nep-int New Economics Papers
on International Trade
Issue of 2021‒04‒19
38 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Macroeconomic effects of the trade wars: Smoot-Hawley Protectionism Tariff By Toptancı, Ali İskan
  2. The Openness Hypothesis in the Context of Economic Development in Sub-Saharan Africa: The Moderating Role of Trade Dynamics on FDI By Asongu, Simplice; Nnanna, Joseph; Acha-Anyi, Paul
  3. Is green always attractive? The location choices of Chinese outward FDI By Andrea Ascani; Simona Iammarino
  4. The Partial and General Equilibrium Effects of the Greater Arab Free Trade Agreement By El-Sahli, Zouheir
  5. Trade barriers in government procurement By Alen Mulabdic; Lorenzo Rotunno
  6. The effect of foreign direct investment on tax revenue in developing countries By Abdramane Camara
  7. Global Supply Chains in the Pandemic By BarthŽlŽmy Bonadio; Zhen Huo; Andrei A. Levchenko; Nitya Pandalai-Nayar
  8. Immigrant Workers, Firm Export Performance and Import Competition By Léa Marchal; Giulia Sabbadini
  9. "The Impact of Robot Adoption on Global Sourcing". By Akin A. Cilekoglu; Rosina Moreno; Raul Ramos
  10. Trade Shocks, Fertility, and Marital Behavior By Osea Giuntella; Lorenzo Rotunno; Luca Stella
  11. Assessing the Potential Economic Gains of China-Pakistan-Economic-Corridor Energy Projects for Pakistan By Saddam Hussain; Chunjiao Yu; Ali Sohail; Sadaf Manzoor; Ao Li
  12. Reforming Market Access in Agricultural Trade: Tariff Removal and the Trade Facilitation Agreement By Beckman, Jayson
  13. Concentration in International Markets: Evidence from US Imports By Alessandra Bonfiglioli; Rosario Crinò; Gino Gancia
  14. The long journey towards Pan-African integration: The African Continental Free Trade Area and its challenges By Tröster, Bernhard; Janechová, Eva
  15. Buena vista: Social corporate responsibility provisions in regional trade agreements By Monteiro, José-Antonio
  16. Bilateral digital connectivity and firm participation in export markets By Joël Cariolle; Michele Imbruno; Jaime de Melo
  17. Who Benefits from Global Value Chain Participation? Does Functional Specialization Matter? By Petr Pleticha
  18. A Practical Proposal to End Corporate Tax Abuse: METR, a Minimum Effective Tax Rate for Multinationals By Petr Jansky; Alex Cobham; Tommaso Faccio; Javier Garcia-Bernardo; Jeffery Kadet; Sol Picciotto
  19. Productivity effects of processing and ordinary export market entry: A time-varying treatments approach By Girma, Sourafel; Görg, Holger
  20. Trade Intensity, Net Trade, and Revealed Comparative Advantage By Andrey A. Gnidchenko; Vladimir A. Salnikov
  21. Trade and Market Power in Product and Labor Markets By Gaelan MacKenzie
  22. Trade Shocks, Fertility, and Marital Behavior By Osea Giuntella; Lorenzo Rotunno; Luca Stella
  23. The Effect of Corrupt Market Experience on FDI: Evidence from Swedish Manufacturing Enterprises By Thede, Suanna; Karpaty, Patrik
  24. Environmental policy and the CO2 emissions embodied in international trade By Koutchogna Kokou Edem ASSOGBAVI; Stéphane Dées
  25. Do Remittances Worsen Export Diversification? By Erik Vardanyan
  26. Assessing the Impact of COVID-19 on Trade: a Machine Learning Counterfactual Analysis By Marco Due\~nas; V\'ictor Ortiz; Massimo Riccaboni; Francesco Serti
  27. Exporters' reaction to positive foreign demand shocks By Asier Minondo
  28. The Economic Effects of International Sanctions: An Event Study By Gutmann, Jerg; Neuenkirch, Matthias; Neumeier, Florian
  29. Globalization and Female Economic Participation in MINT and BRICS countries By Osinubi, Tolulope; Asongu, Simplice
  30. Immigrant Misallocation By Serdar Birinci; Fernando Leibovici; Kurt See
  31. The role of relatedness and strategic linkages between domestic and MNE sectors in regional branching and resilience By Mattie Landman; Sanna Ojanper\"a; Stephen Kinsella; Neave O'Clery
  32. New Frontiers in Asia-Pacific Trade, Investment and International Business Dispute Resolution By Luke Nottage; Bruno Jetin
  33. A CO2-border adjustment mechanism as a building block of a climate club By Bierbrauer, Felix; Felbermayr, Gabriel; Ockenfels, Axel; Schmidt, Klaus M.; Südekum, Jens
  34. Immigration Policy and Remittance Behaviour By Piracha, Matloob; Tani, Massimiliano; Tchuente, Guy
  35. Trade and the Composition of Growth By Robert F. Kane
  36. Does Fair Trade Breed Contempt? A Cross-Country Examination on the Moderating Role of Brand Familiarity and Consumer Expertise on Product Evaluation By Herédia-Colaço, V; Coelho do Vale, R; Villas-Boas, SB
  37. Foreign Direct Investment in China and Domestic Activities of Japanese Firms By OKUBO Toshihiro
  38. The Impact of COVID-19 on Global Production Networks: Evidence from Japanese Multinational Firms By ZHANG Hongyong

  1. By: Toptancı, Ali İskan
    Abstract: In this study, trade wars started after the USA accepted the Smoot-Hawley tariff in June 1930. US businessmen opposed the implementation of this tariff, and many of them retaliated by increasing the tariffs on imports from the US. Using the new quarterly data on the bilateral trade of 99 countries during the war period, it is seen that US exports to protesting countries fell by 15-22%, while US exports against those who retaliated fell between 28-33%. Therefore, if a second data on US exports on a product basis is used, US exports to retaliatory markets were significantly affected. This situation is stated to be a possible mechanism where the USA is targeted despite the MFN (Most Observed Nation Registration) obligations of the countries. It is observed that the earnings of retaliating countries from trade declined by about 8-17%.
    Keywords: USA,Protectionism,Trade Wars,Import and Export,Retaliation
    JEL: F13 F14 N70 N72
    Date: 2021
  2. By: Asongu, Simplice; Nnanna, Joseph; Acha-Anyi, Paul
    Abstract: This study investigates the simultaneous openness hypothesis by assessing the importance of trade openness in modulating the effect of foreign direct investment (FDI) on economic dynamics of gross domestic product (GDP) growth, real GDP and GDP per capita. The focus of the study is on 25 countries in Sub-Saharan Africa over the period spanning from 1980 to 2014. First, trade imports modulate FDI to induce net positive effects on GDP growth and GDP per capita. Second, trade exports moderate FDI to generate overall positive impacts on GDP growth, real GDP and GDP per capita. Implications of the study are discussed, inter alia: (i) both FDI and trade infrastructures are necessary for FDI-focused measures to engender positive economic development outcomes in host communities and countries. (ii) Macroeconomic conditions that are relevant for promoting economic development are necessary for the interactions between trade openness and FDI to generate favorable outcomes in terms of GDP growth, real GDP and GDP per capita.
    Keywords: Economic Output; Foreign Investment; Sub-Saharan Africa
    JEL: E23 F21 F30 L96 O55
    Date: 2020–10
  3. By: Andrea Ascani (Gran Sasso Science Institute); Simona Iammarino (London School of Economics)
    Abstract: With the exponential growth of the role of China in the global economy, the environmental implications of its international expansion are serious but still scarcely investigated. This paper analyses the location of 6,494 manufacturing subsidiaries of Chinese Multinational Enterprises (MNEs) in 78 countries over the period 2008-2015, in response to the environmental performance of host economies, in order to explore whether degraded environmental contexts represent a pull factor for Chinese outward foreign direct investment (FDI). We build an original conceptual framework combining traditional race-to-the-bottom arguments with a set of conditioning factors pertaining to heterogeneity of both host countries and MNEs. By empirically accounting for endogeneity concerns, our results suggest that Chinese outward FDI may feed a downward spiral by systematically favouring locations with more fragile ecosystem vitality, that is, a weakly sustainable use of local natural resources and the consequent erosion of the quality of the natural ecosystems. These results characterise Chinese subsidiaries (i) locating in developing countries, (ii) operating within deficient institutional frameworks and (iii) privately owned
    Keywords: multinational enterprises, outward FDI, environment, location strategies, China
    JEL: F23 F64 Q5
    Date: 2020–11
  4. By: El-Sahli, Zouheir
    Abstract: Regional trade agreements among developing countries are understudied in the literature. The Greater-Arab Free Trade Agreement (GAFTA) is one such agreement among the Arab countries. The few existing studies on GAFTA suffer from many shortcomings that we address in this study. We incorporate the latest advances in the literature to investigate the partial and general equilibrium effects of GAFTA. The partial equilibrium estimates suggest that GAFTA had a positive and significant effect on bilateral trade of around 40% in 1998 and 61% seven years later after the phasing out of tariffs. The general equilibrium analysis suggests that the welfare effects of the agreement are very small and mostly negligible in the member states. The results highlight that deeper integration among the Arab countries is imperative to bring about further welfare benefits to the member states. This result can be generalized to recommend deeper regional trade agreements among developing countries to capitalize on the benefits of free trade.
    Keywords: free trade agreements, Greater-Arab Free Trade Agreement, economic integration, international trade, gravity model, general equilibrium
    JEL: F1 O1 O2
    Date: 2021–02
  5. By: Alen Mulabdic (World Bank, 1818 H Street, Washington DC, USA.); Lorenzo Rotunno (Aix-Marseille Univ., CNRS, IRD, AMSE, Marseille, France.)
    Abstract: This paper estimates trade barriers in government procurement, a market that accounts for 12% of world GDP. Using data from inter-country input-output tables in a gravity model, we find that home bias in government procurement is significantly higher than in trade between firms. However, this difference has been shrinking over time. Results also show that trade agreements with provisions on government procurement increase cross-border flows of services, whereas the effect on goods is small and not different from that in private markets. Provisions containing transparency and procedural requirements drive the liberalizing effect of trade agreements.
    Keywords: government procurement, trade agreements, gravity equation
    JEL: F13 F14 F15 H57
    Date: 2021–04
  6. By: Abdramane Camara (CERDI - Centre d'Études et de Recherches sur le Développement International - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne)
    Abstract: Internal resource mobilisation remains a big challenge for developing countries. While many studies have attempted to highlight several strategies to increase tax revenues, the contribution of FDI flows in this process has received little attention. When discussing the link between FDI and tax revenues, two opposing mechanisms may be at play: (1) FDI inflows could boost tax revenues by broadening the corporate income tax base with a new entry (new investment); (2) to attract FDI, many developing countries grant large tax exemptions to new investors who can sometimes lead to unfair competition, FDI inflows may not result in a significant increase in tax revenues. This paper tries to provide an empirical answer to FDI inflows' crucial role in tax revenue mobilisation. Using a System GMM system estimator for 90 developing countries over the period 1990-2017, our results strongly suggest that FDI inflows lead, to a significant tax revenue increase. Nevertheless, this effect is not observed in resource-exporting countries where tax revenues seem statistically insensitive to FDI inflows.
    Keywords: Foreign direct investment,tax revenue,System GMM,resource exporting countries.
    Date: 2019–06
  7. By: BarthŽlŽmy Bonadio (University of Michigan); Zhen Huo (Yale University); Andrei A. Levchenko (University of Michigan, NBER, & CEPR); Nitya Pandalai-Nayar (University of Texas, Austin. & NBER)
    Abstract: We study the role of global supply chains in the impact of the Covid-19 pandemic on GDP growth using a multi-sector quantitative framework implemented on 64 countries. We discipline the labor supply shock across sectors and countries using the fraction of work in the sector that can be done from home, interacted with the stringency with which countries imposed lockdown measures. One quarter of the total model-implied real GDP decline is due to transmission through global supply chains. However, ÒrenationalizationÓ of global supply chains does not in general make countries more resilient to pandemic-induced contractions in labor supply. This is because eliminating reliance on foreign inputs increases reliance on the domestic inputs, which are also disrupted due to nationwide lockdowns. In fact, trade can insulate a country imposing a stringent lockdown from the pandemic-shock, as its foreign inputs are less disrupted than its domestic ones. Finally, unilateral lifting of the lockdowns in the largest economies can contribute as much as 2.5% to GDP growth in some of their smaller trade partners.
    Keywords: production networks, international transmission, pandemic, Covid-19
    JEL: F41 F44
    Date: 2021–04
  8. By: Léa Marchal (UP1 - Université Paris 1 Panthéon-Sorbonne, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Giulia Sabbadini (Institut de hautes études internationales et du développement - Graduate Institute of International and Development Studies [Geneva, Switzerland])
    Abstract: This paper investigates whether the employment of immigrant workers affects the performance of firms in their export markets when they are facing an increase in import competition. Exploiting the surge of Chinese imports following its accession to the World Trade Organization and using a sample of French manufacturing exporters from 2002 to 2015, we find that an increase in the growth rate of Chinese imports in a market has a negative effect on both the survival probability of firms and the growth rate of sales on that market. This negative effect on firm performance is mitigated by the employment of immigrant workers.
    Keywords: Firm,Heterogeneity,Immigrant workers,Import competition,Productivity
    Date: 2021–03
  9. By: Akin A. Cilekoglu (AQR-IREA Research Group, University of Barcelona.); Rosina Moreno (AQR-IREA Research Group, University of Barcelona.); Raul Ramos (AQR-IREA Research Group, University of Barcelona and IZA.)
    Abstract: This paper studies the impact of robot adoption on firms’ global sourcing activities. Using a rich panel dataset of Spanish manufacturing firms, we show that robot adopting firms increased their intermediate input purchases from foreign and domestic suppliers between 2006 and 2016. The effects of robots differ across sourcing strategies: the highest in foreign outsourcing and the lowest in foreign vertical integration. We find that robot adopters fragment their production further by reducing the concentration of purchases from suppliers and the increase in intermediate input purchases is related to quality upgrading to a certain extent. Marginal treatment effects estimates suggest that responses to adoption are heterogeneous: higher probability of adoption intensifies the effects on outsourcing and weakens the effects on vertical integration. In contrast to rising concerns over reshoring, our findings suggest that robots have yet promoted trade in intermediate inputs.
    Keywords: Robots, Reshoring, Trade, Production fragmentation. JEL classification: F14, F23, L23.
    Date: 2021–04
  10. By: Osea Giuntella (University of Pittsburgh and IZA); Lorenzo Rotunno (Aix Marseille Univ, CNRS, AMSE, Marseille, France.); Luca Stella (Cattolica University, CESifo and IZA)
    Abstract: Using longitudinal data from the German SocioEconomic Panel, we analyze the effects of exposure to trade on the fertility and marital behavior of German workers. We find that individuals working in sectors that were more affected by import competition from Eastern Europe and suffered worse labor market outcomes were less likely to have children. In contrast, workers in sectors that benefited from increased exports had better employment prospects and higher fertility. These effects are driven by low-educated and married men, and reflect changes in the likelihood of having any child (extensive margin). While among workers exposed to import competition there is evidence of some fertility postponement, we find a significant reduction of completed fertility. There is instead little evidence of any significant effect on marital behavior.
    Keywords: international trade, labor market outcomes, fertility, marriage
    JEL: F14 F16 J13
    Date: 2021–04
  11. By: Saddam Hussain (Hubei University); Chunjiao Yu (Hubei University); Ali Sohail (Xjtu - Xi'an Jiaotong University); Sadaf Manzoor (Riphah International University); Ao Li (Hubei University)
    Abstract: As the extended part of One Belt One Road (OBOR) initiative that aims to interconnect the economic world, China-Pakistan-Economic-Corridor consists of different projects like road and railway, agricultural projects and energy projects in Pakistan. This paper aims to assess the current situation and the potential economic benefits of the energy projects of CPEC for Pakistan. Through research based on the statistical data, we find CPEC enormous contribution of $35 billion investment in the energy sector will bring some positive changes in energy sector of Pakistan. Actually, CPEC is playing a vital role in economic development of Pakistan.The potential economic gains include the following: increasing of supply energy mix with cheaper pricesgenerating energy by utilizing local resources-coal, wind, solar energy and water which help decreasing energy importdecrease trade depicts, encourage Foreign Direct Investment (FDI), reducing unemployment, infrastructural development, industrial zones, trade and local manufacturing industries.This study also explores some risks and challenges to the economy of Pakistan from CPEC.
    Keywords: CPEC,OBOR,Social-Economic Development,Pakistan
    Date: 2020–11–30
  12. By: Beckman, Jayson
    Abstract: Twenty-five years after World Trade Organization member countries agreed to agricultural policy reforms embodied in the Uruguay Round Agreement on Agriculture of 1994 (URAA), multilateral efforts to reduce barriers to agricultural trade have largely stalled. This report estimates the potential gains in global trade and welfare (societal well-being) from two trade reform scenarios: elimination of agricultural tariffs, and a reduction in agriculture trade costs through implementation of the Trade Facilitation Agreement (TFA). Simulations reveal that reducing trade costs through the TFA could increase trade value by 7.27 percent. Removing agricultural tariffs could lead to an even larger global increase in trade value of 11.09 percent. Both scenarios would lead to an increase in societal well-being of $42.9 billion and $56.3 billion annually (respectively). This would represent gains to the global agricultural sector of a little more than 2 percent for each scenario. Although these gains represent an increase in agricultural market access, other market access barriers remain (e.g., nontariff measures).
    Keywords: Agribusiness, Agricultural and Food Policy, Demand and Price Analysis, Institutional and Behavioral Economics, International Development, International Relations/Trade, Political Economy
    Date: 2021–04–07
  13. By: Alessandra Bonfiglioli; Rosario Crinò; Gino Gancia
    Abstract: We use transaction-level data to study changes in the concentration of US imports. Concentration has fallen in the typical industry, while it is stable by industry and origin country. The fall in concentration is driven by the extensive margin: the number of exporting firms has grown, and the number of exported products has fallen relatively more for top firms. Instead, average revenue per product of top firms has increased. At the industry level, top firms are converging, but top firms within country are diverging. Finally, higher concentration from an origin country is associated with a fall in prices, foreign entry and industry growth. These facts suggest that intensified competition in international markets coexists with growing concentration among national producers.
    Keywords: superstar firms, concentration, US imports, firm heterogeneity, international trade
    JEL: E23 F12 F14 L11 R12
    Date: 2021
  14. By: Tröster, Bernhard; Janechová, Eva
    Abstract: On the 1st of January 2021, African countries started the African Continental Free Trade Area (AfCFTA). It is a largely symbolic step toward the long-term goal of economic integration on the African continent. The integration process includes an extensive agenda that requires time and will affect the development in African countries in multiple ways. While studies typically report potential trade and welfare gains, the overall impact of the agreement depends on various factors. In this ÖFSE Briefing Paper, we (i) present the state of play in the AfCFTA negotiations and implementation, (ii) discuss the challenges for the AfCFTA based on the characteristics of African trade, and (iii) offer a critical assessment of economic impact studies. A positive contribution of the AfCFTA to the Agenda 2063 of the African Union requires appropriate policies to overcome the limitations and challenges of the integration process, in particular through coordinated industrial policies. These efforts should be supported by the European Union, including through adjustments to its current trade regime with African partners.
    Keywords: AfCFTA,trade liberalization,continental integration,Regional EconomicCommunities,Economic Partnership Agreements
    Date: 2021
  15. By: Monteiro, José-Antonio
    Abstract: Corporate social responsibility (CSR) has become an integral part of many companies' business strategy. A detailed analysis of 579 RTAs, including 305 agreements currently in force and notified to the WTO (as of December 2020), reveals that a limited but increasing number of RTAs, namely 65 agreements, refer explicitly to CSR. These CSR-related provisions are particularly heterogeneous in terms of location in the RTA, language, scope and commitments. An increasing number of RTAs incorporate an article dedicated to CSR in different chapters, including on investment, labour or environment. Most CSR-related provisions are formulated in best endeavour language. These provisions promote the voluntary adoption and respect of CSR, including internationally recognized CSR principles standards and guidelines. Building on provisions included in some bilateral investment treaties (BITs), only a couple of recent RTAs have expanded the scope of CSR-related provisions by requiring investors to make their best efforts to comply with some of the principles established under the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises.
    Keywords: Regional Trade Agreements,Corporate social responsibility,Labour,Environment,Inclusiveness
    JEL: F13 F15
    Date: 2021
  16. By: Joël Cariolle (FERDI - Fondation pour les Etudes et Recherches sur le Développement International); Michele Imbruno (Sapienza University [Rome], Nottingham Center for Research on Globalisation and Economic Policy (GEP)); Jaime de Melo (UNIGE - Université de Genève, FERDI - Fondation pour les Etudes et Recherches sur le Développement International)
    Abstract: This paper studies how bilateral digital connectivity resulting from telecommunications submarine cable (SMC) deployment affects firm participation in export markets. Using an unbalanced panel of bilateral trade data from 48 countries during the period 1997-2014, we find that a SMC connection between two countries is associated with an increase in the number of bilateral exporters in developed countries, but also with a reduction in the number of bilateral exporters in developing countries. This negative association between bilateral connectivity and firm participation in export markets appears to be stronger in the poorest developing areas: Middle East and North Africa, South Asia and Sub-Saharan Africa. The growth in world connectivity spurred by SMCs deployment has therefore had a heterogeneous effect on firm decision to export, pushing more firms from high-income countries to enter export markets, and some incumbent exporters from lower-income countries to exit them.
    Keywords: Internet Connectivity,ICT,Submarine cables,Export behaviour
    Date: 2020–09–30
  17. By: Petr Pleticha (Institute of Economic Studies, Faculty of Social Sciences & CERGE-EI, Charles University, Prague, Czech Republic)
    Abstract: Global value chain (GVC) participation has transformed many lines of business. The benefits it provides in terms of greater specialization and technology diffusion, however, do not spread identically across countries and industries. This paper shows that taking into account the functional specialization helps to explain how the benefits of GVC participation are distributed. Using data for 35 industries in 40 countries in 2000-2011, we estimate the impact of GVC participation on value added within a production function framework. The results indicate that there is heterogeneity in the effects of GVC participation, according to the functional specialization of the respective industry and its GVC partners. Participating in R&D-related GVCs is especially profitable for fabrication-oriented industries and low-developed countries. It follows that any GVC participation analysis will be incomplete if it fails to take the functional specialization of the GVC participants into consideration.
    Keywords: global value chains, input-output analysis, technology diffusion, development
    JEL: F02 F14 O33 O47
    Date: 2021–04
  18. By: Petr Jansky (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic); Alex Cobham (Tax Justice Network); Tommaso Faccio (Independent Commission for the Reform of International Corporate Taxation, Nottingham University Business School); Javier Garcia-Bernardo (Tax Justice Network, CORPTAX, Charles University in Prague); Jeffery Kadet (Lancaster University UK, International Centre for Tax and Development); Sol Picciotto (University of Washington School of Law in Seattle)
    Abstract: An initiative is needed to break the logjam in the international negotiations to reform taxation of multinational enterprises (MNEs). The explosion of profit shifting observed since the 1990s has resulted in hundreds of billions of dollars of tax revenues being lost around the world each year – but reform efforts have thus far failed to deliver measurable progress on the primary agreed goal of better aligning MNEs’ taxable profits with the location of their real economic activity. More recently, countries have committed also to ensure that MNEs’ global profits are subject to a minimum effective tax rate, but progress towards international agreement remains stalled. Our proposal for a minimum effective tax rate (METR) could be applied to MNEs by any countries that choose to do so, whether they are home to MNEs, host of MNEs, or both. The METR would be compatible with existing tax treaties, but being non-discriminatory it also complies with other international obligations and could be introduced unilaterally. Economic modelling shows the METR would deliver major revenue gains for participating countries, and adoption would also contribute to, rather than impede, momentum for a more comprehensive multilateral agreement.
    Keywords: multinational enterprise; corporate taxation; tax reform; effective tax rate; minimum tax; minimum effective tax rate
    JEL: F23 H25 H32
    Date: 2021–04
  19. By: Girma, Sourafel; Görg, Holger
    Abstract: China's policy of encouraging export processing has been the topic of much discussion in the academic literature and policy debate. We use a recently developed econometric approach that allows for time varying "treatments" and estimate economically and statistically significant positive causal effects of entering into export processing and ordinary export markets on subsequent firm level productivity. These productivity effects are shown to be larger than those accruing to firms who enter into ordinary exporting. Interestingly, the estimation of quantile treatment effects shows that the positive effects do not accrue similarly to all types of firms, but are strongest for those at the low to medium end of the distribution of the productivity variable. We also find that export processors gain more when entering the industrialised North rather than the South, while this does not appear to matter much for ordinary exporting.
    Keywords: export processing,firm performance,China,time varying treatments
    JEL: F14 F61 O14
    Date: 2021
  20. By: Andrey A. Gnidchenko (National Research University Higher School of Economics); Vladimir A. Salnikov (National Research University Higher School of Economics)
    Abstract: More than a half a century ago, Bela Balassa proposed his famous revealed comparative advantage (RCA) index which represents the intensity of exports and can be represented as the ratio of actual-to-expected trade. Today, the index is still applied in the majority of empirical comparative advantage studies, though many alternative indices that account for the demand dimension by capturing imports have been proposed, and theoretical considerations indicate that a proper RCA index should be based on net trade. However, these alternatives cannot be represented as the ratio of actual-to-expected trade. We develop a new net trade RCA (ntRCA) index which estimates the comparative advantage from net trade and can be presented as the ratio of actual-to-expected net trade. The index is interpreted as the relative ability of a country to gain from trade in a certain product
    Keywords: revealed comparative advantage, trade specialization, net trade
    JEL: F14 C43 O57
    Date: 2021
  21. By: Gaelan MacKenzie
    Abstract: This paper studies the effects of endogenous firm-level market power in input and product markets on equilibrium prices and wages as well as the gains from trade using a general equilibrium model with heterogeneous firms. Firm-level prices and wages are functions of two endogenous distortions: (i) a markup of price over marginal cost that depends on product market shares and (ii) a markdown of wages relative to marginal revenue product that depends on labor market shares. Both distortions cause large firms to be too small relative to local labor market competitors compared to a setting with perfect competition in input and product markets. Opening product markets up to trade reallocates market shares in product and labor markets towards countries' large firms, which can reduce misallocation but also increases the labor market power of these firms. After estimating the structural parameters of the model using Indian plant-level data, I show that accounting for endogenous labor market power implies only small welfare losses due to misallocation and therefore a negligible increase in the gains from trade. Trade has significantly larger effects on firms' markups than on their markdowns. Nevertheless, because of the increase in large firms' input market power, there is a redistribution of the gains from trade from wages to firm profits.
    Keywords: Economic models; Labour markets; Market structure and pricing; Productivity; Trade integration
    JEL: D43 F12 J L13
    Date: 2021–04
  22. By: Osea Giuntella (University of Pittsburgh, Department of Economics); Lorenzo Rotunno (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Luca Stella (Università Cattolica del S. Cuore - Catholic University of the Sacred Hearth)
    Abstract: Using longitudinal data from the German SocioEconomic Panel, we analyze the effects of exposure to trade on the fertility and marital behavior of German workers. We find that individuals working in sectors that were more affected by import competition from Eastern Europe and suffered worse labor market outcomes were less likely to have children. In contrast, workers in sectors that benefited from increased exports had better employment prospects and higher fertility. These effects are driven by low-educated and married men, and reflect changes in the likelihood of having any child (extensive margin). While among workers exposed to import competition there is evidence of some fertility postponement, we find a significant reduction of completed fertility. There is instead little evidence of any significant effect on marital behavior.
    Keywords: international trade,labor market outcomes,fertility,marriage
    Date: 2021–03
  23. By: Thede, Suanna (Örebro University School of Business); Karpaty, Patrik (Örebro University School of Business)
    Abstract: In this paper, we analyze if the enterprise decision to invest in a corrupt market is affected by its experience of other corrupt markets. Our conjecture is that multinational enterprises (MNEs) can learn how to navigate corrupt environments and reduce their corruption-related market entry costs. We test this conjecture using a rich data set on manufacturing enterprises from an uncorrupt country, Sweden, over the 1997-2015 period. The market entry effect of corrupt country experience is examined using an extended gravity model (Morales et al., 2019) controlling for income group, regional and border country experience. We find strong support of our conjecture using mixed logit estimations, which are consistent with the multidimensional entry decision of the extended gravity model. To understand the effect of corruption on foreign direct investment, the outreach pattern of MNEs needs to be taken into account.
    Keywords: Corruption; multinational enterprise; foreign direct investment.
    JEL: F23
    Date: 2021–03–03
  24. By: Koutchogna Kokou Edem ASSOGBAVI; Stéphane Dées
    Abstract: As polices to curb carbon emissions are not implemented similarly across countries, a so-called ’carbon leakage’ may offset domestic carbon reductions at the global level by redirecting CO2-intensive production to places with less stringent environmental regulation. This article uses a standard gravity model with panel data to assess whether a tightening in environmental policy plays as an incentive to offshore highly polluting activities. Our results show no evidence of carbon leakage through international trade. On the contrary, stringent environment policy leads to a reduction in CO2 emissions embodied in traded goods, both from the exporter and the importer’s side. Such results are robust to focusing on trade between emerging and advanced economies. Emissions embodied in trade are rather explained by usual trade determinants, such as shipping costs or income, and the energy intensity of goods produced by the exporting countries.
    Keywords: CO2 emissions; international trade; panel data models
    JEL: C32 F18 Q56
    Date: 2021
  25. By: Erik Vardanyan (Economic Research Department, Central Bank of Armenia)
    Abstract: The paper explores the impact of workers’ remittances on the level of export diversification. The hypothesis is that significant inflow of remittances causes overvaluation of real exchange rate, which in turn deteriorates diversity of export. The theoretical base is in line with the Dutch disease phenomenon. The paper uses annual cross-national panel data over 2000-2016 period and System GMM methodology. The evidence suggests that indeed large inflow of remittances is associated with less diversified export. The economic intuition behind is that remittance-caused real exchange rate appreciation unevenly suppresses export of goods: some goods "suffer" more than others do. In terms of the number of product-names, a percentage point increase in remittances to GDP sent home "reduces" variety of export by approximately five active lines. There are other interesting findings as well. An improvement of government effectiveness facilitates overall export diversification; terms of trade improvement and rise of real exchange rate volatility mostly increase export concentration rather than alter number of exported product-names.
    Keywords: remittances, export diversification, export concentration, export variety, real exchange rate, System GMM
    JEL: F14 F24 F31
    Date: 2019–08
  26. By: Marco Due\~nas; V\'ictor Ortiz; Massimo Riccaboni; Francesco Serti
    Abstract: By interpreting exporters' dynamics as a complex learning process, this paper constitutes the first attempt to investigate the effectiveness of different Machine Learning (ML) techniques in predicting firms' trade status. We focus on the probability of Colombian firms surviving in the export market under two different scenarios: a COVID-19 setting and a non-COVID-19 counterfactual situation. By comparing the resulting predictions, we estimate the individual treatment effect of the COVID-19 shock on firms' outcomes. Finally, we use recursive partitioning methods to identify subgroups with differential treatment effects. We find that, besides the temporal dimension, the main factors predicting treatment heterogeneity are interactions between firm size and industry.
    Date: 2021–04
  27. By: Asier Minondo
    Abstract: I use the quasi-natural experiment of the 2018 African swine fever (ASF) outbreak in China to analyze swine exporters' reaction to a foreign market's positive demand shock. I use the universe of Spanish firms' export transactions to China and other countries, and compare the performance of swine and other exporters before and after the ASF. The ASF increased Spanish swine exporters' sales to China three times. Swine exporters did not increase exported product portfolio or export revenue concentration in their best-performing products in China after the ASF. The increase in exports to China positively impacted export revenue and survival in third markets. This positive impact was especially intense for small swine exporters.
    Date: 2021–04
  28. By: Gutmann, Jerg; Neuenkirch, Matthias; Neumeier, Florian
    Abstract: Although international sanctions are a widely used instrument of coercion, their economic effects are still not fully understood. This study uses a novel dataset and an event study approach to evaluate the economic consequences of international sanctions, thereby accounting for pre-treatment dynamics in countries subject to sanctions. Our analysis focuses on the effects of sanctions on GDP growths as well as various transmission channels through which sanctions affect economic activity. We document a significant negative effect of international sanctions on GDP growth and its components (consumption, investment, and government expenditures) as well as on trade and foreign direct investment. Additional panel difference-in-differences estimations reveal that this detrimental effect is driven by financial sanctions and US unilateral sanctions.
    Keywords: economic growth,event study,international sanctions,transmission channels
    JEL: F43 F51 F52 F53 O43 O47
    Date: 2021
  29. By: Osinubi, Tolulope; Asongu, Simplice
    Abstract: This study examines the effect of globalization on female economic participation (FEP) in MINT (Mexico, Indonesia, Nigeria & Turkey) and BRICS (Brazil, Russia, India, China & South Africa) countries between 2004 and 2018. Four measures of globalization are employed and sourced from KOF globalization index, 2018, while the female labour force participation rate is a proxy for FEP. The empirical evidence is based on Pooled Mean Group (PMG) estimators. The findings of the PMG estimator from the Panel ARDL method reveal that political and overall globalization in MINT and BRICS countries have a positive impact on FEP, whereas social globalization exerts a negative impact on FEP in the long-run. It is observed that economic globalization has no long-run effect on FEP. Contrarily, all the measures of globalization posit no short-run effect on FEP in the short-run. This supports the argument that globalization has no immediate effect on FEP. Thus, it is recommended that both MINT and BRICS countries should find a way of improving the process of globalization generally to empower women to be involved in economic activities. This study complements the extant literature by focusing on how globalization dynamics influence FEP in the MINT and BRICS countries.
    Keywords: Globalization; female; gender; labour force participation; MINT and BRICS countries
    JEL: D60 E60 F40 F59
    Date: 2020–08
  30. By: Serdar Birinci; Fernando Leibovici; Kurt See
    Abstract: We quantify the barriers that impede the integration of immigrants into foreign labor markets and investigate their aggregate implications. We develop a model of occupational choice with natives and immigrants of multiple types whose decisions are subject to wedges which distort their allocation across occupations. We estimate the model to match salient features of U.S. and cross-country individual-level data. We find that there are sizable GDP gains from removing the wedges faced by immigrants in U.S. labor markets, accounting for approximately one-fifth of the overall economic contribution of immigrants to the U.S. economy. These effects arise from both increased flows from non-participation to predominantly manual jobs as well as from reallocation within the market sector that raises productivity in non-routine cognitive jobs. We contrast our findings for the U.S. with estimates for 11 high-income countries and document substantial differences in the magnitude of immigrant wedges across countries. Importantly, we find differences in the distribution of immigrant wedges across occupations lead to substantial variation in the gains from removing immigrant misallocation, even among countries with similar average degrees of distortions.
    Keywords: Immigration; Occupational Barriers; Mobility; Misallocation
    JEL: J24 J31 J61
    Date: 2021–04
  31. By: Mattie Landman; Sanna Ojanper\"a; Stephen Kinsella; Neave O'Clery
    Abstract: Despite the key role of multinational enterprises (MNEs) in both international markets and domestic economies, there is no consensus on whether or how they positively impact their host economy. In particular, do MNEs foster the creation of new domestic firms through knowledge spillovers? In this study, we look at the impact of the presence of related MNE industries on the entry and exit of domestic export industries in Irish regions before, during, and after the 2008 financial crisis. Specifically, we are interested in whether the presence of MNEs in a region results in knowledge spillovers and the creation of new domestic export activities in related sectors. To quantify how related an industry is to a region's current export basket we deploy an existing cohesion variable, closeness, that measures the relatedness of a new industry to existing industries within a region. We also introduce a new variable, strategic closeness, which captures not only the relatedness of industries within a region but their own connectivity or embeddedness. We use a dataset containing all government-supported export firms in Ireland between 2006-2018. We find that the presence of related MNE industries is associated with the entry of new domestic activity, suggesting that Irish regions benefited from domestic-MNE linkages. However this relationship was temporarily lost after the financial crisis and only recently re-established, with domestic entry dependent on the presence of highly embedded MNE sectors. Furthermore, we find that related MNEs help protect domestic industries against exit after the crisis and thereby play a role in enhancing regional resilience.
    Date: 2021–04
  32. By: Luke Nottage; Bruno Jetin (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique, Universiti Brunei Darussalam)
    Abstract: Asia-Pacific trade and investment flows have burgeoned over recent decades, albeit impacted by China-US trade tensions and especially the COVID-19 pandemic (§1.02). International investment agreements have proliferated to liberalise and protect investments (§1.03), mostly adding the option of investor-state dispute settlement (ISDS). Asia-related ISDS cases have also started to grow, albeit somewhat belatedly (§1.04), complementing a more longstanding upward trend in international commercial arbitration (ICA) cases involving Asian parties filed in the region as well as the traditional Western centres (§1.05). The eastward shift in international dispute resolution has already involved initiatives to improve not just support for ICA and ISDS arbitrations, but also to develop alternatives such as international commercial courts and mediation. Core arguments from ensuing chapters (§1.06) cover the main existing venues for international dispute resolution in Asia (China, Hong Kong and Singapore) but also some emerging contenders (Japan, Malaysia, India and Australia). Overall (§1.07), can ICA venues improve their attractiveness through law reforms, case law development and other measures, despite growing concerns about costs and delays? Will some emerging concerns about ISDS prompt Asia-Pacific states to become more active 'rule makers' in international investment law? How might these issues be affected by the COVID-19 pandemic?
    Keywords: international trade,foreign direct investment (FDI),free trade agreements (FTAs),international investment treaties,international economic law,arbitration,mediation,international commercial courts,Asia,COVID-19
    Date: 2021–04–03
  33. By: Bierbrauer, Felix; Felbermayr, Gabriel; Ockenfels, Axel; Schmidt, Klaus M.; Südekum, Jens
    Abstract: The EU steps up its efforts to curb its territorial CO2-emissions. It is planning to introduce a carbon border adjustment mechanism (CBAM) to level the playing field and to raise own resources. However, unilateral European climate policy action, whether shored up with a CBAM or not, can only play a limited role in reducing global CO2-emissions. A U-CBAM cannot stop indirect leakage, it has ambiguous effects on other countries' mitigation efforts, and it poses the risk of conflicts with trade partners.The EU, together with the US and other like-minded countries, should push hard to establish a climate club with a common minimum price of CO2and a common CBAM applied to third countries. Such a framework would incentivize other countries to join while limiting leakage and reducing the risk of trade policy disputes.
    Keywords: Climate Policy,Carbon Leakage,Carbon Border Adjustment,Climate Club,Klimapolitik,Carbon Leakage,CO2-Grenzausgleich,Klimaclub
    Date: 2021
  34. By: Piracha, Matloob; Tani, Massimiliano; Tchuente, Guy
    Abstract: This paper analyses the remittance behaviour of two cohorts of migrants who entered Australia before and after a policy change implemented in the 1990s, which tightened the entry requirements for a subgroup of applicants. We use a mix of a conditional difference-in-differences and OLS estimator accounting for the presence of interactive fixed-effects to address the challenge of evaluating the impact of policy change using data drawn from two distinct migrant samples, deriving the conditions to obtain a consistent estimator. We show two results: one due to policy change and the other due to change in the composition of migrants. The two results capture different aspects of remittance behaviour.
    Keywords: Immigration,average treatment effect on the treated,difference-in-differences
    JEL: C13 F22 F24 J61
    Date: 2021
  35. By: Robert F. Kane (IUJ Research Institutey, International University of Japan)
    Abstract: This paper studies the relationship between innovation driven growth, distribution, and international trade. The model features two trade barriers: tariffs and distribution costs and three sources of growth: quality improvement, cost reduction, and product proliferation. This paper shows that distribution and manufacturing technologies have important interactions and are fundamentally linked. The distribution costs reduce the incentive to engage in cost reduction. Through this mechanism, trade has a compositional affect on economic growth. Tariffs affect both the extent of the market and the composition of the market. A reduction in tariffs increases market size and hence generates a temporary increase in quality growth and the entry rate. Because overseas sales are distribution intensive, the expansion of overseas sales drives a temporary reduction in manufacturing productivity growth. In contrast, if increased trade is driven by improvements to the distribution technology, both quality improvement and manufacturing productivity growth increase.
    Date: 2021–03
  36. By: Herédia-Colaço, V; Coelho do Vale, R; Villas-Boas, SB
    Abstract: This article is a within- and cross-country examination of the impact of fair trade certification on consumers’ evaluations and attitudes toward ethically certified products. Across three experimental studies, the authors analyze how different levels of brand familiarity and fair trade expertise impact consumer decisions. The authors study this phenomenon across markets with different social orientation cultures to analyze potential dissimilarities in the way consumers evaluate and behave toward ethically certified products. Findings suggest that fair trade certifications enhance product valuations. However, this effect is especially observed for low familiar brands, once the level of fair trade expertise increases. Findings also suggest that there are individual cultural differences with respect to social and environmental labeling expertise that may account for some of the unexplained variation in choice behaviors observed across countries. Results indicate that especially in more (mature) individualistic markets (vs. collectivistic) consumer ethical behavior seems to be greatly influenced by consumers’ perceptions about the eligibility of brands using (or not) fair trade. This effect is strengthened by the significant mediating role of consumers’ ethicality perceptions on the relationship between fair trade and the willingness to pay for brands.
    Keywords: Fair trade, Product valuation, Product evaluation, Willingness to pay, Ethical consumption, Cross-cultural ethical behaviors, Behavioral and Social Science, Business And Management, Applied Ethics, Marketing, Business and Management
    Date: 2019–05–30
  37. By: OKUBO Toshihiro
    Abstract: China has seen dramatic economic growth in the last decades and attracted foreign capital and human resources. This paper studies firm characteristics of the Japanese firms investing in China. We combine several sources of micro-data and construct panel data on Japanese manufacturing firms from 1995 to 2009. As a result we find that the number of firms investing in China steadily increased over time and FDI in China increased domestic sales, productivity, wages and number of employees of Japanese firms, rather than increasing technological development.
    Date: 2021–03
  38. By: ZHANG Hongyong
    Abstract: Using aggregate-level data on Japanese multinational corporations (MNCs) in major host countries and regions, this paper investigates the impact of COVID-19 on global production and supply chains with a focus on East Asia. I use the numbers of COVID-19 cases and deaths as measures of the impact of the pandemic. I find that the pandemic had substantial impacts on the performance (sales, employment, and investment) of Japanese MNCs and global supply chains (exports to Japan and exports to third countries) in Q1–Q3 2020. China recovered quickly in Q2 and grew in Q3, whilst the countries of the Association of Southeast Asian Nations and the rest of the world had still not fully recovered in Q3 2020. Importantly, lockdown and containment policies in host countries had large negative impacts on the sales and employment of Japanese MNCs. In contrast, I did not find positive effects of economic support policies on firm performance. Interestingly, whilst the firm expectations and business plans of Japanese MNCs were negatively affected by the COVID-19 pandemic, their business confidence increased with strong overall government policy responses in host countries in Q1 2020.
    Date: 2021–03

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