nep-int New Economics Papers
on International Trade
Issue of 2021‒10‒04
33 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Inward FDI, outward FDI, and firm-level performance in India By Koray Aktas; Valeria Gattai
  2. Trade Policy is Real News: Theory and Evidence By George Alessandria; Carter Mix
  3. Labour conditions in regional versus global value chains: Insights from apparel firms in Lesotho and Eswatini By Giovanni Pasquali
  4. Services Domestic Regulation - Locking in good regulatory practices: Analyzing the prevalence of Services Domestic Regulation disciplines and their potential linkages with economic performance By Baiker, Laura; Bertola, Elena; Jelitto, Markus
  5. International Trade, Intellectual Property Rights and the (Un)employment of Migrants By Guichard, Lucas; Stepanok, Ignat
  6. From Hermit Kingdom to Miracle on the Han: Policy Decisions that Transformed South Korea into an Export Powerhouse By Douglas A. Irwin
  7. The Pro-Trade Bias of Offshoring By Bandyopadhyay, Subhayu; Basu, Arnab K.; Chau, Nancy H.; Mitra, Devashish
  8. Unilateral tax policy in the open economy By Kohl, Miriam; Richter, Philipp M.
  9. The Economic Impacts of the US-China Trade War By Pablo Fajgelbaum; Amit Khandelwal
  10. Export curbs on essential goods in the wake of Covid-19 and the least developed countries: Permanent scarring from a temporary outburst By Evenett, Simon J.
  11. Coulomb Force Model for International Trades By Mikrajuddin Abdullah
  12. Foreign direct investments . The international directly invested capital divided into cooperation capital and long-way flows. By ANDREI, Liviu; ANDREI, Dalina
  13. Nonlinear Pricing in the Transport Industry and the Gains from Trade By Zheng, Han; Fujii, Daisuke
  14. The Role of Trade in Economic Development By David Atkin; Dave Donaldson
  15. Price Discrimination in the Transport Industry and the Gains from Trade By Zheng, Han
  16. How Economic Ideas Led to Taiwan’s Shift to Export Promotion in the 1950s By Douglas A. Irwin
  17. Globalization, Governance and the Green Economy in Sub-Saharan Africa: Policy Thresholds By Asongu, Simplice; Nnanna, Joseph
  18. New Plant Engineering Techniques, R&D Investment, and International Trade By Stéphan Marette; Anne-Célia Disdier; Anastasia Bodnar; John C. Beghin
  19. Longing for Which Home: Evidence from Global Aspirations to Stay, Return or Migrate Onwards By Els Bekaert; Amelie F. Constant; Killian Foubert; Ilse Ruyssen
  20. Does Political Partisanship Cross Borders? Evidence from International Capital Flows By Elisabeth Kempf; Mancy Luo; Larissa Schäfer; Margarita Tsoutsoura
  21. Impact of FDI on Income Inequality in Pakistan By Mahmood, Haider; Chuadhary, AR
  22. FDI and Onshore Employment Dynamics : Evidence from German Firms with Affiliates in the Czech Republic By Körner, Konstantin; Moritz, Michael; Schäffler, Johannes
  23. Priorities for a development-friendly EU Carbon Border Adjustment (CBAM) By Brandi, Clara
  24. Crop Prices and Deforestation in the Tropics By Nicolas Berman; Mathieu Couttenier; Antoine Leblois; Raphaël Soubeyran
  25. Labor Market Nationalization Policies and Exporting Firm Outcomes: Evidence from Saudi Arabia By Patricia Cortés; Semiray Kasoolu; Carolina Pan
  26. The consequences of intrapreneurship in exporting firms: a structural-model approach By Gonçalo Nuno Rodrigues Brás; Miguel Torres Preto
  27. Keep Off the Grass : Grassland Scarcity and the Security Implications of Cross-Border Transhumance Between Niger and Nigeria By Camille Laville
  28. Economic Consequences of Landlockedness – What Makes a Difference? By Miao, Guannan; Woergoetter, Andreas
  29. Effect of the Utilization of Non-Reciprocal Trade Preferences offered by the QUAD on Economic Growth in Beneficiary Countries By Gnangnon, Sèna Kimm
  30. Run, graduate, run: Internationally mobile students’ reactions to changing political landscapes in Europe By Reinhard Weisser
  31. China’s outward direct investment and its impact on the domestic economy By Margit Molnar; Ting Yang; Yusha Li
  32. The external dimensions of the European green deal: The case for an integrated approach By Koch, Svea; Keijzer, Niels
  33. Cross-country spillovers of renewable energy promotion: The case of Germany By Abrell, Jan; Kosch, Mirjam

  1. By: Koray Aktas; Valeria Gattai
    Abstract: In recent years, India has emerged as a leading foreign direct investment (FDI) player, featuring prominently as both an origin and a destination of FDI. This study takes a firm-level perspective to empirically address the relationship between inward FDI, outward FDI, and firm-level performance in India. Using the Orbis database, our estimates reveal that Indian firms that have at least one foreign shareholder and/or one foreign subsidiary outperform those that do not. Controlling for endogeneity through propensity score matching and difference-in-difference techniques, we show that the deeper the FDI involvement, the larger the performance differentials. Moreover, compared with investing abroad, receiving foreign capital can contribute more toward enhancing the performance of Indian firms.
    Keywords: India, Foreign Direct Investment (FDI), inward, outward, firm-level performance
    JEL: F23 L25 O53
    Date: 2021–09
  2. By: George Alessandria; Carter Mix
    Abstract: We evaluate the aggregate effects of changes in trade barriers when these changes can be implemented slowly over time and trade responds gradually to changes in trade barriers because firm-level trade costs make exporting a dynamic decision. Our model shows how expectations of changes in trade barriers affect the economy. We find that while decreases in trade barriers increase economic activity, expectations of lower future trade barriers temporarily decrease investment, hours worked, and output. Further- more, canceling an expected decline in future trade barriers raises investment and output in the short run but substantially lowers medium-run growth. These effects are larger when the expected reform is bigger. In the data, we find that countries with more trade growth after the General Agreement on Tariffs and Trade (GATT) rounds decreased investment and hours worked in the years leading to the tariff cuts, as predicted by our model.
    Keywords: Trade Policy; Business Cycles; Sunk Costs; Gains from Trade
    JEL: E31 F12
    Date: 2021–09–24
  3. By: Giovanni Pasquali
    Abstract: We explore how decent work varies across Southern Africa apparel firms participating in global value chains (GVCs) and regional value chains (RVCs), respectively. We draw on cross-section survey data from 135 workers in 31 firms across Eswatini and Lesotho, two large apparel exporters serving both global and regional markets. We use a linear probability model to estimate how measurable standards and enabling rights vary depending on whether supplier firms participate in GVCs or RVCs.
    Keywords: Regional value chains, Global value chains, Decent Work, Apparel industry, Lesotho, Eswatini, Working conditions
    Date: 2021
  4. By: Baiker, Laura; Bertola, Elena; Jelitto, Markus
    Abstract: Services is the fastest-growing sector of today's global economy and trade in services is the most dynamic segment of world trade. However, its potential remains constrained by a variety of barriers: trade costs are estimated to be almost double those in goods, and more than 40% of trade costs are accounted for by regulation-related factors. Regulatory measures related to the permission to supply a service, i.e. those related to licensing and qualifications requirements and procedures, and technical standards, can particularly affect service suppliers' ability to trade. With a view to mitigating the unintended trade-restrictive effects of such measures, since 2017, a group of Members has been negotiating a set of regulatory disciplines in the context of the Joint Initiative on Services Domestic Regulation. Since the launch of negotiations in the Joint Initiative at the margins of the 11th WTO Ministerial Conference, a number of delegations have approached the WTO Secretariat for assistance on assessing to what extent their domestic regulatory regimes are consistent with the disciplines on services domestic regulation that the Joint Initiative has developed ("SDR disciplines"), as well as to understand what potential benefits the implementation of such disciplines might bring to their economies. This Paper expands on the individual assistance provided to WTO Members and has the following three objectives: (i) to examine the prevalence of the SDR disciplines in regional and bilateral trade agreements; (ii) to evaluate to what extent Members have already implemented SDRrelated measures in their national regulatory frameworks; and (iii) to analyze the potential linkages between the application of the SDR disciplines and economic performance. Firstly, based on a sample of 74 agreements concluded by 151 Members, we show that the adoption of domestic regulatory disciplines in trade agreements is a fairly established practice, particularly among "new generation" agreements concluded after 2005. Almost 40% of the Members in our sample, across all income levels and regions, being participants of the Joint Initiative or not, have committed on average to at least half of the SDR disciplines. Secondly, we analyze the level of implementation of the SDR disciplines in national regulatory frameworks using a sample of 86 Members. Not only have Members signed on to the SDR disciplines in their trade agreements, but they have also undertaken substantive regulatory reforms that implement these measures at the national level. We find that more than half of the economies in our sample have implemented in their regulatory regimes at least two thirds of the SDR disciplines under study. Lastly, while our research does not claim to establish causal relationships, we provide initial insights on the potential linkages between the application of the SDR disciplines and various indicators of economic performance, including services value-added, share of services trade, participation in global value chains, and level of entrepreneurship.
    Keywords: services domestic regulation,trade in services,trade agreements,economic performance
    JEL: F13 F15 L8 K33
    Date: 2021
  5. By: Guichard, Lucas; Stepanok, Ignat (Institute for Employment Research (IAB), Nuremberg, Germany)
    Abstract: "We study the effect of trade liberalization and intellectual property rights (IPR) protection on the unemployment rate of migrants relative to non-migrants. We build a North-South trade and growth model with a positive steady state rate of migration. We find that bilateral trade liberalization decreases the relative unemployment rate of migrants when migration is low and increases the relative unemployment rate when the migration rate is high. The results do not rely on assumptions about network effects, the probability to find a job for a migrant is independent of the relative size of the migrant diaspora. IPR protection leads to a higher relative unemployment rate of migrants regardless of the size of migration. We empirically test and confirm the theoretical predictions on trade liberalization and IPR protection using data for 20 OECD (Organisation for Economic Co-operation and Development) countries over the period 2000-2014." (Author's abstract, IAB-Doku) ((en))
    Keywords: Außenhandel ; Auswirkungen ; Beschäftigungseffekte ; Einwanderungsland ; Inländer ; internationale Migration ; internationaler Vergleich ; Liberalisierung ; Migranten ; OECD ; Arbeitslosenquote ; Urheberrecht ; 2000-2014
    JEL: F12 F16 F22 F43 J63 O34
    Date: 2021–07–30
  6. By: Douglas A. Irwin
    Abstract: In 1960, South Korea’s exports were about 1 percent of GDP, and the country’s ability to import depended almost entirely on US aid. After changing its foreign exchange and trade policies in the mid-1960s, Korea saw a surge in exports to more than 10 percent of GDP by the end of the decade. What factors account for the shift in policy that enabled this dramatic export growth to occur? The United States helped initiate the process by withholding financial assistance, pressuring Korea to devalue its currency and reform its foreign exchange regime. Initially, the Korean government resisted taking these steps, but in 1964 it became firmly committed to an export promotion strategy to boost foreign exchange earnings and end its dependence on American aid.
    JEL: F13 F31 N75
    Date: 2021–09
  7. By: Bandyopadhyay, Subhayu; Basu, Arnab K.; Chau, Nancy H.; Mitra, Devashish
    Abstract: Technological advance and improvements in communication technologies have facilitated the offshoring of jobs worldwide, where a typical scene following the supply chain involves developing countries importing finished products from developed countries that contain developing country labor content. We demonstrate that this pattern of offshoring can harbor a pro-trade bias, but only among countries upstream along the global supply chain. This upstream-downstream asymmetry has important implications on countries’ (i) incentive to violate trade agreements, and (ii) ability to leverage the dispute settlement procedures to punish violators. We then show that a well-enforced set of labor standards in developing countries, such as a binding minimum wage, resolves this conundrum by reviving the ability of the developing countries to use countervailing tariffs to punish trade agreement violators.
    Keywords: Labor and Human Capital
    Date: 2021–09–01
  8. By: Kohl, Miriam; Richter, Philipp M.
    Abstract: This paper examines the effects of a unilateral reform of the redistribution policy in an economy open to international trade. We set up a general equilibrium trade model with heterogeneous agents allowing for country asymmetries. We show that under international trade compared to autarky, a unilateral tax increase leads to a less pronounced decline in aggregate real income in the reforming country, while income inequality is reduced to a larger extent for sufficiently small initial tax rates. We highlight as a key mechanism a tax-induced reduction in the market size of the reforming country relative to its trading partner, resulting in a firm selection effect towards exporting. From the perspective of a non-reforming trading partner, the unilateral redistribution policy reform resembles a unilateral increase in trade costs leading to a deterioration of terms-of-trade and a decline in both aggregate real income and inequality.
    Keywords: Income inequality,Redistribution,International trade,Heterogeneous firms
    JEL: D31 F12 F16 H24
    Date: 2021
  9. By: Pablo Fajgelbaum; Amit Khandelwal
    Abstract: In 2018, the US launched a trade war with China, an abrupt departure from its historical leadership in integrating global markets. By late 2019, the US had tariffed roughly $350 billion of Chinese imports, and China had retaliated on $100 billion US exports. Economists have used a diversity of data and methods to assess the impacts of the trade war on the US, China and other countries. This article reviews what we have learned to date from this work.
    JEL: F0
    Date: 2021–09
  10. By: Evenett, Simon J.
    Abstract: Anything that jeopardises progress towards the Sustainable Development Goals - such as a global pandemic and how governments react to it - is thus a major source of concern, in particular for least developed countries (LDCs). The first half of 2020 witnessed governments imposing dozens of export curbs on essential medical goods and foods that the LDCs, among other nations, depend upon. Although some of those curbs have subsequently been removed, there is a substantial risk of a permanent reduction in essential goods supplied to LDC markets, as current multilateral trade disciplines on export controls do not specifically require a return to the pre-pandemic status quo. Let us not forget that the G20 trade and investment ministers declared on 3 November 2020 that "any emergency trade measures designed to tackle COVID-19, including export restrictions on vital medical supplies and equipment and other essential goods and services, if deemed necessary, are targeted, proportionate, transparent, temporary, reflect our interest in protecting the most vulnerable, do not create unnecessary barriers to trade or disruption to global supply chains, and are consistent with WTO rules" (G20, 2020). Evidence on resort to export restrictions suggests, however, that G20 fealty to this pledge was uneven. The purpose of this Briefing Paper is to outline the key policy developments implicating the trade in essential goods during the first nine months of the COVID-19 pandemic before drawing out the implications for development policy and trade policy cooperation. These lessons need to be taken on board quickly if the mistakes made in 2020 are not to be repeated in 2021, when policymakers and the private sector around the world face the imperative of the equitable and efficient global distribution of COVID-19 vaccines. Recent export controls on such vaccines suggest important lessons from last year have not been taken on board universally. The key findings and policy recommendations are: Permanent disruption to trade routes in medical goods and medicines cannot be ruled out as a result of temporary export curbs. Revisit the World Trade Organization (WTO) rules that allow export curbs during emergencies. LDCs should increase their buying power by joining together to buy medical goods and medicines from a diversified set of production locations. Such buying power would be multiplied if LDCs joined forces with leading development agencies and the multilateral development banks. Stockpiling in advance of any future pandemic offers no cast-iron guarantee, as no-one can know for sure what medical goods will be in high demand.
    Date: 2021
  11. By: Mikrajuddin Abdullah
    Abstract: I propose the coulomb force model to explain international trade volume as an alternative to the gravitational force model. The empirical equations to accurately describe international trade between countries deviated far from the original gravity equations. This deviation can be avoided by using the Coulomb force model in which all factors other than GDP and the distance between countries are aggregated into a dielectric constant.
    Date: 2021–07
  12. By: ANDREI, Liviu; ANDREI, Dalina
    Abstract: Face to a significant list of theories on the foreign direct investments origins we previously worked on a simple world level FDI=DIA (direct investments abroad) equality on both short and (especially) long terms supporting several approaches: first, the “world top-16”, then the “static-dynamic” difference for world FDI&DIA, an extended analysis on the world area divided in a number of 20 multi-country regions, the Eurasian territory case (taken apart) and specific international capital sections, as a specific structure of this world capital market. This below paper will be for one more issue : international capital sharing into cooperation capital and long-way flows. These two are new concepts on international directly invested capital, in the larger context of such concepts already introduced in our previous papers on this topic. In a methodological view , cooperation capital and long-way flows, will result as composing the total/global amount of international directly invested capital. In this respect there will be below an analysis if exist or not, more than cooperation capital and long-way flows in the total amount of international directly invested capital.
    Keywords: international capital, foreign direct investments (FDI) , direct investments abroad (DIA), flows, stocks, stocks balance
    JEL: F00 F20 F21
    Date: 2020–11–10
  13. By: Zheng, Han; Fujii, Daisuke
    Abstract: Recent empirical research documented that there exists a nonlinear pricing phenomenon in the shipping industry. This paper strives to show how this empirical regularity would alter conventional results in trade literature. This paper also shows that when nonlinear pricing in the shipping industry is considered, while the average productivity is higher conducive to the higher welfare level, the gains from trade are generally lower than the situation without. In addition, the model built in this paper offers micro foundations for the additive trade cost and features an endogenous response of shipping charges to the iceberg trade cost, an empirical finding emphasized in Hummels et al. (2009). In a much broader sense, this paper argues that the heterogeneous firm model offers a lens through which traditional results on some interesting objects, for example, gains from trade, could be altered.
    Keywords: Nonlinear pricing, Shipping industry, Heterogeneous firms, The gains from trade
    JEL: F12 F14 L25 L91 R41
    Date: 2021–09
  14. By: David Atkin; Dave Donaldson
    Abstract: This chapter (to appear in the forthcoming Handbook of International Economics, Vol. 5) develops a framework with which to interpret and survey answers to the question: how does increased openness affect aggregate welfare in a typical developing country? We decompose answers into four mechanisms: (i) an effect akin to technological progress that is purely mechanical; (ii) an effect on factoral terms of trade; (iii) a distortion revenue effect that exacerbates or mitigates the consequences of domestic distortions; and (iv) an effect of trade on the magnitude of those distortions themselves. Our focus lies in the last two mechanisms as these are especially important for the study of low-income settings where domestic distortions are thought to be rife. Throughout, we provide both a review of existing work on these topics and quantitative calculations that aim to gauge the magnitudes involved in a global model that is calibrated to match firm- and industry-level data on trade flows, production techniques, and a host of distortions (tariffs, other taxes, markups, bribes, theft, credit constraints, contracting failures, labor regulations, and public utility provision) that have featured in the literature.
    JEL: F0 O0
    Date: 2021–09
  15. By: Zheng, Han
    Abstract: This paper shows that the shipping industry could hamper the endogenous firm selection into production which is conducive to the overall productivity enhancement and welfare gains, through its discriminatory price. Naturally, if the shipping industry charges a higher transport price to the more productive manufacturing firms, sabotaging their competitive edges, those productive firms would not be capable of expanding as well as they otherwise would do under uniform transport fees, leaving enough space for the less productive firms to survive. Therefore, the effect from another source of gains from trade, firm selection is dampened. Elimination of this discriminatory practice could potentially increase the gains from trade.
    Keywords: Price discrimination, Shipping industry, Heterogeneous firms, The gains from trade
    JEL: F12 L91 R13 R41
    Date: 2021–09
  16. By: Douglas A. Irwin
    Abstract: Taiwan was perhaps the first developing country to adopt an export-oriented trade strategy after World War II. The factors usually associated with big shifts in policy—a macroeconomic crisis, a change in political power or institutions, lobbying by export interests, pressure from international financial institutions—were not present; it was ideas that were key. In 1954, economist S. C. Tsiang proposed that Taiwan boost export earnings rather than squeeze import spending to deal with its chronic shortage of foreign exchange. He recommended a currency devaluation to establish a realistic exchange rate and a market-based system of foreign exchange allocation to end the inefficient rationing by the government. Four years later, a leading policymaker, K. Y. Yin, fought for the adoption of Tsiang’s proposal, helping clear the way for Taiwan’s phenomenal growth in trade.
    JEL: F13 F31 N75
    Date: 2021–09
  17. By: Asongu, Simplice; Nnanna, Joseph
    Abstract: This study assesses how globalization modulates the effect of governance on CO2 emissions in sub-Saharan African countries. The empirical evidence is based on Generalized Method of Moments. The minimum level (or negative threshold) of FDI required for it to interact with political stability and contribute towards the green economy is 45% of GDP, while 90% of GDP is the maximum level (or positive threshold) required for trade to complement “voice & accountability” in mitigating CO2 emissions. 76 % of GDP and 80 % of GDP are respectively negative trade thresholds for government effectiveness and economic governance. The corresponding negative trade thresholds for the rule of law, corruption-control and institutional governance are respectively, 230% of GDP, 63.5% of GDP and 106.5% of GDP. Actionable openness policy thresholds are provided to inform policy makers on how governance interacts with globalization to promote the green economy.
    Keywords: CO2 emissions; Economic development; Africa
    JEL: C52 O38 O40 O55 P37
    Date: 2021–01
  18. By: Stéphan Marette; Anne-Célia Disdier; Anastasia Bodnar; John C. Beghin
    Abstract: New Plant Engineering Techniques (NPETs) may significantly improve both production and quality of foods. Consumers and regulators around the world might be reluctant to accept such products, which may cripple adoption and global market penetration of these products. We develop a parsimonious economic model for R&D investment in food innovations to identify conditions under which NPET technology emerges in a context of international trade. The framework integrates consumers' willingness to pay (WTP) for the new food, the uncertainty of R&D processes, the associated regulatory cost of approval, and the competition between domestic and foreign products. With generic applicability, the model enables the quantitative analysis of new foods that could be introduced in markets and then traded across borders. We apply the framework to a hypothetical case of apples improved with NPETs. Simulation results suggest that import bans and high values of sunk costs can reduce R&D investment in NPETs to suboptimal levels.
    Date: 2021–09
  19. By: Els Bekaert; Amelie F. Constant; Killian Foubert; Ilse Ruyssen (-)
    Abstract: Aspirations provide the underlying dynamics of the behavior of individuals whether they are realized or not. Knowledge about the characteristics and motives of those who aspire to leave the host country is key for both host and home countries to formulate appropriate and effective policies in order to keep their valued immigrants or citizens and foster their (re-)integration. Based on unique individual-level Gallup World Polls data, we model the aspirations or stated preferences to return or migrate onwards of immigrants across 138 countries worldwide. Our analysis reveals selection in characteristics, a strong role for soft factors like social ties and sociocultural integration, and a faint role for economic factors. Changes in circumstances in the home and host countries are also important determinants of aspirations. Results differ by the host countries’ level of economic development.
    Keywords: Return migration, Onwards migration, Migration aspirations, International migration
    JEL: J15 J61 J68 D01 F22 C55
    Date: 2021–09
  20. By: Elisabeth Kempf; Mancy Luo; Larissa Schäfer; Margarita Tsoutsoura
    Abstract: Does partisan perception shape the flow of international capital? We provide evidence from two settings, syndicated corporate loans and equity mutual funds, to show that ideological alignment with foreign governments affects the cross-border capital allocation by U.S. institutional investors. Moreover, we find that ideological alignment with foreign countries also affects investments of non-U.S. investors and can explain patterns in bilateral FDI flows. Our empirical strategy ensures that direct economic effects of foreign elections or bilateral ties between countries are not driving the result. Combined, our findings imply that partisan perception is a global phenomenon and its economic effects transcend national borders.
    JEL: G11 G15 G21 G23
    Date: 2021–09
  21. By: Mahmood, Haider; Chuadhary, AR
    Abstract: The study attempts to find out the impact of foreign direct investment on income inequality in Pakistan. It takes foreign direct investment, government expenditure on health and education and gross domestic product growth rate as independent variable and GINI coefficient as dependent variable. ADF, PP, Ng-Perron and Zivot-Andrews Unit root tests are used to find the unit root problem. ARDL and its error correction model are used to find the long run and short run relationships. The study finds the long run and short run relationships in the model. Foreign direct investment has a positive impact on GINI coefficient. So, foreign direct investment is responsible in increasing the income inequality in Pakistan. Government expenditure on health and education has a negative relationship with income inequality. Economic growth has an insignificant impact on income inequality.
    Keywords: FDI, Income Inequality, Economic Growth, Cointegration
    JEL: F2
    Date: 2021
  22. By: Körner, Konstantin; Moritz, Michael (Institute for Employment Research (IAB), Nuremberg, Germany); Schäffler, Johannes
    Abstract: "In this paper, we revisit questions about the onshore employment effects of firms that conduct foreign direct investment (FDI) in countries with substantially lower average wages. Our results derive from the use of rich administrative records on the universe of employees in German multinational enterprises (MNEs) that were active in the Czech Republic in 2010. Compared with former studies, the unique dataset in this study includes a much higher fraction of small and medium-sized firms and leads to strikingly different results for service MNEs. Applying coarsened exact matching for firms and an event-study design, we show that the domestic employment growth of MNEs decreases relative to that of non-MNEs and that the affected workers are those with low or medium educational attainment in the manufacturing sector and with medium or high educational attainment in the service sector. Regarding workers’ tasks, our results do not show that FDI affects routine jobs beyond a worker’s skill level." (Author's abstract, IAB-Doku) ((en))
    Keywords: Bundesrepublik Deutschland ; Tschechische Republik ; Ausland ; Auslandsinvestitionen ; Auswirkungen ; Beschäftigungseffekte ; Dienstleistungsbereich ; Inländer ; multinationale Unternehmen ; Niedriglohnland ; outsourcing ; qualifikationsspezifische Faktoren ; Arbeitskräftenachfrage ; verarbeitendes Gewerbe ; 1990-2009
    JEL: F23 J23 F66
    Date: 2021–05–10
  23. By: Brandi, Clara
    Abstract: The European Commission unveiled the Carbon Border Adjustment Mechanism (CBAM) in July 2021 as part of its "Fit for 55" climate-policy package. The European Commission had announced this trade-policy instrument under the Green Deal in 2019 as a means of implementing more ambitious climate-policy goals without energy-intensive sectors transferring their emissions abroad (carbon leakage). The CBAM proposal envisages imposing a levy on imports in certain energy-intensive European sectors that is proportional to the carbon content of the goods concerned. The proposal complements the EU's existing Emissions Trading System by requiring importers of goods purchased from especially energy-intensive sectors (steel, cement, electricity, fertiliser and aluminium) abroad to purchase carbon certificates based on emissions data from abroad. CBAM is primarily designed to promote an ambitious climate policy for the EU. However, the EU's current proposal creates the impression that it is mainly about improving domestic competitiveness at the expense of climate-policy effectiveness and development prospects.The draft legislation must now be fleshed out in detail by the EU member states and the European Parliament. In addition to addressing climate-policy effectiveness and compatibility with WTO legislation, account must also be taken of the impact on European trading partners, and, in particular, poor developing countries. Many developing countries are expected to face additional export costs as a result of the CBAM. The EU should carefully evaluate the associated disadvantages for developing countries and work towards achieving a development-friendly design of the mechanism. Corresponding improvements should be made to the CBAM in the EU's legislative process going forward: The EU must ensure that the border adjustments do not have a detrimental impact on poor countries. Least developed countries (LDCs) should be exempted from the CBAM. The EU should provide targeted support to the developing countries affected by the mechanism, for instance, by building their capacity for implementing the CBAM and for reducing carbon emissions in the sectors concerned. The EU should assist low- and middle-income partner countries with the decarbonisation of their manufacturing industries. The EU should also recycle revenue from the CBAM by deploying it primarily for climate-policy purposes abroad. The affected countries should be involved to a greater extent in future through consultations and diplomatic dialogue in the process for further developing the mechanism.
    Date: 2021
  24. By: Nicolas Berman (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, CEPR - Center for Economic Policy Research - CEPR); Mathieu Couttenier (ENS Lyon - École normale supérieure - Lyon, CEPR - Center for Economic Policy Research - CEPR); Antoine Leblois (CEE-M - Centre d'Economie de l'Environnement - Montpellier - UMR 5211 - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Raphaël Soubeyran (CEE-M - Centre d'Economie de l'Environnement - Montpellier - UMR 5211 - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: Global food demand is rising, pushed by growing world population and dietary changes in developing countries. This encourages farmers to increase crop production which, in turn, increases worldwide demand for agricultural land and the pressure on tropical forests. With a possible doubling of world food demand by 2050, this pressure is not likely to decrease in the next decades. While the impact of food demand on deforestation has been pushed forward in the medias, rigorous evidence using large-N data estimating the causal impact of crop price variations on deforestation remains scarce. Here, we quantify this impact over the twenty first century using high resolution annual forest loss data across the tropics, combined with information about crop-specific agricultural suitability and annual international commodity prices. We find a sizeable impact of price variations on deforestation: crop price variations are estimated to have contributed to 35% of the total predicted deforestation in the tropics over the period 2001-2018. We also highlight that the degree of openness to international trade and level of economic development are first-order local characteristics to explain the magnitude of the impact of crop prices on deforestation.
    Date: 2021–09–23
  25. By: Patricia Cortés; Semiray Kasoolu; Carolina Pan
    Abstract: In the last decade, Gulf countries have imposed hiring quotas to promote the participation of natives in the private sector and address high levels of unemployment, particularly among women and the youth. This paper explores how one such policy, Nitaqat in Saudi Arabia, affected the outcomes of exporting firms, the most productive sector of the non-oil economy. We find that whereas the policy was successful in increasing the employment of Saudi nationals by these firms, it came at a high cost. In the year following the announcement of the policy, relative to firms above the quota, firms below the quota were 1.5 percentage points more likely to exit the market, 7 percentage points less likely to export, and conditional on exporting, the value of their exports fell by 14 percent. Additionally, surviving treated firms reduced their labor force by 10 percent. We find that to comply with the policy, firms hired mostly lower-wage, low-skilled Saudis. The policy doubled the share of women in treated firms. Importantly, we find that these short-term effects persisted for at least three years after the policy’s implementation.
    JEL: J21 J61
    Date: 2021–09
  26. By: Gonçalo Nuno Rodrigues Brás (Universidade de Lisboa , IN+, LARSyS, Instituto Superior Técnico; Univ Coimbra, Center for Business and Economics Research, CeBER, Faculty of Economics); Miguel Torres Preto (Universidade de Lisboa , IN+, LARSyS, Instituto Superior Técnico)
    Abstract: A number of recent scientific articles have studied the relationship between entrepreneurial orientation (EO) and firm’s performance, though not all came in the scope of international entrepreneurship (IE). Researchers often test mediating or moderating variables that help explain this relationship. The extensive academic findings lead us to a wide range of mediating/moderating variables and to a lack of consensus in this domain. This study is in scope of IE literature, and it aims to provide new and robust insights supported by consistent empirical findings and to adopt this structural-model approach as a reference in the absence of academic consensus. Specifically, the paper examines the contribution of intrapreneurship to both the firm’s international orientation (IO) and performance in light of the IE guidelines. To this end, we examine how the EO of Portuguese exporters influences corporate performance taking into account the meditating effect of their IO on the EO – performance association through structural equation modelling. Results confirm that IO positively and significantly mediates the relationship between EO and corporate performance. EO and IO were also found to have a direct and positive effect on corporate performance. These findings confirm the relevance of intrapreneurship and international commitment to a better organisational performance and gives us empirical support to conclude that effort taken in these domains could enhance the exporters’ performance. Moreover, this study makes an empirical and theoretical contribution to the IE topic and therefore aims to be a reference to the literature in this domain.
    Keywords: Intrapreneurship, Entrepreneurial orientation, International orientation, Performance, Exporting firms.
    JEL: L26 L25
    Date: 2021–06
  27. By: Camille Laville (CERDI - Centre d'Études et de Recherches sur le Développement International - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne)
    Abstract: In 2018, 1,300 people were killed and 300,000 displaced as a result of herder-farmer conflicts in Nigeria. These tensions threaten the already weakened security, economic development and food security in Western Africa. Indeed, cross-border transhumance of herders during the dry season is an important economic activity recognized by the Economic Community of West African States (ECOWAS). This practice is also an important adaptation strategy to climate change for Sahelian States that have developed a comparative advantage in producing and exporting livestock. However, the establishment of a harmonized legal framework surrounding this practice is hampered by coordination failures between Coastal States (primary receivers of livestock flows) and the Sahelian States (primary providers of livestock flows). The growth of the Nigerian agricultural sector through the expansion of agricultural land threatens the last open pastures and transhumance corridors. Indeed, Nigeria faces a scarcity of arable land for a growing rural population. Is competition for the remaining Nigerian grassland a factor of violence between nomadic herders from Niger and Nigerian farmers? Recent empirical evidence suggests that climate-induced migration of herders to nearby agricultural areas (short transhumance) is associated with a higher risk of herder-farmer conflict for the remaining pastoral resources. However, no analysis has been made on the case of lengthy and costly transhumance. This article analyses the security implications of cross-border transhumance between Niger and Nigeria at the scale of 0.5x0.5 degree cells between 2006 and 2016. Using spatial panel techniques and satellite data on land cover, it questions the importance of grassland grabbing strategies as a cause of the recent herder-farmer conflicts in Nigeria. The obtained results hardly coincide with the idea that transhumant herders from Niger enter into conflict with Nigerian farmers over the grabbing of the last grazing resources. Ultimately, the economy of Sahelian countries, which depends on livestock trade, is threatened by a political instrumentalization of herder-farmer conflicts through the rhetoric of "invaders against farmers."
    Abstract: Pour l'année 2018, le bilan estimé des affrontements entre éleveurs et agriculteurs au Nigéria est de 1 300 victimes et 300 000 personnes déplacées. Ces tensions menacent la stabilité, le développement économique et la sécurité alimentaire déjà affaiblis en Afrique de l'Ouest. En effet, la transhumance transfrontalière des éleveurs pendant la saison sèche est une activité économique dont l'importance régionale est reconnue par la Communauté économique des États de l'Afrique de l'Ouest (CEDEAO). Cette pratique relève également d'une stratégie d'adaptation au changement climatique essentielle pour les États sahéliens qui ont développé un avantage comparatif dans la production et l'exportation de bétail avec leurs voisins. Cependant, la mise en place d'un cadre juridique harmonisé autour de cette pratique est entravée par des problèmes de coordination entre les États côtiers (principaux destinataires des flux de bétail) et les États sahéliens (principaux fournisseurs de flux de bétail). La croissance du secteur agricole nigérian par l'expansion des terres agricoles menace les derniers pâturages ouverts et les couloirs de transhumance. En effet, le Nigéria est confronté à une pénurie de terres arables pour une population rurale croissante. La concurrence pour les derniers pâturages nigérians est-elle un facteur de violence entre les éleveurs nomades du Niger et les agriculteurs nigérians ? Des preuves empiriques récentes suggèrent que la migration des éleveurs induite par le climat dans les zones agricoles voisines (courte transhumance) est associée à un risque plus élevé de conflit éleveur-agriculteur pour les ressources pastorales restantes. Cependant, aucune analyse n'a été faite sur la question de l'accès aux pâturages lors de transhumances longues et coûteuses. Cet article analyse les implications sécuritaires de la transhumance transfrontalière entre le Niger et le Nigéria à l'échelle de cellules de 0,5x0,5 degrés entre 2006 et 2016. En utilisant des techniques de panel spatial et des données satellitaires sur la couverture terrestre, il questionne l'importance des stratégies d'accaparement des prairies comme une cause des récents conflits éleveurs-agriculteurs au Nigéria. Les résultats obtenus coïncident peu avec l'idée que les éleveurs transhumants depuis le Niger entrent en conflits avec les agriculteurs Nigérian pour l'accaparement des dernières ressources en pâturage. In fine, l'économie des pays sahéliens liée au commerce du bétail est menacée par l'instrumentalisation politique du conflit entre éleveurs et agriculteurs passant par l'utilisation de la rhétorique "envahisseurs versus agriculteurs".
    Keywords: Niger,Nigeria,Climate change,Agriculture,Migration
    Date: 2021–09
  28. By: Miao, Guannan (OECD); Woergoetter, Andreas (TU Wien)
    Abstract: The economic disadvantage of landlocked countries is well established in the literature (Faye et al, 2004). This paper investigates the economicimpact of landlockedness on convergence. The econometric analysis is carried out for three income groups and the time before and after the global financial crisis (GFC) of 2007/9. The quality of institutions, investment rate, landlockedness, international trading costs and trade openness are used as conditional variables. The time period under investigation is 1996 to 2016. This paper contributes to the debate between geography (Sachs, 2003) and institutions (Rodrik et al, 2004) as main obstacles for higher economic growth in landlocked countries.
    Date: 2021–09
  29. By: Gnangnon, Sèna Kimm
    Abstract: At the second conference of the UNCTAD in 1968, member states adopted a Resolution (Resolution 21(ii)) which stated, inter alia, that the offer of the non-reciprocal trade preferences (NRTPs) by wealthier countries to developing countries should aim to increase the export earnings of developing countries, promote their industrialization, and accelerate their rates of economic growth. The extant empirical literature has assessed whether the objectives of increasing export earnings, and promoting industrialization have been achieved, and reached mixed evidence. The present article is the first to investigate empirically whether the third goal, that is, whether NRTPs have been instrumental in promoting economic growth in beneficiary countries, has been achieved. Especially, it has examined the effect of the utilization of NRTPs (and not merely the eligibility to NRTPs) offered by the QUAD countries on the economic growth performance of beneficiary countries. It has, additionally, considered how development aid (which is another major policy tool available to wealthier countries to assist developing countries) interact with NRTPs in influencing beneficiary countries' economic growth performance. Two main blocks of NRTPs have been considered here, namely, Generalized System of Preferences (GSP) programs, and other trade preferences programs. The analysis has used a set of 90 beneficiary countries of NRTPs that are concurrently recipients of development aid, over the period 2002-2018. The two-step system generalized methods of moments is the primary estimator used to conduct the empirical analysis. Results have shown that while a higher degree of utilization of each of these two blocks of NRTPs has been associated with high economic growth rate, development aid enhances this positive effect. This highlights the need for donors to support a development strategy based on the provision of both development aid and NRTPs, if they were to help beneficiary countries to promote economic growth.
    Keywords: Utilization of non-reciprocal trade preferences,Economic Growth,QUAD countries,Developing Countries
    JEL: F13 F43 F35 O10
    Date: 2021
  30. By: Reinhard Weisser (Nottingham Trent University)
    Abstract: Over the last decades, Europe attracted an increasing number of internationally mobile students. The related influx of talent into European labour markets constituted an important factor to the knowledge economy. This research addresses the question whether changing political landscapes in Europe, e.g. an increasing scepticism concerning migrants or support for right-wing parties, translated into a diminishing attractiveness of European economies. To this end, international graduates’ staying behaviour in 28 European destination countries is investigated based on bilateral stay rates for almost 150 countries of origin in the years 2009 to 2019. Controlling for various immigration regimes and institutional settings, international graduates are found to display a high level of sensitivity with respect to political dynamics: A distinct dominance of the right political spectrum may lower the number of international graduates willing to stay by up to 50%. The effect is particularly strong in election years when voters’ political preferences become more salient. Eventually, this amounts to a considerable loss for European economies since international graduates have acquired destination country specific human capital and are easily integrated into host societies.
    Keywords: migration policies, graduate mobility, labour market integration, political preferences
    JEL: A1
    Date: 2021
  31. By: Margit Molnar; Ting Yang; Yusha Li
    Abstract: Overseas direct investment by Chinese firms increased eight fold over the past decade, making the country as an important investor in stock terms as Japan. Investing in leasing and business services appears to make up nearly half of China’s ODI stock according to official sources, though it is over-estimated owing to the fact that all investment through third parties and vehicles appears under this sector, not under the one where the investment is actually made. Correcting for this caveat by using firm-level M&A and greenfield investment data indicates that in fact China’s ODI mostly goes to resource-based manufacturing. Also, China is just as an important manufacturing investor as is Japan. Estimation results show that overseas direct investment affects domestic employment negatively in the majority of sectors, indicating substitution instead of a complementary relationship. Furthermore, ODI reduces the speed of labour market adjustment to its long-run equilibrium and increases the domestic price elasticity of demand for labour. There is considerable heterogeneity across sectors, but the impact of ODI on domestic fixed asset investment tends to be negative in most sectors.
    Keywords: fixed asset investment, greenfield investment, labour market adjustment, M&A, ODI, overseas direct investment
    JEL: F21 F23 F62 F63 F66
    Date: 2021–10–05
  32. By: Koch, Svea; Keijzer, Niels
    Abstract: The European Green Deal conveys the EU's ambition to adjust and "green" its economic growth trajectory and become climate-neutral by 2050, as part of its contribution to the Paris Agreement and the Sustainable Development Goals. While being ambitiously pursued within the Union's own borders, the Green Deal also has strong external ramifications, as the EU leaves a tremendous ecological footprint in other parts of the world. The EU has referred to this "external dimension" of the Green Deal without further defining it, and appears to primarily understand it as a reflection of the internal strategies and as a call for the EU's partner countries to follow a sustainable recovery trajectory similar to its own. A number of proposed EU domestic strategies (e.g. biodiversity, blue economy or farm-to-fork) contain chapters on global aspects, yet the EU seems to follow a predominantly sectoral logic to implementing the external dimension of the Green Deal. This approach has certain shortcomings. For one, it creates uncertainty for partner countries on how to adapt to the EU's new rules, regulations and standards, and the extent of EU support for adjusting to this. It also creates a vacuum for member state engagement by means of their economy, finance, climate and foreign policies. Last but not least, it lacks clear governance mechanisms to address potentially conflicting policy objectives and to strive for greater coherence of domestic and external EU policies. Ultimately, the EU needs to define the different external dimensions of the Green Deal and promote an integrated approach. Whereas this applies universally to all partner countries of the EU, we focus in particular on developing countries in this paper. We consider these dimensions to be (1) promoting the Green Deal in bilateral and regional cooperation, (2) ensuring coherence and addressing negative spillovers, both in trade and domestic policies and (3) the EU's global leadership in multilateral fora. Combining those three dimensions and governing them across EU institutions and member states allows for the external response to become an integral part of the EU Green Deal. Such an integrated approach allows the EU to claim leadership vis-à-vis other global powers, make credible commitments in multilateral fora for successful "green diplomacy", and use its market and regulatory power to transform itself and others. In its bilateral relationships, the EU needs to strike a "deal" in the true sense of the word: together formulating and "owning" cooperation agendas that are clear in terms of what is in it for the EU's partners and how the EU will cushion the potential negative adjustment costs of partners. Overall, the EU needs to avoid a "projectisation" of the external dimension of the Green Deal and clarify how the different Commission services and member states aim to work together to deliver the Green Deal, including through its various external policy areas, of which development is just one.
    Date: 2021
  33. By: Abrell, Jan; Kosch, Mirjam
    Abstract: Electricity generation based on renewable energy (RE) sources such as wind and solar replace the most expensive generators that often rely on fossil fuels. In response to RE promotion, wholesale electricity prices and carbon emissions are therefore expected to decrease. In interconnected electricity systems, this so-called merit- order effect stimulates a change in electricity trade ows. Therefore, conventional generation and prices in neighboring countries are also likely to decrease. The impact of these trade reactions on carbon offsets is ambiguous and depends on installed generation and interconnector capacities. Moreover, the cross-border merit-order effect causes opposing effects on consumers and producers: Generators' profits decline, while consumers benefit from lower electricity costs and an increase in the consumer surplus. Using a rich data set of hourly technology-specific generation and wholesale market price data for ten central European countries, we estimate the domestic and cross-border impacts of German RE for the years 2015 to 2020. We find that German RE generation offset 79 to 113 MtCO2 per year. The major emission effect took place in Germany (64 - 99 MtCO2). The average cost of emission offset of 212 to 321e/t were almost entirely borne by German market participants. Neighboring countries do not bear costs, but a significant shift from producer to consumer rents is observed.
    Keywords: Renewable promotion,Electricity prices,Merit-order effect,Cross-border impacts,Carbon emissions
    JEL: Q41 Q42 Q58
    Date: 2021

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