nep-int New Economics Papers
on International Trade
Issue of 2020‒10‒19
thirty-two papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Income and price elasticities of Macedonian export and import of goods – a panel approach By Dijana Janevska Stefanova; Magdalena Petrovska
  2. On the Simultaneous Openness Hypothesis: FDI, Trade and TFP Dynamics in Sub-Saharan Africa By Asongu, Simplice; Nnanna, Joseph; Acha-Anyi, Paul
  3. International agreements on cross-border data flows and international trade: A statistical analysis By Vincenzo Spiezia; Jan Tscheke
  4. Identifying U.S. Merchandise Traders: Integrating Customs Transactions with Business Administrative Data By Fariha Kamal; Wei Ouyang
  5. South Asian Free Trade Area and food trade: Implications for regional food security By Ward, Megan; Herr, Hansjörg; Pédussel Wu, Jennifer
  6. International Trade and Labor Market Integration of Immigrants By Lodefalk, Magnus; Sjöholm, Fredrik; Tang, Aili
  7. The Exports of Higher Education Services from OECD Countries to Asian Countries. A Gravity Approach By Beghin, John C.; Park, Byung Yul
  8. Firms' export decisions: self-selection versus trial-and-error By Mohammad Movahedi; Kiumars Shahbazi
  9. European Union non-tariff barriers to imports of African biofuels By Schuenemann, Franziska; Kerr, William A.
  10. Growth divergence and income inequality in OECD countries: the role of trade and financial openness By Enrico D'Elia; Roberta De Santis
  11. The Optimal Degree of Reciprocity in Tariff Reduction By Chang, Pao-Li
  12. Innovation, market valuations, policy uncertainty and trade: Theory and evidence By Li, Xiaogang
  13. Trade and Economic Growth: Theories and Evidence from the Southern African Development Community By Farahane, Matias Jaime; Heshmati, Almas
  14. The Gravitational Constant? By David S. Jacks; Kevin Hjortshøj O’Rourke; Alan M. Taylor
  15. Immigration and wage dynamics: Evidence from the Mexican Peso crisis By Joan Monràs
  16. India's Revealed Comparative Advantages in Merchandise Trade with Country Groups at Different Levels of Development By Binoy Goswami; Hiranya K. Nath
  17. Reexamining the Foreign direct investment, Renewable energy consumption and Economic growth nexus: Evidence from a new Bootstrap ARDL test for Cointegration By Ghazouani, tarek
  19. 'The politicisation of transatlantic trade in Europe: Explaining inconsistent preferences regarding free trade and the TTIP By Aleksandra Sojka; Jorge Díaz-Lanchas; Frederico Steinberg
  20. The role of Globalization in Modulating the Effect of Environmental Degradation on Inclusive Human Development By Asongu, Simplice; Odhiambo, Nicholas
  21. Within the EAC, which countries stand to benefit from the implementation of the AfCFTA By Bulime, Enock N.W.; Nattabi, Aida K.; Shinyekwa, Isaac M.B.
  22. Misallocation of the Immigrant Workforce: Aggregate Productivity Effects for the Host Country By José Pulido; Alejandra Varón
  23. From Heavy-Tailed Micro to Macro: on the characterization of firm-level heterogeneity and its aggregation properties. By Dewitte, Ruben
  24. The Effects of the 2008 Labour-Migration Reform in Sweden: An Analysis of Income By Irastorza, Nahikari; Emilsson, Henrik
  25. State(s) of negotiation: Drivers of forced migration governance in most of the world By Müller-Funk, Lea; Fröhlich, Christiane; Bank, André
  26. The role of foreign direct investment in growth: Spain, 1964-2013 By Bajo-Rubio, Oscar
  27. The role of domestic-firm knowledge in foreign R&D collaborations: Evidence from co-patenting in Indian firms By Mathew, Nanditha; Napolitano, Lorenzo; Rizzo, Ugo
  28. Participation in global value chains and varieties of development patterns By Bruno Carballa Smichowski; Cédric Durand; Steven Knauss
  29. It’s not about the money! EU funds, local opportunities, and the Brexit vote By Riccardo Crescenzi; Marco Di Cotaldo; Mara Guia
  30. The impact of the Pillar One and Pillar Two proposals on MNE’s investment costs: An analysis using forward-looking effective tax rates By Tibor Hanappi; Ana Cinta González Cabral
  31. Life after Crossing the Border: Assimilation during the First Mexican Mass Migration By David Escamilla-Guerrero; Edward Kosack; Zachary Ward
  32. Brexit and the Euro By Nauro Campos; Corrado Macchiarelli

  1. By: Dijana Janevska Stefanova (National Bank of the Republic of North Macedonia); Magdalena Petrovska (National Bank of the Republic of North Macedonia)
    Abstract: This paper uses a sectoral version of conventional Imperfect substitutes model to motivate a parsimonious estimation of trade elasticities. The elasticities we compute depend directly on the specialization of trade across sectors, which is believed to add econometric precision to our estimates. On the other hand, estimates of income and price elasticities in the existing literature dealing with the case of North Macedonia are typically obtained from aggregate data, which tend to mitigate the importance of sectoral specialization. The basic assumption of the Imperfect substitutes model is that neither imports nor exports serve as perfect substitutes for domestic goods. Moreover, our import and export functions along with the income and price variables, consider some additional parameters as well, such as foreign direct investments and tariffs on imports. To this end, we were able to obtain theory-implied estimates of import and export income and price elasticities for North Macedonia – i.e. trade elasticities relevant to policy - and ultimately to calibration choices. The income and price elasticity coefficients, both in the import and in the export model, have the expected signs - increases in income positively affect exports and imports while increases in prices lower them. Judging by the size of the coefficients, income effects appear to be much more substantial than price effects.
    Keywords: income and price elasticities, imperfect substitutes model, trade, dynamic panel estimators, two-step Difference GMM, North Macedonia
    JEL: F12 F14
    Date: 2020
  2. By: Asongu, Simplice; Nnanna, Joseph; Acha-Anyi, Paul
    Abstract: This study assesses the simultaneous openness hypothesis that trade modulates foreign direct investment (FDI) to induce positive net effects on total factor productivity (TFP) dynamics. Twenty-five countries in Sub-Saharan Africa and data for the period 1980 to 2014 are used. The empirical evidence is based on the Generalised Method of Moments. First, trade imports modulate FDI to overwhelmingly induce positive net effects on TFP, real TFP growth, welfare TFP and real welfare TFP. Second, with exceptions on TFP and welfare TFP where net effects are both positive and negative, trade exports modulate FDI to overwhelmingly induce positive net effects on real TFP growth and welfare real TFP. In summary, the tested hypothesis is valid for the most part. Policy implications are discussed.
    Keywords: Productivity; Foreign Investment; Sub-Saharan Africa
    JEL: E23 F21 F30 L96 O55
    Date: 2020–01
  3. By: Vincenzo Spiezia (OECD); Jan Tscheke (OECD)
    Abstract: This report uses a state-of-the-art gravity model to analyse the effects of selected international data agreements on bilateral trade flows in goods and services for the years 1995-2012. International data agreements can foster cross-border transactions by enhancing consumer trust and the interoperability of national regulatory frameworks, providing legal clarity for firms operating in distinct jurisdictions. Yet they can also involve compliance costs and restrictions on the free flow of data, potentially creating trade barriers. The report sheds light on these issues by examining how entering an international data agreement (e.g. the EU Data Protection Directive, the EU-US and Switzerland-US Safe Harbor agreements or the Council of Europe Convention 108) affects trade among participating countries relative to trade with or among non-participating countries. The results suggest that entering such agreements has a statistically significant and robust effect on trade, though this effect can vary according to the nature of the agreement.
    Date: 2020–10–12
  4. By: Fariha Kamal; Wei Ouyang
    Abstract: This paper describes the construction of the Longitudinal Firm Trade Transactions Database (LFTTD) enabling the identification of merchandise traders - exporters and importers - in the U.S. Census Bureau’s Business Register (BR). The LFTTD links merchandise export and import transactions from customs declaration forms to the BR beginning in 1992 through the present. We employ a combination of deterministic and probabilistic matching algorithms to assign a unique firm identifier in the BR to a merchandise export or import transaction record. On average, we match 89 percent of export and import values to a firm identifier. In 1992, we match 79 (88) percent of export (import) value; in 2017, we match 92 (96) percent of export (import) value. Trade transactions in year t are matched to years between 1976 and t+1 of the BR. On average, 94 percent of the trade value matches to a firm in year t of the BR. The LFTTD provides the most comprehensive identification of and the foundation for the analysis of goods trading firms in the U.S. economy.
    Keywords: trade transactions, matching, machine learning
    JEL: F00 F10 F14
    Date: 2020–09
  5. By: Ward, Megan; Herr, Hansjörg; Pédussel Wu, Jennifer
    Abstract: This paper explores the impact of the South Asian Free Trade Area (SAFTA) agreement on food security by using a gravity model to examine the regional changes in trade in agricultural products. This is followed by a discussion of how this might affect the four dimensions of food security, availability, access, stability and utility. While coordination between SAFTA members has provided some positive food security attainment, institutional uncertainty and conflicts have prevented the full potential benefits from being reached.
    Keywords: International Trade,Food Security,South Asia Free Trade Area,Development,Agriculture
    JEL: F02 F1 F15 O13 Q18
    Date: 2020
  6. By: Lodefalk, Magnus; Sjöholm, Fredrik; Tang, Aili
    Abstract: We examine if international trade improves labor market integration of immigrants in Sweden. Immigrants participate substantially less than natives in the labor market. However, trading with a foreign country is expected to increase the demand for immigrants from that country. By hiring immigrants, a firm may access foreign knowledge and networks needed to overcome information frictions in trade. Using granular longitudinal matched employer–employee data and an instrumental variable approach, we estimate the causal effects of a firm’s bilateral trade on employment and wages of immigrants from that country. We find a positive, yet heterogeneous, effect of trade on immigrant employment but no effect on immigrant wages.
    Keywords: Export,Import,Immigrants,Employment,Wages
    JEL: F16 F22 J21 J31 J61
    Date: 2020
  7. By: Beghin, John C.; Park, Byung Yul
    Abstract: We analyze bilateral exports of higher education services between OECD countries and Asia, using a gravity equation approach, panel data from 1998 to 2016, and PPML regression. The approach treats higher education consumption by Asian countries as a consumable durable good reflecting investment in human capital. Asian Students come to OECD countries to obtain degrees from their universities. Structurally, the flow of students from Asian country j to OECD country i depends on the higher-education capacity of i, the perceived quality of universities in i, expected earnings in i, a series of bilateral transaction costs between i and j, the income per capita in j, school-age demographics in j, and the usual multilateral trade resistance terms. We find that bilateral flows of students are strongly influenced by wage levels in the host country, bilateral distance, importers’ income, demographics, common language, the visa regime prevailing in bilateral country pairs, and the network of migrants from j in i. These results hold through a variation of specifications, proxies, and estimation methods. We find mixed evidence on the role of tertiary education capacity in OECD countries and no evidence of a country’s universities reputations explaining the flow of students. The evolution over time of education capacity, earnings, visa regimes, migrant networks, strong income growth and changes in demographics in nearby export markets explain the emergence of Australia, Canada, Korea, and New Zealand and the loss of market share by the US, which still strongly dominates international trade in higher education services. The decline in Chinese students coming to the US is also predicted for the most recent years driven by reduced by its college-age population.
    Date: 2019–11–11
  8. By: Mohammad Movahedi (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique); Kiumars Shahbazi (Urmia University)
    Abstract: In this paper, a conceptual theoretical model is developed to better integrate various dimensions of the firms' decision to export. The model sheds light on the affirmations of the founding models of the 'new theory of international trade', in particular the role of productivity and sunk costs of exporting in the firms' export decision. It also takes into account two stylized facts that seem difficult to be reconciled with the implications of the founding models 1) many domestic firms, regardless of their productivity level, enter foreign markets every year with little sales and cease all exporting activities in less than a year; 2) several of high-productivity firms choose to only serve their domestic market.
    Keywords: Firm heterogeneity,self-selection,sunk cost of exporting
    Date: 2020
  9. By: Schuenemann, Franziska; Kerr, William A.
    Abstract: The introduction of EU mandates for biofuel use in the transport sector initially led to high expectations that African countries would benefit from biofuel exports to the EU. This market opportunity has not been realised, however, due to regulatory requirements for the production of biofuels that act as non-tariff barriers to the acceptance of African biofuels in the EU. This benefits producers of biofuel crops and processors in the EU by providing economic protection. In particular, the EU import regime fails to acknowledge the challenges faced by African (or other) developing countries in satisfying the requirements. Using a computable general equilibrium model for Malawi, we quantify the foregone potential benefits from biofuel production for exports to the EU arising from non-tariff barriers (NTBs) embedded in the sustainability criteria. Our results show that sugarcane-ethanol production under smallholder outgrower regimes would lead to both economic growth outcomes and rural development, whereas jatropha-biodiesel fails to increase rural incomes due to low profitability. While there is widespread agreement on the latter today, our study is the first to explore the failure of jatropha in Malawi in an economy-wide framework. The ethanol results, however, also hold if land clearing is forbidden, thereby preserving biodiversity as stipulated under the sustainability criteria in the EU Renewable Energy Directive. The EU NTBs embedded in the Renewable Energy Directive thus play a much larger role for countries in Sub-Sahara Africa than simply inhibiting investment opportunities and should be refashioned to lower the entry costs for developing countries.
    Keywords: Non-tariff barriers,biofuels,Malawi,CGE model
    JEL: F13 D58 O13 Q17
    Date: 2019
  10. By: Enrico D'Elia; Roberta De Santis
    Abstract: This paper analyses trade and financial openness effects on growth and income inequality in 35 OECD countries. Our model takes into account both short run and long run effects of factors explaining income divergence between and within the countries. We estimate, for the period 1995-2016, an error correction model in which per capita GDP and inequality are driven by changes over time of selected factors and by the deviation from a long run relationship. Stylised facts suggest that trade and financial openness reduce the growth gaps across the countries but not income inequality, and the effects of finance are stronger in high income countries. Nevertheless, low and middle income countries benefit more from international trade. Our contribution to the existing literature is threefold: i) we study the short and long run effects of trade and financial openness on income level and distribution, ii) we focus on developed countries (OECD) rather than on developing and iii) we provide a sensitivity analysis including in our baseline equation an institutional indicator, a trade agreement proxy and a dummy of global financial crisis. Estimates results indicate that trade openness significantly improved the conditions of OECD low income countries both in short and long run mostly, consistently with the catching up theory. It also decreased inequality, but only in low and middle income countries. Differently financial openness had a positive and significant impact only in the short run on middle income countries and increased income disparities within countries in the short term in low income countries and in the long term in high income countries.
    Keywords: Trade openness, income inequality, panel data analysis
    Date: 2019–10
  11. By: Chang, Pao-Li (School of Economics, Singapore Management University)
    Abstract: This paper characterizes the optimal reciprocal trade policy in the environment of Melitz (2003) with firm productivity heterogeneity. With all the conflicting effects of import tariffs on welfare considered, the optimal degree of reciprocity in multilateral tariff reduction is shown to be free trade.
    Keywords: Firm Heterogeneity; Reciprocal Trade Policy
    JEL: F12 F13
    Date: 2020–08–21
  12. By: Li, Xiaogang
    Abstract: This dissertation presents the theoretic and empirical findings on innovation, market returns, and trade, with particular focuses on how a firm's innovation activities affect their market returns through the channel of productivity-improving, and how policy uncertainty affects a firm's trading and innovation decisions.Chapter 2 examines the relationship between productivity and innovation, using the U.S. manufacturers' patent data from 1976-2006. First, this chapter investigates whether productive firms actively participate in innovation in terms of having more patents, and then examines whether their innovation activities are involved in a wide spectrum of technological categories. The empirical results reveal that: (i) productivity is positively correlated with the number of patents granted and the number of technological categories for these patents; and (ii) productivity is positively correlated with the number of citations per granted patent and is also positively correlated with the number of technological categories for cited patents per granted patent.Chapter 3 examines the impact of innovation on a firm's operating performance, market valuation, and stock returns, especially the role of Innovation Efficiency in predicting a firm's future market valuation. Three different measures of Innovation Efficiency--the number of granted patents per patent or citation (backward and forward) technological fields scaled by research and development expenditures--are proposed, which combine the breadth of knowledge used to innovate and R\&D investments. The empirical results show that: (i) firm's market valuation and excess returns increases are largely driven by the changing valuation of Innovation Efficiency, while innovation quantity, measured by patent intensity and R\&D intensity, has a strong and significant negative effect; (ii) the positive effect of Innovation Efficiency became larger over time from 1950 to 2010 and for high-technology industries; (iii) high efficient innovation firms are able to achieve higher and more persistent profitability and better operating performance through the effect of productivity.Chapter 4 introduces a dynamic general equilibrium growth model with policy uncertainty where policy uncertainty endogenously affects the dynamics of technical change, market leadership, firm entry and exit selection, and trade flows, in a world with two large open economies at different stages of development. The theoretical investigation illustrates that increase in policy uncertainty has a significant negative effect on exports and imports, but has ambiguous effects on innovation and welfare, while dynamically, trade liberalization boosts domestic innovation through induced international competition. In the empirical portion, this chapter studies how policy uncertainty affects innovation and firm decisions to enter into and exit from export markets by estimating the impact of trade policy uncertainty on patents applied by Chines manufacturing firms, as well as firm's entry and exit. Using Chinese patent applications and Chinese customs transactions between 2000-2006, this chapter exploits time-variation in product-level trade policy and the empirical results show that: (i) Chinese firms have less incentive in innovation activities when facing increased trade policy uncertainty; (ii) Chinese firms are less likely to enter new foreign markets when their products are subject to increased trade policy uncertainty; (iii) Chinese firms are more likely to exit from established foreign markets when policy uncertainty increases.
    Date: 2020–01–01
  13. By: Farahane, Matias Jaime; Heshmati, Almas
    Abstract: This paper empirically tests the hypothesis that trade can act as an engine of growth using panel data for the Southern African Development Community (SADC), a regional integration agreement (RIA) organization, the central objective of whose formation was the need to accelerate, foster, and encourage the region’s growth. Our results indicate that during the period covered by this study (2005-2017), export expansion stimulated growth, more openness to trade reduced it, and that the formation of SADC had not yet brought about any effects on growth perhaps because of lack of full establishment of the primary instruments for achieving its central objective. These results lead to three conclusions. Firstly, trade through export expansion seems to be a better solution for SADC for achieving the central objective of its formation. Secondly, more openness to trade seems to jeopardize growth. Finally, the formation of SADC has not yet brought about the expected gains from a RIA. In this context, we recommend that policymakers should consider adopting measures aimed at supporting increased trade through promoting export expansion, achieving strong absorption of negative chocks that usually result from trade, and exploring the possibility of establishing all the planned primary instruments for achieving SADC’s central objective.
    Keywords: International trade,Regional integration agreements,Free trade area,Customs union,Prebish-Singer hypothesis
    JEL: F15 F36 F43 O43 O47
    Date: 2020
  14. By: David S. Jacks; Kevin Hjortshøj O’Rourke; Alan M. Taylor
    Abstract: We introduce a new dataset on British exports at the bilateral, commodity-level from 1700 to 1899. We then pit two primary determinants of bilateral trade against one another: the trade-diminishing effects of distance versus the trade-enhancing effects of the British Empire. We find that gravity exerted its pull as early as 1700, but the distance effect then attenuated and had almost vanished by 1800. Meanwhile the empire effect peaked sometime in the late 18th century before significantly declining in value. It was only after 1950 that distance would once again exert the same influence that it has today.
    Keywords: Distance, empire, gravity
    JEL: F1 N7
    Date: 2020–10–05
  15. By: Joan Monràs
    Abstract: How does the US labor market absorb low-skilled immigration? I address this question using the 1995 Mexican Peso Crisis, an exogenous push factor that raised Mexican migration to the US. In the short run, high-immigration locations see their low-skilled labor force increase and native low-skilled wages decrease, with an implied inverse local labor demand elasticity of at least -.7. Mexican immigration also leads to an increase in the relative price of rentals. Internal relocation dissipates this shock spatially. In the long run, the only lasting consequences are a) lower wages and employment rates for low-skilled natives who entered the labor force in high-immigration years, and b) lower housing prices in high-immigrant locations, since Mexican immigrant workers disproportionately enter the construction sector and lower construction costs. I use a quantitative dynamic spatial equilibrium many-region model to obtain the counterfactual local wage evolution absent the immigration shock, to study the role of local technology adoption in generating wage dynamics, to analyze the role of unilateral state level immigrant restrictive laws, and to study the role of housing markets
    Keywords: International and internal migration, local shocks, local labor demand elasticity, local housing markets.
    JEL: F22 J20 J30
    Date: 2019–08
  16. By: Binoy Goswami (Faculty of Economics, South Asian University); Hiranya K. Nath (Department of Economics and International Business, Sam Houston State University)
    Abstract: This paper uses annual trade data for 16 product groups to analyze India's comparative advantage (CA) in merchandise trade with high, middle income, and least developed countries during 2003-2018. The results suggest that India has always had CA over all three groups of countries in animal, food products, and textiles and clothing, and had comparative disadvantage (CDA) in wood. There are important variations in its CA/CDA for other items across country groups. These results are largely robust to alternative CA measures and to restricted subsamples of countries within each group. The analysis of distributional dynamics indicates that India's CA over least developed countries is more persistent than over other two groups. In contrast, India's CDA over middle income countries is more persistent than over other groups. In general, the probabilities of switching from CDA to CA are higher than those for shifting from CA to CDA for all three groups. India's CA in various products are likely to result from the availability of certain natural resources including climatic condition and geographic location, relative abundance of cheap unskilled, semi-skilled, and highly skilled labor, together with the market-oriented reforms and trade liberalization. The results have specific implications for India's policies to promote industries and trade.
    Keywords: Merchandise Trade, Comparative Advantage (CA), Comparative Disadvantage (CDA), Revealed Comparative Advantage (RCA), Revealed Symmetric Comparative Advantage (RSCA), Nonparametric Methodology, Distributional Dynamics; India
    JEL: F14 O57
    Date: 2020–08
  17. By: Ghazouani, tarek
    Abstract: This study re-examines the long-run relationship among foreign direct investment (FDI), renewable energy consumption (RE) and economic growth (GDP) for 9 Middle East and North Africa (MENA) countries over the period 1990–2015 using a newly developed cointegration test by McNown et al. (2018), the bootstrap autoregressive distributed lag (ARDL) which allows us to generate critical values for ARDL tests that are valid and appropriate for the specific data sets used and allow for endogeneity and feedback that may exist among the variables. In the long run analysis, we found evidence of cointegraion: (i) for Algeria, Armenia, Mauritania, and Tunisia when GDP is the dependant variable; (ii) for Egypt, Iran, Israel, Tunisia and Turkey when FDI is the dependent variable; and (iii) only for Iran, Morocco, and Tunisia when RE is the dependent variable. The short run Granger-causality analysis reveals varied nature of direction of causality between all variables and that is different among countries. This confirms that uniform policy recommendation relating to the causality between these variables may not work for these selected MENA countries.
    Keywords: FDI; Renewable energy consumption; Economic growth; Bootstrap ARDL; MENA
    JEL: C15 F21 O11 Q43
    Date: 2018–11–11
  18. By: Morales Meoqui, Jorge; Assistant, JHET
    Abstract: David Ricardo indicated in his famous numerical example in the Principles that it would be advantageous to Portugal to import English cloth made by 100 men, although it could have been produced locally with the labor of only 90 Portuguese men. As the production of the cloth required less quantity of labor in Portugal, it has been commonly inferred that this country had a production cost advantage over England in cloth making. This inference will be proven wrong here by showing that the English cloth had a lower cost of production than the Portuguese cloth. This finding refutes the widespread belief that Ricardo had formulated a new law, principle or rule for international specialization, known as comparative advantage. He used the same rule for specialization as Adam Smith in the Wealth of Nations. Thus, the popular contraposition of Smith’s absolute versus Ricardo’s comparative cost advantage has to be dismissed.
    Date: 2020–09–21
  19. By: Aleksandra Sojka; Jorge Díaz-Lanchas; Frederico Steinberg
    Abstract: The Transatlantic Trade and Investment Partnership (TTIP) generated an unprecedented public contestation across Europe. In this paper, we focus on the sources of such backlash in European public opinion. Previous studies of this issue have analysed opinions on free trade and the specific agreement separately. However, not accounting for their correlated character could lead to biased conclusions about their determinants. To address this, we apply an innovative empirical approach and construct a set of bivariate probit models to calculate joint probabilities for the different configurations of support and opposition. We validate that attitudes toward free trade and the TTIP have similar but not identical foundations. Inconsistent preferences are rooted in individual values, EU attitudes, and political cues, as well as treaty partner heuristics. Our innovative empirical approach offers an improved understanding of trade attitudes within EU’s multilevel context.
    Keywords: trade liberalisation, free trade, public opinion, trade agreements, TTIP
    Date: 2020–01
  20. By: Asongu, Simplice; Odhiambo, Nicholas
    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
  21. By: Bulime, Enock N.W.; Nattabi, Aida K.; Shinyekwa, Isaac M.B.
    Abstract: The implementation of the African Continental Free Trade Area (AfCFTA) will affect EAC countries in terms of tax revenues, trade volumes and poverty. Estimates paint a mixed picture among specific EAC economies regarding the increase in demand following the reduction in tariffs, also known as trade effect. Burundi has the most considerable total trade effect of US$ 9.5 million, followed by Kenya with US$ 5.2 million and Uganda with US$ 4.2 million. On the other hand, Tanzania and Rwanda register adverse total trade effects. All the EAC countries incur tariff revenue losses; for instance, Kenya incurs US$ 14.2 million loss followed by Uganda with a US$ 13.5 million loss. Whereas Uganda and Burundi experience positive welfare effects, Kenya, Tanzania and Rwanda experience negative welfare effects. To benefit from the AfCFTA, EAC economies need to (i) increase competitiveness to mitigate the negative impact of trade diversion (ii) pursue policies that promote industrialisation and (iii) compensate for the customs revenue loss by leveraging the envisaged increase in the trade volumes and value for other taxes.
    Keywords: International Relations/Trade
    Date: 2020–08–28
  22. By: José Pulido (Banco de la República de Colombia); Alejandra Varón (Universidad de los Andes)
    Abstract: Mass migrations can impact the amount of labor misallocation in the host country if immigrants, relative to natives, face more frictions that prevent them from working in their preferred occupations. The resulting misallocation would imply an aggregate productivity loss in the short run while migration occurs, but an subsequent lapse of productivity growth when the immigrants start to be assimilated by the labor market. We study the case of Colombia during 2015-2019, a period when the country received a massive inflow of migrants from Venezuela. Through the lens of a Roy model of occupational choice with two types of frictions - discrimination and barriers preventing workers from choosing their preferred occupations - we quantify the extent of occupational misallocation for immigrants, and its implications for Colombian aggregate labor productivity. Our estimates indicate that both type of frictions significatively misallocate Venezuelan immigrants. Removing those frictions would lead at least one third of immigrants to reallocate, permanently increasing Colombian aggregate productivity by 0.9%. **** RESUMEN: Las migraciones masivas pueden aumentar la ineficiencia en la asignación del trabajo en el país anfitrión si los trabajadores inmigrantes, en relación con los nativos, enfrentan más fricciones en el mercado laboral que les impidan trabajar en sus ocupaciones deseadas. La mala asignación resultante genera una pérdida de productividad agregada en el corto plazo mientras la migración ocurre, pero un crecimiento posterior cuando los inmigrantes se asimilen en el mercado laboral. En este artículo estudiamos el caso de Colombia durante 2015-2019, un período en el que el país recibió una afluencia masiva de migrantes desde Venezuela. A partir de un modelo de Roy de elección ocupacional con dos tipos de fricciones – discriminación laboral y obstáculos que obligan a los trabajadores a elegir ocupaciones distintas a las de su preferencia – cuantificamos el grado de mala asignación del trabajo de los inmigrantes y sus implicaciones sobre la productividad agregada laboral colombiana. Nuestras estimaciones indican que ambos tipos de fricciones generan asignaciones ocupacionales ineficientes para los migrantes, y que al eliminar dichas fricciones al menos una tercera parte de los trabajadores migrantes cambiaria de ocupación, lo que incrementaría la productividad colombiana en un 0.9% de forma permanente.
    Keywords: Immigration, misallocation, Roy model, discrimination, productivity, Migración, asignación ocupacional, modelo de Roy, discriminación, productividad
    JEL: F22 O15 J61 O24
    Date: 2020–10
  23. By: Dewitte, Ruben
    Abstract: This paper emphasizes the importance of two sufficient statistics to characterize firm-level heterogeneity in the workhorse heterogeneous firms trade model: the Cumulative Distribution Function (CDF) and the mean of firm-level sales. Contradicting the strong focus on the CDF, a close fit to average sales proves to be critical for model performance. Moreover, this average varies largely across finite sample draws due to sales being heavy-tailed, providing evidence that individual firms can influence the aggregate economy. As a result, modeled aggregate trade elasticities and Gains From Trade are unlikely to materialize: they are biased in finite samples and underlying characterizations of firm-level heterogeneity are rejected by the data.
    Keywords: Average productivity, firm size distribution, heavy-tailed Distributions, granularity, gains from trade
    JEL: F11 F12 L11
    Date: 2020–09–16
  24. By: Irastorza, Nahikari; Emilsson, Henrik
    Abstract: In 2008, Sweden changed its labour-migration policy in order to facilitate more labour migration from countries outside the EU. The unique design of the new law meant abandoning most state ambitions to shape labour migration. Under the new regulation, there are no labour-market tests or any consideration of the level of human capital. Instead, policy-makers trusted employers to select workers. We adopt a difference-in-differences approach and apply a series of OLS regressions on register data to assess the effects of the policy change on non-EU labour migrants' labour-market outcomes, as measured by income. The effects of the policy change are substantial. Non-EU labour migration increased and its composition changed after the reform, resulting in a significant decrease in mean incomes. The regression analysis shows that, despite the favourable economic cycle during the post-reform period, moving to Sweden as a third-country labour migrant following the 2008 labour-migration reform had a negative effect on the migrants' annual income. However, this effect became marginal after controlling for occupational level. We conclude that changes in their occupational composition were the main drivers of the income drop for non-EU labour migrants. In sum, the new non-selective labour-migration policy lowered labour migrants' mean income by opening the door to unskilled labour.
    Keywords: Migration policy,effects,2008 reform,labour migration,income,Sweden
    JEL: J15 J21 J30 J61
    Date: 2020
  25. By: Müller-Funk, Lea; Fröhlich, Christiane; Bank, André
    Abstract: Between normative aspirations and national interests, forced migrants often become pawns in host states' negotiations with internal and external actors. Focusing on North Africa, the Middle East, and the Horn of Africa, this paper offers an analytical framework to better understand forced migration governance across space and time from a more global, pluralist perspective in a logic of iterative theory-building. We hypothesise that some drivers of forced migration governance are distinct from drivers of migration governance - for example, global policy and conceptions of humanitarian norms and principles play a larger role in the former. We hypothesise that while forced migration governance is negotiated around humanitarian principles, in which international actors, externalisation, and civil society play a crucial role, it also functions as a regime strategy and is driven by certain characteristics of forced migrant groups, including size and perceived identity proximity. Finally, forced migration governance is characterised by strong path dependency.
    Keywords: migration governance,forced migration,stability,Middle East,North Africa,Horn of Africa,regime strategy,crisis
    Date: 2020
  26. By: Bajo-Rubio, Oscar
    Abstract: Foreign direct investment (FDI) has played a major role in the deep process of transformation experienced by the Spanish economy since the first 1960s, which even intensified following the integration with the now European Union (EU) in 1986. In this paper, we analyse the long-run effects of FDI in Spain, by estimating a production function including the foreign capital stock over the period 1964-2013. We find a significant contribution of foreign capital on the accumulated growth of GDP over the period of analysis, which seems however to have been greater during the first years of the period analysed.
    Keywords: Economic growth,Foreign direct investment
    JEL: F21 F43 O40
    Date: 2020
  27. By: Mathew, Nanditha (UNU-MERIT); Napolitano, Lorenzo (Joint Research Center (JRC), European Commission); Rizzo, Ugo (Department of Mathematics and Computer Science, University of Ferrara)
    Abstract: In this paper we analyze the impact of foreign R&D collaborations on the performance of domestic firms and how the relationship is augmented by the pre-existing capabilities of the domestic firms. Using data on Indian firms, we study patterns of co-invention of Indian firms with foreign partners. The results from a causal mediation analysis confirm the crucial role played by domestic firms' absorptive capacity in enhancing the benefits from a foreign collaboration. The evidence we present in this work highlights the microeconomics behind the process of technological capability accumulation and catching up in developing countries.
    Keywords: Co-patenting, Foreign Collaboration, Absorptive Capacity, Capability accumulation, Corporate Performance
    JEL: D24 L20 O12 O32 O33 O34
    Date: 2020–10–05
  28. By: Bruno Carballa Smichowski; Cédric Durand (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique); Steven Knauss
    Abstract: This paper relates participation in global value chains (GVCs) to development patterns at the country level. It accounts for the diversity and interdependence of development through a crosscountry analysis for 51 countries between 1995 and 2008. We identify three patterns of socioeconomic development related to various degrees and modes of GVC participation: a social upgrading mirage, the reproduction of the core and unequal growth. This result is achieved thanks to the introduction of two new elements to the literature: first, the introduction of new macroeconomic indicators of GVC participation and economic gains that are explicitly based in a theoretically consistent definition of GVCs; second, the identification of a variety of interdependent development patterns related to GVC participation through the use of principal component analysis and cluster analysis.
    Keywords: Global value chains,Development,PCA JEL classification: F63
    Date: 2020–09–20
  29. By: Riccardo Crescenzi; Marco Di Cotaldo; Mara Guia
    Abstract: Growing Euroscepticism across the European Union (EU) leaves open questions as to what citizens expect to gain from EU Membership and what influences their dissent for the EU integration project. This paper looks at EU Structural Funds, one of the largest and most visible expenditure items in the EU budget, to test the impact of EU money on electoral support for the EU. By leveraging the Referendum on Brexit hold in the United Kingdom, a spatial RDD analysis offers causal evidence that EU money does not influence citizens’ support for the EU. Conversely, the analysis shows that EU funds contribute to mitigate Euroscepticism only where they are coupled with tangible improvements in the local labour market conditions. In order to gain support from its citizens, the European Union needs to produce tangible impacts, generating opportunities at the local level where these are felt the most by voters.
    Keywords: Europe, EU funds, Cohesion Policy, Brexit, Euroscepticism, RDD
    Date: 2019–10
  30. By: Tibor Hanappi; Ana Cinta González Cabral
    Abstract: This working paper presents the analytical framework used by the Secretariat to estimate the direct effects of the Pillar One and Pillar Two proposals on MNE’s investment costs. The analysis builds on the standard ETR framework and extends it in two important respects. First, ETRs are calculated for an investment performed by an entity belonging to an MNE group and account for the possibility that MNEs use their organisational structure to shift profits to low tax jurisdictions. Second, the model incorporates a stylised version of the tax provisions introduced under Pillar One and Pillar Two. The results, covering over 70 jurisdictions, account for differences in tax bases and rates, and are empirically calibrated to map MNE activities, i.e., the location of their profits, turnover and assets as well as the impact of the proposals. Overall, the results suggest that the Pillar One and Pillar Two proposals would lead to modest increases on global weighted ETRs. This paper feeds into the broader analysis of the investment impacts of the Pillar One and Pillar Two proposals.
    JEL: H32 F21 H25
    Date: 2020–10–12
  31. By: David Escamilla-Guerrero; Edward Kosack; Zachary Ward
    Abstract: The first mass migration of Mexicans to the United States occurred in the early twentieth century: from smaller pre-Revolutionary flows in the 1900s, to hundreds of thousands during the violent 1910s, to the boom of the 1920s, and then the bust and deportations/repatriations of the 1930s. We show that despite these large shifts, the rate of economic assimilation was remarkably similar across arrival cohorts. We find that the average Mexican immigrant held a lower-paying job than US-born whites near arrival and further fell behind in the following decade. However, Mexican assimilation was not uniquely slow since we also find that the average Italian immigrant fell behind at a similar rate. Yet, conditional on geography, human capital, and initial earning score, Mexicans had a slower growth rate than both US-born whites and Italians. We argue that Mexican-specific structural barriers help to explain why Mexican progress was slower than other groups and why different Mexican arrival cohorts had limited variation in outcomes despite the large shocks to migration.
    Keywords: assimilation, immigration, Mexico, mobility, mob violence
    JEL: J15 J61 J62 N31 N32
    Date: 2020–10–05
  32. By: Nauro Campos; Corrado Macchiarelli
    Abstract: The year 2019 marks the 20th anniversary of the euro as well as Brexit, the expected exit of the United Kingdom from the European Union. This paper examines the relationship between Brexit and the stability of the euro area. We look at stability from the perspective of the distance between core and periphery groups of countries which, we show, is mainly determined by the level of synchronization of economic activity among them. We provide new evidence that the UK economy, since 1990, has become significantly more integrated with the EU economy. The UK moved from being in the periphery before 1990 to being in the core afterwards. We also provide evidence that the level of business cycles synchronization of the UK economy with the EU has had the highest, among all countries, variability over time. We conclude with some policy implications from Brexit for the stability of the euro area.
    Keywords: European Monetary Union, Eurozone, Core-periphery
    Date: 2020–03

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