nep-int New Economics Papers
on International Trade
Issue of 2020‒07‒27
48 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Measuring Trade in Value Added with Firm-Level Data By Bems, Rudolfs; Kikkawa, Ayumu Ken
  2. Intellectual Property and the Organization of the Global Value Chain By Bolatto, Stefano; Naghavi, Alireza; Ottaviano, Gianmarco; Zajc Kejzar, Katja
  3. The impact of Brexit on Africa in times of the Corona Crisis By Kohnert, Dirk
  4. Trade, Productivity and (Mis)allocation By Berthou, Antoine; Chung, John Jong-Hyun; Manova, Kalina; Sandoz, Charlotte
  5. The Global Impact of Brexit Uncertainty By Hassan, Tarek Alexander; Hollander, Stephan; Tahoun, Ahmed; van Lent, Laurence
  6. The long Road towards Supply Chain Trade in Africa By Jaime de Melo; Anna Twum
  7. UK Regions in Global Value Chains By Pieter IJtsma; Bart Los
  8. The U.S.-Chinese Trade War: An Event Study of Stock-Market Responses By Egger, Peter; Zhu, Jiaqing
  9. Data Governance, AI, and Trade: Asia as a Case Study By Susan Ariel Aaronson
  10. High Order Openness By Jean Imbs; Laurent L. Pauwels
  11. How Did the 2003 SARS Epidemic Shape Chinese Trade? By Ana P. Fernandes; Heiwai Tang
  12. Global Trade and Margins of Productivity in Agriculture By Farid Farrokhi; Heitor S. Pellegrina
  13. Trade Networks and Firm Value: Evidence from the US-China Trade War By Huang, Yi; Lin, Chen; Liu, Sibo; Tang, Heiwai
  14. Policy instruments for FDI promotion in Africa By Mösle, Saskia; Steglich, Frauke
  15. Markups, Quality, and Trade Costs By Natalie Chen; Luciana Juvenal
  16. Refugees and Foreign Direct Investment: Quasi-Experimental Evidence from U.S. Resettlements By Mayda, Anna Maria; Parsons, Chris; Pham, Hannah; Vezina, Pierre-Louis
  17. Trade Openness and Fertility Rates in Africa: Panel Data Evidence By Manoel Bittencourt; Matthew Clance; Yoseph Y. Getachew
  18. The Micro and Macro Dynamics of Capital Flows By Felipe Saffie; Liliana Varela; Kei-Mu Yi
  19. Productivity Growth and Value Chains in Four European Countries By Izabela Karpowicz; Nujin Suphaphiphat
  20. Implications of COVID-19 on Tennessee Exports of Forest Products By Muhammad, Andrew; Taylor, Adam
  21. The costs of regulatory barriers to trade in services: New estimates of ad valorem tariff equivalents By Sebastian Benz; Alexander Jaax
  22. Atlantic Trade and the Decline of Conflict in Europe By Ahsan, Reshad; Panza, Laura; Song, Yong
  23. Emerging Trade Battlefield with China: Export Competition and Firms’ Coping Strategies By Yao Pan; Katariina Nilsson Hakkala
  24. Do FDI Firms Employ More Workers than Domestic Firms for Each Dollar of Assets? By Sakai Ando; Mengxue Wang
  25. Gifts of the Immigrants, Woes of the Natives: Lessons from the Age of Mass Migration By Tabellini, Marco
  26. The Value of Reputation in Trade: Evidence from Alibaba By Maggie X. Chen; Min Wu
  27. Effects of Regional Trade Agreement to Local and Global Trade Purity Relationships By Siyu Huang; Wensha Gou; Hongbo Cai; Xiaomeng Li; Qinghua Chen
  28. Keeping track of global trade in real time By Jaime Martínez-Martín; Elena Rusticelli
  29. Decomposing the Margins of Transfer Pricing By Andrea Lassmann; Benedikt Marian Maximilian Zoller-Rydzek
  30. Economic Integration and Democracy: An Empirical Investigation By Magistretti, Giacomo; Tabellini, Marco
  31. Globotics and development: When manufacturing is jobless and services are tradable By Baldwin, Richard; Forslid, Rikard
  32. Provincial interdependence and China’s “irrational” outward foreign direct investment By Mengheng Liu; Xingwang Qian
  33. Recent Issues in Capital Flows \Trends in Capital Inflows to Japan & Asia and Challenges Ahead \ By WASHIMI Kazuaki
  34. Playing Easy or Playing Hard to Get: When and How to Attract FDI By Gresik, Thomas A.; Schindler, Dirk; Schjelderup, Guttorm
  35. Propagation of shocks in global value chains: the coronavirus case By Elie Gerschel; Alejandra Martinez; Isabelle Mejean
  36. Competition, Competitiveness and Growth in Sub-Saharan Africa By Reda Cherif; Sandesh Dhungana; Xiangming Fang; Jesus R Gonzalez-Garcia; Yuanchen Yang; Mustafa Yenice; Jung Eun Yoon
  37. Exploring the Impact of Economic Integration Agreements Through Extreme Bounds Analysis By Byungyul Park; John C. Beghin
  38. Globalization and Outbreak of COVID-19: An Empirical Analysis By Mohammad Reza Farzanegan; Mehdi Feizi; Hassan F. Gholipour
  39. Gravity in International Finance: Evidence From Fees on Equity Transactions By Milsom, L.; Pažitka, V.; Roland, I.; Wójcik, D.
  40. Productivity growth and global value chain participation in the digital age By Claudio Battiati; Cecilia Jona-Lasinio; Silvia Sopranzetti
  41. On ‘Trade Induced Technical Change: The Impact of Chinese Imports on Innovation, IT and Productivity’ By Campbell, Douglas L.; Mau, Karsten
  42. ‘Send Them a Shipload of Rice’: Australia’s Food Aid to Indonesia, 1960s-1970s By Pierre van der Eng
  43. Globalization of Science: Evidence from Authors in Academic Journals by Country of Origin By Vit Machacek
  44. GLOBAL CONNECTIONS AND THE STRUCTURE OF SKILLS IN LOCAL CO-WORKER NETWORKS By László Lõrincz; Guilherme Kenji Chihaya; Anikó Hannák; Dávid Takács; Balázs Lengyel; Rikard Eriksson
  45. Global Uncertainty and Global Economic Policy Uncertainty: Different Implications for Firm Investment By Hyunduk Suh; Jin Young Yang
  46. The Effect of Globalisation on Labour Market Institutions in Europe. By Germana Bottone
  47. Multinational Corporations’ Effective Tax Rates: Evidence from Orbis By Javier Garcia-Bernardo; Petr Jansky; Thomas Torslov
  48. Immigration and Innovation. By Arthur Grimes; Shaan Badenhorst; David C. Maré; Jacques Poot

  1. By: Bems, Rudolfs; Kikkawa, Ayumu Ken
    Abstract: Global Value Chains have proliferated economic policy debates. Yet a key concept---trade in value added---is likely mismeasured because of sectoral aggregation bias stemming from reliance on input-output tables. This paper uses comprehensive firm-level data on both domestic and international transactions to study this bias. We find that sectoral aggregation leads to overstated trade in value added and, correspondingly, understated import content of gross exports. The economic magnitude of the estimated bias varies from moderate to large---at 2-5 p.p. of gross exports for Belgium and 17 p.p. for China. We study how the interplay between within-sector heterogeneities in firm import and export intensities and firm size determine the magnitude of the sectoral aggregation bias.
    Keywords: Aggregation bias; global value chains; Input-Output Tables
    JEL: E01 F14 L14
    Date: 2020–01
  2. By: Bolatto, Stefano; Naghavi, Alireza; Ottaviano, Gianmarco; Zajc Kejzar, Katja
    Abstract: This paper introduces the concept of intangible assets in a property rights model of sequential supply chains. Firms transmit knowledge to their suppliers to facilitate input customization. Yet, to avoid knowledge dissipation, they must protect the transmitted intangibles, the cost of which depends on the knowledge intensity of inputs and the quality of institutions protecting intellectual property rights (IPR) in supplier locations. When input knowledge intensity increases (decreases) downstream and suppliers' investments are complements, the probability of integrating a randomly selected input is decreasing (increasing) in IPR quality and increasing (decreasing) in the relative knowledge intensity of downstream inputs. Opposite but weaker predictions hold when suppliers' investments are substitutes. Comprehensive trade and FDI data on Slovenian firms' value chains provide evidence in support of our model's predictions. They also suggest that, in line with our model, better institutions may have very different effects on firm organization depending on whether they improve the protection of tangible or intangible assets.
    Keywords: Appropriability; firm organization; intangible assets; Intellectual Property; Outsourcing; sequential production; Stage complementarity; Upstreamness; vertical integration
    JEL: D23 F12 F14 F21 F23 L22 L23 L24 O34
    Date: 2019–12
  3. By: Kohnert, Dirk
    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.
    Keywords: Corona, Brexit, Africa, GB, EU, international trade, economic recession, poverty, South Africa, Nigeria, Kenya, African Studies
    JEL: F13 F35 F54 F63 G15 I1 N17 N47 N67 O17 P16 Z13
    Date: 2020–06–17
  4. By: Berthou, Antoine; Chung, John Jong-Hyun; Manova, Kalina; Sandoz, Charlotte
    Abstract: We examine the gains from globalization in the presence of firm heterogeneity and potential resource misallocation. We show theoretically that without distortions, bilateral and export liberalizations increase aggregate welfare and productivity, while import liberalization has ambiguous effects. Resource misallocation can either amplify, dampen or reverse the gains from trade. Using model-consistent measures and unique new data on 14 European countries and 20 industries in 1998-2011, we empirically establish that exogenous shocks to export demand and import competition both generate large aggregate productivity gains. Guided by theory, we provide evidence consistent with these effects operating through reallocations across firms in the presence of distortions: (i) Both export and import expansion increase average firm productivity, but the former also shifts activity towards more productive firms, while the latter acts in reverse. (ii) Both export and import exposure raise the productivity threshold for survival, but this cut-off is not a sufficient statistic for aggregate productivity. (iii) Efficient institutions, factor and product markets amplify the gains from import competition but dampen those from export access.
    Keywords: Allocative Efficiency; export demand; import competition; international trade; Misallocation; productivity
    JEL: F10 F14 F43 F62 O24 O40 O47
    Date: 2019–12
  5. By: Hassan, Tarek Alexander; Hollander, Stephan; Tahoun, Ahmed; van Lent, Laurence
    Abstract: Using tools from computational linguistics, we construct new measures of the impact of Brexit on listed firms in the United States and around the world; these measures are based on the proportion of discussions in quarterly earnings conference calls on the costs, benefits, and risks associated with the UK's intention to leave the EU. We identify which firms expect to gain or lose from Brexit and which are most affected by Brexit uncertainty. We then estimate effects of the different types of Brexit exposure on firm-level outcomes. We find that the impact of Brexit-related uncertainty extends far beyond British or even European firms; US and international firms most exposed to Brexit uncertainty lost a substantial fraction of their market value and have also reduced hiring and investment. In addition to Brexit uncertainty (the second moment), we find that international firms overwhelmingly expect negative direct effects from Brexit (the first moment) should it come to pass. Most prominently, firms expect difficulties from regulatory divergence, reduced labor mobility, limited trade access, and the costs of post-Brexit operational adjustments. Consistent with the predictions of canonical theory, this negative sentiment is recognized and priced in stock markets but has not yet significantly affected firm actions.
    Keywords: Brexit; cross-country effects; Machine Learning; sentiment; uncertainty
    JEL: D8 E22 E24 E32 E6 F0 G18 G32 G38 H32
    Date: 2019–12
  6. By: Jaime de Melo (FERDI - Fondation pour les Etudes et Recherches sur le Développement International); Anna Twum
    Abstract: The recent Africa Continental Free Trade Area (AFCFTA), in force since May 2019, is an important opportunity to developing and deepen supply chain trade across Africa. Evidence shows that integration into production networks-Global value Chains (GVCs) or Regional Value Chains (RVCs)-provides new opportunities for developing countries to participate in global trade and diversify their export baskets through hyperspecialisation in fragmented production processes. Without an ecosystem of supply chain trade, a country would have to be able to produce a complete product before entering a new line of business.
    Date: 2020–05–29
  7. By: Pieter IJtsma; Bart Los
    Abstract: The nature of international trade has changed in the first decade of the 21st century. Many production processes have become organized in internationally dispersed supplier networks, so-called global value chains (GVCs). This tendency has implications for the competitiveness of countries and regions. This paper uses the regionalized world input output tables from the EUREGIO-database, for 2000 and 2010. These give quantitative descriptions of the world production structure, and the linkages between regions and countries regarding the sourcing of raw materials, parts, components and (business) services. Linking regional data on employment by industry to these tables allows us to quantify differences in the extent to which UK regions were contributing to GVCs. It also presents indications of changes in regional competitiveness and numerical evidence on regional Brexit risks for regional employment.
    Keywords: technological progress, telecommunications, deflators
    JEL: R11 R15 F62
    Date: 2020–06
  8. By: Egger, Peter; Zhu, Jiaqing
    Abstract: At the beginning of 2018, President Trump started taking protective tariff measures against products from China in a sequence of events which started a "trade war" between the United States (U.S.) and China. As the value of trade flows affected on both sides rose to a significant amount, this episode will become an interesting research object in the future. A thorough analysis of many outcomes of interest is at this point in time -- and even will be in the next few years -- impossible due to a lack of data which will only become available at a later point. However, as is customary with historical preferential liberalizations in trade agreements and potentially the opposite of it through Brexit, it is possible to gauge consequences of this "trade war" or "trade dispute" when focusing on the stocks of listed companies around related tariff-change announcements or implementations by the U.S. and China in the relevant time span. This paper proposes such an analysis and finds, very much consistent with the rumors from business, that the associated protectionist tariffs appear to have done to a large extent the opposite of what was intended: they hurt domestic firms in targeted and also other, untargeted sectors of an acting country, and they affect third countries and territories which are not even party to the "trade war" or "dispute".
    Keywords: event study; Stock market; U.S.-China "trade war"
    JEL: F15 F23 G14
    Date: 2019–12
  9. By: Susan Ariel Aaronson (George Washington University)
    Abstract: The arc of history seems to be bending again towards the dynamic nations of Asia (Gordon: 2008). The countries and territories of the Asia Pacific region are both a locus for trade and a source of technology fueled growth. In 2017, Asia recorded the highest growth in merchandise trade volume in 2017 for both exports and imports (WTO: 2018, 32). UNCTAD reports that exports of digitally deliverable services increased substantially across all regions during the period 2005– 2018, with a compound annual growth rate ranging between 6 and 12 per cent (table III.1). Growth was the highest in developing countries, especially in Asia (UNCTAD: 2019, 66). Artificial intelligence (AI) is already a leading source of growth for many Asian countries. The AI market in the Asia Pacific was estimated at around US $450 million in 2017 and is expected to grow at a compounded annual growth rate of 46.9% by 2022 (Ghasemi: 2018). Several analysts believe Asia’s AI growth will soon overtake the US (Lee: 2018; Ghasemi: 2018)
    Keywords: artificial intelligence, AI, ethics, innovation, trade, foreign investment, nationalist
    JEL: O3 O25 O38 O33 F13
    Date: 2020–06
  10. By: Jean Imbs (NYU Abu Dhabi, PSE (CNRS),CEPR); Laurent L. Pauwels (University of Sydney)
    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: Measuring Openness, Global supply chains, Growth, Productivity, Synchronisation
    JEL: E32 F44
    Date: 2020–04–29
  11. By: Ana P. Fernandes; Heiwai Tang
    Abstract: This paper examines the impact of the Severe Acute Respiratory Syndrome (SARS) epidemic on China’s trade. Using quarterly transaction-level trade data of all Chinese firms, we find that firms in regions with local transmission of SARS experienced lower import and export growth at both the intensive and extensive margins, compared to those in the unaffected regions. The affected firms’ trade growth remained lower two years after SARS. Products that are more capital-intensive, skill-intensive, upstream in the supply chains, and differentiated experienced a smaller export decline but a stronger recovery. Small exporters were more likely to exit, slowing down trade recovery.
    Keywords: Covid-19, SARS, trade collapse, post-pandemic recovery, natural disasters, disruption, global supply chains
    JEL: F12 F14
    Date: 2020
  12. By: Farid Farrokhi; Heitor S. Pellegrina
    Abstract: We study the effects of globalization on agricultural productivity across countries. We develop a multi-country general equilibrium model that incorporates choices of crops and technologies in agricultural production at the micro-level of fields covering the surface of the earth. We estimate our model using field-level data on potential yields of crops under different technologies characterized by factor and input intensity. We evaluate the welfare and productivity gains from reductions in trade costs of agricultural outputs and inputs across countries between 1980 and 2015. In addition to gains from international crop specialization, we find notable gains from access to foreign agricultural inputs. This mechanism operates through a shift from traditional (labor-intensive) technologies to modern (input-intensive) ones.
    JEL: F10 F14 F60 Q16 R14
    Date: 2020–06
  13. By: Huang, Yi; Lin, Chen; Liu, Sibo; Tang, Heiwai
    Abstract: This paper evaluates the financial implications of policy shocks for global production networks. We use the announcements of tariff increases on a wide range of goods by the US and Chinese governments in 2018-2019 as events, starting with the presidential memorandum issued by the Trump administration on March 22, 2018, to study the impact of trade policy shocks on firms' stock market performance. Using various novel datasets, we document significantly heterogeneous responses by firms to the announcements. We also show that these responses are determined by the degree to which firms are directly and indirectly exposed to US-China trade through the global value chains. In particular, US firms that are more dependent on exports to and imports from China have lower stock returns and higher default risk around the announcement dates, whereas the reduced import competition from China has a limited effect on the firms. We also find consistent patterns of stock market reactions by Chinese firms. Two reverse experiments in 2019 further validate how the complex structure of global trade shapes stock market reactions to policy shocks.
    JEL: F10 G12 G14 O24
    Date: 2019–12
  14. By: Mösle, Saskia; Steglich, Frauke
    Abstract: Global foreign direct investment (FDI) has increased substantially over the past decades and so has FDI in Africa. However, still only 3 percent of global FDI stocks and 1 percent of German FDI is located in Africa. There are several policy instruments that can contribute to higher investment in developing countries. The Policy Brief outlines several important investment promotion instruments of both sender and recipient countries of FDI and assesses their impact.
    Date: 2020
  15. By: Natalie Chen; Luciana Juvenal
    Abstract: We investigate theoretically and empirically how exporters adjust their markups across destinations depending on bilateral distance, tariffs, and the quality of their exports. Under the assumption that trade costs are both ad valorem and per unit, our model predicts that markups rise with distance and fall with tariffs, but these effects are heterogeneous and are smaller in magnitude for higher quality exports. We find strong support for the predictions of the model using a unique data set of Argentinean firm-level wine exports combined with experts wine ratings as a measure of quality.
    Keywords: Patterns of trade;Trade models;Demand elasticity;Financial statistics;Export prices;Distance,export unit values,heterogeneity,markups,quality,tariffs,trade costs.,WP,trade cost,valorem,markup,export price,wine spectator
    Date: 2020–02–21
  16. By: Mayda, Anna Maria; Parsons, Chris; Pham, Hannah; Vezina, Pierre-Louis
    Abstract: We exploit the designs of two separate U.S. refugee dispersal policies to provide causal evidence that refugees foster outward FDI to their countries of origin. Drawing upon aggregated individual-level refugee and project-level FDI data, we first leverage the quasi-random distribution of refugees "without U.S. ties" after the enactment of the 1980 Refugee Act, to show that outward FDI to refugees' countries of origin grew more from those U.S. commuting zones that hosted greater numbers of refugees after 1990. Secondly, we exploit the specificities of the Indochina Migration and Refugee Assistance Act, which resulted in a quasi-experimental dispersal of Vietnamese refugees in 1975, to provide causal evidence that Vietnamese refugees fostered FDI to their home region, while national domestic reforms in Vietnam amplified the positive FDI-creating effects of the overseas Vietnamese diaspora. Overall, our results highlight a new mechanism through which refugees foster development to their origin countries.
    Keywords: Foreign direct investment; networks; Refugees
    JEL: F21 F22 F23
    Date: 2019–12
  17. By: Manoel Bittencourt; Matthew Clance; Yoseph Y. Getachew
    Abstract: We study the effect of trade openness on fertility rates in fifty African countries during the1962 - 2010 period. By disaggregating the trade openness data in novel ways, and allowing for country and time fixed effects, our results indicate that trade openness and imports of manufactured goods are significantly related to lower fertility. Furthermore, trade with the former colonial powers and imports of high-skilled manufactured goods, which include television receivers and telecommunications equipment, are significantly related to lower fertility too. Given that Africa export mostly agricultural products and raw materials, the results contrast with the comparative-advantages prediction. Our results, however, suggest that the knowledge, new information, beliefs, attitudes and gender norms emanating from imported high-skilled manufactured goods such as television receivers are affecting fertility choices and, ultimately, having a reinforcing effect on Africa's ongoing demographic transition.
    Keywords: Openness, Fertility, Africa
    JEL: F6 J10 N37 O55
    Date: 2020–01
  18. By: Felipe Saffie; Liliana Varela; Kei-Mu Yi
    Abstract: We empirically and theoretically study the effects of capital flows on resource allocation within sectors and cross-sectors. Novel data on service firms – in addition to manufacturing firms – allows us to assess two channels of resource reallocation. Capital inflows lower the relative price of capital, which promotes capital-intensive industries – an input-cost channel. Second, capital inflows increase aggregate consumption, which tilts the demand towards goods with high income elasticities – a consumption channel. We provide evidence for these two channels using firm-level census data from the financial liberalization in Hungary, a policy reform that led to capital inflows. We show that firms in capital intensive industries expand, as do firms in industries producing goods with high income elasticities. In the short-term, the consumption channel dominates and resources reallocate towards high income elasticity activities, such as services. We build a dynamic, multi-sector, heterogeneous firm model with multiple sectors of an economy transitioning to its steady-state. We simulate a capital account liberalization and show that the model can rationalize our empirical findings. We then use the model to assess the permanent effects of capital flows and show that the long-term allocation of resources and, thus, aggregate productivity depend on degree of long-term financial openness of the economy. Larger liberalizations trigger long-run debt pushing the country to a permanent trade surplus. This tilts long-run production towards manufacturing exporters, which also increases aggregate productivity.
    JEL: F15 F41 F43 F63
    Date: 2020–06
  19. By: Izabela Karpowicz; Nujin Suphaphiphat
    Abstract: Advanced economies have been witnessing a pronounced slowdown of productivity growth since the global financial crisis that is accompanied in recent years by a withdrawal from trade integration processes. We study the determinants of productivity slowdown over the past two decades in four closely integrated European countries, Austria, Denmark, Germany and the Netherlands, based on firm-level data. Participation in global value chains appears to have affected productivity positively, including through its effect on TFP when facilitated by higher investment in intangible assets, a proxy for firm innovation. Other contributors to productivity growth in firms are workforce aging, access to finance, and skills mismatches.
    Keywords: Total factor productivity;Real sector;Gross domestic product;Labor productivity;Financial crises;Productivity,firms,GVC,WP,TFP,productivity growth,selected country,advanced economy,intermediate input
    Date: 2020–01–31
  20. By: Muhammad, Andrew; Taylor, Adam
    Abstract: The coronavirus (COVID-19) pandemic has spread across the globe since the first death in China in early January 2020. As COVID-19 began to spread across the U.S. in March 2020, businesses closed and individuals were asked to limit trips and comply with shelter-in-place or stay-at-home orders (Baker et al., 2020). Countries around the globe imposed similar measures. Consequently, the pandemic has negatively affected the global economy beyond anything experienced in nearly a century. Estimates so far indicate the virus could decrease global economic growth by 3.0 percent to 6.0 percent in 2020 (Jackson et al., 2020). While there have been extensive stories about the impact of COVID-19 on the U.S. food supply, little has been reported on how agriculture-related products primarily used in manufacturing have been impacted by COVID-19. In this report, we examine how the COVID-19 outbreak affected Tennessee forest product exports. The impacts of COVID-19 on forest products are due to supply and demand disruptions in both the finished wood products markets (e.g., furniture) and the interrelated market for raw materials and inputs (e.g., logs and lumber). Labor disruptions due to COVID-19 have resulted in decreased incomes, resulting in decreased demand for furniture and other finished wood products. Lockdowns and stay-at-home orders have limited shopping, also decreasing demand for these products. Given that labor is a primary resource for production, distribution and sales, stay-at-home and lockdown orders have also contributed to decreased sales due to limited product availability. Statista (2020) reported that U.S. furniture sales decreased by 21 percent in March and decreased by 49 percent in April when compared to previous months. U.S. imports of furniture and home furnishings were down $1.2 billion as of April 2020 when compared to same period (January-April) in 2019 (Census, 2020). This phenomenon is not limited to the U.S. (Jackson et al., 2020). Any decrease in demand for finished wood products in turn negatively affects the demand for forest products. It must also be noted that forest product sales, and exports in particular, have also been directly impacted by COVID-19. Labor disruptions have affected both production and distribution of forest products. Restrictions on movement have also affected transport and other trade-/market-facilitating activities (WTO, 2020), all of which have negatively affected Tennessee forest product exports. Like many forest-product exporting states, Tennessee exports mainly go to manufacturers in China. For instance, China accounted for almost half of Tennessee’s forest product exports in 2017 (Luppold et al., 2018; U.S. Department of Agriculture, 2020). Being so reliant on China for sales, Tennessee was particularly impacted by the U.S-China trade war, which is discussed briefly in this report and in a UT Extension report published earlier this year (Muhammad and Smith, 2020). More importantly, 2020 was expected to be a recovery year for U.S. exports due to the U.S.-China Phase One Trade Agreement (signed January 2020) and the announcement in February 2020 by China’s State Council Tariff Commission that U.S. commodities including forest products would be exempt from retaliatory tariffs (Inouye, 2020). Thus, it is conceivable that Chinese imports would have returned to pre-trade war levels in 2020. However, recent data show that not only did the COVID-19 outbreak thwart this potential recovery, but resulted in even greater losses when compared to 2019. In this report we examine how the COVID-19 outbreak impacted Tennessee forest product exports. To put this in context, we provide a background and overview of Tennessee production and exports and briefly discuss how the U.S.-China trade war impacted Tennessee. To assess the impacts of COVID-19, we examine the most recent trade data for 2020 and assess how Tennessee and U.S. exports in January-April 2020 compare to the same period in previous years. We close the report with a brief summary and implications.
    Keywords: Demand and Price Analysis, International Relations/Trade, Resource /Energy Economics and Policy
    Date: 2020–07–17
  21. By: Sebastian Benz (OECD); Alexander Jaax (OECD)
    Abstract: This paper presents new estimates of policy-induced trade costs in five services sectors for 46 countries. Results demonstrate the significant untapped economic potential of multilateral, plurilateral, and unilateral services trade liberalisation. Even though services trade has more than tripled in the last two decades, the results show that trade costs are still high. The results are not only interesting in and of themselves, but they can also be used as input for further analysis on the economic benefits from different scenarios regarding the dismantling of barriers to trade in services. This paper exploits recent advances related to the measurement of services barriers in the OECD Services Trade Restrictiveness Index (STRI).
    Keywords: services trade, services trade restrictions, trade cost, trade liberalisation
    JEL: F68 F15 F14 F13
    Date: 2020–07–08
  22. By: Ahsan, Reshad; Panza, Laura; Song, Yong
    Abstract: We use over 250 years of conflict and market integration data to provide the first evidence that Atlantic trade contributed to Europe's pacification between 1640 and 1896. While the decline in conflict in Europe during this period has been well documented, the role of Atlantic trade has not been previously explored due to a lack of historical trade data. We overcome this constraint by using wheat prices to calculate time-varying measures of market integration between Europe and the New World, which we use as a proxy for Atlantic trade. To identify the causal effects of Atlantic trade, we exploit exogenous changes in wind patterns and tropical cyclone activity over the Atlantic Ocean to instrument trade. Our results suggest that the growth in Atlantic trade between the mid-17th to the early 19th century lowered the probability of intra-European conflict onset by 14.90 percent. We find empirical support for two channels driving our results: first, Atlantic trade led to an increase in real wages and a reduction in both army and navy sizes in Europe. Second, we show that the possibility of forgone Atlantic trade acted as a deterrent to conflict.
    Keywords: Atlantic Trade; conflict; International Relations
    JEL: D74 F10 F51 N43
    Date: 2019–12
  23. By: Yao Pan (George Washington University); Katariina Nilsson Hakkala (ETLA and Aalto University)
    Abstract: This paper analyzes how intensified Chinese export competition affects the exports and product ranges of Western firms. Using a novel identification strategy that exploits changes in Chinese export policies, we find that Chinese export competition reduces aggregate product-level exports of Finland. Firm-level analysis using administrative data further shows that Chinese competition leads to substantial price cuts to retain market shares, especially for homogeneous products. In addition, we also discover that firms respond to the increased level of Chinese export competition by dropping their marginal products. Taken together, these results highlight the importance of export competition with China for developed countries.
    Keywords: Trade Flows, Export Competition, Firm-level, Product Mix, China
    JEL: F14 F61 L25
    Date: 2019
  24. By: Sakai Ando; Mengxue Wang
    Abstract: This paper studies whether FDI firms employ more workers than domestic firms for each dollar of assets. Using the Orbis database and its ownership structure information, we show that, in most economies, domestic firms tend to employ more workers per asset than FDI firms. The result remains robust across individual industries in the case study of the United Kingdom. The analysis of the switchers (ownership changes from domestic to foreign or vice versa) suggests that ownership changes do not have an immediate impact on the employment per asset. This result suggests that different patterns of employment per asset seem to come from technological differences rather than from different ownership structures.
    Keywords: Foreign investment;International investment position;Balance of payments;Labor productivity;Job creation;FDI,Orbis,Ownership,WP,domestic firm,SPEs,total percentage,investment enterprise
    Date: 2020–03–13
  25. By: Tabellini, Marco
    Abstract: In this paper, I jointly investigate the political and the economic effects of immigration and study the causes of anti-immigrant sentiments. I exploit exogenous variation in European immigration to U.S. cities between 1910 and 1930 induced by World War I and the Immigration Acts of the 1920s as well as instrument immigrants' location decision relying on pre-existing settlement patterns. I find that immigration triggered hostile political reactions, such as the election of more conservative legislators, higher support for anti-immigration legislation, and lower redistribution. Exploring the causes of natives' backlash, I document that immigration increased natives' employment, spurred industrial production, and did not generate losses even among natives working in highly exposed sectors. These findings suggest that opposition to immigration was unlikely to have economic roots. Instead, I provide evidence that natives' political discontent was increasing in the cultural differences between immigrants and natives. Results in this paper indicate that, even when diversity is economically beneficial, it may nonetheless be socially hard to manage.
    Keywords: Age of Mass Migration; Cultural diversity; Immigration; Political Backlash
    JEL: J15 J24 N32
    Date: 2020–01
  26. By: Maggie X. Chen (George Washington University); Min Wu (George Washington University)
    Abstract: We examine the role of an online reputation mechanism in international trade by exploring T-shirt exports on Alibaba. Exploiting rich transaction data and features of search and rating algorithms, we show that exporters displaying a superior reputation perform significantly better than peers with nearly identical true ratings and observables and the value of reputation rises with the level of information friction and the specificity of information. We develop a dynamic reputation model with heterogeneous cross-country information friction to quantify the effect of the reputation mechanism and find a 20-percent increase in aggregate exports fueled by a market reallocation towards superstars
    Keywords: reputation, information, superstar, Alibaba
    JEL: F1 D8
    Date: 2020–04
  27. By: Siyu Huang; Wensha Gou; Hongbo Cai; Xiaomeng Li; Qinghua Chen
    Abstract: In contrast to the rapid integration of the world economy, many regional trade agreements (RTAs) have also emerged since the early 1990s. This seeming contradiction has encouraged scholars and policy makers to explore the true effects of RTAs, including both regional and global trade relationships. This paper defines synthesized trade resistance and decomposes it into natural and artificial factors. Here, we separate the influence of geographical distance, economic volume, overall increases in transportation and labor costs and use the expectation maximization algorithm to optimize the parameters and quantify the trade purity indicator, which describes the true global trade environment and relationships among countries. This indicates that although global and most regional trade relations gradually deteriorated during the period 2007-2017, RTAs generate trade relations among members, especially contributing to the relative prosperity of EU and NAFTA countries. In addition, we apply the network to reflect the purity of the trade relations among countries. The effects of RTAs can be analyzed by comparing typical trade unions and trade communities, which are presented using an empirical network structure. This analysis shows that the community structure is quite consistent with some trade unions, and the representative RTAs constitute the core structure of international trade network. However, the role of trade unions has weakened, and multilateral trade liberalization has accelerated in the past decade. This means that more countries have recently tended to expand their trading partners outside of these unions rather than limit their trading activities to RTAs.
    Date: 2020–05
  28. By: Jaime Martínez-Martín (Banco de España); Elena Rusticelli (OECD)
    Abstract: This paper builds an innovative composite world trade cycle index (WTI) by means of a dynamic factor model to perform short-term forecasts of world trade growth of both goods and (usually neglected) services. The selection of trade indicator series is made using a multidimensional approach, including Bayesian model averaging techniques, dynamic correlations and Granger non-causality tests in a linear VAR framework. To overcome the real-time forecasting challenges, the dynamic factor model is extended to account for mixed frequencies, to deal with asynchronous data publication and to include hard and survey data along with leading indicators. Nonlinearities are addressed with a Markov switching model. In the empirical application, simulations analysis in pseudo real-time suggest that: i) the global trade index is a very useful tool for tracking and forecasting world trade in real time; ii) the model is able to infer global trade cycles very precisely and better than several competing alternatives; and iii) global trade finance conditions seem to lead the trade cycle, in line with the theoretical literature.
    Keywords: real-time forecasting, world trade, dynamic factor models, markov switching models
    JEL: E32 C22 E27
    Date: 2020–07
  29. By: Andrea Lassmann (Johannes Gutenberg Universität Mainz, Germany); Benedikt Marian Maximilian Zoller-Rydzek (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: This paper examines the determinants and margins of profit shifting through transferpricing. We develop a theory model, where transfer pricing patterns are governed by a generalized concealment cost function (CCF). Our empirical analysis draws on micro-level data about transaction-level imports, firm-level characteristics, as well as tax differentials between regions in Switzerland and countries abroad. We find, both theoretically and empirically, that more productive multinational firms deviate less from the arms’ length price and trade lower quantities, compared to MNEs with lower productivity. Moreover, the decision of firms to engage in transfer pricing depends negatively on a fixed cost component in the CCF, as well as trade costs. The model allows us to estimate a theory-consistent concealment cost function, which can be used for counterfactual analysis.
    Keywords: Multinational firms; tax avoidance; tax havens; transferpricing
    JEL: F23 H25 H26 H32
    Date: 2019–01
  30. By: Magistretti, Giacomo; Tabellini, Marco
    Abstract: We study whether economic integration fosters the process of democratization and the channels through which this might happen. Our analysis is based on a large panel dataset of countries between 1950 and 2014. We instrument actual trade with predicted trade constructed by estimating a time-varying gravity equation similar to Feyrer (2009). We find that economic integration has a positive effect on democracy, driven by trade with democratic partners and stronger for countries with lower initial levels of economic and institutional development. These results are consistent with a learning/cultural exchange process whereby economic integration promotes the spread of democracy from more to less democratic countries. We corroborate this interpretation by providing evidence against alternative mechanisms, such as income effects, human capital accumulation, and trade-induced changes in inequality.
    Keywords: democracy; economic integration; Institutional development; international trade
    JEL: F14 F15 P16
    Date: 2020–01
  31. By: Baldwin, Richard; Forslid, Rikard
    Abstract: Globalization and robotics (globotics) are transforming the world economy at an explosive pace. While much of the literature has focused on rich nations, the changes are quite likely to affect developing nations in important ways. The premise of the paper - which should be regarded as a thought-piece - is based on an extreme thought experiment. What does development look like when digitech has rendered manufacturing jobless and many services freely traded? Our conclusion is that the service-led development path may become the norm rather than the exception; think India, not China. Since success in the service sector is based on quite different factors than success in manufacturing, development strategies and mindsets may have to change. This is an optimistic conclusion since it suggests that developing nations can directly export the source of their comparative advantage - low-cost labor - without having first to make goods with that labor.
    Keywords: Development; Digital Technology; Globotics
    JEL: F1
    Date: 2020–01
  32. By: Mengheng Liu (Zhejiang University); Xingwang Qian (SUNY Buffalo)
    Abstract: China’s outward foreign direct investment (OFDI) has increased by more than 70-fold since early 2000. A sudden plummet of 30% OFDI in 2017 particularly merits explanation. We suggest that the interdependent behavior of Chinese provincial OFDI plays a key role in the astonishing increase and sudden decease in China’s OFDI. Using OFDI data from 31 Chinese provinces, we find that OFDI from one province positively depends on neighboring provinces’ OFDI. While the spillover from neighbors’ behavior increases provincial OFDI, it tends to lead to more OFDI than warranted by economic fundamentals, resulting in an irrational OFDI bubble. Further, we argue that the “follow the leader” firm behavior and the OFDI promotional policies under China’s political tournament environment give rise to the neighboring interdependence. Finally, based on our results, we make a plausible estimation of the amount of irrational OFDI in China in 2016.
    Keywords: China’s outward FDI; provincial interdependence; spillover effect; government promotion policy
    JEL: F21 F63
    Date: 2020–04–30
  33. By: WASHIMI Kazuaki (Bank of Japan)
    Abstract: While international capital transactions can improve economic welfare through the efficient allocation of resources across borders, they can also lead to the destabilization of an economy due to sudden reversals of capital flows. Nevertheless, empirical analyses have shown mixed results depending on the countries and transactions on which the analyses have focused, which highlights that there are different effects depending on the type and contents of the capital transaction. This report introduces recent issues in capital flows and summarizes developments in capital inflows to Asia including Japan. From that perspective, in the medium to long term, Japan will continue to face the challenges in attracting inward FDI and maximizing spillover effects for economic growth, while emerging Asian nations need to develop domestic financial markets and manage the impact of excessive volatility of inward portfolio investments.
    Keywords: International Capital Flows; Foreign Direct Investment; Foreign Portfolio Investment
    JEL: F21 F32
    Date: 2020–07–08
  34. By: Gresik, Thomas A. (Dept. of Economics, University of Notre Dame); Schindler, Dirk (Erasmus School of Economics, Erasmus University Rotterdam); Schjelderup, Guttorm (Dept. of Business and Management Science, Norwegian School of Economics)
    Abstract: We study the link between a country’s institutional quality in tax collection and its optimal corporate tax policies in a model of heterogeneous multinationals that can shift income using both debt and transfer prices. Countries with weak institutional quality can be made worse off adopting policies that attract FDI as the benefits from higher wages and production are more than offset by tax base erosion. Countries with moderate institutional quality can gain from under-utilizing their ability to collect taxes, since the benefit of attracting more FDI outstrips the benefit of increased tax revenue. Countries with very strong institutions benefit from FDI and should utilize their full ability to collect taxes.
    Keywords: FDI; thin capitalization rules; transfer pricing; institutional quality
    JEL: F23 F68 H26 H32
    Date: 2020–06–30
  35. By: Elie Gerschel (IPP - Institut des politiques publiques, CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE ParisTech - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique); Alejandra Martinez (IPP - Institut des politiques publiques); Isabelle Mejean (CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE ParisTech - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique, IPP - Institut des politiques publiques)
    Abstract: Before spreading globally, the Covid-19 epidemic was concentrated in the Hubei province. To contain the spread of the virus, the Chinese government has imposed quarantine measures and travel restrictions, entailing the slowdown of economic activity. We study the propagation of this geographically concentrated productivity slowdown to the global economy, through global value chains. Reliance on Chinese inputs has dramatically increased since the early 2000s. As a consequence, most countries are exposed to the Chinese productivity slowdown, both directly through their imports of Chinese inputs and indirectly, through other inputs themselves produced with some Chinese value added. This note aims at quantifying the total exposure of France compared to other countries. First, we compute the share of Chinese value added in French production. Then, we use data at the country and sector levels to quantify the impact of travel restrictions on French GDP.
    Date: 2020–03
  36. By: Reda Cherif; Sandesh Dhungana; Xiangming Fang; Jesus R Gonzalez-Garcia; Yuanchen Yang; Mustafa Yenice; Jung Eun Yoon
    Abstract: Does greater product market competition improve external competitiveness and growth? This paper examines this question by using country-and firm-level data for a sample of 39 sub-Saharan African countries over 2000–17, as well as other emerging market economies and developing countries, and finds that an improvement in domestic competition is associated with a signficant increase in real GDP per capita growth rate, achieved mainly through an improvement in export competitiveness and productivity growth. Price levels, including of essential items, are also generally lowered with an increase in competition. Moreover, at the firm-level, evidence shows that greater competition—proxied through a decline in corporate market power—is associated with an increase in firm’s investment and the labor’s share in output. These effects are more pronounced in the manufacturing sector and among domestic firms compared to foreign firms.
    Keywords: Economic integration;Trade policy;Global competitiveness;Total factor productivity;International trade agreements;Markups,Market Power,Competition,Sub-Saharan Africa,WP,sub-Saharan African country,markup,sub-Saharan,effect of competition,emerge market economy
    Date: 2020–02–14
  37. By: Byungyul Park; John C. Beghin
    Abstract: This paper provides an empirical strategy guided by the data to estimate the long-term effect of Economic Integration Agreements (EIAs) on trade flows. The strategy uses Extreme Bounds Analysis (EBA) to guide the choice of lags and leads in the effects, the periodicity of time intervals if any, and starting year and associated data exclusions. We show that arbitrarily selected intervals and the starting year can result in non-robust estimates of the long-term effect of EIAs on trade flows. The empirical strategy follows two steps: EBA firstly sifts lags and leads of EIAs robustly related with trade flows from candidates and then these are in turn included in the gravity equation to estimate the long-term aggregate effect of EIAs on trade. We find that various lags and one lead are robustly and positively related to trade flows, leading to the long-term effect of 64%. The long-term estimate obtained from EBA-based estimation has a larger contemporaneous effect and smaller lagged effects compared to previous studies relying on subjective choices of lags and leads and periodicity.
    Date: 2020–06
  38. By: Mohammad Reza Farzanegan; Mehdi Feizi; Hassan F. Gholipour
    Abstract: The purpose of this study is to examine the relationship between globalization, Coronavirus Disease 2019 (COVID-19) cases, and associated deaths in more than 100 countries. Our ordinary least squares multivariate regressions show that countries with higher levels of socio-economic globalization are exposed more to COVID-19 outbreak. Nevertheless, globalization cannot explain cross-country differences in COVID-19 confirmed deaths. The fatalities of coronavirus are mostly explained by cross-country variation in health infrastructures (e.g., share of out of pocket spending on health per capita and the number of hospital beds) and demographic structure (e.g., share of population beyond 65 years old in total population) of countries. Our least squares results are robust to controlling outliers and regional dummies. This finding provides the first empirical insight on the robust determinants of COVID-19 outbreak and its human costs across countries.
    Keywords: COVID-19, globalization, public health
    JEL: I12 I18 I15 F63 F68
    Date: 2020
  39. By: Milsom, L.; Pažitka, V.; Roland, I.; Wójcik, D.
    Abstract: We shed light on the impact of institutional quality and information barriers on trade in financial services using a novel panel data set on revenue earned on domestic and crossborder equity securities underwriting transactions. Our data set covers 91,511 transactions across 122 countries of origin and 145 countries of destination for the period 2000-2015. The granularity of our data set enables us to estimate theory-consistent gravity equations, avoiding the methodological caveats that apply to most of the existing literature on gravity in international finance. First, we find that institutional quality in the exporting country, proxied by the rule of law, is an important determinant of financial services trade. In addition, we provide support for the "bonding hypothesis" (Coffee, 1999) in the literature on the determinants of foreign listings. Foreign firms can increase their valuation by bonding themselves to high-quality institutions through cross-listing. In line with this hypothesis, we find that institutional quality matters primarily for transactions where the underwriter is located in the country of the stock exchange where the shares are listed. Second, we focus on the role of multinational business networks in breaking down information frictions. Specifically, we control for several measures of "connectivity" based on banks' parent-subsidiary networks and syndication ties across banks. We find evidence supporting our hypothesis. In all our estimations, we control for the classical determinants of trade in the gravity framework, including distance. Interestingly, we find that the inclusion of our institutional and informational variables leaves a very limited role for physical distance - supporting the consensus in the literature on gravity in international finance that the role of distance reflects institutional and information frictions.
    Keywords: Gravity, international trade, international finance, equity securities underwriting, multinational business networks, finacial geography
    JEL: F14 F23 F65 G15 G24
    Date: 2020–06–26
  40. By: Claudio Battiati; Cecilia Jona-Lasinio; Silvia Sopranzetti
    Abstract: This paper provides an overview of the current productivity trends and their potential drivers exploring the impact of Global Value Chain (GVC) participation in the European economies and in the US taking into account the scope of country industry digital development. In particular, we investigate whether the reorganization of the production activity and the adoption of new business models as captured by the extent of GVC participation contribute to gain fresh insights about the factors affecting the productivity slowdown in the digital age. The analysis covers 12 European countries (AT, BE, DE, DK, ES, FI, FR, IT, NL, PR, SE, UK) plus the US and 30 industries (ISIC Rev. 4) over the years 2000-2014. We empirically test the linkages between productivity growth and GVC participation in an augmented production function framework and we find: a) a positive and statistically significant impact of forward and backward participation on productivity growth; b) a stronger productivity growth effect in the digital sectors of forward compared to backward linkages; c) relatively bigger productivity returns from forward participation in the medium intensive digital sectors.
    Keywords: Productivity growth, Global value chains, Digital economy
    JEL: O30 F23
    Date: 2020–04
  41. By: Campbell, Douglas L.; Mau, Karsten (RS: GSBE other - not theme-related research, Macro, International & Labour Economics)
    Abstract: Bloom, Draca, and Van Reenen (2016) find that Chinese import competition induced a rise in patenting, IT adoption, and TFP by up to 30% of the total increase in Europe in the late 1990s and early 2000s. We uncover several coding errors in an important robustness check of their patent results. When corrected, we find no statistically significant relationship between Chinese competition and patents. Other specifications in the original paper use a problematic log(1+patents) transformation. This normalization induces bias given low average patent counts for firms in China-competing sectors, and rapidly declining patents across the sample.
    JEL: F14 F13 L25 L60
    Date: 2020–07–09
  42. By: Pierre van der Eng
    Abstract: This paper asks why it took 10 years since a major famine in Indonesia in 1957 for Australia’s food aid to increase in greater amounts, and why food aid was so significant In Australia’s foreign aid to Indonesia during the late 1960s and 1970s. Indonesia’s reluctance to apply for food aid under the Colombo Plan is the reason for the delay. A combination of humanitarian, commercial and international relations interests converged to shape Australia’s rapidly growing food aid to Indonesia after 1966. Food aid contributed to alleviating food shortages and famines in Indonesia. It also supported Australian firms in regaining their share in the growing market for wheat-based products in Indonesia, and in building market share for Australian rice exports, in competition with US producers and the US PL480 food aid program. Food aid also allowed Australia to expand its foreign aid program to Indonesia rapidly after 1966, in support of the government of new President Soeharto and improved bilateral relations.
    Keywords: Australia, Indonesia, international relations, food supply, food aid
    JEL: F14 F35 N55 N57 O19
    Date: 2020–07
  43. By: Vit Machacek (Institute of Economic Studies, Faculty of Social Sciences, Charles University Opletalova 26, 110 00, Prague, Czech Republic; CERGE-EI, Politickych veznu 7, 110 00 Prague, Czech Republic)
    Abstract: The scientific community faces an everlasting pressure to publish internationally. This study measures the tendency to publish in globalized journals on a large dataset of journals indexed in the Scopus database. Based on data on 34 964 journals indexed in the Scopus Source List (Scopus 2018), we derived seven globalization indicators. These were subsequently scaled-up to the level of 174 countries and 27 disciplines between 2005 and 2017. The methodology draws from the pioneering work of Zitt and Bassecoulard (1998; 1999). The paper is accompanied by the interactive publication available at Advanced countries tend to have high globalization that is not varying across disciplines. Social sciences and health sciences are less globalized than physical and life sciences. The globalization in the former Soviet bloc is lower, especially in social sciences or health sciences. China has profoundly globalized its science system; gradually moving from the lowest globalization rates to the world average. Contrary Russia was constantly among the least globalized during the whole period, with no upward trend.
    Keywords: - - -
    Date: 2020–05
  44. By: László Lõrincz (Centre for Economic- and Regional Studies, Institute of Economics, Budapest and Networks, Technology and Innovation Lab, Corvinus University of Budapest); Guilherme Kenji Chihaya (Department of Geography, Umea University;); Anikó Hannák (Department of Information Science, University of Zurich); Dávid Takács (Department of Geography, Umea University); Balázs Lengyel (Centre for Economic- and Regional Studies, Institute of Economics, Budapest; Networks, Technology and Innovation Lab, Corvinus University of Budapest;Agglomeration and Social Networks Lendület Research Group, Hungarian Academy of Sciences); Rikard Eriksson (Department of Geography, Umea University; Center for Regional Science, Umea University)
    Abstract: Social connections that reach distant places are advantageous for individuals and firms by providing access to new skills and knowledge. However, systematic evidence on how firms work up global knowledge access is still missing. In this paper, we analyse how global work connections relate to differences in the skill composition of employees within companies. We gather survey data from 10% of workers in a local industry in Sweden and complement this with digital trace data to map co-worker networks and skill composition. This unique combination of data and features allows us to quantify global connections of employees and measure the degree of skill-similarity and skill-relatedness to co-workers. We find that the workers with extensive local networks typically have related skills to others in the region and to their co-workers. Workers with more global ties typically bring in less related skills to the region. These results provide new insights to the composition of skills within knowledge intensive irms by connecting the geography of networks contacts to the diversity of skills accessible through them.
    Keywords: Co-worker networks, skills, relatedness, global connections, survey, online social network
    JEL: D85 J24 J61
    Date: 2020–07
  45. By: Hyunduk Suh (Inha University); Jin Young Yang (Zayed University)
    Abstract: Global Economic Policy Uncertainty (EPU) and non-EPU global uncertainty measures exhibit heterogenous behavior, especially in 2010s. Using firm-level data from 36 countries, we estimate the effect of global uncertainty on corporate investment in 1997-2016. Eleven global uncertainty measures, including global EPU, are employed to encompass macro, micro, and higher-order dimensions of uncertainty. We find different effect of EPU and non-EPU global uncertainty measures on investment. Only EPU measures negatively affect investment, while non-EPU measures have positive effects. The negative effects of EPU measures on investment are stronger for firms with high investment irreversibility and high leverage, but no such effect is observed from non-EPU measures.
    Keywords: Global uncertainty; Economic Policy Uncertainty, Investment
    JEL: E22 F30 G31
    Date: 2020–05
  46. By: Germana Bottone
    Abstract: This article aims at participating in the discussion about the effects of globalization on labour market institutions. Most surveys show that globalisation brings about a greater flexibility in the organization of labour, higher wage dispersion and social dumping. According to these surveys, globalisation has two basic outcomes. First of all, it sharpens the risk of layoff for the low-skilled workers, as labour market requires more qualified employees and product and process innovations, in order to face the world competition. Second, globalisation provokes a huge institutional change in the labour market. Namely, the increased capital mobility sparks off a re-allocation of resources, amplified by the trade integration, towards countries where Trade Unions are less powerful and taxation is lower. Actually, shareholders may decide where to invest and where to locate firms; therefore they have gained a strong bargaining power: policy makers may mitigate the threat of relocation or instead encourage labour market deregulation in order to avoid capital flight. Applying the approach known as “Grounded Theory” we analyse ad hoc data, in order to find out whether or not key changes in the labour market institutions have taken place. In addition, we aim at finding out which is the role of institutional context in shaping the reform of the labour market. Finally, some policy suggestions are provided
    Date: 2020–06
  47. By: Javier Garcia-Bernardo (University of Amsterdam, Faculty of Social and Behavioural Sciences, Spui 21, 1012 WX Amsterdam, The Netherlands); Petr Jansky (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Opletalova 26, 110 00, Prague, Czech Republic); Thomas Torslov (Faculty of Social Sciences, Oster Farimagsgade 5, DK-1353 Copenhagen K, Denmark)
    Abstract: Effective tax rates (ETRs) estimated from the balance sheet data of multinational corporations (MNCs) are useful for comparing MNCs’ corporate income taxation across countries. In this paper we propose a new methodological approach to estimate ETRs as reliably and as for as many countries as possible using Orbis’ unconsolidated data for the 2011–2015 period. We focus on countries with at least 50 available companies, which results in a sample of 50, mostly European, countries. We estimate the ETR of a country as the ratio of corporate income tax to gross income for all affiliates of MNCs in that country, weighted by gross income. We propose four ETR estimations, including lower and upper bounds, which differ by gross income calculation. We find that ETRs substantially differ from statutory rates for some countries. For example, we show that despite similar statutory rates of 28% and 29%, MNCs in Luxembourg paid as little as 1–8% of gross income in taxes while those in Norway paid as much as 45–66%. Despite being the best available, existing data is still imperfect, and we therefore call for better data in the form of MNCs’ unconsolidated, public country-by-country reporting data.
    Keywords: Effective tax rate, multinational corporation, foreign direct investment, profit shifting, tax haven, tax competition
    JEL: C81 F21 F23 H25 H26
    Date: 2020–06
  48. By: Arthur Grimes (Motu Economic and Public Policy Research); Shaan Badenhorst (Motu Economic and Public Policy Research); David C. Maré (Motu Economic and Public Policy Research); Jacques Poot (Vrije Universiteit Amsterdam, and University of Waikato Author-Name Isabelle Sin; Motu Economic and Public Policy Research)
    Abstract: One of the main challenges facing non-metropolitan regions is the attraction and retention of highly-educated young people. A loss of the brightest can lead to reduced business creation, innovation, growth and community wellbeing in such regions. We use rich longitudinal microdata from New Zealand’s integrated administrative data infrastructure to analyse the determinants and geography of the choice of destination of tertiary educated (university and polytechnic) graduates. We address the question of post-student location choice in the context of the approach of Chen and Rosenthal (2008) who introduced a methodology for calculating ‘quality of life’ and ‘quality of business’ indicators for urban areas reflecting consumption and productive amenities respectively. Specifically, we test whether students – of different characteristics (e.g. institutional type and field of study) – locate in places that are regarded as good to live or good to do business. Our estimates are conditional on students’ prior school (home) location and the location of their higher education institution. We find that graduates are attracted to locate in places that have high quality production amenities. High quality consumption amenities have heterogeneous effects on the location choice of students. Creative Arts and Commerce graduates are relatively more likely to locate in places that are attractive to business, consistent with a symbiosis between bohemians and business. Places can leverage their existing (productive or consumption amenity) strengths to act as drawcards to recent graduates. The results are important for local decision-makers who wish to know which factors can attract and retain young qualified people.
    Keywords: Innovation; Immigration; Local labour market
    JEL: I23 J24 J61 R23 R58 Z13
    Date: 2020–04

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