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on International Trade |
| By: | Kristian Orsini; Arian Perić |
| Abstract: | Notwithstanding a quite diversified export base, a fair degree of sophistication of its products and a well-established presence in a large number of markets, Croatia’s export performance has trailed that of other Central and Eastern European countries – most of which joined the EU already in 2004. Following its EU accession in 2013, however, Croatia’s export performance has improved markedly. The aim of this paper is to review the performance of Croatia’s exports of goods over the past two decades and assess to what extent EU accession facilitated the surge in exports. The strong export growth is partly explained by the recovery in global demand, as well as policies geared to restore external competitiveness and wage restraint. More importantly, our analysis provides evidence that EU accession opened new opportunities for Croatian firms, which are making inroads into EU value chains and gaining market shares. Interestingly, deeper trade links with the EU do not seem to have come at the cost of Croatia's historical trade ties with CEFTA countries – and particularly the ex-Yugoslav economies. Sluggish demand growth, nevertheless, implies that these markets now absorb a much lower share of Croatia’s total exports. Policy action should aim to ensure that real wage improvements go hand in hand with productivity gains, while incentivise investing in product upgrades, particularly in sectors where Croatia already enjoys a strategic advantage. At EU level, relaunching accession talks with candidate members participating in CEFTA would boost Croatia's strategic role in the regional trade flows. |
| Keywords: | Croatia, EU accession, Trade developments, value chains, export elasticities, CEE, CEFTA, Understanding the Croatian export boom, Kristian Orsini, Arian Perić. |
| JEL: | F14 F15 F43 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:euf:ecobri:065&r= |
| By: | Mercedes Campi (Universidad de Buenos Aires / CONICET); Marco Dueñas (Universidad de Bogotá Jorge Tadeo Lozano); Le Li (Sant’Anna School of Advanced Studies); Huabin Wu (Shangai University) |
| Abstract: | In the 1990s, China started a process of structural reforms and of trade liberalization, which was followed by the accession to the World Trade Organization (WTO) in 2001. In this paper, we analyze trade patterns of Chinese firms for the period 2000-2006, characterized by a notable increase in exports volumes. Theoretically, in a more open economy, firms are expected to move from the production of a set of less-competitive products towards more internationally competitive ones, which implies specialization. We study several stylized facts on the distribution of Chinese firms trade and growth rates, and we analyze whether firms have diversified or specialized their trade patterns between 2000 and 2006. We show that Chinese export patterns are very heterogeneous, that the volatility of growth rates depends on the level of exports, and that volatility is stronger after trade liberalization. Both, diversification in products and destinations have a positive impact on trade growth, but diversification of destinations has a stronger effect. We conclude that the success of Chinese exports is not only due to an increase in the intensive margin, related to the existence of economies of scale, but also due to an increase in the extensive margin, related to the existence of economies of scope. |
| Keywords: | Industrial dynamics Margins of trade Diversification and specialization Economies of scope |
| JEL: | F14 F L25 |
| Date: | 2021–04 |
| URL: | http://d.repec.org/n?u=RePEc:aoz:wpaper:65&r= |
| By: | Pamina Koenig; Sebastian Krautheim; Claudius Löhnert; Thierry Verdier; Thierry Verdier |
| Abstract: | NGO campaigns against firms with value chains involving production in developing and emerging economies are a salient feature of economic globalization. What determines the patterns of the internationalization of NGO campaigns? Stylized facts obtained from recently available data containing 102 532 campaigns by 4 343 NGOs targeting 11 429 firms from 145 countries guide our theoretical analysis. We propose a model of global sourcing and international trade in which heterogeneous NGOs campaign against heterogeneous firms in response to infringements along their international value chains. We find that campaigns are determined by a triadic gravity equation, i.e. bilateral trade costs between the country of the NGO, the country of the firm and the sourcing country affect campaigns. Most notably, the latter implies that by advancing the internationalization of production, falling trade costs boost the internationalization of NGO campaigns. We use our data to estimate the NGO level triadic gravity equation implied by our model and find strong support for our predictions. |
| Keywords: | international trade, international sourcing, gravity, NGOs, campaigns, social activism |
| JEL: | F12 F14 F60 L31 O35 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9068&r= |
| By: | Demena, B.A.; Msami, J.; Mmari, D.E.; van Bergeijk, P.A.G. |
| Abstract: | Productivity development is a key issue for export-driven growth and development. We use East African Community (EAC) firm-level data. Instead of focusing on single EAC partners, using the World Bank Enterprise Surveys, investigate firm-level productivity difference for seven countries that are part of the COMESA-EAC-SADC tripartite free trade area (TFTA). Using export and ownership dimensions, we identify four types of firms: National Domestic, National Exporters, Foreign Domestic and Foreign Exporters. We find a clear export productivity premium for national manufacturing firms and service sectors, but not for foreign owned firms. We also find clear foreign-ownership productivity premium for both domestic and exporting firms in manufacturing sectors but less clear in services sectors. The gap between national export premium and foreign-ownership premium is stronger in manufacturing firms as opposed to service sectors. Moreover, we find clear and strong productivity premia in size, training programmes and level of development in the manufacturing firms. In the services sector, these premia are always smaller and only significant for medium-sized firms. There is no difference in experience premium between sectors in terms of both significance and magnitude of the estimated coefficients. |
| Keywords: | Productivity, exports, firm heterogeneity, FDI, sub-Saharan Africa, EAC. |
| JEL: | O12 J24 F23 D20 O55 |
| Date: | 2021–05–06 |
| URL: | http://d.repec.org/n?u=RePEc:ems:euriss:135504&r= |
| By: | Kohnert, Dirk |
| Abstract: | ABSTRACT & RÉSUMÉ: Despite the Corona crisis, London is pushing ahead with the implementation of Brexit. This will have a profound impact not only on the EU but also on Africa. The British government's vision of a reinvigorated 'Global Britain' relies heavily on a reinforced cooperation with Commonwealth Sub-Saharan Africa. Already the temporary closure of manufacturing supply chains between China and the rest of the world because of the pandemic seriously affected economic activity in GB and the EU. However, African commodity exporters such as Nigeria, South Africa, and Kenya will likely bear the brunt of both the direct and indirect effects of this weaker demand. This will add up to the economic effects of the spread of Corona in Africa. Most likely the vulnerable and the poor in Africa's informal sector will have to suffer the most by both health hazards and the economic decline. RÉSUMÉ: Malgré la crise de Corona, Londres poursuit la mise en œuvre du Brexit. Cela aura un impact profond non seulement sur l'UE mais aussi sur l'Afrique. La vision du gouvernement britannique d'une «Grande-Bretagne mondiale» revigorée repose largement sur une coopération renforcée avec l'Afrique subsaharienne du Commonwealth. Déjà, la fermeture temporaire des chaînes d'approvisionnement manufacturières entre la Chine et le reste du monde en raison de la pandémie a sérieusement affecté l'activité économique en GB et dans l'UE. Cependant, les exportateurs africains de matières premières tels que le Nigeria, l'Afrique du Sud et le Kenya supporteront probablement le poids des effets directs et indirects de cette demande plus faible. Cela s'ajoutera aux effets économiques de la propagation de Corona en Afrique. Les personnes vulnérables et pauvres du secteur informel africain devront très probablement souffrir le plus des risques sanitaires et du déclin économique. |
| Keywords: | Corona, Brexit, Africa, GB, EU, international trade, economic recession, poverty, South Africa, Nigeria, Kenya, African Studies |
| JEL: | F13 F35 F54 F63 G15 I1 N17 N47 N67 O17 P16 Z13 |
| Date: | 2020–06–17 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:107700&r= |
| By: | Anirudh Shingal (S.P. Jain Institute of Management & Research, Mumbai and European University Institute) |
| Abstract: | Given the importance of services for economic activity in general and the salience of reducing service link costs for overcoming the economic and health challenges emanating from COVID-19, we examine the implications of the pandemic for services trade in the original group of ASEAN+6 countries that began negotiating the Regional Comprehensive Economic Partnership agreement. Our analysis reveals that with the exception of the Philippines and Viet Nam for services exports, and Cambodia and India for services imports, up to half of total services trade for all other sample countries could be adversely affected by the pandemic. In the absence of bilateral services trade data for 2020, we proxy the impact of COVID-19 on services trade using bilateral data on announced greenfield investment in services sectors from fDi Markets. Structural gravity estimates suggest that a 1% increase in COVID-19-related deaths in the source country may have reduced ASEAN+6 bilateral greenfield investment by US$0.15 million in 2020 relative to the corresponding value in 2019. |
| Keywords: | COVID-19, services trade, ASEAN, RCEP, STRI, gravity, greenfield investment |
| JEL: | F1 F15 F23 |
| Date: | 2021–04–19 |
| URL: | http://d.repec.org/n?u=RePEc:era:wpaper:dp-2021-02&r= |
| By: | Canals, Claudia; Klein, Michael A; Sener, Fuat |
| Abstract: | International standards in the protection of intellectual property rights (IPRs) are increasingly guided by bilateral and regional preferential trade agreements (PTAs). In this paper, we estimate the effect of these IP-related PTAs on US offshoring behavior in developing countries. We utilize a difference-in-difference empirical methodology that addresses several possible sources of endogeneity and exploits industry variation in the importance of IPRs to identify the effect of these PTA-induced IPR reforms. We find that IP-related PTAs are associated with a substantial increase in US offshoring in IPR-intensive industries relative to non-IPR-intensive industries. This increase occurs both within the boundaries of the multinational firm and through arm’s-length contracts with domestic firms. We do not find strong evidence for a compositional shift towards either type of offshoring. These findings provide direct empirical evidence that PTA-induced IPR reform stimulates multinational activity in developing countries. |
| Keywords: | Intellectual property rights; Patents; Preferential trade agreements; Offshoring; Outsourcing; Subcontracting; Multinational firms |
| JEL: | F13 F23 O33 O34 |
| Date: | 2021–05–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:107694&r= |
| By: | Chen, Yongmin; Jiang, Haiwei; Liang, Yousha; Pan, Shiyuan |
| Abstract: | This paper studies how foreign direct investment (FDI) affects innovation in the host country, using matched firm-level patent data of Chinese firms. The data contain multidimensional information about patent counts and citations which, together with an identification strategy based on Lu et al. (2017), allows us to measure innovation comprehensively and to uncover the causal relationship. Our empirical analysis shows that FDI has positive intra-industry effects on the quantity and quality of innovation by Chinese firms. We show that these positive effects are driven by increases in competition, rather than by knowledge spillover from FDI which is measured by patent citations between domestic firms and foreign invested enterprises (FIEs). We further investigate the inter-industry effects of FDI and find that FDI has positive vertical effects on innovation in upstream sectors. |
| Keywords: | FDI; Innovation; Patent; Competition; Spillover |
| JEL: | F2 L5 O3 |
| Date: | 2021–05–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:107680&r= |
| By: | Werner Roeger (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW)); Paul J.J. Welfens (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW)) |
| Abstract: | A deeper macroeconomic analysis of foreign direct investment (FDI), innovation and other key variables is needed to better understand technology shock effects, transmission dynamics and policy perspectives in open economies. FDI outward stock relative to the source country total capital stock was above 10 percent in nine OECD countries in 2017, including the UK and the US. This paper adds FDI to a standard model with a tradable and a non-tradable sector. Here, we define non-tradable in a broad sense. The non-tradable sector covers those firms which are located in the tradable sector but undertake FDI in order to overcome the costs associated with exports but it also includes firms in the service industry who offer services which are intrinsically non-tradable, but which can be offered internationally via subsidiaries. This relates to traditional services (e.g., in retail) but also to novel digital services. We study how opening up the non-tradable sector to international transactions (via FDI) affects the international transmission of technology shocks and of persistent demand shocks. We consider a wide range of technology shocks differentiated by product and process innovations and by sectoral origin. Product innovations in formerly non-tradable sectors widen the scope in which innovations in one country can be transmitted abroad. One major difference between FDI and trade is the location of production, which induces different international income flows and requires upfront investment in the case of FDI. We show that this has implications for both the current account and the exchange rate. Process innovation in the tradable sector leads to a fall in the terms of trade (ToT) and a real appreciation of the exchange rate, expressed as the ratio between domestic and foreign consumer prices. The opposite sign is due to the Balassa-Samuelson effect. This pattern changes with a total factor productivity (TFP) shock in the non-tradable sector. Now, the ToT increases and the real exchange rate depreciates (aside from a short run appreciation). In the case of product innovations, both ToT and the real exchange rate (RER) behave similarly in both cases. However, the composition of the Current Account (CA) varies. With a process innovation in the export sector, both the trade balance and the primary income balance turn negative while product innovations in the FDI sector make the primary balance positive while the trade balance stays negative. We are especially interested in seeing whether the impulse responses to permanent shocks can tell us something about the reasons for persistent external imbalances in countries like Germany and the United States. For the US we find that product innovations originating from US multinationals, at least qualitatively matches well the negative current account and trade balance and a positive primary income balance. The German/Eurozone CA surplus is less easy to explain by technological factors since in our model all technology shocks are associated with persistent CA deficits. Our model confirms what has been shown in previous studies that the German CA is strongly driven by savings. We add to this the observation that increased savings also shows up in an improved primary income balance, which can indeed be observed for Germany. |
| Keywords: | FDI, Product innovation, Process Innovation, Demand Shock, DSGE |
| JEL: | C6 E1 F21 O30 O31 O32 |
| Date: | 2021–04 |
| URL: | http://d.repec.org/n?u=RePEc:bwu:eiiwdp:disbei300&r= |
| By: | Julia Bahlmann (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW)); Paul J.J. Welfens (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW)) |
| Abstract: | There is a long debate about potential pollution haven effects existing in the global North and South in the context of rising environmental stringency. This contribution takes a fresh look at intra-OECD foreign direct investment and employs a modern FDI gravity modelling approach to shed more light on these issues. There is clear evidence in favor of the pollution haven hypothesis - countries with weaker environmental policy and regulation are able to attract relatively high FDI inflows so that new challenges for environmental policy and international cooperation in environmental policy have to be considered. As regards environmental policy, more political cooperation between the OECD countries seems to be required in order to prevent or mitigate "quasi-carbon leakage" effects from undermining the effectiveness of environmental and climate policy. The evidence obtained from this analysis of OECD countries suggests the benefit of extending this research in future to other country groups, to include countries in Asia or Latin America and Africa. |
| Keywords: | FDI, Pollution Haven Countries, OECD, Gravity Modelling, Environmental Policy |
| JEL: | F21 Q43 Q50 Q58 C23 |
| Date: | 2021–04 |
| URL: | http://d.repec.org/n?u=RePEc:bwu:eiiwdp:disbei294&r= |
| By: | Yoto V. Yotov |
| Abstract: | The gravity equation is the workhorse model for analysis of bilateral trade flows. Despite solid theoretical foundations and clear gains from theory-consistent policy analysis, there are still gaps between gravity theory and empirics. This paper focuses on domestic trade flows, and I argue that there are significant benefits from adhering to theory by estimating gravity equations with domestic (in addition to international) trade flows. To this end, I review the contributions from the related literature and I synthesize them into fifteen arguments for using domestic trade flows in gravity estimations. The survey of the literature reveals the need for further theory contributions and new data developments, and points to opportunities for more empirical analysis and policy applications. |
| Keywords: | domestic trade flows, structural gravity, trade policy, estimation |
| JEL: | F13 F14 F16 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9057&r= |
| By: | Bown, Chad P. |
| Abstract: | The US-China trade war forced a reluctant semiconductor industry into someone else's fight, a very different position from its leading role in the 1980s trade conflict with Japan. This paper describes how the political economy of the global semiconductor industry has evolved since the 1980s. That includes both a shift in the business model behind how semiconductors go from conception to a finished product, as well as the geographic reorientation toward Asia of demand and manufactured supply. It uses that lens to explain how, during the modern conflict with China, US policymakers turned to a legally complex set of export restrictions targeting the semiconductor supply chain in the attempt to safeguard critical infrastructure in the telecommunications sector. The potentially far-reaching tactics included weaponization of exports by relatively small but highly specialized American software service and equipment providers in order to constrain Huawei, a Fortune Global 500 company. It describes potential costs of such policies, some of their unintended consequences, and whether policymakers might push them further in the attempt to constrain other Chinese firms. |
| Keywords: | Export restrictions; Huawei; National Security; Semiconductors; SMIC; Supply Chains; USâ??China trade relations |
| JEL: | F13 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15597&r= |
| By: | Julien Burton; Magdalena Kizior |
| Abstract: | France’s export market shares declined in the 2000s as in other advanced economies following the rise of major competitors among emerging economies. However, the fall has been more marked for France than for similar EU economies. Cost competitiveness was at first considered the main reason for the deterioration in export performance and the policy response was to introduce actions to lower labour cost. Although measures like the competitiveness and employment tax credit (Crédit d’impôt pour la compétitivité et l’emploi, CICE) lowered the unit labour cost, France’s export market shares stabilised but did not recover fully, especially for goods. The attention could then be shifted to other aspects of competitiveness. Non-price competitiveness (a proxy for “quality”) is intrinsically difficult to measure but can be approximated as the export sales that cannot be explained by the price and other controlled parameters (distance, economic size …). Our contribution is to apply a gravity model to an updated worldwide dataset of bilateral trade flows in goods and to assess the non-price component of exports at a detailed sectoral level, focussing on the case of France. Overall, France’s exports’ non-price competitiveness (a proxy for “quality”) is medium-high, ranking 11th among a set of 37 countries (OECD and EU countries) but it has deteriorated in the recent years. The fall in the aggregate indicator was among the most pronounced over the period 2003-2016, notably in the aftermath of the 2008 crisis. This evolution seems to have been driven by average and lower “quality” goods, while only the top of the distribution tended to improve their advantage over time. .Moreover, the performance in terms of non-price competitiveness is quite heterogeneous across the manufacturing sectors. France achieves very good results in sectors in which it specialises such as aeronautics, cosmetics and beverages, while it performs average in sectors like machinery, electrical equipment, vehicles (particularly the car industry) or pharmaceuticals, which are the most important sectors in volume in global trade. France has demonstrated its ability to produce goods of high quality or high perceived quality through innovation (aeronautics), know-how (agriculture, wines) and branding (luxury products). However this applies to a relatively small share of its exports. To regain competitiveness, several proposals, leveraging on non-price competitiveness aspects, can be suggested: e.g. develop the dissemination of innovation from public to private sector, invest in human capital through education and training, reduce barriers to investment and improve the business environment to boost firm growth. |
| Keywords: | Can we evaluate the quality of French products based on export data?, Julien Burton, Magdalena Kizior, France, quality of exports, non-cost competitiveness, trade performance, bilateral trade flows, trade in goods |
| JEL: | F1 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:euf:ecobri:064&r= |
| By: | Paul J.J. Welfens (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW)); Kaan Celebi (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW)) |
| Abstract: | There has been some recent debate about changes in the Phillips curve in the context of economic globalization and a flattening of the curve, respectively. Little evidence has been found in support of such links so far. However, our analysis shows that both inward FDI stock variables and outward FDI stock variables significantly affect the Phillips curve and the inflation-unemployment trade-off in the medium term. In the Euro Area, the inward FDI stock variable raises the slope of the Phillips curve, while the outward FDI stock variable brings a flattening of the Phillips curve; the latter effect is not observed in the case of the UK and in the case of the US there are no clear FDI effects. Furthermore, we consider - also for the first time in the literature - the impact of product innovations and process innovations. For the UK and the Euro Area, we find significant parameters for the variables mentioned. The analysis clearly suggests that foreign direct investment is crucial for understanding key macroeconomic variables; thus the findings could reinforce new DSGE research perspectives by ROEGER/WELFENS (2021) who have developed a new macro model with FDI. The OECD should urgently consider providing more data on FDI - for example, sector FDI stock data - and on product innovations and process innovations. |
| Keywords: | Globalization, Phillips curve, Foreign Direct Investment, Institutional Changes, New Phillips curve |
| JEL: | F62 F68 E31 F21 F23 O43 |
| Date: | 2021–04 |
| URL: | http://d.repec.org/n?u=RePEc:bwu:eiiwdp:disbei301&r= |
| By: | Gérard Pogorel (SES - Département Sciences Economiques et Sociales - Télécom ParisTech, ECOGE - Economie Gestion - I3, une unité mixte de recherche CNRS (UMR 9217) - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique - X - École polytechnique - Télécom ParisTech - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - Université Paris sciences et lettres) |
| Abstract: | ABOUT THE EVENT From national economies and companies slowing their activities down to the revival of some protectionist measures, the world is facing an unprecedented crisis deeply affecting the current international trade order. At a time when trade negotiations between the EU and third countries are still very high on the agenda, Europe's economic revival depends also on how we redefine our relations with partners across the globe. Faced by instability on the other side of the Atlantic and competition from China, Europe needs to be clear about defining its values and its comparative advantage. In addition to the ongoing ratification of Free Trade Agreement (FTA) with Vietnam, to the question of the future EU-UK relationship, Covid-19 has brought several new questions to the fore: How do we keep supply chains flowing for food and medicines? What role can the EU have in distributing its values and standards within the framework of difficult trade relations? How do we ensure less dependence in Europe for some essential products such as medical supplies? |
| Date: | 2020–07–30 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02904877&r= |
| By: | Ben Shepherd |
| Abstract: | This paper reviews trade in pharmaceutical products, focusing on ASEAN countries. Trade in this sector is of singular policy importance as a result of the COVID-19 pandemic. First, the paper shows that pharmaceuticals are traded within Global Value Chains, which in turn means that international linkages are complex. Second, the paper shows that policy reforms can help boost trade in the sector, which has important human development implications during the pandemic period. |
| Keywords: | COVID-19, global value chains, public health, gravity model |
| JEL: | F15 O24 |
| Date: | 2021–04–23 |
| URL: | http://d.repec.org/n?u=RePEc:era:wpaper:dp-2021-05&r= |
| By: | Adao, Rodrigo; Carrillo, Paul; Costinot, Arnaud; Donaldson, Dave; Pomeranz, Dina D. |
| Abstract: | We develop a new factor content approach to study the impact of trade on inequality. Our analysis generalizes the theoretical results of Deardorff and Staiger (1988) and improves on past empirical implementations of these results. Combined with unique administrative data from Ecuador, our approach yields measures of individual-level exposure to exports and imports, for both capital and labor income, as well as estimates of the incidence of such exposure across the income distribution. We find that international trade raises earnings inequality in Ecuador, especially in the upper-half of the income distribution. However, the drop in inequality experienced by Ecuador over the last decade would have been less pronounced in the absence of trade. |
| JEL: | F10 F11 F12 F14 F16 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15598&r= |
| By: | Sascha Keil (Technische Universitaet Chemnitz, Fakultaet für Wirtschaftswissenschaften, Professur für Wirtschaftspolitik, Sascha Keil, 09107 Chemnitz (Germany)) |
| Abstract: | This paper sheds light on serious methodological difficulties of employing the empiric export equation in order to derive long-run trade elasticities. The unreliable estimated price coefficient (Kaldor Paradox) and the potential presence of cointegrationare identified as the most relevant points. It can be shown that difficulties are in part due to methodological issues. New empirical evidence, encompassing eleven Euro area countries and the timespan 1995–2019, has been obtained from different cointegration techniques. In seven out of eleven cases a robust long-run relationship can be detected and price elasticity was consistently found being significant and negative. |
| Keywords: | International trade, Competitiveness, Kaldor Paradox, Export equation, ARDL |
| JEL: | F14 C13 |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:tch:wpaper:cep042&r= |
| By: | Beck, Roland; Di Nino, Virginia; Stracca, Livio |
| Abstract: | We revisit the effects of globalisation over the past 50 years in a large sample of advanced and emerging countries. We use accessions to \Globalisation Clubs" (WTO, OECD, EU), financial liberalisation and an instrument for trade openness to study the trade-off between efficiency (proxied by real GDP per capita and TFP) and equity (proxied by the labour share of income and the Gini index of inequality). We find that (i) most of our episodes lead to an increase in trade openness (ii) effects on GDP per capita are mostly positive with some interesting exceptions and (iii) there is little evidence that globalisation shocks lead to more inequality. JEL Classification: F13, F36 |
| Keywords: | efficiency, equity, EU, financial liberalization, globalisation, OECD, trade integration, WTO |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20212546&r= |
| By: | Mary Amiti; Sang Hoon Kong; David Weinstein |
| Abstract: | We show that the specific factors model can be used to derive a rigorous link between movements in stock prices and productivity, wages, employment, output, and welfare. We also prove that the commonly used measure of the effective rate of protection equals the dual measure of revenue TFP, providing a theoretical foundation for why many studies have found that trade liberalization significantly increases firm-level productivity. Our method enables us to trace a tariff announcement's effect on TFP through its impact on macro variables (e.g., exchange rates) and through its effect on the relative prices of imports. We apply this framework to understanding the implications of the U.S.-China trade war. Our results show that the trade-war announcements caused large declines in U.S. stock prices, expected TFP, and expected inflation largely by moving macro variables, but also by causing declines in the returns of firms trading with China. We find that markets expect the trade war to lower U.S. welfare by 7.8 percentage points, which is much larger than the predictions of static models but in line with those of dynamic models. |
| JEL: | F13 F14 F16 |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28758&r= |
| By: | Lutz Sager (McCourt School of Public Policy, Georgetown University) |
| Abstract: | I investigate the distributional effects of environmental trade measures. Distributional effects are assigned to two channels: ‘Use-side’ effects describe which consumers bear the burden of changing prices, while ‘source-side’ effects describe shifts in income between sectors, factors of production and different groups of workers. I present simple statistics to characterize the distributional tendencies of climate policies in each of these channels. I then apply these statistics to assess the distributional effects of two types of policy instruments: Border Carbon Adjustments and Green Industrial Policy. I conclude with a more detailed case study investigating the distributional effects of introducing Border Carbon Adjustments to complement an EU-wide carbon price. The analysis highlights the importance of modeling the effects of environmental trade policy at different scales, capturing shifts between countries, as well as shifts between sectors and income groups within them. Classification-Q56, Q58, F18 |
| Keywords: | Climate Policy, International Trade, Redistributive Effects, Border Carbon Adjustment, Industrial Policy |
| Date: | 2021–05–10 |
| URL: | http://d.repec.org/n?u=RePEc:geo:guwopa:gueconwpa~21-21-11&r= |
| By: | Antràs, Pol |
| Abstract: | This paper evaluates the extent to which the world economy has entered a phase of de-globalisation, and it offers some speculative thoughts on the future of global value chains in the post-COVID-19 age. Although the growth of international trade flows relative to that of GDP has slowed down since the Great Recession, this paper finds little systematic evidence indicating that the world economy has already entered an era of de-globalisation. Instead, the observed slowdown in globalisation is a natural sequel to the unsustainable increase in globalisation experienced in the late 1980s, 1990s and early 2000s. I offer a description of the mechanisms leading to that earlier expansionary phase, together with a discussion of why these forces might have run out of steam, and of the extent to which they may be reversible. I conclude that the main challenge for the future of globalisation is institutional and political in nature rather than technological, although new technologies might aggravate the trends in inequality that have created the current political backlash against globalisation. Zooming in on the COVID-19 global pandemic, I similarly conclude that the current health crisis may further darken the future of globalisation if it aggravates policy tensions across countries. |
| Keywords: | COVID-19; global value chains; globalisation; trade wars |
| JEL: | F1 F2 F3 F4 F5 F6 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15462&r= |
| By: | Paul Lavery; Jose-Maria Serena; Marina-Eliza Spaliara; Serafeim Tsoukas |
| Abstract: | We analyse the impact of private equity buyouts on firm exports, on a panel of UK non-financial firms over 2004-2017. Using difference-in-differences estimations, we show that private equity ownership increases the probability of exporting, the value of exports, and the export to sales ratio. We further show that the positive impact of private equity ownership on exports holds only after private-to-private buyouts, or acquisitions of small or young target firms. Our findings suggest that private equity investors mitigate the credit constraints faced by their portfolio companies, hence boosting their exports. |
| Keywords: | Private equity buyouts; exporting; credit constraints; transactions |
| JEL: | G34 G32 |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:gla:glaewp:2021_06&r= |
| By: | Kim, Duyeon |
| Abstract: | China under Xi Jinping is seeking to reshape international rules, norms, and institutions to gain political and economic influence under the guise of providing global public goods for mutual gains. Meanwhile, democratic and like-minded countries will need to compete in some areas and cooperate in other areas with China-a feat that is far easier said than done. The United States, Europe, Korea, and Asia must engage and compete with China on their terms, based on mutual respect and understanding without compromising values such as democracy, rule of law, and human rights as well as best practices including fair and open trade and reciprocity. These are certainly challenging tasks whose playbook and manual need to be written along the way. The United States, Europe, and South Korea must navigate unchartered territory, which China seeks to create in its image. They must identify ways to not only defend the rulesbased international order but prevent their respective economic interests from colliding with their shared interests, values, and purposes. |
| Keywords: | Belt and Road Initiative,United States,Europe,South Korea,Quad |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:opodis:20218&r= |
| By: | Martin, Julien; Mejean, Isabelle; Parenti, Mathieu |
| Abstract: | This paper examines how the degree of stickiness in business relationships influences the real impact of aggregate uncertainty. We first develop a novel index of relationship stickiness (RS) for more than 5,000 HS6 products based on the duration of firm-to-firm trade. The RS measure is derived from a stylized search model in which a higher degree of stickiness implies a lower probability of switching and longer firm-to-firm trade relationships, conditional on match quality. Relationship stickiness shapes the dynamics of firm-to-firm relationships in response to uncertainty shocks. Uncertainty shocks induce a significant and larger decrease in the rate at which new firm-to-firm relationships are formed in high-RS product categories. The relationship between uncertainty and separation rates also varies along the distribution of RS indices, the probability of a trade relationship ending being significantly reduced in sticky-product markets in uncertain times. These results provide evidence that trade of sticky products is characterized by wait-and-see behaviors during uncertainty episodes. |
| Keywords: | firm-to-firm trade; relationship specificity; uncertainty |
| JEL: | D22 F14 F44 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15609&r= |
| By: | Archanun Kohpaiboon; Juthathip Jongwanich (Faculty of Economics, Thammasat University) |
| Abstract: | This paper examines the effect of the COVID-19 pandemic on global production sharing in ASEAN Member States. Product-level analysis – on hard disk drives, air conditioners, microwaves, televisions, washing machines, and automotive parts – is undertaken to examine trade patterns between January 2019 and October/November 2020. The key finding suggests that the pandemic caused parts shortages, but this effect has been short-lived. There is no strong evidence that multi-national enterprises have altered their supply chains or means of sourcing parts and components in response to the pandemic. There is some indication that multi-national enterprises are moving away from China, but whether this reflects a ‘COVID-19 effect’ or the trade war between the United States and China is not clear. COVID-19, a once-in-a-century event, may not alone be a compelling reason to restructure supply chain management relating to global production sharing, which has been a structural phenomenon driving economic globalisation. |
| Keywords: | COVID-19, global production sharing, ASEAN |
| JEL: | F14 F20 |
| Date: | 2021–04–21 |
| URL: | http://d.repec.org/n?u=RePEc:era:wpaper:dp-2021-03&r= |
| By: | Santamaría, Marta (University of Warwick); Ventura, Jaume (CREI, Universitat Pompeu Fabra and Barcelona GSE); Yesilbayraktar, Ugur (Universitat Pompeu Fabra and Barcelona GSE) |
| Abstract: | Are country borders still an impediment to trade flows within Europe? Using a microlevel survey with 3 million annual shipments of goods, we construct a matrix of bilateral trade for 269 European regions. Take two similar region pairs, one containing regions in different countries and the other containing regions in the same country. The market share of the origin region in the destination region for the international pair is 17.5 percent that of the intranational pair. Across industries, this estimate ranges from 12.3 to 38.9 percent. For post-1910 borders, this estimate is 28.8 percent. The implication is clear : Europe is far from having a single market. |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:1355&r= |
| By: | Bartelme, Dominick; Lan, Ting; Levchenko, Andrei A. |
| Abstract: | This paper estimates the impact of external demand shocks on real income. Our empirical strategy is based on a first order approximation to a wide class of small open economy models that feature sector-level gravity in trade flows. The framework allows us to measure foreign shocks and characterize their impact on income in terms of reduced-form elasticities. We use machine learning techniques to group 4-digit manufacturing sectors into a smaller number of clusters, and show that the cluster-level elasticities of income with respect to foreign shocks can be estimated using high-dimensional statistical techniques. We find clear evidence of heterogeneity in the income responses to different foreign shocks. Foreign demand shocks in complex intermediate and capital goods have large positive impacts on real income, whereas impacts in other sectors are negligible. The estimates imply that the pattern of sectoral specialization plays a quantitatively large role in how foreign shocks affect real income, while geographic position plays a smaller role. Finally, a calibrated multi-sector production and trade model can rationalize both the average and the heterogeneity in real income elasticities to foreign shocks under reasonable values of structural parameters. |
| Keywords: | Gravity; k-means clustering; real income; trade specialization |
| JEL: | F43 F62 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15604&r= |
| By: | Eknath, Varun; Ereshchenko, Viktoriya; Hoekman, Bernard; Shingal, Anirudh |
| Abstract: | This paper analyzes a prominent dimension of the initial policy response to the COVID-19 pandemic observed in many countries: the imposition of export restrictions and actions to facilitate imports. Using weekly data on the use of trade policy instruments during the first seven months of the COVID-19 pandemic (January-July, 2020) we assess the relationship between the use of trade policy instruments and attributes of pre-crisis public procurement regulation. Controlling for country size, government effectiveness and economic factors, we find that use of export restrictions targeting medical products is strongly positively correlated with the total number of steps and average time required to complete procurement processes in the pre-crisis period. Membership of trade agreements encompassing public procurement disciplines is associated with actions to facilitate trade in medical products. These findings suggest future empirical assessments of the drivers of trade policy during the pandemic should consider public procurement systems. |
| Keywords: | COVID-19; export controls; public procurement; Trade agreements; Trade facilitation; trade policy |
| JEL: | F13 F15 H57 I18 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15424&r= |
| By: | Corno, Lucia; La Ferrara, Eliana; Voena, Alessandra |
| Abstract: | We investigate the historical origins of female genital cutting (FGC), a harmful practice widespread across Africa. We test the hypothesis --substantiated by historical sources-- that FGC was connected to the Red Sea slave trade route, where women were sold as concubines in the Middle East and infibulation was used to ensure chastity. We hypothesize that differential exposure of ethnic groups to the Red Sea route determined differential adoption of the practice. Combining individual level data from 28 African countries with novel historical data on slaves' shipments by country, ethnic group and trade routes from 1400 to 1900. We find that women belonging to ethnic groups whose ancestors were exposed to the Red Sea route are more likely to be infibulated or circumcised today and are more in favor of continuing the practice. The estimated effects are very similar when slave exports are instrumented by distance to the North-Eastern African coast. Finally, the effect is smaller for ethnic groups that historically freely permitted premarital sex -- a proxy for low demand for chastity. |
| Keywords: | female genital cutting; FGC; FGM; Gender norms; Slave trade |
| JEL: | N37 O15 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15577&r= |
| By: | Geloso, Vincent; Pedersen, Maja; Sharp, Paul |
| Abstract: | Previous work has demonstrated the potential for wheat market integration between the US and the UK before the 'first era of globalization' in the second half of the nineteenth century. It was however frequently interrupted by policy and 'exogenous' events such as war. This paper adds Canada to this story by looking at trade and price data, as well as contemporary debates. We find that she faced similar barriers to the US, and that membership of the British Empire was therefore not a great benefit. We also describe the limitations she faced accessing the US market, in particular after American independence. Transportation costs do not appear to be the main barrier to the emergence of a globalized economy before around 1850. |
| Keywords: | British Empire; Canada; Globalization; market integration; United Kingdom; United States; wheat |
| JEL: | N51 N53 N71 N73 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15591&r= |
| By: | Ahrens, Joachim; Kalkschmied, Katja |
| Abstract: | European development strategies with Africa have been challenged by a pragmatic, self-interested Sino-African trade and development cooperation with a focus on infrastructure projects, which gained momentum in the last twenty years. African-European development cooperation and European norms and standards as role models appear to have lost some of their appeal to African governments due to incoherencies, poor communication, and inadequate deliberations. Recent changes in European development strategies with Africa do not go far enough to solve these issues to stop a gradual shift in development cooperation away from Europe towards China. In this article we discuss and contrast Sino-African relations with African-European relations and investigate whether there exists competition between China and EU in Africa and what opportunities and threats this competition may hold for Africa. |
| Keywords: | Development cooperation,Sino-African relations,European-African relations,competitionover Africa |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:opodis:202110&r= |
| By: | Barbero Jiménez, Javier; Madras, Giovanni; Rodríguez-Crespo, Ernesto; Rodríguez-Pose, Andrés |
| Abstract: | This paper examines â?? using a novel database of regional trade flows between 267 European regions for 2013 â?? how government quality affects trade between European Union (EU) regions. The results of a structural gravity cross-sectional analysis of trade show that trade across EU regions is highly influenced by differences in regional government quality. This influence varies by sector of economic activity and by the level of economic development of the region. The results indicate that, if the less developed regions of the EU want to engage in greater interregional trade, improving their institutional quality is a must. |
| Keywords: | gravity model of trade; institutions; quality of government; regional policy; structural estimation; Trade |
| JEL: | E02 F15 R10 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15667&r= |
| By: | Pierre-Xavier Meschi (CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille - AMU - Aix Marseille Université - UTLN - Université de Toulon); Antonin Ricard (CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille - AMU - Aix Marseille Université - UTLN - Université de Toulon, AMU IAE - Institut d'Administration des Entreprises (IAE) - Aix-en-Provence - AMU - Aix Marseille Université); Ernesto Tapia Moore (KEDGE Business School [Marseille]) |
| Abstract: | This article aims to determine whether pre-internationalization conditions improve the performance of first-time exporting small and medium-sized enterprises (SMEs). Two pre-internationalization conditions are discussed here: firm performance and age at internationalization. Building on the aspiration-level performance model of March and Shapira (1992) with sequential internationalization and international new-ventures approaches, this article develops two research hypotheses proposing an effective alignment with pre-internationalization performance and age at internationalization. These research hypotheses are examined using a panel database of 522 French SMEs that began export operations for the first time in 2014. The statistical results partially support our first hypothesis by showing that early-internationalizing SMEs with a lower performance relative to their peers significantly increase their post-internationalization performance. Contrary to what we predicted in our second hypothesis, we observe that late-internationalizing SMEs, which deliver a much higher performance than their historical aspirations, significantly reduce their post-internationalization performance. |
| Keywords: | Aspiration-level performance model,Early internationalization,First-time exporting SME,Internationalization process,Late internationalization,Social and historical aspirations |
| Date: | 2021–03–19 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03216166&r= |
| By: | di Giovanni, Julian; Levchenko, Andrei A.; Mejean, Isabelle |
| Abstract: | This paper uses a dataset covering the universe of French firm-level sales, imports, and exports over the period 1993-2007 and a quantitative multi-country model to study the international transmission of business cycle shocks at both the micro and the macro levels. The largest firms are both important enough to generate aggregate fluctuations (Gabaix, 2011), and most likely to be internationally connected. This implies that foreign shocks are transmitted to the domestic economy primarily through the largest firms. We first document a novel stylized fact: larger French firms are significantly more sensitive to foreign GDP growth. We then implement a quantitative framework calibrated to the full extent of observed heterogeneity in firm size, exporting, and importing. We simulate the propagation of foreign shocks to the French economy and report one micro and one macro finding. At the micro level heterogeneity across firms predominates: 40 to 85% of the impact of foreign fluctuations on French GDP is accounted for by the "foreign granular residual" -- the term capturing the fact that larger firms are more affected by the foreign shocks. At the macro level, firm heterogeneity dampens the impact of foreign shocks, with the GDP responses 10 to 20% larger in a representative firm model compared to the baseline model. |
| Keywords: | Aggregate fluctuations; granularity; input linkages; international trade; shock transmission |
| JEL: | E32 F15 F23 F44 F62 L14 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15458&r= |
| By: | Seidt, Hans-Ulrich |
| Abstract: | The transforming world of the 21st century has entered a new era. It is characterized by geopolitical conflicts, controversial grand strategies and disruptive events. Over the next years, the Sino-American competition will throw a dark shadow over international relations, global mega-infrastructure projects and the world's maritime trade routes. The current situation highlights the need for a renewed multilateralism and closer cooperation between like-minded countries like the Republic of Korea and Germany. |
| Keywords: | German-Korean cooperation,China's grand strategy,U.S. threat assessment,great power competition,new silk road |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:opodis:20214&r= |
| By: | Gnangnon, Sèna Kimm |
| Abstract: | The international policy discourse, for example by the World Trade Organization and the United Nations, has emphasized the critical role of productive capacities in promoting sustainable development and building economic resilience in developing countries. This paper has examined whether development aid contributes to enhancing productive capacities in recipient countries. To that effect, it considers two main components of the total official development assistance (ODA), including Aid for Trade (AfT) and NonAfT, the latter being the part of total ODA allocated to other sectors than the trade-related sectors. The analysis relies on the index of the overall productive capacities developed recently by the UNCTAD, and covers 111 countries over the period 2002-2018. The findings indicate that development aid, including its two main components contribute to fostering productive capacities in recipient countries, with AfT flows exerting a higher positive effect on productive capacities than NonAfT flows. Moreover, in Least developed countries (LDCs), the positive effect of ODA on productive capacities reflects the key role of both AfT flows and NonAfT flows in contributing to the development of productive capacities. In contrast, in NonLDCs (other countries in the full sample than LDCs), only AfT flows matter positively for the strengthening of productive capacities, as NonAfT flows do not appear to exert a significant effect on productive capacities. These outcomes highlight the criticality of development aid for enhancing productive capacities in developing countries, in particular in LDCs. |
| Keywords: | Development aid,Productive Capacities |
| JEL: | D24 O1 F35 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:233973&r= |
| By: | Acharya, Viral V.; Jiang, Zhengyang; Richmond, Robert; von Thadden, Ernst-Ludwig |
| Abstract: | We analyse the role of international trade and health coordination in times of a pandemic by building a two-economy, two-good trade model integrated into a micro-founded SIR model of infection dynamics. Uncoordinated governments with national mandates can adopt (i) containment policies to suppress infection spread domestically, and (ii) (import) tariffs to prevent infection coming from abroad. The efficient, i.e., coordinated, risk-sharing arrangement dynamically adjusts both policy instruments to share infection and economic risks internationally. However, in Nash equilibrium, uncoordinated trade policies robustly feature inefficiently high tariffs that peak with the pandemic in the foreign economy. This distorts terms of trade dynamics and magnifies the welfare costs of tariff wars during a pandemic due to lower levels of consumption and production as well as smaller gains via diversification of infection curves across economies. |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15649&r= |
| By: | Dreher, Axel; Langlotz, Sarah; Matzat, Johannes; Mayda, Anna Maria; Parsons, Chris |
| Abstract: | We study the extent to which migrant inflows to the United States affect the political polarization of campaign donors and the ideology of politicians campaigning for the House of Representatives in the 1992-2016 period. Implementing various polarization measures based on ideology data derived from 16 million campaign finance contributors, our results show that migrant inflows causally increase the polarization of both campaign donations and leading political candidates. Our estimates hold over the medium-run, although the effects decline over time. The effects of migration are stronger if counties host migrants from more distant cultures, or if incoming migrants are similarly educated. Our main results hold when we focus on refugees as opposed to all immigrants on aggregate. |
| Keywords: | migration; Polarization; Political Ideology; Refugees; United States |
| JEL: | F52 F63 J15 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15587&r= |
| By: | Surak, Kristin; Tsuzuki, Yusuke |
| Abstract: | Residence by investment (RBI) programmes, or ‘golden visa’ schemes, are now found in half of European Union member states. Yet no empirical studies have tested the economic drivers or impacts of these programmes. Filling this lacuna, this article supplies the first comparative quantitative evaluation of the economic origins and outcomes of so-called golden visa programmes in the European Union. Utilising new data, we show that governments across the political spectrum are more likely to begin RBI programmes after a decline in economic growth, especially during an economic crisis, and that the programmes are generally targeted to address failing areas of the economy. Furthermore, we show that wealthy investor migrants are better conceptualised as mobile populations akin to tourists or investors, rather than as immigrants, and that countries price programmes in response to both demand-side and supply-side forces. We also find that the programmes represent a miniscule proportion of foreign investment in most countries, and that the vast majority of the investments go into real estate even when other options are available. However, the impact on real estate markets is trivial, with the sole exception of Greece. The results suggest that states turn to golden visa programmes to plug short-term economic gaps but with negligible national-level economic impact. |
| Keywords: | migration; elites; foreign investment; European Union; globalisation; Taylor & Francis deal |
| JEL: | J1 |
| Date: | 2021–05–10 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:110458&r= |
| By: | Antonia Lopez Villavicencio; Mariam Camarero; Cecilio Tamarit |
| Abstract: | In this paper we analyze some macroeconomic effects derived from the participation of EU countries in global and regional value chains over the period 1990-2019. By employing local projections, we show that the impact of value chain participation on economic performance depends crucially on the country's position in the production chain. While backward participation is linked to better economic performance, forward participation leads to declining domestic output and a rise in unemployment. Moreover, we find evidence of important heterogeneity among EU countries, with peripheral and CEE countries being more sensitive to shocks in the participation indicators. Our results are robust to different controls. |
| Keywords: | Global Value Chains, EU; local projections, VAR |
| JEL: | F14 F15 F62 C32 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:drm:wpaper:2021-12&r= |
| By: | Razin, Assaf |
| Abstract: | Post WWII globalization forces are facing headwinds in the form of global crises-the "The Great Recession" and the "The Pandemic Recession". Israel's trade and financial globalization, however, is steadily rising. The pandemic-induced slump in economic activity is deep, as consumer spending, investment spending, and export demand tumble. Central banks, tied down by the zero interest rate, resort to semi-fiscal expansionary policies. Indeed, the stabilization burden falls on fiscal policy. The paper provides an overview of the new globalization trends in the world and in Israel, with emphasis on the role of global crises, the Global Financial Crisis, and the Pandemic Crisis in changing globalization long-term trends. When the coronavirus hit, supply chains and production have been disrupted. However, the impact of the pandemic shock is not on the supply side only. On the demand side, the desire to invest has plunged, while people across the rich world are now saving much of their income. Would this short-term changes can reinforce the re-trending of the globalization, which is observed since the Global Financial Crisis? The paper focuses on globalization forces and provides an overview of advanced economies and Israel. |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15643&r= |
| By: | Saccal, Alessandro |
| Abstract: | The following contributions are hereby worked: one mathematically formalises Mundell’s Impossible trio and Rodrik’s Globalisation paradox, supplying the latter with a taxonomy in terms of the current account; by means of Kaldor’s price endogeneity in output, one proves that external real money market disparity and trade generate external output mismatches and lead to autarky unless offset, using topology and dynamical systems; one characterises transfers and federalism and shows that all unitary states are federal polities and can merge into confederations; one demonstrates that the said external output mismatches can be only eluded via autarky or neutralisation, irrespective of federalism; one discerns artificial currency areas guaranteeing inter-regional external output equality and modern protectionism as two Nash equilibria, especially rationalising the nexus between the Gold standard, the Industrial revolution and the Great divergence therethrough. |
| Keywords: | autarky; federalism; inefficiency; trilemma. |
| JEL: | E12 F13 F22 F41 F43 F45 F52 F60 N10 O11 O40 |
| Date: | 2019–07–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:107639&r= |
| By: | Cakmakli, Cem; Demiralp, Selva; Kalemli-Ozcan, Sebnem; Yesiltas, Sevcan; Yildirim, Muhammed |
| Abstract: | COVID-19 pandemic had a devastating effect on both lives and livelihoods in 2020. The ar-rival of effective vaccines can be a major game changer. However, vaccines are in short supply as of early 2021 and most of them are reserved for the advanced economies. We show that the global GDP loss of not inoculating all the countries, relative to a counterfactual of global vaccinations, is higher than the cost of manufacturing and distributing vaccines globally. We use an economic-epidemiological model of international production and trade networks and calibrate the model to 65 countries. Our estimates suggest that up to 49 percent of the global economic costs of the pan-demic in 2021 are borne by the advanced economies even if they achieve universal vaccination in their own countries. |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15710&r= |
| By: | Barannikova, Anastasia |
| Abstract: | The present article addresses the problems of economic cooperation between China and ROK from the point of implementing their Eurasian integration initiatives - the One Belt, One Road, Eurasia Initiative and New Northern Policy. The initiatives of both countries, which at first glance are aimed at developing economies of the participants, also pursue distinct political goals. Accordingly, the most serious problems arising on the way of their implementation are of a political nature. |
| Keywords: | Belt and Road Initiative,OBOR,Eurasia Initiative,Eurasian integration,China,ROK |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:opodis:20212&r= |
| By: | Nicolás Ajzenman (Sao Paulo School of Economics - FGV); Patricio Domínguez (Inter-American Development Bank); Raimundo Undurraga (University of Chile) |
| Abstract: | This paper studies the effects of immigration on crime and crime perceptions in Chile, where the foreign-born population more than doubled in the last decade. By using individual-level victimization data, we document null effects of immigration on crime but positive and significant effects on crime-related concerns, which in turn triggered preventive behavioral responses, such as investing in home-security. Our results are robust across a two-way fixed effects model and an IV strategy based on a shift-share instrument that exploits immigration inflows towards destination countries other than Chile. On mechanisms, we examine data on crime-related news on TV and in newspapers, and find a disproportionate coverage of immigrant-perpetrated homicides as well as a larger effect of immigration on crime perceptions in municipalities with a stronger media presence. These effects might explain the widening gap between actual crime trends and public perceptions of crime. |
| Keywords: | crime immigration crime perception media crime beliefs |
| JEL: | O15 F22 K1 |
| Date: | 2021–04 |
| URL: | http://d.repec.org/n?u=RePEc:aoz:wpaper:53&r= |
| By: | Baqaee, David Rezza; Farhi, Emmanuel |
| Abstract: | How do supply and demand shocks, like the ones caused by Covid-19, interact with complex production networks? In this note, we consider a stripped-down version of the model presented in Baqaee and Farhi (2020). Despite its simplicity, the model we present allows for an arbitrary input-output network, complementarities in both consumption and production, incomplete markets, downward nominal wage rigidity, and a zero-lower bound on interest rates. Nevertheless, despite allowing for these realistic ingredients, this model has a very stark property: namely, factor income shares at the initial equilibrium are global sufficient statistics for the input-output network. This irrelevance result clarifies what assumptions must be broken if the production network is to play a role in shock propagation. |
| Keywords: | complementarities; COVID-19; Downward wage rigidity; irrelevance; production networks; Supply Chains |
| JEL: | E0 E1 E4 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15664&r= |
| By: | Lukin, Artyom |
| Abstract: | This paper examines political and economic dimensions of the Russia-China relationship, with an emphasis on Russia's involvement in Beijing's Belt and Road Initiative (BRI). Being the largest, and trans-continental, Eurasian country, Russia occupies an important place in China's BRI. The current relationship between the two great Eurasian powers can be characterized as an entente, or quasi-alliance. Moscow welcomes the BRI, but, unlike many other governments across the world, it has never signed an agreement to formally join the initiative. This signals Russia's stance that Eurasian integration should not be dominated by China, as well as the Kremlin's insistence on status equality with China. In recent years there has been a noticeable rise in shipments from China to Europe, and in the reverse direction, using the rail routes via Russia. However, despite the increase in its trans-continental freight traffic going via Russia, China still refrains from investing in the upgrade of Russia's transport networks, such as railroads, ports and highways, and is overall reluctant to invest in the Russian economy. The reasons are both economic, such as the relatively high risks and low profit margins in the Russian market, and political ones, related to Russia's insistence on parity and equality with China. |
| Keywords: | Russia-China relations,the Belt and Road Initiative,Eurasia |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:opodis:20213&r= |
| By: | Vincent Bignon (Banque de France and CEPR, Paris, France); Cecilia García-Peñalosa (Aix-Marseille University, CNRS, EHESS, AMSE, Marseille, France, CEPR and CESifo) |
| Abstract: | This paper examines a novel negative impact of trade tariffs and the costs they induce by documenting how protectionism reversed the long-term improvements in education and the fertility transition that were well under way in late 19th-century France. The Méline tariff, a tariff on cereals introduced in 1892, was a major protectionist shock that shifted relative prices in favor of agriculture and away from industry. In a context in which the latter was more intensive in skills than agriculture, the tariff reduced the relative return to education, which in turn affected parents' decisions about the quantity and quality of children. We use regional differences in the importance of cereal production in the local economy to estimate the impact of the tariff. Our findings indicate that the tariff reduced enrolment in primary education and increased birth rates and fertility. The magnitude of these effects was substantial, with the tariff offsetting the increasing trend in enrolment rates and the decreasing one in birth rates by a decade. |
| Keywords: | education, fertility, protectionism, France |
| JEL: | J13 N33 O15 |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:aim:wpaimx:2126&r= |
| By: | Heß, Alexander; Hindermann, Christoph Michael |
| Abstract: | The Belt and Road Initiative is an unparalleled China-initiated international infrastructure project. Since its launch, international trade has already increased in the participating countries - a trend that is only there to stay. However, this development is not seen only in a positive light, and to date it is unclear whether it will exclusively benefit the participating countries in the long term or whether it will drag them into debt. In this piece, we investigate possible trade effects that go beyond the proclaimed monetary ones. We check if these projected increases of trade (trade volume and trade freedom) affect mean levels of subjective well-being (SWB) in Asian countries. Applying a fixed effects model, we find no evidence that sheer trade volume nor trade freedom directly affect mean levels of SWB in Asian countries. However, we find measures of wealth (GDP per capita, Human Development Index [HDI]) as well as the unemployment rate to affect SWB at the country level. This may indicate an indirect effect of trade on SWB that is channeled by GDP. Nonetheless, there could be a link between trade and SWB, as it may take some time for the effects/changes of trade to trickle down to SWB. Other possibilities are discussed in detail. |
| Keywords: | Trade volume,freedom of trade,happiness,subjective well-being |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:opodis:20219&r= |
| By: | OECD |
| Abstract: | The support that governments provide to their industrial producers has been a growing source of concern. Much of that support is provided by governments through the financial system, either in the form of below‑market borrowings or below-market equity. To better understand the nature and scale of this support, this report uses publicly available information for 306 of the largest manufacturing firms in 13 industrial sectors, covering the period 2005-19. It finds that below-market borrowings tend to be relatively large in heavy industries, including some that reportedly suffer from excess capacity, while below-market equity returns appear to be more common in high-tech industries such as aerospace and semiconductors. Below-market borrowings also appear to benefit firms with more than 25% government investment relatively more. These findings on below-market finance raise a number of important issues for trade rules, including in relation to transparency and the scope of subsidy disciplines. |
| Keywords: | Excess capacity, Government equity, Government support, Loan subsidies, State-Owned Enterprises, Subsidies, Trade |
| JEL: | F13 F23 G32 H25 H81 L33 L52 L62 O25 |
| Date: | 2021–05–12 |
| URL: | http://d.repec.org/n?u=RePEc:oec:traaab:247-en&r= |