nep-int New Economics Papers
on International Trade
Issue of 2020‒09‒21
33 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. The US-Mexico bilateral trade relation through a value added lens By Armando Aguirre Castro; Diego Cardozo-Medeiros
  2. Trade liberalisation and product mix adjustments: Evidence from South African firms By Falilou Fall; Katharina Längle
  3. UK trade with Africa after Brexit By Giorgia Giovannetti; Enrico Marvasi; Filippo Santi
  4. The Impact of Trade Agreement Policy on Employment By Gyasi, Genevieve
  5. Protection without Discrimination By Rebeyrol, Vincent
  6. The Impact of Services Trade Restrictiveness on Food Trade By Zongo, Amara
  7. Manufacturing Exports Determinants across Mexican States, 2007-2015 By Cabral Torres René; Alvarado Jorge
  8. Internationalization Strategies of Multi-Product Firms: The Role of Technology By Daniel Baumgarten; Michael Irlacher; Karin Mayr-Dorn
  9. Globalization, Recruitments, and Job Mobility By Davidson, Carl; Heyman, Fredrik; Matusz, Steven; Sjöholm, Fredrik; Chun Zhu, Susan
  10. Strategic Trade Policy in Reciprocal Dumping Model with Incomplete Information By Ning, Haokai
  11. Aid for Trade, Export Product Diversification and Import Product Diversification By Gnangnon, Sèna Kimm
  12. The Trade and Welfare Impacts of the U.S. Retaliatory Tariff on EU Olive Oil By A. Malek Hammami; John C. Beghin
  13. Agri-food trade trends in Papua New Guinea: Reflections on COVID-19 policies and dietary change By Schmidt, Emily; Fang, Peixun
  14. Heterogeneous Environmental Regulations, R&D Innovation and Manufacturing Enterprises' Export Technological Sophistication By Hu, Yuanhong
  15. Does Investor Protection Increase Foreign Direct Investment? A Meta-Analysis By Brada, Josef C.; Drabek, Zdenek; Iwasaki, Ichiro
  16. Potential impacts of ballast water regulations on international trade, shipping patterns, and the global economy: An integrated transportation and economic modeling assessment By Zhaojun Wang; Duy Nong; Amanda M. Countryman; James J. Corbett; Travis Warziniack
  17. Productivity, Markups, and Trade: Evidence from Mexican Manufacturing Industries By Puggioni Daniela
  18. On the Equivalence of Tariffs and Quotas with Incomplete Information By Ning, Haokai
  20. Evaluating the Impact of Export Finance Support on Firm-Level Export Performance: Evidence from Pakistan By Fabrice Defever; Alejandro Riaño; Gonzalo Varela
  21. Confucius Institute, Belt and Road Initiative, and Internationalization By Hao Wang; Yonghui Han; Jan Fidrmuc; Dongming Wei
  22. The Competitiveness and Complementarity of Arms Trade of Countries along the "Belt and Road" and its Dynamic Evolution: Based on Complex Network Analysis Method By Hu, Yuanhong
  23. Effect of Poverty on Services Export Concentration in Developing Countries By Gnangnon, Sèna Kimm
  24. Agricultural Trade Costs By John C. Beghin; Heidi Schweizer
  25. Modelling Asymmetric Relationship between Exports and Growth in a Developing Economy: Evidence from Namibia By Teboho Jeremiah Mosikari; Joel Hinaunye Eita
  26. Choice of Trade Policy with Incomplete Information By Ning, Haokai
  27. Royalty Taxation under Profit Shifting and Competition for FDI By Juranek, Steffen; Schindler, Dirk; Schneider, Andrea
  28. Is Publicly-Reported Firm-Level Trade Data Reliable? Evidence from the UK By Breinlich, Holger; Nolen, Patrick; Wright, Greg C
  29. Globalization? Trade War? A Counterbalance Perspective By Xingwei Hu
  30. Trade Liberalization and the Gender Employment Gap in China By Wang, Feicheng; Kis-Katos, Krisztina; Zhou, Minghai
  31. The role of globalization in modulating the effect of enviromental degradation on inclusive human development By Asongu, Simplice A; Odhiambo, Nicholas M
  32. Economic Integration Mexico-United States and Regional Performance in Mexico By Leonardo E. Torre Cepeda; Joana C. Chapa Cantú; Eva Edith González González
  33. Immigrant Inventors and Diversity in the Age of Mass Migration By Francesco Campo; Mariapia Mendola; Andrea Morrison; Gianmarco Ottaviano

  1. By: Armando Aguirre Castro; Diego Cardozo-Medeiros
    Abstract: We use the World Input-Output Database and build on Wang et al. (2013) gross exports decomposition to analyze the bilateral trade relation between Mexico and the United States from a value added perspective. Once we take into account that gross commercial flows are clouded by failing to account for imported content, we find that contrary to what gross flows suggest, Mexico has a value added commercial deficit in manufacturing with the United States. Similar patterns can be observed at the sectoral level with significant differences between the gross and value added sectoral trade balances: an improvement of most sectoral US trade balances, particularly for those sectors importing significant amounts of intermediate goods.
    Keywords: Global value chains, World input-output tables, International fragmentation of production, Trade imbalances
    JEL: E1 F2 F14 F15 F23
    Date: 2020–06
  2. By: Falilou Fall; Katharina Längle
    Abstract: Theoretical and empirical studies on multi-product firms have shown that firms adjust their product mix in response to trade liberalisation. This paper uses the South African Revenue Service (SARS) and National Treasury (NT) firm-level panel to assess the response of South African firms to trade policy changes and demand shocks in destination markets between 2010 and 2016. This paper shows that South African multi-product manufacturers shift their exports towards their core products when competition intensifies in their export destinations and that these dynamics lead to productivity gains at the firm level. Also, trade liberalisation policies in the destination country positively affect the number of exported goods (extensive margin) as well as the average value of already exported products (intensive margin) for multi-product exporters, whereas restrictive measures negatively affect the extensive margin. Regarding trade policy measures, results suggest that tariff liberalisation only amplifies the adjustment of South African exporters if tariff cuts affect South African firms directly, while tariff cuts benefitting other foreign competitors mitigate within firm adjustments. By contrast, the reduction of Non-Tariff Measures (NTMs) always positively affects South African exporters.
    Keywords: Multi-product firms, Productivity, South Africa, Trade
    JEL: D24 F13 F14 F41 L11
    Date: 2020–09–18
  3. By: Giorgia Giovannetti; Enrico Marvasi; Filippo Santi
    Abstract: We analyze current and potential trade between the UK and Sub Saharan Africa (SSA) and estimate the possible effects of UK’s exit from the European Union (Brexit) on bilateral trade. Our results suggest that, despite the UK’s interest and need for new markets and the recent positive economic performance of many SSA countries, Brexit is unlikely to have major effects on bilateral UK-SSA trade. It is difficult for the existing trade potential between the UK and SSA countries to fully materialize. This holds true even in the best-case scenario of full trade liberalization. On the contrary, trade with important partners as South Africa might decline in the scenario where the UK, which will be out of all the Free Trade Agreements signed as part of EU, fails to sign new agreements in a very short period. We conclude that Brexit will probably imply small changes in the trade patterns, which remain largely determined by structural variables including geographical distance, political stability and sectoral specialization. For SSA, the main gains in terms of trade creation are likely to come from deeper regional integration and from linkages with other major players at the world level, such as China and India.
    Keywords: Brexit, Africa, gravity model, trade policy, network analysis
    JEL: F13 F14 F16
    Date: 2020
  4. By: Gyasi, Genevieve
    Abstract: The study used the co-integration and Granger causality test to examine the long run relationship and check the direction of the causalities among GDP, trade, employment and FDI in Morocco.The study confirms that changes in the economic growth in the long run affect trade in the short run. Changes in employment in the long run have marginal effect on trade, GDP and no impact on FDI in the short run. Changes in FDI in the long run have significant effect on GDP and trade in the short run.
    Keywords: Trade (TRD), employment rate (EMP), Investment (FDI) and economic growth (GDP), African Continental Free Trade Area (AFCFTA)
    JEL: F1 F16
    Date: 2020–07–02
  5. By: Rebeyrol, Vincent
    Abstract: This paper shows that domestic regulations may fully respect the non-discrimination principle of the WTO and still act as a protectionist device. The core mechanism is a profit shifting effect between firms within sectors. By increasing production costs of all operating firms in a market, domestic regulations force the least efficient firms to exit, increasing market shares of surviving firms. This generates protectionism in the aggregate if it forces relatively more foreign firms to exit, or if domestic firms are relatively more efficient. Introducing political economy motives in the model, this paper shows that trade liberalization increases the use of domestic regulations in the non-cooperative equilibrium, because it improves their protectionist effect. Moreover, a trade agreement may be welfare reducing if governments only care about the most efficient firms. If thefirm productivity distribution differs across countries, the low productivity country cannot retaliate to a non-discriminatory protectionist policy from the high productivity country. In this context, a Pareto improving trade agreement requires an international income redistribution between countries, which is at odds with the principle of reciprocity in trade negotiations. These results may help explaining why recent trade negotiations are proven difficult and face increasing opposition.
    Keywords: Trade protection; Non-discrimination; WTO; domestic regulations
    JEL: F12 F13 F02
    Date: 2020–08–26
  6. By: Zongo, Amara
    Abstract: International trade in goods requires service inputs such as transport, banking and financial services for production and transportation. Trade in goods and services are now closely linked and contribute to the growth of international trade. The goal of this study is to investigate the effects of restrictions in the banking, accounting, transportation and logistics sectors (cargo handling and custom brokerage) on food trade. We use a gravity model with panel data from 2014 to 2018 for 36 OECD countries, the OECD indices of individual country restrictions and regulatory difference by country pair to capture the level of restrictions in these sectors. Our results suggest that importing and exporting country restrictions have non-significant effects on aggregate food exports, but negative and significant impacts on exports of agricultural raw materials and perishable products (meat, dairy products, eggs, etc.). The regulatory disparity between countries in logistics and banking sectors emerge as the main barrier for food exports. However, these results can be mitigated through regulatory cooperation or harmonization of regulations.
    Keywords: Food trade, service sector, heterogeneity of standards, gravity model
    JEL: F13 F14 K23 Q17
    Date: 2020–04
  7. By: Cabral Torres René; Alvarado Jorge
    Abstract: This article examines manufacturing export determinants across Mexican states and regions from 2007 to 2015, paying particular attention to the role of FDI. The analysis considers internal and external determinants of manufacturing exports under static and dynamic panel data methods, obtaining three main results. First, the ratio of manufacturing to total GDP is the most consistent determinant explaining exports performance, regardless of the econometric specification employed. Second, static panel data estimations under GMM techniques suggest different sensitivity to FDI across regions, with the Mexico-U.S. border region observing the strongest short-term effect of FDI on manufacturing exports. Finally, using dynamic panel data methods, we observe a significant persistence and similar long-term effects of FDI across most of the regions on the exporting manufacturing sector.
    Keywords: Exports;Foreign Direct Investment;Panel Data;Mexico
    JEL: F16 F36
    Date: 2019–08
  8. By: Daniel Baumgarten; Michael Irlacher; Karin Mayr-Dorn
    Abstract: High-performance firms 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 firms at the product-level. We find that the most productive firms sell core varieties via foreign direct investment (FDI) and export products with intermediate productivity. Shocks to trade costs and technology affect the endogenous decision to export or produce abroad at the product-level and, in turn, the relative productivity between parents and affiliates.
    Keywords: multi-product firms, FDI, exports, flexible manufacturing
    JEL: F12 F23 L25 L11
    Date: 2020
  9. By: Davidson, Carl (Department of Economics; Michigan State University; East Lansing, MI 48824); Heyman, Fredrik (Research Institute of Industrial Economics (IFN)); Matusz, Steven (Department of Economics; Michigan State University; East Lansing, MI 48824); Sjöholm, Fredrik (Department of Economics, Lund University, and); Chun Zhu, Susan (Department of Economics; Michigan State University; East Lansing, MI 48824)
    Abstract: Previous research indicates that exporting firms are willing to pay a premium to poach workers from other exporting firms if experience working for an internationally engaged firm reduces trade costs. Since international experience is less valuable to non-exporters, we would expect to see differences in recruitments between firms that are internationally engaged and those that serve only their domestic market. Moreover, as emphasized in Davidson et al. (2020), increased openness might lead to higher job-to-job mobility if increased globalization increases both the share of exporters as well as the number of workers with skills that make them attractive for other exporters. Using linked Swedish employer-employee data for the period 1997-2013, we do find systematic differences between the way exporters and non-exporters recruit workers: exporters have a relatively high share of recruitments from other exporters as hypothesized. We also find that increased openness correlates positively (negatively) with upward (downward) mobility. The effects are strongest for professionals and managers. Hence, our findings provide empirical support for Davidson et al. (2020).
    Keywords: Globalization; Export; Job-Mobility; Recruitments
    JEL: F16 F66 J60
    Date: 2020–09–14
  10. By: Ning, Haokai
    Abstract: This paper extends the conventional literature on strategic trade policy in reciprocal dumping model to the context that involves market demand uncertainty and incomplete information. In order to highlight the role of uncertainty and incomplete information, a simple scenario with linear asymmetric demand, additive stochastic market shock, homogeneous products, and identical constant marginal costs are considered. It is shown that incomplete information at industrial level redistributes the option value associated with better information to the country with the better informed firm. As a result, both governments tend to choose tariffs over export subsidies in the Nash equilibrium of the simultaneous strategic trade policy games under complete and incomplete information. This yields a second best outcome. Moreover, we show that Nash equilibrium outcome is inferior to free-trade outcome.
    Keywords: Intra-industry Trade; Incomplete Information; Uncertainty; Bayesian Nash equilibrium; Tariff; Export subsidy
    JEL: C72 D82 F13 L13
    Date: 2020–03–01
  11. By: Gnangnon, Sèna Kimm
    Abstract: The literature on the effect of Aid for Trade (AfT) has shown that AfT flows can be associated with greater export product diversification in recipient-countries. However, the import product diversification effect of AfT interventions has received scant attention in this literature. The present article aims to fill this gap in the literature by investigating the effect of AfT flows on import product diversification, including when countries diversify their export product baskets. The empirical analysis has shown that AfT flows are associated with greater import product diversification in countries that diversify their export product baskets. This finding applies both to total AfT flows and to its three major components, namely AfT flows for economic infrastructure, AfT flows for productive capacity, and AfT flows for trade policy and regulation. Additionally, the magnitude of the positive effect of total AfT flows on import product diversification increases as recipient-countries enjoy a convergence of their export product structure towards the world's export product structure. On another note, the empirical analysis has revealed that AfT flows induce greater import product diversification in countries that further liberalize their trade policies. These results have important policy implications for both donors and recipient-countries.
    Keywords: Aid for Trade,Export Product Diversification,Import Product Diversification
    JEL: F35 F14
    Date: 2020
  12. By: A. Malek Hammami; John C. Beghin
    Abstract: We investigate the welfare and trade impacts of U.S. retaliatory tariffs from the Airbus WTO dispute on EU olive oil, using a calibrated multi-market partial-equilibrium displacement model. The model accounts for four differentiated types of retail olive oil in the U.S. market. U.S. retailer-blenders source olive oil in eight foreign markets and domestically and for two qualities of oil (virgin, other), and in two shipping container types (non-bulk, bulk). We consider two main scenarios: A 100% tariff on all EU olive oils as initially announced by the USTR, and the actual and final 25% tariff on non-bulk Spanish olive oil. The first scenario leads to significant loss of welfare for U.S. consumers of $924 million, much reduced EU olive oil exports to the United States ($354 million), and increased imports from non-EU sources ($90 million). The second scenario has much more muted effects, with mitigated welfare losses for U.S. consumers ($55 million), strong decreases of Spanish olive oil exports shipped in smaller containers, much larger exports of bulk Spanish olive oil and other olive oils. Aggregate EU exports to the United States are slightly lower given the substantial trade diversion induced by the targeted tariff. We discuss the political economy of the contrasting initial announcement and limited implemented retaliation.
    Date: 2020–08
  13. By: Schmidt, Emily; Fang, Peixun
    Abstract: The onset of the COVID-19 pandemic has presented a unique challenge to governments across the globe, reinforcing the need to improve understanding of domestic and international trade trends to provide more informed options for policy response. Papua New Guinea’s growing international trade in food and other agricultural products will continue to be important to overall food security outcomes among rural and urban households in the country. Rural households that produce key export cash-crops, such as coffee, cocoa, or palm oil, depend on the cash economy to supplement their food consumption, while urban households depend on rice and other agri-food imports, as well as domestic goods, for consumption. This project note focuses on trends in agrifood imports and exports during the last two decades to better evaluate potential changes in import demand and export potential for PNG. In doing so, it informs an upcoming economy-wide multi-market model analysis that will evaluate a variety of potential shocks to PNG’s agri-food system on household welfare in order to identify policies to manage potential food security threats. The COVID-19 pandemic is one of many diverse shocks that may adversely affect the economy of PNG over the next decade. The expansion of a portfolio of organized databases, analytical tools, and policy resources, such as the multimarket model, is warranted to facilitate real-time policy analyses to inform key development investments and initiatives.
    Keywords: PAPUA NEW GUINEA, OCEANIA, agrifood sector, agrifood systems, trade, policies, Coronavirus, coronavirus disease, Coronavirinae, imports, nutrition education, Covid-19
    Date: 2020
  14. By: Hu, Yuanhong
    Abstract: Based on the combined data of China Patent Database, China Industrial Firm Database and China Customs Trade Database from 2004-2010, this paper investigates the impact of heterogeneous environment regulation on the export technological sophistication of manufacturing enterprises. The results show that: the impact of control-type environmental regulation on enterprises' export technological sophistication is U-shaped, and has negative effect on mixed trade enterprises, eastern enterprises and foreign-funded enterprises. The impact of incentive-type environmental regulation on the enterprises' export technological sophistication is inverted Ushaped, and has positive effect on processing trade enterprises, mixed trade enterprises, domestic and foreign-funded enterprises. The impact of participative-type environmental regulation on the enterprises' export technological sophistication has an inverted U-shaped characteristic and has a positive effect on all kinds of trade pattern and ownership of enterprises. The result of mechanism analysis shows that control and participative environmental regulation affect enterprises' export technological sophistication through fundamental innovation and practical innovation, while incentive environmental regulation also affects enterprises' export technological sophistication through design innovation. Considering environmental governance issues has clear policy implications for enhancing the R&D innovation of the whole industrial chain and improving the export competitiveness of China's manufacturing enterprises.
    Keywords: Environmental Regulation,R&D Innovation,Export Technological Sophistication,DVA,Manufacturing
    JEL: F14 O44 F18
    Date: 2020
  15. By: Brada, Josef C.; Drabek, Zdenek; Iwasaki, Ichiro
    Abstract: We undertake a meta-analysis of the effects of international investment agreements for the protection of foreign investors on foreign direct investment using 2107 estimates drawn from 74 studies. Our meta-analysis finds robust evidence that effect of international investment agreements is so small as to be considered zero. However, our results do not rule out the possibility that the effect of these agreements is, in fact, positive and that current research methods are insufficiently powerful or precise to identify the underlying genuine effect. FDI from developed countries appears to be more responsive to the existence of investment protection, and there is evidence of publication-selection bias in favor of studies that find a positive effect for investor protection.
    Keywords: meta-analysis, foreign direct investment, investor protection, bilateral investment treaty
    JEL: F21 F23 F53
    Date: 2020–09
  16. By: Zhaojun Wang; Duy Nong; Amanda M. Countryman; James J. Corbett; Travis Warziniack
    Abstract: Global ballast water management regulations aiming to decrease aquatic species invasion require actions that can increase shipping costs. We employ an integrated shipping cost and global economic modeling approach to investigate the impacts of ballast water regulations on bilateral trade, national economies, and shipping patterns. Given the potential need for more stringent regulation at regional hotspots of species invasions, this work considers two ballast water treatment policy scenarios: implementation of current international regulations, and a possible stricter regional regulation that targets ships traveling to and from the United States while other vessels continue to face current standards. We find that ballast water management compliance costs under both scenarios lead to modest negative impacts on international trade and national economies overall. However, stricter regulations applied to U.S. ports are expected to have large negative impacts on bilateral trade of several specific commodities for a few countries. Trade diversion causes decreased U.S. imports of some products, leading to minor economic welfare losses.
    Date: 2020–08
  17. By: Puggioni Daniela
    Abstract: This paper applies a structural framework to estimate production function coefficients, obtain firm-level markup estimates, and evaluate the impact of the trade liberalization that took place in Mexico in the period 1984-1990 on the profitability of the firms operating in the domestic market and exporters. Quantitatively, the results show no evidence of substantial productivity growth, but some evidence of trade discipline on the price-cost margins. A markup premium is however identified for intensive exporters. Qualitatively, these results suggest that the effectiveness of trade policies crucially depends on adequately implementing complementary reforms aimed at improving the competitiveness and the efficiency in the allocation of resources in the internal market.
    Keywords: Production function estimation;Productivity;Markups;Trade liberalization;Mexican manufacturing industries
    JEL: D22 D24 F14 L11 L60
    Date: 2019–09
  18. By: Ning, Haokai
    Abstract: This paper compares the social welfare effects of tariffs and quotas as strategic trade policy instruments in an oligopolistic industry where the domestic market demand is uncertain and the policy is chosen before the uncertainty is resolved. The uncertain demand, once realized, is assumed to be available only to the domestic firm when the output game is played between domestic and foreign firms. To highlight our assertion, a simple scenario with linear demand, additive stochastic market shock, homogeneous products, and identical constant marginal costs is considered. It is shown that a tariff is superior to a quota regardless of the degree of uncertainty. Moreover, we also show that a prohibitive quota that results in autarky is always preferred to a quota at the free-trade level.
    Keywords: Incomplete Information; Uncertainty; Bayesian Nash equilibrium; Tariff; Quota
    JEL: C72 D82 F13 L13
    Date: 2020–02–01
  19. By: Emre Özçelik (Economics Program, Middle East Technical University, Northern Cyprus Campus, Northern Vyprus); Erdal Özmen (Department of Economics, Middle East Technical University, Ankara, Turkey)
    Abstract: We investigate patterns and globalisation-related causes of premature deindustrialisation (PD) using a large panel of advanced (AE), emerging (EME) and developing (DE) economies. We find that, PD tends to be the case for all EME and DE, except E. Asian countries. African countries appear to be hit worst by PD. Globalisation-related determinants of PD vary across country groups. Higher trade openness leads to deindustrialisation in DE. Trade openness, however, enhances dependent industrialisation in Latin American countries and the ‘factory economies’ of E. Asia, which have stronger linkages to global value chains. It is our contention that development possibilities can be expanded by aiming at higher technology activities and more intense forward-linkages to global value chains. Our findings suggest that such strategic industrial policies at the levels of EME and DE have the potential to generate growth convergence at international level. It is our contention that development possibilities can be expanded by aiming at more intense linkages to global value chains, but proactive industrial policies at the levels of EME and DE are required to achieve such expansion.
    Keywords: Developing Economies, Emerging Market Economies, Global Value Chains, Growth, Industrial Policy, Premature Deindustrialisation
    JEL: L60 O10 O14
    Date: 2020–01
  20. By: Fabrice Defever; Alejandro Riaño; Gonzalo Varela
    Abstract: This paper evaluates the impact of two export finance support schemes: The Export Finance Scheme (EFS) and the Long-Term Finance Facility for Plant & Machinery (LTFF) on firm-level export performance. These policies offer loans to exporters at concessionary interest rates to finance short-term working capital and long-term investment in machinery and equipment respectively. To do so, we combine customs data with information about which firms participate in each scheme and the value of the loans they obtain between 2015 and 2017. We find that EFS and LTFF increased the growth rate of exports sales by 7 and 8-11 percentage points respectively. Neither policy exerts a significant impact on the number of products that a firm exports or the number of foreign countries it sells to. Our analysis indicates that facilitating long-term investment in physical capital is more cost effective to raise exports than subsidizing exporters’ working capital needs.
    Keywords: trade finance, export credit, export subsidies, export margins, Pakistan
    JEL: G21 G28 G32 F13 F65
    Date: 2020
  21. By: Hao Wang; Yonghui Han; Jan Fidrmuc; Dongming Wei
    Abstract: In this paper, we study the role of Confucius Institute in supporting internationalization of Chinese enterprises. Employing a panel dataset containing 66 Belt-Road countries and 75 non Belt-Road countries from 2006 to 2017, we find that the Confucius Institute has had a positive effect on Chinese CMA in general and that this effect has become stronger in Belt-Road countries after the Belt and Road Initiative was launched in 2013. Our results suggest that the earlier the host country joins the Belt and Road Initiative, the stronger is the interactive effect of CI and Belt and Road Initiative. Moreover, we show that the Confucius Classroom, a related program, also positively affects Chinese CMA in the context of the Belt and Road Initiative. These findings are robust to controlling for endogeneity and sample selection biases.
    Keywords: cultural institute, institutions, cultural distance, Belt and Road Initiative, Confucius Institute, cross-border mergers and acquisitions
    JEL: F23 Z10
    Date: 2020
  22. By: Hu, Yuanhong
    Abstract: This paper uses network analysis to study the competitiveness and complementarity and its dynamic change of arms trade among countries along the "Belt and Road" during 2004-2016. The research shows that: (1) The arms trade relations of the countries along the "belt and road" are increasingly strengthened, the trade network density is increased, and the trade centralization trend is obvious. Trade competition intensifies and is greater than trade complementarity. (2) In terms of the complementary relationship of arms trade, there are two important national blocks. One is an export-oriented block composed of Russia and some central-eastern European countries. The other is a compatible type block composed of China, India and other countries. (3) In terms of arms trade competitiveness, the countries along "Belt and Road" are divided into three competing groups: the first group is composed of Russia, Israel and some central-eastern European countries; The second group is composed of China, India and other emerging arms producing and selling countries. The third is a wide range of other countries along the "Belt and Road".
    Keywords: Belt and Road,Arms Trade,Complex Network,Trade Competitiveness,Trade Complementarity
    JEL: F19 F50
    Date: 2020
  23. By: Gnangnon, Sèna Kimm
    Abstract: This paper investigates the effect of poverty on services export concentration in developing countries. The analysis has used an unbalanced panel dataset of 98 developing countries over the period 1995-2014. Findings suggest that a higher poverty rate is positively associated services export concentration, and this effect translates through three channels, namely the education level (a proxy for human capital), the degree of trade policy liberalization (and trade openness), and the level of export product concentration. Thus, if they were to diversify services export items, policymakers should implement policies that directly promote services export diversification (such as liberalizing trade, including reducing services trade barriers, and improving the business environment), but also measures and policies that directly target poor segments of the population.
    Keywords: Poverty,Services export concentration,Education,Trade policy liberalization,Trade Openness,Export product concentration
    JEL: F14 O11 I32
    Date: 2020
  24. By: John C. Beghin; Heidi Schweizer
    Abstract: This article tracks the recent evolution of salient trade costs in agricultural and food markets. We review ways to measure costs and conditions for policy prescriptions to reduce them when feasible. We pay attention to transportation costs, border measures, and standard-like nontariff measures. By pointing out limitations in current approaches and recent developments, we hope to improve our understanding of their effects. We suggest promising directions for further research and investigation of agricultural trade costs, including on the emerging debate on gene-editing and trade, transportation costs, and mainstreaming recent approaches in disentangling effects of trade costs on supply, demand, trade, prices, and welfare.
    Date: 2020–08
  25. By: Teboho Jeremiah Mosikari; Joel Hinaunye Eita (College of Business and Economics, University of Johannesburg)
    Abstract: This study investigates the asymmetric relationship between the main export sectors and economic growth in Namibia. Nonlinear autoregressive distributive lag (NARDL) was used to estimate the asymmetric relationship between the main export sectors and the economic growth of Namibia. The study used quarterly data for the period 2009 – 2018. The data were sourced from the Bank of Namibia and Namibia Statistics Agency. The results indicate that there is an asymmetric relationship between the main export sectors and the economic growth of the Namibian economy. The results show that an increase (positive values) in the export of the three main export products will cause economic growth to improve. A decrease (negative values) in export will cause economic growth to deteriorate. The results suggest that estimating the nonlinear relationship for different sectors of the economy (instead of estimating the relationship at an aggregate level for total exports) will ensure that economic policies are sector-specific. The results further suggest that when exports are declining, expansionary policies will be the appropriate responses.
    Keywords: Asymmetric; NARDL; export; economic growth; Namibia
    JEL: C50 C53 F14 F17
    Date: 2020
  26. By: Ning, Haokai
    Abstract: This paper studies the design of trade policies in an uncertain third market with incomplete information. Governments in each of the two countries select either direct quantity controls or subsidies in an attempt to shift profits in favour of their own firms in an oligopolistic setting. It is shown that the country with firms having information disadvantage tends to choose the direct quantity control, while the country with well-informed firms would use export subsidy (export quota) when the degree of uncertainty is sufficiently high (low).
    Keywords: Uncertainty, incomplete information, Bayesian Nash equilibrium, strategic trade policy, Cournot competition
    JEL: C72 D82 F13 L13
    Date: 2020–02–01
  27. By: Juranek, Steffen (Dept. of Business and Management Science, Norwegian School of Economics); Schindler, Dirk (Erasmus School of Economics, Erasmus University Rotterdam); Schneider, Andrea (Jönköping International Business School)
    Abstract: Multinational corporations increasingly use royalty payments for intellectual property rights to shift profits globally. This threatens not only the tax base of countries worldwide, it also affects the nature of competition for foreign direct investment (FDI). Against this background, our theoretical analysis suggests a surprising solution to the problem of curbing profit shifting without suffering major FDI losses: A strictly positive withholding tax on royalty payments is both the Pareto-efficient solution under international coordination and the optimal unilateral response. If internal debt is sufficiently responsive, governments can even implement Paretooptimal targeting. Then, the royalty tax closes the profit-shifting channel, while all competition for FDI is relegated to internal-debt regulation. Our results question the ban of royalty taxes in double tax treaties and the EU Interest and Royalty Directive.
    Keywords: Source tax on royalties; foreign direct investment; multinationals; profit shifting; internal debt; EU Interest and Royalty Directive
    JEL: F23 H25 O23
    Date: 2020–09–09
  28. By: Breinlich, Holger; Nolen, Patrick; Wright, Greg C
    Abstract: In this paper we compare firms’ self-reported overseas sales, as reported in a commonly used UK financial reporting dataset, with their actual exports, as reportedby Her Majesty’s Revenue and Customs (HMRC). Finding that these flows are inseveral dimensions quite different, we then explore the implications of these differ-ences more formally. Since several studies within the international trade literature report findings based on the self-reported export values in financial datasets, wediscuss these findings in light of the departure of financial dataset-based exportsfrom “true” (HMRC) export values.
    Date: 2020–09–07
  29. By: Xingwei Hu
    Abstract: During the last few decades, globalization and protectionism have ebbed and flowed from time to time among economies. The movements demand that we develop formal analytics that can help countries make better trade policies. The movements also imply that the best trade policies are time-varying and country-specific. Economies and their imports and exports constitute a counterbalanced network where conflict and cooperation are two sides of the same coin of the global economy. A country could improve its relative strength in the interactive network by embracing globalization, protectionism, or a trade war. This paper provides necessary conditions for globalization and trade wars, evaluates their side effects, identifies the right targets for conflict, and recommends a fair resolution for a trade war. Data from 2018 show that trade wars could be an option for the USA to maintain its competitiveness. However, adverse side effects on third parties could be significant. Nevertheless, whether the USA should engage in protectionism depends on its bargaining power.
    Date: 2020–09
  30. 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 censuses between 1990 and 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 in the long run. These dynamics were present both in local economies as a whole and among formal private industrial firms. Examining channels through which tariff reductions differentially affect males and females, we find that trade-induced competitive pressures contributed to a general expansion of female-intensive industries, a shift 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
  31. By: Asongu, Simplice A; Odhiambo, Nicholas M
    Abstract: This study assesses how globalisation modulates the effect of environmental degradation on inclusive human development in 44 countries in Sub-Saharan Africa (SSA), using data for the period 2000 to 2012. The empirical results are based on the Generalized Method of Moments (GMM). The following main findings are established. First, a trade openness (imports + exports) threshold of between 80-120% of GDP is the maximum level required for trade openness to effectively modulate CO2 emissions (metric tonnes per capita) and induce a positive effect on inclusive human development. Second, a minimum threshold required for trade openness to modulate CO2 intensity (kg per kg of oil-equivalent energy use) and induce a positive effect on inclusive human development is 200% of GDP. Third, there is a net positive effect on inclusive human development from the relevance of trade openness in modulating the effect of CO2 emissions per capita on inclusive human development and a negative net effect on inclusive human development from the importance of trade openness in moderating the effect of CO2 intensity on inclusive human development.
    Keywords: CO2 emissions; Economic development; Africa
    Date: 2020–01
  32. By: Leonardo E. Torre Cepeda; Joana C. Chapa Cantú; Eva Edith González González
    Abstract: Based on the World Input-Output Matrix 2016 estimated by Timmer et al. (2016), the Hypothetical Extraction Method is applied in a multi-country context to estimate Mexico's gross output and value added linked to the economic activity of the United States; and then the gross output and value added of the United States linked to Mexico's economic activity. Next, it is shown based on the Ghosh Regional Model how the value added of Mexico linked to the economic activity in the United States is allocated among its sectors and regions. The results capture the strong economic linkage between both economies at the aggregate level, as well as its sectoral concentration. The results also indicate that the Northern and Central regions of Mexico are those with the strongest link to the United States; followed by the Southern region, where the largest share of the oil industry is located.
    Keywords: Hypothetical Extraction, Ghosh Input-Output Model, World Input-Output Matrix, Mexico, United States, Economic Integration
    JEL: R11 R12 R15
    Date: 2020–06
  33. By: Francesco Campo (University of Milano Bicocca); Mariapia Mendola (University of Milano Bicocca, IZA, LdA and CefES); Andrea Morrison (ICRIOS-Bocconi University and Utrecht University); Gianmarco Ottaviano (Bocconi University, BAFFI-CAREFIN, IGIER, CEP, CEPR and IZA)
    Abstract: A possible unintended but damaging consequence of anti-immigrant rhetoric, and the policies it inspires, is that they may put high-skilled immigrants off more than low-skilled ones at times when countries and businesses intensify their competition for global talent. We investigate this argument following the location choices of thousands of immigrant inventors across US counties during the Age of Mass Migration. To do so we combine a unique USPTO historical patent dataset with Census data and exploit exogenous variation in both immigration flows and diversity induced by former settlements, WWI and the 1920s Immigration Acts. We find that coethnic networks play an important role in attracting immigrant inventors. However, we also find that immigrant diversity acts as an additional significant pull factor. This is mainly due to externalities that foster immigrant inventors’ innovativeness. These findings are relevant for today’s advanced economies that have become major receivers of migrant flows and,in a long-term perspective,have started thinking about immigration in terms of not only level but also composition.

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