nep-int New Economics Papers
on International Trade
Issue of 2020‒01‒06
thirty-two papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Exports and (multiple) border-crossing imports: evidence from Indonesia By Harry Wardana; Laura Márquez-Ramos
  2. Global value chains, trade shocks and jobs: an application to Brexit By Hylke Vandenbussche; William Connell Garcia; Wouter Simons
  3. High-Skill Migration, Multinational Companies, and the Location of Economic Activity By Nicolas Morales
  4. Trade and worker deskilling By Dhingra, Swati; Machin, Stephen; Costa, Rui
  5. Services Development and Comparative Advantage in Manufacturing By Xuepeng Liu; Aaditya Mattoo; Zhi Wang; Shang-Jin Wei
  6. The impact of the EU-MERCOSUR deal on Africa in times of resurging protectionism By Kohnert, Dirk
  7. Exclusion in “Ricardian” Trade Models By Crespo, Eduardo; Dvoskin, Ariel; Ianni, Guido
  8. Trade, misallocation, and capital market integration By Tetenyi, Laszlo
  9. Tariff Elimination versus Tax Avoidance: Free Trade Agreements and Transfer Pricing By MUKUNOKI Hiroshi; OKOSHI Hirofumi
  10. Wholesale firms: A catalyst for Swedish exports? By Daunfeldt, Sven-Olov; Engberg, Erik; Halvarsson, Daniel; Kokko, Ari; Tingvall, Patrik
  11. Export markets: substitutes, complements, or independent? By Mari José Aranguren; Sergi Juan de Lucio; Raúl Mínguez; Asier Minondo; Francisco Requena
  12. The role of an Environmental Goods Agreement in the quest to improve the regime complex for climate change By Jaime de Melo; Jean-Marc Solleder
  13. Learning about demand abroad from wholesalers: a B2B analysis By William Connell; Emmanuel Dhyne; Hylke Vandenbussche
  14. The role of the European Union in the international trade and investment order By Woolcock, Stephen
  15. Your Place in the World: The Demand for National and Global Redistribution By Dietmar Fehr; Johanna Mollerstrom; Ricardo Perez-Truglia
  16. From Immigrants to Americans: Race and Assimilation during the Great Migration By Mazumder, Soumyajit
  17. Impact of Exchange Rate Movements on Foreign Trade By Humberto Arandia Claure; Luis Fernando Laura Garzofino
  18. The importance of consumer taste in trade By Bee Yan Aw; Yi Lee; Hylke Vandenbussche
  19. Total factor productivity and the terms of trade By Teresiński, Jan
  20. Cyclically Adjusted Current Account Balance of Turkey By Okan Eren; Gulnihal Tuzun
  21. The China shock, employment protection, and European jobs By Aghelmaleki, Hedieh; Bachmann, Ronald; Stiebale, Joel
  22. Analysis of Time Series to Examine the Impact of the EU Timber Regulation (EUTR) on European Timber Trade By Becher, Georg
  23. Commercialization of High-Tech Innovations and Economic Growth in The Worldwide Most Innovative Countries By Rahman, Sarli; Suwitho, Suwitho; Oh, Andi; Purwati, Astri Ayu
  24. Impacts of Increased Chinese Imports on Japan's Labor Market By HAYAKAWA Kazunobu; ITO Tadashi; URATA Shujiro
  25. Drivers of Cultural Participation of Immigrants: Evidence from an Italian Survey. By Bertacchini, Enrico; Venturini, Alessandra; Zotti, Roberto
  26. Trade Costs in Services. Firm Survival, Firm Growth and Implied Changes in Employment By Elisabeth Christen; Michael Pfaffermayr; Yvonne Wolfmayr
  27. The Effects of Immigration on the Economy: Lessons from the 1920s Border Closure By Ran Abramitzky; Philipp Ager; Leah Platt Boustan; Elior Cohen; Casper W. Hansen
  28. General Equilibrium Resource Elasticity in an Open Resource-Abundant Economy By Aghababaei, Mohammad Ebrahim
  29. Technology gaps, trade and income By Sampson, Thomas
  30. Global Value Chain; International Alliance Strategy; Internationalization of Social Enterprise By Chandra, Gracia Devina
  31. Conceptual Aspects of Global Value Chains By Pol Antràs
  32. Regional Trade Flows and Input Output Data for Europe By Olga Ivanova; d'Artis Kancs; Mark Thissen

  1. By: Harry Wardana (University of Adelaide); Laura Márquez-Ramos (University of Adelaide)
    Abstract: Drawing on the experience of Indonesian firms, we seek to improve the understanding of the internationalization process in emerging market firms faced with a deterioration of their trade conditions. Using matching methods to deal with endogeneity, we empirically analyse inward-outward internationalization connections in two years (2009 and 2015) to test whether these connections change following a reversal of trade liberalization. We focus on importing and exporting activities and we validate the theoretical underpinnings of the claim that importing Indonesian firms export more. We contribute to the literature by introducing a newly-identified underlying mechanism behind the positive relationship between imports and exports: when trade barriers are low, firms that import intermediates sourced from ?complex? value chains achieve significant increases in their exports. We do this by merging the firm-level data with the industry-level data (derived from World Input-Output Database) to construct additional firm-level variables that estimate the proportion of firms? imported inputs that cross border once or more. To deal with selection bias, we match each importing firm with a control group of non-importing firms that, in terms of their labour productivity, foreign ownership, employment and other characteristics, are equally likely to import. We show that when an emerging country facilitates sourcing from foreign countries, firms in that country export more. However, this positive causal effect is channelled through ?complex? importing (that is, when firms import intermediates that have crossed international borders several times). ?Simple? importing (that is, when firms import intermediates that have crossed an international border only once?in this case, the Indonesian border) does not increase firms? exports in periods of trade liberalization. Conversely, ?simple? importing becomes more relevant for exports in periods of trade liberalization reversal. In such circumstances, emerging market firms? participation in value chains becomes less global. Our results are robust to the choice of matching technique and specification. Relevant policy implications can be made: for example, in a world marked by growing scepticism surrounding globalization and openness to international trade and competition, policy makers should bear in mind that policies inhibiting importing activities have negative consequences for exports and hence, the outward internationalization of firms.
    Keywords: internationalization, emerging market firms, value chains, trade liberalization
    JEL: F14 F15 C31
    Date: 2019–10
  2. By: Hylke Vandenbussche; William Connell Garcia; Wouter Simons
    Abstract: We develop a network trade model with country-sector level input-output linkages with the objective of evaluating trade shocks. This framework includes (1) domestic and global value chain linkages between all country-sectors, (2) trade flows via domestic and foreign sectors to a final destination, (3) value added rather than gross trade flows. The model is applied to the sectoral World Input Output Database (WIOD) to predict the impact of Brexit for every individual EU country by aggregating up the country-sector effects. In contrast to other studies, we find EU-27 job losses to be substantially higher than hitherto believed as a result of the closely integrated EU network structure. Upstream country-sectors stand to lose more from Brexit due to their network centrality.
    Date: 2019–03–27
  3. By: Nicolas Morales
    Abstract: This paper examines the relationship between high-skill immigration and multinational activity. I assemble a novel firm-level dataset on high-skill visa applications and show that there is a large home-bias effect. Foreign multinational enterprises (MNEs) in the US tend to hire more migrant workers from their home countries compared to US firms. To quantify the general equilibrium implications for production and welfare, I build and estimate a quantitative model that includes trade, MNE production, and the migration decisions of high-skill workers. I use an instrumental variables approach to show that the relationship between immigration and MNEs proposed by the model holds in the data. The model is then used to run two counterfactual exercises. The first, evaluates the implications of a more restrictive immigration policy in the US. I find that MNEs play a significant role in how immigration affects the location of production and welfare. In the second counterfactual exercise, I increase the barriers to MNE production to calculate the welfare gains generated by MNEs. I show that a model not incorporating migration would overestimate the MNE welfare gains for high-skill workers by 35% and underestimate welfare gains for low-skill workers by 8%.
    Keywords: H-1B visas; IT sector; Multinational companies; High-skill immigration
    JEL: F16 F22 F23 J61
    Date: 2019–12–17
  4. By: Dhingra, Swati; Machin, Stephen; Costa, Rui
    Abstract: This paper presents new evidence on international trade and worker outcomes. It examines a big world event that produced an unprecedentedly large shock to the UK exchange rate. In the 24 hours in June 2016 during which the UK electorate unexpectedly voted to leave the European Union, the value of sterling plummeted. It recorded the biggest depreciation that has occurred in any of the world’s four major currencies since the collapse of Bretton Woods. Exploiting this variation, the paper studies the impact of trade on wages and worker training. Wages and training fell for workers employed in sectors where the intermediate import price rose by more as a consequence of the sterling depreciation. Calibrating the estimated wage elasticity with respect to intermediate import prices to theory uncovers evidence of a production complementarity between workers and intermediate imports. This provides new direct evidence that, in the modern world of global value chains, it is changes in the cost of intermediate imports that act as a driver of the impact of globalization on worker welfare. The episode studied and the findings add to widely expressed, growing concerns about poor productivity performance relating to skills and to patterns of real wage stagnation that are plaguing contemporary labour markets.
    JEL: F14 F31 J24 J31
    Date: 2019–05
  5. By: Xuepeng Liu; Aaditya Mattoo; Zhi Wang; Shang-Jin Wei
    Abstract: Most manufacturing activities use inputs from the financial and business services sectors. But these services sectors also compete for resources with manufacturing activities, provoking concerns about deindustrialization attributable to financial services in developed countries like the United States and United Kingdom, and business services in developing countries like India and the Philippines. This paper examines the implications of services development for the export performance of manufacturing sectors. We develop a methodology to quantify the indirect role of services in international trade in goods and construct new measures of revealed comparative advantage based on value-added exports. We show that the development of financial and business services enhances the revealed comparative advantage of manufacturing sectors that use these services intensively but not of other manufacturing sectors. We also find that a country can partially overcome the handicap of an underdeveloped domestic services sector by relying more on imported services inputs. Thus, lower services trade barriers in developing countries can help to promote their manufacturing exports.
    JEL: F1
    Date: 2019–12
  6. By: Kohnert, Dirk
    Abstract: ABSTRACT & RÉSUMÉ & ZUSAMMENFASSUNG : The EU-Mercosur deal of 2019 was heralded as a milestone of free trade agreements worldwide in times of growing protectionism and nationalism. Critics condemned deficient ecological and sanitary standards as well as persistent non-tariff barriers to trade. The EU farm lobby complained about a sell-out of European interests in advantage of dominating multinationals. However, the fatal repercussions of the deal on Africa have rarely been mentioned. They include increasing cut-throat competition and asymmetrical partnership to the detriment of the African poor. Given the additional destructive impact of the Brexit crisis, African governments should use their increased bargaining power vis à vis the EU27 and the UK, in times of stiffening competition concerning the EU’s Africa trade with new global players such as China and India, to enforce EPAs re-negotiations on a level playing field. RÉSUMÉ : L'accord de 2019 entre l'UE et le Mercosur a été qualifié de jalon dans les accords de libre-échange dans le monde entier à une époque de protectionnisme et de nationalisme grandissants. Les critiques ont condamné les normes écologiques et sanitaires déficientes, ainsi que les obstacles non-tarifaires persistants au commerce. Le lobby agricole de l'UE s'est plaint de la vente d'intérêts européens au profit de multinationales dominantes. Cependant, les répercussions fatales de l'accord sur l'Afrique ont rarement été mentionnées. Ils incluent une concurrence acharnée et un partenariat asymétrique au détriment des pauvres en Afrique. Compte tenu de l'impact destructeur supplémentaire de la crise du Brexit, les gouvernements africains devraient utiliser leur pouvoir de négociation accru vis-à-vis de l'UE27 et du Royaume-Uni, en période de durcissement de la concurrence concernant le commerce africaine de l'UE avec des nouveaux acteurs mondiaux tels que la Chine et l'Inde, pour imposer des renégociations des APEs sur un pied d’égalité. ------------------------------------------------------------------------------------------------------------------------------------------ ZUSAMMENFASSUNG : Das Abkommen zwischen der EU und dem Mercosur von 2019 wurde als Meilenstein für weltweite Freihandelsabkommen in Zeiten wachsenden Protektionismus und Nationalismus eingeläutet. Kritiker bemängelten unzureichende Umwelt- und Hygienestandards sowie anhaltende nichttarifäre Handelshemmnisse. Die EU-Agrarlobby beschwerte sich außerdem über einen Ausverkauf europäischer Interessen zugunsten dominierender multinationaler Unternehmen. Die fatalen Auswirkungen des Abkommens auf Afrika wurden jedoch selten erwähnt. Dazu gehören ein zunehmender Verdrängungswettbewerb und eine asymmetrische Partnerschaft zum Nachteil der afrikanischen Armen. Angesichts der zusätzlichen destruktiven Auswirkungen der Brexit-Krise sollten die afrikanischen Regierungen, in Zeiten zunehmenden Wettbewerbs im Afrikahandel der EU mit neuen globalen Akteuren wie China und Indien, ihre verstärkte Verhandlungsmacht gegenüber der EU27 und Großbritannien einsetzen, um Neuverhandlungen der Wirtschaftlichen Partnerschaftsabkommen auf Augenhöhe durchzusetzen.
    Date: 2019–08–19
  7. By: Crespo, Eduardo (Institute of Economics, Federal University of Rio de Janeiro); Dvoskin, Ariel (CONICET - IDAES National University of San Martín); Ianni, Guido (Roma Tre University)
    Abstract: The paper discusses the following result of the so-called ‘Ricardian’ models of international trade: the impossibility of exclusion from trade. We show that this result holds due to the very restrictive assumptions behind these models: (i) commodities are produced by unassisted labour alone under (ii) complete factor immobility. The moment these assumptions are relaxed, the likelihood of exclusion can no longer be neglected. The reason is the following: even if there were no limits to the fall in the rate of domestic real wages, production costs would reach a positive lower bound due to the presence of imported capital goods. Exclusion is therefore the result of this lower bound being higher than the prevailing international price, for both capital and consumption-goods sectors
    Keywords: absolute advantage; comparative advantage; exclusion from trade; pattern of specialization; Ricardian models of trade
    JEL: B51 F11
    Date: 2019–12–17
  8. By: Tetenyi, Laszlo
    Abstract: I study how cross-country capital market integration affects the gains from trade in a model with financial frictions and heterogeneous, forward-looking firms. The model predicts that misallocation among exporters increases as trade barriers fall, even as misallocation decreases in the aggregate. The reason is that financially constrained productive exporters increase their production only marginally, while unproductive exporters survive for longer and increase their size. Allowing capital inflows magnifies misallocation, because unproductive firms expand even more, leading to a decline in aggregate productivity. Nevertheless, under integrated capital markets, access to cheaper capital dominates the adverse effect on productivity, leading to higher output, consumption and welfare than under closed capital markets. Applied to the period of European integration between 1992 and 2008, I find that underdeveloped sectors experiencing higher export exposure had more misallocation of capital and a higher share of unproductive firms, thus the data is consistent with the model's predictions. A key implication of the model is that TFP is a poor proxy for consumption growth after trade liberalisation.
    Keywords: financial development,misallocation,capital market integration,trade liberalisation
    JEL: F4 O4
    Date: 2019
  9. By: MUKUNOKI Hiroshi; OKOSHI Hirofumi
    Abstract: Free trade agreements (FTAs) entail rules of origin (ROO), which require exporters to identify the origin of exports to prove eligibility for preferential tariff rates. This paper investigated how a multinational enterprise (MNE) in an international oligopoly model reacts to an FTA with ROO when it can manipulate its transfer price for intra-firm trade. Before the formation of an FTA, the MNE uses the transfer price to avoid a high corporate tax or to shift profits from the rival firm in the final-goods market. After the FTA formation, ROO can force the MNE to set the transfer price such that it meets the value-added requirement of ROO, or to change the location of its input production. We show that an FTA with ROO may decrease the profits of both the MNE and the local firm, even when they comply with ROO and take advantage of the tariff elimination provided for in the FTA. Furthermore, there is a case where ROO increase the consumer's gains from an FTA and transform a welfare-reducing FTA into a welfare-improving FTA.
    Date: 2019–12
  10. By: Daunfeldt, Sven-Olov (HUI Research); Engberg, Erik (Growth Analysis); Halvarsson, Daniel (The Ratio Institute); Kokko, Ari (Copenhagen Business School); Tingvall, Patrik (Growth Analysis)
    Abstract: This paper examines the role of wholesale firms as facilitators of exports for small and medium-sized Swedish businesses. Our findings suggest that wholesale firms do facilitate access to difficult markets located outside Europe. For exports of a particular good to a given market, we observe a positive correlation between the export volumes of wholesale and manufacturing firms. Finally, we present evidence that supports a prediction from recent trade models with differentiated firms, namely that wholesale firms can facilitate exports for firms that are not themselves capable of direct exports.
    Keywords: Trade; Wholesale; Intermediation; Productivity; Manufacturing; Institutions
    JEL: D22 F14 F18
    Date: 2019–12–20
  11. By: Mari José Aranguren (Orkestra-Deusto and Deusto Business School, University of Deusto, Camino de Mundaiz 50, 20012 Donostia - San Sebastián (Spain)); Sergi Juan de Lucio (Universidad Antonio de Nebrija and Universidad de Alcalá. Pza. San Diego, s/n, 28801, Alcalá de Henares (Spain)); Raúl Mínguez (Universidad Antonio de Nebrija. Calle de Santa Cruz de Marcenado, 27, 28015, Madrid (Spain)); Asier Minondo (Corresponding author. Deusto Business School, University of Deusto, Camino de Mundaiz 50, 20012 Donostia - San Sebastián (Spain)); Francisco Requena (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain))
    Abstract: Using a large sample of export transactions in Spain over the period 2010-2017, we explore whether firms treat export markets as substitutes, complements, or independent. We find that an exogenous change in revenue in a firm's top export destination does not change its revenue in other destinations. A firm does not have either a larger probability to increase the number of export destinations when it experiences an exogenous drop in revenue in its top export destination. These results suggest that a shock in firms' top export market does not affect their decisions in other export markets.
    Keywords: exports, Spain, manufacturing
    JEL: F10 F14
    Date: 2019–12
  12. By: Jaime de Melo (FERDI - Fondation pour les Etudes et Recherches sur le Développement International); Jean-Marc Solleder (UNIGE - Université de Genève)
    Abstract: The environment-trade nexus requires action. Environmentalists have claimed that the interests of the trade community, as represented at the WTO, would trump environmental concerns while trade specialists have claimed that an open trading system is key to meet the environmental challenge facing us. After a decade-long negotiation at the WTO on the reduction of tariffs on environmental goods (EGs) failed to produce an agreement, in 2014 a group of 14 countries entered plurilateral negotiations aiming for an Environmental Goods Agreement (EGA) that would have substantially reduced or eliminated tariffs on a long list of EGs. This also failed. This paper discusses the hurdles faced by these negotiations, the resulting stalemate, and avenues for reviving the negotiations. We argue that conclusion of the EGA negotiations under the current narrow agenda would help build trust to go further but would produce only very modest gains. Extending the agenda to include non-tariff barriers (NTBs) and environmental services remains the acid test for an EGA to address meaningfully the climate-change challenge.
    Keywords: Environmental Goods,WTO,Climate Change
    Date: 2019–09–16
  13. By: William Connell; Emmanuel Dhyne; Hylke Vandenbussche
    Abstract: This paper uses Business to Business (B2B) transaction level data. It shows that manufacturing firms that initially export via a wholesaler are much more likely to become direct exporters to the same destination in subsequent periods. Theoretically, we rationalize this finding by demonstrating how a connection to a wholesaler reduces uncertainty about the foreign demand. In the data we isolate the channel for demand learning from productivity spillovers. Non-exporting manufacturing firms, previously serving a foreign destination through an exporting wholesaler, have a much higher probability of becoming direct exporters to the same export market in subsequent periods. A connection to an exporting wholesaler results in a probability of exporting to the same destination that is six times higher than a comparable firm without any exposure to the foreign destination.
    Date: 2019–11–14
  14. By: Woolcock, Stephen
    Abstract: The priority of the EU in the international trade and investment order is to provide leadership in supporting the open, rules-based order at a time when it faces its most severe test since the establishment of the General Agreement on Tariffs and Trade (GATT) more than 70 years ago. An effective EU policy on international trade and investment is important for the EU in terms of ensuring access to future growth markets and promoting sustainable development. But at the time of major threats from both the United States and China, it is important for the EU to support an open, rules-based trading system. The EU cannot however, achieve this aim alone, and will need to cooperate with like-minded countries that share this broad aim. The EU’s capability to pursue a coherent policy in pursuit of these general aims requires the establishment of an effective trade policy regime that includes the Council of Ministers, European Commission, and European Parliament. It also requires the (re)establishment of a broad political consensus on the scope and aims of EU trade and investment policy, something that can only be achieved with the full engagement of member state governments and stakeholders in an informed debate.
    Keywords: European Union; trade policy; global investment; GATT; rules-based trading system
    JEL: L81 N0
    Date: 2019–04–11
  15. By: Dietmar Fehr; Johanna Mollerstrom; Ricardo Perez-Truglia
    Abstract: Some of today’s most heated policy debates about Brexit, trade wars, climate change abatement, and migration involve redistribution of resources within a given country (national redistribution) and between countries (global redistribution). Yet, theories and evidence on preferences for redistribution have focused almost exclusively on national redistribution. In this paper, we study preferences for global redistribution. The workhorse model in political economy predicts that individuals who are higher up in the national income distribution are less supportive of national redistribution than those who are lower. Applied to the global arena, the model predicts that individuals who are richer in the global income distribution will be less supportive of global redistribution. We test this hypothesis using a two-year, face-to-face survey of a representative sample of German households. We show that respondents are misinformed about their positions in the national and global income distributions, and we provide novel evidence that those misperceptions are meaningful. Consistent with previous studies, we find support for the political economy model in the national arena: the correlational and experimental estimates indicate that the demand for national redistribution decreases with national relative income. However, the political economy model does not hold in the global arena: support for global redistribution does not depend on global relative income.
    JEL: C83 C91 D63 D83 D91 H23
    Date: 2019–12
  16. By: Mazumder, Soumyajit
    Abstract: How does the appearance of a new immigrant group affect the integration of earlier generations of migrants? We study this question in the context of the first Great Migration (1915-1930), when 1.5 million African Americans moved from the US South to northern urban centers, where 30 million Europeans had arrived since 1850. We exploit plausibly exogenous variation induced by the interaction between 1900 settlements of southern-born blacks in northern cities and state-level outmigration from the US South after 1910. Black arrivals increased both the effort exerted by immigrants to assimilate and their eventual Americanization. These average effects mask substantial heterogeneity: while initially less integrated groups (i.e. Southern and Eastern Europeans) exerted more assimilation effort, assimilation success was larger for those culturally closer to native whites (i.e. Western and Northern Europeans). Labor market outcomes do not display similar heterogeneity, suggesting that these patterns cannot be entirely explained by economic forces. Our findings are instead more consistent with a framework in which changing perceptions of outgroup distance among native whites lowered the barriers to the assimilation of white immigrants.
    Date: 2019–07–03
  17. By: Humberto Arandia Claure (Instituto Nacional de Estadísticas); Luis Fernando Laura Garzofino (Ministerio de Economía y Finanzas Públicas)
    Abstract: In an external context of declining terms of trade since 2011, which gained momentum mainly in 2014, many economies recorded strong devaluations in order to improve their competitiveness. Within this framework, the present paper uses various statistical techniques to analyze the impact of variations in the real exchange rate on foreign trade, using the approaches of the Marshall-Lerner condition, and the “S†and “J†Curves according to the literature and international empirical experience for the case of Bolivia. The main results show that because a significant percentage of exports do not respond to the real exchange rate (price effect), the Marshall-Lerner condition is not complied with for the Bolivian case. This aspect is corroborated through estimation of the “J†Curve and calculation of the “S†Curve, which indicate that the trade balance does not show a significant improvement in the face of real depreciation. In the same way, it is found that the income effect is the most important when analyzing the determinants of export and import demands.
    Keywords: Marshall-Lerner, J-Curve, S-Curve, Real Devaluation, Trade Balance
    JEL: C32 F14 F31 F34
    Date: 2018–12
  18. By: Bee Yan Aw; Yi Lee; Hylke Vandenbussche
    Abstract: This paper documents the importance of consumer taste in trade flows using Belgian firm-product customs data by destination. We identify consumer taste through the use of a control function approach and estimate it jointly with other demand parameters using a very flexible demand specification. Consumer taste is identified for every trade ow. The results show that taste decreases in distance but this relationship is not monotonic. The contribution of consumer taste to actual export revenue ranges between 1-31% depending on the product category in the food industry. Overall, the demand shifters, taste and product quality explain twice as much of the variation in export revenues than cost.
    Date: 2019–03–26
  19. By: Teresiński, Jan
    Abstract: In this paper we analyse how the terms of trade (TOT) - the ratio of export prices to import prices - affect total factor productivity (TFP). We provide empirical macroeconomic evidence for the European Union countries based on the times series SVAR analysis and microeconomic evidence based on industry level data from the Competitiveness Research Network (CompNet) database which shows that the terms of trade improvements are associated with a slowdown in the total factor productivity growth. Next, we build a theoretical model which combines open economy framework with the endogenous growth theory. In the model the terms of trade improvements increase demand for labour employed in exportable goods production at the expense of technology production (research and development - R&D) which leads to a shift of resources from knowledge development towards physical exportable goods. This reallocation has a negative impact on the TFP growth. Under a plausible calibration the model is able to replicate the observed empirical pattern.
    Keywords: total factor productivity,terms of trade,R&D
    JEL: F41 O32 O41 O47
    Date: 2019
  20. By: Okan Eren; Gulnihal Tuzun
    Abstract: We estimate the impact of the domestic and trade partners’ business cycles on the current account balance of Turkey and build a cyclically-adjusted current account balance from 2003Q1 to 2019Q1. To this end, we adopt a methodology that is based on the estimation of domestic and foreign business cycles by a modified version of HP filter and the approximation of their impact on the goods and services trade balances, separately. Our findings suggest that the level and evolution of the current account balance are mainly determined by non-cyclical factors although the size of cyclical adjustment reaches up to 1.4 percent of GDP in certain periods. The domestic business cycles seem to be the main driver of the cyclical changes in the current account balance throughout the period of analysis. Furthermore, the cyclical adjustment is more pronounced in the goods trade balance than the services trade balance. Foreign business cycles have a much bigger effect on the services trade balance than the goods trade balance when compared to the impact of domestic business cycles. Finally, the incorporation of price cycles into the analysis points out that the final cyclically-adjusted current account balance turns out to be more positive in recent periods unlike the case in which only the business cycles are taken into account.
    Keywords: Current Account Balance, Cyclical Adjustment, Business Cycles
    JEL: E32 F14 F32
    Date: 2019
  21. By: Aghelmaleki, Hedieh; Bachmann, Ronald; Stiebale, Joel
    Abstract: We investigate the effects of Chinese import competition on transitions into and out of employment using comparable worker-level data for 14 European countries. Our results indicate that, on average, Chinese imports are associated with an increased probability that employed workers become unemployed and with a reduction in worker flows from unemployment to employment. In countries with high levels of employment protection, incumbent workers are shielded against the risk of job loss due to Chinese competition, but unemployed workers' prospects seem to be particularly negatively affected in these countries. We also provide evidence that the effects of increased Chinese imports differ by worker groups and the tasks performed on the job.
    Keywords: trade adjustments,China,import competition,worker flows,employment transitions,employment protection
    JEL: F14 F16 J23 J63 J64
    Date: 2019
  22. By: Becher, Georg
    Abstract: The objective of the EU Timber Regulation (EUTR), enforced since March 2013, is for importers and exporters to commit to reducing the risk of trading timber products from illegal sources in the EU. EUROSTAT time series on monthly trade with wood products from January 1988 to August 2016 were used to monitor the law’s impact. The time series, subdivided into sections before and after the implementation of EUTR, were investigated in time and frequency domains. The analyses in the time domain indicated the adequateness of the AR (1) and ARMA (1, 1) models. As the confidence intervals for their estimates before and after EUTR do not overlap, the respective time series are considered as different and the influence of EUTR legislation probable (also confirmed by the significant models with EUTR as intervening event). Long term variation of the monthly time series (March 2013 to August 2016) show an increasing linear trend for all wood products and for wood products with tropical woods excluded. Since EU imports of tropical wood were falling before EUTR, the stagnant imports thereafter are judged as uncertainty and time the markets need to adapt to a new legislative situation. The analyses in frequency domain based on inference from periodogram revealed cycles of 3, 4, 6 and 12 months, except for time series of tropical wood imports after EUTR. If cycles are thought of as inherent to import time series, this lack in tropical wood imports can be an indication of a ‘wait-and-see’ attitude of importers as a consequence of EUTR.
    Keywords: Research Methods/ Statistical Methods
    Date: 2019–12–18
  23. By: Rahman, Sarli; Suwitho, Suwitho; Oh, Andi; Purwati, Astri Ayu
    Abstract: This study aimed to reconfirm the factors that caused the differences from the results of previous studies related to the relationship of R&D expenditures, the number of patent applications high-tech exports and economic growth (GDP). Cause of these differences related to the research objects, observation time and the data choice used. Therefore in this study, the research objects were selected 51 countries listed in the 2018 global innovation index, which are then grouped into high-income countries, upper-middle-income, and lower-middle-income. In addition, there are also three alternative choices of data that are used to represent high-tech export variables and economic growth variables. From the analysis conducted it is found that innovation activities could affect the economic growth of high-income countries in the long term and the short term.
    Keywords: Innovation, Economic Growth, FDI Inflows, High-tech Export
    JEL: O1 O3 O5
    Date: 2019–07–10
  24. By: HAYAKAWA Kazunobu; ITO Tadashi; URATA Shujiro
    Abstract: Using Japanese firm/establishment level census data, we investigate the impact of Chinese import penetration on employment in Japan. We found negative impacts of Chinese import penetration on total employment, especially for industries that produce competing products to Chinese imports, and a positive impact of import penetration in the industries from which firms purchase their inputs (upstream import penetration). The negative impacts are mainly driven by firms' exit from the market while positive impacts are enjoyed by surviving firms. We did not find any significant impacts of the penetration in industries to which firms sell their products (downstream penetration).
    Date: 2019–11
  25. By: Bertacchini, Enrico; Venturini, Alessandra; Zotti, Roberto (University of Turin)
    Abstract: The paper aims to explore the drivers of immigrants’ participation to cultural and leisure activities in host countries. First, we discuss how the main analytical approaches on cultural participation can be extended to incorporate factors specific to migrants’ characteristics and behaviour, namely dimensions of proximity to the native population’s culture and the level of integration in the host society. Secondly, we investigate migrants’ propensity for consumption of cultural and leisure activities using data of a special national survey on Income and Living conditions (2011-2012) on foreign households in Italy. Italy represents an interesting case because it is a recent immigration country, making the analysis particularly suitable for studying the behaviour of first-generation immigrants. Our findings suggest that language proficiency, duration of stay and intention to remain in the host country significantly increase the probability to access various types of leisure and cultural activities. Interestingly, after controlling for standard individual predictors, several dimensions of an immigrant’s cultural background and proximity with the culture of the host society still significantly explain variation in cultural participation rates, confirming that cultural differences play a role in migrants’ cultural consumption choice.
    Date: 2019–12
  26. By: Elisabeth Christen; Michael Pfaffermayr; Yvonne Wolfmayr
    Abstract: This paper provides new insight into the firm-level employment impacts of trade cost changes at the industry level in the Austrian services sector. We apply a two-part model of firm survival (exit) and firm growth. Separate regressions for firm entry rates at the industry-region level complete the picture of total trade-induced net job creation. We implement the trade cost measure introduced by Chen and Novy (2011) and base it on own estimates of industry specific substitution elasticities. Falling trade costs in the Austrian services sector over the period 2000 to 2014 resulted in net job creation of about 19,000 jobs accounting for 9.5 percent of overall job flows in the sector. The smallest and least productive firms contract while large and productive firms expand as predicted by theory. Most adjustments occur at the extensive margin due to changes in the probability of firm survival.
    Keywords: Services trade, Trade costs, Elasticity of substitution, Firm-level evidence, Heterogenous firms, Gravity model, Job flows, Trade and employment
    Date: 2019–12–18
  27. By: Ran Abramitzky; Philipp Ager; Leah Platt Boustan; Elior Cohen; Casper W. Hansen
    Abstract: In the 1920s, the United States substantially reduced immigrant entry by imposing country-specific quotas. We compare local labor markets with more or less exposure to the national quotas due to differences in initial immigrant settlement. A puzzle emerges: the earnings of existing US-born workers declined after the border closure, despite the loss of immigrant labor supply. We find that more skilled US-born workers – along with unrestricted immigrants from Mexico and Canada – moved into affected urban areas, completely replacing European immigrants. By contrast, the loss of immigrant workers encouraged farmers to shift toward capital-intensive agriculture and discouraged entry from unrestricted workers.
    JEL: J6 J61 N21
    Date: 2019–12
  28. By: Aghababaei, Mohammad Ebrahim
    Abstract: This study investigates the sensitivity of macro and sectoral variables to natural resource revenues in a resource-abundant developing country. Here, different transmission mechanisms are in effect. The paper considers the exchange rate channel, financial sector channel, capital flow channel, public sector channel, and resource reallocation channel. I employ a large scale real-financial general equilibrium model with especial focus on fossil fuel energy, natural resources, financial sector interactions, inter-sectoral linkages, and public sector responses. The model is used to predict the likely changes in oil and gas exports in Iran. It causes more oil exports but at lower international prices. Our comparative static analysis indicates that resource elasticity for GDP is from +0.10 to +0.13; for public services is from +0.16 to +0.27; for import is from +0.42 to +0.45; for mineral extraction is from -0.50 to -0.10, and for the manufacturing sector is from -0.08 to -0.06. The simulation reveals extraction competition among natural resources.
    Keywords: General equilibrium, natural resources, Dutch Disease, trade, non-tariff barriers
    JEL: C68 F11 O13 O24 Q33
    Date: 2019–12
  29. By: Sampson, Thomas
    Abstract: This paper studies the origins and consequences of international technology gaps. I develop an endogenous growth model where R&D efficiency varies across countries and productivity differences emerge from firm-level technology investments. The theory characterizes how innovation and learning determine technology gaps, trade and global income inequality. Countries with higher R&D efficiency are richer and have comparative advantage in more innovation-dependent industries where the advantage of backwardness is lower and knowledge spillovers are more localized. I estimate R&D efficiency by country and innovation-dependence by industry from R&D and bilateral trade data. Calibrating the model implies technology gaps, due to cross-country differences in R&D efficiency, account for around one-quarter to one-third of nominal wage variation within the OECD.
    Keywords: technology gaps; trade; technology investment; Ricardian comparative advantage; international income inequality
    JEL: F11 F43 O14 O41
    Date: 2019–06
  30. By: Chandra, Gracia Devina
    Abstract: Tulisan ini menjelaskan mengenai beberapa materi dan permasalan mengenai strategi internasional yang biasa terjadi di perusahaan. Seperti global value chain (GVC) yang merupakan nilai rantai yang menghubungkan produsen lokal asal negara berkembang ke pasar internasional. Kemudian international alliance strategy yang menjadi salah satu strategi perusahaan untuk partnership antar perusahaan atau mitra. Dan yang terakhir, internationalization of social enterprise yang membahas mengenai kewirausahaan sosial sebagai lembaga non-profit yang berkembang di Indonesia.
    Date: 2019–06–18
  31. By: Pol Antràs
    Abstract: I offer an overview of some key conceptual aspects associated with the rise of global value chains (GVCs). I outline a series of alternative interpretations and definitions of what the rise of GVCs entails, and I trace the implications of these alternative conceptualizations for the measurement of the phenomenon, as well as for elucidating the key determinants and implications of GVC participation, both at the country level and at the firm level. In the process, I offer some speculative thoughts about the future of GVCs in light of the advent of an array of new technologies.
    JEL: D5 F1 F2 F4 F6
    Date: 2019–12
  32. By: Olga Ivanova; d'Artis Kancs; Mark Thissen
    Abstract: The Regional Trade Flows and Input output Data for Europe are constructed at the regional NUTS2 level with sectoral NACE2 detail and developed for spatial macroeconomic modelling and social-economic analysis for answering a wide-range of policy questions, including policies related to investments in innovation, human capital, green infrastructure and Sustainable Development Goals. The Regional Trade Flows and Input output Data for Europe are particularly well suited for structural modelling such as spatial computable general equilibrium models, as all data are fully internally consistent. In the Regional Trade Flows and Input output Data all European regions are connected with each other via inter-regional trade flows, input use and output supply in form of regional trade matrices, input output tables and supply-use tables. This data base is result of a joint collaborative effort over a decade of several research institutes across Europe, including the Netherlands Environmental Assessment Agency (PBL), the European Commission (DG JRC) and the University of Groningen (Ivanova, Kancs and Stelder 2009, Thissen et al. 2014, Thissen et al. 2018, Ivanova, Kancs and Thissen 2019). Among others, the new EU Economic Modelling System (EU-EMS) developed within the EU Framework Programme for Research and Innovation makes use of the Regional Trade Flows and Input output Data for Europe.
    Keywords: Inter-Regional Trade Flows, Input output Tables, data, Europe, spatial spillovers, SCGE, modelling.
    JEL: C68 D58 F12 R13 R30
    Date: 2019–10–06

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