nep-int New Economics Papers
on International Trade
Issue of 2021‒11‒22
forty papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Services Trade Modelling: DIT Analysis Working Paper By Fraser, Benjamin
  2. Trade effects of a negative export shock on direct exporters and wholesalers By Mathias Juust
  3. Brexit: Trade diversion due to trade policy uncertainty By Eduardo Gutiérrez; Aitor Lacuesta; César Martín Machuca
  4. Azerbaijan's integration in the BRI Middle Corridor: Is WTO accession needed By Nahmadova, Firuza
  5. Towards A Bi-lateral FTA with China: Potential Implications and Negotiation Strategies for Bangladesh By Raihan, Selim; Razzaque, Mohammad A.
  6. Fifteen Years of Korea's FTA: Achievements and Policy Implications By Cho, Moonhee; Kim, Young Gui; Bae, Chankwon; Keum, Hyeyoon; Eom, Jun-Hyun
  8. Optimal Tariffs when the Trade Elasticity Varies By Tomohiro Ara
  9. Services trade in the United Kingdom and the global economy By Annabelle Mourougane; Sebastian Benz; Frédéric Gonzales
  10. ICT Diffusion, Foreign Direct Investment and Inclusive Growth in Sub-Saharan Africa By Ofori, Isaac K.; Asongu, Simplice
  11. Foreign Direct Investment, Governance and Inclusive Growth in Sub-Saharan Africa By Ofori, Isaac K.; Asongu, Simplice
  12. Under attack: Terrorism and international trade in France, 2014–2016 By Nitsch, Volker; Rabaud, Isabelle
  13. The Phase One Trade Deal: Projections and Implications By Chad Hart; Lee L. Schulz
  14. Future of WTO Reform: Paths Forward for the Appellate Body By Dikler, Jennifer
  15. Estimating the elasticity of consumer prices to the exchange rate: an accounting approach By Hadrien Camatte; Guillaume Daudin; Violaine Faubert; Antoine Lalliard; Christine Rifflart
  16. Linkages of Trade, Environment and Labour in FTAs: Trends and Prospects By Lee, Cheon-Kee; Lee, Jukwan; Park, Hyeri; Kang, Yoo-Duk
  17. Trade Networks, Heroin Markets, and the Labor Market Outcomes of Vietnam Veterans By Lonsky, Jakub; Ruiz, Isabel; Vargas-Silva, Carlos
  18. Risks and global supply chains: What we know and what we need to know By Richard Baldwin; Rebecca Freeman
  19. The State-level Burden of the Trade War: Interactions between the Market Facilitation Program and Tariffs By Edward J. Balistreri; Wendong Zhang; John Beghin
  20. Implications of Hong Kong's Special Status Revocation for Agricultural Trade between the United States, Hong Kong, and Mainland China By Xi He; Wendong Zhang
  21. A perfect storm in fertilizer markets By Beghin, John C.; Nogueira, Lia
  22. Immigration and Occupational Comparative Advantage By Gordon H. Hanson; Chen Liu
  23. Free Trade and the Formation of Environmental Policy: Evidence from US Legislative Votes By Jevan Cherniwchan; Nouri Najjar
  24. ASEAN Economic Integration on Services: An Analysis of Economic Impacts and Implications By La, Meeryung
  25. LDC Graduation of Bangladesh- In Search of Coping Strategies for the Bangladeshi RMG Industry By Ehsan, Zaeem-Al
  26. Labor Market Impact of Immigration in the European Union By Joe, Dong-Hee
  27. Study on the Changes in China's Industrial Policies and Industrial Structures in Manufacturing Sector after China's Reform and Opening By Choi, Wonseok; Yang, Pyeongseob; Pak, Jinhee; Kim, Joohye; Choi, Jiwon; Zhao, Xinwang
  28. 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
  29. Nonlinearities and a Pecking Order in Cross-border Investment By Sara B. Holland; Sergei Sarkissian; Michael Schill; Francis E. Warnock
  30. Border Carbon Adjustments: Rationale, Design and Impact By Mr. James Roaf; Ian Parry; Mr. Michael Keen
  31. BELT AND ROAD INITIATIVE: What Are Bangladesh’s Interests? By Fahmida Khatun; Syed Yusuf Saadat
  32. Institutional Integration and Productivity Growth: Evidence from the 1995 Enlargement of the European Union By Campos, Nauro F.; Coricelli, Fabrizio; Franceschi, Emanuele
  33. How Residence Permits Affect the Labor Market Attachment of Foreign Workers: Evidence from a Migration Lottery in Liechtenstein By Berno Buechel; Selina Gangl; Martin Huber
  34. The Determinants of Competitiveness of the Portuguese Defense Industry By Roxanne Merenda
  35. Directions for the Development of a Single Window to Facilitate International Trade By Agapova, Anna
  36. Tracking Trade from Space: An Application to Pacific Island Countries By Mr. Serkan Arslanalp; Mr. Robin Koepke; Jasper Verschuur
  37. A Note on Migration, Diversity and Economic Growth: a Replication Study of Bove and Elia (World Development, 2017) By Ventura, Luigi
  38. A Real-Options Analysis of Climate Change and International Migration By Marius Braun
  39. Population growth, immigration, and labour market dynamics By Elsby, Michael W.L.; Smith, Jennifer C.; Wadsworth, Jonathan
  40. The Reform of the WTO's Appellate Body: An Economic Perspective By Yea, Sangjun

  1. By: Fraser, Benjamin
    Abstract: This paper sets out a gravity modelling methodology for estimating the effect of restrictions to trade in services and simulating their trade impact. We build on existing work by using new OECD data on services trade restrictiveness in free trade agreements (FTAs).
    Keywords: Services trade; gravity modelling; trade modelling; trade in services; STRI
    JEL: F13 F14
    Date: 2021–08–30
  2. By: Mathias Juust
    Abstract: This paper examines the effects on the exports of Estonian firms of the Russian export shock of 2014, which was a multifaceted negative market-wide income shock. The dataset covers all the Estonian exporters that exported to Russia in 2013 and the empirical analysis uses a difference-in-difference method in combination with the coarsened exact matching method to account for heterogeneities between the treatment and control groups. I find that the wholesalers affected were able to show better export performance after the shock than direct exporters were. The trade performance after the shock was lower for both wholesalers and direct exporters that had lower initial productivity levels
    Keywords: export shock, firm-level trade effects, trade effects, trade policy
    JEL: F13 F14 F23
    Date: 2021–11–10
  3. By: Eduardo Gutiérrez (Banco de España); Aitor Lacuesta (Banco de España); César Martín Machuca (Banco de España)
    Abstract: During the long process of negotiation after the 2016 Brexit referendum there was a high uncertainty about the final shape of bilateral trade relations between the European Union (EU) and the United Kingdom (UK), especially for particular sectors and firms. Given this context, the paper explores whether a fraction of Spanish trade with the UK was diverted to other markets after the referendum as a function of Spanish firms’ exposition to the British market. The paper shows that firms more exposed to that particular market (above 10% of foreign sales and purchases) were able to almost fully divert the shock in their sales and purchases, mostly to other European countries. Instead, there was an heterogeneous responses of Spanish firms with a low share of British bilateral flows over total trade. Given a particular share, trade diversion appears to be more limited for imports relative to exports and for big companies.
    Keywords: policy uncertainty, Brexit, trade diversion
    JEL: F02 F13 F14 F15 F61 F68
    Date: 2021–11
  4. By: Nahmadova, Firuza
    Abstract: Azerbaijan’s accession to the World Trade Organization (WTO) has been under discussion since the late 1990s, however this process is not any closer to being achieved today. Despite the government’s multiple economic reforms and the implementation of strategic roadmaps, the same can not be said about Azerbaijan’s commitment to bilateral and multilateral market access negotiations (WTO 2017). The objective of this article is to investigate the potential impact of WTO accession on the economic strategy of Azerbaijan. Contrary to other WTO members, China does not automatically apply the Most-Favored Nation (MFN) tariff rate to non-members. The cost-benefit analysis in this paper suggests that the Azerbaijani goods with the highest untapped potential in China suffer from the application of the General Tariff Rate (GTR) versus the MFN tariff applied to all WTO members (China Customs 2021; International Trade Center, 2021). Findings suggest that Azerbaijan’s WTO accession is required for this country to integrate into the Middle Corridor and reap its benefits fully.
    Keywords: Trade, Azerbaijan, China, WTO, customs, tariffs, Middle Corridor
    JEL: C15 F13 F17 O19 O53
    Date: 2021–05
  5. By: Raihan, Selim; Razzaque, Mohammad A.
    Abstract: The growing relative significance of China in the global economy and international trade has been a defining feature of globalization over the past three decades. Trade with China, which continues to grow quite strongly, offers new opportunities for specialization, efficiency gains, export market diversification and attracting investments. China is also a prominent force in global supply chains, forming networks of cross-border suppliers. It has now become an important source of technical and financial assistance, particularly in developing large-scale infrastructures. Very recently, China has offered an extended duty-free market access of 97.5% of tariff lines to Bangladesh going much beyond of about 62%. However, this kind of unilateral offer remains valid until a country’s LDC graduation. Bangladesh will have to ensure continuity of the improved market access offer to generate and sustain the interest of investors who would want to take advantage of the preferences. A negotiated trading arrangement (e.g. FTA) with China will thus remain an important issue in the medium to longer terms.
    Keywords: FTA, Bangladesh, China, BRI, FDI
    JEL: F14 F15 F17 F47
    Date: 2020–06
    Abstract: Since signing the first free trade agreement (FTA) with Chile in 2004, Korea has established 16 FTAs with 57 countries including EFTA, ASEAN, EU, US, etc. In this study we examine whether Korea's FTAs have achieved their original objectives in the following three aspects: FTA network, product market openness and foreign direct investment (FDI). We find that Korea showed a high level of centrality during 2010-2016, but recently it has weakened slightly. The empirical analysis shows that FTAs have a positive effect on the increase in both exports and imports. We also find that FTAs have a positive effect on FDI. In addition, FTAs increased outbound foreign direct investment (OFDI) to both developed and developing countries, but increased inbound foreign direct investment (IFDI) only from developed countries.
    Keywords: Korea; FTA; policy; network; product market; openness; foreign direct investment
    Date: 2020–12–22
  7. By: Mathias Juust
    Abstract: This paper examines the effects on the exports of Estonian firms of the Russian export shock of 2014, which was a multifaceted negative market-wide income shock. The dataset covers all the Estonian exporters that exported to Russia in 2013 and the empirical analysis uses a difference-in-difference method in combination with the coarsened exact matching method to account for heterogeneities between the treatment and control groups. I find that the wholesalers affected were able to show better export performance after the shock than direct exporters were. The trade performance after the shock was lower for both wholesalers and direct exporters that had lower initial productivity levels.
    Keywords: export shock, firm-level trade effects, trade effects, trade policy
    Date: 2021
  8. By: Tomohiro Ara
    Abstract: We show that the variable nature of the trade elasticity provides new policy implications of optimal tariffs. Conditional on the two sufficient statistics for welfare, the optimal level of import tariffs is the same across different trade models with a constant trade elasticity, but more generally it depends on the micro structure that makes the trade elasticity variable. Using analytical solutions of comparative statics with respect to trade liberalization and country size, we also quantitatively compare the difference in bilateral and unilateral impacts of these competitive pressures on optimal tariffs with a variable trade elasticity.
    Date: 2021–10–29
  9. By: Annabelle Mourougane; Sebastian Benz; Frédéric Gonzales
    Abstract: Services play a more important role in trade and employment in the United Kingdom than in most other OECD countries. The UK services sector is supported by an open and transparent trade regime, policies that support competition and innovation, and regulatory transparency that facilitates the creation of new services businesses and start-ups. That said, certain barriers to services trade remain. This report sheds light on the role of services trade in the UK economy, describing recent trends and highlighting future challenges, and explores policy options to support a sustainable recovery from the COVID-19 crisis.
    Keywords: COVID-19, Services Trade Restrictiveness Index
    JEL: F13 F14 F15 F68 L80 O52
    Date: 2021–11–22
  10. By: Ofori, Isaac K.; Asongu, Simplice
    Abstract: This study examines the joint effects of ICT diffusion (composed of access, usage and skills), and foreign direct investment (FDI) on inclusive growth in sub-Saharan Africa (SSA). The study draws on data from the World Bank’s World Development Indicators, and the Global Consumption and Income Project for the period 1980–2019 for the analysis. The study provides evidence robust to several specifications from ordinary least squares and dynamic system GMM estimation techniques to show that: (1) FDI and ICT diffusion and corresponding components (ICT access, usage, skills) induce inclusive growth in SSA; (2) compared to its direct effect, FDI is remarkable in fostering shared growth in SSA in the presence of greater ICT diffusion, and (3) compared to ICT access and usage, ICT skills are more effective in driving inclusive growth in SSA. Overall FDI modulates ICT dynamics to engender positive synergy effects on inclusive growth. Policy recommendations are provided in line with the implementation of the African Continental Free Trade Area (AfCFTA) Agreement and the projected rise in FDI in SSA from 2022.
    Keywords: FDI; ICT Access; ICT Diffusion; ICT Skills; ICT Usage; Inclusive Growth; sub- Saharan Africa
    JEL: E23 F21 F30 L96 O55
    Date: 2021–01
  11. By: Ofori, Isaac K.; Asongu, Simplice
    Abstract: Motivated by the projected rebound of foreign direct investment (FDI) inflow to sub-Saharan Africa (SSA) following the implementation of the AfCFTA and the finalization of the Africa Investment Protocol, we examine how FDI modulates the effects of various governance dynamics on inclusive growth in SSA. We do this by testing two hypotheses first, whether unconditionally FDI and various governance indicators (rule of law, control of corruption, regulatory quality, governance effectiveness, political stability, and voice and accountability) foster inclusive growth in SSA; and second, whether these governance dynamics engender positive synergy with FDI on inclusive growth in SSA. Using data from the World Bank’s World Governance Indicators and the World Development Indicators for the period 1990–2020, we employ several fixed effects, random effects, and the system GMM estimators for the analysis. First, we find that FDI and all our governance dynamics are significant inclusive growth enhancers in SSA. Second, though FDI amplifies the effects of all our governance dynamics on inclusive growth in SSA, governance effectiveness, voice and accountability, and political stability are keys. Policy recommendations are provided.
    Keywords: AfCFTA; Economic Integration; FDI; Governance; Inclusive Growth; Africa
    JEL: F15 F43 F60 O55 R58
    Date: 2021–01
  12. By: Nitsch, Volker; Rabaud, Isabelle
    Abstract: Terrorist events typically vary along many dimensions, making it difficult to identify their economic effects. This paper analyses the impact of terrorism on international trade by examining a series of three large-scale terrorist incidents in France over the period from January 2015 to July 2016. Using firm-level data at monthly frequency, we document an immediate and lasting decline in cross-border trade after a mass terrorist attack. According to our estimates, France’s trade in goods, which accounts for about 70 of the country’s trade in goods and services, is reduced by more than 6 billion euros in the first 6 months after an attack. The reduction in trade mainly takes place along the intensive margin, with particularly strong effects for partner countries with low border barriers to France, for firms with less frequent trade activities and for homogeneous products. A possible explanation for these patterns is an increase in trade costs due to stricter security measures.
    Date: 2021
  13. By: Chad Hart (Center for Agricultural and Rural Development (CARD) at Iowa State University); Lee L. Schulz (Center for Agricultural and Rural Development (CARD) at Iowa State University)
    Abstract: Chad Hart and Lee Schulz examine the "Phase One" trade deal and determine how it will affect US imports and exports and trade relations with major trading partners. Hart and Schulz find that the USMCA and Japan agreements concentrate on solidifying existing trade flows, rather than significantly expanding trade opportunities. The new trade deals maintain and protect US trading relationships with Canada, Mexico, and Japan, with the prospect for continued, but limited, growth. The China deal, on the other hand, has the potential to radically change global trade flows. Hart and Schulz are both CARD and Extension economists. Hart is a crop market specialist and Schulz is a livestock industry specialist. Schulz and Hart's APR articles examine the largest factors currently influencing some of the United States' largest agricultural industries ( Production Projections and Trade Adjustments and Volatile Prices and Profit Margins ).
    Date: 2020–02
    Abstract: This article investigates the current crisis surrounding the Appellate Body of the World Trade Organization, as well as solutions that have been proposed in order to remedy it. Citing frustrations with the Appellate Body, since 2017, the United States has blocked any new appointments to the Appellate Body. As a result, due to the expiration of its members' terms, the Appellate Body has not been able to rule on any disputes appealed within the World Trade Organization since December 2019. This paper provides a summary of the United States' criticisms of the body, as well as a variety of proposals to address them, written by other World Trade Organization members, academics, and experts. Implementing a mixture of these proposals will prove critical to the revival of the Appellate Body and to the continued success of the World Trade Organization.
    Keywords: WTO; World Trade Organization; Appellate Body; U.S.
    Date: 2021–03–23
  15. By: Hadrien Camatte; Guillaume Daudin (DIAL - Développement, institutions et analyses de long terme, OFCE - Observatoire français des conjonctures économiques - Sciences Po - Sciences Po, LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique); Violaine Faubert; Antoine Lalliard; Christine Rifflart (OFCE - Observatoire français des conjonctures économiques - Sciences Po - Sciences Po)
    Abstract: We analyse the elasticity of the household consumption expenditure (HCE) deflator to the exchange rate, using world input-output tables (WIOT) from 1995 to 2019. In line with the existing literature, we find a modest output-weighted elasticity of around 0.1. This elasticity is stable over time but heterogeneous across countries, ranging from 0.05 to 0.22. Such heterogeneity mainly reflects differences in foreign product content of consumption and intermediate products. Direct effects through imported consumption and intermediate products entering domestic production explain most of the transmission of an exchange rate appreciation to domestic prices. By contrast, indirect effects linked to participation in global value chains play a limited role. Our results are robust to using four different WIOT datasets. As WIOT are data-demanding and available with a lag of several years, we extrapolate a reliable estimate of the HCE deflator elasticity from 2015 onwards using trade data and GDP statistics.
    Keywords: Global value chains,Spillovers,Input-output linkages,Cost-push inflation
    Date: 2021–11–02
    Abstract: Trade-related issues such as market access and tariff elimination or reduction have been the main concerns of free trade agreements or FTAs since the early 2000s. With more attention recently given to the concept of sustainable development, however, a growing number of countries start to share a common understanding that global and concerted efforts for environmental and labour protection are crucial for sustainable growth. In this context more of the recent FTAs focus on non-trade concerns such as protection of the environment and workers. A leading example is the FTA between Korea and the EU. Ever since the Korea-EU FTA, the EU has included a chapter on “Trade and Sustainable Development” or “TSD” to extensively provide for environment and labour obligations in its bilateral trade agreements. Further, it is noteworthy that the U.S. and the EU have resorted to dispute settlement and enforcement mechanisms within their FTAs to ensure that their trade partners effectively implement environment and labour obligations at the domestic level. For instance, on December 17, 2018, the European Commission requested a consultation to Korea under the Korea-EU FTA on the grounds that the Korean government had not shown sufficient efforts in ratifying the remaining four of the eight fundamental ILO Conventions and thus acted inconsistently with the TSD Chapter of the same FTA. This is the first case that the EU has ever initiated a dispute settlement procedure under a TSD chapter. The Panel of Experts was composed on December 30, 2019, and the final report was recently published on January 25th, 2021. Against this background, for consideration by the Korean government this Brief discusses the emerging trends of environmental and labour provisions in U.S. and EU trade agreements (with a special emphasis on the USMCA), particularly focusing on the aspect of ‘enforceability’ of such obligations.
    Keywords: FTAs; trade; environment; labour; EU; TSD
    Date: 2021–03–26
  17. By: Lonsky, Jakub; Ruiz, Isabel; Vargas-Silva, Carlos
    Abstract: The role of ethnic immigrant networks in facilitating international trade is a well-established phenomenon in the literature. However, it is less clear whether this relationship extends to illegal trade and unauthorized immigrants. In this paper, we tackle this question by focusing on the case of the heroin trade and unauthorized Chinese immigrants in the early 1990s United States. Between mid-1980s and mid-1990s, Southeast Asia became the dominant source of heroin in the US. Heroin from this region was trafficked into the US by Chinese organized criminals, whose presence across the country can be approximated by the location of unauthorized Chinese immigrants. Instrumenting for the unauthorized Chinese immigrant enclaves in 1990 with their 1900 counterpart, we first show that Chinese presence in a community led to a sizeable increase in local opiates-related arrests, a proxy for local heroin markets. This effect is driven by arrests for sale/manufacturing of the drugs. Next, we examine the consequences of Chinese-trafficked heroin by looking at its impact on US Vietnam-era veterans - a group particularly vulnerable to heroin addiction in the early 1990s. Using a triple-difference estimation, we find mostly small but statistically significant detrimental effects on labor market outcomes of Vietnam veterans residing in unauthorized Chinese enclaves in 1990.
    Keywords: Trade networks,heroin markets,Vietnam veterans,labor market outcomes
    JEL: F16 F22 J15 K42
    Date: 2021
  18. By: Richard Baldwin; Rebecca Freeman
    Abstract: Recent supply disruptions catapulted the issue of risk in global supply chains (GSCs) to the top of policy agendas and created the impression that shortages would have been less severe if GSCs were either shorter and more domestic, or more diversified. But is this right? We start our answer by reviewing studies that look at risks to and from GSCs, and how GSCs have recovered from past shocks. We then look at whether GSCs are too risky—starting with business research on how firms approach the cost-resiliency trade-off. We propose the risk-versus-reward framework from portfolio theory as a good way to evaluate whether anti-risk policy is justified. We then discuss how exposures to foreign shocks are measured and argue that exposure is higher than direct indicators imply. Finally, we consider the future of GSCs in the light of current policy proposals and advancing technology before pointing to the rich menu of topics for future research on the risk-GSC nexus.
    JEL: F10 F13 F14 F15 F23
    Date: 2021–10
  19. By: Edward J. Balistreri; Wendong Zhang (Center for Agricultural and Rural Development (CARD) at Iowa State University); John Beghin
    Abstract: As the Trump Administration works with China's President Xi to pen a new US-China trade deal, Ed Balistreri, Wendong Zhang, and John Beghin examine the current US-China trade war and its uneven distribution of impacts on US states. The authors find that the distribution of Market Facilitation Payments created "winner" and "loser" states; that is, for some states, the MFP payments totally offset the incidence of tariff retaliation, and for others they don't. Interestingly, they note that while most of the winner states are "red" states that voted for President Trump in 2016, key "purple" battleground states, such as Michigan, Ohio, Wisconsin, and Pennsylvania, didn't receive large enough MFP payments to offset tariff retaliations. Balistreri and Zhang are both CARD economists that have examined the US-China trade war in depth. They both helped author "The Impact of the 2018 Trade Disruptions on the Iowa Economy," a CARD series paper that was the first to determine the fiscal impacts the US-China trade war would have on Iowa's economy.
    Date: 2020–02
  20. By: Xi He (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 1992, the United States granted Hong Kong status as a customs territory separate from mainland China. On June 29, 2020, however, the US Department of Commerce withdrew that status due to recent tensions between China and the United States. Hong Kong, as the world's largest re-exporting port, plays a large intermediary role in US-China trade, and the revocation of its special status may provoke China into taking retaliatory economic and/or political actions. He and Zhang examine trends in Hong Kong's import/export of US agricultural products and how that trade may be affected. They find that the revocation itself is not likely to directly affect US-China agricultural trade prospects much if neither China nor the United States responds with further actions.
    Date: 2020–07
  21. By: Beghin, John C.; Nogueira, Lia
    Abstract: This briefing note reviews the recent surge in world and US fertilizer prices and its causes, from Worldwide supply disruptions, strong demand, various policies exacerbating the surge and changing trade patterns, and transportation and logistics issues.
    Keywords: International Relations/Trade
    Date: 2021–11–12
  22. By: Gordon H. Hanson; Chen Liu
    Abstract: Job choice by high-skilled foreign-born workers in the US correlates strongly with country of origin. We apply a Fréchet-Roy model of occupational choice to evaluate the causes of immigrant sorting. In a gravity specification, we find that revealed comparative advantage in the US is stronger for workers from countries with higher education quality in occupations that are more intensive in cognitive reasoning, and for workers from countries that are more linguistically similar to the US in occupations that are more intensive in communication. Our findings hold for immigrants who arrived in the US at age 18 or older (who received their K-12 education abroad) but not for immigrants who arrived in the US as children (who received their K-12 education domestically). We obtain similar results for immigrant sorting in Canada, which supports our interpretation that origin-country education quality, rather than US immigration policy, is what drives sorting patterns. In counterfactual analysis, we evaluate the consequences of reallocating visas for college-educated immigrants according to origin-country education quality.
    JEL: F22 I25 J61 O15
    Date: 2021–10
  23. By: Jevan Cherniwchan (Department of Economics, Carleton University); Nouri Najjar (Department of Economics,)
    Abstract: We examine NAFTA’s effect on roll call votes on environmental legislation in the US House of Representatives. Our results suggest that reductions in US tariffs caused representatives of affected districts to significantly reduce their support for environmental policy, but reductions in Mexican tariffs did little to affect legislator behavior.
    Keywords: NAFTA, trade liberalization, voting, environmental policy
    JEL: F18 F64 F68 Q56 Q58
    Date: 2021–09–15
    Abstract: ASEAN continues its efforts to liberalize services trade in the region as part of the process of establishing the ASEAN Economic Community (AEC). ASEAN has been increasing the level of regional liberalization through package negotiations of the ASEAN Framework Agreement on Services (AFAS). After signing the 10th AFAS package, the package negotiations were replaced by the ASEAN Trade in Services Agreement (ATISA), which takes a negative list approach and includes regulatory cooperation between member states. Upon this backdrop, this paper attempts to examine the progress of service market integration within ASEAN and analyze the impact of service liberalization pursued by ASEAN. Based on the analysis results, we also present policy implications to enhance cooperation with ASEAN in the service sectors.
    Keywords: ASEAN; service; integration; ASEAN Economic Community; AEC; AFAS; ATISA
    Date: 2021–05–28
  25. By: Ehsan, Zaeem-Al
    Abstract: This paper set out to assess the implication of graduation on the RMG sector of Bangladesh and propose coping strategies for smooth transition. It has been identified that Bangladesh has a RMG export concertation (80%) in the EU and North American market, a product concentration of 73% in 5 basic products, a dependence on cotton for 74% of RMG exports and a very poor global competitiveness index rank (105th out of 141 countries). Graduation from LDC category will mean that Bangladesh will be subject to standard Generalized System of Preferences. Bangladesh would also lose Duty-Free and Quota Free access to EU, Canada and other developed countries. Furthermore, RMG exports from Bangladesh will be subject to normal Rules of Origins, entailing the erosion of the “single transformation” charge they were once entitled to. Hence, to ease transition and to take full advantage of graduation, Bangladesh should expand its international market for RMG exports by targeting markets it has condoned till date. These include China, India, Indonesia etc. To widen its portfolio and reduce its dependence on cotton, Bangladesh should invest in Man-Made Fabric (MMF) and high-tech products. To this end Bangladesh should attract FDI to utilize the potential of backward linkage in MMF. Attracting FDI will prove to be easier if Bangladesh can improve its competitive indicators by investing more in infrastructure, industrial upgradation, administrative hurdles etc.
    Keywords: Bangladesh, LDC, RMG
    JEL: F18 O4
    Date: 2021–03
    Abstract: Immigration is one of the factors often considered as the causes of Brexit. Researchers find evidences that regions with more immigrants from the new member states of the European Union (EU hereinafter) in eastern Europe tended to vote more in favor of Brexit in the 2016 referendum. Similar relations between the size of immigrant population and anti-immigration attitudes or far-right voting are found in other richer EU member states. A common explanation for this relation is the concern that immigrants negatively affect the outcome in the host labor market. Immigration is drawing attention in Korea too. Although immigrants' share in population is still substantially smaller in Korea than in the EU, its increase is noticeable. Also, certain industries in Korea are known to be already heavily reliant on immigrant labor. Recently, as entry into the country was tightened due to the COVID-19 pandemic, firms and farms are reported to have faced a disruption in production. This trend of increasing presence of immigrants in population and in the labor market, vis-à-vis the low fertility rate and rapid aging in Korea, is raising interest and concern on the socioeconomic impact of immigration. To offer some reference for the debates related to immigration in Korea, KIEP researchers (Joe et al. 2020 and Joe and Moon 2021) look at the EU, where immigrants' presence was much higher from much earlier on, and where the greater heterogeneity among the immigrants allows for richer analyses. This World Economy Brief presents some of their findings that are salient for Korea.
    Keywords: EU; labor market; immigration; Brexit
    Date: 2021–04–15
    Abstract: As China's recent industrial advancement has changed the trade structure between Korea and China from a complementary relationship to a more competitive one, the need for research on Chinese industrial policy has increased. Therefore, this study aims to analyze and evaluate changes in major industrial policies and industrial structures following China's reform and opening. We also analyze changes in the trade structure between Korea and China due to changes in China's industrial structure. Based on these analyses, we propose the following policy implications for Korea. Under the U.S.-China trade friction, China is expected to focus on a powerful science and technology strategy, promotion of the digital economy, "new infrastructure" construction, and the China Standard 2035 strategy. Korea needs to diversify its export market in the information and communication technology sector, prepare Korea's industrial technology protection system, and expand its participation in China's domestic market while diversifying global supply chains. Second, a response strategy is needed considering China's import growth rate in advanced manufacturing and to improve Korea's trade competitiveness. Finally, China's industrial policy is expected to evolve from simple incubation measures to a comprehensive strategy brought into harmony with the market, and further research on the creation of Chinese industrial ecosystems through policy and interaction between companies is expected.
    Keywords: China; Korea; opening; industrial; trade friction
    Date: 2021–04–19
  28. 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
  29. By: Sara B. Holland; Sergei Sarkissian; Michael Schill; Francis E. Warnock
    Abstract: Nonlinearities arise in international investment because of a pecking order in barriers. Some severe barriers render all others meaningless, and only when they are alleviated do other barriers become important. We show, using quantile regressions designed to model relations at more points than just the conditional mean, how various investment theories hold at different points in the distribution of bilateral cross-border equity holdings. Our results reconcile a number of findings in the literature by highlighting that datasets that focus on different points of the barriers (investment) distribution can naturally lead to different results.
    JEL: F15 F21 F3 G15
    Date: 2021–10
  30. By: Mr. James Roaf; Ian Parry; Mr. Michael Keen
    Abstract: This paper assesses the rationale, design, and impacts of border carbon adjustments (BCAs). Large disparities in carbon pricing between countries raise concerns about competitiveness and emissions leakage. BCAs are potentially the most effective domestic instrument for addressing these challenges—but design details are critical. For example, limiting coverage of the BCA to energy-intensive, trade-exposed industries facilitates administration, and initially benchmarking BCAs on domestic emissions intensities would ease the transition for trading partners with emission-intensive production. It is also important to consider how to apply BCAs across countries with different approaches to emissions mitigation. BCAs alone do not solve the free-rider problem in carbon pricing, but might be a step to an effective international carbon price floor.
    Keywords: border carbon adjustment; climate mitigation; carbon pricing; competitiveness, emissions leakage; allowance allocation, design issues, World Trade Organization rules.
    Date: 2021–09–27
  31. By: Fahmida Khatun; Syed Yusuf Saadat
    Abstract: In the aftermath of the Global Financial Crisis of 2007, growth slowed down in the economy of China, as well as in the world economy. In response to this, China unveiled a grand strategy of opening up to the world. The centrepiece of this strategy was the Silk Road Economic Belt and the 21st Century Maritime Silk Road, later known as the Belt and Road Initiative (BRI). As a truly global endeavour, the BRI has ramifications far beyond the borders of China. Bangladesh has been part of the Bangladesh-China-India-Myanmar (BCIM) Economic Corridor, which was subsequently included as one of the six economic corridors under the BRI. Hence, it is important to investigate how the BRI affects Bangladesh. This study analyses the BRI from Bangladesh’s perspective and aims to uncover what interests the country may have in participating in this initiative. Bangladesh’s role in the BCIM Economic Corridor is briefly discussed, and the five types of connectivity proposed under the initiative are examined from Bangladesh’s viewpoint. The possible challenges related to the BRI which are pertinent to Bangladesh are highlighted, and the Chinese response to these challenges is also noted. A number of recommendations are made for guiding future research on the topic.
    Keywords: Belt and Road Initiative, BRI, BCIM, Bangladesh-China-India-Myanmar, Bangladesh economy
    Date: 2021–07
  32. By: Campos, Nauro F. (University College London); Coricelli, Fabrizio (Paris School of Economics); Franceschi, Emanuele (Paris School of Economics)
    Abstract: This paper studies the productivity effects of integration deepening. The identification strategy exploits the 1995 European Union (EU) enlargement, when all candidate countries joined the Single Market but one — Norway — did not join the EU. Our synthetic difference-in-differences estimates on sectoral and regional data suggest had Norway chosen deeper integration, the average Norwegian region would have experienced an increase in yearly productivity growth of about 0.6 percentage points. This method also helps determining the sources of heterogeneity, apparently inherent to integration, highlighting higher costs of the missed deeper integration for more peripheral regions and industrial sector.
    Keywords: institutional integration, economic integration, productivity growth, European Union, European Economic Area
    JEL: C33 F15 F55 O43 O52
    Date: 2021–11
  33. By: Berno Buechel; Selina Gangl; Martin Huber
    Abstract: We analyze the impact of obtaining a residence permit on foreign workers' labor market and residential attachment. To overcome the usually severe selection issues, we exploit a unique migration lottery that randomly assigns access to residence permits for workers with an employment contract in Liechtenstein, which is situated centrally in Europe. Using an instrumental variable approach, our results show that lottery compliers raise their employment probability in Liechtenstein by on average 24 percentage points across outcome periods (2008 to 2018) as a result of receiving a permit. Relatedly, their activity level and employment duration in Liechtenstein increase by on average 20 percentage points and 1.15 years, respectively, over the outcome window. These substantial and statistically significant effects are predominantly driven by individuals not (yet) working in Liechtenstein prior to the lottery rather than by previous cross-border commuters, but even for the latter group, positive employment effects emerge in the longer run. Indeed, we find both the labor market and residential effects to be persistent even several years after the lottery with no sign of fading out. These results suggest that granting resident permits to foreign workers can be effective to foster labor supply, despite the alternative of commuting cross-border from adjacent regions.
    Keywords: international migration, cross-border commuting, natural experiment, lottery
    JEL: F22 J61
    Date: 2021
  34. By: Roxanne Merenda
    Abstract: This paper exploits a panel data ranging from 2010 to 2019 to investigate firm-level determinants of export intensity in the Portuguese defense industry, using a fixed effects model. As in any study exploiting corporate finance panel data, it is likely that some variables are endogenous due to reverse causality. Although we address this issue, the interpretation of our results cannot be fully causal. We find evidence that learning economies, proxied by export persistence, are the largest determinants associated with export intensity at firm level. Worker productivity and firm size also play a positive and significant role. Financial indicators such as financial pressure and leverage ratio negatively correlate with export intensity, albeit not always significantly. Finally, and contrary to the literature, we cannot find evidence that the Portuguese defense industry’s competitiveness rely on investment and R&D, nor is it impacted by geographical agglomeration.
    Keywords: Exports, Competitiveness, Firm-level data, Defense industry
    JEL: D22
    Date: 2021–11
  35. By: Agapova, Anna
    Abstract: The article analyses the concept of "single window mechanism" used abroad and in the practice of the EAEU countries. It has been shown that the transition to paperless technologies is a feature of customs control is one of the important indicators of the development of the national single window mechanism. The work analyzed the correspondence of such elements as Interagency Electronic Interaction System and ST «Portal Seaport» with the reference model of the national single window mechanism. It was established that KPS «Portal Seaport» can be considered as a pilot project for the implementation of the single window mechanism, but is not a product that is a single window, because it does not meet the requirements for creating a single window mechanism. It was also established that the mechanism of the "single window" existing in Russia, as a member country of the EAEU, did not work out the interaction between the business community (B2B) and between business and the state (B2G). The article shows that the reference model of the "single window" existing abroad contains a comprehensive idea of the single window mechanism, its scope, and a single information space. The problems of further development of the single window mechanism, as well as the directions for their solution, were identified.
    Keywords: single window, EAEU, international trade, interagency interaction
    JEL: H70 K20
    Date: 2021–03–29
  36. By: Mr. Serkan Arslanalp; Mr. Robin Koepke; Jasper Verschuur
    Abstract: This paper proposes an easy-to-follow approach to track merchandise trade using vessel data and applies it to Pacific island countries. Pacific islands rely heavily on imports and maritime transport for trade. They are also highly vulnerable to climate change and natural disasters that pose risks to ports and supply chains. Using satellite-based vessel tracking data from the UN Global Platform, we construct daily indicators of port and trade activity for Pacific island countries. The algorithm significantly advances estimation techniques of previous studies, particularly by employing ways to overcome challenges with the estimation of cargo payloads, using detailed information on shipping liner schedules to validate port calls, and applying country-specific information to define port boundaries. The approach can complement and help fill gaps in official data, provide early warning signs of turning points in economic activity, and assist policymakers and international organizations to monitor and provide timely responses to shocks (e.g., COVID-19).
    Keywords: Merchandise trade Data; I. Pacific island; liner shipping connectivity index; Merchandise import; supply disruption; Imports; Natural disasters; COVID-19; Trade balance; Tourism; Pacific Islands; Global; port boundary; port call; vessel data
    Date: 2021–08–20
  37. By: Ventura, Luigi
    Abstract: A recent paper (Bove and Elia (2017)) argues that migrants' diversity, as captured by the indexes of both fractionalization and polarization, exerts a posive effect on GDP growth. In fact, by using the same dataset and method- ology, it can easily be shown that the impact of diversity cannot be distinguished from that of migration itself, due to the very high correlation among the corresponding variables. Also, if one disentangles migration from diversity, following Alesina et al. (2016), only migration maintains a positive impact on growth while diversity, as captured by fractionalization, turns out to be weakly and positively associated to growth, but limitedly to the 1980-2010 time span. Polarization, on the other hand, does not seem to exert any effect on growth. The question as to whether diversity is more or less beneficial in terms of economic growth remains therefore an intriguing one, and calls for more theoretical and empirical analyses, possibly based on less (geographically) aggregated data.
    Keywords: Diversity, economic growth, migration.
    JEL: C23 C51 E21 F36
    Date: 2021–05–06
  38. By: Marius Braun (Justus Liebig University Giessen)
    Abstract: The potential impact of climate change on international migration patterns has recently received considerable attention in both the public and academic debate. Yet, much of the empirical literature fails to find increases in international migration due to climate change. The current paper attempts to resolve this “immobility paradox†by applying a real-options framework to the relationship between climate change and international migration. This framework suggests that individuals may postpone their migration response to climate change in the face of uncertainty and only migrate once impacts of climate change have exceeded certain thresholds. I test this prediction using semiparametric regression methods which allow me to empirically identify the threshold effects implied by the real-options framework. However, the findings are generally inconsistent with such threshold effects. Rather, the results suggest that in low-income countries, individuals’ migration response is hampered by the existence of liquidity constraints. These are likely to become more binding due to climate change-induced decreases in agricultural productivity.
    Keywords: climate change, international migration, real-options, semiparametric methods
    JEL: C14 F22 Q54
    Date: 2021
  39. By: Elsby, Michael W.L. (University of Edinburgh); Smith, Jennifer C. (University of Warwick, CAGE, Migration Advisory Committee); Wadsworth, Jonathan (Centre for Economic Performance at the LSE, CReAM at UCL and IZA Bonn)
    Abstract: This paper examines the role of population flows on labour market dynamics across immigrant and native-born populations in the United Kingdom. Population flows are large, and cyclical, driven first by the maturation of baby boom cohorts in the 1980s, and latterly by immigration in the 2000s. New measures of labour market flows by migrant status uncover both the flow origins of disparities in the levels and cyclicalities of immigrant and native labour market outcomes, as well as their more recent convergence. A novel dynamic accounting framework reveals that population flows have played a non-trivial role in the volatility of labour markets among both the UK-born and, especially, immigrants.
    Keywords: Immigration ; worker flows ; labour market dynamics JEL Classification: E24 ; J6
    Date: 2021
    Abstract: Throughout this study, I consider some possible changes that may occur when the WTO's AB is reformed based on the opinions stated by the US. Especially focusing on the issues of activist AB and its reviewing member countries' domestic law, I conclude that banning the AB's activist role may result in more opportunistic and inefficient policy choices on the part of member countries as to importing industries with less disputes cases. Regarding the latter issue, I argue that limiting the AB's standard of review does not much change strategic decisions of member countries.
    Keywords: WTO; Appellate Body; US
    Date: 2021–05–20

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.