nep-int New Economics Papers
on International Trade
Issue of 2019‒10‒28
29 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Brexit Impacts: Opportunities for German-Irish Trade By Morgenroth, Edgar
  2. TBTs, Firm Organization and Labour Structure By Giorgio Barba Navaretti; Lionel Fontagné; Gianluca Orefice; Giovanni Pica; Anna Rosso
  3. Board of directors and export-spillovers: What is the impact on extensive margins of trade? By Lööf, Hans; Viklund-Ros, Ingrid
  4. Reordering international trade: what will it cost? By Rasa Stasiukynaite
  5. Are global value chains receding? The jury is still out. Key findings from the analysis of deflated world trade in parts and components By Guillaume Gaulier; Aude Sztulman; Deniz Ünal
  6. Brain Drain or Brain Gain? International labor mobility and human capital formation By Anelí Bongers; Carmen Díaz-Roldán; José L. Torres
  7. Oil Curse, Economic Growth and Trade Openness By Vespignani, Joaquin; Raghavan, Mala; Majumder, Monoj Kumar
  8. Should the Caribbean Look to the East? An Assessment of Caribbean Export Potential By Lorde, Troy; Alleyne, Antonio; Hosein, Roger; Yifei, Mu
  9. Tariffs and Politics: Evidence from Trump’s Trade Wars By Fetzer, Thiemo; Schwarz, Carlo
  10. Revisiting Mexican migration in the Age of Mass Migration. New evidence from individual border crossings By David Escamilla-Guerrero
  11. Exchange rate pass-through to import prices: Accounting for changes in the Eurozone trade structure By Antonia Lopez-Villavicencio; Valérie Mignon
  12. How the iPhone Widens the US Trade Deficit with China: the Case of the iPhone X By Yuqing Xing
  13. Does Technological Investment Have an Impact on Outward Foreign Direct Investment? A Microeconometric Analysis on Indian Manufacturing Firms By Nazrina Haque
  14. WTO'ing a Resolution to the China Subsidy Problem By Chad P. Bown; Jennifer A. Hillman
  15. Firm dynamics in an global and uncertain economy By Gigout, Timothee
  16. Collective Reputation in Trade: Evidence from the Chinese Dairy Industry By Jie Bai; Ludovica Gazze; Yukun Wang
  17. The sources of international investment income in emerging market economies By Joyce, Joseph
  18. The Belt and Road turns five By Uri Dadush
  19. Are Exchange Rate, Exports and Domestic Investment in Tunisia Cointegrated? A Comparison of ECM and ARDL Model By Bakari, Sayef; Tiba, Sofien
  20. Unit Values for Import and Export Price Indexes – A Proof of Concept By Don Fast; Susan Fleck
  21. “Constructuring” the First Maritime Globalization. Competing Shipping Subsidies and the Race for the Commercial Spaces 1881‐1914 By Giulio Mellinato
  22. An Assessment of Global Formula Apportionment By Ruud A. de Mooij; Li Liu; Dinar Prihardini
  23. Trade Liberalization and Industrial Growth in Pakistan: Co integration Analysis (1990-2017 By Azam, Amir; Khan, Amir
  24. International Diversification Impact on Firm Performance: A Study of the East African Community (EAC) Firms By Aniceth Kato Mpanju
  25. Cognitive and Non-Cognitive Abilities of Immigrants: New Perspectives on Migrant Quality from a Selective Immigration Country By Naghsh Nejad, Maryam; Schurer, Stefanie
  26. Forecasting Swiss Exports using Bayesian Forecast Reconciliation By Florian Eckert; Rob Hyndman; Anastasios Panagiotelis
  28. Challenges for the European governments regarding the China's One Belt One Road Initiatives in Europe By Krystian Duczek
  29. Chile's export diversification since 1960: A free market miracle or mirage? By Lebdioui, Amir

  1. By: Morgenroth, Edgar
    Abstract: While there is still uncertainty whether and how the UK will leave the EU, a hard or no-deal Brexit is still a possibility. Under such a scenario the EU will impose most favoured nation tariffs on imports from the UK, which will impact on import prices. This will change the relative attractiveness of imports from other EU countries compared to that for imports from the UK. This means that sourcing from alternative markets. This paper considers imports from the UK to Germany and Ireland and the degree to which these can be replaced by Irish or German goods respectively. The analysis uses detailed 6 digit trade data for 2017 in conjunction with the EU-WTO tariffs, which are assumed to be passed through perfectly. The impact of additional transport costs given the longer transport distance is accounted for. The results suggest that there are significant opportunities for trade reorientation with potential in over half of the all the six digit product groups that are currently imported from the UK.
    Keywords: Brexit, trade diversion, market share
    JEL: F13 F14 F17
    Date: 2019–10–17
  2. By: Giorgio Barba Navaretti (Università degli Studi di Milano and LdA.); Lionel Fontagné (Paris School of Economics – Université Paris I, CEPII and CESifo.); Gianluca Orefice (CEPII and CESifo.); Giovanni Pica (Università della Svizzera Italiana, LdA and CSEF.); Anna Rosso (Università degli Studi di Milano, LdA and CEP)
    Abstract: Trade shocks in export markets may affect the employment composition and the organization of exporting firms. In particular, the imposition of new technological standards in destination markets may force exporters to adjust the firm's organization to comply and cope with the additional complexity of the new production process. This paper investigates the effects on firms' organization of shocks induced by the introduction of Technical Barriers to Trade (TBTs) in exporting countries. It relies on the Specific Trade Concern (STC) data released by the WTO to identify trade-restrictive TBT measures, combined with matched employer-employee data for the population of French exporters over the period 1995-2010. It also exploits information on the list of product-destinations served by each French exporter. Controlling for tariffs and for a given state of technology in the sector of the firm, it finds that exporters respond to increased complexity associated with restrictive Technical Barriers to Trade at destination by raising the share of managers at the expense of blue collars, white collars and professionals. This paper is related to the growing literature exploring how firms organize production in hierarchies to economize on their use of knowledge. It is also related to the well beaten literature on the labour market effects of trade, but from the perspective of exports rather than imports.
    Keywords: skill composition, labor demand, job polarization, trade barriers.
    Date: 2019–10–18
  3. By: Lööf, Hans (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Viklund-Ros, Ingrid (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: Increased export experience on the board of non-exporting firms has a causal effect on their propensity to enter foreign markets in later periods. Using a universal set of Swedish employer-employee panel data for the period 2000-2014, this paper finds evidence on spillover from exporters to non-exporters through outside board directors. The identification strategy to account for endogenous selection of external board members relies on external instruments and applications of different instrumental variable approaches, capturing also unobserved heterogeneity. Our findings are robust to controlling for export background among managers and employees, as well as firm size, human capital, total factor productivity, productivity spillovers, firm location and industry classification.
    Keywords: Export spillovers; extensive margins of trade; outside directors; employer-employee data; endogeneity
    JEL: C26 F14 L20 M20 O33
    Date: 2019–10–16
  4. By: Rasa Stasiukynaite (Bank of Lithuania)
    Abstract: This paper overviews early research which has gone into the possible effects of the recent tensions in international trade. We have witnessed the increase and the promises of future increase in tariffs, in the case of the new trade policy of the US, and the promises of the future increase in the non-tariff barriers (possibly even tariffs) in the UK’s decision to leave the EU. The focus in the research is mostly on trade policy and on the results, insights, and conclusions, while the discussion on the econometric specification or estimation of the models is out of scope.
    Keywords: international trade, tariffs, gains from trade, protectionism, trade policy, Brexit
    Date: 2019–10–15
  5. By: Guillaume Gaulier (Banque de France, Centre de recherche de la Banque de France - Banque de France); Aude Sztulman (DIAL - Développement, institutions et analyses de long terme, LEDa - Laboratoire d'Economie de Dauphine - Université Paris-Dauphine); Deniz Ünal (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique)
    Abstract: In this article, we examine the dynamics of Global Value Chains (GVCs) since the 2000s. Did itshow a marked expansion up to the Great Recession and did GVCs begin a downturn in the2010s? To better understand the evolution of GVCs at the world level, we use very detailed tradedata for 2000 to 2016, which distinguishes different production stages along the GVC. Inparticular, among intermediate goods, we focus on Parts and Components (P&C) rather thansemi-finished products since the manufacture of P&C corresponds to activities more embedded inGVCs. We control, also, for the global business cycle and price effects using an originalproduction stages deflator based on detailed bilateral trade unit-values. This new GVC indicatorshows moderate growth over the study period with no trend reversal.
    Keywords: global value chains,parts and components – P&C,trade in volume,electronics
    Date: 2019–10–14
  6. By: Anelí Bongers (Department of Economics, University of Málaga); Carmen Díaz-Roldán (Department of Economics, University of Castilla-La Mancha); José L. Torres (Department of Economics, University of Málaga)
    Abstract: This paper studies the impact of international labor migration on human capital investment in both destination and origin countries using an integrated theoretical framework. We develop a two-country Dynamic Stochastic General Equilibrium human capital investment model with international labor mobility, in which both decision to migrate and to invest in skill acquisition are endogenous. We show that human capital formation process in the countries of origin is very sensible to migration policies implemented by destination countries. Our results show that human capital accumulation in the country of origin is encouraged by the possibility of emigration to higher labor productivity countries, supporting the recent view of the "brain gain" hypothesis. Productivity shocks hitting the destination country reduces human capital investment by natives but increase human capital investment in the country of origin when migration is allowed. Finally, we ?nd that migration increases world human capital, increasing the stock of human capital in both destination and origin countries.
    JEL: F22 J24 J61
    Date: 2018–12
  7. By: Vespignani, Joaquin (Tasmanian School of Business & Economics, University of Tasmania); Raghavan, Mala (Tasmanian School of Business & Economics, University of Tasmania); Majumder, Monoj Kumar (Tasmanian School of Business & Economics, University of Tasmania)
    Abstract: An important economic paradox that frequently arises in the economic literature is that countries with abundant natural resources are poor in terms of real gross domestic product per capita. This paradox, known as the ‘resource curse’, is contrary to the conventional intuition that natural resources help to improve economic growth and prosperity. Using panel data for 95 countries, this study revisits the resource curse paradox in terms of oil resources abundance for the period 1980–2017. In addition, the study examines the role of trade openness in influencing the relationship between oil abundance and economic growth. The study finds that trade openness is a possible avenue to reduce the resource curse. Trade openness allows countries to obtain competitive prices for their resources in the international market and access advanced technologies to extract resources more efficiently. Therefore, natural resource–rich economies can reduce the resource curse by opening themselves to international trade.
    Keywords: Oil rents, real GDP per capita, trade openness, dynamic panel data model
    JEL: E23 F13 Q43
    Date: 2019
  8. By: Lorde, Troy; Alleyne, Antonio; Hosein, Roger; Yifei, Mu
    Abstract: This study assesses the export potential of East Asia for the Caribbean within the framework of a structural gravity model. Export potential of 30% is estimated to be available to the Caribbean within East Asia. Individual markets with the greatest export potential are Singapore, China, and Japan. Various simulations of a free trade agreement between the two regions suggest the existence of even larger potential. The challenge for the Caribbean is that without significant structural changes, the region will be unable to exploit East Asia’s potential. Greater effort at the industry and policy levels will be critical for export expansion.
    Keywords: export potential, trade complementarity, natural trading partner, non-traditional markets, structural gravity, free trade agreement, Caribbean, East Asia
    JEL: C33 C51 C53 F14 F17
    Date: 2019–06–03
  9. By: Fetzer, Thiemo (University of Warwick and CAGE, Department of Economics); Schwarz, Carlo (University of Warwick and CAGE, Department of Economics)
    Abstract: We use the recent trade escalation between the US,China, the European Union (EU), Canada and Mexico to study whether retaliatory tariffs are politically targeted. Using aggregate and individual-level data we find evidence that the retaliatory tariffs disproportionally targeted areas that swung to Trump in 2016, but not to other Republican candidates. We propose a novel simulation approach to construct counterfactual retaliation responses. This allows us to both quantify the extent of political targeting and assess the general feasibility. Further, the counterfactual retaliation responses allow us to shed light on the potential trade-offs between achieving a high degree of political targeting and managing the risks to ones own economy. China, while being constrained in its retaliation design, appears to put large weight on achieving maximal political targeting. The EU seems successful in maximizing the degree of political targeting, while at the same time minimizing the potential damage to its own economy and consumers.
    Keywords: trade war ; tariff ; targeting ; political economy ; elections ; populism
    JEL: F13 F14 F16 F55 D72
    Date: 2019
  10. By: David Escamilla-Guerrero
    Abstract: This paper introduces and analyses the Mexican Border Crossing Records (MBCRs), an unexplored data source that records aliens crossing the Mexico-United States land border at diverse entrance ports from 1903 to 1955. The MBCRs identify immigrants and report rich demographic, geographic and socioeconomic information at the in¬dividual level. These micro data have the potential to support cliometric research, which is scarce for the Mexico-United States migration, especially for the beginnings of the flow (1884–1910). My analysis of the MBCRs suggests that previous literature might have inaccurately described the initial patterns of the flow. The results diverge from historical scholarship because the micro data capture better the geographic composition of the flow, allowing me to characterize the initial migration patterns with more precision. Overall, the micro data reported in the MBCRs offer the opportunity to address topics that concern the economics of migration in the past and present.
    Keywords: migration, micro data, Mexico
    JEL: N01 N36
    Date: 2019–10–24
  11. By: Antonia Lopez-Villavicencio; Valérie Mignon
    Abstract: This paper assesses whether the emergence of new trading partners (i.e., China and Eastern Europe) as suppliers reduces the exchange rate pass-through (ERPT) in Eurozone countries which differ regarding their external exposure. Using bilateral data on import prices at the two-digit sector level, we find that (i) pass-through is complete in many cases, (ii) ERPT from China is higher than from the United States, and (iii) there is no compelling evidence of a generalized link between ERPT and the increasing integration of some emerging markets in European imports. We also show that the launch of the single currency has not provoked a sufficient change in the part of trade exposed to exchange rate fluctuations and, therefore, has not affected the pass-through. Overall, the trend of liberalization in new players' markets has not altered the competitive environment such as to induce exporters of other countries to absorb exchange rate depreciations.
    Keywords: Exchange Rate Pass-through;Import Prices;China;Eastern Europe;Eurozone
    JEL: E31 F31 F4 C22
    Date: 2019–06
  12. By: Yuqing Xing (National Graduate Institute for Policy Studies, Tokyo, Japan)
    Abstract: Through an examination of the case of the iPhone X, this paper demonstrates that Chinese companies involved in production of the iPhone X have moved up the value chain. According to the bill of materials, those companies contributed 25% of the value added of the iPhone X. About 45% of the value added of the iPhone X originated from Japan, Korean and other economies. The iPhone trade remains a significant element of the statistics distortion of the Sino-US bilateral trade imbalance. In terms of gross value, the import of one iPhone X results in a $332.75 trade deficit for the US; measured in terms of value added, the deficit is a mere $104. Depreciation of the yuan has very limited power to counterbalance the tariffs imposed by the Trump administration because foreign value added embedded in Chinese exports is 33.9% on average. Simulation results show that to counterbalance a 25% tariff, the yuan would have to depreciate by 43.3% against the US dollar on average; and to fully compensate for a 25% tariff burden on the iPhone X, a 400% depreciation of the yuan would be necessary. Hedging the risk of the punitive US tariffs by depreciation of the yuan is mission impossible.
    Date: 2019–10
  13. By: Nazrina Haque (BRAC University, Dhaka)
    Abstract: The main purpose of this paper is to look for characteristics that determine Outward FDI with microeocnometric techniques on firm level data. Many studies have explored different dimensions of trade but little trace has been found on outward FDI which is an important channel of global exposure. To explore this area, this paper works with firm level data of Indian manufacturing firm after trade liberalization, aiming to investigate the relationship between technological investment and outward FDI. As the study is dealing with limit observation in the dependent variable, implies estimating the model with censored data, the best approach to estimate the model could have been with Tobit model. The first model is the standard Tobit model, taking the intensity of outward FDI as dependent variable and technological investment with other control variables as independent variables along with time and year dummy. It showed, there is a significant and positive relation between technological investment and outward FDI. Other characteristics were found statistically significant in choosing outward FDI. This standard Tobit model did not account for potential endogeneity, which was controlled in model 2 by taking one year lag of all independent variables. After controlling for possible endogeneity the impact of technological investment on outward FDI was persistent along with some other characteristics. The third model was considered the best approach in this paper, as it controlled for possible unobserved heterogeneity. Time averages of all the independent variables were taken as control to account for unobserved heterogeneity that is correlated with the independent variables. This approach works as fixed effect in the model. However, there could be other unobserved heterogeneity which are not correlated with the independent variables, in order to control for that, this model also considers random effect along with fixed effect approach. This model is predicted to be the most robust one among the other models. The results show that, technological investment has a statistical and positive impact on outward FDI. Along with that, investment in knowledge has a statistically significant positive impact on outward FDI. Unlike them, age, size and profit have negative impact on outward FDI. To have more robust results, this paper expands the model using tobit-double hurdle estimation.
    Keywords: Firm level, Microeconometric Analysis, Outward FDI
    JEL: C34 D22 C33
    Date: 2019–10
  14. By: Chad P. Bown (Peterson Institute for International Economics); Jennifer A. Hillman (Georgetown University Law Center)
    Abstract: The United States, European Union, and Japan have begun a trilateral process to confront the Chinese economic model, including its use of industrial subsidies and deployment of state-owned enterprises. This paper seeks to identify the main areas of tension and to assess the legal-economic challenges to constructing new rules to address the underlying conflict. It begins by providing a brief history of subsidy disciplines in the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO) predating any concerns introduced by China. It then describes contemporary economic problems with China's approach to subsidies, their impact, and the apparent ineffectiveness of the WTO's Agreement on Subsidies and Countervailing Measures (ASCM) to address them. Finally, it calls for increased efforts to measure and pinpoint the source of the problems--in a manner analogous to how the Organization for Economic Cooperation and Development (OECD) took on agricultural subsidies in the 1980s--before providing a legal-economic assessment of proposals for reforms to notifications, evidence, remedies, enforcement, and the definition of a subsidy.
    Keywords: WTO, subsidy, state-owned enterprise, dispute settlement
    JEL: F13
    Date: 2019–10
  15. By: Gigout, Timothee
    Abstract: In this dissertation, I study firm dynamics in the context of a global and uncertain economy. In the first chapter, I show how uncertainty generates reallocation among French multinationals. In a second chapter, I study how an increase in demand uncertainty negatively impacts firm growth and how the persistence of this effect depends on the synchronicity of the firm dynamic with that of the other firms in its sector. Finally in the third chapter, I highlight how the extensive margin of international trade contribute to shape the direction, quantity and content of the international transmission of knowledge.
    Keywords: International Economics; Uncertainty; Firm Dynamics; Heterogeneity
    JEL: D22 D81 F1 F14 F23 F61 G15 O33 O34 O4
    Date: 2019–09–03
  16. By: Jie Bai (Center for International Development at Harvard University); Ludovica Gazze; Yukun Wang
    Abstract: Collective reputation implies an important externality. Among firms trading internationally, quality shocks about one firm’s products could affect the demand of other firms from the same origin country. We study this issue in the context of a large-scale scandal that affected the Chinese dairy industry in 2008. Leveraging rich firm-product level administrative data and official quality inspection reports, we find that the export revenue of contaminated firms dropped by 84% after the scandal, relative to the national industrial trend, and the spillover effect on non-contaminated firms is measured at 64% of the direct effect. Notably, firms deemed innocent by government inspections did not fare any better than noninspected firms. These findings highlight the importance of collective reputation in international trade and the challenges governments might face in signaling quality and restoring trust. Finally, we investigate potential mechanisms that could mediate the strength of the reputation spillover. We find that the spillover effects are smaller in destinations where people have better information about parties involved in the scandal. New firms are more vulnerable to the collective reputation damage than established firms. Supply chain structure matters especially in settings where firms are less vertically integrated and exhibit fragmented upstream-downstream relationships.
    Keywords: Global Supply Chain
    JEL: F10 F14 L15 L66 O10 O19
    Date: 2019–10
  17. By: Joyce, Joseph
    Abstract: We investigate international investment income flows in 26 emerging market countries during the period of 1998-2015. Net investment income registered a deficit for this group of countries of between 2-3% of GDP during this period. This deficit has been dominated by payments on foreign direct investment liabilities, which is consistent with the change in the composition of the external liabilities of these countries. Our results indicate that both capital account and trade openness are associated with the deficits on direct investment income. In addition, there was a small deficit in portfolio investment income, which is affected by the development of domestic financial markets and investor protection. Other investments’ income and the income from foreign exchange reserves have a negligible role in total investment income.
    Keywords: investment income, FDI, emerging markets
    JEL: F21 F32
    Date: 2019–10–07
  18. By: Uri Dadush
    Abstract: China’s Belt and Road Initiative (BRI) is an international trade and development strategy. Launched in 2013, it is one of the ways China asserts its role in world affairs and captures the opportunities of globalisation. The BRI has the potential to enhance development prospects across the world and in China, but that potential might not be realised because the BRI’s objectives are too broad and ill-defined, and its execution is too often non-transparent, lacking in due diligence and uncoordinated.
    Keywords: China, Belt & Road Initiative (BRI), Xi Jinping, Ancient Silk Road, World Trade Organization (WTO), Five-point plan, Steel, Infrastructure, Energy
    Date: 2019–01
  19. By: Bakari, Sayef; Tiba, Sofien
    Abstract: The objective of the paper is to investigate the effect of the exchange rate, exports, and domestic investment by adopting a comparative approach between the ECM and ARDL procedure for the case of the Tunisian economy during the period of study1966-2017. Our insights of Error Correction Model recorded that the Domestic Investment and Exports have a negative impact on Exchange Rate. In accordance with the highlights of the ARDL model. Understanding these controversial nexus seems to be vitality, especially, for this current critical situation of the Tunisian economy.
    Keywords: Exchange rate, Exports, Domestic investment, ECM, ARDL.
    JEL: E2 E22 F00 F13 F14 F31 F68
    Date: 2019
  20. By: Don Fast; Susan Fleck
    Abstract: The U.S. Bureau of Labor Statistics’ import and export price indexes (MXPI) are published from an ever decreasing sample relative to the size of trade. The Principal Federal Economic Indicator has an opportunity to retain and regain detailed MXPI using unit values calculated from comprehensive administrative trade data. Unit values are known to be biased, although bias is less prevalent among homogeneous products. This research presents a new methodological and statistical approach to blend unit values into official price indexes. First, a proof of concept for identifying homogeneous items is based on an analysis of two export products – dairy and vegetables – for 2015-16. The results provide a prototype and a roadmap for a consistent and testable approach that aligns with the concepts in official MXPI measures, maximizes the use of high-frequency data, and mitigates unit value bias. Applying the prototype, 52 of 142 import and 50 of 129 export 5-digit BEA End Use categories are identified as homogeneous using administrative data. This coverage accounts for 35 and 39 percent of the 2016 value of imports and exports, respectively. Incorporating unit values has the potential to deepen coverage and expand publication of detailed import and export price indexes.
    JEL: E3 E31 F0 F1 F3
    Date: 2019–10
  21. By: Giulio Mellinato
    Abstract: The aim of this paper is to investigate the process of politicization of the highest levels of the global commercial connectivity network, during its formative decades. The paper highlights the role played by the differences among the national approaches, along with some of the key mechanisms driving the development of the maritime sector during the considered period. As the preferred instrument for the development of the national system of long-range maritime connectivity, the shipping subsidies were diffused almost everywhere. However, the interactions with the institutional, sociotechnical and commercial national environments produced very dissimilar outcomes in different countries, with direct reflections in the construction of the commercial connectivity conditions, acting indirectly also over the evolution of the geopolitical scenario.
    JEL: F02 F14 F52 N40 N70
    Date: 2019–10
  22. By: Ruud A. de Mooij; Li Liu; Dinar Prihardini
    Abstract: Formula apportionment as a way to attribute taxable profits of multinationals across jurisdictions is receiving increased attention. This paper reviews existing literature and discusses experiences in selective federal states to evaluate the economic properties of formula apportionment relative to the current international tax regime that is based on separate accounting. It highlights major advantages, such as the elimination of profit shifting within multinational groups; and it discusses new distortions and the impact on tax competition. The analysis exploits different datasets to assess the direct revenue implications for individual countries under alternative formulas. The distributional effects across countries are found to be large, reflecting major discrepancies between where profits are currently attributed and where factors of production are located or sales take place. The largest losses appear in investment hubs (i.e. countries with a disproportionate ratio of foreign direct investment to GDP), while several large advanced countries are likely to gain. Developing countries gain most likely if employment receives a large weight in the formula; they also tend to benefit, on average, from a formula based on sales by destination.
    Date: 2019–10–11
  23. By: Azam, Amir; Khan, Amir
    Abstract: Free trade is the absence of any restrictions either through import duties or otherwise of the commercial movements of the goods and services as well as of the finances between a particular country and the rest of the world. The importance of trade is typically expressed relative to the size of a country’s economy. Through this paper we will analyze the attempts in Pakistan to liberalize her foreign trade regime. We apply co integration analysis, which will tell us about the long run relationship between trade liberalization and industrial growth. The time period of the study has been set 1990-2017 and the Error Correction Model after the existence of co-integration is applied showing the speed of adjustment i.e. the lag of error term has been found negative and significant with existence of long run relationship between trade liberalization and Industrial Growth in Pakistan with a convergence mode of relationship that confirmed that in case of any structural change or policy shocks the relationship can be bring back to its normal position with an speed of -0.21.
    Keywords: Trade Liberalization, Industrial Growth, Error Correction Model, Pakistan
    JEL: F14 L7
    Date: 2019–04–18
  24. By: Aniceth Kato Mpanju (Tanzania Institute of Accountancy)
    Abstract: The major purpose of this research was to analyse the impact of internationalisation strategy on industry performance among the East African Community (EAC) firms. We used a sample to 279 domestic firms and multinational companies (MNC?s) subsidiaries in the manufacturing sector, service sector and agriculture sector. The impact of internationalisation strategy on firm performance was investigated by logistic regression analysis using statistical package for social sciences (SPSS). The results confirm that performance is perceived to be stronger by firms with foreign connections as compared to domestic firms, and that the MNC?s subsidiaries experience better (sustainable development) performance of their functions as compared to local firms.
    Keywords: EAC firms, Firm performance, International diversification, Internationalisation theories, MNCs
    JEL: L25
    Date: 2019–10
  25. By: Naghsh Nejad, Maryam (University of Technology, Sydney); Schurer, Stefanie (University of Sydney)
    Abstract: Economic theory suggests that selective immigration policies based on observable characteristics will affect unobservable migrant quality. Little empirical evidence exists on this hypothesis. We quantify traditionally unobservable components of migrant quality in Australia, a high-migrant share OECD country with a selective immigration policy. We proxy migrant quality with widely-accepted measures of personality and cognitive ability. Both first- and second-generation immigrants outperform natives on socially-beneficial personality traits. While first-generation migrants suffer language-ability penalties, their off-spring overcome these penalties and outperform natives in cognitive ability. Immigrants do not outperform natives in the labor market, a finding which may be explained by heterogeneous wage returns to non-cognitive ability.
    Keywords: economics of immigration, migrant quality, selection on unobservables, non-cognitive ability, cognitive ability
    JEL: F22 J61 J24 J31 J62 O15
    Date: 2019–10
  26. By: Florian Eckert (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Rob Hyndman (Department of Econometrics & Business Statistics, Monash University, Australia); Anastasios Panagiotelis (Department of Econometrics & Business Statistics, Monash University, Australia)
    Abstract: This paper conducts an extensive forecasting study on 13,118 time series measuring Swiss goods exports, grouped hierarchically by export destination and product category. We apply existing state of the art methods in forecast reconciliation and introduce a novel Bayesian reconciliation framework. This approach allows for explicit estimation of reconciliation biases, leading to several innovations: Prior judgment can be used to assign weights to specific forecasts and the occurrence of negative reconciled forecasts can be ruled out. Overall we find strong evidence that in addition to producing coherent forecasts, reconciliation also leads to improvements in forecast accuracy.
    Keywords: Hierarchical Forecasting, Bayesian Forecast Reconciliation, Swiss Exports, Optimal Forecast Combination.
    JEL: C32 C53 E17
    Date: 2019–07
  27. By: Valentina Kalygina (RUDN University, Moscow); Anna Chernysheva (RUDN University, Moscow)
    Abstract: The purpose of this study is to determine the most effective marketing strategies that would be effective for the international companies in the Russian FMCG market under the import substitution policy. The condition of FMCG market is one of the main indicators of the economic situation in any country. Moreover, this market is very sensitive to any changes in the external environment. That is why it requires from the companies a special approach to the development of marketing strategies. To achieve the goal, analytical alignment methods, statistical methods, methods of analysis and synthesis were used. The study covers the period from 2015 to 2018. The marketing strategies of the 4 largest TNCs (Nestle, Coca Cola, Danone and P&G) are analyzed. The results of the study prove that the Russian FMCG market continues to be of undoubted interest for foreign companies. Their investments to the Russian economy are growing, the number of provided jobs is increasing. The most appropriate marketing strategy in the Russian FMCG market for international companies is the glocalization strategy. The import substitution does not deny the creation of a special mechanism for attracting direct foreign investment, which opens up great opportunities for foreign companies. The study contributes to researches in the field of marketing strategies of international companies in the FMCG markets in the period of global economic instability and sanctions wars. The study can open a new discussion on the feasibility of applying a glocalization strategy in emerging markets in the context of import substitution.
    Keywords: FMCG market, glocalization, international marketing strategy, import substitution
    JEL: F23 M31 L19
    Date: 2019–10
  28. By: Krystian Duczek (University of Szczecin)
    Abstract: The author of the poster will present issues that are raised in front of the European governments regarding the completion of cooperation in the construction of the China's One Belt One Road Initiatives that has an impact on increasing the import and export between Europe and China. The author will also present the possibilities to reduce the trade deficit of imports and exports between Europe and China. Will discuss the issue related to the construction of a transshipment port in Lodz Poland and the impact of this project on the stronger position of Poland in the European Union and the measurable benefits of creating a "transshipment center and warehouse for Europe". The author will also undertake analysis of the recent political and economic decisions which are having a strategic significance on the prospective development of the China's One Belt One Road Initiatives.
    Keywords: International business, The New Silk Road, International policy, China, Transportation
    Date: 2019–10
  29. By: Lebdioui, Amir
    Abstract: Conventional wisdom has proclaimed Chile's recent economic development a ?free market miracle?. In an examination of Chile's export diversification experience, this article departs from that view. By analysing the dynamics underlying the emergence of the salmon, fruit, forestry and wine sectors in Chile's export basket since the 1960s, the study sheds light on the crucial role of industrial policy in the process of capability accumulation that shapes new industries. The article undertakes a qualitative historical analysis of the scope and nature of policy interventions in each of the four sectors and conducts a quantitative policy evaluation using the difference-in-difference method. It finds that public institutions are essential in overcoming market failures inhibiting the emergence of new industries. Specifically, it shows that the government has a key role to play as a catalyst of human capital accumulation, as a venture capitalist, in trade promotion, and in ensuring ?national? sector reputation through a strong regulatory and quality control role. By elaborating on the dynamic process of structural transformation and capability accumulation, this article contributes to theoretical debates on the role of vertical policies in the emergence of new competitive sectors, and debates relating to static versus dynamic approaches to comparative advantage.
    Keywords: Chile; exports; forestry; wine; salmon; fruit; industrial policy; difference in difference method
    JEL: J1
    Date: 2019–10–03

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