nep-int New Economics Papers
on International Trade
Issue of 2021‒07‒26
thirty-two papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Modelling Tariffs in TINFORGE – a Methodology Report By Anke Mönnig; Dr. Marc Ingo Wolter
  2. The impact of trade on R&D: Evidence from UK firms By S, Minkyu.
  3. Exports “brother-boost†: the trade-creation and skill-upgrading effect of Venezuelan forced migration on Colombian manufacturing firms By Carlo Lombardo; Leonardo Peñaloza-Pacheco
  4. How Do Immigrants Promote Exports? By Gianluca Orefice; Hillel Rapoport; Gianluca Santoni
  5. Import Processing and Trade Costs By Jerónimo Carballo; Alejandro Graziano; Georg Schaur; Christian Volpe Martincus
  6. Beyond the Income Effect of International Trade on Ethnic Wars in Africa By Fabien Candau; T Gbandi; G Guepie
  7. Entrepot: Hubs, Scale, and Trade Costs By Sharat Ganapati; Woan Foong Wong; Oren Ziv
  8. The Japan-Philippines Economic Partnership Agreement, a Decade After: Evaluating the Impact on Philippine Trade By Quimba, Francis Mark A.; Barral, Mark Anthony A.; Mark Anthony A.
  9. Pulling up or binding down: a review of upgrading trajectories in apparel and agro-processing global value chains for developing countries By Giovanni Pasquali; Aarti Krishnan; Jakob Engel
  10. The Impact of Trade Liberalization on the Mexican Automobile Industry: Evidence from the First 20 Years of NAFTA By Gabriela López Noria
  11. Mechanics of Global Value Chains: India's Perspective By Dutta, Sourish
  12. Predicting Exporters with Machine Learning By Francesca Micocci; Armando Rungi
  13. International Investment Agreements, Double-Taxation Treaties and Multinational Activity: The (Heterogeneous) Effects of Binding By Monika Sztajerowska
  14. Reinvest the relationship between exports and economic growth in African countries: New insights from innovative econometric methods By Bakari, Sayef
  15. The impact of the Trade Facilitation Agreement (TFA) on the Arab Maghreb Union's regional integration. By Allali Sara
  16. Asylum Migration, Borders and Terrorism in a Structural Gravity Model By Federico Carril-Caccia; Jordi Paniagua; Rafael Francisco Requena
  17. A matching model of the market for migrant smuggling services By Naiditch, Claire; Vranceanu, Radu
  18. Intra-Africa agricultural trade, governance quality and agricultural total factor productivity: Evidence from a panel vector autoregressive model By Espoir, Delphin Kamanda; Bannor, Frank; Sunge, Regret
  19. Trading patterns within and between regions: a network analysis By Matthew Smith; Yasaman Sarabi
  20. Import Competition, Formalization, and the Role of Contract Labor By Pavel Chakraborty; Rahul Singh; Vidhya Soundararajan
  21. Revisiting the Relationship between Trade Liberalization and Taxation By Grégoire Rota-Graziosi; Rabah Arezki; Alou Adesse Dama
  22. Survival Analysis of Export Relationships of Philippine MSMEs By Bautista, Mark Edison Q.; Manzano, George N.
  23. Fundamentals vs. policies: can the US dollar’s dominance in global trade be dented? By Georgios Georgiadis; Helena Le Mezo; Arnaud Mehl; Cedric Tille
  24. Possible Effects of China's Belt and Road Initiative on Philippine Trade and Investments By Paderon, Marissa M.; Ang, Ricardo B. III
  25. Does Educational Mismatch Affect Emigration Behaviour? By Wanner, Philippe; Pecoraro, Marco; Tani, Massimiliano
  26. Migration and Labor Market Integration in Europe By Dorn, David; Zweimüller, Josef
  27. Nontariff Measures in the Philippines: A Preliminary Analysis Using Incidence Indicators By Quimba, Francis Mark A.; Calizo, Sylwyn C. Jr.
  28. The China-Central Asia-West Asia Economic Corridor of the Belt and Road Initiative's Economic Impact on Kazakhstan By Çınar, Müge
  29. Bias and Consistency in Three-way Gravity Models By Martin Weidner; Thomas Zylkin
  30. Mexico's 20 years of North American Free Trade Agreement: Socio-Environmental Trends and Unequal Exchange By Vita, Gibran
  31. Migrant Inventors as Agents of Technological Change By Andrea MORRISON; Ernest MIGUELEZ
  32. Opimal Unilateral Climate Policy with Carbon Leakage at the Extensive and the Intensive Margin By Peter Kjær Kruse-Andersen; Peter Birch Sørensen

  1. By: Anke Mönnig (GWS - Institute of Economic Structures Research); Dr. Marc Ingo Wolter (GWS - Institute of Economic Structures Research)
    Abstract: Studies on foreign trade and its economic impact are numerous. Ricardo's thesis that the international division of labour is welfare-enhancing, even if a country has comparative disadvantages in the production of all goods, became a basic assumption of economic thought. On this basis, free trade was considered superior to protectionism, although later studies such as Samuelson and Autor relativized Ricardo by showing constellations in which international division of labour can also lead to a permanent loss of welfare. For Germany, foreign trade has developed into one of the most important drivers of economic growth. Since the European Monetary Union, Germany's share of the balance of payments in gross domestic product has risen significantly and exceeded the six-percent mark for the first time in 2007. More than ever, foreign markets determine the success and failure of those sectors that have become – directly and indirectly – dependent on foreign demand. However, world trade not only affects the production structure of domestic industry, but also affects demand for employment. The number of people in jobs that are directly or indirectly linked to export flows continues to rise. Looking beyond the labour market, this also results in changes in occupations and qualification requirements. Particularly in the first decade of the post-war period, the sharp increase in world trade and thus its increasing importance can be explained by a reduction in trade barriers (within the framework of GATT/WTO, but also by increasing regional integration, e.g. by the EU or the North American Free Trade Agreement NAFTA2). Regional integration into the EU, but also the number of free trade agreements, has continued to increase. Further free trade agreements (e.g. between the EU and Canada and the EU and Japan) were also negotiated or concluded in 2017/2018. The worldwide average tariff rate declined to 2.6% (World Development Indicator, value for 2017). The World Trade Organisation (WTO) sets nowadays the framework of international trade. It currently holds 164 members that all agreed to the rules of the General Agreement on Tariffs and Trade (GATT). The aim of this trade agreement is to reduce tariffs and other trade barriers and to implement a non-discriminatory trade system that grants both the rights and obligations of its member countries. Non-discrimination of WTO members is guaranteed by the principle of the most favoured nation (MFN), in addition to the requirement to treat imported and domestic goods equally on the market. In addition to coordinating world trade, the WTO has a dispute settlement function. However, the possibilities for sanctions in the event of misconduct by members are limited. This can be observed by the present tariff war between USA and China, two members of the WTO. This goes in line with an observable strong current against globalisation and free trade. The failure of the TTIP negotiations, the US import tariffs on steel and aluminium, the escalating trade war between the USA and China and the "abuse of power" of tariffs in political disputes (USA and Turkey) show that free trade in goods and services is under pressure. Even within the European Union, the exit of Great Britain from the EU enhances the likelihood of reintroducing tariffs on European ground. For an economy like Germany which is strong in exports and which holds close economic linkages within the European Union and beyond, it is crucial to know the effects of free trade on the German economy. In order to be able to map such developments and assess the impact of trade barriers on the domestic labour market, the model TINFORGE has been further developed in such a way that trade barriers in form of tariffs are implemented product-specific and country-specific. The remainder of the paper is structured as follows: first a brief introduction to trade costs, the measurement of trade costs, the impact of tariffs on the economy as well as the reason for trade are given. Then, the modelling of tariffs in TINFORGE is described in greater detail. The methodology is then tested on a scenario of an increase in US import tariffs on EU motor vehicles. The paper closes with a summary and conclusion.
    Keywords: Welthandelsmodell, Zölle, Methoden
    JEL: F12 F17 F62
    Date: 2020
  2. By: S, Minkyu.
    Abstract: How does firm innovation respond to changing trade environments? This paper investigates this question using the matched administrative datasets for UK firms' R&D expenditures and their trade exposures between 2002 and 2011. I find a strong adverse impact of import competition from China on UK firms' R&D, which is supportive of the `Schumpeterian hypothesis'. There is no evidence that the improved access to Chinese inputs for individual firms offset this negative competition channel. Increased export demand, by contrast, significantly stimulates firms' innovation efforts. Our results also reveal heterogeneity in the R&D responses depending on the firms' initial conditions: First, more productive British firms raise their R&D spending by much more in response to increased foreign demand. Second, exporters reduce R&D by less than non-exporters in the face of the rising Chinese competition. These findings together imply that innovation of purely domestic and less profitable firms was most hurt by globalization, leading to a widening productivity gap across firms.
    Keywords: R&D, Chinese competition, Firm-level trade
    JEL: F14 F60 O31
    Date: 2021–07–08
  3. By: Carlo Lombardo (CEDLAS-IIE-FCE-UNLP); Leonardo Peñaloza-Pacheco (CEDLAS-IIE-FCE-UNLP and Cornell University)
    Abstract: This paper studies the impact of a massive skilled labor supply shock on Colombian manufacturing firms’ exports, the Venezuelan exodus. We exploit crosssectional and time variability of Venezuelan forced migrants’ settlements in Colombian sub-national areas through an enclave instrumental variables approach to account for the selection of immigrants’ location. Using yearly customs data from 2013 to 2019, we find that the Venezuelan migration improved Colombian manufacturing firms’ export performance, particularly to high-income countries of the OECD located in North America and low-income countries. This effect was stronger for firms that exported less prior to the exodus (2012). Furthermore, using a detailed yearly panel of manufacturing firms from 2013 to 2019 we identify the potential labor market driving mechanism of the trade-creation effect: immigrants lowered exporting firms’ blue-collar wages, and allowed them to upgrade their labor force skill composition, namely firms were able to hire workers more compatible with exports to developed destinations.
    JEL: F22 F16 F14 J61 J31
    Date: 2021–07
  4. By: Gianluca Orefice; Hillel Rapoport; Gianluca Santoni
    Abstract: How does immigration affect export performance? To answer this question, we propose a unified empirical framework allowing to disentangle various mechanisms put forth in previous literature. These include the role of networks in reducing bilateral transaction costs as well as productivity shifts arising from migration-induced knowledge diffusion and increased workforce diversity. While we find evidence supporting all three channels (at both the intensive and the extensive margins of trade), our framework allows to gauge their relative importance. We then focus on diversity and find stronger results in sectors characterized by more complex production processes and more intense teamwork cooperation. This is consistent with theories linking the distribution of skills to the comparative advantage of nations. The results are robust to using a theoretically grounded IV approach combining three variations on the shift share methodology.
    Keywords: International Trade;Birthplace Diversity;Migration;Productivity
    JEL: F14 F16 F22 O47
    Date: 2021–06
  5. By: Jerónimo Carballo; Alejandro Graziano; Georg Schaur; Christian Volpe Martincus
    Abstract: Trade facilitation policy focuses on accelerated and transparent shipment processing to reduce trade costs. A common measure to evaluate processing frictions is the time it takes to import. In this paper we translate import processing times to costs. Our theory considers that shipment processing times at the port of entry are random and firms choose lead times to buffer processing shocks. Based on this theory, we employ detailed data on import processing dates, instrumental variables, and firm-product-origin level import data to estimate import processing costs. Evaluated at the median, import processing is equivalent to a 20 percent import tariff. For experienced importers, the import processing cost tariff drops to about 12 percent. Our time cost estimate generalizes existing approaches in the literature. We show that our extensions are economically relevant to determine import processing costs, predict who would benefits from trade facilitation, and interpret existing data on the time it takes to import.
    Keywords: trade costs, border processing, trade policy
    JEL: F10 F13 F14
    Date: 2021
  6. 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); T Gbandi (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)
    Abstract: We use detailed information on the location of agricultural and mining production to approximate international trade for different ethnic groups in order to study its impact on ethnic conflicts in Africa between 1993 and 2010. The goal is to go beyond the income effects of trade to study the residual effects of globalization on conflicts. We find that once we control for income but also for a wide variety of different factors in conflicts (using political variables and fixed effects), the international trade by ethnic groups has a pacific impact on conflicts. While this peaceful impact of trade is mainly found in the trade in agricultural products, it does not have a significant impact in the international trade in mining products. Finally, we propose an original two-step analysis showing that exports significantly reduce conflicts by affecting time-varying national characteristics. We interpret this result as an indication that globalization in Africa has participated in the formation of new national identities with peaceful effects between ethnic groups.
    Keywords: Ethnic Wars,Regional Trade,Globalization,National Identity,Africa
    Date: 2021–06–18
  7. By: Sharat Ganapati; Woan Foong Wong; Oren Ziv
    Abstract: Entrepôts are hubs that facilitate trade between multiple origins and destinations. We study these entrepôts, the network they form, and their impact on international trade. We document that the trade network is a hub-and-spoke system, where 80% of trade is shipped indirectly—nearly all via entrepôts. We estimate indirect-shipping consistent trade costs using a model where shipments can be sent indirectly through an endogenous transport network and develop a geography-based instrument to estimate economies of scale in shipping. Counterfactual infrastructure improvements at entrepôts have on average ten times the global welfare impact of improvements at non-entrepôts.
    JEL: F10 F12 F14
    Date: 2021–07
  8. By: Quimba, Francis Mark A.; Barral, Mark Anthony A.; Mark Anthony A.
    Abstract: The Japan-Philippines Economic Partnership Agreement (JPEPA), the first bilateral FTA that the Philippines entered into, aims to facilitate and promote free transborder flow of goods, services, capital, and people between the two countries. This paper explores the use of synthetic control method to understand the effects of JPEPA on Philippine exports. The results reveal that the Philippines benefited from the JPEPA as determined by the difference in the actual exports and the counterfactual exports.
    Keywords: JPEPA, Japan-Philippines Economic Partnership Agreement, Free Trade Agreement, transborder flow of goods, Philippine exports
    Date: 2021
  9. By: Giovanni Pasquali; Aarti Krishnan; Jakob Engel
    Abstract: There exist a plethora of developing country value chain studies based on a variety of methodological approaches, both in the academic literature and through policy reports. However, there has been little systematic synthesis of the findings and approaches taken in these studies. This study presents the results of a meta-analysis of 35 case studies (including 12 policy reports from the World Bank and 23 academic articles) on the determinants and outcomes of integration in apparel and agro-processing global value chains (GVCs) for primarily low-income developing countries.
    Keywords: Global value chains, Apparel industry, Agro-processing, Low income countries, Export upgrading, Supplier upgrading
    Date: 2021
  10. By: Gabriela López Noria
    Abstract: This paper examines the impact of trade liberalization under NAFTA on the productivity of the Mexican automobile industry. Using a panel of establishments for the period 1994-2014, in a first stage a Cobb-Douglas production function is estimated by the Levinsohn and Petrin's (2003) method (in an alternative exercise by that of Ackerberg, Caves and Frazer, 2015) to obtain a productivity measure. In a second stage, a model is estimated by System GMM to analyze the effect of trade openness on the estimated productivity. The main results indicate that there exists a positive association between trade liberalization and productivity for medium size establishments, but not for small or large establishments. This finding is consistent with that of other authors, who find that trade liberalization results in higher productivity for some firms, but not for all of them (e.g. Lileeva and Trefler, 2010; Bustos, 2011).
    JEL: F13 L62 D24
    Date: 2021–07
  11. By: Dutta, Sourish
    Abstract: The global production as a system of creating values is eventually forming a vast web of value chains. It explains the transitional structures of world trade and development of the world economy. It is truly a new wave of globalisation, and we term it as the global value chains (GVCs), creating the nexus among firms, workers and consumers around the globe. The emergence of this new scenario raises some crucial questions. It asks how an economy's businesses, producers and employees are connecting to the global economy. How are they capturing the gains out of it regarding different dimensions of economic development? Indeed, this GVC approach is very crucial for understanding the organisation of the global industries and firms. It requires analysing the statics and dynamics of different economic players involved in this complex global production network. Its widespread notion deals with diverse global, regional, and local issues from the top-down to bottom-up, building scope for policy analysis. In this context, this study will attempt to quantify the extent and impacts of India's engagement in GVCs, based on available data. It will also strive to propose a comprehensive strategic framework to identify the objectives of India's GVC participation and development with some suitable economic strategies to achieve them.
    Date: 2021–06–26
  12. By: Francesca Micocci (IMT School for Advanced Studies Lucca); Armando Rungi (IMT School for advanced studies)
    Abstract: In this contribution, we exploit machine learning techniques to predict out-of-sample firms' ability to export based on the financial accounts of both exporters and non-exporters. Therefore, we show how forecasts can be used as exporting scores, i.e., to measure the distance of non-exporters from export status. For our purpose, we train and test various algorithms on the financial reports of 57,021 manufacturing firms in France in 2010-2018. We find that a Bayesian Additive Regression Tree with Missingness In Attributes (BART-MIA) performs better than other techniques with a prediction accuracy of up to 0:90. Predictions are robust to changes in definitions of exporters and in the presence of discontinuous exporters. Eventually, we argue that exporting scores can be helpful for trade promotion, trade credit, and to assess firms' competitiveness. For example, back-of-the-envelope estimates show that a representative firm with just below-average exporting scores needs up to 44% more cash resources and up to 2:5 times more capital expenses to reach full export status.
    Keywords: exporting; machine learning; trade promotion; trade finance; competitiveness
    JEL: F17 C53 C55 L21 L25
    Date: 2021–07
  13. By: Monika Sztajerowska (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: There are close to 3,000 international investment agreements (IIAs) that aim to protect and promote cross-border investment. Do they achieve their main purpose? This paper provides novel firm-level evidence on the effects of IIAs on location decisions of multinational enterprises (MNEs) in a multi-country context. It uses unique micro-level data on the location of MNEs' affiliates globally and country-pair data on the coverage and content of treaties over a twenty-year period (1990-2010). It finds that IIAs, in particular those with the investor state dispute settlement (ISDS), increase the probability of MNEs' first foreign entry when they are accompanied by a double-taxation treaty. This interaction between investment and tax treaties can have important policy implications.
    Keywords: Double Taxation Treaties,Bilateral Investment Agreements,Multinational Enterprises,Double Taxation Treaties Multinational Enterprises,Double Taxation Treaties F23,F14,F15,F53
    Date: 2021–06
  14. By: Bakari, Sayef
    Abstract: This research examined the relationship between exports and economic growth in Africa. It employed many innovation econometric methods including Panel FMOLS and DOLS Estimates; Panel VECM; Panel ARDL Model; Pooled OLS, Random Effect Model, Fixed Effect Model and Hausman Test; Panel Pairwise Granger Causality Tests; Panel Toda-Yamamoto Causality Test; and Panel GMM Model. The findings suggested that the estimates of each model prove that there is a positive bidirectionnel relationship between exports and economic growth. Data includes 49 African countries for the period 1960–2018. These empirical results have some notable policy implications.
    Keywords: Exports, Economic Growth, Innovative Econometric Methods, African countries
    JEL: F0 F1 F10 F13 F14 O4 O47 O55
    Date: 2021
  15. By: Allali Sara (Université Mohammed V, Rabat)
    Abstract: This article presents an assessment of the implementation of the Trade Facilitation Agreement (TFA) in the context of the Arab Maghreb Union's ongoing regional integration efforts and its main contributions. It indicates that trade-related costs hamper not only Africa's integration with the rest of the world but, more specifically, its regional integration. The article analyzes some relevant indicators from the World Bank Doing Business database. Given the asymmetric magnitude of transaction costs by international standards, the analysis affirms how critical trade facilitation is for the UMA's growth. Moreover, in order to estimate the UMA's trade potential, the article uses a gravity model applied to panel data over a period of 10 years for 16 countries. It results that in North Africa, trade potential is far from being attained and the flows studied here represent only 46% of the estimations. Within this set, the UMA is at 56% of the estimated level. To conclude, regardless of the significant economic progress registered in the last ten years, the Maghreb is still impaired from a lack of solidity and involvement in its trade relations. Hence, the analysis of this potential shows the relative presence of potential according to each country, and in this way, calls to mind the need for policies that aim to build true integration in the Maghreb.
    Keywords: Trade facilitation,Gravity Model,Exports
    Date: 2021–05–30
  16. By: Federico Carril-Caccia (Department of Spanish and International Economics, University of Granada, Granada (Spain).); Jordi Paniagua (Dep. Applied Economics II, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).); Rafael Francisco Requena (Dep. Applied Economics II, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).)
    Abstract: In this paper we examine the impact of terrorism attacks on asylum-related migration flows. So far, the literature that examines the “push factors” such as terrorism explaining forced migration has omitted the fact that the vast majority of people forced to flee, tend to do it somewhere else within the country. The novel feature of our research is the estimation of a structural gravity equation that includes both international migration and internally displaced persons, a theoretically-consistent framework that allows us to identify country-specific variables like terror attacks. For that purpose, we use the information on the number of asylum applications, the number of internally displaced persons, and the number of terrorist attacks in each country for a sample of 119 origin developing countries and 141 destination countries over 2009-2018. The empirical results reveal several interesting and policy-relevant traits. Firstly, the number of forced migration abroad is still minimal compared to internally displaced persons, but globalization forces are pushing up the ratio. Secondly, terror violence has a positive and significant effect on asylum migration flows relative to the number of internally displaced persons. Thirdly, omitting internally displaced people biases downward the effect of terrorism on asylum applications. Fourthly, we observe regional heterogeneity in the effect of terrorism on asylum migration flows; in Latin America, terrorist attacks have a much larger impact on the number of asylum applications relative to internally displaced persons than in Asia or Africa.
    Keywords: Asylum migration; forced migration; internally displaced persons; structural gravity; terrorism
    Date: 2021–07
  17. By: Naiditch, Claire (Université de Lille); Vranceanu, Radu (ESSEC Research Center, ESSEC Business School)
    Abstract: The important flows of irregular migration could not exist without the emergence of a criminal market for smuggling services. A matching model à la Pissarides (2000) provides a well-suited framework to analyze such a flow market with significant trade frictions. Our analysis considers the competitive segment of this underground market in which small-business smugglers can freely enter. The model allows us to determine the equilibrium number of smugglers, the matching probability, the number of successful irregular migrants and, as an original concept, the equilibrium migrant welfare. Changes in parameters can be related to the various policies implemented by destination countries to cut down irregular migration.
    Keywords: Smuggling; Irregular migration; Matching model; Migrant welfare
    JEL: F22 J46 O15
    Date: 2020–01–30
  18. By: Espoir, Delphin Kamanda; Bannor, Frank; Sunge, Regret
    Abstract: The African Continental Free Trade Area (AfCFTA) agreement was signed by at least 54 African countries and has the potential of lifting up to 30 million Africans out of extreme poverty, according to the World Bank (2020). The agricultural sector is regarded as a fertile ground for achieving the AfCFTA ambitions. However, agricultural productivity in Africa is low and falling. It is argued that intra-Africa trade and good governance can help increase agricultural productivity. Nonetheless, both are low, casting doubt on their ability to enhance agricultural productivity. This study attempts for the first time to examine the causal relationship between the intra-Africa agricultural trade, governance quality, and the agricultural total factor productivity (ATFP) for 47 countries over the period 1995–2018. We extend the analysis to regional economic communities (RECs) to understand the diversity in this relationship within the continent. Using the panel VAR model in the generalized method of moment (GMM) estimation approach, our results suggest a long-run equilibrium relationship between the three variables. Specifically, the results indicate that at the African level, intra-Africa agricultural trade has a statistically positive effect on governance quality and ATFP. In contrast, good governance has positive and negative impacts on ATFP and trade, respectively. We also find that ATFP positively influences intra-Africa agricultural trade and governance. At the RECs level, our estimations show significant heterogeneity in the three variables’ impacts. Based on our findings, we recommend a rapid implementation of the AfCFTA agreement. However, we suggest that the implementation should be idiosyncratic to each region’s structural economies. Furthermore, we encourage the promotion of good governance, particularly in agriculture policy implementation.
    Keywords: Agricultural trade,agricultural total factor productivity,governance,PVAR
    JEL: C23 G38 O47 Q17
    Date: 2021
  19. By: Matthew Smith; Yasaman Sarabi
    Abstract: This study examines patterns of regionalisation in the International Trade Network (ITN). This study makes use of Gould Fernandez brokerage to examine the roles countries play in the ITN linking different regional partitions. An examination of three ITNs is provided for three networks with varying levels of technological content, representing trade in high tech, medium tech, and low-tech goods. Simulated network data, based on an advanced network model controlling for degree centralisation and clustering patterns, is compared to the observed data to examine whether the roles countries play within and between regions are result of centralisation and clustering patterns. The findings indicate that the roles countries play between and within regions is a result of centralisation and clustering patterns; indicating a need to examine the presence of hubs when investigating regionalisation and globalisation patterns in the modern global economy.
    Date: 2021–07
  20. By: Pavel Chakraborty; Rahul Singh; Vidhya Soundararajan
    Abstract: Using the case of the Indian manufacturing sector and exploiting plausibly exogenous variation from Chinese imports, we provide causal evidence that higher import competition increases the share of the formal enterprise employment. We find an increase in the level of formal enterprise employment, driven by the high productivity firms, and in contrast, a fall in the informal enterprise employment. This labor reallocation is enabled by contract workers, who do not carry stringent ring costs. Our estimates imply that Chinese import competition led to an increase in the share of formal sector employment by 4.1 percentage points between 2000 and 2005. We calculate the labor productivity gap between the formal and informal sector, adjusting for differences in prices and worker characteristics and find them to be salient in explaining the observed gap. Our preferred estimate of the productivity gap implies an increase in labor productivity by 3.19% in response to Chinese import competition.
    Keywords: Formal sector employment, Contract workers, Chinese import, Reallocation, Misallocation
    JEL: F14 F16 O17 O47 F66
    Date: 2021
  21. By: Grégoire Rota-Graziosi (CERDI - Centre d'Études et de Recherches sur le Développement International - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne); Rabah Arezki; Alou Adesse Dama (CERDI - Centre d'Études et de Recherches sur le Développement International - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne)
    Abstract: This paper explores the dynamic effects of trade liberalization on tax revenue using a worldwide panel dataset. Results point to statistically significant negative effect of liberalization on (non- resource) tax revenues in the short term and no significant effect in the medium term. Liberalization also alter the tax structure tilting revenues toward indirect taxes away from direct ones. Economies which have implemented value added taxes prior to liberalization have mitigated its negative effects on tax revenues. The evidence is supportive of the complementarity role of state capacity to reap the benefits of liberalization.
    Keywords: Tax,Tax structures,Openness,Liberalization,Natural resources
    Date: 2021–06
  22. By: Bautista, Mark Edison Q.; Manzano, George N.
    Abstract: This study examines the survivability of Philippine micro, small, and medium enterprises’ (MSMEs) exports to select countries within the frameworks of the Asia-Pacific Economic Cooperation Boracay Action Agenda to Globalize MSMEs and the Association of Southeast Asian Nations Strategic Action Plan for SME Development. It documents the survival rate and duration of Philippine exported goods and shows that most export relationships of the Philippines are brief. It also finds that MSMEs, on average, account for a more significant number of the Philippines’ export relations than large establishments.
    Keywords: MSMEs, export, micro, small, and medium enterprises, survival analysis, Asia-Pacific Economic Cooperation Boracay Action Agenda to Globalize MSMEs, Association of Southeast Asian Nations Strategic Action Plan for SME Development
    Date: 2021
  23. By: Georgios Georgiadis (European Central Bank); Helena Le Mezo (European Central Bank); Arnaud Mehl (European Central Bank & CEPR); Cedric Tille (Geneva Graduate Institute & CEPR)
    Abstract: The US dollar plays a dominant role in the invoicing of international trade, albeit not an exclusive one as more than half of global trade is invoiced in other currencies. Of particular interest are the euro, with a large role, and the renminbi, with a rising role. These two currencies are well suited to contrast the roles of economic fundamentals and policies, as European policy makers have taken a neutral stance in contrast to the promotion of the international role of the renminbi by the Chinese authorities. We assess the drivers of invoicing using the most recent and comprehensive data set for 115 countries over 1999-2019. We find that standard mechanisms that foster use of a large economy’s currency predicted by theory—i.e. strategic complementarities in price setting and integration in cross-border value chains—underpin use of the dollar and the euro for trade with the United States and the euro area. These mechanisms also support the role of the dollar, but not the euro, in trade between non-US and non-euro area countries, making the dollar the globally dominant invoicing currency. Fundamentals and policies have played a contrasted role for the use of the renminbi. We find that China’s integration into global trade has further strengthened the dominant status of the dollar at the expense of the euro. At the same time, the establishment of currency swap lines by the People’s Bank of China has been associated with increases in renminbi invoicing, with an adverse effect on dollar use that is larger than for the euro.
    Keywords: International trade invoicing, dominant currency paradigm, markets vs. policies
    JEL: F14 F31 F44
    Date: 2021–07–06
  24. By: Paderon, Marissa M.; Ang, Ricardo B. III
    Abstract: China’s "One Belt, One Road" (OBOR) initiative aims to foster connectivity and cooperation among 65 nations. Together, these countries account for about 60 percent of the world’s total population and 30 percent of the world’s gross domestic product. OBOR, also called the "21st Century Maritime Silk Road", has two main channels that will then connect each other to Europe. These are the land-based Silk Road Economic Belt (One Belt), which connects Xi’an, China, to Rotterdam, Netherlands, and the sea-based Maritime Silk Road (One Road), which connects Venice, Italy, to Fuzhou, China, through the Suez Canal and the Indian Ocean. For countries that have officially signed to participate in OBOR and are located on these channels, the proposed priority areas for cooperation include infrastructure development and connectivity, policy dialogues, unimpeded trade, financial support, and people-to-people exchanges. Using a vector autoregression model, this paper estimates the likely effects of OBOR on Philippine trade and investments.
    Keywords: China, connectivity, 21st Century Maritime Silk Road, One Belt, One Road, trade and investments
    Date: 2020
  25. By: Wanner, Philippe (University of Geneva); Pecoraro, Marco (University of Neuchatel); Tani, Massimiliano (University of New South Wales)
    Abstract: This paper uses linked Swiss administrative and survey data to examine the relationship between educational mismatch in the labour market and emigration decisions, carrying out the analysis for both Swiss native and previous immigrant workers. In turn, migrants' decisions separate returning home from onward migration to a third country. We find that undereducation is positively associated with the probability of emigration and return to the country of origin. In contrast, the reverse relationship is found between overeducation and emigration, especially among non-European immigrant workers. According to the predictions of the traditional model of migration, based on self-selection, migrants returning home are positively selected relative to migrants emigrating to other countries. We also find that immigrants from a country outside the EU27/EFTA have little incentive to return home and generally accept jobs for which they are mismatched in Switzerland. These results highlight the relevance to understand emigration behaviours in relation to the type of migrant that is most integrated, and productive, in the Swiss market, hence enabling better migration and domestic labour market policy design.
    Keywords: emigration, return migration, onward migration, wages, occupation, educational mismatch
    JEL: J15 J24 J61 O15
    Date: 2021–07
  26. By: Dorn, David (University of Zurich); Zweimüller, Josef (University of Zurich)
    Abstract: The European labor market allows for the border-free mobility of workers across 31 countries that cover most of the continent's population. However, rates of migration across European countries remain considerably lower than interstate migration in the United States, and spatial variation in terms of unemployment or income levels is larger. We document patterns of migration in Europe, which include a sizable migration from east to west in the last twenty years. An analysis of worker-level microdata provides some evidence for an international convergence in wage rates, and for modest static gains from migration. We conclude by discussing obstacles to migration that reduce the potential for further labor market integration in Europe.
    Keywords: labor migration, wages, Europe, European Union single market
    JEL: F22 F53 J31 J61
    Date: 2021–07
  27. By: Quimba, Francis Mark A.; Calizo, Sylwyn C. Jr.
    Abstract: As several countries have reduced tariff rates, other forms of regulatory measures that impact on trade have proliferated. These regulations, collectively known as nontariff measures (NTMs), can be imposed on imports and exports. Using descriptive indicators, NTMs could be measured with coverage ratios, frequency indices, and prevalence scores. Across the different government agencies, it has been found that the Department of Agriculture and the Department of Environment and Natural Resources both implement the most number of NTMs with 422 and 103 NTMs, respectively. Moreover, both agricultural goods and manufactured goods have been shown to be highly regulated at 92.2 percent and 93.9 percent, respectively, albeit agricultural goods have a higher prevalence score (19.8) compared to manufacture goods (8.9).
    Keywords: trade, nontariff measures, Philippines, NTMs, prevalence scores, agricultural goods, manufactured goods, DENR, DA
    Date: 2020
  28. By: Çınar, Müge
    Abstract: In September 2013, Chinese President Xi Jinping introduced an ambiguous, geoeconomic & geostrategic concept, “One Belt One Road,” during his visit to Kazakhstan. This global infrastructural development strategy was later defined as the Belt and Road initiative, which is an umbrella for the concepts of the Silk Road Economic Belt and the 21st Century Maritime Silk Road. the Belt and Road Initiative set out to accomplish more advanced transport connections and better economic integration of the member countries. it also aims for interconnection in finance, policies, and infrastructure. Kazakhstan, whose energy and transport infrastructure China has already invested in prior to the BRI, is essential for the SREB, the land-based section of the BRI since it occupies a crucial geostrategic position in the region. Kazakhstan, apart from its great landmass in Euroasia that makes it a linchpin for transport and trade links on the continent, holds large energy reserves. Moreover, it is the strongest economy in the region. Thus, “China considers Kazakhstan crucial for transit, a source of energy, and as a stable neighbour of its unstable Xinjiang province”. This article, It is aimed to analyze the importance of the China-Central Asia-West Asia Economic Corridor of the Belt and Road Initiative's Economic Impact on Kazakhstan.
    Date: 2021–01–08
  29. By: Martin Weidner (Institute for Fiscal Studies and cemmap and UCL); Thomas Zylkin (Institute for Fiscal Studies)
    Abstract: We study the incidental parameter problem in "three-way" Poisson Pseudo-Maximum Likelihood "PPML" gravity models recently recommended for identifying the effects of trade policies. Despite the number and variety of fixed effects this model entails, we confirm it is consistent for small T and we show it is in fact the only estimator among a wide range of PML gravity estimators that is generally consistent in this context when T is small. At the same time, asymptotic confidence intervals in fixed-T panels are not correctly centered at the true point estimates, and cluster-robust variance estimates used to construct standard errors are generally biased as well. We characterize each of these biases analytically and show both numerically and empirically that they are salient even for real-data settings with a large number of countries. We also offer practical remedies that can be used to obtain more reliable inferences of the effects of trade policies and other time-varying gravity variables.
    Date: 2020–01–07
  30. By: Vita, Gibran
    Abstract: The North American Free Trade Agreement (NAFTA) is the most influential trade agreement, signed by the governments of USA, Canada and Mexico in 1992. It came into effect the 1st of January of 1994 promising economic growth and better employment opportunities to reduce Mexican emigration. The Zapatista Army of National Liberation (EZLN), a civil resistance movement against capitalist neo-liberalism, protested the agreement, warning that it would feed social inequalities and threaten indigenous rights, autonomy, land access and use of natural resources. The Zapatistas feared the NAFTA would reinforce a master-servant relationship where Mexican human and natural resources are displaced, undermined or employed for the benefit of USA-CAN. In this paper we use Multiregional Input-Output Analysis based on the EORA model to examine changes in the carbon, land material, water and employment footprints in Mexico derived from the NAFTA agreement. We pay particular attention to the fairness of the resource exchange between USA and Mexico. We find all the consumption-based footprints grew between the period of 1990-2015. The carbon footprint increased by 50%, land by 32%, material by 46% and water by 566%. Territorial based employment rose by 7% and consumption based employment by 14%. Consumption of land and water considerably sped up after NAFTA. Remarkably, the land footprint doubled between 1994 and 2003, whereas GDP only increased by 20%. After that peak, the changes in land footprints retracted and stabilized at a 32% yearly increase until 2015, which corresponded to a 65% increase in GDP. Carbon intensity per unit of GDP has noticeably decreased after the NAFTA, nevertheless rising consumption heavily drives carbon emissions, eating-up efficiency gains. We confirm that the unequal trade has increased after the NAFTA, with surpluses for carbon, materials and more heavily for labour -meaning Mexico has become a net source for these resources. Not so for land and water, where Mexico remains a net consumer (2) We confirm that a large portion of the increases in Mexico’s carbon, material and water are destined to satisfy USA-CAN consumption. (3) We confirm a master-servant dynamic where the employment embodied in trade leaves Mexico with a 73% surplus -a net supplier of labor among NAFTA partners.
    Date: 2021–07–15
  31. By: Andrea MORRISON; Ernest MIGUELEZ
    Abstract: How do regions enter new and distant technological fields? Who is triggering this process? This work addresses these compelling research questions by investigating the role of migrant inventors in the process of technological diversification. Immigrant inventors can indeed act as carriers of knowledge across borders and influence the direction of technological change. We test these latter propositions by using an original dataset of immigrant inventors in the context of European regions during the period 2003-2011. Our findings show that: immigrant inventors generate positive local knowledge spillovers; they help their host regions to develop new technological specialisations; they trigger a process of unrelated diversification. Their contribution comes via two main mechanisms: immigrant inventors use their own personal knowledge (knowledge creation); they import knowledge from their home country to the host region (knowledge transfer). Their impact is maximised when their knowledge is not recombined with the local one (in mixed teams of inventors), but it is reused (in teams made by only migrant inventors). Our work contributes to the existing literature of regional diversification by providing fresh evidence of unrelated diversification for European regions and by identifying important agents of structural change. It also contributes to the literature of migration and innovation by adding fresh evidence on European regions and by unveiling some of the mechanisms of immigrants’ knowledge transmission.
    Keywords: patents, migration, technological diversification, relatedness, Europe
    JEL: O30 F20 F60
    Date: 2021
  32. By: Peter Kjær Kruse-Andersen; Peter Birch Sørensen
    Abstract: We analyse the optimal design of unilateral climate policy in an open economy where the government is committed to a target for reduction of domestic CO2 emissions but where it is also concerned about carbon leakage. We highlight the importance of distinguishing between leakage at the extensive margin where firms relocate to a foreign country to avoid the domestic carbon tax, and leakage at the intensive margin where domestic firms lose world market shares to foreign competitors due to the tax. Assuming that the government cannot implement border carbon adjustments, we show that the optimal allocation can still be implemented through a combination of taxes on emissions, taxes on domestic consumption of energy and final goods, an output subsidy as well as a lump-sum location subsidy to leakage-exposed firms, subsidies to carbon capture, taxes on domestic production of fossil fuels, and a subsidy to domestic production of green energy. Simulation experiments indicate that the social welfare gain from implementing the optimal leakage-adjusted tax-subsidy scheme rather than a single uniform emissions tax could amount to 0.5 percent of national income. A location subsidy aimed at reducing leakage at the extensive margin contributes to reducing the welfare loss from leakage.
    Keywords: carbon leakage, optimal carbon taxation in an open economy
    JEL: H21 H23 Q48 Q54
    Date: 2021

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