nep-int New Economics Papers
on International Trade
Issue of 2021‒01‒04
43 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Non-tariff Measures: What’s Tariffs Got to Do with It? By David J. Kuenzel
  2. The Role of Productive and Technological Capabilities on Export Dynamics in Developing Countries By Sebastian Vergara
  3. Non-trade provisions in trade agreements and FDI By Mattia Di Ubaldo; Michael Gasiorek
  4. Comparative Analysis of Trade Competitiveness between Bangladesh and Vietnam By , AISDL
  5. Transition to a market economy, foreign direct investment and export performance in Vietnam By Prema-chandra Athukorala; Nguyen Trung Kien
  6. The African Continental Free Trade Area: Potential Economic Impact and Challenges By Lisandro Abrego; Mario de Zamaroczy; Tunc Gursoy; Garth P. Nicholls; Hector Perez-Saiz; Jose-Nicolas Rosas
  7. Demand elasticity of processed food exports from developing countries: A panel analysis of U.S. imports By Wanissa Suanin
  8. What impact are subsidies and trade barriers abroad having on Australasian and Brazilian agriculture? By Kym Anderson; Ernesto Valenzuela
  9. The Effects of Globalisation on International Trade Models: A Research on China By Toptancı, Ali İskan
  10. Long†run impacts of trade shocks and export competitiveness: Evidence from the U.S. BSE event By Chen, Chen-Ti; Crespi, John M.; Hahn, William; Schulz, Lee L.; Taha, Fawzi
  11. The Economic Consequences of Sir Robert Peel: A Quantitative Assessment of the Repeal of the Corn Laws By Douglas A. Irwin; Maksym G. Chepeliev
  12. Cross border investment by state-owned enterprises By Valentina Burrai; Luciano Giua; Kateryna Perepechay
  13. A Model of the Euro Area, China and the United States: Trade Links and Trade Wars By Volha Audzei; Jan Bruha
  14. The impact of COVID-19 on transport and logistics connectivity in the landlocked countries of South America By Rivera, Alejandra
  15. How the United States marched the semiconductor industry into its trade war with China By Chad P. Bown
  16. Use and Abuse of Antidumping by Global Cartels By Arevik Gnutzmann-Mkrtchyan; Hoffstadt
  17. Greening regional trade agreements on non-tariff measures through technical barriers to trade and regulatory co-operation By Christophe Bellmann; Colette van der Ven
  18. Foreign Investments Hit by COVID-19 Pandemic. FDI in Central, East and Southeast Europe By Amat Adarov; Gabor Hunya
  19. Immigration, Political Ideologies and the Polarization of American Politics By Axel Dreher; Sarah Langlotz; Johannes Matzat; Anna Maria Mayda; Christopher Parsons
  20. Impact of the ASEAN Economic Community and implications for Latin America By Elms, Deborah
  21. Trade Uncorked: Genetic Resistance and Quality Heterogeneity in Wine Exports By Olivier BARGAIN; Jean-Marie CARDEBAT; Raphaël CHIAPPINI
  22. Trade protectionism in Australia: its growth and dismantling By Kym Anderson; Arndt-Corden Department of Economics
  23. Impact of COVID-19 on transport and logistics connectivity in the Caribbean By González Moncada, Verónica
  24. Imperfect Competition, Border Carbon Adjustments, and Stability of a Global Climate Agreement By Soham Baksi; Amrita Ray Chaudhuri
  25. Agri-food trade in Myanmar: Its role in Myanmar’s future economic takeoff By Diao, Xinshen; Masias, Ian; Lwin, Wuit Yi
  26. Product Innovations, Process Innovations and Foreign Direct Investment: New Theoretical Aspects and Empirical Findings By Paul J.J. Welfens
  27. Quantifying the Demand, Supply, and Welfare Effects of Natural Disasters Using Monthly Trade Data By Gabriel J. Felbermayr; Jasmin Katrin Gröschl; Benedikt Heid
  28. The Liverpool Cotton Brokers Association and the crowning of King Cotton, 1811-1900: Examining the role of a private order institution in global trade By Aldous, Michael; Coyle, Christopher
  29. Common Trade Exposure and Business Cycle Comovement By Oscar Avila-Montealegre; Carter Mix
  30. trade for development. determinants of economic growth in COMESA region. A panel data approach. By Gelaye, Gassahun Getenet
  31. Special economic zones and transnational zones as tools for Southern Africa's growth: Lessons from international best practices By Roseline T. Karambakuwa; Ronney M. Ncwadi; Weliswa Matekenya; Leward Jeke; Syden Mishi
  32. Free Trade Agreements and Local Economic Development: a Global Analysis with High-Resolution Data By John Cruzatti C.
  33. Impact of COVID-19 on the trade of goods and services in Spain By Asier Minondo
  34. Transparency in extractive industry commodities trading By Olle Östensson
  35. Understanding the effects of granting work permits to undocumented immigrants By Joan Monràs; Javier Vázquez-Grenno; Ferran Elias
  36. The role of unemployment and job change when estimating the returns to migration By Emmler, Julian; Fitzenberger, Bernd
  37. New-Keynesian Trade: Understanding the Employment and Welfare Effects of Trade Shocks By Andres Rodriguez-Clare; Mauricio Ulate; Jose P. Vasquez
  38. Hops, Skip & a Jump: The Regional Uniqueness of Beer Styles By Bernardo S. Buarque; Ronald B. Davies; Ryan M. Hynes; Dieter Franz Kogler
  39. a. Longer term impacts of the COVID-19 Pandemic on European agriculture By Lowenberg-DeBoer, James; Behrendt, Karl; Boot, Alastair; Byrne, Richard; de Silva, Carrie; Eastham, Jane; Huang, Iona; Keeble, Simon; May, Daniel; Munley, Mary; Paparas, Dimitrios; Schroer-Merker, Eva; Thelwell, Simon
  40. European Monetary Union and Inequality: A Synthetic Control Approach By Florentin Kerschbaumer; Andreas Maschke
  41. Italian PhD students at the borders: The relationship between family background and international mobility By Valentina Tocchioni; Alessandra Petrucci
  42. Bilateral international investments: The big sur? By Fernando Broner; Tatiana Didier; Sergio L. Schmukler; Goetz von Peter
  43. Bilateral International Investments: The Big Sur? By Fernando Broner; Tatiana Didier; Sergio L. Schmukler; Goetz von Peter

  1. By: David J. Kuenzel (Department of Economics, Wesleyan University)
    Abstract: After successive rounds of tariff reductions by GATT/WTO members, non-tariff measures (NTMs) have increasingly become the focal point of multilateral trade negotiations. It remains an open question whether the liberalization in tariff rates has subsequently been weakened or even erased by increases in NTMs. Using a product-level global panel of WTO members over the period 1996-2018, this paper systematically examines the empirical relevance of various tariff measures for the imposition of NTMs. I find that bound or applied tariff reductions on their own have not much of an impact on NTM incidence. The relevant trade policy margin for detecting a tariff-NTM nexus is instead tariff overhangs, the difference between WTO members’ bound and applied tariff rates. Countries impose more NTMs when their sectoral applied tariffs are close to their respective bound rates, indicating that small tariff overhangs signal limited legal trade policy flexibility.
    Keywords: GATT/WTO, Non-tariff Measures, Tariff Overhangs, Tariffs
    JEL: F13 F14 F53
    Date: 2020–12
  2. By: Sebastian Vergara
    Abstract: Productive and technological capabilities matter. The more conventional strands of the literature have emphasized them as major engines of export, growth and development. But how they matter is less clear, and many open questions remain on how capabilities influence export dynamics at microeconomic level. This paper empirically investigates their role on export dynamics in 40 developing countries between 2002 and 2012. In doing so, the paper exploits a country-sector-year database containing exporter-level statistical information. The empirical analysis shows that, within sectors, countries with higher productive capacities have more exporters, and the exporters are larger and charge higher prices for their products, even after controlling for level of development, size of the economy, commodity-dependency and other variables. The results also confirm a positive relationship between technological capabilities and diversification: within sectors, exporters in countries with stronger capabilities tend to export a higher number of products and to more destination markets. Finally, technological capabilities play a specific role in high-technology sectors, such as electronics, electrical machinery and equipment and pharmaceuticals. In these sectors, exporters from countries with higher R&D investments are more diversified in terms of destination markets. Thus, the paper shows that, even comparing exporters’ behaviour only among developing countries, stronger productive and technological capabilities are significantly related to the “extensive” and “intensive” margin of exports, diversification across products and destinations, and product quality; all crucial aspects of developing countries’ insertion in global markets. Overall, the paper underscores the role of capabilities not only on developing countries’ macroeconomic resilience to trade shocks, but also on their medium-term development prospects.
    Keywords: productive capacities, technological capabilities, export dynamics, R&D investments
    JEL: F14 O3
    Date: 2019–09
  3. By: Mattia Di Ubaldo (University of Sussex); Michael Gasiorek (University of Sussex)
    Abstract: Preferential trade agreements (PTAs) increasingly feature a variety of provisions related to civil and political rights (CPR), economic and social rights (ESR), and environmental protection (EP). In this paper we estimate the effect of the degree of legalization of PTAs in these non-trade provisions on the flow of bilateral greenfield FDI. We explore this relation in a structural gravity setting and find that all three types of non-trade provisions affect the flow of FDI negatively. This appears to be driven by investments directed to middle- and low-income countries, in particular for EP provisions. For the subsample of EU PTAs, only CPR provisions appear to have an effect on the flow of FDI.
    Keywords: FDI, preferential trade agreements, non-trade provisions, gravity equations
    JEL: F13 F15 F21
    Date: 2020–12
  4. By: , AISDL
    Abstract: Bangladesh and Vietnam have been the largest garments exporters to the world in recent decades after China. Therefore, competition between Bangladesh and Vietnam in the textile industry is getting intense day-by-day. Nonetheless, both the country shared some of the similar traits in policy reformation. Such as, both the nations became independent during the 1970s and reformed export-oriented policies during the 1980s. However, except for the apparel industry, Bangladesh had not gained any extraordinary success that can be comparable to Vietnam. Moreover, Vietnam’s trade competitiveness had always been better than Bangladesh in most of the period. The paper aims to identify the areas where Bangladesh is lagging behind Vietnam in terms of trade. In this regard, the various international index had been compared. From the comparisons, it has been linked with the trade scenario associated with both the nations. The findings are Vietnam’s policy has always been investing more in human capital, infrastructure and chances of export diversification. Additionally, Vietnam had been prosperous in attaining FDI inflows in different sectors of the economy. Hence, the country gained strong trade competitiveness through diversified export basket especially in electronics. In Bangladesh, FDI inflows and export growth rates had increased over the years. Then again, most of the foreign investments go towards the textile industry. Therefore, the export basket is highly concentrated around the garments sector. Moreover, Bangladesh had not been able to produce productive human capital and economic infrastructure. As a result, competitiveness did not improve noticeably. For a successful export diversification, increasing FDI inflows in other sectors rather than garments is necessary for Bangladesh to achieve akin success like Vietnam.
    Date: 2019–12–14
  5. By: Prema-chandra Athukorala; Nguyen Trung Kien
    Abstract: This chapter examines emerging patterns of foreign direct investment and trade in the Vietnamese economy in the context of its transition from central planning to a market economy over the past three decades. Following a stage-setting overview of policy reforms, it analyses the role of foreign direct investment in outward orientation of the manufacturing sector by linking it to the rapidly-evolving East-Asia-centred global production networks. The indications are specialisation in labour intensive talks within global production networks of electronics and electrical goods is going to play the dominant role in expanding manufacturing exports from Vietnam in years to come. The analysis brings into sharp relief the pivotal role of concurrent liberalisation of foreign investment and trade policy regimes, albeit in a constrained fashion, in the process of economic transition in this era of economic globalisation.
    Keywords: Vietnam, economic transition, foreign direct investment, export performance
    JEL: F13 F23 O14
    Date: 2020
  6. By: Lisandro Abrego; Mario de Zamaroczy; Tunc Gursoy; Garth P. Nicholls; Hector Perez-Saiz; Jose-Nicolas Rosas
    Abstract: Political momentum towards Africa-wide free trade has been intensifying. In March 2018, over 40 countries signed the African Continental Free Trade Area (AfCFTA) agreement. Once fully implemented, the AfCFTA is expected to cover all 55 African countries, with a combined GDP of about US$2.2 trillion. This SDN takes stock of recent trade developments in Sub-Saharan Africa and assesses the potential benefits and costs of the AfCFTA, as well as challenges to its successful implementation. In addition to increased trade flows both in existing and new products, the AfCFTA has the potential to generate substantial economic benefits for African countries. These benefits include higher income arising from increased efficiency and productivity from improved resource allocation, higher cross-border investment flows, and technology transfers. Besides lowering import tariffs, to ensure these benefits, African countries will need reduce other trade barriers by making more efficient their customs procedures, reducing their wide infrastructure gaps, and improving their business climates. At the same time, policy measures should be taken to mitigate the differential impact of trade liberalization on certain groups as resources are reallocated in the economy and activities migrate to locations with comparatively lower costs.
    Keywords: Trade barriers;Tariffs;Trade liberalization;Trade facilitation;Employment;SDN,trade diversion,AfCFTA agreement,CGE trade model,trade openness,preferential trade arrangement,trade growth
    Date: 2020–05–13
  7. By: Wanissa Suanin
    Abstract: There has been a growing emphasis in resource-rich developing countries on promoting processed food exports as part of their export expansion and diversification strategy. A key issue for this strategy is whether global market conditions are conducive for significant trade gains. We estimate price and income elasticities of demand for processed food exports from developing countries using a new quarterly panel dataset for the United States, the major market for these products, over the period 1992– 2018. Our findings indicate that demand for processed food imports from developing countries has high income elasticity combined with low price elasticity. The implication is that expansion of imports is driven by demand expansion driven by income growth which counterbalances any possible negative impact of an increase in relative prices. Income elasticity of demand for processed food imports is much higher than that for unprocessed food imports, reflecting preferences for processed food.
    Keywords: Demand elasticity; Processed food trade; Developing countries; ARDL estimator
    JEL: F14 Q11 Q17
    Date: 2020
  8. By: Kym Anderson; Ernesto Valenzuela
    Abstract: This paper provides new estimates of the extent and economic effects of agricultural policies that provide domestic support or import protection to farmers in countries that compete in the global marketplace with unsubsidized farmers. Analyses earlier this century found that import market access barriers accounted for more than 90% of the global welfare cost of all assistance to farmers, with domestic support measures providing as little as 5%. Since then the share contributed by domestic support has grown greatly in some high-income and emerging economies, thanks to policy reinstrumentation. Using the latest version of the GTAP model and database of the global economy, this paper estimates the economic effects of direct farmer subsidies, and of the producer subsidy and consumer tax equivalents of farm trade policies, on farmers in three lightly assisting countries. The estimates adjusted for country size suggest the effects on agricultural exports, net farm income, and national economic welfare of such policies are far more adverse for Australia, Brazil and especially New Zealand than for the rest of the world, and that domestic supports abroad are much more important contributors to those losses now than they were at the start of this century.
    Keywords: Agricultural trade distortions, domestic supports, farm subsidies, market access, trade negotiations.
    JEL: Q17 Q18 Q58 O54 O56
    Date: 2020
  9. By: Toptancı, Ali İskan
    Abstract: It seems that "globalization processes" are failing. Instead, there has been an increase in nationalist and protectionist policies in the Western world. Therefore, it may force structural changes in international trade. The main purpose of this article is to uncover whether any changes and any income distribution in the Western world can be traced back to changing trading patterns. More specifically, there is increased efficiency in wages and opportunities for workers between export-oriented firms and the rest. China tends to trade heavily produced goods with more human capital. This leads to more vertical intra-industry trade with Western countries. Horizontal intra-industry trade provides positive economies and greater product variety for consumers, while vertical intra-industry trade is responsible for further structural change. Especially the presence of unskilled workers in the USA and the EU, experienced people take the gains of structural change. Thus, China's rising vertical intra-industry trade is responsible for some of the sectoral changes in Western countries and the separation of less-skilled workers. As a result, less-skilled workers in Western countries are consistently worse off. This may be one of many reasons to explain the rise of populism, nationalism, and protectionism in current western politics.
    Keywords: International Trade,Intra and Inter-Industry Trade,Economic Sectors,China,EU,USA
    Date: 2020
  10. By: Chen, Chen-Ti; Crespi, John M.; Hahn, William; Schulz, Lee L.; Taha, Fawzi
    Abstract: This paper examines how comparative advantages of major beef exporters changed following the 2003 bovine spongiform encephalopathy (BSE) outbreak, which significantly disrupted the U.S. beef trade until approximately 2007. Using longitudinal data on beef export values and constructed revealed comparative advantage measures, we show that while some measures of the long†run impacts of BSE on U.S. beef export competitiveness have returned to pre†2003 levels, the U.S.’s comparative advantage has not. We also examine a hypothetical scenario of no BSE event in 2003 and predict that in the absence of the BSE outbreak, the U.S. beef sector would have been increasingly more competitive by 2017 than it actually was. Long†term trade competitiveness may not simply return to normal even after a short†term disruption.
    Date: 2020–11–01
  11. By: Douglas A. Irwin; Maksym G. Chepeliev
    Abstract: Britain’s repeal of the Corn Laws in 1846 was the signature trade policy event of the nineteenth century. This paper provides a quantitative general equilibrium evaluation of the repeal on sectoral output and employment, factor prices and income distribution, international trade and the terms of trade, and economic welfare based on a detailed input-output matrix of the British economy in 1841. We find that the repeal left Britain’s overall welfare roughly unchanged, or perhaps negligibly (0.1 percent) lower, as the static efficiency gains are offset by the adverse terms-of-trade effects of the tariff reduction. Labor and capital gained a slight amount of income at the expense of landowners (whose income fell about 3-5 percent). Combining the changes in factor payments with different consumption patterns across income groups, we find that the top 10 percent of income earners lose while the bottom 90 percent of income earners, who spent a disproportionate amount of their income on food, gain. To assess whether the model yields reasonable results, we compare the model’s output, price, and trade predictions with the actual ex post outcomes.
    JEL: F13 F17 N33 N73
    Date: 2020–11
  12. By: Valentina Burrai; Luciano Giua; Kateryna Perepechay
    Abstract: The paper analyses data on state-owned enterprises as cross-border investors and takes a first step towards analysing their investment characteristics since 2000. It shows that the number of cross-border investments by state-owned enterprises was overall small, with most originating from the People’s Republic of China (hereafter “China”), and suggests that the investment preferences of state-owned enterprises may fuel excess capacity in the steel sector. This is because state-owned enterprises display a preference for building new capacity over acquiring existing capacity when investing abroad, and a preference for investment destinations with volatile demand growth. Data also suggest that state-owned enterprises might be more likely to undertake domestic capacity closures after a cross-border investment, which is likely influenced by recent policies introduced to curb excess capacity in China. Conversely, the data offer insufficient evidence regarding the link between cross-border investment by state-owned enterprises and capacity outcomes in target jurisdictions.
    Date: 2020–12–15
  13. By: Volha Audzei; Jan Bruha
    Abstract: In this paper we develop a dynamic stochastic general equilibrium model featuring the euro area, the United States and China, with an exogenous rest of the world. The countries in the model are linked through trade and international bond purchases. Having estimated the model, we study several scenarios of trade wars between the countries. Our findings suggest that no country benefits from imposing tariffs in the long run. The degree to which a particular country is hurt depends on the strength of its import and export links.
    Keywords: Bayesian estimation, China, multi-country DSGE, trade wars
    JEL: C11 E37 F13 F41
    Date: 2020–12
  14. By: Rivera, Alejandra
    Abstract: Given their geographic situation, landlocked developing countries have been hit doubly hard by the cross-border processes implemented to contain the coronavirus disease (COVID-19) pandemic. This research provides a detailed explanation of the responses to the COVID-19 pandemic in the areas of international trade and transport adopted by the Governments of the Plurinational State of Bolivia and of Paraguay to limit the effects of the pandemic on trade operations and supply chains in their countries. It also provides a set of policy recommendations to preserve and improve trade facilitation and transport connectivity with transit countries in the framework of Vienna Programme of Action for Landlocked Developing Countries for the Decade 2014–2024.
    Date: 2020–12–22
  15. By: Chad P. Bown
    Abstract: The US-China trade war forced a reluctant semiconductor industry into someone else’s fight, a very different position from its leading role in the 1980s trade conflict with Japan. This paper describes how the political economy of the global semiconductor industry has evolved since the 1980s. That includes both a shift in the business model behind how semiconductors go from conception to a finished product as well as the geographic reorientation toward Asia of demand and manufactured supply. It uses that lens to explain how, during the modern conflict with China, US policymakers turned to a legally complex set of export restrictions targeting the semiconductor supply chain in the attempt to safeguard critical infrastructure in the telecommunications sector. The potentially far-reaching tactics included weaponization of exports by relatively small but highly specialized American software service and equipment providers in order to constrain Huawei, a Fortune Global 500 company. It describes potential costs of such policies, some of their unintended consequences, and whether policymakers might push them further in the attempt to constrain other Chinese firms.
    Keywords: Export restrictions, supply chains, national security, semiconductors, Huawei, US–China trade relations
    JEL: F13
    Date: 2020–12
  16. By: Arevik Gnutzmann-Mkrtchyan; Hoffstadt
    Abstract: Antidumping creates opportunities for abuse to stifle market competition. Whether cartels actually abuse trade policy for anticompetitive purposes remains an open question in the literature. To address this gap, we construct a novel dataset that matches cartel investigations with trade data at the product level. We then estimate the world import price and quantity effects of antidumping in cartel products. We find that the use of antidumping in cartel industries helps to maintain higher world import prices and lower quantities during cartel periods, and to induce the establishment of a cartel. The effect is present both for antidumping cases that result in duties and cases that are withdrawn by the petitioning industry.
    Keywords: cartels, collusion, antitrust, antidumping, trade policy
    JEL: F13 F14 L41
    Date: 2020
  17. By: Christophe Bellmann; Colette van der Ven
    Abstract: This report explores how regional trade agreements (RTAs) can serve as a vehicle to reflect environmental objectives in chapters and articles dealing with technical barriers to trade and regulatory co-operation. In particular, the analysis builds upon examples from seven recent RTAs that aim at deep economic integration, and explores ways to further incorporate environmental objectives. The report identifies a range of options to reconcile economic and environmental objectives, related to areas of technical barriers to trade and regulatory co-operation, by incorporating environmental considerations as overarching principles, provisions on regulatory impact assessments and ex post evaluations, non-regression clauses, and dedicated chapters and sectoral annexes.
    JEL: F13 F18 R11 Q56
    Date: 2020–12–22
  18. By: Amat Adarov (The Vienna Institute for International Economic Studies, wiiw); Gabor Hunya (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: FDI inflows to Central, East and Southeast Europe (CESEE – 23 economies) declined by 58% in the first half of 2020, against the same period of 2019. This drop is more dramatic than the global plunge in FDI (49%, estimated by UNCTAD), but is smaller than the setback faced by the developed economies (75%). The CESEE country groups have been unevenly affected the decline has amounted to 35% in the EU-CEE, 8% in the Western Balkans, and about 40% in both the group of the CIS plus Ukraine and in Turkey. Russia recorded negative FDI inflows in the first half of 2020, following unusually high amounts a year before. In EU-CEE, FDI had already started to decline in 2019, putting an end to a three-year growth period. The capital pledged in greenfield investment projects in CESEE fell by 23% – less than the global decline of 34% in the first half of 2020. The quarter-to-quarter decline in 2020 was sharpest in the second quarter and was followed by a levelling-off in the third. In annual comparison, the capital commitments were 41% lower in the first three quarters of 2020 than in the previous year. Manufacturing was more vulnerable to the recession than other sectors – in terms of both FDI flows and greenfield investments. Participation in global value chains has suffered from demand and supply shocks, and from disruption to production, trade and supply networks. This may yet provide an impulse to shorten value chains, relocate and ‘back-shore’ cross-border production-sharing activities in the future, which may depress FDI. Technological change may also bring some redistribution of locations for manufacturing production and tradable services in the medium and longer term. However, European value chains may soon recover from the initial shocks, and international investors are under no pressure to undertake costly relocations. Re-shoring will be slow if Asia remains the growth engine of the world economy. The automotive industry will face transformation as it adapts to new technologies, but will keep most of its established locations in the region. Most of CESEE may gain from the near-shoring of production by European companies, as they move away from more distant locations. The wiiw FDI Database is available online This online access with a modern query tool supports easy search and download of data. The wiiw FDI Database contains the full set of FDI data with time series starting form 1990 as far as available. Access to wiiw FDI Database
    Keywords: foreign direct investment, balance of payments, COVID-19 crisis, re-shoring, back-shoring, new EU member states, Central Europe, Southeast Europe, Western Balkans, Austria, China, Turkey, CIS, Russia, Ukraine
    JEL: C82 F21 O57 P23
    Date: 2020–12
  19. By: Axel Dreher; Sarah Langlotz; Johannes Matzat; Anna Maria Mayda; Christopher Parsons
    Abstract: We study the extent to which migrant inflows to the United States affect the political polarization of campaign donors and the ideology of politicians campaigning for the House of Representatives in the 1992-2016 period. Implementing various polarization measures based on ideology data derived from 16 million campaign finance contributors, our results show that migrant inflows causally increase the polarization of both campaign donations and leading political candidates. Our estimates hold over the medium-run, although the effects decline over time. The effects of migration are stronger if counties host migrants from more distant cultures, or if incoming migrants are similarly educated. Our main results hold when we focus on refugees as opposed to all immigrants on aggregate.
    Keywords: migration, refugees, polarization, political ideology, United States
    JEL: J15 F52 F63
    Date: 2020
  20. By: Elms, Deborah
    Abstract: The Association of Southeast Asian Nations (ASEAN) has become one of the most important players in the global trading system. Comprising 10 countries with very diverse income levels, ASEAN is now the world’s fifth largest economy and plays a central role in the so-called “Factory Asia”. This document begins with an overview of the history and institutions of ASEAN, before focusing on one of its three pillars: the ASEAN Economic Community (AEC), including a critical assessment of outcomes in the areas of trade in goods, trade in services and investment, among others. The document draws best practices from the experience of ASEAN that may be relevant to other regional arrangements pursuing similar goals, and concludes by considering aspects of importance to Latin America’s ongoing economic integration initiatives.
    Date: 2020–12–17
  21. By: Olivier BARGAIN; Jean-Marie CARDEBAT; Raphaël CHIAPPINI
    Abstract: A nascent literature explores the impact of taste differences on trade. In gravity model estimations, the coefficient on geographical distance is large because it tends to capture such (usually unobservable) preference-related frictions. A related stream of research also shows that the effect of distance decreases with quality. We bring both aspects together by asking how heterogeneity in tastes affect exports and how this effect may depend on good quality. We examine these questions in the context of French wine, i.e. a cultural good characterized by a great variety of types (accommodating a large heterogeneity in wine tastes) and of quality levels (from cheap table wine to the finest grands crus). A series of gravity models are estimated using very complete data on French wine exports by detailed appellation between 1998 and 2015. We use genetic distance as a proxy for taste differences explained mainly by biology and culture, while controlling for the other pathways through which culture affects trade (for instance the role of trust) and for other factors associated with genetic distance (e.g. micro-geography). We show that the ‘taste’ component of genetic distance has an independent effect on trade, explaining between 20% and 40% of the coefficient of physical distance. Heterogeneous effects of physical and genetic distances are estimated using alternative proxies of quality (namely the reputation of wine regions and experts’ scores). We confirm that high-end wines tend to escape gravity but also the home bias due to tastes – possibly illustrating the fact that luxury goods have become global iconic products, less associated to national original preferences but rather to status and investment motives.
    Keywords: wine trade; cultural/genetic distance; geographical distance; gravity model; PPML
    JEL: F10 F14 L66 Q17
    Date: 2020
  22. By: Kym Anderson; Arndt-Corden Department of Economics
    Abstract: Protection from import competition was a defining feature of the birth of the Australian federation in 1901. For the next 70 years, the extent of protection grew, and broadened from mainly tariffs to also involving import licencing after World War II. There was a one-off 25% across-the-board cut in tariffs in 1973 and some dismantling of agricultural subsidies, but that was followed by the re-imposition of import quotas for the most-protected manufactured goods. Then a new reformist government began, in the mid-1980s, a long process of dismantling all protection as part of an overall economic reform program that also involved de-regulation, privatization and moving to a flexible exchange rate. The rewards included three decades of faster economic growth and an unprecedented rise in Australians’ living standards. This paper provides a history of economic thought on the pros and cons of protectionism for the small, distant, natural resource-rich Australian economy and a survey of the literature on the extent, effects and political economy reasons behind the growth of Australian protection and its eventual dismantling.
    Keywords: import restrictions; tariffs; sectoral assistance; price-distorting policies; political economy of trade policy
    JEL: F13 F14 O19 O53
    Date: 2020
  23. By: González Moncada, Verónica
    Abstract: Given their small size and geographic isolation, Caribbean countries are highly reliant on trade and tourism as important sources of income and employment. Lockdowns in the wake of the COVID-19 pandemic have left islands closed, airports without flights, hotels shuttered, cruise ships docked in ports and economies in crisis. This research provides a detailed explanation of the responses to COVID-19 in the areas of international trade and transport adopted by English-speaking countries of the Caribbean Community (CARICOM) to limit the effects of the pandemic on trade operations and supply chains in the region. It also provides a set of policy recommendations to preserve and improve trade and transport connectivity in the Caribbean basin.
    Date: 2020–12–15
  24. By: Soham Baksi; Amrita Ray Chaudhuri
    Abstract: We analyze the stability of a global climate agreement to mitigate greenhouse gas emissions when countries choose pollution taxes simultaneously and strategically. Emissions arise from the production of a good, which is traded across countries with segmented markets that are imperfectly competitive. We find that, while a global climate agreement involving all countries is unstable under autarky, a move from autarky to free trade may stabilize the grand coalition between countries. As markets become more competitive, it becomes more likely that the global climate agreement is stable, and the environmental and welfare gains from global cooperation also become larger. Further, we introduce a border carbon adjustment (BCA) mechanism consisting of an import tariff set equal to the pollution tax differential across countries. We find that allowing countries to use a BCA tends to destabilize an otherwise stable grand coalition.
    JEL: Q54 F18 H23
    Date: 2020–12
  25. By: Diao, Xinshen; Masias, Ian; Lwin, Wuit Yi
    Abstract: Agri-food exports are important for Myanmar’s economic takeoff, in particular for the transformation of agri-food systems. This paper analyzes the past performance of key agri-food exports and assess their role and future potential to contribute to the transformation of Myanmar’s agri-food system and the overall economy.
    Keywords: MYANMAR, BURMA, SOUTHEAST ASIA, ASIA, trade, agrifood sector, exports, maize, rice, grain legumes, rubber, groundnuts, sesame seed, fishery byproducts, cattle, fruit, palm oils, policies, trade policies, gross national product, agrifood systems, agri-food exports
    Date: 2020
  26. By: Paul J.J. Welfens (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW))
    Abstract: The distinction between product innovations and process innovations is crucial for industrialized countries as well as for newly industrialized countries - and only a distinct consideration of product innovations in macroeconomic modeling allows to fully understand Schumpeterian innovation dynamics and their national and international impact. With this focus, initially a simple microeconomic modelling of product versus process innovation is considered in a setting with both inward and outward foreign direct investment, largely following the Bertschek approach. Results from the European Union's Community Innovation Survey are considered as well as relative export unit values - relative to the US EUV - which are a proxy for product innovations in the tradables sector. Regression results show that inward FDI raise both product innovations and process innovations in the EU. The key aspects of both process innovations and product innovations are then considered in an open economy macro model which brings many new insights, including a much better understanding of the links between innovation dynamics, the current account, FDI, the real exchange rate, output and inflation. Product innovations have a different impact on the real exchange rate than process innovations and a dynamic view of the Vernon product cycle is required for an adequate analysis. As regards the demand for money, product innovations affect this demand in a different way to process innovations. Optimal product innovations are also considered. Innovations in Schumpeterian macroeconomics thus gets crucial new perspectives.
    Keywords: Innovation, product innovation, foreign direct investment, macro modeling, US, EU
    JEL: C6 F21 O30 O31
    Date: 2020–12
  27. By: Gabriel J. Felbermayr; Jasmin Katrin Gröschl; Benedikt Heid
    Abstract: We estimate the short-run trade effects of natural disasters using monthly trade data and data on the physical intensity of earthquakes and storms. We find large negative effects for heavily indebted poor, least developed or landlocked developing countries but only small effects for other economies. We use our estimates to identify key parameters of a dynamic quantitative trade model to disentangle the effects of disasters on supply, demand, and welfare and their spillovers on third countries via trade linkages. We apply our model to quantify the effects of the 1992 earthquake in Nicaragua, a small, heavily indebted poor country, and the 2011 Tohoku earthquake in Japan, a large developed economy. We find that spillovers are negligible if the country affected by a disaster is small but sizable for large economies. Similar disasters have heterogeneous effects on countries’ demand and supply, highlighting the importance of event-specific policies in the aftermath of disasters.
    Keywords: economic effects of natural disasters, monthly trade data, dynamic quantitative trade model, earthquakes, storms
    JEL: F14 F18 Q54 C68
    Date: 2020
  28. By: Aldous, Michael; Coyle, Christopher
    Abstract: In the 19th century, the Liverpool Cotton Brokers Association (CBA) coordinated the dramatic growth of Liverpool's raw cotton market. This article shows how the CBA achieved this through the development of a private order institutional framework that improved information flows, introduced standardization and contracting regimes, and regulated market exchange platforms. These developments corresponded with significantly improved market coordination, which facilitated the growth of the largest raw cotton market in the world. The article's findings demonstrate and quantify the importance of nonstate actors, in creating institutions of global exchange central to the first wave of globalization.
    Keywords: private order institutions,non-state actors,globalization,Liverpool Cotton Brokers Association
    JEL: D03 F13 N43 N53 N74 Q17
    Date: 2020
  29. By: Oscar Avila-Montealegre; Carter Mix
    Abstract: A large empirical literature has shown that countries that trade more with each other have more correlated business cycles. We show that previous estimates of this relationship are biased upward because they ignore common trade exposure to other countries. When we account for common trade exposure to foreign business cycles, we find that (1) the effect of bilateral trade on business cycle comovement falls by roughly 25 percent and (2) common exposure is a significant driver of business cycle comovement. A standard international real business cycle model is qualitatively consistent with these facts but fails to reproduce their magnitudes. Past studies have used models that allow for productivity shock transmission through trade to strengthen the relationship between trade and comovement. We find that productivity shock transmission increases business cycle comovement largely because of a country-pair's common trade exposure to other countries rather than because of bilateral trade. When we allow for stronger transmission between small open economies than other country-pairs, comovement increases both from bilateral trade and common exposure, similar to the data. **** La literatura empírica ha mostrado que países que comercian más entre ellos tienen ciclos económicos más correlacionados. En este artículo mostramos que las estimaciones previas de la relación comercio-sincronización están sesgados al alza pues ignoran el hecho de que los países están expuestos a socios comerciales comunes. Cuando incluímos el efecto de la exposición comercial común a ciclos comerciales externos, encontramos que 1) el efecto del comercio bilateral se reduce cerca del 25 % y 2) la exposición común es un factor importante para la sincronización de ciclos económicos. Un modelo estándar de ciclos económicos reales es cuantitativamente consistente con estas relaciones pero falla al momento de reproducir sus magnitudes. Encontramos que la transmisión de choques de productividad aumenta la sincronización del ciclo económico principalmente a través de la exposición comercial común de los países, más allá del comercio bilateral. Cuando permitimos una mayor transmisión de productividad entre economías pequeñas, la sincronización aumenta tanto por comercio bilareral como por exposición común, consistente con la evidencia empírica.
    Keywords: trade, business cycles, open economy macroeconomics, Comercio internacional, ciclos económicos, macroeconomía abierta
    JEL: F1 E32 F41 F44
    Date: 2020–12
  30. By: Gelaye, Gassahun Getenet
    Abstract: The objective of this paper is to analyze the determinants of economic growth in COMESA member countries from 1985-2015 using a panel data approach. In the study both descriptive and econometric analysis were used. For model specification a Hausman test and link tests were used. A Hausman test suggested for fixed effect model as an appropriate model in this study. In addition, other CLM assumptions were detected before the actual regression result and there were found a problem of serial correlation and heteroskedasticity. As a result, a cluster robust of standard error test was used to handle the problem. The regression result show that foreign direct investment, broad money, trade openness, and human capital growth were found to have positive and significant impact on economic growth in the region. In contrast, gross fixed capital formation in this study was found to have insignificant impact on economic growth in COMESA member countries. Moreover, government final consumption expenditure, inflation and population growth affects economic growth negatively and significantly in COMESA member countries. In this paper a policy recommendation appeal to appreciate domestic saving and investment from the residence, and reduction of tariff for imported capital goods and domestic innovation, reforms to be forwarded more open to global trade for the region (COMESA) member countries through reduction of trade barriers between the COMESA member countries and the rest of the world, and government consumption or investment in the region should be geared towards more productive activities for economic growth were discussed in this research paper.
    Date: 2020–11–29
  31. By: Roseline T. Karambakuwa; Ronney M. Ncwadi; Weliswa Matekenya; Leward Jeke; Syden Mishi
    Abstract: The paper evaluates strategies for developing successful special economic zones and transnational zones for Southern African countries to spur growth and employment. Most special economic zones implemented in Southern Africa have largely failed to bring adequate growth and employment due to numerous constraints. Globally, selected countries have successfully implemented export-oriented industries through such spatial industrial policy.
    Keywords: Special Economic Zones, Spatial industrial policy, Growth, best practice, Sustainability, southern Africa
    Date: 2020
  32. By: John Cruzatti C. (Alfred-Weber-Institute for Economics)
    Abstract: This paper analyses the e ects of Free Trade Agreements (FTAs) on subnational economic development in 170 countries over the 1990-2015 period. Applying a di erence-in-di erence strategy, I exploit subnational variation on how FTAs distinctively a ect areas that are mainly suitable for agriculture, manufacturing, and the provision of services. I test two mechanisms that can connect our main results on development with popular resistance against FTAs. One, I expect a larger number of winners in primary industries - due to the comparatively higher geographic concentration in secondary and tertiary economic sectors. Two, I argue FTAs that include legal provisions beyond tari s and quotas are less e ective in promoting local development - due to the potential increase of external transaction costs. My main results indicate that FTAs improve local economic development. However, the e ect is largely driven by the agricultural sector. I find moreover that FTAs including provisions on standards, public procurement, and intellectual property rights, reduce the positive impact of FTAs. Finally, I show how these FTAs' gains are bigger for developed countries
    Date: 2019–09
  33. By: Asier Minondo
    Abstract: The COVID-19 crisis has led to the sharpest collapse in the Spanish trade of goods and services in recent decades. The containment measures adopted to arrest the spread of the virus have caused an especially intense fall of trade in services. Spain's export specialization in transport equipment, capital and outdoor goods, and services that rely on the movement of people has made the COVID-19 trade crisis more intense in Spain than in the rest of the European Union. However, the nature of the collapse suggests that trade in goods can recover swiftly when the health crisis ends. On the other hand, COVID-19 may have a long-term negative impact on the trade of services that rely on the movement of people.
    Date: 2020–12
  34. By: Olle Östensson
    Abstract: The paper reviews the debate about transparency in extractive industry commodities trade. It examines the obstacles to improved transparency. A critical review of the experience with estimating losses from a lack of transparency concludes that many of the published estimates of losses from transfer mispricing and misinvoicing suffer from methodological deficiencies and appear to be exaggerations.
    Keywords: Transparency, commodity trading, Extractive industries, Conflict minerals, responsible sourcing, Transfer mispricing, misinvoicing, commodities, Trade
    Date: 2020
  35. By: Joan Monràs; Javier Vázquez-Grenno; Ferran Elias
    Abstract: This paper studies the legalization of 600,000 non-EU immigrants by the unexpectedly elected Spanish government following the terrorist attacks of 2004. By comparing non-EU to EU immigrants we first estimate that the policy did not lead to magnet effects. We then show that the policy change increased labor market opportunities for immigrants by allowing them to enter sectors of the economy with fewer informal employment. We rely on cross-province comparisons to document that payroll-tax revenues increased by around 4,000 euros per legalized immigrant, and the heterogeneous effect of the policy on various groups of workers. We provide a theoretical framework based on monopsonistic competition to guide our empirical work and interpret our findings.
    Keywords: Immigration, undocumented immigrants, public policy evaluation
    JEL: F22 J31 J42 J J61 R11
    Date: 2020–12
  36. By: Emmler, Julian; Fitzenberger, Bernd (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "Estimating the returns to migration from East to West Germany, we focus on pre-migration employment dynamics, earnings uncertainty, and job change. Migrants are found to be negatively selected with respect to labor market outcomes, with a large drop in earnings and employment during the last few months before migration. We find sizeable positive earnings and employment gains of migration both in comparison to staying or job change. The gains vary considerably with pre-migration earnings and with the counterfactual considered. Future migrants haveworse expectations for their labor market prospects in the East and migrants show a greater openness to mobility." (Author's abstract, IAB-Doku) ((en)) Additional Information also released (possibly different) as: IZA discussion paper, 13740
    Keywords: Einkommenseffekte, IAB-Biografiedaten, Arbeitsmarktrisiko, Entscheidungskriterium, Mobilitätsbereitschaft, Arbeitslosigkeit, Wanderung, Arbeitsplatzwechsel, Migrationstheorie, Arbeitsmarktchancen, Migrationsforschung, Erwartung, Binnenwanderung, Westdeutschland, Ostdeutschland, Bundesrepublik Deutschland
    JEL: J61 R23 O15 P25
    Date: 2020–12–16
  37. By: Andres Rodriguez-Clare (University of California, Berkeley and NBE); Mauricio Ulate (Federal Reserve Bank of San Francisco); Jose P. Vasquez (Princeton University)
    Abstract: There is a growing empirical consensus that trade shocks can have important effects on unemployment and nonemployment across local-labor markets within an economy. This paper introduces downward nominal wage rigidity to an otherwise standard quantitative trade model and shows how this frame-work can generate changes in unemployment and nonemployment that match those uncovered by the empirical literature studying the “China shock.†We also compare the associated welfare effects predicted by this model with those in the model without unemployment. We find that the China shock leads to average welfare increases in most U.S. states, including many that experience unemployment during the transition. However, nominal rigidities reduce the overall U.S. gains from the China shock between one and two thirds. In addition, there are ten states that experience welfare losses in the presence of downward nominal wage rigidity but would have experienced welfare gains without it.
    JEL: F16 F10
    Date: 2020–09
  38. By: Bernardo S. Buarque; Ronald B. Davies; Ryan M. Hynes; Dieter Franz Kogler
    Abstract: Perhaps more than any other product, beer evokes the place it was made. Weißbier and Germany, dubbels and Belgium, and most of all, Guinness and Ireland. Part of what makes these beers so memorable is what sets them apart and gives them their ‘taste of place’. Many studies have tried to place that taste, and due to a lack of detailed data, have relied largely on qualitative methods to do so. We introduce a novel data set of regionalized beer recipes, styles, and ingredients collected from a homebrewing website. We then turn to the methods of evolutionary economic geography to create regional ingredient networks for recipes within a style of beer, and identify which ingredients are most important to certain styles. Along with identifying these keystone ingredients, we calculate a style’s resiliency or reliance on one particular ingredient. We compare this resiliency within similar styles in different regions and across different styles in the same region to isolate the effects of region on ingredient choice. We find that while almost all beer styles have only a handful of key ingredients, some styles are more resilient than others due to readily available substitute ingredients in their region.
    Keywords: Beer; Economic geography; Network analysis
    JEL: Q10 R11
    Date: 2020–12
  39. By: Lowenberg-DeBoer, James; Behrendt, Karl; Boot, Alastair; Byrne, Richard; de Silva, Carrie; Eastham, Jane; Huang, Iona; Keeble, Simon; May, Daniel; Munley, Mary; Paparas, Dimitrios; Schroer-Merker, Eva; Thelwell, Simon
    Abstract: The longer-term impacts of the COVID-19 pandemic on the European food supply chain may be substantially different than the short-term adaptation of farmers, food processors and retailers. The main consumer preference changes are likely to be linked to greater on-line ordering, home delivery and in-home consumption. The food industry changes will probably be more persistent and of greater magnitude than those on the consumer side, including a preference for production and processing closer to consumption, and greater flexibility in processing. The COVID-19 pandemic will promote greater automation throughout the food chain with automation of combinable crops leading the way because the engineering is more tractable than for fruits and vegetables. The COVID-19 pandemic will lead to a re-emphasis on food production and food security in agricultural policy throughout Europe. That re-emphasis of food security will be strongest in those countries which saw the largest and longest disruption in consumer level food availability. The COVID-19 pandemic has disrupted the European food system, but in the longer run it could also create opportunities for those ready to adapt to the changing realities.
    Keywords: Agribusiness, Agricultural and Food Policy, Crop Production/Industries, Farm Management, International Relations/Trade
    Date: 2020–09–25
  40. By: Florentin Kerschbaumer; Andreas Maschke (University of Leeds)
    Abstract: The promise of greater material prosperity and economic convergence has underpinned the process of European economic integration. Its consequences for income inequalities within countries, however, have so far been little discussed. This paper seeks to contribute to the literature by investigating the effects of European economic integration on intra-country income inequality using the synthetic control method. We find that EMU, out of our sample of eight euro countries, has significant effects on inequality in Germany and Spain. From the several theories outlined in the literature, our results lend most support to the growth regime mechanism.
    Keywords: Income Inequality, European Monetary Union, Synthetic Control Method
    JEL: D63 N10 N14 P16
    Date: 2020–12
  41. By: Valentina Tocchioni (Dipartimento di Statistica, Informatica, Applicazioni "G. Parenti", Università di Firenze); Alessandra Petrucci (Dipartimento di Statistica, Informatica, Applicazioni "G. Parenti", Università di Firenze)
    Abstract: Previous literature has suggested that PhD students’ mobility has become a fundamental step during doctoral studies, both for training purposes and for creating transnational research networks. In recent years, there has been a significant increase in migration of highly educated and highly skilled Italians. Most studies concentrate on employment-related characteristics of researchers’ and scientists’ mobility, largely neglecting other topics, such as family background characteristics of those who decide to study and go abroad. Using the Istat Survey on occupational conditions of PhD holders conducted in 2014 and 2018 in Italy, along with modelling using multinomial logistic regression analyses, we aim to investigate the relationship between family background characteristics and mobility during PhD studies according to different types of international stay. Our results show that both parental education and mother’s economic activity are related to the propensity for studying abroad among PhD candidates, whereas father’s social class seems to have a lower impact on this decision. The gap in doctoral mobility among PhD students with respect to socio-economic status seems also to vary according to the different types of stay abroad. Overall, our findings intend to shed light on potential disparities related to studying abroad among PhD students and their links to family background, which may have future repercussions on students’ occupational prospects.
    Keywords: PhD students, international mobility, family background, higher education, multinomial logistic regression, Italy
    JEL: I24 I23 C25
    Date: 2020–12
  42. By: Fernando Broner; Tatiana Didier; Sergio L. Schmukler; Goetz von Peter
    Abstract: Using country-to-country data, this paper documents a set of novel stylized facts about the rise of the South in global finance. The paper assembles comprehensive bilateral data on cross-border bank loans and deposits, portfolio investment in debt and equity, foreign direct investment, and international reserves. The main finding is that global financial integration with and especially within the South (countries outside the G7 and Western Europe) has grown faster than within the North. By 2018, the South accounted for 24 to 40 percent of international loans and deposits, portfolio investment, and foreign direct investment, an increase of roughly 10 percentage points since 2001. The growing importance of the South is reflected in the intensive and extensive margins, with fast growth in the number of bilateral links. Although China weighs heavily in these trends, international investment in the rest of the South has increased to a similar extent.
    Keywords: international capital flows; emerging economies; international financial integration; foreign direct investment; portfolio investment
    JEL: F21 F36 G15
    Date: 2020–12
  43. By: Fernando Broner; Tatiana Didier; Sergio L. Schmukler; Goetz von Peter
    Abstract: Using country-to-country data, this paper documents a set of novel stylized facts about the rise of the South in global finance. The paper assembles comprehensive bilateral data on cross-border bank loans and deposits, portfolio investment in debt and equity, foreign direct investment, and international reserves. The main finding is that global financial integration with and especially within the South (countries outside the G7 and Western Europe) has grown faster than within the North. By 2018, the South accounted for 24 to 40 percent of international loans and deposits, portfolio investment, and foreign direct investment, an increase of roughly 10 percentage points since 2001. The growing importance of the South is reflected in the intensive and extensive margins, with fast growth in the number of bilateral links. Although China weighs heavily in these trends, international investment in the rest of the South has increased to a similar extent.
    Keywords: International Capital Flows, emerging economies, international financial integration, Foreign Direct Investment, portfolio investment
    JEL: F21 F36 G15
    Date: 2020–12

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