nep-int New Economics Papers
on International Trade
Issue of 2021‒06‒28
37 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. The Impact of Interwar Protection: Evidence from India By Arthi, Vellore; Lampe, Markus; Nair, Ashwin; O'Rourke, Kevin Hjortshøj
  2. The Effects of Restrictive Measures on Cross-Border Investment: Evidence from OECD and Emerging Countries By Amara ZONGO
  3. Trade Policy is Real News: Theory and Evidence By George A. Alessandria; Carter B. Mix
  4. Misallocation in Open Economy By Maria D. Tito; Ruoying Wang
  5. Trade Policy and the Marshall–Lerner Condition: Application of the Tobit Model By Masuda, Kazuto
  6. The Impact of the First Wave of the COVID-19 Pandemic on Trade between Canada and the United States By Cardoso, Miguel; Malloy, Brandon
  7. The Impact of Infrastructure development on Foreign Direct Investment in Cameroon By Mbiankeu Nguea, Stéphane
  8. What Happened to the U.S. Deficit with China during the U.S.-China Trade Conflict? By Hunter L. Clark; Anna Wong
  9. Trade Shocks and Credit Reallocation By Federico, Stefano; Hassan, Fadi; Rappoport, Veronica
  10. Anatomy of the trade-effect of regional trade agreements and agenda for future research By Masood, Amjad
  11. Some Benefit, Some Are Left Behind: NAFTA and Educational Attainment in the United States By Leopoldo Gòmez-Ramírez; María Padilla-Romo
  12. Trade and Innovation By Marc J. Melitz; Stephen J. Redding
  13. Capital-Reallocation Frictions and Trade Shocks By Lanteri, Andrea; Medina, Pamela; Tan, Eugene
  14. Illegal Immigration: The Trump Effect By Mark Hoekstra; Sandra Orozco-Aleman
  15. WTO Dispute Settlement and the Appellate Body: Insider perceptions and Members' revealed preferences By Fiorini, Matteo; Hoekman, Bernard; Mavroidis, Petros C; Saluste, Maarja; Wolfe, Robert
  16. Trade, Value Chain Technology and Prices: Evidence from Dairy in East Africa By Liz Ignowski; Bart Minten; Johan Swinnen; Bjorn Van Campenhout; Senne Vandevelde
  17. EU Trade and Non-Trade Objectives: New Survey Evidence on Policy Design and Effectiveness By Basedow, Robert; Fiorini, Matteo; Hoekman, Bernard; Yildirim, Aydin
  18. The effects of cross-border acquisitions on firms’ productivity in the EU By Gregori, Wildmer Daniel; Martinez Cillero, Maria; Nardo, Michela
  19. Palm oil in milk: how the European Union strengthens its presence on the West African dairy market by selling a milk powder substitute By Christian Corniaux; Vincent Chatellier; Djiby Dia; Guillaume Duteurtre
  20. Rethinking International Subsidy Rules By Hoekman, Bernard; Nelson, Doug R
  21. Diplomatic relations and cross-border investments in the European Union By Damioli, Giacomo; Gregori, Wildmer Daniel
  22. Effect of Contract Farming in a Small Open Less-Developed Economy: A General Equilibrium Analysis By Bhattacharyya, Ranajoy; Das, Gouranga; Marjit, Sugata
  23. From Stocks to Flows – Evidence for the Climate-Migration-Nexus By Berlemann, Michael; Haustein, Erik; Steinhardt, Max F.
  24. Essays in international trade and industrial organization By Ludovic Panon
  25. The Seeds of Ideology: Historical Immigration and Political Preferences in the United States By Giuliano, Paola; Tabellini, Marco
  26. Characteristics of Companies involved in the Fairtrade Platform By Jan Salamoun
  27. Essays on economic geography, migration and transport infrastructure By Florin Cucu
  28. DEglobalizaion and Social Safety Nets in Post-Covid-19 Era: Textbook Macroeconomic Analysis By Razin, Assaf
  29. Costs, incentives, and institutions in bridging evolutionary economic geography and global production networks By Rodríguez-Pose, Andrés
  30. The future of investment treaties - possible directions By David Gaukrodger
  31. Automation, Globalization and Vanishing Jobs: A Labor Market Sorting View By Faia, Ester; Laffitte, Sebastien; Mayer, Max; Ottaviano, Gianmarco
  32. International Migration Literature Search in Bangladesh during the period of 1971-2020 By Khan, Adnan; Mrs, Sultana
  33. Culture, Immigration and Tax Compliance By Antoine Malézieux; Benno Torgler
  34. The Generalized System of Preferences and NGO Activism By Lionel Fontagné; Michela Limardi
  35. Re-examining the Philosophical Underpinnings of the Melting Pot vs. Multiculturalism in the Current Immigration Debate in the United States By Woldeab, Daniel; Yawson, Robert M.; Woldeab, Irina
  36. African regional integration: A problem-driven approach to delivering regional public goods By Bruce Byiers; Antoine Cazals; Alfonso Medinilla; Jaime de Melo
  37. Globalization and political economy of food policies: insights from planting restrictions in colonial wine markets By Giulia Meloni; Johan Swinnen

  1. By: Arthi, Vellore; Lampe, Markus; Nair, Ashwin; O'Rourke, Kevin Hjortshøj
    Abstract: Research on the quantitative impact of interwar protection on trade flows remains scarce, and much of it has concluded that the impact was surprisingly small. In this paper we ask: Did Indian interwar protection hurt UK manufacturers, by raising tariffs on manufactured imports? Or did it favour UK interests, by discriminating against "foreign" (i.e. non-British) producers? We answer this question by quantifying the impact of trade policy on the value and composition of Indian imports, using novel disaggregated data on both trade policies and imports for 114 commodity categories coming from 42 countries. Indian trade elasticities were generally larger than those in the United Kingdom at the same time. We find that even though Indian protection lowered total imports, it substantially boosted imports from the UK. Trade policy had a big impact on trade flows.
    Keywords: British Empire; India; interwar period; trade policy
    JEL: F13 F14 N75
    Date: 2020–05
  2. By: Amara ZONGO
    Abstract: This paper investigates the effects of global and sectoral restrictive measures on cross-border FDI among 49 advanced and emerging countries. We use a gravity model with panel data from 2010 to 2019 and the FDI Restrictiveness Index of the OECD that quantifies the level of restriction in FDI. Our results suggest that global restrictive measures do not significantly affect cross-border FDI in OECD countries, while restrictions in the service sector have negative and significant effects on FDI. Moreover, the overall restrictive measures and those in the service sector negatively impact inward FDI among OECD and big emerging countries. In addition, restrictions in the services sector impede inward FDI in African countries. Interestingly, restrictions in the secondary sector boost FDI between advanced and African countries, with larger effects for inward investments in African countries. The analysis of disaggregated sectoral restrictive measures shows that restrictions in business and other financial services are negatively associated with intra-OECD FDI, while restrictions in the banking sector have a significant positive impact on FDI. We also find that restrictions in the manufacturing sector have restrictive impacts on inwrad FDI in big emerging countries, and those in the mining, quarrying, and oil extraction sector hinder inward FDI in African countries. Reforms to liberalize sectoral restrictions by country have positive effects on FDI, but deregulation of the services sector has beneficial effects on inward FDI in all countries.
    Keywords: International Trade, FDI stocks, FDI restrictions, Gravity model
    JEL: D25 F10 F14 L51
    Date: 2021
  3. By: George A. Alessandria; Carter B. Mix
    Abstract: We evaluate the aggregate effects of changes in trade barriers when these changes can be implemented slowly over time and trade responds gradually to changes in trade barriers because firm-level trade costs make exporting a dynamic decision. Our model shows how expectations of changes in trade barriers affect the economy. We find that while decreases in trade barriers increase economic activity, expectations of lower future trade barriers temporarily decrease investment, hours worked, and output. Further-more, canceling an expected decline in future trade barriers raises investment and output in the short run but substantially lowers medium-run growth. These effects are larger when the expected reform is bigger. In the data, we find that countries with more trade growth after the General Agreement on Tariffs and Trade (GATT) rounds decreased investment and hours worked in the years leading to the tariff cuts, as predicted by our model.
    JEL: E3 F1 F4
    Date: 2021–06
  4. By: Maria D. Tito; Ruoying Wang
    Abstract: This paper estimates the impact of reducing export and import tariffs on firm input choices. In presence of borrowing constraints, lower export tariffs facilitate the reallocation of capital and labor inputs across firms, while a decline in import tariffs either tightens import competition or increases the availability of imported inputs; all three mechanisms suggest that a higher degree of openness should be associated with lower misallocation. To analyze the empirical relationship between openness and input misallocation, we draw on the annual surveys conducted by the Chinese National Bureau of Statistics (NBS) between 1998 and 2007. From the surveys, we con- struct firm-level measures of input misallocation that control for firm heterogeneity; we identify shocks to openness using industry tariff levels and firm trade shares. We find that firm facing higher tariffs in either import or export markets make less optimal input choices. We further decompose our analysis between input and output tariffs: our results suggest that the labor reallocation mainly occurs because of lower input tariffs, while the selection effect induced by changes in output tariffs does not necessarily cause more distorted firms to exit and, therefore, tends to have an insignificant effect on input allocation. Finally, we calculate the contribution of tariff changes towards aggregate misallocation and productivity: our results indicate that the impact of firm-level tariff reductions on aggregate misallocation and productivity was marginal in our sample period, but the presence of sizeable interactions between trade shocks and mis- allocation at the sector level suggests that our result should be interpreted as a lower bound of the overall effect.
    Keywords: Openness; Misallocation; Export Tariffs; Input and Output Tariffs
    JEL: F14
    Date: 2021–01–29
  5. By: Masuda, Kazuto (Bank of Japan)
    Abstract: This paper establishes the micro-foundation for the income-price approach to export and import functions from the firm’s profit maximization problem. Following Boyd et al. (2000), we derive the Marshall–Lerner condition mathematically and analyze the effects of home and foreign trade policies, such as the minimum access and quantitative trade restriction, on the Marshall–Lerner condition. In conclusion, such trade policies make the condition theoretically difficult to hold since the marginal effects of the Tobit estimates under deterministic trade policies are always lower than the ordinary least squares (OLS) estimates under no trade policies in absolute values.
    Date: 2021–06–14
  6. By: Cardoso, Miguel; Malloy, Brandon
    Abstract: We examine how the COVID-19 pandemic has impacted trade between Canada and the U.S., using a novel dataset on monthly bilateral trade flows between Canadian provinces and U.S. states, merged with COVID-19 health data. We find a statistically significant and robust negative relationship between the severity of COVID-19 and changes in Canadian exports and imports. Our results show that a one-standard deviation rise in COVID-19 severity in a Canadian province leads to a fall of 3.1-4.9\% in exports and a 6.7-9.1\% fall in imports. This result is robust to the measure of COVID-19 severity used: case levels, hospitalizations or deaths. We also investigate the role of COVID-19 policy responses and find that lockdown stringency measures did not significantly affect Canadian export or import flows. Decomposing our analysis by industry, we determine that trade in the relatively more labour-intensive manufacturing industry was most negatively affected by the pandemic, while the agriculture industry suffered the least disruption to trade flows. Collectively our results suggest that while trade was most adversely affected in industries and regions hardest hit by the pandemic, government-imposed lockdown restrictions do not appear to have caused significant additional decreases in Canadian exports or imports.
    Keywords: COVID-19,international trade,lockdown restrictions,manufacturing
    JEL: F15 F53
    Date: 2021
  7. By: Mbiankeu Nguea, Stéphane
    Abstract: Better access to improved infrastructure services is one of the components of a favourable investment climate for foreign investors and an important engine for sustainable economic growth. This study investigates the impact of communication, energy and transport infrastructure development on Foreign Direct Investment (FDI) in Cameroon over the period 1984-2014. Auto Regressive Distributed Lags (ARDL) bounds test approach to cointegration has been applied to analyse the annual time series data coming from United Nations Conference on Trade and Development (UNCTAD) and World Development Indicators (WDI). The results show that communication infrastructure exerts a positive and significant impact on FDI inflows. In addition, energy infrastructure reduces the volume of FDI inflows, while transport infrastructure is not relevant in attracting FDI inflows. According to these findings, this study recommends that the government of Cameroon pay further attention to improving the quality of infrastructure in order to attract more FDI.
    Keywords: Infrastructure, ARDL, FDI, Cameroon
    JEL: F21 H41 R42
    Date: 2021–06–20
  8. By: Hunter L. Clark; Anna Wong
    Abstract: The United States’ trade deficit with China narrowed significantly following the imposition of additional tariffs on imports from China in multiple waves beginning in 2018—or at least it did based on U.S. trade data. Chinese data tell a much different story, with the bilateral deficit rising nearly to historical highs at the end of 2020. What’s going on here? We find that (as also discussed in a related note) much of the decline in the deficit recorded in U.S. data was driven by successful efforts to evade U.S. tariffs, with an estimated $10 billion loss in tariff revenues in 2020.
    Keywords: China; tariff; trade
    JEL: F0
    Date: 2021–06–21
  9. By: Federico, Stefano; Hassan, Fadi; Rappoport, Veronica
    Abstract: This paper shows that there are endogenous financial constraints arising from trade liberalization. Banks with a large share of loans on firms exposed to competition from China suffer an increase in non-performing loans and reduce their credit capacity. The drop in credit supply affects both firms directly exposed to import-competition from China, and firm expected to expand upon trade liberalization, with economically relevant implications in terms of employment, investment, and output. This financial spillover between losers and winners from trade retards the reallocation of factors of production between firms and sectors, crucial to the welfare implication of trade liberalization.
    JEL: F61 F62 G21
    Date: 2020–05
  10. By: Masood, Amjad
    Abstract: It is a common practice to take interval data with non-consecutive years to treat RTAs in gravity estimation. However, the current study shows that the interval approach yields biased estimates. Based on the findings, the study suggests emphasizing the question of "How do agreements affect trade?" in addition to the rather simple question of "Do agreements affect trade?" using consecutive data. It would be interesting to see how the trade-effect curve of a specific RTA, or a group of RTAs deviates from the curve for the cumulative effect of all RTAs in force worldwide.
    Keywords: RTAs; Structural Gravity; Bilateral Trade; Interval Data
    JEL: F10 F13 F14
    Date: 2021
  11. By: Leopoldo Gòmez-Ramírez (Universidad del Norte); María Padilla-Romo (Department of Economics, University of Tennessee)
    Abstract: This paper examines the persistent effects of eliminating tariffs on Mexican imports, following the implementation of the North American Free Trade Agreement (NAFTA), on Americans' human capital investment. We leverage quasi-experimental changes in tariffs on Mexican imports following NAFTA across birth cohorts and within states. We show that NAFTA increases the probability of ever attending college and earning a degree. These results, however, mask important heterogeneous effects within the sample. In terms of race and ethnicity, gender, and their intersection, we find white Americans drive these positive effects, which in turn are smaller for white women. In contrast, the educational attainment of racial and ethnic minorities, especially men, shrank under NAFTA, decreasing their probability of graduating from high school.
    Keywords: NAFTA; human capital; trade openness; inequality
    JEL: F14 F61 I24 J15 J16
    Date: 2021–06
  12. By: Marc J. Melitz; Stephen J. Redding
    Abstract: Two central insights from the Schumpeterian approach to innovation and growth are that the pace of innovation is endogenously determined by the expectation of future profits and that growth is inherently a process of creative destruction. As international trade is a key determinant of firm profitability and survival, it is natural to expect it to play a key role in shaping both incentives to innovate and the rate of creative destruction. In this paper, we review the theoretical and empirical literature on trade and innovation. We highlight four key mechanisms through which international trade affects endogenous innovation and growth: (i) market size; (ii) competition; (iii) comparative advantage; (iv) knowledge spillovers. Each of these mechanisms offers a potential source of dynamic welfare gains in addition to the static welfare gains from trade from conventional trade theory. Recent research has suggested that these dynamic welfare gains from trade can be substantial relative to their static counterparts. Discriminating between alternative mechanisms for these dynamic welfare gains and strengthening the evidence on their quantitative magnitude remain exciting areas of ongoing research.
    JEL: F1 F43 O4
    Date: 2021–06
  13. By: Lanteri, Andrea; Medina, Pamela; Tan, Eugene
    Abstract: What are the short- and medium-term effects of an import-competition shock on firm dynamics and aggregate productivity? We address this question by combining detailed data on investment dynamics of Peruvian manufacturing firms, data on trade flows from China, and a quantitative general-equilibrium model with heterogeneous firms subject to idiosyncratic shocks. In the data, we find evidence of substantial frictions that slow capital reallocation, by rendering disinvestment and firm exit costly. In our model, these frictions shape the transitional dynamics after a trade shock. On impact, a drop in output prices due to import competition induces a spike in inaction, and exit of some productive firms, consistent with our empirical evidence. These effects expand the aggregate productivity wedge relative to a frictionless benchmark. Overall, productivity gains materialize slowly over time, whereas welfare gains emerge early in the transition.
    Keywords: capital reallocation; Firm Dynamics; Investment Irreversibility; Trade Shocks
    Date: 2020–05
  14. By: Mark Hoekstra; Sandra Orozco-Aleman
    Abstract: Recent years have witnessed the emergence of increasingly provocative anti-immigrant politicians in both Europe and the United States. We examine whether the 2016 election of Donald Trump, who made illegal immigration and border enforcement a centerpiece of his campaign, reduced illegal immigration into the U.S. We exploit the fact the election result was widely unexpected and thus generated a large, overnight change in expected immigration policy and rhetoric. We compare migration flows before and after the election and find that while it reduced immigration among deported Mexicans and at least temporarily among Central Americans, it had no effect on the overall inflow of unauthorized Mexican workers.
    JEL: J15 J6 J61
    Date: 2021–06
  15. By: Fiorini, Matteo; Hoekman, Bernard; Mavroidis, Petros C; Saluste, Maarja; Wolfe, Robert
    Abstract: The WTO dispute settlement system is in crisis, following the decision of the United States to block new appointments to the Appellate Body (AB). The AB went into hibernation in December 2019, not having enough sitting members to be able to operate. What do WTO members think of the performance of WTO dispute settlement? How much do WTO members care about the existence and operation of an appeals mechanism? In this paper, we report on the results of a survey of WTO Members' perceptions of the AB and the role it plays (should play). We complement this with data on Members' revealed preferences in their use of the dispute settlement system, their intervention in WTO debates on the AB crisis and their responses to demise of the AB. The data reveal strong support for the basic design of the dispute settlement system but also that the United States is not alone in perceiving that the AB went beyond its mandate. There are substantive questions that need to be addressed if the Appellate Body impasse is to be resolved.
    Keywords: Appellate Body; Conflict resolution; Dispute Settlement; WTO
    JEL: F13
    Date: 2020–05
  16. By: Liz Ignowski; Bart Minten; Johan Swinnen; Bjorn Van Campenhout; Senne Vandevelde
    Abstract: Agricultural value chains, particularly in the developing world, have been going through drastic changes over the past decades. Differences in world market participation and access to value chain technologies might however have resulted in uneven experiences across countries. In this paper, we explore their impact on prices in the value chain, using the example of two East African countries, Ethiopia and Uganda. We develop a conceptual framework and then validate the model using unique primary price data collected at several levels in the dairy value chains in both countries. We find that prices are overall significantly lower in Uganda than Ethiopia, reflecting their respective net exporting and importing status. Moreover, despite shorter value chains, we find much more significant effects of distances from the capital (the major end destination) on milk prices in Ethiopia than in Uganda. This is seemingly linked to the widespread presence of milk chilling centers in Uganda. While it has been shown that such technology is important for milk quality, we find here that they also have the added benefit to reduce the impact of farmer’s remoteness on prices and therefore allow for more geographically extended value chains.
    Date: 2021
  17. By: Basedow, Robert; Fiorini, Matteo; Hoekman, Bernard; Yildirim, Aydin
    Abstract: EU trade policy increasingly focuses on the achievement of so-called non-trade policy objectives (NTPOs) such as the promotion of human rights or environmental protection, motivating research on the political economy determinants and effectiveness of linking of trade policy and NTPOs. This research note reports selected findings from a new expert survey of stakeholder perceptions on trade-NTPO linkage. These suggest that EU institutions' views align more with those of civil society organizations than business, but also reveal significant differences in the perceived effectiveness of trade-NTPO linkage strategies. Many stakeholder groups believe that policy instruments other than trade agreements are better tools to pursue NTPOs. These findings suggest that further research on EU trade policy and nontrade issues should consider the broader range of external policy tools available to the EU in pursuit of NTPOs and the determinants of differences in preferences for alternative policy instruments.
    Keywords: European Union; issue linkage; nontrade issues; Trade agreements
    JEL: F13
    Date: 2020–05
  18. By: Gregori, Wildmer Daniel (European Commission); Martinez Cillero, Maria (European Commission); Nardo, Michela (European Commission)
    Abstract: This study empirically investigates the extent to which firms in the European Union, once acquired through a cross-border acquisition, show different productivity levels as compared to those firms that have not been acquired. Our identification strategy relies on the combination of Propensity Score Matching and the Staggered Difference-in-Difference estimator, using firms’ balance sheet for the years 2008-2018. We find that cross-border acquisitions decrease the productivity of the acquired firms, especially in the manufacturing and services sectors, as well as in less knowledge intensive activities. Firms targeted by acquirers originating in emerging market economies also experience a negative effect on productivity.
    Keywords: Cross-border M&As, FDI, TFP, European Union, Propensity Score Matching, DiD
    JEL: D24 F23 F60 G34
    Date: 2021–05
  19. By: Christian Corniaux (UMR SELMET - Systèmes d'élevage méditerranéens et tropicaux - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Vincent Chatellier (INRAE, SMART-LERECO, Nantes); Djiby Dia (BAME, ISRA, Bel Air, Dakar); Guillaume Duteurtre (UMR SELMET - Systèmes d'élevage méditerranéens et tropicaux - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: This paper discusses the recent boom in trade of blends of skimmed milk powder & palm oil between the European Union and West Africa. Due to tensions on international markets of milk ingredients, and in response to strong local demand for dairy raw materials, imports of these "fat-filled blends" in West Africa have exceeded purchases of milk powders. Imports of blends from the EU, in particular, have quadrupled since the 2000s, reaching 324,000 tonnes in 2019. Blends of skimmed milk powder & vegetable fats now account for 40% of the total value of imports of dairy products in the region. In this context, proper labelling and information to consumers are of particular importance to avoid unfair practices. Several associations and producers' organizations also question the underlying food and economic models with potential impacts on human health, environment and rural development. Due to the weak protection of local markets, these substitutes hamper the development of local dairy farming.
    Abstract: Cette communication s'intéresse à l'essor du commerce des mélanges de poudre de lait écrémé et de matières grasses végétales (MGV) entre l'Union européenne et l'Afrique de l'Ouest. En raison des tensions qui s'expriment sur les marchés internationaux et de la forte demande locale en matières premières laitières, les importations ouest-africaines de ces « mélanges MGV » ont dépassé les achats de poudres de lait. Les importations provenant de l'UE, en particulier, ont quadruplé depuis les années 2000, atteignant 324 000 tonnes en 2019. Les mélanges MGV représentent aujourd'hui 40% de la valeur totale des importations de produits laitiers dans la région. Sont débattus ici les enjeux en termes d'étiquetage et d'information des consommateurs associés aux risques de tromperies, ainsi que les modèles alimentaires et économiques sous-jacents. Nous montrons en particulier qu'en raison de la faible protection des marchés locaux, ces substituts de produits laitiers remettent en cause les perspectives de développement de l'élevage local.
    Keywords: Dairy sector,Milk quotas,Blends of skimmed milk powder and palm oil,EU,Africa,Exports,Imports,International trade,Secteur laitier,Quotas laitiers,Mélanges de poudre de lait écrémé et de matières grasses végétales,UE,Afrique,Exportations,Importations,Commerce international
    Date: 2020–12–02
  20. By: Hoekman, Bernard; Nelson, Doug R
    Abstract: Geo-economic tensions, notably associated with the rise of China, and global collective action problems â?? climate change; the COVID-19 pandemic â?? call for international cooperation to revise and develop rules to guide both the use of domestic subsidies and responses by governments to cross-border competition spillover effects. Current WTO rules dividing all subsidies into prohibited or actionable categories are no longer fit for purpose. Piecemeal efforts in preferential trade agreements and bi- or trilateral configurations offer a basis on which to build but are too narrow in scope. Addressing spillover effects of subsidies could start with G20 countries launching a work program to mobilize an epistemic community concerned with subsidy policies, tasked with building a more solid evidence base on the magnitude, purpose and effects of subsidy policies. The need for such cooperation has become even more pressing by the COVID-19 pandemic and the associated increase in the use of subsidy programs in major economies.
    Keywords: G20; international cooperation; Spillovers; Subsidy policies; WTO
    JEL: E61 F02 F15
    Date: 2020–05
  21. By: Damioli, Giacomo (European Commission); Gregori, Wildmer Daniel (European Commission)
    Abstract: This study investigates the extent to which diplomatic relations affected merger and acquisition (M&A)activities in the EU during the years 2001–2019. Implementing a gravity model, we find a U-inverted relationship between diplomatic distance and M&A activities: (i) a worsening in diplomatic relations fosters M&As, but beyond a certain level (ii) an increase in diplomatic distance slows down M&A flows. While (ii) is in line with the dominant view found in the political relations literature, (i) suggests that cross-border acquisitions, in line with the internalisation theory, are a way for the investing firm to mitigate weak diplomatic relations’ related issues, such as access to host markets’ information and technology. These findings are confirmed especially when foreign investors target technology-intensive firms, as well as in the most recent years.
    Keywords: Diplomatic relations, Cross-border M&A, EU, Foreign location choices, Gravity model
    JEL: F21 F52 G34 P16
    Date: 2021–04
  22. By: Bhattacharyya, Ranajoy; Das, Gouranga; Marjit, Sugata
    Abstract: In this paper, we analyse the entry of a cash crop producing foreign Contract Farming (CF) subsector within the agricultural sector of a country. Entry requires a cash crop price that is substantially above the price of the food crop already being produced within the country. Entry of CF could cause ‘vanishing’ of the food-crop sector. We employ a variant of 3×3 mixed Specific Factor-Heckscher Ohlin general equilibrium model of production and trade where introduction of a new policy may lead to the emergence of a new cash-crop sector resulting in finite changes where we show the possibilities of sectoral diversification with combinations of contract farming vis-à-vis traditional agriculture under some plausible conditions. Such ramifications could (a) increase GDP; (b) give rise to adverse distributional consequences for labour, and land-owner; (c) reduce domestic production of food and increase food import and hence, (d) aggravate food insecurity. Thus, CF might imply a tradeoff between food insecurity, inequality and growth. However, either zero CF and extremely high CF are suboptimal and hence, CF cannot be substitute of non-CF agricultural sector producing Food crops. In fact, fallacy of composition shows that aggregate has a price effect so that food-crop sector never disappears. Our results seem to be consistent when compared to some empirically robust conclusions found in the literature and some secondary data available in the FAO website.
    Keywords: Demand and Price Analysis, International Relations/Trade
    Date: 2021–06
  23. By: Berlemann, Michael (Helmut Schmidt University, Hamburg); Haustein, Erik (Helmut Schmidt University, Hamburg); Steinhardt, Max F. (Free University of Berlin)
    Abstract: Slow onset climate change has the potential to cause significant migration flows. Scientists have recently made considerable efforts to quantify these flows based on empirical methods. However, the literature on international migration has failed to come to a clear conclusion as many studies found no significant effects of climate, while others did. In this paper, we aim to uncover a factor which likely contributes to the mixed picture in the literature: how migration flow data is obtained from migrant stock data. Using the influential study of Cattaneo and Peri (2016) as a workhorse, we demonstrate that the derived empirical results depend heavily on the applied method to derive migration flows. Therefore, our study reveals the necessity for future research on international migration to test the sensitivity of estimated effects to changes in the construction of migration flows.
    Keywords: climate change, emigration, economic development, migration data
    JEL: F22 J61 O15 Q54 Q56
    Date: 2021–06
  24. By: Ludovic Panon (Département d'économie)
    Abstract: Cette thèse est un recueil de trois essais dans les domaines du commerce international et de l'organisation industrielle. Les deux premiers chapitres étudient les implications macroéconomiques de l'hétérogénéité des entreprises. Dans le premier, j'utilise des données sur l'univers des firmes exportatrices françaises de produits manufacturés de 1994 à 2001 pour étudier la relation entre le commerce international et la part du travail dans le secteur manufacturier. En particulier, j'étudie comment et dans quelle mesure des changements de demande sur les marchés étrangers ont un impact sur la part du travail. Le deuxième chapitre, fruit d'un travail conjoint avec Flavien Moreau, étudie le coût des distorsions de concurrence sur la productivité agrégée. Pour ce faire, nous avons constitué une base de données sur l'identité des entreprises qui pratiquent l'entente et qui ont été sanctionnées par l'Autorité de la concurrence. Nous documentons de nouveaux faits stylisés sur les cartels et les entreprises anticoncurrentielles. Nous utilisons un modèle macroéconomique statique pour étudier le coût économique des cartels : est-il important ? Si oui, pourquoi diffère-t-il de ce qu'Arnold Harberger a révélé dans son article de 1954 ? Le troisième chapitre, co-écrit avec Florin Cucu, étudie le lien entre les politiques d'asile et la politique étrangère en utilisant des données de panel sur les demandes d'asile dans l'Union européenne de 1999 à 2017. Nous étudions ensuite les conséquences de cette relation sur les flux commerciaux internationaux dans un modèle de régression gravitaire.
    Keywords: Commerce international, part du travail, ententes, réfugiés; International trade, labor share, cartels, refugees
    Date: 2020–06–25
  25. By: Giuliano, Paola; Tabellini, Marco
    Abstract: We test the relationship between historical immigration to the United States and political ideology today. We hypothesize that European immigrants brought with them their preferences for the welfare state, and that this had a long-lasting effect on the political ideology of US born individuals. Our analysis proceeds in three steps. First, we document that the historical presence of European immigrants is associated with a more liberal political ideology and with stronger preferences for redistribution among US born individuals today. Next, we show that this correlation is not driven by the characteristics of the counties where immigrants settled or other speci c, socioeconomic immigrants' traits. Finally, we provide evidence that immigrants brought with them their preferences for the welfare state from their countries of origin. Consistent with the hypothesis that immigration left its footprint on American ideology via cultural transmission from immigrants to natives, we show that our results are stronger when inter-group contact between natives and immigrants, measured with either intermarriage or residential integration, was higher. Our fi ndings also indicate that immigrants influenced American political ideology during one of the largest episodes of redistribution in US history--the New Deal-- and that such effects persisted after the initial shock.
    Keywords: cultural transmission; Immigration; Political Ideology; Preferences for Redistribution
    JEL: D64 D72 H2 J15 N32 Z1
    Date: 2020–05
  26. By: Jan Salamoun (Department of Trade, Tourism and Languages, Faculty of Economics, University of South Bohemia In České Budějovice)
    Abstract: Fair Trade is a business model whose basic idea and goal is greater fairness in international trade with the developing world. In particular, it offers fair trading conditions that do not exploit the grower but take into account his possibilities and production costs. It prides itself on the sustainability of trade and therefore supports environmental protection in the area. An integral part of this system is the involvement of businesses as intermediaries between producers and consumers. The companies enter business processes with a clear vision aimed at orienting themselves in the area of fair trading, while others consider this to be only an opportunity for visibility. For this reason, the idea of Fair Trade has its criticisms, and like all certifications, the Fairtrade have their shortcomings. Criticism is often based on ignorance of the thing or unrealistic ideas of "how it should be to make it work". At other times, criticism of the ethical concept overlaps with the rules of a particular certification, or it blames the system for misuse of the logo by some of the merchants. The article reveals some theoretical aspects and also deals with a selected sample of companies based on a quota selection from the set, which is part of the certification company Fairtrade Czechia and Slovakia. Based on the chosen methods, we answer the research question and the verified hypothesis.
    Keywords: Process Management, Business, Fairtrade, Sustainable Consumption, Certification
    JEL: Q01 M31
    Date: 2020–08
  27. By: Florin Cucu (Département d'économie)
    Abstract: Cette thèse étudie les déterminants de la variation spatiale et de la persistance de l'activité économique. Le premier chapitre évalue l'impact du Système d’Autoroutes Inter-États sur la composition des zones métropolitaines aux États-Unis. Les estimations indiquent que chaque autoroute a entraîné une augmentation de 0,6 point de pourcentage de la part des résidents hautement qualifiés d’une ville. En utilisant un modèle spatial quantitatif, le chapitre mesure également les effets sur le bien-être associés à une suppression hypothétique des autoroutes. Les effets sont significatifs pour toutes les catégories de travailleurs. Les pertes sont néanmoins plus importantes pour les travailleurs qualifiés, vu qu’ils sont plus mobiles et paient les coûts de migration plus souvent.Le deuxième chapitre montre une forte persistance du développement en Angleterre et au Pays de Galles au cours des 800 dernières années. En utilisant des données sur l'établissement des marchés médiévaux, l'étude met en évidence une forte corrélation entre l'activité commerciale et la productivité agricole au Moyen Âge. Les régions avec des marchés prospères sont mieux développées aujourd’hui. Les résultats suggèrent que la dépendance au sentier en est l'explication la plus probable. Le troisième chapitre étudie la relation entre les politiques d'asile et les tensions internationales. L'hypothèse est que les pays de l'Union européenne acceptent davantage de réfugiés provenant d'États perçus comme des rivaux. Des données sur les demandes d'asile de 1999 à 2017 le confirment. Cela pourrait expliquer une corrélation négative entre les politiques d’asile et les importations de l'UE.
    Keywords: Infrastructure routière, migration, persistance, réfugiés; Transport infrastructure, migration, persistence, refugees
    Date: 2020–11–26
  28. By: Razin, Assaf
    Abstract: Globalization is expected to be reversed, at least partially, in the post pandemic era. The Great Financial Recession of 2008â??10 marked a historic turning point in the direction of weakening the degree of global economic integration. Now, in the post-pandemic era, policymakers appear poised to take deliberate steps to reinforce the movement toward de-globalization. At the same time, safety nets are expected to be strengthened. In this paper, we develop a model, with which we analyze central macroeconomic interactions between globalization and safety nets. We put together stylized elements of trade globalization, financial globalization, international tax competition, immigration, and welfare state, all in a two-skill, two-period stylized model, where policy (taxes and social benefits) is determined through majority voting.
    Keywords: deglobalization; social safety nets
    Date: 2020–05
  29. By: Rodríguez-Pose, Andrés
    Abstract: Two of the most influential strands in economic geography and regional studies – evolutionary economic geography and global production networks – have run on parallel tracks with limited cross-fertilization. The Regional Studies Annual Lecture 2020 paper by Henry Yeung proposes building bridges across both strands to improve our understanding of the uneven distribution and evolution of economic activity across the world. He puts forward the concept of strategic coupling as the foundation of such bridges. In this reply I argue that strategic coupling will not suffice, unless the variations in costs and incentives for engaging in networks and the different capacity of cities and regions to assimilate the benefits of innovation diffusion through networks are taken into consideration.
    Keywords: evolutionary economic geography; global production networks; strategic coupling; institutions; Taylor & Francis deal
    JEL: F23 L22 R58
    Date: 2021–06–03
  30. By: David Gaukrodger (OECD)
    Abstract: As our societies face new challenges and make new demands from policies addressing international investment, there is a new urgency to profoundly reconsider treaties addressing investment. This paper was prepared originally as background for initial inter-governmental and public discussions at the OECD about future investment treaties as well as possible alternatives. The paper surveys potential roles for treaties addressing investment in (i) contributing to sustainable development and responsible business conduct; (ii) preserving and improving investment market access and liberalisation of investment, and facilitating FDI; (iii) regulating subsidised state-owned enterprises, competition in subsidies for investment, and digitalisation; and (iv) addressing the interests of treaty-covered and other investors in reasonable legal predictability and a level playing field, together with the need for policy space and public support for treaty policy. It considers potential use of more flexible and varied remedies and implementation mechanisms. A final section briefly considers treaty policies as governments and societies confront the urgent challenge of climate change.
    Keywords: environmental law, human rights, labour law, responsible business conduct, sustainable development
    JEL: F18 F13 F21 F23 F53 F60 K23 K32 K33 K40
    Date: 2021–06–28
  31. By: Faia, Ester; Laffitte, Sebastien; Mayer, Max; Ottaviano, Gianmarco
    Abstract: We show, theoretically and empirically, that the effects of technological change associated with automation and offshoring on the labor market can substantially deviate from standard neoclassical conclusions when search frictions hinder efficient assortative matching between firms with heterogeneous tasks and workers with heterogeneous skills. Our key hypothesis is that better matches enjoy a comparative advantage in exploiting automation and a comparative disadvantage in exploiting offshoring. It implies that automation (offshoring) may reduce (raise) employment by lengthening (shortening) unemployment duration due to higher (lower) match selectivity. We find empirical support for this implication in a dataset covering 92 occupations and 16 sec- tors in 13 European countries from 1995 to 2010.
    Keywords: automation; core-task-biased technological change; horizontal specialization; offshoring; positive assortativity; two-sided heterogeneity; Wage inequality
    JEL: F16 F66 J64 O33 O47
    Date: 2020–05
  32. By: Khan, Adnan; Mrs, Sultana
    Abstract: The Bangladeshi diaspora consists of people of Bangladeshi descent who have immigrated to or were born in another country. First generation migrants may have moved abroad from Bangladesh for better living conditions, to escape poverty, to support their financial condition or to send money back to families in Bangladesh. With a total of 10 million Bangladeshis living abroad, the country has ranked fifth among top 20 countries of origin for international migrants. There is a large Bangladeshi diaspora population in Saudi Arabia. There are also significant migrant communities in various Arab states of the Persian Gulf, particularly the United Arab Emirates and Oman, where Bangladeshis are mainly classified as foreign workers. British Bangladeshis are mainly concentrated in east London boroughs Tower Hamlets and Newham; the migration to Britain is mainly linked with chain migration from the Sylhet Division. Besides the UK and Middle East, Bangladeshis also have a significant presence in the United States, Malaysia, South Africa, Singapore, and in other Western countries such as Italy, Canada, and Australia. This research paper is designed to provide an illustrated account of what kind of research has been done on these migrants at home and abroad over the past fifty years.
    Keywords: migration, expatriate, diaspora, temporary, workers, labour, literature
    JEL: J6 J60 J61 J62 J69
    Date: 2020
  33. By: Antoine Malézieux; Benno Torgler
    Abstract: Although understanding how multiculturalism shapes society is imperative in today's globalized world, insights on certain behavior domains remain limited, including those on tax compliance among domestic versus foreign taxpayers. Our meta-study of laboratory tax experiments analyzes over 50,000 tax declaration decisions by almost 5,000 subjects entailing 95 nationalities. Not only do immigrant participants exhibit signicantly less tax compliance than natives even with controls for numerous covariates, but tax compliance correlates positively with tax morale, which in turn also interacts signicantly with immigration status. Few variablesmainly linked to politicsinuenced the gap of compliance between natives and immigrants.
    Keywords: Tax evasion; Immigration; Meta-analysis
    JEL: C9 H0 H3
    Date: 2021–06
  34. 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 US Generalized System of Preferences (GSP) is accorded conditional on compliance with labor rights and leaves room for petitioning and revising the scheme upon request by interest groups. 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 under the international spotlight
    Keywords: GSP; labor standards; NGOs; wage determination
    JEL: J52 J80
    Date: 2021–04
  35. By: Woldeab, Daniel; Yawson, Robert M.; Woldeab, Irina
    Abstract: Immigration to the United States is certainly not a new phenomenon, and it is therefore natural for immigration, culture and identity to be given due attention by the public and policy makers. However, current discussion of immigration, legal and illegal, and the philosophical underpinnings is ‘lost in translation’, not necessarily on ideological lines, but on political orientation. In this paper we reexamine the philosophical underpinnings of the melting pot versus multiculturalism as antecedents and precedents of current immigration debate and how the core issues are lost in translation. We take a brief look at immigrants and the economy to situate the current immigration debate. We then discuss the two philosophical approaches to immigration and how the understanding of the philosophical foundations can help streamline the current immigration debate.
    Keywords: Immigration, multiculturalism, melting pot, ethnic identity, acculturation, assimilation
    JEL: F2 F22 J1 J10 J11 J6 J60 J61 K3 K37 O1 O15 R2 R23
    Date: 2021–03–27
  36. By: Bruce Byiers (ECDPM - European Centre for Development Policy Management); Antoine Cazals (Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres, DRM - Dauphine Recherches en Management - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique); Alfonso Medinilla (ECDPM - European Centre for Development Policy Management); Jaime de Melo (FERDI - Fondation pour les Etudes et Recherches sur le Développement International, University of Geneva [Switzerland])
    Abstract: Africa is well endowed with organizations to promote regional cooperation and integration. It has 8 African Union (AU)-recognized regional economic communities (RECs), 7 other economic organizations and 25 specialized regional organizations (ROs). On average each country is member of 3 RECs and 4 other ROs. The number of continental treaties signed by African Union member states has accelerated over the last four decades. At the same time, progress on ratifying and implementing these and their regional equivalents is slow, undermining their impacts. This has led to calls to rationalize memberships. At its 50th anniversary in 2013, the AU launched the 50year AU2063 programme, "The Africa we want, " with 15 flagship projects, heralding a renewed push towards continent-wide projects.
    Keywords: Public goods,Regional public goods,Cooperation,Regional cooperation
    Date: 2021–05–28
  37. By: Giulia Meloni; Johan Swinnen
    Abstract: Globalization transforms not just the economics of production and exchange in the world, but also the political economy of public policies. We analyze how wine regulations, and more specifically planting rights restrictions, have been affected by globalization, in particular colonial expansions of wine producing empires. We study several historic cases and find that (a) planting right restrictions and compulsory uprooting of vineyards are introduced to deal with falling wine prices as colonial wine production takes off and expands; (b) that enforcement of the restrictions and uprooting was difficult and often imperfect; and (c) that there was a strong persistence of the policies: after their introduction the restrictions remain in place for a long time (often centuries) and they are only removed after major shocks to the political economy equilibrium.
    Date: 2021–05–25

This nep-int issue is ©2021 by Luca Salvatici. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.