nep-int New Economics Papers
on International Trade
Issue of 2020‒05‒25
27 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Trade, Productivity and (Mis)allocation By Antoine Berthou; John Jong-Hyun Chung; Kalina Manova; Charlotte Sandoz-Dit-Bragard
  2. Future Connectivity Chinese One Belt, One Road: Prospects and Implications to Nepal By Bista, Raghu
  3. Patterns of regional agri-food trade in Asia By Diao, Xinshen; Li, Ruoxin
  4. The effect of policy uncertainty on South Africa, SADC, and beyond By Mustapha Douch
  5. The Effect of the Ebola Virus Disease on intra-regional trade in West Africa By Abban, Stanley
  6. Investment Facilitation and Mode 3 Trade in Services : Are Current Discussions Addressing the Key Issues ? By Echandi,Roberto; Sauve,Pierre
  7. Trade Facilitation in Services : Concepts and Empirical Importance By Van Der Marel,Erik Leendert; Shepherd,Ben
  8. Trade in value-added and the welfare gains of international fragmentation By NJIKE, ARNOLD
  9. The Impact of Sanctions Imposed by the European Union against Iran on their Bilateral Trade: General versus Targeted Sanctions By Mahdi Ghodsi; Hüseyin Karamelikli
  10. Brexit: Implication for Developing Countries By Alessandro Nicita
  11. Trade Facilitation in Services : A Conceptual and Empirical Analysis By Gillson,Ian John Douglas; Molinuevo,Martin; Saez,Juan Sebastian
  12. International Trade and Social Connectedness By Michael Bailey; Abhinav Gupta; Sebastian Hillenbrand; Theresa Kuchler; Robert Richmond; Johannes Stroebel
  13. A Spatial Analysis of Inward FDI and Rural-Urban Wage Inequality: Evidence from China By Hao Wang; Jan Fidrmuc; Qi Luo
  14. Trade Liberalization, Economic Reforms and Foreign Direct Investment – A Critical Analysis of the Political Transformation in Vietnam By Nguyen, V.C.
  15. The Environmental Bias of Trade Policy By Joseph S. Shapiro
  16. Immigration, Innovation, and Growth By Konrad B. Burchardi; Thomas Chaney; Tarek Alexander Hassan; Lisa Tarquinio; Stephen J. Terry
  17. Liberalizing versus Facilitating Mode 4 Trade in Services By Shingal,Anirudh
  18. The role of WTO committees through the lens of specific trade concerns raised in the TBT committee By Cassehgari Posada, Kian; Ganne, Emmanuelle; Piermartini, Roberta
  19. Does Immigration Decrease Far-Right Popularity? Evidence from Finnish Municipalities By Lonsky, Jakub
  20. The Effect of the U.S.-China Trade War on U.S. Investment By Mary Amiti; Sang Hoon Kong; David Weinstein
  21. Trade and Welfare (Across Local Labor Markets) By Ryan Kim; Jonathan Vogel
  22. Non-gravity trade By Brueckner, Markus; Van Long, Ngo; Vespignani, Joaquin
  23. Trade Induced Technological Change: Did Chinese Competition Really Increase European Innovation? By Douglas L. Campbell; Karsten Mau
  24. Facilitating Trade in Services By Hoekman,Bernard M.
  25. Taxation des multinationales : quelques propositions pour améliorer l’équité fiscale en période de crise By Jean-Denis Garon; Julien Martin
  26. No Country for Young People? The Rise of Anti-immigration Populism in Ageing Societies By Dotti, Valerio
  27. Migration Costs and Observational Returns to Migration in the Developing World By Lagakos, David; Marshall, Samuel; Mobarak, Ahmed Mushfiq; Vernot, Corey; Waugh, Michael E.

  1. By: Antoine Berthou; John Jong-Hyun Chung; Kalina Manova; Charlotte Sandoz-Dit-Bragard
    Abstract: We examine the gains from globalization in the presence of firm heterogeneity and potential resource misallocation. We show theoretically that without distortions, bilateral and export liberalizations increase aggregate welfare and productivity, while import liberalization has ambiguous effects. Resource misallocation can either amplify, dampen or reverse the gains from trade. Using model-consistent measures and unique new data on 14 European countries and 20 industries in 1998-2011, we empirically establish that exogenous shocks to export demand and import competition both generate large aggregate productivity gains. Guided by theory, we provide evidence consistent with these effects operating through reallocations across firms in the presence of distortions. (i) Both export and import expansion increase average firm productivity, but the former also shifts activity towards more productive firms, while the latter acts in reverse. (ii) Both export and import exposure raise the productivity threshold for survival, but this cut-off is not a sufficient statistic for aggregate productivity. (iii) Efficient institutions, factor and product markets amplify the gains from import competition but dampen those from export access.
    Keywords: : International Trade, Productivity, Allocative Efficiency.
    JEL: F10 F14 F43
    Date: 2020
  2. By: Bista, Raghu
    Abstract: One Belt, One Road (OBOR) that is a Belt and Road Initiative (BRI) is a connectivity approach of China with the objectives of integrating 68 countries of the world by road and maritime for new connectivity, new trade flow and new world order for Asia Pacific and Europe. At initial level, Nepal was not a part of OBOR. In recent years, Nepal is a part of BRI. In this context, BRI is a key concern of Nepalese economy, trade and investment in the constraint of the geopolitical blocked for better connectivity beyond Neighbor Countries, India and China. This paper has a curiosity whether BRI will have better connectivity for great trade prospects and its positive implication to Nepal. This paper examines this research question with the secondary data base of foreign trade by employing Econometric Model based on Gravity Model and descriptive statistics. Based on the assumptions, BRI is a good opportunity for better connectivity, better regional integration and accessibility, better and fast transportation with minimum value addition and tremendous market access and size. As result, it is an opportunity for export trade if Nepal has exportable items but there is a pressure of import trade. In tourism, it will have positive implications with 441.8 million Rs income from 0.6 million Chinese tourist arrivals, along with investment and technology transfer, despite dept trap risk. Therefore, OBOR may be a better prospect.
    Keywords: OBOR, BRI, Trade, Tourism, Investment, China, Nepal
    JEL: F13 F14 F15 F17
    Date: 2019–11–02
  3. By: Diao, Xinshen; Li, Ruoxin
    Abstract: This paper analyzes the implication of economic structural change and dietary transformation on changing patterns of agri-food trade among 17 Asian development countries. Sub-regional trade in Central, South, and Southeast Asia is the focus of the paper, along with trade with other partners outside the sub-regions. The paper finds that Asian markets for total agri-food exports and exports of nutritious foods are generally more important than the markets outside of Asia and for many of them, the importance of Asian markets increases over time. While net exporters and importers co-exist in each sub-region, with a few exceptions, sub-regional trade is often less important. Many small countries trade only with one or two large neighbors and less so with each other. The dietary transformation impacts trade in nutritious foods in diverse ways. With income growth, increased domestic demand for nutritious foods seem to lead to more imports of these foods. While many South and Southeast Asian countries have a comparative advantage in exports of some nutritious food products, growth in these exports can be negatively affected by rising domestic demand. Although nutritious food exports continue to play important roles in total agri-food exports, export growth of nutritious food is often slower than overall growth of agri-food exports. The dietary transformation also seems to lead to increases in demand for processed foods which many Asian countries meet through imports, often, accounting for a large component of total agri-food imports. On the other hand, processed foods generally account for a small portion of agri-food exports. However, there are a few countries where processed food export growth is rapid. In these cases, the sub-regional market is expanding, but with few exceptions, it is still less important than trade with countries outside the sub-regions. The paper also finds that agri-food exports and imports are highly concentrated, and a small group of commodities dominate most countries export and import portfolios and remain unchanged over time. The main markets for these important commodities are generally not in the sub-regions and this mismatch between demand and supply of agri-food commodities within sub-region is a natural barrier for promoting regional trade. The modified trade complementary index developed in this paper is based on Michaely (1996) and shows that trade complementarity measures are positively correlated with actual bilateral trade. Small countries tend to enjoy higher levels of complementarity with one or two large trading partners than with other small countries in the same sub-region. This implies that small countries could be better off from bilateral trade arrangements with large partners compared to a regional trade agreement within the sub-region. Because the sub-regional market is oftentimes not large enough to meet large countries’ import demand or consume their export supply, regional trade agreements within sub-regions may be less likely to serve their needs for trade expansion than negotiating with large trading partners outside the sub-regions. While many Asian developing countries’ governments have been pushing for trade diversification and want to reduce export dependencies concentrated on one or two large trading partners, this paper shows the challenges to achieve this policy goal. For small countries, focusing on bilateral trade arrangements with their dominant trading partners seems to be a more practical and effective strategy than regional trade agreements within sub-regions. Long-term trade arrangements, consistent trade policies, and various preferential trade arrangements should be pursued by small countries with their larger trading partners to promote agri-food exports.
    Keywords: BANGLADESH; SOUTH ASIA; ASIA; INDIA; SRI LANKA; NEPAL; PAKISTAN; INDONESIA; SOUTHEAST ASIA; SOUTH EAST ASIA; CAMBODIA; LAO PEOPLE'S DEMOCRATIC REPUBLIC; INDOCHINA; MYANMAR; BURMA; MALAYSIA; PHILIPPINES; THAILAND; VIET NAM; VIETNAM; KAZAKHSTAN; KYRGYZSTAN; TAJIKISTAN; UZBEKISTAN; CENTRAL ASIA; agrifood sector; trade; exports; diet; nutrition; economic growth; imports; processed foods; trends; agri-food; agri-food trade; nutritious foods; nutritious food exports; agri-food export commodities; export commodities
    Date: 2020
  4. By: Mustapha Douch
    Abstract: The principal contribution of this paper is to investigate the relationship between policy uncertainty, caused by recent developments in international markets, and firms' trade margins for the largest economy in Africa: South Africa. In particular, using a unique database on the population of traders, we investigate the exogenous result of the Brexit referendum and assess its impact on South African exporters' and importers' participation in the global market.
    Keywords: Brexit, policy uncertainty, Preferential trade agreements, trade margins
    Date: 2020
  5. By: Abban, Stanley
    Abstract: The West African sub-region experienced the World’s largest Ebola outbreak after its maiden outbreak in Central Africa. In this background, economic activities were heavily affected hence intra-regional trade shares of affected countries. Given this, the study seeks to investigate the effect of the Ebola Virus on affected countries’ shares to intra-regional trade. Additionally, the study seeks to investigate the impact of ECOWAS membership on trade in West Africa. The Poison Pseudo Maximum Likelihood (PPML) was used to estimate the augmented gravity model of international trade. The results showed that the Ebola Virus Disease reduced the share of affected countries’ trade to intra-regional partners by two folds. Also, the study showed that ECOWAS membership doubles the level of trade. The study concludes that the ECOWAS should be proactive in their response to disease outbreak by investing in research. Additionally, the study shows that Mauritania will benefit from opting for the ECOWAS.
    Keywords: Ebola Virus Disease, Poison Pseudo Maximum Likelihood (PPML), ECOWAS, gravity model of international trade.
    JEL: F1 F14 F15
    Date: 2020–05–09
  6. By: Echandi,Roberto; Sauve,Pierre
    Abstract: Based on a novel approach to measuring the cost of trade in services for Modes 1 (cross-border supply), 2 (consumption abroad), and 4 (temporary movement of service suppliers), developed by the World Trade Organization Secretariat, this pper reviews available evidence on factors affecting trade costs for services supplied via a commercial presence in a host country market, so-called Mode 3 trade. It does so with a view to answering the question of whether the current ?facilitation? agendas on services and investment proceeding at the World Trade Organization focus on the most important factors affecting Mode 3?related trade costs, by far the most important of all modes of supplying services internationally. The paper explores the policy opportunity costs arising from the decision to focus the investment facilitation agenda on matters of regulatory transparency and the streamlining of administrative procedures. It recalls how reducing regulatory heterogeneity, tackling discriminatory impediments to cross-border investment, and developing investor-state conflict management mechanisms to retain and expand investment and prevent dispute escalation -- all issues left unaddressed by ongoing negotiations -- hold important potential for reducing Mode 3 trade costs and facilitating expanded investment.
    Date: 2020–05–05
  7. By: Van Der Marel,Erik Leendert; Shepherd,Ben
    Abstract: This paper examines the concept of trade facilitation in services from the perspective of the recent literature on the determinants of services trade. The aim is to conceptualize trade facilitation in this area as a dimension of international integration beyond the baseline restrictiveness of policy, as captured by indicators of discriminatory market access. The analysis focuses on the role of governance structures, institutions, and transparency in shaping the environment for trading in services internationally. In addition to examining these factors, the paper provides some novel empirical estimates. Using a gravity model, the analysis finds that the ad valorem equivalents of common measures of institutional quality, governance, and transparency are larger relative to measures of sheer policy restrictiveness, frequently a significant multiple. The paper also shows that the ad valorem equivalents of data restrictions are of similar magnitude to policy restrictions in services. The conclusion is that framing discussions of trade facilitation in services around the concept of reducing trade costs -- specifically those stemming from areas where improvement is needed in governance, institutions, and transparency -- could potentially bring significant benefits in increased integration of the global services economy.
    Date: 2020–05–07
    Abstract: In order to take profit from the differences in factor endowments and technology that exist between countries, firms delocalize or externalize a share of their goods’ production process to other countries. This phenomenon is so widespread today that very few manufactured goods are produced entirely within the borders of a single country. We examine in this paper the macroeconomic gains related to this phenomenon by calculating the net share of international fragmentation in the welfare gains of trade. To do so, we propose a model that allows us to identify all the components related to international fragmentation in these welfare gains, something that most of the classical trade models fail to do. We show that the net share of international fragmentation in the welfare gains of trade represents on average 22% of the gains of trade, a way lower figure than the share that could be inferred from standard trade models. The shutdown of international fragmentation would, therefore, only reduce the average real wage by 3%.
    Keywords: Global supply chains,Welfare effects of trade, Trade in value-added,Computable general equilibrium
    JEL: F1 F6
    Date: 2020–05–16
  9. By: Mahdi Ghodsi (The Vienna Institute for International Economic Studies, wiiw); Hüseyin Karamelikli
    Abstract: Economic sanctions are intensively used by international institutions to enforce political objectives. Since 2006 the EU has been implementing general sanctions against the whole economy of Iran, affecting their trade relations. Since 2007, and following the imposition of sanctions by the UN Security Council, the EU has also implemented smart sanctions targeting Iranian entities and natural persons associated with its military activities. In a non-linear autoregressive distributed lag (NARDL), this paper investigates the impact of general and targeted EU sanctions against Iran on quarterly bilateral trade values between the 19 members of the euro area (EA19) and Iran between the first quarter of 1999 and the fourth quarter of 2018. The results indicate that general sanctions have strongly hampered trade flows between the two trading partners. The impact of general sanctions on the total imports of the EA19 from Iran is more than four times stronger than on the total exports of the EA19 to Iran. Moreover, the EU’s general sanctions have hampered trade in almost all sectors, except for the primary sectors. Furthermore, our study finds that the impact of smart sanctions targeting Iranian entities and natural persons is much smaller than the impact of general sanctions on total trade values and the trade values of many sectors. Smart sanctions affect the exports of most sectors from the EA19 to Iran, while they are statistically insignificant for the imports of many sectors from Iran. Thus, this paper provides evidence on the motivations behind smart sanctions, which target specific individuals and entities rather than the whole economy, unlike general sanctions, which have a negative impact on ordinary people.
    Keywords: Smart sanctions, Iran, trade values, time series analysis, NARDL
    JEL: F13 F14 F50 F51
    Date: 2020–05
  10. By: Alessandro Nicita
    Abstract: The United Kingdom (UK) market accounts for about 3.5% of world trade and represents an important trading partner for many developing countries. As the UK is set to exit the European Union, its trade policy will likely be adapted to better reflect its national priorities. This paper focuses on possible changes in the UK tariff structure that Brexit could bring. The findings of this paper indicate that changes in UK market access conditions could have important consequences for some developing countries. To minimize possible negative implications of Brexit on low income countries exports the UK needs to make sure that preferential access is maintained. Still, the analysis shows that maintaining preferences may not be enough in the event of MFN liberalization. It is of critical importance that UK retains substantial MFN tariffs on products of importance for low income countries exports.
    Date: 2019
  11. By: Gillson,Ian John Douglas; Molinuevo,Martin; Saez,Juan Sebastian
    Abstract: Beyond their key contribution to value chains in all sectors, services represent a centrally important source of economic and export diversification. This paper discusses how to promote trade in services as a channel for growth, employment, and diversification by assessing services trade costs and identifying policies that contribute to their reduction: a concept termed trade facilitation in services. It summarizes the latest research on the costs facing trade in services beyond discriminatory market access and national treatment and finds that these are high. It proposes measures that could fall under the scope of a potential trade facilitation in services agenda, namely: (i) streamlining processes and procedures used in administering regulatory policies aside from the policy itself, (ii) improving access to information on regulatory policies (that is, transparency), and (iii) boosting the efficiency of governance structures for regulators that set policies affecting trade in services.
    Keywords: International Trade and Trade Rules,Trade Facilitation,Trade and Services,Business Cycles and Stabilization Policies,Construction Industry,Common Carriers Industry,Food&Beverage Industry,General Manufacturing,Textiles, Apparel&Leather Industry,Plastics&Rubber Industry,Pulp&Paper Industry,Rules of Origin,Trade Policy,Trade and Multilateral Issues
    Date: 2020–05–07
  12. By: Michael Bailey; Abhinav Gupta; Sebastian Hillenbrand; Theresa Kuchler; Robert Richmond; Johannes Stroebel
    Abstract: We use anonymized data from Facebook to construct a new measure of the pairwise social connectedness between 180 countries and 332 European regions. We find that two countries trade more with each other when they are more socially connected and when they share social connections with a similar set of other countries. The social connections that determine trade in each product are those between the regions where the product is produced in the exporting country and those where it is used in the importing country. Once we control for social connectedness, the estimated effect of geographic distance on trade declines substantially, and the effect of country borders disappears. Our findings suggest that social connectedness increases trade by reducing information asymmetries and by providing a substitute for both trust and formal mechanisms of contract enforcement. We also present evidence against omitted variables and reverse causality as alternative explanations for the observed relationships between social connectedness and trade flows.
    Keywords: international trade, social connectedness, contract enforcement, information frictions
    JEL: F10 F50 F60
    Date: 2020
  13. By: Hao Wang; Jan Fidrmuc; Qi Luo
    Abstract: When investigating the relationship between inward FDI and rural-urban inequality, previous studies overlook the inter-regional interactions. Building on the literature that highlights the significant role of rural-urban migration in inequality, this article investigates spatial spillover effect of inward FDI on the rural-urban wage inequality by utilizing the Spatial Durbin Model (SDM) both in the short run and long run. In particular, we carefully consider the heterogeneity of inward FDI and categorize it with respect to entry modes and sectoral distribution. On the basis of a panel dataset covering 30 provinces in China from 2000 to 2016, our results show that overall the inward FDI should not be blamed for the exacerbation of rural-urban wage inequality. We do not find significant relationship between inward FDI in secondary and tertiary sector while the FDI in primary sector has a slight negative effect. When we separate the FDI according to entry modes, we find that WFE is shown to have a negative effect on the rural-urban wage inequality and this effect is more pronounced in the long run when we conduct a period average estimation. This change also similarly applies to the equity joint ventures.
    Keywords: spatial spillovers, foreign direct investment, rural-urban wage inequality, SDM
    JEL: C21 F21 O19
    Date: 2020
  14. By: Nguyen, V.C.
    Abstract: The purpose of this study is to discuss the trends of integration into the global economy since political and economic reforms (so-called Doimoi) and its influence on every presence of foreign investment in Vietnam. Lasting 20-year-war period and ended in 1975, by the mid-1980s per capita income was stuck between $200 and $300, Vietnam’s government introduced Doimoi through a series of reforms, and steered the country to be a socialist-oriented market economy. Based on the analysis of reform process and integration, the results are concerned. Our results demonstrate that foreign direct investment performance has significantly embraced trade liberalization with gusto. Further, the open trade policy in relation to FTAs could significantly promote foreign investment and maximize its benefits on the economy.
    Date: 2020–03–30
  15. By: Joseph S. Shapiro
    Abstract: This paper documents a new fact, then analyzes its causes and consequences: in most countries, import tariffs and non-tariff barriers are substantially lower on dirty than on clean industries, where an industry’s “dirtiness” is defined as its carbon dioxide (CO2) emissions per dollar of output. This difference in trade policy creates a global implicit subsidy to CO2 emissions in internationally traded goods and so contributes to climate change. This global implicit subsidy to CO2 emissions totals several hundred billion dollars annually. The greater protection of downstream industries, which are relatively clean, substantially accounts for this pattern. The downstream pattern can be explained by theories where industries lobby for low tariffs on their inputs but final consumers are poorly organized. A quantitative general equilibrium model suggests that if countries applied similar trade policies to clean and dirty goods, global CO2 emissions would decrease and global real income would change little.
    JEL: F13 F18 F6 H23 Q50 Q56
    Date: 2020–05
  16. By: Konrad B. Burchardi; Thomas Chaney; Tarek Alexander Hassan; Lisa Tarquinio; Stephen J. Terry
    Abstract: We show a causal impact of immigration on innovation and dynamism in US counties. To identify the causal impact of immigration, we use 130 years of detailed data on migrations from foreign countries to US counties to isolate quasi-random variation in the ancestry composition of US counties that results purely from the interaction of two historical forces: (i) changes over time in the relative attractiveness of different destinations within the US to the average migrant arriving at the time and (ii) the staggered timing of the arrival of migrants from different origin countries. We then use this plausibly exogenous variation in ancestry composition to predict the total number of migrants flowing into each US county in recent decades. We show four main results. First, immigration has a positive impact on innovation, measured by the patenting of local firms. Second, immigration has a positive impact on measures of local economic dynamism. Third, the positive impact of immigration on innovation percolates over space, but spatial spillovers quickly die out with distance. Fourth, the impact of immigration on innovation is stronger for more educated migrants.
    JEL: J61 O31 O40
    Date: 2020–05
  17. By: Shingal,Anirudh
    Abstract: The growing importance of services trade for countries across the world is well-documented in the services and trade literatures. At the same time, regulatory and administrative barriers to the movement of service suppliers to deliver services internationally have resulted in very low shares of"Mode 4"trade in total services trade. Against this background, this paper conceptualizes an agenda for trade facilitation in services as it would apply to the movement of natural persons. It also provides descriptive statistical evidence from the Organisation for Economic Co-operation and Development's Services Trade Restrictiveness Index database. The paper differentiates between regulatory measures that may improve transparency or facilitate access for service providers and those measures that impede Mode 4 trade as well as the administrative, financial, and economic costs of compliance with such measures.
    Keywords: International Trade and Trade Rules,Trade Facilitation,Transport Services,Trade and Services,Trade Policy,Rules of Origin,Trade and Multilateral Issues
    Date: 2020–05–05
  18. By: Cassehgari Posada, Kian; Ganne, Emmanuelle; Piermartini, Roberta
    Abstract: In this paper we provide some evidence of the common claim that STCs improve transparency and monitoring as well as help mitigate trade conflicts. We analyse the content of 555 STCs raised in the TBT committee in the period 1995-2018. We find that: (i) STCs are used to acquire new and higher quality information than that provided merely by notifications; (ii) STCs are used as a monitoring tool, thus making members more accountable; and (iii) STCs facilitate the resolution of trade concerns non-litigiously. By reviewing existing literature, we provide evidence that all this is important because transparency and monitoring reduce trade costs, improve regulatory practices and build and sustain trust. We also indicate the potential for some reforms to improve the efficiency of the system. These include: introducing a reporting system on the outcome of STCs, use of STCs raised in committees to fill the gap of missing notifications, systematic use of the STC mechanism at the stage of draft measures, building-in the dispute settlement system the requirement to raise the matter and discuss it within the relevant committee before filing a formal dispute settlement case.
    Keywords: Transparency,WTO reform,Monitoring,Value of WTO,Good Governance,DisputeSettlement,Negotiations
    JEL: F02 F13 F53 F55
    Date: 2020
  19. By: Lonsky, Jakub
    Abstract: Across Europe, far-right parties have made significant electoral gains in recent years. Their anti-immigration stance is considered one of the main factors behind their success. Using data from Finland, this paper studies the effect of immigration on voting for the far-right Finns Party on a local level. Exploiting a convenient setup for a shift-share instrument, I find that one percentage point increase in the share of foreign citizens in municipality decreases Finns Party's vote share by 3.4 percentage points. Placebo tests using pre-period data confirm this effect is not driven by persistent trends at the municipality level. The far-right votes lost to immigration are captured by the two pro-immigration parties. Turning to potential mechanisms, immigration is found to increase voter turnout, potentially activating local pro-immigration voters. Moreover, the negative effect is only present in municipalities with high initial exposure to immigrants, consistent with the intergroup contact theory. Finally, I also provide some evidence for welfarestate channel as a plausible mechanism behind the main result.
    Keywords: Immigration,far-right,political economy,voting
    JEL: H71 J15 J61 P16
    Date: 2020
  20. By: Mary Amiti; Sang Hoon Kong; David Weinstein
    Abstract: We develop a new method of quantifying the impact of policy announcements on investment rates that makes use of stock market data. By estimating the effect of U.S.-China tariff announcements on aggregate returns and the differential returns of firms exposed to China, we identify their effect on treated and untreated firms. We show theoretically and empirically that estimates of policy-induced stock-market declines imply lower returns to capital, which lowers investment rates. We estimate that the tariff actions through 2018 and 2019 will lower the investment growth rate of listed U.S. companies by 1.9 percentage points by the end of 2020.
    JEL: E22 F13 F14
    Date: 2020–05
  21. By: Ryan Kim; Jonathan Vogel
    Abstract: What are the welfare implications of trade shocks? We provide a sufficient statistic that measures changes in welfare, to a first-order approximation, taking into account adjustment in labor supply, in frictional unemployment, and in the sectors to which workers apply while allowing for arbitrary heterogeneity in worker productivity and nonpecuniary returns across sectors. We apply these insights to measure changes in welfare across commuting zones (CZs) in the U.S. between 2000-2007. We find that granting China permanent normal trade relations lowers the welfare of a CZ at the 90th percentile of exposure by 3.1 percentage points relative to a CZ at the 10th percentile; of this, approximately 65 percent is due to changes in unemployment and much of this is driven by the non-pecuniary costs of unemployment.
    JEL: F1
    Date: 2020–05
  22. By: Brueckner, Markus (Research School of Economics, Australian National University); Van Long, Ngo (Department of Economics, McGill University); Vespignani, Joaquin (Tasmanian School of Business & Economics, University of Tasmania)
    Abstract: This paper examines the relationship between countries’ bilateral trade with the United States that is not due to gravity (non-gravity trade) and the distribution of income within countries. In countries where only a small share of the population are educated, an increase in non-gravity trade is associated with a significant increase in income inequality. As education of the population increases the correlation between non-gravity trade and income inequality becomes smaller. Non-gravity trade has no significant effect on income inequality in countries that are world leaders in education.
    Keywords: non-gravity trade, inequality, education
    JEL: F1 E2
    Date: 2020
  23. By: Douglas L. Campbell (New Economic School); Karsten Mau (School of Business and Economics, Maastricht University)
    Abstract: Bloom, Draca, and Van Reenen (2016) find that Chinese competition induced a rise in patenting, IT adoption, and TFP by up to 30% of the total increase in Europe in the early 2000s. Yet average patents per firm fell by 94% for the most China-competing firms in their sample, but also by 94% for non-competing firms. Their findings for patents appear to be driven by the decision to normalize patents by adding one (i.e., patents+1). Since China-competing firms had fewer patents to begin with, adding one induces bias, making it appear as though patents declined by a smaller percentage in the China-competing sectors. When we estimate a negative binomial regression using patents as the dependent variable, correcting several coding errors, we find no (or even negative) correlation between Chinese competition and patent growth.
    Keywords: Patents, China, Europe, Textiles, Trade Shocks, Manufacturing
    JEL: F14 F13 L25 L60
  24. By: Hoekman,Bernard M.
    Abstract: In 2016, the Government of India proposed negotiations on an agreement to facilitate trade in services to complement the 2013 World Trade Organization Trade Facilitation Agreement in goods. The proposal did not find much support, but plurilateral talks launched in 2017 on various policy areas encompass areas that are very relevant from a services trade facilitation perspective. This paper argues that participating in the current plurilateral talks can do much to achieve services trade facilitation objectives by identifying good regulatory practices. Although elements relevant to services trade facilitation are on the table in the World Trade Organization, there are important gaps. Identifying priorities for complementary international cooperation to facilitate trade in services on a plurilateral basis requires initiatives that bring together governments, services industry associations, and sectoral regulators.
    Date: 2020–05–05
  25. By: Jean-Denis Garon; Julien Martin
    Abstract: Dans la foulée de la crise de la COVID-19, les gouvernements ont engagé des sommes colossales pour venir en aide au secteur privé. Certaines entreprises qui bénéficient de cette aide tirent profit de stratégies d’optimisation fiscales et sont présentes dans les paradis fiscaux. Au cours des dernières années, le gouvernement du Canada n’a que très timidement agi contre l’évitement fiscal des entreprises multinationales. Fondée sur l’espérance d’une plus grande coordination entre pays, l’approche canadienne s’est avérée plus patiente que celle de nombre de nos partenaires commerciaux. Plusieurs facteurs expliquent pourquoi les grandes entreprises multinationales bénéficient d’un rapport de force favorable face à nos gouvernements. La mobilité du capital et des biens s’étant substantiellement accrue avec les grands accords de libre-échange, les grandes entreprises sont jugées crédibles lorsqu’elles menacent de quitter le Canada. Dans l’espace commercial nord-américain, la concurrence fiscale s’est aussi accrue. Cette grande élasticité de l’assiette fiscale de l’impôt des sociétés, du moins à long terme, militait en faveur de recourir disproportionnément à l’impôt sur le revenu des particuliers et aux taxes sur la valeur ajoutée pour financer les grandes missions de l’état. Depuis le milieu des années 1990, les taxes sur le capital sont d’ailleurs pratiquement disparues du paysage. Étant donné les circonstances exceptionnelles engendrées par la COVID-19, nous croyons utile de proposer des avenues pour taxer les profits des entreprises multinationales présentes dans les paradis fiscaux. Nous identifions trois pistes de réflexion : la taxation des profits excédentaires, l’établissements de taux effectifs minimaux et imposer des conditions supplémentaires à l’aide financière de l’État.
    Keywords: , Taxation des multinationales,Évasion fiscale,Paradis fiscaux,Équité
    Date: 2020–05–12
  26. By: Dotti, Valerio
    Abstract: Abstract We investigate the effects of (i) population ageing and (ii) rising income inequality on immigration policies using an overlapping-generations model of elections with endogenous political parties. In each period, young people work and pay taxes while old people receive social security payments. Immigrants are generally young, meaning they contribute significantly to financing the cost of public services and social security. Among natives, the elderly and the poor benefit the most from public spending. However, because these two types of voters do not fully internalize the positive fiscal effects of immigration, they have a common interest in coalescing around a populist party (or multiple) seeking to curb immigration and increase the tax burden on high-income individuals. Population ageing and rising income inequality increase the size and, in turn, the political power of such parties, resulting in more restrictive immigration policies, a larger public sector, higher tax rates, and lower societal well-being. Calibrating the model to UK data suggests that the magnitude of these effects is large. The implications of this model are shown to be consistent with patterns observed in UK attitudinal data.
    Keywords: Immigration, Ageing, Policy, Voting.
    JEL: C71 D72 H55 J61
    Date: 2020–04–14
  27. By: Lagakos, David (UCSD and NBER); Marshall, Samuel (University of Warwick); Mobarak, Ahmed Mushfiq (Yale University, NBER, Deakin University and CEPR); Vernot, Corey (Yale University); Waugh, Michael E. (New York University and NBER)
    Abstract: Recent studies find that observational returns to rural-urban migration are near zero in three developing countries. We revisit this result using panel tracking surveys from six countries, finding higher returns on average. We then interpret these returns in a multi-region Roy model with heterogeneity in migration costs. In the model, the observational return to migration confounds the urban premium and the individual benefits of migrants, and is not directly informative about the welfare gain from lowering migration costs. Patterns of regional heterogeneity in returns, and a comparison of experimental to observational returns, are consistent with the model’s predictions.
    Keywords: rural-urban migration ; observational returns to migration ; migration costs ; rural-urban gaps ; gains from lowering migration costs JEL codes: O11 ; O18 ; R23
    Date: 2020

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