nep-int New Economics Papers
on International Trade
Issue of 2020‒08‒24
47 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Rising Import Tariffs, Falling Export Growth: When Modern Supply Chains Meet Old-Style Protectionism By Kyle Handley; Fariha Kamal; Ryan Monarch
  2. Offshoring: What Consequences for Workers? Evidence from Global Value Chains By Katharina Längle
  3. The Impact of Restrictive Measures on Bilateral FDI in OECD Countries By Zongo, Amara
  4. Upgrading of Exports: Does the Integration into Trade Agreements Pave the Way to Product Upgrading? By Katharina Längle
  5. Spanish regions in Global Value Chains: How important? How different? By Elvira Prades-Illanes; Patrocinio Tello-Casas
  6. On the Simultaneous Openness Hypothesis: FDI, Trade and TFP Dynamics in Sub-Saharan Africa By Simplice A. Asongu; Joseph Nnanna; Paul N. Acha-Anyi
  7. Rents, “infant industry” and contingent protection policies: gains and losses for Argentina’s biodiesel industry By Nogues, Julio; O'Connor, Ernesto
  8. TBTs, Firm Organization and Labour Structure By Giorgio Barba Navaretti; Lionel Fontagné; Gianluca Orefice; Giovanni Pica; Anna Rosso
  9. Internationalization strategies of multi-product firms: The role of technology By Daniel Baumgarten; Michael Irlacher; Karin Mayr-Dorn
  10. Estimation of the scale of export barriers concentrated on different parts of the EAEU border By Kuznetsov, Dmitriy (Кузнецов, Дмитрий)
  11. Toward the path of Economic Expansion in Nigeria: The Role of Trade Globalization By Udi Joshua; Oladimeji M. Salami; Andrew A. Alola
  12. Technological Diffusion through Foreign Direct Investment: A Firm-level Analysis of Indian Manufacturing Industries By Azusa Fujimori; Manabu Furuta; Takahiro Sato
  13. Product-Level Trade Elasticities: Worth Weighting For By Lionel Fontagné; Houssein Guimbard; Gianluca Orefice
  14. Internationally Linked Firms, Integration Reforms and Productivity : Evidence from Pakistan By Lovo,Stefania; Varela,Gonzalo J.
  15. Where You Export Matters: Measuring Uncertainty in Turkey's Export Markets By Jianchun Fang; Giray Gozgor; Sercan Pekel
  16. Migration and Trade during the Belle Époque in Argentina (1870-1913) By Giuseppe De Arcangelis; Rama Dasi Mariani; Federico Nastasi
  17. Competition in Taxes and IPR By Ronald B. Davies; Yutao Han; Kate Hynes; Yong Wang
  18. Working Paper 335 - Intra-African Foreign Direct Investment (FDI) and Employment: A Case Study By ECMR African Development Bank
  19. Foreign Direct Investment and Knowledge Diffusion in Poor Locations By Abebe, Girum; McMillan, Margaret; Serafinelli, Michel
  20. Productivity trends and drivers in global agriculture: could the UK match up in a post Brexit world? By Revell, Brian
  21. (Unintended) Consequences of export restrictions on medical goods during the Covid-19 pandemic By Marco Grassia; Giuseppe Mangioni; Stefano Schiavo; Silvio Traverso
  22. Protectionism and the effective lower bound in the euro area By Pietro Cova; Alessandro Notarpietro; Massimiliano Pisani
  23. Critically important: the heterogeneous effect of diplomatic tensions on trade By Hinz, Julian; Leromain, Elsa
  24. The Tariff Tripod of Pakistan: Protection, Export Promotion, and Revenue Generation By Jamil Nasir
  25. Trade shocks and credit reallocation By Stefano Federico; Fadi Hassan; Veronica Rappoport
  26. Trade, technology, and absorptive capacity: Firm-level evidence across geographical clusters in the Tanzanian textiles and apparel sector By Amrita Saha; André Castro; Marco Carreras; Daniele Guariso
  27. Does Foreign Direct Investment Induces Societal Development in India? By Dr. A. Muthusamy
  28. Competition and inclusive regional economic growth in food production: Barriers to entry and the role of African multinational corporations By Teboho Bosiu; Thando Vilakazi
  29. Fuel-mining exports and growth in a developing state: the case of the UAE By Kalaitzi, Athanasia Stylianou; Chamberlain, Trevor William
  30. The domestic economic impacts of immigration By David Roodman
  31. Globalization, Time-Preferences, and Populist Voting By Aronsson, Thomas; Hetschko, Clemens; Schöb, Ronnie
  32. Investigating the fiscal resource curse: What's China got to do with it? By Daniel Chachu; Edward Nketiah-Amponsah
  33. Intellectual property aspects of the Japan-EU economic partnership agreement By Bonadio, Enrico; Mcdonagh, Luke; Sillanpaa, Tiffany M.
  34. Export performance and capacity pressures in Central and Eastern Europe By Karsten Staehr
  35. Why Does Globalization Fuel Populism? Economics, Culture, and the Rise of Right-wing Populism By Dani Rodrik
  36. Service Trade Restrictions of the EEA Countries: A Multivariate Data Analysis for the European Business Services By Andre Jungmittag
  37. Globalization and gender inequality: Evidence from South Africa By Caro Janse van Rensburg; Carli Bezuidenhout; Marianne Matthee; Victor Stolzenburg
  38. Offshoring to a Developing Nation with a Dual Labor Market By Bandyopadhyay, Subhayu; Basu, Arnab K.; Chau, Nancy H.; Mitra, Devashish
  39. The Dynamics of the Current Global Restructuring and Contemporary Framework of the US–China Trade War By Vlados, Charis
  40. Trade Wars: Nobody Expects the Spanish Inquisition By Bekkers, Eddy; Francois, Joseph; Nelson, Doug R; Rojas-Romagosa, Hugo
  41. Fast tracking the SADC integration agenda to unlock regional collaboration gains along growth corridors in Southern Africa By Alexis Habiyaremye
  42. WTO'ing a Resolution to the China Subsidy Problem By Bown, Chad P.; Hillman, Jennifer
  43. Has immigration contributed to the rise of right-wing extremist parties in Europe? By Anthony Edo; Yvonne Giesing
  44. Liberal trade policy and food insecurity across the income distribution: an observational analysis in 132 countries, 2014–17 By Barlow, Pepita; Loopstra, Rachel; Tarasuk, Valerie; Reeves, Aaron
  45. OPTIMUM CURRENCY AREA INDEX FOR THE ECONOMIC COMMUNITY OF WEST AFRICAN STATES (ECOWAS) By Ngozi E. Egbuna; Ismaila Jarju; Sani Bawa; Ibrahima Diallo; Olukayode S. Odeniran; Isatou Mendy; Edward Nyarko
  46. The geography of innovation and development: global spread and local hotspots By Crescenzi, Riccardo; Iammarino, Simona; Ioramashvili, Carolin; Rodríguez-Pose, Andrés; Storper, Michael
  47. Incentives, Globalization, and Redistribution By Andreas Haufler; Carlo Perroni

  1. By: Kyle Handley (University of Michigan and NBER); Fariha Kamal (U.S. Census Bureau); Ryan Monarch (Board of Governors of the Federal Reserve)
    Abstract: We examine the impacts of the 2018-2019 U.S. import tariff increases on U.S. export growth through the lens of supply chain linkages. Using 2016 confidential firm-trade linked data, we identify firms that eventually faced tariff increases. They accounted for 84% of all exports and represented 65% of manufacturing employment. For the average affected firm, the implied cost is $900 per worker in new duties. We construct product-level measures of exporters' exposure to import tariff increases and estimate the impact on U.S. export growth. The most exposed products had relatively lower export growth in 2018-2019, with larger effects in 2019. The decline in export growth in 2019Q3, for example, is equivalent to an ad valorem tariff on U.S. exports of 2% for the typical product and up to 4% for products with higher than average exposure.
    Keywords: Global supply chains; tari s; trade war; U.S. exports
    JEL: F1 F13 F14 F23 H2
    Date: 2020–08
  2. By: Katharina Längle (Centre d'Economie de la Sorbonne - Université Paris 1 panthéon-Sorbonne, Paris School of Economics;
    Abstract: This paper investigates the question which aspects of offshoring harm low skilled workers using data from the WIOD for 14 manufacturing industries in 16 countries between 1995 and 2008. By considering the use of foreign production factors in domestic production, the paper shows that low skilled workers are directly and negatively affected by offshoring of low skilled tasks. Importantly, the paper determines a further indirect channel highlighting the role of growing foreign competition in domestic markets for intermediate goods. Accordingly, wage shares of low skilled workers decline when competition in domestic downstream value chains increases. Interpreting this channel in the light of the litterature on defensive skill-biased innovation, the shift in wage shares away from low skilled workers might be provoked by skill intensive investments in response to tougher foreign competition in domestic markets for intermediate goods
    Keywords: Global value chains; Input-Output Tables and Analysis; Organization of Production; Empirical Studies of Trade
    JEL: F23 L23 L24 M11
    Date: 2020–04
  3. By: Zongo, Amara
    Abstract: In 2016, some 55 economies introduced at least 112 measures affecting foreign investment. Two thirds of these measures sought to liberalise, promote and facilitate new investment (falling since 2016). Almost a third of these measures are new restrictions (increasing since 2016). Restrictive policies are growing in trade policy choices. This paper investigates the effects of restrictions on FDI stocks among OECD countries. Using a gravity model with panel data from 2010 to 2017 for all OECD countries, we suggest negative effects of restrictions on FDI stocks. Services sector deregulation and strict environmental restrictions have positive effects on FDI. Therefore, the difference in FDI restrictions between countries emerges as the key factor for foreign investment. This study also shows the substitution between foreign and domestic investment in the presence of FDI restrictions. The optimal policy to be implemented to attract FDI is to liberalise or deregulate the services sector specifically the financial sector.
    Keywords: International Trade, FDI stocks, FDI restrictions, OECD countries, gravity model
    JEL: F1 F13 F14 K23
    Date: 2020–03–15
  4. By: Katharina Längle (Centre d'Economie de la Sorbonne - Université Paris 1 panthéon-Sorbonne, Paris School of Economics;
    Abstract: This paper investigate whether trade agreements help middle income countries to upgrade their product portfolio exported to high income countries. Combining product level trade flows from the CEPPII-Baci database with information on product complexity from the Atlas of Economic Complexity and the DESTA database on trade agreements, this question is studied for a set of 135 countries between 2001 and 2013 based on a gravity framework. In thhis context, the development of the extensive and intensive margins for high complex products is considered as proxy for product upgrading. By exploiting the cross sectional dimension of the panel, this study finds that middle income countries export a wider product scope of complex goods if their trade relation is covered by an agreement including trade provisions related to competition, services and investments, compared to country pairs without an equivalent framework. Still, the consideration of the time dimension leads to ambiguous effect of these provisions. While positive estimation results for the intensive margin of complex goods are in line with related papers, negative effects on the extensive margin of complex goods are at odds with expectations of the mechanism between agreements and trade
    Keywords: Empirical Studies of Trade; Economic Complexity; Trade Integration
    JEL: F14 F15 F53
    Date: 2020–04
  5. By: Elvira Prades-Illanes (Banco de España); Patrocinio Tello-Casas (Banco de España)
    Abstract: The recent release of EUREGIO, a novel global input-output database with regional detail for EU countries, allows to analyze the participation of EU regions in Global Value Chains and their implications for the propagation of sector-specific shocks. We focus on Spanish regions to exploit the granular information embedded in this database. We first characterize foreign and domestic trade inter-linkages of Spanish regions and sectors. Using an extended version of the Leontief scheme, we compute upstream output and value added multipliers. Then, we calculate indicators developed in the Global Value Chain literature to breakdown each region trade flows, both exports and outflows, into value added components. Finally, by means of examples, we analyze the role of networks (domestic or foreign) in the propagation of demand shocks (from customers to suppliers), to evaluate the heterogeneous impact across regions and to illustrate the potential of this approach. Our findings indicate that Spanish regions participate differently in Global Value Chains and this fact may have important implications in the propagation of shocks. According with our results, the strongest user-supplier linkages are usually within the same sector, and, in general, with industries within the same region or other Spanish regions. The Basque Country is the region with sectors with the largest total output-multipliers and Catalonia with the lowest ones. Concerning their participation in Global Value Chains, the Basque Country is the most integrated region in the backward segment of the value chain, closely followed by Madrid, while Catalonia –and a lesser extent Canary Islands– shows a comparatively low participation. Concerning the forward participation, Catalonia shows the largest one on exports, while Madrid and the Basque Country in outflows.
    Keywords: Global Value Chains, input-output structure, networks, EUREGIO
    JEL: F14 F15
    Date: 2020–08
  6. 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 assesses the simultaneous openness hypothesis that trade modulates foreign direct investment (FDI) to induce positive net effects on total factor productivity (TFP) dynamics. Twenty-five countries in Sub-Saharan Africa and data for the period 1980 to 2014 are used. The empirical evidence is based on the Generalised Method of Moments. First, trade imports modulate FDI to overwhelmingly induce positive net effects on TFP, real TFP growth, welfare TFP and real welfare TFP. Second, with exceptions on TFP and welfare TFP where net effects are both positive and negative, trade exports modulate FDI to overwhelmingly induce positive net effects on real TFP growth and welfare real TFP. In summary, the tested hypothesis is valid for the most part. Policy implications are discussed.
    Keywords: Productivity; Foreign Investment; Sub-Saharan Africa
    JEL: E23 F21 F30 L96 O55
    Date: 2020–01
  7. By: Nogues, Julio; O'Connor, Ernesto
    Abstract: Abstract Since 2007 and in response to nascent legislation providing subsidies, Argentina’s biodiesel industry started growing fast. The legislation was approved on the target idea that the economy should diversify away from exporting primary products, and shifting to higher processing stages in this case, shifting from soybeans to soybean oil and biodiesel. Initially, responding to these policies clearly tilted towards foreign sales, most of the output was exported. Nevertheless, these export subsidies put investment at risk when the EU imposed antidumping measures. More recently, policies have been tilted towards sales in the domestic market but at the cost of government controlled biodiesel prices. The paper offers estimates of protectionist rents (subsidies) received by the industry from export sales, as well as from sales in the domestic market. We also address the future risks in international markets of continuing with a policy of subsidized exports.
    Keywords: Biodiesel, escalated export taxes, export subsidies, Argentina, European Union, antidumping.
    JEL: F13 F14 F61 Q48
    Date: 2020–08
  8. By: Giorgio Barba Navaretti (Universita degli Studi di Milano and LdA); Lionel Fontagné (Paris School of Economics, Université Paris I & CEPII); Gianluca Orefice (University of Paris-Dauphine, CEPII and CESifo); Giovanni Pica (Universita della Svizzera Italiana, LdA and CSEF); Anna Rosso (Universita degli Studi di Milano, LdA and CEP)
    Abstract: This paper investigates the effects on firms' occupational structure of shocks induced by the intro- duction of Technical Barriers to Trade (TBTs) in importing countries. We rely on the Specific Trade Concern (STC) data released by the WTO to identify trade-restrictive TBT measures, combined with matched employer-employee data for the population of French exporters over the period 1995- 2010, and with information on the list of product-destinations served by each French exporter. Con- trolling for time-invariant firm/occupation effects and for time-varying sector/occupation shocks, IV estimates show that exporters respond to increased complexity associated with restrictive TBTs at destination by raising the share of managers at the expense of blue collars, white collars and professionals. This evidence is consistent with the growing literature exploring how firms organize their workforce composition in presence of exogenous (foreign) shocks; and it is also related to the well-beaten literature on the labour market effects of trade.
    Keywords: skill composition, labor demand, trade barriers, non-tariff measures
    JEL: F13 F14 J53
    Date: 2020–06
  9. By: Daniel Baumgarten; Michael Irlacher; Karin Mayr-Dorn
    Abstract: High-performance frrms typically have two features in common: i) they produce in more than one country and ii) they produce more than one product. In this paper, we analyze the internationalization strategies of multi-product frrms at the product-level. We find that the most productive frrms sell core varieties via foreign direct investment (FDI) and export products with intermediate productivity. Shocks to trade costs and technology a ect the endogenous decision to export or produce abroad at the product-level and, in turn, the relative productivity between parents and aliates.
    Keywords: Multi-product firms; FDI; exports; exible manufacturing
    JEL: F12 F23 L25 L11
    Date: 2020–06
  10. By: Kuznetsov, Dmitriy (Кузнецов, Дмитрий) (The Russian Presidential Academy of National Economy and Public Administration)
    Abstract: The basis of the data used is the detailed data of the customs statistics of Russia. An empirical model for assessing the level of barriers to export at the customs border of the Russian Federation can be obtained on the basis of the simplest theoretical model of route selection by an international freight carrier. The study showed that time costs affect the flow of trade not only through an increase in transport costs, but also directly, reducing the value of the transaction for the seller and / or buyer. The magnitude of these effects is comparable, but for consumer goods, a relatively greater contribution of the direct component can be noted. In turn, this indicates that, generally speaking, the contribution of the time component to trade costs between the two countries depends, inter alia, on the structure of trade.
    Date: 2020–04
  11. By: Udi Joshua (Lokoja, Kogi state, Nigeria); Oladimeji M. Salami (Lokoja, Kogi state, Nigeria); Andrew A. Alola (Istanbul Gelisim University, Istanbul, Turkey)
    Abstract: There are debates regarding the effect of globalization on national economies, and whether or not trade openness has a significant positive or negative influence on economic expansion and development. Thus, this study is aimed at investigating the relationship between trade globalization and Nigeria’s economic advancement. The autoregressive distributed lags (ARDL) model was employed for the time series data: real GDP, openness, foreign direct investment and population growth over the period 1981-2017. The findings of this estimation revealed that population growth is significant but inhibitor of economic prosperity (real GDP) in the short-term. However, the significant and long-run determinants of the real GDP are population growth and trade openness but not foreign direct investment. Furthermore, the Granger Causality test revealed that real GDP granger causes population growth. The study therefore concluded that trade openness and globalization are necessary for Nigeria’s economic expansion and development. Consequently, the study opined that the land border closure policy recently implemented by the Nigerian government might necessitate a significant reassessment so that the economic development projections of the country are not hindered.
    Keywords: Economic Expansion; Trade Globalization; Nigeria
    Date: 2020–01
  12. By: Azusa Fujimori (Department of Management, Osaka Seikei University, Japan); Manabu Furuta (Department of Economics, Aichi Gakuin University, Japan); Takahiro Sato (Research Institute for Economics and Business Administration, Kobe University, Japan)
    Abstract: This study examines technology diffusion resulting from foreign direct investment (FDI) in the domestic manufacturing sector in India. We employ unit-level panel data (where a unit refers to an enterprise within the manufacturing sector) from 2000 to 2007, covering all medium- and large-size manufacturing enterprises in India, obtained from India's Central Statistics Office. We attempt to empirically capture evidence of FDI technology spillover effects through two key mechanisms: horizontal spillover (technology diffusion within the same industry) and vertical spillover (technology diffusion between foreign firms and their customer or suppliers). Vertical spillover effects can be further divided into backward linkages (technology diffusion from foreign firms to upstream industries), and forward linkages (technology diffusion from foreign firms to downstream industries). In addition, technology diffusion can be the result of both short- and long-term spillover effects. The results of the empirical analyses highlight the presence of short- and long-term horizontal spillover effects, both of which negatively affect the total factor productivity performance of domestic manufacturers. Moreover, we find an inverse relationship between the growth of FDI and total factor productivity in upstream industries in the short term; however, this changes to a positive relationship in the long term. Furthermore, the results show no evidence of FDI spillover effects to downstream sectors.
    Keywords: Technology diffusion; Foreign direct investment; Total factor productivity; Backward spillover effect; Manufacturing industries; Unit-Level data
    JEL: C81 F21 O53
    Date: 2020–03
  13. By: Lionel Fontagné (Paris School of Economics, Université Paris I & CEPII); Houssein Guimbard (CEPII); Gianluca Orefice (University of Paris-Dauphine, CEPII and CESifo)
    Abstract: Trade elasticity is a crucial parameter in evaluating the welfare impacts of changes in trade frictions. The value of this parameter varies widely across product categories, however, which is especially important for developing countries' evaluation of the welfare gains from trade. We estimate, and make publicly-available, trade elasticities at the product level (the 6-digit level of the Harmonized System, comprising over 5,000 product categories) by exploiting the variation in bilateral applied tari s for each product category for the universe of available country pairs over the 2001 to 2016 period. We address potential endogeneity issues, as well as heteroskedasticity and selection bias due to zero trade ows. Homogenous elasticities lead to the underestimation of the welfare impact of trade, in particular for developing economies, and all the more so for those with high import penetration in less-elastic sectors.
    Keywords: Trade Elasticity, International Trade, Tariffs, Welfare Gains.
    JEL: F14 F17
    Date: 2020–06
  14. By: Lovo,Stefania; Varela,Gonzalo J.
    Abstract: This paper examines productivity dynamics and drivers for Pakistani firms listed in the stock exchange (publicly listed firms) over 2012-17. It relies on policy and outcome measures of integration in upstream merchandise and services sectors, to assess their impact on productivity downstream. The paper presents three main findings. First, the productivity of publicly listed firms remained stagnant over the period, in line with macro-level indicators for Pakistan. Second, foreign-owned or exporting firms are more productive than domestic-owned or domestic-oriented firms. Foreign investors target more productive firms, and their productivity grows after being acquired. Exporters tend to exhibit productivity growth after becoming exporters. Third, increased import duties on intermediates, or reduced levels of foreign direct investment in upstream services sectors, are associated with decreases in the total factor productivity of firms downstream. Gains from lower input tariffs accrue to those that do not secure duty exemption schemes -- domestic-oriented firms or smaller exporters. Gains from upstream services foreign direct investment accrue mostly to firms that are further from the productivity frontier. Taken together, these results suggest that productivity growth in Pakistan would benefit from increased exposure of upstream sectors to global markets.
    Keywords: International Trade and Trade Rules,Textiles, Apparel&Leather Industry,Common Carriers Industry,Food&Beverage Industry,Construction Industry,Plastics&Rubber Industry,General Manufacturing,Pulp&Paper Industry,Business Cycles and Stabilization Policies,Rules of Origin,Trade Policy,Trade and Multilateral Issues,Investment and Investment Climate
    Date: 2020–08–03
  15. By: Jianchun Fang; Giray Gozgor; Sercan Pekel
    Abstract: Using data from the World Uncertainty, World Trade Uncertainty, and World Pandemic Uncertainty indices for 142 countries, this paper introduces three new indicators for measuring uncertainty in Turkey’s export markets from the first quarter of 1996 to the first quarter of 2020. The indicators measure uncertainty in Turkey’s export destinations. After introducing three indicators of uncertainty for export markets, we investigate their effects on economic growth. We find that all uncertainty indicators are negatively related to economic performance. Specifically, an increase in uncertainty in export destinations leads to a slower growth rate of up to two quarters. Pandemic-induced uncertainty negatively affects economic growth only at the higher quantiles. We also discuss potential implications.
    Keywords: export market diversification, economic policy uncertainty, trade policy uncertainty, COVID-19 uncertainties, developing economics, quantile regressions
    JEL: F14 F43 D81 C21
    Date: 2020
  16. By: Giuseppe De Arcangelis (Department of Social Sciences and Economics, Sapienza University of Rome); Rama Dasi Mariani (CEIS, University of Rome Tor Vergata; Department of Social Sciences and Economics, Sapienza University of Rome); Federico Nastasi (Department of Social Sciences and Economics, Sapienza University of Rom)
    Abstract: Between 1870 to 1914 the Argentine economy performed spectacularly with a yearly average real growth rate of 5.94 per cent. Increased resource endowment in both land and labor, via migration, and openness to trade have been considered the two main drivers of this success. In this paper we underline the central role of Argentine immigration in contributing not only to increase resource endowments, but also to lower trade costs boosting exports and imports. By considering Argentine bilateral trade and migration from eight European countries (Austro-Hungarian Empire, Belgium, France, Germany, Italy, Spain, Switzerland and United Kingdom) we use a migration-augmented gravity model to estimate the contribution of the massive inflows of Europeans. In particular, we find that the main pro-trade effect was on imports: an increase of 10 per cent of migrants from one country could increase imports up to 8 per cent from the same trade partner. To overcome the typical endogeneity problem our study proposes migration to the US from the same countries as a instruments that could capture the same push (but not Argentine pull) factors triggering European out-migration.
    Keywords: Gravity Model, Migration and Imports, China-shock based Instrumental Variable
    JEL: F22 N76
    Date: 2020–06
  17. By: Ronald B. Davies; Yutao Han; Kate Hynes; Yong Wang
    Abstract: We examine competition for foreign direct investment when governments compete in tax incentives along with intellectual property rights (IRPs) protection. Higher IPRs result in a lower probability of the multinational enterprise (MNE) being imitated and thus higher expected profits and tax revenues, all else equal. We show that, from the perspective of competing hosts, equilibrium IPRs are too high while taxes are too low. Coordination between jurisdictions can therefore lower the multinational's expected payoff, providing a rationale for why during recent trade negotiations FDI home countries complain about low IPRs in some locations while not pushing for them to be centrally determined.
    Keywords: Tax competition; FDI; IPRs; Imitation
    JEL: F23 H25
    Date: 2020–06
  18. By: ECMR African Development Bank (Research Department, African Development Bank)
    Abstract: Most foreign direct investment (FDI) into Africa is currently concentrated on natural resources, but investment in non-resource-based FDI, and in particular, FDI in manufacturing, generates more jobs and has the potential to alleviate the continent's unemployment problem. The key factors that drive intra-African FDI can be analyzed by focusing on investments from South African multinationals to other African countries. This paper does so using a panel-corrected standard errors estimator with a firm-level FDI dataset for 2003-2016. The results suggest that market attractiveness has a positive impact on intra-regional FDI, while business regulations have an adverse effect. Doubling GDP per capita or doubling the share of labor force is expected to increase South African FDI by about 31% or 46%, respectively. Inversely, for host countries, an increase in the capital requirement, the lack of legal rights, or the tax burden is expected to reduce FDI by about 31%, 62%, or 17%, respectively. However, a reduction in legal rights from the median country level to that of the least restrictive country and a decrease in the tax burden from the median country level to that of the least restrictive country should raise South African FDI by 59% and 31%, respectively. Overall, these results underline the adverse impact of business regulations on intra-regional investment flows and suggest that policies that foster economic growth, promote higher per capita incomes, expand the labor force, and improve the business environment in African countries will facilitate intra-regional FDI.
    Keywords: Foreign direct investment, Intra-Trade, Employment, Africa JEL classification: F15, F21, F63, J21, J64, L25
    Date: 2019–06–26
  19. By: Abebe, Girum (Policy Studies Institute); McMillan, Margaret (Tufts University); Serafinelli, Michel (University of Essex)
    Abstract: We use a plant level survey to identify interactions between domestic plants and foreign direct investment (FDI) in Ethiopia's manufacturing sector. One third of Ethiopian plants are linked to FDI through labor sharing, supply chains and competition. Technology upgrading most commonly occurs as a result of competition in output markets and observation and imitation of FDI in the same line of business. Other benefits include enhanced managerial practices and knowledge about exporting. Spillovers from FDI are identified by comparing changes in total factor productivity (TFP) among domestic plants in districts where a large greenfield foreign plant produces and districts where FDI in the same industry and around the same time was licensed but not yet operational. Over the four years starting with the year of the FDI opening, the TFP of domestic plants is 11 percent higher in treated districts, employment in domestic plants increases and more domestic plants open.
    Keywords: Foreign Direct Investment, local economic development, productivity and technology
    JEL: F21 O18 D24
    Date: 2020–06
  20. By: Revell, Brian
    Abstract: The analysis in the paper focuses on global trends in total factor productivity (TFP) growth and some of its key components and drivers. The relative performance of the UK in relation to many key countries with globally important agri-food sectors, either or both as exporters and or importers of agricultural products, and as potential targets of its future UK post-Brexit strategy are examined. Two approaches are explored in order to gain some insights into productivity growth and its measurement: the decomposition output growth through the contributions of growth in land, labour, capital, material inputs and TFP, and modelling output growth to identify the significant contributing variables. Finally, the challenges that the agricultural sector of the might face as a consequence of its proposed UK post Brexit agricultural policy (if and when it might happen) for its productivity are considered and some conclusions regarding the relevance to future agri-technology developments are outlined.
    Keywords: Agricultural and Food Policy, International Relations/Trade
    Date: 2019–10–21
  21. By: Marco Grassia; Giuseppe Mangioni; Stefano Schiavo; Silvio Traverso
    Abstract: In the first half of 2020, several countries have responded to the challenges posed by the Covid-19 pandemic by restricting their export of medical supplies. Such measures are meant to increase the domestic availability of critical goods, and are commonly used in times of crisis. Yet, not much is known about their impact, especially on countries imposing them. Here we show that export bans are, by and large, counterproductive. Using a model of shock diffusion through the network of international trade, we simulate the impact of restrictions under different scenarios. We observe that while they would be beneficial to a country implementing them in isolation, their generalized use makes most countries worse off relative to a no-ban scenario. As a corollary, we estimate that prices increase in many countries imposing the restrictions. We also find that the cost of restraining from export bans is small, even when others continue to implement them. Finally, we document a change in countries' position within the international trade network, suggesting that export bans have geopolitical implications.
    Date: 2020–07
  22. By: Pietro Cova (Bank of Italy); Alessandro Notarpietro (Bank of Italy); Massimiliano Pisani (Bank of Italy)
    Abstract: This paper evaluates the macroeconomic impact on the euro area (EA) of the imposition of tariffs by simulating a multi-country New Keynesian model featuring the effective lower bound (ELB) on the EA monetary policy rate. The main results are as follows. First, the bilateral tariff dispute between the United States (US) and China (CH) has positive spillovers on the EA economy, because of favorable trade diversion effects. Second, simultaneous tariff increases between the US and CH and between the US and EA have negative effects on euro-area GDP and (ex-tariff) inflation. The effects are magnified if the ELB binds in the EA. Third, if the elasticity of substitution among tradables is low, the spillovers on euro-area GDP of US-CH trade tensions are negligible if the ELB is not binding, while they become negative if the ELB binds.
    Keywords: euro area, inflation, tariffs, effective lower bound, DSGE models.
    JEL: C54 E52 F13 F41
    Date: 2020–07
  23. By: Hinz, Julian; Leromain, Elsa
    Abstract: With global value chains interlocking today’s economies, what is the impact of diplomatic tensions on international trade? We exploit variation in monthly data on imports, a measure of imported input use in the domestic economy, and the incidence of bilateral diplomatic tensions to show that their impact on trade is heterogeneous across countries and industries. Trade in industries that are crucial for domestic production is more sensitive to political tensions. We expose the underlying mechanism in a simple framework before testing it in reduced form.
    Keywords: Diplomatic tensions; Political relations; Trade
    JEL: R14 J01
    Date: 2020–07–15
  24. By: Jamil Nasir (Pakistan Institute of Development Economics, Islamabad)
    Abstract: This paper gives an overview of tariff structure of Pakistan. The protection of local industry, export promotion and revenue generation constitute the triangular tripod of Pakistan tariff. The said three objectives are achieved mainly through imposition of high tariffs on output goods (protection of local industry), duty- exemption schemes and SROs for exporters (export promotion), and multiple levies at import stage on tariff-inclusive price (revenue generation). About half of the revenue of FBR is collected from imports. Protection to sectors like auto and textile is high and consumer welfare is totally missing from the entire scheme of tariff. Despite high protection and multiple export promotion schemes, local manufacturing is weak and exports are stagnant. The revenue has, however, increased manifold over the years and interestingly revenue witnessed big upward jump when MFN rates of tariff fell. Revenue generation is the major consideration in tariff setting. Tariffs are set as an exercise in accounting with the assumption that rates and revenue have got a positive linear relationship. Income effect, substitution effect and volume effect hardly enter into the mental calculations of tariff setters. Due to high incidence of taxes at import stage, incentives for smuggling, under- invoicing, misdeclaration, and evasion are high. Smuggling is rampant and hard to control due to peculiar geographic situation of Pakistan. Under-invoicing is clear from the trade gap between China and Pakistan. As regards misdeclaration, evasion and corruption at ports, I calculate a hypothetical value of CD based on TWA and CEF for the period 1997-98 to 2018-19. These calculations provide interesting policy insights. First, evasion through misdeclaration is high when tariff rates are high and evasion goes down in percentage terms with reduction in tariff rates. Second, CEF increases as a result of reforms in Customs like simplification and automation of clearance processes and procedures. After detailed discussion, paper suggests that protection provided to the local industry should be time-bound with clear sunset date and accountability against rent -seeking. Based on cap-cape equation, paper further suggests that exemptions and concessions in import duties should preferably be provided through tariff code and not through SROs and difficult-to-use exportoriented schemes. In order to put the country on the trajectory of long term growth, import tariffs on input goods and machinery should be phased out in the short to medium term and instead of relying on increase in tariff rates and imposition of additional levies on imports, better policy option is to enhance CEF through reforms aimed at risk based automated clearances.
    Keywords: Tariff Structure, Protection, Under-invoicing, Misdeclaration, Smuggling, Input goods, Output goods, Collection Efficiency Factor
    Date: 2020
  25. By: Stefano Federico (Bank of Italy); Fadi Hassan (Bank of Italy); Veronica Rappoport (London School of Economics)
    Abstract: This paper shows that there are endogenous financial constraints arising from trade liberalization. We find that banks with a high share of loans to firms exposed to competition from China experience an increase in non-performing loans and a reduction in their credit capacity. The drop in credit supply affects both firms directly exposed to import-competition from China and firms expected to expand upon trade liberalization, with economically relevant implications in terms of employment, investment, and output. This financial spillover between losers and winners from trade holds back the reallocation of factors of production between firms and sectors, which is crucial to the welfare implication of trade liberalization.
    Keywords: trade liberalisation, China shock, bank credit, resource reallocation, gains from trade
    JEL: F10 F14 F65 G21
    Date: 2020–07
  26. By: Amrita Saha; André Castro; Marco Carreras; Daniele Guariso
    Abstract: Trade-linked technological change has potential to increase incomes in low-income countries (LICs). The most labour-intensive segments of the textiles and apparel global value chain are in LICs. However, gaps between available technologies and best practices make it difficult to adopt more efficient production processes or move into higher value-added functions. This paper examines current technology use in the Tanzanian textiles and apparel sector, using nationally representative secondary data, primary quantitative data, and qualitative information from semi-structured interviews.
    Keywords: absorptive capacity, Firm productivity, Global value chains, Tanzania, textiles, apparel
    Date: 2020
  27. By: Dr. A. Muthusamy (Alagappa University, Karaikudi, 630003, Sivaganga, India Author-2-Name: Raghuveer Negi Author-2-Workplace-Name: Alagappa University, Karaikudi, 630003, Sivaganga, India Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: Objective - This paper argues the retrospective effect of foreign investment inflow. The FDI not only causes economic growth in the nation also it vindicate the societal development in the host nation. It is assumed that FDI does affect societal development either directly or indirectly also it can be constructive or dubious. Methodology – The societal development indicators have been taken for the study such as access to electricity, refugee population, and total natural resource on rent. The Ordinary Least Square (OLS) method used for regression analysis, Augmented Dickey-Fuller (ADF) used to analyse stationarity and Autoregressive Distributive Lag (ARDL) used for empirical results. Findings – The result shows the consistency in FDI inflows, but all the taken indicators have not experienced the positive effect of FDI on the societal development of a nation. Novelty – Also, the policies of the government and initiative related to foreign investment inflow have major impact on societal growth in the nation. Type of Paper - Empirical.
    Keywords: Electricity; FDI; India; Natural Resources; Refugee Population; Societal Development
    JEL: A1 E01 M14 M16
    Date: 2020–06–30
  28. By: Teboho Bosiu; Thando Vilakazi
    Abstract: The growth of African multinational companies in Southern and East Africa in recent decades brings with it a great opportunity for development of productive capacity in the region and greater regional integration. This study identifies three emerging multinationals in the region?Trade Kings (from Zambia), Export Trading Group (Kenya), and Mount Meru (Tanzania)?that have developed capabilities over time to become effective competitors of incumbent food production companies in other country markets.
    Keywords: African multinational corporations, Multinational firms, barriers to entry, food production, Regional integration
    Date: 2020
  29. By: Kalaitzi, Athanasia Stylianou; Chamberlain, Trevor William
    Abstract: This study examines the causal effects of traditional UAE exports on economic growth over the period 1981-2012, using a neoclassical production function augmented with fuel-mining exports and imports of goods and services. To investigate the existence of a long-run relationship between fuel-mining exports and economic growth, the study applies the Johansen cointegration test, while the direction of the short-run causality is examined by applying the Granger causality test in a vector error correction model framework. In addition, a modified Wald test in an augmented vector autoregressive model, developed by Toda and Yamamoto (1995), is used to investigate the existence of a long-run causality between the variables. The cointegration analysis confirms the existence of a long-run relationship between the variables, while fuel-mining exports are found to have a negative impact on economic growth. Moreover, the study finds that fuel-mining exports do not cause economic growth in the short-run or the long-run.
    Keywords: causality; economic growth; exports; UAE
    JEL: O47 F43 C32
    Date: 2020–05–01
  30. By: David Roodman
    Abstract: This paper critically reviews the research on the impact of immigration on employment and wages of natives in wealthy countries--where "natives" includes previous immigrants and their descendants. While written for a non-technical audience, the paper engages with technical issues and probes one particularly intense scholarly debate in an appendix. While the available evidence is not definitive, it paints a consistent picture. Industrial economies can generally absorb migrants quickly, in part because capital is mobile and flexible, in part because immigrants are consumers as well as producers. Thus, long-term average impacts are probably zero at worst. And the long-term may come quickly, especially if migration inflows are predictable to investors. Possibly, skilled immigration boosts productivity and wages for many others. Around the averages, there are distributional effects. Among low-income "native" workers, the ones who stand to lose the most are those who most closely resemble new arrivals, in being immigrants themselves, being low-skill, being less assimilated, and, potentially, undocumented. But native workers and earlier immigrants tend to benefit from the arrival of workers different from them, who complement more than compete with them in production. Thus skilled immigration can offset the effects of low-skill immigration on natives and earlier immigrants.
    Date: 2020–07
  31. By: Aronsson, Thomas (Department of Economics, Umeå University); Hetschko, Clemens (University of Leeds and CESifo, Munich); Schöb, Ronnie (Freie Universität Berlin and CESifo)
    Abstract: Societies see growing support for populist politicians who advocate an end to globalization. Our behavioral economics model links impatience to voters’ appraisals of an income shock due to globalization that is associated with short-run costs and delayed gains. The model shows that impatient individuals may reject further globalization if they are subject to borrowing constraints. Using German data, we confirm that impatient voters choose right-wing antiglobalist parties. Similarly, we show for the United Kingdom that a preference for immediate gratification increases the support for right-wing anti-globalist parties as well as for Brexit. A policy implication of our study is that governments may use up-front redistribution to gain voters’ support for further globalization.
    Keywords: Globalization; time-preference; impatience; time-inconsistency; populism; Brexit; up-front redistribution
    JEL: D72 D91 F15 F61 F68 H53
    Date: 2020–07–22
  32. By: Daniel Chachu; Edward Nketiah-Amponsah
    Abstract: The term fiscal resource curse refers to countries' inability to raise taxes from a broad base in the presence of natural resources. We employ a novel instrumental variable strategy to estimate the causal effect of resource revenues on non-resource tax effort by exploiting the so-called 'China shock'. Since its 2001 accession to the World Trade Organization, China's non-renewable resource trade has driven up commodity prices, raising resource revenues among exporting countries.
    Keywords: China, infrastructure, Natural resources, Tax, tax effort, Trade
    Date: 2020
  33. By: Bonadio, Enrico; Mcdonagh, Luke; Sillanpaa, Tiffany M.
    Abstract: The Japan-EU Economic Partnership Agreement (JEPA) was signed on 1 July 2018 and entered into force on 1 February 2019, with Ch.14 focusing on intellectual property (IP) rights. JEPA should be hailed as a positive contribution to strengthening IP protection in the two blocs, and therefore further promoting trade and reciprocal investments. The IP Ch. of JEPA covers all IP rights, including copyright, trade marks, geographical indications (GIs), designs and unregistered appearance of products, patents, supplementary protection certificates, trade secrets and pharma test data. Given the important role that GI provisions play in JEPA, this article pays particular attention to them. During the negotiations, Japan made concessions to the EU with regard to GIs protection. Indeed the EU has a strong interest here, as its Member States (in particular the Mediterranean and southern countries, namely France, Italy and Spain, and to a lesser extent Portugal and Greece) possess a large number of geographical names in relation to foodstuff, wines and spirits, such as Champagne, Parmigiano and Feta (conversely, the number of Japanese GIs protected in the EU under this agreement is far fewer).
    Keywords: artists' resale right; bilateral trade agreements; copyright; European Union; geographical indications; patents; Japan; supplementary protection certificates; trade marks; trade secrets
    JEL: L81
    Date: 2020–04–01
  34. By: Karsten Staehr
    Abstract: This paper investigates whether various measures of capacity pressure or available production capacity may help predict the dynamics of exports from the EU countries in Central and Eastern Europe. The analysis uses annual panel data for the 11 countries from 2001 to 2019. Reduced form estimations reveal that cost competitiveness measures have little or no predictive power. The measures of capacity pressure comprise capacity utilisation in industry, the unemployment rate and the output gap, and the measures are all robust predictors of future export dynamics. The results are robust to various changes in the time and country sample, control variables and specification, and also hold in panel vector autoregressive models.
    Keywords: export, competitiveness, capacity utilisation, output gap, unemployment, Central and Eastern Europe
    JEL: F14 F17 E32
    Date: 2020–08–10
  35. By: Dani Rodrik
    Abstract: There is compelling evidence that globalization shocks, often working through culture and identity, have played an important role in driving up support for populist movements, particularly of the right-wing kind. I start with an empirical analysis of the 2016 presidential election in the U.S. to show globalization-related attitudinal variables were important correlates of the switch to Trump. I then provide a conceptual framework that identifies four distinct channels through which globalization can stimulate populism, two each on the demand and supply sides of politics, respectively. I evaluate the empirical literature with the help of this framework, discussing trade, financial globalization, and immigration separately. I conclude the paper by discussing some apparently anomalous cases where populists have been against, rather than in favor of trade protection.
    JEL: F1 F3 F6
    Date: 2020–07
  36. By: Andre Jungmittag (European Commission - JRC)
    Abstract: This study uses a multidimensional approach to condense the information available in widely used service trade policy indicators and to describe the service trade restrictiveness of the European Economic Area (EEA) countries in five business service sectors (computer services and the four professional services) in a comparative way. Specifically, the study provides a multivariate data analysis of the sub-indices of the original OECD service trade restrictiveness index (STRI) applying to third countries without a Preferential Trade Agreement (PTA) and the same sub-indices of the OECD intra-EEA STRI. Additionally, the OECD FDI regulatory restrictiveness index is included in the analysis. The multivariate data analysis includes a correlation analysis, principal component analysis, and a cluster analysis. Briefly summarised, the following results are obtained: The correlation analysis shows that business services sectors of those EEA countries that are highly protected against third countries are also relatively highly protected against other EEA countries. Furthermore, there is a complementarity of the restrictions on foreign entry and movement of people with regard to their impact on trade of skilled labour-intensive professional services. The principal component analysis identifies for all business service sectors the overall service trade restrictiveness in the sector under consideration as the most important latent factor that accounts for between 35% (architecture services) and 45% (legal services) of the total variance of the included indicators. Finally, for each business service sector, the cluster analysis identifies clusters of countries that are among themselves relatively homogeneous in terms of their service trade restrictions. This allows deriving cluster-specific policy recommendations.
    Keywords: Economic Integration, service trade, foreign direct investment, service trade restrictions, trade policy indicators, principal component analysis, cluster analysis
    Date: 2020–07
  37. By: Caro Janse van Rensburg; Carli Bezuidenhout; Marianne Matthee; Victor Stolzenburg
    Abstract: Inequality has been rising in most countries for several decades, with negative consequences for social cohesion and economic growth. Substantial gender wage gaps contribute significantly to overall wage inequality. We look at an often-overlooked driver of gender inequality: international trade. Trading firms constitute 70 per cent of employment in South African manufacturing and, hence, have a large impact on the country's labour dynamics.
    Keywords: gender wage gap, International trade, Linked employer-employee data, South Africa
    Date: 2020
  38. By: Bandyopadhyay, Subhayu (Federal Reserve Bank of St. Louis); Basu, Arnab K. (Cornell University); Chau, Nancy H. (Cornell University); Mitra, Devashish (Syracuse University)
    Abstract: We present a model of offshoring of tasks to a developing nation, which is characterized by a minimum wage formal sector and a flexible wage informal sector. Some offshored tasks are outsourced by the formal sector to the lower wage informal sector. An improvement in the productivity in performing offshored tasks in the developing country raises offshoring, but not necessarily formal-to-informal outsourcing, and, in response, the developed nation wage can fall. Productivity improvements in the informal sector expand both offshoring and outsourcing, and the developed nation wage must rise. When the minimum wage is reduced, the developed nation wage falls when most of the efficiency gains accrue to the informal sector.
    Keywords: offshoring, outsourcing, informal sector, dual labor markets
    JEL: F1 F2 J4 J8
    Date: 2020–06
  39. By: Vlados, Charis (Democritus University of Thrace, Department of Economics)
    Abstract: The current escalation of the US–China trade war shows that the dynamics of the crisis and restructuring of the global socioeconomic system are in an accelerating phase. In the present study, we seek to explore the fundamental dimensions and future directions of the US–China trade war and delineate a conceptual framework for understanding its significance for restructuring of the global system. Through some representative scientific contributions to the study on the US–China trade war, we find an increasing emphasis on the declining and repositioning of US global hegemony, which the earlier optimistic theoretical forecasts did not manage to predict. By linking the dynamics of the crisis and restructuring of the global socioeconomic system to the forces of innovation and change management, we argue that this trade war is yet another proof of the gradual restructuring of global equilibriums. These alterations of the structures of the global system seem to lead to the creation of a new equilibrium regime we call “new globalization,” which requires the gradual construction of a new global architecture.
    Keywords: Globalization Crisis and Restructuring; Us–China Trade War; Innovation; Creative Destruction; New Globalization
    JEL: F63
    Date: 2020–01–20
  40. By: Bekkers, Eddy; Francois, Joseph; Nelson, Doug R; Rojas-Romagosa, Hugo
    Abstract: This paper assesses the utility of economic theory of rational trade wars to predict such events or to prescribe courses of action to control their consequences. Trade wars are fundamentally political events whose causes are almost completely political and whose consequences are to a significant degree also political. Contemporary economic theory has developed during a uniquely peaceful and liberal period in world history, affecting how economists have thought about trade conflicts, leaving the profession unprepared to provide serious analysis or advice.
    Keywords: general equilibrium trade models; International Political Economy; optimal taxation; trade wars
    JEL: F13 F14
    Date: 2019–10
  41. By: Alexis Habiyaremye
    Abstract: Despite more than two decades of economic integration efforts, levels of spatial development inequality remain high within the Southern African Development Community (SADC). Owing to persistent delays in the implementation of the SADC integration agenda, infrastructure connectivity is still overly inefficient, while cumbersome customs also continue to impede the free movement of goods and services. This hampers the growth potential of planned spatial development initiatives in the region.
    Keywords: Growth, growth corridors, intra-regional trade, Regional integration, Southern African Development Community, SADC, Structural transformation
    Date: 2020
  42. By: Bown, Chad P.; Hillman, Jennifer
    Abstract: The United States, European Union, and Japan have begun a trilateral process to confront the Chinese economic model, including its use of industrial subsidies and deployment of state-owned enterprises. This paper seeks to identify the main areas of tension and to assess the legal-economic challenges to constructing new rules to address the underlying conflict. It begins by providing a brief history of subsidy disciplines in the GATT and WTO predating any concerns introduced by China. It then describes contemporary economic problems with China's approach to subsidies, their impact, and the apparent ineffectiveness of the WTO's ASCM to address them. Finally, it calls for increased efforts to measure and pinpoint the source of the problems-in a manner analogous to how the OECD took on agricultural subsidies in the 1980s-before providing a legal-economic assessment of proposals for reforms to notifications, evidence, remedies, enforcement, and the definition of a subsidy.
    Keywords: Dispute Settlement; state-owned enterprise; Subsidy; WTO
    JEL: F13
    Date: 2019–10
  43. By: Anthony Edo; Yvonne Giesing
    Abstract: Alongside a range of already well documented factors such as deindustrialization, technological progress and international trade, a series of recent empirical econometric studies show that immigration has contributed to the rise of extreme right-wing parties in Europe. Our study highlights, however, that there is no mechanical link between the rise of immigration and that of extreme right-wing parties. Exploiting French presidential elections from 1988 to 2017, we show that the positive impact of immigration on votes for extreme right-wing parties is driven by low-skilled immigration and immigration from non-European countries. Our results moreover show that high-skilled immigration from non-European countries has a negative impact on extreme right-wing parties. These findings suggest that the degree of economic and social integration of immigrants plays an important role in the formation of anti-immigrant sentiment. Fostering integration should therefore reduce negative attitudes toward immigrants and preserve national cohesion at a time when the economic consequences of the Covid-19 pandemic could reinforce mistrust and xenophobia.
    Keywords: Voting;Immigration;Political Economy
    JEL: D72 F22 J15 P16
    Date: 2020–07
  44. By: Barlow, Pepita; Loopstra, Rachel; Tarasuk, Valerie; Reeves, Aaron
    Abstract: Background: Eradicating food insecurity is necessary for achieving global health goals. Liberal trade policies might increase food supplies but how these policies influence individual-level food insecurity remains uncertain. We aimed to assess the association between liberal trade policies and food insecurity at the individual level, and whether this association varies across country-income and household-income groups. Methods: For this observational analysis, we combined individual-level data from the Food and Agricultural Organization of the UN with a country-level trade policy index from the Konjunkturforschungsstelle Swiss Economic Institute. We examined the association between a country's trade policy score and the probability of individuals reporting moderate-severe or severe food insecurity using regression models and algorithmic weighting procedures. We controlled for multiple covariates, including gross domestic product, democratisation level, and population size. Additionally, we examined heterogeneity by country and household income. Results: Our sample comprised 460 102 individuals in 132 countries for the period of 2014–17. Liberal trade policy was not significantly associated with moderate-severe or severe food insecurity after covariate adjustment. However, among households in high-income countries with incomes higher than US$25 430 per person per year (adjusted for purchasing power parity), a unit increase in the trade policy index (more liberal) corresponded to a 0·07% (95% CI −0·10 to −0·04) reduction in the predicted probability of reporting moderate-severe food insecurity. Among households in the lowest income decile (
    Keywords: food insecurity; trade policy; global health; Economic and Social Research Council
    JEL: R14 J01
    Date: 2020–08–01
  45. By: Ngozi E. Egbuna; Ismaila Jarju; Sani Bawa; Ibrahima Diallo; Olukayode S. Odeniran; Isatou Mendy; Edward Nyarko
    Abstract: This study assesses the speed of real convergence in ECOWAS using the Optimal Currency Area (OCA) theory to determine the readiness of member countries for a monetary union. The study leveraged on Bayoumi and Eichengreen (1996) and computed OCA indices utilizing both variables suggested by the traditional OCA criteria and the new variables identified in the literature. Empirical results from the analysis showed that ECOWAS countries could be divided into three groups: those exhibiting high level of real convergence and would be ready to join the monetary union at the proposed date of 2020, those exhibiting medium level of convergence and may be ready for the union shortly after 2020, and those converging slowly and would require more time to achieve convergence. Additional results indicated that UEMOA countries have achieved real convergence and the single currency programme benefitted the countries at least in line with the OCA analysis. The results also showed that small countries stand to benefit most from joining a monetary union than having its own currency. The study recommends that the formation of an ECOWAS monetary union should assume a gradual approach. In the interim, however, WAMZ countries should intensify efforts to meet the ECOWAS nominal macroeconomic convergence criteria on a sustained basis, as this would make the countries move faster towards real convergence.
    Keywords: Optimum Currency Area, real convergence, Business cycle asymmetry, trade linkages, ECOWAS
    JEL: C33 C43 F15 O55
    Date: 2019–06
  46. By: Crescenzi, Riccardo; Iammarino, Simona; Ioramashvili, Carolin; Rodríguez-Pose, Andrés; Storper, Michael
    Abstract: Through successive industrial revolutions, the geography of innovation around the globe has changed radically, and with it the geography of wealth creation and prosperity. Since the Third Industrial Revolution, high incomes are increasingly metropolitan, leading to a renewal of inter-regional divergence within countries. These metropolitan areas are also hotbeds of innovation. At the same time, global networks for the production and delivery of goods and services have expanded greatly in recent decades. The globalization of production is mirrored in the globalization of innovation. The paper argues that the emerging geography of innovation can be characterised as a globalized hub-to-hub system, rather than a geography of overall spread of innovation and illustrates these trends using patent data. Although much attention has been given to explaining the rise and growth of innovation clusters, there is as yet no unified framework for the micro-foundations of the agglomeration and dispersion of innovation. In addition, there appear to be strong links between growing geographical inequality of innovation and prosperity, particularly within countries. This is particularly relevant in the context of declining overall research productivity, which could be driving growing geographical concentration. All in all, there is a rich agenda for continuing to investigate the relationship between the geography of innovation, economic development and income distribution.
    Keywords: geography of innovation; clusters; networks; inequality
    JEL: O33 R12
    Date: 2020–06
  47. By: Andreas Haufler; Carlo Perroni
    Abstract: We offer a new explanation for why taxes have become less progressive in many countries in parallel with an increase in income inequality. When performance-based compensation differentials are needed to incentivize effort, redistribution through progressive income taxes becomes less precisely targeted. Taxation reduces after-tax income inequality but undermines incentive contracts, lowering effort and raising pre-tax income differentials. Market integration can widen the spread of project returns and make contract choices more responsive to changes in the level of taxation, resulting in a lower optimum income tax rate even when individuals are not inter-jurisdictionally mobile.
    Keywords: redistributive taxation, performance-based contracts, market integration
    JEL: H21 F15 D63
    Date: 2020

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