|
on International Trade |
| By: | Andrea Andrenelli (OECD); Javier López González (OECD) |
| Abstract: | The debate about whether or not to extend the WTO Moratorium on imposing customs duties on electronic transmissions has, to date, narrowly focused on its potential customs revenue implications. This paper sets out to broaden and deepen this debate. First, by putting current estimates of the customs revenue implications into perspective, showing that potential losses tend to be low relative to overall government revenue. Second, by deepening the debate on the cost of tariffs, arguing that these are unstable sources of revenue, that they are associated with lower output and productivity and that their burden falls mainly on domestic consumers, not foreign firms. Third, by broadening the debate to consider the benefits associated with electronic transmissions, including growing consumer welfare and export competitiveness. The paper argues that, overall, the revenue implications of the Moratorium are likely to be relatively small and that its lapse would come at the expense of wider gains in the economy. |
| Keywords: | customs duties, digital economy, digital trade, digitisable goods, e-commerce, electronic transmissions, trade policy |
| JEL: | F13 O33 |
| Date: | 2019–11–13 |
| URL: | http://d.repec.org/n?u=RePEc:oec:traaab:233-en&r=all |
| By: | Sharma, Rishi (Department of Economics, Colgate University); Kuenzel, David (Department of Economics, Colgate University) |
| Abstract: | We study the effects of preferential trade agreements (PTAs) on multilateral liberalization using a new global tariff database that covers the 2001-2010 period. Employing a theoretically motivated empirical approach and instrumental variable strategy, we provide evidence that PTAs induce tariff cuts on non-member countries. Our baseline estimates imply that each 1% point PTA-induced decline in applied tariffs lowers most-favored nation (MFN) tariff rates by 0.42% points. This effect is driven by countries that negotiate deeper preferential trade deals. PTAs that span more policy fields are prone to lead to more inefficient trade diversion, which creates a stronger incentive to subsequently cut MFN tariffs. At the same time, our results are remarkably consistent across other subsamples emphasized in the literature, including high- and low-tariff importers, poorer and richer economies as well as large and small countries. |
| Keywords: | Trade Agreements, GATT/WTO, Tariffs |
| JEL: | F13 F14 |
| Date: | 2019–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:cgt:wpaper:2019-02&r=all |
| By: | Jose Manuel Rueda-Cantuche (European Commission – JRC); Robert Marschinski (European Commission – JRC); Nuno Sousa (European Commission - TRADE) |
| Abstract: | The present report contributes to the European Commission’s aim to gather comprehensive, reliable and comparable information to support evidence-based policymaking. The promotion of deeper commercial ties across the Atlantic is key in the European Commission’s strategy to create the conditions for a more dynamic and innovative European Union (EU) economy. This is why the 2015 Communication “Trade for all: Towards a more responsible trade and investment policy†points to the conclusion of the Transatlantic Trade and Investment Agreement as a priority for the EU trade policy. Against this background this reports focuses on the contribution of transatlantic trade to the creation of job opportunities in Europe. For this it offers an ample set of indicators related to the quantification of the employment supported by EU exports to the United States (US). This work builds on the report “EU Export to the World: Effects on Employment and Income†that was published in June 2015 by the European Commission's Joint Research Centre (JRC) and Directorate General for Trade. It is grounded on the same methodology and on the same World Input-Output Database (WIOD) database. |
| Keywords: | Employment, international trade, exports, European Union |
| JEL: | C67 F14 F15 F16 D33 E01 E24 |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc102062&r=all |
| By: | David J. Kuenzel (Department of Economics, Wesleyan University); Rishi R. Sharma (Department of Economics, Colgate University) |
| Abstract: | We study the effects of preferential trade agreements (PTAs) on multilateral liberalization using a new global tariff database that covers the 2001-2010 period. Employing a theoretically motivated empirical approach and instrumental variable strategy, we provide evidence that PTAs induce tariff cuts on non-member countries. Our baseline estimates imply that each 1% point PTA-induced decline in applied tariffs lowers most-favored nation (MFN) tariff rates by 0.42% points. This effect is driven by countries that negotiate deeper preferential trade deals. PTAs that span more policy fields are prone to lead to more inefficient trade diversion, which creates a stronger incentive to subsequently cut MFN tariffs. At the same time, our results are remarkably consistent across other subsamples emphasized in the literature, including high- and low-tariff importers, poorer and richer economies as well as large and small countries. |
| Keywords: | Trade Agreements, GATT/WTO, Tariffs |
| JEL: | F13 F14 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:wes:weswpa:2019-004&r=all |
| By: | Alfaro, Martin (University of Alberta, Department of Economics); Lander, David (Peking University) |
| Abstract: | This paper reconciles for the first time the wide range of outcomes arising in studies of trade liberalizations. We define an imperfect-competition model encompassing the major variants of monopolistic competition (Krugman, Melitz, and Chaney) and Cournot (with free and restricted entry). This model reveals that seemingly disparate outcomes are not due to market structure, as usually conjectured, but differences in marginal entrants' features. Thus, once we reconcile these differences, the same outcomes emerge across all models. By identifying assumptions on marginal entrants that generate pro-competitive, anti-competitive, or null effects, we also explain why puzzling outcomes arise in some standard frameworks. |
| Keywords: | imperfect competition; unilateral liberalization; import competition; export opportunities |
| JEL: | D43 F10 F12 L13 |
| Date: | 2019–10–30 |
| URL: | http://d.repec.org/n?u=RePEc:ris:albaec:2019_016&r=all |
| By: | Nissen, Aleydis |
| Abstract: | There has been a polarised debate on the desirability of import restrictions to increase corporate accountability for child labour that occurs in global supply chains. Some scholars have indicated that states in favour of imposing import restrictions could sidestep this debate relying upon the perceptions that people in the importing market might have. They have based this argument on the case law of the World Trade Organization’s Dispute Settlement Mechanism (WTO DSM). The attitude-behaviour gap has, however, been largely overlooked in their analyses. This behavioural phenomenon provides an explanation as to why there is an inconsistency between what people value or believe and what they actually do. This essay revisits the WTO DSM's case law in order to determine whether such values or beliefs might justify import restrictions. On balance, this essay finds that the WTO DSM has not sufficiently taken the attitude-behaviour gap into account in its interpretation of Article III(4) and Article XX(a) 1994 General Agreement on Tariffs and Trade (GATT). |
| Date: | 2018–06–13 |
| URL: | http://d.repec.org/n?u=RePEc:osf:lawarx:4hb5z&r=all |
| By: | Murshed, S. Mansoob |
| Abstract: | This paper surveys issues related to globalization, and the obstacles to the successful integration of vulnerable economies. For many developing countries, the positive benefits of the increased globalization that has been taking place since around 1980 remain distant and elusive. The economies of many countries in the developing world remain extremely vulnerable to domestic and external shocks. They have, effectively, become marginalized from the world system. To a great extent, the obstacles to the successful participation of vulnerable developing economies in the international system are rooted in the causes of their underdevelopment and poor economic performance. Nevertheless, the new rules of the game and the international economic environment prevalent since about 1980 following accelerated globalization, leaves them vulnerable in novel ways. Developments in the arrangements for conducting multilateral trade and technology transfer have left nations in the South more vulnerable than in the past. The ability to conduct independent macroeconomic policy is severely constrained. Nations are more reliant on volatile international capital markets, for finance and investment; many developing countries are completely eschewed by international private capital markets. The problem of poverty in many developing countries seems to have been exacerbated following globalization. When we consider the obstacles to the meaningful participation of vulnerable developing economies in the international system, many are domestic in origin, but external factors beyond the control of these countries play an important part as well. Among the former are poorly designed policies to promote growth on the supply-side, macroeconomic mismanagement on the aggregate demand side and institutional failure. In the latter category protectionist tendencies in the North are the most important factor. Many of these appear in the guise of concerns for environmental and labour standards. Globalization does, however, offer new possibilities to developing countries; particularly because shifts in the international division of labour, as well as technological innovations, could favour the South. |
| Keywords: | International Development |
| URL: | http://d.repec.org/n?u=RePEc:ags:widerw:295502&r=all |
| By: | Felbermayr , Gabriel (Kiel Institute & Kiel University); Yotov, Yoto (School of Economics Drexel University LeBow College of Business) |
| Abstract: | Bilateral trade balances often play an important role in the international trade policy debate. Academic economists understand that they are misleading indicators of competitiveness and of the gains from trade. However, they also recognize their political relevance, calling for accurate statistical measurement and for more scholarly work. Disturbingly, Davis and Weinstein (2002) argue that the canonical gravity model of trade fails when confronted with bilateral trade balances data, dubbing this ``The Mystery of the Excess Trade Balances''. Capitalizing on the latest developments in the theoretical and empirical gravity literature, we demonstrate that the workhorse international trade model actually performs well in explaining bilateral trade balances. Moreover, in our data, only 11 to 13% of the variance in bilateral balances is due to asymmetric bilateral trade costs, belying beliefs that bilateral imbalances are driven by `unfair' manipulation of terms-of-trade. We also perform several general equilibrium experiments within the same structural gravity framework to show that free trade agreements tend to exacerbate bilateral imbalances and that macroeconomic rebalancing leads to adjustment with all trade partners. |
| Keywords: | Trade Imbalances; Structural Gravity Estimation |
| JEL: | F13 F14 |
| Date: | 2019–08–20 |
| URL: | http://d.repec.org/n?u=RePEc:ris:drxlwp:2019_005&r=all |
| By: | Silvia Fabiani (Bank of Italy); Alberto Felettigh (Bank of Italy); Claire Giordano (Bank of Italy); Roberto Torrini (Bank of Italy) |
| Abstract: | Over the last two decades Italy’s intra-euro area export performance has been weak when compared with that of Germany and Spain, but not in relation to France. This paper first tracks the heterogeneous developments in the four countries’ goods exports in the euro-area market across different sub-periods and product categories. It then discusses some potential determinants of these dynamics: price competitiveness and the entry of new competitors, namely China and the Central and Eastern European countries (the “CEE6”), in the euro-area market. By exploiting several datasets and by using different techniques, the paper quantitatively explores the impact of developments in intra-euro area price competitiveness; it analyzes the role played by China and by the CEE6 in displacing the four economies’ exports in the euro-area market and in activating their total exports via the heightened import demand stemming from the new competitors. These effects are found to be heterogeneous across the four countries, and generally more unfavourable for Italy, thereby helping to explain the country’s relative underperformance, at least vis-à-vis Germany. |
| Keywords: | goods exports, global value chains, competition from low-wage economies, euro area |
| JEL: | F00 F10 F40 F62 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_530_19&r=all |
| By: | Lall, Sanjaya |
| Abstract: | This paper considers the rationale for and limitations to selective export promotion policies in developing countries, with a focus on manufactured exports. It draws upon the experience of the most successful exporters in the developing world - the 'Asian Tigers' and 'new Tigers' - to illustrate the policy needs of upgrading and 'dynamizing' comparative advantage. It describes the different export structure and performance of these countries, and considers the role of domestic technological effort in developing their competitive advantages. It considers the role of 'permissive' and 'positive' policies in promoting exports: the former consist of a conducive macroeconomic and business environment, the latter of more direct interventions in product and factor markets (including those in export promotion, human capital development, technological activity, credit allocation, trade and foreign direct investment). The wide differences between the Asian countries in their policy interventions is highlighted as the explanation for their differing export performances. The paper goes on to consider the theoretical rationale for policy interventions, especially those of a selective nature. It closes with some of the practical difficulties in designing and implementing selective policies. |
| Keywords: | International Development |
| URL: | http://d.repec.org/n?u=RePEc:ags:widerw:295338&r=all |
| By: | Beghin, John C; Park, Byungyul |
| Abstract: | We analyze bilateral exports of higher education services between OECD countries and Asia, using a gravity equation approach, panel data from 1998 to 2016, and PPML regression. The approach treats higher education consumption by Asian countries as a consumable durable good reflecting investment in human capital. Asian Students come to OECD countries to obtain degrees from their universities. Structurally, the flow of students from Asian country j to OECD country i depends on the higher-education capacity of i, the perceived quality of universities in i, expected earnings in i, a series of bilateral transaction costs between i and j, the income per capita in j, school-age demographics in j, and the usual multilateral trade resistance terms. We find that bilateral flows of students are strongly influenced by wage levels in the host country, bilateral distance, importers’ income, demographics, common language, the visa regime prevailing in bilateral country pairs, and the network of migrants from j in i. These results hold through a variation of specifications, proxies, and estimation methods. We find mixed evidence on the role of tertiary education capacity in OECD countries and no evidence of a country’s universities reputations explaining the flow of students. The evolution over time of education capacity, earnings, visa regimes, migrant networks, strong income growth and changes in demographics in nearby export markets explain the emergence of Australia, Canada, Korea, and New Zealand and the loss of market share by the US, which still strongly dominates international trade in higher education services. The decline in Chinese students coming to the US is also predicted for the most recent years driven by reduced by its college-age population. |
| Keywords: | International Relations/Trade |
| Date: | 2019–11–11 |
| URL: | http://d.repec.org/n?u=RePEc:ags:nbaesp:296470&r=all |
| 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 - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne, 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 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02315466&r=all |
| By: | Ulrich Schetter (Center for International Development at Harvard University) |
| Abstract: | We propose a structural alternative to the Economic Complexity Index (ECI, Hidalgo and Hausmann 2009; Hausmann et al. 2011) that ranks countries by their complexity. This ranking is tied to comparative advantages. Hence, it reveals information different from GDP per capita on the deep underlying economic capabilities of countries. Our analysis proceeds in three main steps: (i) We first consider a simplified trade model that is centered on the assumption that countries’ global exports are log-supermodular (Costinot, 2009a), and show that a variant of the ECI correctly ranks countries (and products) by their complexity. This model provides a general theoretical framework for ranking nodes of a weighted (bipartite) graph according to some under- lying unobservable characteristic. (ii) We then embed a structure of log-supermodular productivities into a multi-product Eaton and Kortum (2002)-model, and show how our main insights from the simplified trade model apply to this richer set-up. (iii) We finally implement our structural ranking of economic complexity. The derived ranking is robust and remarkably similar to the one based on the original ECI. |
| Keywords: | bipartite graph, economic complexity, international trade, laplacian matrix, log-supermodularity, monotonic eigenvector, ranking |
| JEL: | F10 F11 F14 O49 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:cid:wpfacu:119a&r=all |
| By: | Jochmans, K.; Verardi, V. |
| Abstract: | We present an instrumental-variable approach to estimate gravity equations. Our procedure accommodates the potential endogeneity of policy variables and is fully theory-consistent. It is based on the model in levels and accounts for multilateral resistance terms by means of importer and export fixed effects. The implementation is limited-information in nature, and so is silent on the form of the mechanism that drives the actual policy decisions. The procedure spawns specification tests for the validity of the instruments used as well as a test for exogeneity. We estimate gravity equations from five cross-sections of bilateral-trade data where the policy decision of interest is the engagement in a free trade agreement. We rely on the interaction of the countries in the pair with third-party trading partners to construct a credible instrumental variable based on the substantial transitivity in the formation of trade agreements that is observed in the data. This instrument is strongly correlated with the policy variable. Our point estimate of the average impact of a free trade agreement increases over the sampling period, starting at 61% and clocking o_ at a 117% increase in bilateral trade volume. Not correcting for endogeneity yields stable estimates of around 25%. |
| Keywords: | endogeneity, fixed effects, gravity equation, instrumental variable, multilateral resistance, free trade agreement |
| JEL: | C26 F14 |
| Date: | 2019–11–11 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1994&r=all |
| By: | Krolikowski, Pawel (Federal Reserve Bank of Cleveland); McCallum, Andrew H. (Board of Governors, Federal Reserve System) |
| Abstract: | We add goods-market frictions to a general equilibrium dynamic model with heterogeneous exporting producers and identical importing retailers. Our tractable framework leads to endogenously unmatched producers, which attenuate welfare responses to foreign shocks but increase the trade elasticity relative to a model without search costs. Search frictions are quantitatively important in our calibration, attenuating welfare responses to tariffs by 40 percent and increasing the trade elasticity by 50 percent. Eliminating search costs raises welfare by 1 percent and increasing them by only a few dollars has the same effects on welfare and trade flows as a 10 percent tariff. |
| Keywords: | Search; trade; welfare; constrained optimization; |
| JEL: | C61 D83 F12 |
| Date: | 2019–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedcwq:163502&r=all |
| By: | Chen, Zhe; Hong, Junjie; Sun, Xiaonan |
| Abstract: | This study investigates the impact of exchange rate fluctuations on trade mode choices among assembly firms. Using the Chinese Customs data from 2000 to 2006, we show that exchange rate pass-through (ERPT) depends on which entity is responsible for importing inputs. Relative to passively receiving inputs under pure assembly (PA) mode, foreign invested assembly firms mainly source inputs by themselves through import and assembly (IA) mode and enjoy lower ERPT by doing so. We then relate exchange rate fluctuations to processing mode choices and find that the share of import through PA increases with exchange rate volatilities. This effect is more pronounced for firms in liquidity constrained industries and is mitigated by better local financial development. |
| Keywords: | exchange rate risk, trade mode choice, processing trade, financial constraint, F14, F23, F31 |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:agi:wpaper:00000159&r=all |
| By: | Dany Bahar (Center for International Development at Harvard University); Andreas Hauptmann; Cem Özgüzel; Hillel Rapoport |
| Abstract: | During the early 1990s Germany offered temporary protection to over 700,000 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: | F14 F22 |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:cid:wpfacu:120a&r=all |
| By: | Karin Gourdon; Christian Steidl |
| Abstract: | This paper provides an initial assessment of the shipbuilding industry in the context of global value chains by presenting new descriptive evidence on value added generation and sourcing patterns of intermediate inputs for ship construction of major shipbuilding economies. The findings reveal that shipbuilding relies heavily on intermediate inputs as around 70-80% of the final output value of ship production is generated through supplier sectors. Concerning sourcing activity, China appears to be the most self-sufficient among the four jurisdictions studied, followed by Japan and the EU28, while Korea seems to be more globally integrated. The analysis also explores variations among the four economies in the cost structure of shipbuilding inputs, which might partly be explained by differences in the ship types produced. |
| Keywords: | global value chains, input output tables, shipbuilding, value added |
| JEL: | F14 L23 L62 |
| Date: | 2019–11–14 |
| URL: | http://d.repec.org/n?u=RePEc:oec:stiaaa:2019/08-en&r=all |
| By: | Garfinkel, Michelle (University of California, Irvine); Syropoulos, Constantinos (School of Economics Drexel University LeBow College of Business); Yotov, Yoto (School of Economics Drexel University LeBow College of Business) |
| Abstract: | We analyze how trade openness matters for interstate conflict over productive resources. Our analysis features a terms-of-trade channel that makes security policies trade-regime dependent. Specifically, trade between two adversaries reduces each one's incentive to arm given the opponent's arming. If these countries have a sufficiently similar mix of initial resource endowments, greater trade openness brings with it a reduction in resources diverted to conflict and thus wasted, as well as the familiar gains from trade. Although a move to trade can otherwise induce greater arming by one of them and thus need not be welfare improving for both, aggregate arming falls. By contrast, when the two adversaries do not trade with each other but instead trade with a third (friendly) country, a move from autarky to trade intensifies conflict between the two adversaries, inducing greater arming. With data from the years surrounding the end of the Cold War, we exploit the contrasting implications of trade costs between enemies versus trade costs between friends to provide some evidence that is consistent with the theory. |
| Keywords: | resource insecurity; interstate disputes; conflict; arming; trade openness; comparative advantage |
| JEL: | D30 D74 F10 F51 F52 |
| Date: | 2019–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:drxlwp:2019_006&r=all |
| By: | Monge-Naranjo, Alexander (Federal Reserve Bank of St. Louis) |
| Abstract: | Gino Gancia, Giacomo Ponzetto and Jaume Ventura have written an extremely interesting paper on a topic that is very timely for the global economy. In this article, I will first argue that GPV have succeeded in formalizing their hypothesis, and that while providing very suggestive analytical results, additional work can and should be done with the model, especially with regards to relative changes in the relative weights of incumbent countries. Second, I will comment on the potential insights if the rest of the world is modeled more realistically. Third, I will call for extending the baseline model to incorporate additional aspects beyond trade, such as investment and immigration flows, which appear to be relevant for the story of the European Union and its discontents. Four, I will add my non-European perspective on using the model to understand the story of the European Union. |
| Keywords: | Economic unions; Non-tariff barriers; European integration. |
| JEL: | D71 D78 F15 F55 F62 H77 |
| Date: | 2019–10–25 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:2019-035&r=all |
| By: | Ufuk Akcigit; Sina T. Ates; Giammario Impullitti |
| Abstract: | This note examines the optimal mix of tariff policies and R&D subsidies to support domestic firms in global technological competition and to enhance aggregate welfare. |
| Date: | 2019–09–30 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfn:2019-09-30&r=all |
| By: | Maria D. Tito |
| Abstract: | This note contributes to expand the knowledge on foreign trade in services by presenting a series of stylized facts about exporters of services. |
| Date: | 2019–08–14 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfn:2019-08-14&r=all |
| By: | Bellino, Enrico (Università Cattolica del Sacro Cuore (Catholic University of the Sacred Heart)); Fratini, Saverio M. (Roma Tre University) |
| Abstract: | In this paper we will focus upon the role of absolute advantages in international specialization in connection with the phenomenon of capital mobility. We will provide a historical and analytical reconstruction of the main contributions, starting from the contrast between Smith’s and Ricardo’s standpoint on the issue. Two deep-rooted conclusions will be questioned by the analysis of this literature: (a) the unequivocal mutual benefits of opening up to international trade; and (b) the specialization of each country in the production of at least one good. With regard to this point, we will also provide a generalization of a result obtained by Parrinello (2010). |
| Keywords: | capital mobility; absolute advantage; specialization. |
| JEL: | B51 D24 F21 |
| Date: | 2019–11–12 |
| URL: | http://d.repec.org/n?u=RePEc:ris:sraffa:0038&r=all |
| By: | Petr Jansky (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Opletalova 26, 110 00, Prague, Czech Republic); Jan Laznicka (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Opletalova 26, 110 00, Prague, Czech Republic) |
| Abstract: | Much of the foreign direct investment worldwide is affected by one of more than 3000 bilateral tax treaties. There is an agreement that dividend and interest payments respond to these tax treaties’ provisions, but evidence is scarce as to the magnitude of this response. We aim to fill in this gap for as many countries as possible by estimating the elasticities of dividend and interest income with respect to withholding tax rates, and the associated revenue foregone, exploiting the best available cross-country datasets. We collect information on withholding tax rates from the International Bureau of Fiscal Documentation; this includes information on EU directives, which imply zero withholding rates among all the EU member states and Switzerland, in addition to standard bilateral tax treaties. We combine this detailed information on withholding tax rates with foreign direct investment data from the International Monetary Fund, which we use to approximate bilateral dividend and interest flows; this results in a large panel data set of around 65,000 annual country-pair observations. While also observing heterogeneity in elasticities across countries, we estimate dividend flows to be highly elastic in a cross-country regression: a 1% increase in the applicable withholding tax is associated with a 2.3% - 2.6% decrease in dividend flows. We apply the elasticities to estimate potential tax revenue foregone. We estimate the largest annual revenue foregone for the United States (2.3 - 2.9 billion USD) and Canada (1.4 - 3.2 billion USD), while the investor country behind the largest revenue foregone is the Netherlands (2.9 – 3.3 billion USD). We arrive at somewhat lower and less robust estimates for interest income. Although our headline revenue estimates are, as expected, lower than static estimates that do not reflect elasticities, we nevertheless show that the revenue foregone of tax treaties remain non-negligible for some countries. |
| Keywords: | foreign direct investment, multinational enterprise, tax treaty, double taxation agreement, elasticity, withholding tax |
| JEL: | F21 F23 H25 H26 H32 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2019_33&r=all |
| By: | Philipp Harms (Johannes Gutenberg University Mainz); Jakob Schwab (German Development Institute) |
| Abstract: | We use the 2003 and 2013 waves of the International Survey Program (ISSP) in order to explore the change in people’s attitudes that may be behind the recent backlash against globalization. We show that the average support for international trade has decreased in many – albeit not all – countries, and we demonstrate that these changes are related to the depth and length of the global financial crisis of 2008/09 as well as the evolution of income inequality. Moreover, our results document a declining support for international trade of those individuals who are likely to benefit from globalization: the young, high-skilled and well-off. We show that this “eroding enthusiasm of the elites” is empirically relevant even if we control for individuals’ increasing exposure to international labor-market competition. |
| Keywords: | Globalization, Protectionism, Attitudes, Survey Studies |
| Date: | 2019–11–03 |
| URL: | http://d.repec.org/n?u=RePEc:jgu:wpaper:1912&r=all |
| By: | R. deBruijne; G. M. Henley |
| Abstract: | This research investigated the impact of the Brexit Referendum on the value of real estate investment companies in the UK and the EU. In order to assess whether the Brexit Referendum imposed different effects between EU member states due to potential relocations from the UK to the EU, event studies are performed on a relocating sample and an on-relocating sample. There locating sample consists of companies from EU member states which are popular potential relocating locations. The non-relocating sample represents companies from the other EU member states. This study uses all publicly listed REIT sand REOCs in the UK and in the remaining 27 EU member states. In addition, the role of foreign exchange exposure on stock returns during the Brexit Referendum out comes is analysed. The results show that the Brexit Referendum imposed a significantly negative impact on companies incorporated in the UK. For EU incorporated companies no significant results have been found. In addition, no significant difference is observed for the potential relocating countries relative to the non-relocating countries. With respect to the role of foreign exchange exposure, the results show that geographic investment allocation and shareholder nationality significantly impacted the returns of real estate investment companies following the Brexit Referendum. |
| Keywords: | BREXIT; Event Study; real estate companies; referendum |
| JEL: | R3 |
| Date: | 2018–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:afr:wpaper:afres2018_115&r=all |
| By: | Dario Caldara; Matteo Iacoviello; Patrick Molligo; Andrea Prestipino; Andrea Raffo |
| Abstract: | In this note, we first document the recent rise in trade policy uncertainty, henceforth TPU, by using two complementary measures based on text-search analysis: one focusing on newspapers articles, and another constructed from transcripts of firms' earning calls. We then use econometric evidence on the joint movements in aggregate TPU, industrial production, and other macroeconomic variables in order to provide an estimate of the effects of the recent spikes in TPU on U.S. GDP, as well as GDP in advanced foreign economies (AFEs) and emerging market economies (EMEs). |
| Date: | 2019–09–04 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfn:2019-09-04&r=all |
| By: | Konstantinos Dellis (University of Piraeus – Bank of Greece) |
| Abstract: | Foreign direct investment (FDI) has grown dramatically as a major form of international capital transfer over the past decades. The unprecedented growth of cross-country FDI flows has been attributed to a rich set of economic, geographical and institutional factors. In this paper we examine the role of financial system heterogeneity as a potential detrimental factor to FDI flows across OECD economies. To do so, we use a panel dataset of the most recently updated bilateral FDI data at the country level according to OECD BMD4 definition and construct measures of financial distance using a broad set of financial indicators. The econometric approach consists of a gravity-style model, estimated according to the latest advancements in econometric techniques in order to avoid omitted variable bias. The results indicate that financial system similarityis associated with increased bilateral FDI flows, a conclusion that is robust across different estimation strategies and financial distance measures. This insightful policy implication for advanced economies is that the restructuring of the financial system and harmonization to best practices can contribute to economic recovery through the FDI channel as well. Finally, the results highlight the importance for the full implementation of the Banking Union and the Capital Markets Union in the EU. |
| Keywords: | Foreign Direct Investment; Financial Development; Economic Growth; Advanced Economies |
| JEL: | O43 F21 F38 F65 G20 |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:bog:wpaper:269&r=all |
| By: | Juan Carlos Conesa; Matthew J. Delventhal; Pau S. Pujolas; Gajendran Raveendranathan |
| Abstract: | We study the impact of trade on a country catching up to the industrial leader.We calibrate our dynamic, two-country model to Spain and UK from 1850 to 2000, accounting for the inter-war trade collapse (IWTC) and the subsequent catch up by Spain. In our model, the effects of trade disruptions are stronger with more distance tothe leader and more openness. A collapse today (less distance, more openness) similarto the IWTC (more distance, less openness) decreases the capital stock thrice as much(12% instead of 4%). Importantly, traded varieties would fall today but increased dur-ing the IWTC |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:nys:sunysb:19-04&r=all |
| By: | Kulyk, Iryna |
| Abstract: | Food security has emerged high on the agenda of development agencies, policy makers and private stakeholders. As a consequence of major events affecting agricultural production such as the world food crisis of 2007-2008 which prompted skyrocketing world market prices for grains, or highly variable weather leading to harvest failures, the governments of exporting countries tend to restrict their exports with the aim of limiting domestic food price inflation and mitigating any negative impacts on their local markets. According to USDA projections to 2025, Russia, Ukraine and Kazakhstan will further strengthen their position on the world wheat market. The countries are known to have unrealised grain production potential, deteriorated grain storage and transport infrastructure, and government interference in agricultural trade, i.e. application of restrictive measures on grain exports. The topic of trade barriers in the RUK countries remains highly relevant as demonstrated by the recent implementation of export duties for wheat in the Russian Federation. Given the highly variable weather in the RUK region as well as other changing macroeconomic factors, it is hard to predict whether the countries will restrict exports in the future. Barriers to trade can be of formal or informal nature. Formal barriers are documented in governmental resolutions, while informal barriers can stem from administrative procedures, the market structure and the institutional framework observed in the country (Deardorff and Stern, 1997). Administrative measures such as the delayed supply of wagons, additional certifications and controls, bribing, preferential access and soft budget constraints for state trading enterprises are a few examples of the informal impediments to trade observed in the RUK region. Both the formal and informal barriers described above lead to higher transaction and time costs, result in foregone opportunities for trade, damage the image of the country and provide disincentives for investments in the sector. This prevents the RUK countries from realising their potential in grain production as well as grain export. Goal of the dissertation: Thus, the general objective of this thesis is to analyse the impediments to grain exports from Russia, Ukraine and Kazakhstan. In order to reach this objective I have divided it into three more specific goals, which are reflected in the structure of the thesis. Each aspect is covered in a separate essay. [...] |
| Keywords: | Agricultural and Food Policy, Crop Production/Industries, Food Security and Poverty, International Relations/Trade |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iamost:296495&r=all |
| By: | Carol C. Bertaut; Beau Bressler; Stephanie E. Curcuru |
| Abstract: | In this note, we document the large and growing distortions in official capital flows and investment statistics as a result of globalization. We provide a series of stylized facts about the extent and causes of these distortions, and also include data files containing U.S. portfolio holdings restated on a nationality basis to reflect the true exposures of U.S. investors. |
| Date: | 2019–09–06 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfn:2019-09-06&r=all |
| By: | Kohnert, Dirk |
| Abstract: | ABSTRACT & RÉSUMÉ & ZUSAMMENFASSUNG: Whereas the impact of Brexit on Anglophone Africa was a major issue in the controversial British discussions on the pros and cons of Brexit, possible repercussions on French-speaking Africa have been rarely mentioned up to now. Yet, the range of possible Brexit effect is impressive, including the revival of progressive social networks in Francophone Africa. The latter are already demanding more political and economic sovereignty, for example with respect to the increasingly anachronistic F CFA currency. Yet, in view of the lack of countervailing power of Britain within the EU in the case of Brexit, the murky network of Françafrique could be re-vitalized and consolidated as well. Finally, the Brexit and its spread-effects could also impact negatively on acquired human rights, both in Europe and in Africa. The withdrawal in general will have widely disregard implications for hitherto shared ethics. In fact, the Brexit constitutes a retrograde step in promoting a political and socio-cultural climate which could become similar to that of Apartheid South Africa. This includes the pursuit of ultranationalist goals and compromising on established human rights, for example with respect to growing inequality and the crusade against infidels and outsiders. More generally, the Brexit will also impact negatively on acquired ethics concerning popular articipation, both in Europe and in Africa. RÉSUMÉ: Alors que l’impact du Brexit sur l’Afrique anglophone était un sujet majeur dans les discussions controversées britanniques sur les avantages et les inconvénients du Brexit, les répercussions possibles sur l’Afrique francophone ont rarement été mentionnées. Pourtant, la gamme d'effet possible du Brexit est impressionnante, y inclus la renaissance des réseaux sociaux progressistes en Afrique francophone. Ces derniers demandent déjà plus de souveraineté politique et économique, par exemple vis-à-vis de la monnaie de plus en plus anachronique du F CFA. Cependant, compte tenu du manque de puissance compensatrice de la Grande-Bretagne au sein de l'UE dans le cas du Brexit, le réseau trouble de la Françafrique pourrait également être revitalisé et consolidé. Enfin, le Brexit et ses effets de propagation pourraient également avoir une incidence négative sur les droits de l'homme acquis, tant en Europe qu'en Afrique. Le retrait du Royaume-Uni en général aura des implications sur l‘ éthique jusque-là partagée. En fait, le Brexit constitue un pas en arrière dans la promotion d'un climat politique et socioculturel humanitaire. Ce dernier pourrait ressembler dans le future à celui de l'Afrique du Sud de l'apartheid. Cela inclut la poursuite d'objectifs ultranationalistes et la compromission des droits de l'homme établis, par exemple en ce qui concerne l'inégalité croissante et la croisade contre les infidèles et les étrangers. Plus généralement, le Brexit aura également un impact négatif sur l'éthique acquise concernant la participation populaire, tant en Europe qu'en Afrique. ------------------------------------------------------------------------------------------------------------------------------------------- ZUSAMMENFASSUNG: Während der Einfluss des Brexit auf den Afrikanischen Commonwealth in der Diskussionen über die Vor- und Nachteile des Brexit ein wichtiges Thema war, wurden mögliche Auswirkungen auf das frankophone Afrika bisher in der wissenschaftlichen Literatur selten erwähnt. Die Bandbreite der möglichen Brexit-Effekte ist jedoch auch hier beeindruckend, bis hin zur Wiederbelebung progressiver sozial-politischer Netzwerke im frankophonen Afrika. Letztere fordern bereits mehr politische und wirtschaftliche Souveränität, beispielsweise in Bezug auf die zunehmend anachronistische F CFA-Währung. Angesichts des fehlenden Gegengewichtes Großbritanniens in der EU im Falle des Austritts, könnte das korrupte Netzwerk des ‚Françafrique‘ außerdem wiederbelebt und konsolidiert werden. Schließlich könnte der Brexit auch die mühsam erkämpften Menschenrechte sowohl in Europa als auch in Afrika negativ beeinflussen. Denn beim Brexit wurden bislang Auswirkungen auf die gemeinsam geteilte Ethik weitgehend außer Acht gelassen. Tatsächlich stellt der Brexit einen Rückschritt bei der Förderung eines humanen politischen und soziokulturellen Klimas dar. Letzteres droht sich eher in Richtung eines Apartheid Südafrika zu entwickeln, eingeschlossen der Verfolgung ultranationalistischer Ziele und der Schwächung etablierten Menschenrechte, beispielsweise hinsichtlich wachsender Ungleichheit und des Kreuzzugs gegen ‚Ungläubige‘ und Außenstehende. Generell wird der Brexit außerdem negative Auswirkungen auf die partizipative Ethik haben, sowohl in Europa als auch in Afrika. |
| Date: | 2019–05–30 |
| URL: | http://d.repec.org/n?u=RePEc:osf:africa:eudbh&r=all |
| By: | Asher Colombo; Gianpiero Dalla Zuanna (Università di Bologna; Università di Padova) |
| Abstract: | Today, in Spain, Portugal, Italy, Malta and Greece, the incidence of the foreign population is entirely comparable to that of the more traditional European reception countries. Only forty years ago, however, the foreign population in these five southern European countries was decidedly modest. The migration balance with foreign countries has become positive since the 1970s, inverting a secular trend. However, after the migration boom at the beginning of the 21st century, a sudden and sharp decline was observed in the following years of crisis. This paper has a dual purpose. First it describes seventy years of Italian migrations, from the 1950s to date, systematically distinguishing the Centre and North from southern Italy, and connects them with the migratory history of previous decades. We show how the ‘stop and go’ of migrations can be interpreted in the light of the pull factors determined by structural changes in demography and in the labour market. Secondly, it identifies the persistent and structural peculiarities that have shaped the foreign population in Italy, building a model very different from that of central and northern Europe. |
| Keywords: | immigrazione; demografia; mercato del lavoro; Italia; dualismo territoriale |
| JEL: | J61 N34 |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:workqs:qse_45&r=all |
| By: | Cornia, Giovanni Andrea |
| Abstract: | Recent mainstream analyses of changes in income distribution over the post World War II period have concluded that income inequality within countries tends to be stable, that there is no strong association between growth and inequality and that, therefore, poverty is best reduced through growth oriented, rather than distributive, policies.This paper challenges this view. It argues that while income inequality declined in several nations between the 1950s and 1970s, this trend has been reversed during the last twenty years in two-thirds of the countries with adequate data. This conclusion is based on an econometric analysis of inequality trends for 77 countries accounting for 82 per cent of world population and 95 per cent of world GDP-PPP. Weighing the results by these two variables further strengthens these conclusions, which are supported also by a host of country and regional studies.This paper also suggests (without testing formally) that the traditional causes of income inequality (land concentration, unequal access to education, urban rural gap, and so on) are unlikely to explain its rise over the last two decades. Such an increase is more likely to be related to shifts towards skill-intensive technologies and, even more so, to the adoption of the unfettered liberalization of domestic and international markets. Easy generalizations are obviously not possible, as the impact in each nation depends on specific policy mixes and country circumstances. Yet, recurrent factors associated with the recent increase in inequality include: the decline in the labour share during structural adjustment; trade liberalization (in both the North and South); the ’financialization’ of the economy and the rise in the financial rent between 1982–96; erroneous approaches to the privatization of state assets; changes in labour institutions (reduced regulation, erosion of the minimum wage and of the trade unions, and higher labour mobility); and, in some countries, the erosion of the redistributive role of the state following the changes introduced over the last twenty years in the tax and transfer systems.Since the early 1990s, the international community has made the eradication of poverty its foremost development objective. Yet, the decline of poverty in the years ahead depends also on trends in income inequality, a fact which still attracts little concern by the policymakers. Much of the recent rise in income inequality must thus be viewed with alarm, as it may well prove to be incompatible with poverty reduction objectives. |
| Keywords: | International Development |
| URL: | http://d.repec.org/n?u=RePEc:ags:widerw:295482&r=all |
| By: | Bloom, Nicholas (Stanford University); Bunn, Philip (Bank of England); Chen, Scarlet (Stanford University); Mizen, Paul (University of Nottingham); Smietanka, Pawel (Bank of England); Thwaites, Gregory (LSE Centre for Macroeconomics) |
| Abstract: | We use a major new survey of UK firms, the Decision Maker Panel, to assess the impact of the June 2016 Brexit referendum. We identify three key results. First, the UK’s decision to leave the EU has generated a large, broad and long-lasting increase in uncertainty. Second, anticipation of Brexit is estimated to have gradually reduced investment by about 11% over the three years following the June 2016 vote. This fall in investment took longer to occur than predicted at the time of the referendum, suggesting that the size and persistence of this uncertainty may have delayed firms’ response to the Brexit vote. Finally, the Brexit process is estimated to have reduced UK productivity by between 2% and 5% over the three years after the referendum. Much of this drop is from negative within-firm effects, in part because firms are committing several hours per week of top-management time to Brexit planning. We also find evidence for smaller negative between-firm effects as more productive, internationally exposed, first have been more negatively impacted than less productive domestic firms. |
| Keywords: | Brexit; economic uncertainty; policy uncertainty |
| JEL: | D80 E66 G18 H32 |
| Date: | 2019–08–30 |
| URL: | http://d.repec.org/n?u=RePEc:boe:boeewp:0818&r=all |
| By: | Broadbent, Ben (Bank of England and Centre for Macroeconomics); Di Pace, Federico (Bank of England); Drechsel, Thomas (London School of Economics and Centre for Macroeconomics); Harrison, Richard (Bank of England and Centre for Macroeconomics); Tenreyro, Silvana (Bank of England, Centre for Macroeconomics, CEPR and London School of Economics) |
| Abstract: | The UK economy has experienced significant macroeconomic adjustments following the 2016 referendum on its withdrawal from the European Union. This paper develops and estimates a small open economy model with tradable and non-tradable sectors to characterise these adjustments. We demonstrate that many of the effects of the referendum result can be conceptualised as news about a future slowdown in productivity growth in the tradable sector. Simulations show that the responses of the model economy to such news are consistent with key patterns in UK data. While overall economic growth slows, an immediate permanent fall in the relative price of non-tradable output (the real exchange rate) induces a temporary ‘sweet spot’ for tradable producers before the slowdown in tradable sector productivity associated with Brexit occurs. Resources are reallocated towards the tradable sector, tradable output growth rises and net exports increase. These developments reverse after the productivity decline in the tradable sector materialises. The negative news about tradable sector productivity also leads to a decline in domestic interest rates relative to world interest rates and to a reduction in investment growth, while employment remains relatively stable. As a by-product of our analysis, we provide a quantitative analysis of the UK business cycle. |
| Keywords: | Brexit; small open economy; productivity; tradable sector; UK economy |
| JEL: | E13 E32 F17 F47 O16 |
| Date: | 2019–08–27 |
| URL: | http://d.repec.org/n?u=RePEc:mpc:wpaper:0051&r=all |
| By: | Shukla, S.P. |
| Abstract: | The object of this paper is to analyse the evolution of the international trading system from its inception as GATT in 1947 to its latest incarnation as WTO, comprising the complex array of agreements forming its substance and mandate. The study focuses on the adequacy or the inadequacy of the system as it evolved and functioned in an environment of changing international economic and political reality. The study also attempts to grapple with the more difficult question of looking at the future prospects of the system, the strains that it will need to face and the subsequent changes that are called for in its approach, content and functioning. The paper consists of six parts. The first parts deals with the birth and features of GATT. It views GATT in its historical context and refers to the demise of the Havana Charter, the attenuation of multilateralism and the emphasis on European consolidation in the context of the cold war. The second part provides a synopsis of GATT's functioning during the first three decades of its existence (1950-79). The third part deals with the period 1980 through 1994. The fourth part devotes itself to the analysis of the paradigm shift brought about by WTO. In this part, the new issues (TRIMS, TRIPS and services) as well as the old elements of the WTO system are analysed (agriculture, textiles and clothing and some systemic issues such as safeguard system, balance-of-payments rules and dispute settlement). The fifth part traces the journey of WTO from triumph (Marrakesh 1994) to fiasco (Seattle 1999). The last part of the Working Paper attempts to delineate what is to be done. The possibility of a degree of moderation, if not redress, to the on-going process of inequitable integration can emerge only if formal democratic representation, as mandated in the constitution of WTO, is strategically exercised by those majority members who bear the costs of integration. |
| Keywords: | International Development |
| URL: | http://d.repec.org/n?u=RePEc:ags:widerw:295522&r=all |
| By: | Opeyemi Akinyemi (CEPDeR, Covenant University, Ota, Nigeria); Uchenna Efobi (CEPDeR, Covenant University, Ota, Nigeria); Evans Osabuohien (Covenant University, Ota, Ogun State, 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 |
| URL: | http://d.repec.org/n?u=RePEc:agd:wpaper:19/081&r=all |