nep-int New Economics Papers
on International Trade
Issue of 2020‒01‒13
33 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Policy Brief: Policy actions to facilitate upgrading of the agricultural sector in Trinidad and Tobago By -
  2. The cost of non-TTIP: a global value chain approach By Hylke Vandenbussche; William Connell Garcia; Wouter Simons
  3. The Margins of Intermediate-input Trade: Theory and Evidence By ARA Tomohiro; ZHANG Hongyong
  4. Low-wage import competition and populist backlash: The case of Italy By Barone, Guglielmo; Kreuter, Helena
  5. How do natural disasters affect services trade? By Xu, Ankai; Kouwoaye, Amèvi Rocard
  6. The 'Margin call'. Export experience and firm entry into new export markets By Matteo Bugamelli; Andrea Linarello; Roberta Serafini
  7. Decomposing firm-product appeal: how important is consumer taste? By Bee Yan Aw; Yi Lee; Hylke Vandenbussche
  8. International health worker mobility and trade in services By Carzaniga, Antonia Giulia; Dhillon, Ibadat S.; Magdeleine, Joscelyn; Xu, Lihui
  9. Trade Liberalization and Firm Profitability: Insights from Ghana's Manufacturing Sector. By Hoedoafia, Mabel Akosua
  10. The Migration State in the Global South: Nationalizing, Developmental, and Neoliberal Models of Migration Management By Adamson, Fiona; Tsourapas, Gerasimos
  11. Applied services trade policy: A guide to the Services Trade Policy Database and the Services Trade Restrictions Index By Borchert, Ingo; Gootiiz, Batshur; Magdeleine, Joscelyn; Marchetti, Juan A.; Mattoo, Aaditya; Rubio, Ester; Shannon, Evgeniia
  12. The Persistent Effects of Brief Interactions: Evidence from Immigrant Ships By Battiston, Diego
  13. Estimating the Effects of the Totalization Agreements By Ananth Seshadri
  14. An Empirical Analysis of Foreign Direct Investment and Domestic Investment as Drivers of Economic Growth in South Africa By Lerato Mothibi; Lorainne Ferreira
  15. Theorizing State-Diaspora Relations in the Middle East: Authoritarian Emigration States in Comparative Perspective By Tsourapas, Gerasimos
  16. Exit, Voice and Political Change: Evidence from Swedish Mass Migration to the United States By Karadja, Mounir; Prawitz, Erik
  17. What Is Real and What Is Not in the Global FDI Network? By Jannick Damgaard; Thomas Elkjaer; Niels Johannesen
  18. Network Determinants of Cross-Border Merger and Acquisition Decisions By Tatiana Didier; Sebastian Herrador; Magali Pinat
  19. Tax Havens and Cross-border Licensing By Jay Pil CHOI; ISHIKAWA Jota; OKOSHI Hirofumi
  20. The importance of exchange rate stability for export growth By Aleksandra ?or?evi? Zori?
  21. International trade in intermediate inputs and the welfare gains from monetary policy cooperation By Liutang Gong; Jianjian Liu; Chan Wang; Liyuan Wu; Heng-fu Zou
  22. Immigration and crime: the role of self-selection and institutions By Fabio Mariani; Marion Mercier
  23. Implications of Automation for Global Migration By Yixiao ZHOU; Rod TYERS
  24. Demand Risk and Diversification through Trade By Federico Esposito
  25. The Effect of Scale, Technique, Composition and Trade Openness on Energy Demand: Fresh Evidence from Malaysia By Shahbaz, Muhammad; Alam, Md. Mahmudul; Uddin, Gazi Salah; Nanthakumar, Loganathan
  26. Price discrimination in bribe payments: Evidence from informal cross-border trade in West Africa By Sami Bensassi; Joachim Jarreau
  27. The Chilling Effect: Investor-State Dispute Settlement, Graphic Health Warnings, the Plain Packaging of Tobacco Products, and the Trans-Pacific Partnership By Rimmer, Matthew
  28. Firm turnover in the export market and the case for fixed exchange rate regime By Hamano, Masashige; Pappadà, Francesco
  29. Greening regional trade agreements: Subsidies related to energy and environmental goods By Shunta Yamaguchi
  30. The electronics industry in Indonesia and its integration into global supply chains By Raj-Reichert, Gale.
  31. The China-Us Trade Imbalance: An International Macroeconomic Perspective By Anthony J Makin
  32. Global networks, local specialisation and regional patterns of innovation By Andrea Ascani; Luca Bettarelli; Laura Resmini; Pierre-Alexandre Balland
  33. More development, less emigration to OECD countries: Identifying inconsistencies between cross-sectional and time-series estimates of the migration hump By Bencek, David; Schneiderheinze, Claas

  1. By: -
    Abstract: For many countries, the acceleration of integration into the global economy and multilateral trading system provides an opportunity to access a wider range of goods and services as well as export markets, increasing their economic incomes, and improving the welfare of the citizenry. In particular, preferential trade agreements tend to increase export market access opportunities for the agro-industrial products of developing countries. While increased market access offers many opportunities for enhancing the economic growth of exporting countries, developing countries are often unable to seize these opportunities due to supply-side constraints and other challenges. Among these are bottlenecks in production and distribution networks, intense competition from other global exporters, quality standards, Sanitary and Phyto-Sanitary (SPS) requirements and other non-tariff measures (NTMs) erected in major export markets. Expansion in global production and trade has increasingly been fueled by global value chains (GVCs), thereby fragmenting the production process and offering up opportunities for participation in segments. If the intended benefits of the liberalization of international trade in agricultural products are to accrue to small developing economies like Trinidad and Tobago, there is need for the adoption of a comprehensive approach to value chain management... Accordingly, this policy brief takes a look at the structure and performance of the agriculture industry in Trinidad and Tobago; and considers policy action to facilitate upgrading of the sector where necessary to improve its competitiveness and participation in global and regional value chains.
    Date: 2019–12–23
  2. By: Hylke Vandenbussche; William Connell Garcia; Wouter Simons
    Abstract: What is the cost of non-TTIP for the European Union and the United States? To address this question, this paper develops a network trade model with international sector-level input-output linkages. Our model is entirely general with closed-form solutions and can be used for any trade policy experiment. We use World Input Output Data (WIOD) to simulate the effects of TTIP in terms of value added and employment. We find that a deep TTIP raises European GDP by 1.3%, and US GDP by 0.7%. The largest share of these TTIP gains result from the reduction in Non-Tariff Barriers (NTBs) rather than from the removal of tariffs. The potential gains from TTIP are higher for the EU than for the US. These findings may offer an explanation for the current US stance on TTIP.
    Date: 2018–02–09
  3. By: ARA Tomohiro; ZHANG Hongyong
    Abstract: This paper develops a heterogeneous-firm model in which asymmetric countries export and import intermediate inputs. We show that the elasticities with respect to variable trade costs are larger in intermediate-input trade than those in final-good trade, due to an extra adjustment through the extensive margin. To empirically assess this theoretical prediction, we combine the China Customs data with the tariff-gravity data, and explore the impact of tariffs as well as distances on China's imports. We find that the empirical evidence suggests that the trade elasticities with respect to the two variable trade costs are significantly greater for intermediate-input trade than final-good trade.
    Date: 2019–12
  4. By: Barone, Guglielmo; Kreuter, Helena
    Abstract: This paper empirically studies the role of trade globalization in shifting the electoral base towards populism. We proxy trade shock with swiftly rising import competition from China and compare the voting pattern at the parliamentary national elections from 1992 to 2013 in about 8,000 Italian municipalities differently exposed to the trade shock. We instrument import competition with Chinese export flows to other high-income countries and estimate the model in first differences. Our results indicate that trade globalization increases support for populist parties, besides fostering a tendency to cast invalid votes or even abstain from voting. To rationalize these findings, we offer evidence that import competition worsens labor market conditions - higher unemployment, lower income and durable consumption - and increases inequality. Finally, we point out that public expenditure plays a role in mitigating the political consequences of the trade shock, arguably because it alleviates economic distress.
    Keywords: trade globalization,populism,inequality,Handelsglobalisierung,Populismus,Einkommensgefälle
    JEL: D72 F60
    Date: 2019
  5. By: Xu, Ankai; Kouwoaye, Amèvi Rocard
    Abstract: This paper is the first in the literature to examine the impact of natural disasters on trade in services. We measure the magnitude of natural disasters using two distinct sets of variables and quantify the effect of natural disasters on trade in services using a structural gravity model. We find that, overall, natural disasters lead to a decline of services exports of the affected country but have ambiguous effects on its services imports. On average, a large natural disaster can reduce services exports by 2% to 3%. Capital-intensive service sectors such as transport and communications are most affected by a large natural disaster, with the negative impact on communications exports lasting for up to five years after a disaster. We also find consistently across all estimations that the negative impact of natural disasters on services trade is larger than that on merchandise trade.
    Keywords: international trade,gravity model,services,natural disasters,climate change
    JEL: F14 P48 L80 C23 Q54 H84
    Date: 2019
  6. By: Matteo Bugamelli (Bank of Italy); Andrea Linarello (Bank of Italy); Roberta Serafini (European Central Bank)
    Abstract: We use firm-level data on the universe of Italian exporters to characterize the evolution of aggregate goods exports during the period 2000-15. We first decompose aggregate annual export dynamics into the intensive and the extensive margin, where the latter is further broken down into its firm, product and market components. We document that the intensive margin and, to a lesser extent, net market entry have been the main drivers of export growth, counterbalancing the negative effect coming from firms ceasing their exporting activity. The contribution of the intensive margin comes mostly from medium-large and, especially, more productive firms, while that of net market entry is concentrated among medium-sized firms. We then focus on market entry and ask which characteristics are more significant in affecting the probability that an already-exporting firm enters a new destination market. We focus in particular on the role of export experience and show that firm-destination specific dimensions, such as the distance between the new market and the closest market already served by the firm and the contiguity between the two, play an important role. These results show the prevalence of expansion strategies that follow a proximity principle.
    Keywords: firm level data, intensive and extensive trade margins, entry into foreign markets, export experience
    JEL: F10
    Date: 2019–12
  7. By: Bee Yan Aw; Yi Lee; Hylke Vandenbussche
    Abstract: We develop and structurally estimate a trade model in order to identify the importance of consumer taste for exporters. The model separates taste from quality and productivity (TFPQ) at the firm-product level. Export data by destination countries allow us to identify the level of taste from consumer heterogeneity across destinations. We decompose export revenue into the contribution of taste, quality and costs. We fi nd that taste is very important and explains about 50% of the variation in export revenue. Productivity (TFPQ) differences between firm-products become more prominent than taste in explaining export success only when the cost elasticity of improving quality is high.
    Date: 2018–02–11
  8. By: Carzaniga, Antonia Giulia; Dhillon, Ibadat S.; Magdeleine, Joscelyn; Xu, Lihui
    Abstract: Despite its substantial and increasing importance to health systems and inclusive economic growth, the relationship between international trade in services and health worker mobility has been largely unexplored. However, international health worker mobility and trade in services have both been increasing rapidly, and at a growing pace in recent years. Trade in services frameworks (global, regional, bilateral) are an important vehicle for health worker mobility. In this paper we analyse the commitments made in the context of the General Agreement on Trade in Services (GATS) and regional and bilateral trade agreements that cover services. Although there is room for more and deeper commitments, undertakings related to health worker mobility are already made in many trade agreements, with commitments more numerous and deeper in the regional and bilateral agreements than in the context of GATS. In addition, trade in services frameworks contain flexibility to strengthen and advance ethical health worker mobility, in accordance with the principles and recommendations of the WHO Global Code of Practice on the International Recruitment of Health Personnel. A strengthened collaboration between health and trade stakeholders could therefore serve to significantly expand sustainable development worldwide. There is potential for health stakeholders to strategically leverage trade dialogue and agreements to meet health system needs. Building on available tools, trade in services could help address the concerns of the health sector by ensuring that health worker mobility can respond to worldwide demand, while explicitly addressing health systems concerns across countries.
    Keywords: health services,trade in services,health worker,worker mobility
    JEL: F13 F16 F22 F66 I11 J61
    Date: 2019
  9. By: Hoedoafia, Mabel Akosua
    Abstract: The private sector is recognized as an engine of growth; hence a well-developed private sector is deemed as the means to accelerate the rapid industrialization needed in developing countries. In this light, The Government of Ghana over the years has put in place policies to make the private sector flourish. A key strategy was the liberalization of trade through the economic recovery and structural adjustment programmes in the 1980s. However, much is not known about the impact of such policies on the profitability of the private sector especially with respect to trade. Indeed, there is a paucity of research addressing the profitability of firms due to trade liberalization especially the private sector in the African context. This paper fills this gap by investigating how tariffs as a measure of trade liberalization affect the profitability of Ghanaian private firms in the manufacturing sector using firm-level data spanning 1991 to 2001. Profitability is measured as the net profit margin of a firm. A two-step approach was employed in the empirical analysis of the tariff-profitability nexus. The net profit margin of firms was estimated in the first step. After which the effect of tariffs on the estimated net profit margin of firms was examined. The findings reveal that tariff reductions result in increased profitability of local firms. In addition, productivity was found to positively impact firm profitability.
    Keywords: profitability, tariffs, private sector, manufacturing, trade liberalization, Ghana
    JEL: F1 F13 F14 O24
    Date: 2019–11–26
  10. By: Adamson, Fiona; Tsourapas, Gerasimos (University of Birmingham)
    Abstract: How do states in the Global South manage cross-border migration? This article identifies Hollifield’s “migration state” as a useful tool for comparative analysis yet notes that in its current version the concept is limited, given its focus on economic immigration in advanced liberal democracies. We suggest a framework for extending the “migration state” concept by introducing a typology of nationalizing, developmental, and neoliberal migration management regimes. The article explains each type and provides illustrative examples drawn from a range of case studies. To conclude, it discusses the implications of this analysis for comparative migration research, including the additional light it sheds on the migration management policies of states in the Global North.
    Date: 2019–10–25
  11. By: Borchert, Ingo; Gootiiz, Batshur; Magdeleine, Joscelyn; Marchetti, Juan A.; Mattoo, Aaditya; Rubio, Ester; Shannon, Evgeniia
    Abstract: Better information on how services policies vary across economies and sectors over time would improve the empirical analysis of their impact. This paper describes the Services Trade Policy Database (STPD), a joint initiative by the World Bank and the WTO Secretariat, which builds on a database developed by the World Bank nearly ten years ago and draws on a recent OECD database. The STPD offers comparable information on services trade policies for 68 economies in 23 subsectors across five broad areas - financial services, telecommunications, distribution, transportation and professional services, respectively. The STPD features several improvements. First, data are collected according to a newly developed policy classification, consistent with both the earlier World Bank database and the current OECD database, enabling for the first time a comparison of services policies over a significant period and across a large cross-section of industrial and developing economies. Second, the database contains information not just on core trade policies but also on other increasingly relevant aspects, such as licensing conditions and data restrictions. Third, policy restrictiveness is quantified following a more systematic approach that aggregates the information within a single consistent and transparent framework. Building on these innovations will make it possible to identify global patterns of services trade policies as well as secular trends in policymaking over the past decade.
    Keywords: services,trade policy,investment,STRI,trade restrictions,quantification
    JEL: F13 F14 F23 L80
    Date: 2019
  12. By: Battiston, Diego
    Abstract: This paper shows that brief social interactions can have a large impact on economic outcomes when they occur in high-stakes decision contexts. I study this question using a high frequency and detailed geolocalized dataset of matched immigrants-ships from the age of mass migration. Individuals exogenously travelling with (previously unrelated) higher quality shipmates end up being employed in higher quality jobs at destination. Several findings suggest that shipmates provide access and/or information about employment opportunities. Firstly, immigrants' sector of employment and place of residence are affected by those of their shipmates' contacts. Secondly, the baseline effects are stronger for individuals travelling alone and with fewer connections at destination. Thirdly, immigrants are affected more strongly by shipmates who share their language. These findings underline the sizeable effects of even brief social connections, provided that they occur during critical life junctures.
    Keywords: immigration; social interactions; networks, ships
    JEL: J01 J24 J61 N3
    Date: 2018
  13. By: Ananth Seshadri (University of Wisconsin)
    Abstract: This paper quantifies the effects of the totalization agreements that coordinate the United States Social Security program with the comparable programs of other countries. For each treated country that has signed an agreement with the U.S., we construct a synthetic control country by properly weighting other countries that have not signed a totalization agreement with the U.S. to make sure that the resulting synthetic control mimics the behavior of the treated country before the totalization agreement entered into force. Using the synthetic country to approximate what would happen to the treated country after the agreement, we find, on average, that totalization agreements reduce U.S. exports significantly and increase U.S. imports and U.S. foreign direct investment in the fifth year after the agreement. Moreover, we find the effects are quite heterogeneous across countries/agreements, with some agreements increasing U.S. exports and others decreasing U.S. imports, both of which are the opposite of the average effects. In future work, we will investigate why the effects vary across countries by relating the estimates in this paper to the bilateral trade patterns between the U.S. and the treated countries, as well as the number and composition of beneficiaries of the totalization agreements.
    Date: 2019–09
  14. By: Lerato Mothibi (North West University); Lorainne Ferreira (North West University)
    Abstract: The South African economy has made great strides since its advent to democracy in 1994. However, South Africa is constrained by its continuous policy uncertainty generated by the South African government. This has resulted in poor sector performance, declining investments and slow economic growth. Investment, nonetheless, plays a crucial role in growing the South African economy. As such, policymakers often debate whether to focus on FDI or domestic investment, especially in developing countries. In order to point out where most government resources should be allocated, this study will investigate which type of investment ? FDI or domestic investment ? will have the most significant impact on economic growth in South Africa. This study makes use of the autoregressive distributive lag model (ARDL) over the period 1994 to 2018 to determine the impact of both FDI and domestic investment on economic growth in the short- and long-run. The study concludes that when policymakers seek to harness the potential of investment to encourage economic growth, they should not be distinguishing whether domestic or foreign investment should be a priority, but rather, what can be done to make the two forms of investment work together to achieve optimal benefits for the growth of the economy?
    Keywords: South Africa, Foreign direct investment, Domestic investment, Economic growth
    JEL: A10 C01 E22
    Date: 2019–10
  15. By: Tsourapas, Gerasimos (University of Birmingham)
    Abstract: Recent scholarly interest in the politics of migration and diaspora across the Global South has yet to address how authoritarian states attempt to reach out to populations abroad. In an effort to shift the discussion on state-diaspora relations beyond liberal democratic contexts and single-case studies, this article comparatively examines how authoritarian emigration states in the Middle East – Libya, Syria, Egypt, Turkey, and Jordan – behave towards their own citizens living beyond state borders. It identifies how each state develops multi-tier diaspora engagement policies aimed at three separate stages of citizens’ mobility: first, policies of exit regulate aspects related to emigration from the country of origin; second, overseas policies target citizens beyond the territorial boundaries of the nation state; finally, return policies set processes of readmission into the country of origin. In doing so, the article identifies similarities across disparate Middle East states’ engagement with emigration and diaspora policymaking. At the same time, the article paints a more complex picture of non-democracies’ strategies towards cross-border mobility that problematizes existing conceptualizations of authoritarian practices and state-diaspora relations.
    Date: 2019–07–24
  16. By: Karadja, Mounir; Prawitz, Erik (Research Institute of Industrial Economics)
    Abstract: We study the political effects of mass emigration to the United States in the nineteenth century using data from Sweden. To instrument for total emigration over several decades, we exploit severe local frost shocks that sparked an initial wave of emigration, interacted with within-country travel costs. Our estimates show that emigration substantially increased the local demand for political change, as measured by labor movement membership, strike participation, and voting. Emigration also led to de facto political change, increasing welfare expenditures as well as the likelihood of adopting more inclusive political institutions.
    Date: 2019–09–05
  17. By: Jannick Damgaard; Thomas Elkjaer; Niels Johannesen
    Abstract: Macro statistics on foreign direct investment (FDI) are blurred by offshore centers with enormous inward and outward investment positions. This paper uses several new data sources, both macro and micro, to estimate the global FDI network while disentangling real investment and phantom investment and allocating real investment to ultimate investor economies. We find that phantom investment into corporate shells with no substance and no real links to the local economy may account for almost 40 percent of global FDI. Ignoring phantom investment and allocating real investment to ultimate investors increases the explanatory power of standard gravity variables by around 25 percent.
    Date: 2019–12–11
  18. By: Tatiana Didier; Sebastian Herrador; Magali Pinat
    Abstract: This paper assesses whether cross-border M&A decisions exhibit network effects. We estimate exponential random graph models (ERGM) and temporal exponential random graph models (TERGM) to evaluate the determinants of cross-country M&A investments at the sectoral level. The results show that transitivity matters: a country is more likely to invest in a new destination if one of its existing partners has already made some investments there. In line with the literature on export platforms and informational barriers, we find a sizable impact of third country effects on the creation of new investments. This effect is sizable and larger than some of the more traditional M&A determinants, such as trade openness.
    Date: 2019–12–04
  19. By: Jay Pil CHOI; ISHIKAWA Jota; OKOSHI Hirofumi
    Abstract: Multinational enterprises (MNEs) are incentivized to use transfer pricing in tax planning when corporate tax rates differ in different countries. The incentive is stronger when MNEs own intangible assets which can easily be shifted across countries. To mitigate such strategic avoidance of tax payments, the OECD proposed the arm's length principle (ALP). This paper investigates how the ALP affects MNEs' licensing strategies and welfare in the presence of a tax haven. We specifically deal with two methods of the ALP: the comparable uncontrolled price method and the transactional net margin method. The ALP may distort MNEs' licensing decisions, because providing a license to unrelated firms restricts the MNE's profit-shifting opportunities due to the emergence of comparable transactions. In particular, the avoidance of licensing in the presence of the ALP may worsen domestic welfare if the licensee and the MNE's subsidiary do not compete in the domestic market, but may improve welfare if they compete.
    Date: 2019–12
  20. By: Aleksandra ?or?evi? Zori? (Faculty of Economics, University of Belgrade)
    Abstract: Exchange rates movements can have significant effects on different economic variables, affecting the overall macroeconomic stability of the country. Consequently, economic policymakers and researchers continuously monitor and analyze the diverse effects that exchange rate fluctuations can cause. Given that exchange rates have one of the key roles in the country's trade activities, and having in mind the importance of international trade for market economies, the effect of exchange rates on trade has become a highly relevant issue (especially after the collapse of the Bretton Woods system), both in the theory of international economics and for economic policymakers. Usually, the analysis of the effects of exchange rate movements on trade implies the analysis of exchange rate volatility. However, another important aspect of the influence of exchange rates on trade should not be ignored. In addition to the standard interest in examining the impact of the exchange rate volatility on trade, in recent literature increasing importance is given to the analysis of the effects of the exchange rate misalignment. As Bleaney (1992) points out, short-term volatility measures have to be complemented by longer-run measures that better account for persistence and mean-reversion, which can characterize exchange rate changes. In this respect, compared to volatility, a greater source of uncertainty for participants in international trade can be the exchange rate misalignment (Côté, 1994). In addition, the global external imbalances at the beginning of the 2000s, as well as the global economic crisis, have raised the issue of the effects of undervalued currencies on trade partners.Bearing previously in mind, the analysis of misalignment is of great importance. Given that, unlike volatility, the literature dealing with the examination of this aspect of the influence of exchange rates on trade is limited so far, the aim of this paper is to shed light on the importance of the equilibrium exchange rate for export growth, analyzing the theoretical and empirical literature dealing with this issue.
    Keywords: exchange rates, international trade, export, exchange rate misalignment
    JEL: F31 F40 O24
    Date: 2019–10
  21. By: Liutang Gong (Guanghua School of Management and LMEQF Peking University); Jianjian Liu (Guanghua School of Management and LMEQF Peking University); Chan Wang (School of Finance, Central University of Finance and Ecoonomics); Liyuan Wu (Guanghua School of Management and LMEQF Peking University); Heng-fu Zou (China Economics and Management Academy, Central University of Finance and Ecoonomics)
    Abstract: This paper introduces international trade in intermediate inputs into Clarida et al.(2002) to examine the welfare gains from monetary policy cooperation when the world is hit by cost-push shocks. We find that Clarida et al.(2002)'s prediction is right. Specifically, the introduction of the international trade in intermediate inputs opens a new channel through which the terms of trade at the stage of intermediate-goods production produce the spillover effect. In Clarida et al. (2002), the risk sharing effect and the terms of trade effect cancel out and the welfare gains from monetary policy cooperation disappear when the utility function of consumption is logarithmic. By contrast, in our model, the new channel still works. By internalizing the spillover effect produced through the new channel, the cooperative monetary policymaker achieves the welfare gains which are substantially larger than those found in the literature. In addition, we find that the welfare gains increase with the degree of intermediate-goods trade openness.
    Date: 2020
  22. By: Fabio Mariani (IRES/LIDAM, UCLouvain; IZA, Bonn); Marion Mercier (CNRS, Universite Paris-Dauphine PSL, LEDa-DIAL, Paris; IZA, Bonn)
    Abstract: Contrarily to popular perception, empirical evidence suggests that immigrants do not commit more crimes than natives, in spite of having lower legitimate earning opportunities. To make sense of this, we propose a novel theoretical framework based on a predator/prey model of crime, where endogenous migration decisions and career choices (between licit and illicit activities) are jointly determined. In this setting, we show that the involvement of migrants in crime crucially depends on self-selection into migration, as well as productivity and institutional quality in the host economy. We also nd that stricter immigration policies may induce an adverse selection of migrants, and eventually attract more foreign-born criminals. Finally, a dynamic extension of our model can account for the higher crime rates of second-generation immigrants and, based on the interplay between crime and institutions, highlights the critical role of immigration and assimilation for the long-run evolution of crime and the rule-of-law in host countries.
    Keywords: Migration; Crime.
    JEL: F22 K42 O17
    Date: 2019–12
  23. By: Yixiao ZHOU (Crawford School of Public Policy, Australian National University); Rod TYERS (Business School, University of Western Australia; Research School of Economics and Centre for Applied Macroeconomic Analysis (CAMA), Australian National University)
    Abstract: Relative wages and the share of total value added accruing to low-skill workers have declined during the past three decades, among both OECD countries and large developing countries. The primary beneficiary until recently has been skill, the supply of which has risen as education investment has increased. The rise in artificial intelligence (AI)-driven automation suggests that declines in value added shares accruing to low-skill workers will continue. Indeed, AI-driven automation creates an impulse for diminished labor market performance by low-skill workers throughout the world but most prominently in high-fertility, relatively youthful regions with comparatively strong growth in low-skill labor forces. The implied bias against such regions will therefore enhance emigration pressure. This paper offers a preliminary analysis of these effects. Central to the paper is a model of the global economy that includes general demography and real wage sensitive bilateral migration behavior, which is used to help quantify potential future growth in real wage disparities and the extent, direction and content of associated migration flows. Overall, global wage inequality is increased by expanded skilled migration, primarily because of large increases in skilled wage premia that arise in developing regions of origin. Inter-regional divergences in skilled wages are reduced, however, due to the additional skilled labour market arbitrage opportunities offered by more open migration policies.
    Keywords: Automation, demographic change, migration incentives, labor markets and economic growth
    JEL: C68 E22 E27 F21 F43 J11
    Date: 2019
  24. By: Federico Esposito
    Abstract: I develop a theory of risk diversification through geography. In a general equilibrium trade model with monopolistic competition, characterized by stochastic demand, risk-averse entrepreneurs exploit the spatial correlation of demand across countries to lower the variance of their global sales. I show that the model-consistent measure of demand risk, the “Diversification Index”, depends on the multilateral covariance of a country’s demand with all other markets. The model implies that both the probability of entry and the level of trade flows to a market are increasing in the Diversification Index. The firms’ risk diversification behavior can generate, upon a trade liberalization, a strong competitive pressure on prices, which in general equilibrium can lead to higher welfare gains from trade than the ones predicted by trade models with risk neutrality. Using a panel of domestic and international sales of Portuguese firms, I estimate “risk-augmented” gravity regressions, which show that the Diversification Index significantly affects trade patterns at the extensive and intensive margins. I quantify that the risk diversification channel increases welfare gains from trade by 16% relative to models with risk neutrality. Finally, the quantitative application highlights the role of demand uncertainty in shaping the economic consequences of the recent integration of China in the global economy.
    Date: 2019
  25. By: Shahbaz, Muhammad; Alam, Md. Mahmudul (Universiti Utara Malaysia); Uddin, Gazi Salah; Nanthakumar, Loganathan
    Abstract: The aim of this paper utilizes an energy demand model to investigate the impact of trade openness on energy consumption by incorporating scale and technique, composition and urbanization effects in the case of Malaysia. The study covers the sample period of 1970-2011 using quarter frequency data. We applied the bounds testing approach in the presence of structural breaks to examine the long run relationship between the variables. The VECM Granger causality is used to detect the direction of causality between the variables. Our findings indicate that growth effect (scale and technique effect) has a positive (negative) impact on energy consumption whereas composition effect stimulates energy demand in Malaysia.. Energy consumption is positively influenced by both from openness and urbanization. This study opens new policy insights for policy making authorities to articulate a comprehensive energy and trade policy to sustain economic growth and improve the environmental quality of Malaysia.
    Date: 2019–06–14
  26. By: Sami Bensassi (Birmingham Business School - University of Birmingham [Birmingham]); Joachim Jarreau (LEDa - Laboratoire d'Economie de Dauphine - Université Paris-Dauphine)
    Abstract: What factors explain the persistence and pervasiveness of corruption in certain parts of the world? In West Africa, many day-to-day transactions require the payment of bribes. Quantitative evidence on these bribes and their determinants is scarce. This paper sheds light on the level and the frequency of bribe payments in informal coss-border trade. It examines how bribes depend on the trade regime and on market structure. We rely on data from a survey of traders in Benin to estimate the determinants of bribe payments. We exploit variations in the trade regime across Benin's borders, as well as changes in trade restrictions over time and variations in route availability across space and time. We find that reductions in trade barriers help to lower bribes, but do not eliminate them, with bribes remaining frequent in liberalized trade regimes. These results suggest that collusive corruption – used to circumvent regulations and taxes – coexists with coercive corruption, where officials use their monopoly power to extract transfers from traders.
    Keywords: Informal trade,Corruption,Trade policy
    Date: 2019
  27. By: Rimmer, Matthew (Queensland University of Technology)
    Abstract: Investor-State Dispute Settlement (ISDS) poses significant challenges in respect of tobacco control, public health, human rights, and sustainable development. Two landmark ISDS rulings provide procedural and substantive guidance on the interaction between ISDS and tobacco control. The ISDS action by Philip Morris against Uruguay in respect to graphic health warnings raised important procedural and substantive issues. The ISDS matter between Philip Morris and Australia over the plain packaging of tobacco products highlighted matters in respect of abuse of process. In the Trans-Pacific Partnership (TPP), there was a special exclusion for tobacco control measures in respect of ISDS. There was also a larger discussion about the role of general public health exceptions. In the Comprehensive Economic and Trade Agreement (CETA), there was a debate about the application of ISDS to intellectual property rights. In the European Union, there has been discussion of the creation of an international investment court. In the renegotiation of the North American Free Trade Agreement (NAFTA), there has even been calls to abolish ISDS clauses altogether from both Republicans and Democrats. This article concludes there is a need to protect tobacco control measures implementing the WHO Framework Convention on Tobacco Control 2003 from further investor and trade challenges.
    Date: 2017–12–29
  28. By: Hamano, Masashige; Pappadà, Francesco
    Abstract: This paper revisits the case for exible vs. fixed exchange rate regime in a two-country model with firm heterogeneity and nominal wage rigidity under incomplete financial markets. Dampening nominal exchange rate fluctuations simultaneously stabilizes the firm turnover in the export market. When firms are homogeneous and low productive, the fixed exchange rate regime dominates the flexible one because it reduces the fluctuations in labor demand arising from entry and exit of exporters following a demand shock. We also show that an alternative regulation policy in the export market does not rule out the possible adoption of a managed floating regime.
    JEL: F32 F41 E40
    Date: 2020–01–07
  29. By: Shunta Yamaguchi (OECD)
    Abstract: Many regional trade agreements (RTAs) contain chapters and articles that are environmentally specific. However, Parties can elect to more broadly incorporate environmental objectives in their RTAs to address their environmental concerns in such agreements. This report investigates in what ways RTAs could incorporate environmental objectives in chapters and articles related to subsidies for energy and environmental goods. It highlights the current state of play in incorporating provisions related to environmentally related subsidies in RTAs, and also illustrates possible ways to incorporate environmental objectives in RTAs based on existing practice and information. Regional disciplines on subsidies could be considered in RTAs with respect to the Parties’ environmental objectives in several ways, such as ensuring non-discriminatory measures, agreeing on a set of non-actionable subsidies, committing to phase-out certain subsidies, and securing greater transparency.
    Keywords: agreements, environment policy, environmental provisions, free trade agreements, regional trade agreements, subsidies, trade and environment, trade policy
    JEL: H23 F13 F18 R11 N50 Q56
    Date: 2020–01–07
  30. By: Raj-Reichert, Gale.
    Abstract: Fuelled by outsourcing and offshoring, the electronics industry has become one of the most globally fragmented production systems, with extensive and complex global supply chains. Production of electronics in Indonesia began in the 1980s, when large brands and multinational enterprises established operations in the country. This report describes the history of the electronics industry in Indonesia, its structure, and its integration into global supply chains. Relevant public governance and private compliance initiatives that key stakeholders are pursuing to advance decent work are discussed. The report also identifies challenges and opportunities for the development of Indonesia’s electronics industry while ensuring decent work. This research report is the outcome of the second component of an ILO development cooperation project entitled “The Future of Work in Information and Communication Technology (ICT)”. It further contributes to the implementation of the ILO programme of action on Decent Work in Global Supply Chains established in 2017.
    Date: 2019
  31. By: Anthony J Makin (Griffith University)
    Abstract: While the United States is presently the world?s largest economy, China is the world?s largest exporter, replacing the US as the largest manufacturing nation a decade ago. Since then, the China-US trade imbalance has been the key source of economic tension between the two superpowers, stretching back to concerns raised by the Bush and Obama administrations. Members of the European Union have had similar concerns about their trade imbalances with China. In the US, since the turn of the century the demise of manufacturing firms unable to compete against low priced Chinese imports has repeatedly sparked calls for retaliatory action by the US government against China. Given the impact exchange rates have on international competitiveness and trade flows, the value of the exchange rate has also been central to the ongoing China-US dialogue on the trade imbalance. The US government has repeatedly pressed China to revalue its currency from the mid-2000s on the grounds that its undervalued currency boosted the competitiveness of China?s manufacturing sector and contributed to the bilateral trade imbalance. While the CNY/$US exchange rate has strengthened significantly over the past decade, somewhat paradoxically, China?s trade deficit with the United States has continued to widen from a deficit of near $80 billion in 2000 to close to $400 billion in 2018. Under the Trump administration, direct action has been taken to reduce this trade imbalance by imposing tariffs on Chinese imports to the US, beginning with tariffs on steel and aluminium and extended to solar panels and household appliances. China has retaliated by imposing tariffs on chemicals, coal, medical equipment and soybeans.This paper presents a two-country international macroeconomic framework for examining the determinants of the China-US trade imbalance. Inspired by Alexander?s (1952) much neglected absorption approach, it emphasises that the bilateral trade imbalance reflects discrepancies between levels of their respective output, or aggregate supply, and expenditure, or aggregate demand. The paper is structured as follows. Section 2 summarises recent Chinese and US growth, bilateral balance of payments trends and protectionist measures, before Section 3 proposes a simple international macroeconomic framework based on the distinction between output and expenditure to examine the key issues. Section 4 then adapts the framework to examine the influence of discrepant economic growth, exchange rate management, protectionist measures and foreign direct investment on the trade imbalance, before Section 5 draws policy implications.
    Keywords: China; United States; Trade Imbalance; Exchange Rate; Protection; Foreign Investment
    JEL: F00
    Date: 2019–10
  32. By: Andrea Ascani; Luca Bettarelli; Laura Resmini; Pierre-Alexandre Balland
    Abstract: A large academic consensus exists on the idea that successful innovative processes are geographically bounded within regions. Nevertheless, the ability of regions to capture and re-use external knowledge is also regarded as a fundamental element to sustain and refine the local profile of specialisation and competitiveness. The present article combines these views to investigate the sources of the regional innovation process, by analysing data on Italian regions over the period 2007-2012. We define regional external networks based on all the foreign subsidiaries of local multinational enterprises identifiable as global ultimate owners. Our main results suggest that both the internal specialisation and the outward networks can generate indigenous innovation, but the role of the networks varies substantially according to its density, its degree of complementarity with the specialisation profile, its geographical spread and the specific location of the foreign subsidiaries. Our results, then, support a view of the regional innovation as an interactive process whereby valuable knowledge resources are not only generated within the reach of the local economy, but they are also integrated with external inputs. This contrasts with recent anti-globalisation views according to which the increase in the foreign operations of national companies impoverishes the local economy.
    Keywords: outward foreign direct investment, innovation, specialisation, networks, relatedness
    JEL: O3 F23 R10 F60
    Date: 2020–01
  33. By: Bencek, David; Schneiderheinze, Claas
    Abstract: Comparing the emigration rates of countries at different stages of economic development, an inverse u-shape emerges. Although merely based on cross-sectional evidence, the 'migration hump' is often treated as a causal relationship. Since the peak is located at rather high per capita incomes of 6000-10 000 USD policy makers in rich destination countries worry that supporting economic development in poor origin countries might increase migration. In this paper we systematically test whether the migration hump holds up to more scrutiny, finding that the crosssectional pattern is misleading. Using 35 years of migration flow data from 198 countries of origin to OECD destinations, we successfully reproduce the hump-shape in the cross-section. However, more rigorous fixed effects panel estimations that exploit the variation over time consistently show a negative association between income and emigration. This result is independent of the level of income a country starts out at and thus casts doubt on any causal interpretation of the migration hump.
    Keywords: international migration,economic development,development assistance
    JEL: F22 F63 O15
    Date: 2019

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