nep-int New Economics Papers
on International Trade
Issue of 2021‒06‒21
forty-one papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. The socio-economic impact of Brexit on CANZUK and the Anglosphere in times of Corona : The case of Canada, Australia and New Zealand By Kohnert, Dirk
  2. The Smoot-Hawley Trade War By Kris James Mitchener; Kirsten Wandschneider; Kevin Hjortshøj O’Rourke
  3. Foreign Workers, Product Quality, and Trade: Evidence from a Natural Experiment By Ariu, Andrea
  4. Subnational Income Growth and International Border Effects By Hanna L. Adam; Mario Larch; David Stadelmann
  5. Structural Change and Global Trade By Logan T. Lewis; Ryan Monarch; Michael Sposi; Jing Zhang
  6. Trade Integration, Global Value Chains, and Capital Accumulation By Michael Sposi; Kei-Mu Yi; Jing Zhang
  7. Indian buyers in global markets: Quality, prices, and productivity By M.A. Anderson; M.H. Davies; J.E. Signoret; S.L.S. Smith
  8. Estimating the Ex-ante and the Ex-post Effects of Chinese Outward FDI By Donatella Baiardi; Valeria Gattai; Piergiovanna Natale
  9. Three essays on international economics By Kim, Gyu Hyun
  10. The Relationship between Foreign Direct Investment and Economic Growth: A Case of Turkey By Orhan Gokmen
  11. Under Attack: Terrorism and International Trade in France, 2014-16 By Volker Nitsch; Isabelle Rabaud
  12. Wake Not a Sleeping Lion: Free Trade Agreements and Decision Rights in Multinationals By MUKUNOKI Hiroshi; OKOSHI Hirofumi
  13. Employment Effects of Economic Sanctions By Ali Moghaddasi Kelishomi; Roberto Nisticò
  14. Consumer Taste in Trade By Aw-Roberts, Bee Yan; Lee, Yi; Vandenbussche, Hylke
  15. Unfolding Trade Effect in Two Margins of Informality. The Peruvian Case By Camila Cisneros-Acevedo
  16. Competition, Productivity and Trade, Reconsidered By ARA Tomohiro
  17. The Heterogeneous Effects of Trade across Occupations: A Test of the Stolper-Samuelson Theorem By Sergi Basco; Maxime Liégey; Martí Mestieri; Gabriel Smagghue
  18. Federalism and Foreign Direct Investment - An Empirical Analysis By Lars P. Feld; Ekkehard A. Köhler; Leonardo Palhuca; Christoph A. Schaltegger
  19. Sequential Exporting across Countries and Products By Facundo Albornoz; Héctor F. Calvo Pardo; Gregory Corcos; Emanuel Ornelas
  20. Four great Asian trade collapses By Alan de Bromhead; Alan Fernihough; Markus Lampe; Kevin Hjortshøj O’Rourke
  21. Foreign Direct Investment, Governance and Inclusive Growth in Sub-Saharan Africa By Isaac K. Ofori; Simplice A. Asongu
  22. Powering structural transformation and productivity gains in Africa: The role of global value chains and resource endowments By Owusu, Solomon
  23. A Simple Model of Buyer-Seller Networks in International Trade By Philipp Herkenhoff; Sebastian Krautheim; Philip Sauré
  24. Carbon Tax and Border Tax Adjustments with Technology and Location Choices By Haitao CHENG; ISHIKAWA Jota
  25. Direct Monetary Costs and Its Determinants in Migration Decisions: Case of Cross-Border Labour Migration from Cambodia to Thailand By Chan Mono Oum; Gazi M. Hassan; Mark J. Holmes
  26. Spoils of War: Trade Shocks and Segmented Labor Markets in Spain during WWI By Simon Fuchs
  27. The influence of value-chain governance on innovation performance: A study of Italian suppliers By Brancati, Emanuele; Pietrobelli, Carlo; Torres Mazzi, Caio
  28. Foreign direct investment and domestic private investment in Sub-Saharan African countries: crowding-in or out? By Askandarou Cheik Diallo; Luc Jacolin; Isabelle Rabaud
  29. Unravelling the markups changes: the role of demand elasticity and concentration By Michał Gradzewicz; Jakub Mućk
  30. The long-term growth impact of refugee migration in Europe: A case study By Manthei, Gerrit
  31. The Global Distribution of Routine and Non-routine Work By Piotr Lewandowski; Albert Park; Simone Schotte
  32. Demographics and the Evolution of Global Imbalances By Michael Sposi
  33. The Global Transmission of Real Economic Uncertainty By Juan M. Londono; Sai Ma; Beth Anne Wilson
  34. The Trade Impact of the Covid-19 Pandemic By Xuepeng Liu; Emanuel Ornelas; Huimin Shi
  35. What does Network Analysis teach us about International Environmental Cooperation? By Stefano Carattini; Sam Fankhauser; Jianjian Gao; Caterina Gennaioli; Pietro Panzarasa
  36. Does Immigration Grow the Pie? Asymmetric Evidence from Germany By Nicolo Maffei-Faccioli; Eugenia Vella
  37. A brief perspective on globalization. By Rashid, Muhammad
  38. The Intellectual Property Protection System of the Foreign Investment Law: Basic Structure, Motivation and Game Logic By Luo Ying
  39. GLOBAL UNCERTAINTY By Giovanni Caggiano; Efrem Castelnuovo
  40. The Generalized System of Preferences and NGO Activism By Lionel Fontagné; Michela Limardi
  41. International labour standards and The Republic of Bulgaria – a century of experience By Стайков, Ивайло

  1. By: Kohnert, Dirk
    Abstract: ABSTRACT & RÉSUMÉ & ZUSAMMENFASSUNG : Although Britain has been one of the hardest hit among the EU member states by the corona pandemic, Boris Johnson left the EU at the end of 2020. Brexit supporters endorsed the idea of CANZUK, i.e. a union between the UK, Canada, Australia and New Zealand. The CANZUK was embedded in a vision of the revival of the olden days of Great Britain and its role in the ‘Anglosphere’, dating back to World War II and 19th-century British settler colonialism. It is rather doubtful whether the CANZUK members can realize Boris Johnson’s vision of prosperous trade in the ‘Anglosphere’. Besides, there are many open questions, notably on the overall effect of Brexit on CANZUK concerning the socio-economic impact of the global Corona crisis. Last, but not least, will the relative weight of the UK vis à vis other global players like China and India diminish in the medium and long run. After all, the new global focus of international trade will be reallocated from the Atlantic (America and Europe) to the Asian Pacific region, the key player in world economies to come. RÉSUMÉ : Bien que la Grande-Bretagne ait été l'un des États membres les plus durement touchés par la COVID-19 pandémie, Boris Johnson a quitté l'UE fin 2020. Les partisans du Brexit ont approuvé l'idée de CANZUK, c'est-à-dire, une union entre le Royaume-Uni, le Canada, l'Australie et Nouvelle-Zélande. Le CANZUK s’inscrivait dans une vision de la renaissance des anciens temps de la Grande-Bretagne et de son rôle dans « l ’Anglosphère », datant de la Seconde Guerre mondiale et du colonialisme des colons britanniques du XIXe siècle. Il est assez douteux que les membres de CANZUK puissent revaloriser la vision de Boris Johnson d’un commerce prospère dans « l’Anglosphère ». En outre, de nombreuses questions restent ouverts, notamment sur l'effet global du Brexit sur CANZUK par rapport à l'impact socio-économique de la COVID-19 crise mondiale. Enfin, le poids relatif du Royaume-Uni par rapport à d'autres acteurs mondiaux, comme la Chine et l'Inde, diminuera à moyen et long terme. Après tout, la nouvelle orientation mondiale du commerce international sera réaffectée de l'Atlantique (Amérique et Europe) à la région Asie-Pacifique, l'acteur clé de l’économie mondiale à venir. ---------------------------------------------------------------------------------------------------------------------------- ZUSAMMENFASSUNG : Obwohl Großbritannien von der Corona Ppandemie unter den EU-Mitgliedstaaten mit am stärksten betroffen war, verließ Boris Johnson die EU Ende 2020. Die Befürworter des Brexit unterstützten die Idee eines CANZUK Handelsvertrages, d.h. einer Union zwischen Großbritannien, Kanada, Australien und Australien Neuseeland. CANZUK war eingebettet in eine Vision der Wiederbelebung der alten Tage Großbritanniens und seiner Rolle in der „Anglosphäre“, die auf den Zweiten Weltkrieg und den britischen Siedlerkolonialismus des 19. Jahrhunderts zurückgeht. Es ist zweifelhaft, ob die CANZUK-Mitglieder Boris Johnsons Vision eines prosperierenden Handels in der „Anglosphäre“ umsetzen können. Außerdem gibt es viele offene Fragen, insbesondere zu den Gesamteffekten des Brexit auf CANZUK angesichts der sozioökonomischen Auswirkungen der globalen Corona-Krise. Nicht zuletzt, wird das relative Gewicht Großbritanniens gegenüber anderen Global Playern wie China und Indien mittel- und langfristig abnehmen. Schließlich wird sichh der globale Schwerpunkt des internationalen Handels vom Atlantik (Amerika und Europa) auf den asiatisch-pazifischen Raum verlagern, dem Hauptakteur der zukünftigen Weltwirtschaft.
    Keywords: Brexit, COVID-19-pandemic, Corona crisis, CANZUK, Canada, Australia, New Zealand, United Kingdom, international trade, customs union, Anglosphere, settler colonialism, white dominions
    JEL: F13 F15 F22 F52 F68 I1 N1 N4 N40 O24 O5 Z13
    Date: 2021–05–26
  2. By: Kris James Mitchener; Kirsten Wandschneider; Kevin Hjortshøj O’Rourke
    Abstract: We document the outbreak of a trade war after the U.S. adopted the Smoot-Hawley tariff in June 1930. U.S. trade partners initially protested the possible implementation of the sweeping tariff legislation, with many eventually choosing to retaliate by increasing their tariffs on imports from the United States. Using a new quarterly dataset on bilateral trade for 99 countries during the interwar period, we show that U.S. exports to countries that protested fell by between 15 and 22 percent, while U.S. exports to retaliators fell by 28-33 percent. Furthermore, using a second new dataset on U.S. exports at the product-level, we find that the most important U.S. exports to retaliating markets were particularly affected, suggesting a possible mechanism whereby the U.S. was targeted despite countries’ MFN obligations. The retaliators’ welfare gains from trade fell by roughly 8-17%.
    Keywords: Trade wars, gravity model, Smoot-Hawley, Great Depression, trade policy
    JEL: F13 F14 N70
    Date: 2021–03–01
  3. By: Ariu, Andrea
    Abstract: This paper shows that international labor mobility attenuates information frictions, and leads to higher-quality products, more trade, and more effective global value chains. Exploiting the variation in the time and intensity at which Swiss postal codes were hit by the increasing availability of foreign workers due to the implementation of the Swiss-EU Agreement on the Free Movement of Persons, I find that the inflow of high-skilled European workers led to an upgrade in the quality of inputs imported from their origin countries. Better intermediates improved the quality of output, making Swiss products more appealing for international markets and boosting exports. Therefore, the efficacy of Swiss global value chains improved: upstream thanks to higher-quality intermediate inputs brought by the intensification of the existing buyer-seller relations; and downstream because higher-quality products eased increasing exports to existing buyers and helped finding new customers, especially in distant destinations.
    Keywords: GVCs; Information Frictions; Innovation; labor mobility; Trade
    JEL: F14 F16 F22
    Date: 2020–06
  4. By: Hanna L. Adam; Mario Larch; David Stadelmann
    Abstract: This paper analyses the effect of international borders and of trade agreements at international borders on subnational (i.e. regional) growth. We construct an extensive panel dataset covering 1,350 regions in 86 countries worldwide between 1950 and 2017. Our results show that international borders decrease regional income per capita, while trade agreements at international borders increase regional income per capita by about the same magnitude. The positive marginal effect of trade agreements on regional income corresponds to at least three fifths of the negative marginal effect of international borders. Thus, trade agreements can compensate negative border effects and explain regional inequalities within countries. An array of robustness tests supports our interpretations.
    Keywords: border effects, trade, trade agreements, GDP per capita, regional analysis
    JEL: F14 F15 F43 O18 R12
    Date: 2021
  5. By: Logan T. Lewis; Ryan Monarch; Michael Sposi; Jing Zhang
    Abstract: Services, which are less traded than goods, rose from 58 percent of world expenditure in 1970 to 79 percent in 2015. Using a Ricardian trade model incorporating endogenous structural change, we quantify how this substantial shift in consumption has affected trade. Without structural change, we find that the world trade to GDP ratio would be 15 percentage points higher by 2015, about half the boost delivered from declining trade costs. In addition, this structural change has lowered the global welfare gains from trade integration by almost 40 percent over the past four decades. Absent further reductions in trade costs, ongoing structural change implies that world trade as a share of GDP would eventually decline. Going forward, higher income countries gain relatively more from reducing services trade costs than from reducing goods trade costs.
    Keywords: Globalization; Structural Change; International Trade
    JEL: F41 L16 O41
    Date: 2020–11–12
  6. By: Michael Sposi; Kei-Mu Yi; Jing Zhang
    Abstract: Motivated by increasing trade and fragmentation of production across countries since World War II, we build a dynamic two-country model featuring sequential, multi-stage production and capital accumulation. As trade costs decline over time, global-value-chain (GVC) trade expands across countries, particularly more in the faster growing country, consistent with the empirical pattern. The presence of GVC trade boosts capital accumulation and economic growth and magnifies dynamic gains from trade. At the same time, endogenous capital accumulation shapes comparative advantage across countries, impacting the dynamics of GVC trade: a country becoming more capital abundant concentrates more on the capital-intensive stage of the production.
    Keywords: Multistage production; International trade; Capital accumulation
    JEL: F10 F43 E22
    Date: 2020–11–13
  7. By: M.A. Anderson; M.H. Davies; J.E. Signoret; S.L.S. Smith
    Abstract: We examine import prices paid by direct-sourcing Indian manufacturing firms in the early 2000s using a unique data set that matches firm characteristics with product and source-country trade data, offering a theoretical and empirical extension of Halpern and Koren (2007). We find that import prices are positively associated with firm productivity, distance from source-country, and source-country GDP per capita, and negatively associated with source-country remoteness, an effect we attribute to the higher scope for quality differentiation in less remote locations. Further, we find that source-country characteristics matter more, and cost factors less, for differentiated than for non-differentiated goods.
    Keywords: Importers, Firm-level data, Pricing, Input quality, productivity, India
    JEL: F1 F10 F12 F14
    Date: 2021–04
  8. By: Donatella Baiardi; Valeria Gattai; Piergiovanna Natale
    Abstract: This study investigates the relationship between outward Foreign Direct Investment (FDI) and the performance of Chinese enterprises. Using firm-level panel data over the period 2008–2014, we introduce a taxonomy of outward FDI that accounts for the decision to invest abroad and the location of foreign affiliates. Through different specifications, we show systematic differences in performance between FDI starters and non-starters two years before and two years after the first investment by the starters. This fact points to the existence of strong ex-ante and ex-post effects of Chinese outward FDI. On one hand, we provide evidence — so far not present in the literature — that the best performing Chinese firms self-select into outward FDI. On the other hand, controlling for endogeneity through propensity score matching (PSM) techniques, we detect significant learning effects from outward FDI to firm-level performance. Interestingly, these effects are heterogeneous with respect to destination, with deeper learning for Chinese enterprises investing in Asia.
    Keywords: FDI; China; ex-ante effects; ex-post effects; panel data
    JEL: F23 L25 O53
    Date: 2021–06
  9. By: Kim, Gyu Hyun
    Abstract: This dissertation consists of two essays on trade and one on international finance. Chapter 2 studies how international trade lowers markups of multiple varieties produced by a discrete heterogeneous firm as a short-run equilibrium. Chapter 3 assesses a two-step estimation method recently used under the WTO Article 22.6 arbitration. Specifically, this paper focuses on the two latest arbitration cases using the Armington framework: Korea's large residential washers (LRW) (case DS464) and anti-dumping duty case involving China (case DS471). Chapter 4 considers how equity home bias is related to a country-level behavioral factor (unfamiliarity) when domestic investors have limited information about foreign equities.
    Date: 2021–01–01
  10. By: Orhan Gokmen
    Abstract: This paper examines the relationship between net FDI inflows and real GDP for Turkey from 1970 to 2019. Although conventional economic growth theories and most empirical research suggest that there is a bi-directional positive effect between these macro variables, the results indicate that there is a uni-directional significant short-run positive effect of real GDP on net FDI inflows to Turkey by employing the Vector Error Correction Model, Granger Causality, Impulse Response Functions and Variance Decomposition. Also, there is no long-run effect has been found. The findings recommend Turkish authorities optimally benefit from the potential positive effect of net incoming FDI on the real GDP by allocating it for the productive sectoral establishments while effectively maintaining the country's real economic growth to attract further FDI inflows.
    Date: 2021–06
  11. By: Volker Nitsch; Isabelle Rabaud
    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
  12. By: MUKUNOKI Hiroshi; OKOSHI Hirofumi
    Abstract: Free trade agreements (FTAs) with rules of origin (ROO) affect the location of input production for vertically integrated, multinational enterprises (MNEs). FTA-induced relocation changes the allocation of decision rights within MNEs and the purpose of transfer pricing from avoiding high taxes to strengthening their product-market competitiveness. This study shows that an FTA with ROO may hurt both MNEs and local firms despite tariff elimination, when the relocation occurs and the decision rights change from centralized to decentralized. Moreover, such an FTA can hurt consumers. Nevertheless, ROO increase the feasibility of FTAs thanks to larger tax revenues.
    Date: 2021–04
  13. By: Ali Moghaddasi Kelishomi (School of Business and Economics, Loughborough University); Roberto Nisticò (Università di Napoli Federico II, CSEF and IZA)
    Abstract: This paper investigates the effect of economic sanctions on employment. We exploit the imposition of a series of unexpected and unprecedented international economic sanctions on Iran in 2012 and estimate the short-run effects of the change in import exposure on manufacturing employment at the industry level. Our estimates indicate that the sanctions led to an overall decline in manufacturing employment growth rate by 16.4 percentage points. Yet, we uncover significant asymmetric effects across industries with different ex-ante import shares. Interestingly, the effects are mostly driven by labor-intensive industries and industries that heavily depend on imported inputs. This suggests that the overall negative impact of the sanctions on employment might have been largely due to the decline in productivity experienced by industries with a high propensity to import inputs from abroad.
    Keywords: Trade Shock, Economic Sanctions, Employment.
    JEL: F16 F51 J21
    Date: 2021–06–08
  14. By: Aw-Roberts, Bee Yan; Lee, Yi; Vandenbussche, Hylke
    Abstract: This paper documents the importance of consumer taste for the food industry using firm-product level customs data by destination country. We identify consuer taste through the use of a control function approach and estimate it jointly with other demand parameters using a flexible demand specification. We find that, on average, consumer taste explains as much of the variation in export revenue as marginal costs. The contribution of consumer taste to export revenue variation, ranges between 2% to 30% depending on the product category in the food industry. Our results also show that consumer taste decreases in distance but this relationship is non-monotonic.
    Keywords: consumer taste; exports; firm-product; Food; productivity; Quality
    JEL: F12 F14
    Date: 2020–06
  15. By: Camila Cisneros-Acevedo
    Abstract: This paper studies the effect of an increase in import competition on informality along two margins. I consider the extensive margin, where workers are hired by unregistered employers and the intensive margin, where even though jobs are carried out in registered firms, employees are off the books. Peru's relentless informal employment and its unprecedented trade-driven growth provides an ideal case study. Using a rich household survey, I find that exposure to trade impacts on informality through two competing and contrasting mechanisms. On the one hand, extensive-informal employment declines as unregistered employers shrink or exit due to their low productivity. On the other hand, intensive-informal employment rises as registered employers reduce costs by hiring informal workers. Furthermore, results suggest that the intensive margin drives the overall effect. Hence, I find that trade liberalisation increases informality.
    Keywords: trade liberalization, labour informality, Peru
    JEL: F16 F14 J46
    Date: 2021
  16. By: ARA Tomohiro
    Abstract: We study unilateral trade liberalization and unilateral market expansion and their impact on optimal tariffs in a heterogeneous firm model with a general productivity distribution and an endogenous wage. We show that unilateral trade liberalization entails selection effects, but unilateral market expansion entails anti-selection effects in a country of origin. Conditional on the two sufficient statistics for welfare, the optimal level of import tariffs is the same across different trade models with a constant trade elasticity, but more generally the optimal level depends on the micro structure that makes the trade elasticity variable.
    Date: 2021–04
  17. By: Sergi Basco; Maxime Liégey; Martí Mestieri; Gabriel Smagghue
    Abstract: This paper develops and implements a novel test of the Stolper-Samuelson theorem. We use nationally-representative matched employer-employee panel data from 1997 through 2015 to study the effect of the rise in China’s exports on French worker earnings. Our version of the Stolper-Samuelson theorem states that there is a negative correlation between occupation exposure to Chinese competition and change in worker earnings. First, we document substantial heterogeneity in trade adjustment across occupations. Then, consistent with the Stolper-Samuelson prediction, we show that workers initially employed in occupations more intensively used in hard-hit industries experience larger declines in earnings. We also show that workers tend to move out of hard-hit industries, but they tend to remain in their initial occupation.
    Keywords: Stolper-Samuelson Theorem; Earnings Inequality; Trade and Inequality
    JEL: F11 F14 F16
    Date: 2020–10–23
  18. By: Lars P. Feld; Ekkehard A. Köhler; Leonardo Palhuca; Christoph A. Schaltegger
    Abstract: Previous empirical studies suggest that decentralization, measured by the number of government layers, is associated with less foreign direct investment (FDI). With an improved dataset on tax autonomy of sub-federal government tiers, we present evidence that fiscal decentralization (de facto) does not reduce FDI. If local governments can set their tax rates and bases independently, they attract more FDI. Analyzing 83,458 corporate cross-border acquisitions (CBA), between 148 source and 187 host countries from 1997 to 2014, we also find that takeovers between two countries increase with size, cultural similarities and common borders of two economies. Shared institutions such as membership in a customs union facilitate CBA. These results apply for high-income hosts but not for middle-income countries.
    Keywords: fiscal decentralization, cross-border acquisition (CBA), Foreign Direct Investment (FDI), tax autonomy
    JEL: G34 H25 H71
    Date: 2021
  19. By: Facundo Albornoz; Héctor F. Calvo Pardo; Gregory Corcos; Emanuel Ornelas
    Abstract: How do exporters expand their product scope and geographical presence? We argue that new exporters are uncertain about their profitability in different countries and products, but learn it as they start to export. As a consequence, exporters add products and countries sequentially, in an interdependent process. Exploiting disaggregated data on French exporters, we find empirical support consistent with such a mechanism, where firms learn from their initial export experiences and then adjust their sales, number of products and destination countries accordingly. Our results indicate that part of the learning is firm-specific, and not merely product- or market-specific. Furthermore, we find that firms tend to expand in the sub-extensive margin first by widening product scope within a destination and later by entering new destinations; and that firms’ core products are particularly resilient despite being used to “test the waters” when entering additional countries.
    Keywords: export dynamics, experimentation, uncertainty, multiproduct firms, market interdependence
    JEL: F10 F14 D22 L25
    Date: 2021
  20. By: Alan de Bromhead; Alan Fernihough; Markus Lampe; Kevin Hjortshøj O’Rourke
    Abstract: This paper introduces a new dataset of commodity-specific, bilateral import data for four large Asian economies in the interwar period: China, the Dutch East Indies, India, and Japan. It uses these data to describe the interwar trade collapses in the economies concerned. These resembled the post-2008 Great Trade Collapse in some respects but not in others: they occurred along the intensive margin, imports of cars were particularly badly affected, and imports of durable goods fell by more than those of non-durables, except in China and India which were rapidly industrializing. On the other hand the import declines were geographically imbalanced, while prices were more important than quantities in driving the overall collapse.
    Keywords: Trade collapses; interwar economy; protection
    JEL: N75 F14
    Date: 2021–04–01
  21. 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
  22. By: Owusu, Solomon (UNU-MERIT, Maastricht University)
    Abstract: Sixty years ago, many countries in Africa implemented various industrial policies to promote structural transformation and industrialization, all aimed at generating productivity gains. Today, the consensus seems to be that the region has since recorded moderate productivity gains and industrialization remains elusive. Participation in global value chains (GVC) has recently been highlighted as a pathway to fast-track development in terms of productivity gains and structural change in the region. This paper builds on these arguments and investigates how participation in GVC affects aggregate labour productivity growth and its two sub-components: within and structural change. It further examines how this relationship differs with the extent of country’s natural resource endowments. The results show that participation in GVCs has a significant positive effect on productivity growth in Africa. This gain is largely through backward participation and is stronger for countries that are further from the productivity frontier. The analysis using the sub-components of productivity growth also shows that GVC participation has a positive and significant effect on productivity growth by inducing an efficient reallocation of resources within sectors (intra-sector reallocation) but not across sectors (inter-sector reallocation). Moreover, these benefits arise mostly in non-resource intensive and non-oil resource intensive countries. Overall, the results indicate that GVC participation matters for productivity growth in Africa but highlights differences in the channel of impact across countries with different natural resource endowments.
    Keywords: Global value chains, structural change, productivity, resource endowment, Africa
    JEL: C67 F15 O11 O13 O14 O47 O55
    Date: 2021–05–17
  23. By: Philipp Herkenhoff; Sebastian Krautheim; Philip Sauré
    Abstract: The recent literature on firm-to-firm trade has documented salient empirical regularities of the buyer-seller network. We propose a simplistic re-interpretation of the classical Krugman (1980) model that accounts for surprisingly many of the empirical regularities. This re-interpretation relies on randomized bundling of Krugman-varieties into heterogeneous firms, economically neutral “sales units” that import foreign varieties but belong to local firms, and a statistical reporting threshold that applies to firm-to-firm transactions. We argue that our model provides an important benchmark for the assessment of theoretical models that aim to identify the determinants of firm-to-firm networks in international trade.
    Keywords: firm-to-firm, buyer-seller, trade, network, random matching
    JEL: F10 F12 F14
    Date: 2021
  24. By: Haitao CHENG; ISHIKAWA Jota
    Abstract: We develop a simple international duopoly model to analyze unilateral taxes on greenhouse-gas emissions and border tax adjustments (BTAs) where firms can abate emissions by adopting a clean technology. We specifically explore three policy regimes: i) carbon taxes alone (no BTAs); ii) carbon taxes accompanied by carbon-content tariffs (partial BTAs); and iii) carbon taxes coupled with emission-tax refunds for exports and carbon-content tariffs (full BTAs). We find that carbon taxes are not effective in decreasing global emissions in certain circumstances. Interestingly, an increase in the carbon tax rate can increase global emissions. High tax rates may discourage the adoption of a clean technology. When firm locations are fixed, full BTAs eliminate cross-border carbon leakage. However, partial BTAs can be more effective in reducing global emissions than full BTAs. When firm locations are endogenous, firms tend to produce in foreign countries to avoid the home carbon tax. BTAs discourage production in foreign countries. This effect is stronger with full BTAs than with partial BTAs.
    Date: 2021–04
  25. By: Chan Mono Oum (University of Waikato); Gazi M. Hassan (University of Waikato); Mark J. Holmes (University of Waikato)
    Abstract: Migration cost is a critical factor of human labour mobility, and little is known about how much migrant workers would pay for their foreign jobs. Previous studies do not capture the effects of direct worker-paid migration costs on migration decisions; the endeavour to ensure a positive return on migration thus remains a puzzling and new frontier in labour migration research. The paper investigates the effect of the direct monetary costs on formal or informal migration decisions of Cambodian labour migrants to Thailand, using unique data from a 422-household survey in Cambodia. The survey also includes data from 17 registered recruiting agencies that enable us to construct the alternative specific conditional logit model with alternative migration cost-specifics. After controlling for the endogenous costs of moving using the Control Function method, we find that reducing the total cost of labour migration lowers the probability of choosing irregular migration by 15.8 percentage points. The choice of regular or irregular migration is also determined by other factors such as destination countries' immigration policies, such as deportation, length of stay, and income. The labour migration policies should be revisited by considering these factors to curb the high migration cost.
    Keywords: costs of migration; regular migration; irregular migration; Cambodia
    JEL: F22 J08 R23
    Date: 2021–06–10
  26. By: Simon Fuchs
    Abstract: How does intranational factor mobility shape the welfare effects of a trade shock? I provide evidence that during WWI, a demand shock emanated from belligerent countries and affected neutral Spain. Within Spain, labor predominantly reallocated locally, while the most affected provinces experienced drastic increases in wages and consumer prices. Embedding imperfect labor mobility in an economic geography model, I show that external demand shocks can improve allocative efficiency, but asymmetric shocks cause localized increases in wages and consumer prices instead of reallocation. Adjusting an aggregate gains of trade formula to take domestic reallocation into account more than triples the estimated welfare effects.
    Keywords: gains from trade; labor mobility; economic geography
    JEL: D5 F11 F12 F15 F16 N14 N9 R12 R13
    Date: 2021–05–28
  27. By: Brancati, Emanuele (Sapienza University of Rome, and IZA Institute of Labor Economics); Pietrobelli, Carlo (UNU-MERIT, and University of Roma Tre); Torres Mazzi, Caio (UNU-MERIT)
    Abstract: This paper explores how value-chain governance affects the innovation performance of suppliers of intermediate products. We take advantage of a unique dataset of Italian firms to identify governance regimes along suppliers' technological capabilities and the level of explicit coordination in the value chain. Our results indicate that 'modular' value-chain governance is more conducive to innovation for suppliers, especially when these firms have medium capability levels. Conversely, market-based governance modes appear to strongly reduce the innovativeness of suppliers with low capability. These patterns are also reflected in export performances and sales of innovative products. Our results go partially against other findings in the GVC literature, whereby relational value chains are seen to provide the most favourable environment to learn and innovate. Interestingly, the highest levels of technological capabilities consistently reduce the correlation between supplying intermediates and innovation performance, which indicates that technology-gap is an important mediator of learning within value chains.
    Keywords: global value chains, export, suppliers, innovation, technological capabilities
    JEL: F14 O30 O32
    Date: 2021–04–22
  28. By: Askandarou Cheik Diallo (LEO - Laboratoire d'Économie d'Orleans - UO - Université d'Orléans - Université de Tours - CNRS - Centre National de la Recherche Scientifique); Luc Jacolin (Centre de recherche de la Banque de France - Banque de France); Isabelle Rabaud (LEO - Laboratoire d'Économie d'Orleans - CNRS - Centre National de la Recherche Scientifique - Université de Tours - UO - Université d'Orléans)
    Abstract: With a fall of 42% of Foreign Direct investment (FDI) flows worldwide in 2020, the Covid-19 crisis has raised important concerns about the impact of this source of financing on economic growth in Africa, in particular through its effect on national investment. While FDI is often seen as a welcome boost to economic growth and long run development, its net effect may depend critically on whether it stimulates domestic private investment or crowds it out and over what time horizon. This paper investigates the relationship between FDI and private investment in Sub-Saharan Africa (SSA), using a sample of 40 countries over 1980- 2017. To disentangle short term from long-term dynamics, our empirical analysis is based on Pooled Mean Group (PMG), Mean Group (MG) and Dynamic Full Effects (DFE). We find that FDI has little effect on private investment in the short run but significant crowding-in effects in the long-run: a one percentage point increase of the share of FDI in GDP leads to a 0.29% rise in private investment, in the long run. Our results also show that FDI interacts with public domestic investment to boost these positive effects. Finally, we show that the impact of FDI on domestic private investment is stronger in non-natural resource exporting diversified countries as opposed to non-diversified commodity exporters.
    Keywords: Financial development,Domestic investment,Foreign direct Investment,Crowding-in/crowding-out effects
    Date: 2021
  29. By: Michał Gradzewicz (Narodowy Bank Polski and SGH Warsaw School of Economics); Jakub Mućk (Narodowy Bank Polski and SGH Warsaw School of Economics)
    Abstract: We propose a framework allowing to identify sources changes in aggregate markups. Our approach derives from the conjectural variation theory and allows to evaluate the role of price elasticity of demand as well as concentration in shaping the markups. In the empirical part, we show that a decline in the aggregate markups in Poland, showed by Gradzewicz and Muck (2019), can be explained to a large extent by rising demand elasticity, while rising concentration has mitigated this effect. We also document that at the industry level the globalization trends, e.g. international fragmentation, increasing standardization and tighter integration with global economy, affect both demand elasticity and markups but in a theory-consistent, inverse way. Besides, we identify factors which are specific to demand elasticity (product varieties and a home bias) and the markups (import content of exports).
    Keywords: markups, price elasticity of demand, globalization
    JEL: C23 D22 D4 F61 L11
    Date: 2020
  30. By: Manthei, Gerrit
    Abstract: Many questions have been raised about the political and economic consequences of the recent surge in refugee immigration in Europe. Can refugee immigration promote long-term per-capita growth? How are the drivers of per-capita growthinfluenced by immigration? What are the policy implications of refugee immigration? Using an adjusted Cobb-Douglas productionfunction,with labour divided into two complementary groups,this study attempts to provide some answers. By applying the model to current immigration data from Germany, the study finds that refugee immigration can lead to long-term per-capita growth in the host country and that the growth is higher if immigrants are relatively young and have sufficiently high qualifications. Further, capital inflowsare a prerequisite for boosting per-capita growth. These findings can inform the migration policiesof countries that continue to grapple with refugee immigration.
    Keywords: Refugee,Immigration,Growth,Labour Supply,Wages
    JEL: E20 F22 O41
    Date: 2020
  31. By: Piotr Lewandowski (Corresponding author. Institute for Structural Research (IBS), Warsaw, and IZA, Bonn.); Albert Park (HKUST Institute for Emerging Market Studies, Hong Kong, and IZA, Bonn.); Simone Schotte (UNU-WIDER, Helsinki.)
    Abstract: Studies of the effects of technology and globalization on employment and inequality commonly assume that occupations are identical around the world in the job tasks they require. To relax this assumption, we develop a regression-based methodology to predict the country-specific routine task intensity (RTI) of occupations based on survey data collected in 46 low-, middle- and high-income countries. We find that within the same occupation jobs in low- and middle-income countries are more routine intensive than in high-income countries. We attribute these differences mainly to lower technology use in less-developed countries. Using predicted country-specific RTI measures for 87 countries that together employ more than 2.5 billion workers, we find that from 2000 to 2017 the shift away from routine work and towards non-routine work in low- and middle-income countries was much slower than in the high-income countries. The gap in average RTI increased and high-income countries remain the dominant provider of non-routine work. In contrast, assuming that occupations are identical around the world significantly overestimates the role of non-routine tasks in low- and middle-income countries and leads to an implausible conclusion that they have become the dominant supplier of non-routine work.
    Keywords: de-routinization, economic development, global division of labour, task content of jobs, skills
    JEL: J21 J23 J24
    Date: 2020–06
  32. By: Michael Sposi (Southern Methodist University)
    Abstract: The age distribution evolves asymmetrically across countries, influencing capital flows through differences in aggregate saving rates and labor supply. I build a general equilibrium model featuring overlapping generations and international trade where dynamics are driven by capital accumulation and borrowing and lending. The equilibrium can be replicated by a model in which every country is inhabited by a representative household that experiences an endogenous, time-varying discount factor reflecting the co-evolution of the entire age distribution and relevant prices. This equivalence affords computation of the exact transitional dynamics. I calibrate the model to match national accounts and bilateral trade data and quantify how demographic forces affected capital flows between 28 countries since 1970. On average, increasing a country's mean age by one year boosts its current account by 0.4 percent of GDP. Observed bilateral trade patterns dictate the cross-country dispersion and magnitude of capital flows in response to changes in any individual country's demographics.
    Keywords: Demographics; Global imbalances; Dynamics; International trade
    JEL: F11 F21 J11
    Date: 2021–03
  33. By: Juan M. Londono; Sai Ma; Beth Anne Wilson
    Abstract: Using a sample of 30 countries representing about 65% of the global GDP, we find that real economic uncertainty (REU) has negative long-lasting domestic economic effects and transmits across countries. The international spillover effects of REU are (i) additional to those of domestic REUs, (ii) statistically significant, and (iii) economically meaningful. Trade ties play a key role in explaining why uncertainty generated in one country can affect economic outcomes in other countries. Based on this evidence, we construct a novel index for global REU as the trade-weighted average of all countries' REUs. We disentangle the effects of the domestic and foreign components of global REU and find that, on average, innovations to the foreign component can contribute up to 28% of the future variation in domestic industrial production, with the effect being disproportionately larger on its manufacturing component, the component contributing the most to the tradable goods sector, than on its retail sales component.
    Keywords: Economic effects of uncertainty; International transmission; Spillovers
    JEL: G01 E32 F62 F44
    Date: 2021–04–30
  34. By: Xuepeng Liu; Emanuel Ornelas; Huimin Shi
    Abstract: Using a gravity-like approach, we study how Covid-19 deaths and lockdown policies affected countries’ imports from China during 2020. We find that a country’s own Covid-19 deaths and lockdowns significantly reduced its imports from China, suggesting that the negative demand effects prevailed over the negative supply effects of the pandemic. On the other hand, Covid-19 deaths in the main trading partners of a country (excluding China) induces more imports from China, partially offsetting countries’ own effects. The net effect of moving from the pre-pandemic situation to another where the main variables are evaluated at their 2020 mean is, on average, a reduction of nearly 10% in imports from China. There is also significant heterogeneity. For example, the negative own effects of the pandemic vanish when we restrict the sample to medical goods and are significantly mitigated for products with a high “work-from-home” share or a high contract intensity for products exported under processing trade, and for capital goods. We also find that deaths and lockdowns in previous months tend to increase current imports from China, partially offsetting the contemporaneous trade loss, suggesting that trade is not simply “destroyed,” but partially “postponed".
    Keywords: trade flows, Covid-19, lockdown, stringency, China
    JEL: F14
    Date: 2021
  35. By: Stefano Carattini; Sam Fankhauser; Jianjian Gao; Caterina Gennaioli; Pietro Panzarasa
    Abstract: Over the past 70 years, the number of international environmental agreements (IEAs) has increased substantially, highlighting their prominent role in environmental governance. This paper applies the toolkit of network analysis to identify the network properties of international environmental cooperation based on 546 IEAs signed between 1948 and 2015. We identify four stylised facts that offer topological corroboration for some key themes in the IEA literature. First, we find that a statistically significant cooperation network did not emerge until early 1970, but since then the network has grown continuously in strength, resulting in higher connectivity and intensity of cooperation between signatory countries. Second, over time the network has become closer, denser and more cohesive, allowing more effective policy coordination and knowledge diffusion. Third, the network, while global, has a noticeable European imprint: initially the United Kingdom and more recently France and Germany have been the most strategic players to broker environmental cooperation. Fourth, international environmental coordination started with the management of fisheries and the sea, but is now most intense on waste and hazardous substances. The network of air and atmosphere treaties is weaker on a number of metrics and lacks the hierarchical structure found in other networks. It is the only network whose topological properties are shaped significantly by UN-sponsored treaties.
    Date: 2021–06
  36. By: Nicolo Maffei-Faccioli; Eugenia Vella
    Abstract: We provide empirical evidence suggesting that net migration shocks can have substantial demand effects, potentially acting like positive Keynesian supply shocks. Using monthly administrative data (2006-2019) for Germany in a structural VAR, we show that the shocks stimulate vacancies, wages, house prices, consumption, investment, net exports, and output. Unemployment falls for natives (dominant jobcreation effect), driving a decline in total unemployment, while rising for foreigners (dominant job-competition effect). The geographic origin of migrants and the education level of residents matter crucially for the transmission. Overall, the evidence implies that the policy debate should focus on redistributive strategies between natives and foreigners.
    Keywords: Migration, job creation, job competition, Keynesian supply shocks
    JEL: C11 C32 E32 F22
    Date: 2021–05–10
  37. By: Rashid, Muhammad
    Abstract: The purpose of this paper is to examine globalization from a variety of perspectives relevant to the present day and time. We first examine what is globalization in present day context, then we examine the importance of financial flows from globalization. We further examine into how digitization is taking place across the globe and the consequences that it brings. We also look at the consequences of globalization on the environment and finally we come to the discussion of the importance of globalization in present day times and especially in regards to the Covid-19 pandemic. Is prudence in terms of globalization a better path rather than irrational exuberance.? Is stability better than volatility.?
    Keywords: Globalization, Finance, Digitization, Environment, Sustainability, Covid, 19, Public Health
    JEL: F6 F60 F64 F65 I0 M1 M16 M3
    Date: 2021–03–19
  38. By: Luo Ying
    Abstract: The intellectual property protection system constructed by China's Foreign Investment Law has opened a new phase of rule of law protection of intellectual property rights for foreign-invested enterprises, which is an important institutional support indispensable for optimizing the business environment under the rule of law.The development of the regime was influenced by the major concerns of investors' home countries, the "innovation-driven development" strategy, and the trend towards a high level of stringent protection of international intellectual property and investment rules.In addition, there is a latent game of interests between multiple subjects, which can be analyzed by constructing two standard formal game models according to legal game theory.The first game model aims to compare and analyze the gains and losses of China and India's IPR protection system for foreign-invested enterprises to attract foreign investment.The second game model is designed to analyze the benefits of China and foreign investors under their respective possible behaviors before and after the inclusion of IPR protection provisions in the Foreign Investment Law, with the optimal solution being a "moderately cautious" strategy for foreign investors and a "strict enforcement" strategy for China.
    Date: 2021–06
  39. By: Giovanni Caggiano (Monash University and University of Padova); Efrem Castelnuovo (University of Padova)
    Abstract: We estimate a novel measure of global financial uncertainty (GFU) with a dynamic factor framework that jointly models global, regional, and country-specific factors. We quantify the impact of GFU shocks on global output with a VAR analysis that achieves set-identification via a combination of narrative, sign, ratio, and correlation restrictions. We find that the world output loss that materialized during the great recession would have been 13% lower in absence of GFU shocks. We also unveil the existence of a global finance uncertainty multiplier: the more global financial conditions deteriorate after GFU shocks, the larger the world output contraction is.
    Keywords: Global Financial Uncertainty, dynamic hierarchical factor model, structural VAR, world output loss, global finance uncertainty multiplier
    JEL: C32 E32
    Date: 2021–02
  40. By: Lionel Fontagné (Banque de France, Université Paris 1 Panthéon-Sorbonne Centre d'Economie de la Sorbonne, PSE, CEPII); Michela Limardi (Centre d'Economie de la Sorbonne, RIME lab (Université de Lille))
    Abstract: Can preferential market access help to enforce Labor Laws in beneficiary countries? The Generalized System of Preferences (GSP) is accorded conditional on compliance with labor rights. The United States scheme leaves room for petitioning and revising the scheme upon request by interest groups. We here focus on such a review episode, and ask whether it led to the better enforcement of domestic Labor Laws in Indonesia. Using data from Indonesian Manufacturing firms, we show that GSP renegotiation combined with the activism of workers' rights groups helped increase firm-level average wages up to the minimum wage level, not only inside but also outside the export sector. GSP leverage allowed labor NGOs to act more effectively by putting the violation of national Labor Laws and poor working conditions under the international spotlight
    Keywords: GSP; labor standards; NGOs; wage determination
    JEL: J52 J80
    Date: 2021–04
  41. By: Стайков, Ивайло
    Abstract: The study analyzes the nature and importance of international standards for labour and social human rights, which have been created for a century by the International Labour Organization. Briefly presented the instruments that accepts this organization and their role in international legal regulation of labour. The report is dedicated to the 100th anniversary of the membership of Bulgaria in this universal specialized international organization.
    Keywords: International Labour Organization, international labour standards, international labour law, conventions, recommendations, declarations, labour and social human rights, Republic of Bulgaria
    JEL: J80 J83 K31 K33
    Date: 2021

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