nep-int New Economics Papers
on International Trade
Issue of 2019‒09‒16
48 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Participation and benefits of SMEs in GVCs in Southeast Asia By Javier López González; Laura Munro; Julien Gourdon; Emanuele Mazzini; Andrea Andrenelli
  2. Helping SMEs internationalise through trade facilitation By Javier López González; Silvia Sorescu
  3. The Impact of the Brexit Vote on EU Multinational Companies By abe harraf
  4. L'impact de l'accord UE-MERCOSUR sur l'Afrique à l’heure de protectionnisme croissant By Kohnert, Dirk
  5. The determinants of global value chains participation: The case of developing economies By Georges Badr
  6. Trade policy of the United States and China in the new era of trade wars: macroeconomic and behavioral approach By Wanda Dugiel; Magdalena Miko?ajek-Gocejna
  7. Corporate taxes and multi-product exporters: Theory and evidence from trade dynamics By Flach, Lisandra; Irlacher, Michael; Unger, Florian
  8. An analysis into FDI as a contributor of growth and development in a group of a selected set of countries from Asia, Africa and South America By JASSODRA Maharaj
  9. Foreign Direct Investment and Tax: OECD Gravity Modelling in a World with International Financial Institutions By Fabian J. Baier
  10. Innovation union: Costs and benefits of innovation policy coordination By Teodora Borota; Fabrice Defever; Giammario Impullitti
  11. Diagonal Cumulation and Sourcing Decisions By Pamela Bombarda; Elisa Gamberoni
  12. French Households’ Portfolio: The Financial Almost Ideal Demand System Appraisal By Julia Schmidt; Walter Steingress
  13. Determinants of German outward FDI: variable selection using Bayesian statistical By Mariam Camarero; Laura Montolio; Cecilio Tamarit
  14. FDI and Duration of Intermediate Goods Imports: Empirical Evidence from Japanese affiliates in China By Chih-Hai Yang; Tadashi Ito; Toshiyuki Matsuura
  15. Phytosanitary protocols and constraints relating to apple exports - comparison of three major exporting countries: France, Italy and Chile By Jean Marie Codron; Pasquale Lubello; Iciar Pavez Lizarraga
  16. Fostering participation in digital trade for ASEAN MSMEs By Javier López González
  17. New Concerns in International Business: The Application of Sanitary and Phytosanitary Policies By Maria Esther Kim
  20. Global Value Chains in economic development By Herr, Hansjörg; Dünhaupt, Petra
  21. What s in a Name? The Semantics of Migration and Its Policy Implications By Nguh Nwei Asanga Fon
  22. The KOF Globalisation Index – Revisited By Savina Gygli; Florian Haelg; Jan-Egbert Sturm
  23. FDI in Selected Developing Countries: Evidence from Bundling and Unbundling Governance By Simplice A. Asongu
  24. Economic history and contemporary challenges to globalization. By Kevin Hjortshøj O'Rourke
  25. Politicized Trade: What Drives Withdrawal of Trade Preferences? By Martin Gassebner; Arevik Gnutzmann-Mkrtchyan
  26. Trade and capital flows: Substitutes or complements? An empirical investigation By Ansgar Belke; Clemens Domnick
  27. The Brexit Conundrum Worsens the UK's Relationship with the European Union By John Ryan
  28. The Suspense of Trade Agreements By Filip Tarlea
  29. Foreign Direct Investment Spillovers Within and Between Sectors: Evidence from a Developing Economy By Oluwasheyi Oladipo
  30. Cabotage Sabotage? The Curious Case of the Jones Act By William W. Olney
  31. Evaluating international impacts of China-specific shocks in an input-output framework By Simola, Heli
  32. Trade and labour market institutions: A tale of two liberalizations By Alessandro Ruggieri
  33. Does remittance inflow granger-cause economic growth in South Africa? A dynamic multivariate causality test By Nyasha, Sheilla; Odhiambo, Nicholas M
  34. Price Discrimination within and across EMU Markets: Evidence from French Exporters By François Fontaine; Julien Martin; Isabelle Mejean
  35. The Global Value Chain under Imperfect Capital Markets By Jaerim Choi
  36. A Dissection of Trading Capital: Trade in the Aftermath of the Fall of the Iron Curtain By Beestermöller, Matthias; Rauch, Ferdinand
  37. What Do We Really Know about the Transatlantic Current Account? By Martin T. Braml; Gabriel J. Felbermayr
  38. Estimating the Trade Elasticity over Time By Hakan Yilmazkuday
  39. Do Global Crude Oil Markets Behave as One Great Pool? By NIYATI BHANJA
  40. Linkages between Globalisation, Carbon dioxide emissions and Governance in Sub-Saharan Africa By Simplice A. Asongu; Rexon T. Nting; Joseph Nnanna
  41. The Three Meaningful Votes: Voting on Brexit in the British House of Commons By Toke Aidt; Felix Grey; Alexandru Savu
  42. The supply of foreign talent: How skill-biased technology drives the skill mix of immigrants Evidence from Switzerland 1990–2010 By Andreas Beerli; Ronald Indergand; Johannes Kunz
  43. An Economic Topology of the Brexit vote By Pawel Dlotko; Simon Rudkin; Wanling Qiu
  44. How local conditions affect global banking: The case of BBVA and Santander By Cuevas Casaña, Joaquim; Martín Aceña, Pablo; Pons Brias, María A.
  45. Tax Avoidance through E-Commerce and Cross-Border Shopping By Benjamin Harbolt
  46. Exchange Rates, Retailers, and Importing: Theory and Firm-Level Evidence By Alex Chernoff; Patrick Alexander
  47. Seasonal Migration and Education of Children Left Behind: Evidence from Armenia By Davit Adunts; Geghetsik Afunts
  48. The Impact of Brexit on UK Firms By Nicholas Bloom; Philip Bunn; Scarlet Chen; Paul Mizen; Pawel Smietanka; Gregory Thwaites

  1. By: Javier López González (OECD); Laura Munro (OECD); Julien Gourdon (OECD); Emanuele Mazzini (OECD); Andrea Andrenelli (OECD)
    Abstract: Although global value chain (GVCs) participation in Southeast Asia has been growing, little is known about whether the benefits from participation are accruing to larger firms or if small and medium sized enterprises (SMEs), which make up the majority of companies and employ the bulk of the domestic workforce, are also able to take advantage of the new opportunities on offer. This paper uses detailed firm level data from Southeast Asian countries to split the OECD Trade in Value Added database and map how SMEs have been participating in GVCs. It then identifies the benefits associated with this participation and looks into the policy levers that can help make GVC participation in the region more inclusive. It suggest that policy makers focus on: i) reducing trade costs that hit SMEs hardest; including tariffs, trade agreements and trade facilitation; ii) creating an enabling environment to promote domestic linkages so that SMEs can create partnerships with larger firms and multinationals to export indirectly; and iii) reducing non-tariff measures that are especially onerous for SMEs through wider ASEAN regulatory harmonisation and adopting more flexible rules of origin.
    Keywords: Global Value Chains (GVCs), multinationals, Non-Tariff Measures (NTMs), Rules of Origin (RoO), Small and Medium-sized Enterprises (SMEs), trade in value added
    JEL: D22 F13 F14 L11 L25
    Date: 2019–09–11
  2. By: Javier López González (OECD); Silvia Sorescu (OECD)
    Abstract: Small and medium-sized enterprises (SMEs) play an important role in generating economic activity and employment in developing and developed countries. However, partly due to remaining at-the-border trade costs, SMEs continue to be less represented in international trade – as direct exporters or importers – than larger firms. Drawing on cross-country data from the World Bank Enterprise Survey (WBES), together with the OECD Trade by Enterprise Characteristics (TEC), this paper looks at the relationship between the trade facilitation environment – as measured through the OECD Trade Facilitation Indicators (TFIs) – and various measures of international engagement of SMEs. While there are differentiated impacts across firm size for different trade facilitation areas, the analysis shows that firms of all sizes across both developed and developing economies benefit from improvements in the overall trade facilitation environment, helping them export and import. However, on aggregate, smaller firms benefit more from improvements in the overall trade facilitation environment relative to large firms. The analysis also suggests that some trade facilitation measures matter more in addressing fixed versus variable costs for SMEs and provides some guidance as to what trade facilitation policy reforms might be prioritised.
    Keywords: exporting, importing, inclusive trade, SMEs, trade costs, trade facilitation
    JEL: D22 F13 F14 L11 L25
    Date: 2019–09–11
  3. By: abe harraf (University of Northern Colorado)
    Abstract: The Brexit vote and its final outcome on EU multinational companies that are operating in United Kingdom is predicted to have adverse economic and financial outlook for the country. Such consequences could be broken down into three profound impacts: financial, economic and legal, and labor mobility. Financial implications are expected to be harmful in the form of higher business and administrative costs, decrease in foreign direct investment (FDI) in the United Kingdom, and fallout for some selected industries. Economic and legal consequences of the vote are equally inevitable to take a toll on the country and its businesses that their business operation are closely tied to other EU countries. The Brexit would potentially cause an increase in the trading costs for EU multinational companies, looking to engages in international trade while operating in the UK. Moreover, the economic effects of the Brexit vote could potentially result in inflation and increase in the costs of imported goods for United Kingdom residents. Further negative economic implications such as volatility of the English Pound and of the economy in the short-term might result. In addition, leaving EU will likely result in reduced labor mobility and immigration, devastating Britain businesses due to an increased labor cost that are further challenged with the aging population that is prevalent in the most of the western Europe economies. Such difficulties will likely result in the major multinational corporations to opt to forego their operations in the United Kingdom and move their headquarters and business enterprises to another European country. Through the exploration of these potentially harmful impacts on the Great Britain economy, the paper attempts to support the hypothesis that Brexit initiative would have many unintended consequences that could devastate the Great Britain economy for some time.
    Keywords: Brexit, European Union, International Trade
    Date: 2019–06
  4. By: Kohnert, Dirk
    Abstract: ABSTRACT & RÉSUMÉ & ZUSAMMENFASSUNG : The EU-Mercosur deal of 2019 was heralded as a milestone of free trade agreements worldwide in times of growing protectionism and nationalism. Critics condemned deficient ecological and sanitary standards as well as persistent non-tariff barriers to trade. The EU farm lobby complained about a sell-out of European interests in advantage of dominating multinationals. However, the fatal repercussions of the deal on Africa have rarely been mentioned. They include increasing cut-throat competition and asymmetrical partnership to the detriment of the African poor. Given the additional destructive impact of the Brexit crisis, African governments should use their increased bargaining power vis à vis the EU27 and the UK, in times of stiffening competition concerning the EU’s Africa trade with new global players such as China and India, to enforce EPAs re-negotiations on a level playing field. RÉSUMÉ : L'accord de 2019 entre l'UE et le Mercosur a été qualifié de jalon dans les accords de libre-échange dans le monde entier à une époque de protectionnisme et de nationalisme grandissants. Les critiques ont condamné les normes écologiques et sanitaires déficientes, ainsi que les obstacles non-tarifaires persistants au commerce. Le lobby agricole de l'UE s'est plaint de la vente d'intérêts européens au profit de multinationales dominantes. Cependant, les répercussions fatales de l'accord sur l'Afrique ont rarement été mentionnées. Ils incluent une concurrence acharnée et un partenariat asymétrique au détriment des pauvres en Afrique. Compte tenu de l'impact destructeur supplémentaire de la crise du Brexit, les gouvernements africains devraient utiliser leur pouvoir de négociation accru vis-à-vis de l'UE27 et du Royaume-Uni, en période de durcissement de la concurrence concernant le commerce africaine de l'UE avec des nouveaux acteurs mondiaux tels que la Chine et l'Inde, pour imposer des renégociations des APEs sur un pied d’égalité. ------------------------------------------------------------------------------------------------------------------------------------------ ZUSAMMENFASSUNG : Das Abkommen zwischen der EU und dem Mercosur von 2019 wurde als Meilenstein für weltweite Freihandelsabkommen in Zeiten wachsenden Protektionismus und Nationalismus eingeläutet. Kritiker bemängelten unzureichende Umwelt- und Hygienestandards sowie anhaltende nichttarifäre Handelshemmnisse. Die EU-Agrarlobby beschwerte sich außerdem über einen Ausverkauf europäischer Interessen zugunsten dominierender multinationaler Unternehmen. Die fatalen Auswirkungen des Abkommens auf Afrika wurden jedoch selten erwähnt. Dazu gehören ein zunehmender Verdrängungswettbewerb und eine asymmetrische Partnerschaft zum Nachteil der afrikanischen Armen. Angesichts der zusätzlichen destruktiven Auswirkungen der Brexit-Krise sollten die afrikanischen Regierungen, in Zeiten zunehmenden Wettbewerbs im Afrikahandel der EU mit neuen globalen Akteuren wie China und Indien, ihre verstärkte Verhandlungsmacht gegenüber der EU27 und Großbritannien einsetzen, um Neuverhandlungen der Wirtschaftlichen Partnerschaftsabkommen auf Augenhöhe durchzusetzen.
    Keywords: UE, MERCOSUR, Afrique, post-colonialisme, développement, commerce international, APE, Brexit, sécurité, partenariat, entreprises multinationales
    JEL: E23 E26 F13 F15 F23 F35 F42 F54 N46 N47 O17 Z13
    Date: 2019–09–06
  5. By: Georges Badr (University of Grenoble Alpes)
    Abstract: The expansion of the global value chains (GVCs) is the result of the economic globalization that has transformed the production process and made the economies more interdependent and integrated. Different studies were conducted to define a theoretical framework that explains the GVCs and to measure statistically the extent of this phenomenon. Today, researchers are investigating other appealing aspects of this phenomenon, in particular the way that countries could participate in GVCs, the gains and the risks related to their participation. The opportunities offered by the GVCs are underlined by researchers and international institutions since GVCs are conceived to be the new development strategies of economies. Therefore, GVCs has attracted the attention of policy makers in developing countries since these chains can procure new opportunities in terms of industrial, social and economic upgrading. The objective of this paper is to identify empirically the factors that affect the participation of upper-middle-income economies in the GVCs in order to increase their gains from international trade. Our paper is one of the first to use the latest version of UNCTAD-EORA-GVC database and to investigate the determinants that affect this group of countries. Our results suggest that factors related to logistics, education and innovation increase the participation of developing countries in GVCs. In addition, policy factors such as taxes, control of corruption and other business environment related-factors are also key determinants of the integration into GVCs. Hence, this paper contributes to the literature by offering guidance to the policy makers of developing countries in order to integrate and to enhance their participation in GVCs by increasing their trade in value-added.
    Keywords: Global Value Chains, Policy factors, International trade, Developing economies
    JEL: F14 F15 E60
    Date: 2019–07
  6. By: Wanda Dugiel (Warsaw School of Economics); Magdalena Miko?ajek-Gocejna (Warsaw School of Economics)
    Abstract: The aim of the paper is to analyze the causes and effects of the growing protectionist tendencies in the US trade policy during the Donald Trump Presidency and the course of retaliatory actions of states, in particular China, in response to the increase of tariffs by the United States, for the development of international trade.The study uses statistical data on the dynamics of international trade, trade exchange between trading partners, the level of tariffs, real GDP, the importance of industries covered by the trade war, in the economies of the United States, China and the European Union.The analysis covers the motives of the United States in trade policy in 2018-2019, both in economic and behavioral terms, in particular the problem of market imperfections, the crisis of homoeconomicus in the face of growing dissatisfaction of societies in developed countries from pressure to further liberalization of the international trade, with financial constraints in politics social. At the heart of President Trump's protectionist actions were many of the same reasons that led to the waning US interest in further multilateral liberalization in the WTO. The study uses statistical data, formulates a case study regarding the efficiency of the commercial dispute resolution system in the World Trade Organization (WTO). The study also uses a historical method. The comparative analysis concerns the contemporary trade conflict between the United States and China and the course and effects of the introduction of the Smoot-Hawley Act for trade in the United States in 1930. The economic and social effects of the US trade wars with China and other trading partners, including the European Union, will become visible in the short run by 2020. Most of these effects will affect production levels, domestic prices, trade, GDP, social policy in The United States, which in future will be reviewing, trade policy tools in bilateral trade relation, with less involvement in WTO initiatives.Controlled retaliation of US trading partners, China's conciliatory trade policy of unilateral concessions to China's access to the US market limits the likelihood of a global trade war, whose negative effects would affect most countries around the world.
    Keywords: trade wars, Section 232, protectionism, United States, homoeconomicus
    JEL: F02 F13
    Date: 2019–06
  7. By: Flach, Lisandra; Irlacher, Michael; Unger, Florian
    Abstract: This paper analyzes how exporters are affected by corporate tax reforms in destination markets. We introduce tax policy in a trade model of multi-product firms and show that producers face tougher competition in export markets with lower corporate tax rates. This competitive effect induces firms to reduce the number of exported products and to skew their export sales towards the better performing varieties. We estimate the effects of corporate taxes on trade dynamics by exploiting policy reforms in 45 destination countries of exports during the period 2005-2012. Our results provide strong support for competitive effects of corporate taxation.
    Keywords: multi-product firms,corporate taxation,exporter dynamics,international trade
    JEL: H25 F12 L11
    Date: 2019
    Abstract: Both the flow and stock of FDI grew very rapidly in the first part of the twentieth century but this was no match to the growth in FDI after the 2nd World War. It is without doubt that the main mechanism of interconnectedness in the global economy has shifted from trade to FDI which has spread rapidly throughout the world dominating a wide range of industries. One of the most controversial issues is whether Foreign Direct Investment is beneficial to countries. Supporters of FDI (Rodrik, 2000) emphasize that growth is enhanced in the host country as FDI enables technology diffusion, enhances employment of human capital and allows host countries to gain access to wider global markets. On the other hand there is a substantial body of literature which emphasizes that FDI creates hardly any benefits to the host nation. It is often argued that the presence of plentiful and cheap labour is the main reason for attracting FDI. This study attempts to investigate whether FDI contributes to growth in a selected group of countries from Asia, Africa and South America using a panel data analysis. A panel data analysis is conducted for 12 countries in order to examine the effects of FDI, employment, and investment formation (lagged) on economic growth. The data for all variables are from the period from 1977 to 2016.
    Keywords: Foreign Direct Investment, growth, technology, panel
    JEL: F21 F23 F29
    Date: 2019–07
  9. By: Fabian J. Baier (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW))
    Abstract: In this paper, bilateral OECD FDI flow data from 1985 to 2017 is evaluated and compiled to create a new dataset in order to clarify the controversial role (in the literature) of corporate tax levels on the decisions of firms regarding whether or not, and where, to undertake investments. In the course of our research we find the need to control for interaction with international financial institutions: Membership in BIS, EBRD, ADB and MIGA. Quantitative analyses via gravity models firstly provide findings which are consistent with previous studies and, secondly, expand the knowledge about FDI and tax by providing new results relevant for policymakers in the context of globalization and international institutions. It is shown that falling corporate tax rate levels lead to increasing FDI inflows, the effect is, however, smaller than expected; if deviation from international cooperation is chosen as a national strategy (i.e. unilateralism), the tax rate, however, gains in importance. On the other hand, unilateralism triggers various effects decreasing FDI inflows, as trade openness is likely to decrease, the opportunity costs for other nations to deviate decrease, and therefore bilateral tax differences are likely to decrease as well; which will further reduce the effect of low tax levels. Evidence for the phenomenon of implementing low corporate tax levels in order to keep domestic firms within the country and reduce their incentives to invest abroad is not found.
    Keywords: Foreign Direct Investment, Corporate Taxation, International Financial Institutions, Gravity Equation, OECD Countries
    JEL: C32 E65 F21 F23 G20
    Date: 2019–08
  10. By: Teodora Borota; Fabrice Defever; Giammario Impullitti
    Abstract: In this paper, we document large heterogeneity in innovation policy and performance between old and new EU member states, and present firm-level evidence on the close link between foreign direct investment (FDI) spillovers and eastern European firms' innovation. Guided by these facts and motivated by the pressing debate on further EU integration, we build a two-region endogenous growth model to analyse the gains from innovation policy cooperation in an economic union. The two regions, the West (the old members) and the East (the new post-2004 members), feature firms competing in innovation for market leadership, are integrated via free trade and costly technology transfer via FDI and have different innovation performance and policy. Calibrating the model to reproduce key features of the EU economy, we compare the outcomes of an East-West R&D subsidy war with a coop- eration scenario with unified subsidy across regions, and obtain three main results. First,we find that the dynamic gains spurring from the impact of cooperation on the economy's growth rate are sizable and substantially larger than the static gains obtained internalising the strategic motive for subsidies. Second, our model suggests that the presence of FDI and multinational production alleviates the strategic motive and increases the gains from cooperation. Third, separating FDI and innovation policy generates larger gains from cooperation, a policy complementarity driven by the knowledge spillovers carried by FDI.
    Keywords: Optimal innovation policy, growth theory, international policy coordination, EU integration, FDI spillovers.
    Date: 2019
  11. By: Pamela Bombarda; Elisa Gamberoni (Université de Cergy-Pontoise, THEMA)
    Abstract: Products must fulfill predetermined rules of origin (RoOs) to be exported under the preferential access granted by a Free Trade Area (FTA) member. In turn, rules of cumulation (RoCs) establish which countries' inputs qualify when computing the extent of origin of a product. Recent literature shows that restrictive rules of origin affect sourcing decision by reducing imports of intermediate goods from third countries relative to FTA partners. This paper explores the effects of rules of cumulation on trade in intermediate goods using the introduction of the Pan-European Cumulation System (PECS) in 1997. PECS provided the EU FTA's peripheral partners (\Spokes") with the possibility of cumulating stages of production from a larger number of countries to qualify for preferential access to the EU market. Therefore, PECS might have altered EU- centric value chains organization of production resulted from RoOs and bilateral ROC. We estimate a triple difference in difference specification and exploit different control groups. Our results show that the effects of RoCs on trade in intermediates are larger, the stricter the RoO applied to the related final good. Specifically, when switching from bilateral to diagonal cumulation we find a reduction in Spokes' imports of intermediates from the rest of the world relative to those from Spokes themselves, reinforcing value chain connections within the cumulation zone. We also find a reduction in Spokes' imports from the EU15 relative to the rest of the world and the Spokes themselves. Our findings suggest that indeed PECS allowed a reassessment of sourcing decisions: thanks to the possibility to cumulate, peripheral countries re-organized global value chain links.
    Keywords: Intermediate Trade, rules of origin, rules of cumulation, PECS, input-output tables
    JEL: F12 F13 F14 F15
    Date: 2019
  12. By: Julia Schmidt; Walter Steingress
    Abstract: Product standards are omnipresent in industrialized societies. Though standardization can be beneficial for domestic producers, divergent product standards have been categorized as a major obstacle to international trade. This paper quantifies the effect of standard harmonization on trade flows and characterizes the extent to which it changes the cost and demand structure of exporting. Creating a novel and comprehensive database on crosscountry standard equivalences, we identify standard harmonization events at the document level. Our results show that the introduction of harmonized standards increases trade through a larger sales volume of existing exporters (intensive margin) and more entry (extensive margin). These findings are consistent with a multi-country heterogeneous firm model featuring endogenous standard adoption. Because of additional demand, standard harmonization raises firms’ incentives to produce varieties in accordance with the standard despite high sunk investment costs. Firms’ export sales expand and entry into foreign markets is encouraged.
    Keywords: : Non-tariff barriers, international trade, standardization, harmonization.
    JEL: F13 F14 F15 L15
    Date: 2019
  13. By: Mariam Camarero (Jaume I University. Department of Economics, Av. de Vicent Sos Baynat s/n, E-12071 Castellón, Spain); Laura Montolio (University of Valencia, Department of Applied Economics II, Av. dels Tarongers, s/n Eastern Department Building E-46022 Valencia, Spain); Cecilio Tamarit (University of Valencia, INTECO Joint Research Unit. Department of Applied Economics II. PO Box 22.006 - E-46071 Valencia, Spain)
    Abstract: This paper provides new evidence on the drivers of German outward foreign direct investment (FDI) stocks for the period 1996-2012. In contrast to previous empirical studies, we adopt a Bayesian model averaging (BMA) approach for a robust selection of those variables. We find evidence that determinants that are associated with horizontal FDI appear to be dominant for explaining bilateral FDI with developed countries while for the group of developing countries covariates associated with vertical FDI motives play a larger role. Within Europe, while the majority of FDI is horizontally driven in “core" countries, for peripheral ones the vertical motivation for FDI seems to prevail. Moreover, our results are compatible with more complex FDI models where vertical determinants and institutional variables are gaining prominence, in parallel with the development of global value chains (GVC). Our results can provide hints for policymakers’ strategies to attract German investment.
    Keywords: FDI determinants; Outward Foreign Direct Investment; Germany; Bayesian Model Averaging; Variable selection
    JEL: F21 F23 C11 C52
    Date: 2019–09
  14. By: Chih-Hai Yang (National Central University); Tadashi Ito (Gakushuin University); Toshiyuki Matsuura (Keio University)
    Abstract: This paper examines the duration of intermediate goods imports and its determinants for Japanese affiliates in China. In addition to product characteristics, we consider also the influences of affiliate and parent firm characteristics, as well as regional agglomeration. Based on a unique parent?affiliate?transaction matched panel dataset over the 2000?2006 period, we adopt a discrete-time hazard model to conduct empirical estimations. Results show that products with a higher upstreamness index, differentiated goods, and process-trade goods are less likely to be substituted for local procurement. Firms located in agglomerated regions with more foreign affiliates tend to shorten the duration of imports from their home country. In terms of parent-firm characteristics, multinational enterprises that have many foreign affiliates or greater foreign production experience continue to import intermediate goods for a longer duration.
    Keywords: Trade duration, FDI, Intermediate goods, Agglomeration
    Date: 2019–07
  15. By: Jean Marie Codron (UMR MOISA - Marchés, Organisations, Institutions et Stratégies d'Acteurs - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - INRA Montpellier - Institut national de la recherche agronomique [Montpellier] - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Pasquale Lubello (UMR MOISA - Marchés, Organisations, Institutions et Stratégies d'Acteurs - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - INRA Montpellier - Institut national de la recherche agronomique [Montpellier] - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier, Montpellier SupAgro - Institut National d'Etudes Supérieures Agronomiques de Montpellier); Iciar Pavez Lizarraga (UMR MOISA - Marchés, Organisations, Institutions et Stratégies d'Acteurs - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - INRA Montpellier - Institut national de la recherche agronomique [Montpellier] - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier)
    Abstract: The Sustain'Apple project deals with phytosanitary regulations in international trade and the institutional devices to comply with those regulations. Phytosanitary regulations are issued by new destination countries (mostly in Asia and North and South America) to avoid importing and disseminating quarantine organisms (in particular pests) and limit the economic effects of regulated non-quarantine organisms. Our report focuses on public and private devices which formulate, negotiate and implement the phytosanitary protocols that exporting countries must comply with, to get access to targeted markets. By comparing France with Italy and Chile, we have been able to identify strengths and weaknesses of the French system. The interest for such a comparison arouses from the two following questions : first how can we explain the contrasted market positioning between France and Italy on one hand and Chile on the other hand, Chile having by far the largest market share in destinations with phytosanitary constraints; second, how can we explain low institutional efficacy in preparing and negotiating phytosanitary protocols as revealed by professional leaders who regret lack of information from and weak cooperation with plant protection services. The institutional devices comparison has been conducted after having positioned the markets of the three countries and identified, for each of them, issues of quarantine pests and phytosanitary constraints imposed by main customer countries.
    Keywords: crab apples,sps agreement,international trade,pomme,fruit,accord sps,exportation,commerce international,norme phytosanitaire,france,italie,chili
    Date: 2019
  16. By: Javier López González (OECD)
    Abstract: This paper provides a broad overview of some of the issues that digital trade raises for ASEAN countries and its MSMEs, including new opportunities that digitalisation presents for ASEAN firms to increase trade. However, it shows that adoption of relatively simple digital tools, such as webpages, remains relatively low, constraining the ability of ASEAN SMEs to engage in trade as exporters and importers. The paper argues that, to benefit from digital trade, policy makers need to consider issues related to accessing digital networks jointly with a range of old and new trade issues.
    Keywords: ASEAN, digital trade, SMEs, trade costs
    JEL: D22 F13 F14 L11
    Date: 2019–09–11
  17. By: Maria Esther Kim (University of Buenos Aires, Buenos Aires, Argentina)
    Abstract: In recent years, the debate over the application of non-tariff measures for environmental protection as a new form of disguised restriction on international trade by developed countries has become increasingly important. While tariffs have decreased over the decades, the increasing application of environmental-related requirements are a new factor that affects international business. These new requirements not only modify companies’ decision-making processes at national and international levels, but also within the firm. Hence, this paper proposes to examine the application of such measures by the European Union in the tea, coffee and yerba mate market, and their impact on exporting Latin-American firms for the 1995-2015 period and analyze whether there has been an improvement in their productive quality. For this aim, through a qualitative methodology, we carried out interviews with specialists of the field and surveys to Latin-American exporting companies. In this way, this analysis discusses with theorists if the application of measures related to environmental sustainability leads to ameliorate firms’ productive quality. Among the results, it is highlighted the fact that non-tariff measures—in particular sanitary and phytosanitary ones—have been used as trade barriers. However, complying with them allows exporting companies to develop environmental performance strategies and ultimately, it leads to a positive growth in their productive quality in the medium-long term.
    Keywords: non-tariff measures, trade barriers, sanitary and phytosanitary policies, productive quality
    Date: 2019–07
  18. By: VILAS GAIKAR (Smt. CHM. College, University of Mumbai, India)
    Abstract: India since ages has been known to be an agrarian country. Indian agriculture and allied activities consist of 54.6% of the population (census 2011) and contributes 17.4% to the country?s Gross Value Added for the year 2016-17 (Current prices). India?s agricultural export amounts to $33.87 billion as of 2017, and it is 10.5% of total exports of the country.The paper is classified in the various parts like introduction, objectives, review of literature, research methodology, growth rates in agricultural commodity trade, India?s agriculture trade, foreign trade policy by the government on agriculture, conclusion and suggestions.The growth in trade for agricultural commodity of India was analyzed by employing an exponential model of the form Yt = abteu. In the present research paper agricultural trade, the data has been collected from the secondary sources from the economic survey, annual reports from the agricultural ministry and so on at the same time has been analyzed and evaluated by using Carl Pearson?s co relation co efficient test. After the systematic analysis of the data there has been suggestions made by the researcher to improve agricultural trade to strengthen Indian economy
    Keywords: Agricultural trade, Indian Economy, Export and import, exponential model, trade policy
    JEL: Q10 Q17 C00
    Date: 2019–06
  19. By: ANA CECILIA PARADA ROJAS (Instituto Politécnico Nacional); Humberto Ríos Bolívar (Instituto Politécnico Nacional); JORGE OMAR RAZO DE ANDA (Instituto Politécnico Nacional)
    Abstract: During periods of remarkable trade openness, increase income inequality in many countries. This paper analyzes how factors that influence inequality due to commercial globalization interact each other. For which a reliable Classifier Tree -selected through a modeling process of bootstrapping- is built, it has 14 knowledge rules and classifies 84% of the observations correctly. This model indicates that inequality?s changes into a country, due greater economic integration, depend principally on the labor market? structure ?in agricultural countries and urbanization processes (industrialization) it reduces depending in turn on the rule of law; on the other hand, in countries with a strong service sector and good trade terms it increases in periods of stagnation or with low levels of high technology exports.
    Keywords: Income Inequality, Globalization, International Trade, Data Mining, Classification and Regression Tree (CART)
    JEL: C44 D33 F10
    Date: 2019–06
  20. By: Herr, Hansjörg; Dünhaupt, Petra
    Abstract: Global Value Chains (GVCs) started to play an increasing and key role in the global economy from the 1990s on. The market mechanism in GVCs supports industrialisation in the Global South and under certain conditions product and process upgrading. But GVCs do not lead to the catching-up of countries in the sense of them approaching real GDP per capita levels comparable with developed countries. These arguments are supported by a critical interpretation of the traditional trade theory, the New Trade Theory and specific approaches to explain GVCs, especially different governance structures and power relationships. Several case studies support these arguments. For catching-up, countries need comprehensive horizontal and vertical industrial policy and policies for social coherence. The small number of countries which managed to catch up did this in different variations.
    Keywords: Global Value Chains,Under-development,Rent-seeking,Industrial Policy
    JEL: F16 F23 O19 O25
    Date: 2019
  21. By: Nguh Nwei Asanga Fon (Eastern Mediterranean University, Famagusta, North Cyprus,)
    Abstract: Across the globe, migration has emerged as one of the most daunting challenges bedeviling globalization. The second decade of the 21st Century has been marked by issues on how to manage influx of migrants on both sides of the Atlantic (the European Migrant Crisis of 2015 and debates on ‘Migrant Caravan’ and border security in the US). A major borne of contention on migration is a war of words over its framing. The semantics of migration are meticulously exploited by rival politicians and political parties, policy actors, and other stakeholders to frame the issue, orient policy and mobilize support or acquiescence to their cause (usually securitization versus accommodation). This paper probes into the discourse on migration with a focus on its framing by pro and anti-migration actors and stakeholders and how this has affected policy decisions and actions concerning the issue. Empirical cases of how migration was framed in Europe and the US were examined with a greater tendency towards securitization. Recommendations were also advanced on how to resolved the migration stalemate with the de-politicization of the term as a starting point.
    Keywords: Migration, Immigration, Migrant crisis, Refugee, Open door policy
    Date: 2019–07
  22. By: Savina Gygli; Florian Haelg (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Jan-Egbert Sturm (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: In this paper we present and describe the revised version of the KOF Globalisation Index, a composite index measuring globalisation for every country in the world along the economic, social and political dimension. The original index was introduced by Dreher (2006) and updated in Dreher et al. (2008). This second revision of the index introduces the differentiation between de facto and de jure measures along the different dimensions of globalisation, the differentiation between trade and financial globalisation within the economic dimension of globalisation and time-varying weighting of the variables entering the index. Finally, the revised version incorporates several additional variables in the construction process. At the aggregate level, we show that a bidirectional relationship between de facto and de jure globalisation exists.
    Keywords: Keywords: Globalisation, composite indicators, Granger causality, economic growth
    JEL: F15 F36 F43 F53 O19 O24 O57 Y10
    Date: 2018–02
  23. By: Simplice A. Asongu (Yaoundé/Cameroon)
    Abstract: The objective of this study is to assess governance drivers of FDI in a panel of BRICS and MINT countries for the period 2001-2011. We bundle and unbundle governance determinants using a battery of contemporary and non-contemporary estimation techniques. Our findings reveal the following: Firstly, for both contemporary and non-contemporary specifications, while the majority of our governance determinants of Gross FDI are significant, they are overwhelmingly insignificant for Net FDI. Secondly, the significance of the governance dynamics in increasing order of magnitude are general governance, political governance, economic governance, political stability, regulation quality and government effectiveness. Thirdly, for non-contemporary specifications, the significance of governance variables is as follows in ascending order of magnitude: economic governance, institutional governance, general governance, corruption-control, political governance and political stability. The importance of combining governance indicators is captured by the effects of political governance, economic governance and institutional governance. The results indicate that the simultaneous implementation of the various components of governance clarifies a country’s attractiveness for FDI location. Policy implications are discussed with particular emphasis on the timing of FDI and its targeting.
    Keywords: Foreign direct investment, emerging countries, governance
    JEL: C52 F21 F23 P37 P39
    Date: 2019–01
  24. By: Kevin Hjortshøj O'Rourke
    Abstract: Abstract The paper surveys three economic history literatures that can speak to contemporary challenges to globalization: the literature on the anti-globalization backlash of the nineteenth century, focused largely on trade and migration; the literature on the Great Depression, focused largely on capital flows, the gold standard, and protectionism; and the literature on trade and warfare.
    Keywords: globalization, deglobalization.
    JEL: N70 F02
    Date: 2018–12–03
  25. By: Martin Gassebner (University of Hannover, CESifo, KOF Swiss Economic Institute); Arevik Gnutzmann-Mkrtchyan (University of Hannover, Belarusian Economic Research and Outreach Center (BEROC), CESifo)
    Abstract: While it is well understood that industrialized countries use aid to grantpolitical favors, little research covers alternative channels such as trade policytowards developing countries. We analyze eligibility investigations and revokingof U.S. Generalized System of Preferences (GSP) benefits to see whetherpolitical friends of the U.S. receive favorable treatment. While countries politicallyaligned with the U.S. are equally likely to be investigated, they aresignificantly less likely to have their benefits suspended.
    Keywords: Keywords: Development, Trade Policy, United Nations General Assembly
    JEL: F13 F53 O19 O24
    Date: 2017–11
  26. By: Ansgar Belke; Clemens Domnick
    Abstract: This paper examines the linkages between the trade of goods and financial assets. Do both flows behave as complements (implying a positive correlation) or as substitutes (negative correlation)? Although a classic topic in international macroeconomics, the empirical evidence has remained relatively scarce so far, in particular for the Euro area where trade and financial imbalance played a prominent role in the build-up of the European sovereign debt crisis. Consequentially, we use a novel dataset, providing estimates for financial flows and its four main categories for 42 countries and covering the period from 2002-2012, to test the so-called trade-finance nexus. Since theoretical models stress that both flows might be influencing each other simultaneously, we introduce a novel time-varying instrumental variable based on capital control restrictions to estimate a causal effect. The results of the gravity regressions support theories that underline the complementarity between exports and capital flows. When testing the trade-finance nexus for different types of capital flows, the estimated coefficient is most pronounced for foreign direct investment, in line with theories stressing informational frictions. Robustness checks in the form of different estimation methods, alternative proxies for capital flows and sample splits confirm the positive relationship. Interestingly, the trade-finance nexus does not differ among countries belonging to the EMU, the European Union or among core and peripheral Euro area countries.
    Keywords: Capital flows, economic integration, Heckscher-Ohlin paradigm, interaction between trade integration and capital mobility, trade
    JEL: F14 F15 F21 F41
    Date: 2019–04
  27. By: John Ryan
    Abstract: This paper examines the shortcomings in the UK government’s Brexit negotiation strategy which reflected Prime Minister Theresa May’s weak political leadership. The Prime Minister focused on securing the short-term political survival of her government amidst turbulent and fractious domestic politics, over negotiations with the EU27. Brexit negotiations were poorly planned and the government was woefully unprepared. Brexit also threatens a serious re-opening of old wounds in Northern Ireland, as debate grows around the prospect of a united Ireland inside the EU. UK politics is in turmoil and in a chronic crisis. What route the Brexit saga takes next is uncertain. But the crossroads is approaching – either the UK leaves on 31 October 2019 with no deal or it finds a route towards an accommodation with the EU. The phenomenon of British exceptionalism towards the EU is set to take a new dramatic turn, while the UK’s chaotic political divisions will not disappear any time soon.
    Keywords: Brexit, withdrawal agreement, European Union, United Kingdom Republic of Ireland
    JEL: F15 F50 F51
    Date: 2019
  28. By: Filip Tarlea (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: Preferential trade agreements (PTAs) are signed between two or more countries following the conclusion of the negotiation process. The duration of this process varies considerably across existing trade agreements and ranges between 316 and 5125 days. This paper presents the consequences of the length of the negotiation process on trade growth. The contribution of this paper to the literature is threefold. Firstly, it includes as a determinant of trade a new variable that captures negotiations duration for the largest number of PTAs possible, covering all such events from January 1988 until October 2014. This unveils yet another previously ignored feature of PTAs (as trade driver) that leaves results based on a dichotomous PTA status in question. Secondly, this paper evaluates for the first time the anticipation effects of a PTA, concentrating solely on the negotiation period. Lastly, methodologically, this paper introduces for the first time in the international economics literature a dose response-function approach permitting continuous treatment and many non-treated units. The paper concludes that —ceteris paribus —lengthy PTA negotiations undermine trade growth.
    Keywords: Trade agreements; Negotiations; Enforcement; Uncertainty
    JEL: F10 F12 F17
    Date: 2018–03
  29. By: Oluwasheyi Oladipo (State University of New York at Old Westbury)
    Abstract: With volatile global capital flows, the stability of FDI and its emergence as an important source of foreign capital for developing economies has renewed interest in its linkages with sustainable economic growth in developing countries. FDI is crucial as it influences production, employment, income, prices, imports, economic growth, balance of payments and the general welfare of the recipient country. Nigeria has attracted huge inflows of FDI over the last decade?from $1.14 billion in 2001 to $4.4 billion in 2016. Though FDI has been concentrated in the oil and gas sectors, the government is now seeking to channel it into the communication, manufacturing and financial services sectors.The broad objective of this study is to examine the spillover effect from oil FDI on the Nigerian economy: (i) is there positive micro linkage from the oil FDI on the domestic economy in Nigeria? (ii) are there positive spillover effects from oil FDI to domestic labor markets in Nigeria?We will trace which sectors/subsectors are recipients of these linkages. How have foreign oil multinationals helped the domestic firms in terms of technology transfer, and employment linkages? What are the linkages between the foreign oil companies and the domestic Petroleum Training Institute in terms of technology transfer on one hand and employment of the Institute?s graduates on other hand? Are the policies embarked upon to attract FDI and ensure its spillover to other sectors of the Nigerian economy sufficient to stimulate economic growth?
    Keywords: FDI, sectoral spillovers, economic development
    JEL: F21 O11 F35
    Date: 2019–06
  30. By: William W. Olney (University of Hawai‘i)
    Abstract: This paper examines the economic implications of the Jones Act, which is a 1920 U.S. cabotage law that restricts domestic waterborne shipments to American vessels. The rapid rise of the Asian shipbuilding industry over the last century has contributed to the closure of most American shipyards and to the decline in American built ships. Thus, the Jones Act requirements have become more onerous over time. The results show that the decline in Jones-Act-eligible vessels, instrumented for using shipbuilding in another high-income country, has reduced domestic waterborne shipments into U.S. states relative to other modes of transport and relative to waterborne imports. These findings are stronger in coastal states and for commodities that are typically transported via water. Furthermore, there is evidence that this reduction in domestic trade, due to the Jones Act, has increased consumer prices. These findings support common, but to date unverified, claims that the Jones Act impedes domestic trade and drives up prices.
    Keywords: Cabotage, Jones Act, Shipping, Domestic Trade, Prices, Trade Policy
    JEL: F14 R48
    Date: 2019–09
  31. By: Simola, Heli
    Abstract: The slowing in China’s massive economy has wide implications. China plays an essential role in international production chains, so disturbances can spill over to other economies in the global production network. We evaluate the international transmission and impact of various China-specific shocks with an input-output framework applied to the World Input-Output Database (WIOD). We consider shocks to Chinese final demand at the aggregate level, bilateral import tariffs between the US and China and sector-specific shocks to Chinese final demand and supply. Our results suggest that aggregate level shocks, as well as certain sector-specific shocks originating in China, may have large impacts elsewhere. Transmission of shocks through the global production network, however, is mitigated by the relatively low import-intensity of Chinese production.
    JEL: C67 F14 F43
    Date: 2019–09–06
  32. By: Alessandro Ruggieri
    Abstract: In this paper I study how labour market institutions at the time of a trade reform determine the dynamic response of unemployment. I first document that for a large group of developing countries (1) unemployment increases on average following a trade reform, (2) there are significant cross-country differences in unemployment response, and (3) cross-country variation in the labour market institutions in place at the time of the reform can account for the observed unemployment changes. I interpret this evidence through the lens of a model of international trade, featuring heterogeneous firms, endogenous industry dynamics and search and matching frictions and a dual labour market. I estimate the model to match the pre-liberalization firm dynamic in Colombia and Mexico, two countries that differed by the labour regulations in place at the time of trade liberalization, and I characterize numerically the full transition path towards the new steady state. I show that the dynamic response of unemployment to a reduction in trade costs is non-linear across different combinations of labour market institutions in place at the time of the reform. Consistent with the cross-country evidence, the response is stronger and more persistent when the firing costs are lower and the statutory minimum wage and unemployment benefits are larger. Those three institutions account for up to 46 percent of the average unemployment response in the case of Mexico, and up to 41 percent in the case of Columbia.
    Keywords: Trade reform, labor market institutions, unemployment, transitional dynamics, gains from trade.
    Date: 2019
  33. By: Nyasha, Sheilla; Odhiambo, Nicholas M
    Abstract: In this study we examine the dynamic causal relationship between remittances and economic growth in South Africa during the period from 1970 to 2017. Although South Africa is well known for being a source of cross-border remittances to various countries, especially in the African continent, remittance inflows to South Africa have grown in the recent past. The growth in remittances on the one hand, and the need to fight against poverty and inequality in South Africa and ultimately improve economic growth, on the other hand, prompted the need for this study. The study uses the autoregressive distributed lag (ARDL) approach within a multivariate Granger-causality setting to examine the remittance-growth causal link ? in an effort to address the variable omission bias. The empirical findings of the study show that remittances and economic growth are not causally related in South Africa, irrespective of whether the estimations are done in the long run or in the short run. This finding, though contrary to the expectation, is not surprising, given the level of financial sector development South African.
    Keywords: Remittances; Economic Growth; South Africa; Granger-Causality
    Date: 2019–08
  34. By: François Fontaine; Julien Martin; Isabelle Mejean
    Abstract: We study the cross-sectional dispersion of prices paid by EMU importers for French products. We document a significant level of price dispersion both within product categories across exporters, and within exporters across buyers. This latter source of price discrepancies, sellers' price discrimination across buyers, is indicative of deviations from the law-of-one price. Price discrimination (i) is substantial within the EU, within the euro area, and within EMU countries; (ii) has not decreased over the last two decades; (iii) is more prevalent among the largest firms and for more differentiated products; (iv) is lower among retailers and wholesalers; (v) is also observed within almost perfectly homogenous product categories, which suggests that a non-negligible share of price discrimination is triggered by heterogeneous markups rather than quality or composition effects. We then estimate a rich statistical decomposition of the variance of prices to shed light on exporters' pricing strategies.
    JEL: F1 F14 F4
    Date: 2019–09
  35. By: Jaerim Choi (University of Hawaii at Manoa)
    Abstract: An abstract: This paper develops a model to study how suppliers’ financial constraints interact with suppliers’ position in a global value chain. I embed financial frictions into the property-rights model of the global value chain, as in Antr’and Chor (2013), to derive the optimal allocation of ownership rights along the global value chain. The model predicts that multinational firms are more likely to integrate downstream intermediate input suppliers in countries with weak financial institutions when the production process is sequential complements. Using U.S. intrafirm trade data for the years 2000–2010, together with a triple-interaction term between “downstreamness†of an industry, demand elasticity of an industry, and financial development of a country, I provide empirical evidence that supports the key prediction of the model.
    Keywords: Global value chain, Imperfect capital markets
    JEL: D23 F12 F23 L23 O16
    Date: 2019–08
  36. By: Beestermöller, Matthias; Rauch, Ferdinand
    Abstract: We study trade in Europe after the fall of the Iron Curtain, and show that the countries of the former Austro-Hungarian monarchy trade significantly more with one another after 1989 than predicted by a standard gravity model. Cultural trading capital, established under Habsburg rule and maintained in the period of the Iron Curtain, seems to have survived over four decades of separation and gives an initial boost to trade. This surplus trade disappeared rapidly after 1990 as countries rearranged themselves with the new geopolitical circumstances. We document the rate of decay of these forces.
    Date: 2018
  37. By: Martin T. Braml; Gabriel J. Felbermayr
    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 a cumulated 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
  38. By: Hakan Yilmazkuday (Department of Economics, Florida International University)
    Abstract: Using quarterly data on the U.S. imports from its major trading partners and the corresponding trade costs, this paper estimates the trade elasticity by using a panel structural vector autoregressive model that can distinguish between short-run versus long-run elasticity measures in a continuous way and is robust to any endogeneity problem. The estimated trade elasticity measures are highly consistent with studies in alternative literatures, suggesting a short-run value of about 1 (after one quarter), a medium-run value of about 5 (after one year), and a long-run value of about 7 (after five years).
    Keywords: Trade Elasticity, Short-run, Medium-run, Long-run
    JEL: F13 F14
    Date: 2019–09
  39. By: NIYATI BHANJA (MICA-The School of Ideas)
    Abstract: In energy economics literature, the controversial assertion of whether crude oil markets are regionalized (Weiner; 1991) or behave as one unified entity (Adelman; 1984) is still an unsettled debate. While the proponents of globalization hypothesis trust that the crude oil markets behave as one big pool, the advocates of regionalization believe that they are segmented. The recent years? experience with the growing price spread between West Texas Intermediate (WTI) and Brent Crude, the two most influential light crude oil benchmarks of North America and Europe respectively, the debate has specifically become a point of discussion and deliberation within international energy forums.. Globalization in crude oil markets refers to the presence of strong co-movements. On the contrary, if the markets are fragmented and display least association, they are considered to be regionalised. An insight into the nature of the global oil market is critical in understanding the dynamics of international crude oil prices as well as its economic and financial implications.
    Keywords: Crude Oil, Globalization, Regionalization, Wavelet
    JEL: F42
    Date: 2019–06
  40. By: Simplice A. Asongu (Yaoundé/Cameroon); Rexon T. Nting (London, UK); Joseph Nnanna (The Development Bank of Nigeria, Abuja, Nigeria)
    Abstract: This study investigates linkages between environmental degradation, globalisation and governance in 44 countries in Sub-Saharan Africa using data for the period 2000-2012. The Generalised Method of Moments is employed as empirical strategy. Environmental degradation is proxied by carbon dioxide emissions whereas globalisation is appreciated in terms of trade openness and net foreign direct investment inflows. Bundled and unbundled governance indicators are used, namely: political governance (consisting of political stability/no violence and “voice & accountability”), economic governance (encompassing government effectiveness and regulation quality), institutional governance (entailing corruption-control and the rule of law) and general governance (a composite measurement of political governance, economic governance and institutional governance). The following main finding is established. Trade openness modulates carbon dioxide emissions to have positive net effects on political stability, economic governance, the rule of law and general governance.
    Keywords: Carbon dioxide emissions; Economic development; Africa
    JEL: C52 O38 O40 O55 P37
    Date: 2019–01
  41. By: Toke Aidt; Felix Grey; Alexandru Savu
    Abstract: Why do politicians rebel and vote against the party line when high stakes bills come to the floor of the legislature? We leverage the three so-called Meaningful Votes that took place in the British House of Commons between January and March 2019 on the Withdrawal Agreement that the Conservative government had reached with the European Union to address this question. The Withdrawal Agreement was decisively defeated three times and a major revolt amongst Conservative backbench Members of Parliament (MPs) was instrumental in this. We find that three factors influenced their rebellion calculus: the MP’s own preference, constituency preferences and career concerns. Somewhat paradoxically, the rebellion within the Conservative Party came from MPs who had supported Leave in the 2016 Brexit referendum and from MPs elected in Leave leaning constituencies.
    Keywords: Brexit, roll call votes, rebellions, party discipline, party coherence, House of Commons
    JEL: D72
    Date: 2019
  42. By: Andreas Beerli (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Ronald Indergand (Staatssekretariat für Wirtschaft SECO); Johannes Kunz (Centre for Health Economics)
    Abstract: An important goal of immigration policy is facilitating the entry and supply of workers whose skills are scarce in national labour markets. In recent decades, the introduction of information and communication technology [ICT] fuelled the demand for highly skilled workers at the expense of lower skill groups throughout the developed world. In this paper, we show that the skill mix of newly arriving immigrants strongly responded to this shift in the demand for skills. Exploiting the fact that different regions in Switzerland were differentially exposed to ICT due to their pre-ICT industrial composition, we present evidence suggesting more exposed regions experienced stronger growth in relative employment and wage premia for highly skilled workers between 1990 and 2010. We find robust evidence that regions with higher initial ICT exposure experienced a considerably stronger relative influx of highly skilled immigrants. Taken together, these results strongly sug- gest that immigrants responded to skill-biased changes in economic opportunities. Complementing these findings, we document whether and how the response of immigrants to skill demand changed when Switzerland abolished immigration restrictions for European workers.
    Keywords: Keywords: immigrant sorting, international migration; routine-biased technical change; information and communication technology; skill supply
    JEL: F22 J61 J24 J31 J23
    Date: 2017–11
  43. By: Pawel Dlotko; Simon Rudkin; Wanling Qiu
    Abstract: A quest to understand the decision of the UK to leave the European Union, Brexit, in the referendum of June 2016 has occupied academics, the media and politicians alike. As the debate about what the future relationship will look like rages, the referendum is given renewed importance as an indicator of the likely success, or otherwise, of any forward plans. Topological data analysis offers an ability to faithfully extract maximal information from complex multi-dimensional datasets of the type that have been gathered on Brexit voting. Within the complexity it is shown that support for Leave drew from a far more similar demographic than Remain. Obtaining votes from this concise set was more straightforward for Leave campaigners than was Remain's task of mobilising a diverse group to oppose Brexit. Broad patterns are consistent with extant empirical work, but the strength of TDA Ball Mapper means that evidence is offered to enrich the narrative on immobility, and being ``left-behind'' by EU membership, that could not be found before. A detailed understanding emerges which comments robustly on why Britain voted as it did. A start point for the policy development that must follow is given.
    Date: 2019–09
  44. By: Cuevas Casaña, Joaquim; Martín Aceña, Pablo; Pons Brias, María A.
    Abstract: This paper explores why Spanish banks internationalise and why Latin America has been the main region for the international expansion of BBVA and Santander. It shows that prior to 1986 Spanish banks had a limited presence abroad, and analyses the main drivers of this initial expansion (remittances and trade connections). However, from 1986 on, there was a confluence of domestic and external factors (economic and regulatory changes in Latin America) that encouraged the international forays of BBVA and Santander. The fact that changes in the Spanish and the Latin American financial sectors occurred just when other transnational banks were turning their attention to other regions created the optimal conditions for the expansion of Spanish banks in Latin America.
    Keywords: Banking globalisation,Financial markets in Latin America,Spanish banks
    JEL: G15 G21 N26
    Date: 2019
  45. By: Benjamin Harbolt
    Abstract: As e-commerce has grown over the last few decades so has states' concern for its use for sales tax avoidance. Using a panel of Washington State tax jurisdictions from 2005 through 2015, I estimate the effect of a sales tax regime change on the elasticities of taxable sales. I find the regime change, targeted at reducing sales tax avoidance through remote purchases, had a differential impact that varied by tax jurisdiction. I find that in tax jurisdictions near the border of lower-sales-tax states (Oregon and Idaho) consumers became more responsive to the difference in sales tax rates across borders than their counterparts in the interior of the state. I interpret this as a substitution by consumers along the Oregon and Idaho border from e-commerce purchases to cross-border shopping in order to avoid sales taxes.
    Keywords: sales tax avoidance, destination-based taxation, cross-border shopping
    JEL: H26 H71
    Date: 2019
  46. By: Alex Chernoff; Patrick Alexander
    Abstract: We develop a model with firm heterogeneity in importing and cross-border shopping among consumers. Exchange-rate appreciations lower the cost of imported goods, but also lead to more cross-border shopping; hence, the net impact on aggregate retail prices and sales is ambiguous. Using Canadian firm-level data from 2002 to 2012, we find empirical support for several predictions of the model. We then estimate the model-implied exchange-rate elasticities of aggregate retail prices and sales. Our benchmark results indicate a deflationary effect of appreciations on retail prices and a small positive effect on sales. From 2002 to 2012, the Canadian exchange rate appreciated by 57%, which, according to our model, led to a 6.5% reduction in the retail price index. We also find that the estimated elasticities of aggregate retail prices and sales grew over this period, driven by import growth from China. This suggests that the transmission of exchange-rate movements to prices has grown since the early 2000s, which has consequences for the role of Canada’s flexible exchange rate regime in supporting inflation stability.
    Keywords: Exchange rates; International topics; Service Sector
    JEL: F10 F14 L81
    Date: 2019–09
  47. By: Davit Adunts; Geghetsik Afunts
    Abstract: There is much evidence that migration of a parent affects the educational performance of children left behind (CLB). Nevertheless, there is no agreement on the direction of the impact. In this paper, we use Armenian school data and report evidence of a negative impact of parental seasonal migration on the educational performance of CLB. We employ a different approach than those used in the prior literature by (i) using the intensity of seasonal migration (the number of times the parent migrated) instead of a binary variable (whether the parent migrated or not) and (ii) the number of children entering first grade whose parent is a seasonal migrant as an instrument for the intensity of seasonal migration. We find that seasonal migration negatively affects the educational performance of CLB, and that it mainly affects boys; there is no significant impact on girls. Additionally, we find that using a zero-one dummy for migration as prior studies have done upwardly biases the IV estimate by approximately a factor of three, while our intensity measure yields more accurate results.
    Keywords: seasonal migration; children left behind; educational performance;
    JEL: F22 J13 O15
    Date: 2019–04
  48. By: Nicholas Bloom; Philip Bunn; Scarlet Chen; Paul Mizen; Pawel Smietanka; Gregory Thwaites
    Abstract: We use a major new survey of UK firms, the Decision Maker Panel, to assess the impact of the June 2016 Brexit referendum. We identify three key results. First, the UK’s decision to leave the EU has generated a large, broad and long-lasting increase in uncertainty. Second, anticipation of Brexit is estimated to have gradually reduced investment by about 11% over the three years following the June 2016 vote. This fall in investment took longer to occur than predicted at the time of the referendum, suggesting that the size and persistence of this uncertainty may have delayed firms’ response to the Brexit vote. Finally, the Brexit process is estimated to have reduced UK productivity by between 2% and 5% over the three years after the referendum. Much of this drop is from negative within-firm effects, in part because firms are committing several hours per week of top-management time to Brexit planning. We also find evidence for smaller negative between-firm effects as more productive, internationally exposed, firms have been more negatively impacted than less productive domestic firms.
    JEL: E0
    Date: 2019–09

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