nep-int New Economics Papers
on International Trade
Issue of 2019‒08‒26
forty-four papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Friends like this: The impact of the US-China trade war on global value chains By Mao, Haiou; Görg, Holger
  2. Domestic Investment, Export, Import and Economic Growth in Brazil: An Application of Vector Error Correction Model By Bakari, Sayef; Fakraoui, Nissar; Sofien, Tiba
  3. Looking through conduit FDI in search of ultimate investors – a probabilistic approach By Casella, Bruno
  4. The gravity model for Maltese goods exports and imports By Reuben Ellul
  5. On the Effects of GATT/WTO Membership on Trade: They Are Positive and Large after All By Mario Larch; José-Antonio Monteiro; Roberta Piermartini; Yoto V. Yotov
  6. Multinationals, Intrafirm Trade, and Employment Volatility By Kozo Kiyota; Toshiyuki Matsuura; Yoshio Higuchi
  7. Monopsonistic Labor Markets and International Trade By Priyaranjan Jha; Antonio Rodriguez-Lopez
  8. Exporting and Offshoring with Monopsonistic Competition By Hartmut Egger; Udo Kreickemeier; Christoph Moser; Jens Wrona
  9. On the Effects of Sanctions on Trade and Welfare: New Evidence Based on Structural Gravity and a New Database By Gabriel J. Felbermayr; Constantinos Syropoulos; Erdal Yalcin; Yoto V. Yotov
  10. The impact of Foreign Direct Investment and the institutional quality on Welfare in Latin America and Sub-saharan Africa By Aloui, Zouhaier
  11. Technology-induced Trade Shocks? Evidence from Broadband Expansion in France By Malgouyres, Clément; Mayer, Thierry; Mazet, Clément
  12. Adjusting to Globalization in Germany By Wolfgang Dauth; Sebastian Findeisen; Jens Suedekum
  13. From Local to Global: A Unified Theory of Public Basic Research By Gersbach, Hans; Schetter, Ulrich; Schmassmann, Samuel
  14. An FDI-driven approach to measuring the scale and economic impact of BEPS By Bolwijn, Richard; Casella, Bruno; Rigo, Davide
  15. Globalization, Gender, and the Family By Wolfgang Keller; Hale Utar
  16. The effectiveness of restrictive immigration policies: the case of transitional arrangements By Ulceluse, Magdalena; Kahanec, Martin
  17. Voting with their Money: Brexit and Outward Investment by UK Firms By Breinlich, Holger; Leromain, Elsa; Novy, Dennis; Sampson, Thomas
  18. Environmental Policy and Firm Selection in the Open Economy By Udo Kreickemeier; Philipp M. Richter
  19. Early 20th Century American Exceptionalism: Production, Trade and Diffusion of the Automobile By Dong Cheng; Mario J. Crucini; Hyunseung Oh; Hakan Yilmazkuday
  20. Labour Markets, Trade and Technological Progress: A Meta-Study By Nikos Terzidis; Steven Brakman; Raquel Ortega-Argiles
  21. Foreign aid, bilateral asylum immigration and development By Murat, Marina
  22. Do remittances worsen export diversification? By Vardanyan, Erik
  23. Refugees' and Irregular Migrants' Self-Selection into Europe: Who Migrates Where? By Cevat Giray Aksoy; Panu Poutvaara
  24. What do we really know about the transatlantic current account? By Braml, Martin T.; Felbermayr, Gabriel
  25. VAT Compliance, Trade, and Institutions By Peter Morrow; Michael Smart; Artur Swistak
  26. FDI Statistics and International Production: Towards (Re-) Conciliation? By CASELLA, BRUNO
  27. From Local to Global Competitors on the Beer Market By Erik Strøjer Madsen
  28. Technology Gaps, Trade and Income By Thomas Sampson
  29. The impact of civil society and governance on poverty: Are there differences between the North and East Africa region? By Aloui, Zouhaier
  30. Taxation, foreign aid and political governance in Africa By Simplice A. Asongu; Nicholas M. Odhiambo
  31. Migration. Comparing political and cultural visions By Bruni, Michele; Catani, Mario
  32. Ramifications of the internationalisation of Brazilian public policy instruments for the rural sector By Carolina Milhorance
  33. How resilient is ASEAN-5 to trade shocks? Regional and global shocks compared. By Raghavan, Mala; Devadason, Evelyn S
  34. British Stock Market, BREXIT and Media Sentiments - A Big Data Analysis By Gopal K. Basak; Pranab Kumar Das; Sugata Marjit; Debashis Mukherjee; Lei Yang
  35. Forecasting U.S. Textile Comparative Advantage Using Autoregressive Integrated Moving Average Models and Time Series Outlier Analysis By Zahra Saki; Lori Rothenberg; Marguerite Moor; Ivan Kandilov; A. Blanton Godfrey
  36. Brexit: Bremsspuren beim Handel zwischen Britannien und Deutschland By Busch, Berthold
  37. Did Austerity Cause Brexit? By Fetzer, Thiemo
  38. Export activity, innovation and institutions in Southern European nascent entrepreneurship By Marques, Helena
  39. Internationalization Strategy of Japanese MNCs in Russia By Panibratov, A; Sato
  40. Immigration and the Evolution of Local Cultural Norms By Schmitz, Sophia; Weinhardt, Felix
  41. Measuring international uncertainty using global vector autoregressions with drifting parameters By Michael Pfarrhofer
  42. Exchange Rate Pass-Through: A Competitive Search Approach By Beverly Lapham; Ayman Mnasri
  43. Globalisation and Female Economic Participation in Sub-Saharan Africa By Simplice A. Asongu; Uchenna R. Efobi; Belmondo V. Tanankem; Evans S. Osabuohien
  44. Internationalization of the State-Owned Enterprises from Emerging Markets: Literature Review and Research Agenda By Panibratov, A.; Klishevich, D.

  1. By: Mao, Haiou; Görg, Holger
    Abstract: This paper considers the indirect impact the recent tariff increases between the US and China can have in third countries through links in global supply chains. We combine data from input-output relationships, imports and tariffs, to calculate the impact of the tariff increases by both the US and China on cumulative tariffs for other countries and thus hurt trade partners further downstream in global supply chains. We also show that this is particularly important for tariff increases on Chinese imports in the US. These are likely to be used as intermediates in production in the US, which are then re-exported to third countries. The most heavily hit third countries are the closest trade partners, namely Canada and Mexiko. We estimate that the tariffs impose additional burden of around 500 to 600 million US dollars on these two countries. China's tariffs on US imports have less of an effect.
    Keywords: trade war,cumulative tariffs,indirect tariffs
    JEL: F1
    Date: 2019
  2. By: Bakari, Sayef; Fakraoui, Nissar; Sofien, Tiba
    Abstract: This paper aims to investigate the nexus between domestic investment, exports, imports, and economic growth for the Brazilian economy during the period 1970-2017, using the VECM methodology. In the short-run, our empirical results pointed out that import, exports, and domestic investment cause economic growth. Also, economic growth causes exports. Exports, imports, and economic growth cause domestic investment. However, in the long-run, our results revealed that domestic investment and exports have a positive effect on economic growth. Also, imports have a negative effect on economic growth. The results recorded a positive impact of economic growth and imports on domestic investment. Exports have a negative effect on domestic investment. Finally, we record the absence of significant impact of economic growth, exports and domestic investment on imports, and economic growth, domestic investment, and imports on exports. Due to the importance of these aspects to the economic performance of Brazil, the policymakers are invited to orient these issues towards the sustainability facets to guarantee a sustained growth path.
    Keywords: Export, Import, Domestic Investment, Economic Growth, VECM, Brazil.
    JEL: E22 F1 F10 F11 F13 F14 F43 O47 O54
    Date: 2019–08
  3. By: Casella, Bruno
    Abstract: This paper presents a novel computational method to determine the distribution of ultimate investors in bilateral FDI stock. The approach employs results from the probabilistic theory of absorbing Markov chains. The method allows for the estimation of a bilateral matrix that provides inward positions by ultimate counterparts for over 100 recipient countries, covering 95% of total FDI stock and including many developing countries. Reconstructing the global FDI network by ultimate investors enables a more accurate and complete snapshot of international production than do standalone bilateral FDI statistics. This has considerable implications for policymaking. It also provides more nuanced context to some contemporary developments such as the trade tensions between the United States, China and others, as well as Brexit
    Keywords: ultimate investors, bilateral FDI, conduit FDI, international production, absorbing Markov chains
    JEL: F23 F3 F36
    Date: 2019–04–26
  4. By: Reuben Ellul (Central Bank of Malta)
    Abstract: Malta’s path of economic development benefited from international trade, as the country is situated on trade routes linking Europe, Africa and Asia. This paper aims to look at the country’s location, trade agreements, cultural attributes and size in a gravity model framework. Its almost 50 year old relationship with the EU and its precursors, coupled with its strategic location, led to extraordinary growth rates in trade in goods between 1960 and 2016. The various versions of the gravity model applied here suggest strong and significant impacts of successive trade agreements with the European continent for both exports and imports. This is looked at using nominal, real and sectoral data.
    JEL: C23 F1 F14 F15
    Date: 2019
  5. By: Mario Larch; José-Antonio Monteiro; Roberta Piermartini; Yoto V. Yotov
    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
  6. By: Kozo Kiyota (Keio University); Toshiyuki Matsuura (Keio University); Yoshio Higuchi (Keio University)
    Abstract: This paper examines the theoretically ambiguous relationship between the volatility of employment growth and the foreign exposure of firms. We employ unique Japanese firm-level data over the period 1994--2012. This allows us to investigate any differences in this relationship across multinational firms and trading and nontrading firms, manufacturing and wholesale trade, and intrafirm and interfirm trade. One major finding is that in manufacturing, employment volatility increases as the share of intrafirm exports to total sales increases. In contrast, in wholesale trade, employment volatility declines as the share of intrafirm imports to total imports increases. One possible interpretation of these results is that the transmission of foreign supply and demand shocks could be through not only manufacturing, but also wholesale trade firms. Further, a higher share of intrafirm trade could magnify foreign demand shocks in manufacturing, and could mitigate foreign supply shocks in wholesale trade.
    Keywords: Employment volatility, Multinational firm, Intrafirm trade, Wholesale trade
    JEL: F1 F16 L25 L81
    Date: 2019–08
  7. By: Priyaranjan Jha; Antonio Rodriguez-Lopez
    Abstract: This paper introduces a framework to study the impact of trade liberalization on wage inequality and welfare in the presence of monopsonistic labor markets. The interaction of firm heterogeneity in productivity with idiosyncratic preferences of workers for working at different firms generates between-firm wage inequality for workers with identical skills. The degree of monopsony power is captured by the elasticity of firm-level labor supply, with a lower elasticity implying more wage-setting power by the firm. With more productive firms paying higher wages, monopsony power dampens the impact of firm heterogeneity on the allocation of market shares and allows lower productivity firms to survive. In a closed economy this increases inequality, but in an open economy high levels of monopsony power inhibit exporting, which may reduce inequality by compressing wages on the right side of the distribution. Nevertheless, inequality in the open economy is always higher than in autarky. Monopsony power reduces social welfare (for empirically plausible values of the labor supply elasticity) and the gains from trade.
    Keywords: monopsonistic labor market, wage inequality, trade liberalization
    JEL: F12 F13 F16
    Date: 2019
  8. By: Hartmut Egger; Udo Kreickemeier; Christoph Moser; Jens Wrona
    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
  9. By: Gabriel J. Felbermayr; Constantinos Syropoulos; Erdal Yalcin; Yoto V. Yotov
    Abstract: Using a new, global data base covering the years 1950 to 2015, we study the impact of sanctions on international trade and welfare. We make use of the rich dimensionality of our data and of the latest developments in the structural gravity literature. Starting with a broad evaluation by sanction type, we carefully investigate the case of Iran. Effects are significant but also widely heterogeneous across sanctioning countries. Moreover, they depend on the direction of trade. We also perform a counterfactual analysis which translates our partial equilibrium sanction estimates into heterogeneous but intuitive general equilibrium effects within the same framework.
    Keywords: sanctions, effectiveness of sanctions, structural gravity
    JEL: F10 F13 F14 F50 F51 H50 N40
    Date: 2019
  10. By: Aloui, Zouhaier
    Abstract: This article examines the impact of foreign direct investment (FDI) and institutional quality on well-being in Latin American and sub-Saharan African countries between 1996-2014. We use as key variables FDI, indicators of institutional quality (control of corruption and the rule of law) and the Human Development Index (HDI) as the main variables. Our analyzes confirm the positive and significant relationship between FDI and well-being in Latin America. Although the rule of law has been established to improve well-being. This result shows that legal variables of institutional quality play an important role in improving well-being. Nevertheless, this relationship between FDI, institutional quality and well-being is significantly different between Latin America and sub-Saharan Africa. So legal indicators create a positive effect on well-being. This study shows that institutional quality indicators attack well-being in the Latin American region. In addition, the quality of institutions and the strengthening of governance tend to amplify the positive effects on well-being in the region. The result of the regression confirms the positive links between FDI, institutional quality and improved well-being. Regarding the impact of FDI and institutional quality on well-being, FDI and the rule of law have more impact on improving well-being in Latin American countries than in sub-Saharan African countries.
    Keywords: Foreign Direct Investment, Institutions, Welfare, Latin America, Sub-Saharan Africa.
    JEL: F21 I31 K23
    Date: 2019–08–09
  11. By: Malgouyres, Clément; Mayer, Thierry; Mazet, Clément
    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: consumer welfare; Imports; internet; Trade
    JEL: F14 F15 L23 O33
    Date: 2019–07
  12. By: Wolfgang Dauth; Sebastian Findeisen; Jens Suedekum
    Abstract: We study the impact of trade exposure on the job biographies of 2.4 million manufacturing workers in Germany. Rising export opportunities lead to two equally important sources of earnings gains: on-the-job, and via employer switches within the same industry. Highly skilled workers benefit the most. Import shocks mostly hurt lowskilled workers, especially when they possess lots of industry-specific human capital. They also destroy workers’ rents when separating from high-wage plants, and they leave strongly scarring effects in the event of a mass layoff. We connect our results to the growing theoretical literature on the labor market effects of trade.
    Keywords: Trade Adjustments, Worker Mobility, Frictional Labor Markets
    JEL: F16 J31 R11
    Date: 2019–08
  13. By: Gersbach, Hans; Schetter, Ulrich; Schmassmann, Samuel
    Abstract: We analyze public investment in basic research in a multi-country, multi-industry environment with international trade. Basic research generates ideas which private firms take up in applied research to develop new varieties. A country's current specialization in international trade thus determines which ideas can be commercialized domestically. We demonstrate that the equilibrium is consistent with key patterns observed from the data. We then compare basic research investments of national governments with optimal investments of a global social planner. We show that national investments are inefficient along three dimensions: (1) There is typically too little total investment in basic research. (2) Basic research is too heavily concentrated in industrialized countries. (3) And basic research is potentially insufficiently directed to support innovation in complex, high-tech industries.
    Keywords: basic research; economic growth; international trade; knowledge spillover; optimal policy
    JEL: F10 F43 H40 O31 O38
    Date: 2019–07
  14. By: Bolwijn, Richard; Casella, Bruno; Rigo, Davide
    Abstract: This paper explores the link between foreign direct investment (FDI) and the BEPS (base erosion and profit shifting) practices of multinationals (MNEs). It puts the spotlight on the outsize role of offshore investment hubs as major players in global corporate investment, a role that is largely due to MNEs’ tax planning, although other factors contribute. The paper shows that tax avoidance practices enabled by FDI through offshore hubs are responsible for significant leakage of development financing resources. In policy terms, these findings call for enhanced cooperation and synergies between international tax and investment policymaking.
    Keywords: multinational enterprise, BEPS, revenue losses, developing countries, offshore investment
    JEL: F02 F23 F36
    Date: 2018–09–14
  15. By: Wolfgang Keller; Hale Utar
    Abstract: This paper shows that globalization has far-reaching implications for the economy’s fertility rate and family structure because it influences work-life balance. Employing population register data on all births, marriages, and divorces together with employer-employee linked data for Denmark, we show that lower labor market opportunities due to Chinese import competition lead to a shift towards family, with more parental leave and higher fertility as well as more marriages and fewer divorces. This shift is driven largely by women, not men. Correspondingly, the negative earnings implications of the rising import competition are concentrated on women, and gender earnings inequality increases. The paper establishes the market- versus family choice as a major determinant of trade adjustment costs. While older workers respond to the shock rather similarly whether female or male, for young workers the family response takes away the adjustment advantage they typically have–if the worker is a woman. The female biological clock–low fertility beyond the early forties–is central to this gender difference in adjustment, rather than the composition of jobs or workplaces, as well as other potential causes.
    Keywords: fertility, earnings inequality, marriage, divorce, import competition, gender gap
    JEL: F16 J12 J13 J16
    Date: 2019
  16. By: Ulceluse, Magdalena; Kahanec, Martin
    Abstract: The paper contributes to the on-going debates concerning the effectiveness of immigration policies, by investigating the case of the transitional arrangements implemented during the European Union enlargement rounds of 2004 and 2007. It has been argued that instead of deterring immigration, the arrangements rather altered the channels of entry. The hypothesis is that, as self-employed workers were not subjected to the transitional arrangements, these migrants used self-employment as a strategy to circumvent restrictions. Our results suggest that this might indeed have been the case post-2007, but not post-2004. We argue that in the latter case, migrants did not need to use self-employment as a strategy, because of alternative, restrictions-free destinations like Ireland and the UK. Our results point to the importance of immigration policies in shaping destination choices and have implications for future EU enlargement rounds.
    Date: 2019
  17. By: Breinlich, Holger; Leromain, Elsa; Novy, Dennis; Sampson, Thomas
    Abstract: We study the impact of the 2016 Brexit referendum on UK foreign direct investment. Using the synthetic control method to construct appropriate counterfactuals, we show that by March 2019 the Leave vote had led to a 17% increase in the number of UK outward investment transactions in the remaining EU27 member states, whereas transactions in non-EU OECD countries were unaffected. These results support the hypothesis that UK companies have been setting up European subsidiaries to retain access to the EU market after Brexit. At the same time, we find that the number of EU27 investment projects in the UK has declined by around 9%, illustrating that being a smaller economy than the EU leaves the UK more exposed to the costs of economic disintegration.
    Keywords: Brexit; Foreign direct investment; synthetic control method
    JEL: F15 F21 F23
    Date: 2019–07
  18. 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
  19. By: Dong Cheng; Mario J. Crucini; Hyunseung Oh; Hakan Yilmazkuday
    Abstract: The beginning of the twentieth century provides a unique opportunity to explore the interaction of rapid technological progress and trade barriers in shaping the worldwide diffusion of a new, highly traded good: the automobile. We scrape historical data on the quantity and value of passenger vehicles exported from the United States to other destination countries, annually from 1913 to 1940. We model the rise of US automobile from global obscurity toward a level dependent upon the extent of long-run pass-through of US prices into destination markets and destination GDP per capita. The results based on a diffusion model with CES preferences and non-unitary income elasticity shows that 62% of the gap in diffusion levels between the U.S. and the rest of the world is due to price frictions such as markups, tariffs, and trade costs, while the remaining 38% is due to income effects.
    JEL: F1 L62 N60 N70 O33
    Date: 2019–07
  20. By: Nikos Terzidis; Steven Brakman; Raquel Ortega-Argiles
    Abstract: Technological progress and trade potentially affect wages and employment. Technological progress can make jobs obsolete and trade can increase unemployment in import competing sectors. Empirical evidence suggests that both causes are important to explain recent labour market developments in many OECD countries. Both causes are often mentioned in tandem, but the relative contribution of each cause is less clear. This study presents a meta-analysis to shed light on the relative contribution of technological progress and trade in recent labour market developments and allows us to identify the winners and losers of automation and globalization. Using a sample of 77 studies and 1158 estimates, we find that both effects are important. Automation is beneficial at the firm level, and is more likely to displace low-skilled employment. Trade is more likely to benefit high-skilled employment and affects industry negatively. Somewhat surprisingly, given the consensus in the literature, automation has a positive effect for estimates considering the period before 1995, and trade a negative effect. We also find some evidence of publication biases.
    Keywords: labour markets, technological progress, trade, meta-study
    JEL: F23 J31 J63 O11
    Date: 2019
  21. By: Murat, Marina
    Abstract: This paper measures the links between aid from 14 rich to 113 developing economies and bilateral asylum applications during years 1993 to 2013. Dynamic panel models and Sys-GMM are used. Results show that asylum applications are related to aid nonlinearly in the level of development of origin countries, in a U-shaped fashion, where only the downward segment proves to be robust to all specifications. Asylum inflows from poor countries are negatively, significantly and robustly associated with aid in the short run, with mixed evidence of more lasting effects, while inflows from less poor economies show a positive but weak relation with aid. Moreover, aid leads to negative cross-donor spillovers. Applications linearly decrease with humanitarian aid. Voluntary immigration is not linked to aid. Overall, the reduction in asylum inflows is stronger when aid disbursements are conditional on economic, institutional and political improvements in the recipient economy.
    Keywords: foreign aid,asylum seekers and refugees,development
    JEL: F35 F22 J15
    Date: 2019
  22. By: Vardanyan, Erik
    Abstract: The paper explores the impact of workers' remittances on the level of export diversification. The hypothesis is that significant inflow of remittances causes overvaluation of real exchange rate, which in turn deteriorates diversity of export. The theoretical base is in line with the Dutch disease phenomenon. The paper uses annual cross-national panel data over 2000-2016 period and System GMM methodology. The evidence suggests that indeed large inflow of remittances is associated with less diversified export. The economic intuition behind is that remittance-caused real exchange rate appreciation unevenly suppresses export of goods: some goods "suffer" more than others do. In terms of the number of product-names, a percentage point increase in remittances to GDP sent home "reduces" variety of export by approximately five active lines. There are other interesting findings as well. An improvement of government effectiveness facilitates overall export diversification; terms of trade improvement and rise of real exchange rate volatility mostly increase export concentration rather than alter number of exported product-names.
    Keywords: remittances,export diversification,export concentration,export variety,real exchange rate,System GMM
    JEL: F14 F24 F31
    Date: 2019
  23. By: Cevat Giray Aksoy; Panu Poutvaara
    Abstract: About 1.4 million refugees and irregular migrants arrived in Europe in 2015 and 2016. We model how refugees and irregular migrants are self-selected. Using unique datasets from the International Organization for Migration and Gallup World Polls, we provide the first large-scale evidence on reasons to emigrate, and the self-selection and sorting of refugees and irregular migrants for multiple origin and destination countries. Refugees and female irregular migrants are positively self-selected with respect to education, while male irregular migrants are not. We also find that both male and female migrants from major conflict countries are positively self-selected in terms of their predicted income. For countries with minor or no conflict, migrant and non-migrant men do not differ in terms of their income distribution, while women who emigrate are positively self-selected. We also analyze how border controls affect destination country choice.
    Keywords: refugees, self-selection, human capital, predicted income
    JEL: J15 J24 O15
    Date: 2019
  24. By: Braml, Martin T.; Felbermayr, Gabriel
    Abstract: Do the U.S. have a current account surplus or a deficit with the EU? Since 2009, official sources disagree: The U.S. Department of Commerce claims a consistent U.S. surplus while Eurostat reports the opposite. International transactions are notoriously difficult to measure accurately, but the size of the transatlantic discrepancy is extremely substantial: over the last ten years, it has grown to accumulated 1 Trillion USD. In times of severe trade policy disagreements across the Atlantic, this gap is obviously problematic. This paper tries to dissect the transatlantic reporting gap. Two country-pairs - U.S.-UK and U.S.-Netherlands - account for almost the entire transatlantic discrepancy, which, in 2017, stood at about 180 billion USD. In the former case, national statistics on net services trade disagree by as much as 55 billion USD; in the latter case, there is a reporting difference in net primary income of about 60 billion USD. In contrast, data provided by the Bundesbank for the German-U.S. current account closely mirror U.S. data. Non-random measurement error and, possibly, deliberate manipulation seem to cause the observed discrepancies.
    Keywords: Current Account,Statistical Discrepancies,Service Trade,Trade War
    JEL: F14 F32 H26
    Date: 2019
  25. By: Peter Morrow; Michael Smart; Artur Swistak
    Abstract: We develop a simple structural model of value added tax (VAT) compliance, and estimate it using widely available national accounts data to learn about compliance in countries where little is currently known. International border controls improve VAT compliance, generating a correlation between imports and aggregate VAT revenues that is informative about domestic non-compliance. Estimates suggest that revenue lost due to domestic non-compliance is large, particularly in countries with low perceived institutional quality. Border controls keep overall VAT revenues high especially in countries open to international trade.
    JEL: H25 H26
    Date: 2019
    Abstract: In a highly complex global production landscape, the quest for sound statistics to measure the international activity of multinational enterprises (MNEs) has become ever more pressing, and challenging at the same time. Rationales for the use of FDI statistics from Balance of Payments, traditionally the main indicators of international production, seem to have weakened as boundaries between "real" and financial investment are becoming increasingly blurry. The purpose of this paper is to critically revisit the main objections to the use of FDI statistics to describe international production, and the possible counter-arguments and mitigating factors. Such balanced approach is aimed at providing concrete indications on the best analytical use of FDI statistics to measure international production.
    Keywords: FDI, international production, multinational enterprises, foreign affiliates.
    JEL: C8 C80 F23 Y1
    Date: 2019–04–15
  27. By: Erik Strøjer Madsen (Department of Economics and Business Economics, Aarhus University)
    Abstract: Liberalization of trade has been high on the political agenda after the Second World War. First through the international corporation in GATT and WTO and later the creation of the internal market in Western Europe and the opening up of Eastern Europe and China. The breweries respond to these changes in institution by a global M&A strategy and the following concentration of ownership among breweries increased the large breweries’ global market share dramatically. Why does this concentration in ownership take place, and was there some pay off to the breweries of this strategy? We will examine the market power hypothesis, how the increasing concentration has affected the growth of global brands and the beer prices. First, we examine where the increasing global concentration is reflected in a concentration of ownership in local markets. Next, we examine the effects of ownership concentration on the level of beer prices. Finally, we examine the effects of the global ownership on the market share of the global beer brand.
    Keywords: Branding, Brewing industry, Global market power
    JEL: L11 L66 M37
    Date: 2019–08–20
  28. By: Thomas Sampson
    Abstract: This paper studies the origins and consequences of international technology gaps. I develop an endogenous growth model where R&D efficiency varies across countries and productivity differences emerge from firm-level technology investments. The theory characterizes how innovation and learning determine technology gaps, trade and global income inequality. Countries with higher R&D efficiency are richer and have comparative advantage in more innovation-dependent industries where the advantage of backwardness is lower and knowledge spillovers are more localized. I estimate R&D efficiency by country and innovation-dependence by industry from R&D and bilateral trade data. Calibrating the model implies technology gaps, due to cross-country differences in R&D efficiency, account for around one-quarter to one-third of nominal wage variation within the OECD.
    Keywords: technology gaps, trade, technology investment, Ricardian comparative advantage, international wage inequality
    JEL: F11 F43 O14 O41
    Date: 2019
  29. By: Aloui, Zouhaier
    Abstract: This article attempts to study the impact of civil society and governance on poverty. In this work, we have tried to answer the following questions: what is the effect of civil society and governance on poverty in the region of North and East Africa? In this framework, the basic assumption was the existence of a direct and indirect effect of civil society and the quality of governance in reducing poverty. The study of this hypothesis was formulated in a static model applied to data available on the region of North and East Africa between 1996-2016. The results of our regressions show that civil society, has a positive effect in reducing poverty in East Africa, but negative in North Africa and the political and legal indicators, has a positive effect on poverty in the East African countries and administrative indicators, has a positive effect in North Africa. This result implies that civil society and governance quality factors play an important role in reducing poverty in East Africa as North Africa. The relationship between civil society, governance and poverty varies according to the stage of development. But notes significant differences between the region of North Africa and East. This supports our contention that civil society and governance has more impact on poverty in the East African region, the poorest than in the rich region of North Africa. For example, the relationship between civil society and poverty is positive and significant for East Africa, is negative and significant in North Africa. The relationship between governance (policy and legal indicators) and poverty is positive and significant for East Africa, but in North Africa only administrative indicators have a positive effect on poverty. This supports our claim that governance has more impact on poverty than civil society.
    Keywords: civil society, governance, poverty, Regional Economic Integration, North Africa, East Africa.
    JEL: H55 H75 I32
    Date: 2019–07–30
  30. By: Simplice A. Asongu (Yaoundé/Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa)
    Abstract: This study examines the hypothesis that foreign aid dilutes the positive role of taxation on political governance. The empirical evidence is based on the Generalised Method of Moments and 53 African countries for the period 1996-2010. For more policy options, the dataset is disaggregated into fundamental characteristics of African development based on income levels, legal origins, natural resources and landlockedness. While the hypothesis is invalid in baseline Africa, low income and English common law countries of the continent, the research cannot conclude on its validity for other fundamental characteristics of development. Policy implications, caveats and directions for future research are discussed.
    Keywords: Foreign Aid; Political Economy; Development; Africa
    JEL: B20 F35 F50 O10 O55
    Date: 2019–01
  31. By: Bruni, Michele; Catani, Mario
    Abstract: Different interpretations of migration confront themselves in the political arena. Considering two factors, necessity and acceptability, the paper identifies four stereotyped visions: the society of the walls, the society of mercy, the society of ghettos, and the society of reason. The first three share the ideological assumption that migration flows are supply determined, that they are pushed by poverty, lack of jobs, and desperation due to the lack of perspectives of a better future. The fourth vision states, based on robust empirical evidence, that migrations are determined by the structural shortage of labour that characterizes an increasing number of Developed countries, in the presence of an unlimited supply of labour in the Least developed countries. The implication of this idea is that international migrations flows of increasing size are unavoidable and indispensable to both groups of countries that should reach a political agreement to jointly manage them with mutual advantage. An Annex -that summarize previous work of one of the author but is based on the last data and estimates released by UN DESA- provides a short, critical introduction to the concept of the demographic transition and present the statistical implications of its most relevant consequence: the demographic polarization of the plane.
    Keywords: Migration,Demographic transition,Demographic polarization,Structural labour shortage,Structural excess of labour,Africa
    JEL: F22 J11 J24
    Date: 2019
  32. By: Carolina Milhorance (IPC-IG)
    Abstract: "International organisations and agencies from Western countries are no longer the only ones formulating development standards and international best practices. The proliferation of movements for exporting and importing social, economic and policy management models means it is now more relevant than ever to consider the relationships between countries of the global South. Most recent studies have focused on the drivers and strategies of emerging countries to promote South?South cooperation, while analysis of the impact of such initiatives is still scarce. In her recent book, Milhorance (2019) analyses the content of, processes involved in and consequences of the internationalisation of Brazilian rural public policies since the early 2000s". (...)
    Keywords: Ramifications, internationalisation, Brazilian, public, policy, instruments, rural, sector
    Date: 2019–05
  33. By: Raghavan, Mala (Tasmanian School of Business & Economics, University of Tasmania); Devadason, Evelyn S (Faculty of Economics & Administration, University of Malaya)
    Abstract: This paper revisits the resilience of the ASEAN region to external shocks amidst the unfolding effects of the US-China trade war. It investigates and compares the effects of regional(ASEAN) and global (US, China) shocks on ASEAN-5 using a structural VAR framework. To identify the propagation of economic shocks and spillovers on ASEAN-5, the changing trade links between the economies considered are used to account for time variations spanning the period 1978Q1 to 2018Q2. Three major results follow from the analyses on trade links and output multiplier effects. First, the response of ASEAN-5 to shocks from the US and China were more pronounced than regional shocks for the period after the Asian financial crisis. Second, the increasing cumulative impact of China’s shock on ASEAN was congruous to the growing trade links and trade intensities between ASEAN and China. Third, the US and China were dominant growth drivers for the weaker trade-linked ASEAN partners. Taken together, the results suggest that global shocks matter for the region, and the economic resilience of the region to global shocks depends on indirect effects, apart from the direct trade links.
    Keywords: trade links; SVAR model; ASEAN-5; China; US
    JEL: F41 C32
    Date: 2019
  34. By: Gopal K. Basak; Pranab Kumar Das; Sugata Marjit; Debashis Mukherjee; Lei Yang
    Abstract: In this paper we show, using a Machine Learning Framework and utilising a substantial corpus of media articles on Brexit, confirmed evidence of co-integration and causality between the ensuing media sentiments and British currency. The novel contribution of this paper is that along with sentiment analysis using commonly used lexicons, we devised a method using Bayesian learning to create a more context aware and more informative lexicon for Brexit. Moreover, leveraging and extending this we can unearth hidden relationship between originating media sentiments and related economic and financial variables. Our method is a distinct improvement over the existing ones and can predict out of sample outcomes better than conventional ones.
    Keywords: digitization, machine learning
    Date: 2019
  35. By: Zahra Saki; Lori Rothenberg; Marguerite Moor; Ivan Kandilov; A. Blanton Godfrey
    Abstract: To establish an updated understanding of the U.S. textile and apparel (TAP) industrys competitive position within the global textile environment, trade data from UN-COMTRADE (1996-2016) was used to calculate the Normalized Revealed Comparative Advantage (NRCA) index for 169 TAP categories at the four-digit Harmonized Schedule (HS) code level. Univariate time series using Autoregressive Integrated Moving Average (ARIMA) models forecast short-term future performance of Revealed categories with export advantage. Accompanying outlier analysis examined permanent level shifts that might convey important information about policy changes, influential drivers and random events.
    Date: 2019–08
  36. By: Busch, Berthold
    Abstract: Noch immer ist unklar, wann die Briten die EU verlassen werden. Es deutet aber viel darauf hin, dass der Brexit schon heute die Handelsbeziehungen zwischen dem Vereinigten Königreich und Deutschland beeinflusst hat. Das ist zum einen der Unsicherheit darüber geschuldet, ob es zu einem geordneten Austritt mit Übergangsfrist oder einem ungeordneten Verlassen des Vereinigten Königreichs kommt. Die Unsicherheit hat zu einem Investitionsabsentismus in Britannien beigetragen. Zum anderen hat die deutliche Abwertung des britischen Pfunds britische Exporte begünstigt und britische Importe verteuert, was über einen Preisanstieg die Dynamik des privaten Konsums gebremst hat. Insgesamt zeigte sich durch den Brexit ein dämpfender Einfluss auf die britische Volkswirtschaft, der sich auch in den Handelsbeziehungen niedergeschlagen hat. Während die deutschen Exporte in die Europäische Union insgesamt im Zeitraum 2015 bis 2018 um 12,4 Prozent wuchsen, gingen die deutschen Ausfuhren in das Vereinigte Königreich um 7,8 Prozent zurück. Hieraus ergibt sich eine Differenz von gut 20 Prozentpunkten. Die deutschen Einfuhren aus der EU-27 stiegen um 14,7 Prozent an, die Einfuhren aus dem Vereinigten Königreich gingen um 3,5 Prozent zurück. Auch im längerfristigen Vergleich des deutsch-britischen Außenhandels zeigte sich eine nennenswerte Veränderung. Von 1991 bis 2015 wuchsen die deutschen Exporte in das Vereinigte Königreich im Jahresdurchschnitt um 5,3 Prozent, von 2015 bis 2018 ergab sich ein jahresdurchschnittlicher Rückgang um 2,7 Prozent. Bei den deutschen Einfuhren aus Britannien zeigte sich ein ähnliches Bild. Bei Kraftwagen und Kraftwagenteilen, die einen Anteil von knapp einem Viertel am deutsch-britischen Außenhandel haben, sanken die deutschen Exporte in das Vereinigte Königreich im Dreijahreszeitraum 2018 gegenüber 2015 um knapp 23 Prozent, die Importe von dort um 13,6 Prozent. Pharmazeutische Erzeugnisse hatten mit einem Minus von 41,5 Prozent den stärksten relativen Exportrückgang zu verzeichnen; auf der Importseite gab es dagegen kaum eine Veränderung. Kraftwagen- und Kraftwagenteile sowie pharmazeutische Erzeugnisse zählen zu den Branchen mit engen britisch-deutschen Vorleistungsverflechtungen. Das deutet darauf hin, dass der Umbau der britisch-deutschen Wertschöpfungsketten bereits im Gange ist. Blickt man näher auf den Güteraustausch der fünf außenhandelsstärksten Bundesländer, so weisen alle fünf einen Rückgang der Exporte in das Vereinigte Königreich auf. In drei Ländern sanken auch die Importe; in Bayern blieben sie praktisch unverändert, in Hessen nahmen sie gegen den Trend deutlich zu.
    JEL: F14 F15 F20
    Date: 2019
  37. By: Fetzer, Thiemo
    Abstract: This paper documents a significant association between the exposure of an individual or area to the UK government's austerity-induced welfare reforms begun in 2010, and the following: the subsequent rise in support for the UK Independence Party, an important correlate of Leave support in the 2016 UK referendum on European Union membership; broader individual-level measures of political dissatisfaction; and direct measures of support for Leave. Leveraging data from all UK electoral contests since 2000, along with detailed, individual-level panel data, the findings suggest that the EU referendum could have resulted in a Remain victory had it not been for austerity.
    Keywords: austerity; EU; Globalization; political economy; voting
    JEL: D72 H2 H3 H5 P16
    Date: 2019–07
  38. By: Marques, Helena
    Abstract: This paper studies the role of personal characteristics, perceptual variables and country-level conditioning (financial environment, government quality and support, education quality and entrepreneurship know-how, innovation environment and support, business infrastructure, entrepreneurial culture and society, and gender roles) in explaining the export propensity and intensity of nascent entrepreneurs in four Southern European countries (Portugal, Spain, Italy and Greece), using Total Early-stage Entrepreneurial Activity (TEA) data from the Global Entrepreneurship Monitor (GEM) dataset in 2003-2010. Due to the nascent nature of the business, export activity is starting or about to start at the time of the survey and, for that reason, it cannot be studied using theoretical frameworks based on productivity heterogeneity, which has not yet been measured. In this sample of nascent businesses, there is no evidence of a selection effect into exporting and the individual-level factors influencing export propensity and intensity are identical. The most relevant individual-level variables facilitating export activity are new products, new technology, graduate education, and entrepreneurship networks. The most relevant country-level factors facilitating export activity are the availability of funding, the national government's macroeconomic support, and the support for new technology.
    Keywords: entrepreneurship,exporting,innovation,institutions,Southern Europe
    JEL: F14 J24 L26 O43
    Date: 2019
  39. By: Panibratov, A; Sato
    Abstract: The paper offers empirical tests and is engaged with the extension of the integration-responsiveness (I-R) framework given the injection of Cultural distance. The study identifies how Cultural distance affects Global integration and Local responsiveness in terms of the Internationalization strategy of Japanese MNCs in Russia by setting a special., emphasis on Japanese MNCs in Manufacturing, and Services/Retail in Russia based on case study research with surveys. The study on the linkage of Cultural distance and I-R framework with the typology is still lacking. The contexts of Japanese MNCs and the Russian market have been ignored in the existing research. We believe that outcomes of the research contribute to the extension of the I-R framework and that can be replicable to similar cases with the generalization of the uniqueness of Japanese MNCs in Russia.
    Keywords: cultural distance, global integration, internationalization strategy, Japan, local responsiveness, MNC, Russia,
    Date: 2019
  40. By: Schmitz, Sophia (Federal Ministry of Finance); Weinhardt, Felix (DIW Berlin)
    Abstract: We study the local evolution of cultural norms in West Germany in reaction to the sudden presence of East Germans who migrated to the West after reunification. These migrants grew up with very high rates of maternal employment, whereas West German families followed the traditional breadwinner-housewife model. We find that West German women increase their labor supply and that this holds within household. We provide additional evidence on stated gender norms, West-East friendships, intermarriage, and childcare infrastructure. The dynamic evolution of the local effects on labor supply is best explained by local cultural learning and endogenous childcare infrastructure.
    Keywords: cultural norms, local learning, gender, immigration
    JEL: J16 J21 D1
    Date: 2019–07
  41. By: Michael Pfarrhofer
    Abstract: This paper investigates the time-varying impacts of international macroeconomic uncertainty shocks. We use a global vector autoregressive (GVAR) specification with drifting coefficients and factor stochastic volatility in the errors to model six economies jointly. The measure of uncertainty is constructed endogenously by estimating a scalar driving the innovation variances of the latent factors, and is included also in the mean of the process. To achieve regularization, we use Bayesian techniques for estimation, and introduce a set of hierarchical global-local shrinkage priors. The adopted priors center the model on a constant parameter specification with homoscedastic errors, but allow for time-variation if suggested by likelihood information. Moreover, we assume coefficients across economies to be similar, but provide sufficient flexibility via the hierarchical prior for country-specific idiosyncrasies. The results point towards pronounced real and financial effects of uncertainty shocks in all countries, with differences across economies and over time.
    Date: 2019–08
  42. By: Beverly Lapham; Ayman Mnasri (Qatar University)
    Abstract: We develop an open economy monetary model with heterogeneous households which is characterized by incomplete pass-through of exchange rate movements to import prices. Partial pass-through arises in our environment due to the presence of competitive search in international goods' markets. Under competitive search, agents choose a sub-market in which to exchange goods, where different sub-markets are characterized by different price and trading probability combinations. Preference and policy shocks which induce exchange rate movements cause households to choose a different sub-market for their purchases of traded goods--an extensive margin response. These responses mitigate the direct effect of nominal exchange rate changes on equilibrium traded goods' prices, thereby generating incomplete exchange rate pass-through to goods' prices. In the calibrated model, exchange rate pass-through due to foreign shocks ranges between 19% and 62%, which is in the range of import price pass-through estimates for developed economies. Due to risk aversion by households, the magnitude of pass-through depends on the size and direction of the initial shock, making the model consistent with the observed phenomenon of asymmetric pass-through. Importantly, by incorporating household heterogeneity, we are able to examine the role of precautionary savings in affecting pass-through, characterize how pass-through varies across different types of households, and examine the distributional effects of exchange rate movements.
    Keywords: Exchange Rate Pass-Through, Competitive Search, Monetary Policy
    JEL: F31 O24 E58
    Date: 2019–06
  43. By: Simplice A. Asongu (Yaoundé/Cameroon); Uchenna R. Efobi (Covenant University, Nigeria); Belmondo V. Tanankem (MINEPAT, Cameroon); Evans S. Osabuohien (Covenant University, Ota, Nigeria)
    Abstract: This study assesses the relationship between globalisation and the economic participation of women (EPW) in 47 Sub-Saharan African countries for the period 1990-2013. EPW is measured with the female labour force participation and employment rates. The empirical evidence is based on Panel-corrected Standard Errors and Fixed Effects regressions. The findings show that the positive effect of the overall globalisation index on EPW is dampened by its political component and driven by its economic and social components, with a higher positive magnitude from the former or economic globalisation. For the most part, the findings are robust to the control for several structural and institutional characteristics. An extended analysis by unbundling globalisation shows that the positive incidence of social globalisation is driven by information flow (compared to personal contact and cultural proximity) while the positive effect of economic globalisation is driven by actual flows (relative to restrictions). Policy implications are discussed with some emphasis on how to elevate women’s social status and potentially reduce their victimisation to male dominance.
    Keywords: Globalisation; female; gender; inequality; inclusive development; labour force participation; Africa
    JEL: E60 F40 F59 D60 O55
    Date: 2019–01
  44. By: Panibratov, A.; Klishevich, D.
    Abstract: Research on the internationalizing state-owned companies (SOEs) is extremely relevant in the scientific community of strategic management and international business. Emerging markets show many examples of internationalized state-owned companies that are successful competitors to private firms, even though traditionally state companies are concerned mostly with their domestic markets. The research literature provides different answers to the question what theories better explain the international strategies of state-owned companies, and whether traditional theoretical approaches are able to explain these strategies. One of the dominant theoretical perspectives used in the analysis of international strategies of SOEs is the institutional perspective that explores the mutual influence of state ownership and institutional prerequisites of state-owned companies to international strategy. Scholars study the internationalization of SOEs through the lenses of resource-based view, resource dependency theory, political economy, transaction costs and neo-institutional theory. The major contribution of the research of internationalization of SOEs is that state ownership in companies indeed matters in terms of firms’ international strategies. State ownership influences the way firms internationalize, the choice of ownership in the international division, the degree of control and management features. The essence and scale of this influence continues to be in the center of scientific discussion. This review presents the promising and underexplored research avenues that have the potential for further development.
    Keywords: state-owned enterprises, internationalization, emerging markets,
    Date: 2019

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