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on International Trade |
| By: | Fernando López-Vicente (Banco de España); Jacopo Timini (Banco de España); Nicola Cortinovis (Utrecht university) |
| Abstract: | What are the effects of trade agreements with labor provisions on trade? This question has increasingly gained traction due to the growing importance of trade agreements and the proliferation of specific clauses related to labor rights and conditions included in such agreements. So far, the literature has focused on analyzing these effects at an aggregate level, with mixed results. In this paper, we capture heterogeneous effects of trade agreements with labour provisions separating exports by the factor intensity of their production process (labor-intensive vs. non-labor-intensive). Embedding institutional comparative advantage within a gravity framework, we show that, overall, the effects of trade agreements with labor provisions are no different from those of the universe of trade agreements. However, by affecting their comparative advantage, we find that agreements including labor provisions tend to reduce labor-intensive exports from emerging and developing to advanced economies (“South-to-North” exports). |
| Keywords: | international trade, trade agreements, labor provisions, comparative advantages, gravity models |
| JEL: | F13 F14 F16 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:2017&r=all |
| By: | Benedikt Heid (School of Economics, University of Adelaide); Mario Larch (Faculty of Law, Business Management and Economics, University of Bayreuth); Yoto V. Yotov (School of Economics, LeBow College of Business, Drexel University) |
| Abstract: | We propose a simple method to identify the effects of unilateral and non-discriminatory trade policies on bilateral trade within a theoretically-consistent empirical gravity model. Specifically, we argue that structural gravity estimations should be performed with data that include not only international trade flows but also intra-national trade flows. The use of intra-national sales allows identification of the effects of non-discriminatory trade policies such as most favored nation tariffs, even in the presence of exporter and importer fixed effects. A byproduct of our approach is that it can be used to recover estimates of the trade elasticity, a key parameter for quantitative trade models. We demonstrate the effectiveness of our techniques in the case of MFN tariffs and "Time to Export" as representative non-discriminatory determinants of trade on the importer and on the exporter side, respectively. Our methods can be extended to quantify the impact on trade of any country-specific characteristics as well as any non-trade policies. |
| Keywords: | Gravity Model; Non-discriminatory Trade Policies; Tariffs; Subsidies; Time to Export; Trade Elasticity of Substitution. |
| JEL: | F10 F13 F14 F47 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:adl:wpaper:2020-06&r=all |
| By: | Lodefalk, Magnus (Örebro University); Sjöholm, Fredrik (Department of Economics, Lund University); Tang, Aili (Örebro University) |
| Abstract: | We examine if international trade improves labor market integration of immigrants in Sweden. Immigrants participate substantially less than natives in the labor market. However, trading with a foreign country is expected to increase the demand for immigrants from that country. By hiring immigrants, a firm may access foreign knowledge and networks needed to overcome information frictions in trade. Using granular longitudinal matched employer–employee data and an instrumental variable approach, we estimate the causal effects of a firm’s bilateral trade on employment and wages of immigrants from that country. We find a positive, yet heterogeneous, effect of trade on immigrant employment but no effect on immigrant wages. |
| Keywords: | Export; Import; Immigrants; Employment; Wages |
| JEL: | F16 F22 J21 J31 J61 |
| Date: | 2020–06–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lunewp:2020_012&r=all |
| By: | Catherine Fuss (Economics and Research Department, National Bank of Belgium) |
| Abstract: | After establishing that exporters obtain higher margins than non-exporters, the paper takes a new look at export premia by comparing multi-product exporters’ costs, prices and markups on the domestic and foreign markets. This firm-product-market analysis is made possible thanks to a unique dataset for Belgian manufacturing firms over 1996-2016. Firm-product estimates of marginal costs are obtained following De Loecker et al. (2016) methodology, based on firm-product production data. Combined with firm-product international transaction data, firm-product unit values can be computed separately for the domestic market and foreign markets. Markups can then be recovered at the firm- product-market level from observed unit values and estimated marginal costs. The empirical results suggest that firms select their best products, the ones with lower marginal cost, for foreign markets. They partly translate this cost advantage into lower prices, but essentially extract higher margins from these. |
| Keywords: | markups, multi-product firms, pricing decisions, international trade |
| JEL: | D22 D24 F14 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbb:reswpp:202006-383&r=all |
| By: | Kuznetsov, Dmitriy (Кузнецов, Дмитрий) (The Russian Presidential Academy of National Economy and Public Administration) |
| Abstract: | In the presented paper cross-sectional and time-series patterns of the formation of the export product scope of Russian manufacturing enterprises are studied. The main conclusions of the analysis can be formulated as follows. Firstly, in the detailed data of Russian exports indicate that the relatively greater importance of the specific competencies of firms (specific productivity) compared to the efficiency of managing business processes in an enterprise (company-wide productivity). Secondly, there is a dependence of the Russian firms export product scope and its concentration on the various characteristics of importing countries, reflecting, among other things, the proximity of the market and the local level of competition. It is further demonstrated that the shocks of competition levels in export markets translate into firm productivity shocks through redistribution of resources within firms. These shocks can make a significant contribution to the dynamics of productivity of manufacturing enterprises. Thirdly, the most successful products of the company are products of high quality. Fourth, the formation of the export product scope of Russian firms takes place mainly in the direction of goods close to the current basket of export firms in terms of labor structure, as well as the structure of intermediate consumption. To a somewhat lesser extent, the “export proximity” of goods is associated with vertical production ties between sectors. In turn, the proximity of the product to the comparative advantages of the region increases the likelihood of exporting this product and is positively related to the volume of exported goods. |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:rnp:wpaper:032036&r=all |
| By: | Evans, S.; Mehling, M.; Ritz, R.; Sammon, P. |
| Abstract: | As part of the European Green Deal, the EU is considering the introduction of a Border Carbon Adjustment (BCA) to ensure that the price of imports into the EU more accurately reflects the environmental costs of their carbon content. BCAs could be an alternative to free allocation to trade-exposed sectors as a measure to address the risk of carbon leakage in the EU’s Emissions Trading System. While a BCA for exports is not categorically excluded, it is less likely to be consistent with WTO rules and therefore less likely to be proposed than an import-only BCA. A key point is that replacing free allocation by an import-only BCA would weaken the competitiveness of EU producers in foreign markets. The reason is that free allocation also helps support the cost competitiveness of domestic products that are exported to markets outside the EU. Therefore, a move to import-only BCAs does not necessarily make redundant the continued use of free allocation to help safeguard overall industrial competitiveness. While combining an import BCA with free allocation can increase the risk of legal challenges, such risks may be reduced with an appropriate design. More broadly, policymakers need to navigate a complex trade-off between competitiveness support, a stronger carbon price signal, and extra fiscal revenue. |
| Keywords: | Border carbon adjustment, carbon pricing, competitiveness, international trade |
| JEL: | H23 K33 Q54 |
| Date: | 2020–05–06 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:2036&r=all |
| By: | Iciar Pavez (UMR MOISA - Marchés, Organisations, Institutions et Stratégies d'Acteurs - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - INRA - Institut National de la Recherche Agronomique - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques); Jean Marie Codron (UMR MOISA - Marchés, Organisations, Institutions et Stratégies d'Acteurs - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - INRA - Institut National de la Recherche Agronomique - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques); Pasquale Lubello (UMR MOISA - Marchés, Organisations, Institutions et Stratégies d'Acteurs - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - INRA - Institut National de la Recherche Agronomique - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques, Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Maria Cecilia Florêncio (Universidade Federal Rural de Pernambuco, Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier) |
| Abstract: | Biosecurity regulations and standards govern international agricultural inter-firm transactions. Drawing mainly on new institutional economics, our study offers insights into the institutional factors, at both the macro and meso levels, that influence the choice of inter-firm contracts for Chilean apple exports. First and foremost, it examines the influence of the Sanitary and Phytosanitary (SPS) provisions included in trade agreements signed by Chile with its trade counterparts on the choice of alternative contracts displaying different degrees of completeness. It also focuses on the institutions in the importing countries, the legal institutions enforcing contracts, the efficiency of logistics and the effect of hidden informal rules such as corruption, on the choice between free consignment, minimum guaranteed and sale contracts. We also explore the private institutions, primarily linked to direct imports by supermarkets. The results of our econometric analysis show that less complete contracts, i.e. free consignment and minimum guaranteed arrangements, are chosen when exporting to countries with safe business environments and higher number of SPS provision in international trade agreements. On the contrary, when exporting to non-reliable countries, exporters tend to protect themselves through more complete contracts, i.e. sale contracts. We found evidence that direct exports to supermarkets are more prone to occur under sale contracts which suggest the dual function of contracts, both as a safeguard and as a coordination tool to adopt specific customers' requirements. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02622435&r=all |
| By: | Amat Adarov (The Vienna Institute for International Economic Studies, wiiw); Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | The study analyses the relationships between capital dynamics, productivity, global value chains and foreign direct investment using panel data techniques. Among other results, we confirm the high importance of tangible and intangible ICT capital for productivity and GVC integration. We examine the extent of underinvestment in ICT in the EU relative to other major economies and identify bottlenecks for efficient capital allocation. The sluggish economic performance of the EU in the post-crisis period has been further challenged by the COVID-19 outbreak. Consolidating policy efforts to facilitate ICT investment, tackling the barriers to ICT adoption and broad-based digitalisation are critical for the EU in order to maintain a competitive edge and unlock new growth opportunities in the new normal. |
| Keywords: | Productivity, digitalisation, ICT capital, FDI, global value chains, barriers to ICT investments, intangible capital |
| JEL: | F14 F15 F21 E22 O47 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:wii:rpaper:rr:446&r=all |
| By: | Noha Elboghdadly (University of Bath, UK and Alexandria University, Egypt); Michael Finus (University of Graz, Austria) |
| Abstract: | Border carbon adjustments (BCAs) have been suggested as a measure to reduce carbon leakage in the presence of unilateral climate policies and/or to enforce cooperative climate agreements. In an intra-industry trade model, this paper studies whether and under which conditions a sequence of escalating threats of implementing BCA-measures could be successful in enforcing a fully cooperative agreement. We start from a situation where moving from non-cooperative production-based carbon taxes to a socially optimal tax is not attractive to the environmentally less concerned country. We then test whether the threat of imposing BCA-measures, in the form of import tariffs or, additionally, complemented by export rebates, will enforce cooperation. We show that import tariffs are the least distortionary policy instrument but the weakest threat, and import tariffs with a full export rebate is the most distortionary instrument if implemented but the most effective threat to enforce cooperation. In an escalating penalty game, we determine the subgame-perfect equilibrium path along which threats must be deterrent but also credible. We show that BCA-measures help to enforce cooperation, reduce global emissions and are welfare improving if they need to be implemented. However, whenever full cooperation would generate the highest global welfare gains, BCAs fail to establish cooperation, a version of the paradox of cooperation, as proposed by Barrett (1994). |
| Keywords: | Border carbon adjustments; escalating penalties; enforcement of cooperation; carbon leakage. |
| JEL: | C7 F12 F18 Q58 H23 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:grz:wpaper:2020-11&r=all |
| By: | Sophie Drogue (ECO-PUB - Economie Publique - AgroParisTech - INRA - Institut National de la Recherche Agronomique); Lubica Bartova (Slovak University of Agriculture) |
| Abstract: | Applied trade analysis and modeling would not be possible without databases. Over the last few years, a considerable effort has been devoted to put together and harmonize a huge amount of data. This has lead to the construction of large-scale datasets on trade (imports and exports in volume and value terms). In parallel, increasing attention has been devoted to measuring tariffs and other trade barriers. These efforts are still under way. It is only recently that large-scale models, for example, have taken into account the lower tariffs applied under preferential agreements (the former generation of models only considered the "bound" tariffs that act as a ceiling in many countries). The changes resulting from the introduction of better data on tariffs have been very significant, and many institutions have revised considerably their estimates of, say, gains resulting from trade liberalization (Ackerman 2005). However, empirical difficulties faced by modelers suggest that there is still a need for improvement, especially in the area of applied tariffs and tariff rate quotas. The aim of this study is to review the main data sources dealing with world tariffs and trade. After discussing some issues and methodology, we provide a brief description of the main datasets available in terms of the origin of the data, its accessibility, reliability and shortcomings. |
| Date: | 2020–06–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02814480&r=all |
| By: | Imbs, Jean; Pauwels, Laurent |
| Abstract: | Conventional measures of openness are based on direct trade. They imply foreign shocks are irrelevant to sectors that do not trade directly across borders, e.g., services. But shocks propagate via the supply chain: Sectors that trade indirectly across borders via downstream linkages are affected by foreign shocks. We introduce a measure of openness based on indirect trade, computing the fraction of downstream linkages that cross a border. The measure, labeled "High Order Trade" (HOT), is computed using recently released data on international input-output linkages for 50 sectors in 43 countries, including services. HOT correlates positively with conventional trade measures across countries, much less across sectors as many more are open according to our measure. Some services are among the most open sectors in some economies, and services generally rank at the middle of the distribution. HOT correlates significantly with sector productivity, growth, and synchronization; conventional measures of trade do not. We introduce an instrument for HOT using network theory. We show HOT causes productivity and synchronization, but not growth. |
| Keywords: | Global supply chains; growth; Measuring Openness; productivity; Synchronisation |
| JEL: | E32 F44 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14653&r=all |
| By: | Faude, Benjamin |
| Abstract: | What are the implications of the proliferating preferential trade agreements (PTAs) for the liberal trade order? Many scholars and practitioners see large increases in PTAs as a destabilizing factor that undermines core features of the post-war international trade system. By contrast, this paper argues that the accelerated growth of PTAs since the mid-1990s enhances the resilience of the liberal trade order. PTAs increase the ability of the order to accommodate heterogeneous preferences and distributive conflicts. They represent a continuation of a longer path of liberalization set in motion by the General Agreement on Tariffs and Trade (GATT). This path-dependent development created conditions for a gradual expansion of the membership and the regulatory scope of the GATT/WTO system, but also heightened levels of preference heterogeneity and distributive conflicts. By enabling groups of states with homogenous preferences to layer new rules on top of the multilateral GATT/WTO system, PTAs enable the continuation of the liberalization path. Consequently, PTAs have served as complements rather than to undermine the WTO. |
| JEL: | L81 |
| Date: | 2020–04–29 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:103927&r=all |
| By: | Huysmans, Martijn; Curzi, Daniele |
| Abstract: | To protect distinctive regional foods, the European Union (EU) has a legal scheme covering over 1,000 Geographical Indications (GIs) for food items such as Parma ham and Gouda Holland. Using Eurostat Comext export data 2004-2018 for cheeses at the CN8 level, this paper tests whether past protection of GIs through 11 Free Trade Agreements (FTAs) has increased trade in them. The answer matters for trade policy, since the protection of at least some GIs has been a red line in EU FTA negotiations. The analysis is set in a standard gravity-model framework, using a pseudo-Poisson maximum likelihood (PPML) approach to account for the issue of zero-trade flows. We find that legal protection of GIs in FTAs does not significantly increase trade in them. Our main suggested policy implication is that the EU should focus on external promotion of its GIs rather than asking trading partners for stronger legal protection. |
| Keywords: | Agricultural and Food Policy, International Relations/Trade |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aesc20:303703&r=all |
| By: | Kohnert, Dirk (GIGA - German Institute of Global and Area Studies, Hamburg) |
| Abstract: | ABSTRACT & RÉSUMÉ: Despite the Corona crisis, London is pushing ahead with the implementation of Brexit. This will have a profound impact not only on the EU but also on Africa. The British government's vision of a reinvigorated 'Global Britain' relies heavily on a reinforced cooperation with Commonwealth Sub-Saharan Africa. Already the temporary closure of manufacturing supply chains between China and the rest of the world because of the pandemic seriously affected economic activity in GB and the EU. However, African commodity exporters such as Nigeria, South Africa, and Kenya will likely bear the brunt of both the direct and indirect effects of this weaker demand. This will add up to the economic effects of the spread of Corona in Africa. Most likely the vulnerable and the poor in Africa's informal sector will have to suffer the most by both health hazards and the economic decline. RÉSUMÉ: Malgré la crise de Corona, Londres poursuit la mise en œuvre du Brexit. Cela aura un impact profond non seulement sur l'UE mais aussi sur l'Afrique. La vision du gouvernement britannique d'une «Grande-Bretagne mondiale» revigorée repose largement sur une coopération renforcée avec l'Afrique subsaharienne du Commonwealth. Déjà, la fermeture temporaire des chaînes d'approvisionnement manufacturières entre la Chine et le reste du monde en raison de la pandémie a sérieusement affecté l'activité économique en GB et dans l'UE. Cependant, les exportateurs africains de matières premières tels que le Nigeria, l'Afrique du Sud et le Kenya supporteront probablement le poids des effets directs et indirects de cette demande plus faible. Cela s'ajoutera aux effets économiques de la propagation de Corona en Afrique. Les personnes vulnérables et pauvres du secteur informel africain devront très probablement souffrir le plus des risques sanitaires et du déclin économique. |
| Date: | 2020–06–16 |
| URL: | http://d.repec.org/n?u=RePEc:osf:africa:tdbgu&r=all |
| By: | Sebastian Heise |
| Abstract: | The COVID-19 pandemic has had a significant impact on trade between the United States and China so far. As workers became sick or were quarantined, factories temporarily closed, disrupting international supply chains. At the same time, the trade relationship between the United States and China has been characterized by rising protectionism and heightened trade policy uncertainty over the last few years. Against this background, this post examines how the recent period of economic disruptions in China has affected U.S. imports and discusses how this episode might impact firms’ supply chains going forward. |
| Keywords: | COVID-19; supply chains; trade |
| JEL: | F00 F1 |
| Date: | 2020–05–12 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednls:87954&r=all |
| By: | Biavaschi, Costanza; Facchini, Giovanni |
| Abstract: | What is the role played by immigrant groups in shaping migration policy in the destination country? We address this question exploiting cross-state variation in U.S. citizens' access to the franchise, due to the presence of residency requirements. First we document that naturalized immigrants were more geographically mobile than natives. Second, congressmen representing districts with large numbers of naturalized U.S. citizens were more likely to support an open migration policy, but this effect is reversed once we account for residency requirements. Our results indicate that electoral accountability of U.S. congressmen to naturalized immigrants was a key factor in explaining this outcome. |
| Keywords: | immigration policy; political economy |
| JEL: | F22 J61 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14684&r=all |
| By: | Esther Mirjam GIRSBERGER |
| Abstract: | This paper investigates the impact of regional migration on average wages and wage inequality in the West African Economic and Monetary Union (UEMOA). We exploit a unique data from a unified labour force household survey which covers natives and migrants in the seven economic capitals of the region. We estimate the counterfactual wage distributions of UEMOA migrants in absence of migration to evaluate the effect of regional migration. We find that regional migration increases the average wage by 1.8% and it entails a decrease in inequality in the UEMOA region between -1.5% (for the Gini coefficient) and -4.5% (for the interquartile ratio). The decrease in inequality in the UEMOA region is driven by a reduction in inequality between countries, while the migration effect on within-inequality differs across countries and remains overall small. When accounting for possible general equilibrium effects of migration on stayers’ wages, we find a similar or even stronger decrease in inequality, yet a smaller increase in the average wage. With general equilibrium effects, the effect on the average wage is smaller because UEMOA migrants tend to be (negatively-)intermediately selected (both at origin and destination) and depress the average wage of natives in their destination and lead to a slight increase of the average wage among natives in their sending countries, with the former effect dominating. Moreover, regional migration in the UEMOA mostly flows from countries with low wages to countries with higher wages. In combination with the general equilibrium effects described above this leads to a larger decrease in between-country inequality than in a setting with exogenous wages. |
| Keywords: | Bénin, Burkina Faso, Côte d'Ivoire, Mali, Niger, Sénégal, Togo |
| JEL: | Q |
| Date: | 2019–03–15 |
| URL: | http://d.repec.org/n?u=RePEc:avg:wpaper:en9446&r=all |
| By: | Borchert, Ingo (University of Sussex Business School); Larch, Mario (University of Bayreuth); Shikher, Serge (United States International Trade Commission); Yotov, Yoto (Drexel School of Economics) |
| Abstract: | The objective of this paper is threefold. First, we test and validate the new International Trade and Production Database for Estimation (ITPD-E) for disaggregated gravity estimations. Second, we capitalize on the rich industry dimension of the ITPD-E to obtain benchmark gravity estimates for a wide range (170) of industries. We document differences and similarities of the impact of the standard gravity variables across the broad sectors of Agriculture, Mining and Energy, Manufacturing, and Services. Third, we use the large number of disaggregated gravity estimates to evaluate the stylized facts and best practice recommendations for gravity estimations. We compare the results obtained using Poisson Pseudo Maximum Likelihood (PPML) estimation with the results from several alternative specifications, including OLS, PPML without the zero trade flows, PPML with interval data, PPML without domestic trade, and PPML without the proper set of fixed effects to control for the multilateral resistances in gravity regressions that pool across industries. The findings from these experiments confirm and reinforce some results from the literature while challenging others. |
| Keywords: | domestic trade; internal trade; domestic national trade; gravity estimation |
| JEL: | F10 F13 F14 |
| Date: | 2020–06–18 |
| URL: | http://d.repec.org/n?u=RePEc:ris:drxlwp:2020_008&r=all |
| By: | Bergin, P. R.; Corsetti, G. |
| Abstract: | In the wake of Brexit and the Trump tariff war, central banks have had to reconsider the role of monetary policy in managing the economic effects of tariff shocks, which may induce a slowdown while raising inflation. This paper studies the optimal monetary policy responses using a New Keynesian model that includes elements from the trade literature, including global value chains in production, firm dynamics, and comparative advantage between two traded sectors. We find that, in response to a symmetric tariff war, the optimal policy response is generally expansionary: central banks stabilize the output gap at the expense of further aggravating short-run inflation---contrary to the prescription of the standard Taylor rule. In response to a tariff imposed unilaterally by a trading partner, it is optimal to engineer currency depreciation up to offsetting the effects of tariffs on relative prices, without completely redressing the effects of the tariff on the broader set of macroeconomic aggregates. |
| Keywords: | tariff shock, tariff war, optimal monetary policy, comparative advantage, production chains |
| JEL: | F40 |
| Date: | 2020–04–06 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:2026&r=all |
| By: | Asongu, Simplice; Odhiambo, Nicholas |
| Abstract: | The research assesses how information and communication technology (ICT) modulates the effect of foreign direct investment (FDI) on economic growth dynamics in 25 countries in Sub-Saharan Africa for the period 1980-2014. The employed economic growth dynamics areGross Domestic Product (GDP) growth, real GDP and GDP per capita while ICT is measured by mobile phone penetration and internet penetration. The empirical evidence is based on the Generalised Method of Moments. The study finds that both internet penetration and mobile phone penetration overwhelmingly modulate FDI to induce overall positive net effects on all three economic growth dynamics. Moreover, the positive net effects are consistently more apparent in internet-centric regressions compared to “mobile phone”-oriented specifications. In the light of negative interactive effects, net effects are decomposed to provide thresholds at which ICT policy variables should be complemented with other policy initiatives in order to engender favorable outcomes on economic growth dynamics. Practical and theoretical implications are discussed. |
| Keywords: | Economic Output; Foreign Investment; Information Technology; Sub-Saharan Africa |
| JEL: | E23 F21 F30 L96 O55 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:101136&r=all |
| By: | Beck, Thorsten; Wagner, Wolf |
| Abstract: | Policies that curtail social and economic activities during a pandemic are predominantly decided upon at the national level, but have international ramifications. In this paper we examine what type of inefficiencies this may create and how cooperation across countries may improve outcomes. We find that inefficiencies arise even among completely identical countries. We show that countries are likely to choose excessively lenient policies from the perspective of world welfare in later stages of the pandemic. This provides a rationale for setting minimum containment standards internationally. By contrast, in early and intermediate stages of the pandemic, national containment policies may also be excessively strict. Whether or not this is the case depends on country's degree of economic integration relative to (outward and inward) mobility of people. |
| Keywords: | Covid-19 pandemic; cross-border cooperation; externalities |
| JEL: | F2 F5 F6 I1 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14668&r=all |
| By: | Stefan Borsky (University of Graz, Austria); Hannah B. Hennighausen (University of Graz, Austria); Andrea Leiter (University of Innsbruck, Austria); Keith Williges (University of Graz, Austria) |
| Abstract: | International trade in wildlife is one contributing factor to zoonotic disease risk. Using descriptive statistics, this paper shows that in the last decades, the volume and pattern of internationally traded wildlife has changed considerably and, with it, the zoonotic pathogens that are traded. In an econometric analysis, we give evidence that an international environmental trade agreement could be used to limit the spread of zoonotic pathogens and disease. More specifically, combining zoonotic disease data with wildlife trade data from the Convention on International Trade in Endangered Species of Wildlife and Fauna (CITES), we show that making trade requirements more stringent leads to a decrease in the number of animals traded and, incidentally, also the number of zoonotic diseases that are traded. Our results contribute to the discussion of policy measures that manage the spread of zoonotic diseases. |
| Keywords: | Zoonotic diseases; international wildlife trade; CITES; gravity model. |
| JEL: | F18 F53 Q27 Q54 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:grz:wpaper:2020-12&r=all |
| By: | James R. Markusen |
| 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 F10 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27219&r=all |
| By: | Glitsch, Julian; Godart, Olivier N.; Görg, Holger; Mösle, Saskia; Steglich, Frauke |
| Abstract: | German Foreign Direct Investment (FDI) in Africa is lagging behind China, France, the Netherlands, the UK, the US, and other economies. It represented only 1 percent of the German total FDI stock abroad in 2018 and is concentrated in few African countries. Overall, around 850 German firms have roughly 200,000 employees on the African continent (as of 2017). Compared with the main sending countries, German FDI is more concentrated in manufacturing as opposed to the natural resources sector. Germany has engaged in various proactive policies to encourage FDI, including in Africa. For example, the Federal Government offers investment guarantees to German firms to cover political risks, which are often high in developing and emerging countries. German Chambers of Commerce abroad provide information on the local business environment, local investment opportunities and partners and thus aim to bridge information gaps often hindering FDI. More recently, new initiatives such as "German Desks" and "AfricaConnect" were introduced. They rely on private-public partnerships to facilitate access to local business opportunities but also to third markets in neighboring countries. Based on an analysis of German FDI in 115 countries since 2010, we confirm that German Chambers of Commerce are related to a higher German FDI stock in their country of location. Moreover, we find that German investment guarantees help to reduce negative effects of low institutional quality. They are nevertheless only a second best option as compared to improving the national institutional environment. This is particularly true in the African context if the goal is to increase significantly the number of German firms active on the continent. Recipient countries have also developed tools to attract FDI including "Investment Promotion Agencies" (IPAs) and "Special Economic Zones" (SEZs), aiming at compensating for weaknesses in the national business environment. While there is some evidence in the literature about IPAs as investment facilitators, the evidence is rather mixed concerning SEZs. In our analysis of German FDI, we do not find a significant correlation between the presence of SEZs and the German FDI stock. Assessing the impact of very recent initiatives such as the "German Desks" and "AfricaConnect" is less straightforward as they are still in their infancy. They have the potential to reduce costly information barriers to FDI. Nevertheless, their beneficial effect on German FDI may take time to materialize and depends strongly on a business friendly institutional environment and cross border openness between African countries to FDI and trade. |
| Keywords: | Africa,Foreign Direct Investment,Investment Promotion |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:kcgpps:5&r=all |
| By: | Douadia Bougherara (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Carole Ropars-Collet (SMART - Structures et Marché Agricoles, Ressources et Territoires - AGROCAMPUS OUEST - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Jude Saint-Gilles (SMART - Structures et Marché Agricoles, Ressources et Territoires - AGROCAMPUS OUEST - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | We use Almost Ideal Demand Systems (AIDS) models estimated by the nonlinear seemingly unrelated regression (SUR) method on scanner data (i) to examine the demand for ecolabeled food products (organic and fair trade) as a function of the good having a private label (PL) or a national brand (NB) and (ii) to assess the impact of information campaigns promoting organic and fair trade products. We find that while demand is elastic for NB organic milk and NB fair trade coffee, it is inelastic for their PL counterpart. As for organic eggs, demand is always inelastic. Cross-price elasticities show substitutability between ecolabeled and conventional goods but only within the NB goods (milk and eggs) and within the PL goods (milk and coffee), but also complementarity between NB conventional and PL ecolabeled goods (milk and coffee). Finally, we find that while information campaigns increase the predicted expenditure shares of PL organic milk by 33%, of NB fair trade coffee by 50%, they decrease the predicted expenditure shares of PL conventional eggs but only by 3%. These effects are non-lasting. |
| Keywords: | organic,fair trade,information campaign |
| Date: | 2020–06–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02790604&r=all |
| By: | Agbahey, Johanes; Siddig, Khalid; Grethe, Harald |
| Abstract: | Results of general equilibrium models are sensitive to model parameterization and specification. The role of macroeconomic closures and the effect of trade elasticities are documented in the literature, but there is no systematic analysis of the implications of different labor supply specifications for the effect of shocks to labor markets. This study analyzes these implications, using data for the West Bank economy and a general equilibrium model with four different labor market specifications. The findings indicate that increased Palestinian employment in Israel leads to changes in real GDP in the range of -1.8% to +3.4%, depending on the model specification. This wide range of effects on macroeconomic aggregates stems from the definition of the production boundary, the implicit assumptions on the opportunity cost of labor in activities outside the production boundary, and the conditions for a transfer of labor across the boundary. Economic theory indicates that the labor-leisure trade-off is the most consistent framework for modeling labor supply decisions. However, in the absence of data for activities outside the SNA boundary, the full-employment assumption may be the second-best alternative, although it risks overstating the changes in real wage rates. The surplus labor and upward-sloping labor supply curve specifications both tend to understate the increases in wage rates and overstate the welfare gains. |
| Keywords: | Agricultural and Food Policy, Agricultural Finance, Labor and Human Capital, Research Methods/ Statistical Methods |
| Date: | 2020–06–24 |
| URL: | http://d.repec.org/n?u=RePEc:ags:huiawp:303829&r=all |
| By: | Pinelopi K. Goldberg; Tristan Reed |
| Abstract: | What is the pathway to development in a world with less international integration? We answer this question within a model that emphasizes the role of demand-side constraints on national development, which we identify with sustained poverty reduction. In this framework, development is linked to the adoption of an increasing returns to scale technology by imperfectly competitive firms, who need to pay the fixed setup cost of switching to that technology. Sustained poverty reduction is measured as a continuous decline in the share of the population living below $1.90/day PPP in 2011 US dollars over a five year period. This outcome is affected in a statistically significant and economically meaningful way by both domestic market size, which is measured as function of the income distribution, and international market size, which is measured as a function of legally-binding provisions to international trade agreements, including the General Agreement on Tariffs and Trade, the World Trade Organization and 279 preferential trade agreements. Counterfactual estimates suggest that, in the absence of international integration, the average resident of a low and lower-middle income country does not live in a market large enough to experience sustained poverty reduction. |
| JEL: | F10 F13 F15 L10 L16 O10 O14 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27286&r=all |
| By: | PINSHI, Christian P. |
| Abstract: | COVID-19 is spreading at a rate that could cause fear for international trade. In the past three months, the total number of confirmed cases has increased. The virus has confined more than half of the planet, contaminating the functioning of industries, dysfunctioning infrastructure at the national level, such as health care, transport, commerce and public services. The slowdown in production in China has had effects worldwide, reflecting China's growing importance in global supply chains and in commodity markets. The Democratic Republic of the Congo (DRC), where foreign trade represents on average 60% of its economy, is severely affected by this pandemic. The economy is in recession, prices continue to climb, the value of the currency continues to depreciate and leads to a loss of confidence. |
| Keywords: | COVID-19, International trade, economic growth |
| JEL: | F43 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:101071&r=all |
| By: | Pasquale Lubello (UMR MOISA - Marchés, Organisations, Institutions et Stratégies d'Acteurs - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - INRA - Institut National de la Recherche Agronomique - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques, Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Jean Marie Codron (UMR MOISA - Marchés, Organisations, Institutions et Stratégies d'Acteurs - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - INRA - Institut National de la Recherche Agronomique - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques); Vincent Mathieu-Hurtiger (CTIFL - Centre Technique Interprofessionnel des Fruits et Légumes) |
| Abstract: | The aim of this paper is to illustrate the concept of path dependence through the case of a cold treatment technique used in the international apple trade during sea transit to prevent the introduction or dissemination of quarantine organisms in importing countries. We show that this technique is now systematically required and functions as a "de facto" standard, despite the existence of potentially less costly, and equally effective, alternative treatment methods. Drawing on the institutional literature on path dependence, we show that the negotiation costs that an exporting country would have to bear in order to have its trading partners accept a more efficient alternative method can be so high that it becomes preferable to continue using the current technique despite its higher adoption cost. |
| Abstract: | Dans cet article, les auteurs illustrent le concept de dépendance de sentier avec le cas d'un dispositif de traitement au froid utilisé pendant le transit maritime dans le commerce international des pommes pour empêcher l'introduction ou la dissémination d'organismes de quarantaine dans les pays importateurs. Ils montrent que ce dispositif est aujourd'hui systématiquement requis et fonctionne comme une norme de facto malgré l'existence de modalités de traitement alternatives potentiellement moins onéreuses et tout aussi efficaces. Conformément au cadre théorique mobilisé, les auteurs indiquent les coûts de négociation qu'un pays exportateur devrait supporter pour faire accepter à ses partenaires commerciaux un dispositif alternatif plus efficient, peuvent s'avérer si élevés qu'il devient préférable de continuer à utiliser le dispositif en usage malgré son coût d'adoption supérieur. |
| Keywords: | international trade,cold treatment,path dependence,negotiation cost,commerce international,pomme,fruit frais,traitement au froid,dépendance de sentier,coût de négociation,apple |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02624995&r=all |
| By: | Nandonde, Felix; Adu-Gyamfi, Richard; Mmusi, Tinaye; Wamalwa, Herbert; Asongu, Simplice; Opperman, Johannes; Makindara, Jeremiah |
| Abstract: | In recent decades, the impact of South African foreign direct investment in Africa has been captured by research and policy. This paper investigates linkages and spillover effects of South African foreign direct investment in Botswana and Kenya. The study uses primary data to investigate qualitative implications. The findings reveal that South African firms operate in sectors including retail, food-processing, and information and communication technology. Linkages forged in these sectors include supply, employee, joint venture, service, and institutional nexuses. Supply and service linkages create observable spillovers which point to the fact that younger local firms tend to benefit from South African firms in terms of technology transfer and training opportunities. Host country policymakers are therefore encouraged to provide favourable incentives for foreign direct investment to promote entrepreneurship. Other policy implications are also discussed. |
| Keywords: | Foreign direct investment, linkages, spillover effects, South Africa, Botswana, Kenya |
| JEL: | E23 F21 F30 L96 L98 O55 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:101137&r=all |
| By: | Francesco Campo (University of Milano Bicocca); Mariapia Mendola (University of Milano Bicocca, IZA, LdA and CefES); Andrea Morrison (ICRIOS-Bocconi University and Utrecht University); Gianmarco Ottaviano (Bocconi University, BAFFI-CAREFIN, IGIER, CEP, CEPR and IZA) |
| Abstract: | A possible unintended but damaging consequence of anti-immigrant rhetoric, and the policies it inspires, is that they may put high-skilled immigrants off more than low-skilled ones at times when countries and businesses intensify their competition for global talent. We investigate this argument following the location choices of thousands of immigrant inventors across US counties during the Age of Mass Migration. To do so we combine a unique USPTO historical patent dataset with Census data and exploit exogenous variation in both immigration flows and diversity induced by former settlements, WWI and the 1920s Immigration Acts. We find that coethnic networks play an important role in attracting immigrant inventors. However, we also find that immigrant diversity acts as an additional significant pull factor. This is mainly due to externalities that foster immigrant inventors’ innovativeness. These findings are relevant for today’s advanced economies that have become major receivers of migrant flows and,in a long-term perspective,have started thinking about immigration in terms of not only level but also composition. |
| URL: | http://d.repec.org/n?u=RePEc:csl:devewp:wp464&r=all |
| By: | Alviarez, Vanessa; Head, Keith; Mayer, Thierry |
| Abstract: | Multinational acquisitions, unlike greenfield investments, can subtract from the number of active competitors. The outcomes for consumers depend on the change in markups and whether new owners implement significant quality or productivity improvements. We assess the consequences of multinational acquisitions in beer and spirits. Rather than confining the study to an individual country, we apply recent methods with minimal data requirements to conduct a worldwide evaluation. After correcting for severe limited mobility bias, owner fixed effects contribute very little to the performance of brands. On average, foreign ownership tends to raise costs and lower appeal. Using the estimated model, we simulate the consequences of counterfactual national merger regulation. The US beer price index would be 4--7\% higher had competition authorities not forced divestitures. On the other hand, up to 30\% savings could have been obtained in Latin America by emulating the pro-competition policies of the US and EU. |
| Keywords: | brands; competition policy; Concentration; firm effects; frictions; Markups; mergers and acquisitions; multinationals; oligopoly |
| JEL: | F12 F23 F61 L13 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14628&r=all |
| By: | Boehm, Christoph; Levchenko, Andrei A.; Pandalai-Nayar, Nitya |
| Abstract: | We propose a novel approach to estimate the trade elasticity at various horizons. When large countries change Most Favored Nation (MFN) tariffs, small trading partners that are not in a preferential trade agreement experience plausibly exogenous tariff changes. The differential growth rates of imports from these countries relative to a control group â?? countries not subject to the MFN tariff scheme â?? can be used to identify the trade elasticity. We build a panel dataset combining information on product-level tariffs and trade flows covering 1995-2017, and estimate the trade elasticity at short and long horizons using local projections (Jordà , 2005). Our main findings are that the elasticity of tariff-exclusive trade flows in the year following the exogenous tariff change is about â??0.7, and the long-run elasticity ranges from â??1.5 to â??2. The welfare-relevant long-run trade elasticity is about â??0.6. Our long-run estimates are smaller than typical in the literature, and it takes 7-10 years to converge to the long run, implying that (i) the welfare gains from trade are high and (ii) there are substantial market penetration costs to accessing new customers. |
| Keywords: | Trade Elasticity |
| JEL: | F14 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14645&r=all |
| By: | Malakhov, Vladimir (Малахов, Владимир) (The Russian Presidential Academy of National Economy and Public Administration); Simon, Mark (Симон, Марк) (The Russian Presidential Academy of National Economy and Public Administration); Motin, Alexander (Мотин, Александр) (The Russian Presidential Academy of National Economy and Public Administration); Letnyakov, Denis (Летняков, Денис) (The Russian Presidential Academy of National Economy and Public Administration); Kascian, Kirill (Касцян, Кирилл) (Center for the Study of Ethnic and Linguistic Diversity (Prague)); Novikov, Kirill (Новиков, Кирилл) (The Russian Presidential Academy of National Economy and Public Administration) |
| Abstract: | International migration is so diverse, complex and controversial that the development of a coherent approach to its regulation is perhaps one of the most difficult problems in the emerging system of international governance. First of all, there is a conflict between migration policy and international law. Migration policy is considered the prerogative of nation-states, and the latter are guided by the imperatives of "national egoism." At the same time, the laws of national states enshrined the obligations to protect human rights formulated in international law. For all the severity of this collision, it cannot be argued that it is absolutely insoluble. Its solution (which each time occurs ad hoc) consists in balancing between pragmatic egoism and moral imperatives. A typical example of such ad hoc balancing is the decision of Angela Merkel to cancel the Dublin Agreement in September 2015. A number of observers argued that humanitarian rhetoric at the time of the decision to simultaneously allow an unprecedented number of refugees into the country was nothing more than a cover for a perfectly rational calculation. The political and legal dimension of the problem also lies in the opposition of two attitudes regarding the optimal immigration policy: “open”, “liberal”, on the one hand, and “closed”, “illiberal”, on the other. The personification of these two poles is the dispute between Angela Merkel and Victor Orban. |
| Keywords: | international migration, international law, global governance, national interest, international institutions, russian migration policy |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:rnp:wpaper:032037&r=all |
| By: | Juvenal, Luciana; Petrella, Ivan |
| Abstract: | When analyzing terms of trade shocks, it is implicitly assumed that the economy responds symmetrically to changes in export and import prices. Using a sample of developing countries our paper shows that this is not the case. We construct export and import prices using commodity and manufacturing price data matched with trade shares and separately identify export price, import price and global demand shocks using sign and narrative restrictions. Our findings indicate that, taken together, export and import price shocks account for around 40 percent of output fluctuations. We also find that global demand shocks, which simultaneously affect export and import prices, are often undetected in the terms of trade measure despite having a large effect on business cycles. |
| Keywords: | business cycles; commodity prices; terms of trade; World Shocks |
| JEL: | F41 F44 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14594&r=all |
| By: | Klaus S. Friesenbichler; Agnes Kügler; Andreas Reinstaller |
| Abstract: | We draw on trade theory to empirically explore the effects of value chain integration on producer price dynamics. Using the EU as an example of an integrated area, we construct measures of backward and forward linkages with intra- and extra-EU trading partners at the country-sector level. We find that especially upstream integration and EU-accession dampen inflation. The results for downstream integration indicate a price-increasing relationship. We propose novel EU integration indicators and offer insights to both theory and applied research. We also add to the policy debate on the price effects of (dis-)integration of EU countries. |
| Keywords: | inflation, EU integration, Single Market, producer prices, value chains |
| Date: | 2020–06–12 |
| URL: | http://d.repec.org/n?u=RePEc:wfo:wpaper:y:2020:i:602&r=all |
| By: | PINSHI, Christian P. |
| Abstract: | The Eighteenth Ordinary Session of the Conference of Heads of State and Government of the African Union concluded with the adoption of a strategy aimed at creating a continental free trade area, which aims to deepen the economic integration of Africa; intensify intra-African trade; improve competitiveness; contribute to the movement of capital and people; promote sustainable and inclusive socio-economic development; transform the structural structure of African economies and promote industrialization. To this order we analyze the implications of African central banks and their strategic roles in the process of the continental free trade area. We note that much of the analysis of the continental free trade area in Africa has turned to the implications for government revenue, tariff and non-tariff barriers, welfare, uneven distribution. This note examines the implications of central banks in the continental free trade area. |
| Keywords: | African Continental Free Trade Area, African Central Banks |
| JEL: | E58 E59 F13 |
| Date: | 2019–12–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:101069&r=all |
| By: | Archanskaia, Liza; Van Biesebroeck, Johannes; Willmann, Gerald |
| Abstract: | We illustrate a new source of comparative advantage that is generated by countries' different ability to adjust to technological change. Our model introduces substitution of workers in codifiable (routine) tasks with more efficient machines, a process extensively documented in the labor literature, into a canonical 2x2x2 Heckscher-Ohlin model. Our key hypothesis is that labor reallocation across tasks is subject to frictions, the importance of which varies by country. The arrival of capital-augmenting innovations triggers the movement of workers out of routine tasks, and countries with low labor market frictions become relatively abundant in non-routine labor. In the new equilibrium, more flexible countries specialize in producing goods that use non-routine labor more intensively. We document empirically that the ranking of countries with respect to the routine intensity of their exports is strongly related to labor market institutions and to cultural norms that influence adjustment to technological change, such as risk aversion or long-term orientation. The explanatory power of this mechanism for trade flows is especially strong for intra-EU trade. |
| Keywords: | comparative advantage; resource allocation; routine tasks |
| JEL: | F11 F14 F15 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14578&r=all |
| 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. Ce document examine la relation entre le commerce bilatéral des pays avec les États-Unis qui n'est pas due à la gravité (commerce non gravitaire) et la répartition des revenus au sein des pays. Dans les pays où seule une petite partie de la population est éduquée, une augmentation du commerce non gravitaire est associée à une augmentation significative des inégalités de revenus. À mesure que l'éducation de la population augmente, la corrélation entre le commerce non gravitaire et l'inégalité des revenus diminue. Le commerce non gravitaire n'a pas d'effet significatif sur l'inégalité des revenus dans les pays qui sont les leaders mondiaux de l'éducation. |
| Keywords: | Non-Gravity Trade,Inequality,Education, Commerce non gravitaire,Inégalité,Éducation |
| JEL: | F1 E2 |
| Date: | 2020–06–10 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2020s-33&r=all |
| By: | Rajeev K. Goel; James W. Saunoris; Srishti S. Goel |
| Abstract: | Reliable supply chains are crucial to the productivity and economic growth of nations. Despite the recognition of its importance, formal research on the contribution of supply chain logistics, including the relative impacts across different logistics dimensions, is less. The importance of supply chains has been recently been brought to the forefront in the wake of the challenges posed by the coronavirus crisis. This paper uses data over a recent decade for more than 130 nations to examine the relative effects of the different aspects of supply chain logistics on economic growth. Placing the empirical framework in a standard growth model, results show that improvements in the aggregate supply chain logistics performance yield positive growth dividends. These dividends are also present in most disaggregated dimensions of logistics, with the performance of the timeliness of shipments having the greatest positive impact on growth. The growth impacts of investment, labor growth, labor quality, are positive and in line with the extant literature. A simulation exercise discussed some supply chain disruption scenarios and their growth implications that could provide useful for nations in planning for the challenges posed by the COVID-19 crisis. |
| Keywords: | economic growth, supply chain, logistics, infrastructure, disruptions, coronavirus |
| JEL: | O40 L80 L91 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8294&r=all |
| By: | Anelli, Massimo (Bocconi University); Basso, Gaetano (University of California, Davis); Ippedico, Giuseppe (University of California, Davis); Peri, Giovanni (University of California, Davis) |
| Abstract: | Emigration of young, motivated individuals may deprive countries-of-origin of entrepreneurs. We isolate exogenous variation in a large emigration wave from Italy between 2008 and 2015 by interacting diaspora networks with economic pull factors in destination countries, and find that larger emigration rates reduced firm creation and innovative start-ups. We estimate that for every 100 emigrants, 26 fewer firms were created. An accounting exercise shows that 37 percent of the effect was due to the disproportionate loss of young people. The remaining effect was due to selection into emigration of highly entrepreneurial individuals, as well as negative spillovers on firm creation. |
| Keywords: | emigration, demography, brain drain, entrepreneurship, innovation, EU integration |
| JEL: | J61 H7 O3 M13 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13390&r=all |
| By: | Elise S. Brezis (Bar-Ilan University) |
| Abstract: | The views of Keynes on Trade policy are clear: Protectionism as well as hoarding a surplus in the balance of payment are wrong. This paper analyzes the optimality of protectionist policies and having a surplus in the context of the international political system. I show that in the situation of a hegemonic country, all classes – the working class as well as the elite – opt for free trade. But, in a balance of power context, wherein no single actor on the international scene possesses hegemonic status, the working class will choose protectionism, having a surplus, asking for harsh reparations, while the transnational elite and Keynes will not. |
| Keywords: | Balance of Power, Carthaginian Peace, Hegemony, Reparations, National Sovereignty, Trade Policy |
| JEL: | E12 F30 |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:biu:wpaper:2020-02&r=all |
| By: | Giuliano, Paola (University of California, Los Angeles); Tabellini, Marco (Massachusetts Institute of Technology) |
| Abstract: | We test the relationship between historical immigration to the United States and political ideology today. We hypothesize that European immigrants brought with them their preferences for the welfare state, and that this had a long-lasting effect on the political ideology of US born individuals. Our analysis proceeds in three steps. First, we document that the historical presence of European immigrants is associated with a more liberal political ideology and with stronger preferences for redistribution among US born individuals today. Next, we show that this correlation is not driven by the characteristics of the counties where immigrants settled or other specific, socioeconomic immigrants' traits. Finally, we conjecture and provide evidence that immigrants brought with them their preferences for the welfare state from their countries of origin. Consistent with the hypothesis that immigration left its footprint on American ideology via cultural transmission from immigrants to natives, we show that our results are stronger when inter-group contact between natives and immigrants, measured with either intermarriage or residential integration, was higher. Our findings also indicate that immigrants influenced American political ideology during one of the largest episodes of redistribution in US history — the New Deal — and that such effects persisted after the initial shock. |
| Keywords: | immigration, culture, political ideology, preferences for redistribution |
| JEL: | D64 D72 H2 J15 N32 Z1 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13268&r=all |
| By: | Borjas, George J. (Harvard University); Cassidy, Hugh (Kansas State University) |
| Abstract: | Employment rates in the United States fell dramatically between February 2020 and April 2020 as the initial repercussions of the COVID-19 pandemic reverberated through the labor market. This paper uses data from the CPS Basic Monthly Files to document that the employment decline was particularly severe for immigrants. Historically, immigrant men were more likely to be employed than native men. The COVID-related labor market disruptions eliminated the immigrant employment advantage. By April 2020, immigrant men had lower employment rates than native men. The reversal occurred both because the rate of job loss for at-work immigrant men rose relative to that of natives, and because the rate at which out-of-work immigrants could find jobs fell relative to the native job-finding rate. A small part of the relative increase in the immigrant rate of job loss arises because immigrants were less likely to work in jobs that could be performed remotely and suffered disparate employment consequences as the lockdown permitted workers with more "remotable" skills to continue their work from home. |
| Keywords: | immigration, labor supply, COVID-19 |
| JEL: | J21 J61 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13277&r=all |
| By: | Barthélémy Bonadio; Zhen Huo; Andrei A. Levchenko; Nitya Pandalai-Nayar |
| 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. |
| JEL: | F41 F44 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27224&r=all |
| By: | Schmitt, Alexander; Van Biesebroeck, Johannes |
| Abstract: | A vast empirical literature analyzes the determinants of the make-or-buy decision, but firms also need to decide how to organize their supplier relationships when they choose to buy. The global value chains framework provides predictions on the nature of buyer-supplier collaboration. We use a unique transaction-level dataset of outsourced automotive components to study carmakers' choice between four distinct types of supplier governance: market, captive, relational, or modular. The theory formulates predictions based on three characteristics: the complexity or contractibility of a transaction, the capabilities of suppliers, and how objectively codifiable performance requirements are. The results illustrate that sourcing relationships differ systematically and that proxies for the three characteristics have effects in line with the theory. |
| Keywords: | GVC; Outsourcing; PRT; TCE; Theory of the firm |
| JEL: | L22 L23 M11 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14549&r=all |
| By: | Faia, Ester (Goethe University Frankfurt); Laffitte, Sébastien (ENS Paris-Saclay); Mayer, Maximilian (Goethe University Frankfurt); Ottaviano, Gianmarco (Bocconi University) |
| Abstract: | We show, theoretically and empirically, that the effects of technological change associated with automation and offshoring on the labor market can substantially deviate from standard neoclassical conclusions when search frictions hinder efficient assortative matching between firms with heterogeneous tasks and workers with heterogeneous skills. Our key hypothesis is that better matches enjoy a comparative advantage in exploiting automation and a comparative disadvantage in exploiting offshoring. It implies that automation (offshoring) may reduce (raise) employment by lengthening (shortening) unemployment duration due to higher (lower) match selectivity. We find empirical support for this implication in a dataset covering 92 occupations and 16 sectors in 13 European countries from 1995 to 2010. |
| Keywords: | automation, offshoring, two-sided heterogeneity, positive assortativity, wage inequality, horizontal specialization, core-task-biased technological change |
| JEL: | O33 O47 F16 F66 J64 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13267&r=all |
| By: | Etienne Montaigne (UMR MOISA - Marchés, Organisations, Institutions et Stratégies d'Acteurs - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - INRA - Institut National de la Recherche Agronomique - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques, Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Rikko Togawa (Kyoto University [Kyoto]); Samson Zadmehran (UMR MOISA - Marchés, Organisations, Institutions et Stratégies d'Acteurs - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - INRA - Institut National de la Recherche Agronomique - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques, Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Alfredo Coelho (Bordeaux Sciences Agro - Ecole Nationale Supérieure des Sciences Agronomiques de Bordeaux-Aquitaine); Shigeaki Oda (Kyoto University [Kyoto]) |
| Abstract: | This article briefly analyzes the implications for the wine sector of the signing of the Economic Partnership Agreement (EPA) between the European Union and Japan on the 17th of July 2018. After having recalled the consequences on all the exchanges and then on the agri-food sector, the effects on the wine sector were specified, in particular the disappearance of the 15% customs duties and the recognition of PDOs and PGIs. This note recalls the classic advantages of this type of agreement but underlines the complexity of an impact assessment by market segments. The power of the EU wine is compared to the Japanese weakness. But this agreement is also seen as enabling the EU to level the playing field with the signatory countries of the Trans-Pacific Agreement: Australia, Chile, New Zealand and the United States. Finally, due to the nature and origins of their wines, the Japanese wine production is expected to remain in a highly differentiated market segment, rather oriented towards high prices following the German and Swiss models. |
| Abstract: | Cet article analyse brièvement les conséquences sur le secteur viticole de l'accord de partenariat économique (APE) - Economic Partnership Agreement (EPA) que l'Union Européenne et le Japon ont signé le 17 juillet 2018. Après avoir rappelé les conséquences sur l'ensemble des échanges, puis sur le secteur agro-alimentaire, les effets sur la filière vin sont précisés, en particulier la disparition des 15 % de droits de douanes et la reconnaissance des AOP et IGP. Cette note rappelle les avantages claissiques de ce type d'accord mais souligne la complexité d'une évaluation d'impact par segment de marché. La puissance de l'UE viticole est comparée à la faiblesse japonaise. Mais par ailleurs cet accord est considéré comme un rattrapage de compétitivité vis-à-vis des pays signataires de l'accord transpacifique : l'Australie, le Chili, la Nouvelle Zélande et les États-Unis. Enfin la production japonaise est appelée à se maintenir dans un segment de marché très différencié par la nature et l'origine de ses vins, et plutôt orientée vers des prix élevés comme dans les modèles allemand et suisse. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02623130&r=all |