nep-int New Economics Papers
on International Trade
Issue of 2020‒12‒21
forty-one papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Global Value Chains, Trade Shocks and Jobs: An Application to Brexit By Hylke Vandenbussche; William Connell Garcia; Wouter Simons
  2. Exporters in Africa: What Role for Trade Costs? By Helena Afonso; Sebastian Vergara
  3. North Africa's export economies and structural fragility: the limits of development through European value chains By Azmeh, Shamel; Elshennawy, Abeer
  4. Do Standards Improve the Quality of Traded Products? By Anne-Célia Disdier; Carl Gaigné; Cristina Herghelegiu
  5. Aggregate Implications of Firm Heterogeneity: A Nonparametric Analysis of Monopolistic Competition Trade Models By Rodrigo Adão; Costas Arkolakis; Sharat Ganapati
  6. Mapping the Commonwealth Countries’ Participation in Global Value Chains By Escaith, Hubert; Khorana, Sangeeta
  7. Refining Britain's economic diplomacy By Yueh, Linda Y.
  8. Learning by exporting: the role of competition By Deasy D. P. Pane; Arianto A. Patunru
  9. Trade Liberalization, Income, and Multidimensional Deprivation in Brazil By Louisiana Teixeira
  10. Trade Integration, Global Value Chains, and Capital Accumulation By Michael Sposi; Kei-Mu Yi; Jing Zhang
  11. FDI, child labor and gender issues in Sub – Saharan Africa: an empirical approach By Kechagia, Polyxeni; Metaxas, Theodore
  12. Pollution Reduction by Rationalization in Indian Firms By Inma Martínez-Zarzoso; Shampa Roy-Mukherjee; Finn-Ole Semrau; Anca M. Voicu
  13. The Cost of Dissolving the WTO: The Role of Global Value Chains By Ahmad Lashkaripour; Mostafa Beshkar
  14. A Dashboard for Trade Policy Diagnostics By Jaime de Melo
  15. The Role of Central and Eastern Europe in Global Value Chains: Evidence from Occupation-Level Employment Data By Gábor Márk Pellényi
  16. Consumer Taste in Trade? By Bee Yan Aw-Roberts; Yi Lee; Hylke Vandenbussche
  17. The Neoliberal Globalization Link to the Belt and Road Initiative: The State and State-Owned-Enterprises in China [alternative title: Bilateral and Multilateral Dualities of the Chinese State in the Construction of the Belt and Road Initiative] By Bayari, Celal
  18. The viral effects of foreign trade and supply networks in the euro area By Di Nino, Virginia; Veltri, Bruno
  19. Institutional quality and FDI inflows: an empirical investigation for Turkey By Kechagia, Polyxeni; Metaxas, Theodore
  20. The Response of the Chinese Economy to the U.S.-China Trade War: 2018–2019 By Chang, Pao-Li; Yao, Kefang; Zheng, Fan
  21. Global oil prices and the macroeconomy: The role of tradeable manufacturing versus nontradeable services By Khalil, Makram
  22. Illicit trade and infectious diseases By Beverelli, Cosimo; Ticku, Rohit
  23. Pandemics, Global Supply Chains, and Local Labor Demand: Evidence from 100 Million Posted Jobs in China By Hanming Fang; Chunmian Ge; Hanwei Huang; Hongbin Li
  24. The regional impact of economic shocks: Why immigration is different from import competition By Christoph Albert; Joan Monràs
  25. A model of global beverage markets By Glyn Wittwer; Kym Anderson
  26. Asia’s emergence in global beverage markets: The rise of wine By Kym Anderson
  27. The Political Impact of Refugee Migration: Evidence from the Italian Dispersal Policy By Francesco Campo; Sara Giunti; Mariapia Mendola
  28. Cling together, swing together: The contagious effects of COVID-19 on developing countries through global value chains By Pahl, Stefan; Brandi, Clara; Schwab, Jakob; Stender, Frederik
  29. Trade Openness and Employment, Implications on Urbanisation in Sub-Saharan Africa By Adou, Niango Sika Antoine Brice
  30. Divided We Fall: International Health and Trade Coordination During a Pandemic By Viral Acharya; Zhengyang Jiang; Robert J. Richmond; Ernst-Ludwig von Thadden
  31. West Africa’s dependency on imports of dairy products By Vincent Chatellier
  32. De-Globalisation? Global Value Chains in the Post-COVID-19 Age By Pol Antràs
  33. Renewable, non-renewable energy consumption, economic growth, trade openness and ecological footprint: Evidence from organisation for economic Co-operation and development countries By Destek, Mehmet; Sinha, Avik
  34. Financial integration and the global effects of China's growth surge By Rod Tyers; Yixiao Zhou
  35. Assessing the effects of seasonal tariff-rate quotas on vegetable prices in Switzerland By Daria Loginova; Marco Portmann; Martin Huber
  36. Prospects for Growth in U.S. Dairy Exports to Southeast Asia By Davis, Christopher G.; Cessna, Jerry
  37. Leveraging Foreign Direct Investment for Sustainability: An Approach to Sustainable Human Development in Nigeria By Fisayo Fagbemi; Tolulope T. Osinubi
  38. Autarchy along the distribution By Silvia Fabiani; Alberto Felettigh; Alfonso Rosolia
  39. Do PTAs with environmental provisions reduce emissions? Assessing the effectiveness of climate-related provisions? By Zakaria Sorgho; Tharakan Joe
  40. The economic and political costs of population displacement and their impact on the SDGs and multilateralism By Kristinn Sv. Helgason
  41. Trade Liberalization and Gender: Income and Multidimensional Deprivation Gaps in Brazil By Louisiana Teixeira

  1. By: Hylke Vandenbussche; William Connell Garcia; Wouter Simons
    Abstract: We develop a network trade model with country-sector level input-output linkages. It includes (1) domestic and global value chain linkages between all country-sectors, (2) direct as well as indirect shipments (via other sectors and countries) to a final destination, (3) value added rather than gross trade flows. The model is solved analytically and we use the sectoral World Input Output Database (WIOD) to predict the impact of Brexit for every individual EU country by aggregating up the country-sector effects. In contrast to other studies, we find EU-27 job losses to be substantially higher than hitherto believed as a result of the closely integrated EU network structure. Upstream country-sectors stand to lose more from Brexit due to their network centrality in Europe.
    Keywords: JEL C530, JEL D570, JEL F170, JEL F140, global value chains, trade shocks, jobs, employment, Brexit
    Date: 2019–01–01
  2. By: Helena Afonso; Sebastian Vergara
    Abstract: This paper investigates the role of trade costs in exporter dynamics in Africa. In comparison to exporters from other regions, African exporting firms are fewer, smaller and relatively less diversified in terms of products and destinations. African countries also display the highest rates of entry, exit and turnover of exporting firms, exporting products and export destinations. This suggests that Africa’s exporting activity is volatile and subject to a lot of experimentation, with exporters having difficulties in maintaining trade relationships. The analysis also confirms that trade costs are a crucial factor in explaining exporter performance in Africa vis-à-vis other regions, but also among African countries. Trade costs play a disproportionate role in affecting the size of new exporters and the survival of exporters in Africa in comparison to other regions. Also, trade costs differences across African countries are a relevant factor in explaining the lower market diversification of exporters from landlocked countries. A key implication is that the African Continental Free Trade Agreement can entail large benefits in the medium-term, especially in terms of export flows and destination markets. Yet, the diversification of export products will likely remain limited without strengthening productive capacities.
    Keywords: Trade costs, exporters dynamics, Africa
    JEL: F14
    Date: 2020–06
  3. By: Azmeh, Shamel; Elshennawy, Abeer
    Abstract: Over recent decades, three North African economies – Tunisia, Morocco and Egypt – have been regional pioneers in adopting integration in global value chains as a path to economic development and transformation. Reflecting their geographical proximity to Europe, preferential access to the EU market, and large wage gap between them and European economies, each have emerged as important locations for labour-intensive activities in European value chains in the garments, electronics and automotive sectors. Reflecting the range of incentives offered, the coastal areas in the three economies witnessed a relatively large influx of foreign and domestic investment. As a result, the three economies experienced important economic transformation processes with an increase in their manufacturing sectors, manufacturing jobs and manufactured exports. Notwithstanding this relative success, the reliance on low-cost labour as a source of competitive advantage, in addition to these economies and their firms’ weak position in European value chains, has limited the wider economic and social benefits of this growth and also left these countries in a structurally fragile position vis-à-vis shifts in the European market. This fragility was illustrated in recent years following the global economic crisis and the European debt crisis on one hand, and the protest movements of the Arab Spring on the other. In recent years, the exhaustion of this low-cost platform model has driven a divergence in the three economies with Morocco succeeding in upgrading its position in a number of European value chains while Egypt and Tunisia have been forced to maintain competitiveness though successive currency devaluations.
    JEL: R14 J01 L81 N0
    Date: 2020–12–01
  4. By: Anne-Célia Disdier (PSE - Paris School of Economics); Carl Gaigné (SMART - Structures et Marché Agricoles, Ressources et Territoires - AGROCAMPUS OUEST - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Cristina Herghelegiu (ULB - Université libre de Bruxelles)
    Abstract: We examine whether standards raise the quality of traded products by correcting mar-ket failures associated with information asymmetry on product attributes. Our predictionson their quality and selection effects are based on a new trade model under uncertaintyabout product quality in which heterogeneous firms can strategically invest in quality sig-naling. Using French firm-level data, we exploit information on prices and productivity toestimate the quality of exported products. Higher quality is assigned to products suppliedby an exporter with higher marginal costs conditional on productivity. In accordance withour theory, quality standards enforced on products by destination countries (i) reduce theexport probability of low-quality firms but also that of high-quality low-productivity firms;(ii) increase the export participation and sales of high-productivity high-quality firms; (iii)improve the average quality of consumption goods exported by France.
    Keywords: Firm exports,quality standards,information asymmetry,product quality
    Date: 2020–01–08
  5. By: Rodrigo Adão; Costas Arkolakis; Sharat Ganapati
    Abstract: We measure the role of firm heterogeneity in counterfactual predictions of monopolistic competition trade models without parametric restrictions on the distribution of firm fundamentals. We show that two bilateral elasticity functions are sufficient to nonparametrically compute the counterfactual aggregate impact of trade shocks, and recover changes in economic fundamentals from observed data. These functions are identified from two semiparametric gravity equations governing the impact of bilateral trade costs on the extensive and intensive margins of firm-level exports. Applying our methodology, we estimate elasticity functions that imply an impact of trade costs on trade flows that falls when more firms serve a market because of smaller extensive margin responses. Compared to a baseline where elasticities are constant, firm heterogeneity amplifies both the gains from trade in countries with more exporter firms and the welfare gains of European market integration in 2003-2012.
    JEL: C14 F12 F14 F15
    Date: 2020–11
  6. By: Escaith, Hubert; Khorana, Sangeeta
    Abstract: This background paper provides a general picture of the characteristics and dynamics of Global Value Chains (GVC) in the Commonwealth countries. The main building blocks of the empirical analysis are based on a measure of inter-industrial linkages between and across between 43 of the 53 Commonwealth countries and sectors for which data were available. Using a trade network perspective, it measures the international flows of value-added and assesses countries’ position within GVCs. After calculating a series of in-depth GVC indica-tors, the paper assesses the potential for trade creation within the Commonwealth communi-ty. This review is complemented by several suggestions of policy and enabling measures aimed at facilitating the participation of those countries that are at the lower end of the val-ue chain.
    Keywords: Trade; Commonwealth; input-output; global value chains; inter-industry linkages; trade complementarity; regional trade agreements
    JEL: C67 F13 F15 F60 O19 O24
    Date: 2020–01
  7. By: Yueh, Linda Y.
    Abstract: The EU referendum has thrown up many questions around globalisation as well as how to reposition Britain in the world after Brexit. The UK government’s professed intent to leave the European Union and negotiate its own free trade agreements means that Britain would be setting its own trade policies for the first time since 1973, and would need to explicitly set out the aims of British trade and associated foreign investment policies for the first time in four decades. With this in mind, clearly defining the UK’s economic diplomacy is crucial. Current global and domestic conditions are politically challenging. However, this offers an opportunity for the UK to take a lead in setting a helpful direction for the rest of the world, and ensuring that trade and investment policies benefit all in society.
    JEL: N0
    Date: 2019–07
  8. By: Deasy D. P. Pane; Arianto A. Patunru
    Abstract: This paper finds that increased competition in export markets could reinforce firms’ learning-by-exporting processes. We investigate competition as a learning channel by employing 25 years’ worth of Indonesian garment firms’ data. Firms in this labour-intensive industry experienced a long period of a quota regulation under the Multi-Fibre Arrangement (MFA), which governed much of the global trade in garments before its abolition in 2005. This allows us to conduct a quasi-natural experiment type of study on how the MFA affected apparel exporters’ performance. Using propensity score matching and difference-indifference methods, we find that the impact of exporting on total factor productivity during the MFA implementation period is mixed; but after it was abolished, productivity increased by more than 12 percent. This implies that exporters gain a significant learning-by-exporting benefit from competition (that is, without a special facility such as the MFA), and that interventions that protect exporters from such competition might lessen the benefit.
    Keywords: learning-by-exporting, total factor productivity, MFA, developing countries
    JEL: D22 D24 F13 F14
    Date: 2020
  9. By: Louisiana Teixeira (Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres, LEDA-DIAL - Développement, Institutions et Modialisation - LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique, IRD - Institut de Recherche pour le Développement)
    Abstract: The aim of this study is to treat the trade liberalization's impacts in both monetary and non-monetary conditions. Using the difference-indifferences method and a panel from 1987-1997, the obtained evidence suggests that trade liberalization have differently impacted the labor force within formality and informality; import and export sectors; in terms of income and household's deprivation. Trade have worsened the average income and implied a deterioration in the household's multidimensional conditions in the formal sectors and contributed to the labor informalization process already underway, putting in evidence the migration of workers towards informality. Moreover, although the shock of trade harmed more intensely import sectors, export sectors would be expelling skilled better-paid workers to specialize in unskilled lower paid labor. The trade liberalization perpetuated the international division of labor and was unable to permit structural changes capable of adjusting distortions inherent to the national productive structure.
    Keywords: Trade Liberalization,Labor,Income,Multidimensional Poverty
    Date: 2020–11–10
  10. By: Michael Sposi; Kei-Mu Yi; Jing Zhang
    Abstract: Motivated by increasing trade and fragmentation of production across countries since World War II, we build a dynamic two-country model featuring sequential, multi-stage production and capital accumulation. As trade costs decline over time, global-value-chain (GVC) trade expands across countries, particularly more in the faster growing country, consistent with the empirical pattern. The presence of GVC trade boosts capital accumulation and economic growth and magnifies dynamic gains from trade. At the same time, endogenous capital accumulation shapes comparative advantage across countries, impacting the dynamics of GVC trade: a country becoming more capital abundant concentrates more on the capital-intensive stage of the production.
    JEL: E22 F10 F43 O4
    Date: 2020–11
  11. By: Kechagia, Polyxeni; Metaxas, Theodore
    Abstract: Trade openness, market size and economic conditions are traditional factors that influence the operation of multinational enterprises (MNEs) and the international capital flows. Over the past years, multinational companies consider additional factors when investing their capitals abroad, among which the political, social and financial conditions of the recipient country. In particular, low labor cost is listed among the factors that attract more foreign investors, which in certain cases could be attributed to the fact that MNEs employ unskilled workers, such as minor employees. Therefore, the association of Foreign Direct Investment (FDI) and child labor in developed and developing economies is an important social issue, which attracted limited research interest though. An extended literature review of empirical studies is conducted in order to investigate and discuss findings on the association between FDI inflows and child labor. Additionally, factors that could potentially determine the exploitation of minor employees by MNEs are presented. Therefore, the purpose of the paper is to empirically investigate the interaction between FDI and child labor in developing countries, taking into consideration gender issues. The paper concludes that previous empirical studies reached contrasting results, considering that different empirical models and methodologies were used. It is observed that a positive association between FDI inflows and child labor is observed by certain researchers, while, on the contrary, others conclude that FDI inflows reduce child labor. Moreover, FDI and child labor determinants, such as the sectoral distribution of inflows or the UN Convention on the Rights of the Child respectively, have also been considered by previous researches. The present research contributed to the existing literature since it is the first effort to empirically investigate the association between FDI and child labor in Sub – Saharan countries by gender. Additionally, the study extends to the investigation of the agriculture as a determinant variable of child labor between male and female minor employees. The paper concludes with a number of policies and proposals that will reduce or prevent child labor in the subsidiaries of multinational companies.
    Keywords: FDI, child labor, MNEs, Sub-Saharan Africa
    JEL: E2 F2 J4 J46 O5 O55
    Date: 2020
  12. By: Inma Martínez-Zarzoso (University of Göttingen); Shampa Roy-Mukherjee (University of East London); Finn-Ole Semrau (IFW, Kiel Institute for the World Economy); Anca M. Voicu (Rollins College)
    Abstract: This paper uses data for Indian firms over the period 1987 to 2016 to estimate a panel data model that considers firm heterogeneity to estimate the relationship between energy intensity and internationalization strategies of the firm. Both, the extensive and intensive margins of exports are considered as explanatory factors of energy intensity together with a number of control variables including estimated total factor productivity, foreign ownership, size and innovation activities. The main results indicate that exporters are more energy efficient than non-exporters and that there is heterogeneity between industries. More energy-intensity industries present a higher reduction in energy intensity for exporters in comparison to non-exporters.
    Keywords: Indian firms; energy intensity; exporting firms; trade liberalization; panel data
    Date: 2020
  13. By: Ahmad Lashkaripour (Indiana University); Mostafa Beshkar (Indiana University)
    Abstract: As trade agreements face renewed pressure, we show that the rise of global value chains has multiplied the value of trade agreements to unprecedented levels. We cast our argument using a non-parametric neoclassical trade model that accommodates global input-output networks and nests a wide class of quantitative trade models as a special case. To guide our analysis, we derive analytic formulas for optimal non-cooperative trade taxes in this general framework. These formulas predict the extent of trade restriction if global trade agreements were to dissolve. Mapping these formulas to data, we quantify the value of trade agreements for various countries. We find that the disintegration of existing trade agreements will erase 30% of the overall gains from trade, which amounts to a $2.7 trillion loss in global GDP. Around 41% of this value is driven by the agreements’ facilitation of global value chains.
    Date: 2020–05
  14. By: Jaime de Melo (FERDI - Fondation pour les Etudes et Recherches sur le Développement International, UNIGE - Université de Genève)
    Abstract: The set of measures that affect international trade in goods and services defines trade policy. Trade policies affect trade costs. "Good" trade policy seeks to minimize trade costs. Traditionally trade policy was restricted to measures imposed at the border (tariffs, import quotas, export taxes, subsidies). It is now recognized that trade costs extend beyond border measures to include "behind-the-border" measures (logistics, regulations). Trade costs also depend on the quality of the institutional environment (completeness of contracts and enforcement). This primer proposes elements of a "good trade policy" for an African country where the context is country-specific but where common geographical characteristics, common policies, and common market failures often prevail. … /…
    Date: 2020–11–04
  15. By: Gábor Márk Pellényi
    Abstract: This paper examines the role of Central Eastern European economies within global value chains. Occupation-level employment data are combined with an input-output model to analyse the types of jobs sustained by exporting industries. Based on its initial comparative advantage of low wages, the region remains specialised in fabrication tasks, which limits the domestic value added content of exports. Functional upgrading – the acquisition of more sophisticated service tasks within firms – could improve value capture, but it progressed slowly between 2011-2018. It could be boosted by raising the supply of high-skilled workers and improving local R&D and innovation capabilities.
    Keywords: value chain, Central Eastern Europe, upgrading, value capture, input-output model, The Role of Central and Eastern Europe in Global Value Chains: Evidence from Occupation-Level Employment Data, Pellényi
    JEL: F16 F23 F66 J24 O11 O14
    Date: 2020–12
  16. By: Bee Yan Aw-Roberts; Yi Lee; Hylke Vandenbussche
    Abstract: This paper documents the importance of consumer taste for the food industry using firm-product level customs data by destination country. We identify consuer taste through the use of a control function approach and estimate it jointly with other demand parameters using a flexible demand specification. We find that, on average, consumer taste explains as much of the variation in export revenue as marginal costs. The contribution of consumer taste to export revenue variation, ranges between 2% to 30% depending on the product category in the food industry. Our results also show that consumer taste decreases in distance but this relationship is non-monotonic.
    Keywords: consumer taste, exports, firm-product, food, productivity, quality, JEL F12, JEL F14
    Date: 2020–06–07
  17. By: Bayari, Celal
    Abstract: The Chinese state has integrated its economy into the neoliberal globalization of trade and investment without neoliberalizing its own financial markets, and to ensure stability, the state applies strict controls on interest rates, capital movement and the value of RMB. The Chinese state policies have divided the domestic economy into upstream and downstream domains whereby the state extracts rents from the private businesses profits downstream and then pump them upstream to underwrite the SOEs operating as monopolies (domestically), and as strategic traders, and investors (internationally). The state is the largest owner in the economy through holdings of shares in listed companies, direct ownership of enterprises, influence over privatized SOEs, and ownership of the public utility companies. The state has thus structured the domestic market in a way that has made the appearance of the BRI a cogent outcome. The BRI is a demand creation project for two distinct zones of the state-owned internationalized businesses, firstly, the Chinese state finance sector and secondly other sectors that primarily include the construction, logistics, and utilities. The Chinese state’s regulatory characteristics makes the financing and construction of the BRI possible, and reverential to the aims of the state. Further, the Chinese state has increased its weight in the Bretton Woods financial institutions, the IMF, and World Bank, while institutionalizing its reach in the formation of the Asian Infrastructure Investment Bank and the co-creation of the New Development Bank. These processes have simultaneously ensured commitments to multilateralism and bilateralism.
    Keywords: Belt and Road Initiative, Chinese economy, Neoliberalism, New Keynesianism, State-Owned-Enterprises
    JEL: E2 E22 E27 F12 F13 F15 F17 F18 F2 F21 F29 F3 F30 F33 F34 F36 F4 F42 F43 F47 F62 F63 F64 F66 G0 G00 K2 K21 K23 O1 O11 O14 O16 O19 O32 P2 P21 P28 P33 P48 P51
    Date: 2020–05–01
  18. By: Di Nino, Virginia; Veltri, Bruno
    Abstract: Containment measures of COVID-19 have generated a chain of supply and demand shocks around the globe with heterogeneous fallout across industries and countries. We quantify their transmission via foreign trade with a focus on the euro area where deep firms integration within regional supply chains and strong demand linkages act as a magnification mechanism. We estimate that spillover effects in the euro area from suppression measures in one of the five main euro area countries range between 15-28% the size of the original shock; negative foreign demand shocks depress euro area aggregate activity by about a fifth the size of the external shock and a fourth of the total effect is due to indirect propagation through euro area supply chain. Last, reopening to regional tourism softened the contraction of aggregate activity due to travel and tourism bans by about a third in the euro area. Our findings suggest that enhanced coordination of recovery plans would magnify their beneficial effects.
    Keywords: COVID-19,supply networks,GVCs,euro area foreign trade
    JEL: F14 F23 F40
    Date: 2020
  19. By: Kechagia, Polyxeni; Metaxas, Theodore
    Abstract: Foreign direct investment (FDI) inflows are fundamental and strong drivers of the global economic system. Mostly for the developing countries in several geographic region, the attraction of FDI is considered a catalyst for economic growth, under the condition that the recipient economies present institutional conditions that encourage foreign investors. The present study aims at providing empirical evidence and at investigating the impact of institutional quality on the amount of FDI inflows during 2002 – 2017, focusing on the case of Turkey. The country applied institutional reform programs and made significant efforts in order to attract more foreign investors. The present paper contributes to the existing knowledge since it is the first empirical research to study the impact of institutional quality indicators on the amount of FDI inflows in Turkey, using time series analysis, as well as panel data analysis in selected countries of the region. The study concludes that upgraded quality of the studied institutional indicators in Turkey, except for government effectiveness, during the specific time period is positively related to FDI inflows. Suggestions for future research and policy implications are discussed.
    Keywords: Foreign direct investment, Institutional quality, Turkey, Case study, Time series analysis, panel data analysis
    JEL: O1 O43 O5 O53
    Date: 2020
  20. By: Chang, Pao-Li (School of Economics, Singapore Management University); Yao, Kefang (School of Economics, Singapore Management University); Zheng, Fan (School of Economics, Singapore Management University)
    Abstract: In this paper, we follow the micro-to-macro approach of Fajgelbaum et al. (2020) and analyze the impacts of the 2018–2019 U.S.-China trade war on the Chinese economy. We use highly disaggregated trade and tariff data with monthly frequency to identify the demand/supply elasticities of Chinese imports/exports, combined with a general equilibrium model for the Chinese economy (that takes into account input-output linkages, and regional heterogeneity in employment and sector specialization) to quantify the partial and general equilibrium effects of the tariff war at the product/sector/region/aggregate levels. This complements the studies that focus on the ex post response of the U.S. economy by Amiti, Redding and Weinstein (2019), Fajgel baum et al. (2020), and Cavallo et al. (2020).
    Keywords: Chinese Economy; Tariff War; Elasticity Estimation; Regional Labor Market Adjustment; Welfare Analysis
    JEL: F13 F14 F16
    Date: 2020–11–18
  21. By: Khalil, Makram
    Abstract: This paper studies the ability of manufacturing-specific shocks to explain global oil prices. In an estimated three-region DSGE model (UnitedStates, OPEC, rest-of-world) in corporating two sectors (manufacturing and services) in the oil-importing economies and featuring cross-border manufacturing supply chains, oil inventories as well as endogenous oil supply, such shocks rationalize the observed empirical pattern of a positive comovement between global oil prices and the global cyclical gap between manufacturing output and services provision. Given positive manufacturing technology shocks, oil demand and demand for intermediate manufactured goods as well as global trade decline in tandem. Of similar importance are shocks to final manufactured goods demand that are amplified by input-output linkages and international trade. From the perspective of the US, all foreign shocks that cause higher oil prices - including adverse oil supply shocks - have a positive impact on manufacturing relative to service s as well as a positive impact on aggregate core inflation and policy rates. These dynamics rationalize, to a large extent, the observed pattern during major oil price hikes, and, correspondingly (with opposite signs), during important episodes of low oil prices.
    Keywords: endogenous global oil price,trade channel,manufacturing and services,oil and the business cycle,oil intensity,intermediate inputs
    JEL: E32 F41 Q43
    Date: 2020
  22. By: Beverelli, Cosimo; Ticku, Rohit
    Abstract: We collect a novel dataset that covers about 130 countries and the six four-digit live animal categories in the Harmonized System (HS) over a sixteen-year period, to study the link between illicit trade in live animals and threat to animal health from infectious diseases. Our results imply that a one percent increase in illicit imports in an HS four-digit live animal category is associated with a 0.3 to 0.4 percent rise in infections amongst related species in the importing country. We explore the mechanisms and find that mis-classifying or under-pricing an imported species are the channels through which illicit trade impacts animal health.
    Keywords: illicit trade,missing imports,disease,live animals
    JEL: F14 F18 I18 K42 Q57
    Date: 2020
  23. By: Hanming Fang; Chunmian Ge; Hanwei Huang; Hongbin Li
    Abstract: This paper studies how the COVID-19 pandemic has affected labor demand using over 100 million posted jobs on one of the largest online platforms in China. Our data reveals that, due to the effects of the pandemic both in China and abroad, the number of newly posted jobs within the first 13 weeks after the Wuhan lockdown on January 23, 2020 was about one third lower than that of the same lunar calendar weeks in 2018 and 2019. Using econometric methods, we show that, via the global supply chain, COVID-19 cases abroad and in particular pandemic-control policies by foreign governments reduced new job creations in China by 11.7%. We also find that Chinese firms most exposed to international trade outperformed other firms at the beginning of the pandemic but underperformed during recovery as the Novel Coronavirus spread throughout the world.
    JEL: F16 J2
    Date: 2020–11
  24. By: Christoph Albert; Joan Monràs
    Abstract: Prior literature has documented large and persistent employment effects in regions exposed to import competition, but non-lasting effects in locations receiving large immigrant waves. Import competition and immigration are comparable to the extent that imports are thought of as the labor embedded in imported goods. We explain this puzzle by arguing that a fundamental difference between trade and immigration is that whereas immigrants systematically enter metropolitan areas with high housing prices, import competition affects all kinds of local labor markets. We argue that when housing expenditure is decreasing as a share of income, internal migration is more responsive to local shocks in high-price locations. We provide evidence that, irrespective of the local shock, internal migration is indeed more responsive in high than in low housing price locations. Hence, conflicting findings in the literature reflect differences between the average local labor markets receiving each shock, rather than systematic differences in how local labor markets absorb those different shocks.
    Date: 2019–11
  25. By: Glyn Wittwer; Kym Anderson
    Abstract: This paper describes a new empirical model of the world’s markets for alcoholic beverages and, to illustrate its usefulness, reports results from projections of those markets from 201618 to 2025 under various scenarios. It not only revises and updates a model of the world’s wine markets (Wittwer, Berger and Anderson, 2003) but also adds beer and spirits so as to capture the substitutability of those beverages among consumers. The model has some of the features of an economywide computable general equilibrium model, with international trade linking the markets of its 44 countries and seven residual regions. It is used to simulate prospects for these markets by 2025 (business-as-usual), which points to Asia’s rise. Then two alternative scenarios to 2025 are explored: one simulates the withdrawal of the United Kingdom from the European Union (EU); the other simulates the effects of the recent imposition of additional 25% tariffs on selected beverages imported by the United States from several EU member countries. Future applications of the model are discussed in the concluding section.
    Keywords: CGE modeling; wine; beer; spirits; changes in beverage preferences; international trade in beverages; premiumization of alcohol markets
    JEL: C53 F11 F17 Q13
    Date: 2020
  26. By: Kym Anderson
    Abstract: Asia’s alcohol consumption, and its retail expenditure on each of beer, distilled spirits and grape wine, have more than doubled so far this century. In the process, the mix of beverages in Asia’s consumption of alcohol has been converging on that of the west as wine’s share rises. Since Asia’s beverage production has not kept up with its expansion in demand, imports net of exports are increasingly filling the gap – especially for wine. This paper analyses trends in consumption and imports for the region and key Asian countries, and provides projections to 2025 using a new model of global beverage markets.
    Keywords: Changes in beverage tastes, premiumization of alcohol consumption, impacts of tax and trade policies, beverage market projections
    JEL: F14 F17 L66 Q13
    Date: 2020
  27. By: Francesco Campo; Sara Giunti; Mariapia Mendola
    Abstract: The ‘refugee crisis’ in Europe has created a public opinion backlash. Italy has been on the frontline of this crisis but little is known about its political impact on voting behavior and electoral outcomes. We collect unique administrative data on the refugee relocation system across Italian municipalities during the crisis (2014-2017) to assess the causal effect of the inflow of asylum seekers on political support for radical-right anti-immigration parties and vote shares in parliamentary elections. We exploit exogenous variation in refugee settlement induced by the Italian Dispersal Policy, set up in 2014 as to exceptionally enlarge the national reception capacity. We find a positive and significant effect of the share of asylum seekers on right-wing-populist support. The effect is significantly heterogeneous across municipality characteristics, yet robust to dispersal policy features. We show that the anti–immigration backlash is not rooted in adverse economic effects, while it is triggered by radical–right propaganda.
    Keywords: Immigration, Refugee Crisis, Political Preferences, Dispersal Policy
    JEL: H53 I38
    Date: 2020–12
  28. By: Pahl, Stefan; Brandi, Clara; Schwab, Jakob; Stender, Frederik
    Abstract: This paper aims at estimating the economic vulnerability of developing countries to disruptions in global value chains (GVCs) due to the COVID-19 pandemic. It uses data on trade in value-added for a sample of 12 developing countries in sub-Saharan Africa, Asia and Latin America to assess their dependence on demand and supply from the three main hubs China, Europe, and North America. Using first estimates on COVID-19-induced changes in production and sectoral final demand, we obtain an early projection of the GDP effect during the lockdowns that runs through trade in GVCs. Our estimates reveal that adverse demand-side effects reduce GDP by up to 5.4 per cent, and that collapsing foreign supply is responsible for a drop in GDP of a similar magnitude. Overall, we confirm conjecture that the countries most affected are those highly integrated into GVCs (Southeast Asian countries). We argue, however, that these countries also benefit from a well-diversified portfolio of foreign suppliers, leading to a cushioning of economic downswing from adverse supply-side spillovers, because COVID-19 stroke major hubs at different times during the first wave in early 2020. Moreover, despite expected hazardous home market effects, sub-Saharan Africa's GDP appears to be comparatively less affected though GVCs due to a lack of intensive supply- and demand-side dependencies.
    Keywords: COVID-19,global value chains,input-output analysis,international trade,supply- and demand-side dependency,shock spillover
    Date: 2020
  29. By: Adou, Niango Sika Antoine Brice
    Abstract: Why are African countries urbanizing so fast? How do cities promote growth and why is it important to solve urban issues in Africa? In the context of higher push for trade liberalisation multilaterally, it is not trivial to ask these set of question. In this study the main objective is to check the influence of trade openness of African economies on their urbanisation rate. We also assess, how evolution of non-agricultural employment has also impacted this rate. We used panel data specifications, both in static and dynamic design. The data used are collected between 1990 and 2019 on 38 African countries. Although generally urbanisation has increased during recent years in Africa, regions have experienced different pathways in the process. The results show that both trade openness and non-agricultural employment have been motivation for people to urbanise over years, in Africa. When we consider countries with high amount of people living in slums, they are more driven by employment purpose. Other variables such as per capita GDP and the fertility rate have positive and significant influence, while FDI and national investment have mixed impact. It is important to collaborate in a continental level to take advantage of the rapid urbanisation.
    Keywords: Urbanisation, Trade Openness, Employment, Panel Data
    JEL: F14 O18 R11
    Date: 2020–11–23
  30. By: Viral Acharya; Zhengyang Jiang; Robert J. Richmond; Ernst-Ludwig von Thadden
    Abstract: We analyse the role of international trade and health coordination in times of a pandemic by building a two-economy, two-good trade model integrated into a micro-founded SIR model of infection dynamics. Uncoordinated governments with national mandates can adopt (i) containment policies to suppress infection spread domestically, and (ii) (import) tariffs to prevent infection coming from abroad. The efficient, i.e., coordinated, risk-sharing arrangement dynamically adjusts both policy instruments to share infection and economic risks internationally. However, in Nash equilibrium, uncoordinated trade policies robustly feature inefficiently high tariffs that peak with the pandemic in the foreign economy. This distorts terms of trade dynamics and magnifies the welfare costs of tariff wars during a pandemic due to lower levels of consumption and production as well as smaller gains via diversification of infection curves across economies.
    Keywords: International Trade, Tariffs, SIR model, COVID-19, Health policies, Terms of trade
    Date: 2020–12
  31. By: Vincent Chatellier (SMART - Structures et Marché Agricoles, Ressources et Territoires - AGROCAMPUS OUEST - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: The world dairy sector is undergoing sustained development due to the increasing dairy needs of a growing population and a gradual change in diets. This article looks at the place of West African countries in the "dairy planet". The analysis uses FAO statistical data over a long period (1961 to 2017) and customs statistics from 2000 to 2018 for global data ("BACI" database) and from 2000 to 2019 for European data ("COMEXT" database). Although per capita consumption of dairy products per year is still low in many West African countries compared with industrialised countries, overall requirements for dairy products are increasing rapidly as a result of population growth. Due to numerous difficulties (climate, soil quality, low animal productivity, lack of investment, etc.), the development of milk production in West Africa (5.8 billion litres in 2017 for sixteen countries, equivalent to the production of Brittany) is not sufficient to meet local needs. A little over two thirds of the dairy products imported into this zone come from the EU, whose exports have increased sharply over the past ten years (end of milk quotas). Around 40% of these imports are skimmed milk and vegetable fat powder blends (based on palm oil), a product that benefits from a competitive price and which is only very slightly taxed on entry into West African countries.
    Abstract: Le secteur laitier mondial connait un développement soutenu en raison de l'augmentation des besoins en produits laitiers d'une population en croissance et d'un changement progressif des régimes alimentaires. Cet article s'intéresse à la place des pays de l'Afrique de l'Ouest dans la « planète laitière ». L'analyse mobilise pour ce faire, d'une part, les données statistiques de la FAO sur une longue période (1961 à 2017) et, d'autre part, les statistiques des douanes de 2000 à 2018 pour les données mondiales (base de données « BACI ») et de 2000 à 2019 pour les données européennes (base de données « COMEXT »). Si la consommation de produits laitiers par habitant et par an est encore faible dans de nombreux pays de l'Afrique de l'Ouest, comparativement aux pays industrialisés, les besoins globaux en produits laitiers augmentent rapidement sous l'effet de la croissance démographique. En raison de nombreuses difficultés (climat, qualité des sols, faible productivité des animaux, manque d'investissement, etc.), le développement de la production laitière en Afrique de l'Ouest (5,8 milliards de litres en 2017 pour seize pays, soit l'équivalent de la production de la Bretagne) n'est pas suffisant pour faire face aux besoins locaux. Les importations de cette zone en produits laitiers se font pour un peu plus des deux tiers en provenance de l'UE, dont les exportations ont fortement augmenté depuis une dizaine d'années (fin des quotas de production). Ces importations concernent à 40% des mélanges de lait écrémé et de matière grasse végétale en poudre (à base d'huile de palme), un produit qui bénéficie d'un prix compétitif et qui n'est que très faiblement taxé à l'entrée dans les pays de l'Afrique de l'Ouest.
    Keywords: Milk production,Milk powder,Vegetable fat powder,West Africa,International trade,European Union,Competitiveness,Production laitière,Poudre de lait,Matière grasse végétale en poudre,Afrique de l'Ouest,Commerce international,Union Européenne,Compétitivité
    Date: 2020–10–29
  32. By: Pol Antràs
    Abstract: This paper evaluates the extent to which the world economy has entered a phase of de-globalisation, and it offers some speculative thoughts on the future of global value chains in the post-COVID-19 age. Although the growth of international trade flows relative to that of GDP has slowed down since the Great Recession, this paper finds little systematic evidence indicating that the world economy has already entered an era of de-globalisation. Instead, the observed slowdown in globalisation is a natural sequel to the unsustainable increase in globalisation experienced in the late 1980s, 1990s and early 2000s. I offer a description of the mechanisms leading to that earlier expansionary phase, together with a discussion of why these forces might have run out of steam, and of the extent to which they may be reversible. I conclude that the main challenge for the future of globalisation is institutional and political in nature rather than technological, although new technologies might aggravate the trends in inequality that have created the current political backlash against globalisation. Zooming in on the COVID-19 global pandemic, I similarly conclude that the current health crisis may further darken the future of globalisation if it aggravates policy tensions across countries.
    JEL: F1 F2 F4 F5 F6
    Date: 2020–11
  33. By: Destek, Mehmet; Sinha, Avik
    Abstract: The purpose of this study is to examine the validity of Environmental Kuznets Curve hypothesis for ecological footprint with the role of renewable energy use, non-renewable energy use and trade openness in 24 Organisation for Economic Co-operation and Development countries. For this purpose, we investigate the period from 1980 to 2014 using with second generation panel data methodologies which allow to cross-sectional dependence among countries. The group-mean results show that the inverted U-shaped Environmental Kuznets Curve hypothesis does not hold in Organisation for Economic Co-operation and Development countries because we found the U-shaped relationship between economic growth and ecological footprint. In addition, it is concluded that increasing renewable energy consumption reduces ecological footprint and increasing non-renewable energy consumption increases environmental degradation.
    Keywords: Ecological footprint; Environmental Kuznets curve; Renewable energy
    JEL: Q5 Q53
    Date: 2020
  34. By: Rod Tyers; Yixiao Zhou
    Abstract: China’s financial openness, as measured by cross border flows and asset ownership, peaked during its 2000s growth surge, as did downward pressure on global interest rates and price levels. This was despite China’s restriction of financial inflows to approved FDI and tight controls on private outflows. We analyze the global effects of the growth surge and their dependence on these financial policies by employing a global macro model with national portfolio rebalancing, in which flexibility in asset differentiation is used to index financial integration. The results suggest that, globally, the growth surge raised asset prices, reduced yields and bolstered deflationary pressures, while improving aggregate economic welfare. It is shown that, without capital controls, most surge effects on China would have been moderated substantially while the global impacts would have been larger.
    Keywords: financial integration, China, imbalances, macro policy, spill-overs
    Date: 2020
  35. By: Daria Loginova; Marco Portmann; Martin Huber
    Abstract: Causal estimation of the short-term effects of tariff-rate quotas (TRQs) on vegetable producer prices is hampered by the large variety and different growing seasons of vegetables and is therefore rarely performed. We quantify the effects of Swiss seasonal TRQs on domestic producer prices of a variety of vegetables based on a difference-in-differences estimation using a novel dataset of weekly producer prices for Switzerland and neighbouring countries. We find that TRQs increase prices of most vegetables by more than 20% above the prices in neighbouring countries during the main harvest time for most vegetables and even more than 50% for some vegetables. The effects are stronger for more perishable vegetables and for conventionally produced ones compared with organic vegetables. However, we do not find clear-cut effects of TRQs on the week-to-week price volatility of vegetables although the overall lower price volatility in Switzerland compared with neighbouring countries might be a result of the TRQ system in place.
    Date: 2020–12
  36. By: Davis, Christopher G.; Cessna, Jerry
    Abstract: Food demand in Southeast Asia (SEA) is expected to grow in the coming decades, creating pportunities for exporters of dairy products. The top dairy product suppliers to the region are New Zealand, the European Union (EU), the United States, and Australia. This study analyzes trends in market share over the 2006-18 timeframe and the price sensitivity for the top four U.S. dairy products imported by SEA countries: skim milk powder (SMP), whey products, cheese, and lactose. In 2018, these four products accounted for 85 percent of the total value of SEA dairy imports from the United States. Our findings show differing trends in market share and price sensitivity across products and countries. Our analysis reveals that SEA importers are more likely to substitute U.S. products for EU dairy products than for dairy products from New Zealand or Australia. Our research indicates that the United States has the potential to gain market share as import expenditures increase (holding prices constant) for cheese in Indonesia; whey products in Malaysia, Singapore, and the Philippines; SMP in Indonesia and Vietnam; and lactose in the Philippines, Indonesia, and Malaysia. SEA imports of U.S. dairy products are sensitive, in varying degrees, to changes in U.S. prices—as well as price changes for products from competing suppliers, such as the EU, Australia, and New Zealand.
    Keywords: Food Security and Poverty
    Date: 2020–12
  37. By: Fisayo Fagbemi (Obafemi Awolowo University, Nigeria); Tolulope T. Osinubi (Obafemi Awolowo University, Nigeria)
    Abstract: The paper assesses the interconnections between FDI and human capital development in Nigeria over the period 1981-2018. The analysis is carried out with the use of both non-linear autoregressive distributed lag (NARDL) and linear ARDL bounds test approach to cointegration, and VECM Granger causality technique. Findings reveal that the effect of FDI on human capital is found to be insignificant in the long run, while it is significant in the short run. However, following the asymmetric link, the empirical evidence reveals that a rise in FDI inflows to a certain rate, in the long-run, could result in a significant increase in the level of human capital development, suggesting that the magnitude of inward FDI matters in the economy. This further implies that as FDI inflows require sound technical know-how, and more skilled labour to work with or adapt to more advanced technologies, such could draw attention to improved human capital. Results also indicate that there is unidirectional causality between FDI and human capital in the long run, which runs from human capital to FDI, suggesting that the quality of human capital matters for sustainable leverage and attractiveness of FDI inflows. By implication, it is critical to adopt policy measures that could engender the sustainable development of human capital by the government, while the underlying structural bottlenecks and protracted state of insecurity that could deter foreign investors are accorded significant attention.
    Keywords: Economic Development, Foreign direct investment, Human capital development, Nigeria
    Date: 2020–01
  38. By: Silvia Fabiani (Bank of Italy); Alberto Felettigh (Bank of Italy); Alfonso Rosolia (Bank of Italy)
    Abstract: We measure the share of foreign value added embedded in the domestic consumption expenditure of the Italian household sector as a whole and of households along the distribution of consumption expenditure. We find that for each euro spent for consumption by households, almost irrespective of their affluence, about 20 to 40 cents remunerate foreign production factors; around two fifths of this foreign value added originate in other euro-area countries. Because of their heterogeneous bundles, households consume foreign value added through different expenditure items; less affluent ones do so through price-inelastic varieties and necessities.
    Keywords: global value chains, foreign and domestic value added, distribution of households’ consumption expenditure, exchange-rate shocks, international policy transmission
    JEL: D39 E21 F42 F45
    Date: 2020–11
  39. By: Zakaria Sorgho (ULaval - Université Laval [Québec], FERDI - Fondation pour les Etudes et Recherches sur le Développement International); Tharakan Joe (HEC Liège, CORE - Center of Operation Research and Econometrics [Louvain] - UCL - Université Catholique de Louvain)
    Abstract: The aim of this paper is to assess the effectiveness on climate change mitigation of the climate-related commitments contained in PTAs. Because of a lack of availability of detailed data on PTAs, the academic literature on the role of PTAs with environmental provisions (PTAwEP) in global climate governance remains limited. A novel and detailed database identifying nearly 300 different types of environmental provisions from more than 680 PTAs since 1947 allows us to establish per country and per year the number of PTAs by distinguishing PTAs with climate-related provisions (PTAwCP) and PTAs with provisions related to other environmental issues. Using panel data covering 165 countries over the period 1995 to 2012, controlling for endogeneity issues, our main result shows that PTAwCP statistically reduce the level of CO2, CH4 and N2O. This suggests that governments seem to comply with the climate-related commitments they made in the PTAs, what potentially helps tackling global warming. Moreover, findings show that to be effective in terms of mitigating climate change, a PTAwEP should contain climate-related commitments.
    Keywords: Preferential trade agreements,Climate-related provisions,Environmental policy,Greenhouse gases,Global warming,Climate change
    Date: 2020–11–04
  40. By: Kristinn Sv. Helgason
    Abstract: While migration and population displacement has always been part of the human experience, the context within which it occurs today has materially changed. Migration has become an important part of economic globalization and closely related to countries´ development process. Conflicts, poverty, natural disasters and climate events are also forcing people to migrate in an ever-increasing number. For many low-income countries with large number of internally-displaced people, on the other hand, the high economic costs are making it more difficult for them to invest in SDG implementation. Developing countries also host most of the externally-displaced people at high economic costs, which similarly affects their ability to achieve the SDGs. The political costs of hosting large number of refugees in developed states have also been significant in recent years, particularly in the aftermath of the 2015 European Refugee Crisis. The refugee crisis triggered intense politicization of migration and sharp rise in anti-immigration sentiments and support for populist parties in many countries of the region, leading some governments to tighten their borders, introduce more restrictive immigration policies and retreat from multilateral migration efforts. There is at the same time growing recognition that population displacement and migration is a contemporary global challenge that can only be solved through effective multilateral cooperation. In this context, it becomes important for states to build on the current nascent governance architecture such as the Global Compact on Refugees and the Global Compact for Migration so that the benefits of migration and population displacement can be more effectively harnessed for the achievement of the SDGs.
    Keywords: migration, population displacement, climate change, conflicts, populism, multilateralism, SDGs
    JEL: F22 Q01
    Date: 2020–05
  41. By: Louisiana Teixeira (Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres, LEDA-DIAL - Développement, Institutions et Modialisation - LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique, IRD - Institut de Recherche pour le Développement)
    Abstract: The aim of this study is to treat the Brazilian trade opening in the 1990s and its impacts on gender inequalities before and after the Stabilization Plan, Plano Real *. Using the difference in differences method and a panel from 1987-1997, the obtained evidence suggests that before the Real Plan, trade liberalization reduced the existent gender income and deprivation gap. Nonetheless, these apparent improvements seemed to be related to men's greater losses within formal activities and to a female labor's expansion through informality. After the Stabilization Plan, trade would increase gender disparities by bringing greater income gains and deeper deprivation decrease to men. The opening policies in the 1990s perpetuated the international and the gendered division of labor and was unable of permitting structural changes capable of creating comparative advantages. Thus, it guaranteed the maintenance of gender distortions, where changes continued to occur unevenly.
    Keywords: Trade Liberalization,Labor,Gender,Income,Multidimensional Poverty
    Date: 2020–11–10

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