nep-int New Economics Papers
on International Trade
Issue of 2019‒07‒22
37 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. How U.S. Agriculture Will Fare Under the USMCA and Retaliatory Tariffs By Chepeliev, Maksym; Wally Tyner; Dominique van der Mensbrugghe
  3. Like Me, Buy Me: The Effect of Soft Power on Exports By Andrew K. Rose
  4. Technology-Induced Trade Shocks? Evidence from Broadband Expansion in France By Clément Magouyres; Thierry Mayer; Clément Mazet
  5. Do institutions and good governance affect inward FDI? Empirical evidence from emerging countries By Younsi, Moheddine; Bechtini, Marwa
  6. The Impact of a Trade War: Assessment of the Current Tariffs and Alternative Scenarios By Karyne B. Charbonneau
  7. Currency Wars? Unconventional Monetary Policy Does Not Stimulate Exports By Andrew K. Rose
  8. Capital Flight, Foreign Direct Investment and Natural Resources in Africa By Leonce Ndikumana; Mare Sarr
  9. Economic Geography Aspects of the Panama Canal By Stephan E. Maurer; Ferdinand Rauch
  10. Foreign Direct Investment, Information Technology and Economic Growth Dynamics in Sub-Saharan Africa By Simplice A. Asongu; Nicholas M. Odhiambo
  11. Regional Effects of Exchange Rate Fluctuations By Christopher L. House; Christian Proebsting; Linda L. Tesar
  12. South Asia: Formulating Services Sector Policies for Development, A Policy Perspective By Prachi Agarwal
  13. Mexican Migration to the United States: Selection, Assignment, and Welfare By BURZYNSKI Michal; GOLA Pawel
  14. Personality Traits, Migration Intentions, and Cultural Distance By Fouarge, Didier; Özer, Merve Nezihe; Seegers, Philipp K.
  15. Emigration from the UK 1870-1913: Quantity and Quality By Timothy J. Hatton
  16. Environmental Policy and Firm Selection in the Open Economy By Udo Kreickemeier; Philipp M. Richter
  17. International Migration Intentions and Illegal Costs: Evidence from Africa-to-Europe Smuggling Routes By Guido, Friebel; Miriam, Manchin; Mariapia, Mendola; Giovanni, Prarolo
  18. Trade Wars and Trade Deals: Estimated Effects using a Multi-Sector Model By Carlos Caceres; Diego A. Cerdeiro; Rui Mano
  19. Structural Transformation and Quality Ladders: Solving the “Theil's Cube” By Andrey A. Gnidchenko
  20. Cultural Factors and Study Destinations of International Students By Hao Wei; Ran Yuan; Laixun Zhao
  21. The Elasticity of Substitution between Domestic and Foreign Goods: A Quantitative Survey By Bajzik, Jozef; Havranek, Tomas; Irsova, Zuzana; Schwarz, Jiri
  22. Are some dictators more attractive to foreign investors? By François, Abel; Panel, Sophie; Weill, Laurent
  23. Environmental policy and firm selection in the open economy By Kreickemeier, Udo; Richter, Philipp M.
  24. Chinese regional inequality and sectoral foreign direct investment By Azarhoushang, Behzad; Wu, Jennifer Pédussel; Zaroki, Shahryar
  25. The influence of Brazilian exports on price transmission processes in the coffee sector: a Markov-switching approach By Vollmer, Teresa; von Cramon-Taubadel, Stephan
  26. In brief...Globalisation and its discontents By Josh De Lyon; Elsa Leromain
  27. Regional Business Cycle Synchronization in Emerging and Developing Countries: Regional or Global Integration? Trade or Financial Integration? By Chi Gong; Soyoung Kim
  28. In brief...Brexit and outward investment by UK firms By Holger Breinlich; Elsa Leromain; Dennis Novy; Thomas Sampson
  29. Harmonization of Documents for International Transport: A study in the context of South and South-West Asia By Goran Andreev
  30. Die Folgen des Brexit für die Least Developed Countries By Olekseyuk, Zoryana; Rodarte, Israel Osorio
  31. Import protection through antidumping filings and economic activity By Goldbaum, Sergio; Pedrozo Junior, Euclides
  32. The Effects of Rising Cabbage Import on Cabbage Production in Thailand By Mahathanaset, Itthipong; Pensupar, Kampanat
  33. Technological Changes, Offshoring, and the Labor Share By Weicheng Lian
  34. Tom Hertel’s influence and its lessons about academic inquiry By Hillberry, Russell; David Hummels
  35. Upstreamness, Wages and Gender: Equal Benefits for All? By Gagliardi, Nicola; Mahy, Benoît; Rycx, Francois
  36. Cross-border transport infrastructure in the EU By Aris Christodoulou; Panayotis Christidis
  37. The politics of the globalization backlash: Sources and implications By Jeffry Frieden

  1. By: Chepeliev, Maksym; Wally Tyner; Dominique van der Mensbrugghe
    Abstract: A hallmark of the Trump Administration has been to reverse the post-World War II consensus on lowering of trade barriers and a commitment towards multilateral free trade, towards a more protectionist and perhaps mercantilist position vis-à-vis trade policy. One of the Administration’s first actions in this regard was the decision to leave the Trans-Pacific Partnership (TPP) agreement, followed thereafter by raising tariffs on steel and aluminum imports. President Trump left no doubt where he stood on the North American Free Trade Agreement (NAFTA), which he often stated was the “worst trade deal maybe ever signed anywhere.” The administration’s actions on trade are likely to have significant implications for U.S. farmers as these actions target three of the largest markets for U.S. agricultural exports—Canada, China and Mexico—accounting for some 44% of U.S. agricultural exports representing an average of $63 billion from 2013 to 2015.
    Date: 2018
  2. By: Aleksandra Kordalska (Gdansk University of Technology, Gdansk, Poland); Magdalena Olczyk (Gdansk University of Technology, Gdansk, Poland)
    Abstract: The goal of the paper is to decompose gross exports/imports to/from Germany for seven selected economies in Central and Eastern Europe (CEE): the Czech Republic, Estonia, Hungary, Lithuania, Latvia, Poland, and Slovakia for 2000 and 2014, to identify the role of German in absorbing, reflecting, and redirecting CEE trade. We use a gross trade decomposition proposed by Borin and Mancini (2017), which is the extended version of the methodology of Koopman, Wang, and Wei (KWW; 2014). Our analysis shows the deep integration of CEE into ‘Factory Germany’ as well as also the overestimated role of Germany as a market of final destination. Germany plays the increasing role in CEE export redirection (and vice versa) to extra-European destinations, especially to the US, China, and Russia. Additionally, we state that the Baltic countries and Poland export domestic value added mostly included in services, while the Visegrád countries do so in manufacturing.
    Keywords: value-added exports, CEE economies, trade linkages, GVC decomposition
    JEL: F1 F14 F1
    Date: 2019–07
  3. By: Andrew K. Rose (University of California, Berkeley)
    Abstract: In this paper I quantify a gain that a country receives when its global influence is considered to be admirable by others. I use a standard gravity model of bilateral exports, a panel of data from 2006 through 2013, and an annual survey conducted for the BBC by GlobeScan which asks people in up to 46 countries about whether each of up to 17 countries were perceived to have “a mainly positive or negative influence in the world.” Holding other things constant, a country’s exports are higher if it is perceived by the importer to be exerting more positive global influence. This effect is statistically and economically significant; a one percent net increase in perceived positive influence raises exports by around .8 percent. Succinctly, countries receive a commercial return on their soft power.
    Keywords: empirical, panel, model, data, gravity, positive, negative, net, world, global, BBC, influence
    JEL: F14 F59
  4. By: Clément Magouyres (Ecole d'Économie de Paris - Paris School of Economics (PSE)); Thierry Mayer (Département d'économie); Clément Mazet (Département d'économie)
    Abstract: In this paper, we document the presence of “technology-induced” trade in France between 1997 and 2007 and assess its impact on consumer welfare. We use the staggered roll-out of broadband internet to estimate its causal effect on the importing behavior of affected firms. Using an event-study design, we find that broadband expansion increases firm-level imports by around 25%. We further find that the “sub-extensive” margin (number of products and sourcing countries per firm) is the main channel of adjustment and that the effect is larger for capital goods. Finally, we develop a model where firms optimize over their import strategy and which yields a sufficient statistics formula for the quantification of the effects of broadband on consumer welfare. Interpreted within this model, our reduced-form estimates imply that broadband internet reduced the consumer price index by 1.7% and that the import-channel, i.e. the enhanced access to foreign goods that is allowed by broadband, accounts for a quarter of that effect.
    Keywords: Internet; Trade; Imports; Consumer welfare
    JEL: F14 F15 L23 O33
    Date: 2019–07
  5. By: Younsi, Moheddine; Bechtini, Marwa
    Abstract: This study seeks to strengthen the existing literature by investigating the relationship between governance indicators and FDI inflows for the emerging countries (ECs) using a dynamic panel gravity model approach over the period 1996~2014. The empirical results reveal that among the six indicators of good governance, political stability, government effectiveness and regulatory quality are found to be robust determinants for FDI attractiveness in Emerging countries. The remaining three indicators, i.e. voice and accountability, rule of law, and control of corruption are found significantly and negatively associated with FDI inflows. The empirical results show also that larger per capita GDP difference between the investing partner and host country, high level of trade openness, low level of inflation rate, and better infrastructure are crucial factors to speed-up FDI inflows in ECs. However, this study provides strong evidence that ECs depict a large gap with regard to the quality of institutions and other macroeconomic factors and thereby their ability to attract FDI. To conclude, policymakers are required to improve the quality of institutions and business climate in order to attract more FDI in these countries.
    Keywords: Governance indicators, FDI, Emerging countries, Panel gravity model.
    JEL: C23 D73 F21 F23
    Date: 2019–07–02
  6. By: Karyne B. Charbonneau
    Abstract: This note uses Charbonneau and Landry’s (2018) framework to assess the direct impact of the current trade tensions on the Canadian and global economies, as well as possible implications if the conflict escalates further. Overall, my findings show that the estimated impact of current tariffs on real gross domestic product (GDP) remains relatively small, which is in line with the literature on gains from trade, but the impact on trade is much larger. With a modest escalation of trade tensions, monetary policy in Canada could face a situation of rising prices and falling real GDP. This dilemma would be worse if Canada takes an active role in the trade conflict. If trade tensions rise more dramatically, the effect on Canada would depend on Canada’s access to the US market. A significant and more broad-based rise in tariffs could lead to large global impacts.
    Keywords: Recent economic and financial developments; Trade Integration
    JEL: F11 F13 F14 F15 F50
    Date: 2019–07
  7. By: Andrew K. Rose (University of California, Berkeley)
    Abstract: I investigate whether countries that use unconventional monetary policy (UMP) experience export booms. I use a popular gravity model of trade which requires neither the exogeneity of UMP, nor instrumental variables for UMP. In practice, countries that engage in UMP experience a drop in exports vis-à-vis countries that are not engaged in such policies, holding other things constant. Quantitative easing is associated with exports that are about 10% lower to countries not engaged in UMP; this amount is significantly different from zero and similar to the effect of negative nominal interest rates. Thus there is no evidence that countries have gained export markets through unconventional monetary policy; any currency wars launched have been lost.
    Keywords: quantitative; easing; negative; nominal; interest; trade; gravity; bilateral; data; empirical
    JEL: F14 E58
  8. By: Leonce Ndikumana (Department of Economics and PERI, University of Massachusetts Amherst); Mare Sarr (School of International Affairs, Pennsylvania State University)
    Abstract: This paper provides theoretical and empirical insights into the puzzling simultaneous rise in foreign direct investment inflows in Africa and capital flight from the continent over the past decades. Indeed, paradoxically, even as African countries have become more attractive to foreign private capital, they have continued to experience capital exodus in the context of improved economic performance, especially since the turn of the century. This paper explores three questions. First, does foreign direct investment fuel capital flight as has been established in the case of external borrowing? In other words, is there an FDI-fueled capital flight phenomenon akin to debt-fueled capital flight? Second, is natural resource endowment a possible channel for the capital flight-FDI link, given that resource-rich countries tend to be both preferred destinations of FDI and prominent sources of capital flight? Third, does the quality of institutions mitigate the impact of natural resources on capital flight? The paper develops a theoretical model that conceptualizes these linkages and sets the stage for an econometric investigation of these questions. The results from econometric analysis based on a sample of 30 African countries over the period 1970-2015 show that FDI flows are positively related to capital flight, suggesting a possible FDI-fueled capital flight phenomenon. However, there is no evidence for an FDI overhang effect; past stock of FDI has no impact on capital flight. High natural resource rents are associated with high capital flight and the quality of institutions does not mitigate this link. The paper offers some policy insights derived from the empirical results.
    Keywords: capital flight; foreign direct investment; natural resources; Africa
    JEL: F3 O16 O55
    Date: 2019
  9. By: Stephan E. Maurer; Ferdinand Rauch
    Abstract: This paper studies how the opening of the Panama Canal in 1914 changed market access and influenced the economic geography of the United States. We compute shipment distances with and without the canal from each US county to each other US county and to key international ports and compute the resulting change in market access. We relate this change to population changes in 20-year intervals from 1880 to 2000. We find that a 1 percent increase in market access led to a total increase of population by around 6 percent. We compute similar elasticities for wages, land values and immigration from out of state. When we decompose the effect by industry, we find that tradable (manufacturing) industries react faster than non-tradable (services), with a fairly similar aggregate effect.
    Keywords: market access, Panama Canal, trade shock, gravity
    JEL: F1 R1 O1 N72
    Date: 2019–07
  10. By: Simplice A. Asongu (Yaoundé/Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa)
    Abstract: The research assesses how information and communication technology (ICT) modulates the effect of foreign direct investment (FDI) on economic growth dynamics in 25 countries in Sub-Saharan Africa for the period 1980-2014. The employed economic growth dynamics areGross Domestic Product (GDP) growth, real GDP and GDP per capita while ICT is measured by mobile phone penetration and internet penetration. The empirical evidence is based on the Generalised Method of Moments. The study finds that both internet penetration and mobile phone penetration overwhelmingly modulate FDI to induce overall positive net effects on all three economic growth dynamics. Moreover, the positive net effects are consistently more apparent in internet-centric regressions compared to “mobile phone”-oriented specifications. In the light of negative interactive effects, net effects are decomposed to provide thresholds at which ICT policy variables should be complemented with other policy initiatives in order to engender favorable outcomes on economic growth dynamics. Practical and theoretical implications are discussed.
    Keywords: Economic Output; Foreign Investment; Information Technology; Sub-Saharan Africa
    JEL: E23 F21 F30 L96 O55
    Date: 2019–01
  11. By: Christopher L. House; Christian Proebsting; Linda L. Tesar
    Abstract: We exploit differences across U.S. states in terms of their exposure to trade to study the effects of changes in the exchange rate on economic activity at the business cycle frequency. We find that a depreciation in the state-specific trade-weighted real exchange rate is associated with an increase in exports, a decline in unemployment and an increase in hours worked. The effect is particularly strong in periods of economic slack. We develop a multi-region model with inter-state trade and labor flows and calibrate it to match the state-level orientation of exports and the extent of labor migration and trade between states. The model replicates the relationship between exchange rates and unemployment. Counterfactuals show that the high degree of interstate trade plays a dominant role in transmitting shocks across states in the first year, whereas interstate migration shapes cross-sectional patterns in following years. The model suggests that a 25% Chinese import tariff on U.S. goods would be felt throughout the United States, even in states with small direct linkages to China, raising unemployment rates by 0.2 to 0.7 percentage points in the short run.
    JEL: F22 F41
    Date: 2019–07
  12. By: Prachi Agarwal (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) South and South-West Asia Office)
    Abstract: This paper analyses the current development in trade in services in South Asia. South Asia’s language heritage, strong traditions of higher education, computer savvy diaspora and embrace of modern telecom infrastructure, have all contributed to services being a large part of the region’s GDP, with an increasing contribution to their export baskets. Countries in South Asia have formulated aggressive policies to promote the development of trade in services, with a focus on Information Technology and Communication, Professional services, Tourism and Travel, and Healthcare services. It was found that each country in the region has targeted specific niche markets to develop and to increase global exports and outreach. While some countries have formulated ‘Vision Documents” for their economy, others have devised specialized programs for “Priority Sectors”. This study divides the general policy themes under specific categories: (i) Skill development programs, (ii) nation-wide connectivity and digitization plans, (iii) initiatives to boost technology and entrepreneurship, with a focus on start-ups and intellectual property rights (IPRs), (iv) and export and brand promotion policies. This paper then highlights the best practices in the region and provides recommendations to develop a more competitive services sector. This research was undertaken to obtain an in-depth analysis of current policy making to promote the development of services for domestic and trade purposes, as well as assessing the impact of these policy tools. Such findings were primarily based on desk-based research from publicly available information sources combined with discussions with key stakeholders as well as an informed interpretation of the findings.
    Keywords: IT industry, South Asia, Trade in services, Trade policy
    JEL: F13 F14 L88 N75
    Date: 2019–07
  13. By: BURZYNSKI Michal; GOLA Pawel
    Abstract: This paper quanti fies the effects of Mexican migration to the United States on individual welfare along the continuous distribution of skills in both countries. We develop a model that focuses on the sorting of workers within and across national labor markets. Mexican workers self-select into migration, and then, within each country, all workers match with productivity-differentiated fi rms. Firms operate in monopolistically competitive international markets, which they can freely enter or exit. These features of the model ensure that workers with similar skills are substitutes and dissimilar workers are complements. Thus, migration redistributes welfare in the source and host country. In particular, the observed Mexican immigration to the United States depresses the wages of below-median local workers. However, the welfare losses in the United States are modest in scope: A $1.70 per day lump-sum tax on Mexican immigrants is sufficient to fi nance a compensating transfer for all U.S. citizens.
    Keywords: Migration; matching; selection; welfare
    JEL: C68 C78 F22 J24
    Date: 2019–07
  14. By: Fouarge, Didier (ROA, Maastricht University); Özer, Merve Nezihe (Maastricht University); Seegers, Philipp K. (Maastricht University)
    Abstract: This paper investigates the relationship between Big Five personality traits and individuals' intentions to migrate in countries that vary in their culture. Using data collected from university students in Germany, we find that extraversion and openness are positively associated with migration intentions, while agreeableness, conscientiousness, and emotional stability negatively relate to migration intentions. Openness positively and extraversion negatively relate to the willingness to move to culturally distant countries after controlling for geographic distance and economic differences between countries. Using language as a cultural distance indicator provides evidence that extravert and conscientious individuals are less likely to prefer linguistically distant countries while agreeable individuals tend to consider such countries as potential destinations.
    Keywords: migration intentions, destination choice, cultural distance, Big Five personality traits
    JEL: D91 J61 Z1
    Date: 2019–06
  15. By: Timothy J. Hatton
    Abstract: In this paper I revisit the determinants of emigration from the UK during the age of mass migration from 1870 to 1913. During those years the cumulative gross outflow was 10 million while the net outflow of nearly 6 million amounted to 13 percent of the UK population in 1913. I focus on the determinants of emigration to the three principal destinations, the USA, Canada and Australia and New Zealand combined. In the absence of restrictive immigration policies, the flow of emigration to these destinations responded to economic shocks and trends. I also investigate differences in the skill content of emigration, as represented by the occupational composition of adult male emigrants to these three destinations. Emigrants to Australia and New Zealand were more skilled on average than those heading across the Atlantic, a feature that does not correspond well with skill differentials in the manner predicted by the Roy model. While assisted passages (subsidised fares) increased the volume of emigration to Australia and New Zealand they cannot account for its higher skill content.
    Date: 2019–07
  16. By: Udo Kreickemeier; Philipp M. Richter
    Abstract: In this paper, we analyse the effects of a unilateral change in an emissions tax in a model of international trade with heterogeneous firms. We find a positive effect of tighter environmental policy on average productivity in the reforming country through reallocation of labour towards exporting firms. Domestic aggregate emissions fall, due to both a scale and a technique effect, but we show that the reduction in emissions following the tax increase is smaller than in autarky. Moreover, general equilibrium effects through changes in the foreign wage rate lead to a reduction in foreign emissions and, hence, to negative emissions leakage in case of transboundary pollution.
    Keywords: Trade and environment; Heterogeneous firms; Unilateral environmental policy; Emissions leakage
    JEL: F18 F12 F15 Q58
    Date: 2019
  17. By: Guido, Friebel; Miriam, Manchin; Mariapia, Mendola; Giovanni, Prarolo
    Abstract: Irregular migrants from Africa and the Middle East ow into Europe along land and sea routes under the control of human smugglers. The demise of the Gaddafi regime in 2011 marked the opening of the Central Mediterranean Route for irregular border-crossing between Libya and Italy. This resulted in the immediate expansion of the global smuggling network, which produced an asymmetric reduction in bilateral distance between country pairs across the Mediterranean sea. We exploit this source of spatial and time variation in irregular migration routes to estimate the elasticity of migration intentions to illegal moving costs proxied by distance. We build a novel dataset of geolocalized time-varying migration routes, combined with cross-country survey data on individual intentions to move from Africa (and the Middle East) into Europe. Netting out any country-by-time and pair-level confounders we find a large negative effect of distance along smuggling routes on individual migration intentions. Shorter distances increase the willingness to migrate especially for youth, (medium) skilled individuals and those with a network abroad. The effect is stronger in countries closer to Libya and with weak rule of law.
    Keywords: International Migration, Human Smuggling, Illegal Migration, Libyan Civil War
    JEL: K23 K42
    Date: 2018–11
  18. By: Carlos Caceres; Diego A. Cerdeiro; Rui Mano
    Abstract: This paper studies the potential long-term effects of three illustrative scenarios using a multi-sector computable general equilibrium (CGE) trade model calibrated to 165 countries. The first scenario estimates effects from potential U.S. auto tariffs. The second analyzes a ‘transactional deal’ between the U.S. and China to close their bilateral deficit. The third, in the absence of such a deal, considers a potential escalation in bilateral tariffs between the two countries. Some common features emerge across all three scenarios: the overall effects on GDP tend to be relatively small albeit negative in most cases, including for the U.S. However, sectoral disruptions and positive and negative spillovers to highly exposed ‘by-stander’ economies can be large. There is also heterogeneity at the subnational level in the U.S. -- richer states tend to benefit from certain scenarios. We discuss how estimated impacts depend on the extent to which the U.S. is able to re-shore production in protected sectors. These results can usefully complement estimates obtained through macroeconomic models that are better suited to capture dynamic effects, such as those stemming from trade policy uncertainty. More generally, our results both underscore the value of adhering to the existing levels of liberalization, and highlight the risks associated with a fragmentation or even a complete breakdown of the trading system.
    Date: 2019–07–03
  19. By: Andrey A. Gnidchenko (National Research University Higher School of Economics)
    Abstract: We propose a decomposition of weighted Theil index of export concentration into the quantity- and quality-driven terms and calculate the proposed components for 5038 product groups and 120 countries. We link our findings to the debate on the role of quality upgrading in structural transformation. The results do not support the idea that climbing quality ladders (or quality upgrading within the actually exported products) is the best way to proceed with structural transformation: for most countries, the share of the quality-driven component of weighted Theil index doesn’t exceed 20 per cent
    Keywords: structural transformation, diversification, international trade, Theil index, unit values, quality ladders.
    JEL: F10 F14 L16 C43
    Date: 2019
  20. By: Hao Wei (Department of International Economics, Beijing Normal University, China); Ran Yuan (Department of International Economics, Beijing Normal University, China); Laixun Zhao (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)
    Abstract: We examine the role of cultural factors in attracting international students, using data of 102 countries from 2000 to 2015. Our results show that the export of cultural products is conducive to the increase of international students, and in particular, international students choose to study in developing countries whose official language and religious beliefs are different from their home countries, while they tend to go to developed countries with a common language. We also examine the features of international students in China and Chinese students in other countries. The policy implication from our study is that "soft power" such as a unique culture, common value and migration networks is important in attracting foreign students.
    Keywords: Cultural Factors, International Students, Cultural Goods Exports, Migration Networks, Chinese Students Abroad
    JEL: F16 I23
    Date: 2019–07
  21. By: Bajzik, Jozef; Havranek, Tomas; Irsova, Zuzana; Schwarz, Jiri
    Abstract: A key parameter in international economics is the elasticity of substitution between domestic and foreign goods, also called the Armington elasticity. Yet estimates vary widely. We collect 3,524 reported estimates of the elasticity, construct 34 variables that reflect the context in which researchers obtain their estimates, and examine what drives the heterogeneity in the results. To account for inherent model uncertainty, we employ Bayesian and frequentist model averaging. We present the first application of newly developed non-linear techniques to correct for publication bias. Our main results are threefold. First, there is publication bias against small and statistically insignificant elasticities. Second, differences in results are best explained by differences in data: aggregation, frequency, size, and dimension. Third, the mean elasticity implied by the literature after correcting for both publication bias and potential misspecifications is 3.
    Keywords: Armington,trade elasticity,meta-analysis,publication bias,Bayesian model averaging
    JEL: C83 D12 F14
    Date: 2019
  22. By: François, Abel; Panel, Sophie; Weill, Laurent
    Abstract: Since political uncertainty is greater in dictatorships than in democracies, we test the hypothesis that foreign investors scrutinize public information on dictators to assess this risk. In particular, we as-sume they use five suitable dictators’ characteristics: age, political experience, education level, ed-ucation in economics, and prior experience in business. We perform fixed effects estimations on an unbalanced panel of 100 dictatorial countries from 1973 to 2008 to explain foreign direct investment (FDI) inflows. We find that educated dictators are more attractive to foreign investors. We obtain strong evidence that greater educational attainment of the leader is associated with higher FDI. We also find evidence that the leader having received education in economics and prior experience in business is associated with greater FDI. By contrast, the leader’s age, and political experience have no relationship with FDI. Our results are robust to several tests and checks, including a comparison with democracies.
    JEL: F21 F23
    Date: 2019–07–08
  23. By: Kreickemeier, Udo; Richter, Philipp M.
    Abstract: In this paper, we analyse the effects of a unilateral change in an emissions tax in a model of international trade with heterogeneous firms. We find a positive effect of tighter environmental policy on average productivity in the reforming country through reallocation of labour towards exporting firms. Domestic aggregate emissions fall, due to both a scale and a technique effect, but we show that the reduction in emissions following the tax increase is smaller than in autarky. Moreover, general equilibrium effects through changes in the foreign wage rate lead to a reduction in foreign emissions and, hence, to negative emissions leakage in case of transboundary pollution.
    Keywords: Strategic Environmental Policy,Firm Location,Carbon Leakage,General Equilibrium,Trade and environment,Heterogeneous firms,Unilateral environmental policy,Emissions leakage
    JEL: F18 F12 F15 Q58
    Date: 2019
  24. By: Azarhoushang, Behzad; Wu, Jennifer Pédussel; Zaroki, Shahryar
    Abstract: Following the 1978 economic reforms, China gradually became first amongst developing countries and the second in the world, after the USA, in terms of stock of inward Foreign Direct Investment (FDI). Sustained GDP growth, a high rate of capital return and brisk economic development made China one of the best destinations for foreign capital; however, the benefits of this spectacular growth have not been evenly distributed throughout the various Chinese regions. There are many low-income and poor economic performing provinces in China although poverty is mainly concentrated in the inland regions. Since the beginning of the 2000s, a series of policies have been designed and implemented by the Chinese government to encourage foreign company investment in central and western provinces to help decrease the regional inequality with limited successes. This paper uses Panel Least Squares method to empirically analyze the impact of industrial sector FDI on Chinese regional inequality during 2003-2013. The resulting analysis shows the connection between FDI in industrial sectors and regional inequality in China. In particular, regional inequality affects FDI location choices. The findings show that economic and non-economic indicators such as human capital, infrastructure, per capita income, and government policies affect regional inequality and foreign firms' location choices. Despite government policies to support inland regional economic development, foreign firms still prefer to invest in coastal provinces further illustrating the effects of clusters in this region.
    Keywords: FDI,China,Panel,regional inequality,MNCs
    JEL: F21 F23 F16 C33
    Date: 2019
  25. By: Vollmer, Teresa; von Cramon-Taubadel, Stephan
    Abstract: Most analysis of agricultural commodity market integration is solely based on price information. However, adding trade data can improve the understanding of interactions between interrelated markets. We link the analysis of price transmission processes between spot and futures markets with trade information to study the influence of Brazilian coffee exports on global price interdependencies. Using a Markov-switching vector error correction model (MSVECM) we allow for structural changes over time. Our results reveal two regimes. One regime is characterized by periods of sideways or downward trending coffee prices with low price volatility, and the other one by phases of price spikes and high price volatility. Price information is transmitted through both the spot and the futures prices and the speed of the price transmission process is significantly affected by the total daily volume and value of Brazilian coffee exports.
    Keywords: Demand and Price Analysis, International Relations/Trade
    Date: 2019–07–05
  26. By: Josh De Lyon; Elsa Leromain
    Abstract: CEP's Trade Week brought together researchers and policy-makers to discuss the recent trend towards protectionism, its causes and directions for future policy. Josh De Lyon and Elsa Leromain report.
    Keywords: trade, protectionism
    Date: 2019–07
  27. By: Chi Gong (Sichuan University); Soyoung Kim (Seoul National University)
    Abstract: This paper examines the effects of regional versus global integration and trade versus financial integration on regional business cycle synchronization in three regions containing developing and emerging countries (East Asia, Latin America, and Central and Eastern Europe). The main empirical results are as follows: (1) strong and similar common global linkages, especially financial linkages, have significant positive effects on the synchronization of regional business cycles; (2) after controlling global linkages, regional trade integration has a positive effect on regional business cycle synchronization, whereas regional financial integration has a negative effect; and (3) although the direction for the effect of each type of integration is similar across regions, the relative importance of each in explaining regional business cycle synchronization is different. Specifically, while global financial linkages play the most important role in East Asia and Latin America, regional trade integration is most important in Central and Eastern Europe.
    Keywords: regional business cycle synchronization, regional and global economic integration, trade and financial integration, emerging and developing countries
  28. By: Holger Breinlich; Elsa Leromain; Dennis Novy; Thomas Sampson
    Abstract: Media reports have highlighted that some UK firms have started to move production abroad in anticipation of Brexit. CEP analysis confirms that there has indeed been a substantial increase in outward investments. The shift is entirely driven by the services sector, perhaps because Brexit negotiations have made manufacturing the priority.
    Keywords: brexit, investment, firms
    Date: 2019–07
  29. By: Goran Andreev (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) South and South-West Asia Office)
    Abstract: Simplification of documentary requirements, an important aspect of international transport facilitation, can have substantial impacts in terms of reducing transport costs and improving trade competitiveness. This is especially so in the case of the South and South-West Asian countries, where procedural reforms for easing cross-border transport remain far behind advanced subregions of the Asia-Pacific region. Against an examination of the existing documentary requirements and legal arrangements in the subregion, this paper provides options for harmonization of road transport documents through a stepby- step approach. It outlines the key elements necessary for such harmonization based on modern electronic information systems. Among various options, the paper highlights solutions for dealing with transport permits and customs transit related documents. Employment of electronic vehicle/cargo tracking based on available models such as the UNESCAP Secure Cross Border Transport Model can strongly support implementation of a subregional road permit system and paperless customs transit system. The paper also provides recommendations for the special case of documentary reforms for transit, which applies to the landlocked countries of the subregion including Afghanistan, Bhutan and Nepal, based on lessons from international models such as the European New Computerized Transit System (NCTS) and ASEAN Customs Transit System (ACTS). Given the complexities of harmonization of cross-border transport documents, the paper calls for cooperation among all competent authorities and stakeholders, including customs and the private sector, at the national and regional levels.
    Keywords: Cross-border transport, trade, South Asia
    JEL: F13 N75 O24
    Date: 2018–10
  30. By: Olekseyuk, Zoryana; Rodarte, Israel Osorio
    Abstract: Seit dem britischen Referendum am 23. Juni 2016 plant Großbritannien den Austritt aus der Europäischen Union (EU). Unter Berufung auf Artikel 50 des Vertrags von Lissabon (im März 2017) wird Großbritannien den gemeinsamen Markt und die Zollunion im März 2019 verlassen. Die Verhandlungen über den „Brexit“ erweisen sich aufgrund der gegenteiligen Positionen der beiden Vertragspartner als schwierig. Obwohl das Austrittsabkommen erfolgreich verhandelt wurde, besteht über den endgültigen „Deal“ zwischen der EU und Großbritannien nach wie vor weitgehende Unklarheit. Unabhängig vom Ausgang der Gespräche wird der Brexit grundlegende Veränderungen der britischen Handelsregelungen mit Drittländern mit sich bringen. Den Anfang bildet eine Verhandlung der nationalen Bedingungen für die Mitgliedschaft in der Welthandelsorganisation (WTO) gefolgt von einer Neuverhandlung zahlreicher Freihandelsabkommen der EU. Darüber hinaus wird Großbritannien nicht länger dem Allgemeinen Präferenzsystem (GSP) oder der Initiative „Alles außer Waffen“ (EBA) angehören, nach der die am wenigsten entwickelten Länder niedrige oder keine Abgaben auf ihre Exporte an die EU zahlen. Auch die Wirtschaftspartnerschaftsabkommen (EPA) zwischen der EU und den AKP-Ländern (Afrika, Karibik und Pazifik) gelten für Großbritannien dann nicht mehr. Während negative Auswirkungen des Brexit für Großbritannien und die EU im Mittelpunkt stehen, werden die Konsequenzen für Drittstaaten weniger beachtet. In der vorliegenden Analyse präsentieren wir daher neue Erkenntnisse zu den Auswirkungen des Brexit auf die am wenigsten entwickelten Länder (LDCs) und diskutieren Empfehlungen für politische Maßnahmen. Die 49 ärmsten Länder der Welt profitieren derzeit von der Vorzugsbehandlung im Rahmen der EBA-Initiative, die für 99% aller Produkte gilt. Über 35% der Bekleidungs-, 21% der Textilien- und 9% der Zuckerexporte dieser Länder entfallen auf Großbritannien (basierend auf UN Comtrade, 2013-2015). Unsere Ergebnisse zeigen, dass der Verlust dieser Vorzugsbehandlungen in Verbindung mit dem EU-Austritt Großbritanniens das Bruttoinlandsprodukt (BIP) der EBA-Länder um 0,01 bis 1,08% senken könnte. Dabei werden die Verluste in Kambodscha und Malawi aufgrund der starken Marktabhängigkeit am größten sein. Zudem könnte der Brexit einen Anstieg der Anzahl der Menschen, die in extremer Armut leben (KKP 1,90 US-Dollar pro Tag), um fast 1,7 Millionen in den EBA-Ländern bewirken, wobei es sich um konservative Schätzungen der negativen Folgen des Brexit handelt. Zusätzliche Effekte durch die Unsicherheit, die Abwertung des Pfund Sterling, rückläufige Entwicklungshilfe, Transfers und Investitionen wurden dabei noch nicht berücksichtigt. Großbritannien muss handeln, um die negativen Konsequenzen für wirtschaftlich schwache Länder abzumildern. Entsprechende Maßnahmen könnten eine Replizierung der Präferenzen in existierenden EU-Abkommen oder eine entwicklungsfreundliche Handelspolitik mit einem Präferenzzugang für Dienstleistungsimporte und kumulativen Ursprungsregeln sein. Auch die EU könnte die LDCs unterstützen, z.B. durch liberale kumulative Ursprungsregeln. Darüber hinaus sollten auch die Entwicklungsländer ihre Exportziele und -industrien stärker diversifizieren und eine wirtschaftliche Transformation anstoßen, die sie weniger abhängig vom Handel, von der Entwicklungshilfe und den ausländischen Direktinvestitionen Großbritanniens macht.
    Keywords: Handel und Investitionen,Regionale + globale + transnationale Governance
    Date: 2019
  31. By: Goldbaum, Sergio; Pedrozo Junior, Euclides
    Abstract: Despite the well-documented counter-cyclical relationship between import protection and GDP growth, the deep economic recession that has been affecting Brazil since 2014 was followed by a decrease in the number of antidumping investigations. To investigate the relationship between import protection through antidumping (AD) filings and economic activity we updated and adapted the Bown and Crowley 2012 and 2013 papers. We run a negative binomial panel regression model where the independent variable and the main independent variable are on a country-bilateral basis. Our database included samples from both emerging economies and developed countries. The results suggest that the counter cyclical relationship between AD filings and imposing country GDP is valid only for developed countries, while emerging economies show rather a pro-cyclical trend. Results should be regarded with caution since the expected negative relationship between exporting country GDP and AD filings has not been confirmed and annual data may not be appropriate to analyze the relationship under scrutiny.
    Date: 2019–05
  32. By: Mahathanaset, Itthipong; Pensupar, Kampanat
    Abstract: This paper investigates the impact of a higher import of cabbage after Thailand’s FTA with trade partners enacted. A system of cabbage demand, supply and harvested area equations are estimated using time-series data and GMM estimation. The results reveal that an increase in cabbage import quantity will significantly reduce the domestic price, harvested area, and supply as well as farmers’ welfare. Using the producer surplus as a welfare measurement, our calculation shows that Thai cabbage farmers as a whole will lose money of 56,359,884 Baht. In the short run, production subsidies might be needed to alleviate the harmful effects on the farmers. However, in the long run, in order to avoid economic inefficiency due to production subsidies, food safety standards for cabbage import should be established. In addition, government should encourage the farmers to adopt GAP which helps improve their yields as well as product quality and farm gate price, and reduce their production costs, so that they can compete with cabbage imports.
    Keywords: Agricultural and Food Policy, International Relations/Trade
    Date: 2019–07–17
  33. By: Weicheng Lian
    Abstract: Existing studies on the downward trend in the labor share of income mostly focus on changes within individual countries. I document, however, that half of the global decline in the labor share of income can be traced to the relocation of activities between countries. I develop a two-country model to show that when the relative price of investment goods falls, production activities with a small elasticity of substitution between capital and labor tend to get offshored from high- to low-wage countries. The model provides an explanation as to why such relocation may drive the labor share down in both developed and developing economies, as well as globally.
    Date: 2019–07–02
  34. By: Hillberry, Russell; David Hummels
    Abstract: Fields of academic inquiry differ in their preferred forms of output, in the ways in which knowledge is accumulated and stored, and so in the ways that academic influence is measured. We compare Tom Hertel’s research record to other international economists of his generation in order to illustrate the unique breadth and influence of his work, and of the GTAP project broadly. We then provide an analytical framework that helps explain the evolution of the field of international economics from a tool-use standpoint. This framework helps us to assess the academic productivity gains from creating the GTAP model and consortium. It also provides a possible answer to a significant puzzle: why is GTAP increasingly influential in the physical and biological sciences, but less so within the international economics community?
    Date: 2018
  35. By: Gagliardi, Nicola (Free University of Brussels); Mahy, Benoît (University of Mons); Rycx, Francois (Free University of Brussels)
    Abstract: This paper provides first evidence on the impact of a direct measure of firm-level upstreamness (i.e. the steps before the production of a firm meets final demand) on workers' wages. It also investigates whether results vary along the earnings distribution and by gender. Findings, based on unique matched employer-employee data relative to the Belgian manufacturing industry for the period 2002-2010, show that workers earn significantly higher wages when employed in more upstream firms. Yet, the gains from upstreamness are found to be very unequally shared among workers. Unconditional quantile estimates suggest that male top-earners are the main beneficiaries, whereas women, irrespective of their earnings, appear to be unfairly rewarded. Quantile decompositions further show that these differences in wage premia account for a substantial part of the gender wage gap, especially at the top of the earnings' distribution.
    Keywords: upstreamness, global value chains, wages, gender
    JEL: J16 J31
    Date: 2019–06
  36. By: Aris Christodoulou (European Commission - JRC); Panayotis Christidis (European Commission – JRC)
    Abstract: The report provides a set of indicators and tools that allow policy makers to measure accessibility and connectivity of border regions in Europe at both national and international levels. The methodology can be used to identify areas where transport infrastructure may be lacking and prioritize potential investments based on specific policy relevant criteria. The approach uses very detailed spatially disaggregate data covering EU28 plus Norway and Switzerland at grid level (1km by 1km), as well as the complete road network. This level of resolution allows many of the specificities of the areas covered to be taken into account.
    Keywords: accessibility, road transport, border regions, network efficiency
    JEL: R00 R40 O18 L91
    Date: 2019–01
  37. By: Jeffry Frieden (Harvard University)
    Abstract: A backlash against globalization has led to widespread political movements hostile both to economic integration and to existing political institutions throughout the advanced industrial world. Openness to the movement of goods, capital, and people has had important distributional effects. These effects have been particularly marked in communities dependent upon traditional manufacturing, some of which have experienced a downward spiral from the direct economic effects of foreign competition through broader economic decline to serious social problems. Those harmed by globalization have lashed out both at economic integration, and at the elites they hold responsible for their troubles. Political discontent is in part due to failures of compensation – insufficient provision of social safety nets for those harmed by economic trends. It is also due to failures of representation – the belief that prevailing political parties and politicians have not paid adequate attention to the problems faced by large groups of voters. Countries vary on both dimensions, as do national experiences with the populist upsurge. Previously dominant socio-economic interests and political actors may act to try to address this dissatisfaction, but the path faces serious economic and political obstacles.

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