nep-int New Economics Papers
on International Trade
Issue of 2021‒04‒26
43 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Do foreign investment and trade spur innovation? By Gorodnichenko, Y; Svejnar, J; Terrell, K
  2. COVID-19 and trade facilitation in Southern Africa: Implications for the AfCFTA By Kudzai Mataba; Faizel Ismail
  3. Do voluntary sustainability standards increase countries' access to cocoa export markets? By Grassnick, Nina; Brümmer, Bernhard
  4. ASEAN’s limited regional Integration spells globalisation, not Failure By Jayant Menon
  5. Exploring the geographical bias of manufactured exports in MERCOSUR By Fernando Delbianco; Andrés Fioriti; Germán González
  6. Assessing the Impact of COVID-19 on Trade: a Machine Learning Counterfactual Analysis By Dueñas, Marco; Ortiz, Víctor; Riccaboni, Massimo; Serti, Francesco
  7. Divergent Integration By Haaland, Jan I.; Wooton, Ian
  8. The Role of SMEs in extra-EU Exports: Key performance indicators By Cernat, Lucian; Jakubiak, Malgorzata; Preillon, Nicolas
  9. “The Impact of Robot Adoption on Global Sourcing” By Akin A. Cilekoglu; Rosina Moreno; Raul Ramos
  10. Employment effects of joining global production networks: Does domestic value added matter? By Wannaphong Durongkaveroj
  11. Trade Shocks, Fertility, and Marital Behavior By Osea Giuntella; Lorenzo Rotunno; Luca Stella
  12. The power surplus: Brussels calling, legal empathy and the trade-regulation nexus By Garcia Bercero, Ignacio; Nicolaïdis, Kalypso
  13. The International Transmission of Local Economic Shocks Through Migrant Networks By María Esther Caballero; Brian Cadena; Brian K. Kovak
  14. Trade barriers in government procurement By Alen Mulabdic; Lorenzo Rotunno
  15. Trade, Consumption Pollution and Tax By Cheng, Haitao
  16. R&D Internationalization Strategies of the World’s Top Corporate R&D Investors By Heike Belitz; Anna Lejpras
  17. Reflections on the economic modelling of free trade agreements By Nilsson, Lars
  18. Female participation in EU exporting activities: jobs and wages By Rueda-Cantuche, Jose Manuel; Kutlina-Dimitrova, Zornitsa; Sousa, Nuno
  19. Migration and terrorism By Krieger, Tim
  20. Trade integration strategies and welfare. A comparative study of six selected Latin-American countries By Luis Marcelo Florensa; Pedro Esteban Moncarz
  21. The Economic Effects of International Sanctions: An Event Study By Jerg Gutmann; Matthias Neuenkirch; Florian Neumeier
  22. Impact of Grain Export on the Russian Empire’s Industrial Development in the Late 19th and Early 20th Centuries By Rozinskaya Natalia; Arkhina Anna
  23. COVID-19 and global beverage markets: Implications for wine By Glyn Wittwer; Kym Anderson
  24. Low, High and Super Congestion of a Renewable Natural Resource under Autarky and Trade By Schiff, Maurice
  25. Taking Gains from Trade Seriously: The Effects of Consumer Perspective on Free Trade By Yu Jin Woo; Ikuo Kume
  26. Trade policy reflections beyond the COVID19 outbreak By Nilsson, Lars; Kennedy, Brian; Tucci, Alessandra; Velazquez, Beatriz; Nolte, Stefan; Kutlina-Dimitrova, Zornitsa
  27. Structural transformation and inequality: Does trade openness matter? By Wannaphong Durongkaveroj
  28. Who cares about sanctions? Observations from annual reports of European firms By Davydov, Denis; Sihvonen, Jukka; Solanko, Laura
  29. Labor-Eliminating Technology, Wage Inequality and Trade Protectionism By John Gilbert; Onur A. Koska; Reza Oladi
  30. International Student Applications in the United Kingdom after Brexit By Amuedo-Dorantes, Catalina; Romiti, Agnese
  31. Protectionism, competitiveness and business cycles: The Argentinean case By Ileana Raquel Jalile
  32. Is the European Union’s investment agreement with China underrated? By Uri Dadush; André Sapir
  33. The global network of embodied R&D flows By Fabrizio Fusillo; Sandro Montresor; Giuseppe Vittucci Marzetti
  34. Export Survival with Uncertainty and Experimentation By Sebastián Fanelli; Juan Carlos Hallak
  35. Intersectoral linkages and imports of Vietnam: An input-output approach By Hai Thanh Nguyen
  36. Perception of Institutional Quality Difference and Return Migration Intention: The Case of the Vietnamese Diaspora By Ngoc Thi Minh Tran; Michael P. Cameron; Jacques Poot
  37. Refugee influx and economic activity: evidence from Rohingya refugee camps in Bangladesh By José Joaquín Endara
  38. The Comparative Legitimacy of Arms Exports - A Conjoint Experiment in Germany and France By Rudolph, Lukas; Freitag, Markus; Thurner, Paul
  39. Trade, Labor Markets, and the China Shock: What Can Be Learned from the German Experience? By Christian Dustmann
  40. Migration Costs, Sorting, and the Agricultural Productivity Gap By Qingen Gai; Naijia Guo; Bingjing Li; Qinghua Shi; Xiaodong Zhu
  41. How the Earnings Growth of U.S. Immigrants Was Underestimated By Duleep, Harriet; Liu, Xingfei; Regets, Mark
  42. Output falls and the international transmission of crises By Brinca, Pedro; João, Costa-Filho
  43. Differences in Immigrants Wage Gap: Evidence from Chile By Roberto à lvarez; Miguel A. González; Jaime Ruiz-Tagle

  1. By: Gorodnichenko, Y; Svejnar, J; Terrell, K
    Abstract: Using large firm-level and industry-level data sets from eighteen countries, we find that foreign direct investment (FDI) and trade have positive spillover effects on product and technology innovation by domestic firms in emerging markets. The FDI effect is more pronounced for firms from advanced economies. However, while we detect the spillover effects with micro data at the firm-level, when we use linkage variables computed from input-output tables at the industry level we find much weaker, and usually insignificant, effects. These patterns are important for policy, suggesting that spillovers are localized to firms engaged directly with multinationals and in trade, rather than affecting all domestic firms in industries with FDI presence.
    Keywords: Economics
    Date: 2020–01–01
  2. By: Kudzai Mataba; Faizel Ismail
    Abstract: COVID-19 has created a trade crisis in Southern Africa, with a dramatic slowdown in cross-border trade. The crisis, which exposed weaknesses and deficiencies in the trade facilitation regimes, presents an opportunity for the African Continental Free Trade Area (AfCFTA) to address and contribute to greater levels of trade within Africa. This working paper looks at the impact of the border closures in response to the pandemic, and its impact on trade and the movement of goods in and out of the Southern African Development Community (SADC).
    Keywords: COVID-19, Trade facilitation, Regional integration, Infrastructure, SADC, International trade
    Date: 2021
  3. By: Grassnick, Nina; Brümmer, Bernhard
    Abstract: Large chocolate manufacturers have committed themselves to only using certified cocoa beans and some governments want to increase the share of certified cocoa products consumed in their countries. Thus, Voluntary Sustainability Standards (VSSs) become quasi-mandatory for cocoa producers and grinders to ensure access to these markets. Yet, their trade effects are unclear. We study the effect of a VSS on raw and processed cocoa exports. We use a unique dataset that contains the UTZ Certified cocoa production quantity of cocoa-producing countries from 2010 to 2016. This allows us to estimate a gravity model of trade and analyse the effect of the share of UTZ Certified cocoa production quantity in a country on the trade value of raw cocoa beans, cocoa powder, cocoa paste and cocoa butter. Our results show that UTZ certification only enhances bilateral exports of cocoa beans and paste, while it reduces exports of cocoa butter and has mixed effects on cocoa powder exports.
    Keywords: Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety, International Development, International Relations/Trade
    Date: 2021–04
  4. By: Jayant Menon
    Abstract: In assessing regionalism, it has become customary to look to the European experience to serve as a benchmark against which all other regional integration programs are judged. But ASEAN is different. Compared to Europe, it is outward- rather than inward-looking, market rather than government driven, and institution light rather than heavy. These differences reflect the very different motivations and objectives of the two regional programs. ASEAN’s success lies in its almost unique achievement of using regionalism for globalisation. The metrics that we use to assess regionalism must reflect true objectives, even if they lie below the surface. Widely used indicators such as shares of intra-regional trade and investment not only fail to capture the real story, but they can point in the wrong direction.
    Keywords: Regionalism; Globalisation; ASEAN
    JEL: F13 F14 F15
    Date: 2021
  5. By: Fernando Delbianco; Andrés Fioriti; Germán González
    Abstract: We propose a novel approach to understand the industrialization pattern of MERCOSUR countries during the last 60 years. We perform an index to measure the geographical bias of manufactured exports between the region and the world and show that regional trade agreements allowed MERCOSUR countries to decrease de bias and increase competitiveness. However, we show that in recent years the bias deepened in favor of exporting to the region a higher proportion of manufactured goods. Our main result is that these economies present a U-shape geographical bias in manufactured exports associated with a bimodal distribution of breaks. Furthermore, we observe that the 1980 and 2000s were the most relevant periods for defining the region trends.
    Keywords: Economic integration, MERCOSUR, Industrialization, Intraindustry trade, exports
    JEL: F1 F10 F15 F14 O14 O54
    Date: 2020–11
  6. By: Dueñas, Marco; Ortiz, Víctor; Riccaboni, Massimo; Serti, Francesco
    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.
    Keywords: Machine Learning; International Trade; COVID-19
    JEL: F14 F17 D22 L25
    Date: 2021–04
  7. By: Haaland, Jan I. (Dept. of Economics, Norwegian School of Economics and Business Administration); Wooton, Ian (Department of Economics, Strathclyde Business School, University of Strathclyde.)
    Abstract: Trade liberalisation is often characterised as either preferential or non-discriminatory but not all preferential trade agreements are the same. We focus on non-tariff measures that can constitute barriers to trade and that differ between free-trade agreements (FTAs) and customs unions (CUs). In particular, we investigate the role of rules of origin (RoO) in restricting market access for nations excluded from a CU. We develop a simple general equilibrium model characterised by trade in intermediate and final products and use this to examine the implications of binding RoO in an FTA on market outcomes and the welfare of agents in the economy. We highlight the phenomenon of “induced trade diversion” where RoO can result in countries losing from preferential market access.
    Keywords: Preferential trading; non-tariff measures; rules of origin
    JEL: F12 F13 F15
    Date: 2021–04–16
  8. By: Cernat, Lucian (DG Trade); Jakubiak, Malgorzata (DG Trade); Preillon, Nicolas (DG Trade)
    Abstract: This paper examines the growing importance of EU exporting small and medium enterprises (SMEs) for EU exports in recent years in terms of standard metrics (the number of exporting SMEs, their share in total EU exports) but also in respect to several key performance indicators, such as export competitiveness, digital intensity of their exports, greenhouse gas (GHG) emissions and jobs supported by EU exporting SMEs. The empirical evidence suggests that the number of EU exporting SMEs has grown steadily over time. EU exporting SMEs seem to perform better than the OECD average in sectors of medium digital intensity. In particular, SMEs are competitive in digitally intensive goods, where EU large firms do not seem to be equally successful. SME exports have also lower GHG emissions than average levels, with 70% of SME exports belonging to low and medium-low emission intensity. Finally, yet importantly, EU SME exports are a major driver for export-led job creation: over 13 million jobs in Europe depend on EU SME exports.
    Keywords: SMEs; international trade; performance indicators
    JEL: F13
    Date: 2020–04–09
  9. By: Akin A. Cilekoglu (AQR-IREA, University of Barcelona); Rosina Moreno (AQR-IREA, University of Barcelona); Raul Ramos (AQR-IREA, University of Barcelona)
    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: Wannaphong Durongkaveroj
    Abstract: Is the emphasis placed in trade and industry policy-making in developing countries on the share of domestic value-added ('value-added ratio') in exports consistent with the objective of achieving economic development through an export-oriented development strategy? This paper examines the rationale behind this policy emphasis, first by revisiting the conventional case for using the value-added ratio as a policy guide, and then by undertaking an input-output (I-O) analysis of manufacturing industry in Thailand with an emphasis on employment generation and equity.
    Keywords: global production networks, value added, Exports, Employment, Thailand, Business networks, Production
    Date: 2021
  11. By: Osea Giuntella; Lorenzo Rotunno; Luca Stella
    Abstract: Using longitudinal data from the German Socio-Economic 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 J14
    Date: 2021
  12. By: Garcia Bercero, Ignacio; Nicolaïdis, Kalypso
    Abstract: The EU may not be a superpower but it holds a ‘power surplus’ when it comes to the trade-regulatory nexus. The strategic challenges posed by the deployment of this power surplus are the subject of this paper, which argues that in order to be a responsible regulatory power and positively influence the multilateral agenda, the EU needs to develop a coherent overall approach to the external dimension of its regulatory policies. In this spirit, and in most cases, the EU would be ill advised to project itself as a model or to seek to ‘weaponise’ its regulatory powers in pursuit of unrelated foreign policy goals. Instead, it should wield this power to enhance the regulatory compatibility between its own and others’ jurisdictions through cooperation rather than relying on the passive market-based influence of the so-called Brussels effect. This is simply a way to be faithful to its core defining philosophy of legal empathy. The CEPS Policy Insight by authors Ignacio Garcia Bercero and Kalypso Nicolaïdis offers a typology of different forms of external EU regulatory impact, a discussion of the risks of either underuse or overuse of the regulatory power surplus, and considers the ‘good global governance’ model implied by a principled geopolitical role. It moves on to discuss a unifying conceptual framework to encompass this approach, under the umbrella of ‘managed mutual recognition’ as the operationalisation of legal empathy. It concludes with six specific suggestions as to how the EU can best exercise its regulatory power through a closer integration of trade and regulatory policies.
    Date: 2021–03
  13. By: María Esther Caballero; Brian Cadena; Brian K. Kovak
    Abstract: Using newly validated data on geographic migration networks, we study how labor demand shocks in the United States propagate across the border with Mexico. We show that the large exogenous decline in US employment brought about by the Great Recession affected demographic and economic outcomes in Mexican communities that were highly connected to the most affected markets in the US. In the Mexican locations with strong initial ties to the hardest hit US migrant destinations, return migration increased, emigration decreased, and remittance receipt declined. These changes significantly increased local employment and hours worked, but wages were unaffected. Investment in durable goods and children's education also slowed in these communities. These findings document the effects in Mexico when potential migrants lose access to a strong US labor market, providing insight regarding the potential impacts of stricter US migration restrictions.
    JEL: F22 J21 J23 J61 R23
    Date: 2021–04
  14. By: Alen Mulabdic (World Bank Group); 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)
    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
    Date: 2021–04
  15. By: Cheng, Haitao
    Abstract: Consumption is an important source of greenhouse gas (GHG) emissions. This study theoretically analyzes how trade liberalization and consumption tax affect firm locations across countries and GHG emissions originating from consumption. Introducing consumption-originated emissions in a standard footloose capital model, we find several novel results that extend previous analyses of production-originated GHG emissions. First, trade liberalization has a non-monotonic effect on global emissions; that is, as trade costs decline, global emissions initially decrease and then increase. Second, consumption taxes cause carbon leakage; that is, the tax on one country reduces emissions in that country, while increasing it in the rest of the world. Third, optimal consumption taxes that maximize global welfare must be neutral about firm location decisions. In particular, even if firms are asymmetrically distributed across countries in the absence of a consumption tax, the optimal tax level must be identical across countries.
    Keywords: Asymmetric market sizes, Consumption pollution, Consumption tax harmonization, Footloose capital model, Trade liberalization
    JEL: F18 Q54 Q58
    Date: 2021–04
  16. By: Heike Belitz; Anna Lejpras
    Abstract: This paper contributes to the debate on the internationalization of the R&D activity of multinational enterprises (MNEs). Specifically, we examine the following research questions: (1) What are the determinants of the MNEs’ R&D internationalization level? (2) What types of internationalization strategies—home-base-augmenting (HBA), home-base-exploiting (HBE), technology-seeking (TS), and/or market-seeking (MS)—do the MNE employ? and (3) What are the typical patterns in pursuing different strategy mixes by MNEs? To this end, we merge data on 2,000 global research leaders from the 2012-2014 period with the EPO Worldwide Patent Statistical Database PATSTAT. Based on the final dataset, covering about 1,700 world’s top corporate R&D investors and their patenting activity, we find that about one-fifth focus their patent-relevant R&D activity in their home country only. Our study confirms former results of the literature that R&D offshoring is used by leading R&D performers predominantly to acquire complementary technological knowledge (HBA strategy) and to use their home-based technological advantages to expand their market penetration (HBE strategy). With patent data from the late 2010s, we find a further increase in the proportion of HBA strategies compared to the 2000s. This indicates the growing importance of international knowledge exchange between technologically similarly oriented locations. Hence, the increased attraction of foreign R&D locations is no reason for concern regarding the perceived hollowing-out of the national innovation systems. Indeed, since the advantages built at home are at the core of both the HBA and HBE strategies, the national system of innovation in the home country should support the technological advantages of firms, thereby enabling them to succeed in their R&D activity abroad.
    Keywords: R&D, patents, innovation, internationalization, multinational firms, global firms
    JEL: F23 O19 O31 O32
    Date: 2021
  17. By: Nilsson, Lars (DG Trade)
    Abstract: This paper discusses various aspects of economic modelling of free trade agreements (FTAs) raised directly or indirectly by high-level policymakers and the general public with an interest in trade, including explicit free trade critics. It starts with a brief description of the basic features of computable general equilibrium (CGE) models, their gradual adaptation to modern trade theory and some of the criticism they have been subject to. The paper then discusses the underlying workhorse data and points to a few critical areas which are in need of further efforts to increase the quality of model based simulations. It also describes on-going efforts and past projects that have been undertaken to improve the tools available to modellers. Some necessary practical modelling choices are then discussed in terms of their impact on the modelling results followed by some thoughts on how the results of relatively complex technical undertakings such as CGE modelling exercises could be presented to a broad audience.
    Keywords: economic modelling; free trade agreements
    JEL: C68 F13
    Date: 2019–07–09
  18. By: Rueda-Cantuche, Jose Manuel (JRC); Kutlina-Dimitrova, Zornitsa (DG Trade); Sousa, Nuno (DG Trade)
    Abstract: This analysis sheds new insights on the gender-balance of the employment opportunities supported by extra-EU exports. It shows that in 2017 more than 13 million female workers in the EU had jobs thanks to the exports of goods and services to the rest of the world. However, there is a gender gap when it comes to the employment prospects offered by extra-EU exports: only 38% of the jobs dependent on exports to the world are taken up by women. The analysis suggests that such gender gap is largely due to the concentration of female employment in the less export-oriented sectors, notably in services. Furthermore, the current note makes clear that labour compensation for female workers in exports-supported jobs stagnated in comparison to total employment over the time period considered. Although all exports-supported jobs benefit from a wage premium, there is a gender wage gap of 4 p.p.
    Keywords: international trade; gender; employment
    JEL: F13
    Date: 2019–09–09
  19. By: Krieger, Tim
    Abstract: This chapter explores the complex interaction between migration and terrorism. It proposes a 'terrorism-migration cycle' to investigate systematically this interaction at every stage of the migration process. Importantly, no stage of the migration process is independent of what happened on the previous stage, affecting how terrorism and migration interact. It is shown that terrorism may be a trigger of migration in the origin country, that only particular selections of migrants choose to leave a country, and that these migrants then sort into different destinations. The role of migration governance as a means to avoid the influx of potential terrorists is explored as well as the responses of destination-country populations and governments to the threat of imported terrorism. As yet other challenges, homegrown terrorism within immigrant communities and political violence directed against immigrants are discussed. Finally, it is argued that there are feedback effects of diasporas on the origin countries of immigrant communities.
    Date: 2020
  20. By: Luis Marcelo Florensa; Pedro Esteban Moncarz
    Abstract: Latin America has historically been a region not very open to international trade. However, since the early 1990s, a change in trend has been observed, although it was not homogeneous neither it took place at a similar pace when comparing among countries in the region. In this paper, we estimate and compare the effects that different preferential trade integration strategies have had on consumer welfare, through changes in the prices of the goods and services consumed. Three channels are identified, changes in unit values, and in the quality and variety of the goods that are consumed. For the six countries analyzed here, which correspond to the region's main economies, the results show differences in the effects, both in terms of their magnitude and the channel through which they materialized. Argentina is the worst performer, while Mexico is at the opposite end. Except for Chile, countries that followed a more aggressive integration policy show better results.
    Keywords: trade integration, welfare, Latin America
    JEL: F14 F15 F6
    Date: 2020–11
  21. By: Jerg Gutmann; Matthias Neuenkirch; Florian Neumeier
    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
  22. By: Rozinskaya Natalia (Department of Economics, Lomonosov Moscow State University); Arkhina Anna (Utrecht University)
    Abstract: This paper deals with the problem of the grain export impact on Russia’s industrial development in the late 19th and early 20th century. Authors estimated VECM models to analyze how grain export affected industrial growth. It was concluded that grain export had a long-term negative impact on industry growth in Russia. There are four possible channels of influence: through consumption, through savings, through the distribution of labor and through investment. The authors considered the investment-related channel of influence and concluded that grain export had a negative long-term impact on industrial capital. Their argument stems from the fact that at the end of the 19th and beginning of the 20th century, grain exporters were predominantly small, export profits were widely dispersed among intermediaries and traders preferred to invest not in Russia but elsewhere.
    Keywords: grain export, foreign trade, industrial development, Russia Empire, VECM
    JEL: N5 N13
    Date: 2021–04
  23. By: Glyn Wittwer; Kym Anderson
    Abstract: This paper provides an empirical case study of impacts of the COVID-19 pandemic on global beverage markets, particularly the wine sector. Both international trade and domestic sales have been adversely affected by temporary shifts away from on-premise sales by social distancing measures and self-isolation that led to closure of restaurants, bars and clubs plus declines in international travel and tourism. Partly offsetting this has been a boost to off-premise and direct e-commerce sales. We first estimate those impacts in 2020 and their expected partial recovery in 2021 using a new model of global beverage markets. A further recent disruption to global wine trade has been the imposition by China in late 2020 of prohibitive tariffs on its imports of bottled wine from Australia. Its diversionary and trade-reducing effects are compared with those due to COVID-19.
    Keywords: Beverage market modeling, pandemic responses by consumers, prohibitive tariffs, trade diversion
    JEL: C63 D12 F14 F17 Q17
    Date: 2021
  24. By: Schiff, Maurice (World Bank)
    Abstract: Numerous developing economies depend vitally on renewable natural-resource (NR)-based commodities. This study develops a general equilibrium model to examine the steady-state impact of changes in a small economy's NR congestion under open access and optimal regulation. This issue has often been examined under 'low' congestion (LC) – with MC > AC and both upward sloping. Two more categories, 'high' (HC) and 'super' (SC) congestion – whose AC is backwardbending and MC
    Keywords: natural resource, low, high and super congestion, open access and optimal regulation, autarky and trade, society’s collapse
    JEL: D62 F18 Q22 Q27 Q56
    Date: 2021–04
  25. By: Yu Jin Woo (Waseda Institute of Political Economy, Waseda University); Ikuo Kume (School of Political Science and Economics, Waseda University)
    Abstract: Why do people’s preferences toward trade liberalization fluctuate? And why do we observe eventual return of public support toward free trade? The traditional literature on international political economy has typically calculated individuals’ preferences based on their comparative advantage as producers, which arises from their specific or general skill level or employment status. What needs to be taken into account, however, is that their economic preferences are constructed based upon their intertwined identities as both producers and consumers. Using a unique survey design, we conduct an experiment in Japan (2015) that shows that consumer priming resiliently offsets negative impacts arising from employment priming. The consumer effect reduces individuals’ concerns on income level or employment when they are exposed to consumer and employment primings simultaneously. Furthermore, our subgroup analyses reveal that the consumer effect remains powerful even for low-income earners or those exposed to high levels of job insecurity.
    Keywords: Trade liberalization, consumer perspective, income-earner perspective, survey experiment, Japan
  26. By: Nilsson, Lars (DG Trade); Kennedy, Brian (DG Trade); Tucci, Alessandra (DG Trade); Velazquez, Beatriz (DG Trade); Nolte, Stefan (DG Trade); Kutlina-Dimitrova, Zornitsa (DG Trade)
    Abstract: This note provides an analysis on the implications of the COVID19 on a number of key areas in international trade policy. It reviews the range of existing literature and present findings from some in-house analysis conducted by DG TRADE. It provides clear evidence in support of the role of trade in the post COVID19 era while highlighting how harmful protectionist measures must be avoided in order to stimulate a successful economic recovery. Finally, it focuses on bringing together the most recent and persuasive facts and figures to show how embracing new technologies along with an open trade policy will help solve issues with global value chains and improve their preparedness and resilience to any future shocks.
    Keywords: trade policy; COVID-19
    JEL: F13
    Date: 2020–06–09
  27. By: Wannaphong Durongkaveroj
    Abstract: The purpose of this paper is to examine how trade openness impacts on income inequality in the process of economic transformation. The paper begins with an analytical framework drawing on Kuznets (1955) to set the stage for the empirical analysis. It then examines the role of trade openness in the structural transformation-income inequality nexus using a multicountry panel data analysis covering 48 countries for the period from 1960 to 2010. The results suggest that an increase in the share of employment in manufacturing reduces inequality, irrespective of the stages of structural transformation, and the impact on income inequality is larger for countries with higher degree of trade openness. The findings withstand controlling for the other relevant explanatory variables and the use of different estimators.
    Keywords: structural change, inequality, trade openness, inequality
    JEL: O10 O24 O53
    Date: 2021
  28. By: Davydov, Denis; Sihvonen, Jukka; Solanko, Laura
    Abstract: This paper uses textual analysis to examine how European corporations assess sanctions in their annual reports. Using observations from a panel of almost 11,500 corporate annual reports from 2014–2017, we document significant cross-country variation in how firms perceive Russia-related sanctions. Even after controlling for firm-level characteristics, cross-country differences remain for sentiments about sanctions and contexts in which sanctions are mentioned. We also examine the role of macroeconomic linkages in explaining these differences. We show that the Russia’s inward and outward FDI stocks and high levels of imports and exports with Russia only partially explain the cross-country variation, leaving a nontrivial share of variation unexplained.
    JEL: D22 F51
    Date: 2021–04–20
  29. By: John Gilbert; Onur A. Koska (University of Canterbury); Reza Oladi
    Abstract: Rapid automation in manufacturing has raised pressing questions in public and policy discourse regarding the effects of a labor-eliminating technical progress in an industry. We address the implications of a labor-eliminating technology adopted in manufacturing for factor price changes, for skilled and unskilled wage gap, and for trade policies intending to protect workers. Using an otherwise traditional multi-sector general equilibrium model, we derive the conditions under which a labor-eliminating technology will be adopted in manufacturing, and show that such a technical change in manufacturing will increase the rate of return on capital, and decrease both skilled and unskilled labor wages. We derive conditions under which wage inequality increases, and most importantly, we show that implementing protectionist trade policies in the industry experiencing a labor-eliminating technical progress will paradoxically hurt the workers that the policy is meant to protect.
    Keywords: Automation; Skilled-Unskilled Wage Gap; Trade Policy
    JEL: D51 F13 J23 O14
    Date: 2021–04–01
  30. By: Amuedo-Dorantes, Catalina (University of California, Merced); Romiti, Agnese (University of Strathclyde)
    Abstract: On June 23, 2016, the people of the United Kingdom voted to leave the European Union. We examine how this decision (henceforth, Brexit) has impacted international student applications in the United Kingdom. Using administrative data spanning from 2013 through 2019, along with a quasi-experimental approach, we find evidence of Brexit curtailing the growth rate of international student applications by 14 percent. The impact appears larger for applications to pursue STEM studies and for those received by more selective universities, suggestive of students with more alternatives choosing to study elsewhere. Furthermore, applications appear to have dropped the most among EU students originating from countries with weaker labor markets and economies for whom the ability to stay in the United Kingdom after their studies might have been a critical pull factor. Finally, the drop in applications has resulted into fewer international enrolments. Given the contributions of international student exchanges to research, development and growth, further research on the implications of Brexit for UK universities and the ability to attract valuable talent is well-warranted.
    Keywords: Brexit, international student applications, college education, United Kingdom
    JEL: F22 I20 O15 I28 J61
    Date: 2021–04
  31. By: Ileana Raquel Jalile
    Abstract: This paper uses quarterly available data for Argentina to estimate the impact of macroeconomic shocks and exchange rate movements on import protection policies over 1989–2016. While part of the empirical literature in this latitude is devoted to the analysis of the primary determinants of such protectionist measures, there is not any domestic effort linking the imposition of new import restrictions to macroeconomics shocks as I shall explore in this paper. This analysis is important because we can better address the relationship between business cycles, exchange rates and import restriction and capture the precise timing of any trade policy changes taking place during the cycles of the businesses
    JEL: F13 F14
    Date: 2020–11
  32. By: Uri Dadush; André Sapir
    Abstract: The authors are grateful to Bruegel colleagues and to Petros Mavroidis for helpful comments, and to Mia Hoffmann for superb research assistance. The European Union is very open to foreign direct investment. By comparison, despite considerable liberalisation in the past two decades, foreign investors in China’s markets still face significant restrictions, especially in services sectors. Given this imbalance, the EU has long sought to improve the situation for its companies...
    Date: 2021–04
  33. By: Fabrizio Fusillo (Università di Torino); Sandro Montresor (Gran Sasso Science Institute); Giuseppe Vittucci Marzetti (Università di Milano-Bicocca)
    Abstract: We combine the World Input-Output Dataset (WIOD) with OECD data on Analytical Business Enterprise R&D (ANBERD) and build up the network that emerges by mapping the sectoral R&D expenditure that flows in an embodied way among 690 industry-country nodes (23 industries of 30 countries), from 2009 to 2013. Drawing on frontier network analysis techniques, we examine the distribution of the relational properties of the country-industry nodes, identify the most central of them, and detect the clusters that they form. Our analysis reveals that, while the diffusion of embodied R&D is highly pervasive on a global scale, the linkages it creates across sectors tend to be highly asymmetric and polarised. Furthermore, except for transportation and ICT related industries, embodied R&D flows determine communities largely confined within national borders. Despite being based on structural inputoutput relationships, the position and role of country-industry nodes in the global network of embodied R&D knowledge show a certain variability both over time and across network dimensions.
    Keywords: R&D flows, input-output, global innovation network, network analysis
    JEL: O33 R15 O57
    Date: 2021–04
  34. By: Sebastián Fanelli; Juan Carlos Hallak
    Abstract: Two central facts characterize the dynamics of firm exports. One is the known fact that export survival rates are strikingly low one year after entering a foreign market. The other is the novel fact that re-entrants in export markets are more likely to survive than first-time entrants. Existing models of exporter dynamics cannot explain these two facts. In this paper, we develop a tractable model of exporter dynamics that can explain them by introducing uncertainty and experimentation. The model delivers analytical predictions on survival probabilities upon entry in a foreign market. In addition to the two facts, the model can also explain other exporter dynamics facts that have been the focus of previous work. We test the main mechanism of the model by exploiting variation in the degree of uncertainty across products and markets. The results support the relevance of uncertainty and experimentation as a central feature that characterize exporter dynamics.
    Keywords: Exporter dynamics, uncertainty, experimentation, foreign demand, geometric brownian motion.
    JEL: F10 F12 F14
    Date: 2020–11
  35. By: Hai Thanh Nguyen
    Abstract: This study traces the intersectoral linkages, or the interdependence of industries, in Vietnam’s economy within the period of 2000-2012 using the input-output analysis. The total linkages– computed using Leontief inverse–are generally employed by policymakers in identifying critical industries for policy focus However, for many countries that heavily dependent on imported inputs like Vietnam, total linkages can give an erroneous result. The paper shows how important are the domestic linkages, which is the inverse net of imports, in analyzing the importance of industries in the economy. By constructing the non-competitive input-output tables relying on the assumption that imports are distributed across industries in the same proportion as the gross domestic output of the corresponding industry, the paper finds that there are considerable divergences between total and domestic linkages. The results indicate that failure to take into account import dependence tends to overestimate intersectoral linkages of some key sectors in the Vietnamese economy.
    Keywords: Regionalism; Globalisation; ASEAN
    JEL: D57 O21 O53
    Date: 2021
  36. By: Ngoc Thi Minh Tran (University of Waikato and Vietnam National University); Michael P. Cameron (University of Waikato); Jacques Poot (University of Waikato and Vrije Universiteit Amsterdam)
    Abstract: This study examines whether the perception of difference in institutional quality between OECD destination countries and Vietnam, and the stated importance attached to such difference, influences Vietnamese migrants’ intention to return home. We use data from a web-based survey (N = 159) that we conducted in 2016. The countries covered capture about 90% of the Vietnamese diaspora in the world. We find, by means of weighted logistic regression analysis with a range of measures of institutional quality, that migrants who perceive a larger institutional quality difference are less likely to have the intention to return. However, there is considerable heterogeneity by gender. Women are, if they attach importance to institutional quality, particularly concerned about control of corruption, while the between-country difference in government effectiveness and regulatory quality matters to men. Concerns about a lack of voice & accountability; and about political instability & the presence of violence/terrorism deter return migration of both genders.
    Keywords: Return migration intention, institutional quality, perception, heterogeneity, Vietnam
    JEL: F22 O15
    Date: 2021–04
  37. By: José Joaquín Endara
    Abstract: Using nighttime lights data and the location of historically important markets for host populations in Southern Bangladesh, we assess the impact of the sudden refugee influx in August 2017 in the economic activity for the local community. Using a difference in difference estimation, we find that a sudden refugee influx produced an increase of 24% in economic activity in host markets within 5 kilometers of refugee camps. The results are robust to different specifications, and we include as controls the population around markets from the High-Resolution Settlement Layer by CIENSIN and Facebook and travel times through the local road networks. We argue that the refugee influx plus the humanitarian response are responsible for this effect. This paper contributes to the literature documenting the impacts of refugees on host communities.
    Keywords: Refugee impacts, Forced migration impacts, Nighttime lights, Difference in Difference, Rohingyas, Travel times, High Resolution Settlement Layer
    JEL: O15 O12 R23 D62
    Date: 2020–11
  38. By: Rudolph, Lukas (LMU Munich); Freitag, Markus; Thurner, Paul
    Abstract: Despite fierce politicization and heated public debates in arms-exporting democracies, systematic research on mass public preferences on arms trade is lacking. Combining political economy models of arms trade with the literatures on trade preferences and foreign policy attitudes, we argue that citizens trade off economic incentives, strategic interests and moral considerations when assessing arms trade and that deeply rooted `strategic cultures’ lead to differences in citizen preferences between countries. To derive the implicit weighting of different features of arms trade, we draw on population-representative conjoint survey experiments (N=6,617), fielded in November/December 2020 in two of the global top-5 exporting countries of major arms: Germany and France. We find that both country populations show structured preferences towards arms exports which predominantly center around their moral repercussions. However, German respondents place more weight on moral consequences and, compared to French respondents, a larger share is in fundamental opposition. We conclude that these diverging preferences potentially conflict with plans of a common European defense and security policy.
    Date: 2021–04–19
  39. By: Christian Dustmann (Department of Economics and Centre for Research and Analysis of Migration (CReAM))
    Abstract: A number of recent works have shown that the substantial increase in imports to the United States from China over recent decades led to large but highly concentrated negative labor market outcomes for those workers most exposed to these imports. On the other hand, such substantially negative effects were largely absent in Germany, the world’s fourth-largest economy. This paper discusses aspects that likely contribute to explaining these differences: the German industry structure, its nature of industrial relations, as well as the ability to and willingness of workers to retrain. Moreover, with the China shock being in large part over, any future shocks will most likely look quite different. It is unlikely that the economic shocks of the future will affect the same workers, in the same ways, as the China shock did. Therefore, by focusing the policy discussion on trade policy exclusively, we may overlook other looming challenges. Instead, it may be more fruitful to discuss how to design industrial policies, labor market policies, and education and training policies so that modern economies can adapt flexibly to a range of possible shocks.
    Keywords: Trade, Inequality, Germany, Industrial Relations, Vocational Training
    JEL: F14 F16 F66
    Date: 2021–04
  40. By: Qingen Gai; Naijia Guo; Bingjing Li; Qinghua Shi; Xiaodong Zhu
    Abstract: We use a unique panel dataset and a policy experiment as an instrument to estimate the impact of policy-induced migration cost reductions on rural-to-urban migration and the associated increase in labor earnings for migrant workers in China. Our estimation shows that there exist both large migration costs and a large underlying productivity difference between rural agricultural and urban non-agricultural sectors in China. More than half of the observed labor earnings gap between the two sectors can be attributed to the underlying productivity difference, and less than half of the gap can be attributed to sorting of workers. We also structurally estimate a general equilibrium Roy model and use it to quantify the effects of reducing migration costs on the observed sectoral productivity difference, migration, and aggregate productivity. If we implement a hukou policy reform by setting the hukou liberalization index in all regions of China to the level of the most liberal region, the observed agricultural productivity gap would decrease by more than 30%, the migrant share would increase by about 9%, and the aggregate productivity would increase by 1.1%. In contrast, in a partial equilibrium in which the underlying productivity difference does not change with migration cost, the hukou policy reform would reduce the observed agricultural productivity gap by only 9%, the migrant share would increase by more than 50%, and the aggregate productivity would increase by 6.8%.
    Keywords: Migration cost; sorting; agricultural productivity gap; panel data; general equilibrium Roy model; China
    JEL: E24 J24 J61 O11 O15
    Date: 2021–04–17
  41. By: Duleep, Harriet; Liu, Xingfei; Regets, Mark
    Abstract: Two radically different descriptions of immigrant earnings trajectories in the U.S. have emerged. One asserts that immigrant men following the 1965 Immigration and Nationality Act have low initial earnings and high earnings growth. Another asserts that post-1965 immigrants have low initial earnings and low earnings growth. We describe the methodological issues that create this divide and show that low earnings growth becomes high earnings growth when immigrants are followed from their initial years in the U.S., earnings growth is allowed to vary with entry earnings, and-when following cohorts instead of individuals-sample restrictions commonly used by labor economists are avoided.
    Keywords: Sample restrictions,immigrant earning growth,human capital investment,the U.S. census
    JEL: J1 J2 J3 C1
    Date: 2021
  42. By: Brinca, Pedro; João, Costa-Filho
    Abstract: Economic crises are usually transmitted across countries via either price or quantity shocks on the balance of payments. This paper complements the literature on international trade and business cycles by analyzing the role of imported intermediates goods inputs during the Great Financial Crisis in small open economies. We find that in an increasingly integrated world, intra-industry international trade is an important channel of propagation of shocks. A depreciation of the real exchange rate rises to costs of intermediate output, which decreases production. Our quantitative model is able to reproduce both the intensity and the velocity of the crisis in Mexico.
    Keywords: Great Recession, Intermediate goods, Business Cycle Accounting
    JEL: E27 E30 E32 E37
    Date: 2021–04–20
  43. By: Roberto à lvarez; Miguel A. González; Jaime Ruiz-Tagle
    Abstract: This paper analyses migratory wage gaps in Chile taking into account differences in their characteristics in order to improve the comparability between groups. Using data from the Chilean National Socioeconomic Characterization Survey (CASEN) we employ a matching procedure developed by Nopo (2008) which allow to estimate a common support and the mean counterfactual wage for immigrants. It is found that immigrants tend to do better in labour markets, earning on average more than natives in both 2015 and 2017. The heterogeneity of the immigrant population is relevant as those from countries with high Afro-descendant or Hispanic population earn on average -16% than natives. Scarce time spent in the country is an important determinant of their insertion in local labour markets since it explain near 60% of the gap. In fact, more recent immigration from countries with high African/Hispanic population have tend to earn -26% less. This cannot be explained by time spent in the country alone, so some discrimination could be relevant. These claims are supported by the finding that immigrants of the same group, but with more than five years of residence, are still subject to occupational segregation
    Date: 2020–11

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