nep-int New Economics Papers
on International Trade
Issue of 2021‒03‒15
forty-five papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Effect of Multilateral Trade Liberalization on Services Export Diversification By Gnangnon, Sèna Kimm
  2. When Tariffs Disrupt Global Supply Chains By Gene M Grossman; Elhanan Helpman
  3. Gravity for Cross-border Licensing and the Impact of Deep Trade Agreements: Theory and Evidence By Naoto JINJI; Yukiko SAWADA; Xingyuan ZHANG; Shoji HARUNA
  4. Trade liberalization along the firm size distribution: The case of the EU-South Korea FTA By Chowdhry, Sonali; Felbermayr, Gabriel
  5. Do Country Centrality and Similarity to China matter in the Allocation of Belt and Road Projects? By Kaku Attah Damoah,; Giorgia Giovannetti; Enrico Marvasi
  6. The competitiveness of Moldova’s agri-food trade with E.U. after DCFTA implementation By Cimpoies, Liliana; Sarbu, Olga
  7. Five Stylized facts on Belt and Road Countries and their Trade Patterns By Kaku Attah Damoah,; Giorgia Giovannetti; Enrico Marvasi
  8. "Two roads diverged in [soft]wood". Targeted dumping, differential pricing methodology, and zeroing: US-Canada anti-dumping in softwood lumber (WTDS534/R) By Eugene Beaulieu; Janet Whittaker
  9. Fostering the development of the coffee global value chain By Görlich, Dennis; Hanley, Aoife; Liu, Wan-Hsin; Semrau, Finn Ole
  10. Inventor Migration and Knowledge Flows: A Two-Way Communication Channel ? By Ernest Miguelez; Claudia Noumedem Temgoua
  11. Foreign direct investment and economic growth in Kenya: An empirical investigation By Odhiambo, Nicholas M
  12. EU exports of livestock products to West Africa: An analysis of dairy and poultry trade data By Zamani, Omid; Pelikan, Janine; Schott, Johanna
  13. Leveling the Playing Field: Industrial Policy and Export-Contingent Subsidies in India-Export Measures By Swati Dhingra; Timothy Meyer
  14. Welfare gains through globalization: Evidence from Japan's manufacturing sector By Takahide Aoyagi; Tadashi Ito; Toshiyuki Matsuura
  15. Trade, value chain technology and prices: evidence from dairy in East Africa By Liz Ignowski; Bart Minten; Jo Swinnen; Bjorn Van Campenhout; Senne Vandevelde
  16. Migration, Specialization, and Trade: Evidence from the Brazilian March to the West By Heitor S. Pellegrina; Sebastian Sotelo
  17. Endogenous Immigration, Human and Physical Capital Formation, and the Immigration Surplus By Isaac Ehrlich; Yun Pei
  18. Separating the Political from the Economic: The Russia-Traffic in Transit Panel Report By Pramila Crivelli; Mona Pinchis-Paulsen
  19. Deepening or delinking? Innovative capacity and global value chain participation in the ICT sectors By Lema, Rasmus; Pietrobelli, Carlo; Rabellotti, Roberta; Vezzani, Antonio
  20. The effects of international trade on structural change and CO2 emissions By Hübler, Michael; Bukin, Eduard; Xi, Yuting
  21. Trade after Trump: Can the Biden Administration Shore up the Eroding Foundations of American Leadership? By Craig VanGrasstek
  22. Economic Impacts of Investment Facilitation By Edward J. Balistreri; Zoryana Olekseyuk
  23. Economic Statecraft: from Negative Sanctions to Positive Sanctions By Raul Caruso
  24. Precarization or protection? The impact of trade and labour policies on informality By Rita K. Almeida; Lourenço S. Paz; Jennifer P. Poole
  25. Labour Market Effects of Trade in a Small Open Economy By Agnes Kügler; Klaus S. Friesenbichler; Cornelius Hirsch
  26. Cost Competitiveness and Export Performance By Kaitila, Ville
  27. Thinking outside the container: A machine learning approach to forecasting trade flows By Stamer, Vincent
  28. The EU-Africa summit 2021 : Quo vadis, in the light of Brexit and Corona By Kohnert, Dirk
  29. Trade costs and patterns of trade in the Philippines By Eugenia C. Go
  30. The transmission of productivity through global value chains: formal concept and application to recent developments in the EU27 By David Martinez Turegano
  31. Intellectual Property Infringement by Foreign Firms: Import Protection through the ITC or Court By James A. Brander; Barbara J. Spencer
  33. Bank-based financial development and foreign direct investment in Sub-Saharan African countries: A dynamic causal linkage By Odhiambo, Nicholas M
  34. Commentary on World Development Report 2020: Trading for Development in the Age of Global Value Chains By Byahut, Rajkumar; Dutta, Sourish; Iyer, Chidambaran G.; Nataraj, Manikantha
  35. Globalization, Governance and the Green Economy in Sub-Saharan Africa: Policy Thresholds By Simplice A. Asongu; Joseph Nnanna
  36. Import Competition from China in Manufacturing after the Financial Crisis: Evidence for European Regions By Werner Hölzl
  37. The Impact of Import Competition from China on Firm-level Productivity Growth in the EU By Klaus S. Friesenbichler; Agnes Kügler; Andreas Reinstaller
  38. A quantitative model of the oil tanker market in the Arabian Gulf By Kilian, Lutz; Nomikos, Nikos K.; Zhou, Xiaoqing
  39. Market power and productivity trends in the European economies. A macroeconomic perspective. By Claudio Battiati; Cecilia Jona-Lasinio; Enrico Marvasi; Silvia Sopranzetti
  40. The effect of different risk factors on foreign direct investment By Sergei Tkachenko
  41. Increasing security of supply for critical medical and pharmaceutical goods in the EU: Lessons from the COVID-19 pandemic By Grumiller, Jan; Grohs, Hannes
  42. Description of version 2 of the panel dataset on non-trade policy outcome indicators (NTPOID_v2) By Miriam Manchin
  43. A test of exports-led growth hypothesis in Sub-Saharan African countries: Evidence from panel data analysis By Odhiambo, Nicholas M
  44. Effectiveness of International Migration since Early Stage By Akasaka, Shintaro
  45. Global food prices, local weather and migration in Sub-Saharan Africa By Lars Ludolph; Barbora Šedová

  1. By: Gnangnon, Sèna Kimm
    Abstract: The present study is an extension of the work on the effect of multilateral trade liberalization (MTL) on export product diversification undertaken by Gnangnon (2019b). The analysis focuses on the effect of MTL on services export diversification. The analysis has revealed that MTL is associated with greater services export diversification in both developed and developing countries alike. This is particularly the case in countries with a high reliance on manufactured goods exports or those that enjoy greater export product diversification. Interestingly, MTL enhances services export diversification in countries that experience higher foreign direct investment inflows. Overall, through its positive effect on both export product diversification and services export diversification, greater cooperation among World Trade Organization (WTO) Members on trade matters could help revive economic growth, particularly in the current COVID-19 pandemic that has significantly plummeted it.
    Keywords: Multilateral trade liberalization,Services export diversification,Export product diversification,Foreign direct investment inflows
    JEL: O14 F13 F14
    Date: 2021
  2. By: Gene M Grossman (Princeton University); Elhanan Helpman (Harvard University)
    Abstract: We study unanticipated tariffs on imports of intermediate goods in a setting with firm-to-firm supply relationships. Firms that produce differentiated products conduct costly searches for potential input suppliers and negotiate bilateral prices with those that pass a reservation level of match productivity. Global supply chains are formed in anticipation of free trade.Once they are in place, the home government surprises with an input tariffs. This can lead to renegotiation with initial suppliers or new search for replacements. We identify circumstances in which renegotiation generates improvement or deterioration in the terms of trade. The welfare implications of a tariffs are ambiguous in this second-best setting, but plausible parameter values suggest a welfare loss that rises rapidly at high tariff rates.
    Keywords: global supply chains, global value chains, input tari§s, importedintermediate goods
    JEL: F13 F12
    Date: 2021–01
  3. By: Naoto JINJI; Yukiko SAWADA; Xingyuan ZHANG; Shoji HARUNA
    Abstract: We examine whether deep regional trade agreements (RTAs) facilitate cross-border technology transfer. The mode of technology transfer we focus on is licensing. We first derive a micro-founded structural gravity model for cross-border licensing from a model in which heterogeneous firms choose to supply their goods to foreign markets through export, foreign direct investment, or licensing. We show several comparative statics results regarding the effects of changes in the fixed costs of serving the destination country, the freeness of trade, and the strength of intellectual property rights (IPR) protection on bilateral flows of licensing revenues. We then empirically test our theoretical predictions using data on cross-border flows of royalties and license fees for 49 countries in the period 1995–2012. Various dummy variables and indexes are used to capture the impact of shallow and deep RTAs on cross-border licensing. Consistent with our theoretical predictions, we find that improved access to the destination market through a deep RTA and stronger IPR protection through an RTA with legally enforceable IPR provisions and technologyrelated provisions increase bilateral flows of licensing revenues. By contrast, a shallow RTA without IPR provisions does not increase cross-border licensing revenues.
    Keywords: regional trade agreement; deep integration; technology transfer; licensing; gravity model.
    JEL: F15 O33
  4. By: Chowdhry, Sonali; Felbermayr, Gabriel
    Abstract: In 2011, the EU-South Korea Free Trade Agreement (EUKFTA) entered into force. With its focus on non-tariff barriers (NTBs), it is a leading example of a deep new generation agreement. Using detailed French customs data for the period 2000 to 2016, we investigate how exporters of different size have gained from the agreement. Applying a diff-in-diff strategy that makes use of the rich dimensionality of the data, we find that firms with larger pre-FTA sizes benefit more from the FTA than firms at the lower end of the size distribution, both at the extensive (product) and the intensive margins of trade. The latter finding is in surprising contrast to leading theories of firm-level behavior. Moreover, we find that our main result is driven by NTB reductions rather than tariff cuts. In shedding light on the distributional effects of trade agreements within exporters, our findings highlight the need for effective SME-chapters in FTAs.
    Keywords: Trade Policy,Firm Heterogeneity,Firm Size Distribution,Non-Tariff Barriers
    JEL: F13 F14
    Date: 2021
  5. By: Kaku Attah Damoah,; Giorgia Giovannetti; Enrico Marvasi
    Abstract: We analyze the relationship between trade patterns and the allocation of investment projects carried out under the China-led Belt and Road Initiative (BRI). Rooted on a novel database, we construct the intermediate trade network and assess its role in the allocation of the projects. Investments tend to concentrate in countries located in central nodes of the international production networks as well as towards suppliers of intermediate goods whose revealed comparative advantage (RCA) overlaps with China. High income countries closer to destination markets tend to attract fewer but larger investments. Controlling for gravity variables as well as for political proximity to China adds explanatory power without affecting the results on the importance of trade. The BRI represents an opportunity for China to upgrade its exports and for the countries receiving investments to enhance their participation in GVC with possible positive impact on development.
    Keywords: Belt and Road, China, global value chains, trade in intermediates, network-centrality.
    JEL: F14 F15 F21
    Date: 2021
  6. By: Cimpoies, Liliana; Sarbu, Olga
    Abstract: This paper analyzes the changes that occurred in Moldova’s trade of agricultural and food products since the implementation of the Deep and Comprehensive Free Trade Agreement (DCFTA) with European Union. The research will include the analysis of Moldova’s foreign trade activity from the perspective of agricultural and food products, the changes that occurred in their structure, dynamics and competitiveness. The data used will underline the period 2015- 2019, regarding the agricultural and food trade commodities. The competitiveness will be assessed through trade indicators as Revealed Symmetric Comparative Advantages (RSCA) and Trade Balance Index (TBI) based on product mapping approach. As result we delimitate four groups of products classified according to their comparative advantages/disadvantages and export specialization. By analyzing the obtained results we have found three agri-food products that have comparative advantages and are net exporters on E.U. market. About half of agri-food products that fall into the category of comparative advantage but are net importers. The competitiveness of this group has potential to grow and it could be improved.
    Keywords: agri-food products, competitiveness, trade.
    JEL: F10 Q17
    Date: 2020–11–19
  7. By: Kaku Attah Damoah,; Giorgia Giovannetti; Enrico Marvasi
    Abstract: Since the start of the China-led Belt and Road Initiative, several countries became involved and some of them received investment projects. Using data for the period 2012-2018, we show that pre-existing trade patterns are related to the likelihood to participate in the initiative and receive investments. We summarize our findings into five stylized facts. First, BRI countries with completed projects tend to be poorer and larger. Second, projects are more likely to occur in countries with intensified intermediate trade with China. Third, countries that received projects have more diversified export structures and their sectoral specialization overlaps to that of China. Fourth, among middle-high income countries, projects tend to favor those with high levels of intra-industry trade. Fifth, among BRI countries with projects, the complexity or sophistication of goods trade increases faster with income. These findings suggest that the allocation of BRI investments partially reflects the trade patterns, favoring destinations with specific characteristics.
    Keywords: Belt and Road, China, global value chains, trade in intermediates, centrality, networks.
    JEL: F14 F15 F21
    Date: 2021
  8. By: Eugene Beaulieu; Janet Whittaker
    Abstract: The United States and Canada have a long-standing series of disputes over softwood lumber that until now have focused on alleged subsidies and countervailing duties (CVDs). The United States changed things up this time around and the US Department of Commerce (USDOC) found dumping after applying the Differential Pricing Methodology to softwood lumber from Canada. The panel found that the USDOC erroneously aggregated export price differences when applying the DPM, but departed from the WTO Appellate Body’s previous ruling in US – Washing Machines regarding the use of zeroing and the inclusion of differential prices under Article 2.4.2 of the Anti-Dumping Agreement. To date, the United States and Canada have not been able to resolve the long-standing softwood lumber dispute, and this time the focus shifts from subsidies and countervailing duties to anti-dumping duties. It remains to be seen what happens in this specific dispute on appeal—if, and when, the WTO Appellate Body starts to function again. It will also be interesting to see whether this panel decision encourages parties to argue for, and future panels to permit departures from, Appellate Body rulings with which they disagree.
    Keywords: WTO, dispute settlement, antidumping, trade remedies, softwood lumber, Canada, U.S.
    Date: 2021–02
  9. By: Görlich, Dennis; Hanley, Aoife; Liu, Wan-Hsin; Semrau, Finn Ole
    Abstract: The overarching aim of the study is to investigate the key factors that determine how and how intensively countries can be integrated into the coffee global value chain (GVC) and thus can better reap the globalization benefits. The empirical analysis shows how the international trade in coffee has developed across regions/countries over the past three decades. It provides evidence-based insights into the key determinants of countries' GVC integration in the coffee industry. It discusses countries' functional and product upgrading for their GVC integration. Based on the empirical results obtained, policy implications are derived to support the further development of the coffee GVC. This study serves as a background study for the Coffee Development Report 2020 in preparation by the International Coffee Organisation.
    Keywords: coffee,trade,development,global value chain,upgrading
    JEL: F14 O13 O30
    Date: 2020
  10. By: Ernest Miguelez (GREThA - Groupe de Recherche en Economie Théorique et Appliquée - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique); Claudia Noumedem Temgoua (GREThA - Groupe de Recherche en Economie Théorique et Appliquée - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper documents the influence of networks of highly skilled migrants on the international diffusion of knowledge – particularly those with degrees and occupations in science, technology, engineering and mathematics. It investigates knowledge inflows to host countries brought in by skilled immigrants. It then explores knowledge feedback to home countries generated by these migrants. We test our hypotheses in a country-pair gravity model setting, for the period 1990–2010, using patent citations across countries to measure international knowledge diffusion. Our results confirm our hypotheses on the positive impact of skilled migrants on knowledge flows to host and home countries. However, the former are not robust to instrumental variables and country-pair fixed-effects, and only matter in certain contexts: when the sending countries are developing nations and for knowledge diffusion within the boundaries of multinationals.
    Date: 2020
  11. By: Odhiambo, Nicholas M
    Abstract: In this paper, the casual relationship between foreign direct investment (FDI) and economic growth in Kenya during the period 1980-2018 is examined. In an attempt to address the omission-of-variable bias, which has been detected in some previous studies, two variables, namely money supply and trade, are used as intermittent variables, thereby leading to a system of multivariate Granger-causality equations. Using the ARDL bounds testing approach, the results show that there is a unidirectional causal flow from economic growth to FDI in Kenya. These results apply, irrespective of whether the causality is conducted in the short run or in the long run. Based on these results, it can be concluded that the current burgeoning FDI inflows that Kenya has attracted in recent years are largely driven by the strong economic growth and prudent macroeconomic policies that the country has been pursuing in recent decades. To our knowledge, this may be the first study of its kind to examine in detail the causal relationship between FDI and economic growth in Kenya in recent years. Policy implications are discussed.
    Date: 2021–01
  12. By: Zamani, Omid; Pelikan, Janine; Schott, Johanna
    Abstract: The present report provides the results of the first work package of the IMMPEX project which aims to investigate the impact of German and European livestock product exports on agri-food sectors in selected African countries. Based on various criteria like trade statistics and a literature review, we identified the poultry and dairy sectors in Senegal and Ghana for further analysis in the course of the project. In this report, we provide an overview of the poultry and dairy product trade flows from Germany, the EU, and from the rest of the world to West Africa. We also show how imports, domestic production, and consumption of poultry and dairy products have developed over time. Our analysis reveals an upward trend of dairy and poultry products imports in both countries. Apart from the 28 EU countries, Brazil and the US are the main exporters of poultry to Ghana. However, the share of the EU increased since 2011. Senegal's domestic production has considerably expanded under the import ban on uncooked poultry meat in 2006. Nevertheless, compared with poultry production growth rates in Ghana, Senegal still has lower growth rates. With regard to dairy, intra-African trade plays an important role in this sector, however, there is evidence that intra-African trade flows might be related to reexports. The EU and New Zealand are the main competitors in the dairy markets of Ghana and Senegal.
    Date: 2021
  13. By: Swati Dhingra; Timothy Meyer
    Abstract: In India-Export Measures, the United States challenged a range of Indian measures as prohibited export-contingent subsidies, and a WTO panel largely agreed. This article examines the factors at play in the United States’ decision to bring the challenge. At the level of policy, the United States case reflects India’s graduation from the protections afforded developing nations’ export-contingent subsidies under the Agreement on Subsidies and Countervailing Measures. A closer examination, however, shows that India ramped up its export-contingent subsidies just as the SCM Agreement required it to wind those subsidies down. Moreover, the expanded Indian subsidies led to increased import competition with the politically influential metals and pharmaceutical sectors in the United States, which pushed the U.S. challenge. We reflect on the larger implications of the challenge for the future of trade rules on industrial policy. In particular, we note that the United States pursued a trade enforcement policy that would have the effect of increasing pharmaceutical prices in the United States, by reducing subsidies for imported generic drugs, at a time at which the Trump administration allegedly was trying to reduce the price of prescription drugs. This disconnect suggests the need for both greater transparency in trade policy and greater governmental coordination on the connection between trade policy and other policy priorities.
    Keywords: Industrial policy, export subsidies, India, WTO, policy coherence
    Date: 2021–02
  14. By: Takahide Aoyagi; Tadashi Ito; Toshiyuki Matsuura
    Abstract: Welfare gains achieved through international trade are a cornerstone of the literature on international economics. However, the data and research methods needed to empirically assess these welfare gains have only recently become available. Building on recently developed methodologies for estimating the elasticity of substitution and computing welfare gains from trade, we estimate Japan's welfare gains from liberalizing trade in the manufacturing sector. To do so, we estimate the elasticities of substitution using Harmonized System (HS) 9-digit product codes, for various periods of time. The analysis shows that Japan's welfare gains from trade liberalization occurred especially from the 1990s onward, and reached eleven percent vis-a-vis the autarky situation.
    Date: 2021–03
  15. By: Liz Ignowski; Bart Minten; Jo Swinnen; Bjorn Van Campenhout; Senne Vandevelde
    Abstract: Agricultural value chains, particularly in the developing world, have been going through drastic changes over the past decades. Differences in world market participation and access to value chain technologies might however have resulted in uneven experiences across countries. In this paper, we explore their impact on prices in the value chain, using the example of two East African countries, Ethiopia and Uganda. We develop a conceptual framework and then validate the model using unique primary price data collected at several levels in the dairy value chains in both countries. We find that prices are overall significantly lower in Uganda than Ethiopia, reflecting their respective net exporting and importing status. Moreover, despite shorter value chains, we find much more significant effects of distances from the capital (the major end destination) on milk prices in Ethiopia than in Uganda. This is seemingly linked to the widespread presence of milk chilling centers in Uganda. While it has been shown that such technology is important for milk quality, we find here that they also have the added benefit to reduce the impact of farmer’s remoteness on prices and therefore allow for more geographically extended value chains.
    Date: 2021–02–24
  16. By: Heitor S. Pellegrina (NYU Abu Dhabi); Sebastian Sotelo (University of Michigan)
    Abstract: Exploiting a large migration of farmers to the West of Brazil between 1950 and 2010, we study how migration shapes aggregate and regional comparative advantage. We document that farmers emigrating from regions with high employment in an activity are more likely to work in that activity and have higher income than other migrants doing so. We incorporate this heterogeneity into a quantitative model and find that, by reshaping comparative advantage, declines in migration costs contributed substantially to Brazil's rise as a leading commodity exporter. Opportunities to migrate, moreover, account for a substantial share of the gains from trade.
    Keywords: International Trade, Migration, Comparative Advantage
    JEL: F11 F22
    Date: 2021–01
  17. By: Isaac Ehrlich; Yun Pei
    Abstract: We evaluate the economic consequences of immigration in a two-country, two-skill, overlapping-generations framework, where immigration, population, human and physical capital formation, and economic growth are endogenous variables. We go beyond extant literature by integrating physical capital in our model. This enables the derivation of new insights about the induced-immigration effects of exogenous triggers, including pull and push factors and policy variables, on the dynamic evolution of the “immigration surplus” in the short run versus the long run, in destination vs. source countries and in the global economy. The policy shifts we analyze include the easing of constraints on potential migrants’ labor and physical capital mobility, and the role of physical capital endowments. We also discuss the policy implications of asymmetries in the net benefits from immigration across destination and source countries.
    JEL: F22 F43 J11 J24 O15
    Date: 2021–02
  18. By: Pramila Crivelli; Mona Pinchis-Paulsen
    Abstract: This paper reviews the World Trade Organization (WTO) Panel Report “Russia-Measures Concerning Traffic in Transit” of April 2019. It constitutes the first attempt to disentangle the legal and political aspects related to the invoked essential security interests from the economic considerations underlying the measures imposed on the transit through Russia of goods exported from Ukraine to the Republic of Kazakhstan and Kyrgyzstan. One the one hand, the Panel’s analytical framework for the interpretation of Article XXI of the GATT denied Members unilateral determination over the security exceptions. It further enables future WTO panels a pathway for reviewing possible abuses of the security exceptions, a growing concern with the rising complexity of transnational economic relations. On the other hand, our economic analysis suggests a stricter assessment of Russia’s transit restrictions was necessary to satisfy this framework. In particular, the economic analysis argues the Panel adopted a circular assessment when considering the plausibility of whether Russia implemented its measures for the protection of its essential security interests in time of emergency in international relations. Ultimately, the Panel's attention to finding a diplomatic and legal path forward failed economic scrutiny; still, a legal assessment argues that the Panel's findings fit the legal design of Article XXI:b of the GATT.
    Keywords: WTO, dispute settlement, national security, transit, trade barriers, Russia
    Date: 2021–02
  19. By: Lema, Rasmus (Aalborg University, and University of Johannesburg); Pietrobelli, Carlo (UNU-MERIT, and University Roma Tre); Rabellotti, Roberta (University of Pavia, and Aalborg University); Vezzani, Antonio (University Roma Tre)
    Abstract: Innovation trajectories in global value chains can take highly differentiated pathways. Firms and other organisations operating in a sector in a given country may gain or lose innovative capacity over time compared to their peers in other countries. In this paper we address the question: do stylised trajectories emerge from the analysis of countries' relative innovative capacity and global value chain participation? We draw explorative insights from a cluster analysis of 45 countries on the subsectors of the information and communication technology industry: hardware and software. Our analysis uncovers remarkable differences across sectors and countries. We identify different trajectories and discuss the sub-sectoral specificities which contribute to explaining these differences. The association between the strengthening of innovative capacity and deeper insertion in global value chains applies to only a handful of countries and only in the software subsector. These findings raise questions for future research on innovation in global value chains.
    Keywords: Global value chains, Innovation capacity, Innovation trajectories, Hardware, Software, ICT
    JEL: F23 D23 L22 L25 O10 O32 O38
    Date: 2021–03–01
  20. By: Hübler, Michael; Bukin, Eduard; Xi, Yuting
    Abstract: This article introduces a new econometric model that includes an innovative measure of intersectoral structural change. This model describes the structural convergence (or divergence) of sector share patterns across countries (from the North-South or global perspective) influenced by international trade. The econometric analysis applies panel data estimators with different types of fixed effects to the 2013 and 2016 releases of the World Input-Output Database (WIOD), covering the periods 1995-2009 and 2000-2014. The results show that international trade promotes structural convergence, which is enhanced by sectoral capital intensities. It seems, however, that in this millennium, structural divergence has been fostered by trade-induced specialization in CO2-intensive production.
    Keywords: structural change,international trade,CO2 emissions,macro-econometrics,panel data,WIOD
    JEL: C51 F14 F18 O11 O44
    Date: 2020
  21. By: Craig VanGrasstek
    Abstract: The results of the 2020 elections do not mean a quick or easy return to U.S. leadership in the trading system. This examination instead stresses a series of global and domestic challenges, several of which stem from long-term shifts in power and wealth. In addition to the rise of China, these include a reputational hangover from the Trump administration and the proliferation of agreements that prize targeted liberalization over nondiscrimination. The Biden administration must also contend with protectionist industries, lack of comity between the branches of government, and the two parties’ contradictory priorities on trade-related issues. The net effect is that American statesmen may continue to assign a low priority to trade, their attention is more likely to be directed toward discriminatory than multilateral initiatives, and the administration will face competing demands that complicate the negotiation and approval even of free trade agreements with selected partners.
    Keywords: US trade policy, domestic politics, China, Biden administration, trade agreements
    Date: 2021–02
  22. By: Edward J. Balistreri; Zoryana Olekseyuk
    Abstract: We quantify the impacts of a potential Investment Facilitation Agreement (IFA) given the outcomes of the structured discussions. The analysis is based on an innovative multi-region general equilibrium simulation model including bilateral representative firms. Consideration is given to Foreign Direct Investment (FDI) and monopolistic competition. The model shows empirically relevant gains associated with removal of investment barriers. The expected global welfare gains range between 0.56% and 1.74% depending on the depth of a potential IFA. The benefits are concentrated among the members with the highest welfare increase for the low and middle income countries. Notable spillovers accrue to non-participants, which can be increased by joining the agreement. Our results contribute to the relatively scarce research on investment facilitation and provide policy makers with information on the potential effects of an IFA.
    Date: 2021–02
  23. By: Raul Caruso (Department of Economic Policy and CSEA, Catholic University of Sacred Heart CESPIC, Catholic University Our Lady of Good Counsel)
    Abstract: This paper presents some insights on economic statecraft with a special focus on economic sanctions. Taking some evidence on negative economic sanctions as point of departure the paper is an attempt to throw light on aspects and factors which could be considered relevant while designing ‘positive’ economic sanctions. Two aspects have been highlighted as being crucial. First, a proper consideration of interest and social groups has been proven to explain the failure of comprehensive negative sanctions, the success of smart sanctions and – more interestingly – the potential success of positive sanctions. Secondly, the existence (or the lack) of some institutional arrangement between sender states also explains the failure of negative sanctions as well as the potential success of positive sanctions.
    Keywords: economic sanctions, positive sanctions, negative sanctions, effectiveness, trade, interest groups
    JEL: F51 H56 F5 N40
    Date: 2021–01
  24. By: Rita K. Almeida; Lourenço S. Paz; Jennifer P. Poole
    Abstract: Several episodes of market-oriented reforms in developing countries have been accompanied by a significant rise in work outside of the formal economy. This paper investigates whether the impact of increased exposure to trade on formal employment is mediated by the strength of labour regulations. We rely on data from the Brazilian Census which provides information on workers' demographics and employment, including job formality status.
    Keywords: Brazil, Informality, Trade, Regulation, Instrumental variable, Labour
    Date: 2021
  25. By: Agnes Kügler; Klaus S. Friesenbichler; Cornelius Hirsch
    Abstract: Austria is a small open economy that in the last decades underwent two different waves of increasing trade integration: one with Eastern Europe and one with China. This paper studies the effects of increases in trade with China and Eastern Europe on labour market dynamics in Austrian NUTS-4 regions for two ten-year periods between 1995 and 2015. Given the limited data available, the current analysis could not identify significant effects on aggregate labour dynamics neither for rising imports from Eastern Europe or China, nor for rising exports to Eastern Europe. However, there is weak evidence that exports to China have facilitated employment growth, especially in high quality segments. Overall, these results add a cautious perspective to the discussion of import competition.
    Keywords: Trade, Employment, China, Eastern Europe, Austria
    Date: 2021–02–12
  26. By: Kaitila, Ville
    Abstract: Abstract This brief focuses on the importance of international cost competitiveness of output in Finland, as measured by relative nominal unit labour costs, and the development of export markets for Finnish goods exports. Cost competitiveness fluctuates around some long-term equilibrium level and tends to adjust towards that level over the course of time, while export markets can in principle grow forever. According to our estimation results, both improved cost competitiveness and growth in export markets support Finnish exports. These explicatory variables are positively correlated, which shows that Finland’s cost competitiveness is procyclical. This may be due to wage rigidities and differences in economic structures vis-à-vis other countries, among other things. Procyclicality may increase the volatility of Finnish exports, but it may also smoothen the domestic demand cycle. In principle, more volatile cost competitiveness and thereby more volatile development in the volume of exports may increase uncertainty and affect investments and economic growth negatively. Based on forecasts by Etla and the European Commission, Finland’s cost competitiveness improved by 0.7 per cent in 2020, but it will decline by three per cent this year and further by one per cent next year. The decline is due to development in labour costs. On the other hand, export markets will grow markedly.
    Keywords: Cost competitiveness, Exports, Export demand, Forecast
    JEL: F14 F16 F17
    Date: 2021–03–08
  27. By: Stamer, Vincent
    Abstract: Global container ship movements may reliably predict global trade flows. Aggregating both movements at sea and port call events produces a wealth of explanatory variables. The machine learning algorithm partial least squares can map these explanatory time series to unilateral imports and exports, as well as bilateral trade flows. Applying out-of-sample and time series methods on monthly trade data of 75 countries, this paper shows that the new shipping indicator outperforms benchmark models for the vast majority of countries. This holds true for predictions for the current and subsequent month even if one limits the analysis to data during the first half of the month. This makes the indicator available at least as early as other leading indicators.
    Keywords: Trade,Forecasting,Machine Learning,Container Shipping
    JEL: F17 C53
    Date: 2021
  28. By: Kohnert, Dirk (GIGA - German Institute of Global and Area Studies, Hamburg)
    Abstract: ABSTRACT & RÉSUMÉ : Every three years, the AU-EU summit reunites African and EU leaders to outline the future direction of cooperation. The 6th summit had been to reaffirm and renew the partnership between the two blocks already in October 2020, but it was pushed back to the first quarter of 2021 or even later due to COVID-19 crisis. Besides, Brussels had to deal with its own post-Brexit situation and its repercussions on EU-Africa relations, excluding the UK. African states, for their part, wanted to renegotiate the EU-Africa partnership and to balance it with new promising Post-Brexit visions of the British premier Johnson about increased economic ties with the African Angloshere. China and other global players compete with the EU and its member states in the new scramble for African resources. Given that Africa is increasingly courted by other partners it could be inclined to successively limit its relations with the EU and see it as a mere provider of aid and security against Islamic terrorism. This trend was reinforced by the fact that the new EU-Africa strategy still hasn't been approved by EU member states. And a timely replacement of the Cotonou Agreement, which expires in November 2021, is open to question. RÉSUMÉ : Tous les trois ans, le sommet UA-UE réunit les dirigeants africains et européens pour définir l'orientation future de la coopération. Le 6e sommet devait réaffirmer et renouveler le partenariat entre les deux blocs déjà en octobre 2020, mais il a été repoussé au premier trimestre 2021, ou même plus tard, en raison de la crise du COVID-19. En outre, Bruxelles a dû faire face à sa propre situation post-Brexit, compte tenu l'exclusion du Royaume-Uni, et à ses répercussions sur les relations UE-Afrique. Les États africains, pour leur part, souhaitaient renégocier le partenariat UE-Afrique, et l'équilibrer avec les nouvelles visions post-Brexit prometteuses du Premier ministre britannique Johnson sur le renforcement des liens économiques avec l'Anglosphère africaine. La Chine et d'autres acteurs mondiaux sont en concurrence avec l'UE et ses États membre dans la nouvelle ruée vers les ressources africaines. Étant donné que l'Afrique est de plus en plus courtisée par d'autres partenaires, elle pourrait être encline à limiter successivement ses relations avec l'UE et à la considérer comme un simple fournisseur d'aide et de sécurité contre le terrorisme islamique. Cette tendance a été renforcée par le fait que la nouvelle stratégie UE-Afrique n'a toujours pas été approuvée par les États membres de l'UE. Et un remplacement opportun de l'accord de Cotonou, qui expire en novembre 2021, est sujet à caution.
    Date: 2021–02–26
  29. By: Eugenia C. Go (Asian Development Bank)
    Abstract: I investigate the effect of a transport program in the Philippines on domesticmaritime trade patterns. The Roll-on Roll-off Terminal System (RRTS) introduced in 2003 promotes the use of roll-on roll-off ships for interisland trade. Exploiting the variation in the availability of services between ports and the timing at which they were introduced, I find that port-pairs in RRTS trade 35% more compared to unconnected pairs with comparable characteristics. This gain largely comes from the greater variety of products traded along RRTS pairs. Transactions are 7.7% to 9.3% more frequent in RRTS routes, suggestive of inventory management as an avenue of trade costs savings. The strong responses in the extensive margin and transaction frequency highlight how the RRTS reduced the fixed cost of trade. High value and time-sensitive products systematically benefit more from the RRTS. These gains do not come from displacing trade from competing non-RRTS ports. Instead, the RRTS complements trade in liner routes by supporting feeder traffic.
    Keywords: Trade cost, transport cost, trade patterns
    JEL: F14 F63 R40
    Date: 2021–03
  30. By: David Martinez Turegano (European Commission - JRC)
    Abstract: Inspired by the ideas developed in Timmer (2017), this paper proposes a measure of Global Value Chain – Total Factor Productivity (GVC-TFP) and a decomposition of its changes into three informative factors: changes in factor requirements associated with efficiency gains/losses in the use of capital and labour, shifts in the distribution of value added due to changes in factor shares, and shifts in the composition of the value chain, which are mainly due to geographical relocation of production stages. Based on the World Input-Output Database (WIOD), we use this methodology to analyse the evolution of GVC-TFP in different sectors across EU27 Member States between 2000 and 2014. Comparing the periods before and after the Great Recession, we find a sharp contrast between the intensity, the sectoral composition, geographical contributions and the nature of the driving forces of GVC-TFP developments. In the context of the economic crisis following the COVID-19 pandemic, in which import dependency and supply security mark the debate on the future of the EU Single Market, we find that our methodology could contribute to a comprehensive assessment of strategic restructuring of value chains.
    Keywords: Productivity, value chain, sectoral heterogeneity, convergence, European Union
    JEL: E24 F14 F23 L16
    Date: 2021–03
  31. By: James A. Brander; Barbara J. Spencer
    Abstract: This paper examines intellectual property litigation as a method of protection from patent-infringing imports. Claims against patent-infringing imports entering the United States may be filed before the International Trade Commission (ITC) or in district court. The ITC applies injunctions (import prohibitions) that would seem to provide more protection from infringing imports than the standard license fee remedy in court. Settlements prior to legal adjudication are common in both venues. Using a model with Nash bargaining and Cournot competition, we show that an ITC filing may restrict imports by less than in court. This result tends to apply if product differentiation is high and the size of the patented cost-reducing innovation is large.
    JEL: C70 F12 F13 K41 O34
    Date: 2021–02
  32. By: Andrei N. Medushevskiy (National Research University Higher School of Economics)
    Abstract: Globalisation has provoked a deep transformation in international law, political affairs and governance with contradictory consequences. It has stimulated the cosmopolitan project of global constitutionalism, transnational integration and the unification of democratic standards. However, it also resulted in the fragmentation of international affairs, the deterioration of constitutional democracy and a feeling of a growing shortage in democracy on national and international levels of governance. The international debate on global legal stability therefore cannot ignore the problem of constitutional transformation. The most simple solution to the dilemma consists in the polarised opposition of two trends in the development of the international legal order, namely, integration (in the form of the constitutionalisation of international law) and its fragmentation (in form of the separation of different global constitutional regions, supra-national actors or regimes). According this view, the two rival trends cannot be coordinated and a sharp collision cannot be avoided. The result could be described as a “zero-sum game”, as progress in integration means an equal regress in fragmentation and vice versa. This approach is therefore useful as a methodological presumption grounded on the very abstract, linear and teleological vision of globalisation considering its development from a black and white perspective and associating it strictly with positive results—progress in human rights protection, the supremacy of law and law-based states. The current global pandemic, however, reveals the other side of globalisation—economic recession, legal contradictions, the prevalence of egoistic motives, and the perceived interests of separate regions and national states over general international values or a different interpretation of its content and “common” character. That simple fact makes it important to reconsider the complex character of legal globalisation and the reciprocal relations between its opposite sides—constitutionalisation and the fragmentation of international constitutionalism. Trying to balance the impact of these two opposing trends, the author analyses the positive and negative effects of globalisation on constitutional development regarding such issues as transnational constitutionalisation, democracy and national sovereignty, the changing place of multilayer constitutionalism, the international separation of powers, and the system of global governance in the establishment of transnational constitutional democratic legitimacy. From this point of view, the populist backslide in Central and Eastern Europe (CEE) looks dangerous and unforeseen, but it is a systemic and potentially predictable reaction of global regions on the uneven character of integration, the lack of democratic legitimacy and a new answer to the contortions and dysfunctions of global governance. An adequate response to these challenges could be found in a new concept of constitutional integration based on ongoing dialogue between the transnational and national actors of legal globalisation. This dialogue is possible by using a conflict-mediation strategy, elaborated by international experts, especially, for the deliberation of complex and protracted conflicts, which have no clear practical solutions in the short to medium term.
    Keywords: globalisation, global constitutionalism, international and national law, constitutionalisation, democracy, national sovereignty, multilayer constitutionalism, separation of powers, global governance, transnational constitutional legitimacy; populist backslide; constitutional identity, reinvented legal traditionalism
    JEL: Z
    Date: 2021
  33. By: Odhiambo, Nicholas M
    Abstract: In this paper, the causal relationship between financial development and foreign direct investment in sub-Saharan African (SSA) countries is examined. Three proxies of financial development, namely bank deposits, deposit money bank assets, and liquid liabilities have been used to examine this linkage. Using a multivariate panel Granger-causality model, the study found that the causal relationship between financial development and foreign direct investment is dependent on the variable used to measure the level of financial development. The relationship also varies over time. Overall, the study found a causal flow from FDI to financial development to predominate, at least in the short run. The study, therefore, recommends that policies aimed at attracting foreign direct investment inflows should be prioritised in SSA countries in the short run, in order to foster the development of the financial sector in the region.
    Date: 2021–01
  34. By: Byahut, Rajkumar; Dutta, Sourish; Iyer, Chidambaran G.; Nataraj, Manikantha
    Abstract: The importance of trade to an economy needs no emphasis. You sell products or services that you are competitive at and buy those where you are not. Experience of countries such as South Korea and China demonstrate that resources required for development can be garnered through trade; thus, motivating many countries to embrace trade as a means for development. Simultaneously, emergence of 'Global Value Chain' or 'GVC' as they are popularly known has changed the way we trade. Though the concept of GVC was introduced in the early 2000s, there are examples of global value chains before the 1980s. However, the scale of the phenomenon and the way in which technological change, by lowering trade costs, has allowed fragmentation of production was not possible before (Hernandez et al., 2014). In this context, the World Bank has recently published its 'World Development Report 2020: Trading for Development in the Age of Global Value Chains' (WDR). The report prescribes that GVCs still offer developing countries a clear path to progress and that developing countries can achieve better outcomes by pursuing market-oriented reforms specific to their stage of development.
    Keywords: Global Value Chains,International Trade,Global Production Network,Firm-level Trade
    JEL: F0 F1 F2
    Date: 2020
  35. By: Simplice A. Asongu (Yaounde, Cameroon); Joseph Nnanna (The Development Bank of Nigeria, Abuja, Nigeria)
    Abstract: This study assesses how globalization modulates the effect of governance on CO2 emissions in sub-Saharan African countries. The empirical evidence is based on Generalized Method of Moments. The minimum level (or negative threshold) of FDI required for it to interact with political stability and contribute towards the green economy is 45% of GDP, while 90% of GDP is the maximum level (or positive threshold) required for trade to complement “voice & accountability†in mitigating CO2 emissions. 76 % of GDP and 80 % of GDP are respectively negative trade thresholds for government effectiveness and economic governance. The corresponding negative trade thresholds for the rule of law, corruption-control and institutional governance are respectively, 230% of GDP, 63.5% of GDP and 106.5% of GDP. Actionable openness policy thresholds are provided to inform policy makers on how governance interacts with globalization to promote the green economy.
    Keywords: CO2 emissions; Economic development; Africa
    JEL: C52 O38 O40 O55 P37
    Date: 2021–01
  36. By: Werner Hölzl
    Abstract: This research studies the effect of import competition from China for the period after the financial crisis 2008-09 until 2014. It draws on a unique dataset containing employment information for 248 regions in the EU. The uncovered coefficients are statistically not significant, indicating that Chinese imports were not an important driver of deindustrialisation in Europe in the period analysed. The estimates are imprecise, however. An analysis of the economic importance of the results leads to the conclusion that Chinese import competition was not a primary driving force of European manufacturing employment. Possible explanations for the lack of significant results are discussed.
    Keywords: Trade, Employment, China, EU, Regions
    Date: 2021–02–12
  37. By: Klaus S. Friesenbichler; Agnes Kügler; Andreas Reinstaller
    Abstract: We revisit the impact of rising imports from China on within firm labour productivity growth in the EU. The period analysed is 2003 through 2016 and thus covers the recent increase of technology-intensive imports from China. We find that higher fractions of Chinese imports in aggregate imports slow down labour productivity growth of domestic firms in Europe. The adverse effect becomes more pronounced at higher growth rates. Multinationals are able to partly compensate the negative effects of import competition and benefit from Chinese imports at higher productivity growth intensities. The effects are strongest for local firms and firms in low tech industries. No effects were found for firms in high-tech industries.
    Keywords: Import Competition, Multinational Firms, Productivity, Manufacturing, EU, China
    Date: 2021–02–12
  38. By: Kilian, Lutz; Nomikos, Nikos K.; Zhou, Xiaoqing
    Abstract: Using a novel dataset, we develop a structural model of the Very Large Crude Carrier (VLCC) market between the Arabian Gulf and the Far East. We study how fluctuations in oil tanker rates, oil exports, shipowner profits, and bunker fuel prices are determined by shocks to the supply and demand for oil tankers, to the utilization of tankers, and to the cost of operating tankers, including bunker fuel costs. Our analysis shows that time charter rates are largely unresponsive to tanker cost shocks. In response to higher costs, voyage profits decline, as cost shocks are only partially passed on to round-trip voyage rates. Oil exports from the Arabian Gulf also decline, reflecting lower demand for VLCCs. Positive utilization shocks are associated with higher profits, a slight increase in time charter rates and lower fuel prices and oil export volumes. Tanker supply and tanker demand shocks have persistent effects on time charter rates, round-trip voyage rates, the volume of oil exports, fuel prices, and profits with the expected sign.
    Keywords: Shipping,VLCC,crude oil,bunker fuel,tanker,voyage,time charter,profits,exports,passthrough
    JEL: Q43 R41
    Date: 2020
  39. By: Claudio Battiati; Cecilia Jona-Lasinio; Enrico Marvasi; Silvia Sopranzetti
    Abstract: Recent empirical investigations have documented an upward trend in profit rates, markups, and concentration over the last decades, bringing a renewed interest in market power and its causes and consequences. While most studies have focused on the US, recent works identify similar patterns in other advanced economies as well. In light of such results, a growing concern is emerging about the negative effects of declining competition. Do we observe a similar pattern in the EU countries? This paper relies on national accounting data to investigate these issues for four major EU countries: France, Germany, Italy and Spain. We find that, despite some common trends, EU countries are differentiated and followed different trends relative to the US. The upward markup trend is less pronounced than in the US and markups are positively correlated with productivity and investments, including on innovation; while imported inputs and Global Value Chains have pro-competitive effects. In the EU, despite country and sector specificities, increased concentration and market power are generally of less concern than in the US, while a larger role for the most efficient firms might increase efficiency.
    Keywords: productivity growth, markups, market power, global value chains.
    JEL: F40 F10 F60
    Date: 2021
  40. By: Sergei Tkachenko (UPV/EHU - Universidad del Pais Vasco / Euskal Herriko Unibertsitatea [Espagne], MSU - Lomonosov Moscow State University)
    Abstract: Scientific research about the effect of different factors of risk on foreign direct investment realised for and presented on the International scientific forum Lomonosov 2021, section "Risks and methods of managing risks in the era of digitalisation".
    Keywords: Foreign direct investment,FDI,investment
    Date: 2021
  41. By: Grumiller, Jan; Grohs, Hannes
    Abstract: This Briefing Paper examines the resilience of the medical product and pharmaceutical global value chains. Based on this assessment, policy recommendations are presented to increase supply security, including measures to improve the resilience of supply chains, and to expand stockpiling. We also highlight that industrial policy measures to promote reshoring should play a more important role, and that coordination on the EU-level is necessary. Given the large differences between products and supply chains within and between sectors, policies need to be tailored to specific products and product groups. Finally yet importantly, repercussions of EU policy on the Global South also need to be taken into account.
    Keywords: supply chain resilience,reshoring,pharmaceuticals,medical products,COVID-19
    Date: 2021
  42. By: Miriam Manchin
    Abstract: This dataset covers an extensive range of non-trade policy outcomes which can be found in trade agreements. The variables measuring these various non-trade outcomes are grouped along four main categories: (1) economics and social rights, (2) political and civil rights, (3) environmental issues, and (4) security issues. The data covers the period from 1960 to 2018 with the number of countries covered being 217. Overall, the number of variables in the dataset is 490, from which 30 are summary indexes which are constructed using principal component analysis.
    Keywords: Database, non-trade policy outcomes
    JEL: Y10 F60
    Date: 2021–01
  43. By: Odhiambo, Nicholas M
    Abstract: This study examines the dynamic causal relationship between exports and economic growth in sub-Saharan African (SSA) countries during the period 1980-2017. The study also examines whether the causality between these two macroeconomic variables depends on the countries? level of income. For this purpose, the full sample of SSA countries is disaggregated into two subsets ? one comprising of low-income countries and the other consisting of middle-income countries. In order to address the omission-of-variable bias, which has been reported in some of the previous studies, the study uses a multivariate panel Granger causality model to examine this linkage. Specifically, the study incorporates external debt as an intermittent variable in a bivariate setting between exports and economic growth, thereby creating a dynamic multivariate Granger-causality model. Although the study found the existence of a long-run relationship between exports and economic growth, the study failed to find any export-led growth response in both low-income and middle-income countries. Instead, the study found evidence of a bi-directional causality and a neutrality response in middle-income and low-income countries, respectively. The study concludes that the argument that exports always lead to economic growth may have been oversold to many SSA countries. The study, therefore, cautions low-income SSA countries against over-relying on an export-led growth strategy to achieve a sustained growth path. Instead, they should consider pursuing domestic demand-led growth strategies alongside their export promotion strategies to expand the real sector of their economies.
    Date: 2021–01
  44. By: Akasaka, Shintaro
    Abstract: This paper synthesizes insights from new global data on the effectiveness of migration policies. It investigates the complex links between migration policies and migration trends to disentangle policy effects from structural migration determinants. The analysis challenges two central assumptions underpinning the popular idea that migration restrictions have failed to curb migration. First, post‐World War II global migration levels have not accelerated, but remained relatively stable while most shifts in migration patterns have been directional. Second, post‐World War II migration policies have generally liberalized despite political rhetoric suggesting the contrary. While migration policies are generally effective, substitution effects can limit their effectiveness, or even make them counterproductive, by geographically diverting migration, interrupting circulation, encouraging unauthorized migration, or prompting “now or never” migration surges. These effects expose fundamental policy dilemmas and highlight the importance of understanding the economic, social, and political trends that shape migration in sometimes counterintuitive, but powerful, ways that largely lie beyond the reach of migration policies.
    Keywords: migration, trends, determinants, policy, visa, refugee
    JEL: J0 J01 J08 J6 J61
    Date: 2020
  45. By: Lars Ludolph (London School of Economics and Political Science); Barbora Šedová (Potsdam Institute for Climate Impact Research (PIK), Mercator Research Institute on Global Commons and Climate Change, University of Potsdam)
    Abstract: In this paper, we study the effect of exogenous global crop price changes on migration from agricultural and non-agricultural households in Sub-Saharan Africa. We show that, similar to the effect of positive local weather shocks, the effect of a locally-relevant global crop price increase on household out-migration depends on the initial household wealth. Higher international producer prices relax the budget constraint of poor agricultural households and facilitate migration. The order of magnitude of a standardized price effect is approx. one third of the standardized effect of a local weather shock. Unlike positive weather shocks, which mostly facilitate internal rural-urban migration, positive income shocks through rising producer prices only increase migration to neighboring African countries, likely due to the simultaneous decrease in real income in nearby urban areas. Finally, we show that while higher producer prices induce conflict, conflict does not play a role for the household decision to send a member as a labor migrant.
    Keywords: labour migration, food prices, climate, Africa
    JEL: O15 O55 Q56 Q54
    Date: 2021–03

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