nep-int New Economics Papers
on International Trade
Issue of 2019‒07‒29
fifty papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. How Brexit affects Least Developed Countries By Olekseyuk, Zoryana; Rodarte, Israel Osorio
  2. Investment facilitation for development: a new route to global investment governance By Berger, Axel; Gsell, Sebastian; Olekseyuk, Zoryana
  3. Tariff Bindings and the Dynamic Formation of Preferential Trade Agreements By James Lake; Moïse Nken; Halis Murat Yildiz
  4. On the effects of GATT/WTO membership on trade: They are positive and large after all By Larch, Mario; Monteiro, José-Antonio; Piermartini, Roberta; Yotov, Yoto V.
  5. Governing digital trade – a new role for the WTO By Cheng, Wallace; Brandi, Clara
  6. Lifting Growth in the Western Balkans; The Role of Global Value Chains and Services Exports By Nadeem Ilahi; Armine Khachatryan; William Lindquist; Nhu Nguyen; Faezeh Raei; Jesmin Rahman
  7. Can the Japanese Agri-food Sectors Survive by Promotingtheir Exports?:A General Equilibrium Analysis with Farm Heterogeneity and Product Differentiation By Nobuhiro Hosoe; Yuko Akune
  8. Determinants of Foreign Direct Investment in Ghana: A Sectoral Analysis By Yakubu, Ibrahim Nandom; Mikhail, Abdul Azeez
  9. Direct and indirect impacts of liberal immigration policies on the inflow of multinationals in the U.S. By Shin, Geiguen
  10. Exporting and offshoring with monopsonistic competition By Egger, Hartmut; Kreickemeier, Udo; Moser, Christoph; Wrona, Jens
  11. [WTO Case Review Series No.25] Indonesia—Measures Concerning the Importation of Chicken Meat and Chicken Products (WT/DS484): Interface between Halal Requirement and Free Trade (Japanese) By SEKINE Takemasa
  12. Technology-Induced Trade Shocks? Evidence from Broadband Expansion in France By Clément Magouyres; Thierry Mayer; Clément Mazet
  13. Do Import Tariffs Generate Stagflationary Tendencies? By Mohammed, Mikidadu
  14. Evaluating the impact of global oil prices on the SADC and the potential for increased trade in biofuels and natural gas within the region By Moyo Alfred
  15. The contribution of services to trade and development in Southern Africa By Visagie Justin; Turok Ivan
  16. Capital Adjustment Cost: Implications for Domestic and Export Sales Dynamics By Yanping Liu
  17. EU engagement with Africa on migration: a change of approach required By Castillejo, Clare
  18. Exchange rate pass-through to import prices: Accounting for changes in the Eurozone trade structure By Valérie Mignon; Antonia Lopez Villavicencio
  19. Spreading the gains?: Prospects and policies for the development of regional value chains in Southern Africa By Black Anthony; Edwards Lawrence; Ismail Faizel; Makundi Brian; Morris Mike
  20. Environmental policy and firm selection in the open economy By Kreickemeier, Udo; Richter, Philipp M.
  21. Trade Liberalization and Unemployment in India: A State Level Analysis By Dhamija, Nidhi
  22. Regional Effects of Exchange Rate Fluctuations By Christopher L. House; Christian Proebsting; Linda L. Tesar
  23. Import promotion as an instrument of development cooperation: Lessons from European experiences for Austrian development cooperation By Grumiller, Jan; Raza, Werner G.
  24. Quantifying the Benefits of Labor Mobility in a Currency Union By Christopher L. House; Christian Proebsting; Linda L. Tesar
  25. Foreign direct investment,information technology and economic growth dynamics in Sub-Saharan Africa By Asongu, Simplice A; Odhiambo, Nicholas M
  26. Multinational Expansion in Time and Space By Stefania Garetto; Lindsay Oldenski; Natalia Ramondo
  27. The effect of foreign competition on family and network labour allocation By Klymak Margaryta
  28. On the Heterogeneous Welfare Gains and Losses from Trade By Carroll, Daniel R.; Hur, Sewon
  29. Pre-Feasibility Study of Sarawak-West Kalimantan Cross-Border Value Chains By Lord, Montague; Chang, Susan
  30. U. S. Trade Policies and Their Impact on Domestic Vegetables, Fruits and Nuts Sector: a Detailed Tariff Line Analysis By Chepeliev, Maksym; Golub, Alla; Hertel, Thomas W.; Saeed, Wajiha
  31. Linkages and spillover effects of South African foreign direct investment in Botswana and Kenya By Nandonde Felix; Adu-Gyamfi Richard; Mmusi TinayeSonto; Wamalwa Herbert; Asongu Simplice; Opperman Johannes; Makindara Jeremiah
  32. Not all Terms of Trade Shocks are Alike By Juvenal, Luciana; Petrella, Ivan
  33. Roman Transport Network Connectivity and Economic Integration By Matthias Flückiger; Erik Hornung; Mario Larch; Markus Ludwig; Allard Mees
  34. Linkages and spillover effects of South African foreign direct investment in Botswana and Kenya By Felix A. Nandonde; Richard Adu-Gyamfi; Tinaye S. Mmusi; Herbert Wamalwa; Simplice A. Asongu; Johannes P. Opperman; Jeremiah R. Makindara
  35. The influence of Brazilian exports on price transmission processes in the coffee sector: A Markov-switching approach By Vollmer, Teresa; von Cramon-Taubadel, Stephan
  36. Internalization of the butter market By Baran, Joanna
  37. The Impacts of Domestic and Foreign Direct Investments on Economic Growth: Fresh Evidence from Tunisia By Bouchoucha, Najeh; Bakari, Sayef
  38. Are Routine Jobs Moving South? Evidence from Changes in the Occupational Structure of Employment in the U.S. and Mexico By Guido Matias Cortes; Diego M. Morris
  39. Foreign Direct Investment as a Determinant of Cross-Country Stock~Market Comovement By Alexis Anagnostopoulos; Orhan Erem Atesagaoglu; Elisa Faraglia; Chryssi Giannitsarou
  40. Towards a borderless Africa? Regional organisations and free movement of persons in West and North-East Africa By Dick, Eva; Schraven, Benjamin
  41. Extraction-cum-substitution: A KISS approach to mapping the impacts of bilateral trade conflicts By Escaith, Hubert
  42. The politics of capital markets union By Ringe, Wolf-Georg
  43. The limits of material benefits: remittances and pro-Americanism in Mexico By Meseguer, Covadonga; Jaupart, Pascal; Aparicio, Javier
  44. Limitations and perspectives of responsible management of Global Value Chains: From codes of conduct to the French law on the duty of vigilance By Corinne Vercher-Chaptal
  45. Regional migration governance in Africa and beyond: a framework of analysis By Dick, Eva; Schraven, Benjamin
  46. Moving up the copper value chain in Southern Africa By Mtanga Sithembiso; Makgetla Neva; Levin Saul
  47. Regional migration governance: contributions to a sustainable international migration architecture By Dick, Eva; Koch, Anne; Schraven, Benjamin; Etzold, Benjamin
  48. Review on Global Implications of Goods and Service Tax and its Indian Scenario By R, Revathi; L. M., Madhushree; Aithal, Sreeramana
  49. How addressing divisions on African migration inside the EU can strengthen transnational development By Schöfberger, Irene
  50. Do trade deals encourage environmental cooperation? By Morin, Jean-Frédéric; Chaudhuri, Vera; Gauquelin, Mathilde

  1. By: Olekseyuk, Zoryana; Rodarte, Israel Osorio
    Abstract: Following the decision of the British referendum on 23 June 2016, the United Kingdom (UK) plans to exit the European Union (EU). Article 50 of the Lisbon Treaty was invoked at the end of March 2017 and the UK will officially leave the single market and customs union in March 2019. Brexit negotiations have proven difficult due to diverging positions of the two partners on many issues, such as freedom of movement, financial contributions and the potential re-emergence of a tough border between the Republic of Ireland and Northern Ireland. Despite the successfully negotiated Withdrawal Agreement and Political Declaration, there is still con¬siderable political uncertainty about the final EU-UK deal. Regardless of the final outcome of the negotiations, Brexit implies fundamental changes in the British trade regime concerning third countries. This starts with a negotiation of national terms of access for World Trade Organization (WTO) membership and extends to renegotiation of the numerous EU free trade agreements. Moreover, the UK will no longer be part of the European Generalised Scheme of Preferences (GSP) or the Everything But Arms (EBA) treaty, which allow vulnerable developing countries to pay fewer or no duties on their exports to the EU. The Economic Partnership Agree-ments (EPAs) between the EU and African, Caribbean and Pacific countries will not apply to the UK either. While the negative effects of Brexit on the UK and EU are in the limelight, the implications for third countries receive less attention. This paper puts the spotlight on these often-overlooked issues by presenting new findings on Brexit implications for Least Developed Countries (LDCs) and discussing policy recommendations. Developing countries with close ties to the UK will suffer from Brexit as import duties are once again imposed. In particular, 49 of the world’s poorest countries presently benefit from preferential treatment that covers 99% of all products under the EBA agreement. Although these countries account for only 1.15% of the UK’s imports, the share of their exports to the UK exceeds 35% in apparel, 21% in textiles and 9% in sugar (calculations based on the UN Comtrade data for 2013-2015). Our findings show that losing these preferences together with the UK’s withdrawal from the EU may cause EBA countries’ GDPs to fall by -0.01% to -1.08%. Our simulations also indicate that the highest losses will occur in Cambodia and Malawi, where dependence on the UK market is strong. Moreover, Brexit may cause the number of those living in extreme poverty (PPP $1.90 a day) to rise by nearly 1.7 million in all EBA countries. These are conservative estimates of Brexit’s negative impacts; they do not take into account the addi¬tional implications of uncertainty, depreciation of the pound sterling, reduced aid spending, remittances and investments. The UK must act to mitigate the adverse effects on economically vulnerable countries. Such action may include replicating existing EU treaties that grant preferential access to goods from LDCs, creating a more development-friendly UK trade policy with preferential access to services imports and cumulative rules of origin, as well as offering better-targeted aid for trade initiatives. The EU could also support LDCs by implementing liberal cumulative rules of origin and applying its preferential treatment partly to goods with a low value-added content from considered countries. In addition, developing countries should diversify their export destinations and industries as well as engage in economic transformation that makes them less dependent on UK trade, aid and foreign direct investment (FDI).
    Keywords: Handel und Investitionen,Regionale + globale + transnationale Governance
    Date: 2019
  2. By: Berger, Axel; Gsell, Sebastian; Olekseyuk, Zoryana
    Abstract: While global investment needs are enormous in order to bolster the implementation of the 2030 Agenda for Sustainable Development, developing countries are often excluded from global foreign direct investment (FDI) flows. Beyond economic fundamentals like market size, infra¬structure and labour, the impediments to FDI in developing countries relate to the predictability, transparency and ease of the regulatory environment. In contrast, tax incentives and international investment agreements (IIAs) have been found to be less important (World Bank, 2018). To harness the advantages of FDI, it is critical that governments have policies and regulations in place that help to attract and retain FDI and enhance its contribution to sustainable development. The 2030 Agenda and the Addis Ababa Action Agenda, thus, call for appropriate international frameworks to support investments in developing countries. In this context, the Joint Ministerial Statement on Investment Facilitation for Development adopted at the 11th Ministerial Conference of the World Trade Organization (WTO) in December 2017 called for the start of “structured discussions with the aim of developing a multilateral framework on investment facilitation”. Investment facilitation refers to a set of practical measures concerned with improving the transparency and predict¬ability of investment frameworks, streamlining procedures related to foreign investors, and enhancing coordination and cooperation between stakeholders, such as host and home country government, foreign investors and domestic corporations, as well as societal actors. Despite the deadlock in the WTO’s 17-year-old Doha Round negotiations, the structured discussions on investment facilitation, which have been under way since March 2018, show that the members of the WTO take a strong interest in using the WTO as a platform to negotiate new international rules at the interface of trade and investment. In contrast to previous attempts by developed countries to establish multilateral rules for investment, the structured discussions are mainly driven by emerging and developing countries. Most of them have evolved over the past years into FDI host and home countries reflecting the changing geography of economic power in the world. Their increased role has led to a shift of policy agendas, focusing on practical measures to promote FDI in developing countries while excluding contentious issues such as investment liberali¬sation and protection, and investor–state dispute settlement (ISDS). This policy brief provides an overview of the emerging policy debate about investment facilitation. We highlight that four key challenges need to be tackled in order to negotiate an investment facilitation framework (IFF) in the WTO that supports sustainable development: There is a need to properly conceptualise the scope of investment facilitation as a basis for empirical analyses of the potential impact of a multilateral IFF. Many less- and least-developed countries do not yet participate in the structured discussions. It is necessary to enhance their capacity to participate in the structured discussions and address their specific concerns. In order to enhance the contribution of FDI to sustainable development it is necessary to support the development of governance mechanisms at the domestic level. It is key to ensure transparency towards countries not yet participating in the discussions, the business sector and societal actors to support a successful policy process.
    Keywords: Regionale + globale + transnationale Governance,Handel und Investitionen
    Date: 2019
  3. By: James Lake; Moïse Nken; Halis Murat Yildiz
    Abstract: We show that multilateral tariff binding liberalization substantially impacts the nature and extent of Preferential Trade Agreement (PTA) formation. First, it shapes the nature of forces constraining expansion of Free Trade Agreements (FTAs). The constraining force is a free riding incentive of FTA non-members under relatively high bindings but an exclusion incentive of FTA members under relatively low bindings. Second, multilateral tariff binding liberalization shapes the role played by PTAs in the attainment of global free trade. Initially, tariff binding liberalization leads to Custom Union (CU) formation in equilibrium but in a way that undermines the pursuit of global free trade. However, further tariff binding liberalization leads to FTA formation in equilibrium and in a way that facilitates the attainment of global free trade. Our theoretical analysis also has implications regarding recent empirical discussions over the relative merits of FTAs versus CUs.
    Keywords: tariff bindings, preferential trade agreement, free trade agreement, customs union, global free trade, dynamic
    JEL: C72 F12 F13
    Date: 2019
  4. By: Larch, Mario; Monteiro, José-Antonio; Piermartini, Roberta; Yotov, Yoto V.
    Abstract: We capitalize on the latest developments in the empirical structural gravity literature to revisit the question of whether and how much does GATT/WTO membership affect international trade. We are the first to capture the non-discriminatory nature of GATT/WTO commitments by measuring the effects of GATT/WTO membership on international trade relative to domestic sales. These unilateral effects of GATT/WTO membership are found to be large, positive, and statistically significant. We also obtain bilateral GATT/WTO estimates, which are larger than those reported in the literature. In particular, our results imply that, on average, joining GATT and/or WTO has increased trade between members by 171% and trade between member and non-member countries by about 88%. We also find that although both GATT/WTO has been effective in promoting trade between members, the WTO has been more effective in promoting trade with non-members than GATT. A battery of sensitivity experiments confirms the effectiveness of our methods and robustness of our main findings.
    Keywords: GATT/WTO,International Trade,Domestic Sales,Structural Gravity
    JEL: F13 F14 F16
    Date: 2019
  5. By: Cheng, Wallace; Brandi, Clara
    Abstract: Digitalisation is transforming the economy and redefining trade. Recently, members of the World Trade Organization (WTO) have started to discuss how trade policies and rules should be adapted to address this transformation. For example, in January 2019, 76 WTO members announced the launch of “negotiations on trade-related aspects of electronic commerce”. The scope of these e-commerce negotiations is yet to be defined, but to ban tariffs on electronic trans­missions will certainly be on the priority list of WTO members such as the United States (US) and the European Union (EU). The idea of banning tariffs on electronic transmission originated at the WTO’s Ministerial Conference (MC) in 1998, when Members declared that they would “continue their current practice of not imposing customs duties on electronic transmissions”. This temporary moratorium on e-commerce tariffs needs to be regularly extended, requiring a decision made “by consensus”. Members have repeatedly extended the moratorium on tariffs on “electronic trans­missions”, most recently at the latest WTO MC in 2017. But the WTO e-commerce moratorium is increasingly disputed: First, while net exporters of digital products and services, typically industrialised countries, understand the tariff ban to apply to digital content, net importers interpret it as referring only to electronic carriers (e.g. CDs, electronic bits), which means that they regard themselves as permitted to impose customs duties on the content of online trade. Second, while net exporters like the US and the EU propose a permanent ban on e-commerce tariffs in order to provide greater certainty to consumers and business, arguing that the resulting revenue losses are small, net importers like India and South Africa underline that they suffer much greater revenue losses than industrialised countries and have to bear the brunt of the moratorium. Third, while industrialised countries argue that the ban on tariffs on electronic transmissions would reduce market distortions, developing countries are concerned that a permanent moratorium would limit their options to protect domestic products and services traded online. Fourth, the moratorium has stirred a debate about how to create a level playing field between domestic and foreign suppliers of digital products and services. We argue that WTO members should take the ongoing debate as an opportunity for the WTO to play an important role in redefining trade in a digitalised economy. To take up this challenge, we recommend the following: (a) WTO Members should seek agreement on what the e-commerce tariff moratorium covers and what it does not. (b) Concerns about who wins and who loses in the wake of the moratorium require deep-dive reflections. WTO members should thus not rush to make the moratorium permanent. They should consider extending it for (at least) another two years at MC12 and use this time to prepare a fully fledged agreement to replace the tempo­rary decision and which could be called the Agreement on Digital Products and Other Services (ADPOS). (c) The WTO secretariat should actively engage in the ongoing broader discussions about taxation in the digitalised economy. New evolutions of international and national tax reforms and data-driven digital trade offer unprecedented opportunities for the WTO to reshape the trade agenda. But the WTO may be left behind in addressing the future of trade in a digitalised economy if it does not respond strategically.
    Keywords: Digitalisierung,Handel und Investitionen
    Date: 2019
  6. By: Nadeem Ilahi; Armine Khachatryan; William Lindquist; Nhu Nguyen; Faezeh Raei; Jesmin Rahman
    Abstract: In the past 25 years, exports have contributed strongly to growth and economic convergence in many small open economies. However, the Western Balkan region, consisting of small emerging market economies, has not fully availed itself of this driver of growth and convergence. A lack of openness, reliance on low value products, and weak competitiveness largely explain the insignificant role of trade and exports in the region’s economic performance. This paper focuses on how the countries in the Western Balkan could lift exports through stronger integration with global value chains and broadening of services exports.
    Keywords: Economic growth;Foreign trade;Supply;Services industry;Regional integration;Trade; Global Value Chains; Supply Chains; Growth; Services Trade; EU accession; Regional Integration
  7. By: Nobuhiro Hosoe (National Graduate Institute for Policy Studies, Tokyo, Japan); Yuko Akune (Nihon University)
    Abstract: Manufacturingindustries have attracted research attention regarding roles of firm heterogeneityand product differentiation in the new new trade theory. Agricultural sectors also produce new goods by product differentiationthrough breeding, food processing, quality-upgrading, and branding.In reaction to the recent globalization, the Japanese government has sought strategiesto promote its domestic agri-food sectors by means of product differentiation and export promotion. This computable general equilibrium study examinesthe relevance of thesepoliciesby simulating hypothetical trade liberalizationin agriculture and/or food. We show that agricultural trade liberalization would not increase Japans agricultural exports but would increase food exports; and that food trade liberalization would promote food exports. Both types of liberalization would increase domestic production in agri-food sectors through agri-food linkages and variety effects. This finding affords evidence of the relevance of product differentiation strategy through food processing and exportation,but not of agricultural export promotion strategy.
    Date: 2019–07
  8. By: Yakubu, Ibrahim Nandom; Mikhail, Abdul Azeez
    Abstract: This study assesses the determinants of foreign direct investment (FDI) at sector level in Ghana taking into consideration the agriculture sector, services sector, and manufacturing sector. Using sector level data spanning 2000-2014, findings from the Ordinary Least Squares (OLS) regression analysis show that market size (measured by GDP) and labour cost have a significant impact on the inflows of agriculture sector FDI. The results also confirm trade openness and exchange rate to significantly influence services sector FDI. Unexpectedly, none of the variables are found to have significant effect on manufacturing sector FDI. The study recommends that the government should implement strategies that will enhance the growth of Ghana’s GDP, and deregulate the economy to allow more foreign investors into the country.
    Keywords: Determinants, Foreign Direct Investment, Ghana, OLS, Sector
    JEL: F1 F18 F44
    Date: 2019–01–08
  9. By: Shin, Geiguen
    Abstract: Many studies suggest that stringent labor protection and higher labor costs in host countries can limit foreign direct investment. This implies that foreign firms are sensitive to the flexibility of the labor market in the U.S. The U.S. has experienced increasing immigrants, which have preserved the stable labor supply in the U.S. market. The U.S. is a good case to test the relationship between immigration and FDI because the U.S. is not only the largest host and home country of FDI but also the country that has one of the highest immigrant populations and experiences a significant reduction in labor supply and an increase in the minimum cost of labor. Utilizing a time-series analysis from 1970 to 2016, this study suggests that the expansive immigration policies directly increase FDI inflows in the U.S., and indirectly increase FDI inflows throughout lowering potential labor costs and securing a stable labor supply.
    Keywords: foreign direct investment,immigration policy,labor cost
    JEL: F16 J15
    Date: 2019
  10. By: Egger, Hartmut; Kreickemeier, Udo; Moser, Christoph; Wrona, Jens
    Abstract: We develop a model of international trade with a monopsonistically competitive labour market in which firms employ skilled labour for headquarter tasks and unskilled workers to conduct a continuum of production tasks. Firms can enter foreign markets through exporting and through offshoring, and we show that due to monopsonistic competition our model makes sharply different predictions, both at the firm level and at the aggregate level, about the respective effects of the export of goods and the offshoring of tasks. At the firm-level, exporting leads to higher wages and employment, while offshoring of production tasks reduces the wages paid to unskilled workers as well as their domestic employment. At the aggregate level, trade in goods is unambiguously welfare increasing since domestic resources are reallocated to large firms with high productivity, and firms with low productivities exit the market. This reduces the monopsony distortion present in autarky, where firms restrict employment to keep wages low, resulting in too many firms that are on average too small. Offshoring on the other hand gives firms additional scope for exercising their monopsony power by reducing their domestic size, and as a consequence the resources spent on it can be wasteful from a social planner's point of view, leading to a welfare loss.
    Keywords: Monopsonistic labour markets,Exporting,Two-way offshoring,Tasks,Heterogeneous firms,Wages,Employment
    JEL: F12 F16 F23
    Date: 2019
  11. By: SEKINE Takemasa
    Abstract: In the realm of trade disputes, Indonesia's presence is gradually increasing. The case at hand is one instance in which a consultation has been requested regarding Indonesia under the World Trade Organization (WTO) dispute settlement procedure. This case is significant in that it deals with the issues regarding the amendment of legal instruments that constitute the measure in question during the procedure (the so-called "moving target" issue); the legal assessment of trade restrictions based on the halal requirements (the "trade and religion" issue); and the interpretation of Articles III:4 and XX of the General Agreement on Tariff and Trade (GATT) as well as Article 8 of the WTO Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement). Among these, the treatment of halal requirements appears to be the most defining issue in this case. Restricting imports of non-halal products is not necessarily based on scientific evidence and the standards for such restrictions differ between countries. Under such circumstances, distinguishing between a genuinely religious measure and a disguised restriction is a difficult task. While the thorough examination on the details of halal requirements did not unfold in this case, it may serve as an important trigger to think concretely about the relationship between halal requirements and free trade.
    Date: 2019–06
  12. 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
  13. By: Mohammed, Mikidadu
    Abstract: The recent U.S. trade policy shift has reignited interest about the macroeconomic effects of import tariffs. This paper examines the impacts of import tariff shocks on U.S. macroeconomic performance using quarterly data from 1989-2017. Relying upon the estimation of structural VAR model with sign restrictions, the results suggest that tariff shocks on net-imported vital intermediate input, such as steel, trigger stagflationary tendencies as characterized by short-run increase in inflation and unemployment and decline in real output.
    Keywords: import tariff shocks, steel, stagflation, structural VAR
    JEL: C3 F10 F14
    Date: 2018–08–15
  14. By: Moyo Alfred
    Abstract: This paper investigates whether Southern African Development Community countries that are vulnerable to changes in oil prices could instead substitute oil and petroleum products with biofuels and gas from within the region.A pooled mean group estimator was used to determine the impact of oil prices on the gross domestic product of 15 Southern African Development Community countries. Results indicate that Mauritius, Mozambique, Tanzania, and Zambia would be negatively affected by oil price changes. Next, two gravity models capturing bilateral trade between South Africa and Zambia and those countries identified as being vulnerable were estimated using pseudo-Poisson maximum likelihood.The main finding, based on the gross domestic products of the exporter and importer countries, is that potential for trade is higher with South Africa than Zambia. This implies that these countries are more likely to import gas and biofuels from there. Transport costs are the main impediments to importing from Zambia.
    Keywords: oil prices,Panel data analysis,Regional integration,SADC,Economic growth
    Date: 2019
  15. By: Visagie Justin; Turok Ivan
    Abstract: Services are the fastest growing portion of world trade and now account for nearly a quarter of global exports. This presents opportunities for emerging economies to adapt and enter new markets.Many countries in southern Africa have struggled to diversify from a heavy reliance on primary commodities towards manufacturing industries. Tradable services could contribute to economic growth and development by bolstering industrial capabilities, facilitating productivity growth, and contributing directly to exports.The authors examine evidence on international services trade for the Southern African Development Community between 1995 and 2012, and supplement this with a review of Foreign Direct Investment from South Africa. Tradable services appear to have made a limited contribution to total trade for most countries, and there is little evidence of significant regional integration or specialization in higher value-added activities.The role of tradable services is an important policy and research agenda that warrants much more attention all round.
    Keywords: Services,southern Africa,Tradable sectors,International trade
    Date: 2019
  16. By: Yanping Liu
    Abstract: Theoretical and empirical work on export dynamics has generally assumed constant marginal production cost, which implies separability of production decisions for export and domestic product markets. However, recent studies have documented a negative contemporaneous correlation between …rms’ domestic and export sales growth, suggesting that …rms could be capacity constrained in the short run and face increasing marginal production cost. This paper develops and structurally estimates a dynamic model of …rm export behavior incorporating short-term capacity constraints and endogenous capital investment. Consistent with the empirical evidence, the model features substitution of sales across markets in the short term, and generates di¤erent short- and long-term export responses. The model is …t to a panel of plant-level data for Colombian manufacturing industries and used to simulate …rm transitions in response to permanent and temporary exchange-rate devaluations. The results indicate that incorporating capital adjustment costs has quantitatively important implications for …rm-level responses. First, it takes more than …ve years for …rms to fully adjust to a permanent change of the exchangerate process. Second, the long-run exchange rate elasticity of exports is substantially higher than that in the short run. Firms’ expectation on the permanence of the policy change also matters. The failure to accurately anticipate the duration of the devaluation results in reduction in …rm-level pro…ts due to over- or under- investment in capital
    Keywords: International trade, heterogeneous firms; capacity constraints; capital adjustment costs; firm dynamics; firm panel data.
    JEL: F12 L11 F14
    Date: 2019–07
  17. By: Castillejo, Clare
    Abstract: Migration was an important issue at the November African Union (AU)-European Union (EU) summit. While the tone of discussion was somewhat improved on that of recent years, divisions between the two continents remain great. Europe and Africa still have fundamentally different positions in relation to migration, with the EU and many European member states prioritising prevention and return, while African governments focus more on remittances and legal migration opportunities. However, Europe’s current approach does not acknowledge these differing interests and instead seeks to impose its own agenda in ways that threaten to undermine important African ambitions. In recent years, the EU has launched initiatives aimed at curbing migration from Africa that have caused significant controversy, notably the EU Emergency Trust Fund for Africa (EUTF) and the Migration Partnership Framework (MPF). These initiatives suffer from a number of weaknesses. The EUTF is based on the flawed premise that development assistance can prevent migration. It diverts aid to migration goals, and its projects often do not comply with development principles such as transparency, ownership and alignment. Meanwhile, the MPF seeks to use positive and negative incentives across a range of external action areas to encourage partners to cooperate with the EU’s migration goals – primarily on prevention and return. So far, results have been limited and it has soured relations with some partner countries. The case of Ethiopia illustrates the limitations of the EU’s current approach. The country is an important regional player on migration and refugee issues and has been largely constructive in multilateral migration processes, such as Khartoum and Valetta. While Ethiopia is an MPF priority country and a recipient of large amounts of EUTF funding, the goals of the EU and Ethiopia on migration have not been aligned. The EU is frustrated that Ethiopia has not cooperated on returns, while Ethiopia is disappointed that the EU has offered little in terms of legal migration and that EUTF funding has led to multiple, uncoordinated projects that are disconnected from local priorities and are implemented by outsiders. It is clear that the EU needs to change its approach to migration in Africa, beginning with the recognition that Europe will need African migration in years to come. The EU should explore how Africa and Europe can work together to foster intra-African movement that supports Africa’s economic growth, to ensure protection for refugees and vulnerable migrants, and to allow both continents to benefit from safe and orderly African labour migration to Europe. It should also move from attempting to address “root causes” of migration with short-term development funds, to examining how Europe could readjust its trade and investment policy in Africa to create more decent jobs and opportunities. Importantly, the EU must continue to press African governments to live up to their responsibilities to provide a decent life for citizens so they do not have to migrate in such large numbers and insecure circumstances. Critically, the EU must be honest about conflicting interests and positions among its own member states and work towards effective common migration and asylum systems. However, such a change in approach requires European leaders to shift the current political discourse around migration to a more constructive one.
    Keywords: Flucht und Migration
    Date: 2018
  18. By: Valérie Mignon; Antonia Lopez Villavicencio
    Abstract: This paper assesses whether the emergence of new trading partners (i.e., China and Eastern Europe) as suppliers reduces the exchange rate pass-through (ERPT) in Eurozone countries which differ regarding their external exposure. Using bilateral data on import prices at the two-digit sector level, we find that (i) pass-through is complete in many cases, (ii) ERPT from China is higher than from the United States, and (iii) there is no compelling evidence of a generalized link between ERPT and the increasing integration of some emerging markets in European imports. We also show that the launch of the single currency has not provoked a sufficient change in the part of trade exposed to exchange rate fluctuations and, therefore, has not affected the pass-through. Overall, the trend of liberalization in new players' markets has not altered the competitive environment such as to induce exporters of other countries to absorb exchange rate depreciations.
    Keywords: Exchange rate pass-through; import prices; China; Eastern Europe; Eurozone
    JEL: E31 F31 F4 C22
    Date: 2019
  19. By: Black Anthony; Edwards Lawrence; Ismail Faizel; Makundi Brian; Morris Mike
    Abstract: Regional integration is making steady progress in Africa and a key objective is to improve the prospects for industrialization by expanding the regional market. This paper draws on a combination of trade data analysis and industry case studies to better understand the links and synergies between regional value chains and regional integration.The trade data and case studies of three diverse sectors (apparel, food retailing, and automotive) demonstrate the expansion and diversity of regional trade and regional value chains in Southern Africa. This diverse composition of regional exports is suggestive of an opportunity to further enhance industrial development through intra-regional trade.The long-term sustainability of Southern African regionalism depends on the recognition of the importance of regional industrial policy that takes account of the dynamics driving global and regional value chains and facilitates regional linkages across all these sectors.
    Keywords: Apparel industry,Automotive industry,Food retailing,Regional integration,Southern African Development Community,Value chains
    Date: 2019
  20. 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 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 Q58
    Date: 2019
  21. By: Dhamija, Nidhi
    Abstract: The study empirically examines the relationship between trade liberalization and unemployment for the Indian economy using data for Indian states (separately for rural and urban areas). This study provides support to the argument that effects of trade liberalization have been different for the states in India. The results find evidence for the negative relationship unemployment and trade openness. The relationship is significant for rural parts of the states which also drive results for the total state; though for urban part of the states, relationship is not found to be significant. The results also indicate that this effect is higher and stronger for more flexible states. The results hence, confirm to the theory that in developing countries trade openness leads to increase in the employment of labour; but more so of unskilled workers and leads to a movement away from the agriculture and hence rural sector of the economy. This is substantiated by internal migration trends for India which showed an increase in population mobility during post reform period. The data also corroborated the shift from rural agricultural to rural non-agricultural and urban sectors of the economy.
    Keywords: Trade Liberalization, Unemployment, Labour market institutions, Panel data
    JEL: E24 F14 F16
    Date: 2019–07–11
  22. By: Christopher L. House (University of Michigan & NBER); Christian Proebsting (Ecole Polytechnique Federale de Lausanne); Linda L. Tesar (University of Michigan & NBER)
    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.
    Keywords: Regions, exchange-rate fluctuations
    JEL: F22 F41
  23. By: Grumiller, Jan; Raza, Werner G.
    Abstract: This briefing paper discusses import promotion agencies (IPOs) as a comparatively new instrument of development cooperation in Europe. The paper assesses the potential of import promotion agencies to promote exports from Low Income Countries (LICs) to High Income Countries (HICs). The comparative analysis of European IPOs reveals that their mandates and priorities typically reflect the particular articulation of interests of development cooperation and business associations in each country. The paper concludes by presenting policy recommendations for Austria.
    Keywords: Import Promotion,Export Promotion,Structural Transformation,Global Value Chains,Import Information Hub Austria
    Date: 2019
  24. By: Christopher L. House (University of Michigan & NBER); Christian Proebsting (Ecole Polytechnique Federale de Lausanne); Linda L. Tesar (University of Michigan & NBER)
    Abstract: Unemployment differentials are bigger in Europe than in the United States. Migration responds to unemployment differentials, though the response is smaller in Europe. Mundell (1961) argued that factor mobility is a precondition for a successful currency union. We use a multi-country DSGE model with cross-border migration and search frictions to quantify the benefits of increased labor mobility in Europe and compare this outcome to a case of fully flexible exchange rates. Labor mobility and flexible exchange rates both work to reduce unemployment and per capita GDP differentials across countries provided that monetary policy is sufficiently responsive to national output.
    Keywords: Labor mobility, currency union, unemployment
    JEL: E24 E42 E52 E58 F15 F16 F22 F33
    Date: 2018–12
  25. By: Asongu, Simplice A; Odhiambo, Nicholas M
    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
    Date: 2019–07
  26. By: Stefania Garetto (BU, CEPR, and NBER); Lindsay Oldenski (Georgetown University); Natalia Ramondo (UCSD and NBER)
    Abstract: This paper studies the expansion patterns of the multinational enterprise (MNE) in time and space. Using a long panel of US MNEs, we document that: MNE affiliates grow by exporting to new markets; the activities of MNE affiliates persist during the affiliate’s life, usually starting with sales to their host market and eventually expanding to export markets; and MNE affiliates’ entry into new locations does not depend on the location of preexisting affiliates. Informed by these facts, we develop a multi-country quantitative dynamic model of the MNE that features heterogeneity in firm-level productivity, persistent aggregate shocks, and a rich structure of costs that affect MNE expansion. Importantly, MNE affiliates can decouple their locations of production and sales, and endogenously choose to enter or exit the host and the export markets. We introduce a compound option formulation that allows us to capture in a tractable way the rich heterogeneity that is observed in the data and that is necessary for quantitative analysis. Using the calibrated model, our quantitative application to Brexit reveals that export platforms are important for understanding the reallocation of MNE activity in time and space, and that the nature of the frictions to MNE activities matters for aggregate firm dynamics.
    Keywords: Economic Growth, Innovation, Credit Constraints, Convergence, Policy Analysis, Money, Inflation
    JEL: O11 O23 O31 O33 O38 O42
    Date: 2019–04
  27. By: Klymak Margaryta
    Abstract: This paper examines whether foreign competition affects the reallocation of unpaid and family workers from household businesses to working outside of the family firm.Using a rich panel dataset of Vietnamese manufacturing enterprises that went through trade liberalization, I find that import competition leads to the switching of family and unpaid employees from working at the household firm to working externally.This response to heightening foreign competition is also greater for less financially stable firms, and for the households largely reliant on the income from the household firm. This finding is consistent with income diversification on the part of households who own firms threatened by import competition. We also explore heterogeneous effects among entering and exiting firms, as well as industry-switching firms.
    Keywords: unpaid labour,family workers,foreign competition,Household business
    Date: 2019
  28. By: Carroll, Daniel R. (Federal Reserve Bank of Cleveland); Hur, Sewon (Federal Reserve Bank of Cleveland)
    Abstract: How are the gains and losses from trade distributed across individuals within a country? First, we document that tradable goods and services constitute a larger fraction of expenditures for low-wealth and low-income households. Second, we build a trade model with nonhomothetic preferences—to generate the documented relationship between tradable expenditure shares, income, and wealth—and uninsurable earnings risk—to generate heterogeneity in income and wealth. Third, we use the calibrated model to quantify the differential welfare gains and losses from trade along the income and wealth distribution. In a numerical exercise, we permanently reduce trade costs so as to generate a rise in import share of GDP commensurate with that seen in the data from 2001 to 2014. We find that households in the lowest wealth decile experience welfare gains over the transition, measured by permanent consumption equivalents, that are 67 percent larger than those in the highest wealth decile.
    Keywords: trade gains; inequality; consumption;
    JEL: E21 F10 F13
    Date: 2019–07–19
  29. By: Lord, Montague; Chang, Susan
    Abstract: This pre-feasibility study on Sarawak-West Kalimantan cross-border value chains covers six topics: It analyzes existing trade patterns and competitive advantages of Sarawak and West Kalimantan, as well as government objectives in promoting cross-border commercial activities. It proposes a border economic area spread over a wide geographic area that covers a network of interrelated activities and provides a fully integrated approach to the border economic area design and implementation. It identifies potential cross-border value chains that can serve as high-profile projects for the border economic area. It determines the preference orderings of project features by key stakeholders such as government and development partners, commercial entities, and the local population. It estimates the net monetary returns for the project portfolio, a cost-effectiveness analysis of the stand-alone capacity-building projects, ranks stakeholders’ non-monetary preferences, and incorporates the the preference ranking order into the project portfolio’s net monetary returns. It provides an overall program appraisal for the set of projects. Based on pre-feasibility results, it lays out a plan for implementation of the border area development program.
    Keywords: pre-feasibility, Sarawak, West Kalimantan, Kalimantan, cross-border value chains, trade, competitive advantage, cross-border commercial activities, border economic area, network of interrelated activities, integrated approach, high-profile projects, preference orderings, project appraisal, net monetary returns, project portfolio, cost-effectiveness analysis, capacity-building projects, non-monetary preferences, preference ranking order, net monetary returns, program appraisal, border area development program, cost-benefit analysis.
    JEL: F12 F14 F15 F17 F21 L1 L11 L7 L70 L80 O5 O53
    Date: 2019–02
  30. By: Chepeliev, Maksym; Golub, Alla; Hertel, Thomas W.; Saeed, Wajiha
    Keywords: International Relations/Trade
    Date: 2019–06–25
  31. By: Nandonde Felix; Adu-Gyamfi Richard; Mmusi TinayeSonto; Wamalwa Herbert; Asongu Simplice; Opperman Johannes; Makindara Jeremiah
    Abstract: In recent decades, the impact of South African foreign direct investment in Africa has been captured by research and policy.This paper investigates linkages and spillover effects of South African foreign direct investment in Botswana and Kenya. The study uses primary data to investigate qualitative implications. The findings reveal that South African firms operate in sectors including retail, food-processing, and information and communication technology.Linkages forged in these sectors include supply, employee, joint venture, service, and institutional nexuses. Supply and service linkages create observable spillovers which point to the fact that younger local firms tend to benefit from South African firms in terms of technology transfer and training opportunities.Host country policymakers are therefore encouraged to provide favourable incentives for foreign direct investment to promote entrepreneurship. Other policy implications are also discussed.
    Keywords: Spillover effects,Economic linkages,Economic Policy and Good Governance,firms,Foreign Direct Investment
    Date: 2019
  32. By: Juvenal, Luciana (International Monetary Fund); Petrella, Ivan (University of Warwick)
    Abstract: Fluctuations in terms of trade are one of the major sources of concern for policy makers in developing countries. Theoretical models predict that terms of trade shocks account for a large share of business cycle fluctuations. However, recent empirical studies find a weak link between terms of trade and output fluctuations, uncovering the “terms of trade disconnect.” This disconnect happens because not all terms of trade shocks are alike. When analyzing terms of trade shocks, it is implicitly assumed that the economy responds symmetrically to changes in export and import prices. Our paper shows that this is not the case. To shed light on how terms of trade affect the economy, we estimate export price, import price and global demand shocks, which proxy for world disturbances, using a VAR model with sign-restrictions complemented with a narrative approach for a sample of 36 countries. We construct our own measure of export and import prices using commodity and manufacturing prices matched with trade shares. Our findings indicate that, taken together, export and import price shocks account for around 50 percent of output fluctuations. We also find that global demand shocks explain the high correlation between export and import prices since they generate a simultaneous increase in both, yielding a small effect on the terms of trade but large effects on the economy.
    Keywords: terms of trade ; commodity prices ; business cycles ; world shocks
    JEL: C53 E32
    Date: 2019
  33. By: Matthias Flückiger; Erik Hornung; Mario Larch; Markus Ludwig; Allard Mees
    Abstract: We show that the creation of the first integrated pan-European transport network during Roman times influences economic integration over two millennia. Drawing on spatially highly disaggregated data on excavated Roman ceramics, we document that interregional trade was strongly influenced by connectivity within the network. Today, these connectivity differentials continue to influence cross-regional firm investment behaviour. Continuity is largely explained by selective infrastructure routing and cultural integration due to bilateral convergence in preferences and values. Both plausibly arise from network-induced history of repeated socio-economic interaction. We show that our results are Roman-connectivity specific and do not reflect pre-existing patterns of exchange.
    Keywords: economic integration, Roman trade, transport network connectivity, business links, cultural similarity
    JEL: F14 F15 F21 N73 R12 R40 O18
    Date: 2019
  34. By: Felix A. Nandonde (Morogoro, Tanzania); Richard Adu-Gyamfi (Geneva, Switzerland); Tinaye S. Mmusi (Gaborone, Botswana); Herbert Wamalwa (University of Nairobi, Kenya); Simplice A. Asongu (Yaoundé, Cameroon); Johannes P. Opperman (University of Stellenbosch, South Africa); Jeremiah R. Makindara (Morogoro, Tanzania)
    Abstract: In recent decades, the impact of South African foreign direct investment in Africa has been captured by research and policy. This paper investigates linkages and spillover effects of South African foreign direct investment in Botswana and Kenya. The study uses primary data to investigate qualitative implications. The findings reveal that South African firms operate in sectors including retail, food-processing, and information and communication technology. Linkages forged in these sectors include supply, employee, joint venture, service, and institutional nexuses. Supply and service linkages create observable spillovers which point to the fact that younger local firms tend to benefit from South African firms in terms of technology transfer and training opportunities. Host country policymakers are therefore encouraged to provide favourable incentives for foreign direct investment to promote entrepreneurship. Other policy implications are also discussed.
    Keywords: Foreign direct investment, linkages, spillover effects, South Africa, Botswana, Kenya
    JEL: E23 F21 F30 L96 L98 O55
    Date: 2019–03
  35. 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: price transmission,Markov-switching models,coffee,customs data,spot and futures markets
    Date: 2019
  36. By: Baran, Joanna
    Abstract: The aim of the paper was to define geographic scope of internationalization the butter market based on Elzinga–Hogarty method.. Using secondary data (Food and Agriculture Organization, Institute of Agricultural and Food Economics) were find that the butter market is international in the scope, and this scope is evolving from country to semi-global and next to regional. Butter market consists only of 11th EU countries in 2014. Such market has production of 3361 thousand tones, consumption of 3292 thousand tones and export and import at the level of 317 thousand tones, 238 thousand tones, respectively.
    Keywords: Production Economics, Research Methods/ Statistical Methods
    Date: 2019
  37. By: Bouchoucha, Najeh; Bakari, Sayef
    Abstract: This paper aims to analyze the impact of domestic investment and Foreign Direct Investment on economic growth in Tunisia during the period 1976–2017. This study is based on the Auto-Regressive Distributive Lags (ARDL) approach that is proposed by Pesaran et al (2001). Bound testing approaches to the analysis of level relationships. According to the results of the analysis, domestic investment and foreign direct investment have a negative effect on economic growth in the long run. However, in the short run, only domestic investment causes economic growth. The findings are important for Tunisian economic policy makers to undertake the effective policies that can promote and lead domestic and foreign investments to boost economic growth.
    Keywords: Domestic Investment; Foreign Direct Investment; Economic Growth; Tunisia; ARDL.
    JEL: C13 E22 F13 F14 O11 O20 O47 O55
    Date: 2019–06
  38. By: Guido Matias Cortes (York University, Canada; Rimini Centre for Economic Analysis); Diego M. Morris (Nottingham Trent University, UK)
    Abstract: The decline of employment in middle-wage, routine task intensive jobs has been well documented for the United States. Increased offshoring towards lower income countries such as Mexico has been proposed as a potential driver of this decline. We compare the evolution of employment across 181 detailed occupational categories in the U.S. and Mexico and find that, with few exceptions, the occupations that decline in the U.S. have also declined in Mexico. There is therefore little evidence that U.S. jobs are moving South. It is more likely that common shocks are responsible for the decline of middle-wage jobs in both countries.
    Date: 2019–07
  39. By: Alexis Anagnostopoulos; Orhan Erem Atesagaoglu; Elisa Faraglia; Chryssi Giannitsarou
    Abstract: We develop a theoretical framework in order to investigate the link between two recent trends: (i) the rise in cross-country stock market correlations over the past three decades, and (ii) the increase in global foreign direct investment (FDI) positions over the same period. Our objective is twofold: first, we investigate empirically the channel through which the rise in global stock market correlations is associated with the observed increase in global FDI. Second, we develop a two-country stochastic asset pricing model with multinational firms that allows us to quantify the extent to which the recent rise in global FDI can account for the observed increase in cross-country stock market comovement. Calibrating three versions of the model (finnancial autarky, incomplete markets and complete markets) to the US and the rest-of-the-world, we find that a permanent inrcease in FDI positions, as observed from mid 1990s to mid 2000s, leads to substantial increase in cross-country stock market comovements. Increases in FDI alone can account for approximately one third of the observed increase in stock market correlations. We also discuss the role of portfolio diversification and, more generally, asset market integration.
    Date: 2019
  40. By: Dick, Eva; Schraven, Benjamin
    Abstract: The vision of a united Africa and the rejection of the arbitrary borders created by European colonial powers have for decades been at the heart of pan-African endeavours. Achieving the free movement of persons on the continent was a key aim of the 1991 Abuja Treaty, which established the African Economic Community (AEC). And in the ensuing decades, this goal was under¬scored in agreements on African economic integration and in the African Union (AU)’s Agenda 2063. In January 2018, the member states of the AU finally agreed on the Protocol to the Treaty Establishing the African Economic Community Relating to Free Movement of Persons, Right of Residence and Right of Establishment. The continental agendas state that the process of implementing free movement must begin with Africa’s sub-regions. This is not least due to historical reasons. The Economic Community of West African States (ECOWAS) was a pioneer in this regard, with its Free Movement Protocol dating back to 1979. The years that followed saw the free movement of persons integrated into other African regionalisation processes as well. The East African Community (EAC), for instance, has agreed, at least in part, on far-reaching steps; other sub-regions (such as the North African Intergovernmental Authority on Develop¬ment (IGAD)) are currently working towards relevant accords. The present analysis of ECOWAS (West Africa) and IGAD (North-East Africa) shows that both regional organisa¬tions face difficulties with their free movement policies, though the respective challenges emerge in different phases of the political process. In the IGAD region, member states have so far been unable to agree on any free movement treaty, while the ECOWAS region is experiencing delays in the national and subnational implementation of established legislation. These differences can primarily be explained by historic path dependencies, divergent degrees of legalisa¬tion, and differing interests on the part of subregional powers. Finally, regional free movement is being hampered in both regions by internal capacity issues and growing external influences on intra-African migration management and border control. From the perspective of development policy, it is expedient to support free movement at subregional level in Africa. The following recommendations arose from the analysis: Promote regional capacities: Personnel and financial support should be provided to regional organisations to assist them with formulating free movement standards and implementing them at national and subnational level. Harmonise security and free-movement policies: European initiatives on border control and migration management must provide greater support for free movement rather than inhibit intraregional migration and free movement policies. Offer cross-sectoral incentives: The German Government and the European Union should encourage progress with the regionalisation of free movement regimes in related areas of cooperation. In order to effectively implement the recommendations, it is also important to recognise and flesh out the role of regional organisations at global level as well.
    Keywords: Flucht und Migration,Governance
    Date: 2019
  41. By: Escaith, Hubert
    Abstract: This paper presents a simple yet powerful methodological tool for analysing the impact of a bilateral trade conflict on third countries when trade includes intermediate inputs. Mixing input-output modelling with recent development of trade in value-added analysis, the extraction-cum-substitution approach maps and measures the sectoral and global interactions in global value chains.It can also be used to generate “in silico” a large data set of numerical “observations” that can be further analysed using appropriate exploratory statistical techniques. The paper counts with three parts, besides introduction and conclusion. The first one is theoretical, starting with a formal model of inter-industry trade before describing the empirical application to input-output analysis. The second part is didactic, illustrating the method on a small six-countries/three-industries model.The third part applies the methodology to the bilateral trade conflict that arose between China and the USA in 2018. This section shows also how the method can also be used for generating analytical data and identify modes of insertion in the global economy. The program, written in open-source R language, is shown in annex.
    Keywords: input-output analysis; international production networks; China-USA trade conflict; exploratory data analysis
    JEL: C67 D57 F02 F13
    Date: 2019–07–16
  42. By: Ringe, Wolf-Georg
    Abstract: EU policymakers are currently implementing the capital markets union (CMU) agenda-a collection of individual steps that, taken together, should strengthen cross-border market integration in EU capital markets. However, the imminent departure of the United Kingdom from the EU reshuffles the cards in this project, since the absence of the United Kingdom as the continent's most developed capital market jeopardizes the objective of creating a truly Europe-wide deep and liquid market that merits its name. This paper argues that the purpose of the CMU project can and should be redefined. The initial thrust behind the project in 2014-2015 seems to have been to court the British public in a bid to influence the Brexit referendum. After the UK's vote to leave, that objective no longer provides the glue that holds the CMU agenda together. Instead, I show that CMU can helpfully be redefined and reexplained in an entirely new context. Specifically, the CMU agenda provides a sensible set of measures to strengthen the architecture of the Eurozone: cross-border integration of national financial markets holds the promise of promoting so-called 'private risk sharing' that can serve as an important boost to reinforce the fragile framework of the common currency. This paper makes two points. First, it explores the initial motivation behind launching the CMU agenda. The paper argues that the initial purpose was - among other things - a political bid to influence the growing anti-EU attitude and to win over the City of London. Since this strategy was ultimately unsuccessful - at least, it did not suffice to secure a majority voting for a UK-wide 'remain' vote - the entirety of the CMU project was put into question. In a second step, the paper shows that the CMU agenda currently on the table - if sufficiently reinforced and expanded - may find a new purpose in strengthening the Eurozone architecture. The latter point comes amid the ongoing policy debate on the future of the Euro.
    Date: 2019
  43. By: Meseguer, Covadonga; Jaupart, Pascal; Aparicio, Javier
    Abstract: We explore how the reception of remittances affects perceptions of the bilateral relationship between Mexico and the U.S. Scholars have claimed that the economic benefits of the relationship with the U.S. prevail over imperialistic concerns stemming from the asymmetry of power between the two countries. Empirical research shows that Latin American public opinion is indeed more supportive of the U.S. than the theory predicts. We identify, however, two gaps in this literature: first, scholars have explored the determinants of generic expressions of sentiment toward the U.S., overlooking more concrete instances of cooperation between the two countries. Second, scholars have focused on trade and investment and have ignored how the material gains of emigration shape attitudes toward the U.S. Using novel survey data on the bilateral relationship between Mexico and the U.S., our paper fills these two gaps. On one hand, we find that while the reception of remittances correlates positively with good sentiments toward the U.S., those that receive remittances are consistently more opposed to cooperation with the U.S. in the fight against drug trafficking. We argue that this finding can be explained by the different nature of the migratory phenomenon, and the connection between anti-drug trafficking policies and the close scrutiny of illegal flows of money and people.
    Keywords: pro-Americanism; emigration; remittances; Mexico-US bilateral relation; war on drugs; crime; foreign policy
    JEL: N0 F3 G3
    Date: 2017–08–01
  44. By: Corinne Vercher-Chaptal (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 paper first recall the dynamics of the globalisation and financialisation of GVCs and the way in which they impact social conditions of production. We then present the limitations of voluntary ethical schemes to ensure the sustainable and responsible functioning of GVCs. To deal with these limitations, civil society in France backed a law providing for more stringent forms of regulation based on the recognition that the multinationals managing global value chains have a legal liability. After a lengthy itinerary and despite intense opposition from private-sector actors, the law was adopted on 28 March 2017. This is an innovative law not only with respect to the process employed for its adoption, which involved collaboration between civil society, political actors, trade unions and academic experts, but also with respect to its contents. By combining hard-law and soft-law mechanisms (Abbott and Snidal, 2000), government and private-sector standards, the law reflects a significant change in how responsibility in GVCs is conceived. The paper concludes with an analysis of the reasons why 2 the French law on multinationals' duty of vigilance, despite its shortcomings occasioned by the search for a political compromise, represents a major initiative in the regulation of GVCs.
    Date: 2018–06–20
  45. By: Dick, Eva; Schraven, Benjamin
    Abstract: In the context of the global refugee crisis, trans-Saharan and trans-Mediterranean (irregular) migration from Africa to Europe has recently received huge public and political attention, particularly within Europe. Calls for reducing and containing irregular migrant flows and addressing the “root causes” of forced migration dominate the European policy discourse. However, migration within the African continent is much more prevalent than migration from Africa to Europe or other parts of the world. About two-thirds of African international migrants are living in another African country. The types of mobility thereby range from seasonal labour migration to forced displacement with varying geographic extensions. Against this background, the African Union has defined norms and strategic guidelines regulating migration and forced displacement and regional organisations such as the Intergovernmental Authority on Development (IGAD) in the Horn of Africa and the Economic Community of West African States (ECOWAS) are involved in migration governance. Regional organisations and migration platforms are gradually becoming acknowledged political players, also reflecting a general trend of regionalisation and pluralisation in international and migration policies. Their actual involvement in global policy processes, such as the currently negotiated Global Compacts for Migration and on Refugees, as well as in EU-Africa migration initiatives remains nonetheless limited. While increasingly recognised, up to present, regional migration regimes outside Europe remain little understood regarding their main drivers, features and impact. The present paper sets the ground for enhancing this understanding by introducing a framework of analysis for regional migration governance. The framework incorporates elements of various approaches to international organisations of which regional organisations (ROs) form a subset. In this context, both institutional characteristics such as organisational identity and history and the interests of (powerful) member states and external actors are considered key explanatory factors for migration-related strategy formulation and implementation. The framework introduced is intended as a general scheme for the analysis of regional migration governance around the globe – not only specifically in Africa. However, in this study, migration governance in the two African sub-regions - Economic Community of West African States (ECOWAS) and the Intergovernmental Authority on Development (IGAD) at the Horn of Africa - is used to illustrate the diversity of historical pathways, migration realities and challenges as well as institutional settings. Whereas the IGAD sub-region is characterised by high levels of forced displacement, the ECOWAS countries have a long tradition of circular and seasonal labour migration, not least mirrored in a relatively established and internally driven migration policy agenda. The paper shows that the framework facilitates a comprehensive understanding of regional migration governance structures and processes. Our hitherto analysis based on the framework indicates that the organisations studied, IGAD and ECOWAS, are well-placed for the management of regional migration. Institutional structures between the two differ, for instance, with regard to levels of legalisation, with ECOWAS disposing of strong formal powers to enforce regional policies and IGAD privileging informal cooperative relationships between member states. Since both regions experience challenges in the implementation of regional norms at national and sub-national levels, (further) financial and technical support in this area is necessary.
    Keywords: Regionale + globale + transnationale Governance,Flucht und Migration
    Date: 2018
  46. By: Mtanga Sithembiso; Makgetla Neva; Levin Saul
    Abstract: Southern African countries—mainly Zambia and the Democratic Republic of the Congo—account for around a seventh of global production of copper. In the 2010s, they imported over a third of the associated capital goods and components from South Africa.Given this strength, some observers suggest that the South African capital goods industry could do more to support copper fabrication in the region. Theoretically, investing in production of semi-manufactures (principally wire, cable, and tubing) would promote industrialization and enhance value-add. In practice, however, unit prices have only been slightly higher for semis than for refined copper, limiting scope for fabrication—especially as local manufacturers obtain copper essentially at international prices.In any case, the South African capital goods industry is centred on mining, not metalworking machinery. It can only compete with overseas suppliers if it obtains increased financial support for exports and for research and development.
    Keywords: Value chains,Agglomeration,copper,Exports,Global value chains,Industrial policy,Mineral industries,Industrialization
    Date: 2019
  47. By: Dick, Eva; Koch, Anne; Schraven, Benjamin; Etzold, Benjamin
    Abstract: The global migration governance is in a period of transition. There are two main reasons for this: First, the division between an international refugee regime based on the 1951 Geneva Convention on Refugees and a (labour) migration regime is problematic in light of ‘mixed’ migratory flows. Second, the current global migration architecture is characterised by institutional fragmentation and a lack of normative standards. The Global Compact for Migration and the Global Compact on Refugees currently being negotiated are intended to address these shortcomings. Among the crucial questions to be addressed is the role of regional cooperation in a future global migration architecture. This is because the majority of cross-border migration and displacement takes place within regional spaces. Regional cooperation on migration currently occurs in three formats, all of which focus on different issue areas: 1) Migration-related activities of regional organisations (ECOWAS, IGAD, for instance); 2) regional consultative processes (RCPs) and 3) inter-regional cooperation processes (such as Khartoum and Rabat Processes). Experiences from Africa suggest: Groundbreaking norms, for example for the free movement of persons or on refugee rights have been developed on the regional level. This is not least due to some advantages of regional migration governance over global formats. Joint interests tend to be identified more easily, distinct regional features can be better addressed and forging common ground in the formulation of a coherent and developmental migration policy is generally not as difficult. However, in Africa as yet the implementation of regional norms has been deficient. Moreover, the agendas of inter-regional cooperation formats are often strongly influenced by economic and security- interests of Western donors. In this context, the promotion of the protection of refugees’ and migrants’ rights tends to be neglected. Also regional migration interests risk to be undermined. Therefore, additional to regional migration policies, it is necessary to establish binding, universal standards under international law as regards the rights and protection of refugees and migrants. At the same time, the regional level ought to be strengthened. It can provide important impulses for expanding standards of protection and implementing orderly, safe, regular and responsible migration. The international community has to take this into account in the negotiation of the two global Compacts. The con-tributions of German and European development policy ought to focus on the following: Building capacities: Regional organisations ought to be supported financially and technically in all areas of migration, not only in security-relevant aspects. Fostering interaction: Regular exchange among regional organisations and global actors as well as civil society actors should be strengthened. Increasing influence: The weight of regional organisations in global policy processes and in the review and follow-up of the Compacts must be enhanced. __________________ Anne Koch: Research division “Global Issues”, Stiftung Wissenschaft und Politik (SWP) Benjamin Etzold: Bonn International Center for Conversion (BICC)
    Keywords: Deutsche + Europäische + multilaterale Entwicklungspolitik,Regionale + globale + transnationale Governance
    Date: 2018
  48. By: R, Revathi; L. M., Madhushree; Aithal, Sreeramana
    Abstract: Goods and Service tax is tax regime adopted by 160 countries over the globe in order to evade cascading of tax in the economy. India introduced GST in the year 2017 whereas many other countries implemented GST many years before in their tax system. France was the primary country to adopt this single tax system in 1954 and followed by Germany, Italy, Japan, South Korea. GST is one of the top initiatives taken by most of the countries for a structured and developed economy. A value-added tax levied on mainly goods and services provided or sold for domestic or household consumption is called Goods and Service Tax. GST provides revenue or income for the government in the growth procedure of the economy. The section of GST which is accumulated or collected from the consumers by the business or seller of the goods forwarded to the government. In some countries, Goods and Service Tax is also acknowledged as Value Added Tax. This review paper focused on the implications of GST on different countries economy and its collision on the society. Many scholars have researched on this topic before and after the implementation in India. The paper throws light on the various aspects of GST, and how it affects different industrial sectors in the economy. The paper also analyses how various researchers have interpreted their study about GST, its future implications, and impacts in their countries with special emphasis on India.
    Keywords: Goods and Service tax, Value added Tax, ASEAN, Asia, Europe, Oceania, India
    JEL: A1 E4 G0 M2
    Date: 2019–04
  49. By: Schöfberger, Irene
    Abstract: Intense negotiations about migration management policies are taking place inside the European Union (EU), and between the EU and African states. Although these two negotiation processes are often analysed separately, they are actually interlinked. Drawing on interviews with representatives of European and African states and regional organisations as well as on policy analysis, this Briefing Paper argues that negotia¬tions inside the EU restrict EU-Africa cooperation on migration in two ways: first, by transmitting a strengthened focus on border control from the internal to the external dimension of EU migration management policies; second, by framing migration in a narrow way, which has hindered progress with regard to transnational development. Intra-EU policy negotiations on migration are essential for the evolvement of EU-Africa cooperation on migration. Their increasing focus on border controls in Europe and Africa hinders the adoption of policies that support the potential of migration to contribute towards transnational resilience and development. Therefore, addressing the divisions on the internal dimension of EU migration management policy is a prerequisite for identifying sustainable EU-Africa cooperation pathways and supporting African migrants as actors of transnational development. There are two important lessons that the Commission and the member states can learn from their difficulties in reaching an internal agreement on how to manage migration inside and outside the EU. The first lesson is that they need to address the challenge of balancing European national and transnational competencies and approaches. This challenge is inherent to the EU being a transnational union of nation states. The second lesson is that they need to take into greater consideration the needs of vulnerable citizens of both European and African countries. In particular, the EU and its member states should: Focus on the internal dimension of migration management and rebalance the current distribution of national and EU transnational competencies on migration. This is needed to address the conflicts of competencies that are currently hindering the nego¬tiations on common policies. In particular, they should explore the feasibility of transferring some national competencies to the EU, including through the creation of a pilot EU Agency on Labour Migration. Introduce effective mechanisms of transnational responsibility-sharing in the EU in order to safeguard free movement within the Schengen Area. In particular, they should foresee an EU relocation system based on incentives and sanctions as part of a reform of the Dublin Regulation. Take the needs of young and low-skilled workers as well as migrant European workers into greater consideration by promoting employment, job security and labour rights, with funding through the European Social Fund. Reintroduce policy and development cooperation measures supporting the potential of African migration to contribute towards transnational resilience and development and provide adequate funding through the Multiannual Financial Framework 2021-2027. In particular, such measures should support self-determined strategies of African migrants, for example by facilitating circular mobility and the transfer of remittances.
    Keywords: Flucht und Migration,Regionale + globale + transnationale Governance
    Date: 2018
  50. By: Morin, Jean-Frédéric; Chaudhuri, Vera; Gauquelin, Mathilde
    Abstract: Trade agreements have mixed effects on the environment. On the one hand, trade generates additional pollution by raising production levels. Trade rules can also restrict the capacity of governments to adopt environmental regulations. On the other hand, trade agreements can favour the diffusion of green technologies, make production more efficient and foster environmental cooperation. Whether the overall effect is positive or negative partly depends on the content of the trade agreement itself. Recent studies have found that trade agreements with detailed environmental provisions, in contrast to agreements without such provisions, are associated with reduced levels of CO2 emission and suspended particulate matter (Baghdadi et al., 2013; Zhou, 2017). It remains unclear, however, which specific provisions have a positive environmental impact and how they are actually implemented. This briefing paper discusses how provisions on environmental cooperation in trade agreements can contribute to better environmental outcomes. It is frequently assumed that the more enforceable environmental commitments are, the more likely governments are to take action to protect the environment (Jinnah & Lindsay, 2016). This assumption leads several experts to argue in favour of strong sanction-based mechanisms of dispute settlement in order to ensure the implementation of trade agreements’ environmental provisions. Nevertheless, there is evidence to suggest that softer provisions can result in increased environmental cooperation, which can in turn favour domestic environmental protection (Yoo & Kim, 2016; Bastiaens & Postnikov, 2017). The European Union privileges this more cooperative approach in its trade agreements, and a recent European non-paper (2018) stresses that a sanction-based approach is a disincentive for ambitious environmental commitments and can result in a political backlash. To shed light on this debate, this paper examines the design and the implementation of cooperative environmental provisions of trade agreements. Our analysis is based on three main data sources. First, we make use of the TRade & ENvironment Dataset (TREND) which provides information on 285 types of environmental provisions included in 688 trade agreements signed since 1947 (Morin et al., 2018; see also for an online visualisation tool for the data). Second, we draw on official documents to better understand how these provisions are implemented domestically. Third, we fill the gaps using information provided by 12 interviewees who work for 7 different governments. This briefing paper is organised in four parts. We first provide an overview of some general trends in treaty design. In sections 2 to 4, we then take a closer look at selected types of provisions that prove particularly relevant due to their prevalence: (a) general commitments to cooperate on environmental issues; (b) clauses creating international environmental institutions; (c) provisions on technical and financial assistance from one party to another. We find that both the implementation of these provisions and their contribution to environmental protection vary depending on the degree of legal precision, the budgeting of financial resources and governments’ political commitment. Based on these findings, we suggest that trade negotiators should i) lay out precise clauses with specific targets and clear time frames, (ii) specify in the trade agreement where the funding for cooperation activities will be sourced and (iii) create forums where civil society actors can engage in a dialogue with policy-makers on the implementation of trade agreements.
    Keywords: Handel und Investitionen,Umwelt, Ökosysteme und Ressourcen
    Date: 2018

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