nep-int New Economics Papers
on International Trade
Issue of 2021‒08‒09
fifty-four papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Born similar, develop apart: Evidence on Chinese hybrid exporters By Bie, Xiaodong; Ciani, Andrea
  2. The Effect of Non-Tariff Measures on Global Value Chain Participation By Upalat Korwatanasakul; Youngmin Baek
  3. How Do Immigrants Promote Exports? By Gianluca Orefice; Hillel Rapoport; Gianluca Santoni
  4. Trade agreements and decent work in Mexico the case of the automotive and textile industries By Moreno-Brid, Juan Carlos.; Gómez Tovar, Rosa.; Sánchez Gómez, Joaquín.; Gómez Rodríguez, Lizzeth.
  5. Firm Heterogeneity, Variable Markups, and Multinational Production: A Review from Trade Policy Perspective By Ziran Ding
  6. The Impact of Foreign Direct Investment on Innovation: Evidence from Patent Filings and Citations in China By Chen, Yongmin; Jiang, Haiwei; Liang, Yousha; Pan, Shiyuan
  7. Is the COVID-19 Pandemic Recasting Global Value Chains in East Asia? By Nobuaki Yamashita; Kiichiro Fukasaku
  8. Interlocking margins: A framework on the interaction of offshoring and outsourcing decisions By Edwin Jiang
  9. The Effects of SPSs and TBTs on Innovation: Evidence from Exporting Firms in Viet Nam By Duc Anh Dang; Vuong Anh Dang
  10. A simple method to quantify the ex-ante effects of “deep” trade liberalization and “hard” trade protection By Larch, Mario; Tan, Shawn; Yotov, Yoto
  11. The Unfinished Agenda of Trade Liberalization in Philippine Agriculture: Assessing the Impact of Reducing Tariff and Nontariff Barriers By Briones, Roehlano M.
  12. Sugar market policies in the EU and international sugar trade By Berger, Jurij; Brümmer, Bernhard; Fiankor, Dela-Dem; Kopp, Thomas
  13. Impact of FTA on Philippine Industries: Analysis of Network Effects By Quimba, Francis Mark A.; Barral, Mark Anthony A.; Rosellon, Maureen D.; Calizo, Sylwyn C. Jr.
  14. Economic and Emission Impact of Australia–China Trade Disruption: Implication for Regional Economic Integration By Xunpeng Shi; Tsun Se Cheong; Michael Zhou
  15. Trade Openness and Income Inequality: New Empirical Evidence By Florian Dorn; Clemens Fuest; Niklas Potrafke
  16. East Asian Integration and Its Main Challenge: NTMs in Australia, China, India, Japan, Republic of Korea, and New Zealand By Lili Yan Ing; Gracia Hadiwidjaja
  17. Learning from Tumultuous Times - An Analysis of Vulnerable Sectors in International Trade in the Context of the Corona Health Crisis By Oliver Reiter; Robert Stehrer
  18. Trade Openness and Income Inequality: New Empirical Evidence By Florian Dorn; Clemens Fuest; Niklas Potrafke
  19. Export Credit Guarantees: Direct Effects on the Treated and Spillovers to their Suppliers By Ina C. Jäkel
  20. Increased trade with China and Eastern Europe hardly affects Dutch workers By Rob Euwals; Harro van Heuvelen; Gerdien Meijerink; Jan Möhlmann; Simon Rabaté
  21. Illicit Financial Flows and Trade Mispricing: Decomposing the Trade Reporting Gap By Alex Cobham; Petr Jansky; Jan Mares
  22. Trade Policy as an Exogenous Shock: Focusing on the Specifics By Andrew Greenland; John Lopresti
  23. The Role of Digitalisation in Shaping India’s Global Value Chain Participation By Subash Sasidharan; Ketan Reddy
  24. Trade and Innovation By Marc J Melitz; Stephen J Redding
  25. Tariffs and the Exchange Rate: Evidence from Twitter By Dmitry Matveev; Francisco Ruge-Murcia
  26. FTA Utilization of Philippine Imports By Quimba, Francis Mark A.; Rosellon, Maureen Ane D.; Calizo, Sylwyn Jr. C.
  27. Business flies: The trade promoting effect of air connectivity By Wang, Feicheng; Wang, Zheng; Zhou, Zhou
  28. On the Triggers of Hazardous Border Crossings: Evidence from the US-Mexican Border By Chau, Nancy H.; Garip, Filiz; Oritz-Bobea, Ariel
  29. Trade and decent work adequate earnings in the Mexican manufacturing industries By Aleman-Castilla, Benjamin.
  30. Potential for India’s Entry into Factory Asia: Some Casual Findings from International Trade Data By Mitsuyo Ando; Kenta Yamanouchi; Fukunari Kimura
  31. East Asian Production Networks Amidst the COVID-19 Shock By Ayako Obashi
  32. Costs and Benefits of New Disciplines on Electronic Commerce By Serafica, Ramonette B.; Quimba, Francis Mark A.; Cuenca, Janet S.
  33. Latin America and the Caribbean exports to the United States: Analysis of the competition with China and other regions at product level, 2002-2018 By Artecona, Raquel; Perrotti, Daniel E.
  34. Unraveling industry, firm and host-region effects on export behaviors of international new ventures and established exporters By Ine Paeleman; Shaker A. Zahra; Jonas W. B. Lang
  35. Fundamentals vs. policies: can the US dollar’s dominance in global trade be dented? By Georgiadis, Georgios; Le Mezo, Helena; Mehl, Arnaud; Tille, Cédric
  36. International Trade Network: Country centrality and COVID-19 pandemic By Roberto Antonietti; Paolo Falbo; Fulvio Fontini; Rosanna Grassi; Giorgio Rizzini
  37. The Impact of International Migration on sub-Saharan African Women to the Middle East By Estella Achinko
  38. Economic and social effects of the COVID-19 pandemic and the future of global value chains By Dünhaupt, Petra; Herr, Hansjörg; Mehl, Fabian; Teipen, Christina
  39. Did the Opening Up of Rice Importation in the Philippines Worsen Income Poverty and Inequality? A General Equilibrium with Microsimulation Approach By Briones, Roehlano M.
  40. Tradable and Non-tradable Inflation in Turkey: Predicting Different States with Markov Regime-Switching Approach By Hulya Saygili; Aysun Turkvatan
  41. Evolution of the Treaty Interpretation on the Issue of Targeted Dumping: Is it a Clarification of a Treaty or ‘Gap Filling’? (Japanese) By MIYAOKA Kunio
  42. The dynamics of state-business relations between the Ethiopian state and Chinese private firms: A case study of the Eastern Industry Park By Weiwei Chen
  43. Energy footprints and the international trade network: A new dataset. Is the European Union doing it better? By Octavio Fernández-Amador; Joseph F. Francois; Doris A. Oberdabernig; Patrick Tomberger
  44. The Effects of Multinationals on Workers: Evidence from Costa Rican Microdata By Alonso Alfaro Urena; Isabela Manelici; Jose P. Vasquez
  45. A Study on Schrems II Judgement of the European Court of Justice on International Data Flows―With a Focus on Its Effects on the Data Free Flow with Trust Initiative (Japanese) By WATANABE Shota
  46. The regulation of interconnection and regulatory alignment in the Southern African Development Community By Grace Nsomba
  47. Informal Incentives, Labor Supply, and the Effect of Immigration on Wages By Matthias Fahn; Takeshi Murooka
  48. The impact of smart and non-smart sanctions on government health expenditures: evidence from developing resource-based countries By Faraji Dizaji, Sajjad; Ghadamgahi, Zeinab Sadat
  49. Varieties of state capital: What does foreign state-led investment do in a globalized world? By Babic, Milan; Dixon, Adam; Fichtner, Jan
  50. Border enforcement policies and reforms in South Africa (1994-2020) By Handmaker, J.D.; Nalule, C.
  51. Employment Mobility of FDI Workers in Vietnam: New Evidence from Recent Surveys By Nguyen, Cuong Viet
  52. Cross-Border Issues for Digital Platforms: A Review of Regulations Applicable to Philippine Digital Platforms By Serzo, Aiken Larisa O.
  53. Heterogeneity in migration: Network effects across cultures By Bogatzki, Tamara
  54. Exploring the Feasibility of Content Analysis in Understanding International Cooperation in APEC By Quimba, Francis Mark A.; Barral, Mark Anthony A.

  1. By: Bie, Xiaodong; Ciani, Andrea
    Abstract: Processing trade is often a leading channel for the internationalization of firms in emerging economies and to foster their integration in Global Value Chains (GVCs). This study investigates differences in performance among Chinese exporting firms differently involved in processing trade. We distinguish firms pursuing only processing trade from firms which are also involved in ordinary trade (hybrid exporters). We rely on detailed balance sheet data and on customs data on firm transactions for the period 2000-2007. Results show that hybrid exporters outperform firms exclusively involved in processing trade in terms of value added, productivity, profits, product quality, and revenue in the different export destinations. We find that this difference in performance is associated with the increase in Chinese domestic value added. Hybrid exporters can rely to a larger extent than purely processing exporters on domestic inputs which, during this period, benefited from remarkable increases in productivity.
    Keywords: Processing trade,Firm productivity,Domestic value added
    JEL: F01 F10 F14 O1
    Date: 2021
  2. By: Upalat Korwatanasakul (School of Social Sciences, Waseda University, Japan); Youngmin Baek (Institute of Asia–Pacific Studies, Waseda University, Japan)
    Abstract: This study examines the impact of non-tariff measures (NTMs) on global value chain (GVC) participation and the underlying mechanisms. Our study employs a novel approach using an additional compliance requirement indicator as a relative proxy for NTMs to measure their impact on GVC participation. We conduct a cross-sectional analysis at the industry level, spanning 19 industrial sectors in 30 countries in 2015. We combine our additional compliance requirement indicator dataset calculated from NTM data in the Trade Analysis Information System, with our dataset on trade in value added estimated from the Organisation for Economic Co-operation and Development Inter-Country Input–Output Table. Our analysis finds that, while NTMs and tariffs both negatively impact backward GVC participation, the impact of NTMs is greater than that of tariff measures. Moreover, the estimated results show that inward foreign direct investment is positively associated with backward GVC participation. Therefore, policies that reduce trade costs from policy barriers, especially NTMs, and attract more foreign direct investment can help promote GVC participation.
    Keywords: additional compliance requirement indicator, backward GVC participation, global value chain, input imports, non-tariff measures, regulatory distance indicator
    JEL: F13 F14 F63
    Date: 2021–06–21
  3. By: Gianluca Orefice (University of Paris-Dauphine, CEPII and CESifo); Hillel Rapoport (PSE, CEPII and LISER); Gianluca Santoni (CEPII)
    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
  4. By: Moreno-Brid, Juan Carlos.; Gómez Tovar, Rosa.; Sánchez Gómez, Joaquín.; Gómez Rodríguez, Lizzeth.
    Abstract: The study examines the effects of trade liberalization on employment and the labour market in Mexico’s manufacturing industry. The analysis places special emphasis on assessing the extent to which the industry’s distinct trade performance is accompanied by an improvement in labour conditions with the objective of ensuring decent work. For this purpose, the study applies the framework of decent work indicators developed by the International Labour Organization (ILO), in combination with input–output analysis, to explore selected links between international trade and certain indicators of decent work in two industries of Mexico’s manufacturing sector: automotive and textile. We chose these two industries because of the key differences in their organizational structures, their roles in global value chains (GVC) and their dynamism in recent decades. With the policy shift towards trade liberalization in recent decades, the automotive industry has come to be regarded as the jewel of Mexico’s export market. The textile industry, in contrast, suffered a severe shock as trade liberalization brought about increased competition in Mexico’s domestic market, despite the industry increasing its participation in GVCs. A key contribution of the study was to construct a set of relevant time series indicators of decent work for these two industrial activities in Mexico, based on ILO guidelines and official data. Taking into account this set of indicators, as well as Mexico’s labour market regulatory reforms and their links to trade agreements, including the Agreement between the United States of America, the United Mexican States and Canada (USMCA), the study finds important differences in these two industries’ advance towards decent work, which can be partly explained by their distinct performances in international trade. Based on these results, the study offers some policy recommendations to help achieve a more robust pace of progress towards decent work.
    Date: 2021
  5. By: Ziran Ding (Bank of Lithuania, Kaunas University of Technology)
    Abstract: This paper surveys the main ingredients and results of heterogeneous firms trade policy literature that has been developing since the early 2000s. First, I present the stylized facts regarding firm heterogeneity, firmlevel markups, and multinational production’s global structure. I then survey the trade policy papers that build on the workhorse model of firm heterogeneity. Third, I summarize the recent development of theoretical approaches of modeling the firm-level markups and its trade policy implication. Fourth, I discuss the theoretical frameworks that incorporate multinational production into heterogeneous firms’ framework and their trade policy implication. Finally, I discuss directions for future research and offer suggestions for further readings.
    Keywords: Trade policy, Firm heterogeneity, Variable markups, Multinational production.
    JEL: F12 F13 F23 F60
    Date: 2021–07–30
  6. By: Chen, Yongmin; Jiang, Haiwei; Liang, Yousha; Pan, Shiyuan
    Abstract: This paper studies how foreign direct investment (FDI) affects innovation in the host country, using matched firm-level patent data of Chinese firms. The data contain multidimensional information about patent counts and citations which, together with an identification strategy based on Lu et al. (2017), allows us to measure innovation comprehensively and to uncover the causal relationship. Our empirical analysis shows that FDI has positive intra-industry effects on the quantity and quality of innovation by Chinese firms. We show that these positive effects are driven by increases in competition, rather than by knowledge spillover from FDI which is measured by patent citations between domestic firms and foreign invested enterprises (FIEs). We further investigate the inter-industry effects of FDI and find that FDI has positive vertical effects on innovation in upstream sectors.
    Keywords: FDI; Innovation; Patent; Competition; Spillover
    JEL: F2 L5 O3
    Date: 2021–07–26
  7. By: Nobuaki Yamashita (Australian National University, Keio University, and Royal Melbourne Institute of Technology); Kiichiro Fukasaku (Organisation for Economic Co-operation and Development)
    Abstract: This paper assesses how the current COVID-19 pandemic is shaping global value chains in East Asia after the formidable disruptions inflicted by the health crisis. Some have expressed the view that global value chains would readjust and production processes would move home, i.e. reshoring, facilitated by the recent movement of protectionism measures in the post-pandemic world. We evaluate such concerns and examine the role of policy with a focus on non-tariff measures in East Asia.
    Keywords: COVID-19, pandemic, global value chains (GVCs), Non-tariff measures (NTMs), East Asian countries
    JEL: F14 F15
    Date: 2021–07–06
  8. By: Edwin Jiang
    Abstract: I develop a multi-country general equilibrium model on global sourcing which considers individual firm’s decisions on outsourcing as well as offshoring. These decisions are closely connected as more extensive offshoring provides incentives for further integration of inputs. The firm-level decisions aggregate to produce gravity style equations of trade flows between countries, and intra-firm transactions.
    Keywords: international trade, offshoring, outsourcing
    Date: 2021–07
  9. By: Duc Anh Dang (National Centre for Socioeconomic Information and Forecast, Viet Nam); Vuong Anh Dang (National Centre for Social and Economic Modelling University of Canberra, Australia)
    Abstract: Sanitary and phytosanitary (SPS) measures and technical barriers to trade (TBTs) in destination markets may affect firms’ performance. In this paper, we examine how meeting foreign standards affects exporting firms’ innovation, reflected in the product quality, production processes, skills, and technological acquisition. The analysis relies on official regulations on non-tariff measures released by the United Nations Conference on Trade and Development (UNCTAD) and panel data for manufacturing firms in Viet Nam during 2013–2015. To correct for the potential endogeneity of SPS measures and TBTs and measurement errors, we use the number of SPS measures and TBTs imposed on other Association of Southeast Asian Nations (ASEAN) Member States as an instrument variable. Our results indicate that a higher number of SPS measures and TBTs applied by destination countries increases the probability of Vietnamese exporting firms’ skill acquisition. SPS measures also have higher positive impacts on product quality improvement and skill acquisition in the food processing sector. The SPS measures and TBTs have larger impacts on small firms than large firms. Foreign firms tend to acquire more technology and skills than domestic firms when facing SPS measures and TBTs by importing countries. Higher SPS measures and TBTs have more effects on the probability of acquiring skills by state-owned firms. However, the propensity of product quality and technological acquisition of non-state firms is much higher than that of state-owned firms when facing a greater level of SPS measures and TBTs.
    Keywords: trade, non-tariff measures, innovation
    JEL: F14 O33
    Date: 2021–06–22
  10. By: Larch, Mario (University of Bayreuth); Tan, Shawn (World Bank); Yotov, Yoto (Drexel University)
    Abstract: We propose a simple and flexible econometric approach to quantify ex-ante the “deep” impact of trade liberalization and the “hard” effects of protection with the empirical structural gravity model. Specifically, we argue that the difference between the estimates of border indicator variables for {affected and non-affected countries} can be used as a comprehensive measure of the change in bilateral trade costs in response to a hypothetical policy change. To demonstrate the effectiveness of our methods, we focus on the integration between the countries from the Central European Free Trade Agreement (CEFTA) and the European Union (EU); an important policy application that has not been studied before due to lack of data. We overcome this challenge by utilizing a new dataset on trade and production that covers all EU countries and all CEFTA members (except for Kosovo). The partial equilibrium estimates that we obtain confirm the validity of our methods, while the corresponding general equilibrium effects point to significant and heterogeneous potential gains for the CEFTA countries from joining the EU. The proposed methods can also be extended to ex-post analysis and are readily applicable to other applications, e.g. “hard” Brexit.
    Keywords: Trade Costs; Trade Policy; Structural Gravity; CEFTA; EU
    JEL: F10 F13 F14
    Date: 2021–07–30
  11. By: Briones, Roehlano M.
    Abstract: Much progress has been made in pursuing liberalization of agricultural trade in the Philippines. However, some significant tariff and non-tariff barriers remain. This study evaluates the economic impacts of completing the agenda of policy reform by removal of these remaining trade barriers. Scenario analysis using computable general equilibrium modeling finds that trade liberalization is associated with a more rapid expansion in imports and a wider agricultural trade deficit; slower growth of agricultural GDP and wages; higher overall GDP and higher industry- fiscal position and national savings. Liberalization radically accelerates growth of imports for Hogs, and Sugar, while slowing down export contraction of Coconut, Banana, Mango, and most other exports. It slows down output growth of most import substituting goods, while accelerating output growth of export-oriented sectors. Trade liberalization also accelerates growth in per capita consumption, as well as total per capita expenditure. Lastly, it increases social welfare, though the gain is small in relation to base year expenditure. <p>Comments to this paper are welcome within 60 days from date of posting. Email
    Keywords: trade liberalization, agriculture, Tariffs, non-tariff barriers, computable general equilibrium modeling
    Date: 2020
  12. By: Berger, Jurij; Brümmer, Bernhard; Fiankor, Dela-Dem; Kopp, Thomas
    Abstract: In the EU, the 2017/18 sugar marketing year (MY) was the first with no production quota and most of the price support gone. The Uruguay round restrictions on sugar exports were also not binding anymore, making the EU a net exporter. In MY2018/19 the EU turned back into a net importer as domestic sugar production fell. Developments on the demand side have been much less dramatic as global sugar consumption kept growing. These market and policy trends lead to relatively low international prices between 2018 and 2020 before trending upwards in 2021. These low prices were at least partially transmitted to European markets. In a net-export situation and without export restitutions, international export prices would be the anchor for intra-EU price formation. Under these circumstances, the still present interventionist side of the EU's sugar market policy could easily be viewed as irrelevant for price formation within the EU. However, in the more realistic scenario of the EU being a net-importer, price formation will continue to be strongly affected by the existing import restricting policies. There has been no change in the EU schedule of bound tariffs for sugar since the formation of the World Trade Organisation. Other external sugar market policies of the EU are unilateral market access to the common market (i.e., EPA, EBA), tariff rate quotas (e.g., the Balkan and CXL preferences) and preferences granted under bilateral agreements. This report assesses how effective the EU trade policies regarding sugar have been for EU sugar imports and sugar prices within the EU, followed by resulting policy recommendations. [...]
    Date: 2021
  13. By: Quimba, Francis Mark A.; Barral, Mark Anthony A.; Rosellon, Maureen D.; Calizo, Sylwyn C. Jr.
    Abstract: Trade is an important component of the Philippine economy. Contemporary trade is shaped primarily by the evolution of Global Value Chains (GVCs), and this has a significant implication in integrating developing countries, such as the Philippines, into the global economy. An economy's inclusion into GVCs is affected by different factors, one of which is through a Free Trade Agreement (FTA). The impact of FTAs has long been studied in the Philippines, but the network effects of FTA trade shocks and its resulting impact to industry firm performance have not been explored as much. This study contributes to filling that gap by calculating the direct impact of trade agreements to the performance of various sectors. The results of the analysis show that FTA imports have a positive and significant direct effect on industry growth and labor productivity. The network effects, however, are not statistically significant for real Gross Value Added growth. On employment, the direct effect is negative and statistically significant, but the network effects would temper this effect because the upstream effect arising from customers is positive and statistically significant. The shock also has a positive and statistically significant direct effect on labor productivity, which implies that increasing imports increases labor productivity of Philippine sectors. Comments to this paper are welcome within 60 days from date of posting. Email
    Keywords: trade, free trade agreement, Philippines, network effects, trade agreements, FTA, Economic Research Institute for ASEAN and East Asia (ERIA)
    Date: 2020
  14. By: Xunpeng Shi (Australia–China Relations Institute, University of Technology Sydney, Australia); Tsun Se Cheong (Department of Economics and Finance, The Hang Seng University of Hong Kong, Hong Kong); Michael Zhou (Australia–China Relations Institute, University of Technology Sydney, Australia)
    Abstract: This study examines the debates on supply chain resilience and the economic and emissions impact of supply chain rerouting using Australia and China trade as an example. The estimations demonstrate that, in both export and import cases, a trade embargo between Australia and China, despite being compensated by alternative supply chains, will cause gross domestic product loss and emissions increases for both countries. Moreover, even if all other countries gain from the markets left by China, many of them suffer from overall gross domestic product loss and emissions increase. The findings that ASEAN and China may also suffer from an Australia–China trade embargo, despite a gain in trade volume, suggests that no country should add fuel to the fire. The results suggest that countries need to defend rules-based trading regimes and continuously promote regional economic integration.
    Keywords: COVID-19; supply chain; global value chain; economic integration; Australia; China
    JEL: F18 Q56
    Date: 2021–07–07
  15. By: Florian Dorn; Clemens Fuest; Niklas Potrafke
    Abstract: We examine how trade openness influences income inequality within countries. The sample includes 139 countries over the period 1970–2014. We employ predicted openness as instrument to deal with the endogeneity of trade openness. The effect of trade openness on income inequality differs across countries. Trade openness tends to disproportionately benefit the relative income shares of the very poor, but not necessarily all poor, in emerging and developing economies. In most advanced economies, trade openness increased income inequality, an effect that is driven by outliers. Our results suggest a strong effect of trade openness on inequality in China and transition countries.
    Keywords: Trade openness, globalization, income inequality, instrumental variable estimation, panel econometrics, development levels, transition economies
    JEL: C26 D31 D63 F02 F60 H11 H20
    Date: 2021
  16. By: Lili Yan Ing (Economic Research Institute for ASEAN and East Asia (ERIA)); Gracia Hadiwidjaja (World Bank)
    Abstract: While East Asia has been moving forward with its regional integration agenda, one main challenge remains and is growing – non-tariff measures (NTMs). Animal, vegetable, and food products tend to be more regulated than other products, largely due to quality and safety standards. NTMs affect 66%–98% of total trade in those sectors. Our paper presents the frequency index, coverage ratio, and prevalence score to measure NTMs in the region. They are highest amongst food, vegetable, and animal products; and vary amongst other products, depending on the economy. We find that the high frequency index of NTMs does not necessarily translate to a high value of coverage ratio for trade. One explanation could be that countries tend to regulate imported goods which compete with the domestic products more than imported goods which they need.
    Keywords: East Asia, tariff, non-tariff measures, RCEP, WTO
    JEL: F F13 F14 F15
    Date: 2021–07–11
  17. By: Oliver Reiter (The Vienna Institute for International Economic Studies, wiiw); Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: The COVID-19 pandemic marks an unprecedented shock to global growth and trade and brought international dependencies into the spotlight. This triggered discussions on resilience and robustness of global value chains. In this paper we assess which products can be considered as vulnerable to trade shocks at the global level – referred to as ‘risky’ products – by constructing a ‘product riskiness indicator’ for 4700 globally traded products based on components such as market concentration, clustering tendencies, network centrality of players, or international substitutability. In a second step the bilateral imports of risky products are matched to multi-country input-output tables enabling the analysis of the importance of internationally sourced risky products by country and using industries. Higher-tech industries are more prone to supply-chain vulnerability given the large share of risky products in high-tech product categories. Third, we apply a ‘partial global extraction method’ to assess the GDP impact of reshoring. Assuming that imports of risky products are re-shored from non-EU27 to EU27 countries suggests an increase in the EU27 GDP of up to 0.5%. The non-EU27 countries lose from such re-shoring activities accordingly. This suggests that it is also in the interest of the supplier countries and industries to assure robust or at least resilient supply chains. Finally, selected policy aspects in the context of the envisaged EU Open Strategic Autonomy are debated.
    Keywords: supply chains, vulnerability, resilience, robustness, global extraction method
    JEL: F14 F17 F52
    Date: 2021–07
  18. By: Florian Dorn; Clemens Fuest; Niklas Potrafke
    Abstract: We examine how trade openness influences income inequality within countries. The sample includes 139 countries over the period 1970-2014. We employ predicted openness as instrument to deal with the endogeneity of trade openness. The effect of trade openness on income inequality differs across countries. Trade openness tends to disproportionately benefit the relative income shares of the very poor, but not necessarily all poor, in emerging and developing economies. In most advanced economies, trade openness increased income inequality, an effect that is driven by outliers. Our results suggest a strong effect of trade openness on inequality in China and transition countries.
    Keywords: trade openness, globalization, income inequality, instrumental variable estimation, panel econometrics, development levels, transition economies
    JEL: C26 D31 D63 F02 F60 H11 H20
    Date: 2021
  19. By: Ina C. Jäkel (Department of Economics and Business Economics, Aarhus University)
    Abstract: Most countries use export credit agencies (ECAs) to mitigate export-related credit constraints. We evaluate the direct effects of this policy on treated firms, as well as spillovers to non-treated firms. Using data from the Danish ECA and applying a difference-in-difference matching estimator, we find large positive effects on total sales, exports and purchases of treated firms. Next, we derive new measures for horizontal and backward spillovers based on production and purchase statistics. Our results show that upstream firms benefit from EKF guarantees issued to their potential customers, but that domestic producers are not harmed by guarantees given to their competitors.
    Keywords: Public export credit guarantees, Spillover effects, Export finance
    JEL: F12 F14 L15
    Date: 2021–07–26
  20. By: Rob Euwals (CPB Netherlands Bureau for Economic Policy Analysis); Harro van Heuvelen (CPB Netherlands Bureau for Economic Policy Analysis); Gerdien Meijerink (CPB Netherlands Bureau for Economic Policy Analysis); Jan Möhlmann (CPB Netherlands Bureau for Economic Policy Analysis); Simon Rabaté (CPB Netherlands Bureau for Economic Policy Analysis)
    Abstract: Contrary to other studies, we find no robust effect of an increase in trade with China and Central European (CEE) countries on local employment, wages and inequality in the Netherlands. If there is an effect, it is small, with positive effects of increased exports counteracting the negative effects of increased imports. One of the reasons why we find different results for the Netherlands is the fact that the Dutch manufacturing industry was already undergoing changes well before the emergence of China and the CEE countries and became less sensitive to import competition from China or the CEE countries. In addition, the Netherlands has collective wage negotiations, which may help to explain that we do not find any effects on wages. While the effect of increased trade with China and the CEE countries on manufacturing jobs is limited, it can create uncertainty for workers. The negative effect of import competition and the positive impact of export opportunities on manufacturing jobs also point to adjustments across industries and regions. Transitioning workers to new types of work can be difficult for these workers, as they are (temporarily) unemployed and may need to move to other regions.
    JEL: F16 J31 R11
    Date: 2021–07
  21. By: Alex Cobham (Tax Justice Network); Petr Jansky (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic); Jan Mares (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)
    Abstract: Despite a Sustainable Development Goals target to reduce trade mispricing and other illicit financial flows, it is not clear how to measure trade mispricing over time for countries worldwide. We aim to combine a broad coverage of countries by using UN Comtrade data and robustness by developing a new methodology that sheds new light on a potential scale of trade mispricing for many countries worldwide. Specifically, we provide new estimates of the trade reporting gap and, for the first time, we decompose it into seven individual components. Our explorative analysis reveals three main findings. We show, first, that trade reporting gap is large, in absolute values as well as relative to the overall trade. Second, conceptually well-defined components such as product and country misclassifications account only for a small share of trade reporting gap. The large remaining residual hints at the degree of imprecision in international trade reporting and calls for a significant improvement in data quality. Third, the low-income countries' trade reporting gap has the highest ratio relative to their GDP, which is consistent with existing literature that shows low-income countries to be more vulnerable to a variety of illicit financial flows.
    Keywords: international trade; trade reporting gap; trade mispricing; illicit financial flows; low-income countries; global development
    JEL: F13 F14 H26
    Date: 2021–07
  22. By: Andrew Greenland (Elon University); John Lopresti (William & Mary)
    Abstract: This paper proposes a novel strategy for identifying the effects of import competition on economic outcomes that avoids standard concerns related to the endogeneity of trade policy and provides a consistent measure of exposure to trade over time. Conditioning on the level of import tariffs, our approach exploits cross-industry differences in the relative importance of specific rather than ad valorem tariffs. As they are expressed in per unit terms rather than as a share of value, the effective protection provided by a given specific tariff varies with price levels. Using digitized tariff line data between 1900 and 1940, we relate inflation-driven changes in trade protection to changes in imports and labor market outcomes in the full count U.S. census. We show that our measure predicts import growth at both the industry and county level. Using our measure as an instrument, we show that import competition reduces labor force participation in traded sectors during this period. Labor market effects are widespread but fall most heavily on those with little experience or fewer outside labor market options: the young, seniors, and those in rural areas.
    Keywords: International Trade, Economic History, Trade Policy, Inflation, Labor Markets
    JEL: F1 F6 N1 N7 J2
    Date: 2021–06
  23. By: Subash Sasidharan; Ketan Reddy (Indian Institute of Technology Madras, Chennai, India)
    Abstract: This study investigates the role of digital infrastructure in shaping the global value chain (GVC) participation of Indian manufacturing firms. To examine the digitalisation and GVC nexus, a rich, firm-level, unbalanced panel of 4,875 manufacturing firms from the past 2 decades is employed to detail the rising importance of digital infrastructure in the Indian context and then to examine empirically the relationship between digitalisation and GVCs. Employing a logit model, a positive, significant impact of digitalisation is found regarding firms’ GVC participation. Further, subsample results highlight that digitalisation promotes integration of small firms and firms from low-technology industries into the GVC. The findings of the analysis are robust to alternate measures of the GVCs.
    Keywords: digitalisation, Indian manufaturing, global value chain margins, difference-in-difference
    JEL: F14 F15 L86 O14
    Date: 2021–06–01
  24. By: Marc J Melitz (Harvard University); Stephen J Redding (Princeton University, CEPR, NBER)
    Abstract: Two central insights from the Schumpeterian approach to innovation and growth are that the pace of innovation is endogenously determined by the expectation of future profits and that growth is inherently a process of creative destruction. As international trade is a key determinant of firm profitability and survival, it is natural to expect it to play a key role in shaping both incentives to innovate and the rate of creative destruction. In this paper, we review the theoretical and empirical literature on trade and innovation. We highlight four key mechanisms through which international trade affects endogenous innovation and growth: (i) market size; (ii) competition; (iii) comparative advantage; (iv) knowledge spillovers. Each of these mechanisms offers a potential source of dynamic welfare gains in addition to the static welfare gains from trade from conventional trade theory. Recent research has suggested that these dynamic welfare gains from trade can be substantial relative to their static counterparts.Discriminating between alternative mechanisms for these dynamic welfare gains and strengthening the evidence on their quantitative magnitude remain exciting areas of ongoing research.
    JEL: F13 O31
    Date: 2020–06
  25. By: Dmitry Matveev; Francisco Ruge-Murcia
    Abstract: This paper examines the conjecture that an increase in tariffs in a flexible exchange rate regime leads to the appreciation of the local currency. We focus on the reaction of the exchange rate market to tweets by U.S. President Donald Trump regarding possible tariff increases on Canadian and Mexican goods. The anticipation of trade restrictions leads to the U.S. dollar appreciating by 0.023% and 0.051% vis-à-vis the Canadian dollar and Mexican peso within five minutes of the tweet, and comparable percentages for forward rates up to five years ahead. Exchange rate appreciation may mitigate the expenditure-switching intended by the protectionist policy.
    Keywords: Exchange rates; Trade integration
    JEL: F31
    Date: 2021–07
  26. By: Quimba, Francis Mark A.; Rosellon, Maureen Ane D.; Calizo, Sylwyn Jr. C.
    Abstract: This research aims to understand the relationship between preferential margin and Free Trade Agreement (FTA) utilization rates in the case of the Philippines. It uses an empirical model to estimate this relationship using an FTA import ratio as a variable for utilization and the difference between most-favored-nation (MFN) and FTA tariff rates as a variable for margin. Findings suggest that the preferential margin is positively associated with the utilization rates for FTA agreements. Results are found to be relatively robust after controlling for different fixed effects variables. Among the Philippines’ FTA partners, margin is revealed to be significant in increasing imports from its neighbors in the Association of Southeast Asian Nations region. Furthermore, the study found a positive and significant relationship between margin and imports of nearly all commodity groups. <p>Comments to this paper are welcome within 60 days from date of posting. Email
    Keywords: Philippines, FTA utilization, imports, FTA utilization rate, preferential margin, margin of preference
    Date: 2020
  27. By: Wang, Feicheng; Wang, Zheng; Zhou, Zhou
    Abstract: Despite the increasing dominance of digital technology in modern communications, face-to-face interactions are believed to play an irreplaceable role in facilitating complex crossborder business transactions. However, empirical research to identify the impact often faces the challenge of two-way causality when cross-country in-person meetings are measured by international air passenger flows. We propose a novel instrumental variable to estimate the causal effect of international air travel on bilateral trade. Our identification strategy exploits variations in connecting flight capacities in the global flight network to leverage exogenous variations in the air connectivity between two countries. With the inclusion of stringent fixed effects in our estimations and checked for robustness against many possible threats to the identification, our results show that international air connectivity facilitates trade between countries, but only for industries with a higher reliance on relationship-specific investments or incomplete contracts. We also find that stronger enforcement of contracts in the importing country amplifies the trade promoting effect of air connectivity, and that trade in new products, relative to existing products, responds more positively to improved air transport links. Together, these findings suggest that in-person communications reduce transaction costs in international trade by facilitating the exchange of complex knowledge that cannot be easily and completely codified and by breaking market entry barriers.
    Keywords: air connectivity,face-to-face communications,connecting flights,trade
    JEL: F1 F2 R4
    Date: 2021
  28. By: Chau, Nancy H.; Garip, Filiz; Oritz-Bobea, Ariel
    Abstract: We study the self-selection of migrants at crossing locations along the Mexican-U.S. border distinguished by stark differences in physiography and border enforcement intensities. We model the triggers of hazardous crossings, and reveal self-selection patters that are alternative-specific: individuals with low economic prospects at origin communities are favorably selected at high-risk, high-reward crossing locations. Using comprehensive migrant journey level trajectories from the Mexican Migration Project (1980-2005), and identification based on enforcement reforms, community-level trade and weather shocks, as well as migrant-specificc characteristics, we estimate a McFadden choice model of border crossing. Results confirm the negative-selection of migrants in high-risk, high-likelihood of success border crossing locations, in addition to nuanced variations when economic shocks are idiosyncratic rather than permanent. The implications of these observations on the effectiveness of border walls and trade walls in mediating cross-border migration flows are also discussed.
    Keywords: Environmental Economics and Policy
    Date: 2021–03–31
  29. By: Aleman-Castilla, Benjamin.
    Abstract: This paper analyses the impact of non-preferential trade liberalization and exposure to globalization on “adequate earnings” in the Mexican manufacturing industries between 2003 and 2020, using data from the National Survey of Occupation and Employment and from the annual surveys of manufacturing industries. By means of panel data and three-stage least squares estimation strategies, it is found that, although ex- posure to globalization is not robustly associated with gross daily wages per employee, non-discriminatory trade liberalization and exposure to globalization contributed to a reduction in both the working poverty rate among employed persons and the share of employees with low pay rates. The paper is a contribution to the project “Trade, enterprises and labour markets: Diagnostic and firm level assessment (ASSESS)”, joint- ly funded by the European Commission and the ILO.
    Date: 2021
  30. By: Mitsuyo Ando (Keio University, Japan); Kenta Yamanouchi (Kagawa University, Japan); Fukunari Kimura (Keio University, Economic Research Institute for ASEAN and East Asia (ERIA))
    Abstract: Despite its impressive economic growth in the past few decades, India is slow in adopting a task-by-task international division of labour or international production networks (IPNs). Using international trade data for international comparison from multiple angles, this paper visualises the position of India – particularly in machinery IPNs and information and communication technology (ICT) services. Although machinery industries are at the centre of IPNs in East Asia, the paper clearly visualises that India has not yet participated in Factory Asia. Rather, trade data indicate that India is still engaged in import-substituting industrialisation. The paper also argues that ICT services are a strength for the Indian economy, and its competitiveness could be utilised effectively by combining new technologies with traditional industries such as manufacturing. India still has huge potential for utilising the mechanics of a new international division of labour to accelerate economic growth, innovation, and poverty alleviation.
    Keywords: International production networks, unbundling, machinery, global value chain (GVC) participation, gravity equation
    JEL: F14 F68 O53
    Date: 2021–06–30
  31. By: Ayako Obashi (Aoyama Gakuin University, Japan)
    Abstract: In the East Asian context, previous studies showed that trade occurring through production networks remained relatively steady amidst an economic shock and recovered faster and stronger once the shock was over. Using finely disaggregated product-level monthly bilateral trade data, we examine whether network trade in the East Asian region has been robust and resilient in face of the COVID-19 crisis, as well as in normal times, by conducting a series of survival analyses. We find a new set of empirical evidence suggesting the robustness of East Asian network trade in normal times and its resilience even amidst the COVID-19 shock.
    Keywords: East Asian production networks, COVID-19, survival analysis
    JEL: F14 F23
    Date: 2021–06–02
  32. By: Serafica, Ramonette B.; Quimba, Francis Mark A.; Cuenca, Janet S.
    Abstract: In January 2020, the Philippines joined the World Trade Organization Joint Statement Initiative on E-commerce which seeks to develop a multilateral agreement on trade-related aspects of e-commerce. This paper explores the costs and benefits of possible trade disciplines, particularly the moratorium on customs duties on electronic transmissions. Based on estimates of digitizable products, the foregone revenue of a moratorium represents about 0.10 percent and 0.65 percent of national government revenues using the average MFN rate and the bound tariff rate, respectively. Estimates based on broader definitions of electronic transmission range from 0.59 to 1.38 percent and from 3.68 to 8.59 percent of national government revenues using the average MFN rate and bound rate, respectively. However, there are practical difficulties and policy constraints which could limit the actual intake from tariffs. Various barriers to cross-border data flows could also adversely affect not only data-intensive industries but the economy more broadly. Thus, the country should support trade rules that facilitate cross-border data flows. At the same time, the government must invest in digital infrastructure necessary for an efficient and effective tax system fit for the digital economy.
    Keywords: e-commerce, WTO, digital trad, RTAs, customs duties, World Trade Organization
    Date: 2020
  33. By: Artecona, Raquel; Perrotti, Daniel E.
    Abstract: This research looks at Latin America and the Caribbean exports trajectory in the United States market in the almost two decades that followed China's accession to the WTO and compares it with that followed by China and other regions. The analysis exploits product-level United States imports data collected from the United States Census Bureau. The dataset contains information on more than 30.000 products per year for almost 200 countries.
    Date: 2021–07–13
  34. By: Ine Paeleman (University of Antwerp, Antwerp, Belgium); Shaker A. Zahra (Carlson School of Management, University of Minnesota, Minneapolis, Minnesota, U.S.A.); Jonas W. B. Lang (Ghent University, Ghent, Belgium, 4 Business School, University of Exeter, UK)
    Abstract: While an extensive strategy literature seeks to explain differences in firm performance, little is known about how much firm, industry and host-regions matter in explaining heterogeneity in export behaviors. The international entrepreneurship literature has highlighted that firm-, industry- and hostregion-level factors shape export behaviors, yet more research is needed about their relative contribution. We decompose the variance of export behaviors of 4,982 Belgian SMEs during 2006‒2014. Results indicate that firm effects account for the largest part in the variation of export behaviors, followed by industry and host-region effects. However, host-region effects matter more for INVs whereas firm effects matter more for established exporters. There are no substantial differences in industry effects among either sample of firms. Our study contributes to the literatures on variance decomposition and international entrepreneurship.
    Keywords: : new ventures; host-region effects; firm effects; export; variance decomposition
    Date: 2021–07
  35. By: Georgiadis, Georgios; Le Mezo, Helena; Mehl, Arnaud; Tille, Cédric
    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. JEL Classification: F14, F31, F44
    Keywords: dominant currency paradigm, international trade invoicing, markets vs. policies
    Date: 2021–07
  36. By: Roberto Antonietti; Paolo Falbo; Fulvio Fontini; Rosanna Grassi; Giorgio Rizzini
    Abstract: International trade is based on a set of complex relationships between different countries that can be modelled as an extremely dense network of interconnected agents. On the one hand, this network might favour the economic growth of countries, but on the other, it can also favour the diffusion of diseases, like the COVID-19. In this paper, we study whether, and to what extent, the topology of the trade network can explain the rate of COVID-19 diffusion and mortality across countries. We compute the countries' centrality measures and we apply the community detection methodology based on communicability distance. Then, we use these measures as focal regressors in a negative binomial regression framework. In doing so, we also compare the effect of different measures of centrality. Our results show that the number of infections and fatalities are larger in countries with a higher centrality in the global trade network.
    Date: 2021–07
  37. By: Estella Achinko (The Women’s Welfare Foundation (WoWF), Cameroon)
    Abstract: Recently, there has been a surge in female immigration from Africa to the Middle East, joining the global movement of migrants, while, constituting the dangers and feminist dilemmas posed by the rise in African women’s migration. Sub-Saharan African women face challenges as labor migrants in the process of leaving their home countries to the Middle East in search for job opportunities and to better their lives and families. At the center of these challenges have involved extreme dehumaniza-tion through slave labor, human trafficking, sexual exploitation while impacting their psychological and mental well being. This study analyzes the various factors that affect the migration and em-ployment of sub-Saharan African women domestic workers in the Middle East, based on both pull and push factors. The work further examines and shows how gender inequalities play a role in shaping women’s experiences in migration, and how States/governments in both the Middle East and Africa remain complicit in worsening women’s migratory experiences through laws that are be-ing established. This empirical based and theoretical discussion exposes the experiences of sub-Saharan African women through a transnational feminist lens and analysis. Also, it leads to a larger based discussion on transnational feminism and how we can construct a transnational platform that draws attention to the relationship between globalization and the international division of gendered labor. My overarching goal through this study is to draw attention to pursuing and expanding our discussions on feminist migration studies through diverse perspectives that are directed towards the empowerment of women in Africa in particular, and around the world in general.
    Keywords: Domestic labor, Gender, International Migration, Middle East, sub-Saharan Africa, Women
    Date: 2021–05
  38. By: Dünhaupt, Petra; Herr, Hansjörg; Mehl, Fabian; Teipen, Christina
    Abstract: The COVID-19 crisis is unique in many respects and, as the IMF (2021, p. 43) puts it: "a crisis like no other". A global economic contraction occurred that was unprecedented in its speed and depth. Support packages were put together in some parts of the world that also dwarfed anything seen up to that point. Also, the massive differences in how countries, sectors and people were affected by the crisis is unusual in many respects. What is already visible is that national government policies are playing a significant role during the pandemic and its impact on social groups. In this comment, we will briefly assess the impacts of the COVID-19 pandemic up to now (July 2021) and discuss possible future trends for the reorganization of global value chains (GVCs). First, we will give an overview of the pandemic's economic and social effects as well as various policy responses by governments and international organizations. Second, we will discuss the effects of the pandemic on GVCs as well as different scenarios of further restructuring dynamics in GVCs. To conclude, we will argue that although the COVID-19 pandemic might not fundamentally alter the current globalization model, it could serve as a catalyst for already ongoing changes.
    Keywords: COVID-19,Monetary Policy,Fiscal Policy,Crisis Management,Global Value Chains,Global North,Global South
    JEL: E52 E62 F01 F6
    Date: 2021
  39. By: Briones, Roehlano M.
    Abstract: Tariffication of quantitative restrictions on rice imports was a key policy reform of the Duterte administration. This study reviews recent trends in the rice market, and assesses the poverty and distributional effects of rice tariffication using a computable general equilibrium model with microsimulation. Owing to the price difference between domestic prices in Philippines and exporting countries, imports of rice have surged under tariffication. As a result, domestic prices have fallen, though gross marketing margins have increased, amplifying the effect of the drop in retail prices on both wholesale prices and palay prices. The price and associated economic adjustments are expected to cause an increase in income poverty as conventionally measured. However, the increases are rather small, and would diminish over time. The value of the income loss suffered by the poor is far below what the amount provided by law to address problems in the rice economy with tariffication. <p> Comments to this paper are welcome within 60 days from date of posting. Email
    Keywords: poverty, trade liberalization, income distribution, microsimulation, Computable general equilibrium
    Date: 2020
  40. By: Hulya Saygili; Aysun Turkvatan
    Abstract: The recent literature debates the significance of different regimes of inflation and trade linkages in explaining the relationship between inflation and alternative reference indicators. This paper contributes to this literature in several respects. First, it explores which states of the reference indicators are more related with low, normal or high regimes of inflation. Second, it takes globalization into account and performs the analysis for goods and services in the consumer basket classified with respect to their trade openness and content of intermediate imports: tradable/non-tradable items and items with low/high imported intermediate share. It applies Markov regime-switching models to determine the states of inflation and reference series then compare probability scores of matching different regimes of inflation and different regimes of reference indicators. Third, it computes Consumer Price Indices in tradable/non-tradable and low/high imported intermediate details for an emerging country, Turkey which distinguishes from the others with high trade openness, high global integration rate and implementation of inflation targeting regime.
    Keywords: Inflation regimes, Tradable/non-tradable inflation, Markov regime-switching models, Probability score analysis
    JEL: E31 F41 C11
    Date: 2021
  41. By: MIYAOKA Kunio
    Abstract: The second sentence of Article 2.4.2 of the Anti-Dumping Agreement, recognized as a provision that addresses ‘targeted dumping’, is one of the most controversial provisions of the WTO Agreement. There are largely two approaches to interpreting the second sentence: (i) some Members, including the United States, consider that this provision permits ‘zeroing’ where certain prescribed conditions are met; whereas (ii) others posit that this provision instead offers investigating authorities a means to address low-priced exports targeted to a particular purchaser, region, or time period by focusing on that particular group. In US – Washing Machines (DS464, 2016), The Appellate Body took the latter view and held that the use of zeroing was inconsistent with the second sentence. Nevertheless, the United States has continued its practice of using zeroing despite the Appellate Body's ruling, and a recent panel endorsed such practice by saying that the Appellate Body was wrong. The past and ongoing controversy over the interpretation of the second sentence of Article 2.4.2 finds its roots in the constructive ambiguity resulting from the Uruguay Round negotiations and highlights the complex issue of how to draw a proper line between the interpretation of a written treaty and 'gap filling’ by adjudicators.
    Date: 2021–07
  42. By: Weiwei Chen
    Abstract: Despite the Ethiopian government's commitment to attracting foreign direct investment to its emerging manufacturing sector and its shared interests with Chinese private businesses in building profitable investments, relations between Chinese private businesses and the Ethiopian government are not always amicable. 'Win-win' narratives tend to oversimplify the reality of Chinese investments in Ethiopia's manufacturing sector, despite shared interests.
    Keywords: Foreign firms, Political economy, Bargaining, Ethiopia
    Date: 2021
  43. By: Octavio Fernández-Amador; Joseph F. Francois; Doris A. Oberdabernig; Patrick Tomberger
    Abstract: Understanding the global energy network and the developments of energy efficiency is key to advance energy regulation and fight climate change. We develop a global panel dataset on energy usage inventories based on territorial production, final production and consumption over 1997-2014. We apply structural decomposition analysis to isolate energy efficiency changes and study the effectiveness of the European Union Energy Services Directive (2006/32/EC) on energy efficiency. High-income regions are net-importers of embodied energy and use a larger share of non-renewable energy than developing countries. The effectiveness of the Directive is mixed. The different ambition of national energy policies of the European Union members and some complementarity in supply chains underlie the different dynamics found. High-income countries share efficiency gains and changes in the mix of energy sources. These trends are not specific to the European Union. Energy policies in high-income countries are less effective for energy footprints. Our findings are indicative of energy leakage. Energy regulation should account for global supply chains and target energy footprints.
    Keywords: Energy usage, energy efficiency, energy footprints, renewable energy, MRIO analysis, Structural Decomposition Analysis, EU Energy Services Directive.
    JEL: F18 F64 O13 O44 Q40 Q54 Q56
    Date: 2021
  44. By: Alonso Alfaro Urena (Banco Central de Costa Rica and Universidad de Costa Rica); Isabela Manelici (Princeton University); Jose P. Vasquez (Princeton University)
    Abstract: This paper estimates the effects of multinational corporations (MNCs) on workers. To that end, we combine microdata on all formal worker-firm and firm-firm relationships in Costa Rica with an instrumental variable approach that exploits shocks to the size of MNCs in the country. First, using an event-study design, we find an MNC wage premium of nine percent. This premium reflects above market wages rather than compensation for disamenities. Next, we study the effects of MNCs on workers in domestic firms. As MNCs bring jobs that pay a premium, they improve outside options by altering both the level and composition of labor demand. MNCs can also enhance the performance of domestic employers through input-output linkages. Shocks to firm performance may then pass through to wages. We show that the growth rate of annual earnings of a worker experiencing a one standard deviation increase in either her labor market or firm-level exposure to MNCs is one percentage point higher than that of an identical worker with no change in either MNC exposure. Finally, we develop a model to rationalize the reduced-form evidence and estimate structural parameters that govern wage setting in domestic firms. We model MNCs as paying a wage premium and buying inputs from domestic firms. When hiring workers,firms incur recruitment and training costs. We find that workers are sensitive to improvements in outside options.Moreover, we estimate that the marginal recruitment and training cost of the average domestic firm is 90% of the annual earnings of a worker earning the competitive market wage. This high cost allows incumbent workers to extract part of the increase in firm rents coming from intensified linkages with MNCs.
    Keywords: Costa Rica
    JEL: F23 F16 J21 J23 J31 J63 M55
    Date: 2021–04
  45. By: WATANABE Shota
    Abstract: The judgement of Schrems II of the European Court of Justice (CJEU) dealt with compatibility of the Privacy Shield agreement (PS) and Standard Contractual Clauses (SCC) with EU legal system. As such, it may have a significant impact on Japanese policies on international data flows. In the Schrems I judgement, CJEU decided that US surveillance activities were incompatible with the European framework and declared the safe harbor agreement, the previous agreement governing the PS, invalid. US and EU governments set up PS to strengthen legal data protection against US surveillance. This most recent Schrems II judgement determined that the updated US system is still insufficient to meet the standards of the EU. This is the first case where CJEU analyzed the level of data protection of a foreign country and confirmed that standards of review under the Data Protection Directive, formed in the Schrems I judgement, are still applicable under the General Data Protection Regulation (GDPR), the successor of the Directive. This judgement revealed that Data Protection Authorities can order the suspension of international data transfers during their handling of complaints, even when an adequacy decision exists. It also determined that SCCs remain valid, however this is conditional upon additional safeguards based on the risks that exist in import countries, including surveillance risks. This article analyzed the similarity of the Schrems II judgement with the Data Free Flow with Trust (DFFT) initiative of the Japanese government, in addition to the accuracy of US criticism that the judgement is discriminatory against US surveillance when compared to EU members due to the fact that surveillance is excluded from protection under GDPR.
    Date: 2021–07
  46. By: Grace Nsomba
    Abstract: This paper analyses interconnection in telecommunications markets in the Southern African Development Community (SADC) region, focusing on cross-border roaming as well as international interconnection. These issues have been identified as critical for cross-border integration and regulatory alignment. The paper argues for a greater alignment of regulatory approaches across the SADC region to promote competition, lower prices, and innovation.
    Keywords: Southern African Development Community, Competition, Regulation, Telecommunication
    Date: 2021
  47. By: Matthias Fahn; Takeshi Murooka
    Abstract: This paper theoretically investigates how an increase in the supply of homogenous workers can raise wages, generating new insights on potential drivers for the observed non-negative wage effects of immigration. We develop a model of a labor market with frictions in which firms can motivate workers only through informal incentives. A higher labor supply increases firms’ chances of filling a vacancy, which reduces their credibility to compensate workers for their effort. As a response, firms endogenously generate costs of turnover by paying workers a rent, and this rent is higher if an increase in labor supply reduces a firm’s credibility. By this effect, a higher labor supply — for example caused by immigration — can increase workers’ compensation. Moreover, an asymmetric equilibrium exists in which native workers are paid higher wages than immigrants and work harder. In such an equilibrium, an inflow of immigrants increases productivity, profits, and employment.
    Keywords: Informal Incentives, Labor Supply, Immigration.
    JEL: D21 D86 F22 J21 J61 L22
    Date: 2021–05
  48. By: Faraji Dizaji, Sajjad; Ghadamgahi, Zeinab Sadat
    Abstract: This study aims to investigate the impact of economic sanctions on government health expenditures in developing resource export-based countries, using the dynamic panel data method over the period of 2000-2016. The results show that while the impact of non-smart sanctions on public health expenditures is negative and statistically significant, the impact of smart sanctions on public health expenditures is positive. These findings are evidence of widespread human rights violations by non-smart sanctions and their adverse effects on health among the innocent citizens. Moreover, the results confirm that smart sanctions are humane considering their positive impact on health expenditures. These results remain robust to different specifications of health expenditures and alternative definitions of weights of smart and non-smart sanctions.
    Keywords: smart Sanctions, non-smart sanctions, Public Health, Resource Exporting Countries, Dynamic Panel Data
    JEL: F51 I15
    Date: 2021–07–13
  49. By: Babic, Milan (University of Amsterdam); Dixon, Adam; Fichtner, Jan (University of Amsterdam)
    Abstract: Existing studies have scrutinized the rise of states as global owners and investors, yet we still lack a good understanding of what state-led investment does in a globalized economy, especially in its host states. Comparative capitalisms research has analyzed foreign state investment as a potential source of patient capital for coordinated and mixed market economies. However, this patient capital framework cannot explain the recent surge of protectionist sentiments, even among the ‘good hosts’ of state-led investment. Therefore, we extend the patient capital argument and develop a broader framework centered on the globalized nature of foreign state investment. We create and empirically illustrate a novel typology based on different modes of cross-border state investment – from financial to strategic – and different categories of host states. Our results provide a new pathway to study the rise and effects of cross-border state investment in the twenty-first century.
    Date: 2021–07–29
  50. By: Handmaker, J.D.; Nalule, C.
    Abstract: Prior to 1994, South Africa was infamous for its racialised policies and seemingly limitless measures of social control through a regime of apartheid, or racialised separation. Its unforgiving approach of previous, white-minority governments extended to mainly black foreigners, including refugees from the civil war in Mozambique from 1977–1992. After democratic elections in 1994, South Africa’s immediate post-apartheid migration regime was still largely oriented around an unreconstructed, apartheid-era approach of controlling the admission into, residence in, and departure from South Africa. This dire situation triggered a call for reform, to which policymakers were very slow to respond. Ultimately, in its efforts to develop and implement a border management and migration framework, the South African government has heavily relied on legal frameworks, border control policies, strategies and technologies transplanted from Europe and the United States. But, despite all this investment in a precedent-based yet foreign machinery, the government still struggles with its porous borders and irregular immigration. As a result, attempts to manage migration through policy reforms in South Africa have been fraught with challenges and contradictions. Particularly from around 2008, South Africa has not only embraced a spate of ever-more restrictive policies and laws that aim to sift out the desirable from the undesirable migrants, it has defied court judgements that have found the government to be in contravention of the law and the Constitution and obliged it to change. This has culminated in an explicitly deterrent and security-oriented approach that continues to lack effective judicial oversight. In this Working Paper, we present a comprehensive overview of South African migration and Border Control policies over a 25-year period. In a separate paper, which builds on this thick description, we argue that South Africa’s efforts to deter immigrants has not been framed by globally-accepted principles, based on South Africa’s ratification of international treaties governing refugees and migrants in particular, but rather has continued to be a policy of rather arbitrary enforcement is a sad reflection of deep-seated governance problems that the country faces generally.
    Keywords: migration, refugees, South Africa
    Date: 2021–07–28
  51. By: Nguyen, Cuong Viet
    Abstract: In this study, we examine characteristics of employment in FDI in Vietnam. Workers from FDI account for 5.6% of working people. Female and younger people are more likely to work the FDI sector. Compared with private and public sectors, the FDI sector has a lower share of workers who have tertiary education. The FDI sector has a high proportion of workers with social insurance, at 95%. However, there is a relatively large proportion of the FDI workers receiving daily wages and piece payment. The FDI workers have a high number of working hours and more likely to have overtime working hours. The FDI workers have lower wages per hour than those in the private and public sector. However, once observed characteristics of workers are controlled for, the FDI workers have higher hourly and monthly wages than the private as well as public workers. The proportion of FDI workers who moved out of the FDI sector was 11% over a three-month period and 31% over a two-year period. Older workers are more likely to move out of the FDI sector than young ones. There is no evidence that workers move out of the FDI sector after age 35.
    Keywords: FDI,employment,labor,Vietnam
    Date: 2021
  52. By: Serzo, Aiken Larisa O.
    Abstract: This paper identifies certain policy issues in the current regulatory infrastructure of the Philippines, which may prevent digital platforms from innovating and participating in the global digital economy. <p>In brief, these policy issues relate to the incoherence between the national innovation strategy of the government and the mishmash of regulations that digital platforms are subjected to. In particular, this relates to investment regulations, as well as regulations on mass media, retail, advertising, logistics, telecommunications, and education. Such landscape has led to a regulatory environment that is unable to provide certainty as to the legality of the activities of Philippine-based digital platforms. <p>There is a plethora of constitutional, statutory, and policy support for innovation, e-commerce, digitization, and entrepreneurship in the Philippines. However, there is a disconnect between these policies and the environment created by the actual implementation of the regulations. <p> Comments to this paper are welcome within 60 days from date of posting. Email
    Keywords: regulatory reform, digital platforms, foreign direct investments, internet law, mass media, startups, internet economy
    Date: 2020
  53. By: Bogatzki, Tamara
    Abstract: Kollektivistische Gesellschaften verfügen über ein höheres gemeinschaftsspezifisches Sozialkapital als individualistische Gesellschaften. Dieses gesellschaftsspezifische Sozialkapital macht das Verlassen der Gemeinschaft kostspieliger, kann jedoch anteilig zurückgewonnen werden, wenn Individuen in Zielländer mit entsprechenden Diasporen migrieren. Die Forschungsarbeit zeigt, dass eine höhere gegenseitige soziale Abhängigkeit im Herkunftsland die Wichtigkeit von Netzwerken für die Selektion in 30 OECD Zielländer signifikant steigert. Der Effekt ist konsistent über verschiedene empirische Spezifikationen hinweg. Für Migrant*innen aus kollektivistischen Herkunftsländern ist der Netzwerkeffekt bis zu doppelt zu groß wie für Migrant*innen aus individualistischen Herkunftsländern. Ein vergleichbares Muster zeigt sich für allgemeines Vertrauen, das in kollektivistischeren Kulturen niedriger ist und den vorgeschlagenen Sozial-KapitalMechanismus stützt.
    Keywords: Internationale Migration,Kulturökonomik,Wirtschaftsökonomik,Kollektivismus,Individualismus,Migrationsnetzwerke,Sozialkapital,International Migration,Cultural Economics,Economic Sociology,Collectivism,Individualism,Migration Networks,Social Capital
    JEL: F22 Z13
    Date: 2021
  54. By: Quimba, Francis Mark A.; Barral, Mark Anthony A.
    Abstract: International relations is an important aspect in the development of an economy and of a region. It provides economies opportunities to work together to address economic, social, political, environmental, and security issues. It also allows sharing of information, technology, and best practices to help economies progress together. Such cooperation is realized through participation and commitments in regional blocs, such as the Asia-Pacific Economic Cooperation (APEC). Exploring the patterns of such cooperation provides an understanding of how APEC has evolved. It also helps APEC identify the course that it may take in the next decades. The quality of cooperation may also reveal how member-economies have fared so far in their participation, as well as their economic or political stance on certain issues. To do such analysis, however, it must be noted that there are pieces of information that cannot be easily discerned by quantitatively analyzing available structured data. Analyzing cooperation may require a different type of methodology. This paper, therefore, explores the concepts and potential uses of content analysis in understanding international cooperation. <p> Comments to this paper are welcome within 60 days from date of posting. Email
    Keywords: content analysis, text analysis, international cooperation
    Date: 2020

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