in its social and economic dimensions on the obesity of the nations. The study utilized a panel set of Asian countries dividing it into two groups based on the income classification. The annual time period of data series runs from 1985 to 2015. For the low and low middle income countries economic and social globalization positively affects obesity, implying the benefits of globalization leads to adverse impact on health. This is due to life style changes, availability of processed food and lack of public awareness. However, for the richer Asian nations globalization, particularly in its social dimension has negative impact on obesity. The study employs the Westerlund cointegrating techniques to investigate upon the long run causal association between obesity and globalization |
| Keywords: | Obesity; Health; KOF index; Social globalization; Economic globalization; Asia, Granger Causality. |
| JEL: | C1 I00 |
| Date: | 2017–10–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:94601&r=all |
| By: | Bruno Carballa; Steven Knauss (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique); Cédric Durand (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | This appendix to the paper "Participation in global value chains and varieties of development patterns" provides further details concerning data treatment issues and additional statistical output that were unable to be included in the main paper due to space issues. It is divided into three parts. The first part refers to the construction of the raw indicators analyzed in section 3 of the main paper and with which the indexes used as variables for the PCA were built. Information about sources, data treatment and all the methodological choices made to build the database are detailed for every raw indicator. The second part offers more statistical output of the PCA that has not been included in the paper. The third section concludes the appendix by providing further information on the impact that our main methodological and theoretical changes had on the different results we obtain. The underlying database we assembled in order to produce the statistical output in the paper is available upon request from the authors. |
| Date: | 2019–05–20 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cepnwp:hal-02133823&r=all |
| By: | Kym Anderson |
| Abstract: | Despite favourable growing conditions, Australia’s production or exports of wine did not become significant until the 1890s. Both grew in the 1920s, but only because of government support. Once that support was removed in the late 1940s, production plateaued and exports diminished: only 2% of wine production was exported during 1975-85. Yet over the next two decades Australia’s wine production quadrupled and the share exported rose to two-thirds – before falling somewhat in the next ten years. This paper explains why it took so long for Australia’s production and competitive advantage in wine to emerge, why it took off spectacularly after the mid-1980s and why it fell in the ten years to 2015. It concludes that despite the recent downturn in the industry’s fortunes, the country’s international competitiveness is now firmly established and commensurate with its ideal wine-growing climate, notwithstanding the likelihood of further boom-slump cycles in the decades ahead. |
| Keywords: | boom-plateau wine cycles; comparative advantage; wine competitiveness; wine trade specialization |
| JEL: | D12 F15 L66 N10 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:pas:papers:2018-22&r=all |
| By: | Willem THORBECKE |
| Abstract: | Japanese electronic parts and components (ep&c) exports fell in value after the Global Financial Crisis (GFC) while Taiwan and South Korea's ep&c exports soared. This paper reports that the yen appreciation between 2007 and 2011 reduced yen ep&c export prices by 28 percent. This paper also finds that yen appreciations led to small declines in ep&c export volumes and, together with NT dollar depreciations, to large decreases in Japanese semiconductor stock prices. The strong yen caused yen export prices after the GFC to tumble relative to yen production costs, decimating profits. Plummeting profits in turn hindered Japanese ep&c firms from investing enough in capital and innovation to compete with nimble rivals. |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:19035&r=all |
| By: | Jorge Nogueira de Paiva Britto (Universidade Federal Fluminense); Leonardo Costa Ribeiro (Cedeplar-UFMG); Eduardo da Motta e Albuquerque (Cedeplar-UFMG) |
| Abstract: | This paper investigates networks of cross-border patent citations - the patent assignee as a node and an international patent citation as a link. The data (patents and their international citations, selected years between 1991 and 2009) show a network growing over time - more institutions, more links and more countries - and preserving its scale-free properties, a self-organized system with changes in technological specialization. This firm-led network is compared to a network of international colaboration in science - a university-led network. The overlaping of those two international self-organized systems might be a source of an emerging international system of innovation. |
| Keywords: | Patent Citations; International Knowledge flows; Innovation Systems |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:cdp:texdis:td605&r=all |
| By: | Claudius Gräbner; Philipp Heimberger; Jakob Kapeller; Bernhard Schütz |
| Abstract: | This paper analyzes the dynamics of structural polarization and macroeconomic divergence in the context of European integration, where the latter is understood primarily as an increase in economic and financial openness. In the process of estimating the dynamic effects of such an openness shock on 26 EU countries, we develop a taxonomy of European economies that consists of core, periphery and catching-up countries, as well as financial hubs. We show that these four country groups have responded in a distinct way to the openness shock imposed by European integration and argue that the latter should be seen as an evolutionary process that has given rise to different path-dependent developmental trajectories. These trajectories relate to the sectoral development of European economies and the evolution of their technological capabilities. We propose a set of interrelated policy measures to counteract structural polarization and to promote macroeconomic convergence in Europe. |
| Keywords: | Europe, path dependency, European integration, economic openness, competitiveness |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:imk:fmmpap:39-2018&r=all |