nep-int New Economics Papers
on International Trade
Issue of 2021‒08‒16
29 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Optimal Tariffs and Trade Policy Formation: U.S. Evidence from the Smoot-Hawley Era By Douglas A. Irwin; Anson Soderbery
  2. Trade Policy By Lorenzo Caliendo; Fernando Parro
  3. A Simple Method to Quantify the Ex-Ante Effects of "Deep" Trade Liberalization and "Hard" Trade Protection By Mario Larch; Shawn W. Tan; Yotov V. Yotov; Yoto V. Yotov
  4. The Farsighted Stability of Global Tade Policy Arrangements By Stefan Berens; Lasha Chochua; Gerald Willmann
  5. Trade and Management By Bloom, Nicholas; Manova, Kalina; Van Reenen, John; Sun, Stephen Teng; Yu, Zhihong
  6. Decoupling Europe By Felbermayr, Gabriel; Gans, Steffen; Mahlkow, Hendrik; Sandkamp, Alexander-Nikolai
  7. Separating the political from the economic: the Russia–traffic in transit panel report By Crivelli, Pramila; Pinchis-paulsen, Mona
  8. The Wage Fund Theory and the Gains from Trade in a Dynamic Ricardian Model By Sugata Marjit; Noritsugu Nakanishi
  9. Local Shocks and Internal Migration: The Disparate Effects of Robots and Chinese Imports in the US By Marius Faber
  10. Dominant currencies and the export supply channel By Frohm, Erik
  11. Profit Shifting and Equilibrium Principles of International Taxation By Manon Francois
  12. The economic origins of authoritarian values: evidence from local trade shocks in the United Kingdom By Ballard-Rosa, Cameron; Malik, Mashail; Rickard, Stephanie; Scheve, Kenneth
  13. A Search and Learning Model of Export Dynamics By Jonathan Eaton; Marcela Eslava; David Jinkins; C. J. Krizan; James Tybout
  14. Influence of Brexit on education towards Europeanism By Marcel Lincényi; Martin Laczko
  15. Economic incentives modify agricultural impacts of a regional nuclear war concerning food insecurity and famine By Hochman, Gal; Zhang, Hainan; Xia, Lili; Robock, Alan; Aleti, Saketh; van der Mensbrugghe, Dominique Y.; Jagermeyr, Jonas
  16. Legislative and Jurisprudential Considerations Regarding the Restriction of the Free Movement of Goods on the EU Internal Market from the Viewpoint of Public Health Protection By Cristina-Luiza Erimia
  17. “Unusual, Unstable, Complicated, Unreliable and Temporary” Reinterpreting the Ebb and Flow of Globalization By Michael D. Bordo; Catherine R. Schenk
  18. The impact of foreign direct Investment on the development of weather index insurance for low-income farmers in Southern Africa By Mathithibane, Mpho Steve
  19. The Dynamics of International Exploitation By Jonathan F. Cogliano; Roberto Veneziani; Naoki Yoshihara
  20. Location choices of Chinese greenfield investments across EU regions: The role of industry and country-of-origin agglomerations By Yifei Wang; Andrea Ascani; Carolina Castaldi
  21. Applying Evolutionary Economic Geography beyond case studies in the Global North: Regional diversification in Vietnam By Moritz Breul; Fabio Pruß;
  22. The impact of climate legislation on trade-related carbon emissions, 1997–2017 By Eskander, Shaikh; Fankhauser, Samuel
  23. Faith and Assimilation: Italian Immigrants in the US By Gagliarducci, Stefano; Tabellini, Marco
  24. Labor Market Competition and the Assimilation of Immigrants By Christoph Albert; Albrecht Glitz; Joan Llull
  25. The economic costs of restricting international mobility By Elena Rusticelli; David Turner
  26. A Submission to the Joint Standing Committee on Treaties on the Regional Comprehensive Economic Partnership (RCEP) By Rimmer, Matthew
  27. Brexit, Covid-19, and possible frameworks for future UK/EU financial governance cooperation By Howell, Elizabeth
  29. Re-examining the Impact of Remittances on Human Development: Evidence from Sub-Saharan Africa By Umar Mohammed

  1. By: Douglas A. Irwin; Anson Soderbery
    Abstract: This paper examines the political economy of U.S. trade policy around the time of the Smoot-Hawley tariff of 1930, a period when policy was unconstrained by trade agreements. We consider a model of politically-optimal trade policy for a large country that can influence its terms of trade and where workers and firms lobby for protection. The predictions of the model hinge on import demand and export supply elasticities, which we estimate using detailed U.S. import data from 1927-35, as well as industry lobbying data. We find that tariff levels are largely determined by firm lobbies, but about about 5 percentage points of the tariffs are explained by terms of trade considerations. Decomposing the politically-optimal tariff in 1931 reveals an intensification of demand for protection by workers in the Smoot-Hawley tariff.
    JEL: F13 F14
    Date: 2021–07
  2. By: Lorenzo Caliendo; Fernando Parro
    Abstract: We review recent theoretical and empirical research on trade policy. We start by presenting reduced-form evidence of the effects of trade policy in the presence of supply-chain linkages, on the short-run and persistent effects of trade policy across local labor markets, and on the effects of trade policy uncertainty on employment and firms. We describe the shift-share method for trade policy analysis, discuss the interpretation of the estimated effects, and provide a theoretical foundation. We then describe new quantitative frameworks, methods, and data used to study the aggregate and distributional effects of trade policy in general equilibrium. We discuss how to take into account supply-chain linkages, local labor markets, and different sources of dynamics. As an illustration, we quantify the aggregate and distributional effects of the 2018 trade war between the United States and its trading partners. Finally, we present recent theoretical insights on optimal unilateral trade policy with firm and product heterogeneity in the context of large and small open economies with perfectly and imperfectly competitive product markets. We also discuss how optimal trade policy is shaped by the presence of multiple sectors, intermediate goods, and supply-chain linkages. We close the chapter by discussing the scope of future research.
    JEL: F1 F10 F11 F12 F13 F14 F15 F16 F19
    Date: 2021–07
  3. By: Mario Larch; Shawn W. Tan; Yotov V. Yotov; Yoto V. Yotov
    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
  4. By: Stefan Berens; Lasha Chochua; Gerald Willmann
    Abstract: We study the stability of trade policy arrangements under two regulatory scenarios, with/without PTAs. Unlike previous papers, we consider an extensive set of trade policy constellations and allow for unlimited farsightedness of negotiating parties. We find global free trade (GFT) to be uniquely stable under symmetry, with/without PTAs. When two countries are smaller (larger) than the third, availability of PTAs decreases (increases) the stability of GFT. Away from symmetry, GFT is not attainable, and without PTAs the non-cooperative MFN regime is the only stable outcome. The effect of (dis-)allowing PTAs thus depends on the size asymmetry of countries.
    Keywords: trade policy arrangements, stability, unlimited farsightedness
    JEL: F13 F55
    Date: 2021
  5. By: Bloom, Nicholas; Manova, Kalina; Van Reenen, John; Sun, Stephen Teng; Yu, Zhihong
    Abstract: We study how management practices shape export performance using matched production-trade-management data for Chinese and American firms and a randomized control trial in India. Better-managed firms are more likely to export, sell more products to more destinations, and earn higher export revenues and profits. They export higher-quality products at higher prices and lower quality-adjusted prices. They import a wider range of inputs and inputs of higher quality and price, from more advanced countries. We rationalize these patterns with a heterogeneous-firm model in which effective management improves performance by raising production efficiency and quality capacity.
    JEL: R14 J01 L81 N0
    Date: 2021–07–12
  6. By: Felbermayr, Gabriel; Gans, Steffen; Mahlkow, Hendrik; Sandkamp, Alexander-Nikolai
    Abstract: The COVID-19 pandemic revealed the vulnerability of international value chains in the face of global shocks. This has triggered a political discussion regarding a possible reshoring of vulnerable supply chains back home. The aim is to reduce dependencies on foreign suppliers and thus improve crisis resilience of the domestic economy. The debate is also rooted in the growing dependence on Asian suppliers and the colliding political and ideological systems between China and the West. Unilateral decoupling of the EU from China (a doubling of trade costs) would reduce real income in the EU on average by 0.8 percent. In terms of GDP in 2019, this equals a permanent loss in real income of 131.4 bn EUR. Should China retaliate, real income would fall by 1.0 percent (170.3 bn EUR). With its extremely interconnected economy, real income in Germany would even decline by 1.4 percent (48.4 bn EUR). China would also lose from such a trade war, with real income declining by 1.3 percent. Should the EU increase its trade barriers against all its non-European trading partners, real income in the Union would fall by 3.5 percent or 584.3 bn EUR in case of a unilateral increase and by 5.3 percent or 873.1 bn EUR in case the rest of the world responds by also raising trade barriers.
    Keywords: European Union,China,Germany,Trade,Global Value Chains,Europäische Union,Deutschland,Handel,Globale Wertschöpfungsketten
    Date: 2021
  7. By: Crivelli, Pramila; Pinchis-paulsen, Mona
    Abstract: This paper reviews the World Trade Organization (WTO) Panel Report Russia – Measures Concerning Traffic in Transit of April 2019. It constitutes the first attempt to disentangle the legal and political aspects related to the invoked essential security interests from the economic considerations underlying the measures imposed on the transit through Russia of goods exported from Ukraine to the Republic of Kazakhstan and Kyrgyzstan. One the one hand, the panel’s interpretation of Article XXI of the GATT denies Members unilateral determination over security exceptions. It further enables a pathway for future WTO panels to review possible abuses of security exceptions – a growing concern due to the rising complexity of transnational economic relations. On the other hand, our economic analysis suggests a stricter assessment of Russia’s transit restrictions was necessary. In particular, it argues that the panel adopted a circular assessment when considering the plausibility of whether Russia implemented its measures for the protection of its essential security interests at a time of emergency in international relations. Ultimately, although the panel’s focus on finding a diplomatic and legal path forward failed economic scrutiny a legal assessment argues that the panel’s findings fit the legal design of Article XXI:b of the GATT.
    Keywords: WTO; dispute settlement; national security; transit; trade barriers; Russia; CUP deal
    JEL: L81
    Date: 2021–07–14
  8. By: Sugata Marjit; Noritsugu Nakanishi
    Abstract: This paper explores the role of wage fund as the basic source of credit, capital or finance in a dynamic Ricardian model, which consists of three classes of agents: the workers, the capitalist, and the producers of goods. We introduce and develop an elaborate dynamic wage fund model in the context of contemporary economic theory. The modified golden rule can be derived based on a mechanism significantly different from the standard Ramsey-Cass-Koopmans optimal growth framework. We also show that, although international trade in a static setting in the wage fund framework has real asymmetric distributional effects on the welfare of the agents just like the Stolper-Samuelson theorem, those asymmetric distributional impacts are nullified in the dynamic setting. In fact, trade liberalization is Pareto improving along the balanced growth path.
    Keywords: wage fund, Ricardo model, modified golden rule, gains from trade, balanced growth path
    JEL: B12 B17 F10 F43
    Date: 2021
  9. By: Marius Faber
    Abstract: Migration has long been considered one of the key mechanisms through which labor markets adjust to economic shocks. In this paper, we analyze the migration response of American workers to two of the most important shocks that hit US manufacturing since the late 1990s – Chinese import competition and the introduction of industrial robots. Exploiting plausibly exogenous variation in exposure across US local labor markets over time, we show that robots caused a sizable reduction in population size, while Chinese imports did not. We rationalize these results in two steps. First, we provide evidence that negative employment spillovers outside manufacturing, caused by robots but not by Chinese imports, are an important mechanism for the different migration responses triggered by the two shocks. Next, we present a model where workers are geographically mobile and compete with either machines or foreign labor in the completion of tasks. The model highlights that two key dimensions along which the shocks differ – the cost savings they provide and the degree of complementarity between directly and indirectly exposed industries – can explain their disparate employment effects outside manufacturing and, in turn, the differential migration response.
    Keywords: Migration, employment, technology, trade.
    JEL: J21 J23 J61
    Date: 2021–07
  10. By: Frohm, Erik
    Abstract: Dominant currency pricing (DCP) weakens the demand-side effects of exchange rate changes on exports (Gopinath et al., 2020). However, adjustment in the export sector can still occur through other supply-side channels. With bilateral trade data at the HS2-product level, panel fixed-effects regressions and an instrumental variables (IV) approach, this paper presents several novel findings: (1), a depreciation of an exporter’s currency against the US-dollar increases total export volumes between non-US countries, whereas bilateral exchange rates matter very little. (2), there is no statistically significant increase in average exports per firm (the intensive margin), while the aggregate export response is mainly driven by an increase in the number of exporting firms (the extensive margin). (3), there is substantial heterogeneity in the export response to exchange rates against dominant currencies. Market concentration, approximated by the Herfindahl-Hirschman Index (HHI), reduces the response of both the extensive and intensive margins to the US-dollar exchange rate. These results highlight an “export supply channel” of exchange rates in a world with dominant currencies, deepen our understanding of aggregate export adjustment and further underline the heterogeneous export response in different sectors to exchange rate changes. JEL Classification: F14, F31, F41
    Keywords: dominant currencies, exchange rates, export heterogeneity, extensive margins of trade, intensive margins of trade
    Date: 2021–08
  11. By: Manon Francois
    Abstract: We study the choice between source-based and destination-based corporate taxes in a two-country model, allowing multinational firms to use transfer pricing to allocate profits across tax jurisdictions. We show that source-based taxation is a Nash equilibrium for tax revenue maximizing jurisdictions if domestic and foreign firms generate large revenues. We also show that destination-based taxes are a Nash equilibrium when firms generate low revenues, which implies the presence of multiple equilibria. Both the source and the destination principle coexist in equilibrium when domestic and foreign corporate revenues are intermediate. However, the source principle always tax-dominates the destination principle.
    Keywords: tax competition, multinational firms, corporate taxes, transfer pricing
    JEL: F23 H00 H25 H26 H71
    Date: 2021
  12. By: Ballard-Rosa, Cameron; Malik, Mashail; Rickard, Stephanie; Scheve, Kenneth
    Abstract: What explains the backlash against the liberal international order? Are its causes economic or cultural? We argue that while cultural values are central to understanding the backlash, those values are, in part, endogenous and shaped by long-run economic change. Using an original survey of the British population, we show that individuals living in regions where the local labor market was more substantially affected by imports from China have significantly more authoritarian values and that this relationship is driven by the effect of economic change on authoritarian aggression. This result is consistent with a frustration-aggression mechanism by which large economic shocks hinder individuals’ expected attainment of their goals. This study provides a theoretical mechanism that helps to account for the opinions and behaviors of Leave voters in the 2016 UK referendum who in seeking the authoritarian values of order and conformity desired to reduce immigration and take back control of policymaking.
    Keywords: globalization; backlash; public opinion; political economy; economic policy; Department of Political Science
    JEL: R14 J01 L81
    Date: 2021–07–16
  13. By: Jonathan Eaton; Marcela Eslava; David Jinkins; C. J. Krizan; James Tybout
    Abstract: Exporting abroad is much harder than selling at home, and overcoming hurdles to exporting takes time. Our goal is to identify specific barriers to exporting and to measure their importance. We develop a model of firm-level export dynamics that features costly customer search, network effects in finding buyers, and learning about product appeal. Fitting the model to customs records of U.S. imports of manufactures from Colombia we replicate patterns of exporter maturation. A potentially valuable intangible asset of a firm is its customer base and knowledge of a market. Our model delivers some striking estimates of what such assets are worth. Averaging across active exporters, the loss from total market amnesia (losing its current U.S. customer base along with its accumulated knowledge of product appeal) is US$ 3.4 million, about 34 percent of the value of exporting overall. About half is the loss of future sales to existing customers while the rest is the cost of relearning its appeal in the market and reestablishing visibility as an exporter. Given the importance of search, learning, and visibility, the 5-year response of total export sales to an exchange rate shock exceeds the 1-year response by about 40 percent.
    Date: 2021–08
  14. By: Marcel Lincényi (Alexander Dubček University of Trenčín); Martin Laczko (Alexander Dubček University of Trenčín)
    Abstract: The present research study explores the extent to which the withdrawal of the UK from the European Union may negatively affect the efforts to lead in particular young people to have a positive attitude towards this integration group, enhance a feeling of belonging to it or a certain sense of common European citizenship. The main aim of the paper was to identify those selected circumstances of Brexit and its campaigns that could evoke strong Eurosceptic sentiments and, on the contrary, look for ways to eliminate these negative tendencies. The authors discuss how a populist, emotionally focused and often misleading campaign has significantly contributed to the vote of Brexit in a referendum, which is a precedent that may under certain circumstances be repeated in other member countries. The paper also discusses the media dimension of the topic. Especially the question of spreading misinformation, hoaxes, conspiracy or propaganda in alternative media that can strengthen Euroscepticism in many EU countries, including the Slovak Republic.
    Keywords: Brexit,education,European Union,Euroscepticism,media
    Date: 2020–12–30
  15. By: Hochman, Gal; Zhang, Hainan; Xia, Lili; Robock, Alan; Aleti, Saketh; van der Mensbrugghe, Dominique Y.; Jagermeyr, Jonas
    Abstract: A nuclear war using less than 1% of the current global nuclear arsenal could produce climate change unprecedented in recorded human history and large impacts on agricultural productivity. These e↵ects would be most severe for the first five years after the nuclear war and may last for more than a decade. This paper calculates how the price and availability of food worldwide would change by employing the Environmental Impact and Sustainability Applied General Equilibrium model. It evaluates how results depend on assumptions about how free trade would continue in a post-war economic environment. The results suggest that preserving the world trading system is key to preventing widespread food shortages as a thriving world trading system minimizes the costs born from disruptions to climate. The analysis shows that the regional nuclear war scenario would a↵ect regional food supply systems, especially in high latitude regions. Although the global average impact on wheat is only a few percentage points, the regional nuclear war leads wheat production in EU 28 countries to plumed, on average, by more than 15%. The model also suggests that regional impacts may result in a plausible domino e↵ect with substantial negative ramifications for local food supplies.
    Keywords: Agricultural and Food Policy, Environmental Economics and Policy, International Relations/Trade
    Date: 2021–08
  16. By: Cristina-Luiza Erimia (Ovidius University of Constanta, Romania)
    Abstract: In the context of a globalized economy, a functioning internal market of goods is an essential component of the current and future prosperity of the European Union. Taking into account that the harmonized legislation of the European Union has enshrined the principle of free movement of goods in concrete terms and for specific products, such as, for example, medicinal products, this article examines the restrictions and prohibitions which, even if raise barriers to free trade, they defend important objectives, such as human health. In the context of the current major global developments, the article aims to analyze how the reasons justifying the limiting of the free movement of goods, imposed by the principle of precaution for reasons of environmental and human health protection, have been used over time. In all EU policies, the concept of public health is inextricably linked to sustainable development and the effective protection of the health and life of citizens cannot be conceived without the greening of free movement of goods, more and more visible in recent years. At the same time, new innovative products and technical progress involve new challenges, and a national regulatory framework that ignores these developments may soon become an obstacle to cross-border trade.
    Keywords: public health, European internal market, Court of Justice of the European Union, innovative medicinal product, the principle of precaution, harmonized legislation
    Date: 2021–05
  17. By: Michael D. Bordo; Catherine R. Schenk
    Abstract: In 1919, John Maynard Keynes wrote his famous tract The Economic Consequences of the Peace. In that work, he anticipated the collapse of the first era of globalization that began in the mid-nineteenth century. He admonished the short-sighted assumption that these years of relative peace and prosperity for many was a permanent norm, interrupted only briefly by the Great War. The diplomatic failures, lapses in leadership, and promotion of narrow interests and vision outlined by Keynes underpinned his prediction of a backslash of economic nationalism, trade protectionism, and recession. The paper revisits the turning points in the evolution of the global economic system since 1919 by focusing primarily on the evolution of the international monetary system and policy cooperation/coordination. We identify three disruptions and examine how each prompted a change in the underlying ideology about how the international monetary system should organize: World War I, Bretton Woods, 1970s Great Inflation and Managed Floating. Each turning point was characterized by different forms and institutions of cooperation, how rules (either explicit or implicit) were designed and implemented, and the crucial importance of the historical context.
    JEL: F02 F33 N10
    Date: 2021–07
  18. By: Mathithibane, Mpho Steve
    Abstract: This paper investigates the effect of Foreign Direct Investment (FDI) on the growth of agricultural insurance markets for low-income farmers in Southern Africa for the period 2010 to 2020. Agricultural insurance products for low-income farmers are typically based on weather index insurance contracts. These insurance contracts are cost-effective responses to uninsured agricultural risk in developing economies, and are often considered part of effective ex-ante climate change adaptation strategies. The approach followed in this paper is to assess the extent of FDI transactional flows based on a literature review of past and present pilots as well as market-based weather index insurance schemes. The findings revealed that FDI is relatively low to support weather index insurance development and there exists massive scale for expansion and economic growth opportunities. The study advocates for an improved policy environment with a focus on increasing agricultural productivity among low-income farmers while promoting parallel climate change mitigation strategies, this is likely to have spill-over effects on the acceleration and development of appropriate insurance solutions.
    Keywords: Foreign Direct Investment, weather index insurance, Southern African Development Community, Southern African.
    JEL: Q14
    Date: 2021
  19. By: Jonathan F. Cogliano; Roberto Veneziani; Naoki Yoshihara
    Abstract: This paper develops a theoretical and computational framework to analyse imperialistic international relations and the dynamics of international exploitation. A new measure of unequal exchange across borders -- an exploitation intensity index -- is proposed which can be used to characterise the structure of imperialistic international relations in the current global economy. It is shown that wealthy nations are net lenders and exploiters, whereas endowment-poor countries are net borrowers and suffer from exploitation. Capital flows transfer surplus from countries in the core of the global economy to those in the periphery. However, while international credit markets and wealth inequalities are sufficient to generate unequal exchange, they are proved to be insufficient for it to persist. Various possible factors are considered, including technical change and varying social norms, that may explain the persistence of international inequalities.
    Keywords: international exploitation; imperialism; capital movements; technical change
    JEL: B51 D63 C63 F21 F54
    Date: 2021–08
  20. By: Yifei Wang (Utrecht University); Andrea Ascani (Gran Sasso Science Institute); Carolina Castaldi (Utrecht University)
    Abstract: We model the impact of public housing supply on local development by using a spatial equilibrium model with a “share-altering†technological shift from agriculture to manufacturing. The model shows that a larger local availability of houses triggers greater population growth and, consequently, industrialization. It also suggests that these effects are stronger in places that exhibited, prior to the public housing plan, relatively higher population density. These implications are broadly confirmed by an empirical evaluation of the INA-Casa plan, a program implemented by the Italian government in the aftermath of WWII.
    Keywords: industry agglomeration, country-of-origin, agglomeration, multinational enterprises, foreign direct investment, China
    JEL: F23 L20 R30
    Date: 2021–07
  21. By: Moritz Breul; Fabio Pruß;
    Abstract: Hitherto, the path-dependent understanding of regional diversification in Evolutionary Economic Geography (EEG) has drawn largely on insights into industrialized countries. However, in the past few decades several regions in the Global South have undergone rapid structural transformations despite starting out with unfavourable regional asset bases. This raises the question as to whether the strong emphasis on endogenous capabilities in EEG also provides a sound theoretical framework for explaining these tremendous diversification dynamics. This paper therefore aims to re-evaluate the wider validity of the path-dependent conceptualization of regional diversification in the context of a lower-middle income economy. To this end, we analyse the diversification of Vietnamese regions between 2006 and 2015. In order to take into account context-specific conditions that characterize Vietnam’s economy, we add the role of foreign-owned firms and state-owned enterprises to the conceptualization of regional diversification processes. While the role of relatedness holds true for Vietnam, the presence of foreign- owned firms allowed Vietnamese regions to break away from path dependency and diversify to unrelated industries. The findings highlight that only by adapting the analysis to context-specific conditions are we able to understand how regional diversification takes place across different settings.
    Keywords: Regional diversification, relatedness, Evolutionary Economic Geography, path creation, Vietnam
    Date: 2021–07
  22. By: Eskander, Shaikh; Fankhauser, Samuel
    Abstract: We present empirical evidence of the international emissions impact from climate change legislation in 98 countries between 1997 and 2017, using data from Climate Change Laws of the World. Unlike traditional measures of carbon leakage, we focus on net carbon imports, that is, the difference between consumption and production emissions. Using different estimation techniques, we estimate the impact on carbon intensity of two legislation variables, recent legislation (passed in the last 3 years) and older legislation (passed more than 3 years ago). We find that recent legislation reduces production emissions more than consumption emissions, while older laws have a bigger impact on consumption emissions. The combined effect of these changes on net carbon imports is very small. Overall, we find no evidence that domestic climate legislation has increased international carbon leakage over the past two decades. Indeed, in high-income countries the longrun leakage rate may even be negative.
    Keywords: climate change legislation; climate policy; carbon leakage; pollution havens; production emissions; consumption emissions; Centre for Climate Change Economics and Policy; Strategic Research Fund; Faculty of Business and Social Sciences
    JEL: F18 K32 Q54 Q58
    Date: 2021–07–27
  23. By: Gagliarducci, Stefano (University of Rome Tor Vergata); Tabellini, Marco (Harvard Business School)
    Abstract: Ethnic religious organizations are often blamed for slowing down immigrants' assimilation in host societies. This paper offers the first systematic evidence on this topic by focusing on Italian Catholic churches in the US between 1890 and 1920, when four million Italians had moved to America, and anti-Catholic sentiments were widespread. Relying on newly collected data on the presence of Italian Catholic churches across counties over time, we implement a difference-in-differences design. We find that Italian churches reduced the social assimilation of Italian immigrants, lowering intermarriage, residential integration, and naturalization rates. We provide evidence that both stronger coordination within the Italian community and negative stereotyping among natives can explain these effects. Yet, Italian churches had ambiguous effects on immigrants' economic outcomes, and increased literacy and ability to speak English among Italian children.
    Keywords: immigration, assimilation, religious organizations
    JEL: J15 N31 Z12
    Date: 2021–07
  24. By: Christoph Albert (Christoph Albert); Albrecht Glitz (Albrecht Glitz); Joan Llull (Joan Llull)
    Abstract: In this paper, we show that the wage assimilation of immigrants is the result of the intricate interplay between individual skill accumulation and dynamic equilibrium effects in the labor market. When immigrants and natives are imperfect substitutes, increasing immigrant inflows widen the wage gap between them. Using a simple production function framework, we show that this labor market competition channel can explain about one quarter of the large increase in the average immigrant-native wage gap in the United States between the 1960s and 1990s arrival cohorts. Once competition effects and compositional changes in education and region of origin are accounted for, we find that the unobservable skills of newly arriving immigrants increased over time rather than decreased as traditionally argued in the literature. We corroborate this finding by documenting closely matching patterns for immigrants’ English language proficiency.
    Keywords: Immigrant Assimilation, Labor Market Competition, CohortSizes, Imperfect Substitution, General and Specific Skills
    JEL: J21 J22 J31 J61
    Date: 2021–08
  25. By: Elena Rusticelli; David Turner
    Abstract: COVID-19 related travel restrictions, including complete border closures, have been one of the first containment measures to be implemented by many countries and have been continuously adjusted according to the epidemiological situation in departure and destination countries. Despite some easing since mid-2020, the level of such restrictions remain high, especially in Europe and North America. The economic costs of restrictions on international travel are apparent in those sectors most directly impacted, as documented here. However, given their important interlinkages, a uniquely sectoral focus is likely to underestimate the broader macroeconomic costs, which are also assessed, albeit with less precision. The importance of these linkages is borne out by the fact that those OECD countries with the largest travel and tourism sectors -- such as Greece, Iceland, Portugal, Mexico and Spain -- are among those that have experienced the largest falls in GDP in 2020 . Indeed, the pre-crisis size of the travel and tourism sector is found to better explain cross-country differences in GDP growth in 2020, than exposure to any of the other sectors considered most vulnerable to COVID-19, or the average stringency of wider country lockdown measures during 2020. These estimates serve as a means to gauge the potential economic benefits of a rapid return to more normal travel arrangements facilitated by the implementation and agreements around testing and vaccination protocols.
    Keywords: COVID-19, macroeconomic costs, Restrictions to international mobility
    JEL: F2 F5 J6 R4 Z3
    Date: 2021–08–13
  26. By: Rimmer, Matthew (Queensland University of Technology)
    Abstract: Executive Summary This submission provides a critical analysis of the proposed Regional Comprehensive Economic Partnership (RCEP) – focusing in particular upon intellectual property and innovation policy. Recommendation 1 RCEP has a broad membership – even with the departure of India from the negotiations. Nonetheless, there remain outstanding tensions between participating nations – most notably, Australia and China. The re-emergence of United States into trade diplomacy will also complicate the geopolitics of the Asia-Pacific. Recommendation 2 The closed, secretive negotiations behind RCEP highlight the need for a reform of the treaty-making process in Australia, as well as the need for a greater supervisory role of the Australian Parliament. Recommendation 3 In terms of intellectual property principles and objectives, RCEP promotes foreign investment and trade, and intellectual property protection and enforcement. The agreement needs a stronger emphasis on public policy objectives – such as access to knowledge; the protection of public health; technology transfer; and sustainable development. Recommendation 4 RCEP establishes TRIPS-norms in respect of economic rights under copyright law. Recommendation 5 The agreement does not though enhance copyright flexibilities and defences – particularly in terms of boosting access to knowledge, education, innovation, and sustainable development. Recommendation 6 RCEP provides for a wide range of remedies for intellectual property enforcement – which include civil remedies, criminal offences and procedures, border measures, technological protection measures, and electronic rights management information. Such measures could be characterised as TRIPS+ obligations. Recommendation 7 The electronic commerce chapter of RCEP is outmoded and anachronistic. Its laissez-faire model for dealing with digital trade and electronic commerce is at odds with domestic pressures in Australia and elsewhere for stronger regulation of digital platforms. Recommendation 8 RCEP provides for protection in respect of trade mark law, unfair competition, designs protection, Internet Domain names, and country names. Recommendation 9 As well as providing safeguards against trade and investment action by tobacco companies and tobacco-friendly states, RCEP should do more to address the tobacco epidemic in the Asia-Pacific. Recommendation 10 RCEP has a limited array text on geographical indications, taking a rather neutral position in the larger geopolitical debate on the topic between the European Union and the United States. Recommendation 11 RCEP has provisions on plant breeders’ rights and agricultural intellectual property. There is a debate over the impact of such measures upon farmers’ rights in the Asia-Pacific. Recommendation 12 RCEP does not adequately respond to the issues in respect of patent law and access to essential medicines during the COVID-19 crisis. Likewise, RCEP is not well prepared for future epidemics, pandemics, and public health emergencies. Recommendation 13 RCEP provides limited protection of confidential information and trade secrets – even though there has been much litigation in this field in the Asia-Pacific. Recommendation 14 RCEP is defective because it fails to consider the inter-relationship between trade, labor rights, and human rights. Recommendation 15 RCEP fails to provide substantive protection of the environment, biodiversity, or climate in the Asia-Pacific. Recommendation 16 RCEP does little to reform intellectual property in line with the sustainable development goals. Recommendation 17 RCEP does not adequately consider Indigenous rights – including those in the Asia-Pacific. Recommendation 18 RCEP does not contain an investor-state dispute settlement mechanism. However, the Investment Chapter does have a number of items, which are problematic.
    Date: 2021–04–11
  27. By: Howell, Elizabeth
    Abstract: The EU project is at an inflection point. Intra-EU alliances are altering following the UK's departure, the EU's financial markets remain segmented, and there is limited appetite for completing the Banking Union. The second stage of Brexit negotiations also collided with the Covid-19 pandemic, which has strained economies around the world. These issues amount to a ‘polycrisis’ for the EU, raising existential questions about its future. This article focuses on one strand of the debates generated within this polycrisis: future UK/EU policy cooperation with respect to financial governance. The article discusses the importance of the financial services sector to the UK and the EU, and examines potential institutional options for future cooperation. In particular, it advocates harnessing dexterous aspects evident within precedents, including existing EU/third country association agreements, to develop a functional arrangement for future financial governance cooperation, which could also lead to closer UK/EU cooperation than currently appears likely.
    Keywords: coronavirus; Covid-19; Wiley deal
    JEL: F3 G3
    Date: 2021–06–28
  28. By: Patthira Phon-ngam
    Abstract: East-West Economic Corridor (EWEC) has originated from the cooperation of the countries in the Great Mekong Basin Sub-Region which consists of China, Myanmar, Vietnam, Laos, Cambodia, and Thailand. The purpose of this route is to create economic opportunity expectedly to generate more income and reduce poverty for the countries in this region . The length of this road is 1,450 kilometers. 950 of the 1,450 kilometers is in Thailand from Mukdahan Province to Tak Province. It will be the route of international cooperation based on warm friendship and trust in both social and economic aspects The promotion of business investment, travel and services, as well as human resource development will contribute to the development of the area. EWEC may cause the impact on this region in many ways higher security risk along cross border, political problems, drugs, international crime, illegal labors, worker trading, infectious disease, including the destruction of natural resources Key Words: Economic Corridor, Free Follow, Environmental Issues
    Date: 2021–03
  29. By: Umar Mohammed (Ankara Yildirim Beyazit University, Turkey)
    Abstract: Sub-Saharan Africa (SSA) continues to lose its skilled workers through migration in a form of brain drain. In return remittances from these migrant workers to the region have been surging and now constitute a major external source of finance. Do these increasing inflow of remittances contribute to human development? This paper examines the impact of remittances on human development in 30 SSA countries using the system Generalized Method of Moments (sGMM) approach for the period 2004-2018. The empirical results show that remittance inflows impact positively on human development in SSA. Based on the empirical results, it is imperative for SSA countries to have a clear-cut policy framework and strategies on migration to attract, increase and harness the full benefit of remittances.
    Keywords: Brain drain, Generalized Method of Moments, Human development, Remittances
    Date: 2021–05

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