nep-int New Economics Papers
on International Trade
Issue of 2020‒11‒02
seventy papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Technology, Geography, and Trade over Time: The Dynamic Effects of Changing Trade Policy By Carter Mix
  2. Deep Trade Agreements and Global Value Chains By Edith Laget; Alberto Osnago; Nadia Rocha and Michele Ruta
  3. Globalization for Sale By Michael Blanga-Gubbay; Paola Conconi; Mathieu Parenti
  4. The determinants of service export behaviour in Italian non-financial firms By Alessandro Moro; Enrico Tosti
  5. A multi-sector analysis of Switzerland's gains from trade By Laurence Wicht
  6. Rules of Origin and Market Power By Chung, Wanyu; Perroni, Carlo
  7. Policy Uncertainty, Trade, and Global Value Chains: Some Facts, Many Questions By Cristina Constantinescu; Aaditya Mattoo; Michele Ruta
  8. Greening regional trade agreements on investment By Shunta Yamaguchi
  9. Preventing the Bad from Getting Worse: The End of the World (Trade Organization) As We Know it? By Bernard M. Hoekman; Petros C. Mavroidis
  10. Foreign direct investments of Asian emerging economies in V4 countries By Katalin Völgyi
  11. Export Restrictions: A Negative-Sum Policy Response to the COVID-19 crisis By Bernard Hoekman; Matteo Fiorini; Aydin Yildirim
  12. Contrasting Revealed Comparative Advantages when Trade is (also)in Intermediate Products By Escaith, Hubert
  13. Trade and FDI Thresholds of CO2 emissions for a Green Economy in Sub-Saharan Africa By Simplice A. Asongu; Nicholas M. Odhiambo
  14. Integrated versus Segmented Markets: Implications for Export Pricing and Welfare By Raphael Becker; Sergey K. Nigai; Tobias Seidel
  15. Trade Liberalization and Political Violence: Evidence from North-South Preferential Trade Agreements By Francesco Amodio; Leonardo Baccini; Giorgio Chiovelli, and Michele Di Maio
  16. Baptists and Bootleggers in the Biodiesel Trade: EU-Biodiesel (Indonesia) By Carolyn Fischer; Timothy Meyer
  17. Measuring the Regional Economic Cost of Brexit: Evidence up to 2019 By Fetzer, Thiemo; Wang, Shizhuo
  18. The Pursuit of Non-Trade Policy Objectives in EU Trade Policy By Ingo Borchert; Paola Conconi,; Mattia Di Ubaldo, and Cristina Herghelegiu
  19. Export restrictions during global health crises: The international community can and must do better By Laura Puccio; André Sapir
  20. EU27 and the UK: Product Dependencies and the Implications of Brexit By Lisandra Flach; Feodora Teti; Lena Wiest; Margherita Atzei; Lena Wiest
  21. Trade and Exchange Rate Effects: Evidence from Firm-Level Data By Nazire Nergiz Dinçer; Anirudh Shingal; Ayça Tekin-Koru
  22. India’s Export-Led Growth: Exemplar and Exception By Arvind Subramanian; Shoumitro Chatterjee
  23. Services imports and labour in Viet Nam By Alexander Jaax; Louise Johannesson; Thi Xuan Thu Nguyen
  24. Services Trade and Labour Market Outcomes: Evidence from Italian Firms By Omar Bamieh; Francesco Bripi; Matteo Fiorini
  25. Trade in Small Arms and Light Weapons. Are embargoes effective? By Raul Caruso; Adelaide Baronchelli; Roberto Ricciuti
  26. The Gravity of Intermediate Goods By Paola Conconi,; Glenn Magerman; Afrola Plaku
  27. Rethinking International Subsidy Rules By Bernard Hoekman; Douglas Nelson
  28. How did trade in GVC-based products respond to previous health shocks? Lessons for COVID-19 By Anirudh Shingal; Prachi Agarwal
  29. How protectionism harms workers under oligopoly By Rudsinske, Jonas F.
  30. Migrant Integration Policies and Bilateral Migration By Cosimo Beverelli
  31. Did Trump's Trade War Impact the 2018 Election? By Emily Blanchard; Chad P. Bown; Davin Chor
  32. Economic and Environmental Consequences of the ECJ Genome Editing Judgement in Agriculture By Gocht, Alexander; Consmüller, Nicola; Thom, Ferike; Grethe, Harald
  33. International Trade under Monopolistic Competition beyond the CES By Badis Tabarki
  34. Stakeholder Preferences and Priorities for the Next WTO Director General By Matteo Fiorini; Petros C. Mavroidis, Douglas Nelson and Robert Wolfe
  35. Does Export product diversification help to reduce energy demand: Exploring the contextual evidences from the newly industrialized countries By Umer, Shahzad; Buhari, Dogan; Avik, Sinha; Zeeshan, Fareed
  36. Why are Africa's female entrepreneurs not playing the export game? Evidence from Ghana By Ackah, Charles Godfred; Görg, Holger; Hanley, Aoife; Hornok, Cecília
  37. An adverse social welfare effect of quadruply gainful trade By Stark, Oded; Kosiorowski, Grzegorz
  38. To AB or Not to AB? Dispute Settlement in WTO Reform By Bernard M. Hoekman; Petros C. Mavroidis
  39. Pandemics and Protectionism: Evidence from the “Spanish” flu By Boberg-Fazlic, Nina; Lampe, Markus; Pedersen, Maja Uhre; Sharp, Paul
  40. Reforming WTO Conflict Management. Why and How to Improve the Use of “Specific Trade Concerns” By Robert Wolfe
  41. Subsidies, Spillovers and Multilateral Cooperation By Bernard Hoekman; Douglas Nelson
  42. WTO Dispute Settlement and the Appellate Body Crisis: Insider Perceptions and Members’ Revealed Preferences By Matteo Fiorini; Bernard Hoekman; Petros Mavroidis, Maarja Saluste and Robert Wolfe
  43. Asymmetric general oligopolistic equilibrium By Quint, Ansgar F.; Rudsinske, Jonas F.
  44. Informing WTO Reform: Dispute Settlement Performance, 1995-2020 By Bernard M. Hoekman; Petros C. Mavroidis; Maarja Saluste
  45. Brazil’s Agricultural Competitiveness: Recent Growth and Future Impacts Under Currency Depreciation and Changing Macroeconomic Conditions By Valdes, Constanza; Hjort, Kim; Seeley, Ralph
  46. Does value chain participation facilitate the adoption of industry 4.0 technologies in developing countries? By Delera, Michele; Pietrobelli, carlo; Calza, Elisa; Lavopa, Alejandro
  47. “Flying High in a Plane” Appellate Body Report, European Communities and Certain Member States – Measures Affecting Trade in Large Civil Aircraft (WT/DS316/AB/RW) By Pramila Crivelli; Luca Rubini
  48. Return Migration and Earnings Mobility in Egypt, Jordan and Tunisia By Vladimir Hlasny; Shireen AlAzzawi
  49. Yours is Bigger than Mine! Could an Index like the PSE Help in Understanding the Comparative Incidence of Industrial Subsidies? By Robert Wolfe
  50. International trade and tax-motivated transfer pricing By Quint, Ansgar F.; Rudsinske, Jonas F.
  51. Age, Desires and the Implicit Role of Out-Selection Factors of International Migration By Michel Beine
  52. British Relative Economic Decline in the Aftermath of German Unification By Crafts, Nicholas
  53. Facilitating Trade in Services By Bernard Hoekman
  54. What If? Tinkering with the Counterfactual. A Comment on US-Washing Machines (Article 22.6-US) By Edward Balistreri; Petros C. Mavroidis; Thomas J. Prusa
  55. Facing the challenge of globalization: the role of confidence in institutions. By Sarracino, Francesco; Riillo, Cesare Fabio Antonio
  56. Implications of cheap oil for emerging markets By Alain Kabundi; Franziska Ohnsorge
  57. Value Chain Approaches to Reducing Policy Spillovers on International Business By Christopher Findlay; Bernard Hoekman
  58. The Indirect Fiscal Benefits of Low-Skilled Immigration By Mark Colas; Dominik Sachs
  59. The Prospect of the Proposed Currency Union on Intra-regional Trade: Southern African Customs Union By Abban, Stanley
  60. International trade in travel and tourism services: Economic impact and policy responses during the COVID-19 crisis By Barkas, Panagiotis; Honeck, Dale; Rubio, Ester
  61. EU-China Trade-Related Dialogues, a first assessment By Weinian Hu; Jacques Pelkmans
  62. Trade Secret Protection in a Developing Economy By Klein, Michael A
  63. Informal Learning and WTO Renewal. Using Thematic Sessions to Create More Opportunities for Dialogue By Robert Wolfe
  64. The Impact of Foreign Direct Investment on Environment Degradation: Evidence from Emerging Markets in Asia By Vo, Duc
  65. Migration and Remittances: Evidence from Cambodia, Myanmar and Lao Migrant Workers By Thitiwan Sricharoen
  66. Modeling the US-China trade conflict: a utility theory approach By Yuhan Zhang; Cheng Chang
  67. A counterfactual economic analysis of Covid-19 using a threshold augmented multi-country model By Alexander Chudik; Kamiar Mohaddes; M. Hashem Pesaran; Mehdi Raissi; Alessandro Rebucci
  68. Exports and Invoicing: Evidence from the 2015 Swiss Franc Appreciation By Auer, Raphael; Burstein, Ariel; Erhardt, Katharina; Lein, Sarah
  69. Populism and the First Wave of Globalization: Evidence from the 1892 US Presidential Election By Klein, Alexander; Persson, Karl Gunnar; Sharp, Paul
  70. The EU-LAC Cooperation: Norm-setting, Development, and Socio-spatial Difference. A Postcolonial Critique of Normative Power Europe By Ioana Pantilimon

  1. By: Carter Mix
    Abstract: I study the dynamic effects of changes in trade policy in a multi-country model with firms that make durable and destination-specific investments in exporting capacity. Using Mexican exporter-level data, I show that incumbent exporters to minor trade partners account for a smaller share of bilateral exports than do incumbent exporters to major trade partners, indicating a systematic difference in the persistence of the export decision across destinations. The model is calibrated to capture the positive relationship between exporting persistence and export volume, and predicts that trade liberalizations with minor export destinations deliver higher bilateral export growth than liberalizations with major export destinations. Panel analysis on bilateral exports after free trade agreements is consistent with these predictions, con rming that the model is a useful tool for explaining export behavior. Furthermore, I find that heterogeneity in export churning across destinations is a key driver of aggregate dynamics and welfare gains from changes in trade policy.
    Keywords: Trade policy; Heterogeneous firms; Export participation
    JEL: F12 F13 F60
    Date: 2020–10–14
  2. By: Edith Laget; Alberto Osnago; Nadia Rocha and Michele Ruta
    Abstract: Preferential Trade Agreements (PTAs) have become deeper over time, often encompassing a set of disciplines that go beyond traditional trade policy such as investment, competition, and intellectual property rights protection. In the policy and theory literature, a prominent argument why countries sign “deep” PTAs is to promote and facilitate the operation of Global Value Chains (GVCs). This paper exploits a new dataset on the content of PTAs and data on trade in value added and in parts and components to quantify the impact of deep trade agreements on bilateral cross-border production linkages. Results show that the positive impact of deep trade agreements on GVC integration is driven by value added trade in intermediate rather than in final goods and services. Adding a policy area to a PTA increases domestic value added of intermediates (forward GVC linkages) and foreign value added of intermediates (backward GVC linkages) by 0.48 and 0.38 percent, respectively. At the sectoral level, the positive impact of deep PTAs is higher for higher value-added services suggesting that deep agreements help countries to integrate in industries with higher levels of value added. On a larger sample of countries and years, results confirm that adding a provision to a PTA increases bilateral trade in parts and components by 0.3 percent. The content of PTAs also matters for GVC integration, but the impact varies by income group. Provisions outside the current WTO mandate (e.g. investment, competition policy) drive the effect of deep PTAs on value added trade and on North-South trade in parts and components. Provisions under the current WTO mandate (e.g. tariff reduction, customs facilitation) drive the effect of deep PTAs on South-South trade in parts and components.
    Keywords: Trade Agreements, Global Value Chains, Deep Integration, Regionalism.
    JEL: F13 F15
    Date: 2019–10
  3. By: Michael Blanga-Gubbay; Paola Conconi; Mathieu Parenti
    Abstract: We study the role of firms in the political economy of trade agreements. Using detailed information from lobbying reports filed under the Lobbying Disclosure Act, we find that virtually all firms that lobby on free trade agreements (FTAs) support their ratification. Moreover, relative to non-lobbying firms, lobbying firms are larger, and more likely to be engaged in international trade and to operate in comparative advantage sectors. To rationalize these findings, we develop a model in which heterogeneous firms decide whether to lobby and how much to spend in favour or against a proposed FTA. We show that the distributional effects are asymmetric: the winners from the FTA have higher stakes in the agreement than the losers, which explains why only pro-FTA firms select into lobbying. The model also delivers predictions on the intensive margin of lobbying. In line with these predictions, we find that firms spend more supporting agreements that generate larger potential gains - in terms of the extent of the reduction of tariffs on their final goods and intermediate inputs, the depth of the agreement, and the export and sourcing potential of the FTA partners - and when politicians are less likely to be in favor of ratification.
    Keywords: Trade agreements, endogenous lobbying, heterogeneous firms
    JEL: F13 F53 F61
    Date: 2020–04
  4. By: Alessandro Moro (Bank of Italy); Enrico Tosti (Bank of Italy)
    Abstract: This paper analyses the main drivers of Italian service exports using firm-level data. A gravity equation, augmented with firm characteristics and FDI variables, is estimated using a panel of Italian exporters constructed by merging two datasets, the first on international trade in services and the second on FDI relationships, both used to compile the Italian balance of payments. After presenting a formal justification for the presence of FDI variables in the gravity equation, the model is estimated using a panel composed of non-financial firms exporting services other than travel, transport and processing in the period from 2013 to 2018. The econometric analysis shows that FDI is, among the standard drivers of exports (firm size and productivity, foreign demand, trade costs), a significant variable that positively affects Italian firms’ exports of services, pointing to complementarity rather than to substitution. This evidence suggests that a significant component of trade in services includes intra-group transactions.
    Keywords: trade in services, firm-level data, gravity model, FDI, panel data, firm heterogeneity
    JEL: F14 L80 D22 C23 C51
    Date: 2020–09
  5. By: Laurence Wicht
    Abstract: This paper quantifies Switzerland's gains from trade using a multi-country multi-sector general equilibrium Ricardian trade model. The model calibration relies on a novel data source on sectoral linkages to provide a Switzerland-centric analysis. I find that using this novel dataset generates 13.4% higher estimates of the gains from trade for Switzerland, as other data sources tend to underestimate Swiss sectors' exposure to foreign markets. Using this quantitative framework, I then perform a policy-oriented counterfactual analysis to assess the gains from Switzerland's trade integration. I find that Switzerland's wide free trade agreement (FTA) network is associated with small real GDP gains but significantly shapes trade flows. Without Switzerland's FTA network, Swiss real exports decline by -6.9%, while imports decline by -7.6%. An FTA with the US raises real GDP in Switzerland and in the US, albeit only slightly, while CH-US real bilateral trade increases by approximately +7%.
    Keywords: Gains from trade, input-output linkages, free trade agreements
    JEL: F10 F11 F14
    Date: 2020
  6. By: Chung, Wanyu (University of Birmingham and CEPR); Perroni, Carlo (University of Warwick and CESifo)
    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 Classification: F12, F13, F14, D43
    Date: 2020
  7. By: Cristina Constantinescu; Aaditya Mattoo; Michele Ruta
    Abstract: This paper attempts to quantify the impact of economic policy uncertainty on overall trade and trade linked to global value chains. Using new data on policy uncertainty for 18 countries and 24 years, it finds a statistically significant negative impact of policy uncertainty on overall trade growth. A 1 percent increase in uncertainty is associated with a 0.02 percentage point reduction in the growth of goods and services trade, implying that the increase in policy uncertainty since mid-2018 may have caused a 1 percentage point decline in world trade growth. The paper also finds that the impact of policy uncertainty on trade linked to global value chains is similar to overall trade. This is likely to be the result of two opposing forces: global value chains are more dependent on relation-specific investments that are sensitive to policy uncertainty, but these investments also make trade patterns sticky. More research and better data are needed to disentangle these different effects empirically.
    Keywords: Economic Policy Uncertainty, Trade Growth, Global Value Chains.
    JEL: F13 F14
    Date: 2019–11
  8. By: Shunta Yamaguchi
    Abstract: Many governments are increasingly recognising the need to ensure that trade and investment agreements reflect environmental concerns to help achieve overarching environmental goals and to increase their public acceptability. In particular, investment liberalisation and protection, as well as environmental sustainability are essential elements to consider in these agreements to foster economic integration and require coherent policy approaches.In this context, this report investigates possible approaches that can help ensure policy coherence between investment and environment related provisions in regional trade agreements (RTAs). As investment related articles appear not only in RTAs but more broadly in bilateral investment treaties (BITs) and in other international investment agreements (IIAs), the work extends to trade and investment agreements that encompass RTAs, BITs and other IIAs. The report highlights available practices to ensure that investment related provisions reaffirm the domestic environmental policy space.
    Keywords: bilateral investment agreements, environment policy, environmental provisions, free trade agreements, green investment, international investment agreements, investment policy, Regional trade agreements, trade and environment, trade and investment agreements, trade policy
    JEL: F18 F53 P45 R11 Q56
    Date: 2020–10–26
  9. By: Bernard M. Hoekman; Petros C. Mavroidis
    Abstract: Recent survey evidence illustrates that many WTO members and trade practitioners believe that the WTO dispute settlement system needs improvement. We make several proposals to improve the operation of WTO conflict resolution, drawing on proposals made by WTO members in the long-running negotiations to improve WTO dispute settlement procedures. We argue that a focus on technical dimensions of dispute settlement is insufficient to prevent a steady decline in the salience of the organization. Revitalizing the WTO as a forum for rulemaking is needed both to address the cross-border policy spillovers driving trade conflicts between the major trading powers and to improve WTO conflict resolution. Principals – WTO members – should accept that negotiations to clarify and extend existing rules must be an element of a robust system of dispute settlement, and that bolstering WTO dispute settlement is a necessary condition for nascent efforts at plurilateral rulemaking to be successful.
    Keywords: WTO, Appellate Body, Dispute Settlement, Conflict Resolution
    JEL: F15 K40
    Date: 2020–01
  10. By: Katalin Völgyi (Centre for Economic and Regional Studies, Institute of World Economics, Budapest)
    Abstract: This study deals with the outward FDI of six Asian emerging economies (South Korea, Taiwan, Malaysia, Thailand, Indonesia and Vietnam) in Visegrad Group countries. Its main aim is to determine the motives and pull factors for these investments. The investigation is mainly based on company data provided by AMADEUS, and information collected from company interviews and websites, investment promotion agencies, embassies, ministries, and relevant media. The findings show that South Korea is one of the most important non-European FDI source countries for the V4. Of the six Asian countries, the second largest investor is Taiwan. The four ASEAN countries have only small and sporadic investments in V4 countries. South Korean, Taiwanese and ASEAN companies in the V4 have been operating in various manufacturing and services sectors such as automotive, electronics, food, chemical, logistics, finance, real estate, construction, warehousing & storage, IT services, wholesale & retail trade, accommodation, and catering. The study investigates the motives and pull factors for Asian investments only in the automotive and electronics sector which are the most preferred sectors. The evidence shows that market-seeking and efficiency-seeking motivations are behind these investments. The main pull factors of the V4 are the following: free access to the EU market (EU membership since 2004), relatively low-cost production base, skilled labour, government incentives, and relatively developed infrastructure, anti-dumping measure of the EU, and presence of large home-country purchasers of components manufacturers.
    Keywords: FDI, South Korea, Taiwan, ASEAN countries, Visegrad Group
    JEL: F21 F23
  11. By: Bernard Hoekman; Matteo Fiorini; Aydin Yildirim
    Abstract: Many countries, including China, European member states, the European Union, India and the United States have put in place measures to restrict exports of medical products as part of their response to the COVID-19 pandemic. The objective is to allocate domestic supplies to national healthcare systems and citizens. These policies break supply chains that rely on sourcing of inputs from different countries, reduce access to critically needed supplies and foster excessive price spikes and volatility, and generate foreign policy tensions. Experience with widespread use of export restrictions by food exporting countries in times of market disruption and supply shortages suggests a priority for the G20 should be to work with industry to put in place systems to enhance access to information on production capacity, investments to boost supplies and address supply chain bottlenecks affecting production and trade in essential medical supplies.
    Keywords: Coronavirus, COVID-19 pandemic, export restrictions, trade policy, G20
    Date: 2020–04
  12. By: Escaith, Hubert
    Abstract: The paper reviews and compare a selection of existing and new alternative indicators of Revealed Comparative Advantages, with a special emphasis on trade in intermediate products. The research adopts a statistical approach for both its theoretical and its analytical facets. The formal concepts are those used —inter alia—in statistical inference and information theory. The empirical part applies Exploratory Data Analysis on trade and production data from OECD’s Inter-Country Input-Output Tables. International Input-Output data introduce a new dimension in the definition of comparative advantages: upstream or downstream competitiveness. It is shown that One-Way and Two-Way trade indices capture different aspects of trade competitiveness, and are complementary. Comparative advantages being relative by definition, ordinal or dichotomous classifications provide more robust results than the absolute cardinal indices. Even with dichotomous indicators, the classification of best performers remains blurry, fuzziness varying greatly among product categories.
    Keywords: international trade, relative comparative advantages, intermediate inputs, indices, exploratory data analysis
    JEL: C82 F12 F14
    Date: 2020–10–19
  13. By: Simplice A. Asongu (Yaounde, Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa)
    Abstract: This research focuses on assessing how improving openness influences CO2 emissions in Sub-Saharan Africa. It is based on 49 countries in SSA for the period 2000-2018 divided into: (i) 44 countries in SSA for the period 2000-2012; and (ii) 49 countries for the period 2006-2018. Openness is measured in terms of trade and foreign direct investment (FDI) inflows. The empirical evidence is based on the Generalised Method of Moments. The following main findings are established. First, enhancing trade openness has a net positive impact on CO2 emissions, while increasing FDI has a net negative impact. Second, the relationship between CO2 emissions and trade is a Kuznets shape, while the nexus between CO2 emissions and FDI inflows is a U-shape. Third, a minimum trade openness (imports plus exports) threshold of 100 (% of GDP) and 200 (% of GDP) is beneficial in promoting a green economy for the first and second sample, respectively. Fourth, FDI is beneficial for the green economy below critical masses of 28.571 of Net FDI inflows (% of GDP) and 33.333 of net FDI inflows (% of GDP) for first and second samples, respectively. It follows from findings that while FDI can be effectively managed to reduce CO2 emissions, this may not be the case with trade openness because the corresponding thresholds for trade openness are closer to the maximum limit. This study complements the extant literature by providing critical masses of Trade and FDI that are relevant in promoting the green economy in Sub-Saharan Africa.
    Keywords: CO2 emissions; Economic development; Africa; Sustainable development
    JEL: C52 O38 O40 O55 P37
    Date: 2020–01
  14. By: Raphael Becker; Sergey K. Nigai; Tobias Seidel
    Abstract: This paper challenges the common assumption of market segmentation in international trade. To analyze export entry and pricing decisions of firms in integrated vs. segmented markets, we develop a novel tractable approach based on stochastic export costs that allows us to compare firm-level and aggregate outcomes under arbitrary market interdependence. We find that allowing for potential re-exporting arbitrage between countries imposes constraints on export prices of firms and has first-order implications for trade and welfare.
    Keywords: market segmentation, pricing constraints, gains from trade
    JEL: F12 F13 F14 F15
    Date: 2020
  15. By: Francesco Amodio; Leonardo Baccini; Giorgio Chiovelli, and Michele Di Maio
    Abstract: This paper explores the micro-foundations of the trade-conflict nexus. We focus on the reduction of tariffs on agricultural imports from South countries to North countries as resulting from Preferential Trade Agreements. We combine the variation in agricultural tariffs over time with differences in crop suitability across districts within South countries. Our analysis covers 27 South countries and all their PTAs signed with major North countries between 1995 and 2014. Our approach rests upon the observation that differences in agro-climatic conditions within the country generate exogenous variation in suitability to produce different crops. Using 9km x 9km cells as unit of observations, we test if the North-South trade liberalization agreement affect levels of political violence and instability differentially in those districts that are more suitable to produce liberalized crops. We find robust evidence that in those cells, PTAs increase economic output and political violence, in line with the rapacity effect mechanism.
    Keywords: Political violence, trade, agriculture, preferential trade agreement.
    JEL: D22 D24 F51 N45 O12
    Date: 2020–06
  16. By: Carolyn Fischer; Timothy Meyer
    Abstract: EU-Biodiesel (Indonesia) is the latest in two lines of cases. On the one hand, the case offers yet another example of the Dispute Settlement Body striking down creative interpretations of antidumping rules by developed countries. Applying the Appellate Body’s decision in EU-Biodiesel (Argentina), the panel found that the EU could not use antidumping duties to counteract the effects of Indonesia’s export tax on palm oil. On the other hand, the decision is another chapter in the battle over renewable energy markets. Both the EU and Indonesia had intervened in their markets to promote the development of domestic biodiesel industries. The panel’s decision prevents the EU from using antidumping duties to preserve market opportunities created by its Renewable Energy Directive for its domestic biodiesel producers. The EU has responded in two ways. First, through regulations that disfavor palm-based biodiesel, but not biodiesel made from other foodstocks, such as rapeseed oil commonly produced in the EU. Second, the EU has imposed countervailing duties on Indonesian biodiesel, finding that Indonesia’s export tax on crude palm oil constitutes a subsidy to Indonesian biodiesel producers. The EU’s apparently inelastic demand for protection raises two questions: First, when domestic political bargains rest on both protectionist and non-protectionist motives and policies have both protectionist and non-protectionist effects, what are the welfare consequences of restraining only overt protectionism? Second, under what circumstances may regulatory approaches be even less desirable than duties for addressing combined protectionist and environmental interests, and would the WTO have the right powers to discipline them in an environmentally sound way?
    Keywords: World Trade Organization, antidumping, biodiesel, climate governance, economic development.
    Date: 2019–10
  17. By: Fetzer, Thiemo (University of Warwick); Wang, Shizhuo (University of Warwick)
    Abstract: The United Kingdom (UK) reported record employment levels following its vote to Leave the European Union (EU), leading to many pundits discarding the dire pre-Brexit vote impact assessments as part of “project fear.” This paper studies the cost of the Brexit-vote to date across UK regions finding significant evidence suggesting that the economic costs of the Brexit-vote are both sizable and far from evenly distributed. Among 382 districts, at least 168 districts appear to be Brexit-vote losers, having lost, on average 8.54 percentage points of output in 2018 compared to their respective synthetic controls. The Brexit-vote costs are increasing in a districts: a) support for Leave in 2016; b) the size of its manufacturing sector; c) the share of low skilled. The Brexitvote induced economic divergence across regions is already exacerbating the regional economic inequalities that the 2016 EU referendum vote made apparent. Indirect evidence further suggests that firms may, amidst the significant (trade) policy uncertainty, have shifted away from capital to labor in the shortterm given that Brexit has, to date, not led to changes in market access. The resulting short-term employment- and payroll growth post-2016 is not supported by productivity increases in most parts of the UK. This sets up the possibility for significant labor market adjustments once Brexit becomes a defacto reality. Further, there is some evidence suggesting that COVID19 may exacerbate the regional economic impact of the Brexit-vote to date.
    Keywords: Brexit, economic impact, evaluation, trade barriers JEL Classification: F6, H2, H3, H5, P16, D7
    Date: 2020
  18. By: Ingo Borchert; Paola Conconi,; Mattia Di Ubaldo, and Cristina Herghelegiu
    Abstract: The European Union (EU) often conditions preferential access to its market upon compliance by its trading partners with Non-Trade Policy Objectives (NTPOs), including human rights and labor and environmental standards. We systematically document the coverage of NTPOs in EU trade agreements and in its Generalized System of Preferences (GSP). We then examine the extent to which trade agreements and GSP programs can be used to promote NTPOs. Preferential trade agreements are negotiated under multilateral rules, which require members to eliminate all tariffs reciprocally. As a result, once a trade agreement enters into force, the EU cannot easily restrict or extend access to its market so as to “punish bad behavior” or “reward good behavior” on NTPOs by its trading partners. By contrast, GSP preferences are granted on a unilateral basis, so they can be limited or extended, depending on compliance with NTPOs. EU GSP programs can thus provide a carrot-and-stick mechanism to promote NTPOs in partner countries.
    Keywords: Trade Agreements, GSP, Conditionality, Non-Trade Policy Objectives
    JEL: F13 F50 J80 K32
    Date: 2020–04
  19. By: Laura Puccio; André Sapir
    Abstract: COVID-19 represents one of the biggest pandemic faced by humanity in recent times, spreading to almost all countries and territories on all continents. Because it spread so suddenly and quickly, COVID-19 produced an unparalleled increase in demand in personal protective equipment, medical products and devices, which far outpaced the ability to increase supply. The outcome was a shortage in these products, which lead several countries to introduce export restrictions. This paper offers a legal and economic assessment of these export restrictions and argues that the current international rules – administered respectively by the World Health Organisation (WHO) and the World Trade Organisation (WTO) – are ill-suited to deal with critical shortages that are likely to arise during, or at least in the early days of, a pandemic. Absent better rules and greater international cooperation, there was no alternative to the proliferation of export restrictions. The paper proposes the establishment of a new normative framework involving both WHO and WTO to avert supply shortages and export restrictions during a pandemic.
    Keywords: export restrictions, pandemic, covid-19, WTO, WHO, 2005 International Health Regulation, supply shortage
    Date: 2020–10
  20. By: Lisandra Flach; Feodora Teti; Lena Wiest; Margherita Atzei; Lena Wiest
    Abstract: The decision of the UK to leave the EU imposes a key challenge for trade relations and, depending on the outcome of the ongoing Brexit negotiations, will cause severe increases in bilateral trade costs. The experience from former crises has shown that disruptions caused by negative shocks are more severe in case of highly dependent goods, which are sourced from few suppliers. This report provides an overview on product dependencies between EU27 and the UK and uncovers several stylized facts. It shows that, whereas for most of the EU27 countries less than 10% of the highly dependent goods are sourced from the UK, the majority of UK’s imports of highly dependent goods are sourced from countries in the EU27. However, for both, the UK and the EU27, Brexit imposes challenges for supply chains, as in both cases most of these goods are classified as intermediate goods, which are used as input for final production in the destination country. For those goods, uncertainty and rising costs due to Brexit may cause an additional distress on supply chains.
    Date: 2020
  21. By: Nazire Nergiz Dinçer (TED University); Anirudh Shingal (European University Institute, Florence and World Trade Institute, University of Bern); Ayça Tekin-Koru (Australian College of Kuwait)
    Abstract: We estimate an augmented gravity model using a firm-level database on Turkish firms to revisit the trade-exchange rate relationship over 2003-2015 at the intensive export margin. Besides several additional layers of analysis made possible by unique attributes of our firmlevel database, we also examine exchange rate effects separately for firms engaged in manufacturing and services activities, which is a significant departure from existing literature. Our findings suggest considerable heterogeneity in the exchange rate effects on exports at the intensive margin. On the whole, for existing trade flows, more GVC-intensive production is found to attenuate the effect of an exchange change, especially for the servicesintensive firms in the sample.
    Date: 2020–10–20
  22. By: Arvind Subramanian (Ashoka University); Shoumitro Chatterjee (Pennsylvania State University)
    Abstract: Two new facts motivate this long-run assessment of India’s exports and growth. First, since the early 1990s, India has posted the world’s third-highest growth rate in overall and manufacturing exports, which has been critical to India’s overall growth performance. Contrary to perception, India has been an exemplar of the export-led growth model. Second, this aggregate performance has, however, co-existed with an underperformance in unskilled manufacturing exports. This has resulted in at least $140 billion in “missing†unskilled economic activity annually. A cross-country gravity perspective suggests that India is a “normal†exporter and importer of goods and services, but an under-exporter of manufacturing goods. Going forward, India’s unusual, endowment-defying specialization could limit export dynamism. Having not traversed them Lewis curve for unskilled manufacturing, the curve for skilled exports is threatening to turn up as skilled labor becomes scarce.
    Keywords: Globalization, Exports, Economic Development
    Date: 2020–10
  23. By: Alexander Jaax (OECD); Louise Johannesson (OECD); Thi Xuan Thu Nguyen (Diplomatic Academy of Viet Nam)
    Abstract: This paper draws on detailed firm-level and worker-level information to explore the link between services imports and employment dynamics in the case of Viet Nam. The econometric analysis consists of two parts. First, data covering formal firms are exploited to investigate the relationship between sector-level services import intensity and firm-level employment and firm-level average wages. The second part is conducted at the level of workers and also covers informal workers. The results show that sector-level services import intensity positively affects firm-level average wages of Vietnamese formal services firms, whereas a small negative effect on firm-level employment is observed. For manufacturing firms, there is no conclusive evidence regarding the association between services import intensity and firm-level employment. The worker-level analysis identifies a positive wage effect of occupation-level exposure to services imports on domestic workers in foreign-owned businesses in all sectors. The results also suggest that higher skilled workers might be more likely to benefit from services imports. This paper provides support for an approach that combines an emphasis on lowering firms’ costs of sourcing foreign services inputs with efforts to strengthen SMEs’ capabilities and improve workers’ skills.
    Keywords: employment, individual and firm-level data, trade, wages, worker heterogeneity
    JEL: F14 F16 F61 J21 J30 C26
    Date: 2020–10–23
  24. By: Omar Bamieh; Francesco Bripi; Matteo Fiorini
    Abstract: The paper investigates the relationship between services trade performance and employment characteristics in Italian firms. Our analysis is at the micro level and descriptive in nature. We merge micro data on services trade transactions with employment and wage variables at the level of the firm. We find that firms engaged in services trade tend to employ a larger share of managers and white collars and to pay higher average wages. They also exhibit systematically smaller shares of blue collars in their employment structure. These patterns hold qualitatively across all main sectors of firms' affiliation and across sectors of traded services. We find a strong and positive association between services exports and/or imports and total employment. Regression analysis confirms this last finding and shows it is robust to controlling for various confounding heterogeneity.
    Keywords: Services trade, Employment, Firm-level data, Italy
    JEL: F14 F16
    Date: 2020–05
  25. By: Raul Caruso (Department of Economic Policy and CSEA, Catholic University of Sacred Heart CESPIC, Catholic University 'Our Lady of Good Counsel'); Adelaide Baronchelli (University of Verona); Roberto Ricciuti (University of Verona)
    Abstract: This paper analyses the trade in Small Arms and Light Weapons (SALW) from 1990 to 2017. Our analysis relies on an unbalanced panel of 79,245 observations reporting SALW transfers between 9,275 pairs of countries. In particular, we study the impact of embargoes on trade in SALW. We test different channels through which arms embargoes may affect trade in SALW. We use a gravity model framework where we include beside traditional gravity variables also controls specific to trade in SALW. Results show that (i) embargoes reduce SALW imports of target country; (ii) there is no evidence of sanctions-busting because imports neighbor countries do not seem to be positively affected; (iii) Imports of sport arms – which can be subject to fewer restrictions - appear to be unrelated to sanctions, indicating that the trade in this type of weapon may be still quite unrestricted.
    Keywords: Small arms and light weapons; Gravity model, Sanctions, Embargoes.
    JEL: F14 F51 H56 D74
    Date: 2020–05–01
  26. By: Paola Conconi,; Glenn Magerman; Afrola Plaku
    Abstract: One of the puzzles of the gravity literature is the persistent effect of distance on trade flows, despite the dramatic fall in trade costs during the last few decades (Disdier and Head, 2008). A possible reason for the \distance puzzle" is that trade in intermediate goods, which has risen dramatically during this period due to the emergence of global value chains, may be more sensitive to distance than trade in final goods. Using a dataset of bilateral import flows covering 5000 products and more than 200 countries over the 1998-2011 period, we show that intermediate goods are indeed more sensitive to distance than final goods, with differentiated inputs exhibiting the highest distance elasticity. The results are robust to including different sets of controls, and using different samples and econometric methodologies. They suggest that sourcing inputs from nearby countries helps final good producers to better coordinate with their suppliers, monitor their production, and insure the timely delivery of inputs that need to be tailored to their needs.
    Keywords: Gravity, distance, intermediate goods, final goods, product differentiation
    JEL: F14 F23
    Date: 2019–10
  27. By: Bernard Hoekman; Douglas Nelson
    Abstract: Geo-economic tensions and global collective action problems call for international cooperation to revise and develop rules to guide both the use of domestic subsidies and responses by governments to cross-border competition spillover effects. Current WTO rules that divide all subsidies into either prohibited or actionable categories are no longer fit for purpose. Piecemeal efforts in preferential trade agreements and bi- or trilateral configurations offer a basis on which to build, but are too narrow in scope and focus. Addressing the spillover effects of subsidies could start with launching a work program at the 12th Ministerial Conference of the WTO to mobilize an epistemic community concerned with subsidy policies, tasked with building a more solid evidence base on the magnitude, purpose and effects of subsidy policies.
    Keywords: Subsidy policies, spillovers, international cooperation, trade agreements, WTO
    JEL: E61 F02 F15 F42 F68
    Date: 2020–03
  28. By: Anirudh Shingal; Prachi Agarwal
    Abstract: Using difference-in-difference analysis, we examine how trade in GVC-based products may have responded to two previous health shocks - SARS and MERS. Our identification strategy exploits differences in the time period of severe incidence of each disease and in the coverage of trading partners that were more adversely affected than others. While we find no evidence for “reshoring” in response to each of these virus outbreaks, there is some evidence for “near-shoring” in the stylized facts on SARS. Empirical analysis also suggests geographical diversification of value chains - import shares from China and UAE declined during each outbreak, while MERS was accompanied by a fall in import concentration; these effects persisted over time for SARS suggesting that the associated value-chains were not resilient to these health shocks. The findings are observed at both the intensive (import value) and extensive (number of HS-6 products and export destinations) margins. The SARS effects are driven by lower-middle-income importers that were more integrated in GVCs, received more investment, were more competitive and were more reliant on the severely affected partners. We expect similar disruptions to GVC-trade from COVID-19, especially diversification away from China.
    Keywords: GVC-trade, health shocks, COVID-19, reshoring, near-shoring, GVC-disruptions.
    JEL: F1
    Date: 2020–10
  29. By: Rudsinske, Jonas F.
    Abstract: I study welfare and distributional effects of import tariffs in a two-country asymmetric general oligopolistic equilibrium trade model. Tariffs have an anti-competitive effect that reduces labor demand because firms want to shorten supply. Unilaterally increasing the import tariff in absence of foreign retaliation raises domestic welfare at the foreign country's expense, but comes at the cost of favoring profit recipients as compared to workers, whose real wages fall. Only if initial symmetric tariffs are low, the tariff-increasing government could use its rising tariff revenue to neutralize the distributional effect or the negative effect on workers, an action the other country could never take because its tariff revenue declines. If supporting workers is the policy objective, tariffs do not appear to be a suitable tool under oligopoly and need to be accompanied by transfer payments or even profit taxation.
    Keywords: Trade Policy,labor share,general oligopolistic equilibrium,labor demand,strategic trade
    JEL: F13 E25 F12 J23 L13
    Date: 2020
  30. By: Cosimo Beverelli
    Abstract: Using a novel gravity methodology based on international and intra-national (i.e. internal) migration flows, I investigate the impact of non-discriminatory migrant integration policies set by destination countries on bilateral migration. In a sample of 27 destination countries and 189 origin countries for the years 2010-2014, I show that these policies, on average, positively affect migration. Moving from the 25th percentile to the median of the variable that summarizes all migrant integration policies leads to a predicted 27 percent increase in international, relative to internal migration flows. Not all migrant integration policies, however, have such positive effect. Only policies favoring migrants' access to nationality and policies affording migrants legal protection from discrimination are robust determinants of migration flows.
    Keywords: International Migration, Migrant Integration, Gravity Equation
    JEL: F22 J15 J61
    Date: 2020–02
  31. By: Emily Blanchard; Chad P. Bown; Davin Chor
    Abstract: We find that Republican candidates lost support in the 2018 congressional election in counties more exposed to trade retaliation, but saw no commensurate electoral gains from US tariff protection. The electoral losses were driven by retaliatory tariffs on agricultural products, and were only partially mitigated by the US agricultural subsidies announced in summer 2018. Republicans also fared worse in counties that had seen recent gains in health insurance coverage, affirming the importance of health care as an election issue. A counterfactual calculation suggests that the trade war (respectively, health care) can account for five (eight) of Republicans’ lost House seats.
    Keywords: trade war, trade policy, retaliatory tariffs, agricultural subsidies, health insurance coverage, voting
    JEL: F13 F14
    Date: 2020
  32. By: Gocht, Alexander; Consmüller, Nicola; Thom, Ferike; Grethe, Harald
    Abstract: Genome edited crops are on the verge of being placed on the market and their agricultural and food products will thus be internationally traded soon. National regulation, however, diverges regarding the classification of genome edited crops. Major countries such as the US and Brazil do not specifically regulate genome edited crops, while in the European Union they fall under GMO legislation, according to the European Court of Justice (ECJ). As it is in some cases impossible to analytically distinguish products from genome edited plants compared to non-genome edited plants, EU importers may fear the risk of violating EU legislation. They may choose to not import anymore agricultural and food products based on crops, for which genome edited varieties are available. As a consequence, crop products, for which the EU is currently a net importer, would become more expensive in the EU and production would intensify. Furthermore, strong substitution among products covered and not covered by genome editing would occur in consumption, production and trade. We analyse the effects of such a cease of EU imports for cereals and soy on the EU agricultural sector with the comparative static agricultural sector equilibrium model CAPRI. Our results indicate that effects on agricultural and food prices as well as farm income are strong, and the intensification of EU agriculture may result in negative net environmental effects in the EU as well as increases in global greenhouse gas emissions. This suggests that the trade effects should be taken into account when developing domestic regulation for genome edited crops.
    Keywords: International Relations/Trade, Research Methods/ Statistical Methods
    Date: 2020–10–23
  33. By: Badis Tabarki (Centre d'Economie de la Sorbonne, Université Paris 1 Panthéon-Sorbonne and Paris School of Economics)
    Abstract: This paper considers a general yet tractable demand system encompassing directly- and indirectly-separable preferences, with homothetic CES as a commonn ground. An added flexibility of this demand system is that it allows for two alternative curvatures of demand. Beyond the CES, demand may be either "sub-convex": less convex than the CES, or "super-convex": more convex than the CES. Embedded in a general equilibrium trade model featuring standard assumptions on the supply side, this flexible demand system yields new comparative statics results and a wide range of predictions for the gains from trade, while illustrating existing ones in a simple and compact way. The main finding of this paper is that while demand curvature governs comparative statics results and plays a crucial role in determining the structure and the magnitude of welfare gains from trade, the type of preferences has only a second-order importance from a welfare standpoint
    Keywords: gains from trade; heterogeneous firm; non-CES preferences; demand curvature
    JEL: F12 D11 L11
    Date: 2020–08
  34. By: Matteo Fiorini; Petros C. Mavroidis, Douglas Nelson and Robert Wolfe
    Abstract: The WTO is looking for a new Director-General (DG). What does the trade community think is needed? This paper reports on the results of an expert survey undertaken as part of a research project on global trade governance at the European University Institute to solicit views on what WTO members and the international trade community consider the most important attributes of candidates for the position, as well as views on the substantive policy and institutional reform priorities confronting the WTO – and thus the new DG. The results suggest strong support for someone with managerial and political experience, and a professional network that spans international organizations, major capitals, and international business. African respondents assign the highest priority to regional diversity. Resolving the dispute settlement crisis is the highest priority for most respondents; launching discussions on new issues obtains the least support. There is broad agreement on the importance of addressing a range of negotiating topics and institutional reforms, but substantial variation in the rankings assigned by different groups of respondents to specific issues.
    Keywords: WTO, governance, international organizations, leadership attributes, stakeholder preferences
    Date: 2020–07
  35. By: Umer, Shahzad; Buhari, Dogan; Avik, Sinha; Zeeshan, Fareed
    Abstract: This article investigates the impact of export product diversification, extensive margin and intensive margin on emerging economies energy demand covering the period from 1971 to 2014. The study contributes to energy economics by unveiling the interaction between export diversification and energy demand of 10 newly industries countries (NICs). Owing to the growth prospect and trade volume of these nations, it is necessary to assess the various facades of export growth on the energy demand. In this pursuit, we have considered the export product diversification index in its aggregate and disaggregated forms (i.e. extensive margin and intensive margin) in this study. The empirical estimation has been carried out based on GMM, FGLS, FMOLS, and DOLS techniques. The empirical results demonstrate that export diversification, extensive margin, and intensive margin help to reduce the overall energy demand in NICs. Further, the empirical outcomes identify that economic growth, urbanization, and natural resources increase energy consumption. The study discusses fruitful policy implications regarding the exports diversification and energy demand nexus for emerging economies.
    Keywords: Export product diversification; extensive margin; intensive margin; energy consumption; Newly Industrialized Countries; panel co-integration
    JEL: C32 F12 Q56
    Date: 2020
  36. By: Ackah, Charles Godfred; Görg, Holger; Hanley, Aoife; Hornok, Cecília
    Abstract: We explore the export performance of Africa's underperforming female entrepreneurs, using the Ghanaian ISSER-IGC panel, a comprehensive dataset of manufacturing firms for 2011-2015. Uniquely, the data provides information about the severity of key business constraints, across both male and female entrepreneurs. We find that females are less likely to export (and optimize their exporting) than their male peers. Although reduced access to finance seriously constrains the exports of female entrepreneurs, this limitation does not explain their relative inability to leverage value from exports. Consistent with related work, we find that certain social and cultural constraints, in particular constraints linked to bribes and security concerns, are more deeply felt by female entrepreneurs. This may hint at the exclusion of Africa's females (voluntarily or involuntarily) from male-dominated networks or business practices.
    Keywords: female entrepreneurship,business constraints,productivity,exporting,Africa,Ghana
    JEL: D22 F14 J16
    Date: 2020
  37. By: Stark, Oded; Kosiorowski, Grzegorz
    Abstract: Acknowledging that individuals dislike having low relative income renders trade less attractive when seen as a technology that integrates two economies by merging separate social spheres into one. We define a 'trembling trade' as a situation in which gains from trade are less than losses in relative income, with the result that global social welfare is reduced. We show that a 'trembling trade' can arise even when trade is more gainful in four ways: through trade the absolute income of everyone increases, the income gap in both economies is reduced, as is the income gap between the trading economies. However, trade brings populations, economies, or markets that were not previously connected closer together in social space. As a consequence, separate social spheres merge, and people's social space and their comparators are altered. Assuming that people like high (absolute) income and dislike low relative income, the aggregate increase in unhappiness caused by the trade-induced escalation in relative deprivation can result in a negative overall impact of trade on (utilitarian-measured) social welfare, if the absolute income gains are not large enough to mitigate the relative income losses.
    Keywords: gains from trade,Increase of incomes,Decrease of income gaps,Integration,Change of social space,Low relative income,Quadruply gainful trade,"Trembling trade",Social welfare
    JEL: D31 D63 F10 F15 R12
    Date: 2020
  38. By: Bernard M. Hoekman; Petros C. Mavroidis
    Abstract: Recent debates on the operation of the WTO’s dispute resolution mechanism have focused primarily on the Appellate Body (AB). We argue that this neglects the first-order issue confronting the rules-based trading system: sustaining the principle of de-politicized dispute resolution that is reflected in the negative consensus rules for adoption of findings by trade dispute adjudicators. The existence of the AB is not material in this regard. Improving the quality of the panel process, complemented by reforms to WTO working practices that reduce incentives to resort to formal dispute settlement, can resolve the main issues that led to the AB crisis. An effective, coherent and consistent system of WTO dispute resolution need not include an AB.
    Keywords: trade disputes, adjudication, Appellate Body, panels, WTO reform
    JEL: K40
    Date: 2020–05
  39. By: Boberg-Fazlic, Nina (University of Southern Denmark); Lampe, Markus (WU Vienna University of Economics and Business, CEPR); Pedersen, Maja Uhre (University of Southern Denmark); Sharp, Paul (University of Southern Denmark, CAGE, CEPR)
    Abstract: The impact of COVID-19 on recent tendencies towards international isolationism has been much speculated on but remains to be seen. We suggest that valuable evidence can be gleaned from the “Spanish” flu of 1918-20. It is well-known that the world fell into a protectionist spiral following the First World War, but scholars have almost exclusively ignored the impact of the pandemic. We employ a difference-in-differences strategy on data for Europe and find that excess deaths had a significant impact on trade policy, independent of the war. A one standard deviation increase in excess deaths during the outbreak implied 0.022 percentage points higher tariffs subsequently, corresponding to an increase of one third of a standard deviation in tariffs. Health policy should aim to avoid the experience of the interwar period and consider the international macroeconomic impact of measures (not) taken.
    Keywords: Pandemics, protectionism, trade JEL Classification: F13, I19, N74
    Date: 2020
  40. By: Robert Wolfe
    Abstract: With its dispute settlement system in peril, the role of the World Trade Organization (WTO) in mitigating commercial conflict is more important than ever, but its working practices need reform, notably procedures for discussing trade concerns. The Sanitary and Phytosanitary Measures (SPS) and Technical Barriers to Trade (TBT) committees have developed a mechanism for representatives to raise “specific trade concerns” (STCs) about laws, regulations, or practices by their trading partners. These can mitigate sources of friction and help avoid recourse to formal dispute settlement. This article assesses experience with STCs and assesses suggestions for reform of the process and its extension to all WTO committees. The important WTO reform question is whether procedural changes in Geneva can make STCs more effective for all members while facilitating enhanced participation by members who do not now make full use of the possibilities that such procedures offer.
    Keywords: Trade conflict, dispute settlement, transparency, international trade cooperation, WTO reform
    Date: 2020–08
  41. By: Bernard Hoekman; Douglas Nelson
    Abstract: Negative international spillovers created by nontariff policies are a rising source of trade tensions and conflicts. The WTO does not include rules for subsidies for services industries, state-owned enterprises or investment incentives. Existing disciplines on industrial policies are increasingly seen to be inadequate by many WTO members. Efforts to revisit and expand rules for contested policies must recognize the changing nature of international production. A first step in addressing trade conflicts associated with industrial policies is to determine where negative international competition spillovers are both large and systemic in nature. Doing so requires going beyond trade ministries and bringing in finance and line ministries, as well as competition agencies and international organizations with expertise in collecting information on subsidies and analyzing their effects.
    Keywords: Trade agreements, subsidies, spillovers, international cooperation, WTO
    Date: 2020–02
  42. By: Matteo Fiorini; Bernard Hoekman; Petros Mavroidis, Maarja Saluste and Robert Wolfe
    Abstract: The WTO dispute settlement system is in crisis, endangering the future of the organization. The proximate reason for alarm is the dwindling number of Appellate Body (AB) members, the result of the United States blocking new appointments as the terms of sitting members expire. The AB crisis usually is presented as the U.S. against the world. In this paper, we report on the results of a survey of WTO Members’ perceptions of the AB and the role it plays (should play) and contrast this with Members’ revealed preferences in their use of the dispute settlement system and their intervention in WTO debates about the crisis. The data reveal strong support for the basic de-sign of the dispute settlement system but also that the United States is not alone in perceiving that the AB has gone beyond its mandate.
    Keywords: WTO, Appellate Body, dispute settlement, conflict resolution
    Date: 2019–11
  43. By: Quint, Ansgar F.; Rudsinske, Jonas F.
    Abstract: We develop an asymmetric general oligopolistic equilibrium (AGOLE) model, which extends the range of possible applications in general oligopolistic equilibrium modelling. The AGOLE allows to incorporate endogenous and asymmetric marginal utilities of income across countries.As a first exemplary application, we analyze the effects of asymmetric labor market policies. When one country increases its labor supply per capita, it is optimal for its firms to supply a part of the additional production to the other country at reduced prices to artificially inflate domestic prices. This results in a spillover effect letting consumption increase abroad due to a change in the terms of trade. In AGOLE, oligopolistic competition can induce asymmetric price reactions that shift real income and demand between the two countries. We argue that incorporating this cross-country demand channel is crucial for analyzing asymmetric countries or policies in presence of firms with market power.
    Keywords: general oligopolistic equilibrium,strategic trade,international trade and labor market interactions,factor income distribution
    JEL: F12 D51 L13 F16 D33
    Date: 2020
  44. By: Bernard M. Hoekman; Petros C. Mavroidis; Maarja Saluste
    Abstract: This paper presents salient facts on the performance of WTO dispute settlement, using an updated dataset on cases adjudicated between 1992 and mid 2020. The dataset provides a comprehensive compilation of information on WTO disputes, including complainants, respondents and third parties; the substantive matters tabled; the WTO provisions invoked; the claims that are accepted or rejected by adjudicating bodies; the time involved to complete the consultation, panel and appeal (Appellate Body) stages; and the identity of panelists and how they were appointed. We highlight elements of the operation of the system that are salient to WTO reform discussions, while drawing attention to the richness of the dataset by highlighting stylized facts in the hope others will use the data to investigate specific research questions and hypotheses.
    Keywords: WTO, trade disputes, conflict resolution, panels, Appellate Body
    JEL: F13 F51 K
    Date: 2020–09
  45. By: Valdes, Constanza; Hjort, Kim; Seeley, Ralph
    Abstract: Macroeconomic reforms and policies have contributed to Brazil’s emergence as one of the world’s most competitive agricultural exporters. Brazil’s agricultural sector increased its exports in recent years, despite experiencing one of its worst recessions during 2014-16, falling international commodity prices, and slower demand growth in China and other foreign markets. To understand the forces behind this development, this report examines the effects of changing macroeconomic conditions on Brazil’s agricultural production and trade by simulating impacts of accelerated depreciation of its exchange rate and sustained macroeconomic growth. When the Brazilian currency weakens, higher prices in local currency stimulate production and exports of most major commodities. Simulations show that depreciation of Brazil’s currency results in greater world supplies, lower prices in global markets, and increased competition for U.S. exports. Finally, a simulation of stronger Brazilian economic growth shows that an increase in domestic consumption would have reduced Brazil’s exports of beef, corn, cotton, ethanol, pork, and soybean meal, easing downward pressure on world prices. However, Brazil’s soybean exports would not have been significantly affected by stronger economic growth.
    Keywords: Agricultural and Food Policy, Agricultural Finance, International Relations/Trade
    Date: 2020–09
  46. By: Delera, Michele (UNU-MERIT, Maastricht University); Pietrobelli, carlo (UNU-MERIT, Maastricht University, and University Roma Tre); Calza, Elisa (UNU-MERIT, Maastricht University, and UNIDO); Lavopa, Alejandro (UNIDO)
    Abstract: The adoption of new technology is a key driver of firm performance and economic development. In this paper, we develop a framework for the firm-level analysis of the adoption of digital technology in developing economies. We investigate whether firms' participation to global value chains (GVCs) can facilitate the adoption of digital technologies. Using a novel database on the adoption of different generations of technology by manufacturing firms in Ghana, Vietnam, and Thailand, we document that the adoption of Industry 4.0 technologies remains extremely limited. We also find that firms' participation to GVCs is an important driver of digital technology adoption, and that adoption is positively associated with firm-level performance.
    Keywords: Value Chain, GVCs, Industry 4.0, Technology adoption, Economic development, Capabilities
    JEL: O12 O14 O33
    Date: 2020–10–12
  47. By: Pramila Crivelli; Luca Rubini
    Abstract: This article reviews the Appellate Body decision in the implementation phase of the EC – Aircraft dispute. Focusing on some of the key findings, we assess whether they are legally and economically correct. We conclude that a) though still unclear, the test for establishing de facto contingency on import substitution subsidies is probably too demanding; that b) though legitimate, the interpretation of the remedy of removal of the adverse effects for actionable subsidies is the weakest and most deferential possible; that c) the hesitation in confirming that quantitative methods are the key tool to define the relevant market is unwelcome; and that d) the Appellate Body correctly recognise the importance for Panels to consider, in the context of the serious prejudice analysis, whether the like product of the complainant has been subsidised. Most importantly, the analysis of this case, set within the broader jurisprudence and practice, has led us to conclude that WTO subsidy disciplines are not particularly strong. The review of the main economic theories justifying subsidy control (strategic trade policy, terms of trade, private information, commitment theory) has shown that no single theory is able to fully account for subsidies and the need to control them. The key question is the definition of what we want to achieve by controlling subsidies, which is the main message sent to the policy-makers and negotiators that are currently considering law reform.
    Keywords: International Trade, Subsidies, Large Civil Aircraft , World Trade Organization, Dispute settlement, International Law/Economics
    Date: 2019–10
  48. By: Vladimir Hlasny (UN ESCWA); Shireen AlAzzawi (Santa Clara University)
    Abstract: We examine the role of cross-border return migration in the intertemporal and intergenerational transmission of status across seven surveys from Egypt, Jordan and Tunisia. We use transition matrices and instrumental variable regressions to link prime-age men’s present outcomes to those in prior years and to their fathers’ outcomes. Earnings in prior years are inferred using job-type and occupation-group cell means. We find that return migrants land higher-earning jobs and are more inter-generationally mobile. However, they outperform non-migrants not only currently but even in past years. Controlling for mitigating factors, the role of migration disappears, suggesting that individual-level effects and demographics are responsible.
    Keywords: Return migration, intergenerational socioeconomic mobility, MENA
    JEL: F22 O15 R23 J61 J62
    Date: 2020–10
  49. By: Robert Wolfe
    Abstract: State support remains a leading cause of tension in international commercial relations. Governments can see trade distortions that look like they were caused by industrial subsidies, but they lack the data to illuminate that state support. In the 1980s at the height of the farm wars the Organisation for Economic Co-operation and De-velopment (OECD) developed an index that helped countries to see the overall incidence of agricultural subsi-dies, initially called the Producer Subsidy Equivalent (PSE) and the Consumer Subsidy Equivalent (CSE). Are there lessons for today in the PSE approach? In this paper I try to answer that question from the standpoint of economics: how did the PSE evolve, what is it, is the concept relevant to industrial subsidies? And of politics: how was OECD able to create the tool, and do present conditions permit something similar? The brief answer is that the PSE was a response to a shared perception of crisis, but it was pushed by finance not trade or agricul-ture ministers. It drew on well-established concepts in the agricultural economics and trade literatures. And it works best in a context where market power is sufficiently diffuse that a price gap between domestic and world prices can be calculated. Only some of those conditions can be met when applying the approach to concentrat-ed industries dominated by large firms that operate in multi-country supply chains.
    Keywords: Agricultural subsidies, industrial subsidies, fossil fuel subsidies, index, aluminium, semiconductors, steel
    Date: 2020–08
  50. By: Quint, Ansgar F.; Rudsinske, Jonas F.
    Abstract: We study the welfare and distribution effects of corporate taxation and transfer pricing in an asymmetric general oligopolistic equilibrium trade model. Without profit shifting, an increasing profit tax rate shifts welfare towards the taxing country, where it also decreases real wages, whereas real wages rise in the other country. Labor income increases relative to profit income in both countries. Transfer pricing generates an additional benefit from exporting, such that companies want to expand production. Caused by this supply channel, real wages will rise in both countries. Due to shifting tax incomes, a cross-country demand channel relocates consumption from the high- to the low-tax country. In the low-tax country, real profits decrease such that the labor share of income rises.
    Keywords: general oligopolistic equilibrium,international trade,labor share,profit shifting,tax evasion,transfer pricing
    JEL: E25 F10 H25 H26 L13
    Date: 2020
  51. By: Michel Beine (Department of Economics and Management, Université du Luxembourg)
    Abstract: In this note, I attempt to isolate the role of age as a self-selection factor of international migration. I estimate the role of age on intended emigration rather than on observed outcome of migration. I use individual measures of intended emigration drawn from a large-scale survey conducted by Gallup. I find evidence of a monotonic negative effect on desired emigration for the working-age population. The estimations point to a very robust effect suggesting that an additional year of age decreases the probability of intended emigration by about 0.5%. This effect is robust over different periods of time and for most types of countries of origin. The results contrast with previous evidence obtained on observed outcomes of migration, suggesting that out-selection factors interact with age and shape the demographic profile of migrants.
    Keywords: Age, International Migration, Intended Emigration, Logit, Large-scale Survey
    JEL: F22 C25 J61
    Date: 2020
  52. By: Crafts, Nicholas (University of Sussex)
    Abstract: From 1871 to 1913, German economic growth was faster than that of the UK. This represented a successful catch-up of the leading European economy but there was still a significant productivity gap at the end of the period. Slower UK growth should be seen as largely unavoidable but there was a serious weakness in the national innovation system. On the whole, the greater openness of the British economy was advantageous and a move to protectionist policies would have been damaging. The expansion of German industrial production and exports only had a small negative impact on UK national income.
    Keywords: economic growth; productivity performance; trade rivalry; Victorian failure JEL Classification: N13; O52
    Date: 2020
  53. By: Bernard Hoekman
    Abstract: In 2016, the Government of India proposed negotiations on an agreement to facilitate trade in services to complement the 2013 WTO agreement on facilitation of trade in goods. The proposal did not find much support, but plurilateral talks launch in 2017 on various policy areas encompass areas that are very relevant from a services trade facilitation perspective. This paper argues that participating in the current plurilateral talks can do much to achieve services trade facilitation objectives by identifying good regulatory practices. Although elements relevant to services trade facilitation are on the table in the WTO, there are important gaps. Identifying priorities for complementary international cooperation to facilitate trade in services on a plurilateral basis requires initiatives that bring together governments, services industry associations and sectoral regulator.
    Keywords: trade in services, facilitation, G20, international agreement, plurilateral cooperation
    Date: 2020–02
  54. By: Edward Balistreri; Petros C. Mavroidis; Thomas J. Prusa
    Abstract: Typically, the WTO Arbitrator, when charged with evaluating the permissible level of countermeasures (suspension of concessions), has chosen a counterfactual state of the world where the challenged (illegal) measure had not been adopted at all. The Arbitrator then would calculate the trade lost because of the adopted (illegal) measure, and thus, decide on the level of permissible countermeasures. In US-Washing Machines (Article 22.6-US), deviating from this custom, the Arbitrator adopted a different counterfactual, assuming that the complainant had adopted a different, “reasonable” measure. The Arbitrator then evaluated the trade lost based on the distance between the adopted (illegal) and the “reasonable” measure and calculated the level of countermeasures. In this paper, we explain the multitude of perils facing dispute settlement if this approach is adopted in future disputes. We also advance a few thoughts on rethinking the workings of the Arbitrator when measuring the level of permissible countermeasures, since similar slippery slopes risk being reproduced in future cases.
    Keywords: de novo review, retaliation, antidumping
    JEL: K40
    Date: 2020–05
  55. By: Sarracino, Francesco; Riillo, Cesare Fabio Antonio
    Abstract: An extensive debate on the determinants of people's support for globalization concluded that it is necessary to leverage on welfare schemes to compensate those who lose from globalization. Yet, this solution is not universally accepted and it may not be viable in times of budget constraints. We test the hypothesis that confidence in institutions improves people's acceptance of globalization. We use micro data from the Eurobarometer, the European Social Survey and the European Quality of Life Survey to study the case of Luxembourg, a small and open economy, highly integrated in international markets and in which immigrants are more than half of the total residents. Figures indicate that confidence in institutions, and in particular in international ones, increases people's acceptance of globalization. However, when globalization is considered as free movement of people across borders, confidence in international institutions plays a major role. These results are robust to reverse causality.
    Keywords: Globalization; Migration; Institutions; Confidence.
    JEL: D02 F22 O19
    Date: 2020–10–20
  56. By: Alain Kabundi; Franziska Ohnsorge
    Abstract: The COVID-19-triggered collapse in oil prices in March and April 2020 was the seventh, and by far the most severe, in a series of such collapses since 1970. This paper, first, compares this most recent collapse and its drivers with previous ones in an event study. It finds that it was associated with an exceptionally severe plunge in oil demand. Second, in a local projections model, this paper estimates the implications of demand- and supply-driven oil price collapses for growth in emerging markets and developing economies (EMDEs). The paper finds that steep oil price collapses were associated with significant and lasting output losses in energy-exporting EMDEs but no meaningful output gains in energy-importing EMDEs. These results are robust to multiple robustness checks.
    Keywords: Oil price decline, COVID-19 pandemic, macroeconomic implications, supply factors, demand factors, local projections model.
    JEL: Q40 Q41 Q43 F40 E32
    Date: 2020–09
  57. By: Christopher Findlay; Bernard Hoekman
    Abstract: Government policy can add to the costs of doing international business. It can distort the construction of and raise the costs of operation of global value chains (GVCs), to the detriment of the participating economies. Given rising technological and market-driven headwinds confronting GVCs, countries seeking to attract GVC activities have greater incentives to identify and address policies that negatively affect international business investment. Cooperation of businesses with regulators, analysts and researchers has the scope to develop better policy. This paper suggests principles for the design and operation of such cooperation, drawing on the experience with multi-stakeholder value chain partnerships and the policy responses to the 2020 COVID-19 pandemic.
    Keywords: Global value chains, global production networks, international business, trade regulation, multi-stakeholder initiatives, public-private policy partnerships.
    Date: 2020–10
  58. By: Mark Colas; Dominik Sachs
    Abstract: Low-skilled immigrants indirectly affect public finances through their effect on native wages & labor supply. We operationalize this general-equilibrium effect in the workhorse labor market model with heterogeneous workers and intensive and extensive labor supply margins. We derive a closed-form expression for this effect in terms of estimable statistics. We extend the analysis to various alternative specifications of the labor market and production that have been emphasized in the immigration literature. Empirical quantifications for the U.S. reveal that the indirect fiscal benefit of one low-skilled immigrant lies between $770 and $2,100 annually. The indirect fiscal benefit may outweigh the negative direct fiscal effect that has previously been documented. This challenges the perception of low-skilled immigration as a fiscal burden.
    Keywords: immigration, fiscal impact, general equilibrium
    JEL: H20 J31 J62 J68
    Date: 2020
  59. By: Abban, Stanley
    Abstract: Formal currency union with a common policy is welfare superlative to formal currency union due to relatively greater transparency. The study evaluates whether adopting a common currency will lead to trade. Additionally, the study estimates whether countries are under trading or overtrading to investigate whether there exists trade potential. The results show there exists greater trade potential due to geographic and economic fundamentals therefore adopting a common currency will lead to trade. Also, the study showed that the financial markets served as a buffer for the volatility of the currencies notably the Rand. The study concludes that a currency union with a common policy could serve as a panacea when the appropriate institutional policy framework is adopted to reduce trade and non-trade barriers.
    Keywords: Currency Union, Overtrading, under trading, trade potential, Southern Africa Customs Union (SACU).
    JEL: E2 E24 E26 E5 E52 E58 F1 F15
    Date: 2020–04–10
  60. By: Barkas, Panagiotis; Honeck, Dale; Rubio, Ester
    Abstract: In this paper, we investigate tourism-related policy approaches that WTO member countries adopted in the early weeks of the COVID-19 crisis. We highlight the need for stakeholders to coordinate their responses in order to mitigate the negative crisis effects and better prepare the sector for the future. In doing so, we explore the economic impact of potential tourism scenarios, underlining both the demand and supply side effects of the crisis. By compiling and organising information from a range of sources based on information available at the time, the paper provides a systematic approach to map and analyse tourism-related policies for 59 WTO Members across all continents. Our findings confirm that: (i) almost 90% of the countries analysed focused their tourism policy responses on economic stimulus measures to mitigate the negative impacts of COVID-19 and facilitate a strong recovery; (ii) more than half of the examined countries have taken financial measures to support the sector through loans, tax deferrals etc.; (iii) less than a third of the analysed countries enacted social and employment measures.
    Keywords: travel,tourism,services trade,COVID-19,economic policy,monitoring,economic impact
    JEL: F13 L83 O14
    Date: 2020
  61. By: Weinian Hu; Jacques Pelkmans
    Abstract: EU/China bilateral trade policy is largely conducted via a myriad of ‘trade-related’ Dialogues, nearly 50. Both the sheer quantity and the scope are conspicuous. We undertake a first attempt to map and assess these EU/China Dialogues, as far as is possible given the lack of transparency and paucity of hard data. We identify seven functions of the Dialogues. Four key questions are posed: (1) can the web of bilateral Dialogues be seen as an ‘unbundled’ FTA? (not really) ; (2) can Dialogues improve or delay market access? (if not about applied tariffs, both can be found, but easier access may well dominate because of the ‘lesser restrictions’ approach via Chinese reforms stimulated via Dialogues) ; (3) can Dialogues stimulate ‘sustainable development’, both socially and in environment & climate ? (yes, in both) ; (4) can Dialogues address ‘systemic differences’ ? (surely not directly, but in roundabout ways via reforms, selectively).
    Keywords: EU-China trade policy , EU-China economic cooperation , sustainable development , bilateral dialogues
    Date: 2020–07
  62. By: Klein, Michael A
    Abstract: Surveys of U.S. based multinational enterprises reveal that trade secret misappropriation by current and former employees remains a substantial impediment to conducting business in emerging markets. In this paper, I examine the consequences of strengthening legal protection against this employment related trade secret misappropriation in an open economy context. I develop a general equilibrium model featuring heterogenous firms that differ in both standard productivity and the degree to which they must expose employees to their trade secrets. To pre- vent employees from leaking trade secrets, firms offer an incentive compatible wage based on their individual exposure, and the common level of legal protection. Entry selection generates an endogenous distribution of firm specific wages and positive unemployment in equilibrium. Simulations of the calibrated model show that stronger legal protection stimulates multinational investment and increases aggregate productivity. However, these gains are distributed unevenly across workers, and many are worse-off following this reform.
    Keywords: Trade secrets; intellectual property rights, multinational firms, development
    JEL: F16 F23 O34
    Date: 2020–10–06
  63. By: Robert Wolfe
    Abstract: Thematic sessions are a broad class of meetings that are sponsored by or associated with a WTO body in some way, but that are not part of its formal meetings. The WTO held over 100 such sessions in the three years from 2017 to 2019. They bring dynamism to WTO by allowing committees to consider what works well and what does not under an agreement, including by sharing experiences with implementation, and helping to define what is next on the agenda. This paper analyses how such meetings are organized, focusing on how themes are chosen, participation (who speaks), the degree of transparency, and funding, drawing on a database of all thematic sessions from the beginning of 2017 until the end of 2019. Enhanced use of thematic sessions can contribute to strengthening connections between Geneva delegations and capitals.
    Keywords: WTO committees, institutional reform, trade governance, international cooperation
    Date: 2020–08
  64. By: Vo, Duc
    Abstract: This study is conducted to examine the concerns of the foreign direct investment (FDI) causing environment degradation and also to test the validity of the traditional Environmental Kuznets Curve (EKC) in the context of emerging markets in the Asian region. Data of these countries from 1980–2016 are utilised. This study employs panel cointegration Fully Modified Ordinary Least Squares (FMOLS), which treats the endogeneity problem, and its estimators are adjusted for serial correlation. Moreover, this study also uses panel Dynamic Ordinary Least Squares (DOLS), which includes contemporaneous value, leads and, lags of the first di�erence of the regressors to correct endogeneity problems and serial correlations. Findings from this study indicate that the pollution heaven hypothesis and the EKC curve are generally valid in the region. In addition, FDI has a strong impact on the environment.
    Keywords: FDI; environment degradation; pollution heaven hypothesis FMOLS; DOLS; causality; Vietnam
    JEL: Q4 Q43 Q48 Q5 Q56
    Date: 2019–05–10
  65. By: Thitiwan Sricharoen (Faculty of Economics at Sriracha, Kasetsart University, Sriracha Campus, Tambon Tungsukha, Sriracha District, Chonburi, Thailand Author-2-Name: Author-2-Workplace-Name: Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: Objective - The purpose of research is to address and seek to answer leading questions concerning migration, with a focus on migration remittances, and management relating to remittance. Methodology/Technique - The survey was conducted in 2018. In this study, a total of 511 migrant workers from Cambodia, Myanmar and Lao were interviewed. The methodology of this research applies a probit regression analysis. Results - The findings show that repeated migrants who are not first-time migrants are a highly specific group with 54.74%. First-time migrants are most likely to send remittances home while working in Thailand, accounting for approximately 2,826 Baht per month. However, this number decreases among second-time migrants who typically send remittances of approximately 2,331 Baht per month. The saving behavior is not different between first-time migrants and second-time migrants, who save a portion of their earnings. Nonetheless, this number rises to 50% for third and subsequent migrants. An estimation of all migrant's nationalities indicates that the variables that have the most influence on remittances in a positive way are: being of Cambodian nationality, experiencing a burden among their family, being in need of social assistance, being Myanmar migrants and household size, respectively. On the other hand, the variables that effect remittances in a negative way include: attaining below primary school education, education level (in year), real estate owned, and number of migrating household members in Thailand, respectively. Novelty - The findings of this research show that those who graduate with less than primary level education are more likely to send money home compared to those who complete their primary school education. The policy recommendations made by this study include a recommendation that banks decrease money transferring costs, employers to pay salary through banking accounts and migrants to remit money through formal channels. Type of Paper - Empirical.
    Keywords: International Migration; Remittances; Labor Mobility.
    JEL: F22 F24 J61
  66. By: Yuhan Zhang; Cheng Chang
    Abstract: This paper models the US-China trade conflict and attempts to analyze the (optimal) strategic choices. In contrast to the existing literature on the topic, we employ the expected utility theory and examine the conflict mathematically. In both perfect information and incomplete information games, we show that expected net gains diminish as the utility of winning increases because of the costs incurred during the struggle. We find that the best response function exists for China but not for the US during the conflict. We argue that the less the US coerces China to change its existing trade practices, the higher the US expected net gains. China's best choice is to maintain the status quo, and any further aggression in its policy and behavior will aggravate the situation.
    Date: 2020–10
  67. By: Alexander Chudik; Kamiar Mohaddes; M. Hashem Pesaran; Mehdi Raissi; Alessandro Rebucci
    Abstract: This paper develops a threshold-augmented dynamic multi-country model (TGVAR) to quantify the macroeconomic effects of Covid-19. We show that there exist threshold effects in the relationship between output growth and excess global volatility at individual country levels in a significant majority of advanced economies and in the case of several emerging markets. We then estimate a more general multi-country model augmented with these threshold effects as well as long term interest rates, oil prices, exchange rates and equity returns to perform counterfactual analyses. We distinguish common global factors from trade-related spillovers and identify the Covid-19 shock using GDP growth forecast revisions of the IMF in 2020Q1. We account for sample uncertainty by bootstrapping the multi-country model estimated over four decades of quarterly observations. Our results show that the Covid-19 pandemic will lead to a significant fall in world output that is most likely long-lasting, with outcomes that are quite heterogenous across countries and regions. While the impact on China and other emerging Asian economies are estimated to be less severe, the United States, the United Kingdom, and several other advanced economies may experience deeper and longer-lasting effects. Non-Asian emerging markets stand out for their vulnerability. We show that no country is immune to the economic fallout of the pandemic because of global interconnections as evidenced by the case of Sweden. We also find that long-term interest rates could fall significantly below their recent lows in core advanced economies, but this does not seem to be the case in emerging markets.
    Keywords: Threshold-augmented Global VAR (TGVAR), international business cycle, Covid-19, global volatility, threshold effects.
    JEL: C32 E44 F44
    Date: 2020–09
  68. By: Auer, Raphael (University of Basel); Burstein, Ariel (University of Basel); Erhardt, Katharina; Lein, Sarah
    Abstract: The Swiss National Bank's (SNB) elimination of the lower bound on the EUR/CHF exchange rate on January 15 2015 provides a unique setting to study how prices and quantities respond to changes in nominal exchange rates. In this paper, we complement the study of imports in Auer et al. (2020) by looking at how the response of Swiss export prices and export values varies across products according to the currency of invoicing at the border. The rate of pass through (measured in CHF) into export prices was much lower in industries with a higher share of CHF-invoiced export border prices. We show that industries with higher CHF-invoicing shares experienced substantially weaker export growth in the two-year period after January 2015. At short horizons, however, export quantities did not respond across industries as much as prices to the exchange rate shock.
    Keywords: Large exchange rate shocks, exchange rate pass-through, invoicing currency, expenditure switching, price-setting, nominal and real rigidities
    JEL: F11 F31 F41 L11
    Date: 2020–10–20
  69. By: Klein, Alexander (University of Kent, CAGE, CEPR); Persson, Karl Gunnar (University of Copenhagen); Sharp, Paul (University of Southern Denmark, CAGE, CEPR)
    Abstract: The reasons for the famous agrarian unrest in the United States between 1870 and 1900 remain debated. We argue that they are, at least in part, consistent with a simple economic explanation. Falling transportation costs allowed for the extension of the frontier, where farmers received the world price minus the transaction costs involved in getting their produce to market. Many perceived these costs to be unfairly large, owing to the perceived market power of rail firms and the discriminatory practices of middlemen, with farmers closer to the frontier most affected. Consistent with this, we find that the protest, as measured by vote shares for the Populists in the 1892 Presidential elections, is negatively related to wheat prices, transportation costs, and rail network density.
    Keywords: Agriculture, globalization, Grain Invasion, populism, United States JEL Classification: F6, N51, N71
    Date: 2020
  70. By: Ioana Pantilimon (National University of Political Studies and Public Administration, Bucharest)
    Abstract: The aim of this work is to explore the concept and praxis of Normative Power Europe from a postcolonial perspective, by addressing the European imaginaries on Latin America and the Caribbean. The extensively held thesis by the NPE scholars and practitioners is that the European Union externally promotes the set of values that it practices internally, acting as a normative power (Manners, 2002; Diez and Manners 2007; Manners: 2008). The increasing usage and popularity of NPE has, nevertheless, attracted criticism in recent years (Merlingen: 2007; Mayer: 2008; Hyde-Price: 2008; Bachmann and Sidaway: 2009; Onar and Nicolaïdis: 2013; Staeger: 2016), with a wide range of scholars pointing at the limits and roots of NPE. However, postcolonial criticism of the EU as a normative power remains limited, although the EU's external relations with the former colonies of the European powers are addressed, drawing attention to the continuity and persistence of colonial power relations and racism in the EU's foreign policy. Hence, this article focuses on the Strategic Partnership?s Cooperation for Development pillar and questions the postulated discourse of historical and cultural links, which ignores the context they were created in. It argues that the European Union continues to position itself globally as a universal source of knowledge and an exceptional power, building its global identity on the continuing disregardance of the existing epistemological pluralities, and being driven by selective self-reflection. Acting through the means of the Development Cooperation Instrument and through the Latin American Investment Facility, the EU positions itself as a generous aid donor and a norm-setter, without taking into account the international socio-spatial differences.
    Keywords: Normative power Europe, postcolonialism, difference, decolonialism, European Union
    JEL: D63

This nep-int issue is ©2020 by Luca Salvatici. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.