nep-int New Economics Papers
on International Trade
Issue of 2021‒11‒15
forty-two papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. The Impact of Unilateral Trade Policy on International Trade Structure By Cho, Moonhee; Bae, Chankwon; Lee, Kyu Yub; Kang, Jungu; Kim, Ji Hyeon
  2. The Crisis of the WTO and New Direction for Negotiation Strategies of Korea By Suh, Jin Kyo; Lee, Cheon-Kee; Lee, Jukwan; Kim, Jihyeon; Jung, Myeonghwa
  3. Global Value Chains from an Evolutionary Economic Geography perspective: a research agenda By Ron Boschma; ;
  4. Trade liberalization and manufacturing productivity changes in Korea during the past three decades By Song, Yeongkwan
  5. The Impact of Intellectual Property Protection through FTA on International Trade By Kim, Hyunsoo; Yea, Sangjun; Keum, Hyeyoon; Kang, Min Ji
  6. EU Exports to the World: Effects on Employment By RUEDA CANTUCHE Jose; PINERO MIRA Pablo; KUTLINA-DIMITROVA Zornitsa
  7. COVID-19’s impacts on global value chains, as seen in the apparel industry By Castañeda-Navarrete, Jennifer; Hauge, Jostein; López-Gómez, Carlos
  8. Trade globalization and social spending in Spain, 1850-2000 By Sergio Espuelas
  9. Changes in the Regional Structure of China's Domestic Market and Implications By Jung, Jihyun; Choi, Won Seok; Kim, Hong Won; Kim, Joo Hye
  10. Brazil's Transportation Infrastructure and Competitiveness in the Soybean Market By Xi He; Guilherme DePaula; Wendong Zhang
  11. The Economic Effects of Immigration Restriction Policies - Evidence from the Italian Mass Migration to the US By Davide M. Coluccia; Lorenzo Spadavecchia
  12. The Critique from the U.S. Against the WTO's Appellate Body: Revisiting the "Legitimate Regulatory Distinction" Test under the TBT Agreement (Japanese) By NAIKI Yoshiko
  13. Cross-Border Institutions and the Globalization of Innovation By Bian, Bo; Meier, Jean-Marie; Xu, Ting
  14. Working Paper 349 - Revisiting the Relationship between Trade Liberalization and Taxation By Rabah Arezki; Alou Adesse Dama; Grégoire Rota-Graziosi
  15. Working Paper 354 - Taxation, Foreign Direct Investment and Spillover Effects in the Mining Sector By Seydou Coulibaly; Abdramane Camara
  16. The United States' Competitive Positions in Beef, Corn, Pork, Soy, and Wheat Exports: 1980-2019 By Chen-Ti Chen; John M. Crespi; Yongjie Ji
  17. Korea's Strategy on Trade Agreements with Developing Countries in Africa and the Pacific Regions By La, Meeryung
  18. Optimal Unilateral Carbon Policy By Samuel Kortum; David A. Weisbach
  19. Network analysis regarding international trade network By Xiufeng Yan; Qi Tang
  20. Chinese supply chain shocks By Khalil, Makram; Weber, Marc-Daniel
  21. Upheaval in China's Corn Market: Will China expand its Tariff Rate Quota for Corn? By Xi He; Dermot J. Hayes; Wendong Zhang
  22. Production and Trade of ICT from an EU Perspective By Amat Adarov; Dimitrios Exadaktylos; Mahdi Ghodsi; Robert Stehrer; Roman Stöllinger
  23. The Synergy between Governance and Economic Integration in Promoting Female Economic Inclusion in Sub-Saharan Africa By Pamela E. Ofori; Simplice A. Asongu; Vanessa S. Tchamyou
  24. The impact of foreign capital inflows on poverty in Vietnam: An empirical investigation By Musakwa, Mercy T; Odhiambo , Nicholas M
  25. The Synergy between Governance and Economic Integration in Promoting Female Economic Inclusion in Sub-Saharan Africa By Pamela E. Ofori; Simplice A. Asongu; Vanessa S. Tchamyou
  26. The distributional effect of a massive exodus in Latin America and the role of downgrading and regularization By Carlo Lombardo; Julian Martinez-Correa; Leonardo Peñaloza-Pacheco; Leonardo Gasparini
  27. China's FDI in Europe and Europe's Policy Response By Yang, Pyoung Seob; Lee, Cheol-Won; Na, Suyeob; Oh, Taehyun; Kim, Young Sun; Yoon, Hyung Jun; Gang, Yoo-Duk
  28. Approximately Efficient Bilateral Trade By Yuan Deng; Jieming Mao; Balasubramanian Sivan; Kangning Wang
  29. Does Labor Protection Increase Support for Immigration? Evidence from Switzerland By Mirjam Bächli; Teodora Tsankova
  30. Differential Impacts of US-China Trade War and Outbreak of COVID-19 on Chinese Air Quality By Muhammad, Shahbaz; Avik, Sinha; Muhammad Ibrahim, Shah
  31. Who Pays a Visit to Brussels? The Firm Value of Cross-Border Political Access to European Commissioners By Biguri, Kizkitza; Stahl, Jörg R.
  32. What makes us move, what makes us stay: The role of culture in intra-EU mobility By Ekaterina Sprenger
  33. Non-traded goods, factor markets frictions, and international capital flows By Jacek Rothert; Jacob M. Short
  34. Reshoring: An Overview, Recent Trends, and Predictions for the Future By Dikler, Jennifer
  35. Discussion of: the state expropriation risk and the pricing of foreign earnings By Cascino, Stefano
  36. Managing Refugee Protection Crises: Policy Lessons from Economics and Political Science By Matti Sarvimäki
  37. Digital Platform Markets of ASEAN and India: Implications for Cooperation with Korea By Kim, Jeong Gon; Na, Seung Kwon; Lee, Jaeho; Yun, ChiHyun; Kim, Eunmi
  38. Merger Review Regimes in the ASEAN Region and Case Analysis of Grab-Uber Merger By Jang, Yungshin; Kang, Gu Sang
  39. Carbon Offshoring: Evidence from French Manufacturing Companies By Damien Dussaux; Francesco Vona; Antoine Dechezleprêtre
  41. Borderline Disorder: (De facto) Historical Ethnic Borders and Contemporary Conflict in Africa By Emilio Depetris-Chauvin; Ömer Özak
  42. Globalisation and the Slope of the Phillips Curve By Emanuel Kohlscheen; Richhild Moessner

    Abstract: Uncertainty grows with the diffusion of unilateral trade policies. In particular, the average value of the World Uncertainty Index increased by four to fivefold compared to 1990. Recently, unilateral trade policies are spreading internationally. Non-tariff measures including anti-dumping, countervailing measures, SPS and TBT are increasing. Moreover, both developing and developed countries are adopting trade-disruptive measures and these are rapidly increasing. This report analyzes the widespread diffusion of unilateral trade policies and changes in trade structures
    Keywords: trade policy; trade structure
    Date: 2021–09–16
    Abstract: The WTO is facing a historical crisis. Its main functions ‒ namely, providing a negotiating forum, administrating WTO trade agreements and monitoring national trade policies, and resolving trade disputes ‒ have been significantly paralyzed. Although the cause of the crisis is partly institutional, higher uncertainty is also a considerable problem aggravating the fate of the multilateral trading system. Such uncertainty comes from two factors: rising protectionism, and trade frictions between developed and developing countries including those between the United States and China. Meanwhile, the WTO also needs to respond to rapid structural changes in global trade. The center of the world’s trade is shifting towards trade in services. The development and spread of information and communication technology (ICT) are making it easier to supply services across borders. The regionalization or localization of global value chains (GVCs) continues and GVCs are shifting towards knowledge-based goods. Therefore, the WTO faces a historical challenge it is highly unlikely to survive without proper reflection on the new trends of global trade. With Korea no longer claiming for preferential treatments as a developing country, it could take relatively firm negotiating positions at the WTO concerning market expansion and improved access towards foreign markets. Moreover, Korea could contribute as a mediator to speak for balancing the interests of both developed and developing countries on conflicting issues, such as the developing country status. Korea also needs to establish a more precise give-and-take negotiation strategy in future WTO negotiations on agriculture, non-agriculture, and service sectors to maximize its national interests. In particular, Korea should put stress on services and TRIPs negotiations to ensure its international competitiveness on those sectors. Trade in services and IP will dominate trade in goods. Korea also should focus on how to raise the efficiency and stability of the East-Asian regional value chains by strengthening its co-operation with China, Japan, and Southeast Asia. At the same time, Korea needs to consider ways to become the bridgehead connecting East Asia's value chains to either North America's value chains or the EU's value chains utilizing given FTAs with those economies. Finally, Korea should prepare for the emergence of various forms of plurilateral negotiations and where appropriate, take lead and reflect its national interests on the final outcome.
    Keywords: WTO; Korea; negotiation; global trade; service; ICT; GVCs; TRIPs; value chain
    Date: 2021–06–01
  3. By: Ron Boschma; ;
    Abstract: The research agendas of Evolutionary Economic Geography (EEG) and Global Value Chains (GVC) have developed more or less independently from each other, with little interaction so far. This is unfortunate because both streams of literature have a lot to offer to each other. This paper explores how, looking at four strands in the GVC literature. Promising crossovers between EEG and the GVC literature are identified but also some missing links that need to be taken up in future research. These new research avenues, promoting the adoption of an evolutionary perspective on GVCs, are expected to enrich both literatures in mutual ways.
    Keywords: Evolutionary Economic Geography, Global Value Chains, Global Production Networks, Global Innovation Systems, regional diversification, relatedness
    JEL: B52 F23 O19 O33 R10
    Date: 2021–11
  4. By: Song, Yeongkwan
    Abstract: One of the key goals of trade policy, which includes FTAs, should be the enhancement of productivity in the overall economy through the improved productivity of the tradable sector. This can be achieved by enhancing the productivity of existing firms, and eliminating lowproductivity firms to improve overall industrial productivity. This study examines the effects of Korea's trade policies in terms of bolstering the productivity of existing firms in the tradable sector. It shows that Korea's FTAs with major trade partners, such as the EU, US and China, have failed to provide meaningful impetus. As for raising productivity through firm exits, this study confirms that it has a positive impact on raising total factor productivity (TFP) across industry. However, further studies are needed to substantiate that this is owed to trade liberalization. To raise overall economic productivity, future trade policies should be designed to enhance the productivity of existing firms, and expel those with low productivity. A trade policy-driven expansion of imports and exports could brighten the prospects for the tradable sector, encouraging firms to boost productivity. It is imperative that efforts are made to increase the positive effects of trade liberalization and minimize the negative effects on society by shifting the focus of the current Trade Adjustment Assistance system towards supporting workers instead of firms, and improving retraining and vocational programs for the unemployed, among others.
    Date: 2020
    Abstract: The importance of intellectual property rights (IPRs) for innovation has grown and the protection of intellectual property in international trade has also been strengthened. AI-related patent applications have been increasing rapidly and many AI patents are being filed in various industries. Intellectual property also represents one of the main controversies of U.S.-China trade relations in the past three decades and remains one of the core issues behind the two countries' recent trade conflicts. As a result, global protection for IPRs has been expanded in recent decades. This article investigates changes in the trend regarding the IP protection level in FTA and how the IP protection through FTAs has affected the composition of aggregate trade flows of member countries in order to provide basic findings necessary to formulate the FTA policies regarding the protection of IPRs in Korea.
    Keywords: FTA; IPRs; international trade; policy
    Date: 2021–08–09
  6. By: RUEDA CANTUCHE Jose (European Commission - JRC); PINERO MIRA Pablo (European Commission - JRC); KUTLINA-DIMITROVA Zornitsa
    Abstract: The Trade Policy Review also specifies areas and actions that are critical to achieving the EU’s objectives in the medium term. One of the headline actions is to support an informed discussion on trade policy by inter-alia conducting analytical work on the impact of trade policies on employment. Against this background, DG TRADE and the European Commission’s Joint Research Centre (JRC) have prepared a new updated version of two published studies in 2015 and 2018 based for the first time on reliable and comparable official statistics to understand how global trade flows affect employment in the EU. This report illustrates in detail the relationship between trade and employment for the EU as a whole and for each EU Member State, using the recently released Eurostat’s FIGARO database, jointly compiled by Eurostat and JRC. Furthermore, the analysis will complement this information with detailed data on employment by industry, skill and gender using other complementary employment statistics. All indicators relate to EU exports to the world to reflect the scope of EU external trade policymaking.
    Keywords: Employment, Exports, Trade, European Union
    Date: 2021–11
  7. By: Castañeda-Navarrete, Jennifer; Hauge, Jostein; López-Gómez, Carlos
    Abstract: Motivation: The COVID-19 pandemic has massively disrupted international trade and global value chains. Impacts, however, differ across regions and industries. This article contributes to a better understanding of the scale of disruptions to industries and value chains integral to the economies of and livelihoods in developing countries, and what role policy can play to mitigate harm. Purpose: This article aims to: (1) analyse and characterize disruptions to the global apparel value chain caused by the COVID-19 pandemic, focusing on how developing countries have been impacted, and; (2) identify key policies to support a resilient, inclusive and sustainable recovery. Approach and methods: We review COVID-19 related reports published by international and non-governmental organizations, international trade and production statistics, industry surveys and media reports. We frame our analysis predominantly within the Global Value Chains literature. Findings: The global apparel value chain has been severely disrupted by the pandemic, owing to direct effects of sickness on workers in factories, reduced output of materials—cloth, thread, etc.—used to fabricate clothing, and to reduced demand for apparel in high-income countries. Developing countries are suffering disproportionately in terms of profits, wages, job security and job safety. Women workers in the apparel chain have been hit especially hard, not only because most workers in the chain are women, but also because they have experienced increasing unpaid care work and higher risk of gender-based violence. Policy implications: Five key areas of policy to support a resilient, inclusive and sustainable recovery stand out: (1) delivering emergency responses to ensure firm survival and the protection of workers’ livelihoods; (2) reformulating FDI attraction strategies and promoting market diversification; (3) supporting technology adoption and skills development; (4) deploying labour standards to improve workers’ conditions and strengthening social protection systems; and (5) adopting gender-sensitive responses.
    Keywords: apparel industry; Covid-19; economic development; global value chains; power disparities; reshoring; supply chains; coronavirus
    JEL: R14 J01
    Date: 2021–11–01
  8. By: Sergio Espuelas (Universitat de Barcelona)
    Abstract: Between 1850 and 2005, Spain experienced major changes in its trade orientation, combining periods of intense trade protectionism with periods of high trade openness. What was the impact on social spending? The econometric results suggest that globalization effect in 1850-2000 Spain has been conditional on fiscal capacity. When fiscal capacity has been high, trade openness has had a positive effect. However, when fiscal capacity has been low, trade-openness effect on social spending has been negative. The results are robust to alternative measures of fiscal capacity and consistent with a placebo test. This would explain why after the 1960s social spending in Spain increased in parallel with trade openness, whereas before that date social spending grew (slowly) in a context of increasing trade protectionism. Thus, both the compensation effect and the race to the bottom find empirical support but the final outcome depends on the fiscal context.
    Keywords: Social spending, trade openness, globalization, Spain.
    JEL: N3 H5 F68
    Date: 2021
    Abstract: In response to intensifying conflict with the United States and the shock of Covid-19, China reinforced its strategy to expand domestic demand. China's domestic market is an important factor affecting Korea's exports and economic growth. Accordingly, a large body of research has been conducted in Korea on China's expansion policy and changes in its domestic market. However, most studies have analyzed changes in China's consumer market, import market and imported items, limiting the overall understanding of China's domestic economy. In addition, most studies on China's regional domestic market have analyzed the market segmented by region. Recognizing this gap, this study expanded the scope of analysis of the domestic market in China to the entire domestic final demand, and analyzed inter-regional trade relations and other economic relations based on an inter-regional input-output analysis, which has rarely been attempted in analyses of the Chinese domestic market. In addition, the changes in the regional structure of the Chinese import market and Korea's competitiveness were analyzed using Chinese trade statistics. In particular, by synthesizing the changes after the global financial crisis, a turning point in China's economic structure, we project future changes in the regional economic structure of China, which emphasizes the independence of its domestic economy. In addition, in the era of US-China conflict, the study aimed to select regional markets meaningful to Korea, and to present strategic directions toward China focusing on regional cooperation and approaches into the domestic market.
    Keywords: China; domestic market; Korea; cooperation
    Date: 2021–08–10
  10. By: Xi He (Center for Agricultural and Rural Development (CARD) at Iowa State University); Guilherme DePaula (Center for Agricultural and Rural Development (CARD) at Iowa State University); Wendong Zhang (Center for Agricultural and Rural Development (CARD) at Iowa State University)
    Abstract: In 2013, Brazil surpassed the United States to become the world's largest soybean exporter. Brazil's soybean production and exports have accelerated since its trade liberalization in the mid-1990s, and it has gained extra competitiveness over the United States in the export market during the US-China trade war, when China imposed several waves of retaliatory tariffs on US soybeans. For interested readers, a tool is available on the CARD website that shows historical revealed comparative advantages for six leading export countries. In the 2019/20 marketing year, Brazil's soybean exports reached 92 million metric tons, about twice that of US soybean exports. While Brazil's increasing competitiveness in the oilseed market depends critically on its advanced soybean production technology, its adaptation of a double-cropping soy-corn system in the savanna, extended periods of currency depreciation, and declining transportation costs resulting from expanding transportation infrastructure network are key factors as well.
    Date: 2021–10
  11. By: Davide M. Coluccia; Lorenzo Spadavecchia
    Abstract: This article studies the impact of immigration restriction policies on technology adoption in sending countries. From 1920 to 1921, the number of Italian immigrants to the United States dropped by 85% after Congress passed the Emergency Quota Act, a severely restrictive immigration law. In a difference-in-differences setting, we exploit variation in exposure across Italian districts to this massive restriction against human mobility. Using novel individual-level data on Italian immigrants to the US and newly digitized historical censuses, we show that this policy substantially hampered technology adoption and capital investment. We interpret this as evidence of directed technical adoption: an increase in the labor supply dampens the incentive for firms to adopt labor-saving technologies. To validate this mechanism, we show that more exposed districts display a sizable increase in overall population and employment in manufacturing. We provide evidence that “missing migrants,” whose migration was inhibited by the Act, drive this result.
    Keywords: age of mass migration, emigration, economic development, immigration barriers, technology adoption
    JEL: N14 N34 O15 O33
    Date: 2021
  12. By: NAIKI Yoshiko
    Abstract: This paper assesses the "Report on the Appellate Body of the World Trade Organization," published by the U.S. Trade Representatives in February 2020. In particular, this paper examines the U.S. critique of the Appellate Body's interpretation of the non-discrimination obligation under the TBT Agreement and the GATT 1994 in the USTR's Report. The critique in the report was written against the backdrop of the "trilogy" of TBT cases: U.S.-Clove Cigarettes, U.S.-Tuna Labelling , and U.S.-COOL . This paper argues that the U.S. critique regarding the relationship between the TBT Article 2.1 and the GATT Article III is not valid. However, the critique relating to the "legitimate regulatory distinction" test (in the context of U.S.-COOL) presents interesting issues on the specific role of the TBT Agreement (in contrast to the GATT) in the trade rules. Accordingly, the paper revisits the "legitimate regulatory distinction" test newly introduced by the Appellate Body in the TBT trilogy cases.
    Date: 2021–11
  13. By: Bian, Bo; Meier, Jean-Marie; Xu, Ting
    Abstract: We identify strong cross-border institutions as a driver for the globalization of in-novation. Using 67 million patents from over 100 patent offices, we introduce novel measures of innovation diffusion and collaboration. Exploiting staggered bilateral in-vestment treaties as shocks to cross-border property rights and contract enforcement, we show that signatory countries increase technology adoption and sourcing from each other. They also increase R&D collaborations. These interactions result in techno-logical convergence. The effects are particularly strong for process innovation, and for countries that are technological laggards or have weak domestic institutions. Increased inter-firm rather than intra-firm foreign investment is the key channel.
    Keywords: Innovation,technology diffusion,globalization,cross-border institutions,bilateral investment treaties
    JEL: F21 F61 G18 G38 K33 O31 O33
    Date: 2021
  14. By: Rabah Arezki (African Development Bank); Alou Adesse Dama (CERDI, Université Clermont Auvergne); Grégoire Rota-Graziosi (CERDI, Université Clermont Auvergne)
    Abstract: This paper explores the dynamic effects of trade liberalization on tax revenue using a worldwide panel dataset. Results point to statistically significant negative effect of liberalization on (non- resource) tax revenues in the short term and no significant effect in the medium term. Liberalization also alter the tax structure tilting revenues toward indirect taxes away from direct ones. Economies which have implemented value added taxes prior to liberalization have mitigated its negative effects on tax revenues. The evidence is supportive of the complementarity role of state capacity to reap the benefits of liberalization.
    Keywords: tax structure, openness, liberalization, natural resources JEL classification: H2, H87, F13
    Date: 2021–08–09
  15. By: Seydou Coulibaly (African Development Bank); Abdramane Camara (CERDI, Université Clermont Auvergne)
    Abstract: African countries generally cut corporate income tax (CIT) rates in the hopes of attracting foreign direct investment (FDI), but the effectiveness of tax rate reductions in attracting extractive industries FDI is controversial. This paper estimates the impact of CIT rates, as applied to mining companies, on FDI inflows to the gold and silver sectors of African economies. The estimation results indicate that the impact of mining CIT rate on the host country’s gold and silver FDI inflows is negative, but not statistically significant, at the conventional levels of significance. These results indicate that cuts in CIT rates applied to mining companies will not necessarily attract FDI to gold and silver projects. Moreover, we find a strategic complementarity in gold and silver FDI inflows between countries, suggesting that an increase in the host country’s gold and silver FDI inflows may stimulate FDI to gold and silver projects in neighboring countries. Furthermore, the results show that infrastructure, government stability and gold and silver reserves positively affect gold and silver FDI inflows. The main findings of the paper suggest that, instead of granting corporate tax incentives, governments may consider improving the quality of socioeconomic infrastructure, the availability of geological information, and promoting political and economic stability for attracting mining investments.
    Keywords: : FDI in gold and silver, mining corporate tax rate, panel data, spatial econometrics, Africa JEL classification: C23, E62, F21, H25, L72
    Date: 2021–10–12
  16. By: Chen-Ti Chen; John M. Crespi (Center for Agricultural and Rural Development (CARD) at Iowa State University); Yongjie Ji (Center for Agricultural and Rural Development (CARD) at Iowa State University)
    Abstract: In a recent publication, CARD researchers and USDA economists looked at the international relationships between the United States and its major export competitors in beef. In that article, the researchers examined beef because the 2004 bovine spongiform encephalopathy ("mad cow disease") event caused a major disruption in US beef exports and the United States' competitive position. The authors conclude that even when exports return to pre-disruption levels, the disruption could change the structure of the export market. What the researchers found was that it took much longer for the United States' competitive position in beef to return to pre-disruption levels.
    Date: 2021–03
    Abstract: As the US-China trade conflict intensifies, high dependence on US and China has been pointed out as a potential risk to the Korean economy. This calls for trade policies including diversification of trading partners and the establishment of a new model for trade agreements suitable to such diversified partners. Meanwhile, the necessity for such policies grows as protectionism spreads globally and trade order changes after the Covid-19 pandemic. Africa and the Pacific (AP) regions, the main areas of interest in this report, have been excluded from Korea's FTA network despite their high growth potential and strategic significance. Most countries in the AP regions are geographically distant from Korea and mostly underdeveloped, so we have approached the region only in terms of development cooperation. Currently, trade agreements and systems for trade and investment with AP countries are insufficient, and the size of economic cooperation with these countries remains small. However, Africa has high market potential, owing to various factors such as its high population growth, middle-class growth, and transition to digital economy, while the Pacific island countries have abundant fisheries and marine resources, and wield voting power in international organizations. In this regard, it is necessary to build the foundation for cooperation with AP countries in the mid-to-long term. Against this backdrop, this study seeks mid- to long-term strategies to promote trade cooperation with AP countries. First we consider introducing and expanding nonreciprocal arrangements for developing countries in the AP regions, as currently provided to United Nations-defined least developed countries. Then we consider introducing a reciprocal trade agreement, for example, an FTA. As a result, we found that it is necessary to introduce an FTA model suitable for developing countries in the AP regions instead of introducing further nonreciprocal agreements. Based on the results of the study, this paper proposes strategic directions for trade cooperation with the AP regions, and furthermore, provides policy suggestions that should be included in the agreement with those countries.
    Keywords: Korea; Africa; Pacific; trade agreement; trade policy; FTA
    Date: 2021–08–20
  18. By: Samuel Kortum (Cowles Foundation, Yale University); David A. Weisbach (The University of Chicago Law School)
    Abstract: We derive the optimal unilateral policy in a general equilibrium model of trade and climate change where one region of the world imposes a climate policy and the rest of the world does not. A climate policy in one region shifts activities—extraction, production, and consumption—in the other region. The optimal policy trades off the costs of these distortions. The optimal policy can be implemented through: (i) a nominal tax on extraction at a rate equal to the global marginal harm from emissions, (ii) a tax on imports of energy and goods, and a rebate of taxes on exports of energy but not goods, both at a lower rate than the extraction tax rate, and (iii) a goods-speciï¬ c export subsidy. The policy controls leakage by combining supply-side and demand-side taxes to control the price of energy in the non-taxing region. It exploits international trade to expand the reach of the climate policy. We calibrate and simulate the model to illustrate how the optimal policy compares to more traditional policies such as extraction, production, and consumption taxes and combinations of those taxes. The simulations show that combinations of supply-side and demand-side taxes are much better than simpler policies and can perform nearly as well as the optimal policy.
    Keywords: Carbon taxes, Border adjustments, Leakage, Climate change
    JEL: F18 H23 Q54
    Date: 2021–11
  19. By: Xiufeng Yan; Qi Tang
    Abstract: We study the effect of globalization of world economy between 1980 and 2010 by using network analysis technics on trade and GDP data of 71 countries in the world. We draw results distinguishing relatively developing and relatively developed countries during this period of time and point out the standing out economies among the BRICS countries during the years of globalization: within our context of study, China and Russia are the countries that already exhibit developed economy characters, India is next in line but have some unusual features, while Brazil and South Africa still have erratic behaviors
    Date: 2021–11
  20. By: Khalil, Makram; Weber, Marc-Daniel
    Abstract: In structural vector autoregressive models of US and euro area manufacturing, we use sign restrictions to identify shocks that alter the frictions to Chinese supply chain trade. We find a quantitatively significant role of such shocks for the decline of US manufacturing output at the height of the Sino-American trade tensions in 2019. At the beginning of the Covid-19 pandemic in early 2020, the results point towards large spillovers from the shutdown in China to manufacturing in the US and the euro area. Moreover, during the recovery in 2020 and 2021, positive Chinese supply chain shocks related to the shift of preferences towards goods with a large China valued-added content played a role. Interestingly, the impact of China-specific trade shocks is not limited to manufacturing sectors that are highly exposed to China. Furthermore, negative Chinese supply chain shocks cause upward price pressure across the whole manufacturing industry.
    Keywords: Cross-border supply-chain disruptions, China, trade tensions, Covid-19 recession, US and euro area manufacturing.
    JEL: E32 F41 F62
    Date: 2021–10–25
  21. By: Xi He (Center for Agricultural and Rural Development (CARD) at Iowa State University); Dermot J. Hayes (Center for Agricultural and Rural Development (CARD) at Iowa State University); Wendong Zhang (Center for Agricultural and Rural Development (CARD) at Iowa State University)
    Abstract: China's has recently expanded its US agricultural product imports, partially due to the terms of the phase one trade deal and partially due to recent flooding in some of its largest agricultural-producing provinces (also examined in this issue of APR). He, Hayes, and Zhang examine recent price changes and changes in demand for corn in China and find that China will easily exceed its corn TRQ of 7.2 million metric tons in 2020.
    Date: 2020–10
  22. By: Amat Adarov (The Vienna Institute for International Economic Studies, wiiw); Dimitrios Exadaktylos; Mahdi Ghodsi (The Vienna Institute for International Economic Studies, wiiw); Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw); Roman Stöllinger (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: The competitiveness of industries and countries is shaped more and more by technological advancement in the production and use of information and communications technology (ICT). This report considers the supply side of ICT goods and services. It studies the drivers of ICT production location and trade across countries with a focus on the relative position of the EU. The analyses clearly indicate that the EU must step up its efforts to accelerate the shift towards digital production and strengthening the ICT sector that produces the required technologies and services. In addition, from a trade policy perspective, a harmonised set of standards and regulatory framework is to be aimed at to minimise mismatches in technical specifications and requirements. This will lead to the diffusion of positive externalities and should allow for a smooth operation of the global value chains in these products.
    Keywords: information and communications technology, digitalisation, production patterns, trade patterns
    JEL: F14 O33 L11 L63
    Date: 2021–10
  23. By: Pamela E. Ofori (University of Insubria, Varese, Italy); Simplice A. Asongu (Yaoundé, Cameroon); Vanessa S. Tchamyou (Yaoundé, Cameroon)
    Abstract: The debate on the need for Sub-Saharan African (SSA) countries to increase female participation in the economic sector has intensified the coming into force of the African Continental Free Trade Area (AfCFTA) and good governance. This study investigates the joint effects of governance (comprising of political, economic and institutional governance) and economic integration on female economic participation in sub-Saharan Africa (SSA). The study employs panel data of 42 countries in SSA spanning 1996-2020 for the analysis. The empirical strategy uses the dynamic System Generalized Method of Moments (SGMM) estimation technique. The findings reveal that the single effect of economic integration on female economic participation is necessary but not sufficient. Hence, complementing economic integration with good governance further enhances female economic participation in SSA. In general, the joint effect of economic integration and good governance should be a concern for policymakers to promote female economic inclusion.
    Keywords: economic integration; governance; female economic participation; sub-Saharan Africa
    JEL: G20 I10 I32 O40 O55
    Date: 2021–10
  24. By: Musakwa, Mercy T; Odhiambo , Nicholas M
    Abstract: This study investigates the impact of foreign capital inflows on poverty in Vietnam, using annual time series data from 1990 to 2018. The study was motivated by the need to establish if burgeoning foreign capital inflows in Vietnam can support the poverty alleviation agenda. Foreign direct investment (FDI) and external debt were used as proxies for foreign capital inflows; and infant mortality rate, Human Development Index (HDI) and household consumption expenditure were used as poverty proxies. Using the autoregressive distributed lag (ARDL) approach, the study found foreign direct investment to reduce poverty in the short run and long run when household consumption expenditure was used as a poverty measure. However, the study found FDI to worsen poverty in the short run when infant mortality rate and HDI were used as poverty proxies. The study found external debt to have poverty mitigating effect in the short run regardless of the poverty measure used and in the long run only when household consumption expenditure was used as a poverty measure.
    Keywords: autoregressive distributed lag (ARDL), external debt, foreign direct investment, poverty, Vietnam.
    Date: 2021–10
  25. By: Pamela E. Ofori (University of Insubria, Varese, Italy); Simplice A. Asongu (Yaoundé, Cameroon); Vanessa S. Tchamyou (Yaoundé, Cameroon)
    Abstract: The debate on the need for Sub-Saharan African (SSA) countries to increase female participation in the economic sector has intensified the coming into force of the African Continental Free Trade Area (AfCFTA) and good governance. This study investigates the joint effects of governance (comprising of political, economic and institutional governance) and economic integration on female economic participation in sub-Saharan Africa (SSA). The study employs panel data of 42 countries in SSA spanning 1996-2020 for the analysis. The empirical strategy uses the dynamic System Generalized Method of Moments (SGMM) estimation technique. The findings reveal that the single effect of economic integration on female economic participation is necessary but not sufficient. Hence, complementing economic integration with good governance further enhances female economic participation in SSA. In general, the joint effect of economic integration and good governance should be a concern for policymakers to promote female economic inclusion.
    Keywords: economic integration; governance; female economic participation; sub-Saharan Africa
    JEL: G20 I10 I32 O40 O55
    Date: 2021–10
  26. By: Carlo Lombardo (CEDLAS-IIE-FCE-UNLP); Julian Martinez-Correa (CEDLAS-IIE-FCE-UNLP); Leonardo Peñaloza-Pacheco (Cornell University and CEDLAS-IIE-FCE-UNLP); Leonardo Gasparini (CEDLAS-IIE-FCE-UNLP & CONICET)
    Abstract: The massive displacement of Venezuelan citizens to Colombia is the second most important episode of forced migration in the world. We study the impact of this demographic shock on the Colombian income distribution exploiting the geographical heterogeneity in the intensity of migration. We use RIF regressions in an instrumental variables approach to account for the non-random pattern of location of immigrants. We find that despite the fact that Venezuelan immigrants are relatively skilled compared to native Colombian workers, the exodus had a larger negative effect on the lower tail of the wage distribution, implying increases in income inequality and poverty. We link this result to a sizeable downgrading of (mostly unregistered) Venezuelan recent migrants who work in more routine tasks and earn lower wages than natives with similar characteristics. We also explore a large regularization program for immigrants and find that it was associated to a reduction in the extent of downgrading, and hence, to a mitigation of the unequalizing impact of the exodus
    JEL: F14 F22 F16 F23 J61 L60
    Date: 2020–11
    Abstract: China's investment in the European Union (EU) increased significantly during the European financial crisis, but has been on the decline in recent years. The surge of Chinese investment has raised concerns and demands for analysis on the negative effects it could have on the EU companies and industries. In this context, the present study aims to analyze the main characteristics of Chinese investment and M&A in Europe, major policy issues between the two sides, the EU's policy responses, and prospects of Chinese future investment in Eu-rope, going on to draw important lessons for Korea. To summarize the main characteristics of China's investment in Europe, the study found that the EU's share of China's overseas direct investment has continued to increase until recently. Second, investment in the Central and Eastern European Countries (CEECs) is gradually increasing, although it is still insignificant compared to the top five destinations in the EU: Netherlands, Sweden, Germany, Luxembourg and France. Third, China's investment in the EU is being made in pursuit of innovation in manufacturing and to acquire high-tech technologies. When it comes to China's M&A in Europe, the study found that the proportion of indirect China's M&As (via third countries (e.g. Hong Kong) or Chinese subsidiaries already established in Europe) was relatively higher than direct ones. Empirical factor analysis of investment also shows that China's investment in the EU is strongly motivated by the pursuit of strategic assets. Other factors such as institutional-level and regulatory variables are found to have no significant impact, or have an effect contrary to expectations. This suggests that China's investment in the EU is based on the Chinese government's growth strategy, and accompanies an element of national capitalism Today, It is highly expected that the COVID-19 pandemic will have a reorganizing effect on the global value chain (GVC) and Foreign investment regulation in the high-tech sector motivated by national security is emerging as a global issue as the US and the EU are tightening their control. As Korean companies are not free from the risk of falling under such regulations, a thorough and careful response is required. And for the Korean government, it is necessary to prepare legal and institutional measures regulating foreign investment in reference to the US and the EU.
    Keywords: China; FDI; EU; investment; M&A
    Date: 2021–10–31
  28. By: Yuan Deng; Jieming Mao; Balasubramanian Sivan; Kangning Wang
    Abstract: We study bilateral trade between two strategic agents. The celebrated result of Myerson and Satterthwaite states that in general, no incentive-compatible, individually rational and weakly budget balanced mechanism can be efficient. I.e., no mechanism with these properties can guarantee a trade whenever buyer value exceeds seller cost. Given this, a natural question is whether there exists a mechanism with these properties that guarantees a constant fraction of the first-best gains-from-trade, namely a constant fraction of the gains-from-trade attainable whenever buyer's value weakly exceeds seller's cost. In this work, we positively resolve this long-standing open question on constant-factor approximation, mentioned in several previous works, using a simple mechanism.
    Date: 2021–11
  29. By: Mirjam Bächli; Teodora Tsankova
    Abstract: What affects native support for immigration? At a time of rising anti-immigration sentiments, this is a question raised by both academics and policy makers. We study the role of labor protection in shaping native preferences over migration policies. We look at Swiss national votes which took place from 2000 to 2014. Our results show that a higher immigrant exposure reduces pro-immigration vote shares in municipalities with a relatively low-skilled native population. The negative response is mitigated under higher levels of labor protection as measured by collective bargaining coverage. We look at labor market outcomes to understand mechanisms at play and find some suggestive evidence that collective agreements mitigate negative wage responses among low-skilled natives. Overall, the analysis suggests that labor protection affects vote outcomes by improving in addition other labor market conditions or by alleviating existing fears among the native population.
    Keywords: immigration, popular votes, collective bargaining
    JEL: D72 F22 J52 J61
    Date: 2021
  30. By: Muhammad, Shahbaz; Avik, Sinha; Muhammad Ibrahim, Shah
    Abstract: Purpose: Over the last couple of years, Chinese manufacturing sector was affected by the onset of US-China trade war and the outbreak of COVID-19. In such a scenario, air quality in China has encountered a shock, and the impacts of these two incidents are unknown. In this study, we analyze the convergence of air quality in China in presence of multiple structural breaks, and how the impacts of these two events are different from each other. Design/methodology/approach: In order to assess the nature of shocks in the presence of multiple structural breaks, Clemente-Montañés-Reyes (1998) with two structural breaks and Bai and Carrion-i-Silvestre (2009) with five structural breaks are employed. Findings: Our results reveal that air quality in China is showing the sign of convergence, and it is consistent across 18 provinces, which are worst hit by the outbreak of COVID-19. In presence of transitory shocks, the impact of COVID-19 outbreak is found to be higher, whereas the impact of US-China trade war is found to be more persistent. Lastly, outbreak of COVID-19 has been found to have more impact on pollutants with higher severity of health hazard. Originality: To the best of our knowledge, this is the first study that contributes to the empirical literatures in terms of investigating the convergence of overall air pollution and individual air pollutants taking COVID-19 and trade war into account.
    Keywords: China; Trade War; COVID-19; AQI; Convergence
    JEL: Q3
    Date: 2021
  31. By: Biguri, Kizkitza; Stahl, Jörg R.
    Abstract: We present novel evidence on the value of cross-border political access. We analyze data on meetings of US multinational enterprises (MNEs) with European Commission (EC) policymakers. Meetings with Commissioners are associated with positive abnormal equity returns. We study channels of value creation through political access in the areas of regulation and taxation. US enterprises with EC meetings are more likely to receive favorable outcomes in their European merger decisions and have lower effective tax rates on foreign income than their peers without meetings. Our results suggest that access to foreign policymakers is of substantial value for MNEs.
    Keywords: Cross-border political access,European Commission,firm value
    JEL: D72 G30
    Date: 2020
  32. By: Ekaterina Sprenger (ZBW – Leibniz Information Centre for Economics)
    Abstract: This article analyses the determinants of international migration flows within the European Union and specifically focuses on the role of cultural and linguistic differences in explaining the size of these flows. For that purpose, a set of indicators of cultural distance are controlled for along with economic, demographic, geographical, political and network variables using data from 28 member states of the European Union over the period 1998-2018. Economic factors play an important role in examining migration flows, but economic differentials alone may be insufficient to explain the uneven real-life migration pattern in the EU. The results suggest strong evidence of the importance of linguistic distance in explaining the direction of migration flows across the European Union.
    Keywords: European Union; Geographic Mobility; Labour Mobility; Migration; Optimum Currency Area
    JEL: J61 F22 O15
    Date: 2021–10
  33. By: Jacek Rothert (United States Naval Academy; Group for Research in Applied Economics (GRAPE)); Jacob M. Short (Bank of Canada)
    Abstract: The canonical one-sector model over predicts international capital flows by a factor of ten. We show that introducing a non-traded goods sector can reconcile the differences between the theoretical predictions and the observed flows. We analyze the quantitative impact of the nontraded sector using a calibrated model of a small open economy, in which non-traded goods are used in consumption and investment, and need capital and labor to be produced. The model features international frictions directly affecting international borrowing and lending, as well as domestic frictions that limit the scope of inter-sectoral reallocation of capital and labor. We find that: (1) the impact of domestic frictions on the size of international capital flows is similar to the impact of international frictions, and (2) the median elasticity of capital flows with respect to international frictions in the two-sector model with costly inter-sectoral reallocation is about 50-60% lower than that same elasticity in the one-sector model.
    Keywords: non-traded sector, capital flows, savings wedge, allocation puzzle
    JEL: F21 F43 O41
    Date: 2021
    Abstract: With the rise of globalization beginning in the 20th century, came the inevitable rise of offshoring — companies moving at least some parts of their operations abroad in order to cut costs and increase profits. In recent years, however, international developments, such as the rise of wages in what were typically considered low-cost countries, coupled with uncertainties created through global political tensions, have incentivized companies to move their operations back to their respective home countries or to make new investments in United States-based facilities. This phenomenon, known as reshoring, has only increased in 2020 and 2021, amidst US - China tensions and the COVID-19 pandemic. Reshoring is growing in popularity particularly among companies based in the United States. In May 2021, for example, a US solar energy systems manufacturer called GAF Energy announced that the company would relocate its operations from Asia to Silicon Valley, expecting to add 400 jobs in research, engineering, and manufacturing roles (Szal, 2021). Around the same time, cycle and treadmill machine maker Peloton announced that it would invest $400 million to build its first US-based factory, citing heightened demand and the pandemic highlighting uncertainties that come with its global supply chain (Thomas, 2021). The company, which has announced that the US factory will be based in Troy Township, Ohio, stated that it expects to create over 2,000 jobs in the area. Also, in May 2021, Ford Motor announced a joint venture with South Korean battery maker SK Innovation to manufacture battery cells for electric vehicles in the United States (Wayland, 2021). The venture will be based in the US, marking a significant decision for Ford Motor, which operates worldwide and has notably been in the press in recent years for its decisions to offshore operations. (the rest omitted)
    Keywords: reshoring; relocate; moving
    Date: 2021–08–19
  35. By: Cascino, Stefano
    Abstract: Hasan et al. (2021) examine the association between country-level expropriation risk and the pricing of foreign earnings in multinational corporations (MNCs). They contend and find that, when subsidiary country expropriation risk declines, the value relevance of foreign earnings increases. Hasan et al. (2021) view their evidence as consistent with the idea that investors discount foreign earnings when they perceive the risk of expropriation and unfair treatment by foreign governments to be high. The study of Hasan et al. (2021) aims to contribute to the longstanding stream of the literature that examines the pricing and value relevance of foreign earnings (e.g., Thomas, 1999; Callen et al., 2005; Hope et al., 2009), as well as to the nascent literature that investigates the within-MNC determinants of financial reporting transparency (e.g., Dyreng et al., 2012; Beuselinck et al., 2019). My discussion focuses on three key issues. First, related to the study’s theoretical underpinnings, a maintained assumption of Hasan et al. (2021) is that the pricing of foreign subsidiary earnings is only explained by investors discounting foreign subsidiary earnings to account for subsidiary country risk of expropriation in their investment decisions—that is, investors rely less (more) on foreign subsidiary earnings when subsidiary country risk of expropriation is high (low). I argue that Hasan et al. (2021)’s maintained assumption is rather strong, as it neglects the realistic possibility that the pricing of foreign subsidiary earnings is also a function of subsidiary earnings quality. Second, the evidence in Hasan et al. (2021) mainly relies on a cross-sectional identification strategy and thus their findings are to be interpreted with this caveat in mind. Third, while Hasan et al. (2021) are careful in designing a number of sensitivity tests to account for the influence of confounders, potential alternative explanations for their documented findings are hard to rule out. 2 The remainder of my discussion unfolds as follows. Section 2 provides some perspectives on the theoretical underpinnings of Hasan et al. (2021). Section 3 focuses on the empirical challenges. Section 4 discusses potential alternative explanations for the documented findings. Section 5 concludes.
    JEL: M40
    Date: 2021–06–01
  36. By: Matti Sarvimäki (Matti Sarvimäki)
    Abstract: We review and interpret research on the economic and political effects of receiving asylum seekers and refugees in developed countries, with a particular focus on the 2015 European refugee protection crisis and its aftermath. In the first part of the paper, we examine the consequences of receiving asylum seekers and refugees and identify two main findings. First, the reception of refugees is unlikely to generate large direct economic effects. Both labor market and fiscal consequences for host countries are likely to be relatively modest. Second, however, the broader political processes accompanying the reception and integration of refugees may give rise to indirect yet larger economic effects. Specifically, a growing body of work suggests that the arrival of asylum seekers and refugees can fuel the rise of anti-immigrant populist parties, which may lead to the adoption of economically and politically isolationist policies. Yet, these political effects are not inevitable and occur only under certain conditions. In the second part of the paper, we discuss the conditions under which these effects are less likely to occur. We argue that refugees’ effective integration along relevant linguistic, economic, and legal dimensions, an allocation of asylum seekers that is perceived as ‘fair’ by the host society, and meaningful contact between locals and newly arrived refugees have the potential to mitigate the political and indirect economic risks.
    Date: 2021–11
    Abstract: The growth of digital platform markets in ASEAN and India is prominent. With COVID-19, demands for economic and social activities centered on digital platforms are expected to rise further; especially five sectors (e-commerce, sharing economy, education, healthcare and fintech) are fast growing seectors. Korean is a potential partner of ASEAN countries and India. Korea's Digital New Deal policy now stresses tasks such as sharing and utilizing data, convergence of 5G and artificial intelligence across whole industries, spreading digital education, digital healthcare, etc., which are closely related to the economic and social needs of ASEAN countries and India. In order to promote regulatory harmonization and cooperation with ASEAN and India, it is necessary for Korea to promote digital economy and trade agreements.
    Keywords: ASEAN; India; Korea; digital platform; Digital New Deal policy
    Date: 2021–06–11
    Abstract: In 2018, the largest yet cross-border M&A deal between digital platforms in Southeast Asia was reached, namely the Grab-Uber M&A case. The local digital platform Grab consolidated the regional operations of San Francisco, California-based Uber, a development which had significant effects on competition and consumer welfares in the Southeast Asia digital market. The competition authorities in the region independently initiated their investigation and started to deliberate the merger case to determine the anti-competitive effects on their domestic market, and to decide whether this transaction should be restricted or approved. Even though the two merging and merged firms completed their transactions, each authority applied different logic and imposed different remedies in deciding the case. Authorities in some member states such as Singapore and the Philippines decided that the Grab-Uber merger was anti-competitive, while others such as Indonesia and Viet Nam considered the merger not anti-competitive. Upon this backdrop, this article reviews the competition policies and laws of four major ASEAN countries – Indonesia, Singapore, Viet Nam, and the Philippines – from institutional and legal perspectives, focusing on M&A review regimes. Then, we briefly introduce how these com-petition authorities decided on the Grab-Uber merger case, also analyzing the competition effects of the case on the ride-hailing market in the countries. Based on the analysis results, we propose overseas competition policies for Korea.
    Keywords: ASEAN; Grab-Uber; merger; M&A; Southeast Asia; Indonesia; Singapore; Viet Nam; the Philippines
    Date: 2021–09–03
  39. By: Damien Dussaux; Francesco Vona (OFCE - Observatoire français des conjonctures économiques - Sciences Po - Sciences Po); Antoine Dechezleprêtre
    Abstract: Concerns about carbon offshoring, namely the relocation of dirty tasks abroad, undermine the efficiency of domestic carbon mitigation policies and might prevent governments from adopting more ambitious climate policies. This paper is the first to analyse the extent and determinants of carbon offshoring at the firm level. We combine information on carbon emissions, imports, imported emissions and environmental policy stringency based on a unique dataset of 5,000 French manufacturing firms observed from 1997 to 2014. We estimate the impact of imported emissions on firm's domestic emissions and emission intensity using a shift-share instrumental variable strategy. We do not find compelling evidence of an impact of carbon offshoring on total emissions, but show that emission efficiency improves in companies offshoring emissions abroad, suggesting that offshored emissions are compensated by an increase in production scale. The effect is economically meaningful with a 10% increase in carbon offshoring causing a 4% decline in emission intensity. However, this effect is twice as small as that of domestic energy prices and, importantly, does not appear to be driven by a pollution haven motive.
    Keywords: Carbon offshoring,CO2 emissions,Emissions intensity,Import competition,Energy prices
    Date: 2020–01–01
  40. By: Kenneth W. Clements (Economics Department, Business School, The University of Western Australia); Long Hai Vo (Economics Department, Business School, The University of Western Australia)
    Abstract: There are significant disparities in the wealth of nations and how incomes are spent. For example, consumers in the poorest countries spend more than half of income on food, while in the richest countries, this is one-tenth or less. We use the recently published data from the International Comparison Program for 176 countries to estimate cross-country demands. Considerable progress can be made in accounting for much of the disparities in consumption patterns with this simple utility-maximisation model in which variations in incomes and prices are the key drivers. This leads to measures of the “quality” of consumption and its price based on a luxury-necessity-revealed-preference approach, as well as projections of future world food demand.
    Keywords: Global consumption; Quality indexes; Engel’s law; Food demand projections
    JEL: D12 F61 Q11
    Date: 2021
  41. By: Emilio Depetris-Chauvin (Pontificia Universidad Católica de Chile); Ömer Özak (Southern Methodist University)
    Abstract: We explore the effect of historical ethnic borders on contemporary non-civil conflict in Africa. Exploiting variations across artificial regions (i.e., grids of 50x50km) within an ethnicity's historical homeland, we document that both the intensive and extensive margins of contemporary conflict are concentrated close to historical ethnic borders. Following a theory-based instrumental variable approach, which generates a plausibly exogenous ethno-spatial partition of Africa, we find that grid cells with historical ethnic borders have 27 percentage points higher probability of conflict and 7.9 percentage points higher probability of being the initial location of a conflict. We uncover several key underlying mechanisms: competition for agricultural land, population pressure, cultural similarity and weak property rights.
    Keywords: Borders, Conflict, Intra-State Conflict, Ethnic Borders, Non-Civil Conflict, Ethnic Conflict, Territory, Property Rights, Landownership, Population Pressure, Migration, Historical Homelands, Development, Africa, Economic Development, Economic Growth, Voronoi Diagram, Voronoi Tesselation, Thiessen Tesselation
    JEL: D74 N57 O13 O17 O43 P48 Q15 Q34
    Date: 2021–11
  42. By: Emanuel Kohlscheen; Richhild Moessner
    Abstract: We study the effects of globalisation on the slope of the New Keynesian Phillips curve for CPI inflation, based on a broad panel of 35 countries and controlling for possibly non-linear exchange rate effects. We find that the output gap generally has a significant positive effect on inflation, but that this effect decreases as integration in the global economy increases. We conclude that the advance of globalisation has been a key force behind the flattening of price Phillips curves across the world.
    Keywords: inflation, globalisation, openness, output gap, Phillips curve
    JEL: E52 E58
    Date: 2021

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