nep-int New Economics Papers
on International Trade
Issue of 2019‒10‒14
43 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Gravity estimations with FDI bilateral data: Potential FDI effects of deep preferential trade agreements By Kox, Henk L.M.; Rojas Romasgosa, Hugo
  2. Linking Southern Africa into South Africa’s global value chains By Banga Karishma; Balchin Neil
  3. The use by Russia of the WTO dispute settlement mechanisms By Baeva Marina; Knobel Alexander
  4. Complementarity between Firm Exporting and Firm Importing on Industry Productivity and Welfare By ARA Tomohiro
  5. Low-wage import competition and populist backlash: The case of Italy By Guglielmo Barone; Helena Kreuter
  6. Tariffs, Vertical Oligopoly and Market Structure: Empirical Investigation By ARA Tomohiro; ZHANG Hongyong
  7. Service Imports, Workforce Composition, and Firm Performance: Evidence from Finnish Microdata By Andrea Ariu; Katariina Nilsson Hakkala; J. Bradford Jensen; Saara Tamminen
  8. The U.S.-China trade war: Tariff data and general equilibrium analysis By Minghao Li; Edward J. Balistreri; Wendong Zhang
  9. Promotion or Liberalization: The Effect of Targeted Investment Policies on FDI Inflows By INADA Mitsuo
  10. Misallocation Under Trade Liberalization By Jin, Keyu
  11. Asymmetric Effects of Renewable Energy Consumption, Trade Openness and Economic Growth on Environmental Quality in Nigeria and South Africa By Iorember, Paul Terhemba; Usman, Ojonugwa; Jelilov, Gylych
  12. A two-step procedure for Generating Domestic and Asymmetric International Trade Costs when Data are Scarce By Mazhikeyev, Arman
  13. Application of Machine Learning in Forecasting International Trade Trends By Feras Batarseh; Munisamy Gopinath; Ganesh Nalluru; Jayson Beckman
  14. The Aggregate and Distributional Effects of Financial Globalization: Evidence from Macro and Sectoral Data By Furceri, Davide; Loungani, Prakash; Ostry, Jonathan D.
  15. Trade Flows and Exchange Rates: Importers, Exporters and Products By Michael B. Devereux; Wei Dong; Ben Tomlin
  16. Reaping gains from global production sharing: Domestic value addition and job creation by Indian exports By C. Veeramani; Garima Dhir
  17. Trade liberalization and South African manufacturing: Looking back with data By Driver Ciaran
  19. The limits of foreign-led growth: Demand for digital skills by foreign and domestic firms in Slovakia By Jan Drahokoupil; Brian Fabo
  20. Domestic versus export-led agricultural transformation: Evidence from Uganda’s dairy value chain By Bjorn Van Campenhout, Bart Minten, and Johan Swinnen
  21. Deal or no deal - What's at stake for ACP countries with a hard Brexit? By Tröster, Bernhard
  22. Reappraisal of Japan-LAC Trade and Investment Relations Amid China's Ascendance By Mikio Kuwayama
  23. Products or Markets: What Type of Experience Matters for Export Survival? By Martina Lawless; Zuzanna Studnicka
  24. [WTO Case Review Series No.26] European Union—Measures Affecting Tariff Concessions on Certain Poultry Meat Products (WT/DS492): Characteristics of the WTO Panel's Interpretation of Articles XIII and XXVIII of the GATT (Japanese) By HIRAMI Kenta
  25. Staying dry on Spanish wine: the rejection of the 1905 Spanish-Italian trade agreement By Jacopo Timini
  27. Charity begins at home: The political economy of non-tariff barriers to trade in Southern Africa By Ledger Tracy
  28. Trade tax reforms and poverty in developing countries: Why do some countries benefit and others lose? By Kouwoaye Amèvi
  29. Functional Specialisation in Global Value Chains and the Middle-Income Trap By Roman Stöllinger
  30. Managerial Foreign Experience and Outward Foreign Direct Investment: Evidence from China By Wen, Wen; Ke, Yun; Sun, Xiaonan
  31. Integration of immigrants in the EU_15: success or failure? By Adéla Zubíková
  32. The US-China “Trade War”: The War Nobody Can Win By Bahri Yilmaz
  33. The Consumption Response to Trade Shocks: Evidence from the US-China Trade War By Michael E. Waugh
  34. Immigration, Internal Migration, and Technology Adoption By Monras, Joan
  35. Statistical governance and FDI in emerging economies By von Kalckreuth, Ulf
  36. Who Wins in the World Economy and English Football? By Matt Andrews
  37. Determinants of FDI in France: Role of Transport Infrastructure, Education, Financial Development and Energy Consumption By Shahbaz, Muhammad; Mateev, Miroslav; Abosedra, Salaheddin; Nasir, Muhammad Ali; Jiao, Zhilun
  38. Chinese Investments in the US and EU Are Declining—for Similar Reasons By Jacob Funk Kirkegaard
  39. Effects of Offshore Production and R&D on Domestic Innovation Activities By YAMASHITA Nobuaki; YAMAUCHI Isamu
  40. The economic impact of migrants and refugees on Europe By Jamal Bouoiyour; Amal Miftah; Refk Selmi
  41. Climate Change, Inequality, and Human Migration By Burzynski, Michal; de Melo, Jaime; Deuster, Christoph; Docquier, Frédéric
  42. Russia’s Foreign trade in 2018 By Volovik Nadezhda
  43. Winners and losers from China’s ascension in international trade: a structural approach By Costa, Francisco Junqueira Moreira da; Pessoa, João Paulo

  1. By: Kox, Henk L.M.; Rojas Romasgosa, Hugo
    Abstract: This study employs a structural gravity model to analyse the impact of preferential trade agreements (PTAs) on bilateral foreign direct investment (FDI). We use the UNCTAD global database on bilateral FDI stocks and flows. To control for the heterogenous nature of PTAs, we employ two different indicators of PTA depth. We find that ’deeper’ or comprehensive PTAs (e.g. including provisions on investment, public procurement and intel- lectual property rights provision) have a significant positive impact on bilateral FDI between partners. The deepest PTA is expected to increase bilateral FDI stocks between signatory countries by around 54%. As an example, we analyse the potential impact on foreign direct investment of the economic co-operation agreement signed by the Pacific Alliance countries (Chile, Colombia, Mexico, Peru) in 2012.
    Keywords: structural gravity model, foreign direct investment, preferential trade agreements
    JEL: C51 F15 F21 F23
    Date: 2019–09–26
  2. By: Banga Karishma; Balchin Neil
    Abstract: This study explores the potential for South Africa to become an engine for intra- regional trade and industrial development by linking other Southern African countries to its global value chains and, in the process, improving its global trade competitiveness.The study identifies ¢â‚¬Ëœlead products¢â‚¬â„¢ exported by South Africa, and then uses revealed comparative advantage and unit cost analysis to identify intermediate inputs in which Southern African countries have competitiveness to export that is currently untapped due to a lack of supply capacity or other factors. Such products are potential areas where regional investments could lead to the successful creation of regional value chains.The study also identifies ¢â‚¬Ëœnew markets¢â‚¬â„¢ for agricultural lead products exported by South Africa, which could open new opportunities for Southern Africa to supply intermediate agricultural inputs.
    Keywords: Regional integration,Regional value chains,Global value chains
    Date: 2019
  3. By: Baeva Marina (Gaidar Institute for Economic Policy); Knobel Alexander (RANEPA)
    Abstract: The Russian Federation acceded to the World Trade Organization (WTO), and so became subject to its international trade dispute settlement procedures, on August 22, 2012. The mechanism was adopted by the WTO under the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU)2. Thus, from August 2012 onwards, Russia has enjoyed the right to defend its trade interests by applying this particular instrument
    Keywords: Russian economy, foreign trade, WTO, trade disputes
    JEL: F10 F13 F19
    Date: 2019
  4. By: ARA Tomohiro
    Abstract: How different are the impacts of trade barriers on trade flows between intermediate inputs and final goods? How large are the welfare gains from trade for intermediate inputs relative to final goods? To address these questions, we develop a heterogeneous-firm model in which firm exporting and firm importing play a key role in industry productivity and welfare. We derive a gravity equation in intermediate-input trade to show that reductions in intermediate-input trade costs increase aggregate trade flows more than those in final-good trade costs, due to an extra adjustment operating through the extensive margin. We also find the general condition under which the welfare gains from trade are greater in intermediate-input trade than those in final-good trade.
    Date: 2019–08
  5. By: Guglielmo Barone (University of Padova and RCEA); Helena Kreuter (FiFo Institute for Public Economics, University of Cologne)
    Abstract: The surge of populism in many advanced countries calls for the analysis of its causes. In this paper, we empirically study the role of trade globalization in shifting the electoral base toward populism. We proxy trade shock with swiftly rising import competition from China and compare the voting pattern at the parliamentary national elections from 1992 to 2013 in about 8,000 Italian municipalities differently exposed to the trade shock. We instrument import competition with Chinese export flows to other high-income countries and estimate the model in first differences. Our results show that trade globalization increases support for populist parties; they are robust to a large number of sensitivity checks. Moreover, we show that voters’ protest reaction also takes the form of an increase in invalid ballot papers and a drop in turnout. To rationalize these findings, we further offer evidence that import competition worsens labor market conditions – higher unemployment and lower income – and is associated with a rise in inequality, as predicted by trade theory.
    Keywords: trade globalization, populism, inequality
    JEL: D72
    Date: 2019–10
  6. By: ARA Tomohiro; ZHANG Hongyong
    Abstract: We study the impact of tariffs on the margins of intermediate-input trade and examine their impact on optimal tariffs for intermediate inputs. Using China Customs disaggregate product-level data from 2000 to 2008, we find that (i) China's WTO accession and the resulting input import tariff reductions increase China's input imports through both the extensive and intensive margins; (ii) after China's WTO accession, China's input import tariffs are higher, the more concentrated and hence the less competitive China's input markets (at the product level). We confirm that these findings are robust in alternative specifications. The estimation results are consistent with the theoretical prediction of the endogenous market structure by Ara and Ghosh (2017).
    Date: 2019–08
  7. By: Andrea Ariu; Katariina Nilsson Hakkala; J. Bradford Jensen; Saara Tamminen
    Abstract: This paper uses unique Finnish firm-level micro data on service imports, work- force composition, and firm characteristics to examine changes in employment composition and performance of Finnish service importers during a period of a significant increase in services imports (2002-2012). We use world service export supply shocks, which we allocate to firms based on their highly specialized service input structure, as an instrument to identify the impact of service offshoring. We find that firms that increase imports of service inputs reduce employment of low-skill service workers, increase employment of (high-skilled) managers and improve their performance in terms of sales (turnover), assets, service exports, and firm survival. The employment composition and performance responses to service imports differ across firms in the manufacturing sector and those in the service sector.
    JEL: F10 F14 L80
    Date: 2019–10
  8. By: Minghao Li; Edward J. Balistreri (Center for Agricultural and Rural Development (CARD)); Wendong Zhang (Center for Agricultural and Rural Development (CARD))
    Abstract: The current trade war between the United States and China is unprecedented in modern history. This study introduces a database of tariff increases resulting from the recent trade war and quantifies the impacts using the canonical GTAPinGAMS model calibrated to the recently released GTAP version 10 accounts. We find that the tariff increases as of September 2019 decrease welfare in China by 1.9% and welfare in the U.S. by 0.3%. Impacts on sectoral revenue are reported for both countries. China’s exports to and imports from the United States are reduced by 58.3% and 50.7%. Most of the reductions in bilateral trade are absorbed by trade diversion to other countries. The welfare and U.S.-China bilateral trade impacts are exacerbated by additional tariffs threatened by the United States and corresponding retaliations from China. Sensitivity analysis is conducted by increasing and decreasing import substitution (Armington) elasticities by two standard deviations. This has modest impacts on welfare and trade flow results.
    Date: 2019–10
  9. By: INADA Mitsuo
    Abstract: This study empirically examines two Foreign Direct Investment (FDI) policies (targeted promotion and selective liberalization) and quantifies which of the two targeted measures is more effective to attract FDI inflows and to stimulate the activities of Multinational Enterprises (MNEs). We further ask whether policies for promoting FDI inflows should encourage entrants to set up new operations, or whether policies should encourage incumbents to stretch out existing operations. We implement a difference-in-differences estimation that measures the effects of FDI policies by comparing affected and non-affected industries before and after the change of FDI policies in compliance with the Chinese WTO accession. Using aggregated data on foreign equity and sales by MNEs' foreign affiliates in China over the 1999-2007, the results show that selective liberalization has a positive impact on FDI inflows especially from incumbents, while targeted promotion does not. The results suggest that selective liberalization is preferable to targeted promotion.
    Date: 2019–09
  10. By: Jin, Keyu
    Abstract: This paper incorporates firm-level distortions into a Melitz model and characterizes welfare under misallocation. We derive an analogue to the well-known ACR result in an economy with distortions. We highlight a channel through which trade can reduce welfare by exacerbating misallocation. A key statistic to infer welfare is the gap between input and output shares. Using Chinese manufacturing data for quantitative analysis, we show that trade integration can lead to a 18% welfare loss coming from a reduction in allocative efficiency. The overall gains to trade is substantially smaller than implied by standard calculations.
    Keywords: Capital and labor wedges; Gains from trade; industrial policy; Misallocation; trade liberalization
    JEL: E23 F12 F14 L25 O47
    Date: 2019–09
  11. By: Iorember, Paul Terhemba; Usman, Ojonugwa; Jelilov, Gylych
    Abstract: The study investigates the asymmetric effects of renewable energy consumption (REC), trade openness (TOP) and GDP per capita (GDP) on environmental quality in Nigeria and South Africa using the Non-linear Autoregressive Distributed Lag (NARDL) model from 1990Q1-2014Q4. To ensure this, the Zivot-Andrews unit root test and nonlinear ARDL cointegration tests are employed. The empirical results based on the NARDL found that REC, TOP and GDP have asymmetric effects on environmental quality in Nigeria and South Africa in the long-run and the short-run dynamics. Specifically, the long-run effect of a negative change in REC and GDP is stronger than that of a positive change of the same magnitude. Similarly, the effect of a positive change in TOP is stronger than the negative change. The results of the short run for Nigeria indicates that the effect of a negative change in REC and GDP is stronger than that of the positive change, while the effect of a positive change in TOP is stronger than its negative change. For South Africa, the positive change in REC and GDP is stronger than the negative change while for TOP the negative change is stronger than the positive change. The policy implications of the findings are carefully discussed in the text.
    Keywords: Renewable energy consumption; Trade openness; Economic Growth; Environmental quality; Asymmetric effects
    JEL: Q2 Q4 Q43 Q5 Q56
    Date: 2019
  12. By: Mazhikeyev, Arman
    Abstract: The practice of trade cost measurement faces several challenges related to data quality, methodology and theory; but the major issue is that of data scarcity. Due to these facts both domestic and asymmetric trade costs have been ignored despite being a feature of modern trade models. This paper offers a two-step procedure to tackle these limitations and fill the gaps between theory and p ractice. The results of this work show that domestic trade costs proportionally grow with economic size, and that international trade costs are highly asymmetric especially when trading pair sizes differ. Counterfactual simulation results that ignore domestic frictions and adopt symmetric international trade cost measures show over-predicted welfare and trade changes as a response to policy shock in larger sized countries rather than smaller countries. After the proper treatment of trade costs in the simulation, results improve.
    Keywords: trade costs,measurement,domestic frictions,asymmetric costs,international trade,gravity,trade policy simulations
    JEL: F13 F14 F21 F40
    Date: 2019
  13. By: Feras Batarseh; Munisamy Gopinath; Ganesh Nalluru; Jayson Beckman
    Abstract: International trade policies have recently garnered attention for limiting cross-border exchange of essential goods (e.g. steel, aluminum, soybeans, and beef). Since trade critically affects employment and wages, predicting future patterns of trade is a high-priority for policy makers around the world. While traditional economic models aim to be reliable predictors, we consider the possibility that Machine Learning (ML) techniques allow for better predictions to inform policy decisions. Open-government data provide the fuel to power the algorithms that can explain and forecast trade flows to inform policies. Data collected in this article describe international trade transactions and commonly associated economic factors. Machine learning (ML) models deployed include: ARIMA, GBoosting, XGBoosting, and LightGBM for predicting future trade patterns, and K-Means clustering of countries according to economic factors. Unlike short-term and subjective (straight-line) projections and medium-term (aggre-gated) projections, ML methods provide a range of data-driven and interpretable projections for individual commodities. Models, their results, and policies are introduced and evaluated for prediction quality.
    Date: 2019–10
  14. By: Furceri, Davide; Loungani, Prakash; Ostry, Jonathan D.
    Abstract: We take a fresh look at the aggregate and distributional effects of policies to liberalize international capital flows-financial globalization. Both country- and industry-level results suggest that such policies have led on average to limited output gains while contributing to significant increases in inequality. The country-level results are based on 228 capital account liberalization episodes spanning 149 advanced and developing economies from 1970 to the present. Difference-in-difference estimation using industry-level data for 23 advanced economies suggests that liberalization episodes reduce the share of labor income, particularly for industries with higher external financial dependence, higher natural propensity to use layoffs to adjust to idiosyncratic shocks, and higher elasticity of substitution between capital and labor.
    Keywords: Capital account openness; Globalization; inequality
    JEL: F13 G32 O11
    Date: 2019–09
  15. By: Michael B. Devereux; Wei Dong; Ben Tomlin
    Abstract: Using highly-disaggregated transaction-level trade data, we document the importance of new firm-level trade partner relationships and the addition of new products to existing relationships in driving long-run import flows. Moreover, we find that these margins are sensitive to movements in the exchange rate. We rationalize these findings in a model of international trade with endogenous matching between heterogenous importers and exporters. Simulations of the model highlight a new channel through which exchange rate movements can affect trade—through the short-run formation of new trade relationships and the range of products traded within relationships, which can impact long-run flows.
    JEL: F1 F4
    Date: 2019–09
  16. By: C. Veeramani (Indira Gandhi Institute of Development Research); Garima Dhir (Indira Gandhi Institute of Development Research)
    Abstract: Is it in the interest of a country to promote strong local linkages for domestic industries or to participate in global production sharing (GPS) activities wherein linkages are globally dispersed? This paper informs this debate by empirically analyzing which one of these strategies would result in higher levels of domestic value added (DVA) and employment in a developing country, India. A higher level of participation in GPS entails that, for any given country, DVA per unit of exports is smaller than when most inputs are sourced locally. However, owing to the scale and productivity effects of producing for the world market, participation in GPS can lead to higher absolute levels of DVA and domestic job creation. We test this hypothesis using a unique panel data on DVA and jobs tied to Indian exports from 112 sectors for the period 1999-2013. Our regression analysis confirms that participation in GPS, as measured by the sectoral ratio of DVA to gross exports, leads to higher absolute levels of gross exports, DVA and employment. These results are robust to alternative model specifications and estimation techniques. We conclude that developing countries can reap rich dividends by adopting policies aimed at strengthening their participation in GPS.
    Keywords: Exports, Domestic Value Added, Employment, India, Global Production Sharing
    JEL: C67 F14 F15
    Date: 2019–07
  17. By: Driver Ciaran
    Abstract: This paper provides a retrospective assessment of the effects of trade policies on South African manufacturing since the transition to democracy, examining the differences and commonalities in the views of economists in favour of and against an acceleration of trade liberalization.Data from the Bureau of Economic Research are used to test a number of effects on manufacturing industry that were envisaged to flow from trade policy reforms, including effects on mark-ups, productivity, exports, employment, and investment. The evidence presented here shows that a rising real exchange rate results in falling unit raw material costs as expected. However, exporter profitability still suffers because the mark-up also falls, presumably to keep prices from rising too much in foreign currencies.There is evidence, too, that a real appreciation causes the export volume to decrease.
    Keywords: data,Exchange rate,Exports,Trade liberalization,Trade policy,Manufacturing
    Date: 2019
  18. By: Murat Sadiku (South East European University); Luljeta Sadiku (International Balkan University); Nasir Selimi (South East European University)
    Abstract: The level of trade openness plays a crucial role on boosting countries? competitiveness, innovation and productivity. Thus, the purpose of this paper is to empirically analyze the linkage of trade openness and competitiveness for Western Balkan countries covering the time period 2005-2017. The research method consists of a panel regression analysis by examining the static models for both fixed and random effects and using the Hausman test for deciding for the most appropriate model for the proposed sample countries. First, the gross competitiveness index is modelled as dependent variable on trade openness and a set of control variables such as: GDP per capita, gross fix capital formation, FDI, inflation and several interaction variables with trade openness. Second, innovation is taken as dependent variable whereas trade openness and the aforementioned indicators as independent variables. The empirical results of the fixed effects model suggest that trade openness positively affect competitiveness, as well as trade openness enhance innovation as in both models the coefficients of trade openness seem to be statistically significant and with positive signs. Regarding interaction variables between trade and FDI as well as trade and gross capital formation, it is confirmed that countries with higher level of FDI and higher physical capital benefit more from international trade, and in turn increase competitiveness. The findings of this research reveal important policy implications for Western Balkan countries, in terms of strengthening the mutual trade cooperation and joining the efforts for increasing even more their participation into the global market. It will imply extension of competitiveness and a range of paybacks, such that job creation, poverty alleviation and better standards of living of their citizens.
    Keywords: Trade openness, competitiveness, innovation, Western Balkan, panel regression analysis
    JEL: F14 O10 O47
    Date: 2019–10
  19. By: Jan Drahokoupil (European Trade Union Institute, Brussels, Belgium); Brian Fabo (Narodna banka Slovenska, Bratislava, Slovakia)
    Abstract: This paper addresses demand for skilled labour in Slovakia, a country that is characterized by a high degree of economic integration through inward foreign investment and through international backward linkages within global value chains. Developing existing approaches to political economy and global production networks (GPNs), our framework distinguishes between demand for digital skills on two levels: occupational structure; and skill content within occupational types. In this way, we can assess not only what kind of workers are hired by companies, but also what kind of specific skills are required from these workers. Using a large dataset on vacancies from a leading job portal, combined with administrative data on company size and ownership, we show that foreign and mixed-ownership companies generally advertise for higher skilled occupations than domestic firms, but their skill requirements for these jobs are lower than in similar jobs in domestic companies. Foreign companies have higher skill requirements only in some blue-collar jobs linked to assembly and component manufacturing. For white collar occupations, domestic companies are more likely to require digital skills. The findings confirm our expectations about the position of Slovakia as a country in an integrated periphery, where multinational companies are heavily present but rarely bring complex activities. Our key policy implication is that foreign direct investment in the integrated periphery brings only a limited potential for technology transfers.
    Keywords: skills, foreign direct investment, FDI, digitalization, global production networks, job vacancies
    JEL: J24 O33
    Date: 2019–09
  20. By: Bjorn Van Campenhout, Bart Minten, and Johan Swinnen
    Abstract: Driven by increased demand from both local and export markets and facilitated by far-reaching liberalization and privatization policies, the dairy sub-sector in Uganda has undergone significant changes in the last decade. With a comparative advantage in milk production, the southwest of Uganda has started to attract considerable Foreign Direct Investment (FDI) in processing capacity, mainly targeting the export market. As a result, processing capacity increased five-fold and dairy became Uganda’s third most important export product, coming from negligible amounts a decade earlier. In this study, we use observational data collected at different nodes within the value chain to compare the structure of the chain and the roles and economic activities of different actors between export-led value chains and value chains that cater for the local market. Doing so allows us to identify the technological and institutional innovations that both result from the emergence of export-led dairy value chains and at the same time drive further upgrading. Our analysis underscores the importance of milk collection centers, which often take the form of farmer cooperatives, in providing many of the support services that enable other actors in the value chain to produce sufficient milk, and maintain milk sanitation levels necessary for an export sector to emerge.
    Date: 2019
  21. By: Tröster, Bernhard
    Abstract: A few weeks before the Brexit date of 31 October 2019, the big questions remain unanswered: Will Britain withdraw from the European Union? And if so, with or without a deal? These decisions not only affect the European Union and the United Kingdom itself, they also have consequences for the 79 countries of the ACP group, which have many links with both partners. Above all, a 'hard brexit' would create uncertainty for ACP countries and jeopardise their development opportunities. In the event of a disorderly Brexit, however, these risks for the ACP countries arise not so much from international trade as from possible changes in development policy.
    Date: 2019
  22. By: Mikio Kuwayama (Research Fellow of Kobe University Research Institute for Economics and Business (RIEB) and Managing Director of the Japan Association of Latin America and the Caribbean (JALAC))
    Abstract: Though LAC's bilateral trade with Japan has not been as buoyant as that with China in recent years, Japan's trade relations with the region is more diversified and balanced in terms of trading partners, product composition, and trade balance. Furthermore, business activities of Japanese subsidiaries operating in the region are conducive to employment creation, export expansion (especially to third-country markets), and global value-chain developments in the region. In addition, Japan's FDI flows to LAC fare quite well when compared with those from China in both quantitative and qualitative respects: Japan's FDI stock is high and is diversified among targeted industries, thereby contributing to technological transfer and human resource development. Moreover, Japan has been a significant source of development finance for the LAC region; the present scale of JBIC's operations in Latin America rivals those of Chinese policy banks. The nature and scope of JICA's activities in LAC suggest the relationship between Japan and the LAC region has transformed from "Japan as donor and LAC as recipient" to "Japan-LAC global partners." As a result of the preceding, LAC nations are increasingly viewed by Japan as essential economic and political partners as Japan promotes its model of cooperation and economic governance in the Asia-Pacific region and globally. In short, cooperation has been an integral part of the Japan-LAC relationship, demonstrating how interactions in the private sector open space for government-to-government cooperation and vice versa. Strengthening commercial relations with Japan by reciprocally applying the public-private partnership (PPP) principle will assist LAC countries in addressing some structural problems and challenges of long data.
    Date: 2019–10
  23. By: Martina Lawless; Zuzanna Studnicka
    Abstract: Previous research has generally shown that increased export experience has a positive impact on the subsequent survival of newly launched export relationships of a firm. In this paper, we find that there are important differences in the effects of firm experience on export survival depending on the source of the experience. Specifically, experience built up by a firm from previously exporting a particular product before launching it in a new market has a strong positive impact on the survival of a new product-market relationship. In contrast, experience within a market prior to adding a new product has a mainly negative effect on the survival probability of the additional product. This shows that taking a successful product to new markets is more likely to succeed than expanding product range within a market.
    Keywords: Duration of trade; Firm survival; Export experience; Multi-product firms
    JEL: F10
    Date: 2019–10
  24. By: HIRAMI Kenta
    Abstract: China, which is expanding its export of poultry products in recent years, brought the claims concerning the European Union's (EU) modification of its tariff concessions on certain poultry products and the institution of the tariff rate quotas (TRQs) on these products. Since this WTO dispute is a rare case which concerns the interpretation of GATT Articles XXVIII and XIII, the panel grappled with various interpretative issues with no judicial precedent in the GATT/WTO and newly provided legal interpretations of these issues. The Panel rejected most claims made by China but found that the EU's allocation of the TRQs shares among supplying countries was inconsistent with the requirement of Article XIII:2. This finding provides China gains with an important foothold toward the expansion of poultry products export to the EU market. In implementing the panel's recommendations and rulings, however, it is expected that difficulties will arise, as there are other WTO Members which also have a supplying interest behind this dispute. Namely, the allocation of the TRQs made by the EU had been closely interrelated with the GATT Article XXVIII negotiations with Thailand and Brazil, which are major suppliers of poultry products. Therefore, if the EU reallocates the TRQs only in relation to China, new legal problems will arise in relation to Brazil and Thailand.
    Date: 2019–08
  25. By: Jacopo Timini (Banco de España)
    Abstract: After a long debate on wine import tariffs, the Italian Parliament failed to ratify the Spanish-Italian trade agreement on December 17th, 1905. This decision – an unusual episode for a country with relatively low level of protection – left Spain and Italy without a bilateral trade treaty for an entire decade. In the literature, broader political issues and local interests are alternatively indicated as the main drivers of the rejection. Based on a manually assembled database which collects economic and political variables, including MPs personal features, and using a probit model, this paper provides a quantitative analysis of the vote. Results show that constituency interests had a role in determining the result of the vote on the trade treaty. Moreover, constituency interests were also important for the “vote switchers”, i.e. those MPs that supported the overall government policy stance in the first round, but opposed the Spanish-Italian trade agreement in the second.
    Keywords: trade agreement, tariffs, wine, vote
    JEL: D72 F13 N43 N73
    Date: 2019–10
  26. By: Nasir Selimi (South East European University); Murat Sadiku (South East European University); Luljeta Sadiku (International Balkan University)
    Abstract: The development of international trade today represents one of the priorities of the world economies. Scientific studies dealing with the relationship between foreign trade and economic development are numerous and with no doubt increase the interest among the readers. As a result, researchers make a variety of analyzes and conclusions that presents valuable contributions to the science of economics. North Macedonia in its macroeconomic policy as a priority enlist the development of international trade. However, the trade balance in 2018 year revealed the existing problem of trade deficit, as again reached a very high percentage. This is a signal that warns the country?s economy in the present and in the future. The causes of this situation are various, but some are more fundamental. As one of the most was undoubtedly the global financial and economic crisis that were present especially in the European Union member countries. Countries being in this situation, reduced the demand for goods from the different companies from North Macedonia. But this is not the only reason for the difficult position of North Macedonia. Another unfavorable condition is the economic structure of the North Macedonian economy which perhaps is the most important reason. To get out of this situation, North Macedonia in the future must change its economic structure and should be oriented in producing goods that are required more in the global market. It cannot hope to compete in the world market with the goods that competes nowadays in order to be able to improve the balance of foreign trade.
    Keywords: Export, import, trade balance, deficit, surplus.
    JEL: F10 F43 L60
    Date: 2019–10
  27. By: Ledger Tracy
    Abstract: Increased intra-regional trade in southern Africa will have a positive impact on economic growth. However, this requires a shifting of loyalties from the national to the regional. Tension between the goals of long-term regional development and shorter-term national imperatives remains unresolved.This study presents a review of recent and current local content regulation (LCR) initiatives across a sample of the South African Development Community countries. LCRs are widely used across these countries, and their use has increased recently. Evidence suggests that the impact of LCRs is mixed, depending on their national context, whether or not they are implemented in line with the genuine desire to deliver local development, and whether they can remain corruption-free. LCRs may have long-term positive domestic and regional benefits, if they support sustainable local enterprise development and employment.In time this should translate into higher levels of growth across the region, and thus drive higher levels of trade.
    Keywords: Local content,Regional integration,Southern African Development Community
    Date: 2019
  28. By: Kouwoaye Amèvi
    Abstract: This paper studies the relationship between trade tax and domestic tax reforms and poverty in developing countries, and explores whether the role of public goods provision matters in this relationship.Using a sample of 91 developing countries for the 1980¢â‚¬â€œ2016 period, I model the trade tax reforms¢â‚¬â€œpoverty nexus as heterogeneous across countries with cross-sectionally dependent errors. I find that a shift from taxes on international trade towards domestic taxes under revenue-neutrality reduces poverty in the countries that have consolidated, on average, over time their comparative advantage in agriculture, while it increases poverty in countries that moved from being net exporters to net importers of agricultural products.Public goods, however, do not play a significant role in the relationship.
    Keywords: Government spending policy,Common factor models,Taxation,Poverty alleviation,Tax reforms
    Date: 2019
  29. By: Roman Stöllinger (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: The emergence of global value chains (GVCs) has opened up the possibility of functional specialisation as a new dimension of the international dimension of labour. Along with the usual gains from trade associated with specialisation according to comparative advantages, the functional specialisation along value chains functions also reinforce technological asymmetries within the world economy. This paper presents empirical evidence on this asymmetry confirming that developing countries serve primarily as ‘factory economies’ while developed countries take the role of ‘headquarter economies’ (Baldwin, 2013). The concept of the ‘smile curve’ suggests that factory economies generate comparatively little value added in their value chain activities. If this is the case, the specialisation as a factory can be expected to act as a drag on economic growth. Our econometric analysis shows that this is indeed true but only beyond a GDP per capita threshold of about USD 14,800. We see this result tightly connected to the notion of a functional middle-income trap. Escaping this growth trap is difficult but by no means impossible and requires countries to adjust their functional specialisation patterns towards more knowledge-intensive value chain functions, especially in the knowledge-intensive pre-production activities. Disclaimer Research for this paper was financed by the Anniversary Fund of the Oesterreichische Nationalbank (Project No. 17665). Support provided by Oesterreichische Nationalbank for this research is gratefully acknowledged.
    Keywords: functional specialisation, global value chains, smile curve, economic growth
    JEL: L23 F20 F43
    Date: 2019–10
  30. By: Wen, Wen; Ke, Yun; Sun, Xiaonan
    Abstract: Using hand-collected data from Chinese public companies, we examine whether managerial foreign experience affects corporate outward foreign direct investment (OFDI) decision. Our result shows that there is a positive association between managerial foreign experience and OFDI. The finding is robust to alternative sampling method, foreign experience measures, and regression specification. We also use the instrumental variable approach, the propensity score matching procedure, and the Heckman two-stage selection model to mitigate potential endogeneity concerns. While both foreign work and study experience promote OFDI, the effect is significant only in non-state-owned entities and only when returnee managers hold senior positions. Lastly, we show that managerial foreign experience is associated with improved performance of outward investments.
    Keywords: international experience, human capital, knowledge transfer, F21 F22
    Date: 2019–09
  31. By: Adéla Zubíková (Faculty of Economics, University of Economics, Prague)
    Abstract: In 2015, the so-called migration crisis culminated in Europe. Although immigration can bring along many benefits (labor force, cultural diversification), it constitutes a challenge for fiscal policy if immigrants fail to integrate. This paper examines the level of integration in the EU_15 on the data from Eurostat in period 2009 to 2018. The results show that immigrants who were not born in the EU_28 were significantly worse off in terms of the unemployment rate and the risk-of-poverty rate than the host society. Immigrants born in the other EU_28 country were not significantly worse off on the labor market, but the at-risk-of-poverty rate was significantly higher in comparison with the host society. The data didn?t confirm that share of immigrants with tertiary education (both from the EU_28 or outside the EU_28) was significantly lower than the share of the tertiary educated population in the host society. The level of integration of immigrants did not got worse after the migration crisis. Furthermore, the results showed a considerable difference in the degree of integration between EU_15 countries.
    Keywords: immigration, economic integration, social integration, refugees, European Union
    JEL: F22 F29 F50
    Date: 2019–10
  32. By: Bahri Yilmaz (Sabanci University, Koc University)
    Abstract: The main aim of this paper is to analyze US-China trade relations and the so-called “trade war” between the two countries. As a first step, we will look at the trade relations between the two countries and explain why President Trump is eagerly following a protectionist trade policy toward China and fighting with some of America’s oldest trading partners. Finally, we will focus on the possible effects of the trade war on both countries’ economies. The US and EU governments and other leading economic actors have underestimated China’s rapid eco-nomic growth and were unprepared for the dawning of new economic power. Forty years lat-er, the first reaction to new economic power and its expansionary economic policy came from US President Donald Trump and later by the EU and Germany. The trade conflict be-tween the United States and China has not yet affected trade flows, which are still growing in favour of China. Despite the Trump administration’s penalty tariffs on China, the US trade deficit in goods with the country could not be reduced at all. Obviously, the initial round of tariffs imposed by the United States has not stopped Chinese firms from exporting more goods to the United States in the last year. For the time being, nobody can make any predic-tions about the outcome of the trade war. It seems nobody can easily win this war, and it will be costly. The continuation of the trade war between China and the United States will more or less cause strong economic turbulence in every nation as long as both Trump and Xi hold on tight to their trade policies and do not be-have as responsible statesmen. As a final state-ment, to borrow words from Paul Krugman, “at this rate, we may have to wait for a new pres-ident to clean up this mess, if she can.”
    Keywords: China, USA, Trade War, Mercantilism, Exchange Change Regime.
    JEL: E6 F1 F4 N1
    Date: 2019–10
  33. By: Michael E. Waugh
    Abstract: This paper provides evidence on the consumption effects of trade shocks by exploiting changes in US and Chinese trade policy between 2017 and 2018. The analysis uses a unique data set with the universe of new auto sales at the US county level, at a monthly frequency, and a simple difference-in-difference approach to measure the effect of changes in trade policy on county-level consumption. As a lower bound, I estimate the elasticity of consumption growth to Chinese retaliatory tariffs to be around –1. This implies that counties in the upper quartile of the retaliatory-tariff distribution experienced a 3.8 percentage point decline in consumption growth. I further show that the consumption response corresponds with a decline in employment growth. These results suggest that Chinese retaliation is leading to concentrated welfare losses in the US.
    JEL: A0 E0 E21 E65 F0 F13 F4
    Date: 2019–10
  34. By: Monras, Joan
    Abstract: An abundance of a certain factor may shape technology adoption. Traditional approaches have used proxies of local technology adoption in combination with immigrant-driven exogenous changes in the factor mix to document this relationship. In this paper, I back-out implied technology adoption from long-run internal migration patterns in Miami relative to a number of controls groups following the Mariel Boatlift. The identifying assumption is that technology adoption explains the part of the wage recovery that cannot be explained by internal migration. Model-based estimates suggest that local technology adoption explains 60 percent of the relative wage recovery in Miami.
    Keywords: International and internal migration; Technology adoption
    JEL: F22 J20 J30
    Date: 2019–09
  35. By: von Kalckreuth, Ulf
    Abstract: The importance of institutional settings for economic development outcomes is broadly acknowledged nowadays. This paper investigates the role of official statistics in alleviating financing constraints in emerging and developing economies, with a particular focus on Sub-Saharan Africa. Official statistics has a major dual role: it directly adds to the information set of investors regarding the general state of the economy and it is a key commitment and signalling device as to future good governance. Empirically, the paper investigates, for a sample of 98 emerging and developing countries, the relationship between the adoption of the IMF General Data Dissemination Standard (GDDS) for statistical data production and the net incurrence of foreign direct investment liabilities. Direct investment is considerably higher under GDDS. Controlling also for time and country effects, using fixed effects and quantile panel regression, the relationship ceases to be uniformly positive. Heterogeneity matters: There is a large and significant difference between poorer and richer countries, as well as between countries in Sub-Saharan Africa and elsewhere. Given the information asymmetry problems in poor developing countries, this is not unexpected. Furthermore, it becomes evident that the relationship between the adoption of GDDS and net incurrence of FDI liabilities is negative for richer countries and outside Sub-Saharan Africa. For richer countries, the relevant alternative might have been the more demanding SDDS, turning the adoption of GDDS into an unfavourable signal. Quantile regression is carried out using the quantile panel estimator of Canay (2011).
    Keywords: governance,FDI,emerging economies,policy evaluation,quantile panel regression,Compact with Africa,official statistics,asymmetric information,financing constraints
    JEL: O16 G31 D82
    Date: 2019
  36. By: Matt Andrews (Center for International Development at Harvard University)
    Abstract: Globalization has fed significant economic gains across the world. The gains lead some policymakers in developing countries to believe in the potential of ‘catch up’—where they leverage the gains of an open world economy to foster rapid progress and compete with more developed nations. This belief is particularly evident in countries like Rwanda, where policymakers aspire to turn the country into ‘Africa’s Singapore’. This paper asks if such aspiration is realistic: Do developing countries really gain enough from globalization to catch up to more developed countries? The paper examines the world economy as a league in which countries compete for winnings (manifest in higher income and production). Wealthier countries are in the top tiers of this league and poorer countries are in the lower tiers. The paper asks if gains from the last generation of growth have been distributed in such a way to foster ‘catch up’ by lower tier countries, and if we see these countries ‘catching up’ by moving into higher tiers. This analysis of the world economy is compared with a study of English football, where over 90 clubs play in an multi-tier league system. Prominent examples of ‘catch up’ in this system include Leicester City’s rise from the third tier in 2008 to become first tier champion in 2015. The paper asks if such ‘catch up’ is common in English football, given the way winnings are distributed, and if ‘catch up’ is more common in this context than in the world economy more generally.
    Keywords: Globalization
    Date: 2019–01
  37. By: Shahbaz, Muhammad; Mateev, Miroslav; Abosedra, Salaheddin; Nasir, Muhammad Ali; Jiao, Zhilun
    Abstract: This paper explores the effect of education and transportation infrastructure on foreign direct investment for the French economy over the period of 1965-2017. Economic growth, financial development and electricity consumption are also considered as additional determinants of foreign direct investment. In so doing, the SOR unit root test is applied in order to examine unit root properties of variables in the presence of sharp and smooth structural breaks in the series. To examine the presence of cointegration between the variables, the bootstrapping ARDL cointegration test is applied. The empirical results show the presence of cointegration between the variables. Education and transportation add to foreign direct investment. Financial development declines foreign direct investment. The relationship between electricity consumption (economic growth) and foreign direct investment is bidirectional. The nonlinear relationship between education (transportation infrastructure) and foreign direct investment is U-shaped.
    Keywords: FDI, Transport Infrastructure, Education, Financial Development, Energy Consumption, Bootstrapping ARDL
    JEL: E0
    Date: 2019–10–01
  38. By: Jacob Funk Kirkegaard (Peterson Institute for International Economics)
    Abstract: For years China has been one of the world’s most rapidly growing sources of outward foreign direct investment. Since peaking in 2016, however, Chinese outward investments, primarily to the United States but also the European Union, have declined dramatically, especially in response to changes in China’s domestic rules on capital outflows and in the face of rising nationalism in the United States. Concerns about growing Chinese influence in other economies, the ascendant role of an authoritarian government in Beijing, and the possible security implications of Chinese dominance in the high-technology sector have put Chinese outward investments under intense international scrutiny. This Policy Brief analyzes the most recent trends in Chinese investments in the United States and the European Union and reviews recent political and regulatory changes both have adopted toward Chinese inward investments. It also explores the emerging transatlantic difference in the regulatory response to the Chinese information technology firm Huawei. Concerned about national security and as part of the ongoing broader trade friction with China, the United States has cracked down far harder on the company than the European Union.
    Date: 2019–09
  39. By: YAMASHITA Nobuaki; YAMAUCHI Isamu
    Abstract: There has been a global shift in the distribution of manufacturing jobs and activities away from high-wage countries to low-wage countries for the past few decades. This paper examines a largely unexplored channel of the effects of offshore production on onshore (domestic) innovation performance. Controlling for the endogeneity, we find that increased offshore employment and R&D do not have positive impact on the domestic innovation measured by the number of patent applications and the number of forward citations on average. However, offshore R&D increases the quality of domestic innovation when the firms expand R&D function to the developed countries while it has a negative effect in the developing countries. We also find a synergistic effect between production and R&D activities. Therefore, separating the two activities can decrease the efficiency of resource allocation on the domestic innovation.
    Date: 2019–09
  40. By: Jamal Bouoiyour (IRMAPE - Institut de Recherche en Management et Pays Emergents - ESC Pau, CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour); Amal Miftah (LEDA-DIAL - Développement, Institutions et Modialisation - LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris-Dauphine - CNRS - Centre National de la Recherche Scientifique, IRMAPE - Institut de Recherche en Management et Pays Emergents - ESC Pau); Refk Selmi (IRMAPE - Institut de Recherche en Management et Pays Emergents - ESC Pau, CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour)
    Abstract: This policy brief presents some preliminary findings of a recent research regarding the economic impact of legal immigration in terms of growth and unemployment in a large panel of European countries. It sheds some light on a useful and interesting question for policy debate by explicitly distinguishing refugee and economic category immigrants. Our research reveals a non-negative effect of immigration on per capita growth and on employment. The results allow to consider particular implications for the collaboration of EU countries on the immigration issue and seek to inform more specific and actionable public policy interventions .
    Date: 2019–09–29
  41. By: Burzynski, Michal; de Melo, Jaime; Deuster, Christoph; Docquier, Frédéric
    Abstract: This paper investigates the long-term implications of climate change on local, interregional, and international migration of workers. For nearly all of the world's countries, our micro-founded model jointly endogenizes the effects of changing temperature and sea level on income distribution and individual decisions about fertility, education, and mobility. Climate change intensifies poverty and income inequality creating favorable conditions for urbanization and migration from low- to high-latitude countries. Encompassing slow- and fast-onset mechanisms, our projections suggest that climate change will induce the voluntary and forced displacement of 100 to 160 million workers (200 to 300 million climate migrants of all ages) over the course of the 21st century. However, under current migration laws and policies, forcibly displaced people predominantly relocate within their country and merely 20% of climate migrants opt for long-haul migration to OECD countries. If climate change induces generalized and persistent conflicts over resources in regions at risk, we project significantly larger cross-border flows in the future.
    Keywords: climate change; Conflicts; inequality; migration; Urbanization
    JEL: E24 F22 J24 J61 Q15 Q54
    Date: 2019–09
  42. By: Volovik Nadezhda (Gaidar Institute for Economic Policy)
    Abstract: In November 2018, the Organization for Economic Development and Cooperation (OECD) presented its updated forecasts2, according to which global economic growth would slow down from the current 3.7 percent (the OECD’s estimate as of 2018) to 3.5 percent in 2019–2020. Earlier, the OECD’s experts expected a 3.7 percent growth in global GDP in 2019. But growth in trade and investments slowed down on the back of the US protectionist policy. Growth in interest rates and appreciation of the US dollar exchange rate resulted in the capital outflow from developing countries and depreciation of their currencies. In the OECD zone, monetary stimulation measures are gradually scaled down. Trade conflicts between the US and China constitute a separate negative factor. According to the OECD’s estimate, imposition by the US of a 25 percent duty on Chinese imports and adoption by China of similar measures may cost the global economy, US economy and Chinese economy 0.5 percent of GDP, 0.8 percent of GDP and 1 percent of GDP, respectively.
    Keywords: Russian economy, foreign trade, terms of trade, regional pattern
    JEL: F10 F13 F19
    Date: 2019
  43. By: Costa, Francisco Junqueira Moreira da; Pessoa, João Paulo
    Abstract: This paper employs a unified theoretical framework to estimate the effect ofchanges within China on the Brazilian and World’s economy. Based on the Ricar-dian model of trade of Costinotet al.(2012), we perform counterfactuals exercises toanalyze how industries in Brazil would have performed in the absence of the Chineseascension. We discuss two main counterfactual exercises. First, we model produc-tivity growth in China as the main lever by which Chinese supply and demandconditions evolve and affect economies worldwide. Second, we study how changesin composition of Chinese demand (taste) affects trade flows around the world. Thetwo counterfactual exercises together suggest that changes in China’s comparativeadvantage hampered manufacturing sectors abroad, in particular labor-intensiveBrazilian manufacture producers. We find no support for the idea of a China tasteshock driving demand towards raw materials. Our model suggests that if Chinatriggered a commodity boom in the world, or at least in Brazil, this was drivenmostly by increased income in China. And any changes in China’s tastes over prod-ucts contributed to moderate such boom. Specifically, our model indicates that theboom of soybeans cultivation in Brazil is due to changes in Brazilian comparativeadvantage paired with a level increase in demand for this product within China.
    Date: 2019–09–30

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