nep-int New Economics Papers
on International Trade
Issue of 2020‒09‒28
35 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Regional Economic Cooperation in the Western Balkans: The Role of Stabilisation and Association Agreements, Bilateral Investment Treaties and Free Trade Agreements in Regional Investment and Trade Flows By Richard Grieveson; Mario Holzner; Goran Vukšić
  2. When Tariffs Disturb Global Supply Chains By Gene M. Grossman; Elhanan Helpman
  3. Tracing the Local Impacts of Exports on Poverty and Inequality in Mexico By Rodriguez Castelan, Carlos; Vazquez, Emmanuel; Winkler, Hernan
  4. The CETA-agreement on telecommunication services – A blueprint for a future WTO accord in multilateral trade liberalisation? By Fredebeul-Krein, Markus
  5. Rules of Origin and Market Power By Wanyu Chung; Carlo Perroni
  6. Growing Like China: Firm Performance and Global Production Line Position By Davin Chor; Kalina Manova; Zhihong Yu
  7. Asymmetric Effects of Exchange Rate Changes on Exports: A Sectoral Nonlinear Cointegration Analysis for Turkey By Bilgin, Cevat
  8. Product-Level Trade Elasticities: Worth Weighting For By Lionel Gérard Fontagné; Houssein Guimbard; Gianluca Orefice
  9. Trump’s trade attack on China – who laughs last? By Gabriel Felbermayr; Marina Steininger
  10. TBTs, Firm Organization and Labour Structure By Giorgio Barba Navaretti; Lionel Fontagné; Gianluca Orefice; Giovanni Pica; Anna Cecilia Rosso; Lionel Gérard Fontagné
  11. Capital Inflow and Industrial Performance in Nigeria: Including the Excluded By Ibrahim A. Adekunle; Ayomide O. Ogunade; Toluwanimi G. Kalejaiye; Adewale M. Balogun
  12. Hard Brexit ahead: breaking the deadlock By Gabriel J. Felbermayr; Clemens Fuest; Hans Gersbach; Albrecht O. Ritschl; Marcel Thum; Martin T. Braml; Martin Braml
  13. When the Threat Is Stronger Than the Execution: Trade and Welfare under Oligopoly By Dermot Leahy; J. Peter Neary
  14. Random-Coefficients Logit Demand Estimation with Zero-Valued Market Shares By John M. Barrios; Pietro A. Bianchi; Helena Isidro
  15. The greening of South-South trade: levels, growth, and specialization of trade in clean energy technologies between countries in the global South By Jorrit Gosens
  16. FDI in Selected Developing Countries: Evidence from Bundling and Unbundling Governance By Asongu, Simplice
  17. COVID-19, the oil price slump and food security in low-income countries By Heigermoser, Maximilian; Glauben, Thomas
  18. Trade Liberalization and the Gender Employment Gap in China By Wang, Feicheng; Kis-Katos, Krisztina; Zhou, Minghai
  19. Openness to Trade and the Spread of Industrialization: Evidence from Canada during the First Era of Globalization By Taylor Jaworski; Ian Keay
  20. Unobserved Heterogeneity in the Productivity Distribution and Gains From Trade By Dewitte, Ruben; Dumont, Michel; Rayp, Glenn; Willemé, Peter
  21. One Belt, One Road, One Way? By Mau, Karsten; Seuren, Rosalie
  22. The role of Globalization in Modulating the Effect of Environmental Degradation on Inclusive Human Development By Simplice A. Asongu; Nicholas M. Odhiambo
  23. Domestic versus foreign drivers of trade (im)balances: How robust is evidence from estimated DSGE models? By Cardani, Roberta; Hohberger, Stefan; Pfeiffer, Philipp; Vogel, Lukas
  24. Low, High and Super Congestion of an Open-Access Natural Resource: The Autarky Case By Schiff, Maurice
  25. Import Competition and Gender Differences in Labor Reallocation By Mansour, Hani; Medina, Pamela; Velasquez, Andrea
  26. Winners and Losers of Immigration By Fiaschi, Davide; Tealdi, Cristina
  27. Four Big Misconceptions About The Services Trade in Africa By Oumayma Bourhriba; Uri Dadush
  28. Trade in Trash: A Political Economy Approach By James H. Cassing; Ngo Van Long
  29. Linkages between Globalisation, Carbon dioxide emissions and Governance in Sub-Saharan Africa By Asongu, Simplice; Nting, Rexon; Nnanna, Joseph
  30. The Impact of China Exchange Rate Policy on its Trading Partners Evidence Based on the GVAR Model By ABBAS, Shah; Nguyen, V.C.; YANFU, Zhu; Nguyen, Huu Tinh
  31. Migration from Developing Countries: Selection, Income Elasticity, and Simpson's Paradox By Clemens, Michael A.; Mendola, Mariapia
  32. Global Competition, Worker Retention, and Immigrant Employment in Manufacturing SMEs By HASHIMOTO Yuki
  33. Immigration and Entrepreneurship in the United States By Pierre Azoulay; Benjamin Jones; J. Daniel Kim; Javier Miranda
  34. Trade Deficit with China – an Issue for the Euro Area? By Klaus Weyerstrass
  35. Immigration and Redistribution By Benjamin Elsner; Jeff Concannon

  1. By: Richard Grieveson (The Vienna Institute for International Economic Studies, wiiw); Mario Holzner (The Vienna Institute for International Economic Studies, wiiw); Goran Vukšić
    Abstract: In this report we present the results of our econometric investigation of the role of (1) stabilisation and association agreements (SAAs), (2) bilateral investment treaties (BITs) and (3) free trade agreements (FTAs) in the Western Balkans and their impact on the region’s inward foreign direct investment (FDI) and exports, with primary interest in the effects on intra-regional FDI and trade. We find that BITs were generally not related to intra-regional FDI (nor to the FDI from other countries). However, in a separate discussion of Serbian FDI into Montenegro we argue that the corresponding BIT between the two countries may have been an exception. The Central European Free Trade Agreement (CEFTA) contributed to increased intra-regional trade. This effect is stronger if Serbia is left out of the analysis, which may be due to the diversion of Serbian exports to the EU over the same period, possibly also facilitated by Serbia’s SAA with the EU. If all regional FTAs are “merged” with CEFTA and assessed as a single variable, its impact on exports is not significant, unless Serbia is left out of the analysis. This indicates that the early intra-regional FTAs, which were replaced by CEFTA, were weakly implemented and did not contribute significantly to stronger trade integration in the region. Finally, we find that SAAs turn out to be highly significant for FDI from the EU to signee countries, as well as for exports from these countries to the EU. Disclaimer The following background study was written in the context of a joint project conducted by wiiw and the Bertelsmann Stiftung. The project examined whether, and if so how successful, the EU strategy has been in promoting rapprochement and reconciliation through regional cooperation in the Western Balkans. The overall results of the project were published under the title 'Pushing on a string? An evaluation of regional economic cooperation in the Western Balkans'.
    Keywords: Free Trade Agreements, Bilateral Investment Treaties, Economic Cooperation, Western Balkans
    JEL: F13 F14 F21 F53
    Date: 2020–09
  2. By: Gene M. Grossman; Elhanan Helpman
    Abstract: We study unanticipated tariffs on imports of intermediate goods in a setting with firm-to-firm supply relationships. Firms that produce differentiated products conduct costly searches for potential input suppliers and negotiate bilateral prices with those that pass a reservation level of match productivity. Global supply chains are formed in anticipation of free trade. Once they are in place, the home government surprises with an input tariff. This can lead to renegotiation with initial suppliers or new search for replacements. We identify circumstances in which renegotiation generates improvement or deterioration in the terms of trade. The welfare implications of a tariff are ambiguous in this second-best setting, but plausible parameter values suggest a welfare loss that rises rapidly at high tariff rates.
    JEL: F1 F13
    Date: 2020–08
  3. By: Rodriguez Castelan, Carlos (World Bank); Vazquez, Emmanuel (Universidad Nacional de la Plata); Winkler, Hernan (World Bank)
    Abstract: Evidence about the effect of exports on welfare at the local level is scarce. Using a unique dataset of international trade and poverty maps for almost 2,000 Mexican municipalities between 2004 and 2014, the study presented in this paper provides new evidence on the impact of a significant rise in exports on poverty and inequality at the local level. The analysis implements an instrumental variable approach that combines the initial structure of exports across municipalities with global trends in exports from developing to developed countries by sector. The results show that a 10 percent increase in the ratio of exports to workers reduces income inequality measured by the Gini coefficient by 0.17 points (using a 0 to 100 scale), but no significant effects on poverty reduction or average household incomes are identified. The lack of impacts on average incomes is driven by a rise in the supply of labor at the local level because municipalities with higher export growth experienced an increase in labor force participation and attracted more net migration, particularly of unskilled workers. Therefore, while total labor incomes grew in response to an increase in exports, average labor incomes per worker did not change. Declining remittances also blunted the effect of growing exports on household incomes.
    Keywords: international trade, exports, poverty, labor markets, migration
    JEL: F14 F16 I3 D3 J61
    Date: 2020–08
  4. By: Fredebeul-Krein, Markus
    Abstract: In February 1997 WTO members signed the Fourth protocol, which, for the first time, determined a set of international rules for trade in basic telecommunication services. While this agreement was a major step in the direction of liberalising national telecommunication markets, many deficiencies remained. At the time, it was agreed to enter a new round of negotiations by the year 2000. However, 20 years later, as of today, the former rules are still in place without any revision. While this is rather disillusioning from a free trade perspective, progress has been made on bilateral trade agreements. One such agreement is the Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada, which provisionally entered into force on 21 September 2017. CETA, that includes two Chapters affecting telecommunications markets, one on services in general and one on telecommunications services, envisages amongst others to further open up service markets to foreign companies by lifting existing market entry barriers. It is the objective of this paper to analyse whether the CETA-agreement on telecommunications services can serve as a blueprint for a future WTO accord towards multilateral trade liberalisation. In answering this question, the results of the CETA-agreement on telecommunication services will be compared with the results of the WTO accord on telecommunications services. Thereby the focus will be on the question whether CETA can serve as model for a future revision of the WTO rules in the area of telecommunications services. Is CETA a major step in the direction of further liberalising national telecommunication markets and are the regulatory provisions detailed enough to make competitive market access become reality?
    Keywords: regulation,liberalisation,telecommunication communications markets,WTO,CETA
    Date: 2019
  5. By: Wanyu Chung; Carlo Perroni
    Abstract: We study how domestic content requirements in Free Trade Areas (FTAs) affect market power and market structure in concentrated intermediate goods markets. We show that content requirements increase oligopolistic markups beyond the level that would obtain under an equivalent import tariff, and we document patterns in Canadian export data and US producer price data that align with the model’s predictions: producers of intermediate goods charge comparatively higher prices when the associated final goods producers are more constrained by FTA origin requirements and by Most Favoured Nation (MFN) tariffs for both intermediate and final non-FTA goods.
    Keywords: free trade areas, content requirements, market power
    JEL: F12 F13 F14 D43
    Date: 2020
  6. By: Davin Chor; Kalina Manova; Zhihong Yu
    Abstract: Global value chains have fundamentally transformed international trade and development in recent decades. We use matched firm-level customs and manufacturing survey data, together with Input-Output tables for China, to examine how Chinese firms position themselves in global production lines and how this evolves with productivity and performance over the firm lifecycle. We document a sharp rise in the upstreamness of imports, stable positioning of exports, and rapid expansion in production stages conducted in China over the 1992-2014 period, both in the aggregate and within firms over time. Firms span more stages as they grow more productive, bigger and more experienced. This is accompanied by a rise in input purchases, value added in production, and fixed cost levels and shares. It is also associated with higher profits though not with changing profit margins. We rationalize these patterns with a stylized model of the firm lifecycle with complementarity between the scale of production and the scope of stages performed.
    JEL: F10 F14 F23
    Date: 2020–09
  7. By: Bilgin, Cevat
    Abstract: This paper examines the effects of the real exchange rate changes on the selected sectoral exports of Turkey’s manufacturing industry in the context of nonlinear auto-regressive distributed lag model (NARDL). NARDL method includes short-run and long-run coefficient estimates and embraces the asymmetric effects. The previous studies generally used the linear models on the aggregated data and they offered ambiguous results. The latest studies have preferred to use the method of NARDL on the bilateral trade balance data. Instead of using bilateral data, this paper considers the data of sectoral exports, specifically the exports of the selected Turkey’s manufacturing sectors. The estimated NARDL models supply the empirical information about the asymmetric effects of the real exchange rate on the sectoral exports. Results from the model for each sector provide the evidence indicating that the depreciation and appreciation of the domestic currency have asymmetric significant effects on the sectoral exports.
    Keywords: Real exchange rate, Sectoral Export, Nonlinear Cointegration, Asymmetric Effects
    JEL: C13 C51 C52 F14 F31 F41
    Date: 2020
  8. By: Lionel Gérard Fontagné; Houssein Guimbard; Gianluca Orefice
    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 tariffs 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 flows. 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
  9. By: Gabriel Felbermayr; Marina Steininger
    Abstract: This policy brief uses a modern general equilibrium trade model to simulate the effects of the Chinese-American trade dispute. It finds that the tariffs and countertariffs implemented as of today cost the US €2.6 billion and China €5.7 billion of GDP. Both economies lose, but China loses absolutely and relatively much more. Europe, in contrast, could register a GDP gain of €345 million. Chinese exports to the US go down by €52.1 billion, while US exports to China fall by €37.1 billion, so the US trade balance slightly improves. A full-blown tariff war, where both parties tax all imports by additional 25%, would lower US GDP by € 9.5 billion and Chinese GDP by €30.4 billion. If the objective of President Trump is to use trade policy to increase the economic distance with China, an escalation helps. Such a trade war would increase value added in the US manufacturing sector by 0.6% while the agri-food sector would shrink by 1.22%. In China, manufacturing would decline by 0.8%. Chinese exports to the US would fall by a whopping €171.3 billion, while US exports to China would contract by €51.0 billion. So, the bilateral trade balance of the US with China improves; however, with the EU it deteriorates. Hence, while Europe may benefit slightly from trade diversion effects, its trade surplus with the US becomes even larger – foreboding further transatlantic conflict.
    Date: 2019
  10. By: Giorgio Barba Navaretti; Lionel Fontagné; Gianluca Orefice; Giovanni Pica; Anna Cecilia Rosso; Lionel Gérard Fontagné
    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. Controlling 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
    Date: 2020
  11. By: Ibrahim A. Adekunle (Olabisi Onabanjo University, Ago-Iwoye, Nigeria); Ayomide O. Ogunade (Olabisi Onabanjo University, Ago-Iwoye, Nigeria); Toluwanimi G. Kalejaiye (Ijagun, Ogun State, Nigeria); Adewale M. Balogun (Olabisi Onabanjo University, Ago-Iwoye, Nigeria)
    Abstract: Africa most populous black nations remain underdeveloped, mainly due to shambolic industrial sector performance. Rising problems of insecurity, corrupt practices, consumerism structure have made gains from capital inflows minimal. Little empirical credence has been leaned to the capital inflow-industrial output growth relationship in Nigeria. This anomaly has resulted in shortsighted policy formulation and attendant consequences. This paper examined international capital flows and industrial performance in Nigeria. The paper employed the two-step Engle and Granger estimation procedure and the Granger Causality to estimate parameters of the indices of industrial output growth and capital inflows to Nigeria. Findings revealed that labour participation, gross fixed capital formation, foreign direct investment (FDI) and portfolio investment have a significant positive relationship with industrial performance in Nigeria. Findings also revealed unidirectional causality from labour participation, gross fixed capital formation, foreign direct investment (FDI) and portfolio investment to industrial performance in Nigeria. Based on the findings, the Nigerian government should create an enabling environment to attract more capital inflow that could augment domestic resources with the sole aim of growing the industrial sector.
    Keywords: Capital Inflow, Industrial Performance, Error Correction Modelling, Granger Causality, Nigeria
    JEL: C22 F21 P47
    Date: 2020–01
  12. By: Gabriel J. Felbermayr; Clemens Fuest; Hans Gersbach; Albrecht O. Ritschl; Marcel Thum; Martin T. Braml; Martin Braml
    Abstract: Negotiations between the EU and the UK have reached deadlock, with the positions of the UK (no backstop, no single market, no customs union, no dependence on the ECJ), Ireland (backstop, no hard border) and the EU (backstop, indivisibility of the four freedoms, no cherry-picking) all being mutually exclusive. In the current stage of negotiations (or lack of, as the EU insists there will be no re-opening of talks) a hard Brexit is the only possible equilibrium. From a game theoretical perspective, the backstop is inacceptable for any British government as it permanently manifests only one sub-game perfect equilibrium, which is the backstop itself. Conversely, a time limitation on the backstop is unacceptable for the EU, as it risks manifesting another sub-game perfect equilibrium, which is hard Brexit. There­fore, neither renegotiation of the backstop nor elections or the extension of the withdrawal period of Article 50 TFEU can break the deadlock. A first-best solution, which from a trade perspective would be the continuation of UK membership in a reformed EU, is beyond the scope of this analysis. We instead take Brexit as given and discuss terms that limit its political and economic damage. We focus on the contentious issues only; we do not elaborate on the provisions of the Withdrawal Agreement itself, for which a settlement has been reached that appears to be satisfactory for both sides. Because the core debate revolves around the backstop and the issue of a possible border between the Northern Ireland and the Republic of Ireland, we mostly deal with trade policy arrangements.
    Date: 2019
  13. By: Dermot Leahy; J. Peter Neary
    Abstract: We compare trade liberalization under Cournot and Bertrand competition in reciprocal markets. In both cases, the critical level of trade costs below which the possibility of trade affects the domestic firm’s behavior is the same; trade liberalization increases trade volume monotonically; and welfare is U-shaped under reasonable conditions. However, welfare is typically greater under Bertrand competition; for higher trade costs the volume of trade is greater under Cournot competition, implying a “van-der-Rohe Region” in parameter space; and, for even higher trade costs, there exists a “Nimzowitsch Region”, where welfare is higher under Bertrand competition even though no trade takes place.
    Keywords: Cournot and Bertrand Competition, Nimzowitsch Region, oligopoly and trade, trade liberalization, van-der-Rohe Region
    JEL: L13 F12
    Date: 2020
  14. By: John M. Barrios (University of Chicago); Pietro A. Bianchi (Florida International University (FIU)); Helena Isidro (ISCTE-IUL Instituto Universitario de Lisboa)
    Abstract: We examine whether similarities in legal, sociological, and cultural characteristics between countries (country-pair homophily) affect foreign director appointments. Our results from estimating a gravity model, which includes economic and geographic country characteristics, indicate that country-pair homophily is associated with foreign director appointments to corporate boards. Country-pair homophily plays a more significant role in the foreign director market than in other cross-border exchange, such as trade, migration, and foreign investment, consistent with homophily being more important in bilateral voluntary human exchange. We use the international IFRS adoption and the gender-quota adoption in Norway as regulatory interventions to assess the role of country-pair homophily in new foreign director appointments. We find that both events led firms to appoint directors from countries that were, prior to the regulation, less institutionally, socially and culturally similar, attesting to the importance of homophily in foreign director appointments. Overall, we identify an impediment to the effectiveness of foreign director appointments driving global governance practice convergence.
    Keywords: foreign directors, gravity model, corporate governance
    JEL: F20 F22 G15 G34
    Date: 2020
  15. By: Jorrit Gosens (Crawford School of Public Policy, Australian National University)
    Abstract: Countries in the global South, or developing and emerging economies, are experiencing rapid economic growth, and increased economic integration with other countries in the global South, including trade. Some analysts have raised concerns that such South-South trade might encourage the use of outdated conventional energy technologies, and lock developing countries into high carbon growth paths. Here, trade data from the UN Comtrade database is analyzed with a gravity model of trade. Results show that levels of clean energy technologies in South-south trade were relatively low up until the first half of the 2010’s, but that these are entirely comparable to North-North or other trade flows in recent years. The analysis thus finds no evidence to support concerns that South-South trade might encourage high carbon development. South-South trade contains particularly high levels of solar PV, hydropower, and electric two-wheeler technologies, whilst exporters in the global North are more competitive in markets for wind power equipment and electric vehicles. Trade in electric vehicles is the fastest growing class of clean energy technologies, and the dominance of Northern countries in their exports may mean that South-South trade could, in the foreseeable future, once again lag behind in levels of clean energy technologies.
    Date: 2020–05
  16. By: Asongu, Simplice
    Abstract: The objective of this study is to assess governance drivers of FDI in a panel of BRICS and MINT countries for the period 2001-2011. We bundle and unbundle governance determinants using a battery of contemporary and non-contemporary estimation techniques. Our findings reveal the following: Firstly, for both contemporary and non-contemporary specifications, while the majority of our governance determinants of Gross FDI are significant, they are overwhelmingly insignificant for Net FDI. Secondly, the significance of the governance dynamics in increasing order of magnitude are general governance, political governance, economic governance, political stability, regulation quality and government effectiveness. Thirdly, for non-contemporary specifications, the significance of governance variables is as follows in ascending order of magnitude: economic governance, institutional governance, general governance, corruption-control, political governance and political stability. The importance of combining governance indicators is captured by the effects of political governance, economic governance and institutional governance. The results indicate that the simultaneous implementation of the various components of governance clarifies a country’s attractiveness for FDI location. Policy implications are discussed with particular emphasis on the timing of FDI and its targeting.
    Keywords: Foreign direct investment, emerging countries, governance
    JEL: C52 F21 F23 P37 P39
    Date: 2019–01
  17. By: Heigermoser, Maximilian; Glauben, Thomas
    Abstract: The shutdown measures implemented to fight the Covid-19 pandemic resulted in a historic drop in crude oil prices, which implies existential challenges to countries depending on energy exports. The three largest crude oil exporters in Africa (Algeria, Angola and Nigeria) are - like numerous other raw material exporters worldwide - facing devaluing currencies and dwindling currency reserves. As food security in these states largely depends on imports of wheat and rice, domestic food prices are expected to rise due to the currency depreciation. This puts further pressure on populations with already low incomes, while local shutdowns and reduced economic activity lead to additional income losses. Recent panic buying and (temporary) export restrictions on international grain markets further exacerbate the situation. Not least due to currently ample grain stocks, such measures are not to be recommended. Instead, solidarity amongst nations, taking the form of emergency aid such as debt relief, food deliveries and medical aid, is required more urgently than ever. Furthermore, it is advisable to ease bureaucratic and tariff trade barriers to facilitate international trade. Demands for greater autarchy and de-globalisation should be avoided in the current precarious situation.
    Keywords: Food Security and Poverty, International Relations/Trade
    Date: 2020
  18. By: Wang, Feicheng (University of Göttingen); Kis-Katos, Krisztina (University of Goettingen); Zhou, Minghai (University of Nottingham)
    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: 2020–08
  19. By: Taylor Jaworski; Ian Keay
    Abstract: We use new data on manufacturing in Canada to quantify the impact of globalization on the growth and composition of industrialization in the second half of the nineteenth century. We find that industries and regions more exposed to international trade experienced faster growth. Consistent with the literature on economic development in Canada, we find that scale economies, government policy decisions, and domestic market expansion also played an important role in manufacturing growth. However, after controlling for these factors, we find that greater exposure to globalization shaped the pattern of regional industrialization in a way not appreciated in Canadian historiography.
    JEL: F63 N11 N71 O14
    Date: 2020–08
  20. By: Dewitte, Ruben; Dumont, Michel; Rayp, Glenn; Willemé, Peter
    Abstract: A correct parametric approximation of the productivity distribution is essential to calculate Gains From Trade (GFT) in heterogeneous firms models. This paper argues that heterogeneity in productivity is best captured by Finite Mixture Models (FMMs). FMMs build on the existence of unobserved subpopulations in the data. As such, they are generally consistent with models of firm dynamics differing between groups of firms and allow for a very flexible distribution fit. We find FMMs to increase this fit by more than 70% compared to currently considered distributions. A GFT exercise with Portuguese data reveals that only FMMs approximate the ‘true gains’ reasonably well.
    Keywords: Finite Mixture Model, firm size distribution, productivity distribution, Gains From Trade
    JEL: F11 F12 L11
    Date: 2020–07–08
  21. By: Mau, Karsten (RS: GSBE other - not theme-related research, Macro, International & Labour Economics); Seuren, Rosalie
    Abstract: We analyze the trade effects of a new unfolding transport infrastructure in connection with China's Belt and Road Initiative (BRI). Using panel data for the years 1996-2018, featuring 27 exporting countries and 96 industries, we exploit variation in the timing and number of railway connections to estimate whether European countries benefit from increased export revenues and product variety of their shipments to China. We find that both increase and that also indirectly connected countries benefit. Using additional data on the mode of transport, we find that industries with intermediate time-sensitivity appear to increase their utilization of rail-freight to China the most and confirm that the overall increase in exports is driven by these industries.
    JEL: F14 F15 R41
    Date: 2020–09–15
  22. By: Simplice A. Asongu (Yaounde, Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa)
    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
    JEL: C52 O38 O40 O55 P37
    Date: 2020–01
  23. By: Cardani, Roberta; Hohberger, Stefan; Pfeiffer, Philipp; Vogel, Lukas
    Abstract: Estimated DSGE models tend to ascribe a significant and often predominant part of a country's trade balance (TB) dynamics to domestic drivers ("shocks"), suggesting foreign factors to be only of secondary importance. This paper revisits the result based on more agnostic approaches to shock transmission and using "agnostic structural disturbances". We estimate multi-region models for Germany and Spain as countries with very distinct TB patterns since 1999. Results suggest that domestic drivers remain dominant when theory-based restrictions on shock transmission are relaxed, although the transmission of foreign shocks is strengthened.
    Keywords: Agnostic structural disturbances, open economy DSGE model, trade balance, Germany, Spain
    JEL: F30 F32 F41 F45
    Date: 2020–03–02
  24. By: Schiff, Maurice (World Bank)
    Abstract: Production of commodities based on open-access renewable natural resources (NR) has usually been examined under "low" congestion (LC) – where MC > AC and both increase with output. I identify two additional congestion categories, "high" (HC) and "super" (SC) congestion – where AC is backward-bending and MC
    Keywords: open access, natural resource, low, high and super congestion, autarky and trade
    JEL: D62 F18 Q22 Q27 Q56
    Date: 2020–09
  25. By: Mansour, Hani (University of Colorado Denver); Medina, Pamela (University of Toronto); Velasquez, Andrea (University of Colorado Denver)
    Abstract: We study gender differences in the labor market reallocation of Peruvian workers in response to trade liberalization. The empirical strategy relies on variation in import competition across local labor markets based on their industrial composition before China entered the global market in 2001. We find that exposure to Chinese imports led to short-run declines in the employment share of women and men. However, the adverse employment effects are only persistent for women, leading to a reduction in their labor force participation. Lack of job market opportunities in the non-tradable sector act as a significant friction that prevents women from fully offsetting trade-induced displacements.
    Keywords: import competition, female employment, gender discrimination
    JEL: E24 F14 J16 J71
    Date: 2020–08
  26. By: Fiaschi, Davide (University of Pisa); Tealdi, Cristina (Heriot-Watt University, Edinburgh)
    Abstract: We aim to identify winners and losers of a sudden inflow of low-skilled immigrants using a general equilibrium search and matching model in which employees, either native or nonnative, are heterogeneous with respect to their skill level and produce different types of goods. We estimate the short-term impact of this shock for Italy in the period 2008-2017 to be sizeable and highly asymmetric. In 2017, the real wages of low-skilled and high-skilled employees were 8% lower and 4% higher, respectively, compared to a counter-factual scenario with no non-natives. Similarly, employers working in the low-skilled market experienced a drop in profits of comparable magnitude, while the opposite happened to employers operating in the high-skilled market. Finally, the presence of non-natives led to a 10% increase in GDP and to an increment of approximately 70 billions € in Government revenues and 18 billions € in social security contributions. We argue that these results help rationalise the recent surge of anti-immigrant sentiments among the low-income segment of the Italian population.
    Keywords: immigration, welfare, search and matching
    JEL: J61 J64 J21 J31
    Date: 2020–08
  27. By: Oumayma Bourhriba; Uri Dadush
    Abstract: The Service sector is central to economic growth, trade and employment across the world. Trade in services has increased from 8.5 per cent of global GDP in 1995 to 13.1 per cent of GDP in 2017. However, Africa is taking less advantage of these opportunities than others. In this policy brief we highlight important misconceptions that may be holding back services exports in Africa. The potential for services sector growth and services exports from low levels in Africa is large. Policies that can remove impediments to export services growth and thus promote growth in Africa are discussed.
    Date: 2020–03
  28. By: James H. Cassing; Ngo Van Long
    Abstract: We study how the opportunity to trade in trash might influence the equilibrium outcome when the tax on the externality is determined by a political economy process. In our model, individuals have heterogeneous preferences for environmental quality, and there is a leakage when funds are transferred from the pressure groups to the politicians. When hard-core environmentalists and capitalists are organized interest groups while moderate environmentalists are not organized, we find that the politically chosen tax on the externality is below the optimal Pigouvian level. The opportunity to export waste in unlimited quantities, but at a price, is not the environmentalists’ panacea and does not eliminate political social tension and suboptimal results.
    Keywords: trade in trash, interest groups, externalities, environmental lobby, political economy, trade and environment
    JEL: F18 D72
    Date: 2020
  29. By: Asongu, Simplice; Nting, Rexon; Nnanna, Joseph
    Abstract: This study investigates linkages between environmental degradation, globalisation and governance in 44 countries in Sub-Saharan Africa using data for the period 2000-2012. The Generalised Method of Moments is employed as empirical strategy. Environmental degradation is proxied by carbon dioxide emissions whereas globalisation is appreciated in terms of trade openness and net foreign direct investment inflows. Bundled and unbundled governance indicators are used, namely: political governance (consisting of political stability/no violence and “voice & accountability”), economic governance (encompassing government effectiveness and regulation quality), institutional governance (entailing corruption-control and the rule of law) and general governance (a composite measurement of political governance, economic governance and institutional governance). The following main finding is established. Trade openness modulates carbon dioxide emissions to have positive net effects on political stability, economic governance, the rule of law and general governance.
    Keywords: Carbon dioxide emissions; Economic development; Africa
    JEL: C52 O38 O40 O55 P37
    Date: 2019–01
  30. By: ABBAS, Shah; Nguyen, V.C.; YANFU, Zhu; Nguyen, Huu Tinh
    Abstract: This study is designed to investigate the impact of China exchange rate policy on its trading partners by using a country multi-dataset GVAR model. Our model includes samples of 30 countries, six from high-income, six from middle-income and eighteen from low-income countries. This study used annual time series data over the period 1992 to 2017. We constructed currency misalignment index and it provided some interesting features about the currency undervaluation and overvaluation. The results of the currency misalignment shows that China’s Renminbi is structurally more undervalued over the sample period as compared to other countries, and fluctuation in major currencies effects the global trade around the world. The overall empirical results of the GVAR model indicate that RMB undervaluation affects the trade pattern and macroeconomic performance of China’s trading partners. Overall, China’s exchange rate undervaluation has mixed effects on trading partner’s GDP, exports and imports. The devaluation of China’s RMB efficiently stimulated China’s exports and reduced imports. While, in some countries, this effect is reverse, the RMB undervaluation increases the GDP of partner countries and also increases their exports to China. The results confirm the strong and leading role of the Chinese Renminbi in the global trade.
    Date: 2020–07–31
  31. By: Clemens, Michael A. (Center for Global Development); Mendola, Mariapia (University of Milan Bicocca)
    Abstract: How does immigration affect incomes in the countries migrants go to, and how do rising incomes shape emigration from the countries they leave? The answers depend on whether people who migrate have higher or lower productivity than people who do not migrate. Theory on this subject has long exceeded evidence. We present estimates of emigrant selection on both observed and unobserved determinants of income, from across the developing world. We use nationally representative survey data on 7,013 people making active, costly preparations to emigrate from 99 developing countries during 2010–2015. We model the relationship between these measures of selection and the income elasticity of migration. In low-income countries, people actively preparing to emigrate have 30 percent higher incomes than others overall, 14 percent higher incomes explained by observable traits such as schooling, and 12 percent higher incomes explained by unobservable traits. Within low-income countries the income elasticity of emigration demand is 0.23. The world's poor collectively treat migration not as an inferior good, but as a normal good. Any negative effect of higher income on emigration within subpopulations can reverse in the aggregate, because the composition of subpopulations shifts as incomes rise—an instance of Simpson's paradox.
    Keywords: international migration, economic development, self-selection
    JEL: F22 J61 O15
    Date: 2020–08
  32. By: HASHIMOTO Yuki
    Abstract: By focusing on Japanese manufacturing small and medium-sized enterprises (SMEs) that were affected by global competition in the 1990s, we examine the interplay between global competition, immigrant employment, and research and development (R&D) investment in these organizations. To do this, we use firm-level survey data including information on the influence of past globalization, current challenges, and future plans for migrant hiring and R&D investment, showing the process by which firms move toward labor-intensive production as a result of import competition. Our major finding is that manufacturing SMEs facing fierce global competition are more likely to hire immigrant workers and invest less in R&D. In this process, the current poor retention of native young workers plays a substantial role as a channel between past globalization and future immigrant employment. On the other hand, intensifying global competition is directly linked to a decrease in future R&D investment. Neither the shortage of production workers nor the high growth rate in recent years are important determinants of subsequent immigrant hiring or R&D investment.
    Date: 2020–08
  33. By: Pierre Azoulay; Benjamin Jones; J. Daniel Kim; Javier Miranda
    Abstract: Immigration can expand labor supply and create greater competition for native-born workers. But immigrants may also start new firms, expanding labor demand. This paper uses U.S. administrative data and other data resources to study the role of immigrants in entrepreneurship. We ask how often immigrants start companies, how many jobs these firms create, and how these firms compare with those founded by U.S.-born individuals. A simple model provides a measurement framework for addressing the dual roles of immigrants as founders and workers. The findings suggest that immigrants act more as "job creators" than "job takers" and that non-U.S. born founders play outsized roles in U.S. high-growth entrepreneurship.
    JEL: J15 L26 M13 O3
    Date: 2020–09
  34. By: Klaus Weyerstrass
    Abstract: The rise of China in the world economy and its growing importance as investor in industrialised and developing countries raised concerns of policy makers in some countries. The large deficit in the trade with China has caused the US government to increase tariffs on imports from China. Contrary to the situation regarding trade between China and the US, trade between the euro area aggregate and China is almost balanced, with a small deficit in trade with goods and a small surplus in the services balance of the euro area. On the individual country level, Germany, Ireland and Finland record trade surpluses with China. An econometric analysis identified domestic demand as the most important determinant of the trade balance between the euro area and China. Also revealed comparative advantages, the exchange rate between the euro and the renminbi as well as the stance of fiscal policies influence the trade balance. Since trade between the euro area and China is more or less balanced, there is no need for policy actions to address any imbalances. Furthermore, for open economies which many of the euro area countries are, openness to international trade is important. Thus, European policy makers are well advised to advocate free market access, but reciprocity is important.
    Date: 2019
  35. By: Benjamin Elsner (University College Dublin); Jeff Concannon (University College Dublin)
    Abstract: One of the fundamental questions in the social sciences is whether modern welfare states can be sustained as countries welcome more immigrants. On theoretical grounds, the relationship between immigration and support for redistribution is ambiguous. Immigration may increase ethnic diversity, which may reduce the support for redistribution. On the other hand, natives may demand more redistribution as an insurance against labour market risks brought by immigration. In this chapter, we review the theoretical and empirical literature on immigration and redistribution from across the social sciences. We focus on two themes, namely the effect of immigration on natives’ support for redistribution, and the effect on the actual setting of tax and spending policies. Recent empirical evidence suggests that immigration lowers the support for redistribution and leads to lower taxation and spending. However, the magnitude of these effects appears to be highly context-dependent.
    Keywords: Migration, Redistribution, Public Policy
    JEL: F22 H2 H4
    Date: 2020–07–10

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