|
on International Trade |
| By: | Alexandra Sotiriou; Andres Rodriguez-Pose; ; |
| Abstract: | This paper explores the effects of import competition on the manufacturing sector in Chile following the implementation of the country’s two largest Free Trade Agreements (FTA) (with the USA and China). Exploiting cross-industry variation in import exposure, we analyse the effects on manufacturing sales, employment and labour productivity at the finest level of industrial classification (4 digit ISIC level). We detect an overall negative effect of increased Chinese import penetration, owing to substitution effects from low and medium tech imports and a less pronounced effect from USA imports. By introducing interaction effects, we find that the levels of foreign ownership and the export intensity of the domestic industries reverse the negative effect due to the opportunities offered via participation in global value chains. An IV strategy is applied to address standard endogeneity concerns and confirm the robustness of our estimates. |
| Keywords: | import penetration, free trade, manufacturing, Chile, China, USA |
| JEL: | F13 F14 F16 |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:2121&r= |
| By: | Spirin, Victor |
| Abstract: | Proponents of free trade contend that trade liberalization benefits all participants, regardless of whether the country is advanced or developing. There is another benefit to free trade, some economists argue, specifically for the developing nations. According to these economists, the trade-liberalizing developing country will benefit from technology transfer from advanced countries. Here we aim to provide a simple illustration that both these arguments are in direct contradiction with a basic economic optimization principle – and the canonical foundation of international trade – specialization by Ricardo’s comparative advantage. |
| Keywords: | International Trade, Comparative Advantage, Constrained Optimization, Vanek-Reinert Effect |
| JEL: | F1 F6 F63 |
| Date: | 2021–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:108548&r= |
| By: | Ana I. Sanjuán-López (Unidad de Economía Agroalimentaria y de los Recursos Naturales, Centro de Investigación y Tecnología Agroalimentaria de Aragón (CITA), Government of Aragon); Pilar Gracia de Rentería (Unidad de Economía Agroalimentaria y de los Recursos Naturales, Centro de Investigación y Tecnología Agroalimentaria de Aragón (CITA), Government of Aragon); Hugo Ferrer Pérez (Unidad de Economía Agroalimentaria y de los Recursos Naturales, Centro de Investigación y Tecnología Agroalimentaria de Aragón (CITA), Government of Aragon); George Philippidis (Unidad de Economía Agroalimentaria y de los Recursos Naturales, Centro de Investigación y Tecnología Agroalimentaria de Aragón (CITA), Government of Aragon); Emanuele Ferrari (European Commission – JRC) |
| Abstract: | Recently, African countries signed the African Continental Free Trade Agreement (AfCFTA) to provide a single continental market for goods and services with free movement of people and investments and to accelerate intra-Africa trade. African countries recognised the significance of non-tariff measures (NTMs) in achieving the AfCFTA objectives and adopted an Annex to the agreement specifically dedicated to eliminating NTMs, i.e., all those policy measures other than ordinary customs tariffs that can have an effect on trade. Although NTMs will be crucial to the success of AfCFTA, a proper estimation of the expected trade cost reductions associated with NTM eliminations on intra-African trade is lacking. This study examines the impact of NTMs on intra-African trade by exhaustively reviewing databases of previous ad-valorem equivalent (AVE) estimates of NTMs applied by African countries in agri-food products and by providing estimates of NTM trade impacts for sectors and regions of special relevance.The report finds a systematic trade-restricting effect arising from the application of both technical and non-technical measures with a tendency for the latter to be more trade-restrictive. It also finds remarkable deviations in estimated AVEs for Africa from the overall means in the sample of countries. Finally, the estimates highlight that the main hotspots for NTMs in intra-African trade would be in sectors like rice and sugar, while the main policy actions need to address non-technical measures. |
| Keywords: | NTMs; Africa; trade; agriculture; |
| JEL: | F13 F17 Q17 N57 |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc125378&r= |
| By: | Oyegoke, Ebunoluwa O.; Aras, Osman Nuri |
| Abstract: | In most developing countries, Foreign Direct Investment (FDI) serves as a means of earning foreign reserves via investments, businesses and foreign aids from advanced countries. FDI is considered a valuable source of finance and capital formation, Technology-Transfer and know-how, as well as a viable medium for trade among countries. The Spillover effect also allows for the transfer of innovations and invention to the receiving countries, one of which Nigeria belongs. According to the requirement for accelerated growth in association with the Sustainable Development Goals is not completely clear, however, for economies to experience sustainable and inclusive development, cross-border trade is paramount. Presently, Nigeria is the first host economy of FDI in Sub-Saharan Africa, and the third in the continent. Recently, Nigeria has witnessed several trade policies which aim at diversifying the economy away from oil revenue. These policies are focused on improving the industrial sector, and of course, results in austerity. In 2018, the total FDI inflow to the country was around USD 1.9 billion, while in 2017, FDI inflow was around USD 3.5 billion, showing a decrease due to the consequence of the austerity measures imposed in 2018. At the third quarter of 2019, the FDI was only 3.37% (USD 200.08 million) of the total capital inflow for the period. Traditionally, FDI is designed to improve the recipient economies thereby enhancing economic growth and development, it is in this view that many developing countries attract foreign investors with the hope of strengthening their economy by increasing the foreign investment portfolio. However, most empirical analysis of the impact of FDI on economic growth advises otherwise, hence, a controversy. According to the existing literature, some empirical results found a negative relationship between FDI and economic growth, while others opined that as FDI increases, it results in a boost of output productivity, hence a positive relationship between the variables. Therefore, this study contributes to the existing literature by investigating the effects of FDI both on the owner, and the host country, using Nigeria as a case study. |
| Keywords: | Foreign Direct Investment, Economic Growth, Sustainable Development Goals, Nigeria. |
| JEL: | F63 |
| Date: | 2021–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:108348&r= |
| By: | Konrad Buchardi (Stockholms universitet); Thomas Chaney (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Tarek Hassan (BU - Boston University [Boston]) |
| Abstract: | We use 130 years of data on historical migrations to the United States to show a causal effect of the ancestry composition of US counties on foreign direct investment (FDI) sent and received by local firms. To isolate the causal effect of ancestry on FDI, we build a simple reduced-form model of migrations: Migrations from a foreign country to a US county at a given time depend on (i) a push factor, causing emigration from that foreign country to the entire United States, and (ii) a pull factor, causing immigration from all origins into that US county. The interaction between time-series variation in origin-specific push factors and destination-specific pull factors generates quasi-random variation in the allocation of migrants across US counties. We find that doubling the number of residents with ancestry from a given foreign country relative to the mean increases the probability that at least one local firm engages in FDI with that country by 4 percentage points. We present evidence that this effect is primarily driven by a reduction in information frictions, and not by better contract enforcement, taste similarities, or a convergence in factor endowments. |
| Keywords: | Migrations,Foreign direct investments,International trade,Networks,Social ties |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03260191&r= |
| By: | David Kohn; Fernando Leibovici; Michal Szkup |
| Abstract: | We study the role of financial development on the aggregate and welfare implications of reducing trade barriers on imports of physical capital and intermediate inputs. We document that financially underdeveloped economies feature a slower response of real GDP, consumption, and investment following trade liberalization episodes that improve access to imported production inputs. To quantify the role of financial development, we set up a quantitative general equilibrium model with heterogeneous firms subject to financial constraints and estimate it to match salient features from Colombian plantlevel data. We find that the adjustment to a decline of import tariffs on physical capital and intermediate inputs is significantly slower in financially underdeveloped economies in line with the empirical evidence. These effects reduce the welfare gains from trade liberalization and make them more unequal across agents. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ioe:doctra:553&r= |
| By: | Salvador Gil-Pareja (Dep. Applied Economics II, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain). INTECO Research Unit); Rafael Llorca-Vivero (Dep. Applied Economics II, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain). INTECO Research Unit); Jordi Paniagua (Dep. Applied Economics II, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain)) |
| Abstract: | Headquarters (HQs) provide a wide range of services, playing a fundamental role in Foreign Direct Investment (FDI). We use the structural gravity equation to investigate the effect of regional HQs on three dimensions of FDI (number of foreign firms, capital investment, and jobs) at the country-pair- sector level. Furthermore, we explore two underlying mechanisms that help explain this relationship: financial constraints and informational costs and uncertainty. We find a positive effect of regional HQs on FDI, as well as inter-country and inter-sector spillovers. Our results are robust, accounting for HQ intensity, domestic investment flows in the three dimensions and endogeneity tests. |
| Keywords: | FDI; headquarters; spillovers; intangible capital; credit constraints; structural gravity |
| JEL: | F20 F21 F23 |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:eec:wpaper:2107&r= |
| By: | ONOSE, Okpeku Lilian; Aras, Osman Nuri |
| Abstract: | The export-led growth hypothesis states a positive relationship between the growth of exports and long-run economic growth. This study examines the validity of the export-led growth hypothesis of services exports in 5 emerging economies, including Brazil, India, Nigeria, China, and South Africa (BINCS), for the period of 1980-2019. The study employs the panel mean group autoregressive distributed lag (ARDL) procedure to identify a causal relationship between services exports and gross domestic product (GDP) per capita. The findings show that the export-led growth hypothesis in services only has a positive effect on economic growth in the short run while other variables, including foreign direct investment (FDI), gross capital formation, and labour, increase economic growth in the long run. Hence, the emerging countries should focus more on internal investment to boost growth in the long and short run. |
| Keywords: | Exports, Economic Growth, Export-Led Growth, Services Exports, Emerging Economies |
| JEL: | F43 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:108350&r= |
| By: | Fabien Candau (TREE - Transitions Energétiques et Environnementales - UPPA - Université de Pau et des Pays de l'Adour - CNRS - Centre National de la Recherche Scientifique); G Guepie (UNECA - United Nations Economic Commission for Africa - United Nations); R Kouakou (Université Alassane Ouattara) |
| Abstract: | This article puts into question the use of the gravity equation to analyze Regional Trade Agreements (RTAs) in Africa. By surveying the field qualitatively and quantitatively (via a meta-analysis) and by leading our own estimations (with bilateral fixed effects, exporter-time and importer-time effects) on different trade flow databases (UN COMTRADE, DOTS and BACI), we find that the RTAs elasticity of trade in Africa are unreliable due to their unrealistic high level. By introducing intranational trade and bilateral trends into the regression specification, we show that the coefficient of RTAs in Africa are either not significant or drastically reduced. Only COMESA is still significant. We then use a simple general equilibrium model to compare the results obtained with these new elasticities regarding the terms of trade and welfare for members of the COMESA. We find strong trade creation effects that are largely compensated by trade diversion. The welfare gain of COMESA is for most members very low (less than 0.2% of growth). |
| Date: | 2021–06–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03257448&r= |
| By: | Portes, Jonathan (King's College London) |
| Abstract: | I review trends in migration to the UK since the Brexit referendum, examining first the sharp fall in net migration from the EU that resulted, and then the recent more dramatic exodus of foreign-born residents during the covid-19 pandemic. I describe the new post-Brexit system, and review studies which attempt to estimate both the impact on future migration flows and on GDP and GDP per capita. Finally, I discuss the wider economic impact of the new system and some of the policy implications. |
| Keywords: | immigration, Great Britain, productivity |
| JEL: | E24 J24 J61 M53 |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14425&r= |
| By: | Gilberto Libanio (CEDEPLAR/UFMG); Diana Chaib (CEDEPLAR/UFMG) |
| Abstract: | Taking into account the increasing competition between Korea and China in international markets, the proposed study aims to investigate the competition between the two countries for export markets in Latin America, between 2001 and 2019. The paper builds an index of exports quality, based on the classification of exports by technological intensity: primary products, resource-based manufactures, low-tech, medium-tech and high-tech manufactures. Besides that, we calculate an index of competition between Korea and China in Latin American markets, for the period. Then, we estimate an exports function for Korean exports to Latin America by using dynamic panel-data analysis, taking the index of competition, the Chinese exchange rate, and Latin American GDP as explanatory variables. The results suggest a negative impact of the Chinese exchange rate and of competition between China and Korea on Korean exports and a positive impact of the Latin American countries’ GDP on Korean exports. |
| Keywords: | exports, exchange rate, China, Korea, panel data |
| JEL: | F14 O33 |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:cdp:texdis:td632&r= |
| By: | Chen, Gang (Cardiff Business School); Dong, Xue (Zhejiang University of Finance and Economics); Minford, Patrick (Cardiff Business School); Qiu,Guanhua (Cardiff Business School); Xu, Yongdeng (Cardiff Business School); Xu, Zequn (Cardiff Business School) |
| Abstract: | We set up two rival Computable General Equilibrium (CGE) models of world trade, one based on classical theories of comparative advantage, the other based on recent gravity theories. We have tested them by indirect inference on the time-series of trade facts for five major countries or country blocs: the UK, the US, China and the EU. The UK is a small enough economy for the rest of the world's behaviour to be treated as exogenous, so we test the UK model with this held constant; the other countries/blocs are large so we test their model by a `part of model' test in which the other world variables are simulated by a reduced form VAR of the unknown true world model.. We show by Monte Carlo experiments that these tests have high power. Our findings are that the Gravity version of the world model is rejected strongly for two of these country cases, but passes the test for the other two. By contrast the Classical model is comfortably accepted in all cases; our power experiment implies that this world model is very likely to be close to the truth and should therefore be used for policy analysis. The policy message of the classical model is that protection is damaging to welfare; this includes protection by customs union, where even though some members may gain, general welfare is reduced. |
| Keywords: | Pseudo-true inference, DSGE models, Indirect Inference; Wald tests, Likelihood Ratio tests; robustness |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:cdf:wpaper:2021/14&r= |
| By: | Schmidt, Emily; Fang, Peixun |
| Abstract: | The onset of the COVID-19 pandemic has presented a unique challenge to governments across the globe, reinforcing the need to improve understanding of domestic and international trade trends to provide more informed options for policy response. During the last several months, IFPRI has been analyzing a variety of Papua New Guinea (PNG) national and global datasets with the goal of expanding analytical tools to evaluate potential production shortfalls and food price shocks, and their associated impacts on household food security and livelihoods. This research note focuses on agri-food import and export trends during the last two decades to better evaluate potential changes in related import demand and export potential in PNG. In doing so, this research note informs an upcoming economy-wide multi market model analysis that will model a variety of potential shocks to household welfare to identify policies to manage potential ensuing food security threats. PNG’s growth in international agri-food trade (both export and import) will continue to be important to overall food security outcomes among rural and urban households. Rural households that produce key export cash-crops (e.g., coffee, cocoa, palm oil) depend on the cash economy to supplement overall food consumption, while urban households depend on rice and other agri-food imports (as well as domestic goods) for consumption. Agri-food imports are also contributing to important increases in the availability of protein-dense foods, with the value of poultry imports growing, on average, 30 percent per capita per year from 2001 – 2016. Although PNG’s agri-food import data suggest a greater demand for higher value food items such as animal-sourced foods, the total import value of ultra-processed foods, such as sugary drinks, are also increasing rapidly within PNG. The profitability and growth of agricultural exports and imports are driven by several factors, including levels of public investment in infrastructure, weather and climate shocks, security and political stability, and conditions in the world market. Government economic policies, including exchange rate, trade and price policies, also heavily influence agricultural trade. Policy to promote and facilitate domestic movement of goods, as well as macro-economic policies that influence the relative price of tradable to non-tradable goods (the real exchange rate) should be managed appropriately to support and incentivize greater agri-food production and trade. These policies could also be paired with an expanded set of education programs that integrate nutrition-sensitive information to address current increases in demand and consumption of high-saturated and sugary processed goods, of which total import values are rapidly increasing in PNG. Finally, a greater portfolio of organized databases, analytical tools and policy resources are warranted to facilitate real-time policy analysis that can inform key development investments and initiatives. |
| Keywords: | PAPUA NEW GUINEA; OCEANIA; agrifood systems; trade; trends; dietary diversity; obesity; nutrition; overweight; international trade; agrifood trade |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:2028&r= |
| By: | Gong, Yundan; Hanley, Aoife |
| Abstract: | Underpinning China's technological advancement are the twin-engines of exports and innovation. To better understand China's meteoric economic transformation, we explore the extent to which new products are triggered by exports (direct effects) and by exposure to other exporters (indirect effects). Our methodology (generalized propensity score model) tackles two sources of selectivity bias - at the level of the firm and neighbourhood. Given that production is highly specialized and localized, it would be unusual if firms failed to learn from exposure to local exporters. Our findings reveal an overwhelmingly positive direct effect of exports on new product introductions. Also, a more modest spillover effect. Interestingly, firms with a reduced need to innovate (processing exporters) can also appropriate export spillovers. Our findings have implications for other developing countries seeking to maximise exporting in economic clusters, promoting innovation and ultimately growth. |
| Keywords: | export and innovation,export spillovers,Generalized Propensity Score |
| JEL: | C38 D22 O12 O33 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:kcgwps:24&r= |
| By: | Dorothee Hillrichs (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)); Gonzague Vannoorenberghe (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)) |
| Abstract: | This paper develops a novel method to estimate inequality within a country based on what it imports. If preferences are non-homothetic, rich and poor individuals in a country have different consumption profiles. Observing imports can thus inform us about the income distribution in a country. The global availability of trade data allows us to estimate inequality using the same transparent and comparable method for a large sample of countries over time. Compared to conventional data, we feature an especially good coverage of developing countries. We provide a number of robustness checks and cross-validation exercises to gauge the performance of our method. |
| Keywords: | International trade, Inequality, Non-homothetic preferences |
| JEL: | F14 D63 |
| Date: | 2021–06–23 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvir:2021014&r= |
| By: | Demaria Federica (CREA - Consiglio per la Ricerca in Agricoltura e l’analisi dell’economia agraria); Sophie Drogue (UMR MoISA - Montpellier Interdisciplinary center on Sustainable Agri-food systems (Social and nutritional sciences) - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - IRD - Institut de Recherche pour le Développement - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - 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); Pasquale Lubello (UMR MoISA - Montpellier Interdisciplinary center on Sustainable Agri-food systems (Social and nutritional sciences) - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - IRD - Institut de Recherche pour le Développement - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - 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: | In this article, we investigate how pest risk management protocols may affect trade flows of fresh apples. We apply our analysis to two major players in the international trade of fresh apples: France and Chile. These two countries have been chosen because they are among the world's leading apple exporters and although they have similar market shares, they differ in terms of destination markets, seasonality, local conditions and export strategy. In order to assess the impact of pest risk management protocols on international trade of apples from France and Chile, we introduce in a gravity equation beside the traditional variables, a score able to measure their complexity. The results are interesting in the sense that even if the score for France and Chile by main trading partners are rather close, we found that French apples exporters would be more impacted by pest risk management protocols than their Chilean counterparts. |
| Keywords: | SPS measures,International trade,Gravity Modelling,Apples,France,Chile |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03259289&r= |
| By: | Catherine Gagnon; Jason Gagnon |
| Abstract: | The world is increasingly facing a technologically changing employment landscape and such changes are directly affecting the future demand for skills. For regional economies built on labour migration, the impending changes will affect migrants and their families, their countries of origin and the recruitment systems they are attached to – and ultimately disrupt the development benefits of migration. This paper investigates how the future of the employment landscape will affect migration within the Abu Dhabi Dialogue, a regional consultative process for migration in Asia. It investigates the impending changes in the demand for skills in countries of destination, how such changes will affect migration processes and whether countries of origin are ready for the changes. It provides recommendations on how regional consultative processes can foster dialogue between key actors from both countries of origin and destination to better navigate future changes and ensure a smooth transition. |
| Keywords: | employment, future of work, international migration, labour migration, regional co-operation, skills |
| JEL: | F22 O15 J24 J61 F66 |
| Date: | 2021–07–05 |
| URL: | http://d.repec.org/n?u=RePEc:oec:dcdaab:40-en&r= |
| By: | Lutz Kilian; Nikos Nomikos; Xiaoqing Zhou |
| Abstract: | Since the 1970s, exports and imports of manufactured goods have been the engine of international trade and much of that trade relies on container shipping. This paper introduces a new monthly index of the volume of container trade to and from North America. Incorporating this index into a structural macroeconomic VAR model facilitates the identification of shocks to domestic U.S. demand as well as foreign demand for U.S. manufactured goods. We show that, unlike in the Great Recession, the primary determinant of the U.S. economic contraction in early 2020 was a sharp drop in domestic demand. Although detrended data for personal consumption expenditures and manufacturing output suggest that the U.S. economy has recovered to near 90% of pre-pandemic levels as of March 2021, our structural VAR model shows that the component of manufacturing output driven by domestic demand had only recovered to 57% of pre-pandemic levels and that of real personal consumption only to 78%. The difference is mainly accounted for by unexpected reductions in frictions in the container shipping market. |
| Keywords: | Merchandise trade; container; shipping; manufacturing; consumption; COVID-19; supply chain; recession; recovery; globalization |
| JEL: | E32 E37 F47 F62 |
| Date: | 2021–06–17 |
| URL: | http://d.repec.org/n?u=RePEc:fip:feddwp:92810&r= |
| By: | Askandarou Diallo (LEO - Laboratoire d'Économie d'Orleans - UO - Université d'Orléans - Université de Tours - CNRS - Centre National de la Recherche Scientifique); Luc Jacolin (Banque de France - Banque de France - Banque de France); Isabelle Rabaud (LEO - Laboratoire d'Économie d'Orleans - UO - Université d'Orléans - Université de Tours - CNRS - Centre National de la Recherche Scientifique) |
| 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). |
| Keywords: | Financial development,Domestic investment,Foreign direct Investment,Crowding-in/crowding-out effects |
| Date: | 2021–06–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03259551&r= |
| By: | Richard A. Brecher (Department of Economics, Carleton University); Zhihao Yu (Department of Economics, Carleton University) |
| Abstract: | This paper shows that a high-wage country might reduce its unemployment by trading with a low-wage economy,despite popular predictions to the contrary. We demonstrate this possibility in a Heckscher-Ohlin-Samuelson type of model with two countries, which differ only because one of them has a binding minimum-wage constraint and a technological improvement that (despite the heightened wage) creates a comparative advantage in the labor-intensive good. Under these circumstances, the minimum-wage economy will experience an unemployment reduction when it trades with a low-wage counterpart. This theoretical result is consistent with some recent empirical estimates. |
| Keywords: | Trade, Unemployment, Minimum wage, Country-specific technology |
| JEL: | F16 |
| Date: | 2021–05–14 |
| URL: | http://d.repec.org/n?u=RePEc:car:carecp:21-04&r= |
| By: | Eppinger, Peter S.; Kukharskyy, Bohdan |
| Abstract: | Firm integration is fundamentally shaped by contractual frictions. But do better contracting institutions, reducing these frictions, induce firms to be more or less deeply integrated? To address this question, this paper exploits unique micro data on ownership shares across more than 200,000 firm pairs worldwide, including domestic and cross-border ownership links. We uncover a new stylized fact: Firms choose higher ownership shares in subsidiaries located in countries with better contracting institutions. We develop a Property-Rights Theory of the multinational firm featuring partial ownership that rationalizes this pattern and guides our econometric analysis. The estimations demonstrate that better contracting institutions favor deeper integration, in particular in relationship-specific industries. |
| Keywords: | firm integration,contracting institutions,multinational firms,Property-Rights Theory,ownership shares |
| JEL: | F21 F23 D02 D23 L14 L23 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tuewef:148&r= |
| By: | Novotná, Tereza |
| Abstract: | The paper examines the question how the EU and other countries who are in a similar position of "being caught between the US and China", such as South Korea, will shape their relationship with China and how their strategies complement, or contradict, the policies pursued by the US under the Trump and Biden Administrations. Even though Donald Trump has been more vocal in his bid to oppose China, the paper argues that there might be more continuity between Biden and Trump than Biden and Obama and the other Democratic predecessors. The second part of this paper investigates how the EU and South Korea interact with China's pre- and postCovid19 policies such as the Belt and Road Initiative (BRI). The paper explores how BRI has been countered by various forms of connectivity by Brussels and Seoul, how BRI fits within today's geopolitical landscape and whether and where there is any space for creating synergies between the EU and South Korea to offset it. Furthermore, the paper looks at other types of actions, such as the EU-China investment agreement (CAI) and human rights sanctions and how Beijing responded to these EU initiatives. The paper argues that a combination of softand hard-power approaches which Brussels have put forward towards Beijing may in the end work well for the EU as well as the US. The paper concludes by suggesting policy areas where cooperation rather than confrontation between all the actors is possible, such as health, trade, climate action and people-to-people exchanges. |
| Keywords: | EU foreign policy,connectivity,Korean peninsula,China,United States,Covid19 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:opodis:202111&r= |
| By: | Ondrej Schneider (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic) |
| Abstract: | This paper examines migration trends in the European Union since the enlargements of 2004-2007, which brought 100 million citizens of eleven Central and Eastern European countries into the EU. We examine country- and regional-level data on migration trends and show how European integration depleted the labor force in new member countries. Several of them lost 10% of their population since 2006, most of it via negative net migration. In 2019, 18% of Romanians, 14% of Lithuanians, 13% Croats, and Bulgarians lived in another EU country. The quantitative analysis shows that migration contributed positively to regional convergence, as every percentage point of net migration increased GDP per capita by roughly 0.01% and reduced unemployment by 0.1-0.2 percentage points. Further analysis will be needed to disentangle aggregate migration effects to quantify its impact on regions that lose their population via migration. |
| Keywords: | migration, labor markets, convergence, European Union |
| JEL: | F22 F66 J61 O15 R11 R23 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2021_23&r= |
| By: | David Chilosi (King's College London); Stefan Nikolić (Bocconi University) |
| Abstract: | This article exploits the creation of a paradigmatic multi-ethnic state, Yugoslavia, to examine if, to what extent, and why the effect of ethnic ties on trade costs changes over time. We compile and examine a panel of over 550,000 inter-urban price gaps spanning the area of Yugoslavia in the decades before and after the Yugoslav unification of 1918. Controlling for observable trade costs, we find that crossing the border between Serbia and Austria-Hungary significantly increased price gaps before the First World War. Ethno-religious differences explained a large share of this border effect in pre-unification Yugoslavia, but their influence vanished over time. This decline began about twelve years before the unification, and is visible both in city-pairs that were separated by the pre-war border and in those that were not. These patterns suggest that nation-building, rather than a weakening incentive to rely on private order institutions, was the main unifying factor. |
| Keywords: | border effect, ethnicity, market integration, nation-building, trade costs |
| JEL: | F14 F15 F52 N7 N9 Z12 Z13 |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:hes:wpaper:0214&r= |
| By: | Isaac K. Ofori (University of Insubria, Varese, Italy) |
| Abstract: | A conspicuous lacuna in the literature on Sub-Saharan Africa (SSA) is the lack of clarity on variables key for driving and predicting inclusive growth. To address this, I train the machine learning algorithms for the Standard lasso, the Minimum Schwarz Bayesian Information Criterion (Minimum BIC) lasso, and the Adaptive lasso to study patterns in a dataset comprising 97 covariates of inclusive growth for 43 SSA countries. First, the regularization results show that only 13 variables are key for driving inclusive growth in SSA. Further, the results show that out of the 13, the poverty headcount (US$1.90) matters most. Second, the findings reveal that ‘Minimum BIC lasso’ is best for predicting inclusive growth in SSA. Policy recommendations are provided in line with the region’s green agenda and the coming into force of the African Continental Free Trade Area. |
| Keywords: | Economic Integration, Financial Deepening, GMM, MENA, Globalisation, Inequality, Poverty |
| JEL: | F14 F15 F6 I3 O53 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:exs:wpaper:21/044&r= |
| By: | Valentina DI IASIO; Ernest MIGUELEZ |
| Abstract: | This study investigates whether high-skilled immigration in a sample of OECD countries fosters technological diversification in the migrants' countries of origin. We focus on migrant inventors and study their role as vectors of knowledge remittances. Further, we particularly analyze whether migrants spark related or unrelated diversification back home. To account for the uneven distribution of knowledge and immigrants within the host countries, we break down the analysis at the metropolitan area level. Our results suggest that inventors' diasporas have a positive effect on the home countries' technological diversification, particularly for developing countries and technologies with less related activities around - thus fostering unrelated diversification. |
| Keywords: | high-skilled migrants, diversification, relatedness, unrelatedness, technological development |
| JEL: | O31 O33 F22 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:grt:bdxewp:2021-13&r= |
| By: | Atisha Ghosh (Department of Economics, University of Warwick); Ben Zissimos (Department of Economics, University of Exeter) |
| Abstract: | This paper provides the first economics-based rationale for the purpose of naturalization. It presents a new political-economy model of immigration featuring a hold-up problem between the government and capital owners over immigration policy, that causes under-investment in capital. Naturalization plays the role of an institution that the government can use to ‘tie its hands’ to the presence of naturalized immigrants, partially resolving the hold-up problem. The model is used to explain the Koopmans-Michalowski paradox: that while dictatorships are more open in terms of policies towards immigrants, democracies are more open in terms of extending immigration rights through naturalization. |
| Keywords: | hold-up problem, immigration policy, institution, migration, naturalization |
| JEL: | D02 F22 J61 O43 P16 |
| Date: | 2021–06–02 |
| URL: | http://d.repec.org/n?u=RePEc:exe:wpaper:2101&r= |
| By: | Dall’erba, Sandy (Dept. of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign); Chagas, André (Departamento de Economia, Universidade de São Paulo); Ridley, William (Dept. of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign); Xu, Yilan (Dept. of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign); Yuan, Lilin (School of Economics, Nankai University, China) |
| Abstract: | The difference-in-difference (DID) framework is now a well-accepted method in quasi-experimental research. However, DID does not consider treatment-induced changes to a network linking treated and control units. Our instrumental variable network DID methodology controls first for the endogeneity of the network to the treatment and, second, for the direct and indirect role of the treatment on any network member. Monte Carlo simulations and an estimation of the drought impact on global wheat trade and production demonstrate the performance of our new estimator. Results show that DID disregarding the network and its changes leads to significant underestimates of overall treatment effects. |
| Keywords: | International Trade; Climate Change; Crop Yield. |
| JEL: | C21 F14 Q54 |
| Date: | 2021–07–02 |
| URL: | http://d.repec.org/n?u=RePEc:ris:nereus:2021_005&r= |
| By: | Ofori, Isaac Kwesi |
| Abstract: | The debate on the need for Sub-Saharan African (SSA) countries to foster inclusive growth has intensified following the coming into force of the African Continental Free Trade Area (AfCFTA), and the emergence of the coronavirus pandemic. A conspicuous lacuna in the literature is a lack of rigorous empirical work(s) exploring: (1) the joint effect of economic integration and resource allocation, and (2) social equity policies on inclusive growth in SSA. Using data from the World Bank’s World Development Indicators and the Global Consumption and Income Project (1980–2019) for 43 SSA countries, I provide evidence robust to several econometric techniques the fixed-effect, random-effect, and the system generalized method of moments estimators to show that: (1) though economic integration induces inclusive growth, the effect is higher in the presence of greater financial deepening and productive government expenditure; (2) relative to economic integration, social equity policies are rather remarkable in enhancing inclusive growth. Policy recommendations are provided in line with the AfCFTA and the reversals of welfare gains due to the coronavirus pandemic. |
| Keywords: | AfCFTA,Economic Integration,Financial Deepening,Globalisation,Inclusive Growth,Sub-Saharan Africa,Social Protection,Social Inclusion |
| JEL: | E6 F14 F15 F6 H5 O55 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:235483&r= |
| By: | Panda, Jagannath P. |
| Abstract: | Despite the political differences, China and India are in an interdependent trade relationship. Both major powers are each other's largest trading partner. Nevertheless, there is competition between the two countries for supremacy in the Indo-Pacific. India's democratic system and rules-based regulatory policies promote India's rise while standing in the way of China's rise and destabilizing the trade partnership. In addition, the Indian government strongly opposes the BRI. Although competition from the U.S. and India is increasingly pressuring the Chinese government, KpCh is simultaneously responding to the recent Covid-19 pandemic with sovereignty and offering assistance to many countries. That follows Xi's goal to build a strong, sovereign Chinese state that is a global leader and no longer relies on bilateral agreements (such as with India). |
| Keywords: | BRI Diplomacy,India,Foreign Policy |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:opodis:202112&r= |
| By: | Bernhard H. Wittek; Samuel Muehlemann |
| Abstract: | The eastward enlargement rounds of the European Union (EU) between 2004 and 2007 represent a broad regulatory expansion of the European labor market that facilitated the recruitment of individuals from new member states. We focus on the effects of EU enlargement on human capital accumulation and wages in Germany. The analysis employs linked employer-employee data from 2004 to 2017 to investigate the association between the immigration of apprentices from new eastern and central European member states and wages in the German labor market. Descriptive statistics reveal a clear and continuous increase in the number of foreign apprentices from new member states in the years following the removal of transitional restrictions. We find strong positive selection effects, as these immigrants were better educated and subsequently employed in higher-paying establishments compared to individuals who entered the German apprenticeship market prior to EU enlargement. Moreover, the study provides the first extensive evidence of apprentice wage developments in the context of immigration. As apprenticeship graduates eventually become skilled workers, we also analyze indirect effects of migration on the labor market, highlighting the temporal dimension of considerations around the substitutability between foreign and domestic workers. |
| Keywords: | wages, immigration, vocational education and training, apprenticeship, firm-sponsored training |
| JEL: | J24 J31 J61 M53 |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:iso:educat:0184&r= |
| By: | Mathias Hoffmann; Toshihiro Okubo |
| Abstract: | We exploit the natural experiment of Japan’s opening to international trade to examine how comparative advantage can shape a country’s long-run path towards financial development. In the late 19th century, many of Japan’s prefectures had a natural comparative advantage in silk reeling. Producing silk for export required access to finance. At the same time, for technological reasons, borrower-quality in the silk reeling industry was notoriously hard to assess. Silk exporters overcame these frictions by forming local cooperative banks. We show that in the ancient silk prefectures, local cooperative banks continued to dominate local banking markets for over a century while bigger, country-wide banks came to dominate in other regions. By the late 20th century, the silk prefectures are indistinguishable from other regions in terms of their general level of financial development. However, our results suggest that they were effectively less financially integrated with the rest of the country. Hence, comparative advantage in silk favored the emergence of a banking-system dominated by small relationship lenders. But due to the local nature of these lenders, it also caused long-term geographical segmentation in banking markets. |
| Keywords: | Comparative advantage, financial development, financial integration, Japan, banking history, trade credit, export finance, silk industry, relationship lending |
| JEL: | F15 F30 F40 G01 N15 N25 O16 |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:387&r= |
| By: | Cerqua, Augusto; Zampollo, Federico |
| Abstract: | We investigate the influence of anti-immigrant parties on foreigners' location choices in Italy. Considering municipal elections from 2000 to 2018, we create a database that includes a scientific-based classification on the anti-/pro-immigration axis of all Italian political parties based on experts' opinions. Via the adoption of a regression discontinuity design, we find that the election of a mayor supported by an anti-immigrant coalition significantly affect immigrants' location choices only when considering the most recent years. This finding does not appear to be driven by the enactment of policies against immigrants but by an 'inhospitality effect', which got stronger over time due to the exacerbation of political propaganda at the national and local level. |
| Keywords: | immigration,political parties,regression discontinuity design |
| JEL: | D72 J61 C13 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:876&r= |
| By: | Isaac K. Ofori (University of Insubria, Varese, Italy); Mark K. Armah (University of Cape Coast, Cape Coast, Ghana); Emmanuel E. Asmah (University of Cape Coast, Cape Coast, Ghana) |
| Abstract: | Policy recommendations for building resilient and all-inclusive societies post COVID-19 pandemic continue to dominate the media and research landscapes. However, rigorous empirical content backing such claims, particularly, on both poverty and income inequality, is hard to find. Motivated by the bleak outlook of the Middle East and North Africa (MENA) region, as driven primarily by the floundering hydrocarbon sector, vulnerable employment, and low foreign direct investment, we analyse the poverty and income inequality effects of globalisation and resource allocation in the region. Using data from the World Bank’s Poverty and Equity Database for the period 1990–2019, we provide estimates robust to several econometric techniques the pooled least square, fixed effect, random effect, and the system generalized method of moments estimators to show that: (1) while economic globalisation reduces both poverty and income inequality, social globalisation matters only for income inequality in MENA; (2) economic globalisation is remarkable in reducing income inequality through resource allocation. Policy recommendations are provided in the light of the geopolitical fragility and rise in social globalisation of the region. |
| Keywords: | Economic Integration, Financial Deepening, GMM, MENA, Globalisation, Inequality, Poverty |
| JEL: | F14 F15 F6 I3 O53 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:exs:wpaper:21/043&r= |
| By: | Michael Tyrala (Postdoctoral Fellow, Institute of Emerging Market Studies; The Hong Kong University of Science and Technology) |
| Abstract: | Offshore tax evasion and avoidance represent a serious threat to the financial and reputational integrity of the BRI. Most BRI countries are not party to either of the two global standards for financial and tax transparency, which leaves them particularly vulnerable to the threat. China's single-minded focus on reducing tax frictions for BRI cross-border investment has led it to emphasize other tax priorities rather than financial and tax transparency, further exacerbating the threat. China should give high priority to financial and tax transparency in BRI countries, and lead the way by going beyond the two global standards wherever appropriate, such as through public disclosures and extensive non-reciprocal sharing of information. |
| Keywords: | Belt and Road, China, Financial Development, Global Economy |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:hku:briefs:202039&r= |
| By: | Tommaso Faccio (Nottingham University Business School); Sarah Godar (Charles University & Berlin School of Economics and Law); Patr Jansky (Charles University, Prague, Czech Republic); Oliver Seabarron (University of Sheffield and Tax Justice Network) |
| Abstract: | By exploiting country-by-country reports (CBCRs) prepared according to the OECD BEPS Action 13´s minimum standards and voluntarily published by multinational corporations (MNCs), we show that the CBCR data can be used to identify how much MNCs pay in taxes and where, as well as how important tax havens and profit shifting are. The largest, hand-collected sample of these CBCRs combines global information from ten MNCs, which are special not only in terms of tax transparency, by being the only MNCs to publish their CBCR, but also in terms of industry composition, with a half of them in the extractive industries, and - perhaps, therefore - the observed tax characteristics. Specifically, we observe that the worldwide effective tax rates of our sample MNCs are higher on average than our comparison estimates based on the aggregate data for large MNCs published in 2020. We also find that the sample MNCs report slightly more profits in tax havens on average than many large MNCs, although most of the sample MNCs are far below that average. We further find some indication of profit shifting as the sample MNCs´ profits in tax havens are much higher than their economic activity suggests and we estimate a non-linear relationship between profits and effective tax rates, which is negative up to effective tax rates of around 30%. We highlight the differences across countries and MNCs by presenting country-level results, both for the whole sample and for specific MNCs, but CBCR data for even more individual MNCs would be needed to test for any systematic, MNC-specific determinants behind these differences. |
| Keywords: | multinational corporation; country-by-country reporting; effective tax rate; profit shifting; tax haven |
| JEL: | F23 H25 H26 |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2021_22&r= |