nep-int New Economics Papers
on International Trade
Issue of 2020‒03‒16
fifty-four papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Does the belt and road initiative stimulate Chinese exports? The role of state-owned enterprises By Görg, Holger; Mao, Haiou
  2. From Currency Depreciation to Trade Reform : How to Take Egyptian Exports to New Levels? By Youssef,Hoda; Zaki,Chahir
  3. Import Uncertainty and Export Dynamics By Vijil,Mariana; Wagner,Laurent; Woldemichael,Martha Tesfaye
  4. Who Wins, Who Loses ? Understanding the Spatially Differentiated Effects of the Belt and Road Initiative By Lall,Somik V.; Lebrand,Mathilde Sylvie Maria
  5. Domestic versus export-led agricultural transformation: Evidence from Uganda’s dairy value chain: By Van Campenhout, Bjorn; Minten, Bart; Swinnen, Johan
  6. Innovation union: costs and benefits of innovation policy coordination By Borota, Teodora; Defever, Fabrice; Impullitti, Giammario
  7. Measuring What Matters in Global Value Chains and Value-Added Trade By Borin,Alessandro; Mancini,Michele
  8. Toward the path of Economic Expansion in Nigeria: The Role of Trade Globalization By Udi Joshua; Oladimeji M. Salami; Andrew A. Alola
  9. Negotiating agricultural trade in a new policy environment: By Glauber, Joseph W.
  10. Trading off the Income Gains and the Inequality Costs of Trade Policy By Artuc,Erhan; Rijkers,Bob; Porto,Guido
  11. Japan’s Outward FDI Potential By Theresa M. Greaney; Kozo Kiyota
  12. Supply chain trade in East Africa: Prospects and challenges* By Jaime de Melo; Anna Twum
  13. Common Transport Infrastructure : A Quantitative Model and Estimates from the Belt and Road Initiative By De Soyres,Francois Michel Marie Raphael; Mulabdic,Alen; Ruta,Michele
  14. Reopening Pandora's box in search of a WTO-Compatible industrial policy? The Brazil-taxation dispute By Ornelas, Emanuel; Puccio, Laura
  15. Trade Wars : What Do They Mean ? Why Are They Happening Now ? What Are the Costs ? By Mattoo,Aaditya; Staiger,Robert W.
  16. The Impact of Trade Liberalization on Firms' Product and Labor Market Power By Dobbelaere, Sabien; Wiersma, Quint
  17. Exports: LFTTD vs COMPUSTAT SEGMENT By Deniz Civril
  18. Diasporas and Economic Development: A Review of the Evidence and Policy By Dany Bahar
  19. Trade shocks and credit reallocation By Rappoport, Veronica; Federico, Stefano; Hassan, Fadi
  20. Voting with their money: Brexit and outward investment by UK firms By Sampson, Thomas; Breinlich, Holger; Leromain, Elsa; Novy, Dennis
  21. Exploring the Heterogeneous Effects of Export Promotion By Olarreaga,Marcelo; Sperlich,Stefan; Trachsel,Virginie
  22. Migrant Inventors and the Technological Advantage of Nations By Bahar, Dany; Choudhury, Prithwiraj; Rapoport, Hillel
  23. Time Preference and International Trade By Kazumichi Iwasa; Kazuo Nishimaura
  24. Unintended Consequences: Can the Rise of the Educated Class Explain the Revival of Protectionism? By Giordani, Paolo E.; Mariani, Fabio
  25. Myanmar; Technical Assistance Report-External Sector Statistics Mission By International Monetary Fund
  26. Assessing the Value of Market Access from Belt and Road Projects By Reed,Tristan; Trubetskoy,Alexandr
  27. Economic geography aspects of the Panama Canal By Maurer, Stephan; Rauch, Ferdinand
  28. Do Immigrants Make Us Safer? Crime, Immigration, and the Labor Market By Thomas Bassetti; Luca Corazzini; Darwin Cortes; Luca Nunziata
  29. The Elasticity of Substitution between Domestic and Foreign Goods: A Quantitative Survey By Josef Bajzik; Tomas Havranek; Zuzana Irsova; Jiri Schwarz
  30. Uncertainty about Trade Policy Uncertainty By Gianluca Benigno; Jan J. J. Groen
  31. How different are Monetary Unions to national economies according to prices? By Marina Glushenkova; Marios Zachariadis
  32. How Exporters Grow By Doireann Fitzgerald; Stefanie Haller; Yaniv Yedid-Levi
  33. How Mass Immigration Affects Countries with Weak Economic Institutions : A Natural Experiment in Jordan By Nowrasteh,Alex; Forrester,Andrew C.; Blondin,Cole
  34. The Belt and Road Initiative : Economic, Poverty and Environmental Impacts By Maliszewska,Maryla; Van Der Mensbrugghe,Dominique
  35. Corporate Acquisitions and Firm-Level Uncertainty: Domestic Versus Cross-Border Deals By Ye Bai; Sourafel Girma; Alejandro Riaño
  36. The Opportunity Cost of Domestic Oil Consumption for an Oil Exporter: Illustration for Saudi Arabia By Fatih Karanfil; Axel Pierru
  37. The Effect of Immigration on Business Dynamics and Employment By Pia M. Orrenius; Madeline Zavodny; Alexander T. Abraham
  38. The heterogeneous impact of market size on innovation: evidence from French firm-level exports By Aghion, Philippe; Bergeaud, Antonin; Lequien, Matthieu; Melitz, Marc
  39. The Institutional Choice of Bilateralism and Multilateralism in International Trade and Taxation By Rixen, Thomas; Rohlfing, Ingo
  40. What are the price effects of trade? Evidence from the US for quantitative trade models By Jaravel, Xavier; Sager, Erick
  41. Weather Shocks and Migration Intentions in Western Africa: Insights from a Multilevel Analysis By Simone Bertoli; Frédéric Docquier; Hillel Rapoport; Ilse Ruyssen
  42. The Belt and Road Initiative : Reshaping Economic Geography in Central Asia? By Bird,Julia Helen; Lebrand,Mathilde Sylvie Maria; Venables,Anthony J.
  43. Production shocks, exports and market prices: An analysis of the rice sector in Myanmar: By Dorosh, Paul; Win, Myat Thida; Van Asselt, Joanna
  44. Did Import Competition Boost Household Debt Demand? By Julien Sauvagnat; Erik Loualiche; Jean-Noël Barrot; Matthew Plosser
  45. The Impact of Consumer Protection in the Digital Age: Evidence from the European Union By Anja Rösner; Justus Haucap; Ulrich Heimeshoff
  46. Analysis of Coronavirus and carbon emissions By Molintas, Dominique Trual
  47. Strategic Climate Policies with Endogenous Plant Location: The Role of Border Carbon Adjustments By Noha Elboghdadly; Michael Finus
  48. Economic growth, convergence and agricultural economics: By Martin, Will
  49. Modelling the economic impact of the Rohingya influx in Southern Bangladesh: By Filipski, Mateusz J.; Tiburcio, Ernesto; Dorosh, Paul A.; Hoddinott, John F.; Rosenbach, Gracie
  50. Returns to Low-Skilled International Migration : Evidence from the Bangladesh-Malaysia Migration Lottery Program By Mobarak,Mushfiq; Sharif,Iffath Anwar; Shrestha,Maheshwor
  51. Horizontal FDI in a Dynamic Cournot - Oligopoly with Endogenous Entry By Laszlo Goerke
  52. Policy and Economic Frameworks to Deepen Sino-Saudi Cooperation By KAPSARC, King Abdullah Petroleum Studies and Research Center
  53. New Insight into the Causal Linkage between Economic Expansion, FDI, Coal consumption, Pollutant emissions and Urbanization in South Africa By Udi Joshua; Festus V. Bekun; Samuel A. Sarkodie
  54. The Impact of International Trade on the Price of Solar Photovoltaic Modules: Empirical Evidence By Ivan Hajdukovic

  1. By: Görg, Holger; Mao, Haiou
    Abstract: This paper evaluates firms' exporting responses to BRI and considers their heterogeneity in ownership types, product types, regional origin and trade mode. This is done by analyzing firm-product-destination level customs data from 2011 to 2015 in a gravity model framework. Our empirical results show that aggregate export behavior did not change significantly after BRI. However, ownership matters when evaluating firms' reactions. SOEs increase their total exporting and average export value (the intensive margin) to BRI countries, while private domestic firms show no reaction to BRI at any margin. Further, our results on regional heterogeneity suggests that "open through the west", i.e., boosting the development of western regions in China, did not appear to work in the short term. Our findings show clearly the implications of BRI's impact from a firm level perspective.
    Keywords: Belt and Road Initiative,firm's export,extensive margin,intensive margin,state-owned firms
    JEL: F10 O24
    Date: 2020
  2. By: Youssef,Hoda; Zaki,Chahir
    Abstract: The Arab Republic of Egypt is yet to meet its exports potential, which has been historically hampered by several domestic market distortions and multiple barriers, resulting in weak export performance and modest regional and global integration. Although the liberalization of the exchange rate in November 2016 was a necessary step to correct the exchange rate misalignment and ease the ensuing shortages in foreign currency, it has not been sufficient to guarantee a notable improvement in export performance. This paper analyzes Egypt's exports along three dimensions that are key for export performance and future growth: (i) composition and relatedness of exported products; (ii) geographic and product concentration; and (iii) relatedness to globally traded products. The analysis suggests that Egypt continues to specialize in traditional areas of comparative advantage and limited value-added or is expanding toward products for which global demand is declining. The paper uses a gravity model to predict bilateral trade flows based on the economic size, geographic distance, and other relevant characteristics that should typically contribute to facilitated trade and identify specific sectors and markets for which Egypt seems to have an untapped potential. To understand this underperformance, the paper investigates the key impediments to meeting the export potential. It explores some of the important supply and demand side factors and assesses the role of trade policy measures (tariffs and non-tariffs barriers) in impeding export growth. The analysis reveals that despite significant liberalization efforts, Egypt remains among the group of developing countries that have the highest frequency index and coverage ratio of non-tariff measures. Policy recommendations include a call to improve external competitiveness by fostering and diversifying domestic production and complement these efforts by engaging in trade facilitation reforms to remove the non-tariffs barriers to trade, notably, the administrative, technical, and sanitary barriers to trade. These are all necessary for the country to capitalize on its competitive gains from the currency depreciation and to improve the degree of Egypt's integration into global markets.
    Date: 2019–04–09
  3. By: Vijil,Mariana; Wagner,Laurent; Woldemichael,Martha Tesfaye
    Abstract: A supply chain is only as strong as its weakest link. Firms are constantly managing uncertainties, including unexpected delays in the provision of a critical input that can slow down or halt the production process, possibly making the manufacturer miss a delivery deadline. As most exporters are also importers of intermediate goods, supply chain unreliability related to import processing times at the border could impact downstream export dynamics. Exploiting a rich data set built on firm-level information for 48 developing countries over 2006-14, this paper relies on the Poisson pseudo-maximum likelihood estimator to investigate how unpredictability in border clearance times for imports affects manufacturing firms'entry, exit, and survival in export markets. The analysis finds that uncertainty in the time to clear imported inputs impacts neither the entry nor the exit rate, but translates into lower survival rates for new exporters, reducing the number of firms that continue to serve the foreign market beyond their first year of entry. This effect grows larger over time, owing to rising reputational costs to input-importing exporters, and is mainly driven by South-North trade, possibly reflecting the time-sensitivity of buyers in developed countries. The results also reveal heterogeneous effects across export industries, as well as the mediating role of sunk costs of entry in foreign markets, which attenuate the negative effect of uncertainty on survival rates, as firms delay exiting the export market. Most importantly, the measure of uncertainty displays a distinctive effect on export performance, as neither the mean nor the median time to import impacts survival.
    Keywords: International Trade and Trade Rules,Common Carriers Industry,Food&Beverage Industry,Plastics&Rubber Industry,Textiles, Apparel&Leather Industry,Pulp&Paper Industry,Construction Industry,Business Cycles and Stabilization Policies,General Manufacturing,Employment and Unemployment,Transport Services,Business Environment
    Date: 2019–03–25
  4. By: Lall,Somik V.; Lebrand,Mathilde Sylvie Maria
    Abstract: This paper examines how cities and regions within countries are likely to adjust to trade openness and improved connectivity driven by large transport investments from China's Belt and Road Initiative. The paper presents a quantitative economic geography model alongside spatially detailed information on the location of people, economic activity, and transport costs to international gateways in Central Asia to identify which places are likely to gain and which places are likely to lose. The findings are that urban hubs near border crossings will disproportionately gain while farther out regions with little comparative advantage will be relative losers. Complementary investments in domestic transport networks and trade facilitation are complementary policies and can help in spatially spreading the benefits. However, barriers to domestic labor mobility exacerbate spatial inequalities whilst dampening overall welfare.
    Date: 2019–04–08
  5. By: Van Campenhout, Bjorn; Minten, Bart; Swinnen, Johan
    Abstract: Driven by increased demand from both local and export markets and facilitated by far-reaching liberalization and privatization policies, the dairy sub-sector in Uganda has undergone significant changes in the last decade. With a comparative advantage in milk production, the southwest of Uganda has started to attract considerable Foreign Direct Investment (FDI) in processing capacity, mainly targeting the export market. As a result, processing capacity increased five-fold and dairy became Uganda’s third most important export product, coming from negligible amounts a decade earlier. In this study, we use observational data collected at different nodes within the value chain to compare the structure of the chain and the roles and economic activities of different actors between export-led value chains and value chains that cater for the local market. Doing so allows us to identify the technological and institutional innovations that both result from the emergence of export-led dairy value chains and at the same time drive further upgrading. Our analysis underscores the importance of milk collection centers, which often take the form of farmer cooperatives, in providing many of the support services that enable other actors in the value chain to produce sufficient milk, and maintain milk sanitation levels necessary for an export sector to emerge.
    Keywords: UGANDA, EAST AFRICA, AFRICA SOUTH OF SAHARA, AFRICA, agriculture, supply chain, milk production, privatization, export promotion, exports, technological changes, innovation, technology, trade, Foreign Direct Investment,
    Date: 2019
  6. By: Borota, Teodora; Defever, Fabrice; Impullitti, Giammario
    Abstract: In this paper, we document large heterogeneity in innovation policy and performance between old and new EU member states, and present firm-level evidence on the close link between foreign direct investment (FDI) spillovers and eastern European _firms' innovation. Guided by these facts and motivated by the pressing debate on further EU integration, we build a two-region endogenous growth model to analyse the gains from innovation policy cooperation in an economic union. The two regions, the West (the old members) and the East (the new post-2004 members), feature firms competing in innovation for market leadership, are integrated via free trade and costly technology transfer via FDI and have different innovation performance and policy. Calibrating the model to reproduce key features of the EU economy, we compare the outcomes of an East-West R&D subsidy war with a cooperation scenario with unified subsidy across regions, and obtain three main results. First, we find that the dynamic gains spurring from the impact of cooperation on the economy's growth rate are sizable and substantially larger than the static gains obtained internalising the strategic motive for subsidies. Second, our model suggests that the presence of FDI and multinational production alleviates the strategic motive and increases the gains from cooperation. Third, separating FDI and innovation policy generates larger gains from cooperation, a policy complementarity driven by the knowledge spillovers carried by FDI.
    Keywords: optimal innovation policy; growth theroy; international policy coordination; EU integration; FDI spillovers
    JEL: O41 O31 O38 F12 F42 F43
    Date: 2019–08
  7. By: Borin,Alessandro; Mancini,Michele
    Abstract: The spread of global value chains (GVCs) has given rise to new statistical tools, the Inter-Country Input-Output tables and new analytical frameworks aimed at properly identifying production linkages between and within economies. However, several important questions remain unaddressed. This paper proposes a new toolkit for value-added accounting of trade flows at the aggregate, bilateral, and sectoral levels that can be used to investigate a broad set of empirical questions -- including an assessment of the share of trade related to GVCs. The paper shows how different empirical issues require distinct accounting perspectives, and maps these methodologies onto the economic questions they are best suited to address. In this way, in addition to providing novel tools, the paper brings a large part of the related literature under one comprehensive framework.
    Keywords: International Trade and Trade Rules,Industrial and Consumer Services and Products,Transport and Trade Logistics,Crime and Society
    Date: 2019–04–04
  8. By: Udi Joshua (Federal University Lokoja, Kogi state, Nigeria); Oladimeji M. Salami (Federal University Lokoja, Kogi state, Nigeria); Andrew A. Alola (Istanbul Gelisim University, Istanbul, Turkey)
    Abstract: There are debates regarding the effect of globalization on national economies, and whether or not trade openness has a significant positive or negative influence on economic expansion and development. Thus, this study is aimed at investigating the relationship between trade globalization and Nigeria’s economic advancement. The autoregressive distributed lags (ARDL) model was employed for the time series data: real GDP, openness, foreign direct investment and population growth over the period 1981-2017. The findings of this estimation revealed that population growth is significant but inhibitor of economic prosperity (real GDP) in the short-term. However, the significant and long-run determinants of the real GDP are population growth and trade openness but not foreign direct investment. Furthermore, the Granger Causality test revealed that real GDP granger causes population growth. The study therefore concluded that trade openness and globalization are necessary for Nigeria’s economic expansion and development. Consequently, the study opined that the land border closure policy recently implemented by the Nigerian government might necessitate a significant reassessment so that the economic development projections of the country are not hindered.
    Keywords: Economic Expansion; Trade Globalization; Nigeria
    Date: 2020–01
  9. By: Glauber, Joseph W.
    Abstract: The challenges to meeting the growing global food demand—population and income growth and supply uncertainties complicated by climate change, environmental pressures, and water scarcity—all point to the increasing importance of trade and the need for a more, not less, open trading system. Growth in agricultural trade has been facilitated in part through the rules-based system established under the World Trade Organization (WTO), particularly the Uruguay Round Agreement on Agriculture (AoA). The AoA was implemented in 1995 and brought substantial discipline to the areas of market access, domestic support, and export competition. However, progress since the Uruguay Round has been limited. While the Doha Development Agenda (DDA) was launched with much anticipation in 2001, members failed to reach agreement in July 2008 and the trade agenda in Geneva has since advanced slowly. Despite the best efforts of many, the negotiating intensity seen in late 2007 and 2008 has largely dissipated, in part due to the global recession and the inevitable changes in governments that sometime shift the focus of negotiations. Serious efforts were made to renew the negotiations, but in the end, members have had to be content with harvesting the low-hanging fruit, such as trade facilitation and export competition. Although there have been significant accomplishments, they represent but a small portion of what was on the table during the DDA negotiations. In addition, negotiated settlements on the tougher issues, such as market access and domestic support, have become more difficult to obtain in isolation. The recent experience at the WTO’s Eleventh Ministerial Conference in Buenos Aires highlights the difficulties of reaching a negotiated settlement on domestic support in isolation from, say, market access. Given the increasing importance of trade in addressing food security needs and its critical role in efforts to eliminate malnutrition and hunger by 2030, achieving further progress in the liberalization of world trade is of paramount importance.
    Keywords: agricultural trade, agriculture, trade, supply chain, WTO, export control, export subsidies, global agricultural trade, World Trade Organization (WTO), General Agreement on Tariffs and Trade (GATT),
    Date: 2019
  10. By: Artuc,Erhan; Rijkers,Bob; Porto,Guido
    Abstract: This paper characterizes the trade-off between the income gains and the inequality costs of trade using survey data for 54 developing countries. Tariff data on agricultural and manufacturing goods are combined with household survey data on detailed income and expenditure patterns to estimate the first-order effects of the elimination of import tariffs on household welfare. The paper assesses how these welfare effects vary across the distribution by estimating impacts on the consumption of traded goods, wage income, farm and non-farm family enterprise income, and government transfers. For each country, the income gains and the inequality costs of trade liberalization are quantified and the trade-offs between them are assessed using an Atkinson social welfare index. The analysis finds average income gains from import tariff liberalization in 45 countries and average income losses in nine countries. Across countries in the sample, the gains from trade are 1.9 percent of real household expenditure on average. We find overwhelming evidence of a trade-off between the income gains (losses) and the inequality costs (gains), which arise because trade tends to exacerbate income inequality: 45 countries face a trade-off, while only nine do not. The income gains typically more than offset the increase in inequality. In the majority of developing countries, the prevailing tariff structure thus induces sizable welfare losses.
    Date: 2019–04–22
  11. By: Theresa M. Greaney (University of Hawaii at Manoa); Kozo Kiyota (Keio University, University of Hawai‘i, and RIETI)
    Abstract: While Japan’s outward FDI stock is historically high, it is not necessarily clear whether there is untapped growth potential, given the economic size of Japan and that of partner countries. This paper examines whether Japan’s actual outward FDI stock is high or low relative to the FDI predicted by the gravity model using the outward FDI patterns of all OECD nations, which we call counterfactual FDI. The results indicate that the ratio of Japan’s actual to counterfactual FDI is the highest among the OECD countries as of the year 2015. The regional distribution of Japan’s actual to counterfactual FDI favors Southeast Asian nations, South Africa and the US. These results imply that Japan has no unrealized potential for outward FDI.
    Keywords: Outward foreign direct investment, gravity model, Japan
    JEL: F14 F21 F23
    Date: 2020–03
  12. By: Jaime de Melo (FERDI - Fondation pour les Etudes et Recherches sur le Développement International); Anna Twum
    Abstract: Deeper regional integration is the main objective of the recently launched Africa Continental Free Trade Area (AfCFTA). Supply chain trade both at the level of the Regional Economic Communities (RECs) and across RECs are to spearhead the AfCFTA. Indicators of Global Value Chains (GVC) participation show that even though the EAC and other African RECs have increased their participation in GVCs over the period 1990-2015 surpassing MERCOSUR they still lag behind the ASEAN region. There has also been little improvement in the participation of African RECs in Regional Value Chains (RVCs). This outcome is not due to a lack of ambition. Indeed, African Regional Economic Communities (RECs) have prioritized strengthening deeper RVC integration as a stepping stone to their development. The EAC has gone as far as targeting specific value chains: cotton, wood and paper, food and beverages among others, but with very little to show for it so far; only 1.7% of total gross exports of the EAC are related to RVCs. This is in contrast to ASEAN (17.2%), MERCOSUR (4.6%) and SADC (3%); within the EAC, Rwanda has made impressive progress while Uganda has underperformed. Overall, over the period 1990-2015, the EAC and other African RECs have participated mostly in nonregional value chains along forward rather than backward participation (i.e. their value-added exports are mostly on intermediates that enter exports of other trade partners while the share of foreign exports in their exports is low) activities. This paper singles out for discussion three obstacles hampering greater inclusion in global value chains: (i) high tariffs on imports of intermediates; (ii) restrictive rules of origin, an obstacle to intra-regional trade; (iii) high ad-valorem equivalents of barriers to connectivity and more generally to trade in services. Lastly, controlling for per capita income, correlations for the sample of 149 countries over the period 1995-2015 confirms that overall GVC participation is negatively associated with increases on the tariffs on imports and exports of intermediates as well as on trade costs. However, forward GVC participation (i.e. the share of intermediates of foreign origin) is positively associated with the number of mobile phone subscribers a proxy for digital connectivity.
    Date: 2020–02–24
  13. By: De Soyres,Francois Michel Marie Raphael; Mulabdic,Alen; Ruta,Michele
    Abstract: This paper presents a structural general equilibrium model to analyze the effects on trade, welfare, and gross domestic product of common transport infrastructure. Specifically, the model builds on the framework by Caliendo and Parro (2015) -- a Ricardian model with sectoral linkages, trade in intermediate goods and sectoral heterogeneity -- to allow for changes in trade costs due to improvements in transportation infrastructure, financed through domestic taxation, connecting multiple countries. The model highlights the trade impact of infrastructure investments through cross-border input-output linkages. This framework is then used to quantify the impact of the Belt and Road Initiative. Using new estimates on the effects on trade costs of transport infrastructure related to the initiative based on Geographic Information System analysis, the model shows that gross domestic product will increase by up to 3.4 percent for participating countries and by up to 2.9 percent for the world. Because trade gains are not commensurate with projected investments, some countries may experience a negative welfare effect due to the high cost of the infrastructure. The analysis also finds strong complementarity between infrastructure investment and trade policy reforms.
    Keywords: International Trade and Trade Rules,Transport Services,Rules of Origin,Trade Policy,Trade and Multilateral Issues
    Date: 2019–04–01
  14. By: Ornelas, Emanuel; Puccio, Laura
    Abstract: The Brazil-Taxation dispute concerns the complaints taken to the World Trade Organisation by the European Union and Japan against seven different Brazilian industrial subsidy programmes. One concerned the automotive sector and represents a clear case of policies dictated by strong domestic political-economy forces, with little attention to impacts on consumers or imports. The ensuing WTO dispute raises important issues concerning the WTO-compatibility of subsidy measures. In particular, the Appellate Body (AB) reversed the panel findings with respect to two issues: the extent to which subsidy measures can be exempted from complying with National Treatment rules under the General Agreement on Tariffs and Trade, and the identification of local content requirements (LCRs), which are prohibited under the Agreement on Subsidies and Countervailing Measures (SCM). In particular, the AB considered that subsidies, if not based on discriminatory taxation, could be justified under the GATT and could have some discriminatory elements without violating the National Treatment disciplines. Furthermore, it concluded that legitimate eligibility criteria under a subsidy programme should not be construed as prohibited LCRs under the SCM. However, the test devised by the AB to distinguish legitimate eligibility criteria from prohibited LCRs could facilitate circumvention of the LCRs prohibition under the SCM.
    Keywords: trade policy; dispute settlement; industry subsidies; international trade rules; national treatment; local content requirements
    JEL: F13 F53 F51
    Date: 2019–10
  15. By: Mattoo,Aaditya; Staiger,Robert W.
    Abstract: How should economists interpret current trade wars and the recent U.S. trade actions that have initiated them? This paper offers an interpretation of current U.S. trade actions that is at once more charitable and less forgiving than that typically offered by economic commentators. More charitable, because under this interpretation it is possible to see a logic to these actions: the United States is initiating a change from"rules-based"to"power-based"tariff bargaining and is selecting countries with which it runs bilateral trade deficits as the most suitable targets of its bargaining tariffs. Less forgiving, because the main costs of these trade tactics cannot be avoided even if they happen to"work"and deliver lower tariffs. Rather, the paper shows that the main costs will arise from the use of the tactics themselves, and from the damage done by those tactics to the rules-based multilateral trading system and the longer-term interests of the United States and the rest of the world.
    Date: 2019–04–22
  16. By: Dobbelaere, Sabien (Vrije Universiteit Amsterdam); Wiersma, Quint (Vrije Universiteit Amsterdam)
    Abstract: This paper examines the impact of trade liberalization on firms' product and labor market power. We estimate the prevalence and intensity of firm-level price-cost markups and either wage markups or wage markdowns. We take the dependence between these model-consistent measures of product and labor market power explicitly into account. To identify the effect of trade shocks on product and labor market power, we exploit China's reductions in input and output tariffs upon its accession to the World Trade Organization. We find that trade liberalization has not switched firms away from exercising product and labor market power. Reducing tariffs on intermediate inputs has increased a firm's price-cost markup but decreased the degree of wage-setting power that it possesses, conditional on exercising product/labor market power. Finally, we find heterogeneous effects of trade liberalization on the intensity of firms' product and labor market power, giving insights into the true consequences of trade shocks.
    Keywords: price-cost markups, wage markups, wage markdowns, trade liberalization, tariffs
    JEL: F14 F16 L11 P31
    Date: 2020–01
  17. By: Deniz Civril
    Abstract: This technical report compares the 'export sales' variable from the COMPUSTAT Business Information Files with the export data from the Foreign Trade Data (FTD) part of the LFTTD. The analysis of the quality of export data is important to Census planners, as outlined in the 2010 Census document titled Potential Methodological Topics using Foreign Trade Data. The domestic geographic segment of the COMPUSTAT data is compared to the LFTTD export data and differences, which can be related to linking COMPUSTAT to the LBD and LFTTD using the COMPUSTAT-SSEL Bridge File, is documented.
    Date: 2020–02
  18. By: Dany Bahar
    Abstract: The paper reviews recent literature on the economics of migration and diasporas, focusing on economic gains and opportunities that these diasporas could represent for home countries. In addition, the paper discusses policies aimed at leveraging this “diaspora capital".
    Keywords: migration, diaspora, trade, FDI, remittances, knowledge
    JEL: O33 F14 F22
    Date: 2020
  19. By: Rappoport, Veronica; Federico, Stefano; Hassan, Fadi
    Abstract: The effect of trade liberalization on welfare and economic activity remains one of the most important questions in economics. The literature identifies a number of key determinants that reduce the potential gains from trade, by focusing on frictions to labor mobility across regions or sectors. This paper contributes to this debate by exploring a novel channel, namely the reallocation of credit in the aftermath of a trade shock. We find that there are endogenous financial frictions that arise from trade liberalization and spillovers between losers and winners from trade that go through banks, as banks can be negatively affected by a trade shock through the portfolio of firms they lend to. Using data from the Italian credit registry, matched with bank and firm level data, we follow the evolution of bank and firm activities prior to and after the entry of China into the WTO. We identify the sectors most affected by import competition from China and estimate the transmission of this trade shock from firms to their lending banks, and the consequence of the shock on banks' lending to other firms. We find that, controlling for credit demand, banks exposed to the China shock decrease their lending relative to non-exposed banks. Importantly, this lending is reduced both for firms exposed to competition from China and to those that are not and that we should expect to expand. The main mechanism is related to the reduction of the core capital of banks, and their resulting funding capacity, through the rise of non-performing loans. We quantify the impact of this effect on real outcomes such as employment, investment, and output and we find relevant aggregate implications. These findings provide evidence that following a trade shock, bank lending has a key impact on the reallocation channel and on the potential gains from trade.
    Keywords: trade liberalisation; China shock; bank credit; resource reallocation; gains from trade
    JEL: F10 F14 G21
    Date: 2019–09
  20. By: Sampson, Thomas; Breinlich, Holger; Leromain, Elsa; Novy, Dennis
    Abstract: We study the impact of the 2016 Brexit referendum on UK foreign direct investment. Using the synthetic control method to construct appropriate counterfactuals, we show that by March 2019 the Leave vote had led to a 17% increase in the number of UK outward investment transactions in the remaining EU27 member states, whereas transactions in non-EU OECD countries were unaffected. These results support the hypothesis that UK companies have been setting up European subsidiaries to retain access to the EU market after Brexit. At the same time, we find that the number of EU27 investment projects in the UK has declined by around 9%, illustrating that being a smaller economy than the EU leaves the UK more exposed to the costs of economic disintegration.
    Keywords: Brexit; foreign direct investment; synthetic control method
    JEL: F15 F21 F23
    Date: 2019–07
  21. By: Olarreaga,Marcelo; Sperlich,Stefan; Trachsel,Virginie
    Abstract: A semiparametric varying coefficient model is used to explore the heterogeneity in returns to export promotion across countries. Differences in characteristics of export-promotion agencies drive the heterogeneity in returns. Interestingly, characteristics that matter for export growth do not necessarily matter for GDP per capita growth. A 1 percent increase in export-promotion budgets is associated with an average increase in exports of 0.10 percent and an average increase in GDP per capita of 0.06 percent. However, these average returns hide a lot of heterogeneity. Returns in terms of exports vary from 0 percent in Cyprus and Vietnam to 0.22 percent in Portugal. Returns in terms of GDP per capita show less heterogeneity, varying from 0.05 in Malawi to 0.10 percent in Portugal and Nicaragua.
    Keywords: Export Competitiveness,International Trade and Trade Rules,Trade and Services,Transport Services
    Date: 2019–04–29
  22. By: Bahar, Dany (Brookings Institution); Choudhury, Prithwiraj (Harvard Business School); Rapoport, Hillel (Paris School of Economics)
    Abstract: We investigate the relationship between the presence of migrant inventors and the dynamics of innovation in the migrants' receiving countries. We find that countries are 25 to 60 percent more likely to gain advantage in patenting in certain technologies given a twofold increase in the number of foreign inventors from other nations that specialize in those same technologies. For the average country in our sample, this number corresponds to only 25 inventors and a standard deviation of 135. We deal with endogeneity concerns by using historical migration networks to instrument for stocks of migrant inventors. Our results generalize the evidence of previous studies that show how migrant inventors "import" knowledge from their home countries, which translates into higher patenting in the receiving countries. We interpret these results as tangible evidence of migrants facilitating the technology-specific diffusion of knowledge across nations.
    Keywords: innovation, migration, patent, technology, knowledge
    JEL: O31 O33 F22
    Date: 2020–02
  23. By: Kazumichi Iwasa (Research Institute for Economics and Business Administration, Kobe University, Japan); Kazuo Nishimaura (Research Institute for Economics and Business Administration, Kobe University, Japan)
    Abstract: We first consider a closed model, where households' time discount depends on externality in consumption. We can prove that there is a unique steady state, which is a saddle point. Then, we extend the model to a two country world, and derive the condition about the effects of consumption externality under which there is a unique free trade steady state with saddle-point stability.
    Keywords: Time preference; Consumption externality; Two-country model; Heckscher-Ohlin
    JEL: E13 E21 F11 F43
    Date: 2020–02
  24. By: Giordani, Paolo E. (LUISS Guido Carli University); Mariani, Fabio (Université catholique de Louvain)
    Abstract: This paper provides a rationale for the revival of protectionism, based on the rise of the educated class. In a trade model with heterogeneous workers and entrepreneurs, globalization generates aggregate gains but has distributional effects, which can be attenuated through taxation. By playing a two-stage political game, citizens decide on trade openness and the extent of redistribution. In this setting, trade liberalization is politically viable as long as the losers from trade are compensated through the redistributive mechanism. When skilled workers account for a large share of the population, however, there may be limited political support for redistribution, and those who are left behind by globalization – namely unskilled workers and importing-sector entrepreneurs – can form a coalition to impose protectionist measures. We then build a dynamic version of the model, where human capital accumulation is driven by public education. Our analysis suggests that globalization – by favoring the ascent of the educated class and thus eroding the political support for redistribution – may ultimately breed its own decline.
    Keywords: trade, redistribution, political economy, human capital accumulation
    JEL: D72 F68 I24 J24 O40
    Date: 2020–01
  25. By: International Monetary Fund
    Abstract: A technical assistance (TA) mission on external sector statistics (ESS) was conducted for the Central Bank of Myanmar (CBM) in Nay Pyi Taw during June 3–5, 2019, as part of the Project on the Improvement of ESS in the Asia–Pacific region. The Project is funded by the Government of Japan; managed by the IMF’s Statistics Department (STA); and implemented by the IMF Capacity Development Office in Thailand (CDOT). The work on verifying reasonable size of coverage adjustments for Myanmar’s imports was addressed during the mission, using bilateral trade data from Thailand and China. Under conservative scenario (i.e., excluding trade through land border check points which potentially involves exports from Thailand and China going through Myanmar onward to the final destination countries), the analysis suggested that Myanmar’s 2018 imports are under-reported by approximately 1.9 billion USD for Myanmar’s imports from Thailand (total discrepancies are 2.0 billion USD), and another 1.9 billion USD for Myanmar’s imports from China (total discrepancies are 4.3 billion USD).1
    Date: 2020–02–14
  26. By: Reed,Tristan; Trubetskoy,Alexandr
    Abstract: This paper describes a parsimonious approach to the economic analysis of transportation investments. In a gravity model of trade, project benefits may be summarized by a money metric for the change in market access experienced by all cities due to the investment. This metric is equivalent to the change in the value of all payments to urban land?the fixed factor of production. Using this model and an original geographic information system data set of Belt and Road Initiative projects in Eurasia, the paper predicts additional income paid to owners of urban land, for each project and city. Individually, nearly half of the proposed infrastructure is estimated to provide significant gains; however, the rest is estimated to be of little value because it fails to create new least-cost paths between large populations centers. Considering the proposed new transport infrastructure as a system, the share of projects that provide gains increases to almost two-thirds. While gains in market access accrue primarily to low-income countries, gains from many projects accrue outside the project country, and in dollar terms more so to richer countries. This finding is consistent with the idea that infrastructure investment along international trade corridors can be a public good. These estimates should be taken as lower bounds, because they do not include direct benefits to users, for instance, time savings. Even so, they offer a useful way for governments to estimate the short-run gains from infrastructure and prioritize infrastructure spending.
    Keywords: International Trade and Trade Rules,Transport Services,Ports&Waterways,Trade and Services
    Date: 2019–04–11
  27. By: Maurer, Stephan; Rauch, Ferdinand
    Abstract: This paper studies how the opening of the Panama Canal in 1914 changed market access and influenced the economic geography of the United States. We compute shipment distances with and without the canal from each US county to each other US county and to key international ports and compute the resulting change in market access. We relate this change to population changes in 20-year intervals from 1880 to 2000. We find that a 1 percent increase in market access led to a total increase of population by around 6 percent. We compute similar elasticities for wages, land values and immigration from out of state. When we decompose the effect by industry, we find that tradable (manufacturing) industries react faster than nontradable (services), with a fairly similar aggregate effect
    Keywords: Panama Canal; trade shock; gravity
    JEL: F10 R00 O10 N72
    Date: 2019–07
  28. By: Thomas Bassetti (Department of Economics and Management, University of Padova and CICSE); Luca Corazzini (Department of Economic Sciences, University of Venice); Darwin Cortes (Facultad de Economia, Universidad del Rosario); Luca Nunziata (DSEA, University of Padova and IZA)
    Abstract: We present a two-country labor matching model to account for the existing, inconclusive empirical evidence on the relationship between immigration and crime. According to our model, inflows of relatively un- skilled immigrants negatively affect the labor market equilibrium and, therefore, sharpen criminal activities. On the other hand, inflows of relatively skilled immigrants boost economic activity and reduce the crime rate. Given this preliminary result, we endogenize the migration decision, showing that the host country’ s labor-market characteristics are crucial in determining the impact of migrants on crime rate. Countries characterized by low unemployment rates attract both skilled and unskilled immigrants, making the direction of the relationship between immigration and crime unclear. Countries with high unemployment rates attract only unskilled workers, thus favoring the emergence of a positive relationship between immigration and crime. We test the theoretical predictions of our model on a panel of 97 regions located in 12 European host countries built by combining the European Social Survey and the Eurostat Labor Force Survey. We identify a threshold level of unemployment rate above which the crime rate positively responds to immigration.
    Keywords: Immigration, Crime, Labor Market, Frictional Unemployment
    JEL: F22 J61 J64 K42
    Date: 2020–02
  29. By: Josef Bajzik; Tomas Havranek; Zuzana Irsova; Jiri Schwarz
    Abstract: A key parameter in international economics is the elasticity of substitution between domestic and foreign goods, also called the Armington elasticity. Yet estimates vary widely. We collect 3,524 reported estimates of the elasticity from 42 studies over 1977-2018, construct 34 variables that reflect the context in which researchers obtain their estimates, and examine what drives the heterogeneity in the results. To account for the inherent model uncertainty, we employ Bayesian and frequentist model averaging. We present the first application of newly developed non-linear techniques to correct for publication bias. Our main results are threefold. First, there is publication bias against small and statistically insignificant elasticities. Second, the differences in the results are best explained by differences in data: aggregation, frequency, size, and dimension. Third, the mean elasticity implied by the literature after correcting for both publication bias and potential misspecifications is 2.
    Keywords: Armington, Bayesian model averaging, meta-analysis, publication bias, trade elasticity
    JEL: C83 D12 F14
    Date: 2019–12
  30. By: Gianluca Benigno (Centre for Economic Performance (CEP); London School of Economics (LSE); Centre for Economic Policy Research (CEPR)); Jan J. J. Groen
    Abstract: We revisit in this note the macroeconomic impact of the recent rise in trade policy uncertainty. As in the literature, we do find that high trade policy uncertainty can adversely impact domestic and foreign economic activity. In addition, we identify an alternative business sentiment channel that is separate and distinct from the impact of trade policy uncertainty, which provides a complementary explanation of the recent developments in the U.S. and global economic activities. This sentiment channel also implies that subsiding trade policy uncertainty does not necessarily result in a recovery of the manufacturing sector and investment spending as long as business sentiment remains negative.
    Keywords: uncertainty; trade policy; business sentiment
    JEL: C11 C22
    Date: 2020–03–01
  31. By: Marina Glushenkova; Marios Zachariadis
    Abstract: Not that different. Based on a unique dataset of semi-annual microeconomic price levels of goods and services across and within countries for 1990:1-2018:2, we show that time-series volatility and cross-sectional dispersion of law-of-one-price deviations is similar for pairs of cities within the same country and within the European Monetary Union. Our empirical analysis reveals that inflation and nominal exchange rate volatility/dispersion across locations have a positive impact on the volatility/dispersion across locations of law-of-one-price deviations across the globe. Furthermore, dispersion of law-of-one-price deviations across goods falls when the relative inflation rate between these locations rises, suggesting that the degree of price adjustment in individual product markets within a country has an international component shaped by international trade and arbitrage considerations. According to this measure of price integration, economies within the monetary union are half-way to the level of integration characterizing national economies. Moreover, monetary union membership reduces the volatility of law-of-one-price deviations, taking member countries more than half-way towards the volatility levels characterizing national economies.
    Keywords: Law-of-one-price, border effect, economic integration
    JEL: F4
    Date: 2020–03
  32. By: Doireann Fitzgerald; Stefanie Haller; Yaniv Yedid-Levi
    Abstract: We show that in successful episodes of export market entry, there are statistically and economically significant post-entry dynamics of quantities, but no post-entry dynamics of markups. This suggests that shifts in demand play an important role in successful entry, but that firms do not use dynamic manipulation of markups as an instrument to shift demand. We structurally estimate two competing models of customer base accumulation to match these moments. In the first model, firms use marketing and advertising to acquire new customers and thereby shift demand and increase sales. In the second, they use temporarily low markups to do so. The marketing and advertising model fits the quantity and markup moments well, and implies that successful entry is associated with high selling expenses. The second model cannot simultaneously fit quantity and markup moments, even with a counterfactually high price elasticity of demand and trade elasticity. We conclude that successful market entry is more likely to be associated with high selling expenses than low markups.
    Date: 2020
  33. By: Nowrasteh,Alex; Forrester,Andrew C.; Blondin,Cole
    Abstract: To what extent does immigration affect the economic institutions in destination countries? While there is much evidence that economic institutions in developed nations are either unaffected or improved after immigration, there is little evidence of how immigration affects the economic institutions of developing countries that typically have weaker institutions. Using the Synthetic Control Method, this study estimates a significant and long-lasting positive effect on Jordanian economic institutions from the surge of refugees from the First Gulf War. The surge of refugees to Jordan in 1990?1991 was massive and equal to 10 percent of Jordan's population in 1990. Importantly, these refugees were able to have a large and direct impact on Jordanian economic institutions because they could work, live, and vote immediately upon entry due to a quirk in Jordanian law. The refugee surge was the main mechanism by which Jordan's economic institutions improved in the decades that followed.
    Keywords: International Migration,Migration and Development,Human Migrations&Resettlements,Armed Conflict,International Trade and Trade Rules,Youth and Governance,National Governance,Social Analysis,Quality of Life&Leisure,Government Policies,Public Sector Administrative and Civil Service Reform,Democratic Government,Public Sector Administrative&Civil Service Reform,State Owned Enterprise Reform,Energy Privatization,De Facto Governments,Privatization,Economics and Finance of Public Institution Development
    Date: 2019–04–11
  34. By: Maliszewska,Maryla; Van Der Mensbrugghe,Dominique
    Abstract: China's Belt and Road Initiative aims to improve connectivity between China and more than 70 countries through infrastructure investment and regional cooperation. The initiative has the potential to accelerate significantly the rate of economic integration and development in the region, as trade costs decline. The goals of this paper are to (i) study the impacts of infrastructure improvements on Belt and Road Initiative and non?Belt and Road Initiative countries'trade flows, growth, and poverty; and (ii) suggest policies that would help maximize gains from the Belt and Road Initiative?induced trade cost declines. The analysis captures the trade costs reductions as a result of infrastructure improvements. The findings indicate that the Belt and Road Initiative would be largely beneficial. First, global income increases by 0.7 percent (in 2030 relative to the baseline). This translates into almost half a trillion dollars in 2014 prices and market exchange rates. The Belt and Road Initiative area captures 82 percent of the gain, with the largest percent gains in East Asia. Second, globally, the Belt and Road Initiative could contribute to lifting 7.6 million people from extreme poverty and 32 million from moderate poverty. Third, the initiative would lead to a modest increase in global carbon dioxide emissions, with a complex set of positive and negative outcomes at the national level for other types of emissions.
    Keywords: International Trade and Trade Rules,Inequality,Transport Services,Food Security,Construction Industry,Common Carriers Industry,Food&Beverage Industry,General Manufacturing,Pulp&Paper Industry,Textiles, Apparel&Leather Industry,Plastics&Rubber Industry,Business Cycles and Stabilization Policies
    Date: 2019–04–10
  35. By: Ye Bai; Sourafel Girma; Alejandro Riaño
    Abstract: This paper studies the impact of corporate acquisitions - both domestic and cross-border - on the uncertainty faced by acquiring firms. We use data for UK publicly-listed firms from 2004 to 2017 and employ a matching estimator combined with difference-in-differences to control for the endogenous selection of firms into buying other companies. We find that acquisitions exert a large and persistent effect on the volatility of stock returns of acquirers and that this response is crucially determined by the geographic scope of the acquisitions firms undertake. We find that the impact of acquisitions on firm-level uncertainty is characterized by a pecking order: the announcement of a domestic takeover leads to a reduction in the uncertainty faced by the acquirer, while cross-border acquisitions - particularly those involving target firms in emerging markets - engender a positive response in acquirers’ volatility. Our results suggest that acquisitions affect uncertainty because they change firms’ exposure to shocks - as they expand their operation in new markets - and also because they are large and risky investments whose returns take time to materialize.
    Keywords: mergers and acquisitions, uncertainty, volatility, globalization, stock returns, UK
    JEL: G32 G34 F23 F36
    Date: 2020
  36. By: Fatih Karanfil; Axel Pierru (King Abdullah Petroleum Studies and Research Center)
    Abstract: When appraising investment projects from a public perspective, a barrel of oil displaced from or added to domestic consumption has to be valued at its opportunity cost. This paper develops a partial-equilibrium framework to assess the opportunity cost of domestic oil consumption for an oil-exporting country. The framework takes into account that (i) the usual ‘small economy’ assumption does not necessarily hold, (ii) the domestic oil price can be set either at a fixed level or as a function of the international price, and (iii) oil production, level of exports, or domestic consumption can be constrained. We derive the opportunity cost for each case considered and a formula quantifying the net welfare gains from reforming the domestic oil price
    Keywords: Dometic Pricing, Oil, Opportunity Cost, Shadow Price, Saudi Arabia
    Date: 2020–03–01
  37. By: Pia M. Orrenius; Madeline Zavodny; Alexander T. Abraham
    Abstract: Immigration, like any positive labor supply shock, should increase the return to capital and spur business investment. These changes should have a positive impact on business creation and expansion, particularly in areas that receive large immigrant inflows. Despite this clear prediction, there is sparse empirical evidence on the effect of immigration on business dynamics. One reason may be data unavailability since public-access firm-level data are rare. This study examines the impact of immigration on business dynamics and employment by combining U.S. data on immigrant inflows from the Current Population Survey with data on business formation and survival and job creation and destruction from the National Establishment Time Series (NETS) database for the period 1997 to 2013. The results indicate that immigration increases the business growth rate by boosting business survival and raises employment by reducing job destruction. The effects are largely driven by less-educated immigrants.
    Keywords: immigration; business dynamics; firm entry; firm exit; job creation; job destruction
    JEL: J15 J61 L25
    Date: 2020–02–28
  38. By: Aghion, Philippe; Bergeaud, Antonin; Lequien, Matthieu; Melitz, Marc
    Abstract: We analyze how demand conditions faced by a firm impacts its innovation decisions. To disentangle the direction of causality between innovation and demand conditions, we construct a firm-level export demand shock which responds to aggregate conditions in a firm’s export destinations but is exogenous to firm-level decisions. Using exhaustive data covering the French manufacturing sector, we show that French firms respond to exogenous growth shocks in their export destinations by patenting more; and that this response is entirely driven by the subset of initially more productive firms. The patent response arises 3 to 5 years after a demand shock, highlighting the time required to innovate. In contrast, the demand shock raises contemporaneous sales and employment for all firms, without any notable differences between high and low productivity firms. We show that this finding of a skewed innovation response to common demand shocks arises naturally from a model of endogenous innovation and competition with firm heterogeneity. The market size increase drives all firms to innovate more by increasing the innovation rents; yet by inducing more entry and thus more competition, it also discourages innovation by low productivity firms.
    Keywords: innovation; export; demand shocks; patents
    JEL: D21 F13 F14 F41 O30 O47
    Date: 2019–10
  39. By: Rixen, Thomas (Freie Universität Berlin); Rohlfing, Ingo (Universität zu Köln)
    Abstract: Postprint. Please cite as: Rixen, Thomas and Ingo Rohlfing (2007) The Institutional Choice of Bilateralism and Multilateralism in International Trade and Taxation, International Negotiation 12 (3), 389-414.
    Date: 2020–02–28
  40. By: Jaravel, Xavier; Sager, Erick
    Abstract: This paper finds that U.S. consumer prices fell substantially due to increased trade with China. With comprehensive price micro-data and two complementary identification strategies, we estimate that a 1pp increase in import penetration from China causes a 1.91% decline in consumer prices. This price response is driven by declining markups for domestically-produced goods, and is one order of magnitude larger than in standard trade models that abstract from strategic price-setting. The estimates imply that trade with China increased U.S. consumer surplus by about $400,000 per displaced job, and that product categories catering to low-income consumers experienced larger price declines.
    JEL: F10 F13 F14
    Date: 2019–08
  41. By: Simone Bertoli; Frédéric Docquier; Hillel Rapoport; Ilse Ruyssen
    Abstract: We use a multilevel approach to characterize the relationship between weather shocks and (internal and international) migration intentions. We combine individual survey data on migration intentions with measures of localized weather shocks for Western African countries over 2008-2016. A meta-analysis on results from about 310,000 regressions is conducted to identify the specification of weather anomalies that maximizes the goodness of fit of our empirical model. We then use this best specification to document heterogeneous mobility responses to weather shocks, which can be due to differences in long-term climatic conditions, migration perceptions, or adaptation capabilities. We find that droughts are associated with a higher probability of migration intentions in Senegal, Niger and Ivory Coast. The effect on international migration intentions are only significant in Niger. These effects are amplified, but qualitatively similar, when restricting the sample to rural low-skilled respondents.
    Keywords: international migration, migration intentions, individual-level data, weather shocks, Western Africa
    JEL: F22 J61 O13 O15
    Date: 2020
  42. By: Bird,Julia Helen; Lebrand,Mathilde Sylvie Maria; Venables,Anthony J.
    Abstract: This paper develops a computable spatial equilibrium model of Central Asia and uses it to analyze the possible effects of the Belt Road Initiative on the economy of the region. The model captures international and subnational economic units and their connectivity to each other and the rest of the world. Aggregate real income gains from the Belt Road Initiative range from less than 2 percent of regional income if adjustment mechanisms take the form of conventional Armington and monopolistic competition, to around 3 percent if there are localization economies of scale and labor mobility. In the latter case, there are sizeable geographical variations in impact, with some areas developing clusters of economic activity with income increases of as much as 12 percent and a doubling of local populations, while other areas stagnate or even decline.
    Date: 2019–04–08
  43. By: Dorosh, Paul; Win, Myat Thida; Van Asselt, Joanna
    Abstract: Since 2012/13, rice exports to China (which may have reached two million tons in 2015/16) boosted total demand for Myanmar’s rice and rice prices. In mid-2016, however, China stopped rice imports through the main land entry point, putting substantial downward pressure on prices. Analysis presented in this paper, based on econometric estimates of consumption parameters and a simple model of Myanmar’s rice supply and demand, suggests that market prices would fall by 26 to 43 percent or more (in real terms) in the absence of increased exports to the world market and/or government domestic procurement. Such a decline in prices could have seriously harmed Myanmar’s rice producers, including many poor farmers with marketable surpluses. Model simulations suggest that government procurement of about one million tons would limit the estimated price decline to only 17 to 30 percent. Further refinements in the simulations are needed to take account for the seasonal nature of paddy production in Myanmar, possible price-responsiveness of export demand and the effects of changes in paddy incomes on farmer demand for rice. Medium-term analysis of procurement, storage and future sales is needed to analyze fiscal costs under various scenarios, as well, covering alternative shocks to production, export demand and world prices. Nonetheless, the main results are clear: without substantial market interventions on the order of one million tons (milled rice equivalent), the paddy (rice) price could fall dramatically when production increases or export demand declines.
    Keywords: MYANMAR, BURMA, SOUTHEAST ASIA, ASIA, rice, market prices, foreign trade, trade, agricultural production, price stabilization, domestic consumption, product quality, exports, agricultural trade, rice price, rice production, agricultural trade policy, rice economy, rice consumption,
    Date: 2019
  44. By: Julien Sauvagnat; Erik Loualiche; Jean-Noël Barrot; Matthew Plosser
    Abstract: In the years preceding the Great Recession, the United States experienced a dramatic rise in household debt and an unprecedented increase in import competition. In a recent staff report, we outline a link between these two seemingly unrelated phenomena. We argue that the displacement of workers exposed to import competition fueled their demand for mortgage credit, which left many households more vulnerable to the eventual downturn in the housing market.
    Keywords: trade; mortgages; household finance
    JEL: F00
  45. By: Anja Rösner; Justus Haucap; Ulrich Heimeshoff
    Abstract: We investigate the effect of an EU-wide consumer protection regulation on consumer trust as well as consumer behavior. The Unfair Commercial Practice Directive (UCPD) was implemented by EU member states between 2007 and 2010. We utilize data from the Special and Flash Eurobarometer for the years between 2006 and 2014 and experts’ evaluation on consumer protection levels before the introduction of the regulation. This rich data set allows us to apply a difference-in-difference estimator with multiple time periods. We find a significant relationship between the introduction of the UCPD and consumer trust and cross-border purchases for countries with a low consumer protection level before the introduction of the UCPD. The relationship increases over time and stays then relatively constant.
    Keywords: consumer protection, UCPD, B2C, e-commerce, consumer trust, cross-border purchase
    JEL: D18 K20 L50 L51
    Date: 2020
  46. By: Molintas, Dominique Trual
    Abstract: Snapshots of the phenomenon coronavirus serves as the laboratory of epistemologies for development. Factors of development are capital formation and natural resources; condition of foreign trade, economic system and political freedom. The word factor is defined as the influence that contributes to, otherwise enable conclusive results or outcomes—and development is defined as the positive change from current situation per’se. Development is a process, for the reason that change is a constant inevitable part of life; whereby notions of development turnout ambiguous when without specific parameters and figures to bolster arguments or whenever nonspecific. This paper presents the development impact on trade and ecology, economy and capital formation, as a result of the coronavirus phenomenon; specifically the equivalent elucidations by the slash in CO2 emissions and reduced global warming in China.
    Keywords: China, Factors of Development, International Trade, Carbon Emissions, Coronavirus
    JEL: F1 F2 Q5
    Date: 2020–02–14
  47. By: Noha Elboghdadly (University of Bath, UK); Michael Finus (University of Graz, Austria)
    Abstract: Carbon leakage and the relocation of rms is one of the main concerns of governments when choosing their climate policy. In a strategic trade model with endogenous plant location, we study the effect of border carbon adjustments (BCAs) on equilibrium emission taxes in a non-cooperative policy game between two asymmetric countries. To this end, we compare a No-BCA regime with a BCA regime for two scenarios: a simultaneous and a sequential game. Without BCAs, a “race to the bottom” is the only Nash equilibrium. In a Stackelberg equilibrium, a second less negative outcome may emerge, which constitutes a Pareto-improvement to all governments. In this “wise chicken equilibrium”, the Stackelberg leader gives in, letting his/her firms relocate in order to avoid the race-to-the-bottom equilibrium. With BCAs, the race-to-the-bottom in carbon taxes can be avoided in the Nash equilibrium and also in Stackelberg equilibria global emissions are reduced. We show that the country imposing BCAs is always better off, global welfare usually increases with BCAs, even though the country on which BCAs are imposed may be better worse off. We characterize those conditions.
    Keywords: Endogenous plant location; global emissions; emission tax competition; border carbon adjustments
    JEL: F12 F18 H23 H87 Q58
    Date: 2020–03
  48. By: Martin, Will
    Abstract: After nearly two centuries of lagging behind the industrial countries, growth in many developing countries has surged since the early 1990s. This outperformance has major implications for almost all areas of agricultural economics and, if continued, will likely do so into the future. This paper aims to identify the key ways in which the changes in rich and poor country growth rates matter for agricultural economists, as a basis for formulating better research agendas. A key impact arises through sharp increases in demand for agricultural resources as demand for livestock products increases. This changing structure of food demand has important implications for nutrition studies and policies, with the emergence of a double burden of malnutrition. On the supply side, growth in developing countries tends to increase domestic food supply, which is also boosted by increases in research and development spending. Growth in developing countries both stimulates and benefits from increases in infrastructure investment, evaluation of which requires new analytical tools discussed at this conference. Negative impacts include the contribution of increased demand for livestock products to global greenhouse gas emissions. In terms of trade policy, developing country growth is tending to lead to convergence of agricultural policies with the pattern of assistance seen in today’s developed countries, raising concerns about the future need to deal with collective action problems, particularly those that increase the volatility of world prices.
    Keywords: economic growth, agricultural economics, development, agricultural policies, convergent improvement, developed countries, developing countries, trade, trade policies, convergence, O13 Economic Development: Agriculture, Natural Resources, Energy, Environment, Other Primary Product, O41 One, Two, and Multisector Growth Models, O47 Measurement of Economic Growth, Aggregate Productivity, Cross-Country Output Convergence, Q17 Agriculture in International Trade, Q18 Agricultural Policy, Food Policy,
    Date: 2019
  49. By: Filipski, Mateusz J.; Tiburcio, Ernesto; Dorosh, Paul A.; Hoddinott, John F.; Rosenbach, Gracie
    Abstract: In the context of the massive influx of Forcibly Displaced Myanmar Nationals to Bangladesh, this paper aims to evaluate the potential consequences on the Southern Bangladesh economy. It adopts an economywide perspective to study the impacts of increased labor supply and increased consumer demand in a general equilibrium framework, using a Local Economy-wide Impact Evaluation (LEWIE) model. The model is used to illustrate the potential effect of a large arrival of displaced populations on wages, the supply and demand of goods, and incomes of migrant and host populations. Simulations enable comparisons between possible scenarios, including two options for the size of the market being impacted (either the smaller Cox’s Bazar District, or the larger Chittagong Division) and several options for aid provisions from international actors. The databases used are the Forcibly Displaced Myanmar Nationals (FDMN) and Host Community Household Survey carried out by IFPRI, BIDS, WFP and ACF in late 2018 and the official Bangladesh Household Income and Expenditure Survey (HIES) 2016. We find that if the migrants enter the Cox Bazar labor markets only, their large number could potentially lead to a large drop in wage levels of around 30%. However, under similar conditions their impact in the much larger Chittagong Division would be limited to a drop of less than 4%. Cash transfers to migrants could mitigate the wage effects by stimulating local demand, but this effect is limited. Some local households may be hurt due to lower wages and higher prices. Matched transfers to local populations and investments in local industry could potentially offset some of these negative impacts.
    Keywords: BANGLADESH, SOUTH ASIA, ASIA, economic development, migration, refugees, labour market, economic analysis, Local Economy Wide Model, forced migration,
    Date: 2019
  50. By: Mobarak,Mushfiq; Sharif,Iffath Anwar; Shrestha,Maheshwor
    Abstract: Many economists believe that the returns to migration are high. However, credible experimental estimates of the benefits of migration are rare, particularly for low-skilled international migrants and their families. This paper studies a natural experiment in Bangladesh, where low-skilled male migrant workers to Malaysia were selected via a large-scale lottery program. This study tracked the households of lottery applicants and surveyed 3,512 lottery winners and losers. Five years after the lottery, 76 percent of the winners had migrated internationally compared with only 19 percent of the lottery losers. Using the lottery outcome as an instrument, the paper finds that the government intermediated migration increased the incomes of migrants by over 200 percent and their household per capita consumption by 22 percent. Furthermore, low-skilled international migration leads to large improvements in a wide array of household socioeconomic outcomes, including female involvement in key household decisions. Such large gains arise, at least in part, due to lower costs of government intermediation.
    Keywords: Educational Sciences,Inequality,Labor Markets,Employment and Unemployment
    Date: 2020–02–27
  51. By: Laszlo Goerke (Institute for Labour Law and Industrial Relations in the European Union (IAAEU), Trier University)
    Abstract: Entry in a homogeneous Cournot-oligopoly is excessive if and only if there is business-stealing (Amir et al. 2014). The excessive entry prediction has been derived primarily for closed economies and using a welfarist benchmark. We extend this framework and allow for (1) horizontal FDI in a multi-period setting and (2) interest group-based government behaviour. Opening the market to greenfield investments from abroad tends to aggravate the entry distortion. Moreover, market opening may reduce welfare if a more pronounced entry distortion dominates the gain in consumer surplus. Finally, a government, which places sufficiently little weight on the interests of consumers, will object to market opening, even if welfare rises.
    Keywords: Excessive Entry, Cournot-Oligopoly, Horizontal FDI, Political Support Function
    JEL: D43 D72 F21 L13
    Date: 2020–03
  52. By: KAPSARC, King Abdullah Petroleum Studies and Research Center (King Abdullah Petroleum Studies and Research Center)
    Abstract: The Belt and Road Initiative (BRI) has expanded from 65 original member states during its official launch in 2015 to 131 as of April 2019. The countries of the Middle East and North Africa have generally welcomed the initiative and its goal of improving regional connectivity. However, each economy has a different capacity to benefit from the BRI, depending on its size, structure, level of development, and various idiosyncratic features. These characteristics, in turn, shape BRI investments and programs for each host country and their related bilateral (and multilateral) engagement with China, such as the creation of joint action plans, the adjustment of governance structures, and the development of institutional capacity and policy frameworks.
    Keywords: China Belt and Road Inititiative (BRI), Green Power Investment, Petrochemical Integration
    Date: 2019–03–09
  53. By: Udi Joshua (Federal University Lokoja, Kogi state, Nigeria); Festus V. Bekun (Istanbul Gelisim University, Istanbul, Turkey); Samuel A. Sarkodie (Nord University Business School, Norway)
    Abstract: This study examines the relationship between foreign direct investment inflows and economic growth by incorporating the role of urbanization, coal consumption and CO2 emissions as additional variables to avoid omitted variable bias. The different order of integration from the unit root test suggested the adoption of a dynamic autoregressive distributed lag bounds testing procedure. The results confirmed the existence of a long-run equilibrium relationship between the outlined series within the period under investigation with a high speed of convergence. The ARDL equilibrium relationship shows that coal consumption is the largest emitter of carbon dioxide emissions in both short- (0.77%) and long- (0.86%) run. Economic growth was found to escalate CO2 emission by approximately 0.27% (in the short-run) and 0.19% (in the long-run). The Granger causality test indicates a non-causal effect between FDI inflow and economic expansion in South Africa, which implies that FDI is not a driver of economic advancement. The empirical study shows a bidirectional causal effect between urbanization and foreign direct investment. This suggests that urban development stimulates foreign direct investment in South Africa. The findings reveal a one-way link from GDP to coal consumption, suggesting economic prosperity promotes coal consumption. The study underscores that economic development and the attraction of more economic investments is in part, dependent on the conservative policy, development of urban centres through infrastructural improvement, and establishing industrial zones.
    Keywords: South Africa; coal consumption; CO2 emissions; climate change; urbanization
    Date: 2020–01
  54. By: Ivan Hajdukovic (University of Barcelona)
    Abstract: This paper provides an empirical examination on the relationship between international trade and the price of solar photovoltaic (PV) modules. Using a sample of 15 countries over the period 2006-2015, we propose a dynamic linear panel data model based on a new specification, including number of relevant factors influencing solar PV module prices. The empirical analysis reveals that an increase in imports of solar PV cells and modules is associated with a decline in solar PV module prices. This finding suggests that international trade could lead to further price reductions, thus fostering the deployment of solar PV technology. The use of renewable energy can in turn have positive effects on environmental quality by reducing the emission of detrimental greenhouse gases generated by the consumption of fossil fuels. The empirical part reveals several other important findings. Market and technological development are key factors explaining the decline in solar PV module prices. Government policies such as public budget for R&D in PV and feed-in tariff for solar PV are effective in reducing the price of solar PV modules. Moreover, an increase in renewable energy consumption has a negative influence on solar PV module prices.
    Keywords: Dynamic panel data models,Solar photovoltaic module prices,Trade and Environment
    Date: 2020–02–22

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