nep-int New Economics Papers
on International Trade
Issue of 2021‒06‒14
forty-six papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. The effect of tariffs on Spanish goods exports By Eduardo Gutiérrez; César Martín Machuca
  2. Service Offshoring and Export Experience By Giuseppe Berlingieri; Luca Marcolin; Emanuel Ornelas
  3. When are Tariff Cuts Not Enough? Heterogeneous Effects of Trade Preferences for the Least Developed Countries By Fabien Forge; Jason Garred; Kyae Lim Kwon
  4. The Resilience of FDI to Natural Disasters through Industrial Linkages By Kato, Hayato; Okubo, Toshihiro
  5. Revisiting the 'Cobden-Chevalier network' trade and welfare effects By Jacopo Timini
  6. The trade effects of skilled versus unskilled migration By Peter H. Egger, Maximilian v. Ehrlich, Douglas R. Nelson
  7. International Trade and Labor Markets: Evidence from the Arab Republic of Egypt By Robertson, Raymond; Vergara Bahena, Mexico Alberto; Kokas, Deeksha; Lopez-Acevedo, Gladys
  8. A Quantitative Analysis of Tariffs across U.S. States By Ana Maria Santacreu; Michael Sposi; Jing Zhang
  9. Does foreign direct investment promote institutional development in Africa? By Fon, Roger; Filippaios, Fragkiskos; Stoian, Carmen; Lee, Soo-Hee
  10. Measuring Small and Medium-Size Enterprises Contribution to Trade in Value Added: The case of Chile 2013-2016 By Mario Marcel; Diego Vivanco
  11. How Bad Are Trade Wars? Evidence from Tariffs By Petr Polak; Nikol Polakova; Anna Tlusta
  12. Competitiveness of Polish Agriculture in The Context of Globalization and Economic Integration – Competitive Potential and Position By Pawlak, Karolina; Poczta, Walenty
  13. Are importing and exporting complements or substitues in an emerging economy? The case of Colombia. By Andrés Mauricio Gómez-Sánchez; Juan A. Máñez; Juan A. Sanchis
  14. International Friends and Enemies By Kleinman, Benny; Liu, Ernest; Redding, Stephen J.
  15. Immigration and the UK economy after Brexit By Portes, Jonathan
  16. Can export promotion reduce unemployment? By Olarreaga, Marcelo; Ugarte, Cristian
  17. Under attack: Terrorism and international trade in France, 2014-16 By Nitsch, Volker; Rabaud, Isabelle
  18. Trade, poverty and food security: A survey of recent research and its implications for East Africa By Huw Lloyd-Ellis; Ardyn Nordstrom
  19. Not all that glitters is gold: political stability and trade in Sub-Saharan Africa By Simplice A. Asongu; Thales P. Yapatake Kossele; Joseph Nnanna
  20. Digital trade inventory: Rules, standards and principles By Taku Nemoto; Javier López González
  21. China's Foreign Trade and Investment, 1800 - 1950 By Keller, Wolfgang; Shiue, Carol H
  22. Foreign Direct Investment, Governance and Inclusive Growth in Sub-Saharan Africa By Isaac K. Ofori; Simplice A. Asongu
  23. Services Trade Restrictiveness Index (STRI): Measuring services liberalisation and commitments in the GATS and RTAs By Sebastian Benz; Inese Rozensteine
  24. Immigrant Inventors and Diversity in the Age of Mass Migration By Campo, Francesco; Mendola, Mariapia; Morrison, Andrea; Ottaviano, Gianmarco
  25. When the Threat is Stronger than the Execution: Trade and Welfare under Oligopoly By Leahy, Dermot; Neary, J Peter
  26. Foreign Direct Investment, Governance and Inclusive Growth in Sub-Saharan Africa By Ofori, Isaac K.; Asonngu, Simplice A.
  27. Free Trade Agreements and Development: a Global Analysis with Local Data By Cruzatti C., John
  28. The Evolution of The Agri-Food Sector in Terms of Economic Transformation, Membership in The EU and Globalization of The World Economy By Szajner, Piotr; Szczepaniak, Iwona
  29. The birth of new high growth enterprises: Internationalisation through new digital technologies By Teruel Carrizosa, Mercedes; Coad, Alexander; Domnick, Clemens; Flachenecker, Florian; Harasztosi, Péter; Janiri, Mario Lorenzo; Pál, Rozália
  30. How do Firms Respond to Long-term Political Tensions? Evidence from Chinese Food Importers By Li, Haoran; Wan, Xibo; Zhang, Wendong
  31. Population Aging and Migration By Panu Poutvaara
  32. Under Attack: Terrorism and International Trade in France, 2014-16 By Nitsch, Volker; Rabaud, Isabelle
  33. Trade, Unemployment, and Monetary Policy By Cacciatore, Matteo; Ghironi, Fabio
  34. The terrorism-finance nexus contingent on globalisation and governance dynamics in Africa By Simplice A. Asongu; Tii N. Nchofoung
  35. Bangladesh – Graduation from Least Developed Countries Status and Its Implications (Japanese) By USAMI Takashi; FUKUOKA Noriyoshi
  36. Determinants of wage (dis-)satisfaction: Trade exposure, export-led growth, and the irrelevance of bargaining structure By Baccaro, Lucio; Neimanns, Erik
  37. Why Does Globalization Fuel Populism? By Rodrik, Dani
  38. How difficult is China's business environment for European and American companies? By Uri Dadush; Pauline Weil
  39. Gains associated with linking the EU and Chinese ETS under different assumptions on restrictions, allowance endowments, and international trade By Winkler, Malte; Peterson, Sonja; Thube, Sneha
  40. Has Global Agricultural Trade Been Resilient Under Coronavirus (COVID-19)? Findings from an Econometric Assessment By Arita, Shawn; Grant, Jason; Sydow, Sharon; Beckman, Jayson
  41. The Asymmetric Effect of Foreign Direct Investment on the Net Average Wages of Southeastern European Countries By Kurtović, Safet; Maxhuni, Nehat; Halili, Blerim; Krasniqi, Bujar
  42. Potential Mobility from Africa, Middle East and EU Neighbouring Countries to Europe By Richard Grieveson; Michael Landesmann; Isilda Mara
  43. Does COVID-19 threaten globalization? By Afesorgbor, S.K.; van Bergeijk, P.A.G.; Demena, B.A.
  44. Is production in global value chains (GVCs) sustainable? A review of the empirical evidence on social and environmental sustainabilitiy in GVCs By Delera, Michele
  45. Climate Neutral Production, Free Allocation of Allowances under Emissions Trading Systems, and the WTO: How to Secure Compatibility with the ASCM By Roland Ismer; Harro van Asselt; Jennifer Haverkamp; Michael Mehling; Karsten Neuhoff; Alice Pirlot
  46. How ASEAN Can Improve Its Response to the Economic Crisis Generated by the COVID-19 Pandemic: Inputs drawn from a comparative analysis of the ASEAN and EU responses By Antonio Fanelli

  1. By: Eduardo Gutiérrez (Banco de España); César Martín Machuca (Banco de España)
    Abstract: This paper investigates the impact of trade protectionism in the form of tariff barriers on Spanish goods exports. The Spanish economy has signicantly increased its degree of openness, which improves potential economic growth, but also implies a higher exposure to the protectionist shift in the international environment observed in the last years. With the purpose of assessing exports sensitivity to tariff increases, we obtain a database combining annual tariffs applied to Spanish products over the years 1995-2019 from WITS and bilateral extra-EU Spanish goods exports from Eurostat, with a product disaggregation level at 6 digits. We estimate the effect of tariffs both on exporting probability (i.e. exports extensive margin) through a linear probability model and exports levels (i.e. exports intensive margin) through a gravity equation. The findings of this paper show that higher tariffs reduce exports levels through extensive an intensive margins. A 1% tariff increase reduces on average the probability of exporting to aspecic market by nearly 0.08 pp. and exported values by around 1%.
    Keywords: protectionism, exports, tariffs
    Date: 2021–05
  2. By: Giuseppe Berlingieri; Luca Marcolin; Emanuel Ornelas
    Abstract: Service inputs are a key component of the costs of exporting, and contribute to explain the process of internationalization of firms. A new dataset on the participation of French firms in global value chains reveals that firms with longer export experience in a market are more likely to source service inputs from there. We rationalize this fact in a model where firms are initially uncertain about how successful they are as exporters, but learn their export profitability as they keep selling abroad. Because offshoring requires larger sunk costs than domestic sourcing, some firms decide to offshore only when they become sufficiently confident about their export prospects, i.e., once they acquire enough export experience. More export experience in a foreign destination also induces firms to offshore within the boundaries of the firm rather than at arm’s length. The model further implies that firms are more likely to offshore when frictions in the provision of services between the domestic and the foreign market are greater. In turn, offshoring firms sell greater volumes, display less volatility, and are less likely to exit foreign markets. Exploiting our novel dataset, we provide strong empirical support for each of these predictions.
    Keywords: export dynamics, commercial presence, global sourcing, services, firm boundaries
    JEL: F12 F14 F23 L22 L23 L84
    Date: 2021
  3. By: Fabien Forge (University of Ottawa); Jason Garred (Department of Economics, University of Ottawa); Kyae Lim Kwon (Department of Economics, University of Ottawa)
    Abstract: Poor countries export a remarkably narrow range of products. To what extent have trade preferences targeted to the least developed countries (LDCs) changed this situation? We study a large set of recent reforms to the LDC trade preferences offered by OECD countries. Leveraging trade policy variation by importer, exporter, product and year, we show that tariff reductions have increased the prevalence of positive trade flows. However, new flows have been far more likely to emerge in cases with previous ‘export experience’, i.e. where countries already exported the same product to another OECD country, or exported a related product to the same importer. So this wave of tariff cuts for LDCs has resulted in an extension of existing patterns of trade rather than wider export diversification.
    Keywords: Trade policy; trade preferences; tariffs; least developed countries; exports.
    JEL: F13 F14 O24
    Date: 2021
  4. By: Kato, Hayato; Okubo, Toshihiro
    Abstract: When do multinationals show resilience during natural disasters? To answer this, we develop a simple model in which multinationals and local firms in the host country are interacted through input-output linkages. When natural disasters seriously hit local firms and thus increase the cost of sourcing local intermediates, most multinationals may leave the host country. However, they are likely to stay if they are tightly linked with local suppliers and face low trade costs of importing foreign intermediates. We further provide two extensions of the basic model to allow for multinationals with heterogeneous productivity and disaster reconstruction
    Keywords: Foreign direct investment (FDI); Multinational enterprises (MNEs); Input-output linkages; Supply chain disruptions; Multiple equilibria
    JEL: F12 F23 Q54 R11
    Date: 2021–06–02
  5. By: Jacopo Timini (Banco de España)
    Abstract: This study revisits the trade and welfare effects of 19th century bilateralism exploiting the latest developments in structural gravity models, including the consideration of domestic trade. Using bilateral trade data between 1855 and 1875, I show that the Cobden-Chevalier network, i.e. a system of bilateral trade agreements including the Most Favored Nation clause, had large, positive and significant effects on members’ trade. These, however, were heterogeneous at the treaty-level. I then calculate its general equilibrium effects on total trade and welfare. They are considerable, while trade diversion effects are negligible. These results reshape the understanding of the Cobden-Chevalier network, helping in further rationalizing the “free trade epidemic” of the 1860s and 1870s.
    Keywords: international trade, trade agreements, MFN, Cobden-Chevalier, structural gravity models
    JEL: F13 F14 F15 N30 N70
    Date: 2021–05
  6. By: Peter H. Egger, Maximilian v. Ehrlich, Douglas R. Nelson
    Abstract: In this paper, we assess the role of skilled versus unskilled migration for bilateral trade in a flexible econometric model. Using a large data-set on bilateral skill-specific migration and a flexible novel identification strategy, the functionally flexible impact of different levels of skilled and unskilled immigration on the volume and structure of bilateral imports is identified in a quasi-experimental design. We find evidence of a polarized impact of skillspecific immigration on imports: highly concentrated skilled or unskilled immigrants induce higher import volumes than a balanced composition of the immigrant base. This effect turns out particularly important when institutions are weak. Regarding the structure of imports, we observe that skilled immigrants specifically add to imports in differentiated goods. Both bits of evidence are consistent with a segregation of skill-specific immigrant networks and corresponding trade patterns.
    Keywords: Skilled vs. unskilled immigration, Migrant networks, Bilateral trade, Quasirandomized experiments, Generalized propensity score estimation
    JEL: C14 C21 F14 F22
    Date: 2020–01
  7. By: Robertson, Raymond (Texas A&M University); Vergara Bahena, Mexico Alberto (World Bank); Kokas, Deeksha (World Bank); Lopez-Acevedo, Gladys (World Bank)
    Abstract: Since the early 1990s, some developing countries have experienced a coincidence of rising exports – especially those related to global value chains – and improved labor market outcomes. During 2000–10, rising trade was associated with falling poverty and inequality in many developing countries. However, the Arab Republic of Egypt was not one of these countries, although it signed several trade agreements. The lack of trade-related improvements in labor market outcomes – including poverty, inequality, average wage levels, informality, and female labor force participation – could be explained by at least two possibilities. First, it is possible that trade agreements did not produce the same increase in trade for Egypt as for other countries. Second, it is possible that exports do not generate the same kinds of changes in labor market outcomes as experienced in other countries. After presenting the trends in key labor market outcomes over 2000–19, this paper evaluates both hypotheses. Using a gravity model approach, the results suggest that the changes in Egypt's exports following trade agreements are above internationally estimated averages. Second, the results from a Bartik approach find no significant relationship between rising exports and wages, informality, or female labor force participation. Additional analysis shows that Egypt's average wage levels are among the highest among countries that export the same goods exported by Egypt, possibly suggesting that Egypt has a relatively weak comparative advantage in currently exported goods, and thus might need to rethink its export basket.
    Keywords: labor market outcomes, trade agreements, Egypt
    JEL: J31 F16
    Date: 2021–06
  8. By: Ana Maria Santacreu; Michael Sposi; Jing Zhang
    Abstract: We develop a quantitative framework to assess the cross-state implications of a U.S. trade policy change: a unilateral increase in the import tariff from 2 to 25 across all goods-producing sectors. Although the U.S. gains overall from the tariff increase, we find the impact differs starkly across locations. Changes in real consumption (welfare) range from as high as 3.8% in Wyoming to $-0.3% in Florida, depending mainly on how exposed states are to differentially-impacted sectors. As a result, the "preferred'' tariff rate varies greatly across states. Foreign retaliation in trade policy substantially reduces the welfare gains across states, while perpetuating the cross-state variation in those gains. The presence of internal trade frictions amplifies the welfare impacts of changes in trade policy.
    Keywords: International trade; Interstate trade; Welfare gains from trade
    JEL: F11 F62
    Date: 2021–05–21
  9. By: Fon, Roger; Filippaios, Fragkiskos; Stoian, Carmen; Lee, Soo-Hee
    Abstract: Foreign direct investment (FDI) inflows into Africa have increased since the turn of the millennium, mainly due to FDI growth into African countries by multinational enterprises (MNEs) from developing economies. While African governments view this growth as a positive development for the continent, many governments in the West have raised concerns regarding the institutional impact of investments from developing economies. This paper examines the impact of FDI flows on institutional quality in African countries by distinguishing investments from developed versus developing economies. Previous empirical studies have found a significant relationship between FDI flows and institutional quality in African countries but regard the relationship as MNEs rewarding African countries for adopting institutional reforms. However, little attention has been paid to the reverse causality, i.e. that FDI can cause an institutional change in African countries. Using bilateral greenfield FDI flows between 56 countries during 2003-2015, we find no significant FDI effect from developed and developing economies on institutional quality in host countries. However, aggregate FDI flows from developed and developing economies have a significant positive effect on host country institutional quality but differ concerning the impact's timing. In contrast, we find no significant effect of FDI flows from China on host country institutional quality. Our results are robust to alternative measures of institutional quality.
    Keywords: foreign direct investment; co-evolution; institutions; multinational enterprises; Internal OA fund
    JEL: F3 G3 R14 J01
    Date: 2021–08–01
  10. By: Mario Marcel; Diego Vivanco
    Abstract: For many years, policymakers in Chile and elsewhere have been struggling to develop exporting-SMEs, aiming at broadening benefits of trade openness and globalization. Progress in this area, however, has been elusive due to the large entry costs to international trade networks. Still, involvement in international trade is not limited to being the direct exporter. Many firms may contribute and benefit from foreign trade as suppliers or contractors of other exporting firms. This can be measured as a firm´s contribution to Trade in Value Added using an Extended Supply and Use Table framework. Following recent empirical work led by the OECD, we show for Chile, using the 2013-2016 sample span, that (a) the total contribution of SMEs to exported value added is 33%, considerably larger than their share as final exporters (21%); (b) the indirect contribution of SMEs more than doubles the direct one; (c) most of the indirect contribution of SMEs to exported value added takes place through large exporting firms, and (d) even after considering the total SMEs contribution, such share is smaller than in most OECD countries and has remained relatively stagnant over time. Yet, since improving on the latter may happen through increasing the SMEs value contribution to other exporters as much as exporting themselves, policymakers should broaden the scope of public policies aimed at this end.
    Date: 2021–04
  11. By: Petr Polak; Nikol Polakova; Anna Tlusta
    Abstract: We use more than 1,600 estimates from 71 studies to investigate the relation between international trade flows and tariffs. Our results suggest that the empirical literature suffers from the presence of publication bias, which has exaggerated the effect (the true elasticity is closer to zero). After accounting for publication bias, we estimate the trade elasticity with respect to tariffs to be between -0.9 and -2.0. The results of Bayesian model averaging, which takes into account model uncertainty, show that the differences among estimates are systematically driven by the type of data (panel and level of aggregation), the data source (WITS vs. other databases), control variables (distance and trade agreements dummy), and estimation techniques (use of country-level fixed effects). The effect is also diminishing over time.
    Keywords: BMA, international trade, meta-analysis, publication bias, tariffs, trade costs
    JEL: F12 F13 F14 O24 O30
    Date: 2020–12
  12. By: Pawlak, Karolina; Poczta, Walenty
    Abstract: The aim of the research presented in this paper is to assess the competitive potential of Polish agriculture (potential competitiveness) and the competitive position of the Polish agri-food sector on the Single European Market (SEM) with reference to the global context. The conducted research has proven that Polish agriculture, while having significant production potential (potential competitiveness) on a European scale, is at the same time characterized by the significant structural deficiencies of this potential, which may adversely affect he competitive position of Polish agriculture in the future. Poland’s inclusion in the SEM area and the adoption of the rules of the Common Commercial Policy resulted in the creation and diversion of trade in agri-food products, and the comparative advantages achieved on the SEM became a source of favorable export specialization, allowing for relatively good use of the currently existing potential of agriculture and the food industry. This has resulted in the relatively good competitive position of the Polish agri-food sector on the SEM. However, in the long term, the ability to maintain or improve competitiveness in the future will be determined by competitive potential. The Polish agri-food sector has significant potential to increase exports and strengthen its competitive position (also on non-EU markets), provided that strong foundations for the sector are built, including an improvement in competitive potential.
    Keywords: Agricultural and Food Policy, Production Economics
    Date: 2020
  13. By: Andrés Mauricio Gómez-Sánchez (Universidad del Cauca and Universitat de València); Juan A. Máñez (Universitat de València and ERICES); Juan A. Sanchis (Universitat de València and ERICES)
    Abstract: The aim of this paper is investigating the impact of two firm trading strategies (exporting and importing) on total factor productivity (TFP) and the potential complementarity/substitutability effects of these strategies. To assess these effects, we obtain robust estimates of TFP using a GMM approach that explicitly reckons the ability of firms’ trading experience to affect productivity. We use data for Colombian manufacturing firms from the Annual Manufacturing Survey spanning from 2007-2016. Our estimations results suggest that, regardless of the technological intensity of the industry in which the firm operates, active trading strategies (only exporting, only importing, both importing and exporting) pay positive rewards in terms of productivity. Nevertheless, whilst we find positive synergies (complementary) between exporting and importing for firms in med-high tech sectors, for firms operating in low-tech and med-low tech sectors, importing and exporting appear to be substitutes.
    Keywords: imports, export, productivity, complementarity, substitutability
    JEL: F14 D24
    Date: 2021–05
  14. By: Kleinman, Benny; Liu, Ernest; Redding, Stephen J.
    Abstract: We develop sufficient statistics of countries' bilateral income and welfare exposure to foreign productivity shocks that are exact for small shocks in the class of models with a constant trade elasticity. For large shocks, we characterize the quality of the approximation, and show it to be almost exact. We compute these sufficient statistics for over 140 countries from 1970-2012. We show that our exposure measures depend on market-size, cross-substitution and cost of living effects. As countries become greater economic friends in terms of welfare exposure, they become greater political friends in terms of United Nations voting and strategic rivalries.
    Keywords: Productivity Growth; Trade; welfare
    JEL: F14 F15 F50
    Date: 2020–07
  15. By: Portes, Jonathan
    Abstract: I review trends in migration to the UK since the Brexit referendum, examining first the sharp fall in net migration from the EU that resulted, and then the recent more dramatic exodus of foreign-born residents during the covid-19 pandemic. I describe the new post-Brexit system, and review studies which attempt to estimate both the impact on future migration flows and on GDP and GDP per capita. Finally, I discuss the wider economic impact of the new system and some of the policy implications.
    Keywords: Immigration,Great Britain,productivity
    JEL: E24 J24 J61 M53
    Date: 2021
  16. By: Olarreaga, Marcelo; Ugarte, Cristian
    Abstract: The paper examines the impact of export promotion on aggregate unemployment. We findnd that increases in the share of Export Promotion Agencies' (EPAs) budgets on total exports lead to small decreases in aggregate unemployment. This effect is amplifi ed when export promotion efforts are concentrated in sectors in which the country has a comparative advantage. On the other hand, when EPAs aim at reducing aggregate unemployment by focusing their efforts in sectors with high levels of unemployment, then aggregate unemployment increases. These results suggest that even if EPAs' pri- orities were to shift towards reducing unemployment, this would be better addressed by focusing on sectors in which the country has a comparative advantage rather than sectors with high labor market frictions.
    Keywords: comparative advantage; Export Promotion; unemployment
    JEL: F13 F14 O19
    Date: 2020–07
  17. By: Nitsch, Volker; Rabaud, Isabelle
    Abstract: Terrorist events typically vary along many dimensions, making it difficult to identify their economic effects. This paper analyzes the impact of terrorism on international trade by examining a series of three large-scale terrorist incidents in France over the period from January 2015 to July 2016. Using firm-level data at monthly frequency, we document an immediate and lasting decline in cross-border trade after a mass terrorist attack. According to our estimates, France's trade in goods, which accounts for about 70 percent of the country's trade in goods and services, is reduced by more than 6 billion euros in the first six months after an attack. The reduction in trade mainly takes place along the intensive margin, with particularly strong effects for partner countries with low border barriers to France, for firms with less frequent trade activities and for homogeneous products. A possible explanation for these patterns is an increase in trade costs due to stricter security measures.
    Keywords: shock,insecurity,uncertainty,terrorism,international trade,France
    JEL: F14 F52
    Date: 2021
  18. By: Huw Lloyd-Ellis (Queen's University); Ardyn Nordstrom
    Abstract: We survey the latest research on the linkages between international trade, regional integration, poverty and food security in developing economies and draw out its implications for East Africa and future research. While there is now an extensive literature on the impacts of trade reform on poverty outcomes, research on the actual and potential effects of trade and regional integration on food security is much more limited. This reflects inconsistencies in the definition and measurement of food security, substantial data limitations, and the complexity of food systems themselves. Nevertheless, we argue that there is an urgent need and considerable scope for further research on these linkages.
    Keywords: International trade, Food security, East Africa, Regional integration
    JEL: F13 Q17 Q18 I3 D63
    Date: 2021–06
  19. By: Simplice A. Asongu (CEREDEC, Bangui, CAR); Thales P. Yapatake Kossele (CEREDEC, Bangui, CAR); Joseph Nnanna (Abuja, Nigeria)
    Abstract: This study examines linkages between political stability and trade openness dynamics in a panel of 44 countries in SSA from 1996 to 2016. The empirical evidence is based on the generalized method of moments. From the findings, the negative relationship between political stability and merchandise trade is not significant while the negative relationship between political stability and trade openness (exports plus imports) is significant. Hence, the findings do not validate the tested hypothesis that political stability/no violence increases trade in the sub-region. The perspective that some forms of political stability can slow down and prevent international trade is consistent with Oslon in Rise and Decline of Nations (RADON) and recent contributions to the economic development literature which have shown that not all forms of political stability are development friendly because much depends on the extent to which stability translates into, inter alia, good governance. The principal policy implication is that standards of political governance need to be boosted in order to improve the anticipated effects of political stability on trade, especially in the light of the ambitious African Continental Free Trade Area (AfCFTA). Other policy implications are discussed.
    Keywords: Political Stability; Trade; Sub-Saharan Africa
    JEL: F52 K42 O17 O55 P16
    Date: 2021–01
  20. By: Taku Nemoto; Javier López González
    Abstract: Rules affecting digital trade are complex and spread across a diverse set of issues and fora. This paper provides an inventory of existing rules, standards, and principles related to issues that are being discussed in the context of the Joint Statement Initiative (JSI) at the WTO, highlighting the number of existing international instruments at the WTO and across a range of non-WTO fora on which these discussions can build. The Inventory thus aims to help governments better leverage resources towards enabling more informed discussions on digital trade. Additionally, the Inventory shows that there is already substantial uptake of instruments on issues related to digital trade among participants to the JSI discussions. Furthermore, many jurisdictions that do not currently participate in the JSI discussions are already in the process of undertaking reforms in the areas that are being discussed under that initiative.
    Keywords: Data, Digitalisation, E-commerce, Joint Statement Initiative, Regional Trade Agreements, Trade, WTO
    JEL: F13 F15 O3
    Date: 2021–06–08
  21. By: Keller, Wolfgang; Shiue, Carol H
    Abstract: The First Opium War (1840-42) was a watershed in the history of China. In its aftermath Britain and other countries forced open new ports to foreign trade through international treaties. Chinese institutions of trade were abolished and re-organized under Western management, Western legal institutions were introduced in China in form of courts and legal practices, and foreigners in China were tried according to the laws of their country of origin (extraterritoriality). To better understand the implications of these changes during the Treaty Port Era (1842-1943), we begin by discussing the attitudes towards foreign trade before 1840 for both China and the West. Drawing on information from the foreign-led Chinese Maritime Customs organization, we provide a synopsis of China's foreign trade and investment both in terms of patterns and volumes. The paper highlights the link between foreign and domestic trade as well as the important role of new, previously not traded goods for welfare. Employing several outcome measures, we show that Western influence generated significant benefits to China's economy, and the results suggest that the geographic scope of these benefits reached into areas far beyond the treaty ports.
    Date: 2020–07
  22. By: Isaac K. Ofori (University of Insubria, Varese, Italy); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: Motivated by the projected rebound of foreign direct investment (FDI) inflow to sub-Saharan Africa (SSA) following the implementation of the AfCFTA and the finalization of the Africa Investment Protocol, we examine how FDI modulates the effects of various governance dynamics on inclusive growth in SSA. We do this by testing two hypotheses first, whether unconditionally FDI and various governance indicators (rule of law, control of corruption, regulatory quality, governance effectiveness, political stability, and voice and accountability) foster inclusive growth in SSA; and second, whether these governance dynamics engender positive synergy with FDI on inclusive growth in SSA. Using data from the World Bank’s World Governance Indicators and the World Development Indicators for the period 1990–2020, we employ several fixed effects, random effects, and the system GMM estimators for the analysis. First, we find that FDI and all our governance dynamics are significant inclusive growth enhancers in SSA. Second, though FDI amplifies the effects of all our governance dynamics on inclusive growth in SSA, governance effectiveness, voice and accountability, and political stability are keys. Policy recommendations are provided.
    Keywords: AfCFTA; Economic Integration; FDI; Governance; Inclusive Growth; Africa
    JEL: F6 F15 O43 O55 R58
    Date: 2021–06
  23. By: Sebastian Benz; Inese Rozensteine
    Abstract: The number of Regional Trade Agreements (RTAs) have increased markedly over the last decade, with many addressing market openness and rule-making for services trade. Recent RTAs are breaking down existing barriers: on average, removing between 10% and 40% of services restrictions present in the multilateral regime, and going significantly further in binding applied services regimes. When measured against the benchmark of commitments in the General Agreement on Trade in Services (GATS), binding commitments in RTAs eliminate between 40% and 70% of the “water” in the GATS – although low levels of “water” are not necessarily synonymous with high levels of openness. Ultimately, national and collective services reforms and liberalisation will best drive inclusive and sustainable economic growth.
    Keywords: Regional Trade Agreements, Services trade liberalisation, Services trade policy
    JEL: F13 F15 F53
    Date: 2021–06–03
  24. By: Campo, Francesco; Mendola, Mariapia; Morrison, Andrea; Ottaviano, Gianmarco
    Abstract: A possible unintended but damaging consequence of anti-immigrant rhetoric, and the policies it inspires, is that they may put high-skilled immigrants off more than low-skilled ones at times when countries and businesses intensify their competition for global talent. We investigate this argument following the location choices of thousands of immigrant inventors across US counties during the Age of Mass Migration. To do so we combine a unique USPTO historical patent dataset with Census data and exploit exogenous variation in both immigration flows and diversity induced by former settlements, WWI and the 1920s Immigration Acts. We find that co-ethnic networks play an important role in attracting immigrant inventors. However, we also find that immigrant diversity acts as an additional significant pull factor. This is mainly due to externalities that foster immigrant inventors' innovativeness. These findings are relevant for today's advanced economies that have become major receivers of migrant flows and, in a long-term perspective, have started thinking about immigration in terms of not only level but also composition.
    Keywords: Cultural diversity; Innovation; International Migration
    JEL: F22 J61 O31
    Date: 2020–06
  25. By: Leahy, Dermot; Neary, J Peter
    Abstract: We compare trade liberalization under Cournot and Bertrand competition in reciprocal markets. In both cases, the critical level of trade costs below which the possibility of trade affects the domestic firm's behavior is the same; trade liberalization increases trade volume monotonically; and welfare is U-shaped under reasonable conditions. However, welfare is typically greater under Bertrand competition; for higher trade costs the volume of trade is greater under Cournot competition, implying a "van-der-Rohe Region" in parameter space; and, for even higher trade costs, there exists a "Nimzowitsch Region", where welfare is higher under Bertrand competition even though no trade takes place.
    Keywords: Cournot and Bertrand Competition; Cross-Hauling; Nimzowitsch Region; Oligopoly and trade; trade liberalization
    JEL: F12 L13
    Date: 2020–07
  26. By: Ofori, Isaac K.; Asonngu, Simplice A.
    Abstract: Motivated by the projected rebound of foreign direct investment (FDI) inflow to sub-Saharan Africa (SSA) following the implementation of the AfCFTA and the finalization of the Africa Investment Protocol, we examine how FDI modulates the effects of various governance dynamics on inclusive growth in SSA. We do this by testing two hypotheses– first, whether unconditionally FDI and various governance indicators (rule of law, control of corruption, regulatory quality, governance effectiveness, political stability, and voice and accountability) foster inclusive growth in SSA; and second, whether these governance dynamics engender positive synergy with FDI on inclusive growth in SSA. Using data from the World Bank’s World Governance Indicators and the World Development Indicators for the period 1990–2020, we employ several fixed effects, random effects, and the system GMM estimators for the analysis. First, we find that FDI and all our governance dynamics are significant inclusive growth enhancers in SSA. Second, though FDI amplifies the effects of all our governance dynamics on inclusive growth in SSA, governance effectiveness, voice and accountability, and political stability are keys. Policy recommendations are provided.
    Keywords: AfCFTA; Economic Integration; FDI; Governance; Inclusive Growth; Africa
    JEL: F15 F6 O43 O55 R58
    Date: 2021–06–07
  27. By: Cruzatti C., John
    Abstract: This paper analyzes the effects of Free Trade Agreements (FTAs) on various measures of local development in 207 countries over the 1990-2015 period. Using a Difference-in-Differences approach, I exploit spatial and time variation by comparing regions with (exogenously determinded) exploitable and non-exploitable land before and after FTAs are "activated". I show that FTAs have a limited yet positive impact on a region's human development (as measured by the Human Development Index). The results also indicate that this limited impact can be explained by the positive effects of Free Trade Agreements on economic activity (night lights and GDP), together with the lack of significant influence on patterns of inequality (distribution of night lights among population). Finally, I also show that FTAs' impacts on human development are stronger for urbanized regions. Conversely, there is neither clear evidence of a weaker positive effect if trade partners belong to the Global North nor if the agreements include arrangements beyond the elimination of tariffs and quotas.
    Keywords: FTAs; Human Development; Economic Activity; Inequality
    Date: 2021–06–09
  28. By: Szajner, Piotr; Szczepaniak, Iwona
    Abstract: The aim of the article is to contribute to the discussion and research devoted to the evolution of the agri-food sector in the period of systemic transformation, Poland’s membership in the European Union, and globalization of the world economy. The evolution of the Polish agri-food sector, which started in the first years of systemic transformation, intensified in the period of preparations for accession to the European Union (EU), and then stimulated by the processes of deepening economic and trade integration with the EU Member States and the global market, proves that this sector has undergone profound transformations. After joining the EU, the Polish food economy was co-financed with EU funds, which allowed for the acceleration of structural and modernization changes in the sector. Foreign direct investments also played a significant role in the process of strengthening the position of the Polish agri-food sector. However, the key factor in the sector’s development was the dynamic growth of agri-food exports, accompanied by the growing demand for food in the internal market. Due to changes in macroeconomic and market conditions, entities of the domestic agri-food sector will have to face new challenges in the future.
    Keywords: Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety, Food Security and Poverty
    Date: 2020
  29. By: Teruel Carrizosa, Mercedes; Coad, Alexander; Domnick, Clemens; Flachenecker, Florian; Harasztosi, Péter; Janiri, Mario Lorenzo; Pál, Rozália
    Abstract: This paper explores the relationship between new digital technologies, internationalisation activity and its impact on High Growth Enterprises (HGEs), using the EIB Group Survey of Investment and Investment Finance and ORBIS data for 27 EU Member States and the United Kingdom. After controlling for sample selection bias, our results suggest that being a HGE is positively associated with the probability that a firm conducts international activities, particularly FDI. Conversely, the internationalisation process seems to trigger strong subsequent firm-growth for FDI. Furthermore, we show evidence on the positive association between firms that are internationalised and those adopting new digital technologies. The adoption of new digital technologies is indirectly related to the status of being a HGE via internationalisation activity in the current period. Our results highlight the complex influence of exporting and FDI on the capacity to become a HGE and the role of new digital technologies in this process.
    Keywords: Digital technologies,export,FDI,HGE,internationalisation
    JEL: F14 L21 O31
    Date: 2021
  30. By: Li, Haoran; Wan, Xibo; Zhang, Wendong
    Abstract: Political and economic tensions, which often jeopardize trade, are rising among the world’s major powers, and countries like China are more frequently using food-related trade actions to deal with deteriorating political relations. Previous literature largely focuses on how brief, short-lived political tensions affect bilateral trade; however, little is known about firm-level trade responses to long-termpolitical tensions. This paper investigates how importers respond to long-term political tensions by examining the six-year Norway-China political tensions that ended in 2016. In particular, we use an event study approach to examine China’s seafood importers’ responses to China’s 2010 sanction on Norwegian fresh salmon imports after Norway awarded Liu Xiaobo, a Chinese political dissident, a Nobel Peace Prize. Our results reveal firm-level responses at both the extensive and intensive margins. At the intensive margin, firms that imported Norwegian fresh salmon before the sanction saw a 20% persistent decline in their fresh salmon import value and an 80% decrease in import share of Norwegian fresh salmon products over our study period. At the extensive margin, we not only find a trade diversion effect on firms importing from other countries and less firms importing fresh salmon from Norway, but also a permanent "political hedging" effect with a 20% decline in the maximum import share from any particular country, even if not Norway. We also provide evidence of persistent sanction effects even after China-Norway relations unfroze. Our findings emphasize the need to consider the long-term sanction consequences in foreign policy using food-related trade sanctions.
    Date: 2021–06–02
  31. By: Panu Poutvaara
    Abstract: International migration flows largely reflect demographic patterns and economic opportunities. Migration flows increase in expected income and other pull factors in potential destinations, and in push factors in the origin, like high unemployment, low wages, and high population growth. Migration flows decrease in the geographic and cultural distance between the potential origin and destination, and in other migration costs. To the extent that migrants are employed, immigration can alleviate challenges arising from population aging. For origin countries, the effects of migration may go either way, depending on whether increased incentives to invest in education are sufficient to compensate the loss of skilled workers. Throughout the 20th century, Northern America and Australia and New Zealand attracted highest immigration flows. Latin America was consistently a continent of emigration. Europe went through a major reversal from a continent of emigration until 1950s to a continent of immigration. In the 21st century, crucial questions for demographic and migration research are how fertility rate and emigration rate are going to develop in Africa. Even modest increases in emigration from Africa would generate major increases in immigration pressure in the rest of the world, mostly in Europe. Other major questions on the future research agenda are the effects of the climate change and rapid improvements in information technology.
    Keywords: international migration, population aging, demographic trends, fertility, immigrant workers
    JEL: F22 O15 J11 J13 J61
    Date: 2021
  32. By: Nitsch, Volker; Rabaud, Isabelle
    Abstract: Terrorist events typically vary along many dimensions, making it difficult to identify their economic effects. This paper analyzes the impact of terrorism on international trade by examining a series of three large-scale terrorist incidents in France over the period from January 2015 to July 2016. Using firm-level data at monthly frequency, we document an immediate and lasting decline in cross-border trade after a mass terrorist attack. According to our estimates, France’s trade in goods, which accounts for about 70 percent of the country’s trade in goods and services, is reduced by more than 6 billion euros in the first six months after an attack. The reduction in trade mainly takes place along the intensive margin, with particularly strong effects for partner countries with low border barriers to France, for firms with less frequent trade activities and for homogeneous products. A possible explanation for these patterns is an increase in trade costs due to stricter security measures.
    Date: 2021
  33. By: Cacciatore, Matteo; Ghironi, Fabio
    Abstract: We study how trade linkages affect the conduct of monetary policy in a two-country model with heterogeneous firms, endogenous producer entry, and labor market frictions. We show that the ability of the model to replicate key empirical regularities following trade integration---synchronization of business cycles across trading partners and reallocation of market shares toward more productive firms---is central to understanding how trade costs affect monetary policy trade-offs. First, productivity gains through firm selection reduce the need of positive inflation to correct long-run distortions. As a result, lower trade costs reduce the optimal average inflation rate. Second, as stronger trade linkages increase business cycle synchronization, country-specific shocks have more global consequences. Thus, the optimal stabilization policy remains inward looking. By contrast, sub-optimal, inward-looking stabilization---for instance too narrow a focus on price stability---results in larger welfare costs when trade linkages are strong due to inefficient fluctuations in cross-country aggregate demand.
    Keywords: Optimal monetary policy; trade integration
    JEL: E24 E32 E52 F16 F41 J64
    Date: 2020–06
  34. By: Simplice A. Asongu (Yaounde, Cameroon); Tii N. Nchofoung (Ministry of Trade, Cameroon)
    Abstract: This study empirically verifies the effect of terrorism on financial development and how globalisation and governance modulate the incidence of terrorism on financial development in Africa. Two terrorism indicators are adopted for this study, namely, the: number of terrorism incidences and number of terrorism deaths. The methodology involves the pooled data technique running from 1996-2018 for 34 African countries. The results from the POLS, Driscoll-Kraay and the Newey-West standard error corrections show that terrorism is detrimental to financial development. From the interactive regressions, three major tendencies are apparent. First, terrorism dynamics consistently have an unconditional negative effect on financial development. Second, the globalization and government dynamics modulate the terrorism dynamics to broadly induce a negative net effect on financial development. Third, policy thresholds at which the modulating variables reverse the net effect on financial development from negative to positive are: (i) 71.61572 trade (% of GDP) and 13.97872 FDI (% of GDP) for the incidence of terror and (ii) 1.16201 trade (% of GDP) for terror deaths. The computed thresholds make economic sense and worthwhile in terms of policy implications because they are within statistical range. The result is robust to alternative measures of terrorism and financial development. Policy implications are discussed.
    Keywords: terrorism, financial development, globalisation, governance, Pooled data
    JEL: D74 G28 F65 P37 C52
    Date: 2021–03
  35. By: USAMI Takashi; FUKUOKA Noriyoshi
    Abstract: This paper discusses the implications and impacts of Bangladesh's graduation from the Least Developed Countries (LDC) status through an analysis of the country's economic and industrial structure, a summary of the event of graduation, and a survey and analysis of issues in relation to Japanese companies. Bangladesh is expected to graduate from the LDC in 2026. While graduation has some advantages, such as improvement of the country's external image, it also has some disadvantages, such as the inability to use the special preferential tariffs that are granted to countries with that status by the international community. The survey conducted by the authors demonstrates that Japanese companies that operate in Bangladesh and that benefit from special preferential tariffs have already begun to gather information and are even considering transferring their production bases. In order to avoid losing such foreign direct investment, Bangladesh is looking into free trade agreements (FTAs). However, in addition, we believe it is necessary for Bangladesh to develop a friendly business environment that is comparable to that of neighboring Southeast Asian countries, to strengthen its industrial competitiveness, and improve the level of trade diversification. The Japanese government also needs to make further efforts to deepen bilateral economic relations.
    Date: 2021–04
  36. By: Baccaro, Lucio; Neimanns, Erik
    Abstract: Although the determinants of wage militancy and moderation have been studied extensively by comparative political economists, so far the literature has focused on the macro level of analysis. As a result, there has been no attempt to analyze the determinants of individual-level attitudes towards wages. Based on two waves of the International Social Survey Programme, in this paper we fill this gap. We examine to what extent workers internalize the imperatives of competitiveness, and whether wage bargaining institutions facilitate this internalization, as suggested by a large literature on neocorporatism. Surprisingly, we find that the structure of wage bargaining (more or less coordinated or centralized) has no relationship with wage satisfaction or dissatisfaction at the individual level. Instead, wage dissatisfaction decreases strongly when workers are individually exposed to trade and countries rely heavily on export-led growth. Our results point to the need to rethink the determinants of wage moderation.
    Keywords: collective bargaining,export-led growth,trade exposure,wage moderation,wage preferences,exportgetriebenes Wachstum,internationaler Handel,kollektive Lohnverhandlungen,Lohnpräferenzen,Lohnzurückhaltung
    Date: 2021
  37. By: Rodrik, Dani
    Abstract: There is compelling evidence that globalization shocks, often working through culture and identity, have played an important role in driving up support for populist movements, particularly of the right-wing kind. I start with an empirical analysis of the 2016 presidential election in the U.S. to show globalization-related attitudinal variables were important correlates of the switch to Trump. I then provide a conceptual framework that identifies four distinct channels through which globalization can stimulate populism, two each on the demand and supply sides of politics, respectively. I evaluate the empirical literature with the help of this framework, discussing trade, financial globalization, and immigration separately. I conclude the paper by discussing some apparently anomalous cases where populists have been against, rather than in favor of trade protection.
    Date: 2020–07
  38. By: Uri Dadush; Pauline Weil
    Abstract: The authors are grateful to Bruegel colleagues for helpful comments. Despite tensions over China’s discriminatory business practices, China’s trade continues to thrive, and the country has taken over from the United States as the first destination for foreign investment. American and European businesses continue to be engaged in China’s large and growing market, even amid a trade war between China and the United States. Drawing on surveys of companies and...
    Date: 2021–05
  39. By: Winkler, Malte; Peterson, Sonja; Thube, Sneha
    Abstract: Linking the EU and Chinese Emission Trading Systems (ETS) increases the cost-efficiency of reaching greenhouse gas mitigation targets, but both partners will benefit - if at all - to different degrees. Using the global computable-general equilibrium (CGE) model DART Kiel, we evaluate the effects of linking ETS in combination with 1) restricted allowances trading, 2) adjusted allowance endowments to compensate China, and 3) altered Armington elasticities when Nationally Determined Contribution (NDC) targets are met. We find that generally, both partners benefit from linking their respective trading systems. Yet, while the EU prefers full linking, China favors restricted allowance trading. Transfer payments through adjusted allowance endowments cannot sufficiently compensate China so as to make full linking as attractive as restricted trading. Gains associated with linking increase with higher Armington elasticities for China, but decrease for the EU. Overall, the EU and China favor differing options of linking ETS. Moreover, heterogeneous impacts across EU countries could cause dissent among EU regions, potentially increasing the difficulty of finding a linking solution favorable for all trading partners.
    Keywords: Paris Agreement,NDC,Emission Trading,Linking ETS,China,EU,Verbindung von Emissionshandelsystemen,NDC,Pariser Klimabakommen,Emissionshandel
    JEL: F13 F18 Q58 Q54
    Date: 2021
  40. By: Arita, Shawn; Grant, Jason; Sydow, Sharon; Beckman, Jayson
    Abstract: Global agricultural trade, which increased at the end of 2020, has been described as being “resilient” to the impacts of the COVID-19 coronavirus pandemic; however, the size and channels of its quantitative impacts are not clear. Using a reduced-form, gravity-based econometric model for monthly trade, we estimate the effects of COVID-19 incidence rates, policy restrictions imposed by governments to curb the outbreak, and the de facto reduction in human mobility/lockdown effect on global agricultural trade. We find that while agricultural trade remained quite stable through the pandemic, the sector as a whole did not go unscathed. First, we estimate that COVID-19 reduced agricultural trade by the approximate range of 5 to 10 percent at the aggregate sector level; a quantified impact two to three times smaller in magnitude than our estimated impact on trade occurring in the non-agricultural sector. Reductions in human mobility and policy restrictive responses were the most evident drivers of trade losses. Second, we find sharp differences across individual commodities. In particular, we find that non-food items (hides and skins, ethanol, cotton, and other commodities), meat products including seafood, and higher value agri-food products were most severely impacted by the pandemic; however, the COVID-19 trade effect for the majority of food and bulk agricultural commodity sectors were found to be insignificant, or in a few cases, positive. Third, examining the effect across markets, we find mixed evidence that lower-income and least-developed countries’ trade flows were more sensitive to the pandemic. Fourth, we find evidence that trade flows adjusted to these disruptions over time. Finally, the pandemic also impacted the extensive margins of trade with more severe disruptions detected in air shipments. Findings from this study provide intriguing insights into the dimensions of global agricultural supply chains most resilient and most vulnerable to major global market disruptions.
    Keywords: International Relations/Trade
    Date: 2021–05
  41. By: Kurtović, Safet; Maxhuni, Nehat; Halili, Blerim; Krasniqi, Bujar
    Abstract: There is a widespread belief in transition and growing economies that the relationship between FDI and wages is symmetrical. On the other hand, the problem of the nonlinear impact of FDI on wages has remained insufficiently explored. Therefore, this paper aims to determine whether there is an asymmetric effect of FDI stock on the net average wages within the eight SEE (Southeastern European countries) economies. We used the nonlinear autoregressive distributed lag (NARDL) and as well on the annual data for the period from 2000 to 2018. We found that there is an asymmetric impact of FDI stock on the net average wages of Bulgaria and Slovenia. In addition, we found that the symmetric effect is stronger compared to the asymmetric effect that the FDI stock has on the net average wages of Bulgaria, N. Macedonia, Montenegro, Serbia and Slovenia. Finally, we found that productivity, employment and education significantly affect solely Slovenia's net average wages.
    Keywords: symmetry, asymmetry, wages, productivity, employment
    JEL: F21 F23 J3
    Date: 2021–03–12
  42. By: Richard Grieveson (The Vienna Institute for International Economic Studies, wiiw); Michael Landesmann (The Vienna Institute for International Economic Studies, wiiw); Isilda Mara (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Migration from Africa and the Middle East to the EU has intensified over the last two decades. Relative differences between developed EU and less developed African and Middle East countries have not declined that much and continue to drive mobility. Also, demographic trends show a strong contrast between the population of the EU (ageing and shrinking rapidly) and that of Africa and the Middle East (young and continuously increasing). Apart from demographic pressures and development gaps, other forces related to conflicts and wars, as well as climate risks, have become important drivers of mobility and are not expected to fade away soon. Anticipating migration flows in order to ensure better management and regulated mobility has become essential, although this is an exercise subject to high uncertainty. With these caveats in mind, this study seeks to calculate long-term potential mobility from Africa, the Middle East and Eastern EU neighbouring countries to EU28 and EFTA by applying a migration gravity model following a scenario-based approach. Projections for 2020-2029 suggest that migration flows to the EU from Africa, in particular, will dominate the South-North mobility corridor. Migration policies will also play a role in shaping future migration trends, as migration flows are subject to EU destination countries’ applying restrictive migration policies.
    Keywords: International Migration, forecasting, scenario, gravity model, EU, Africa
    JEL: F22 J11 J61 O15
    Date: 2021–05
  43. By: Afesorgbor, S.K.; van Bergeijk, P.A.G.; Demena, B.A.
    Abstract: We analyse the impact of COVID-19 on the world economic system through the three components of globalization: economic, social and political globalization, respectively. The pandemic and the economic policy response have hit these aspects to different degrees. • Economically, the quick recovery of world merchandise trade stands out. • Socially, the reduction in tourism is the largest shock but here a sharp recovery is possible. • Politically, the end of US membership of the WHO and the difficulty of global economic coordination in the G20 are key drivers for 2020. The election of a new US President allows for a quick reversal.
    Keywords: Covid-19, world trade, globalization, deglobalization
    Date: 2021–05–31
  44. By: Delera, Michele
    Abstract: Sustainability in global value chains (GVCs) hinges on the interplay between specialisation, scale, and efficiency effects. This paper reviews different strands of literature which provide evidence on these channels. The evidence that I collect suggests that the sustainability impacts of GVCs are ambiguous. By allowing firms to specialise through the offshoring of relatively more polluting production activities, GVCs are associated to sizeable amounts of carbon leakage. Insofar as firms expand following entry in foreign markets, environmental impacts may also increase. Yet at the same time, participation in GVCs makes firms more energy and emission efficient than their domestic peers through a variety of mechanisms. Thus, GVCs also contribute to dampen emission growth. In terms of social sustainability, GVCs are associated with an income premium for workers and producers alike, although these benefits are not equally distributed.
    Date: 2021
  45. By: Roland Ismer; Harro van Asselt; Jennifer Haverkamp; Michael Mehling; Karsten Neuhoff; Alice Pirlot
    Abstract: To reach climate neutrality, carbon emissions from the production of basic materials need to be significantly reduced. For governments’ support measures to be consistent with their World Trade Organization obligations, they need to be compatible with the WTO’s Agreement on Subsidies and Countervailing Measures (ASCM). This paper analyzes the ASCM consistency of three selected support schemes, namely: (1) free allocation under emissions trading systems such as the European Union Emissions Trading System (EU ETS) to operators of installations deemed to be at significant risk of carbon leakage; (2) a combination of a charge on carbon-intensive materials with free allocation; and (3) carbon contracts for differences (CCfDs) for operators of climate-neutral installations, in which governments pay out the incremental costs of climate neutral-production processes relative to the costs of conventional primary material production. The analysis reveals that the current system of carbon leakage protection through free allocation is vulnerable to challenges under the ASCM. By contrast, a transition to a combination of free allocation and a charge on carbon-intensive materials would implement consistent carbon-pricing and thus would very likely not amount to a subsidy under the ASCM. In a similar vein, support for climate-neutral installations through CCfDs could be designed in such a way that it confers no benefit, so that it would also not constitute a subsidy.
    Keywords: WTO, ASCM, Carbon Pricing, Free allowance allocation, Climate Contribution, Carbon Contracts for Difference
    JEL: K32 F13 Q54 Q56
    Date: 2021
  46. By: Antonio Fanelli
    Abstract: This paper conducts a comparative review of the evolution of the economic crisis generated by the coronavirus disease (COVID-19) pandemic and the responses enacted by the Association of Southeast Asian Nations (ASEAN) and the European Union. It highlights differences and common elements in the strategic approaches, the intensity of the interventions, and governance structures. In the final section, it identifies short- and medium-term actions, inspired by the comparative analysis, which could contribute to improve the ASEAN response.
    Keywords: COVID-19, ASEAN, European Union, regional economic recovery, strategies
    JEL: P50
    Date: 2021–05–31

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