nep-int New Economics Papers
on International Trade
Issue of 2020‒08‒17
fifty papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Assessing Asia - Sub-Saharan Africa global value chain linkages By Tang, Heiwai; Zeng, Douglas Zhihua; Zeufack, Albert G.
  2. The Openness Hypothesis in the Context of Economic Development in Sub-Saharan Africa: The Moderating Role of Trade Dynamics on FDI By Simplice A. Asongu; Joseph Nnanna; Paul N. Acha-Anyi
  3. "The political economy of protection in GVCs: Evidence from Chinese micro data" By Ludema, Rodney D; Mayda, Anna Maria; Yu, Miaojie; Yu, Zhi
  4. Global Value Chains: What are the Benefits and Why Do Countries Participate? By Faezeh Raei; Anna Ignatenko; Borislava Mircheva
  5. The International Trade effects of Bilateral Investment Treaties By Benedikt Heid; Isaac Vozzo
  6. Trade liberalization and SO2 emissions: Firm-level evidence from China's WTO entry By Li, Lei; Löschel, Andreas; Pei, Jiansuo; Sturm, Bodo; Yu, Anqi
  7. A highway across the Atlantic? Trade and welfare effects of the EU-Mercosur agreement By Jacopo Timini; Francesca Viani
  8. Marginal Entrants and Trade-Liberalization Effects Across Models of Imperfect Competition By Alfaro, Martin; Lander, David
  9. Sectoral Real Effective Exchange Rate and Industry Competitiveness in Russia By Irina Bogacheva; Alexey Porshakov; Natalia Turdyeva
  10. Capital dynamics, global value chains, competitiveness and barriers to FDI and capital accumulation in the EU By Amat Adarov; Robert Stehrer
  11. Trade Liberalizations with Granular Firms By Alfaro, Martin; Warzynski, Frederic
  12. Learning About Demand Abroad From Wholesalers: a B2B Analysis By Connell, William; Dhyne, Emmanuel; Vandenbussche, Hylke
  13. Measuring the Regional Economic Cost of Brexit: Evidence up to 2019 By Fetzer, Thiemo; Wang, Shizhou
  14. Trade policies for a circular economy: What can we learn from WTO experience? By Steinfatt, Karsten
  15. Intra-African Trade By William W. Olney
  16. Recent export developments in the pharmaceutical sector in Italy and in the Lazio region By Gloria Allione; Raffaello Bronzini; Claire Giordano
  17. Commodity Terms of Trade; A New Database By Bertrand Gruss; Suhaib Kebhaj
  18. The effects of foreign direct investment on job stability: Upgrades, downgrades, and separations By Borrs, Linda; Eppelsheimer, Johann
  19. Skill-Biased Imports, Human Capital Accumulation, and the Allocation of Talent By Lei Li
  20. Export Conditions in Small Countries and their Effects on Domestic Markets By Alfaro, Martin; Warzynski, Frederic
  21. Effective Trade Costs and the Current Account: An Empirical Analysis By Emine Boz; Nan Li; Hongrui Zhang
  22. Trade liberalization and the gender employment gap in China By Wang, Feicheng; Kis-Katos, Krisztina; Zhou, Minghai
  23. An Evidence of Diverging SAARC Economies By Uzma Zia
  24. Did Trump's Trade War Impact the 2018 Election? By Blanchard, Emily; Bown, Chad P.; CHOR, HAN PING DAVIN
  25. Cabotage Sabotage? The Curious Case of the Jones Act By William W. Olney
  26. IO for Export(s) By Mrázová, Monika; Neary, J Peter
  27. Innovation and Corporate Cash Holdings in the Era of Globalization By Konrad Adler; JaeBin Ahn; Mai Chi Dao
  28. COVID-19, the oil price slump and food security in low-income countries By Heigermoser, Maximilian; Glauben, Thomas
  29. A North-South monetary model of endogenous growth with international trade By Óscar Afonso; Tiago Miguel Guterres Neves Sequeira
  30. An International Comparison of FDI Entry Mode (Japanese) By SAITO Yukiko; TAKAYAMA Haruka
  31. Effects of Exchange Rate Volatility on Export Diversity: The Role of Production Constraints By Ngo Van Long; Yifan Li; Zhuang Miao
  32. Macroeconomic Consequences of Tariffs By Davide Furceri; Swarnali A Hannan; Jonathan David Ostry; Andrew K. Rose
  33. Locating pressures on water, energy and land resources across global supply chains By Taherzadeh, Oliver
  34. The asymmetric effects of twenty years of tariff reforms on Egyptian workers By Giorgia Giovannetti; Enrico Marvasi; Arianna Vivoli
  35. Using Equity Market Reactions to Infer Exposure to Trade Liberalization By Andrew N. Greenland; Mihai Ion; John W. Lopresti; Peter K. Schott
  36. Trade Policy Uncertainty and Stock Returns By Federico Esposito; Marcelo Bianconi; Marco Sammon
  37. International and Interprefectural Migration in Japan : Implications for the Spatial Assimilation Theory By Koji Murayama; Jun Nagayasu
  38. Globalization, Redistribution, and the Size of Government By Espinoza, Raphael; Ostry, Jonathan D.; Zhang, Xiaoxiao
  39. International Migration Responses to Natural Disasters: Evidence from Modern Europe's Deadliest Earthquake By Yannay Spitzer; Gaspare Tortorici; Ariell Zimran
  40. Slow Rockets and Fast Feathers or the Link between Exchange Rates and Exports : A Case Study for Pakistan By Brun,Martin; Gambetta,Juan Pedro; Varela,Gonzalo J.
  41. Income Distribution, International Integration and Sustained Poverty Reduction By Goldberg,Pinelopi Koujianou; Reed,Tristan
  42. David Ricardo vs. Gottfried Haberler: When an Austrian mind matches an English classic mind. By Flavia G. Poinsot
  43. What Do Voters Learn from Foreign News? Emulation, Backlash, and Public Support for Trade Agreements By Chun-Fang Chiang; Jason M. Kuo; Megumi Naoi; Jin-Tan Liu
  44. Trade and Political Fragmentation on the Silk Roads: The Economic Effects of Historical Exchange between China and the Muslim East By Christopher Paik; Lisa Blaydes
  45. Globalization and Female Economic Participation in MINT and BRICS countries By Tolulope T. Osinubi; Simplice A. Asongu
  46. Gender Empowerment, Supply-Chain Linkages and Foreign Direct Investment : Evidence on Bangladesh By Fernandes,Ana Margarida; Kee,Hiau Looi
  47. A Theory of Economic Unions By Gancia, Gino; Ponzetto, Giacomo AM; Ventura, Jaume
  48. Macroeconomic effects of tariffs shocks: the role of the effective lower bound and the labour market By Jacquinot, Pascal; Lozej, Matija; Pisani, Massimiliano
  49. Tell me what you export today and I will tell you what you will export tomorrow: The Product Space and the Evolution of Country pattern of specialization By Antonella Chiappelo; Alejandro Danón; Guillermina Marto; Nicolás Pinto
  50. Export Competitiveness - Fuel Price Nexus in Developing Countries: Real or False Concern? By Kangni R Kpodar; Stefania Fabrizio; Kodjovi M. Eklou

  1. By: Tang, Heiwai; Zeng, Douglas Zhihua; Zeufack, Albert G.
    Abstract: This paper studies the relationship between Asia's economic engagements in Africa and individual African nations' participation in global value chains (GVC) over the past two decades. We find that while overall exports from Africa to Asia are still highly concentrated in resource-intensive sectors, a few African countries have exploited the emerging opportunities to diversify export portfolios through exporting to Asia. Each African nation has a distinct main trade partner in Asia, in contrast to the common view that China has become the dominant trade partner of most African nations. Using a panel data set for 46 African countries over 16 years from 2000 and 2015, we find that exports to Asia are positively correlated with exports to the rest of the world, suggesting that in contrast to trade diversion, trade with Asia complements exports to other countries. Asian economic engagement in the continent is associated with countries' exports 'moving up the value chain', as measured by the upstreamness index proposed by Antras et al. (2012). However, such process was accompanied by a reduction in the length of their production chains, implying that fewer stages and countries are now involved in the production of exported goods.
    Keywords: Global Value Chains,Trade,Industrialization,Asia,Africa,Economic Development
    JEL: F1 L6 O1
    Date: 2020
  2. By: Simplice A. Asongu (Yaounde, Cameroon); Joseph Nnanna (The Development Bank of Nigeria, Abuja, Nigeria); Paul N. Acha-Anyi (Walter Sisulu University, South Africa)
    Abstract: This study investigates the simultaneous openness hypothesis by assessing the importance of trade openness in modulating the effect of foreign direct investment (FDI) on economic dynamics of gross domestic product (GDP) growth, real GDP and GDP per capita. The focus of the study is on 25 countries in Sub-Saharan Africa over the period spanning from 1980 to 2014. First, trade imports modulate FDI to induce net positive effects on GDP growth and GDP per capita. Second, trade exports moderate FDI to generate overall positive impacts on GDP growth, real GDP and GDP per capita. Implications of the study are discussed, inter alia: (i) both FDI and trade infrastructures are necessary for FDI-focused measures to engender positive economic development outcomes in host communities and countries. (ii) Macroeconomic conditions that are relevant for promoting economic development are necessary for the interactions between trade openness and FDI to generate favorable outcomes in terms of GDP growth, real GDP and GDP per capita.
    Keywords: Economic Output; Foreign Investment; Sub-Saharan Africa
    JEL: E23 F21 F30 L96 O55
    Date: 2020–01
  3. By: Ludema, Rodney D; Mayda, Anna Maria; Yu, Miaojie; Yu, Zhi
    Abstract: This paper explores the political economy of import protection in a setting where imports may contain a country's own domestic value added (DVA) via domestically produced inputs that get exported and used in foreign downstream production. We show that import-competing producers and their domestic input suppliers are generally allies in favor of protection, but this alliance weakens as DVA increases, because a home tariff on finished goods decreases foreign demand for home inputs. Empirically, we examine detailed discriminatory trade policies of 23 countries toward China and use Chinese transaction-level processing trade data to construct a measure of DVA. We also measure input customization. We find that both upstream and downstream political organization increase downstream protection, but the effect of the former is smaller when DVA as a share of final imports from China is larger. Tariffs on products containing inputs that are neither customized nor politically organized appear to be unaffected by the DVA share.
    Keywords: global value chains; Lobbying; trade policy
    JEL: F10 F13 F14
    Date: 2019–11
  4. By: Faezeh Raei; Anna Ignatenko; Borislava Mircheva
    Abstract: Over the last two decades, world trade and production have become increasingly organized around global value chains (GVC). Recent theoretical work has shown that countries can benefit from participation in GVCs through multiple channels. However, little is known empirically about the economic importance of supply chains. We use the Eora MRIO database to compute different measures of GVC participation for 189 countries and illustrate global patterns of supply chains as well as their evolution over time in order to contribute to this topic. We find that GVC-related trade, rather than conventional trade, has a positive impact on income per capita and productivity, however there is large heterogeneity and the gains appear more signifcant for upper-middle and high-income countries. We document that “moving up” to more high-tech sectors while participating in major supply chains does take place but is not universal, suggesting other factors matter. We confirm the findings of the standard gravity literature for GVC trade; highlighting the key role of institutional features such as contract enforcement and the quality of infrastructure as determinants of GVC participation.
    Keywords: International trade;Exports;Economic development;Production;Globalization;Economic growth;Development;Financial crises;Index numbers;Patterns of trade;global value chains,gains from trade,Country and Industry Studies of Trade,gross export,value-added,value chain,country 's participation,Eora
    Date: 2019–01–18
  5. By: Benedikt Heid (School of Economics, University of Adelaide); Isaac Vozzo (School of Economics, University of Adelaide)
    Abstract: We study the international trade effects of bilateral investment treaties (BITs) and compare them to those of regional trade agreements (RTAs). We find that a typical BIT increases bilateral trade flows by similar amounts as an RTA if the RTA contains an investment chapter. BITs have larger trade effects than RTAs without an investment chapter. Results are robust to controlling for the effects of unilateral investment laws. They imply that evaluations of trade and investment agreements should also consider investment regulation.
    Keywords: Bilateral investment treaties; regional trade agreements; international trade; structural gravity.
    JEL: F13 F14 F15 F23 F53 K33
    Date: 2020–08
  6. By: Li, Lei; Löschel, Andreas; Pei, Jiansuo; Sturm, Bodo; Yu, Anqi
    Abstract: Is trade liberalization contributing to cleaner production amongst manufacturing firms? Theoretical predictions and empirical evidences are mixed. This study utilizes China's dual trade regime and China's WTO entry in 2001 to construct a unique micro dataset on manufacturing firms for China for the period 2000-2007, and performs a difference-in-difference estimation strategy to directly examine this issue. Specifically, normal exporters that saw tariff changes during the same period form the treatment group; while processing exporters that enjoy tariff-exemptions both pre- and post-WTO entry serve as the control group. Results show that China's WTO entry contributed to a lower SO2 emission intensity for normal exporting firms. We further examine the mechanism and show that the productivity channel accounted for the observed pattern. Specifically, more efficient normal exporters saw greater decline of SO2 emission intensity than average normal exporters. This study contributes to a better understanding of the impact of trade on the environment, especially in developing countries. It also complements the literature in terms of providing China's micro evidence on the impact of trade liberalization on firm's environmental performance.
    Keywords: WTO,trade liberalization,dual trade regime,SO2 emission intensity,China
    JEL: F18 Q53 Q56
    Date: 2020
  7. By: Jacopo Timini (Banco de España); Francesca Viani (Banco de España)
    Abstract: In this paper we analyze the EU-Mercosur agreement and predict its effects on trade and welfare using a general equilibrium structural gravity model. First, we estimate the increase in trade flows generated by trade agreements that are similar to the EU-Mercosur one, in a partial equilibrium setting. In a second step, the estimated increase in trade is mapped into reductions in bilateral trade costs and imputed to EU-Mercosur country pairs to compute the general equilibrium effects of the agreement in terms of trade creation, trade diversion, and welfare effects. Our results indicate that the EU-Mercosur agreement is likely to have a positive impact on trade and welfare of both regional blocs, although with substantial heterogeneity both between and within the two areas.
    Keywords: EU, Mercosur, trade agreement, structural gravity, general equilibrium
    JEL: F13 F14 F15 F17
    Date: 2020–07
  8. By: Alfaro, Martin (University of Alberta, Department of Economics); Lander, David (Peking University)
    Abstract: When should we expect a trade shock to create pro competitive effects? In this paper, we investigate this in setups with firm heterogeneity and a linear demand with horizontal product differentiation. Our main finding is that the characterization of marginal entrants completely determines whether pro-competitive effects arise across standard settings of monopolistic competition (i.e., a la Krugman, Melitz, and Chaney/short-run Melitz) and Cournot (with free and restricted entry). This result holds independently of the assumptions on the rest of the firms, and is particularly stark in Cournot, where marginal entrants comprise merely one firm (the last entrant). We also provide conditions on marginal entrants across market structures that lead to pro-competitive, anti competitive, or null effects following a unilateral trade liberalization.
    Keywords: marginal entrants; imperfect competition; import competition; export opportunities
    JEL: D43 F10 F12 L13
    Date: 2020–07–19
  9. By: Irina Bogacheva (Bank of Russia, Russian Federation); Alexey Porshakov (Bank of Russia, Russian Federation); Natalia Turdyeva (Bank of Russia, Russian Federation)
    Abstract: One of the most popular measures for the economy’s cost competitiveness in foreign trade is the real exchange rate. The common approach to its calculation consists in adjusting the nominal exchange rates for the trade-weighted CPI-based inflation differentials between the domestic economy and its major trade partners. Although such approach is most often used for official statistics, the CPI-based real exchange rate does not accurately capture an economy’s competitiveness in foreign trade. The latter is explained by the fact that the CPI naturally considers price changes for both tradable and non-tradable goods. We aim at constructing a set of alternative indicators of REER that would more extensively account for the structure of the Russian economy and its foreign trade and, hence, provide more reliable estimates of changes in Russian economy's cost competitiveness over time. This is done by taking into an account the structure of the Russian economy combined with the specificities of production processes in industries that are extensively involved in foreign trade, as well as integration of Russian industries into global value chains. Against this background, we also show the importance of distinguishing between the output-based and cost-based real exchange rate concepts when addressing the country’s trade competitiveness issue.
    Keywords: Real Effective Exchange Rate, Global Value Chains, Input-Output Tables, Industry Competitiveness
    JEL: F3 F41 F63
    Date: 2020–07
  10. By: Amat Adarov (The Vienna Institute for International Economic Studies); Robert Stehrer (The Vienna Institute for International Economic Studies)
    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
  11. By: Alfaro, Martin (University of Alberta, Department of Economics); Warzynski, Frederic (Aarhus University)
    Abstract: We quantify the effects of trade liberalization accounting for a fact identified with rich firm-product Danish data: the bulk of manufacturing revenue comes from industries where domestic leaders coexist with a competitive fringe. Our framework features firm-level heterogeneity, extensive-margin adjustments, and allows for a subset of non-negligible firms that behave strategically and have positive profits which are passed back to consumers. In this setup, since profits are affected positively by new export opportunities but negatively by tougher competition, gains of trade are not guaranteed. Estimating the model establishes that a trade liberalization increases Danish income and, hence, welfare. Nonetheless, the predicted gains are substantially lower than if we characterize firms as in the standard monopolistic competition framework.
    Keywords: granularity; large firms; gains of trade; small-economy assumption
    JEL: F10 F12 L13
    Date: 2020–07–19
  12. By: Connell, William; Dhyne, Emmanuel; Vandenbussche, Hylke
    Abstract: This paper uses Business to Business (B2B) transaction level data. It shows that manufacturing firms that initially export via a wholesaler are much more likely to become direct exporters to the same destination in subsequent periods. Theoretically, we rationalize this finding by demonstrating how a connection to a wholesaler reduces uncertainty about the foreign demand. In the data we isolate the channel for demand learning from productivity spillovers. Non-exporting manufacturing firms, previously serving a foreign destination through an exporting wholesaler, have a much higher probability of becoming direct exporters to the same export market in subsequent periods. A connection to an exporting wholesaler results in a probability of exporting to the same destination that is six times higher than a comparable firm without any exposure to the foreign destination.
    Keywords: B2B data; direct and indirect exports; learning about demand
    JEL: F14
    Date: 2019–11
  13. By: Fetzer, Thiemo (University of Warwick); Wang, Shizhou (University of Warwick)
    Abstract: The United Kingdom (UK) reported record employment levels following its vote to Leave the European Union (EU), leading to many pundits discarding the dire pre-Brexit vote impact assessments as part of “project fear.” This paper studies the cost of the Brexit-vote to date across UK regions finding significant evidence suggesting that the economic costs of the Brexit-vote are both sizable and far from evenly distributed. Among 382 districts, at least 168 districts appear to be Brexit-vote losers, having lost, on average 8.54 percentage points of output in 2018 compared to their respective synthetic controls. The Brexit-vote costs are increasing in a districts : a) support for Leave in 2016 ; b) the size of its manufacturing sector; c) the share of low skilled. The Brexitvote induced economic divergence across regions is already exacerbating the regional economic inequalities that the 2016 EU referendum vote made apparent. Indirect evidence further suggests that firms may, amidst the significant (trade policy uncertainty, have shifted away from capital to labor in the short term given that Brexit has, to date, not led to changes in market access. The resulting short-term employment - and payroll growth post-2016 is not supported by productivity increases in most parts of the UK. This sets up the possibility for significant labor market adjustments once Brexit becomes a defacto reality. Further, there is some evidence suggesting that COVID19 may exacerbate the regional economic impact of the Brexit-vote to date.
    Keywords: Brexit ; economic impact ; evaluation ; trade barriers JEL codes: F6 ; H2 ; H3 ; H5 ; P16 ; D7
    Date: 2020
  14. By: Steinfatt, Karsten
    Abstract: From its initial focus on minimizing waste generation, the circular economy has evolved into a broad-based approach to make resource use more sustainable. A big part of the appeal of a circular economy is the opportunities it creates not only for resource savings and better human health and environmental outcomes, but also for trade and economic diversification. As interest in circular economy approaches grows, it becomes increasingly important to ensure that trade policies are designed and implemented with the goals of a circular economy in mind. Doing so would bolster the role of trade in scaling up circular economy solutions worldwide. This paper reviews work at the WTO related to the circular economy. It shows how WTO members have addressed issues related to the circular economy through policy dialogue, peer review, negotiations and more recently, Aid for Trade. Experience in these four areas provides valuable insights into how WTO members can expand the positive contribution of trade to a circular economy, not least by: (i) improving their collective understanding of how trade interacts with the circular economy; (ii) building trust and confidence to engage in mutually beneficial activities related to circular economy; (iii) opening and facilitating trade in key areas of the circular economy; and (iv) supporting efforts in developing countries to seize the potential environmental, economic and social benefits of a circular economy through enhanced trade.
    Keywords: international trade,circular economy,resource efficiency,sustainable development,waste,WTO,transparency,policy coordination,Aid for Trade
    JEL: F13 F18 F42 F64 Q56
    Date: 2020
  15. By: William W. Olney (University of Hawaii; Williams College)
    Abstract: This paper examines why the intra-continental trade share in Africa is only 12%, compared to 47% in North America, 53% in Asia, and 69% in Europe. Results show that exports to other African countries decrease more quickly with distance and increase less quickly with economic size, than exports to non-African countries. The analysis investigates possible explanations and identifies factors that promote trade between African countries. Intra-African exports are found to disproportionately increase with infrastructure (especially roads), trade agreements, and a more efficient customs clearing process. Diversifying the domestic economy away from agriculture and towards services is also associated with more intra-African trade. These results can guide efforts to promote African economic integration.
    Keywords: COVID-19; CO2 emissions; fuel consumption; Global VAR (GVAR); conditional forecasts
    JEL: C33 O50 P18 Q41 Q43 Q47
    Date: 2020–06
  16. By: Gloria Allione (Banca d’Italia); Raffaello Bronzini (Banca d’Italia); Claire Giordano (Banca d’Italia)
    Abstract: According to international trade statistics, the pharmaceutical sector, in which Italy has a significant degree of specialization, has contributed markedly to the rebound in Italy’s goods exports since 2010; in 2019 foreign sales of these products recorded a sharp increase, even by international comparison, which was boosted by Italy’s main exporting region, Lazio. The growth in exports benefited from a significant expansion in the productive capacity of a number of firms in the region and to the spread of contract manufacturing, both at the national and regional level. This activity, when it occurs without a change in ownership of the contracted good between the foreign contractee and the contractor in Italy, is defined as “processing” and is included in goods exports sourced from international trade statistics but not in the corresponding series in national accounts. The pharmaceutical sector’s contribution to the growth in total goods exports in Italy in 2019 is smaller when computed net of processing, yet still larger than that recorded in the previous two-year period, confirming the structural soundness of the sector.
    Keywords: international trade, pharmaceutical products, contract manufacturing
    JEL: E01 F10
    Date: 2020–06
  17. By: Bertrand Gruss; Suhaib Kebhaj
    Abstract: This paper presents a comprehensive database of country-specific commodity price indices for 182 economies covering the period 1962-2018. For each country, the change in the international price of up to 45 individual commodities is weighted using commodity-level trade data. The database includes a commodity terms-of-trade index—which proxies the windfall gains and losses of income associated with changes in world prices—as well as additional country-specific series, including commodity export and import price indices. We provide indices that are constructed using, alternatively, fixed weights (based on average trade flows over several decades) and time-varying weights (which can account for time variation in the mix of commodities traded and the overall importance of commodities in economic activity). The paper also discusses the dynamics of commodity terms of trade across country groups and their influence on key macroeconomic aggregates.
    Keywords: Commodity prices;Commodity trade;Terms of trade;Commodity price indexes;Databases;Commodity price fluctuations;Price indexes;Export price indexes;Commodity terms of trade,General,commodity export,net export,country-specific,price variation,fixed weight
    Date: 2019–01–24
  18. By: Borrs, Linda; Eppelsheimer, Johann (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: We use linked employer-employee data to estimate the effect of foreign direct investment (FDI) on workers' job stability. We are the first to consider firm-internal job transitions. Specifically, we examine the impact of FDI on the individual likelihood to up- or downgrade to occupations with more or less analytical and interactive tasks. To do so, we propose an iterative matching procedure that generates a homogeneous sample of firms with equal probabilities of investing. Based on this sample, we use proportional hazard models to retrieve dynamic effects on workers. We find that FDI increases the likelihood of up- and downgrades by 25 and 37 percent, respectively. These effects increase with the share of non-routine and interactive tasks and become measurable two years after the investment. FDI does not increase the hazard of the separation of workers and firms. Instead, there is a temporal lock-in effect after the investment. Our results highlight the importance of firm-internal restructuring as a channel for adjusting to altered labor demand in response to FDI.
    JEL: F16 F23 F66 J23 J62
  19. By: Lei Li
    Abstract: This paper proposes that imported capital goods, which embody skill-complementary technologies, can lead to an increase in the supply of skill in developing countries like China. By exploiting the cross-prefecture variation in imported capital goods, I show that the surge in imported capital goods encourages human capital accumulation and migration in China. To tackle causality, I instrument a prefecture's import growth of capital goods with that in other regions. There are three main findings. Firstly, the regional difference in imported capital goods can explain 27 percent of the regional difference in college share between 2000 and 2010. A prefecture with a $100 increase in imported capital goods per capita had a 1.4 percentage points increase in college share. Secondly, this paper quantifies the importance of the three channels, namely skill acquisition of local stayers, immigration of skilled workers, and emigration of skilled workers, through which imported capital goods increase college share. I find that the first channel is the most important. Thirdly, I trace out the responses of skill supply to the demand shift. I find that imported capital goods increase college wage premium and the effect attenuates over time with the increase in skill supply. with model: it is fine to mention that K import first increase the demand for for skill by moving the demand curve, and then increase the supply by moving the supply curve?
    Keywords: Imported Capital Goods, Demand for Skill, Supply of Skill, Human Capital Accumulation, Migration
    JEL: F14 F16 F66 J24 J61
    Date: 2020–06
  20. By: Alfaro, Martin (University of Alberta, Department of Economics); Warzynski, Frederic (Aarhus University)
    Abstract: This paper studies the impact of better export access on the domestic economy of small countries, where firms of all sizes commonly export due to the limited size of the home market. We propose and estimate a model where small firms, characterized as in monopolistic competition, coexist with large granular firms making quality investments. In our framework, better export access benefits large firms by expanding their sales volume and, hence, reducing their average quality costs. Simultaneously, they are adversely affected by increased domestic competition following entry by small firms. Estimating the model for several Danish industries shows that, while some large firms benefit from better export access, others are severely hurt by the tougher competition at home. In some cases, the latter effect is so pronounced that domestic market share is reallocated towards small firms and total industry profits decrease.
    Keywords: large firms; small firms; quality; export access; small economy; Denmark
    JEL: F12 F14 L11
    Date: 2020–07–19
  21. By: Emine Boz; Nan Li; Hongrui Zhang
    Abstract: A view receiving increased support is that the height of trade costs in prime export sectors has a strong effect on current account balances: countries specializing in sectors that face relatively high trade costs, such as services, tend to run current account deficits, and similarly, countries specializing in low trade cost sectors, such as manufacturing, tend to run current account surpluses. To test this view, we first infer comparative advantages and trade costs, by sector, within a large sample of countries for the period 1970–2014. Then we construct effective trade costs—trade costs weighted by sectoral comparative advantage—to gauge the height of a country’s overall trade costs. Results reveal that, although higher effective exporting costs are associated with lower current account balances, their impact is quantitatively limited; furthermore, the effective costs of importing often have no statistically significant effect.
    Keywords: Global imbalances;Current account;International trade;Trade restrictions;Trade policy;Comparative advantage;Bilateral trade;Patterns of trade;Balance of trade;trade costs,structural gravity model,trade restrictiveness,Country and Industry Studies of Trade,Open Economy Macroeconomics,trade cost,import barrier,trade flow,restrictiveness,MFN
    Date: 2019–01–15
  22. By: Wang, Feicheng; Kis-Katos, Krisztina; Zhou, Minghai
    Abstract: This paper investigates the impact of import liberalization induced labor demand shocks on male and female employment in China. Combining data from population and firm census waves over the period of 1990 to 2005, we relate prefecture-level employment by gender to the exposure to tariff reductions on locally imported products. Our empirical results show that increasing import competition has kept more females in the workforce, reducing an otherwise growing gender employment gap. These dynamics were present both in the local economies as a whole and among formal private industrial firms. Examining channels through which tariff reductions differentially affected males and females, we find that trade induced competitive pressures contributed to a general expansion of female intensive industries, shifts in sectoral gender segregation, reductions in gender discrimination in the labor market, technological upgrading through computerization and general income growth.
    Keywords: Trade liberalization,Import competition,Gender employment gap,China
    JEL: F13 F14 F16 F66 J16
    Date: 2020
  23. By: Uzma Zia (Pakistan Institute of Development Economics, Islamabad)
    Abstract: Assessment of economic-integration and disparities is essential to gain overall glimpse on regional inequalities. Regional trade and investment agreements are critical for economic integration of the regional economies and political harmony. Their contribution to integration and growth of economies is indispensable as they have been instrumental in reducing trade barriers, improving competitiveness, advancing technological options and attracting foreign direct investment. This study attempts to find income-convergence/ divergence among the SAARC countries in the presence of trade liberalisation, technology accumulation, government effectiveness and foreign direct investment. Using ß-convergence, the income-convergence or divergence is examined for the period 1999-2015. Panel estimation techniques used here takes into account regional-heterogeneity. Findings show there is a lack of interregional associations and SAARC as a regional-alliance did not met the expectations in terms of reaping regional benefits. Since the signing of SAPTA and SAFTA the SAARC countries have been on the path of divergence leading us to conclude that SAARC is practically ineffective at this time.
    Keywords: Regional Economic Integration, SAARC, Income-Convergence/ Divergence, ß-convergence, Trade Liberalisation, Technology Accumulation, Government Effectiveness and Foreign Direct Investment
    Date: 2019
  24. By: Blanchard, Emily; Bown, Chad P.; CHOR, HAN PING DAVIN
    Abstract: We findthat Republican candidates lost support in the 2018 US congressional election in counties more exposed to trade retaliation, but saw no commensurate electoral gains from US tariff protection. The electoral losses were driven by retaliatory tariffs on agricultural products, and were only partially mitigated by the US agricultural subsidies announced in summer 2018. Republicans also fared worse in counties that had seen recent gains in health insurance coverage, affirming the importance of health care as an election issue. A counterfactual calculation suggests that the trade war (respectively, health care) can account for five (eight) of Republicans' lost House seats.
    Keywords: Agricultural Subsidies; Health Insurance Coverage; Retaliatory Tariffs; trade policy; Trade War; voting
    JEL: F13 F14
    Date: 2019–11
  25. By: William W. Olney (University of Hawaii; Williams College)
    Abstract: This paper examines the economic implications of the Jones Act, which restricts domestic waterborne shipments to American vessels. Since the passage of this cabotage law a century ago, a plausibly exogenous rise in foreign competition has contributed to the closure of most American shipyards and to a decline in American-built ships. Thus, the Jones Act requirements have become more onerous over time. The results show that domestic shipments are less likely to be transported via water than imports of the same good into the same state. Additional results exploit the decline in Jones-Act-eligible vessels over time and show that this cabotage law has disproportionately decreased domestic water trade especially in coastal states. These findings support common, but to date unverified, claims that the Jones Act impedes domestic trade.
    Keywords: Cabotage; Jones Act; Domestic Trade; Shipping; Trade Policy
    JEL: F14 F68 R48
    Date: 2020–06
  26. By: Mrázová, Monika; Neary, J Peter
    Abstract: We provide an overview and synthesis of recent work on models of monopolistic competition with heterogeneous firms in international trade, paying particular attention to competition effects, pass-through, selection effects, and linking distributions of firm characteristics and outcomes. A recurring theme is that CES preferences are extremely convenient for deriving analytic results, but also extremely restrictive in their theoretical and empirical implications. We introduce the class of "constant-response demand functions" to describe some related families of demand functions that provide a unifying principle for much recent work that explores alternatives to CES demands.
    Keywords: Heterogeneous Firms; Pass-Through; Quantifying Effects of Globalization; Super- and Sub-Convexity; Supermodularity
    JEL: F12 F23 L11
    Date: 2019–11
  27. By: Konrad Adler; JaeBin Ahn; Mai Chi Dao
    Abstract: We document a broad-based trend in rising cash holdings of firms across major industrialized countries over the last two decades, a trend that is most pronounced for firms engaged strongly in R&D activities. Our contributions to the literature are twofold. First, we develop a simple model that brings together the insights from modern trade theory (Melitz, 2003) with those of contract theory in corporate finance (Holmström and Tirole, 1998) to show that increased openness to trade can result in rising returns to innovation and in turn greater demand for cash as firms insure against innovation-induced liquidity risk. Second, we derive sharp empirical predictions and find supporting evidence for them using firm-level data across major G7 countries during 1995-2014, a period that saw an unprecedented rise in globalization and business innovation.
    Keywords: International trade;Corporate finance;Globalization;Trade models;Bilateral trade;Total factor productivity;Trading systems;Financial crises;Real interest rates;cash holdings, R&D, R&,#x0026,D, Models of Trade with Imperfect Competition and Scale Economies,export opportunity,asset ratio,trade cost,cash flow,total asset
    Date: 2019–01–18
  28. By: Heigermoser, Maximilian; Glauben, Thomas
    Abstract: The shutdown measures implemented to fight the Covid-19 pandemic resulted in a historic drop in crude oil prices, which implies existential challenges to countries depending on energy exports. The three largest crude oil exporters in Africa (Algeria, Angola and Nigeria) are - like numerous other raw material exporters worldwide - facing devaluing currencies and dwindling currency reserves. As food security in these states largely depends on imports of wheat and rice, domestic food prices are expected to rise due to the currency depreciation. This puts further pressure on populations with already low incomes, while local shutdowns and reduced economic activity lead to additional income losses. Recent panic buying and (temporary) export restrictions on international grain markets further exacerbate the situation. Not least due to currently ample grain stocks, such measures are not to be recommended. Instead, solidarity amongst nations, taking the form of emergency aid such as debt relief, food deliveries and medical aid, is required more urgently than ever. Furthermore, it is advisable to ease bureaucratic and tariff trade barriers to facilitate international trade. Demands for greater autarchy and de-globalisation should be avoided in the current precarious situation.
    Date: 2020
  29. By: Óscar Afonso (CEF-UP, CEFAGE-UBI and Faculty of Economics of University of Porto); Tiago Miguel Guterres Neves Sequeira (University of Coimbra, Centre for Business and Economics,CeBER, Faculty of Economics)
    Abstract: We devise a North-South endogenous growth model with international trade and money to study the effects of inflation (and monetary policy) on wage inequality, specialization, and growth. The relationship between monetary policy and wage inequality depends on the fact that skilled-production firms are less credit constrained than unskilled-production firms. Interestingly, inflation affects the structure of production by increasing the production share made by skilled-intensive firms, and decreases economic growth. Furthermore, inflation decreases the difference of wage inequality between countries; shrinking the skill premia difference. Moreover, inflation and trade have opposite effects on wage inequality and on specialization: while trade tends to decrease intra-South wage inequality, inflation tends to increase it; while trade tends to increase the number of different intermediate goods produced with unskilled technology in the South; inflation acts the other way around. Results are confirmed quantitatively.
    Keywords: Inflation; Wage inequality; North-South trade; CIA constraints; Technological knowledge bias.
    JEL: F16 F43 O31 O33 O40 E41
    Date: 2020–06
  30. By: SAITO Yukiko; TAKAYAMA Haruka
    Abstract: There are two types of FDI entry modes. The first is greenfield FDI (i.e., an investing firm builds a new foreign affiliate), and the other is cross-border M&A or brownfield FDI (i.e., an investing firm acquires an existing local firm). We investigate how firms choose between entry modes and compare the choices of Japanese, US, German and Chinese firms. Our empirical analysis suggests that more productive Japanese firms choose cross-border M&A rather than greenfield FDI. This evidence contrasts with the existing literature, specifically, Nocke and Yeaple (2008), which suggests that more productive firms conduct greenfield FDI rather than cross-border M&A.
    Date: 2020–07
  31. By: Ngo Van Long; Yifan Li; Zhuang Miao
    Abstract: We develop a model of product-variety adjustment in which a firm's choice of the number of varieties exported to each market (export scope) reflects a trade-off between short-run responses to demand shocks associated with exchange rate fluctuations and the costs of making investment in the production capacity. Firms reduce their export scopes when markets suffer negative demand shocks but, in the case of positive shocks, are unable to expand them adequately, due to insufficient pre-investment in production capacity. As a result, we observe asymmetric export responses to exchange rate fluctuations, and negative effect of exchange rate volatility on exports. Data on Chinese exporters support our predictions. Nous développons un modèle d'ajustement de la variété des produits dans lequel le choix d'une entreprise du nombre de variétés exportées vers chaque marché reflète un compromis entre les réponses à court terme aux chocs de la demande associés aux fluctuations des taux de change et les coûts d’investissement dans la capacité de production. Les entreprises exportent moins de produits lorsque les marchés subissent des chocs de demande négatifs mais, dans le cas de chocs positifs, ne sont pas en mesure d’augmenter le nombre de produits, car la capacité de production a été déterminée. En conséquence, nous observons des réponses asymétriques des exportations aux fluctuations des taux de change et un effet négatif de la volatilité des taux de change sur les exportations. Les données sur les exportateurs chinois confirment nos prévisions.
    Keywords: Multiproduct Firms,Exchange Rate Volatility, Entreprises multiproduits,Volatilité du taux de change
    Date: 2020–07–20
  32. By: Davide Furceri; Swarnali A Hannan; Jonathan David Ostry; Andrew K. Rose
    Abstract: We study the macroeconomic consequences of tariffs. We estimate impulse response functions from local projections using a panel of annual data that spans 151 countries over 1963-2014. We find that tariff increases lead, in the medium term, to economically and statistically significant declines in domestic output and productivity. Tariff increases also result in more unemployment, higher inequality, and real exchange rate appreciation, but only small effects on the trade balance. The effects on output and productivity tend to be magnified when tariffs rise during expansions, for advanced economies, and when tariffs go up, not down. Our results are robust to a large number of perturbations to our methodology, and we complement our analysis with industry-level data.
    Keywords: Productivity;Unemployment;Output;Real effective exchange rates;Economic conditions;Economic analysis;Trade liberalization;Balance of trade;protection,inequality,exchange rate,trade balance,Macroeconomic Analyses of Economic Development,tariff increase,tariff,real exchange rate,outcome variable
    Date: 2019–01–15
  33. By: Taherzadeh, Oliver
    Abstract: Measures which address the degradation and over-exploitation of natural resources are urgently needed, in individual countries and globally. However, the extraction and use of natural resources is highly interconnected, spatially and sectorally, within a complex web of interactions and feedbacks. Conventional resource footprinting does not reveal how pressures on natural resources are distributed across country and sector supply networks. Within this study pressures across the global water, energy and land (WEL) system are located within the supply networks of 189 countries and 24 global sectors. Pathways of water, energy and land use are found to be mainly indirect, arising from country and sector resource dependencies on immediate (Scope 2) and upstream (Scope 3) producers in their supply network. However, the distribution of these pressures is found to exhibit a high level of variation within and between national and sectoral supply networks and resource systems. Such differences in the resource pressure profile of countries and sectors is scarcely recognised by existing modelling approaches or supplier reporting guidelines, but is of major consequence for the study and management of pressures across the WEL system. If measures are not taken to extend accountability for the indirect pressures imposed across the WEL system, the resource burden of consumption will be greatly mismanaged.
    Date: 2020–06–23
  34. By: Giorgia Giovannetti (Università di Firenze); Enrico Marvasi (Università di Firenze); Arianna Vivoli (Università di Firenze)
    Abstract: After more than two decades of trade liberalization, faced with deep structural problems which were exacerbated by the 2008 financial crisis and culminated in the 2011 Spring Revolution and government change, in 2016 Egypt started to protect some sectors from foreign competition. This paper assesses how tariff reforms during the 1998-2018 period affected the Egyptian labour market by focusing on real wages and job stability (i.e. having a permanent position). The empirical analysis is carried out on worker-level data from the available four waves of Egyptian Labour Market Panel Survey (ELMPS), including the recently released 2018 wave. We find that higher tariff protection tends to deteriorate labour market conditions, both lowering real wages and decreasing the probability of finding a stable job. Furthermore, tariff changes show remarkable asymmetries. There is a negative and significant correlation between tariffs increases and real wages, while the positive impact of tariff reductions turns out to be negligible and insignificant. Our findings support the view that in Egypt protectionism hampered working conditions, contributing to inequality, while liberalizations produced minor average effects.
    Keywords: trade policy, labour market, wage, inequality, Egypt
    JEL: F13 F14 F16
    Date: 2020
  35. By: Andrew N. Greenland; Mihai Ion; John W. Lopresti; Peter K. Schott
    Abstract: We outline a method for using asset prices to identify firm exposure to changes in policy. We highlight the benefits of this approach for studying trade agreements and apply it to two US trade liberalizations, with China and Canada. We find that abnormal equity returns during key events associated with these liberalizations are correlated with standard measures of import competition, vary across firms even within industries, predict subsequent firm outcomes, and provide a more complete view of distributional implications. In both cases, predicted relative increases in operating profit among the largest firms dwarf the relative losses of smaller firms.
    JEL: E0 F13 F14 G12
    Date: 2020–07
  36. By: Federico Esposito; Marcelo Bianconi; Marco Sammon
    Abstract: We examine how trade policy uncertainty is reflected in stock returns. Our identification strategy exploits quasi-experimental variation in exposure to trade policy uncertainty arising from Congressional votes to revoke China’s preferential tariff treatment between 1990 and 2001. More exposed industries commanded a risk premium of 6% per year. The risk premium was larger in sectors less protected from globalization, and more reliant on inputs from China. More exposed industries also had a larger drop in stock prices when the uncertainty began, and more volatile returns around key policy dates. Moreover, the effects of policy uncertainty on expected cash-flows, investors’ forecast errors, and import competition from China cannot explain our results.
    Date: 2020
  37. By: Koji Murayama; Jun Nagayasu
    Abstract: We study the spatial assimilation of foreign residents in Japan by analyzing the con- centration tendency among foreigners who arrive from overseas and relocate within Japan. Using spatial models, we nd that immigrants from overseas tend to move to ethnically concentrated prefectures in Japan; this nding aligns with the spa- tial assimilation theory. In contrast, this trend weakens substantially with their subsequent domestic relocation in Japan, and it di ers by national group. Slow assimilation is found among nationals from countries characterized as being low- income or culturally dissimilar from Japan.
    Date: 2020–07
  38. By: Espinoza, Raphael; Ostry, Jonathan D.; Zhang, Xiaoxiao
    Abstract: This paper investigates how trade and financial globalization affect government decisions to redistribute via spending and taxation, using a large panel covering around 100 democratic countries over the period 1970-2015. We use a time-varying external instrument in regressions with fixed and time effects in order to overcome endogeneity concerns that have plagued the earlier literature. Our findings support the view that more open economies have bigger governments. The paper also examines the impact of globalization on different types of social spending and taxes. We find that trade openness increases the tax burden on labor income and reduces the tax burden on capital income and that financial openness reduces corporate income tax rates. In addition, exposure to trade pushes governments to spend more on labor programs and family benefits. Finally, the paper does not find that political institutions affect the sensitivity of public spending to globalization.
    Keywords: Financial Liberalization; Government size; redistribution; Trade openness
    JEL: F68 H11 H53
    Date: 2019–11
  39. By: Yannay Spitzer; Gaspare Tortorici; Ariell Zimran
    Abstract: The Messina-Reggio Calabria Earthquake (1908) was the deadliest earthquake and arguably the most devastating natural disaster in modern European history. It occurred when overseas mass emigration from southern Italy was at its peak and international borders were open, making emigration a widespread phenomenon and a readily available option for disaster relief. We use this singular event and its unique and important context to study the effects of natural disasters on international migration. Using commune-level data on damage and annual emigration, we find that, despite massive destruction, there is no evidence that the earthquake had, on average, a large impact on emigration or its composition. There were, however, heterogeneous and offsetting responses to the shock, with a more positive effect on emigration in districts where agricultural day laborers comprised a larger share of the labor force, suggesting that attachment to the land was an impediment to reacting to the disaster through migration. Nonetheless, relative to the effects of ordinary shocks, such as a recession in the destination, this momentous event had a small impact on emigration rates. These findings contribute to literatures on climate- and disaster-driven migration and on the Age of Mass Migration.
    JEL: F22 J61 N33 N53 O13 O15 Q54
    Date: 2020–07
  40. By: Brun,Martin; Gambetta,Juan Pedro; Varela,Gonzalo J.
    Abstract: Export responses to real exchange rate (RER) depreciations in Pakistan are lower than those to appreciations. This paper empirically documents this asymmetric response using macro-level data. It then relies on a disaggregated export product?level data set for 2003-17 to test, within a panel fixed-effects framework, three hypotheses explaining the low export response to depreciations, focusing on information costs, supply constraints, and pricing to market. The analysis finds that (i) exports of differentiated products grow more slowly when the RER depreciates than they fall when it appreciates; (ii) exports from sectors with relatively greater supply constraints -- in particular related to accessing finance- respond less to depreciations than to appreciations; and (iii) dollar prices for Pakistani exports tend to fall after nominal depreciations of the Pakistani rupee, in violation of the Dominant Currency Paradigm and consistent with pricing-to-market behavior, further accounting for the low response of exports to RER depreciations.
    Keywords: International Trade and Trade Rules,Access to Finance,Finance and Development,Financial Economics,Labor Markets,Legal Institutions of the Market Economy
    Date: 2020–08–10
  41. By: Goldberg,Pinelopi Koujianou; Reed,Tristan
    Abstract: What is the pathway to development in a world with less international integration? This paper answers this question within a model that emphasizes the role of demand-side constraints on national development, which is identified with sustained poverty reduction. In this framework, development is linked to the adoption of an increasing returns to scale technology by imperfectly competitive firms that 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 purchasing power parity in 2011 US dollars over a five year period. This outcome is affected in a statistically significant and economically meaningful way by 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 or lower-middle income country does not live in a market large enough to experience sustained poverty reduction.
    Keywords: Inequality,International Trade and Trade Rules,Trade and Services,Labor Markets,Food Security
    Date: 2020–07–29
  42. By: Flavia G. Poinsot
    Abstract: In many textbooks of international trade we read that the theory of comparative advantage, of Ricardo, determines its relative prices in function of the labor-cost theory. This approach, actually, emerges with Haberler by 1930s. For Haberler, the Ricardo’s theory of comparative advantage is robust, but not the labor-cost doctrine which, he assumes, Ricardo applies. Haberler, then, reformulates the theory from the Austrian outlook which rejects the classical labor theory of value. The process, epistemologically speaking, resembles that of a Lakatosian “research program”, because while the hard core, the theory of comparative advantage, does not change, the assumptions and the labor-cost theory are eliminated. However, would Ricardo agree with Haberler in that he based the theory of comparative advantage in the labor-cost hypothesis? And, why Haberler thinks, without doubt, that Ricardo adheres to the labor-cost theory? This paper is an attempt to answer these questions.
    Keywords: David Ricardo, Gottfried Haberler, theory of value, theory of comparative advantage, Austrian school of thoughts, epistemology
    JEL: B31 B53 B25 B12 F10
    Date: 2019–11
  43. By: Chun-Fang Chiang; Jason M. Kuo; Megumi Naoi; Jin-Tan Liu
    Abstract: The paper demonstrates voter-based mechanisms underlying policy emulation across countries. We argue that exposure to news about foreign government policies and their effect can change policy preferences of citizens through emulation and backlash against it. These heterogeneous responses arise due to citizens’ divergent predispositions about a foreign country being their peer. We test this argument with coordinated survey experiments in Japan and Taiwan, which randomly assigned news reporting on the South Korea-China trade agreement and solicited support for their government signing an agreement with China. The results suggest that exposure to the news decreases opposition to a trade agreement with China by 6 percentage points in Taiwan (“emulation”) and increases opposition around 8 percentage points in Japan (“backlash”). The results further suggest respondents’ predispositions about peer countries account for the heterogeneity. Our findings caution the optimism about policy convergence across countries as technology lowers the cost of acquiring information.
    JEL: D7 F13 L82
    Date: 2020–07
  44. By: Christopher Paik; Lisa Blaydes (Division of Social Science)
    Abstract: The Silk Roads stretched across Eurasia, connecting East and West for centuries. At its height, the network of trade routes enabled merchants to travel from China to the Mediterranean Sea, carrying with them high-value commercial goods, the exchange of which encouraged urban growth and prosperity. We examine the extent to which urban centers thrived or withered as a function of shocks to trade routes, particularly political fragmentation along natural travel paths. We find that political fragmentation along the roads to Aleppo and historic Chang'an - major terminus locations for cross-regional trade - damaged city growth. These conclusions contribute to our understanding of how a pre-modern international system operated through an examination of exchange between the two most developed world regions of the medieval and early modern periods, China and the Muslim East.
    Date: 2019–12
  45. By: Tolulope T. Osinubi (Obafemi Awolowo University, Ile-Ife, Nigeria); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: This study examines the effect of globalization on female economic participation (FEP) in MINT (Mexico, Indonesia, Nigeria & Turkey) and BRICS (Brazil, Russia, India, China & South Africa) countries between 2004 and 2018. Four measures of globalization are employed and sourced from KOF globalization index, 2018, while the female labour force participation rate is a proxy for FEP. The empirical evidence is based on Pooled Mean Group (PMG) estimators. The findings of the PMG estimator from the Panel ARDL method reveal that political and overall globalization in MINT and BRICS countries have a positive impact on FEP, whereas social globalization exerts a negative impact on FEP in the long-run. It is observed that economic globalization has no long-run effect on FEP. Contrarily, all the measures of globalization posit no short-run effect on FEP in the short-run. This supports the argument that globalization has no immediate effect on FEP. Thus, it is recommended that both MINT and BRICS countries should find a way of improving the process of globalization generally to empower women to be involved in economic activities. This study complements the extant literature by focusing on how globalization dynamics influence FEP in the MINT and BRICS countries.
    Keywords: Globalization; female; gender; labour force participation; MINT and BRICS countries
    JEL: E60 F40 F59 D60
    Date: 2020–08
  46. By: Fernandes,Ana Margarida; Kee,Hiau Looi
    Abstract: This paper studies foreign direct investment spillovers on the gender-related labor market practices of domestic firms, based on a unique firm-to-firm data set of Bangladesh's textiles and garment sectors. The paper looks at the female employment of domestic firms that are directly and indirectly related to foreign direct investment firms through supply chain linkages. These domestic firms are either the local suppliers or customers of foreign direct investment firms, or they share local suppliers and customers with foreign direct investment firms. The estimates show that domestic firms related to foreign direct investment firms have significantly more female administrative workers, but not necessarily female non-administrative workers, due to the former participating in more firm-to-firm interactions.
    Date: 2020–07–27
  47. By: Gancia, Gino; Ponzetto, Giacomo AM; Ventura, Jaume
    Abstract: After decades of successful growth, economic unions have recently become the focus of heightened political controversy. We argue that this is partly due to the growth of trade between countries that are increasingly dissimilar. We develop a theoretical framework to study the effects on trade, income distribution and welfare of economic unions that differ in size and scope. Our model shows that political support for international unions can grow with their breadth and depth as long as member countries are sufficiently similar. However, differences in economic size and factor endowments can trigger disagreement over the value of unions between and within countries. The model is consistent with some salient features of the process of European integration and statistical evidence from survey data.
    Keywords: Economic unions; European integration; non-tariff barriers
    JEL: D71 F15 F55 F62 H77
    Date: 2019–11
  48. By: Jacquinot, Pascal; Lozej, Matija; Pisani, Massimiliano
    Abstract: We simulate a version of the EAGLE, a New Keynesian multi-country model of the world economy, to assess the macroeconomic effects of US tariffs imposed on one country member of the euro area (EA), and the rest of the world (RW). The model is augmented with an endogenous effective lower bound (ELB) on the monetary policy rate of the EA and country-specific labour markets with search-and-matching frictions. Our main results are as follows. First, tariffs produce recessionary effects in each country. Second, if the ELB holds, then the tariff has recessionary effects on the whole EA, even if it is imposed on one EA country and the RW. Third, if the ELB holds and the real wage is flexible in the EA country subject to the tariff, or if there are segmented labour markets with directed search within each country, then the recessionary effects on the whole EA are amplified in the short run. Fourth, if the elasticity of substitution among tradables is low, then the tariff has recessionary effects on the whole EA also when the ELB does not hold. JEL Classification: F16, F41, F42, F45, F47
    Keywords: DSGE models, monetary policy, protectionism, unemployment
    Date: 2020–07
  49. By: Antonella Chiappelo; Alejandro Danón; Guillermina Marto; Nicolás Pinto
    Abstract: Countries pattern of specialization and its evolution has been economic area of notable interest by academy and policy makers. Moreover, many authors show that economies grow by improving the number and complexity of the products that they produce. Hidalgo, Klinger, Barabasi and Hausmann (2007) constructed the Product Space, a network that maps the connection, between every product worldwide traded, in order to explain the evolution of countries pattern of specialization. However, this matrix estimates a conditional probability of exporting products using a symmetrical approach, that tends to punish more tradable products. In order to improve the predictions of the evolution of country productive structure, we propose an asymmetrical measure, assuming that the conditional probability of exporting a product P given P ́ is exported is not the same as the reverse. Consequently, this new measure predicts nearly 40% of the developed products and more than 70% of the declined products.
    Keywords: Product Space, Economic Development, Trade
    JEL: O1 O2 F1
    Date: 2019–11
  50. By: Kangni R Kpodar; Stefania Fabrizio; Kodjovi M. Eklou
    Abstract: This paper investigates the impact of domestic fuel price increases on export growth in a sample of 77 developing countries over the period 2000-2014. Using a fixed-effect estimator and the local projection approach, we find that an increase in domestic gasoline or diesel price adversely affects real non-fuel export growth, but only in the short run as the impact phases out within two years after the shock. The results also suggest that the negative effect of fuel price increase on exports is mainly noticeable in countries with a high-energy dependency ratio and countries where access to an alternative source of energy, such as electricity, is constrained, thus preventing producers from altering energy consumption mix in response to fuel price changes.
    Keywords: Export competitiveness;Export growth;Oil subsidies;Energy prices;Demand elasticity;Developing countries;Retail fuel prices,Fuel Subsidies,Export growth,Developing countries.,fuel price increase,non-fuel,fuel price,price shock,energy price
    Date: 2019–02–04

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