nep-int New Economics Papers
on International Trade
Issue of 2021‒02‒22
thirty papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Integrating South Asia into Asia: Evidence from Trade Statistics By Sapkota, Jeet Bahadur
  3. Why We Still Need Free Trade and Globalization By Dalibor Rohac
  4. International Trade in rough diamonds and the Kimberley Process Certification Scheme By Stefan Borsky; Andrea Leiter
  5. Trade and FDI Thresholds of CO2 emissions for a Green Economy in Sub-Saharan Africa By Simplice A. Asongu; Nicholas M. Odhiambo
  7. PRODUCTIVITY ATTRIBUTABLE TO OFFSHORING IN SELECTED COUNTRIES By D. Victoria Decuir – Herrera; Constantin Colonescu; Rafat Alam
  8. Quantifying the Impact of Economic Sanctions on International Trade in the Energy and Mining Sectors By Larch, Mario; Shikher, Serge; Syropoulos, Costas; Yotov, Yoto
  9. Dominant Currency Dynamics: Evidence on Dollar-Invoicing from UK Exporters By Meredith Crowley; Lu Han; Minkyu Son
  10. Centrality Bias in Inter-city Trade By Tomoya Mori; Jens Wrona
  11. The Long and Short (Run) of Trade Elasticities By Christoph E. Boehm; Andrei A. Levchenko; Nitya Pandalai-Nayar
  12. Has the Euro paid off? A study of the trade-induced welfare effects of the EMU By Silviano Esteve-Pérez; Salvador Gil-Pareja; Rafael Llorca-Vivero; Jordi Paniagua
  13. Regional Trade Agreements with Global Value Chains By ; ; Francois de Soyres
  14. Trade Wars and Trade Talks Revisited: An extension of the Grossman-Helpman Model (1995) By Meeta Keswani Mehra; Gaurav Bhattacharya
  15. Fighting the soaring prices of agricultural food products. VAT versus Trade tariffs exemptions in a context of imperfect competition in Niger : CGE and micro-simulation approach By Celine de Quatrebarbes; Bertrand Laporte; Stéphane Calipel
  16. Managing Migration Flows Through Foreign Aid By Marchal, Léa; Naiditch, Claire; Simsek, Betül
  17. The Rise of Exceptions and the Eclipse of the Elemental Principle of Most-Favoured-Nation By Shubha Ojha
  18. Graham’s Theory of International Values Revisited: A Ricardian Trade Model with Link Commodities By Sato, Hideo; Assistant, JHET
  20. Escaping the middle income trap and getting economic growth: How does FDI can help the host country? By Nguyen-Huu, Thanh Tam; Pham, Ngoc-Sang
  22. Chapter 1-World's marketplace in the challenges of globalization By Tung, Dao Duy
  23. Emigration and development. What are the links? By Marina Murat
  24. Brexit, EU and UEFA. By Aladetoyinbo, Muyiwa
  25. Leveraging Foreign Direct Investment for Sustainability: An Approach to Sustainable Human Development in Nigeria By Fisayo Fagbemi; Tolulope T. Osinubi
  26. International trade and circular Economy - Policy alignment By Shunta Yamaguchi
  30. Global Value Chains and the transmission of exchange rate shocks to consumer prices By Hadrien Camatte; Guillaume Daudin; Violaine Faubert; Antoine Lalliard; Christine Rifflart

  1. By: Sapkota, Jeet Bahadur
    Abstract: Market-led regional integration in Asia is moving fast, despite the slow progress in establishing an effective Asia-wide regional integration institution. However, how South Asian economies are integrating into the Asian economy remains unclear. Using trade statistics from the Asian Development Bank’s regional integration database, this paper investigates the situation and determinants of trade integration of South Asia into Asia. While the trade volume from South Asia to broader Asia rose sharply from US $18.12 billion in 1990 to US $381.84 billion in 2017, the trade share (of total trade) rose from 27.35% to 40.1% during the same period. However, the regional trade intensity index (TII) of South Asia to Asia declined from 1.27% in 1990 to 1.16% in 2017, indicating the declining importance of Asia vis-à-vis the outside world for South Asia. Using the dynamic panel data approach on the cross-country panel data of five South Asian countries for the period 1990–2017, this study explores the determinants of South Asian trade volumes and share into Asia. The results indicate that the past record of the dependent variables and the aid flows from Asian bilateral donors significantly increased both trade volume and share. Other positive determinants of trade volume are the economy size, trade openness, FDI inflows and ICT access. While the number of FTAs is a positive determinant, a country’s level of economic development, size of economy and FDI inflows are the negative determinants of trade share. The military expenditure is a negative determinant for both trade volume and share. The finding suggests that more FTA participations and foreign aids from within the region should be promoted, and militarization should be minimized to accelerate the economic integration of South Asia into Asia.
    Keywords: Asia, South Asia, regional integration, globalization, trade statistics, panel data econometrics
    JEL: F1 F13 F15
    Date: 2020
  2. By: José G. Vargas-Hernández (1 Research Professor, Department of Administration, University Center for Economic and Managerial Sciences. University of Guadalajara, Periférico Norte 799 Edif. G201-7 Núcleo Universitario los Belenes. Zapopan, Jalisco, 45100, México)
    Abstract: The purpose of this work is to analyze the economic-cultural effects that globalization has in each link of the value chain in the commercialization of coffee in the world. Starting from the fact that coffee is the second most consumed beverage globally after water, in the same way it is the second most exported product after oil, the economic influence that has due to the fact that it is a grain that can grow simultaneously in the tropical belt around the world and because the coffee farmer tends to be poor. We will address its influence and contribution to the world economy by analyzing the process from the coffee farmer to the industrialization, uncovering the industrial supply chain to the different distribution channels that reach and delight the final consumer.
    Keywords: Value chain, commercialization, culture, globalization, chopped coffee segmen
    JEL: D46 F10 M21
    Date: 2020–12
  3. By: Dalibor Rohac
    Abstract: Giving up on the institutions underpinning the current trade regime would be extremely unwise, particularly at a time of historically unprecedented economic distress accompanying the COVID-19 pandemic. Without the constraints imposed by the WTO and PTAs, nothing would stop politicians from reverting back to trade policies that cater to special interests while distributing the costs over the wider public. As the example of the Great Depression shows, such danger would be imminent in bad economic times when the temptation to impose discriminatory trade barriers would be strong and doing so would amplify the size of adverse economic shocks. A zero- or negative-sum economic environment provides fuel for extremist ideologies, militarism, and war. Avoiding such a scenario is precisely the challenge facing the world today.
    Keywords: globalism, free trade, tariff, WTO, USA, COVID-19
    JEL: B17 B27 F13
    Date: 2021–01–20
  4. By: Stefan Borsky (University of Graz); Andrea Leiter (University of Innsbruck)
    Abstract: In 2003, the Kimberley Process Certification Scheme (KPCS) went into force to stop the trade in those diamonds, directly linked to the fueling of armed conflict and activities of rebel movements, also known as conflict diamonds. This article gives empirical evidence on the impact of the KPCS on international trade in rough diamonds. We find that bilateral KPCS participation facilitates access to international markets for rough diamonds and increases trade values. The bilateral trade impact of the KPCS does not depend on the exporters' economic development nor the extent of market access. A more detailed analysis of exporters' heterogeneity in trade values shows that unilaterally KPCS intensifies the trade impediments resulting from armed conflicts and, thereby, reduces the scale of potential conflict diamonds traded internationally. We further offer evidence that the KPCS-induced trade effects apply not only to exporter- or importer-hubs but equally to smaller trade partners. Our analysis gives insights into how agreements setting a particular standard may affect international trade patterns in conflict minerals.
    Keywords: International product standards; conflict diamonds; international trade; gravity model.
    JEL: F53 Q34 Q37 Q56 L15
    Date: 2021–02
  5. By: Simplice A. Asongu (Yaounde, Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa)
    Abstract: This research focuses on assessing how improving openness influences CO2 emissions in Sub-Saharan Africa. It is based on 49 countries in SSA for the period 2000-2018 divided into: (i) 44 countries in SSA for the period 2000-2012; and (ii) 49 countries for the period 2006-2018. Openness is measured in terms of trade and foreign direct investment (FDI) inflows. The empirical evidence is based on the Generalised Method of Moments. The following main findings are established. First, enhancing trade openness has a net positive impact on CO2 emissions, while increasing FDI has a net negative impact. Second, the relationship between CO2 emissions and trade is a Kuznets shape, while the nexus between CO2 emissions and FDI inflows is a U-shape. Third, a minimum trade openness (imports plus exports) threshold of 100 (% of GDP) and 200 (% of GDP) is beneficial in promoting a green economy for the first and second sample, respectively. Fourth, FDI is beneficial for the green economy below critical masses of 28.571 of Net FDI inflows (% of GDP) and 33.333 of net FDI inflows (% of GDP) for first and second samples, respectively. It follows from findings that while FDI can be effectively managed to reduce CO2 emissions, this may not be the case with trade openness because the corresponding thresholds for trade openness are closer to the maximum limit. This study complements the extant literature by providing critical masses of Trade and FDI that are relevant in promoting the green economy in Sub-Saharan Africa.
    Keywords: C52; O38; O40; O55; P37
    Date: 2020–01
  6. By: Anvar Kobilov (Department of “Economics and Service†, Faculty of Social Sciences, Kashkadarya region, Karshi sity, Kuchabag street, 17, Karshi State University, Uzbekistan); Oybek Kurbanov (Department of “Economics and Service†, Faculty of Social Sciences, Kashkadarya region, Karshi sity, Kuchabag street, 17, Karshi State University, Uzbekistan)
    Abstract: This paper investigates the determinants of Foreign direct investment (FDI) in selected 78 countries. The paper uses the data sets from 2000 to 2018, according to World Bank Statistics. The chosen empirical model is based on FDI theories and previous empirical studies on this subject. Due to availability of data, selected counties are divided into 4 groups (advanced economies, developing countries, transition economies and low income counties). The results indicate trade openness is significant factor for FDI inflows in selected countries.
    Keywords: Foreign direct investment, grows rate of per capita GDP, age dependency ratio, gross domestic savings, trade openness, inflation, real interest rate.
    JEL: E22 E44
    Date: 2020–09
  7. By: D. Victoria Decuir – Herrera (Undergraduate of Economics, Department of Economics, MacEwan University, Edmonton, Canada); Constantin Colonescu (n Economics, Department of Economics, MacEwan University, Edmonton, Canada); Rafat Alam (Economics, Department of Economics, MacEwan University, Edmonton, Canada)
    Abstract: The term offshoring refers to the process when firms decide to manufacture products abroad to reduce costs and to produce more efficiently. In the field of economics, offshoring is not a new topic, however, the rapid increase in offshoring induced by the incentive of creating a more efficient production, technological changes, and competition to reduce costs has been globally overlooked. Nonetheless, the rate of change in productivity is different among countries due to their uniqueness and resources, as well as between the different sectors of the economy. Although there are many published studies about inward Foreign Direct Investment (FDI), there are not many available studies that focus on the relationship between outward FDI and productivity, additionally, much less in sectors of the economy other than manufacturing and services. For this reason, in an effort to explain the phenomenon of the latter, a multiple linear regression was created to determine the outward FDI of the sectors of the economy that significantly influence productivity. To measure productivity attributable to offshoring, the model used data on outward FDI per sector of the economy and compared to each country’s Gross Domestic Product (GDP) per hour worked. It was found that, in general, there is a distinctively higher productivity in the manufacturing and services sector than other sectors of the economy. This paper presents an alternative way to measure the productivity of offshoring.
    Keywords: Offshoring, productivity, sectors of the economy, inward Foreign Direct Investment (FDI), outward Foreign Direct Investment (FDI)
    JEL: F00 F10 F69
    Date: 2019–06
  8. By: Larch, Mario (University of Bayreuth); Shikher, Serge (United States International Trade Commission); Syropoulos, Costas (School of Economics Drexel University); Yotov, Yoto (School of Economics Drexel University)
    Abstract: Capitalizing on the latest developments in the gravity literature, we utilize two new datasets on sanctions and trade to study the impact of economic sanctions on international trade in the mining sector, which includes oil and natural gas. We demonstrate that the gravity equation is well suited to model bilateral trade in mining and find that sanctions have been effective in impeding mining trade. Our analysis reveals that complete trade sanctions have reduced bilateral mining trade by about 44 percent on average. We also document the presence of significant heterogeneity in the effects of sanctions on mining trade across mining industries and across sanction episodes/cases, depending on the sanctioning and sanctioned countries, the type of sanctions used, and the direction of trade flows. We take a close look at the impact of recent sanctions on Iran and Russia.
    Keywords: Structural Gravity; Sanctions; Mining; Oil; Trade Effects
    JEL: F13 F14 F51
    Date: 2021–01–31
  9. By: Meredith Crowley; Lu Han; Minkyu Son
    Abstract: How do the choices of individual firms contribute to the dominance of a currency in global trade? Using export transactions data from the UK over 2010-2016, we document strong evidence of two mechanisms that promote theuse of a dominant currency: (1) prior experience: the probability that a firm invoices its exports to a new market in a dominant currency is increasing in the number of years the firm has used the dominant currency in its existing markets; (2) strategic complementarity: a firm is more likely to invoice its exports in the currency chosen by the majority of its competitors in a foreign destination market in order to stabilize its residual demand in that market. We show that the introduction of a managerial fixed cost of currency management into a model of invoicing currency choice yields dynamic paths of currency choice that match our empirical findings.
    Keywords: Exchange rate, invoicing currency, firm-level trade, vehicle currency
    JEL: F14 F31 F41
    Date: 2021–01
  10. By: Tomoya Mori (Institute of Economic Research, Kyoto University); Jens Wrona (University of Duisburg-Essen, Mercator School of Management)
    Abstract: Large cities with central location excessively export to smaller cities in close proximity. Using Japanese inter-city trade data, we identify a substantial centrality bias: Exports from central places to their hinterland are 40%-100% larger than predicted by gravity forces. This upward bias stems from aggregating industries, which are hierarchically distributed across large and small cities. Decomposing the centrality bias along the margins of our data, we identify the extensive industry margin as the main driver behind this aggregation bias. Relying on a theory-consistent decomposition of the aggregate gravity equation, we also sort out the underlying theoretical channels that are responsible for the manifestation of the centrality bias.
    Keywords: Inter-city trade, central place theory, gravity equation, aggregation bias
    JEL: C43 F10 F12 F14 R12
    Date: 2021–02
  11. By: Christoph E. Boehm (University of Texas, Austin); Andrei A. Levchenko (University of Michigan, NBER, & CEPR); Nitya Pandalai-Nayar (University of Texas, Austin. & NBER)
    Abstract: We propose a novel approach to estimate the trade elasticity at various horizons. When countries change Most Favored Nation (MFN) tariffs, partners that trade on MFN terms experience plausibly exogenous tariff changes. The differential effects on imports from these to a control group Ð countries not subject to the MFN tariff scheme Ð can be used to identify the trade elasticity. We build a panel dataset combining information on product-level tariffs and trade flows covering 1995-2018, and estimate the trade elasticity at short and long horizons using local projections (Jordˆ, 2005). Our main findings are that the elasticity of tariff-exclusive trade flows in the year following the exogenous tariff change is about -0.76, and the long-run elasticity ranges from -1.75 to -2.25. Our long-run estimates are smaller than typical in the literature, and it takes 7-10 years to converge to the long run, implying that (i) the welfare gains from trade are high and (ii) there are substantial convexities in the costs of adjusting export participation.
    Keywords: Trade Elasticity
    JEL: F14
    Date: 2020–02
  12. By: Silviano Esteve-Pérez (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain)); Salvador Gil-Pareja (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain) de Marcenado, 27, 28015, Madrid (Spain)); Rafael Llorca-Vivero (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain)); Jordi Paniagua (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain))
    Abstract: This paper aims to provide policy-relevant insights into the Euro effect. Relying on partial equilibrium estimates using a new dataset that comprises bilateral international and intranational trade flows of 69 countries during the period 1986-2016, we estimate a general equilibrium gravity model that allows us to quantify the welfare effect of the Euro as well as its impact on consumer prices and producer prices. The results of three counterfactual experiments indicate that the Euro has been successful at increasing welfare for Economic and Monetary Union (EMU) and non-EMU member countries. Our results suggest that a two-speed Euro design would have further increased welfare, albeit its distributional effects within countries, i.e., for consumers and producers. The growth effects of the Euro are mainly driven by trade creation outside the EMU, questioning the cohesiveness of the Euro as an optimum currency area.
    Keywords: Euro, trade, welfare, structural gravity, general equilibrium
    JEL: F13 F14
    Date: 2021–02
  13. By: ; ; Francois de Soyres
    Abstract: This FEDS Note looks at the effect of Regional Trade Agreements on trade between the agreement zone and the rest of the world. Global Value Chains are associated with an increase in outflow. Hence, RTAs can be a stumbling block for multilateralism.
    Date: 2021–02–04
  14. By: Meeta Keswani Mehra (Jawaharlal Nehru University); Gaurav Bhattacharya (Jawaharlal Nehru University)
    Abstract: This paper extends the Grossman and Helpman (1995) model to include environmental regulations, assuming perfectly competitive markets. The politically motivated government uses trade and environmental policies to regulate trade flows (either non-cooperatively through trade wars or through cooperative bargaining as in case of trade talks) and the use of the sector specific environmental resource in the production of the traded good, respectively. Results show that trade wars can be more pronounced when the polluting good traded is subject to environmental regulations in the country of origin. Despite being politically inclined, policy makers may also face a trade-off from trade policies chosen that have several implications on welfare gains/losses from environmental taxes vis-á-vis the improvement/deterioration in environmental quality. The net gain/loss from environmental regulations would thus be an additional factor influencing the trade policy adopted by a nation besides gains/losses from voting support, deadweight loss from price distortion and terms of trade gains/losses. Furthermore, there arises an additional layer of distortion in trade policy when political action groups cannot directly observe the true type of the regulator, i.e., whether he/she is highly corrupt or not. Incomplete knowledge about the degree of benevolence of the regulator causes an upward distortion in trade policy compared to the former case, except for a scenario where the regulator is purely benevolent.
  15. By: Celine de Quatrebarbes; Bertrand Laporte (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique); Stéphane Calipel (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: As happened in West Africa in 2008, in an imported inflation context, it is common for the governments to take short-term tax action to protect the poor: VAT or trade tariffs exemptions. As part of the tax-tariff transition, the comparison between Trade tariffs and VAT has already been the subject of much works. The introduction of VAT, as a tax on final consumption, is supposed to be optimal, due to its economically neutral aspect for production decisions. However, some authors show that in developing countries, a large informal sector affects this result. In this paper, we use a CGE model and a micro-simulation model to compare the effects of VAT and Trade tariffs exemptions to combat rising agricultural food prices. The approach is innovative because it integrates how VAT works in developing countries (VAT increases production costs for some producers), in a context of imperfect competition for the service of marketing products. Results show that VAT exemptions are more effective than Trade tariffs exemptions in limiting the effects of the rise in world prices on poverty in Niger. In the context of the current increase in food prices linked to the Covid-19 crisis (FAO, 2020), this issues may one again be in the limelight for the African governments.
    Keywords: Computable general equilibrium model,Imperfect competition,Indirect taxes,Poverty,Niger
    Date: 2021–02
  16. By: Marchal, Léa; Naiditch, Claire; Simsek, Betül
    Abstract: This paper investigates through which channels foreign aid impacts migration to donor countries. To disentangle the non-donor-specific channels (development and credit constraint channels) from the donor-specific channels (information and instrumentation channels), we use the fact that multilateral aid is not donor-specific contrary to bilateral aid. We estimate a gravity model derived from a RUM model of migration using an IV-2SLS strategy and the DEMIG-C2C and AidData datasets. We find that aid donated by a country increases migration to that donor through an information channel and especially for the poorest recipient countries. In addition, we find that aid weakly reduces migration to any country via a development channel.
    Keywords: Aid,Gravity,Migration
    JEL: F22 F35 O15
    Date: 2021
  17. By: Shubha Ojha (National Law University Jodhpur, India)
    Abstract: It is often asserted that in one respect, the World Trade Organization is in fact fundamentally egalitarian. The term ‘fundamentally egalitarian’ throws light upon the commitment of the World Trade Organization [“WTO†] to an ideal of formal equality. According to this conception all the member states are entitled to offer and receive uniform and equal treatment. The WTO evinces this commitment to formal equality through the ‘principle of Non-Discrimination’. The principle of Non-Discrimination is embodied in two elemental rules- Most-Favoured-Nation Treatment and National Treatment. As per the tenets of the Most-Favoured-Nation [“MFN†] rule, all the member states are required to refrain from treating any member states less favourably than they treat other member states. The principle is purportedly a misnomer. Though the term ‘most-favoured-nation’ suggests special treatment, in the context of the WTO, it is supposed to mean non-discrimination, that is, treating virtually everyone equally. The MFN rule had emerged as a fundamental principle of the General Agreement on Tariffs and Trade, 1947 [“GATT 1947†] but with time, multiple exceptions have come into picture that overshadow the fundamentality of this principle. This research paper ventures into the intricacies and implications of the MFN principle and analyses how the exceptions to the MFN principle have eclipsed the principle in the recent times and have ironically reduced its status from the status of a fundamental principle to that of an exception.
    Keywords: Fundamentally Egalitarian, Formal Equality, Non-Discrimination, Most-Favoured-Nation Treatment, National Treatment
    Date: 2020–08
  18. By: Sato, Hideo; Assistant, JHET
    Abstract: F. D. Graham (1890–1949) presented an innovative multi-country, multi-commodity trade model that attached great importance to link commodities and quantity adjustments, not perfect specializations and price adjustments as emphasized by J. S. Mill and A. Marshall. However, due of some shortcomings, this model was not sufficiently understood and has been forgotten. This study reconstructs Graham’s theory of international values by rectifying the shortcomings. Through this reconstruction, the following is clarified. First, in multi-country, multi-commodity trade models, the existence of link commodities is general and perfect specializations seldom appear; therefore, quantity adjustments are normally performed in the face of demand shifts. Second, notwithstanding unchanging sectoral productivity at a national level, national wage rates can vary greatly according to the patterns of the international division of labor. Third, while the domestic relative wage rate increases with an increase in a home country’s productivity of link commodities, it does not increase with an increase in the productivity of commodities produced only in the home country.
    Date: 2021–02–12
  19. By: Shagufta Sultana (Pakistan Institute of Development Economics, Pakistan)
    Abstract: Pakistan receives huge amount of aid flows every year like other developing countries but still stagnant and aid dependent. This reality forced a vigorous debate on effectiveness of aid. The objective of present study is to examine the effectiveness of foreign aid and other variables such as (bilateral aid, multilateral aid, inflation, trade openness, US aid, UK aid and Japanese aid) on economic growth of Pakistan over the period 1972-2014. When we disaggregate aid in terms of bilateral aid, multilateral aid, aid from United States, aid from UK and aid from Japan, all the aid sources showed insignificant relationship with the economic growth of Pakistan in the short run. Bounds test for Cointegration accepts the hypothesis that no long run relationship exists between the variables. So in the absence of long run relationship study takes the analysis towards short run relationship by using multivariate Granger Causality test. The causality test results showed that total foreign aid, bilateral aid, aid from United States and aid from UK does not causes economic growth significantly in Pakistan over the period 1972-2014. On the other hand multilateral aid and Japanese aid significantly causes growth. Granger Causality test results showsbi-directional causality between multilateral aid and economic growth. The study is useful for policy implications because results show that multilateral aid have significant relationship with economic growth in Granger Causality test. So authorities should give priority to multilateral aid over bilateral aid
    Keywords: Economic Growth, Bilateral aid, Multilateral aid, Inflation, Trade openness, ARDL, ADF, Granger Causality
    JEL: E31 O40 B22
    Date: 2019–12
  20. By: Nguyen-Huu, Thanh Tam; Pham, Ngoc-Sang
    Abstract: The paper investigates the country receiving FDI's optimal strategy in an optimal growth context. First, if the multinational enterprise has high productivity or the entry cost is high, no domestic firm enters the new industry. Still, the host economy's investment stock converges to a higher steady state than that of the closed economy. Second, if the old sector is strong enough and the domestic firm's productivity is high, the foreign firm will be dominated, even eliminated by the domestic one. Third, we show that if the host country invests in R\&D, its economy may grow without bounds. In this case, FDI helps the host country only at the first stages of its development process. We present empirical evidence that supports our theoretical findings.
    Keywords: Optimal growth, FDI, MNE, R\&D, fixed cost
    JEL: E2 F23 F4 O3 O4
    Date: 2021–01–16
  21. By: Mustapha Djaballah (Economics department - University of Mohamed Budiaf ( M’sila) - Algeria)
    Abstract: This article empirically discusses the possible interactions between the rate of economic growth, the rate of change in inflows of foreign direct investment (FDI) and the rate of real equilibrium real exchange, in MENA countries (18 countries) for the period 2000 -2019. The result suggests that there is a positive relationship between financial development and economic growth. The study also documents that inflation and government expenditure have negative impact on economic growth for those selected MENA countries. The paper ends with some policy implications and potential limitations.
    Keywords: GDP, FDI, Exchange rate, Dynamic Panel Modeling
    JEL: C32 O47 F17 F31
    Date: 2020–12
  22. By: Tung, Dao Duy (Tay Do University)
    Abstract: Lecture notes, quizzes, a summary content of the book International business: The challenges of globalization
    Date: 2021–01–17
  23. By: Marina Murat
    Abstract: The ‘mobility transition’ hypothesis – with emigration first increasing and then decreasing as a country develops – (Zelinsky, 1971) is often interpreted as a stylised fact, which bears the implication that immigration into rich countries will grow as low-income countries develop. This paper tests the relationships between development and emigration from 130 developing countries during 25 years. Results, robust to different semiparametric and parametric specifications, show that emigration from low to middle-income countries declines as income increases, education improves or population growth slows down. The stage of development at home affects the main destinations of emigration. Immigration into rich economies increases from countries at intermediate levels of development. Policies supporting development in low-income countries reduce emigration, including that to rich economies.
    Keywords: emigration, income, development, demographic transitions.
    JEL: F22 J11 O11
    Date: 2020–12
  24. By: Aladetoyinbo, Muyiwa
    Abstract: In March 2017, the UK voted to leave the EU in what is now popularly known as Brexit. The decision of the UK has raised many fundamental questions about the relationship between EU law and UK football, and the participation of UK football teams in UEFA tournaments. The also paper addressed the the applicability of EU economic freedom principles to UK football.
    Keywords: Brexit,UK, UEFA, EU, FIFA, football, CJEU, economic freedom.
    JEL: F13 F15 F55 K00 K31 K37
    Date: 2019–04–18
  25. By: Fisayo Fagbemi (Obafemi Awolowo University, Nigeria); Tolulope T. Osinubi (Obafemi Awolowo University, Nigeria)
    Abstract: The paper assesses the interconnections between FDI and human capital development in Nigeria over the period 1981-2018. The analysis is carried out with the use of both non-linear autoregressive distributed lag (NARDL) and linear ARDL bounds test approach to cointegration, and VECM Granger causality technique. Findings reveal that the effect of FDI on human capital is found to be insignificant in the long run, while it is significant in the short run. However, following the asymmetric link, the empirical evidence reveals that a rise in FDI inflows to a certain rate, in the long-run, could result in a significant increase in the level of human capital development, suggesting that the magnitude of inward FDI matters in the economy. This further implies that as FDI inflows require sound technical know-how, and more skilled labour to work with or adapt to more advanced technologies, such could draw attention to improved human capital. Results also indicate that there is unidirectional causality between FDI and human capital in the long run, which runs from human capital to FDI, suggesting that the quality of human capital matters for sustainable leverage and attractiveness of FDI inflows. By implication, it is critical to adopt policy measures that could engender the sustainable development of human capital by the government, while the underlying structural bottlenecks and protracted state of insecurity that could deter foreign investors are accorded significant attention.
    Keywords: Economic Development, Foreign direct investment, Human capital development, Nigeria
    Date: 2020–01
  26. By: Shunta Yamaguchi
    Abstract: Circular economy policies and initiatives largely take place domestically, and yet they have important interlinkages with international trade. This report explores how to make circular economy policies and trade policies mutually supportive by mapping out potential misalignments and identifying opportunities to align and strengthen both policy areas. The report highlights the various interlinkages between international trade and circular economy, and examines the interactions between trade and circular economy at the policy level, focussing on the multilateral trade regime and regional trade agreements, as well as specific policies to promote the circular economy, such as extended producer responsibility and product stewardship schemes, taxes and subsidies, green public procurement, environmental labelling schemes, and standards.
    Keywords: Circular economy, Environment policy, Resource efficiency, Trade and environment, Trade policy
    JEL: F18 O13 Q53 Q56
    Date: 2021–02–19
  27. By: Athanasios Kolliopoulos (Postdoctoral Researcher at Economic University of Athens, Greece)
    Abstract: The literature on the crisis-reform nexus has documented the relationship between governments’ interventions and banking crisis explained by the mass public demand. Nonetheless, the determinant of a global economic governance and coordination for an effective regulatory regime is lacking. In this context, the trade-off effect between regulatory burden for banks and shadow banking ballooning poses crucial questions on the post crisis regulations’ effectiveness. The paper argues that the financial reform policy relies on its interaction with a minimum of global governance and domestic regulations. Studying shadow banks’ development, we show that (a) without a minimum multilateral governance, controlling global imbalances limiting global leverage and financial interconectness is hardly possible. At the same time, shadow banks’ multiple-causes development in the biggest financial centers tell us that (b) global banking regulations don’t fit all due to uneven financial development and varieties of financial capitalism at the national level. Following the conventional approaches for a new governance regime, the contribution focuses on the governance-regulations nexus involved and sketches out a middle way prospective towards a “flexsecure†global governance.
    Keywords: Governance, financial regulation, multilateralism, shadow banking, regulatory burden
    JEL: F3 F5 G01
    Date: 2019–12
  28. By: Dzingai Francis Chapfuwa (1 University of Johannesburg, Faculty of Economics and Econometrics, Johannesburg, South Africa); Peter Baur (Economics, University of Johannesburg, Faculty of Economics and Econometrics, Johannesburg, South Africa)
    Abstract: The paper analysed the interlinkages among institutions, FDI and economic growth. The paper analysed whether institutions play a role in determining the effect of FDI on economic growth and whether the existence of strategic natural resources matter. Dynamic Panel General Method of Moments Technique (GMM) model with Weidmeijer corrected errors and orthogonal deviations is applied for the period 1996 to 2016. The results show that the effect of FDI on economic growth is both negative and positive across the estimated models indicating the heterogeneity in terms of the initial host country conditions. The thesis found that institutions as a whole are weak for SADC countries hence a negative relationship between institutions and economic growth for the SADC countries. What is however key is that FDI on its own without institutional indicators can lead to an increase in economic growth for the SADC countries. The effect of institutions on FDI and hence economic growth was not significant in the full sample. However, after taking out countries endowed with strategic natural resources, good institutional indicators leads to an increase in economic growth eliminating the natural resource endowment bias.
    Keywords: FDI, Institutions, Economic growth, SADC, MNCs, GMM
    JEL: E E02
    Date: 2020–09
  29. By: Dzingai Francis Chapfuwa (University of Johannesburg, Faculty of Economics and Econometrics, Johannesburg, South Africa)
    Abstract: The aim of this study is to examine the role of institutions in determining Foreign Direct Investment (FDI) flows into the Southern African Development Community (SADC) region. Given the financing gap within SADC and the role of FDI in covering the gap, there is a need for the region to attract more FDI. Traditionally, the most popular instrument for attracting FDI is through fiscal incentives. However, over the years this has failed to attract or deliver the expected levels of FDI inflows into the SADC region. The study applies a panel modelling approach (Fixed Effects Model) for all the SADC countries using annual data from 1996 to 2016. However, to deal with the problem of endogeneity, the study further applies the 2 Stage Least Squares (2SLS) methodology. For robustness check, Dynamic General Method of Moments Technique (GMM) is applied. The results of the model indicated that institutions are important in determining the flow of FDI into the SADC region. However, where the host countries have got natural strategic resources, the role of institutions is overshadowed. The market size was also found to be insignificant. Furthermore, the institutional variables affect FDI inflows differently and one of the major findings is that democratic accountability does not matter in influencing the flow of FDI into the SADC region.
    Keywords: Foreign Direct Investment, Institutions, SADC, MNCs
    JEL: E E02
    Date: 2020–06
  30. By: Hadrien Camatte (Banque de France - Gaz de France Direction de la Recherche); Guillaume Daudin (LEDa - Laboratoire d'Economie de Dauphine - CNRS - Centre National de la Recherche Scientifique - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres); Violaine Faubert (Banque de France - Gaz de France Direction de la Recherche); Antoine Lalliard (Banque de France - Gaz de France Direction de la Recherche); Christine Rifflart (OFCE - Observatoire français des conjonctures économiques - Sciences Po - Sciences Po)
    Abstract: Following the 2008 financial crisis, inflation rates in advanced economies have been at odds with the prediction of a standard Phillips curve. This puzzle has triggered a debate on the global determinants of domestic prices. We contribute to this debate by investigating the impact of exchange rate shocks on consumer prices from 1995 to 2018. We focus on cost-push inflation through global value chains, using three sectoral world input-output datasets. Depending on countries, the absolute value of the elasticity of the household consumption expenditure (HCE hereafter) deflator to the exchange rate ranges from 0.05 to 0.35, confirming the importance of global value chains in channelling external shocks to domestic inflation. Using data from WIOD on a sample of 43 countries, we find that the mean output-weighted elasticity of the HCE deflator to the exchange rate increased in absolute value from 0.075 in 2000 to 0.094 in 2008. After peaking in 2008, it declined to 0.088 in 2014. World Input-Output tables (WIOT hereafter) are released with a lag of several years and the latest WIOT dates back to 2015. To fill this gap, we approximate the impact of an exchange rate shock on the HCE deflator from 2016 onwards using up-to -date GDP and trade data. Our extrapolations suggest that the decline in the elasticity of the HCE deflator continued until 2016, before reversing in 2017 and 2018. Our findings are robust to using three different datasets.
    Keywords: Inflation,global value chains,Phillips curve,input output tables,international trade,pass through
    Date: 2021–02–08

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