nep-int New Economics Papers
on International Trade
Issue of 2020‒06‒22
43 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. How important is GVC participation to export upgrading By Ndubuisi, Gideon; Owusu, Solomon
  2. The Impact of Retaliatory Tariffs on Agricultural and Food Trade By Colin A. Carter; Sandro Steinbach
  3. Detecting the Position of Countries in Global Value Chains Using a Bilateral Approach By Oguzhan Erdogan
  4. Trade elasticity: Estimates from product-level data By Juyoung Cheong; Do Won Kwak; Kam Ki Tang
  5. The Determinants of Agricultural Exports: Empirical Validation for the Case of Tunisia By Bakari, Sayef; Khalfallah, Sirine; Zidi, Ahmed
  6. Export Controls: America's Other National Security Threat By Bown, Chad P.
  7. Covid-19 and Food Protectionism : The Impact of the Pandemic and Export Restrictions on World Food Markets By Espitia,Alvaro; Rocha,Nadia; Ruta,Michele
  8. Demand Risk and Diversification through International Trade By Esposito, Federico
  9. The Covid-19 trade contraction: A view from global shipping, the EU and China By Chowdhry, Sonali; Felbermayr, Gabriel; Stamer, Vincent
  10. From global economy-wide modelling to modelling a small product market: The case of wine By Kym Anderson; Glyn Wittwer
  11. The Impact of Interwar Protection: Evidence from India By Vellore Arthi; Markus Lampe; Ashwin R Nair; Kevin Hjortshøj O'Rourke
  12. Cross-border Investments and Uncertainty: Firm-level Evidence By Rafael Cezar; Timothée Gigout; Fabien Tripier
  13. A Model of Global Beverage Markets By Glyn Wittwer; Kym Anderson
  14. Institutions, Infrastructure and East African Community Membership of Burundi and Rwanda on Trade By Abban, Stanley
  15. Diagonal Cumulation and Sourcing Decisions By Pamela Bombarda; Elisa Gamberoni
  16. International Trade and Social Connectedness By Bailey, Michael; Gupta, Abhinav; Hillenbrand, Sebastian; Kuchler, Theresa; Richmond, Robert; Ströbel, Johannes
  17. The Political Economy of Foreign Direct Investment to Developing Countries By Harish, Nikki; Plouffe, Michael
  18. Coronavirus crisis – trade effects for the Iberian and Visegrád countries By Andrea Éltető
  19. Trade and value chains in employment-rich activities (TRAVERA) study of selected non- traditional coconut products in the Philippines By Costales, Cecilio.
  20. The Evolution of Services Trade Policy Since the Great Recession By Borchert,Ingo; Magdeleine,Joscelyn; Marchetti,Juan A.; Mattoo,Aaditya
  21. Global Trade and GDP Co-Movement By de Soyres, Francois; Gaillard, Alexandre
  22. Grey Zones in Global Finance: the distorted Geography of Cross-Border Investments By Delatte, Anne-Laure; Guillin, Amélie; Vicard, Vincent
  23. Exposure to Transit Migration, Public Attitudes and Entrepreneurship By Ajzenman, Nicolas; Aksoy, Cevat Giray; Guriev, Sergei
  24. Does Easing Access to Foreign Financing Matter for Firm Performance? By Udichibarna Bose; Sushanta Mallick; Serafeim Tsoukas
  25. Asia’s emergence in global beverage markets: The rise of wine By Kym Anderson
  26. Applied Services Trade Policy: A Guide to the Services Trade Policy Database and the Services Trade Restrictions Index By Borchert,Ingo; Gootiiz,Batshur; Magdeleine,Joscelyn; Marchetti,Juan A.; Mattoo,Aaditya; Rubio,Ester; Shannon,Evgeniia
  27. Global Comparatives Statics in General Equilibrium: Model Building from Theoretical Foundations By Markusen, James R.
  28. The Incidence of Foreign Market Accessibility on Farmland Rental Rates By Jisang Yu; Nelson B. Villoria; Nathan P. Hendricks
  29. The Effect of the U.S.-China Trade War on U.S. Investment By Amiti, Mary; Kong, Sang Hoon; Weinstein, David E.
  30. The Economic Impact Analysis of US-China Trade War By Wang, Jiann-Chyuan
  31. How Preferences Shape the Welfare and Employment Effects of Trade By Hartmut Egger; Simone Habermeyer
  32. The GTAP version 10A Multi-Region Input Output (MRIO) Data Base By Carrico, Caitlyn; Erwin Corong; Dominique van der Mensbrugghe
  33. Growth, Trade Openness and Environmental Degradation in Nigeria By Ajayi, Patricia; Ogunrinola, Adedeji
  34. Non-Gravity Trade By Markus Brueckner; Ngo Van Long; Joaquin Vespignani
  35. Global Supply Chains in the Pandemic By Bonadio, Barthelemy; Huo, Zhen; Levchenko, Andrei A.; Pandalai-Nayar, Nitya
  36. Trade, Growth, and the International Transmission of Financial Shocks By Ohdoi, Ryoji
  37. Trade protectionism in Australia: its growth and dismantling By Anderson, Kym
  38. Farm Level Impacts of Trade Liberalisation and CAP Removal Across EU: An Assessment using the IFM-CAP Model By Pavel Ciaian; Maria Espinosa; Kamel Louhichi; Angel Perni
  39. A study on skills for trade and economic diversification (STED) in the non-traditional coconut export sectors of The Philippines By Bello, Rolando T.; Pantoja, Blanquita R.; Tan, Maria Francesca O.; Banalo, Roxanne A.; Alvarez, Joanne V.; Rañeses, Florita P.
  40. La globalisation atteinte du coronavirus Inégalités, égoïsme, ploutocratie, insécurité By Jacques Fontanel
  41. Trade models in the European Union By Gräbner, Claudius; Tamesberger, Dennis; Heimberger, Philipp; Kapelari, Timo; Kapeller, Jakob
  42. The Price Effect of Trade: Evidence of the China Shock and Canadian Consumer Prices By Myeongwan Kim
  43. Machine Learning in Gravity Models: An Application to Agricultural Trade By Munisamy Gopinath; Feras A. Batarseh; Jayson Beckman

  1. By: Ndubuisi, Gideon (UNU-MERIT, Maastricht University); Owusu, Solomon (UNU-MERIT, Maastricht University)
    Abstract: Exporting higher-quality and complex products are deemed pathways to economic growth and development. However, producing such products are knowledge-intensive and require quality intermediate inputs and advanced technologies. Integration into global trade networks is increasingly argued to be amongst the pathways to obtain such inputs and technologies, although not all countries may benefit equally from such integration. This paper builds on these arguments and investigates how participation in the global value chain (GVC) affects export-quality. We use a sample of 120 developed and developing countries and find that participation in GVC impacts positively on export quality and, also, brings the export quality of countries closer to the quality frontier, but these effects only work through backward linkages. While this result persists in the sub-sample comprising developing economies, we, however, find that developed countries benefit from both forward and backward linkages in GVC. Overall, the results indicate that GVC participation matters to export upgrading but points to a potential heterogeneity on the channel of impact across countries at different levels of development.
    Keywords: Global Value Chains, Quality Products, Export Products, Quality of Exports
    JEL: F00 F01 F14 O10 O24 O25
    Date: 2020–06–05
  2. By: Colin A. Carter; Sandro Steinbach
    Abstract: This paper analyzes the short-run trade effects of retaliatory tariffs against agriculture and food exports from the United States. The results indicate that these tariffs caused a substantial decline in U.S. agriculture and food exports and induced a reorientation of international trade patterns. We find that losses in foreign trade with retaliatory countries outweigh the gains from trade with non-retaliatory countries by more than USD 14.4 billion. Our results also indicate that non-retaliatory countries accommodated the increased demand from retaliatory countries by reorienting their trade relationships. We find that countries in South America and Europe benefited the most from these adjustments gaining more than USD 13.5 billion in additional foreign sales. The effects of retaliatory tariff increases across products vary substantially, with soybeans and meat products experiencing the most considerable redistribution effects.
    JEL: F14 Q17 Q18
    Date: 2020–05
  3. By: Oguzhan Erdogan
    Abstract: To detect the position of countries in global value chains in a consistent manner, we propose that export and import upstreamness measures of a country should be varying across its trade partners over time. To formalize our argument, we define the notion of bilateral upstreamness between any pair of countries and show how its measure is affected from country-specific factors. Moreover, we incorporate the variables in gravity literature into our estimation equations to account for how geographical factors can have an impact on their bilateral production line position. Following Antrás et al. (2012), we also consider the hypotheses tested in their paper with our more aggregated and recent data set. Similar to their results, we find that better rule of law, higher level of financial development and investment in human capital lead the export composition of countries to be more final good-oriented in international markets. Finally, we portray Turkey’s production line position in comparison with different country blocks and income groups to illustrate our bilateral analysis.
    Keywords: Bilateral upstreamness, International trade, Global value chains, Production line position
    JEL: F14 L14
    Date: 2020
  4. By: Juyoung Cheong; Do Won Kwak; Kam Ki Tang
    Abstract: In a seminal paper, Helpman et al. (2008) demonstrate that accounting for self-selection and firm heterogeneity is crucial for obtaining unbiased estimates in the gravity equation. In this paper, we show how this insight helps solve the trade elasticity puzzle that, hitherto, trade elasticity estimates in the gravity equations have implied very small welfare gains from trade. To apply their approach to product-level data, we propose new exclusion restrictions based on the export learning literature. Our new estimates imply much larger welfare gains from trade than the previous literature suggested.
    Keywords: Gravity Model, Firm Heterogeneity, Disaggregate Data, Trade Elasticity, Learning
    JEL: C13 C23 F10 F15
    Date: 2020–03
  5. By: Bakari, Sayef; Khalfallah, Sirine; Zidi, Ahmed
    Abstract: In this investigation, we attempt to identify and to examined the determinants of agricultural exports in Tunisia. To achieve this aim, we used annual data for the period 1972 – 2017 and seven ad hoc specifications. Empirical results of each specification show us that gross domestic product in the agricultural sector, agricultural imports, bank loans to the agricultural sector and imports of agricultural machinery have a positive effect on agricultural exports in the long run. Conversely, domestic investment in the agricultural sector and the exploitation of agricultural land have a negative effect on agricultural exports in the long term. In the short term, only domestic investments in the agricultural sector cause agricultural exports. Findings and interpretations provide evidence that is very substantial to inspire validity planning and reforms to ameliorate agricultural investment and agricultural trade, so it can uphold economic development in Tunisia.
    Keywords: Determinants, Agricultural, Exports, Tunisia.
    JEL: F11 F12 F13 F14 F17 F18 Q17 Q18
    Date: 2020–05–22
  6. By: Bown, Chad P.
    Abstract: The Trump administration's allegations that some imports are a threat to America's national security have received wide publicity during 2017-20. But the administration was undertaking a more quiet US policy shift on the export side in the same time frame. Addressing the national security threat presented by exports posed different economic and institutional challenges from those associated with import policy, including the acknowledgment that export controls for legitimate national security reasons can be the first-best policy to confront the problem at its source. Yet, export controls could also be misused as a beggar-thy-neighbor policy to redistribute economic well-being across countries, even from one ally to another. This paper describes how US export control policy evolved over 2017-20, as well as the international institutions - first the Coordinating Committee for Multilateral Export Controls (COCOM), then the Wassenaar Arrangement -historically tasked with multilateralizing US export restrictions used to protect national security. With the potential for US export control policy to brush up more frequently against WTO rules designed to limit the use of export restrictions, the paper also highlights new challenges for the WTO's system of resolving trade disputes. Overall, a US failure to strike the right balance for its export control policy would result in it being ineffective at addressing national security risks, costly for the economy, and problematic for trade and diplomatic relations.
    Keywords: dual-use technologies; ECRA; export controls; National Security; uncertainty; Wassenaar Arrangement
    JEL: F13
    Date: 2020–05
  7. By: Espitia,Alvaro; Rocha,Nadia; Ruta,Michele
    Abstract: This paper analyzes the impact of Covid-19 and uncooperative trade policies on world food markets. It quantifies the initial shock due to the pandemic under the assumption that products that are more labor intensive in production are more affected through workers'morbidity and containment policies. It then estimates how escalating export restrictions to shield domestic food markets could magnify the initial shock. The analysis shows that, in the quarter following the outbreak of the pandemic, the global export supply of food could decrease between 6 and 20 percent and global prices increase between 2 and 6 percent on average. Escalating export restrictions would multiply the initial shock by a factor of 3, with world food prices rising by up to 18 percent on average. Import food dependent countries, which are in large majority developing and least developed countries, would be most affected.
    Keywords: International Trade and Trade Rules,Trade and Multilateral Issues,Trade Policy,Rules of Origin,Climate Change and Agriculture,Crops and Crop Management Systems
    Date: 2020–05–19
  8. By: Esposito, Federico
    Abstract: I develop a theory of risk diversification through geography. In a general equilibrium trade model with monopolistic competition, characterized by stochastic demand, risk-averse entrepreneurs exploit the spatial correlation of demand across countries to lower the variance of their global sales. I show that the model-consistent measure of demand risk, the “Diversification Index”, depends on the multilateral covariance of a country's demand with all other markets. The model implies that both the probability of entry and the level of trade flows to a market are increasing in the Diversification Index. The firms' risk diversification behavior can generate, upon a trade liberalization, a strong competitive pressure on prices, which in general equilibrium can lead to higher welfare gains from trade than the ones predicted by trade models with risk neutrality. To assess the quantitative relevance of the risk diversification channel, I rely on a panel of domestic and international sales of Portuguese firms. I estimate “risk-augmented” gravity regressions at the firm and country level, and show that the Diversification Index significantly affects trade patterns at the extensive and intensive margins. Once I structurally estimate the model, I document that the risk diversification channel explains 15% of the observed trade patterns, and increases welfare gains from trade by 16% relative to models with risk neutrality. Finally, the quantitative application highlights the role of demand uncertainty in shaping the economic consequences of the recent integration of China in the global economy.
    Keywords: Demand uncertainty; welfare gains from trade; diversification; China shock
    JEL: F10 F12 F14
    Date: 2020–06–03
  9. By: Chowdhry, Sonali; Felbermayr, Gabriel; Stamer, Vincent
    Abstract: This policy brief examines the effects of the Covid19 pandemic on international trade. Major exporting economies have posted record year-over-year monthly declines in export volume ranging from -7.9% in Germany to -24.3% in South Korea. While logistical bottlenecks are being solved, low demand puts pressure on trade activity. The shipping industry has reduced its activity around Europe, Asia and America by up to -10% pointing to a prolonged reduction in trade. Over the first quarter of 2020, China's trade contracted severely with most economies - particularly Canada, Japan, Russia, Italy and South Africa.The trade collapse affects businesses differently and especially hits those firms that participate in low-value added stages of global value chains by assembling components.
    Keywords: Trade,Covid-19,China,GVCs,Handel
    Date: 2020
  10. By: Kym Anderson (Wine Economics Research Centre, School of Economics, University of Adelaide, Australia, and Arndt-Corden Dept of Economics, Australian National University, Canberra ACT 2601, Australia); Glyn Wittwer (Centre of Policy Studies, Victoria University, Australia)
    Abstract: Under Tom Hertel’s guidance, GTAP’s myriad contributions in providing databases and models for economy-wide analysis of the world’s markets have been enormous, and deservedly well recognized. Less appreciated by the policy community and many economists has been the additional contribution GTAP has made to improving the modelling of global markets for individual product markets. The smaller the national and global markets for a particular product, the less sense it makes to model them as part of the overall economy. But several of the features of CGE models nonetheless can be incorporated usefully into global product market models. This paper reports on one such attempt, namely to model the world’s winegrape and wine markets. Building on a prototype first reported by Wittwer, Berger and Anderson (2003), a much-improved model was developed by Anderson and Wittwer (2013) and has now been further revised with its database updated to 2014 and projected to 2025. Both the model and the new database are described and, to illustrate the model’s usefulness, we compare the 2025 baseline with alternative scenarios chosen to illustrate the empirical importance of possible additional shocks to those markets. One is a more-than-expected strengthening of the US dollar. Another is a set of possible Brexit scenarios, bearing in mind that the UK has been one of the world’s biggest wine-importing countries. We conclude the paper by mentioning fruitful areas for further work such as expanding the model to include other beverages and analysing possible increases in beverage taxes as health lobby groups in many countries strengthen their anti-alcohol and anti-sugar drives.
    Keywords: Global wine markets, trade policies, real exchange rates, Brexit
    JEL: C63 F17 Q02 Q11
    Date: 2018–10
  11. By: Vellore Arthi; Markus Lampe; Ashwin R Nair; Kevin Hjortshøj O'Rourke
    Abstract: Research on the quantitative impact of interwar protection on trade flows remains scarce, and much of it has concluded that the impact was surprisingly small. In this paper we ask: Did Indian interwar protection hurt UK manufacturers, by raising tariffs on manufactured imports? Or did it favour UK interests, by discriminating against “foreign” (i.e. non- British) producers? We answer this question by quantifying the impact of trade policy on the value and composition of Indian imports, using novel disaggregated data on both trade policies and imports for 114 commodity categories coming from 42 countries. Indian trade elasticities were generally larger than those in the United Kingdom at the same time. We find that even though Indian protection lowered total imports, it substantially boosted imports from the UK. Trade policy had a big impact on trade flows.
    JEL: F13 F14 N75
    Date: 2020–05
  12. By: Rafael Cezar; Timothée Gigout; Fabien Tripier
    Abstract: This paper studies the impact of uncertainty on cross-border investments. We build a dataset of firm-level outward Foreign Direct Investments between 2000 and 2015. We create a time and country varying measure of uncertainty based on the dispersion of idiosyncratic investment returns. An increase in uncertainty delays cross-border flows to the affected country. Yet, this average e_ect hides strong heterogeneity. Firms with low ex-ante performance durably reduce their foreign investments. Meanwhile high-performing firms increase their investments after the initial shock. We interpret these results as the evidence of a cleansing effect of uncertainty shocks among multinational firms in the presence of financial frictions.
    Keywords: Uncertainty; Asymmetric Uncertainty; FDI Flows; FDI Returns; Volatility; Multinational Firms.
    JEL: E02 E31 E58 E63 P16
    Date: 2020
  13. By: Glyn Wittwer (Centre of Policy Studies, Victoria University, Australia); Kym Anderson (Wine Economics Research Centre, School of Economics, University of Adelaide, Australia, and Arndt-Corden Dept of Economics, Australian National University, Canberra ACT 2601, Australia)
    Abstract: This paper describes a new empirical model of the world’s markets for alcoholic beverages and, to illustrate its usefulness, reports results from projections of those markets from 2016- 18 to 2025 under various scenarios. It not only revises and updates a model of the world’s wine markets (Wittwer, Berger and Anderson, 2003) but also adds beer and spirits so as to capture the substitutability of those beverages among consumers. The model has some of the features of an economywide computable general equilibrium model, with international trade linking the markets of its 44 countries and seven residual regions. It is used to simulate prospects for these markets by 2025 (business-as-usual), which points to Asia’s rise. Then two alternative scenarios to 2025 are explored: one simulates the withdrawal of the United Kingdom from the European Union (EU); the other simulates the effects of the recent imposition of additional 25% tariffs on selected beverages imported by the United States from several EU member countries. Future applications of the model are discussed in the concluding section.
    Keywords: CGE modeling; wine; beer; spirits; changes in beverage preferences; international trade in beverages; premiumization of alcohol markets
    JEL: C53 F11 F17 Q13
    Date: 2020–02
  14. By: Abban, Stanley
    Abstract: The East African Community (EAC) is in a quest to integrate further to form a currency union. However, empirical evidence has shown that policies initiated as a panacea have failed due to weak institutions. In this background, the study seeks to investigate the role of existing institutions on trade using an augmented gravity model of trade. The Poisson Pseudo Maximum Likelihood (PPML) was used due to its efficiency. Also, the study estimates the impact of infrastructure on trade. Additionally, the study estimates whether Burundi and Rwanda gained from joining EAC in 2009 or rather contributed significantly to trade in EAC. The study showed that institutions are not contributing significantly to trade. Additionally, the study showed that infrastructure had a positive impact on trade. The study also showed that Burundi and Rwanda benefited from joining the EAC by a combined 81%. The study concludes that there is a greater potential to trade therefore an exigency for a new institutional framework and reforms to facilitate trade by reducing trade and non-trade barriers.
    Keywords: East African Community (EAC), Currency union, institutions, gravity model of trade, Poisson Pseudo Maximum Likelihood (PPML), infrastructure, trade barriers, non-trade barriers
    JEL: F1 F15 F4 O1 O17
    Date: 2020–05–09
  15. By: Pamela Bombarda; Elisa Gamberoni (Université de Cergy-Pontoise, THEMA)
    Abstract: Free trade agreements (FTAs) are characterized by rules of origin (RoO) and cumula- tion. These rules define which intermediate goods allow a final product to qualify for preferential access. Recent literature shows that RoO led to a reduction in imports of intermediate goods from third countries relative to partners. We consider the impact of the Pan-European Cumulation System (PECS), which provided the possibility of cumulating stages of production across European Union's FTA peripheral partners. We find that PECS reshaped regional supply chains by increasing imports of inter- mediates among these peripheral countries relative to both the European Union (EU) and third countries. We also find that PECS reinforced their value chain links with third countries relative to the EU, contributing to multilateralize regionalism.
    Keywords: Intermediate Trade, rules of origin, diagonal cumulation, PECS, input-output tables.
    JEL: F12 F13 F14 F15
    Date: 2020
  16. By: Bailey, Michael; Gupta, Abhinav; Hillenbrand, Sebastian; Kuchler, Theresa; Richmond, Robert; Ströbel, Johannes
    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: Contract enforcement; Information Frictions; international trade; Social Connectedness
    JEL: F1 F5 F6
    Date: 2020–04
  17. By: Harish, Nikki; Plouffe, Michael (University College London)
    Abstract: This handbook chapter provides an introduction to foreign direct investment (FDI) and presents and overview of the political-economy issues relating to FDI in the developing world. The chapter discusses FDI in terms of the OLI framework and firm heterogeneity before surveying domestic governance concerns and closing with a discussion of global FDI governance in the context of the investment treaty regime.
    Date: 2018–06–14
  18. By: Andrea Éltető (Institute of World Economics, Centre for Economic and Regional Studies)
    Abstract: In this paper I describe some characteristics of the foreign trade of two European semi-peripheric regions: the Iberian countries (Spain and Portugal) and the Visegrád countries (Poland, Czechia, Slovakia, and Hungary). Based on the developments in the past decade, some conclusions can be drawn for the coronavirus crisis-effects. Visegrád countries are more integrated into the global production chains with a more significant weight of automotive and electronic industry in trade compared to the Iberian economies. This has caused high trade dynamism but high dependence, concentration too. Therefore, short-term crisis effects will be more severe in manufacturing here than in the other region. However, the composition of the service trade is more favourable for the Visegrád region than for the Iberian countries regarding the crisis-shock. Long-term effects stemming from the reorganisation of GVCs can also favour the Visegrád region.
    Keywords: Visegrád countries, Spain, Portugal, foreign trade, global value chains
    JEL: F23 F15 L23
    Date: 2020–05
  19. By: Costales, Cecilio.
    Abstract: Coconut remains as the Philippines’ leading agricultural export product. Three of the top ten agricultural exports are coconut-based export products, namely, coconut oil (both crude and refined), copra cake oil and desiccated coconut. Further, it is estimated that about 1 to 3 million Filipinos are either directly or indirectly employed in the coconut industry. Given the wide extent and scope of the Philippine coconut industry, this study focuses on analyzing and mapping out the export value chains of three non-traditional coconut export products: virgin coconut oil, coco sugar and coco coir. Although these coconut export products are not yet as significant as the more established and leading coconut export products of the Philippines, they have high growth potential. Moreover, the government’s anti-poverty reduction programmes in the coconut sector are centered on these products. This study looks at the threats and opportunities that these three non-traditional coconut export products present for the Philippine coconut industry and its workers.
    Keywords: coconut, value chains, production diversification
    Date: 2020
  20. By: Borchert,Ingo; Magdeleine,Joscelyn; Marchetti,Juan A.; Mattoo,Aaditya
    Abstract: Are changes in services markets provoking reform, restrictions, or inertia? To address this question, this paper draws on a new World Bank-World Trade Organization Services Trade Policy Database. The paper analyzes the services trade policies of 68 economies in 23 subsectors across five broad areas -- financial services, telecommunications, distribution, transportation, and professional services. Policy measures are quantified into a Services Trade Restrictions Index (STRI) following a novel, consistent and transparent framework. The paper identifies patterns of services trade policies across sectors and economies, and secular trends over the past decade. Higher income economies are still more open on average than developing economies, but the chronology of reform differs markedly across sectors. In telecommunications and finance, there is convergence toward greater openness driven by liberalization in the previously more restrictive developing economies. In the hitherto universally protected transport and professional services, there is policy divergence, as some higher income economies pioneer reform. But while explicit restrictions are being lowered in most services sectors?in contrast to recent developments in goods trade policy -- there is greater recourse to regulatory scrutiny, especially in higher income economies. These measures could reflect legitimate prudential or security concerns, but they could also reflect recourse to less transparent forms of protection.
    Keywords: International Trade and Trade Rules,Transport Services,Trade Policy,Rules of Origin,Trade and Multilateral Issues,Telecommunications Infrastructure
    Date: 2020–06–01
  21. By: de Soyres, Francois; Gaillard, Alexandre
    Abstract: We revisit the association between trade and GDP comovement for 135 countries from 1970 to 2009. Guided by a simple theory, we introduce two notions of trade linkages: (i) the usual direct bilateral trade index and (ii) new indexes of common exposure to third countries capturing the role of similarity in trade networks. Both measures are economically and statistically associated with GDP correlation, suggesting an additional channel through which GDP fluctuations propagate through trade linkages. Moreover, high income countries become more synchronized when the content of their trade is tilted toward inputs while trade in final goods is key for low income countries. Finally, we present evidence that the density of the international trade network is associated with an amplification of the association between global trade flows and bilateral GDP comovement, leading to a significant evolution of the trade comovement slope over the last two decades.
    Keywords: International Trade, International Business Cycle Comovement, Networks, Input-Output Linkages.
    JEL: F15 F4 F44 F62
    Date: 2020–01–30
  22. By: Delatte, Anne-Laure; Guillin, Amélie; Vicard, Vincent
    Abstract: Tax avoidance schemes generate artificially complex cross-border financial structures inflating measured international investment stocks in tax havens. Using a standard gravity framework, we estimate that about 40\% of global assets (FDI, portfolio equity and debt) are 'abnormal' - unexplained - stocks. Abnormal stocks are increasing over time and concentrated in a limited number of jurisdictions. Six jurisdictions including three European countries are the largest contributors: Cayman, Bermuda, Luxembourg, Hong Kong, Ireland and the Netherlands. Interestingly, the Luxleaks in 2014 do not appear to have diverted cross-border investments away.
    Keywords: Capital openness; Cross-border investments; Gravity Equation; tax havens
    JEL: F23 G21 H22 H32
    Date: 2020–05
  23. By: Ajzenman, Nicolas; Aksoy, Cevat Giray; Guriev, Sergei
    Abstract: Does exposure to mass migration affect economic behavior, attitudes and beliefs of natives in transit countries? In order to answer this question, we use a unique locality-level panel from the 2010 and 2016 rounds of the Life in Transition Survey and data on the main land routes taken by migrants in 18 European countries during the refugee crisis in 2015. To capture the exogenous variation in natives' exposure to transit migration, we construct an instrument that is based on the distance of each locality to the optimal routes that minimize travelling time between the main origin and destination cities. We first show that the entrepreneurial activity of natives falls considerably in localities that are more exposed to mass transit migration, compared to those located further away. We then explore the mechanisms and find that our results are likely to be explained by a decrease in the willingness to take risks as well as in the confidence in institutions. We also document an increase in the anti-migrant sentiment while attitudes towards other minorities remained unchanged. We rule out the possibility of out-migration of natives or of trade-related shocks (potentially confounded with the mass-transit migration) affecting our results. Using locality-level luminosity data, we also rule out any effect driven by changes in economic activity. Finally, we find no statistically significant effects on other labor market outcomes, such as unemployment or labor force participation.
    Keywords: entrepreneurship; migration; refugee crisis
    JEL: D91 F22 L26 O10 O15
    Date: 2020–04
  24. By: Udichibarna Bose; Sushanta Mallick; Serafeim Tsoukas
    Abstract: The literature shows that rigid capital control policies adversely influence international trade, leading to external financial reforms in terms of greater cross-border access to financing, which can stimulate aggregate productivity. However, the literature overlooks the relationships among access to external financing, firm-level productivity, and exporting performance. We fill this gap by using a rich dataset of 11,612 Indian firms over the period 1988–2014 and study how a unique financial policy intervention affects firm performance. We establish a significant effect of capital-account liberalization through an export-oriented policy initiative on firms’ productivity and, consequently, on their exporting activity. Finally, we find that the benefits of the policy reform are more pronounced for financially vulnerable firms characterized by either high debt or low liquidity.
    Keywords: Productivity; Exporting; Foreign Financing; FX market liberalization
    JEL: F4 F1 G1
    Date: 2020–05
  25. By: Kym Anderson (Wine Economics Research Centre, School of Economics, University of Adelaide, Australia, and Arndt-Corden Dept of Economics, Australian National University, Canberra ACT 2601, Australia)
    Abstract: Asia’s alcohol consumption, and its retail expenditure on each of beer, distilled spirits and grape wine, have more than doubled so far this century. In the process, the mix of beverages in Asia’s consumption of alcohol has been converging on that of the west as wine’s share rises. Since Asia’s beverage production has not kept up with its expansion in demand, imports net of exports are increasingly filling the gap – especially for wine. This paper analyses trends in consumption and imports for the region and key Asian countries, and provides projections to 2025 using a new model of global beverage markets.
    Keywords: Changes in beverage tastes, premiumization of alcohol consumption, impacts of tax and trade policies, beverage market projections
    JEL: F14 F17 L66 Q13
    Date: 2020–02
  26. By: Borchert,Ingo; Gootiiz,Batshur; Magdeleine,Joscelyn; Marchetti,Juan A.; Mattoo,Aaditya; Rubio,Ester; Shannon,Evgeniia
    Abstract: This paper describes the Services Trade Policy Database, a joint initiative by the World Bank and the World Trade Organization Secretariat, which builds on a database developed by the World Bank nearly 10 years ago and draws on a recent Organisation for Economic Co-operation and Development database. The Services Trade Policy Database offers comparable information on services trade policies for 68 economies in 23 subsectors across five broad areas -- financial services, telecommunications, distribution, transportation, and professional services. The database features several improvements. First, the data are collected according to a newly developed policy classification, consistent with the earlier World Bank database and the current Organisation for Economic Co-operation and Development database, enabling a comparison of services policies over a significant period and across a large cross-section of industrial and developing economies. Second, in addition to trade policies, the database contains information on licensing conditions and data restrictions. Third, policy restrictiveness is quantified following a more systematic approach that aggregates the information within a single consistent and transparent framework. Building on these innovations will make it possible to identify global patterns of services trade policies and secular trends in policy making over the past decade.
    Keywords: International Trade and Trade Rules,Trade Policy,Rules of Origin,Trade and Multilateral Issues,Trade and Services,Transport Services
    Date: 2020–06–01
  27. By: Markusen, James R.
    Abstract: International trade economists made seminal contributions to general equilibrium theory, moving away from an emphasis on existence of equilibrium to algebraic formulations which enabled us to characterize key relationships between parameters and variables, such as that between tariffs and domestic factor prices and welfare. But the analysis remained limited in value for policy evaluation: the analysis was local, it provided only qualitative results, it was limited to very small models, and strictly interior solutions had to be assumed. The contribution of this paper is pedagogic and methodological, providing a primer for those wishing to do or teach general-equilibrium counterfactuals on (for example) structural models. I show how the tools from early local comparative statics analyses can be generalized via the use of Shepard's lemma, duality, complementarity and the Karush-Kuhn-Tucker theorem into a global, quantitative analysis of large changes in high-dimension models which also allows for regime changes and corner solutions. I then show how the resulting non-linear complementarity problem directly translates into a numerical model using GAMS (general algebraic modeling system).
    JEL: D50 D58 F50
    Date: 2020–05
  28. By: Jisang Yu; Nelson B. Villoria; Nathan P. Hendricks
    Abstract: We estimate the impact of the tariffs that U.S. export crops face on farmland rental rates. The estimation of the impact of the localized measure on the rents faces two aggregation problems that lead to identification challenges: a) aggregating tariffs across trading partners to obtain crop-specific tariffs, and b) aggregating the crop-specific tariffs across crops to obtain the localized measure. Utilizing shift-share style approaches, we find that a one percent increase in the localized tariff reduces the rents by about 2.6 - 5.3% point, which implies that the 2018 Chinese retaliatory tariffs would reduce the rents by about 2%.
    JEL: F13 F14 Q17 Q18
    Date: 2020–05
  29. By: Amiti, Mary; Kong, Sang Hoon; Weinstein, David E.
    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.
    Keywords: adjustment costs; Event studies; protection
    JEL: E22 F13 F14
    Date: 2020–05
  30. By: Wang, Jiann-Chyuan
    Abstract: The paper aims at analyzing the policy economic impact on Taiwan and providing policy recommendation.There are three purposes of this paper. First, we aim to analyze the advantages and disadvantages of the US-China trade war on Taiwan's economy. Second, we will explore whether the intensification of the trade war will trigger a global financial crisis. Third, we will discuss government’s strategy to arrange and create a conducive environment to welcome the return of Taiwanese entrepreneurs.
    Keywords: US-China trade war, Overseas Taiwanese firms returning home, F5
    Date: 2020–03
  31. By: Hartmut Egger; Simone Habermeyer
    Abstract: We set up a trade model with two countries, two sectors, and one production factor, which features a home-market effect due to the existence of trade costs. We consider search frictions and ?rm-level wagebargaininginthesectorproducingdifferentiatedgoodsandaperfectlycompetitivelabormarket in the sector producing a homogeneous good. Consumers have price-independent generalized-linear preferences over the two types of goods, covering homothetic and quasilinear preferences as two limiting cases. We show that trade between two countries that differ in their population size leads to an expansion of the differentiated goods sector and a contraction of the homogeneous good sector in the larger economy. This induces the larger country to net-export differentiated goods at the cost of a higher economy-wide rate of unemployment in the open economy (with the effects reversed for the smaller country). The welfare effects of trade depend on the preference structure. Looking at the two limiting cases, we show that the larger country is likely to bene?t from trade if preferences are homothetic,whereaslossesfromtradearepossibleifpreferencesarequasilinear. Theoppositeistrue in the smaller country. This reveals an important role of preferences for the welfare effects of trade in the presence of labor market imperfection, a result we further elaborate on in two extensions, in which we consider more general preferences and differences of countries in their per-capita income levels.
    Keywords: Preferences; Search frictions; Wage bargaining; Trade structure; Welfare and employment effects
    JEL: F12 F15 F16 D11
    Date: 2020–02
  32. By: Carrico, Caitlyn; Erwin Corong; Dominique van der Mensbrugghe
    Abstract: This memorandum describes the GTAP version 10A Multi-Region Input Output (GTAPMRIO) Data Base. GTAP-MRIO extends the standard GTAP Data Base (Aguiar et al., 2019) by additionally distinguishing bilateral trade and tariff flows by agents or so-called end-users,namely: firms, private household, government and investors. In constructing GTAP-MRIO,we employ the methodology in Carrico (2017) and update it in four ways. First, an updated concordance table is used—i.e., the United Nations Statistics Division (UNSD) 6-digit Harmonized System 2012 to Broad Economic Categories concordances revision 4 to System of National Accounts end-use framework (HStoBECtoSNA). Second, the International Trade Centre (ITC) Market Access Map (MAcMap) data is directly used in lieu of the TASTE utility (Horridge and Laborde, 2008) which is also based on MAcMap. Third, the optimization programs are updated to take advantage of grid facility in GAMS, thereby reducing MRIO data build time by 90 percent and easing MRIO data construction at the full dimensionality of GTAP data—i.e., 65-sectors and 141-regions for version 10A. Fourth, accompanying GTAPAgg2 (Horridge, 2019) and FlexAgg packages (Villoria and McDougall, 2012) are provided to aid researchers aggregate the GTAP-MRIO data.
    Date: 2020
  33. By: Ajayi, Patricia; Ogunrinola, Adedeji
    Abstract: This study provides empirical insight into the relationship between growth, trade openness, and environmental degradation in Nigeria. The autoregressive distributed lag bounds testing approach was applied on time series data from 1960-2017. Employing the Pollution Haven and Environmental Kuznets Curve hypotheses, empirical findings validate the EKC hypothesis in Nigeria in the long-run. All estimated parameters were found to have the expected signs in the short- and long-run, except population, with the expected sign only in the long-run. The analysis proves that trade openness and population aid environmental degradation in the short-run. It reveals that financial development counters environmental degradation in both the short- and long-run, and real income per capita has a positive and significant effect on environmental degradation in both the short- and long-run. The coefficient of the error correction term suggests that 62.5% of the divergence between actual and equilibrium CO2 emissions is corrected annually. Post-estimation tests employed proves the robustness of the result. The RESET test affirmed the specification of the model and the CUSUM and CUSUM of squares tests confirm the stability of the parameters. Consequently, Nigeria should foster policies that encourage the development and utilization of renewable energy to boost economic development.
    Keywords: Growth; trade openness; environmental degradation, pollution haven hypothesis, environmental Kuznets curve, sustainable development
    JEL: F1 F18 O4 O44
    Date: 2020–02
  34. By: Markus Brueckner; Ngo Van Long; Joaquin Vespignani
    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: 2020–06
  35. By: Bonadio, Barthelemy; Huo, Zhen; Levchenko, Andrei A.; Pandalai-Nayar, Nitya
    Abstract: We study the role of global supply chains in the impact of the Covid-19 pandemic on GDP growth for 64 countries. We discipline the labor supply shock across sectors and countries using the fraction of work in the sector that can be done from home, interacted with the stringency with which countries imposed lockdown measures. Using the quantitative framework and methods developed in Huo, Levchenko, and Pandalai-Nayar (2020), we show that the average real GDP downturn due to the Covid-19 shock is expected to be -31.5%, of which -10.7% (or one-third of the total) is due to transmission through global supply chains. However, ``renationalization'' of global supply chains does not in general make countries more resilient to pandemic-induced contractions in labor supply. The average GDP drop would have been -32.3% in a world without trade in inputs and final goods. This is because eliminating reliance on foreign inputs increases reliance on the domestic inputs, which are also subject to lockdowns. Whether renationalizing supply chains insulates a country from the pandemic depends on whether it plans to impose a more or less stringent lockdown than its trading partners. Finally, unilateral lifting of the lockdowns in the largest economies can contribute as much as 6-8% to GDP growth in some of their smaller trade partners.
    Keywords: COVID-19; International Transmission; Pandemic; production networks
    JEL: F41 F44
    Date: 2020–05
  36. By: Ohdoi, Ryoji
    Abstract: This study develops a two-country model to explore how financial shocks in one country affect its partner country's business cycles through international trade. Unlike existing studies, I introduce the mechanism of endogenous trade patterns, by which a shock can affect both the intensive and extensive margins of trade. I also embed the mechanism of endogenous growth into the model to indicate the potential for prolonged recessions, even for a transitory shock. I obtain the following four main findings. First, an adverse financial shock in one country induces a global recession, even in the absence of international financial transactions. Second, although the downward shift of real GDP in the partner country is not so large, it can be very prolonged. Third, the real value of exports in the partner drops more seriously than its real GDP. Finally, this drop is caused mainly by a change at the intensive margin rather than the extensive margin.
    Keywords: Eaton–Kortum model; Endogenous growth; Financial frictions; Financial shocks; International business cycles; Margins of trade
    JEL: E22 E32 E44 F11 F44 O4 O41
    Date: 2020–05
  37. By: Anderson, Kym
    Abstract: Protection from import competition was a defining feature of the birth of the Australian federation in 1901. For the next 70 years, the extent of protection grew, and broadened from mainly tariffs to also involving import licencing after World War II. There was a one-off 25% across-the-board cut in tariffs in 1973 and some dismantling of agricultural subsidies, but that was followed by the re-imposition of import quotas for the most-protected manufactured goods. Then a new reformist government began, in the mid-1980s, a long process of dismantling all protection as part of an overall economic reform program that also involved de-regulation, privatization and moving to a flexible exchange rate. The rewards included three decades of faster economic growth and an unprecedented rise in Australians' living standards. This paper provides a history of economic thought on the pros and cons of protectionism for the small, distant, natural resource-rich Australian economy and a survey of the literature on the extent, effects and political economy reasons behind the growth of Australian protection and its eventual dismantling.
    Keywords: Import Restrictions; Political economy of trade policy; price-distorting policies; sectoral assistance; tariffs
    Date: 2020–05
  38. By: Pavel Ciaian (JRC - European Commission - Joint Research Centre [Seville]); Maria Espinosa (JRC - European Commission - Joint Research Centre [Seville], Economic Analysis and Economics Policy Department, Universidad de Sevilla); Kamel Louhichi (ECO-PUB - Economie Publique - AgroParisTech - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, JRC - European Commission - Joint Research Centre [Seville]); Angel Perni (JRC - European Commission - Joint Research Centre [Seville], General Economics Department, Universidad de Cádiz)
    Abstract: This paper assesses the farm-level impacts of trade liberalisation and CAP removal across EU using IFM-CAP (Individual Farm Model for CAP Analysis). IFM-CAP is a static positive programming model developed to capture the full heterogeneity of EU farms in terms of feedback to policy representation and impacts. Simulation results show that a small set of farm-types experience an increase in income due to the improvement in prices and yields (e.g. farms spe-cialised in granivores, milk and horticulture), while farms that are most CAP subsidy dependent (e.g. specialist cattle, specialist COP and small farms) lose income by more than 12% at aggregate EU level. As much as 77% of all farms lose income if CAP is removed , while the proportion of most income vulnerable farms almost doubles.
    Abstract: Cet article évalue les impacts au niveau de l'exploitation agricole de la libéralisation du commerce et de la suppression de la PAC à travers l'UE en utilisant IFM-CAP (modèle de ferme individuel pour l'analyse de la PAC). IFM-CAP est un modèle de programmation positive statique développé pour prendre en compte la pleine hétérogénéité des exploitations agricoles de l'UE en termes de représentation et d'impact des politiques. Les résultats de la simulation montrent qu'un petit ensemble d'exploitation agricole type enregistre une augmentation de revenu en raison de l'amélioration des prix et des rendements (par exemple, les exploitations spécialisées dans les granivores, le lait et l'horticulture), tandis que les exploitations qui dépendent le plus de la PAC (par exemple celles spécialisées en bovins et en COP et les petites exploitations) perdent plus de 12% des revenus au niveau agrégé de l'UE. Jusqu'à 77% de toutes les exploitations agricoles perdent des revenus si la PAC est supprimée, tandis que la proportion des exploitations agricoles les plus vulnérables double.
    Keywords: EU- wide,FADN (Farm Accountancy Data Network),Common Agricultural Policy,Farm model,Positive Mathematical Programming,Direct payments,RICA (Réseau d'Information Comptable Agricole),Programmation Mathematique Positive,Payments directs,UE,Modèle de Ferme,Politique Agricole Commune
    Date: 2020
  39. By: Bello, Rolando T.; Pantoja, Blanquita R.; Tan, Maria Francesca O.; Banalo, Roxanne A.; Alvarez, Joanne V.; Rañeses, Florita P.
    Abstract: In the Philippines’ coconut sector, government initiatives have shifted from focusing on traditional coconut exports such as coconut oil, desiccated coconut and copra oil cake or meal to non-traditional coconut exports such as virgin coconut oil, coco sugar and coco coir. The main objectives of this study are to identify current and potential skill needs, to estimate skill gaps, and to provide recommendations for the design of effective and coherent skills development policies to support growth and expand opportunities for the creation of productive employment in the non-traditional coconut export sector. Specifically, this study: reviews the relevant skills literature and government policies and programs and private sector-led initiatives on skills and human resource development; analyses past and current statistical data on skills and employment in the coconut sector and elicits information on skills issues from key informants and focus groups.
    Keywords: skills development, coconut, export diversification
    Date: 2020
  40. By: Jacques Fontanel (CESICE - Centre d'études sur la sécurité internationale et les coopérations européennes - UPMF - Université Pierre Mendès France - Grenoble 2 - UGA - Université Grenoble Alpes - IEPG - Sciences Po Grenoble - Institut d'études politiques de Grenoble)
    Abstract: Globalization, which has been underway since the end of the 20th century, is today leading to growing insecurity, a degraded environment and growing economic and social inequalities. Selfishness as a normal behaviour demanded by the market economy and capitalism is gradually transforming a de jure democracy into a de facto plutocracy.
    Abstract: La globalisation engagée depuis la fin du XXe siècle débouche aujourd'hui sur une insécurité croissante, un environnement dégradé, l'essor des inégalités économiques et sociales. L'égoïsme comme comportement normal revendiqué par l'économie de marché et le capitalisme transforme progressivement une démocratie de droit en une ploutocratie de fait.
    Keywords: globalisation,plutocracy,democracy,globalisation Inequality,Inégalités,ploutocratie,insécurité,démocratie,insecurity
    Date: 2020–04
  41. By: Gräbner, Claudius; Tamesberger, Dennis; Heimberger, Philipp; Kapelari, Timo; Kapeller, Jakob
    Abstract: By studying the factors underlying differences in trade performance across European economies, this paper derives six different 'trade models' for 22 EU-countries and explores their developmental and distributional dynamics. We first introduce a typology of trade models by clustering countries based on four key dimensions of trade performance: endowments, technological specialization, labour market characteristics and regulatory requirements. The resulting clusters comprise countries that base their export success on similar trade models. Our results indicate the existence of six different trade models: the 'primary goods model' (Latvia, Estonia), the "finance model" (Luxembourg), the "flexible labour market model" (UK), the "periphery model" (Greece, Portugal, Spain, Italy, France), the 'industrial workbench model' (Slovenia, Slovakia, Poland, Hungary, Czech Republic), and the 'high-tech model' (Sweden, Denmark, Netherlands, Belgium, Ireland, Finland, Germany and Austria). Subsequently, we comparatively analyse the economic development and trends in inequality across these trade models. We observe a shrinking wage share and increasing personal income inequality in most of the trade models. The "high-tech model" is an exceptional case, being characterised by a relatively stable economic development and an institutional setting that managed to counteract rising inequality.
    Keywords: Trade policy,cluster analysis,European Union,growth models,trade models
    JEL: F10 F16 F43 J3 J5 K2
    Date: 2020
  42. By: Myeongwan Kim
    Abstract: The explosive growth in Chinese imports to Canada over the last two decades has had both negative and positive effects. In this paper, we look at the impact of Chinese imports on the prices Canadians pay for household consumption goods. We find Canadians have benefited from lower prices on some goods and lower inflation overall. To quantify the importance of Chinese imports for individual consumer products and map them to consumer price data, we construct concordance between products in the consumer price index (CPI) and commodities in the Harmonized Commodity Description and Coding System. We estimate that over the 2001-2011 period, cumulative inflation would have been 1.17-percentage-points higher for the total CPI had there been no change in the Chinese share of total imports in Canada. This assumes other factors are held constant. The average annual inflation for the total CPI was 2.1 per cent over the 2001-2011 period, implying that annual inflation would have been about 0.12-percentage-points higher if there had not been a surge in imports from China.
    Keywords: China Shock, Canada, Imports, Productivity, Innovation
    JEL: F62 O32 O51 O53 L60
    Date: 2020–06
  43. By: Munisamy Gopinath; Feras A. Batarseh; Jayson Beckman
    Abstract: Predicting agricultural trade patterns is critical to decision making in the public and private domains, especially in the current context of trade disputes among major economies. Focusing on seven major agricultural commodities with a long history of trade, this study employed data-driven and deep-learning processes: supervised and unsupervised machine learning (ML) techniques – to decipher patterns of trade. The supervised (unsupervised) ML techniques were trained on data until 2010 (2014), and projections were made for 2011-2016 (2014-2020). Results show the high relevance of ML models to predicting trade patterns in near- and long-term relative to traditional approaches, which are often subjective assessments or time-series projections. While supervised ML techniques quantified key economic factors underlying agricultural trade flows, unsupervised approaches provide better fits over the long-term.
    JEL: C45 F14 Q17
    Date: 2020–05

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