nep-int New Economics Papers
on International Trade
Issue of 2021‒02‒08
forty-four papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Who’s paying for the U.S. tariffs? A longer-term perspective By Amiti, Mary; Redding, Stephen; Weinstein, David E.
  2. Intellectual property and the organization of the global value chain By Bolatto, Stefano; Naghavi, Alireza; Ottaviano, Gianmarco I. P.; Zajc Kejzar, Katja
  3. Trade, productivity and (mis)allocation By Berthou, Antoine; Jong-Hyun Chung, John; Manova, Kalina; Sandoz Dit Bragard, Charlotte
  4. Consequences of a Massive Refugee Influx on Firm Performance and Market Structure By Yusuf Emre Akgunduz; Yusuf Kenan Bagir; Seyit Mumin Cilasun; Murat Gunay Kirdar
  5. Wanted! Free Trade Agreements in the Service of Environmental and Climate Protection By Julia Grübler; Roman Stöllinger; Gabriele Tondl
  6. Does It Matter Where You Invest? The Impact of FDI on Domestic Job Creation and Destruction By Ni, Bin; Kato, Hayato; Liu, Yang
  7. Growing like China: firm performance and global production line position By Davin Chor; Kalina Manova; Zhihong Yu
  8. Timing the Impact of Sanctions on Trade By Dai, Mian; Felbermayr, Gabriel; Kirilakha, Aleksandra; Syropoulos, Constantinos; Yalcin, Erdal; Yotov, Yoto
  9. Gains from Trade: Does Sectoral Heterogeneity Matter? By Rahul Giri; Kei-Mu Yi; Hakan Yilmazkuday
  10. The Abolition of Immigration Restrictions and the Performance of Firms and Workers: Evidence from Switzerland By Andreas Beerli; Jan Ruffner; Michael Siegenthaler; Giovanni Peri
  11. Cumulative economic impact of trade agreements on EU agriculture: 2021 update By Emanuele Ferrari; Thomas Chatzopoulos; Ignacio Perez Dominguez; Pierre Boulanger; Kirsten Boysen-Urban; Mihaly Himics; Robert M’barek
  12. Interdependence of sectors of economic activities for world countries from the reduced Google matrix analysis of WTO data By Célestin Coquidé; José Lages; Dima L. Shepelyansky
  13. Economic Integration and Agglomeration of Multinational Production with Transfer Pricing By Kato, Hayato; Okoshi, Hirofumi
  14. Consequences of FTA Withdrawal: Evidence from "Uxit" By Hinnerk Gnutzmann; Arevik Gnutzmann-Mkrtchyan; Tobias Korn
  15. Welfare Implications of Solving the Distance Puzzle: Global Evidence from the Last Two Centuries By Hakan Yilmazkuday
  16. Breaking the export deadlock. Lessons from the analysis of the Moroccan export profile By Pauline Lectard; Alain Piveteau
  17. Participations in global value chains and service-link costs in emerging ASEAN economies By Taguchi, Hiroyuki
  18. The effects of COVID-19 lockdown on Foreign Direct Investment: evidence from Ecuadorian firms By Camino-Mogro, Segundo; Armijos, Mary
  19. The Political Economy of Deep Integration By Giovanni Maggi; Ralph Ossa
  20. Carbon adjustment mechanisms: Empirics, design and caveats By Garnadt, Niklas; Grimm, Veronika; Reuter, Wolf Heinrich
  21. Measurement of Global Value Chain (GVC) Participation in World Development Report 2020 By Dutta, Sourish
  22. Globalization and Greenhouse Gas Emissions: Evidence from the United States By Arik Levinson
  23. Mechanistic Framework of Global Value Chains By Sourish Dutta
  24. One Nation, One Language? Domestic Language Diversity, Trade and Welfare By Gurevich, Tamara; Herman , Peter; Toubal, Farid; Yotov, Yoto
  25. Globalization and Global Crises: Rest of the World vs. Israel By Assaf Razin
  26. The Impact of Immigration on Workers Protection By Adam Levai; Riccardo Turati
  27. The China Syndrome: A Cross-Country Evidence By Mina Taniguchi; Kozo Kiyota; Sawako Maruyama
  28. 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
  29. The Transformation of the Mexican labour regulation model and its link to North American economic integration By Bensusán Areous, Graciela Irma.
  30. One Nation, One Language? Domestic Language Diversity, Trade and Welfare By Tamara Gurevitch; Peter R. Herman; Farid Toubal; Yoto Yotov
  31. Globalization and pandemics By Pol Antràs; Stephen J. Redding; Esteban Rossi-Hansberg
  32. Trade and geography By Stephen J. Redding
  33. Globalization and conflicts: the good, the bad and the ugly of corporations in Africa By Sonno, Tommaso
  34. Employment Effects of Immigration to Germany in the Period of Migration Policy Liberalization, 2005–2018 By Isil Erol; Umut Unal
  35. Import competition, heterogeneous preferences of managers and productivity By Chen, Cheng; Steinwender, Claudia
  36. Decomposition of Bilateral Trade Flows Using a Three-Dimensional Panel Data Model By Yufeng Mao; Bin Peng; Mervyn Silvapulle; Param Silvapulle; Yanrong Yang
  37. Do you want to migrate to the United States? Migration intentions and Cultural Traits in Latin America By Riccardo Turati
  38. Do Labor and Openness Affect the Performance of the Creative Industries? By Sri Kurniawati
  39. Globalization and Muslims By Hasan, Zubair
  40. Do Leader’s Visits Increase Trade Flows? By Kodila-Tedika, Oasis; Khalifa, Sherif
  41. Intra-Industry Trade, Involuntary Unemployment and Macroeconomic Stability By Le Riche, Antoine; Lloyd-Braga, Teresa; Modesto, Leonor
  42. Importing inequality: immigration and the top 1 percent By Arun Advani; Felix Koenig; Lorenzo Pessina; Andy Summers
  43. The global value chains and the evolution of Chinese economic model By Fernanda Ilheu
  44. Currency Union as a Panacea for ills in Africa: A New Institutional Framework and Theoretical Consideration By Abban, Stanley

  1. By: Amiti, Mary; Redding, Stephen; Weinstein, David E.
    Abstract: Using data from 2018, a number of studies have found that recent U.S tariffs have been passed on entirely to U.S. importers and consumers. These results are surprising given that trade theory has long stressed that tariffs applied by a large country should drive down foreign prices. Using another year of data including significant escalations in the trade war, we find that U.S. tariffs continue to be almost entirely borne by U.S. firms and consumers. We show that the response of import values to the tariffs increases in absolute magnitude over time, consistent with the idea that it takes time for firms to reorganize supply chains. We find heterogeneity in the responses of some sectors, such as steel, where tariffs have caused foreign exporters to drop their prices substantially, enabling them to export relatively more than in sectors where tariff passthrough was complete.
    Keywords: tariffs; trade war; passthrough
    JEL: F13 F14
    Date: 2020–02
  2. By: Bolatto, Stefano; Naghavi, Alireza; Ottaviano, Gianmarco I. P.; Zajc Kejzar, Katja
    Abstract: This paper introduces the concept of intangible assets in a property rights model of sequential supply chains. Firms transmit knowledge to their suppliers to facilitate input customization. Yet, to avoid knowledge dissipation, they must protect the transmitted intangibles, the cost of which depends on the knowledge intensity of inputs and the quality of institutions protecting intellectual property rights (IPR) in supplier locations. When input knowledge intensity increases (decreases) downstream and suppliers' investments are complements, the probability of integrating a randomly selected input is decreasing (increasing) in IPR quality and increasing (decreasing) in the relative knowledge intensity of downstream inputs. Opposite but weaker predictions hold when suppliers' investments are substitutes. Comprehensive trade and FDI data on Slovenian firms' value chains provide evidence in support of our model's predictions. They also suggest that, in line with our model, better institutions may have very different effects on firm organization depending on whether they improve the protection of tangible or intangible assets.
    Keywords: sequential production; intellectual property; intangible assets; appropriability; stage complementarity; usptreamness; firm organization; outsourcing; vertical integration; 822390-MICROPROD-H2020-SC6- TRANSFORMATIONS-2018
    JEL: F12 F14 F21 F23 D23 L22 L23 L24 O34
    Date: 2020–01
  3. By: Berthou, Antoine; Jong-Hyun Chung, John; Manova, Kalina; Sandoz Dit Bragard, Charlotte
    Abstract: We examine the gains from globalization in the presence of firm heterogeneity and potential resource misallocation. We show theoretically that without distortions, bilateral and export liberalizations increase aggregate welfare and productivity, while import liberalization has ambiguous effects. Resource misallocation can either amplify, dampen or reverse the gains from trade. Using model-consistent measures and unique new data on 14 European countries and 20 industries in 1998-2011, we empirically establish that exogenous shocks to export demand and import competition both generate large aggregate productivity gains. Guided by theory, we provide evidence consistent with these effects operating through reallocations across firms in the presence of distortions: (i) Both export and import expansion increase average firm productivity, but the former also shifts activity towards more productive firms, while the latter acts in reverse. (ii) Both export and import exposure raise the productivity threshold for survival, but this cut-off is not a sufficient statistic for aggregate productivity. (iii) Efficient institutions, factor and product markets amplify the gains from import competition but dampen those from export access.
    Keywords: international trade; export demand; import competition; productivity; allocative efficiency; misallocation
    JEL: F10 F14 F43 O24 O40 O47
    Date: 2020–01
  4. By: Yusuf Emre Akgunduz; Yusuf Kenan Bagir; Seyit Mumin Cilasun; Murat Gunay Kirdar
    Abstract: This study combines an administrative dataset of the full population of Turkish firms and the setting of the sudden mass migration of Syrian refugees to Turkey to identify the effect of migrants on firm performance and market structure. As a result of the migrant shock, existing firms expand and new firms are established. Quantitatively, a 10 percentage-point rise in migrant-to-native ratio increases average firm sales by 4% and the number of registered firms by 5%. While the number of firms rises, new firms are more likely to be small. The resulting market structure shows less concentration and firms reduce the share of workers formally employed. We further document an increased propensity to export and an increase in the variety of exported products. The impact on exports is driven by a rise in competitiveness of firms in regions hosting Syrians as a decline in export prices is observed. We also uncover evidence for an effect of migrants’ skills and networks on exports, as the export value and variety of products to the Middle East and North Africa (MENA) region increase more than those to the EU region among exporters while the prices of products exported to the two regions show similar changes.
    Keywords: Refugees, Firm performance, Market structure, Sales, Informality, Exports, Migrant business networks
    JEL: J15 J61 F16 L11
    Date: 2021
  5. By: Julia Grübler (The Vienna Institute for International Economic Studies, wiiw); Roman Stöllinger (The Vienna Institute for International Economic Studies, wiiw); Gabriele Tondl
    Abstract: The effects of international trade on the planet’s climate and environment are manifold and complex. This makes assessment of the impact of free trade agreements (FTAs) a delicate matter. This study provides an overview of the development of sustainability chapters in FTAs and discusses their potential and limitations. It highlights particular industry-specific environmental issues related to EU trade, especially with developing countries, and presents complementary policy options. In this vein, it zooms in on the EU-Mercosur FTA, for which a political agreement was reached in June 2019. It contrasts the estimated cost of increased CO2 emissions attributable to intensified trade relations, as one element of the ‘pains from trade’, with the estimated ‘gains from trade’ arising from lower prices for consumers. The analysis suggests that the benefits outweigh the costs; yet, the result is sensitive to assumed prices for pollutants. Furthermore, the effectiveness of the incorporated sustainability chapter is limited by its enforceability. The latter provokes a discussion on the modernisation of the framework of the World Trade Organization, which currently does not allow environmental challenges to be tackled effectively.
    Keywords: free trade agreements, trade policy, environment, sustainability, WTO, Mercosur
    JEL: F13 F14 F18 F64 O13 Q56
    Date: 2021–01
  6. By: Ni, Bin; Kato, Hayato; Liu, Yang
    Abstract: This study uses unique division-level data of Japanese firms to examine how foreign direct investment (FDI) affects domestic employment. Contrary to most previous studies focusing on the effect on net employment growth, we decompose it into gross job creation and gross job destruction. We find that FDI destination plays an important role: FDI to Asia increases job creation, while FDI to Europe or North America decreases it. A frictional search-and-matching model with heterogeneous jobs can explain the differential effects. The model provides additional predictions on job creation and destruction by job type, which are also empirically confirmed.
    Keywords: Outward FDI, firm-establishment-division-level data, multinational enterprises (MNEs), large-firm search model, high/low-skilled jobs
    JEL: F23 J21 J23
    Date: 2021–01–25
  7. By: Davin Chor; Kalina Manova; Zhihong Yu
    Abstract: Global value chains have fundamentally transformed international trade and development in recent decades. We use matched firm-level customs and manufacturing survey data, together with Input-Output tables for China, to examine how Chinese firms position themselves in global production lines and how this evolves with productivity and performance over the firm lifecycle. We document a sharp rise in the upstreamness of imports, stable positioning of exports, and rapid expansion in production stages conducted in China over the 1992-2014 period, both in the aggregate and within firms over time. Firms span more stages as they grow more productive, bigger and more experienced. This is accompanied by a rise in input purchases, value added in production, and fixed cost levels and shares. It is also associated with higher profits though not with changing profit margins. We rationalize these patterns with a stylized model of the firm lifecycle with complementarity between the scale of production and the scope of stages performed.
    Keywords: Global value chains, production line position, upstreamness, firm heterogeneity, firm lifecycle, China
    JEL: F10 F14 F23 L23 L24 L25
    Date: 2020–09
  8. By: Dai, Mian (School of Economics); Felbermayr, Gabriel (Kiel Institute & Kiel University); Kirilakha, Aleksandra (School of Economics); Syropoulos, Constantinos (School of Economics); Yalcin, Erdal (University of Applied Sciences Constance); Yotov, Yoto (School of Economics)
    Abstract: We capitalize on the latest estimation methods in the empirical gravity literature and the development of a new dataset (the Global Sanctions Data Base, GSDB) to study the evolution, over time, of the effects of sanctions on international trade. Our analysis reveals that the contemporaneous effects of sanctions on trade are large, negative and statistically significant. Additionally, we obtain negative and significant anticipatory effects prior to the official imposition of sanctions, as well as negative and significant post-sanction effects, which disappear gradually approximately eight years after the lifting of sanctions. Our work generates several insights related to the estimation of the impact of sanctions on trade and unveils new avenues for future work. For example, we find the strength of the negative impact of sanctions to rise with the duration of the time that sanctions are in force. Moreover, our analysis of unilateral vs. multilateral and US vs. UN vs. EU sanctions suggests that unilateral sanctions and sanctions imposed by the US stand out as being most effective. A battery of sensitivity experiments confirms the robustness of our main findings and conclusions.
    Keywords: Sanctions; the GSDB; Trade Effects; Timing; Duration; Evolution
    JEL: F13 F14 F51
    Date: 2021–01–20
  9. By: Rahul Giri (International Monetary Fund); Kei-Mu Yi (University of Houston; Federal Reserve Bank of Dallas; NBER); Hakan Yilmazkuday (Department of Economics, Florida International University)
    Abstract: This paper assesses the quantitative importance of including sectoral heterogeneity in computing the gains from trade. Our framework draws from Caliendo and Parro (2015) and has sectoral heterogeneity along five dimensions, including the elasticity of trade to trade costs. We estimate the sectoral trade elasticity with the Simonovska and Waugh (2014) simulated method of moments estimator and micro price data. Our estimates range from 2.97 to 8.94 across sectors. Our benchmark model is calibrated to 21 OECD countries and 20 sectors. We remove one or two sources of sectoral heterogeneity at a time, and compare the gains from trade to the benchmark model. We also compare an aggregate model with a single elasticity to the benchmark model. Our main result from these counterfactual exercises is that sectoral heterogeneity does not always lead to an increase in the gains from trade, which is consistent with the theory.
    Keywords: gains from trade, estimated trade elasticities, simulated method of moments, sectoral heterogeneity, international price dispersion, multi-sector trade
    JEL: F10 F11 F14 F17
    Date: 2021–01
  10. By: Andreas Beerli (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Jan Ruffner (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Michael Siegenthaler (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Giovanni Peri (Department of Economics, UC Davis, USA)
    Abstract: We study a reform that granted European cross-border workers free access to the Swiss labor market and had a stronger effect on regions close to the border. The greater availability of cross-border workers increased foreign employment substantially. Although many cross-border workers were highly educated, wages of highly educated natives increased. The reason is a simultaneous increase in labor demand: the reform increased the size, productivity, and innovation performance of skill-intensive incumbent firms and attracted new firms, creating opportunities for natives to pursue managerial jobs. These effects are mainly driven by firms that reported skill shortages before the reform.
    Keywords: border region, cross-border workers, free movement of persons, firm performance, firm relocation, immigration policy, immigration restrictions, labor mobility, skilled immigration
    JEL: F22 J22 J24 J61
    Date: 2020–08
  11. By: Emanuele Ferrari (European Commission – JRC); Thomas Chatzopoulos (European Commission – JRC); Ignacio Perez Dominguez (European Commission – JRC); Pierre Boulanger (European Commission – JRC); Kirsten Boysen-Urban (European Commission – JRC); Mihaly Himics (European Commission – JRC); Robert M’barek (European Commission – JRC)
    Abstract: This report investigates the potential effects of 12 free trade agreements (FTAs) under the current EU trade agenda. For this, it quantifies the cumulated sectoral impacts in terms of bilateral trade, production, demand, and price developments. Moreover, it provides insights on the evolution of supply, demand, and farm-gate prices for the most relevant EU agricultural commodity markets. In contrast to a forecast exercise, this analysis compares two variants of a trade liberalisation scenario (conservative and ambitious) to a business-as-usual (baseline) situation in 2030. The study confirms that the analysed free trade agreements have the potential to benefit the EU agri-food sector when considered simultaneously. It also highlights the vulnerability of the beef, sheep meat, poultry, sugar, and rice sectors.
    Keywords: CGE; PE; modelling; trade; agriculture; EU
    JEL: C68 F11 F17 Q17
    Date: 2021–01
  12. By: Célestin Coquidé (UTINAM - Univers, Transport, Interfaces, Nanostructures, Atmosphère et environnement, Molécules (UMR 6213) - INSU - CNRS - Institut national des sciences de l'Univers - CNRS - Centre National de la Recherche Scientifique - UFC - Université de Franche-Comté - UBFC - Université Bourgogne Franche-Comté [COMUE]); José Lages (UTINAM - Univers, Transport, Interfaces, Nanostructures, Atmosphère et environnement, Molécules (UMR 6213) - INSU - CNRS - Institut national des sciences de l'Univers - CNRS - Centre National de la Recherche Scientifique - UFC - Université de Franche-Comté - UBFC - Université Bourgogne Franche-Comté [COMUE]); Dima L. Shepelyansky (Information et Chaos Quantiques (LPT) - LPT - Laboratoire de Physique Théorique - IRSAMC - Institut de Recherche sur les Systèmes Atomiques et Moléculaires Complexes - INSA Toulouse - Institut National des Sciences Appliquées - Toulouse - INSA - Institut National des Sciences Appliquées - UT3 - Université Toulouse III - Paul Sabatier - Université Fédérale Toulouse Midi-Pyrénées - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We apply the recently developed reduced Google matrix algorithm for the analysis of the OECD-WTO world network of economic activities. This approach allows to determine interdependences and interactions of economy sectors of several countries, including China, Russia and USA, properly taking into account the influence of all other world countries and their economic activities. Within this analysis we also obtain the sensitivity of economy sectors and EU countries to petroleum activity sector. We show that this approach takes into account multiplicity of network links with economy interactions between countries and activity sectors thus providing more rich information compared to the usual export-import analysis.
    Keywords: World Trade Organization,networks,Google matrix,Markovian process,PageRank
    Date: 2020–12–13
  13. By: Kato, Hayato; Okoshi, Hirofumi
    Abstract: Do low corporate taxes always favor multinational production in the course of economic integration? We propose a two-country model in which multinationals choose the locations of production plants and foreign distribution affiliates and shift profits between home plants and foreign affiliates by manipulating transfer prices in intra-firm trade. We show that when trade costs are high, plants are concentrated in the low-tax country, but surprisingly this location pattern reverses when they are low. Unlike existing models with single-plant firms, the impact of economic integration is non-monotonic, which we empirically confirm: a fall in trade costs first decreases and then increases the share of plants in the high-tax country. We also analyze tax competition and find that allowing for transfer pricing makes competition tougher, indicating a possibility of international coordination on transfer-pricing regulation making the world better off.
    Keywords: Profit shifting; Multinational firms; Intra-firm trade; Trade costs; Foreign direct investment (FDI)
    JEL: F12 F23 H25 H26
    Date: 2021–01–25
  14. By: Hinnerk Gnutzmann; Arevik Gnutzmann-Mkrtchyan; Tobias Korn
    Abstract: We use a unique case study to estimate the effect of withdrawing from a free trade agreement on international trade. Lately, the political opposition to international economic cooperation has been on the rise, but little is known about how the withdrawal from a trade agreement affects trade. We analyze a quasi-natural experiment to provide first empirical evidence. In 2004, Estonia joined the European Union, which mandated that it withdraws from its FTA with Ukraine (“Uxit”). Based on the gravity model of international trade, we provide evidence from triple difference–in–differences as well as PPML panel estimations that trade volumes between Estonia and Ukraine fell by more than 20%. We find that withdrawing an FTA revokes all benefits and that no institutional memory is left behind. General equilibrium estimates suggest that FTA withdrawal led to a noticeable loss in welfare of members.
    Keywords: free trade agreement, withdrawal, gravity, European Union, Estonia, Ukraine
    JEL: F13 F14 F15 F17
    Date: 2021
  15. By: Hakan Yilmazkuday (Department of Economics, Florida International University)
    Abstract: This paper theoretically shows that changes in the distance elasticity of trade can be connected to welfare changes that depend on bilateral distance measures and expenditure shares of countries. Empirical results based on international and domestic trade data from the last two centuries show that the negative effects of distance on trade have increased over time when zero trade observations are ignored in inconsistent OLS estimations, confirming the distance puzzle in the literature. The corresponding welfare implications suggest that the world economy has experienced a cumulative welfare loss (about 81%) due to this puzzle in the last two centuries. When the puzzle is solved by considering zero trade observations in PPML estimations, the tables turn such that there are significant welfare gains from trade (about 58%) during the same period due to the decreasing negative effects of distance on trade over time. Welfare gains from further reductions in the negative effects of distance are investigated as well, suggesting significant potential gains from trade in the future.
    Keywords: Welfare Gains from Trade, Distance Elasticity of Trade, Global Welfare
    JEL: F13 F14 F63
    Date: 2021–01
  16. By: Pauline Lectard (GREThA - Groupe de Recherche en Economie Théorique et Appliquée - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique); Alain Piveteau (PRODIG - UMR 215 Prodig - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - IRD [France-Nord] - Institut de Recherche pour le Développement - AgroParisTech, PRODIG - UMR 8586 Prodig - UP1 - Université Panthéon-Sorbonne - IRD [France-Nord] - Institut de Recherche pour le Développement - AgroParisTech - CNRS - Centre National de la Recherche Scientifique, IRD - Institut de Recherche pour le Développement)
    Abstract: Reducing the study of the structural transformation of a country to that of its export profile leads in fact to retain only the liberal position from the "ideological-political duality" of possible positions on the role of international trade in development. Our perspective in this text is different. It does not aim at any form of reductionism, nor does it a priori privilege a model of industrialization in the name of a necessity given by the presumed truth of international markets. Our approach takes note of the strategic choices made by Morocco in favor of an industrialization through export promotion. It proposes to complete the analysis of the economic and political conditions of Moroccan industrialization by an in-depth study of the profile of Moroccan exports. For that purpose, we return in a first point on the role of foreign markets in the recent industrialization strategy of Morocco and draw up an inventory of the structural transformation (I). We then analyze the transformation of the export structure in support of the criteria of diversification and sophistication (II). We then mobilize data and criteria from the work on "product space" to analyze, in Morocco, the tenuous relationship between the transformation of the export profile and structural transformation (III). Clearly, Morocco has successfully seized the opportunities that productive globalization has offered and, in turn, has consolidated sectoral successes by exporting new, more sophisticated and, although still isolated in the Moroccan productive structure, much more centrally located in the product space (automobiles and electrical machinery). However, the risk of seeing an archipelago of export poles along the country's West Atlantic coast without significant impact on structural transformation seems real in view of Morocco's lack of accumulation of production capacity. Capital accumulation per worker, which is relatively low in Morocco, is struggling to improve over the period. As for total factor productivity, it declined significantly to an extremely low level. This result is related to the slow pace of structural transformation, which, consequently, does not seem to be the result of a simple transformation of the export profile in Morocco.
    Abstract: Réduire l'étude de la transformation structurelle d'un pays à celle du profil de ses exportations conduit en fait à ne retenir de la « dualité idéologico-politique » des positions possibles sur le rôle du commerce international dans le développement que la seule position libérale. Notre perspective dans ce texte est différente. Elle ne vise aucune forme de réductionnisme, ni ne privilégie a priori un modèle d'industrialisation au nom d'une nécessité donnée par la vérité présumée des marchés internationaux. Notre approche prend acte des choix stratégiques fait par le Maroc en faveur d'une industrialisation par la promotion des exportations et propose de compléter l'analyse des conditions économiques et politiques de l'industrialisation marocaine du programme de recherche « Made in Morocco » par l'étude approfondie du profil des exportations marocaines. Pour cela nous revenons dans un premier point sur le rôle des marchés extérieurs dans la stratégie d'industrialisation récente du Maroc et dressons un état des lieux de la transformation structurelle (I). Nous analysons ensuite la transformation de la structure des exportations à l'appui des critères de diversification et de sophistication (II). Puis nous mobilisons les données et critères issus des travaux sur « l'espace des produits » pour analyser, au Maroc, la relation restée ténue entre la transformation du profil des exportations et la transformation structurelle (III). Manifestement, le Maroc a su capter avec succès les opportunités que la mondialisation productive lui a offertes et consolider, en retour, des réussites sectorielles en exportant des produits nouveaux, plus sophistiqués et, bien qu'encore isolés dans la structure productive marocaine, situés beaucoup plus au centre de l'espace des produits (automobiles et machines électriques). Pour autant, le risque de voir s'installer le long de la façade ouest-atlantique du pays un archipel de pôles d'exportations sans impact significatif sur la transformation structurelle paraît réel au regard du manque d'accumulation de capacités de production du Maroc. L'accumulation de capital par travailleur, relativement basse au Maroc, peine à s'améliorer au cours de la période. Quant à la productivité totale des facteurs, elle baisse de façon significative pour atteindre un niveau extrêmement bas. Ce résultat est à relier à la lenteur de la transformation structurelle qui, en conséquence, ne semble pas pouvoir, au Maroc, provenir d'une simple transformation du profil des exportations.
    Keywords: Industrial policy,Exports,Middle-income trap,Exports Diversification,Exports sophistication,Structural transformation,Morocco,Politique industrielle,Exportations,Diversification,Sophistication,Transformation structurelle,Maroc
    Date: 2020
  17. By: Taguchi, Hiroyuki
    Abstract: This paper aims to examine the participations in global value chains (GVCs) on emerging ASEAN economies by using the UNCTAD-Eora value-added-trade database, and to investigate a major factor that makes the difference in GVCs participations by using the fragmentation model, in particular, with a focus on the factor of service-link costs. The statistical observations demonstrated that the GVCs participations in ASEAN economies has made great progresses during the 1990s along with their per capita GDP growth, and also that there has been a large gap in the degree of GVCs participations between the forerunners and the latecomers in ASEAN economies. The empirical estimation of the fragmentation model could identify the quantitative linkage between GVCs participations and “logistics performances” representing service-link costs in emerging ASEAN economies. Since the logistics performances are one of manageable factors for countries’ strategies, there should still be the policy space for ASEAN latecomers to catch up with the forerunners in GVCs integrations.
    Keywords: Global value chains, Service-link costs, Logistics performances, ASEAN forerunners and latecomers, Fragmentation model
    JEL: F12 F13 F14 O53
    Date: 2021
  18. By: Camino-Mogro, Segundo; Armijos, Mary
    Abstract: Foreign Direct Investment has been described as an important factor that contributes to economic growth being of particular importance in developing countries. In this sense, we assess how lockdown/ restriction policies may affect FDI inflows. For this, we exploit the exogenous variation coming from the COVID-19 pandemic and its lockdown policies in Ecuador. We use a regression discontinuity in time design, jointly with official administrative FDI data, and find an overall large decrease in FDI inflows (-63%). We also assess differences across FDI sources and find stronger effects coming from capital increases (-64%) compared to new firm constitutions. In addition, we explore heterogeneity in terms of FDI’s country of origin and find that the negative effects are mostly from inflows coming from north and south American investments. We also assess whether partial re-opening of activities positively affects FDI, for this we use the two largest cities in the country where we do not find any significant effect. Our main conclusion is that lockdown policies have a negative impact on FDI inflows, result that is of high policy relevance which can be a tool to design investment attraction policies.
    Keywords: COVID-19; Lockdown; Foreign Direct Investment; Regression Discontinuity; Ecuador
    JEL: D00 D62 D81 F21
    Date: 2020–11–10
  19. By: Giovanni Maggi; Ralph Ossa
    Abstract: Modern trade agreements no longer emphasize basic trade liberalization but instead focus on international policy coordination in a much broader sense. In this paper we introduce the emerging literature on the political economy of such deep integration agreements. We organize our discussion around three main points. First, the political conflict surrounding trade agreements is moving beyond the classic antagonism of exporter interests who gain from trade and import-competing interests who lose from trade. Second, there is a more intense popular backlash against deep integration agreements than there was against shallow integration agreements. And third, the welfare economics of trade agreements have become more complex, in the sense that the insight that "free trade is good" is no longer sufficient as a guide to evaluating the efficiency of international agreements.
    JEL: F13
    Date: 2020–12
  20. By: Garnadt, Niklas; Grimm, Veronika; Reuter, Wolf Heinrich
    Abstract: This article explores the design of Carbon Adjustment Mechanisms based on an analysis of historical data, the existing literature as well as theoretical considerations. In the empirical analysis we quantify territorial emissions as compared to the CO2 footprints for countries within the EU-ETS area and globally, we show which (mostly upstream) industries account for the majority of emissions, and identify how their emissions are imported embedded in final or intermediate products from more downstream industries. In an analysis based on gravity equations, we find evidence for carbon leakage in some emission-intensive industries, but only small overall effects. Based on our own evidence and the current literature, we conclude that - if a Carbon Adjustment Mechanism is to be established - focusing on emissions intensive industries could balance excessive bureaucratic burden and carbon leakage mitigation. To be effective, such a system should also extend to embedded emissions in downstream industries to avoid a shift of imports down the value chain. Concerns with regard to international trade relations could be addressed by not implementing Carbon Adjustment Mechanisms unilaterally, but rather using them as the basis for a cooperative approach to climate protection jointly with the most important trading partners.
    Keywords: Carbon border adjustment,Carbon leakage,Carbon tax,Climate policy
    JEL: Q56 Q53 F18 F14 F55 F64
    Date: 2020
  21. By: Dutta, Sourish
    Abstract: As we can understand with the spread of GVCs, a lot of new questions emerge regarding the measurement of participation and positioning in the globalised production process. The World Development Report (WDR) 2020 explains the GVC phenomenon and then focus on participation and the prospects especially in a world of change in technology. From the overview section, we can figure out that nowadays, goods and services flow across borders as intermediate inputs rather than final goods. In traditional trade, we need two countries with the notions of export and import. However, in GVC trade, the goods and services cross borders multiple times requiring more than two countries. Remarkable improvements in information, communication, and transport technologies have made it possible to fragment production across national boundaries. So the question is: how to conceptualise this type of new trade to justify the measurement of participation.
    Keywords: Global Value Chains, Global Production Network, International Trade
    JEL: F0 F1 F2
    Date: 2020–10–10
  22. By: Arik Levinson (Department of Economics, Georgetown University)
    Abstract: The US has been a global leader in regulating local air pollution and a global laggard in regulating greenhouse gases (GHGs). For decades, critics of US policy have expressed fears that stringent US regulations on local air pollution would lead to pollution havens overseas. Prior research suggests that has not happened. But what about the converse fear? Are the less stringent US climate regulations causing the US to become a pollution haven for other countries’ GHG-intensive industries? We provide a decomposition of US manufacturing GHG emissions and find no evidence of offshoring either to or from the United States since 1990.
    Keywords: Climate, International Trade, Sector Decomposition
    JEL: Q51 Q53 H41
  23. By: Sourish Dutta
    Abstract: Indeed, the global production (as a system of creating values) is eventually forming like a gigantic and complex network/web of value chains that explains the transitional structures of global trade and development of the global economy. It's truly a new wave of globalisation, and we term it as the global value chains (GVCs), creating the nexus among firms, workers and consumers around the globe. The emergence of this new scenario asks: how an economy's firms, producers and workers connect in the global economy. And how are they capturing the gains out of it in terms of different dimensions of economic development? This GVC approach is very crucial for understanding the organisation of the global industries and firms. It requires the statics and dynamics of diverse players involved in this complex global production network. Its broad notion deals with different global issues (including regional value chains also) from the top down to the bottom up, founding a scope for policy analysis (Gereffi & Fernandez-Stark 2011). But it is true that, as Feenstra (1998) points out, any single computational framework is not sufficient to quantification this whole range of economic activities. We should adopt an integrative framework for accurate projection of this dynamic multidimensional phenomenon.
    Date: 2021–01
  24. By: Gurevich, Tamara (U.S. International Trade Commission); Herman , Peter (U.S. International Trade Commission); Toubal, Farid (University of Paris-Dauphin); Yotov, Yoto (School of Economics)
    Abstract: Using new data on linguistic diversity across and within countries, we examine novel channels though which language affects trade patterns and economic welfare. We find that linguistic similarity within a country accounts for about 10 percent of estimated `home bias', demonstrating the importance of shared languages for domestic integration. To highlight the general equilibrium implications of domestic language proximity, we simulate the repeal of Quebec's Bill 101, which made French an official language in Canada and established fundamental language rights for French-speakers. The analysis demonstrates that domestic language diversity has significant implications for Canada's welfare but also sizable economic consequences that stretch far beyond its borders.
    Keywords: Common language; ethno-linguistic diversity; identity; international trade; domestic trade; domestic trade costs; welfare
    JEL: C54 D60 F14 F19 Z13
    Date: 2021–01–20
  25. By: Assaf Razin
    Abstract: Post WWII globalization forces are facing headwinds in the form of global crises-the “The Great Recession” and the “The Pandemic Recession”. Israel’s trade and financial globalization, however, is steadily rising. The pandemic-induced slump in economic activity is deep, as consumer spending, investment spending, and export demand tumble. Central banks, tied down by the zero interest rate, resort to semi-fiscal expansionary policies. Indeed, the stabilization burden falls on fiscal policy. The paper provides an overview of the new globalization trends in the world and in Israel, with emphasis on the role of global crises, the Global Financial Crisis, and the Pandemic Crisis in changing globalization long-term trends. When the coronavirus hit, supply chains and production have been disrupted. However, the impact of the pandemic shock is not on the supply side only. On the demand side, the desire to invest has plunged, while people across the rich world are now saving much of their income. Would this short-term changes can reinforce the re-trending of the globalization, which is observed since the Global Financial Crisis? The paper focuses on globalization and provides comparative overview of experiences of the advanced economies and Israel.
    JEL: F1 F3
    Date: 2021–01
  26. By: Adam Levai (IRES/LIDAM, UCLouvain); Riccardo Turati (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona)
    Abstract: Even though the current literature investigating the labor market impact of immigration assumes implicitly or explicitly labor market regulation as exogenous to immigration (both in terms of size and composition), this is not necessarily the case. This paper shows that the composition of the immigrant population affects, in the medium and long-run, the labor market regulation. We build a new workers protection index based on 36 labor law variables over a sample of 70 developed and developing countries from 1970 to 2010. Exploiting a dynamic panel setting using both internal and external instruments, we find that migrants impact the destination countries’ workers protection mainly through the degree of workers protection experienced in their origin countries, captured by an ”epidemiological” effect. On the other hand, the size of the immigrant population has a small and rather insignificant effect. The results are robust to alternative and competing immigration effects such as diversity, polarization and skill-selection. The effects are particularly strong across two dimensions of the workers protection index: worker representation laws and employment forms laws. This paper provides suggestive evidence that immigrants’ participation to unions and its implications for the political actors is one of the potential mechanisms through which the epidemiological effect could materialize. Finally, calculations based on the estimated coefficients suggest that immigration contributes to a reduction of the degree of workers protection, particularly in OECD high-income countries
    Keywords: Migration, Labor Market Institutions, Labor Regulation, Workers Protection
    Date: 2021–01
  27. By: Mina Taniguchi (Department of Economics and MGSE, University of Munich); Kozo Kiyota (Keio Economic Observatory, Keio University); Sawako Maruyama (Faculty of Economics, Kindai University)
    Abstract: While in many advanced countries the increasing import competition from China on employment is a major concern for policymakers and the general public, its impact of Chinese import competition could be different across countries, depending upon the volume and the composition of the products. This paper examines the impact of the China shock on employment in six advanced countries. We find that the import penetration of final goods from China has negative effects on manufacturing employment in these countries, whereas the import penetration of intermediate inputs from and the exports to China could have positive effects. Moreover, such positive effects could offset or even outweigh the negative effects in some countries. These results together suggest that a careful interpretation is needed when evaluating the external validity of the China shock that is obtained in one country.
    Keywords: The China shock, Cross-country comparisons, Final goods and intermediate inputs, Imports and exports
    JEL: F16 J21
    Date: 2021–01–07
  28. 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 reveal that the number of newly posted jobs within the first 14 weeks after the Wuhan lockdown on January 23, 2020, was about 31% lower than that of comparable periods in 2018 and 2019. We show that, via the global supply chain, COVID-19 cases abroad and pandemic-control policies by foreign governments reduced new-job creation in China by 11.7%. We also find that firms most exposed to international trade outperformed other firms at the beginning of the pandemic but underperformed during the recovery as the virus spread throughout the world.
    Keywords: COVID-19, labor demand, global supply chains, trade, china, employment
    Date: 2020–11
  29. By: Bensusán Areous, Graciela Irma.
    Abstract: This working paper analyses the transformations of the Mexican labour regulation model in its different phases. The first phase is selective inclusion of waged workers among the beneficiaries of the development driven by the internal market. The second phase includes the deactivation of labour protections in the wake of successive economic crises and the move towards a growth model based on exports in the framework of the North American Free Trade Agreement (NAFTA). The third phase begins with the deep institutional reforms linked to renewed trade negotiations with the United States. Finally, the paper presents the genesis and characteristics of the new labour regulation model, which is based on the 2017 constitutional reforms and the 2019 Federal Labour Law, and examines the impact that these developments have had on workers. The paper has at its core the linkages between the Mexican labour regulation model and trade liberalization.
    Date: 2020
  30. By: Tamara Gurevitch; Peter R. Herman; Farid Toubal; Yoto Yotov
    Abstract: Using new data on linguistic diversity across and within countries, we examine novel channels though which language affects trade patterns and economic welfare. We find that linguistic similarity within a country accounts for about 10 percent of estimated `home bias', demonstrating the importance of shared languages for domestic integration. To highlight the general equilibrium implications of domestic language proximity, we simulate the repeal of Quebec's Bill 101, which made French an official language in Canada and established fundamental language rights for Frenchspeakers. The analysis demonstrates that domestic language diversity has significant implications for Canada's welfare but also sizable economic consequences that stretch far beyond its borders.
    Keywords: Common Language;Ethno-linguistic Diversity;Identity;International Trade;Domestic Trade;Domestic Trade Costs;Welfare
    JEL: D60 F14 F19 C54 Z13
    Date: 2020–12
  31. By: Pol Antràs; Stephen J. Redding; Esteban Rossi-Hansberg
    Abstract: We develop a model of human interaction to analyze the relationship between globalization and pandemics. Our framework provides joint microfoundations for the gravity equation for international trade and the Susceptible-Infected-Recovered (SIR) model of disease dynamics. We show that there are cross-country epidemiological externalities, such that whether a global pandemic breaks out depends critically on the disease environment in the country with the highest rates of domestic infection. A deepening of global integration can either increase or decrease the range of parameters for which a pandemic occurs, and can generate multiple waves of infection when a single wave would otherwise occur in the closed economy. If agents do not internalize the threat of infection, larger deaths in a more unhealthy country raise its relative wage, thus generating a form of general equilibrium social distancing. Once agents internalize the threat of infection, the more unhealthy country typically experiences a reduction in its relative wage through individual-level social distancing. Incorporating these individual-level responses is central to generating large reductions in the ratio of trade to output and implies that the pandemic has substantial effects on aggregate welfare, through both deaths and reduced gains from trade.
    Keywords: Globalization, Pandemics, Gravity Equation, SIR Model
    JEL: F15 F23 I10
    Date: 2020–09
  32. By: Stephen J. Redding
    Abstract: This paper reviews recent research on geography and trade. One of the key empirical findings over the last decade has been the role of geography in shaping the distributional consequences of trade. One of the major theoretical advances has been the development of quantitative spatial models that incorporate both exogenous first-nature geography (natural endowments) and endogenous second-nature geography (the location choices of economic agents relative to one another) as determinants of the distribution of economic activity across space. These models are sufficiently rich to capture first-order features of the data, such as gravity equations for flows of goods and people. Yet they remain sufficiently tractable as to permit an analytical characterization of the properties of the general equilibrium and facilitate counterfactuals for realistic policy interventions. We distinguish between models of regions or systems of cities (where goods trade and migration take center stage) and models of the internal structure of cities (where commuting becomes relevant). We review some of key empirical predictions of both sets of theories and show that they have been remarkably successful in rationalizing the empirical findings from reduced-form research. Looking ahead, the combination of recent theoretical advances and novel geo-coded data on economic interactions at a fine spatial scale promises many interesting avenues for further research, including discriminating between alternative mechanisms for agglomeration, understanding the implications of new technologies for the organization of work, and assessing the causes, consequences and potential policy implications of spatial sorting.
    Keywords: trade, geography, local labor markets
    JEL: F1 J4 R1 R4
    Date: 2020–09
  33. By: Sonno, Tommaso
    Abstract: Using georeferenced data on the affiliates and headquarters of multinational enterprises together with georeferenced conflict data, this work is the first to establish a causal link between the activities of multinational enterprises and violence. The results indicate that activities which increase local human capital, such as education and health, decrease the probability of civil conflict, while the activity of sectors intense in scarce resources, in particular forestry, increases conflict. The increase in the likelihood of conflict is amplified especially in areas where the leading ethnic groups can place the burden of land deals on unrepresented groups.
    Keywords: multinationals; civil conflict; FDI; ethnic minority
    JEL: C23 D74 F23 L70 O13
    Date: 2020–01
  34. By: Isil Erol (Queensland University of Technology); Umut Unal (Philipps University Marburg)
    Abstract: Germany has undergone a significant migration policy shift since the early 2000s. This paper examines the total employment effect of immigration during the liberalization of migration policies from 2005 to 2018 using a spatial approach. A set of methods, along with static and dynamic macro-econometric models, were applied on a balanced panel formed by a unique and manually collected data for 156 statistical regions based on the definition of the German Federal Employment Agency. We find suggestive evidence that there has been a significant adverse impact of new immigrants on the overall employment rate, and this negative effect is substantially larger than those reported in previous studies on the employment effect of immigration in the German labour market. In a further step, we divide our sample into two subsamples to capture the employment effect of the massive humanitarian inflows that began in 2015. Our results indicate that, in addition to the new immigrants' lower rate of integration into the local labour markets, a sudden influx of asylum seekers may possibly lead to a substantial fall in the employment rates, because asylum seekers are not immediately allowed to work in the country.
    Keywords: Immigration, Labour market, Employment, Labour Economics, Asylum seekers
    JEL: J00 J15 J61
    Date: 2021
  35. By: Chen, Cheng; Steinwender, Claudia
    Abstract: When managers have objectives beyond maximizing monetary profits, inefficiencies may arise. An increase in competition may then force managers to improve the productivity of the firm in order to ensure survival. While this hypothesis has received ample theoretical attention, empirical evidence is scarce, mainly because preferences of managers are typically unobserved. In this paper, we exploit the fact that a large literature has documented specific non-monetary preferences of family managers. Using Spanish firm-level data, we compare how family-managed and professionally-managed firms react to import competition shocks. We find that import competition leads to productivity increases in family-managed firms that are initially unproductive. Productivity improvements are driven by family management as opposed to family ownership or non-managing family members. Furthermore, we show that these managers increase efficiency by reducing material usage, which is consistent with them trying to increase their short-term cash flow in order to survive. Finally, productivity improvements seem to be particularly pronounced in multi-generational family firms that also introduce organizational changes.
    Keywords: import competition; productivity; family firms; managers
    JEL: D23 F14 L21 L22
    Date: 2020–01
  36. By: Yufeng Mao; Bin Peng; Mervyn Silvapulle; Param Silvapulle; Yanrong Yang
    Abstract: This study decomposes the bilateral trade flows using a three-dimensional panel data model. Under the scenario that all three dimensions diverge to infinity, we propose an estimation approach to identify the number of global shocks and country-specific shocks sequentially, and establish the asymptotic theories accordingly. From the practical point of view, being able to separate the pervasive and nonpervasive shocks in a multi-dimensional panel data is crucial for a range of applications, such as, international financial linkages, migration flows, etc. In the numerical studies, we first conduct intensive simulations to examine the theoretical findings, and then use the proposed approach to investigate the international trade flows from two major trading groups (APEC and EU) over 1982-2019, and quantify the network of bilateral trade.
    Date: 2021–01
  37. By: Riccardo Turati (IRES/LIDAM, UCLouvain; Departament d'Economia Aplicada, Universitat Autonoma de Barcelona)
    Abstract: This paper empirically investigates whether aspiring emigrants from nineteen Latin American countries to the United States hold a different set of cultural traits compared to stayers. Using Gallup World Poll data and proxy on individual pro social behaviors and political attitudes towards the president of the United States, we observe that aspiring migrants share more pro social behaviors and support more the U.S. political leader than stayers. We find that already existing migration network reduces cultural selection on social behaviors, which holds mainly among the young and less educated population, and in less developed countries. The paper shows that such cultural self-selection is unlikely to affect the distribution of cultural traits in the origin countries, avoiding potential negative effects for Latin American countries. If any, culturally selected immigrants should have a beneficial effect to the United States
    Keywords: International migration, migration intentions, self-selection, cultural traits, Latin America region
    Date: 2021–01
  38. By: Sri Kurniawati (Universitas Tanjungpura, Pontianak, 78124, Indonesia Author-2-Name: Nindya Lestari Author-2-Workplace-Name: Universitas Tanjungpura, Pontianak, 78124, Indonesia Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: Objective - The economy cannot be separated from the influence of the civilization advancement in which the economy and business today have experienced a paradigm shift, that is, from a resource economy to an economic paradigm based on knowledge and creativity. One of the industries that is growing in line with current economic progress is the creative industry. This quantitative descriptive research aims to analyze labor and exports which affected the Gross Domestic Product (GDP) of the creative economy sector in Indonesia from 2011 to 2018.Methodology/Technique - The data used in this study is secondary data from the official website of Indonesia Central Bureau of Statistics and UMCOMTRADE 2-digit SITC code revision 4. Findings & Novelty - From the research finding, two main features were obtained. The first was regarding the labor of the creative industry sub-sector which has positive effect on the GDP of the creative industry. In contrast, the second is concerned with the export of the creative industry sub-sector which depicts the contradictory impact on the GDP of the creative industry. Type of Paper - Empirical.
    Keywords: Gross Domestic Product; labor; exports; creative economy sector.
    JEL: N1 F16 J01 O10
    Date: 2020–12–31
  39. By: Hasan, Zubair
    Abstract: This essay discusses the content and evolution of globalization as the blueprint for economic development to shape a new world order, and examine the consequences of that order for Muslim countries. Globalization is, in fact, the revitalization of the age long gospel of lasses faire or freedom of trade that helped the Europeans to colonize the vast tracts of land in other continents to capture their resources and markets. To continue dominating the freed developing economies for that very reason, designed is now a instrument called ‘globalization.’ The ideology, led by the US, stands on three pillars –privatization, internationalization and free movement of goods and capital across the borders. However, there has been a history of resistance to free trade movement the French had launched to counter mercantilist restrictions on trade hurting them. Free trade would benefit all, they contended. Fredrik List, a German economist, countered the contention as found it hurtful to his country. Economically weak must be protected against the powerful until developed. Protection emerged as a counter plea to freedom of trade. It was not the idea of globalization that hurt the Muslim countries so much as its aggressive thrusting on the weak. This essay discusses the content and evolution of globalization as the blueprint for economic development to shape a new world order, and examine the consequences of that order for Muslim countries. Globalization is, in fact, the revitalization of the age long gospel of lasses faire or freedom of trade that helped the Europeans to colonize the vast tracts of land in other continents to capture their resources and markets. To continue dominating the freed developing economies for that very reason, designed is now a instrument called ‘globalization.’ The ideology, led by the US, stands on three pillars –privatization, internationalization and free movement of goods and capital across the borders. However, there has been a history of resistance to free trade movement the French had launched to counter mercantilist restrictions on trade hurting them. Free trade would benefit all, they contended. Fredrik List, a German economist, countered the contention as found it hurtful to his country. Economically weak must be protected against the powerful until developed. Protection emerged as a counter plea to freedom of trade. It was not the idea of globalization that hurt the Muslim countries so much as its aggressive thrusting on the weak.
    Keywords: Globalization; Free trade; Protection; Muslim countries
    JEL: Z1
    Date: 2020–09
  40. By: Kodila-Tedika, Oasis; Khalifa, Sherif
    Abstract: This paper examines the effect of the number of visits by U.S. officials to a country, and the number of visits of the country’s leaders to the United States, on bilateral trade flows between the country and the United States. To achieve our objective, we compile novel variables that indicate the number of official visits from 1960-2015 from the historical archives of the U.S. State Department. To deal with potential endogeneity, we use instrumental variables panel data techniques such as dynamic GMM and systems GMM estimations. The estimation results show that the visits by U.S. Presidents and Secretaries of State do not have a statistically significant effect on bilateral trade flows, while the leader’s trips to the United States have a statistically significant positive effect. This indicates that the leader’s trips to the United States are taken as an opportunity to promote free bilateral trade flows between the country and the United States, while the visits of American officials focus on other issues.
    Keywords: Trade, Executive, Leader’s Trips
    JEL: F10 H11
    Date: 2021–01–26
  41. By: Le Riche, Antoine (Sichuan University); Lloyd-Braga, Teresa (Católica Lisbon); Modesto, Leonor (Universidade Catolica Portuguesa, Lisbon)
    Abstract: We study the impact of intra-industry trade and capital mobility on steady state welfare and on the stability properties of two countries with identical technologies and preferences. We consider a two-factor overlapping generations model, featuring one-sector of differentiated goods with taste for variety. There is imperfect competition in the output market and increasing returns to scale in production (fixed costs and externalities). In one country there is full employment and saddle path stability in autarky, whereas in the other there are efficiency wages, and the autarkic equilibrium may be locally indeterminate. After opening the borders, the rigid wage country may export indeterminacy to the full employment country, particularly if it is big enough. In contrast, when the full employment country is sufficiently big, local indeterminacy, and therefore expectations driven fluctuations may be eliminated in the world. In any case, stochastic and deterministic fluctuations (associated with local indeterminacy and bifurcations) are possible with smaller externalities, whatever the relative size of the two countries. Steady state welfare improves in the full employment country with free trade and capital mobility, while unemployment increases in the country with labor market rigidities, reducing welfare. We also find that taste for variety (and therefore intra-industry trade), reduces the likelihood of local indeterminacy, but leads to flip bifurcations under more plausible values of the model parameters.
    Keywords: bifurcations, indeterminacy, intra-industry trade, taste for variety, involuntary unemployment
    JEL: C62 E32 F12 F43 F44 O41
    Date: 2021–01
  42. By: Arun Advani; Felix Koenig; Lorenzo Pessina; Andy Summers
    Abstract: In this paper we study the contribution of migrants to the rise in UK top incomes. Using administrative data on the universe of UK taxpayers we show migrants are over-represented at the top of the income distribution, with mi-grants twice as prevalent in the top 0.1% as anywhere in the bottom 97%. These high incomes are predominantly from labour, rather than capital, and migrants are concentrated in only a handful of industries, predominantly finance. Almost all (85%) of the growth in the UK top 1% income share over the past 20 years can be attributed to migration.
    JEL: H2 J3 J6
    Date: 2020–09
  43. By: Fernanda Ilheu
    Abstract: According to the Word Bank in the first 38 years of China Economic Reform took 700 million people out poverty line in China at same time benefiting the Global South economy due to the integration of the Transnational Enterprises Global Value Chains with China. Chinese government understood the economic rational of Global Value Chains, Flying Geese Model and Foreign Direct Investment Theories and introduced policies to attract foreign capital, technology, production, and foreign buyers, placing China as the final stage of the production networks in Asia and also transforming China in the biggest buying market of many resources and energy suppliers from less developed countries in Asia, Africa and South America. But a new model of Chinese economic development even more interconnected and interdependent with the world is now on move. Even quite before the world acknowledge the protectionist mindset of the US in Trump era, Chinese President Xi Jinping launched in 2013 a very ambitious initiative under the name of “One Road One Belt the 21st-Century Maritime Silk Road†to enhance a new stage of world globalization, which together with two complimentary initiatives the “International Production Cooperation†and “Third-country Market Cooperation†and in complementarity with the “Made in China 2025†and “Internet Plus†plans will lead China to develop Global Value Chains leaded by Chinese companies and integrating countries of Europe, Africa, Asia, and South America.
    Date: 2020–06
  44. By: Abban, Stanley
    Abstract: Currency union feasibility is the major topic of discourse in most developing economies especially based on the Optimal Currency Area theory. Given this, developing countries have peculiar characteristics that favour the feasibility of forming a currency union that is not accounted for based on the OCA criteria. Also, Currency union is viewed as a panacea for curing ills in struggling economies when the appropriate institutional setting is laid out. Given this, the study showed the channels to which currency union curb ills and suggests an institutional framework to consolidate the gains from trade. The study further argues the need for a new theory to evaluate currency union feasibility hence suggest an intuition ‘Optimal Cost Phase’ as a measure for currency union feasibility which can apply to both developing and developed countries. The study concludes that there is a need for a new institutional framework to ensure transparency and the realization of the policy on a common currency.
    Keywords: Currency Union, Optimal Currency Area (OCA), Optimal Cost Phase (OCP), institutions, common currency
    JEL: E6 F1 F4 F45
    Date: 2020–12–11

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