nep-int New Economics Papers
on International Trade
Issue of 2019‒11‒11
forty-four papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Measuring Fifty Years of Trade Globalization By Nicole Palan; Nadia Simoes; Nuno Crespo
  2. FOREIGN SOURCING AND EXPORTING By Juan A. Máñez Castillejo; María E. Rochina-Barrachina; Juan A. Sanchis Llopis
  3. DOES TERRORISM AFFECT FOREIGN DIRECT INVESTMENT? By Federico Carril-Caccia; Juliette Milgram Baleix; Jordi Paniagua
  4. Growth Gains from Trade By Sugata Marjit; Anwesha Basu; C. Veeramani
  5. International human capital mobility and FDI: Evidence from G20 countries By Takaoka, Sumiko; Etzo, Ivan
  6. The role of non-tariff measures in the agri-food sector: positive or negative instruments for trade? By Santeramo, Fabio Gaetano; Lamonaca, Emilia
  7. The Economic Effects of Trade Policy Uncertainty By Dario Caldara; Matteo Iacoviello; Patrick Molligo; Andrea Prestipino; Andrea Raffo
  8. Oil Curse, Economic Growth and Trade Openness By Vespignani, Joaquin L.; Raghavan, Mala; Majumder, Monoj Kumar
  9. Do Multinationals Transplant Their Business Model? By Dalia Marin; Linda Rousova; Thierry Verdier
  10. Engel's law in the commodity composition of exports By Sung-Gook Choi; Deok-Sun Lee
  11. What Does Financial Crisis Tell Us About Exporter Behavior and Credit Reallocation? By Jiao, Yang; Wen, Yi
  12. Modelling the Consequences of the U.S.-China Trade War and Related Trade Frictions for the U.S., Chinese, Australian and Global Economies By J.A. Giesecke; R. Waschik; N.H. Tran
  13. Capital Controls and Firm Performance By Eugenia Andreasen; Sofía Bauducco; Evangelina Dardati
  14. Migration and Post-Conflict Reconstruction: The Effect of Returning Refugees on Export Performance in the Former Yugoslavia By Dany Bahar; Andreas Hauptmann; Cem Özgüzel; Hillel Rapoport
  15. Parental Economic Shocks and Infant Health: The Effect of Import Competition in the U.S. By Patralekha Ukil
  16. A Consequence of Coerced Free Trade: Biological Living Standards of Korea during the Port-Opening Period, 1876-1910 By Kim, Duol; Park, Heejin
  17. Foreign Direct Investment, Information Technology and Economic Growth Dynamics in Sub-Saharan Africa By Simplice A. Asongu; Nicholas M. Odhiambo
  18. The ethics of African regional and continental integration By Kohnert, Dirk
  19. Breaking Up: Experimental Insights into Economic (Dis)Integration By Gabriele Camera; Lukas Hohl; Rolf Weder
  20. Global value chain participation and exchange rate pass-through By Georgiadis, Georgios; Gräb, Johannes; Khalil, Makram
  21. Migrant Inventors and the Technological Advantage of Nations By Dany Bahar; Prithwiraj Choudhury; Hillel Rapoport
  22. Renewable Energy, Trade Performance and the Conditional Role of Finance and Institutional Capacity of sub-Sahara African Countries By Opeyemi Akinyemi; Uchenna R. Efobi; Simplice A. Asongu; Evans S. Osabuohien
  23. On the Heterogeneous Welfare Gains and Losses from Trade By Carroll, Daniel R.; Hur, Sewon
  24. Linkages and spillover effects of South African foreign direct investment in Botswana and Kenya By Felix A. Nandonde; Richard Adu-Gyamfi; Tinaye S. Mmusi; Herbert Wamalwa; Simplice A. Asongu; Johannes P. Opperman; Jeremiah R. Makindara
  25. Foreign Direct Investment, Domestic Investment and Green Growth in Nigeria: Any Spillovers? By Akintoye V. Adejumo; Simplice A. Asongu
  26. Integration into \'economie-monde and regionalisation of the Central Eastern European space since 1989 By Natalia Zdanowska
  27. Globalization, protectionisms and new equilibriums theory By Vicini, Andrea
  28. The Spanish Current Account Revisited: Descriptive and Empirical Research from 1993 to 2018 By Rodrigo, Alejandro
  29. The influence of EU migration policy on regional free movement in the IGAD and ECOWAS regions By Castillejo, Clare
  30. The Well-Being of Nations: Estimating Welfare from International Migration By Lee, Sanghoon; Lee, Seung Hoon; Lin, Jeffrey
  31. What Drives Chinese Overseas M&A Investment? Evidence from Micro Data By Clemens Fuest; Felix Hugger; Samina Sultan; Jing Xing
  32. The Problem of Anti-Dumping Protection and Developming Country Exports By Tharakan, P.K.M.
  33. Do Immigrants Threaten U.S. Public Safety? By Orrenius, Pia M.; Zavodny, Madeline
  34. Slavery, corruption, and institutions By Rauscher, Michael; Willert, Bianca
  35. The Surprising Sluggishness of French Exports: Reviewing Competitiveness and its Determinants By Charlotte Emlinger; Sébastien Jean; Vincent Vicard
  36. VIETNAM SMEs' PARTICIPATION IN REGIONAL ECONOMIC INTEGRATION. Survey Results of Three Manufacturing Sectors By Nguyen Dinh Chuc; Anh Ngoc Nguyen; Nguyen Thi Kim Thai
  37. Optimal Energy Taxes and Subsidies under a Cost-Effective Unilateral Climate Policy: Addressing Carbon Leakage By Peter Kjær Kruse-Andersen; Peter Birch Sørensen
  38. Revisiting the Trade and Unemployment Nexus: Empirical Evidence from the Nigerian Economy By Stephen T. Onifade; Ahmet Ay; Simplice A. Asongu; Festus V. Bekun
  39. Trade Wars: Nobody Expects the Spanish Inquisition By Bekkers, Eddy; Francois, Joseph; Rojas-Romagosa, Hugo
  40. Revisiting the Trade and Unemployment Nexus: Empirical Evidence from the Nigerian Economy By Stephen T. Onifade; Ahmet Ay; Simplice A. Asongu; Festus V. Bekun
  41. Regional Integration and Energy Sustainability in Africa: Exploring the Challenges and Prospects for ECOWAS By Opeyemi Akinyemi; Uchenna Efobi; Evans Osabuohien; Philip Alege
  42. The Liberalization of Food Marketing in Sub-Saharan Africa By Seppala, Pekka
  43. Regionalization in East Asia-Pacific? An Elusive Process By Ojendal, Joakim
  44. Regionalization in Southern Africa By Oden, Bertil

  1. By: Nicole Palan (Graz Schumpeter Center, University of Graz, Austria); Nadia Simoes (Instituto Universitário de Lisboa (ISCTE - IUL), ISCTE Business School Economics Department; BRU - IUL (Business Research Unit), Lisboa, Portugal); Nuno Crespo (Instituto Universitário de Lisboa (ISCTE - IUL), ISCTE Business School Economics Department; BRU - IUL (Business Research Unit), Lisboa, Portugal)
    Abstract: Although trade globalization is a multi-faceted phenomenon, researchers often capture its magnitude by trade volume alone. In order to gain a deeper understanding of the phenomenon we propose measures that also account for the interconnectedness of countries, for geographical distance, and for the role of individual sectors in bilateral trade. We also improve upon existing indices by moving from a country-level analysis (internationalization) to a truly global perspective (globalization). We measure trade globalization using data from CHELEM (CEPII) over a period of 50 years, covering 72 countries for the sub-period 1967–1990 and 84 countries for 1994-2016. The results show substantial increases in all dimensions of globalization, despite substantial differences between the measures, highlighting the need to analyze globalization with a comprehensive set of indicators. Regarding the number of positive bilateral trade flows, globalization was almost completed by 2016. The importance of distance also diminished throughout the period analyzed, but neighboring countries still share stronger trade relations. Results indicate that trade globalization for high-tech sectors varies significantly from the evolution seen in other sectors, especially large, low-tech sectors. The latter tend to show the highest level of trade globalization over the whole period, but the former group could catch up considerably.
    Keywords: Globalization; trade interdependencies; multidimensional; measures; distance; sectors
    JEL: F10 F14
    Date: 2019–11
  2. By: Juan A. Máñez Castillejo (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).); María E. Rochina-Barrachina (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).); Juan A. Sanchis Llopis (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).)
    Abstract: The aim in this paper is analysing the role of sourcing intermediate inputs internationally on export decisions, distinguishing whether intermediate are sourced from firms belonging to the same business group or from independent suppliers. To analyse firm’s export decision, we use a specification that also accounts for sunk costs and the accumulated experience in export markets (i.e., foreign markets learning). We consider that importing intermediates might have direct and indirect effects (operating through productivity) on the export participation decision. The direct effects on exporting are isolated once we control for productivity and the effects of belonging to an international group. We use a manufacturing panel dataset drawn from the Spanish Survey on Business Strategies (ESEE) for the period 2006-2014. Both productivity and inward or outward FDI increase the probability of exporting. Moreover, our results uncover the existence of sunk costs and export markets learning, and also to the relevant role played by intermediate imports in firms’ export choices. Their effects act both through the (indirect) channel of enhancing firms’ productivity and through a direct effect related to product upgrading, more competitive selling prices, or learning from firm’s importing experience.
    Keywords: Export participation, export market learning, intermediate imports, learning from imports, inward and outward FDI, global value chains, TFP, manufacturing, firm-level data
    JEL: D24 F14 F61 L11
    Date: 2019–11
  3. By: Federico Carril-Caccia (University of Deusto (Spain).); Juliette Milgram Baleix (University of Granada (Spain).); Jordi Paniagua (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).)
    Abstract: The present work assesses the impact of terrorism suffered by a country directly and by neighbour countries on the capacity of attracting greenfield investment. To this end, we estimate a theoretical consistent structural gravity equation which accounts for most known estimation biases: “home bias”, endogeneity and multilateral resistance. We exploit a dataset which covers domestic and foreign investment of 162 countries during 2003-2016 in both extensive and intensive margins. Our methodological strategy allows us to identify the effect of a country-specific time-varying characteristic (terrorism), while controlling for time-varying multilateral resistance. Relative to domestic firm creation, results show that terrorism refrains more the number of greenfield projects. Then, our study highlights that foreign investors are reluctant to invest in a country or in a region affected by terrorism. Though, our results also evidence that good governance appears as an effective tool to counterbalance this damage.
    Keywords: Home bias, gravity equation, terrorism, FDI, greenfield investments, institutions
    JEL: C23 F21 F23 O17
    Date: 2019–11
  4. By: Sugata Marjit; Anwesha Basu; C. Veeramani
    Abstract: This paper revisits the relationship between international trade and economic growth. We measure trade openness indices separately with respect to intermediate inputs and final goods and find that it is the former which turns out to be significant in explaining growth gains from trade. Using sectoral level data from WORLD KLEMS Database on industrial productivity and output and global input output tables to construct the measures of trade openness, our empirical analysis covering 21 countries, 30 industries and 15 years reveals that trade openness in terms of intermediate and capital goods lead to economic growth. Openness in terms of final consumer goods turns out to be insignificant in most specifications. We also estimate traditional cross country growth regressions where we use trade data to construct the two trade openness indices for 174 countries. Here again, we find that it is import of intermediate and capital goods that results in real per-capita income growth. Our empirical results are in line with our theoretical model, where we show, without imposing any transplanted structure in our model that trade in intermediate goods directly leads to higher growth relative to autarky as opposed to trade in final goods.
    Keywords: trade, openness, growth, gains from trade, per capital income
    JEL: C10 F10 O40
    Date: 2019
  5. By: Takaoka, Sumiko; Etzo, Ivan
    Abstract: Human talent will be (or is already) scarce. We view international students as the source of high-skilled labour force, which satisfies the skill and task requirement of firms, particularly those anticipating overseas expansion, and argue whether the international student stock in a country is an indication of positive future prospect for the acquiror country in cross-border mergers. Using the international students’ stocks between pairs of acquiror countries of origin and target firms’ countries for bilateral mergers and acquisitions (M&A) activities, we exploit the within variation of both bilateral M&A activities and bilateral international student stocks between G20 countries. The formation of human capital signals that potential acquirors can access skilled workers and boosts the bilateral M&A activities. Results further indicate that the marginal effect of international students from target country in acquiror country has larger impact than that from acquiror country in target country.
    Keywords: FDI, G20, International students mobility
    JEL: F21 F22 G34
    Date: 2019–10–29
  6. By: Santeramo, Fabio Gaetano; Lamonaca, Emilia
    Abstract: The contribution shows the state of the art of “trade and non-tariff measures” debate in the agri-food sector. It provides an overview on trends in trade and in the level of policy interventions over the last decades, in order to shed lights on potential cause-effect relations. Comparing the evolution of trade and of non-tariff measures (NTMs) in agri-food sector, it appears that the pervasiveness of NTMs is likely to be strictly related to changes in trade patterns. Although the main scope of NTMs is to correct market inefficiencies, they may have a two-fold role: trade catalysts or trade barriers. The potential relationships between trade and NTMs, however, differ across involved countries, products under regulation, and types of measure. Indeed, evidence from the empirical literature support either the “standards as catalysts” and the “standards as barriers” points of view. Our contribution aims at outlining how NTMs and trade influence each other.
    Keywords: Trade; Agri-food sector; Non-tariff measure; Standard as catalyst; Standard as barrier
    JEL: F13 F53 Q17 Q18
    Date: 2019
  7. By: Dario Caldara; Matteo Iacoviello; Patrick Molligo; Andrea Prestipino; Andrea Raffo
    Abstract: We study the effects of unexpected changes in trade policy uncertainty (TPU) on the U.S. economy. We construct three measures of TPU based on newspaper coverage, firms' earnings conference calls, and aggregate data on tari rates. We document that increases in TPU reduce investment and activity using both firm-level and aggregate macroeconomic data. We interpret the empirical results through the lens of a two-country general equilibrium model with nominal rigidities and firms' export participation decisions. In the model as in the data, news and increased uncertainty about higher future tariffs reduce investment and activity.
    Keywords: Trade Policy Uncertainty ; Textual Analysis ; Tariffs ; Investment ; Uncertainty Shocks
    JEL: C1 D22 D80 E12 E32 F13 H32
    Date: 2019–09
  8. By: Vespignani, Joaquin L. (University of Tasmania); Raghavan, Mala (University of Tasmania); Majumder, Monoj Kumar (Sher-e-Bangla Agricultural University)
    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 resource 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: 2019–10–01
  9. By: Dalia Marin; Linda Rousova; Thierry Verdier
    Abstract: What determines whether or not multinational firms transplant the mode of organisation to other countries? We embed the theory of knowledge hierarchies in an industry equilibrium model of monopolistic competition to examine how the economic environment may affect the decision of multinational firms about transplanting the mode of organization to other countries. We test the theory with original and matched parent and affiliate data on the level of decentralization of 660 Austrian and German multinational firms and 2200 of their affiliate firms in Eastern Europe. We find that three factors stand out in promoting the multinational firm’s decision to transplant the organisational form to the affiliate firm in the host country: a competitive host market, the human resource policy of the multinational firm, and when an innovative technology is transferred to the host country. These factors increase the respective probabilities of organizational transfer by 7, 21, and 24 percentage points.
    Keywords: organizational economics of multinational firms, trade and organisation, the theory of the firm, organizational transfer between countries
    JEL: D23 F12 F23 F61
    Date: 2019
  10. By: Sung-Gook Choi; Deok-Sun Lee
    Abstract: Different shares of distinct commodity sectors in production, trade, and consumption illustrate how resources and capital are allocated and invested. Economic progress has been claimed to change the share distribution in a universal manner as exemplified by the Engel's law for the household expenditure and the shift from primary to manufacturing and service sector in the three sector model. Searching for large-scale quantitative evidence of such correlation, we analyze the gross-domestic product (GDP) and international trade data based on the standard international trade classification (SITC) in the period 1962 to 2000. Three categories, among ten in the SITC, are found to have their export shares significantly correlated with the GDP over countries and time; The machinery category has positive and food and crude materials have negative correlations. The export shares of commodity categories of a country are related to its GDP by a power-law with the exponents characterizing the GDP-elasticity of their export shares. The distance between two countries in terms of their export portfolios is measured to identify several clusters of countries sharing similar portfolios in 1962 and 2000. We show that the countries whose GDP is increased significantly in the period are likely to transit to the clusters displaying large share of the machinery category.
    Date: 2019–11
  11. By: Jiao, Yang (Fudan University); Wen, Yi (Federal Reserve Bank of St. Louis)
    Abstract: Using Japanese firm data covering the Japanese financial crisis in the early 1990s, we find that exporters' domestic sales declined more significantly than their foreign sales, which in turn declined more significantly than non-exporters' sales. This stylized fact provides a new litmus test for different theories proposed in the literature to explain a trade collapse associated with a financial crisis. In this paper we embed the Melitz's (2003) model into a tractable DSGE framework with incomplete financial markets and endogenous credit allocation to explain both the Japanese firm-level data and the well-documented aggregate trade collapse during a financial crisis in world economic history. The model highlights the role of credit reallocation between non-exporters and exporters as the main mechanism in explaining exporters' behaviors and trade collapse following a financial crisis.
    Keywords: Credit Crunch; Credit Reallocation; Exporter Behavior; Financial Crisis; Heterogeneous Firms; Trade Collapse
    JEL: E22 E32 E44 F00 F10 F11 F41
    Date: 2019–09–24
  12. By: J.A. Giesecke; R. Waschik; N.H. Tran
    Abstract: We model the U.S.-China trade war, a potential U.S.-China trade deal, and the effects of import restrictions on Australian coal. We begin by examining the effects of the bilateral tariff exchange on the economies of the U.S., China, Australia and the rest of the world. We then go on to examine a scenario in which a U.S.-China trade deal is struck involving removal of the trade war tariffs and an undertaking by China to reduce its bilateral trade surplus with the U.S. by eliminating all pre-trade war tariffs on U.S. goods.We end by noting that there are dimensions to the U.S.-China tariff exchange that go beyond concerns on the part of the U.S. that are purely economic. In this context, the tariff exchange can be viewed in part as a continuation of a wider recent pattern of use of trade instruments to advance political aims. Australia itself appears to have been subject to such instruments, with reports of a slowdown in processing of Australian coal imports through Chinese ports. We simulate the effects on Australia and China of a rise in Chinese barriers to Australian coal imports.
    Keywords: trade policy, trade war, coal embargo, multi-region CGE model
    JEL: F13 F17 C68
    Date: 2019–07
  13. By: Eugenia Andreasen; Sofía Bauducco; Evangelina Dardati
    Abstract: This paper studies the effects of capital controls on firms' production, investment and exporting decisions. We empirically characterize the firm's responses to the introduction of a capital control, using the Chilean encaje implemented between 1991 and 1998 as a laboratory. Motivated by our findings, we build a general equilibrium model with heterogeneous firms, financial constraints and international trade and calibrate it to the Chilean economy. We find that capital controls re- duce aggregate production and investment while increasing exports, the share of exporters and TFP. The effects of capital controls are exacerbated for firms in more capital-intensive sectors and for exporters.
    Date: 2019–10
  14. By: Dany Bahar; Andreas Hauptmann; Cem Özgüzel; Hillel Rapoport
    Abstract: During the early 1990s Germany offered temporary protection to over 600,000 Yugoslavian refugees fleeing war. By 2000, many had been repatriated. We exploit this natural experiment to investigate the role of migrants in post-conflict reconstruction in the former Yugoslavia, using exports as outcome. Using confidential social security data to capture intensity of refugee workers to German industries –and exogenous allocation rules for asylum seekers within Germany as instrument– we find an elasticity of exports to return migration between 0.08 to 0.24. Our results are stronger in knowledge-intensive industries and for workers in occupations intensive in analytical and managerial skills.
    Keywords: Migration;Refugees;Knowledge Diffusion;Management;Exports;Productivity
    JEL: O33 F14 F22
    Date: 2019–10
  15. By: Patralekha Ukil (University of Connecticut)
    Abstract: Much of the literature providing causal evidence of parental economic conditions on infant health has focused on the impact of positive economic or income shocks, as opposed to negative ones. The concept of loss aversion makes it clear that individuals react differently when facing potential losses compared to potential gains, and that losses tend to be twice as psychologically powerful as gains. Moreover, long-term and persistent negative shocks such as those arising through increasing import competition could have different effects on health compared to reasonably temporary shocks such as lay-offs, recessions or business cycle fluctuations. This paper examines the effect of parental or household economic shocks on infant health by exploiting the increasing import competition from China between 1990 and 2000 on U.S. local labor markets as a plausibly exogenous source of variation in economic conditions. It also utilizes additional variation stemming from parental age within the local labor markets, thereby controlling for local labor market trends and allowing the analysis of heterogeneous impacts. Results indicate that commuting zones in the U.S. which experienced increased import penetration over time also experienced an increased incidence of low birthweight and a decrease in average birthweight. Further analyses show that the above results are driven by relatively younger parents as opposed to older parents.
    Keywords: Infant health; Birthweight; Parental Income; International Trade; Income Inequality; Import Competition; Manufacturing Decline
    JEL: F14 F16 F61 I14 J13
    Date: 2019–09
  16. By: Kim, Duol; Park, Heejin
    Abstract: After several hundred years of closed-door policy, Korea finally opened its ports in 1876. Historians have traditionally claimed that the port-opening was coerced by foreign countries, deteriorated the Korean economy, and made Korea become a colony. We examined this traditional view by measuring biological living standards and found the opposite. The height of the Hangryu Deceased, who died on the street but no one claimed their body, increased by 0.82 cm in this period. This finding implies that the colonization of Korea originated from political impotence that could not realize the benefit of foreign trade. This result also proposed that economic growth during the colonial period could be more related to free trade than colonial policies or new institutions
    Date: 2019–10
  17. By: Simplice A. Asongu (Yaoundé/Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa)
    Abstract: The research assesses how information and communication technology (ICT) modulates the effect of foreign direct investment (FDI) on economic growth dynamics in 25 countries in Sub-Saharan Africa for the period 1980-2014. The employed economic growth dynamics areGross Domestic Product (GDP) growth, real GDP and GDP per capita while ICT is measured by mobile phone penetration and internet penetration. The empirical evidence is based on the Generalised Method of Moments. The study finds that both internet penetration and mobile phone penetration overwhelmingly modulate FDI to induce overall positive net effects on all three economic growth dynamics. Moreover, the positive net effects are consistently more apparent in internet-centric regressions compared to “mobile phone†-oriented specifications. In the light of negative interactive effects, net effects are decomposed to provide thresholds at which ICT policy variables should be complemented with other policy initiatives in order to engender favorable outcomes on economic growth dynamics. Practical and theoretical implications are discussed.
    Keywords: Economic Output; Foreign Investment; Information Technology; Sub-Saharan Africa
    JEL: E23 F21 F30 L96 O55
    Date: 2019–01
  18. By: Kohnert, Dirk
    Abstract: The decision of African leaders on the creation of an African Continental Free Trade Area (AfCFTA) in 2018 was not merely a political decision with economic implications. It has significant and complex ethical dimensions too. This, not only concerning a possible trade-off between economic growth and well-being, employment, the depletion of natural resources and related ecological and gender problems. AfCFTA will also impact on growing xenophobia, nationalism and populism, the likely outcome of growing capital and labour mobility
    Keywords: AfCFTA,Regional integration,ethics,international trade,protectionism,nationalism,xenphobia,African Studies
    JEL: F13 F15 F22 F35 F52 F54 N17 N37 N97 O2 O55 Z13
    Date: 2019
  19. By: Gabriele Camera (Economic Science Institute, Chapman University and University of Bologna); Lukas Hohl (University of Basel); Rolf Weder (University of Basel)
    Abstract: Standard international economic theory suggests that people should embrace economic integration because it promises large gains. But recent events such as Brexit indicate a desire for economic disintegration. Here we report results of an experiment, based on a strategic analytical framework, of how size and distribution of potential gains from integration in?uence outcomes and individuals’ inclination to embrace integration. We ?nd that cross-country inequality in potential gains acts as a friction to realize those gains. This suggests that to better understand recent phenomena, international economic theory should account for distributional considerations and behavioral aspects it currently ignores.
    Keywords: Endogenous institutions; Globalization; Indefinitely repeated games; Social dilemmas
    JEL: C70 C90 F02
    Date: 2019
  20. By: Georgiadis, Georgios; Gräb, Johannes; Khalil, Makram
    Abstract: This paper draws a causal link between the rise of global value chain participation and the decline of exchange rate pass-through to import prices over the last decades. We first present a structural two-country model in order to illustrate how participation in global value chains can impact exchange rate pass-through to import prices. In the model, the sensitivity of an economy's domestic-currency production costs to exchange rate changes rises as it participates more in global value chains by importing a larger share of its intermediate inputs. The increased sensitivity of the economy's domestic-currency production costs to exchange rate changes translates into a higher sensitivity of its domestic-currency export prices. The latter implies a reduction of the sensitivity of the economy's foreign-currency export prices – i.e. its trading partner's local-currency import prices – to exchange rate changes. Hence, an increase in the economy's global value chain participation implies a fall in its trading partner's exchange rate pass-through to import prices. We then provide empirical evidence in a cross-country panel dataset for the time period from 1995 to 2014 that is consistent with the mechanisms spelled out in the structural model. In particular, the data suggest that exchange rate pass-though to export prices is higher in economies which participate more in global value chains, and that exchange rate pass-though to import prices is lower in economies whose trading partners participate more in global value chains. Quantitatively, our estimates imply that the rise in global value chain participation can account for about 50% of the decline in exchange rate pass-through to import prices since the mid-1990s. JEL Classification: F32, F41, F62
    Keywords: exchange rate pass-through, global value chain participation
    Date: 2019–11
  21. By: Dany Bahar; Prithwiraj Choudhury; Hillel Rapoport
    Abstract: We investigate the relationship between the presence of migrant inventors and the dynamics of innovation in the migrants’ receiving countries. We find that countries are 25 to 50 percent more likely to gain advantage in patenting in certain technologies given a twofold increase in the number of foreign inventors from other nations that specialize in those same technologies. For the average country in our sample this number corresponds to only 25 inventors and a standard deviation of 135. We deal with endogeneity concerns by using historical migration networks to instrument for stocks of migrant inventors. Our results generalize the evidence of previous studies that show how migrant inventors "import" knowledge from their home countries which translate into higher patenting. We complement our results with micro-evidence showing that migrant inventors are more prevalent in the first bulk of patents of a country in a given technology, as compared to patents filed at later stages. We interpret these results as tangible evidence of migrants facilitating the technology-specific diffusion of knowledge across nations.
    Keywords: Innovation;Migration;Patent;Technology;Knowledge
    JEL: O31 O33 F22
    Date: 2019–10
  22. By: Opeyemi Akinyemi (CEPDeR, Covenant University, Ota, Nigeria); Uchenna R. Efobi (CEPDeR, Covenant University, Ota, Nigeria); Simplice A. Asongu (Yaoundé, Cameroon); Evans S. Osabuohien (CEPDeR, Covenant University, Ota, Nigeria)
    Abstract: The paper investigates the dynamic relationship between renewable energy usage and trade performance in sub-Saharan Africa (SSA), while considering the conditioning role of corruption control, regulatory quality, and the private sector access to finance. Focusing on 42 SSA countries for the period 2004-2016, and engaging the System generalized method of moments (GMM) technique for its estimation, this study found a negative relationship between renewable energy usage and the indicators of trade performance. However, with corruption control, improved regulatory framework, and better finance for the private sector, there are potentials for a positive net impact of renewable energy usage on manufacturing export. For renewable energy and total trade nexus, we find that improved regulatory framework and better finance for the private sector are important conditioning structures. These findings are significant because they highlight the different important structures of SSA countries that improve the effect of renewable energy use on trade outcomes. For instance, the consideration of the financial, institutional and regulatory frameworks in SSA countries in conditioning the renewable energy-trade nexus stipulates a clear policy pathway for countries in this region as the debate for transition to the use of renewable energy progresses.
    Keywords: Environment; Green growth; Trade performance; Pollution; Renewable energy; sub-Saharan Africa
    JEL: C5 F1 Q4 Q5
    Date: 2019–01
  23. By: Carroll, Daniel R. (Federal Reserve Bank of Cleveland); Hur, Sewon (Federal Reserve Bank of Cleveland)
    Abstract: How are the gains and losses from trade distributed across individuals within a country? First, we document that tradable goods and services constitute a larger fraction of expenditures for low-wealth and low-income households. Second, we build a trade model with nonhomothetic preferences—to generate the documented relationship between tradable expenditure shares, income, and wealth—and uninsurable earnings risk—to generate heterogeneity in income and wealth. Third, we use the calibrated model to quantify the differential welfare gains and losses from trade along the income and wealth distribution. In a numerical exercise, we permanently reduce trade costs so as to generate a rise in import share of GDP commensurate with that seen in the data from 2001 to 2014. We find that households in the lowest wealth decile experience welfare gains over the transition, measured by permanent consumption equivalents, that are 57 percent larger than those in the highest wealth decile.
    Keywords: trade gains; inequality; consumption;
    JEL: E21 F10 F13 F62
    Date: 2019–09–23
  24. By: Felix A. Nandonde (Morogoro, Tanzania); Richard Adu-Gyamfi (Geneva, Switzerland); Tinaye S. Mmusi (Gaborone, Botswana); Herbert Wamalwa (University of Nairobi, Kenya); Simplice A. Asongu (Yaoundé, Cameroon); Johannes P. Opperman (University of Stellenbosch, South Africa); Jeremiah R. Makindara (Morogoro, Tanzania)
    Abstract: In recent decades, the impact of South African foreign direct investment in Africa has been captured by research and policy. This paper investigates linkages and spillover effects of South African foreign direct investment in Botswana and Kenya. The study uses primary data to investigate qualitative implications. The findings reveal that South African firms operate in sectors including retail, food-processing, and information and communication technology. Linkages forged in these sectors include supply, employee, joint venture, service, and institutional nexuses. Supply and service linkages create observable spillovers which point to the fact that younger local firms tend to benefit from South African firms in terms of technology transfer and training opportunities. Host country policymakers are therefore encouraged to provide favourable incentives for foreign direct investment to promote entrepreneurship. Other policy implications are also discussed.
    Keywords: Foreign direct investment, linkages, spillover effects, South Africa, Botswana, Kenya
    JEL: E23 F21 F30 L96 L98 O55
    Date: 2019–01
  25. By: Akintoye V. Adejumo (Obafemi Awolowo University, Ile-Ife, Nigeria); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: Globally, investments in physical and human capital have been identified to foster real economic growth and development in any economy. Investments, which could be domestic or foreign, have been established in the literature as either complements or substitutes in varying scenarios. While domestic investments bring about endogenous growth processes, foreign investment, though may be exogenous to growth, has been identified to bring about productivity and ecological spillovers. In view of these competing–conflicting perspectives, this chapter examines the differential impacts of domestic and foreign investments on green growth in Nigeria during the period 1970-2017. The empirical evidence is based on Auto-regressive Distributed Lag (ARDL) and Granger causality estimates. Also, the study articulates the prospects for growth sustainability via domestic or foreign investments in Nigeria. The results show that domestic investment increases CO2 emissions in the short run while foreign investment decreases CO2 emissions in the long run. When the dataset is decomposed into three sub-samples in the light of cycles of investments within the trend analysis, findings of the third sub-sample (i.e. 2001-2017) reveal that both types of investments decrease CO2 emissions in the long run while only domestic investment has a negative effect on CO2 emissions in the short run. This study therefore concludes that as short-run distortions even out in the long-run, FDI and domestic investments has prospects for sustainable development in Nigeria through green growth.
    Keywords: Investments; Productivity; Sustainability; Growth
    JEL: E23 F21 F30 O16 O55
    Date: 2019–01
  26. By: Natalia Zdanowska
    Abstract: The fall of the Berlin Wall in 1989, modified the relations between cities of the former communist bloc. The European and worldwide reorientation of interactions that followed raises the question of the actual state of historical relationships between Central Eastern European cities, but also with ex-USSR and ex-Yugoslavian ones. Do Central and Eastern European cities reproduce trajectories from the past in a new economic context? This paper will examine their evolution in terms of trade exchanges and air traffic connexions since 1989. They are confronted with transnational firm networks for the recent years. The main contribution is to show a progressive formation of several economic regions in Central and Eastern Europe as a result of integration into Braudel's \'economie-monde.
    Date: 2019–10
  27. By: Vicini, Andrea
    Abstract: The recent decision of the US President to adopt a protectionist policy vs. Chinese goods could trigger a domino effect in the global context. The conquest by the Chinese economy of new markets such as the African countries is part of a strategy which includes a network of alliances in order to mitigate the effects of the policy of protectionism. Similar responses also seem to have been considered by the USA. In the current, highly connected context, in which the value chain is globalized i.e. highly segmented in many countries, there is little space for isolationist or protectionist policies. Thus the capability to form networks of alliances between nations, even temporary in nature or limited to specific areas, seems the key strategy to mitigate negative effects and win the global challenge.
    Keywords: Globalization, China, USA, protectionism, alliances
    JEL: F1 F2 F62
    Date: 2019
  28. By: Rodrigo, Alejandro
    Abstract: The current account in general and the trade balance in particular can be useful indicators of competitiveness. Capital investments are undertaken to increase productive capacity and enhance competitive position, but if competitors also invest wisely or our own investments generate a misallocation of resources the competitive position may remain unchanged or even get worse. Empirical research regarding the sustainability of persistent current account deficits for the Spanish economy aims to provide evidence about the predictability of future financial crises. In addition, further analysis is performed concerning the recent current account adjustment in order to answer the inquiries relating its continuity.
    Keywords: current account deficits, trade balance, capital expenditure, unit labor cost, competitive position, intertemporal budget constraint, sustainability.
    JEL: F21 F30 F32 F41
    Date: 2019–10–18
  29. By: Castillejo, Clare
    Abstract: Establishing free movement regimes is an ambition for most African regional economic communities, and such regimes are widely understood as important for regional integration, growth and development. However, in recent years the EU's migration policies and priorities in Africa - which are narrowly focused on stemming irregular migration to Europe - appear to be in tension with African ambitions for free movement. This paper examines how the EU's current political engagement and programming on migration in Africa is impacting on African ambitions to establish free movement regimes. It focuses first on the continental level, and then looks in-depth at two regional economic communities: The Intergovernmental Authority on Development (IGAD) in the Horn of Africa, and the Economic Community of West African States (ECOWAS). The paper begins by examining how free movement has featured within both EU and African migration agendas in recent years, describing how this issue has been increasingly sidelined within the EU's migration policy framework, while receiving growing attention by the African Union. The paper then discusses the impact of EU migration policies and programmes on progress towards regional free movement in the IGAD region. It finds that the EU is broadly supportive of efforts to establish an IGAD free movement regime, although in practice gives this little priority in comparison with other migration issues. The paper goes on to examine the EU's engagement in the ECOWAS region, which is strongly focused on preventing irregular migration and returning irregular migrants. It asks whether there is an innate tension between this EU agenda and the ambitions of ECOWAS to fully realise its existing free movement regime, and argues that the EU's current engagement in West Africa is actively undermining free movement. Finally, the paper discusses the differences between the EU's approach to migration and free movement in these two regions. It offers recommendations regarding how the EU can strengthen its support for free movement in both these regions, as well as more broadly in Africa.
    Date: 2019
  30. By: Lee, Sanghoon (University of British Columbia); Lee, Seung Hoon (Georgia Institute of Technology); Lin, Jeffrey (Federal Reserve Bank of Philadelphia)
    Abstract: The limitations of GDP as a measure of welfare are well known. We propose a new method of estimating the well-being of nations. Using gross bilateral international migration flows and a discrete choice model in which everyone in the world chooses a country in which to live, we estimate each country’s overall quality of life. Our estimates, by relying on revealed preference, complement previous estimates of economic well-being that consider only income or a small number of factors, or rely on structural assumptions about how these factors contribute to wellbeing.
    Keywords: International migration; quality of life; GDP
    JEL: D63 F22 I31 J61
    Date: 2019–08–27
  31. By: Clemens Fuest; Felix Hugger; Samina Sultan; Jing Xing
    Abstract: In recent years Chinese foreign acquisitions have increased significantly. In Europe and the US, these investments are often criticized. Critics argue that Chinese investors outbid other investors with help from their government, that the acquisitions lead to undesirable technology transfer or that they may have negative consequences for the employees of the target firm. We use a large deal-level dataset on cross-border acquisitions to investigate whether Chinese foreign acquisitions differ from cross-border investment coming from other countries. We find that relative to non-Chinese investors, Chinese acquirers indeed appear to be different in some dimensions. They focus on targets with higher debt levels and lower profitability. At the same time, they don’t seem to pay more for targets with given characteristics, questioning the view that they are subsidized to outbid other investors. Policy initiatives like the Belt and Road Initiative and Made in China 2025 influence state-owned but not private Chinese investors, suggesting that geopolitical or technology interests play a role. In the years after the takeover, target companies acquired by Chinese investors exhibit lower growth in capital productivity but a higher growth of employee compensation.
    Date: 2019
  32. By: Tharakan, P.K.M.
    Abstract: The most often used form of contingent protection is the anti-dumping (AD) mechanism. In 1999 the number of AD cases initiated accounted for 86.32 per cent of the total of three main types of contingent protection measures used; countervailing duty (CVD) cases launched accounted for 10 per cent; and Safeguard investigations (SG) started accounted for 3.68 per cent. But it should be noted that the CVD investigations have shown a clear increase between 1997 and 1999. Imposition of AD duties requires affirmative finding of dumping and material injury (or the threat thereof) to the like product domestic industry. The AD system used by (an increasing number of) WTO Member countries is riddled with a number of ambiguities and operational problems. A few industrialized countries accounted for nearly 90 per cent AD cases launched till early 1990s. In recent years there has been a spectacular growth and proliferation of AD investigations. The number of AD investigations launched in 1999 was more than double that of those started in 1995. Our analysis of the data shows the surprising fact that two-thirds of the anti-dumping investigations started against the small, vulnerable economies (countries with a GNP of US$ 50 billion or less and a per capita GNP of US$ 800 or less in 1997) during 1987-1997 were filed by the developing and the newly industrialized countries. The number of definitive AD measures imposed against the small vulnerable economies by the developing countries and newly industrialized countries was slightly greater than those taken by the industrialized countries. So the proliferation of anti-dumping measures has clearly worked to the detriment of small, vulnerable economies. The narrow definition of the product in AD investigations increases the probability of finding dumping and injury. The decision to 'construct normal value' increases the room for administrative discretion. Non-market economies are particularly vulnerable. Market shares of vulnerable low income economies, and vulnerable lower middle income countries are sometimes cumulated with those of co-respondents like USA, Russia and Brazil. This is a perfectly legitimate practice under WTO rules, but it substantially increases the probability of affirmative injury finding. In most jurisdictions, systematic counterfactual analysis is not used in calculating the injury margin. The public interest clause seems to give greater weight to the producers interests than those of the users. To use the anti-dumping system as a tool to facilitate the transition to a liberalized trade regime is a very risky strategy. Neither the retaliatory use of the AD mechanism, nor pleading for special and preferential treatment are the roads which small vulnerable economies should take. They have much to gain by trying to build a broad coalition not only with like-minded governments but also with potential partners in different Member states (consumers' organizations, big retail chains, manufacturers with offshore production facilities) who seem to be concerned about the adverse effects of anti-dumping measures. The first best option would be to dismantle the AD mechanism as a separate trade policy unit and merge the defendable elements of it with the competition policy units of the Members. If this is not politically feasible, various 'fall back positions' could be considered. The scope of the AD system could be limited to monopolizing dumping (particularly predatory cases) alone. Progressive replacement of the AD system with a flexible Safeguard system is a suggestion, which in spite of the criticism it has attracted, deserves serious consideration. In the meantime small vulnerable economies could try to find common ground with other Members and attempt to modify at least the most objectional features of the system such as the cumulation of market shares of the respondents and the lack of counterfactual analysis in the injury determination. The public interest consideration should be seriously taken into account by estimating the inJury of AD decisions not only to the producers but to the economy as a whole. In addition, some of the proposals put forward by practitioners for change on specific points in the Anti-dumping Agreement, deserve consideration. Policy proposals of the type outlined above are economically consistent and defendable without resorting to special interest arguments. And they could serve the interest of all Members and certainly those of small, vulnerable economies.
    Keywords: International Development
  33. By: Orrenius, Pia M. (Federal Reserve Bank of Dallas); Zavodny, Madeline (University of North Florida)
    Abstract: Opponents of immigration often claim that immigrants, particularly those who are unauthorized, are more likely than U.S. natives to commit crimes and that they pose a threat to public safety. There is little evidence to support these claims. In fact, research overwhelmingly indicates that immigrants are less likely than similar U.S. natives to commit violent and property crimes, and that areas with more immigrants have similar or lower rates of violent and property crimes than areas with fewer immigrants. There are relatively few studies specifically of criminal behavior among unauthorized immigrants, but the limited research suggests that these immigrants also have a lower propensity to commit crime than their native-born peers, although possibly a higher propensity than legal immigrants. Evidence about legalization programs is consistent with these findings, indicating that a legalization program reduces crime rates. Meanwhile, increased border enforcement, which reduces unauthorized immigrant inflows, has mixed effects on crime rates. A large-scale legalization program, which is not currently under serious consideration, has more potential to improve public safety and security than several other policies that have recently been proposed or implemented.
    Keywords: crime; immigration; public safety
    JEL: J18 J61 K14
    Date: 2019–08–01
  34. By: Rauscher, Michael; Willert, Bianca
    Abstract: We develop a model where firms profit from coercing workers into employment under conditions violating national law and international conventions and where bureaucrats benefit from accepting bribes from detected perpetrators. Firms and bureaucrats are hetero-geneous. Employers differ in their unscrupulousness regarding the use of slave labour whereas bureaucrats have differing intrinsic motivations to behave honestly. Moreover, there is a socially determined warm-glow effect: honest bureaucrats feel better if their colleagues are honest too. The determination of bribes is modelled via Nash bargaining between the firm and the corrupt civil servant. It is shown that multiple equilibria and hysteresis are possible. Depending on history, an economy may be trapped in a locally stable high-corruption, high-slavery equilibrium and major changes in government policies may be necessary to move the economy out of this equilibrium. Moreover, we show that trade bans that are effective in reducing slavery in the export industry tend to raise slavery in the remainder of the economy. It is possible that this leakage effect dominates the reduction of slavery in the export sector.
    Keywords: Coerced Labour,Modern Slavery,Corruption,Social Norms,Trade-Related Process Standards
    JEL: D73 F16 J47
    Date: 2019
  35. By: Charlotte Emlinger; Sébastien Jean; Vincent Vicard
    Abstract: The large deterioration in France’s current account balance during the euro’s first decade was mainly due to its poor export performances. Although there have been no more market share losses since 2012, French export growth lags behind that of our European partners. Given that labor cost have grown more slowly in France than in Germany since 2011, the sluggishness of French export performance appears surprising. To date, however, the rebalancing of labor costs under way only represents between a quarter and a third of the divergence observed between 1999 and the crisis. Moreover, whether through social contribution exemptions in France or Germany’s introduction of a minimum wage, the relative decrease has mainly concerned low wage brackets, which have little influence on exports. Such limited “catch-up” is symptomatic of the difficulty that the Eurozone has in implementing coordinated rebalancing policies across its Member States. The absence of any marked improvement in French export performances remains difficult to explain by traditional determinants. French specialisation has moved away from Germany’s to become closer to Italy’s, but this does not seem to have been particularly problematic. The hypothesis of a hysteresis effect, according to which the decline in French industrial production is at the origin of an inability to gain back export market shares, is not confirmed analysis. The unquestionable deterioration in non-price competitiveness remains a valuable explanation, but it is difficult to relate it to clearly identified causes, whether as regards quality or investment. Investment statistics suggest that France does not suffer from a lack of R&D expenditures in comparison with its principal neighbours; on the contrary, their level contrasts with the relative decline in manufacturing output. This finding raises the question of how far R&D activities have a ripple effect on French manufacturing. This aspect is even more important if one considers that France’s economy is characterised by the major role played by its multinationals, whose activities abroad have grown more rapidly than those of other large Eurozone countries. The resulting foreign direct investment revenues do much to explain that France has a near equilibrium current account. In this respect, the French economy suffers more from a loss of industrial production sites than from any lack of competitiveness.
    Date: 2019
  36. By: Nguyen Dinh Chuc (Center for Sustainable Urban Development); Anh Ngoc Nguyen (Development and Policies Research Center (DEPOCEN), Hanoi, Vietnam); Nguyen Thi Kim Thai
    Abstract: cognitive outcomes later in life. Few studies examine the impacts of time spent in ECE in developing countries. We use data from the Young Lives project in Vietnam with 2SLS regressions to estimate the impact of years spent in ECE on cognitive outcomes in adolescence. We find that one extra year in ECE corresponds to 21.8 percentage point (1.25 SD) and 30.8 percentage point (2.78 SD) increases in math and verbal cognition scores, respectively. Our estimates suggest that ECE is highly effective in Vietnam and is a potential strategy for bridging educational outcomes gaps.
    Date: 2018–02
  37. By: Peter Kjær Kruse-Andersen; Peter Birch Sørensen
    Abstract: We analyze how a country pursuing a unilateral climate policy may contribute to a reduction in global CO2 emissions in a cost-effective way. To do so its system of energy taxes and subsidies must account for leakage of emissions from the domestic to the foreign economy. We focus on leakage occurring via international trade in electricity and via shifts between domestic and foreign production of other goods. The optimal tax-subsidy scheme is based on an intuitive principle: Impose a uniform carbon tax on all additions to global emissions caused by changes in domestic production and consumption of energy, including additions to emissions occurring via shifts in international trade. Emissions from the sector exposed to foreign competition should be taxed at reduced rates to avoid excessive carbon leakage, and a part of the carbon tax on electricity should be levied at the consumer rather than the producer level to ensure taxation of the carbon content of imported electricity. Producers of renewables-based electricity should receive a subsidy to internalize their contribution to the reduction of global emissions. In other sectors emissions should be taxed at a uniform rate corresponding to the marginal social cost of meeting the target for emissions reduction. Simulations calibrated to data for the Danish economy suggest that redesigning energy taxes and subsidies to account for carbon leakage can generate a welfare gain.
    Keywords: optimal unilateral climate policy, carbon leakage, optimal energy taxes and subsidies
    JEL: H21 H23 Q48 Q54
    Date: 2019
  38. By: Stephen T. Onifade (Selçuk University Konya,Turkey); Ahmet Ay (Selçuk University Konya, Turkey); Simplice A. Asongu (Yaoundé, Cameroon); Festus V. Bekun (Istanbul Gelisim University, Istanbul, Turkey)
    Abstract: The recent exacerbation of unemployment crisis in Nigeria stands to be a serious threat to both socio-economic stability and progress of the country just as the report from the nation’s bureau of statistics shows that at least over 8.5 million people had no gainful employment at all as at the last quarter of the year 2017. It is on the above premise, that the present study explores the link between trade and unemployment for the case of Nigeria with the intention of exploring how the unemployment crisis has been impacted within the dynamics of the country’s trade performance. The empirical evidence shows that the nation’s terms of trade were insignificant to unemployment rate while trade openness and domestic investment, on the other hand, have significant opposing impacts on unemployment in Nigeria over the period of the study. Further breakdowns from the empirical analysis also revealed that the Philips curves proposition is valid within the Nigerian economic context while the evidences for the validity of Okun’s law only exist in the short-run scenario. Based on the empirical results, we recommend that concerted effort should be geared toward stimulating domestic investment by providing adequate financial and infrastructural facilities that will promote ease of doing business while utmost precautions are taken to ensure that unemployment crisis is not exacerbated when combating inflation in the economy in the wake of dynamic trade relations.
    Keywords: Nigeria; Unemployment; Trade; Phillips Curves; Okun’s law
    JEL: E23 F21 F30 O16 O55
    Date: 2019–01
  39. By: Bekkers, Eddy; Francois, Joseph; Rojas-Romagosa, Hugo
    Abstract: This paper assesses the utility of economic theory of rational trade wars to predict such events or to prescribe courses of action to control their consequences. Trade wars are fundamentally political events whose causes are almost completely political and whose consequences are to a significant degree also political. Contemporary economic theory has developed during a uniquely peaceful and liberal period in world history, affecting how economists have thought about trade conflicts, leaving the profession unprepared to provide serious analysis or advice.
    Date: 2019–10–17
  40. By: Stephen T. Onifade (Selçuk University Konya,Turkey); Ahmet Ay (Selçuk University Konya, Turkey); Simplice A. Asongu (Yaoundé, Cameroon); Festus V. Bekun (Istanbul Gelisim University, Istanbul, Turkey)
    Abstract: The recent exacerbation of unemployment crisis in Nigeria stands to be a serious threat to both socio-economic stability and progress of the country just as the report from the nation’s bureau of statistics shows that at least over 8.5 million people had no gainful employment at all as at the last quarter of the year 2017. It is on the above premise, that the present study explores the link between trade and unemployment for the case of Nigeria with the intention of exploring how the unemployment crisis has been impacted within the dynamics of the country’s trade performance. The empirical evidence shows that the nation’s terms of trade were insignificant to unemployment rate while trade openness and domestic investment, on the other hand, have significant opposing impacts on unemployment in Nigeria over the period of the study. Further breakdowns from the empirical analysis also revealed that the Philips curves proposition is valid within the Nigerian economic context while the evidences for the validity of Okun’s law only exist in the short-run scenario. Based on the empirical results, we recommend that concerted effort should be geared toward stimulating domestic investment by providing adequate financial and infrastructural facilities that will promote ease of doing business while utmost precautions are taken to ensure that unemployment crisis is not exacerbated when combating inflation in the economy in the wake of dynamic trade relations.
    Keywords: Nigeria; Unemployment; Trade; Phillips Curves; Okun’s law
    JEL: E23 F21 F30 O16 O55
    Date: 2019–01
  41. By: Opeyemi Akinyemi (CEPDeR, Covenant University, Ota, Nigeria); Uchenna Efobi (CEPDeR, Covenant University, Ota, Nigeria); Evans Osabuohien (CEPDeR, Covenant University, Ota, Nigeria); Philip Alege (CEPDeR, Covenant University, Ota, Nigeria)
    Abstract: This study explores the extent to which regional integration can be a viable tool in driving energy sustainability in the Economic Community of West African States (ECOWAS) sub-region of Africa, and vice versa. It examines the existing opportunities and the attendant challenges for improved firms’ productivity in the sub-region through the appraisal of the ECOWAS West African Power Pool (WAPP). Using three measures of energy sustainability, namely: energy security, energy equity, and environmental sustainability; the study presents the performance of the ECOWAS sub-region in ensuring regional integration for energy sustainability. The findings from the study reveal, inter alia, that there are prospects and benefits for energy integration for sustainable development in the region. Though some progress had been made, there are many challenges. Also, where progress had been made, it is not uniform across the sub-region, though factors such as rising population and political instability could be responsible. It is recommended that the political economy surrounding regional energy integration should be given a priority among the Member States to ensure that there is positive political will for speedy achievement of set goals. Also, investment in human capital to manage the different projects and maintain the facilities cannot be overemphasised.
    Keywords: ECOWAS, Energy, Green growth, Sustainable development, Regional Integration
    JEL: F15 P28 Q43 R11 R58
    Date: 2019–01
  42. By: Seppala, Pekka
    Abstract: Liberalization of food marketings has been implemented as a part of structural adjustment programmes in Sub-Saharan Africa. In this study we assess the i) the aims of the reform policy, ii) the implementation of specific reform measures, iii) the politics of reform, and iv) the impacts of reform.The study highlights the diversity in initial circumstances: during the end of 1970s, state governed marketing boards and cooperatives marketed food crops in most countries but state intervention was generally limited to certain key crops and, on these crops, the level of intervention was further limited by actual policies on crop collection coverage. Pre-reform policies were directed by the aims of nation building and food security and, for this purpose, provided subsidies for both producers and consumers. These subsidies, together with the high costs of marketing operations, caused huge financial problems to governments.Marketing reforms have been implemented at the levels of pricing policies, institutional set-up and macro-economic environment. Several governments embarked on liberalization policies with doubts but during recent years, even the most hesitant countries have also implemented reforms. In certain countries, the liberalization of key food crops touched a delicate political issue with complex vested interests. Behind the debate of cheap food for urban consumers existed a whole range of factors like the patrimonial linkages of marketing boards, regional politics, and the interests of large-scale millers and estate producers. In the economic liberalization debate, political issues are largely simplified and marketing boards are crudely evaluated in terms of economic efficiency.The study compares countries which always relied on private food marketing to countries which liberalized food marketing in 1992 and those still retaining state interventions. The data shows that best growth rates for the production of key food crops are in the countries with more liberal food marketing regimes. However, differences within country groups are significant. Variations can partly be explained by the nature of key crops, with rice subjected to import competition while tubers and plantains are not affected by competition. Maize production in eastern and southern Africa has been the focus of a detailed case-study because of the complexity of its extreme politization.Marketing reform has had relatively little impact on food production which is still growing slower than the population in Sub-Saharan Africa. Its major impact has been the diminished demands on fiscal balance. As liberalization releases government resources for other uses, these should be directed to measures to increase agricultural production: land reforms, input subsidies and the construction of feeder roads. Marketing, milling and consumer support of food crops should be targeted to the crops that are mainly consumed by the poor.
    Keywords: International Development
  43. By: Ojendal, Joakim
    Abstract: This is a state-of-the-art report prepared within the UNU/WIDER project The New Regionalism and the International System - Implications for Development and Security, covering East and Southeast Asia. The report constitutes an initial inventory study on regionalization incentives and prospects and is arranged around the three themes of economic development, regional security and ecological problems. It is basically a study of secondary material with an extensive bibliography.The aim of the report is, first, to provide a survey of recent literature regarding regionalization and regional cooperation in East Asia in general and in Southeast Asia in particular, and, second, to review a number of historical and contemporary debates in regard to the potential regionalization process in East Asia-Pacific in general and in Southeast Asia in particular. To satisfy these vast aims, the report therefore tries to give the reader advice on where to find further readings.The UNU/WIDER project mentioned above acknowledges a number of new features of regional cooperation in the world and the theoretical point of departure for this report - as well as for the larger research programme of which it is a part - is the new regionalism which, it is argues, goes beyond the more traditional debates on regional cooperation. It attempts to display signs of multidimensionality and 'from within approaches. These tendencies are explored and described through discussions on concepts such as open regionalism and new regionalism.The report takes note of recent literature on world regionalization before it lists the most important regional initiatives in East and Southeast Asia. It observes the current imbalance between drastically increased regional economic interactivity coupled with the absence of, or very low keyed, political mechanisms for handling this situation. It argues that there is a need for enhanced political/security cooperation in order to sustain the current transformation process in East and Southeast Asia. Increased regional cooperation on a wide range might be the answer to this question. The report elaborates here on what a maximalist and minimalist approach to regionalization would mean. A version of the maximalist approach could be a developed APEC, while the minimalist version is an extended ASEAN; it is likely that somewhere in between these poles, we will find a future, deepened, regional cooperation.The report reviews various East and Southeast Asian debates pertinent to the question of regionalization. The underlying factors for further regionalization are mentioned briefly for East Asia and, in somewhat more detail, for Southeast Asia before a number of scenarios are discussed and a tentative conclusion is drawn.The report concludes that there are hectic activities in terms of regionalization in East and Southeast Asia. There are, however, severe obstacles to institutionalized regionalization. This does not necessarily stop the process, but rather makes it uncertain in terms of its scope, depth and future direction. The conclusion also gives prominence to a number of key questions such as: the pivotal relation between the US and Japan, the relation between Japan and Southeast Asia, the extension of ASEAN to Indochina and the nature and degree of Asian exclusiveness in any East Asian regional cooperation formula.
    Keywords: International Development
  44. By: Oden, Bertil
    Abstract: This state of the art paper reviews literature published up to the end of 1994 on economic, security and environmental regionalization in southern Africa. In the field of economic regionalization a distinction is made between three main integration models, trade, integration, neofunctional integration and development integration. Furthermore, the concept of new regionalism, which is in focus for the UNU/WIDER project The New Regionalism. Implications for Global Development and International Security' is used. Existing main regional organizations are categorized in accordance with these regionalization concepts and the conclusions from the literature analysing their records as regionalization instruments are summarized.The study offers a number of conclusions as to the relevance for southern Africa of the various regionalization models. Both theory and experience show that the trade integration model is badly equipped to be the basis for regionalization in Africa, as the production structure of most African countries contradicts the assumptions on which the model is based. With South Africa finally included, a regional complementary pattern emerges, which may change the southern African situation in this respect. Still the problem of strong regional imbalance has to be handled. It should also be noted that weak financial institutions and lack of foreign exchange in a number of countries in the region will continue to constrain the intra-regional trade. The impact of the present international doctrine of openness towards the rest of the world is also discussed.The neofunctional integration model is compatible both with the existing integration pattern in the region and a reluctance among the governments in the region to become part of supra-national institutions. Strong players in the economic market have an obvious interest in this type of regionalization which can take place without much political negotiation.The development integration model is especially interesting as a potential instrument for change in a region like southern Africa, where history has created a strong regional imbalance due to the South African dominance. One of the main difficulties in the implementation of the model is often lack of necessary political commitment leading to political decisions at an early stage of the process. It remains to be proved that governments in southern Africa, including South Africa, have this commitment.The concept of new regionalism as conceived in the UNU/WIDER project is closer to development integration than to the other integration models. It is, however, a still broader concept, in which the perspective of 'development from within and below' s more emphasized and including also security and environmental perspectives.The security concept is used in it broadest definition, far from the classical realist one. In southern Africa the benefits of handling potentially destabilizing issues both to increase mutual confidence in the military sector and to contain factors such as competition for water resources, uncontrolled migration flows and organized crossborder criminality from developing into local or even inter-state armed conflicts.When it comes to regional environment co-operation southern Africa follows the rest of Sub-Saharan Africa in that most environmental activities are discussed, planned and sometimes implemented at the national level. The main exception is water management, where inter-state cooperation regarding development of river basins occur, and a more comprehensive regional perspective is needed.The development in southern Africa since 1990 suggests that the most dynamic regionalization forces are to be found among actors (private and public) in the economic field. They act quicker than intergovernmental forces, who will negotiate over long periods before they possibly come to conclusions as to how regional integration and cooperation shall take place. The capacity of state structures to implement regional integration, including creating regional structures, is weak. The resulting regionalization pattern will therefore depend less on inter-governmental action than on nongovernmental forces with their own benefit as main aim. To this shall be added that many governments' political will to integrate is much weaker than their pro-regional rhetoric.The regionalization process in southern Africa will not follow one single model. However, one factor has to be especially focused when choosing analytical instruments, namely the asymmetrical structure of the region. This means that features from the development integration and new regionalism models have to be included. It also means that governments in the region have to attend to regional issues and both the political will and the state capacity have to improve in order to use the dynamics of the market forces in a way that avoids contraproductive developments.
    Keywords: International Development

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